CHAO SAN SAN1 v. WORLDPART INDUSTRIAL LTD

CACV 158/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 158 OF 2002

(ON APPEAL FROM HCA NO. 14189 OF 1998)

-------------------------------------------

--------------------

JUDGMENT

--------------------

Hon. Woo V-P:

1.  I agree with the judgment of Yuen JA and the order she proposes to make in paragraph 11.

Hon Cheung JA:

2.      I also agree.

Hon Yuen JA:

3.      This is an application by the Plaintiffs in HCA 14189/1998 and HCA No. 155561/1998 (the Appellants in CACV 158/2002) for leave to appeal out of time to the Court of Final Appeal from a judgment of this court given on 21 March 2003 dismissing their appeal from Deputy Judge To’s order in which he dismissed their actions and gave judgment on the Defendant’s counterclaims against them respectively. 

4.      At the trial before Deputy Judge To and at the appeal, the Plaintiffs had been represented by counsel but they were unrepresented at this application.

5.      The Notice of Motion for leave to appeal to the Court of Final Appeal (which had obviously been drafted with the benefit of legal advice) sought leave to appeal under s.22(1)(b) of the Hong Kong Court of Final Appeal Ordinance, and the questions that are said to be of great general and public importance were formulated as follows:

“	(1)	the ‘units’ in question were ‘Ting’ houses and this fact is not in dispute.  It is also common ground and practice only indigenous villages of the New Territories are entitled to build a ‘Ting’ house and the usual procedure for such a transaction is that the Government will grant a lot (‘New Lot’) to the indigenous villager and to grant the right to build a small house on the lot.  The building of a small house is also subject to a ‘Building Licence’ which prohibits the indigenous villagers to sub-let, sub-sale, sub-mortgage, part with possession of the small house until a ‘premium’ is paid to the Government.  The Plaintiffs/Appellants in this case are contented [contended] that when the ‘Subscription Letter’ and the ‘Agreement’ were entered into between the Plaintiffs and the Defendant, the Defendant had no title to convey the ‘units’.  At that time the Defendant or the indigenous villager was only given a ‘right’ by the Government to build a small house under a New Grant.  It is fundamental Conveyancing Law that when a Vendor is to sell a property or interest in the property he must deduce a ‘good’ title to the property.  The Plaintiffs are also contended that the  indigenous villager obtained ‘title’ to the small house when he paid a ‘Premium’ to the Government as required under the corresponding Crown Grant.  Therefor when then Plaintiffs issued the ‘Writ of Summons’ to signify the recession [rescission] of the said Agreement, the notice of recession [rescission] was valid since the said writ was issued before the  indigenous villager paid the ‘Premium’ to the said ‘units’ in the small house and the  indigenous villager could not prove ‘title’ to the said units at that time.  The Plaintiffs further contend that the failure of the  indigenous village[r] to pay the ‘Premium’ before the signing of the said Subscription Letter and Agreements amounted to a breach of the Crown Grant.  Such failure went to the root of title of the properties in question and therefore entitling the Plaintiffs to rescind from the said Subscription Letter and Agreements (emphasis added).
	(2)	An agent of the Defendant a Ms Law whose evidence had not been challenged represented highly quality countryside domestic housing village known as ‘Regency Court’ with many amenities e.g. swimming pool, golf driving range would be built and which attracted the Plaintiffs to purchase two units.  All these representations must amount to ‘fraudulent misrepresentations’ since at the time the Plaintiffs entered into the ‘Agreements’ the construction site consisted of a group of ‘Ting’ houses only and those amenities which as admitted by the Defendant could not be built until ‘short term waiver’ could be obtained from the Government.  The said Ms Law had make a further ‘misrepresentation’ when she promised that the Plaintiffs could obtain mortgage loan from banks when she well knew the banks would not grant any loans until the Defendant/ indigenous villager has paid ‘Premium’ on the lot and obtained ‘title’ to the said ‘units’.  The Plaintiffs are also contended that in the ‘Subscription Letter’ and the ‘Agreement’ the Defendant had made ‘fraudulent misrepresentation’ which include: the Defendant entered into the said agreement as Vendor of the properties instead of the ‘Ting’; it was never mentioned either verbally or in the said agreement or Subscription Letter that the ‘units’ were ‘Ting’ house and it was never mentioned that the ‘Ting’ had no ‘title’ to convey at the time when the said Agreement was entered into”.

6.      The second question is clearly not a question of great general and public importance, as it involves allegations of fact specific to this case. 

7.      As far as the first question is concerned, giving it the widest possible construction, the question that the Plaintiffs seem to be postulating is whether the Defendant as developers of units in “Ting” houses had good title when they entered into the agreements to sell the units which was before the payment of premiums, and if they did not, whether that would entitle the Plaintiffs to rescind the Agreements.

8.      There are a number of reasons why leave should not be granted.  First, a reading of the statement of claim in both cases (which I am afraid was not easy to understand) showed that the causes of action asserted were first,  misrepresentation and secondly, breach of an implied term of the agreements that the Defendant should show a good title and deliver to the Plaintiffs a proper abstract of title and verify it by the production of title deeds a reasonable time before completion.  In respect of the latter cause of action, the alleged breach was that "the Defendant had failed to produce any title documents nor show a good title to the Premises within a reasonable time before the completion date to allow the Plaintiffs an adequate opportunity of considering those documents and raising requisitions upon them" (para. 16 Amended Statement of Claim in HCA 14189/98; para. 15 Re-Amended Statement of Claim in HCA 15561/98).  In other words, as far as breach of agreement was concerned, the complaint was of failure to show good title by production of title documents within an adequate time before completion date, not that the Defendant had no title at the time the Subscription Letter and Agreement were entered into. 

9.      Secondly, it would appear from the judgment that at trial, the only issue dealt with was misrepresentation (Deputy Judge To’s judgment, para. 21).  On appeal, an attempt was made by counsel for the Plaintiffs to argue illegality or breach of public policy solely on the ground that the units were in "Ting" houses, in reliance on the decision of the Court of Appeal in Chung Mui Teck & others v Hang Tak Buddhist Hall Association Ltd and another [2001] 2 HKLRD 471.  However, as indicated in paras. 39-42 of this court’s judgment, the mere fact that these units were in “Ting” houses does not mean that there must have been illegality or breach of public policy involved in the development (see e.g. Li Pui Wan v Wong Mei Yin [1998] 1 HKLRD 84).  The facts in each case had to be considered.  If it were to be asserted that on the facts of the present case, there was illegality or a breach of public policy,  those allegations had to be specifically pleaded.  These allegations were not pleaded, they were not addressed at trial and consequently they were not decided in the judgment.  Illegality and breach of public policy are not issues of pure law that could be decided on appeal in a vacuum of findings of fact.

10.      Thirdly and in any event, the first question in the Plaintiffs’ proposed application for leave discloses what appears to be a misunderstanding of conveyancing law (shown in the italicized passages).  At the time of an agreement for sale and purchase of property, the vendor does not need to have good title to the property.  The vendor’s obligation is to pass good title to the property to the purchaser at the time of completion.  However in the present case, the Plaintiffs sought to terminate the agreements (they now say, for want of good title in the vendor) before the Defendant called for completion (which would occur only after payment of the premiums for which Government had issued a demand note).  In any event, as noted in this court’s judgment at para.43, at no time had the Plaintiffs raised any requisitions on title.

11.      In the circumstances, it is unlikely that this court or the Court of Final Appeal would give leave to the Plaintiffs to raise the questions posed as questions of great general or public importance, and consequently, there is no reason to grant an extension of time for them to make the application.  The application for an extension of time must be dismissed with costs to the Defendant/Respondent.