DCMP003678A/2000
IN THE DISTRICT COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
MISCELLANEOUS PROCEEDINGS NO. 3678 OF 2000
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BETWEEN
Lam Suk-fan
Applicant
AND
Choy Ying-keung, Kenny
Respondent
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Coram: H H Judge Carlson in Court
Date of Hearing: 18 June 2001
Date of Judgment: 27 June 2001
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JUDGMENT
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1. This is a vendor and purchaser summons. The issue comes about in this way: the plaintiff, as purchaser, entered into an agreement for sale and purchase ("the agreement") dated 18 October 2000 with the defendant, as vendor, for the sale by the vendor to the purchaser of a flat at No. 15,18/F, Block B, Lung Poon, Court, 8 Lung Poon Street, Kowloon ("the property") at a price of $1.62 million. Before entering into this agreement, the parties signed a provisional sale and purchase agreement on 19 September pursuant to which the purchaser paid $30,000 to the vendor's solicitors, Messrs Yaddy Cheung & Company, as an initial deposit and in part payment of the purchase price. On 18 October, on signing the agreement for sale and purchase, the purchaser paid a further sum of $132,000 to the vendor's solicitors as an additional deposit and in part payment of the purchase price. I should, in summary, set out the relevant terms of the agreement.
(a)
Completion was to take place on 13 November 2000.
(b)
Time was of the essence in every respect.
(c)
The vendor would give and prove his title in accordance with section 13 of the Conveyancing and Property Ordinance, Cap. 219.
(d)
If the vendor fails to complete the sale in accordance with the terms of the agreement, then all the money paid by the purchaser to the vendor shall be returned to the purchaser forthwith, who will also be entitled to recover from the vendor such damages over and above the deposit.
(e)
The purchaser has paid the vendor $162,000 as deposit and part payment of the purchase price.
2. In the usual way, the vendor's solicitors sent the purchaser's solicitors the title deeds and other documents relating to the property under cover of a letter dated 21 October (page 1 and 2 of the correspondence bundle). Those solicitors having perused what had been sent to them noticed that the date of the letter of Removal of Alienation Restrictions Memorial No. 7178976 (this being a property originally purchased from the Housing Authority) was dated 15 July 1997 whilst the date of the Assignment Memorial 7232326 was dated 14 July 1997; the documents relating to the purchase of the property in July 1997 by the vendor in this matter. The difference in these dates disclosed a possible breach of section 17B of the Housing Ordinance, Cap. 283, which is in these terms:
"(1) Where-
(a)
(i)
land in an estate is sold under section 17A; or
(ii)
land in respect of which the Authority is authorised to nominate purchasers is sold and the person selling the land acts without the written permission of the Authority; and
(b)
the person to whom the land is sold purports to mortgage or otherwise charge the land or to assign or otherwise alienate it; and
(c)
that person acts in breach of-
(i)
any term or condition of the agreement for sale and purchase or any covenant in the deed of assignment relating to the land; or
(ii)
in the case of such a mortgage or other charge, any term authorised under paragraph 4(a) of the Schedule as regards the mortgage or other charge,
the purported mortgage, other charge, assignment or other alienation, together with any agreement so to mortgage, charge, assign or otherwise alienate, shall be void.
(2) Where-
(a)
land described in subsection (1) (a) (ii) is sold with the written permission of the Authority; and
(b)
(i)
the person to whom the land is sold purports to mortgage or otherwise charge the land and has not the written permission of the Authority so to mortgage or otherwise charge;
(ii)
the mortgagee or the person in whose favour the charge is executed acts in breach of any of the terms on which the mortgage or other charge was authorised under paragraph 4 of the Schedule,
the purported mortgage or other charge, together with any agreement so to mortgage or otherwise charge, shall be void."
3. The effect of a breach of this section is therefore to render any assignment void. This consequence has been recognised in two cases to which I was referred by Mr Wong, counsel for the purchaser, Chan Chi-hung v Tse Ying-piu [1996] 4 HKC 763 and Li Sze-fat v Cheng Ka-leung [2000] 3 HKC 224.
4. The importance of this section cannot therefore be under-estimated in conveyances and mortgages of property purchased from the Housing Authority.
5. As will become clear in a moment when I consider the correspondence that passed between the parties' solicitors, the purchaser's solicitors took the view that the vendor, by virtue of the effect of section 17B of the Housing Ordinance, was unable to prove good title to the premises and declined to complete the conveyance.
6. The vendor contends that the matter of the misdating of the assignment was no more than a clerical error which could be cured by a statutory declaration by the solicitor who had conducted the 1997 conveyancing and that would have had the effect of showing good title.
7. The purchaser having failed to complete, the vendor has forfeited the deposits. By this summons the purchaser seeks, inter alia, the return of the money paid and a number of declarations, the general effect of which is that the vendor has failed to show good title and therefore that the purchaser was entitled to refuse to complete the agreement and also for an assessment of damages arising out of the vendor's breach of the agreement.
8. The course of the dispute is easily understood from a reading of the correspondence, which is contained in a separate bundle in chronological order. I propose to summarise the effect of these letters.
9. Having received the purchaser's solicitors' letter of 26 October (page 3), the vendor's solicitors promptly wrote to Messrs Gary Tam & Company (see page 7), the solicitors who had dealt with the conveyance in 1997, asking for their comments on this apparent breach of section 17B of the Housing Ordinance. In the meantime, on 2 November the vendor's solicitors sent a letter to the purchaser's solicitors purporting to comply with the matters raised by them on 26 October (page 3). On 3 November (page 11), Messrs Gary Tam & Company replied on the question of the different dates appearing on the assignment and the receipt of the premium. The material parts of this letter are in these terms:
"We refer to your letter of 31 October 2000. Upon checking closed file, we note that the completion date for the transaction was before 10 am on 15 Ouly 2000 (sic) ..."
That must be a mistake and it should be "1997".
"However, we have sent the balance of purchase price to Messrs Ng, Tam, Ko & Chan after 5 pm on 14 July 2000 one day earlier. Inadvertently, our clerk has dated the Assignment on 14 July 2000 (sic), which should in fact be 15 July 2000. As it is not possible to amend the said date of Assignment Memorial No. 7232326, our Mr Tam is prepared to make a Statutory Declaration to clarify the position. We shall send you a draft for your approval before signing.
Your kind attention is deeply appreciated."
The proposed statutory declaration starts at page 12, which I should also set out here:
"I, Gary K W Tam, Solicitor of the High Court of The Hong Special Administrative Region of Rooms 1703-1704 Chinachem Tower, 33-37 Connaught Road, Central, Hong Kong, hereby solemnly sincerely and truly declare and say as follows:
1.
I am the sole proprietor of Gary K W Tam & Company ("My firm").
2.
My firm acted for the Purchaser in completing the Assignment Memorial No. 7232326 on 15 July 1997 ("the said Assignment") under a Sub-Sale Agreement dated 3 June 1997 signed between the Vendor and the Purchaser. Under the said Sub-Sale Agreement, it was stipulated that completion shall be on or before 10 am on 15 July 1997.
3.
My firm sent the duly executed Assignment, and the balance of the purchase price to Messrs Ng, Tam, Ko & Chan acting for the Confirmor Vendor in advance in the late afternoon on 14 July 1997 intending to complete the transaction with the Vendor before 10 am on 15 July 1997.
4.
Inadvertently, the handling conveyancing clerk of my firm had dated the Assignment according to the date of the issue of our letter to Messrs Ng, Tam, Ko & Chan, which Assignment should have been dated 15 July 1997, the completion date under the Sub-Sale Agreement.
5.
For the purpose of clarifying the completion date for the said Assignment, I hereby declare that the completion of the Sale and Purchase of the captioned property under the said Assignment should be 15 July 1997 instead of 14 July 1997."
The vendor's solicitors sent that proposed declaration to the purchaser's solicitors on the same day (page 15) but the declaration "cut no ice" with them (see pages 16 and 17). Their letter of 8 November ended with a curt observation that "the statutory declaration is not sufficient to answer our requisitions".
10. On the same day (page 18) the vendor's solicitors again wrote to Gary Tam & Company asking for further clarification. Completion was now five days away and the matter was becoming urgent. They also wrote to the purchaser's solicitors on 8 November (page 20) pressing the merits of Mr Tam's statutory declaration. The purchaser's solicitors replied the next day (see page 22), plainly unimpressed with the potential effectiveness of a statutory declaration from Mr Tam and this time raising the issue that the mortgage was also void by virtue of the difference in dates. With four days to go the position remained most unpromising.
11. On 9 November (page 23) Gary Tam & Company wrote to the vendor's solicitors also explaining that by inadvertence the mortgage had been dated 14 July when the intention had been to date all the necessary documents 15 July. A statutory declaration would be forthcoming from Mr Tam also dealing with that "inadvertence". All of this was explained to the purchaser's solicitors on the same day (page 24) and in more detail. They also referred to the case of Xiamen International Finance Co Ltd v Tsui Tai-yan [1987] HKLR 977, to which I must make more detailed reference presently, which supports the proposition that the date on a deed or document could be disregarded it there is evidence to the contrary to show that it took effect on some other date.
12. The next day, 10 November, further explanation was forthcoming from Messrs Gary Tam & Company (page 26). That letter bears repetition here:
"We refer to your letter of 9 November 2000.
We do not agree with the opinion of Messrs Kenneth C C Man & Company. We submit that the Statutory Declaration clearly goes to explain the inadvertent dating of the Assignment and the Mortgaging concerned. This is supported by the completion date as stipulated in the Sub-Sale Agreement dated 3 June 1997 (copy enclosed). Secondly, we would draw your attention to Clause 30 thereof requiring payment of the balance of the purchase price on 14 July 1997. In the premises, we submit that the Statutory Declaration proposed to be made by our Mr Tam is 'proper conveyancing evidence' to clarify and resolve the matter effectively.
We also enclose the revised draft Statutory Declaration for your approval. Please kindly inform us the amendment to the Statutory Declaration before 1 pm on 11 November. We shall send you duly signed Statutory Declaration for your further action on 13 November 2000."
The statutory declaration at page 27 also deals with the misdating of the mortgage. All of this was sent to the purchaser's solicitors on the same day (see page 47). In their covering letter, the vendor's solicitors asked whether the purchaser would now accept the statutory declaration so that it could be signed by Mr Tam himself, the principal of Gary Tam & Company, as the solicitor who had oversight of the matters in 1997. That letter drew a completely blank response from the purchaser's solicitors (see their letter of 10 November, page 48, and of 13 November, page 50).
13. Given that negative response, on 13 November (page 51) Mr Tam proposed that he could prepare an urgent ex parte application to the High Court for an order of rectification of the relevant dates of the assignment and of the mortgage, but that he would require a 10 day delay to completion in order that he might get before the court. That news was transmitted to the purchaser's solicitors by the vendor's solicitors by letter on the same day, sent by fax and delivered by hand (page 52). None of this appealed to the purchaser and her solicitors, who replied two days later, not having completed on 13 November, asking for their money back. That letter is in these terms:
"We refer to the captioned property.
Pursuant to Clause 5.1(I) of an Agreement for Sale and Purchase dated 18 November (October?) entered into by our respective clients, your client shall give and prove his title to the above property in accordance with Section 13 of the Conveyancing and Property Ordinance, Cap. 219. However, your client has failed to do so.
Therefore, we shall be grateful if you will return our client's total deposits of $162,000 held by your client and your firm as stakeholder within the next three days.
All our client's rights are hereby reserved."
14. And so that is how the matter is presented to the court. I am bound to say, that on what I hope is a fair reading of the correspondence, that no later than 8 November (see page 17) there is more than a strong suspicion (I do not wish to put it any higher than that, where I have not had the advantage of hearing and seeing the witnesses) that the purchaser and her solicitors had decided that this was not a conveyance that they were interested in going on with. Whether this was for pure commercial reasons or whether they saw the misdating of the documents as a genuine difficulty, I cannot tell for certain. What is unfortunate is that they were prepared to conduct something of a game of cat and mouse with the vendor up to the date of completion. It would have been more impressive had they stood their ground from the outset, which has always been that the misdating was fatal to the vendor's title, rather than cause the vendor and his solicitors to make repeated attempts to satisfy requisitions which the purchaser had already decided were not going to be accepted by her.
15. That having been said, what I am required to answer is a clean point of law where the purchaser's motives are perhaps neither here nor there.
16. Mr Wong for the purchaser has the put the matter very directly. He submits that the following facts are not in dispute and to this extent he is correct:
"(a)
the Assignment as well as the Mortgage were dated 14 July 1997;
(b)
the certificate for the receipt of the premium issued by the Housing Authority was dated 15 July 1997;
(c)
pursuant to the Agreement for Sale and Purchase, the Plaintiff had paid the Defendant a sum of $162,000 being the initial and further deposits of and in part payment of the purchase price of the Property; and
(d)
the Plaintiff had incurred a sum of $16,200 being the commission to the estate agent."
He then refers to section 17AA(1) of the Housing Ordinance which, in its material terms, is as follows:
"...the director of Housing may stipulate by notice in the Gazette, that the agreement for sale and purchase and the deed of assignment shall be subject to the terms, covenants and conditions mentioned in the Schedule and the terms, covenants and conditions so stipulated shall be part of the agreement and deed."
He also draws attention to section 17AA(3) of the Ordinance which contains, inter alia, the following:
"A statement in any agreement for sale and purchase or a deed of assignment...that the agreement or deed is subject to the terms, covenants and conditions mentioned in the Schedule shall be sufficient notice (evidence?), until the contrary is proved, that the Director of Housing has stipulated that the agreement or deed shall be subject to those terms, covenants and conditions."
Paragraph 1 of the schedule provides that:
"Subject to paragraph 4 of this Schedule, the purchaser shall not at any time alienate,...or enter into agreement to alienate..., unless
(b) the purchaser has first paid to the Authority the amount of the premium."
Paragraph 4 of the same schedule states that:
"...a purchaser may 'enter into an agreement for sale and purchase of the land providing it is a condition of such agreement that the premium as assessed by the Director of Housing be paid to the Authority prior to assignment..."
Finally, he draws attention to section 17B, which I have already set out, which provides that any agreement to mortgage, charge, assign or otherwise alienate shall be void if any term or condition of the agreement for sale and purchase or any covenant in the deed of assignment relating to the land is breached.
17. From that Mr Wong submits that having regard to the misdating, the property had not been properly transferred to the vendor in 1997 so that he is now unable to prove good title of the purchaser in time for completion.
18. Mr Joseph Lam for the vendor has put in a written skeleton argument which helpfully traces the matters which he relies upon as showing that Mr Gary Tam's statutory declaration would have covered the difficulty over the misdating and had the purchaser agreed to the statutory declaration, it would have been signed in its expanded form (see page 27) in time for completion to take place as scheduled on 13 November. He starts with the proposition in Browne v Burton (1847) 17 LJQB 49 at page 50 where Patterson, J said:
"Now, the rule uniformly acted upon from the time of Clayton's case in the present day is a that a deed or other writing must be taken to speak from the time of the execution and not from the date apparent on the face of it. That date is indeed to be taken prima facie as the true time of execution; but as soon as the contrary appears, the apparent date is to be utterly disregarded."
19. He also draws attention to Morrell v Studd & Millington (1913) 2 Ch 648 where at page 658 Astbury, J held that where a written instrument contains no date, parol evidence is admissible to show when it was written and from what date it was intended to operate. I am bound to say that I get less assistance from this case which concerned a document with no date at all rather than one which was allegedly misdated.
20. But what is clear is that the general rule is that the date on a deed will be deemed to be the date on which it has been delivered unless the contrary is shown. The importance of the date has been considered by the authors of Hong Kong Conveyancing at chapter 12, paragraphs 50 to 60, where they recognise that a wrongly entered date may be ignored provided there is evidence to show that the date entered in the deed is not the correct date. The question is discussed in the following terms:
"Perhaps too little attention is paid to ensuring that the document is correctly dated. The date to be inserted in the assignment should be the date of the delivery of the deed once it has been executed by all necessary parties, since the deed only takes effect from the date of its delivery. The date on which the deed is stated will not necessarily, therefore, be the correct date of delivery, but, unless the contrary is shown, it will be deemed to have been delivered on the date stated on the deed.
It is important that the correct date is inserted on the document, since the period within which the deed must be stamped and registered is calculated from the date of execution of the document. The date of execution may also be important from the aspect of priority, since the respective dates of creation govern the ranking of competing interests, provided that the documents are registered within 30 days: section 5 of the Land Registration Ordinance.
It might be, however, that the incorrect date is inserted in error. Although there is a presumption that the date inserted on the document is the correct date: Browne v Burton (1847) 17 LJQB 49, this presumption may be rebutted and extrinsic evidence may be adduced to show the correct date. For example, in Xiamen International Finance Co Ltd v Tsui Tai-yan [1987] HKLR 977, Godfrey J ruled that an incorrect date on a deed of assignment should accordingly be disregarded."
21. In Xiamen International Finance Co Ltd v Tsui Tai-yan supra, the facts were different to the situation before me. Godfrey J (as he then was) felt able to ignore the misdating of an assignment since the rule was that a deed takes effect from the date of its delivery. This case concerned a matter where the owner of a property granted a power of attorney to her son dated 3 November 1981, who, on 19 October 1982, assigned the property pursuant to that power of attorney, but the assignment itself was mislaid and when it was presented for registration it was dated 13 September 1983, which of course was the wrong date. The matter itself concerned section 5 of the Power of Attorney Ordinance, Cap 31. It is not necessary for me to consider the issues that presented themselves for resolution by Godfrey J, but merely to observe that having regard to the evidence before him, he was satisfied that the assignment had been wrongly dated. At page 979G he said that the misdating of the assignment can be ignored. The rule is that a deed takes effect from the date of its delivery, which in this case was 19 October 1982. Although it is to be presumed that the date appearing on the deed is the date of its delivery, the presumption is rebuttable: "as soon as the contrary appears, the apparent date is to be utterly disregarded" (see Patterson J in Browne v Burton ).
22. The report of the case does not show what evidence was placed before Godfrey J to satisfy him that the transaction was completed within 12 months of the date on which the power of attorney came into operation and so comply with section 5 of the Power of Attorney Ordinance, but of that evidence the judge said at 979F that "...the facts and circumstances of the case are, to my mind, so compelling that I can conclude beyond reasonable doubt that the purchasers will not be at risk of a successful challenge to their title..." and in so doing, he referred to the House of Lords decision in MEPC Limited v Christian-Edwards [1981] AC 205. The importance of that decision is that it demonstrates that a court should only act to uphold a vendor's title if it is satisfied beyond a reasonable doubt that a purchaser will not be at risk of a successful challenge to that title (see the speech of Lord Russell of Killowen at 230A to D). This therefore is the standard of proof that I must apply in assessing the evidence placed before by the vendor in the form of the proposed statutory declaration by Mr Tam to which I must return presently.
23. But before I can even begin to embark upon such an enquiry, I must decide whether the statutory declaration is capable of curing the defect of an allegedly incorrect date, particularly in the light of Mr Wong's submission which I think, taken to its logical conclusion, is that these documents by virtue of being misdated have resulted in a breach of section 17B and are thereby void. His primary objection therefore is that once void, they are incapable of being "cured".
24. Mr Lam answers this by drawing attention to Hong Kong Conveyancing (Volume 1) chapter VI, paragraph 274. The material parts of the paragraph is as follows:
"Where a defect in the chain of title is found to exist it can often be remedied by a statutory declaration. Indeed this remedy is accorded statutory recognition in respect of non-revocation of powers of attorney. In the words of Godfrey J in Lee Yeung-chun v Ng Choi-chun [1990] 1 HKLR 468:
Where a statutory declaration is made for conveyancing purposes, the object is that it should serve as evidence to assist a vendor of the property in verifying his title. If an issue arises between vendor and purchaser in relation to which the content of such declaration is material, the court will receive the declaration as admissible evidence to be considered in deciding the point in issue. It serves, therefore, the same object in conveyancing as evidence by affidavit or affirmation does in litigation."
25. This is demonstrated by the decision of the Court of Final Appeal in Leung Kwai-lin v Wu Wing-kuen [2001] CFA 212 where the court held that a statutory declaration could be admitted to provide secondary evidence of the contents of a power of attorney that had been lost.
26. In this matter it is important to analyse the steps and transactions which took place when the property was originally conveyed to the vendor in 1997. This analysis has been fairly set out in part III of Mr Lam's skeleton argument which I am content to adopt here:
"8.
(By referring to the Sub-Sale Agreement at P. 138). First of all, by a Principal Agreement dated 2 April 1997, the owner (Yip Sui-ming) contracted to sell the Property to the Vendor (Chow Yuk-shan);
9.
Then Vendor (Chow Yuk-shan) contracted to sell the Property to the Purchaser (Choy Ying-keung who is the Defendant in this action) pursuant to the Sub-Sale Agreement dated 3 June 1997. In effect, Chow Yuk-shan was the confirmor.
10.
According to the Sub-Sale Agreement dated 3 June 1997:
(1)
Clause 6: 'The Vendor shall on completion assign the Property as Confirmor to the Purchaser (as Joint Tenants/Tenants in common in equal shares or his nominee(s) or sub-purchaser(s) and shall procure the Owner to execute a proper Assignment of the Property direct to the Purchaser or his nominee(s) or sub-purchaser(s) subject as hereinafter appears but otherwise free from encumbrances and the Vendor shall also join in to execute such Assignment as Confirmor to assign and confirm the Property to the Purchaser or his nominee(s) or sub-purchaser(s)':
(2)
Clause 30: 'On or after the 5th day of June 1997, the Purchaser may enter the Property to carry out decoration work before payment of the purchase price in full on the following terms:-
(a)
If the balance of the purchase price shall not be paid on or before 14 July 1997 herein specified, the Purchaser shall forthwith vacate the whole of the Property and the deposit already paid shall be forfeited to the Vendor.
(3)
Schedule 6: Completion date:-
'on or before the 15th day of July 1997 before 10 am (Monday to Friday)/before 10 am (Saturday).'
11.
In and around July 1997, the Defendant was represented by Messrs Gary Tam & Company in the purchase of the Property.
12.
Therefore Messrs Gary Tam & Company was and is familiar with the matters which happened in and around July 1997.
13.
It is clear that the balance of the purchase money has to be paid on or before 14 July 1997 while the completion date was on or before 15 July 1997. It is also fair to assume that parties deliberately set out two different time limits, payment of the balance of the purchase price on or before 14 July 1997 while the completion date was schedule to be on or before 15 July 1997. It is also fair to assume that balance of the purchase price had to be paid before completion in order to enable the other party to pay the premium.
14.
Proposed statutory declaration by Mr Gary Tam, solicitors then acting for the Defendant, confirmed that:
(a)
the duly executed Assignment and the balance of the purchase price was sent to Messrs Ng, Tam, Ko & Chan acting for the Confirmor on 14 July 1997;
(b)
the intended completion date was 15 July 1997;
(c)
the handling conveyancing clerk inadvertently dated the Assignment and the Mortgage according to the date of the payment of the balance of the Purchase Price (which was 14 July 1997);
(d)
the transaction was in fact completed on 15 July 1997;
(e)
the Assignment and Mortgage should have been dated 15 July 1997.
15.
It is therefore submitted that Messrs Gary Tam & Company (solicitors then acting for the Defendant), had the knowledge of the events of what happened in or about July 1997. Accordingly, Messrs Gary Tam & Company could affirm and explain the discrepancy and the mistake as to the date appearing in the Assignment and the Mortgage. Messrs Gary Tam could tell the date when the Assignment and the Mortgage had been signed, sealed and delivered by the Owner and the Vendor to the Defendant. That was the date which should appear on the Assignment and the Mortgage, namely 15 July 1997.
16.
The Vendor and the Owner would not assign the Property to the Purchaser unless and until they received the purchase money. As the completion date was on 15 July 1997 and the intention of the parties was to complete on 15 July 1997, the date of the completion should also be 15 July 1997 as stated by Mr Gary Tam." From that analysis Mr Lam goes on to rely on two cases, HKSAR v Pang Ko-fai [1999] 2 HKC 395, a decision of Judge Gill, (sitting as a Deputy Judge of the High Court), and Hong Kong Building Loan Agency Limited v Pang Ko-fai [2000]4 HKC 602, a decision of Sakhrani J. Both cases relate to Mr Pang Ko-fai's purchase of a flat from the Housing Authority in February 1987 which contained the usual provision that if the property was disposed of after 10 years, any agreement to sell must include a condition that the owner pay a premium to the Housing Authority prior to assignment and within 28 days of the agreement. Section 17B of the Housing Ordinance supra renders void any alienation entered into by an owner in breach of the deed of assignment and also creates an offence by virtue of section 27A by anyone entering a void agreement under section 17B. On 16 April 1997, Mr Pang agreed to sell the property. A term of the agreement was that the premises were sold subject to the terms and conditions of the Housing Ordinance Schedule. Mr Pang was notified of the assessment of the premium to be paid by August 1997. In June Mr Pang purported to rescind the agreement but then on 30 September 1997 he signed a form of mortgage on the property. On 9 October he paid the premium from the proceeds of the mortgage. He had not obtained the prior approval of the Director of Housing to mortgage the property prior to payment of the premium. Mr Pang was prosecuted under section 27A and convicted by the magistrate on the basis that the mortgage had been created on 9 September, the date that it was executed, which is before the payment of the premium, and was therefore void under section 17B. On appeal, Judge Gill allowing the appeal held that documents were often prepared and executed before the date of completion of the transaction. Solicitors held documents pending completion and did not deliver them until they were satisfied that all matters had been dealt with. He held that even though the mortgage might recite "I hereby mortgage", it did not take effect unless and until it was delivered to the other side. The actual date of execution was incidental to that process. He found on the evidence that delivery was the date on which the funds ware received from the mortgagee bank and after clearance of those funds part were used to pay the premium. Therefore, Judge Gill held that the mortgage was in fact created on the same date on which the premium was paid and no prior approval was required from the Director of Housing. The mortgage was therefore not void under section 17B. In the related civil action Judge Gill's reasoning was approved and applied by Sakhrani J.
27. Mr Lam submits that the analysis in these two related actions is entirely apposite to what has occurred here. Mr Gary Tam has said that the balance of the purchase price was tendered to the vendor's solicitors on 14 July 1997 with the intention to complete on 15 July 1997. The premium was paid on 15 July 1997 and that was also the date when the assignment and the mortgage took effect. These two documents should have been dated 15 July - by mistake they were dated the previous day.
28. Applying Browne v Burton supra and Xiamen International Finance v Tsui Tai-yan supra, although the rule is that a deed takes effect on the date of delivery and it is to be presumed that the dates appearing on the deed are the dates when the deed became effective, that presumption is rebuttable. I am satisfied therefore that this being the rule, it is open to the vendor in this matter to argue that he can cure or explain the mistake in the date of the assignment and the mortgage by evidence which seeks to rebut the presumption.
29. The question then becomes whether Mr Tam's evidence as contained in the letters that I have referred to including the final version of his offered statutory declaration is sufficient to rebut the presumption. I must be satisfied beyond a reasonable doubt; per Lord Russell of Killowen in MEPC v Christian-Edwards supra.
30. Mr Wong submits that Mr Tam is no position to speak on this matter. He refers to the fact that the conveyancing was done by a clerk and not by Mr Tam. What Mr Tam has offered cannot amount to proof positive of matters that occurred in 1997.
31. I do not agree. Mr Tam was the principal of the firm. He has clearly referred to his firm's papers and in my judgment has provided a cogent account of how and why this conveyance should have proceeded and how these important deeds came to be mistakenly dated. It is not essential that the clerk concerned should have provided the statutory declaration. Mr Tam as the principal is well placed to provide these explanations himself. As a solicitor and officer of the court, I am prepared to accept what he has had to say, which makes good sense as to what had been the intention and that inadvertence resulted in these documents being misdated.
32. In the event that this issue is decided against him, Mr Wong goes on to ask the rhetorical question - where is the statutory declaration? It was never signed and that route appears to have been abandoned because Mr Tam then decided to ask for more time in order to get an order of rectification from the High Court.
33. When one looks at the purchaser's solicitors reaction to the proposed statutory declaration (and I refer here to the more complete second version) where the solicitors made it clear that such a document would not be effective, they can now hardly complain that the declaration was not executed by Mr Tam. I find as a matter of law that what Mr Tam had offered by way of explanation in the correspondence and its enclosed documents, that I have drawn attention to, culminating in the second proposed statutory declaration constituted a sufficient answer to the purchaser's solicitors requisitions and a proper answer to the suggestion that the 1997 conveyance was void by virtue of a breach of section 17B. I am content to hold that all the documents took effect on 15 July, I do so by applying the reasoning in HKSAR v Pang Ko-fai and Hong Kong Building Loan Agency Limited v Pang Ko-fai supra and come to the conclusion that there has been no breach of section 17B of the Housing Ordinance. The presumption that the date on the assignment and the mortgage was also the date of execution of those documents has accordingly been rebutted.
34. For the sake of completeness, I should also say that the fact that Mr Tam asked for a further 10 days to obtain an order of rectification from the High Court is neither here nor there. By the time that he asked for this further time he had already as a matter of law, in my judgment, done enough to show that there had been no breach of the Housing Ordinance and the purchaser should have accepted the vendor's title on the basis of the statutory declaration. The request for a further 10 days was surplus to requirements if I can put it in that way - it did not affect the position at law.
35. For all these reasons, therefore, the purchaser's summons must stand dismissed.
36. I will now adjourn this matter to 13 July at 10.30 am for argument on the question of any further directions that the vendor may seek consequent upon this judgment and also for further consideration to be given to the third party proceedings and for the parties to address me on costs.
Ian Carlson
District Court Judge
Representation:
Mr Joeson Wong, instructed by Kenneth C C Man & Co., for the Applicant
Mr Joseph Lam, instructed by Messrs Au Yeung, Lo & Chung, for the Respondent
Ms Lai, of Kenneth C C Man & Co., for the Applicant
Mr Raymond Au Yeung, of Messrs Au Yeung, Lo & Chung, for the Respondent
Please refer to CACV2013/2001 for the relevant appeal(s) to the Court of Appeal.