LOA KWOK FUN TSO also known as LO KWOK FUN TSO with LAW MA FUK, LO YUET YAU and LAW YAU NIN as Managers AND OTHERS v. JAMAX DEVELOPMENT LTD

HCMP 143/2022

[2022] HKCFI 1424

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 143 OF 2022

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J U D G M E N T

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Introduction

1.  This is the plaintiffs’ (“Ps”)  application by way of originating summons dated 27 January 2022 (“OS”) for inter alia the following orders:

(a)  An order that the Provisional Agreement for Sale and Purchase dated 22 June 1993 registered at the Land Registry by Memorial No. ST735428 (“Provisional Agreement”) be vacated from the Land Registry;

(b)  A declaration that Ps have no obligation to perform the Provisional Agreement;

(c)  A declaration that the Provisional Agreement is no longer registrable under the Land Registration Ordinance (Cap. 128)  (“LRO”); and

(d)  No order as to costs.

2.  Ps were represented by Counsel, Ms Christy Wong, whilst the Defendant (“D”)  did not appear at the hearing.

Background

3.  The following facts are taken from the affirmation made by Law Ma Fuk (“MF Law” and “MF Law’s Affirmation”)  in support of the OS, which I have considered and accepted as evidence in support of Ps’ present application.

4.  Ps are three Tsos, being customary trusts registered under section 15 of the New Territories Ordinance (Cap. 97).  At all material times, Ps have been the registered owners of Lots Nos. 613, 615, 618, 619, 620 and 630 RP in DD 171 (“Lots”).  MF Law, Lo Yuet Yau and Law Yau Nin are the current managers of Ps. 

5.  D (i.e. Jamax Development Limited)  was a company incorporated in Hong Kong on 12 November 1992.

6.  In or around June 1993, Ps were approached by D through estate agents for an intended sale and purchase of the Lots.

7.  On 22 June 1993, Ps entered into the Provisional Agreement for the sale of the Lots with D.

8.  Under Clause 2 of the Provisional Agreement, D (as purchaser)  will pay Ps (as vendors)  an initial deposit of HK$30,000 (“Initial Deposit”)  upon the signing of the Provisional Agreement.  Such deposit was paid by way of a cheque to Ps at the time.

9.  Clause 2 of the Provisional Agreement provided that D shall sign a formal agreement for sale and purchase (“Formal Agreement”)  and pay a further deposit, being 50% of the purchase price (“Further Deposit”), on or before 22 September 1993 (“Agreed Deadline”).

10.  It was expressly stipulated in Clause 3 of the Provisional Agreement that should D fail to sign the Formal Agreement and pay the Further Deposit by the Agreed Deadline, the Initial Deposit would be forfeited.

11.  Clause 4 of the Provisional Agreement further provided that completion of the sale and purchase should take place within 6 months of the signing of the Formal Agreement, or within 1 month of the issuance of the consent letter by the District Office upon the application of the Ps after the signing of the Formal Agreement.

12.  The Provisional Agreement was subsequently registered at the Land Registry by Memorial No. ST735428.

13.  D has failed to complete the purchase of the Lots.  D neither signed the Formal Agreement nor paid the Further Deposit by the Agreed Deadline, and indeed not until now despite the lapse of more than 28 years.  As a result, there was never completion of the sale.  According to MF Ma, he did try to contact D to follow up on the intended purchase on multiple occasions between around September 1993 and December 1993 but to no avail.  He also believed that efforts were made by the estate agents to contact D but they were also unsuccessful.

14.  Since then and until now, Ps have all along been the registered owners of the Lots and have always been in the exclusive possession of the Lots.

15.  In August 2020, the Lands Department issued a notice (“Notice”)  for the resumption of land for Lot No. 385, 618 (Portion), 620 (Portion)  and 630 RP (Portion).  A portion of the Lots is covered by the Notice.  On multiple occasions, the Land Department sent letters to Ps raising requisitions on Ps’ title in the Lots, and sought documentary evidence to show that the Provisional Agreement has been mutually rescinded, determined, cancelled or otherwise ceased to have effect.

16.  Ps therefore went on to follow up and discovered through their solicitors that D was dissolved on 21 October 2005.  Ps were advised that D was struck off by the Registrar as it was defunct, i.e. cease to carry on business or be in operation.  For the purpose of the present application, Ps took out an application in HCMP 1804/2021 to restore D to the Companies Register, and such order was granted by the Honourable Madam Justice Cheng on 11 January 2022.

17.  Thereafter, Ps proceeded to take out the present application on 27 January 2022.

18.  The OS along with the prescribed form of Acknowledgment of Service and MF Ma’s Affirmation were duly delivered to D’s last known address on 5 February 2022.  The Notice of Appointment to hear the OS dated 12 April 2022 was also duly served on D. 

19.  Until now, Ps have not received any Acknowledgment for Service from D nor had D filed any evidence to oppose the present application.  D also did not appear in the present hearing.

Summary disposal of the OS

20.  Ms Christy Wong, Counsel for Ps, invited the court to summarily dispose of the present application against D under Order 28 rule 4(1)  of the Rules of the High Court.  I accept Ms Wong’s submissions that under such rules, upon satisfying the court that D failed to acknowledge service, the burden lies with Ps to show that they have a prima facie case on their evidence and that they are entitled to summary disposal of the OS against D, whereupon the burden will then fall on D to show that it has a defence to Ps’ claims: see Hong Kong Civil Procedure, Vol. 1, [28/6/1], [28/4/2]; Wing Hang Bank Ltd v Liu Kam Ying & Ors [2002] 2 HKC 57, [6-7]; Choy Pui Lam v The Personal Representative of the Estate of Chan Yim Mei, HCMP 313/2015 (unreported, 30 March 2017).

21.  Having considered the Affirmations of Service filed for Ps, I am satisfied that the OS and the Notice of Appointment to hear the OS have been duly served on D, but D did not file any Acknowledgment of Service or any evidence to oppose Ps’ application.  As I will explain below, I am also satisfied that Ps have a prima facie case against D and, in the absence of any evidence filed by D, I agree that the court should summarily dispose of the present application.

Analysis

22.  I have considered the relevant legal principles, helpfully summarised by Ms Wong in her submissions.

23.  To start with, under section 2(1)  of the LRO, an instrument affecting land may be registered at the Land Registry.

24.  As held by Deputy Judge Andrew Cheung (as he then was)  in Wong Kum Chi v Lee Tit Ying [2003] 1 HKLRD 594 at [16], whilst the statutory provisions in section 19 of the LRO relating to the Court’s jurisdiction to vacate a lis pendens do not apply to documents lodged for registration as an instrument affecting land, the court does have the inherent jurisdiction to vacate the registration or purported registration of any instrument in the Land Registry which does not affect or no longer affects land, and to grant a declaration in relation to the registrability of an instrument which has been lodged for registration with the Land Registry. This has been applied in many cases: see e.g. Re Yee Tsim Choi, HCMP 2850/2015 (unreported, 30 March 2016, per Anderson Chow J (as he then was)); Goldstar HK Development Ltd v Mega Gold Enterprises Ltd [2020] 2 HKLRD 1006, per Keith Yeung J; Tang Tsung Fuk Tso v City Wave Development Limited, HCMP 354/2021 (unreported, 10 September 2021), per Deputy High Court Judge Paul Lam SC.

25.  In Hansun Investment Ltd v Sincere Union Development Ltd [2008] 4 HKLRD 442, Deputy Judge Gill observed at [41-42] that the protection of registration of a provisional agreement cannot last beyond the time when it ceases to be registrable, that is, when specific performance is no longer available (applying the Privy Council’s formulation in Anstalt Nybro v Hong Kong Resort Co Ltd [1980] HKLR 76, per Lord Lane at p.81). 

26.  More recently, in Tang Tsung Fuk Tso v City Wave Development Limited, HCMP 354/2021 (unreported, 10 September 2021), Deputy High Court Judge Paul Lam SC granted an order to vacate the registration of a provisional agreement from the Land Registry.  In that case, the completion date of the provisional agreement had long passed (some 23 years ago from the date of judgment), and the defendant was dissolved many years ago (some 19 years ago from the date of judgment).  On such facts, the court held that there is no real possibility at all that the defendant (which has been restored for the purpose of the application only)  would seek specific performance of the provisional agreement or that the court would grant such equitable relief, thereby concluding that the provisional agreement no longer affects land and has ceased to be registrable.  

27.  In the present case, the Provisional Agreement was entered into on 22 June 1993, more than 28 years ago.  D clearly failed to complete and was in repudiatory breach of the Provisional Agreement, having failed to sign the Formal Agreement and paid the Further Deposit.  In any event, completion never took place within 6 months as stipulated under Clause 4 of the Provisional Agreement.  Further, D has become uncontactable after the payment of the Initial Deposit, despite multiple efforts by Ps and the estate agents.  As it transpired, D was dissolved on 21 October 2005 and struck off from the Company Register. 

28.  In these circumstances, it is plain that D was in repudiatory breach of the Provisional Agreement and Ps had duly accepted D’s repudiation of the Provisional Agreement by forfeiting the Initial Deposit.  It is also clear from the background that there is no real possibility at all that D (which has been restored for the purpose of the present application only)  would seek specific performance of the Provisional Agreement or that the court would grant such equitable relief.  Indeed, the facts in the present case bear striking resemblance to those in Tang Tsung Fuk Tso v City Wave Development Limited, HCMP 354/2021 (unreported, 10 September 2021).  All in all, I am satisfied that the Provisional Agreement no longer affects land and has ceased to be registrable.

Conclusion

29.  For all these reasons, I agree that the court should exercise its inherent jurisdiction to vacate the registration of the Provisional Agreement at the Land Registry and to grant a declaration that it is no longer registrable.  I would therefore grant the orders as set out in paragraphs 1(a)  to (c)  above.

30.  As to costs, I fully endorse the observations by Keith Yeung J in Goldstar HK Development Ltd v Mega Gold Enterprises Ltd [2020] 2 HKLRD 1006 at [26] that a counterparty to such an instrument ought either to have completed or withdrawn the registration of a provisional agreement, and doing nothing is not just irresponsible but simply wrong, and could warrant the ordering of costs on an indemnity basis. Nevertheless, on the facts of the present case, D was previously struck off and only restored for the purpose of the present application.  As there are plainly no prospects of recovery of costs against D, it is perhaps understandable that Ps do not see the need to obtain a costs order in their favour.  I therefore make no order as to costs, as proposed in the OS.

31.  It remains for me to thank Ms Christy Wong, Counsel for Ps, for her submissions and assistance rendered to the court.