LAM LEE v. LUI YEM BUN

1993, No. MP3799

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

MISCELLANEOUS PROCEEDINGS

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J U D G M E N T

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1. By an Agreement dated the 13th September 1993 the Plaintiff agreed to buy and the Defendant agreed to sell the suit premises which comprise office accommodation in Beverley Commercial Centre, Kowloon.

2. The said Agreement was a standard form of Agreement. The Defendant was required to deduce a good title to the property in the usual manner.

3. On the 20th September Messrs Iu, Lai & Li, who were representing the Plaintiff wrote to the solicitors representing the Defendant in these terms :-

20 September 1993

BY HAND

Messrs. Joseph Chu & Co.,	URGENT
Solicitors,	BY HAND
29th Floor,
Jardine House,
Hong Kong.

Attention : Miss Lo

Dear Sirs,

Re: Office No. 15 on 17th Floor of Beverley Commercial Centre, Nos 87-105 Chatham Road South, Kowloon.

We thank you for your letter dated 14th September 1993, enclosing the title deeds and documents of the captioned property, with respect to which we have the following requisitions to raise :-

(1) The following documents are missing from the title deeds furnished to us; kindly let us have certified copies of the same for our perusal. To enable us to approve your client's title we would be most grateful if you could let us have copies of the same before completion :-

a. Conditions of Regrant Nos. 11117, 10318, 11118, 11125, 11098, 10312, 11134, 11053, 10404 and 11234;

b. Modification Letters Memorial Nos. 1765380, 1765381, 1782036, 1782035 and 1776569;

c. Assignment Memorial Nos. 1399001, 1383966, 1399002, 1442309, 1444848, 1452665 and 1454036;

d. Memorandum of Adjustment of Shares Memorial No. 2350766;

e. Mortgage Memorial Nos. 1652038, 1703747 and 1895116;

f. Reassignment Memorial Nos. 1694110, 1830098 and 1920357;

g. Certificate of Compliance Memorial No. 2869152; and

h. Nomination Memorial Nos. 1440971 and 1383965.

In the light of the recent case of Formking Development Limited and Lee Kwok Hung. Robert (HCMP 1173 of 1993), we would request that if the two Nominations above mentioned did not state that the deposit money paid by the respective nominators therein were paid by Redbridge Lands Limited or that the respective nominators had relinquished their rights of and in the relevant property, your goodselves would furnish the necessary evidence to prove that resulting trusts had not arisen in favour of the respective nominators with respect to the relevant property.

(2) Only one signatory, particulars of which are set out in Column B below executed the respective documents set out in Column C for the corresponding Companies set out in Column A. Please let us have copies of the seal provisions of the said companies effective at the respective dates of the documents and/or other documentary evidence to prove due execution of the said documents.

Column A	Column B	Column C
Kiu Kwong	Liang Sien,	Deed of
Investment	director	Exchange
Corporation		Memorial
Limited		No. 1830099
		(18/1/1980)

(3) We are aware that the documents set out in Column A below were executed by the attorneys for donors whose names are set out in the corresponding Column B. If the relevant Power of Attorney has been furnished with respect to a document, the date of the Power of Attorney is shown in Column C. If no such date is shown in Column C, please let us have a certified copy of the Power of Attorney authorising the Attorney to sign on the document. In the event that the date shown in Column C with respect to a document is more than one year earlier than the date of the said document, or in the event that the date of the certified copy of the power of attorney obtained by your goodselves is more than one year before the date of the corresponding document, please also let us have a certified copy of the confirmation letter from the respective donor that the power of attorney concerned had not been revoked on the date of the corresponding document.

Column A	Column B (Donor/Attorney)	Column C
Deed of	Kiu Kwong Investment	no Power
Mutual	Corporation Limited/two	of Attorney
Covemorial	attorneys noot named therein
Memorial No.
2350768 and
Assignment
Memorial
No.2382595
Assignment	Sze The Ling/Nanyang	no Power
Memorial	Commercial Bank Trustee	of Attorney
No. 1607623	Limited

Enclosed herewith please find copies of the signing pages of documents set out in Requisition Nos. 2 and 3 for your further action. We reserve our rights to raise further requisitions with respect to the missing or rectified documents. Finally please confirm that your goodselves have retained Mortgage Memorial No. 2382596 and Further Charge Memorial No. 4071294 for the preparation of the necessary release.

Thank you for your kind attention.
	Yours faithfully,
	Signed "

4. While not specifically accepting that there was any defect in the title as a consequence of the said nominations I think that Mr. C.Y. Li who was representing the Defendant entirely based his defence to this Originating Summons on his contention that the Plaintiff was not entitled to raise these requisitions.

5. He argued that by virtue of the provisions contained in S.13 of the Conveyancing and Property Ordinance Cap. 219 the Plaintiff was not entitled to go behind the Assignments made in May and October 1977 as they were both executed more than 15 years ago and complied with the 3 requirements for a good intermediate root of title referred to on pages 96 to 98 of the 4th Edition of J.T. Farrand Contract and Conveyancing - Oyez Longman.

6. At this stage it is necessary to state that Beverley Commercial Centre is a large complex and the building was constructed on Kowloon Inland Lots 10574, 10211, 10575, 10518, 10580, 10160, 10503, 10526, 10247 and 10616.

7. The 2 assignments referred to earlier were assignments of different lots forming part of the title to the land.

8. S.13(1) of Cap. 219 is as follows :-

"13. Proof of title and recitals

(1) Unless the contrary intention is expressed, a purchaser of land shall be entitled to require from the vendor, as proof of title to that land, only production of the Crown lease relating to the land sold and

(a) proof of title to that land

(i) where the grant of the Crown lease contract of sale of that land, extending for the period since that was less than 15 years before the grant; or

(ii) in any other case, extending not less than 15 years before the contract of sale of that land commencing with an assignment, a mortgage by assignment or a legal charge, each dealing with the whole estate and interest in that land; (Replaced 31 of 1988 s.6)

(b) production of any document referred to in the assignment, mortgage or charge mentioned in paragraph (a) creating or disposing of an interest, power or obligation, which is not shown to have ceased or expired and subject to which any part of that land is disposed of; and

(c) production of any power of attorney under which any document produced is executed where that document was executed less than 15 years before the contract of sale of that land. (Amended 31 of 1988 s.6)"

9. The main issue which arises on this summons is whether S. 13 has any application to the particular circumstances of this case.

10. Mr. Li submitted that if the provisions of the Interpretation and General Clauses Ordinance Cap. 1 could be called in aid it was possible to include the plural for the singular and this being the case the 1977 assignments could be considered as being assignments of the whole estate and interest in the land.

11. I regret that I must reject this submission. I can see no justification for extending the scope of S. 13(1)(a)(ii) in this manner as such an interpretation would entirely distort the clear meaning of the sub section.

12. There were no provisions in the Sale and Purchase Agreement which would provide any support to an argument that the root of title should be anything other than was required by The Conveyancing and Property Ordinance. For this fundamental reason I believe that the Defendants contentions that the requisitions referred to pre root defects is bound to fail.

13. Even if I am wrong in this I am satisfied that the Plaintiff must succeed on this application. I say this because even if the 1977 Assignments can be treated as the root of title there is nothing to restrict a Purchaser from establishing aliunde that the earlier title is bad.

14. An explanation concerning this is contained at p. 116 of the judgment of North J. in Cox & Neve's Contract 1891 2 Ch. 109.

" It is not necessary to follow the proceedings any further. There are many points raised, as I understand by the requisitions, but this objection has been taken as a preliminary one, which, if it is decided in one way, will render it unnecessary to investigate the matter further. The purchaser says that he finds there is a covenant still in force restricting his right of building on the property, and that therefore he is entitled to say that a title has not been shown to that which the vendor professed to sell to him, viz., the property free from encumbrances and without any restrictions, except in so far as notice of any restriction was given by the particulars. I think that an attempt has been made to take advantage of the purchaser, and I am not at all satisfied with the course which has been adopted on behalf of the vendor. No affidavit has been made on her behalf, and it is not shown that she has not in her possession at the present moment a duplicate or counterpart of the deed of the 3rd of March, 1847, one copy of which is in the possession of Messrs. Farrer. In the ordinary course of things she would have a copy of that deed, because it was a deed of exchange between adjoining owners of parts of their properties. The copy which Messrs. Farrer have, is the conveyance to W. L. Farrer of the part given up to him, and it also shews what was conveyed by Farrer to Cox. The deed conveying that property to Cox must necessarily have been in his possession, and there is nothing to shew that it is not at this moment in the vendor's possession.

Under these circumstances the vendors's advisers did not choose to commence the abstract of title with the deed of 1847, which would have shewn a title going back forty three years, but they choose to commence with the mortgage deed of July, 1852 - not a very convenient document with which to commence a title - a mortgage only thirty-eight years old. And then it is said - I never heard such a contention before - "The purchaser has been too vigilant. If he had only refrained from making the inquiries which he thought fit to make, and had not thus acquired notice of the deed of 1847, but had taken a conveyance of the property, he would have obtained a good title as a purchaser for value without notice, and could not have been affected by the restrictive covenant." Therefore, it is said, that as it is only the purchaser's own inquisitiveness which has brought this upon him, the vendor ought not to be prejudiced by the inquiry which he thus made. I think it was the vendor's duty to tell the purchaser that this deed existed, and it is the vendor's fault, and not the purchaser's inquisitiveness, which has led to the disclosure. But I must say that I dissent entirely from the proposition that the purchaser would have taken the property free from the restrictive covenant, if he had made no inquiry. On the contrary, I think he would have been bound by it, and for this reason. He had agreed by the bargain contained in the conditions of sale to accept a title of less than forty years. That cannot relieve him from all knowledge of the prior title, or, it would come to this, - that, if a man was content to purchase property on the condition that he should not inquire into the title, he would acquire a title free from any existing restrictions, and would not have constructive notice of any incumbrance. Of course the law does not allow of anything so absurd as that. If a purchaser chooses to take property with a thirty-eight years' title, without going any further back, he has, in my opinion, constructive notice of that which he would actually have known if he had required a forty years' title to be shewn, and had investigated the title during that period. And, when I say a forty years' title, I mean a title deduced for forty years, and for so much longer as it is necessary to go back in order to arrive at a point at which the title can properly commence. The title cannot commence in nubibus at the exact point of time which is represented by 365 days multiplied by 40. It must commence at or before the forty years with something which is in itself, or, which it is agreed shall be, a proper root of title.

Under these circumstances, I think the purchaser was fortunate in discovering that which it was the vendor's duty to tell him, but which the vendor abstained from telling him."

15. For the reasons given by North J. the 1977 Assignments are not free from defects in title if it is accepted that the requisitions raised by the Plaintiff have to be satisfactorily resolved as I am satisfied is the case.

16. The relief sought by the Plaintiff in the Originating Summons is :-

"1. A declaration that the requisition numbered 1 contained in Messrs. Iu, Lai & Li's letter of 20th September, 1993 (a true copy whereof is annexed hereto) arising out of the Nominations memorial Nos. 1440971 and 1383965 in respect of the title to the said Property comprised in the above mentioned contract of sale has not been sufficiently answered by the Defendant;

2. A declaration that good title to the said Property has not been shown in accordance with the said contract of sale and that the Plaintiff is entitled to annul the said contract;

3. That the Defendant may be ordered to pay to the Plaintiff the sum of HK$ 107,000.00 being the amount of the deposits paid by the Plaintiff under the said contract;

4. A declaration that the Plaintiff is entitled to a lien on the said Property for the said deposits;"

17. The Plaintiff is entitled to all of this relief and I make an order accordingly.

18. I am told that there is an agreement between the parties on the subject of costs and so I will decline to make any order on this.