LUO PEIYU v. SHIN HO (HOLDINGS) COMPANY LTD

DCMP 6424/2024

[2025] HKDC 1286

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 6424 OF 2024

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BETWEEN

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REASONS FOR DECISION

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1.  This is a vendor and purchaser summons taken out by the Plaintiff/purchaser on 14 November 2024 for inter alia a declaration that the Defendant/vendor had failed to show and/or to give good title to the Property known as Unit B on 26/F of Block 6, Avon Park, No 15 Yat Ming Road, Fanling, New Territories (“Property”) and the return of deposits paid.

2.  At the last hearing on 6 March 2025, a director of the Defendant appeared for and on behalf of the Defendant without legal representation. Directions were given by the Court to the Defendant for the filing of affidavit evidence in accordance with Order 5A r2 (2)(c) of the Rules of the District Court in order for the director to act for it in these proceedings and also in opposition to the originating summons. Yet, no affidavit has been filed by the Defendant.

3.  At today’s hearing, no one appeared for the Defendant. I am satisfied that the Plaintiff has duly served all the documents to the Defendant and I proceed to hear the matter in its absence.

4.  The factual background can be briefly summarised as follows:

(1) Prior to the entering into the preliminary sale and purchase agreement (“PSPA”) on 25 March 2024, it was known to the Plaintiff that the Property was subject to a Charging Order dated 16 February 2024 arising from a judgment debt owed by the Defendant (“February Charging Order”);

(2) Under Clause 20 the PSPA, D was to discharge the February Charging Order within 30 days prior to completion and all deposits paid by the Plaintiff should be kept by the Defendant’s legal representatives as stakeholder until the discharge;

(3) On 12 April 2024, parties executed the Sale and Purchase Agreement (“SPA”) and a total of HK$430,000 being deposits were paid;

(4) at that time, the only encumbrance shown on the land search record was the February Charging Order as can be seen from the following terms of the SPA:

Clause 21

(a) The parties hereto are aware of that the Property is presently subject to a Sealed Copy Charging Order;

(b) The Vendor hereby agrees and undertakes with the Purchaser to discharge and vacate at his own costs and expenses the said Charging Order on or before Completion (ie 20 June 2024);

Clause 39:

“業主承諾至少在成交前30天，撤銷在田土廳已註冊的法院令 (登記號碼24022101690042) 及不受一切產權負債影響。”

(5) On 20 May 2024, the Plaintiff’s solicitors wrote to put on record that the February Charging Order has not been discharged pursuant to Clause 39 of the SPA and further requested for all title deeds and documents; with no reply from the Defendant’s solicitors, the letter was sent again as reminder on 13 June 2024;

(6) By a letter dated 14 June 2024, the Defendant’s solicitors informed the Plaintiff’s solicitors that they were “instructed” that the final order for discharge of the Property had been granted at the hearing on 13 June 2024 and once they obtained the sealed order, it would be sent to the Defendant;

(7) By a letter dated 18 June 2024, the Plaintiff’s solicitors asked for proof for the discharge and all relevant title deeds and documents of the Property; the Defendant’s solicitors did not reply to this letter and no title documents were sent to the Plaintiff;

(8) Completion did not take place as scheduled on 20 June 2024;

(9) On 24 June 2024, the Defendant’s solicitors wrote to the Plaintiff’s solicitors that “[a]s orders of discharge of the charges against the Property had been granted (save that we shall provide your firm with sealed order of the same upon receipt), we are of the view that it is reasonable for us to release the deposits … to the [Defendant]” unless the Plaintiff objected within 3 days;

(10) The Plaintiff’s solicitors then conducted a land search on 26 June 2024 which revealed the following:

(a) The February Charging Order has not been discharged and/or its registration not vacated;

(b) There is an all monies Legal Charge dated 22 March 2024, i.e. dated three days before the PSPA, but registered only on 19 April 2024, i.e. 7 days after the SPA was executed (“March Legal Charge”); and

(c) A Sealed Copy Charging Order: Notice to show cause dated 5 June 2024 arising from a judgment debt owed by the Defendant and delivered for registration on 14 June 2024 was listed under DEEDS PENDING REGISTRATION (“June Charging Order”);

(11) Clearly, at the time when the PSPA and the SPA were entered into, the Defendant had chosen to deliberately conceal the March Legal Charge which would not be revealed in any search conducted by the Plaintiff;

(12) The Plaintiff’s solicitors immediately wrote on 26 June 2025 to put on record the March Legal Charge and the June Charging Order and reminded the Defendant’s solicitors that the deposits were paid to them as stakeholders and could only be released to the Defendant provided that the balance of purchase price is sufficient to discharge/vacate the existing charging order(s) and legal charge;

(13) On 14 August 2024, the Plaintiff exercised her right to rescind the SPA and demanded the return of all deposits; and

(14) On 14 November 2024, the Plaintiff commenced the present proceedings.

5.  It is trite law that a vendor in a sale and purchase of real property transaction is under a duty to show and prove his title in the property before the date of completion and a duty to give a good title to the purchaser on completion. In addition, clause 16 of the SPA expressly provides that the vendor shall give and show and to prove a good title in accordance with ss 13A and 13 of the Conveyancing and Property Ordinance, Cap 219 respectively.

6.  In showing and proving of title, it is for the vendor’s solicitors to produce all the relevant documents of title to the purchaser’s solicitors for examination before that the date for completion: De Monsa Investments Ltd v Whole Win Management Fund Ltd[1]. By failing to deliver any of the title documents to the Plaintiff’s solicitors, the Defendant had taken no steps at all and must have failed its duty to show and prove its title.

7.  The Defendant has also failed to give title by reason of, to say the least, the March Legal Charge and the June Charging Order which are encumbrances to the title. In addition, the Defendant was also in breach of Clauses 21 and 39 of the SPA by failing to discharge the February Charging Order 2024. In the circumstances, the Plaintiff is entitled to exercise her right to rescind the SPA.

8.  I shall now turn to the reliefs sought by the Plaintiff.

9.  With the leave of the Court, the Plaintiff filed an affirmation of Chan Pak Lun exhibiting an invoice dated 1 September 2024 in respect of the Plaintiff’s claim for legal costs of HK$10,000.

10.  Having considered counsel’s submissions and the authorities, I am satisfied that the Plaintiff should be granted with the declarations and orders as per the draft order handed up and further revised.