CHEUNG FUK YU DANNY AND ANOTHER v. VU POI VAN

DCCJ 2817/ 2013

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 2817 OF 2013

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D E C I S I O N
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1. A judgement is being handed down on 19 March 2015 (“the Judgment”) in this case. Before me is the application by the defendant for leave to appeal against part of the Judgment and the application by the plaintiffs for the payment into court be paid out to them in satisfaction of the Judgment.

2. I shall adopt the same abbreviations used in the Judgment in this decision.

Background

3. This is an action arising out of a conveyancing dispute concerning a village house situated at 2^nd Floor and main rooftop of the building in the remaining portion of Lot No 2111 in Demarcation District No 117, Yuen Long, New Territories, Hong Kong (“the Property”). 

4. On 1 August 2013, the plaintiffs issued the writ of summons alleging that the defendant had failed to prove a good title by failing to answer 4 requisitions (§11 of the Judgment).

5. The defendant denied the allegation of failing to prove title and filed a counterclaim together with its defence on 15 August 2013 for a  declaration that the defendant has sufficiently proved and shown good title to the Property and for the deposit paid to be forfeited.

6. In the Judgment, it is found that Requisition 1 and 4 are properly raised by the plaintiffs but had not been satisfactorily answered by the defendant hence the defendant had failed to show and prove a good title.  An order was made in favour of the plaintiffs with the counter-claim of the defendant being dismissed.

7. On 15 April 2015, the defendant takes out a summons for leave to appeal against the Judgment on the ground that this court erred in its consideration of Requisition 1 and 4 in that:

(a) The court erred in not considering adequately about the Letter of Toleration and the Certificate of Compliance issued by the DLO and the reply letter issued by the BD which tends to show that the defendant had proven beyond reasonable doubt that no enforcement action would be taken by the BD against the owner of the Property (“Ground 1”); and

(b) The court erred in not considering adequately the contractual obligation of the plaintiffs in raising Requisition 4 within the time limit stipulated in the Agreement so that the plaintiffs’ right to raise such requisition should be regarded as waived and the defendant was not obliged to answer the same (“Ground 2”).

8. On 11 May 2015, the plaintiffs take out a summons asking for “part of the sum paid into court by the defendant on 3 December 2014 as security for the plaintiffs’ claims in this action in the sum of HK$290,000 be paid out to the plaintiffs in satisfaction of the Judgment in relation to the repayment of Initial and Further Deposits”.  

Leave to Appeal

9. Under Section 63A(2) of the District Court Ordinance Cap 336, leave to appeal shall not be granted unless the appeal has a reasonable prospect of success or there is some other reason in the interests of justice why the appeal should be heard.  This has now been clearly established by the authorities to mean more than just an arguable case, but an appeal that has merits, the prospects of succeeding must be “reasonable” and therefore more than “fanciful”, without having to be “probable” (Ho Yuen Ki Winnie & Anor v Ho Hung Sun Stanley & Others  HCMP 1009/2009).

Ground 1

10. It is submitted by the defendant that this case should be distinguished from the judgment of Tai Wai Kin v Cheung Wan Wah Christina [2004] 3 HKC 198 which is relied upon by this court in which there was clear evidence of breach in failing to comply with the requirement under Part 1 of the Schedule of BO(ANT).  In this case, there is no evidence to show the thickness of the external wall of the Property and no record as to whether the wall was of reinforced concrete construction. 

11. Yet, with the Certificate of Compliance and the Letter of Toleration issued by the DLO, it could only be inferred to mean that the requirements for exemption of building works are complied with.  This court has erred in not taking full notice and effects of these documents.  And even if there was a breach confirmed in the Letter of Toleration, the Certificate of Compliance was being issued after an inspection by the DLO and it must be the case that the DLO was satisfied that all conditions imposed had been complied with.  In any event, the BD will not and cannot rely on the observations and positions of the DLO (as confirmed in the letter from BD) so there will be no basis for the BD to take any enforcement action.

12. Based on the argument above, the defendant contended that this court has erred in finding that the defendant had failed to prove beyond reasonable doubt that there was no risk of enforcement action by the BD in the Judgment.

13. I do not agree with Mr Kwan that this court had failed to consider adequately the effect of the documents named. 

14. The effect of the Letter of Toleration, the Certificate of Exemption, the DLO Letter and the BD Letter had been considered in the Judgment (§21-29).  The findings that the defendant had failed to prove that there is no risk of any enforcement action on the part of BD is based on the followings :

(a) The Letter of Toleration showed that there is a breach;

(b) The DLO Letter showed that the thickness of the load bearing wall cannot be ascertained so this was never within the DLO’s consideration when the Certificate of Exemption was being issued;

(c) Since the thickness of the wall cannot be ascertained, the Certificate of Exemption was not effective in exempting compliance with section 21 of the Building Ordinance;

(d) In any event, there is specific provision in the Certificate of Compliance reserving all rights of the Government, with the BD being part of it, to take action against any breach;

(e) The documents mentioned above are issued by the DLO and cannot be taken as binding on the BD nor could they be taken to preclude the BD from taking enforcement action; and

(f) The BD Letter cannot be taken to show BD’s unwillingness to interfere with or investigate about whether the requirements of exemption had been satisfied.

15. In his written submission, Mr Kwan has also raised the issue as to the fact that apart from the Letter of Toleration, there is no evidence from an architect or authorised person to confirm the breach remains or exists by 16 July 1993.  I found this to be misconceived.  Not only that such was not a point in issue at trial, the evidence from the DLO Letter did point to the contrary and there is no evidence to support such a contention by the defendant.

16. I found Ground 1 in support of the application for leave to appeal must fail and the defendant has failed to establish an arguable case that will probably succeed on appeal or there is some other reason in the interests of justice to grant leave to appeal.

Ground 2

17. On this ground, Mr Kwan submitted that :

(a) This court erred in finding that out of time limit requisition can be raised if it goes to the root of contract which should be distinguished from root of title as found in more recent judgments;

(b) The description of the Property to be sold stipulated in Clause 1 of the Agreement does not include a right of way; and

(c) There is no evidence to explain why the right of way issue cannot be discovered by the plaintiffs with due diligence within the time limit.

18. At the hearing, Mr Kwan agreed that argument at §18(b) and (c) above are not issues raised at trial and he had nothing further to add to the points so raised.

19. Since the arguments at §18(b) and (c) above had not been raised at trial or in the pleadings, depriving the plaintiffs the opportunity to adduce any evidence to tackle the same, it would be unfair to the plaintiffs if the defendant is allowed to raise them at this leave application.  So I shall refrain from considering the same.

20. As for the argument on root of title or root of contract, in the Judgment, it is the findings of this court that “a requisition is not considered to be waived in the event that it is raised out of time if it goes to the root of the contract”.  This is a findings relying on the case of Big Most Limited v Chan Wa Hung [2002] 4 HKLRD 599.

21. Mr Kwan argued that the court should consider if the terms goes to the root of the title and not root of the contract and the change of wordings from ‘root of title’ to ‘root of contract’ is not supported by authorities.

22. I found Mr Kwan’s submission is only picking on the wordings used but failed to appreciate the nature of the contract involved in this kind of conveyancing disputes.  In a sale and purchase agreement, the gist of the contract is the passing of title from the vendor to the purchaser.  So the root of the contract must be the title of the property.  In this regard, if one referred to the root of contract, it must be referring to the root of the title and this explains why these 2 words had been used interchangeably in Octorich Ltd v Liu Sin Ming & Anor, HCMP 977/1992 which is relied upon by the learned judge in Big Most Limited.

23. I found Ground 2 in support of the application for leave to appeal is unsubstantiated and the defendant had failed to establish an arguable case that will probably succeed on appeal or there is some other reason in the interests of justice to grant leave to appeal.

Payment Out

24. Both parties agreed that the application for payment out should stand or fall depending on the determination of the application for leave to appeal.

25. Given the fact that the application for leave to appeal fails, the plaintiffs should be entitled to lay their hands on the fruits of this litigation from the payment in.

The Order

26. It is ordered that :

(a) The application for leave to appeal by the defendant be dismissed;

(b) HK$290,000 from the payment into court made by the defendant on 3 December 2014 be paid out to the plaintiffs in satisfaction of the Judgment; and

(c) costs order nisi that costs of both applications be to the plaintiffs, to be taxed if not agreed on party and party basis.  Unless any of the parties applies by summons to vary it, the costs order nisi shall be made absolute upon expiry of 14 days.