MA KIN WAH v. TAM TAK MING

DCMP 5748/2025

[2026] HKDC 653

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 5748 OF 2025

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JUDGMENT

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1.  This is a vendor and purchaser summons commenced by the Plaintiff (“P”) seeking (a) a declaration that the Defendant (“D”) has failed to answer satisfactorily certain requisitions and that good title to the property has not been shown, (b) refund of the deposit paid in the sum of HK$400,000, and (c) damages by way of legal costs expended in relation to the sale and purchase in the sum of HK$23,085.

2.  There is no dispute regarding the background facts narrated below.

3.  The parties signed the formal sale and purchase agreement dated 8 August 2025 (“the SPA”) for the sale and purchase of one equal undivided 3^rd part or share of and in the Remaining Portion of Lot No 730 and Section C of 731 both in D.D. 22 with the exclusive and sole right to use the Ground Floor together with Space Underneath Staircase of the building known as No 8 Sheung Wun Yiu, Tai Po, New Territories, Hong Kong (“the Property”) at the price of HK$4,000,000. Deposits in the total sum of HK$400,000 was paid by P to D.

4.  Relevant to the dispute in question are Clauses 6 and 10 of the SPA. Clause 6 is the usual clause that a proper assignment of the Property to P free from all encumbrances will be executed by D on completion. Clause 10 relates to D’s duty to show and give good title, and sub-clause (b) thereof provides that any requisition or objection to title shall be delivered in writing to D’s solicitors within 7 business days after the receipt of the relevant title documents by P’s solicitors, and further requisition on or objection to D’s reply to any requisition previously raised shall be raised within 7 business days after the receipt of the said reply, otherwise the same shall be deemed to be waived and the title deemed to have been accepted.

5.  Under the SPA, the completion was to take place on or before 10 October 2025. As usual, time is of the essence as provided by Clause 19 of the SPA.

6.  On 11 September 2025, D’s solicitors Messrs Solar Wong & Co (“SWC”) delivered the title documents to P’s solicitors Messrs C.O. Yu & Co (“COYC”). By letter dated 15 September 2025 to SWC, COYC raised 5 requisitions. Thereafter until, and even on, the date of completion, ie 10 October 2025, numerous rounds of correspondence were exchanged between the 2 solicitor firms by which answers to those requisitions were given and certain requisitions were repeated as not having been satisfactorily answered and/or were raised as follow-up requisitions.

7.  Finally, by a last letter of that date, SWC informed P that D considered that P’s failure to complete in time was a breach of the SPA and D exercised his right to forfeit the deposit and indicated he would hold P liable for damages.

8.  P’s case is that 3 of the requisitions remained not satisfactorily answered. For ease of reference, I will adopt the terms used by Mr Tsoi, counsel for P, to connote these 3 requisitions – namely, “the Undischarged Mortgage Requisition”, “the Incumbrance Requisition” and “the Maintenance Fee Requisition”.

9.  D, now acting in person, relies on the answers and contentions given in SWC’s letters to say the 3 requisitions have been satisfactorily answered.

10.  D also raised two matters that I can conveniently deal with here. First, he accused that these disputes were excuses put forth by P not to complete because, he said, P in fact did not have the money to complete as he was unable to secure a mortgage loan. Second, he said that P’s mother had purchased a property in the same village or estate and ought to have already investigated and accepted the land title. As have discussed with D during the hearing, the dispute is concerned with the merits of P’s case in terms of legal rights. Therefore, the veracity of the alleged “real reason for P not completing” was neither here nor there. On the second matter, unless it was shown that contractually or by other applicable legal principles, P could be regarded as having accepted the title, what happened in relation to the mother’s acquisition of another property was also neither here nor there. D then acknowledged that he had no basis to claim that P has contractually or under any legal principles accepted the title. I will therefore not delve into the disputes in the parties’ evidence concerning these 2 matters and say no more about them.

11.  I turn next to allude to these requisitions and discuss them.

The Undischarged Mortgage Requisition

12.  The Land Register of the Property shows that a mortgage with the instrument dated 1 April 1941 for HK$100 in favour of Ho Li Shi was registered against the Property with Memorial No TP111980 (“the Mortgage”) and that it has not been discharged.

13.  Regarding the Mortgage were the following rounds of requisitions and replies:

(a)  A requisition regarding the Mortgage was first raised in COYC’s letter of 15 September 2025 in which COYC asked for a certified copy of the Mortgage and of the Release or Discharge. It was replied by SWC’s letter of 22 September 2025, and the reply was that they were of the opinion that the Mortgage did not affect the title as any claim thereunder would have been statute barred.

(b)  The requisition was insisted in COYC’s letter of 23 September 2025. SWC’s reply in their letter of 25 September 2025 essentially was that (a) it was statute barred, (b) there was no real risk of Ho Li Shi making any assertion against the title of the Property, and (c) “only HK$100 needs to be deducted from the balance of purchase price to be stakeheld for satisfying this hypothetical and fanciful claim”.

(c)  The requisition was again insisted by COYC’s letter of 25 September 2025. There, COYC insisted that an order should be obtained under section 12A of the Conveyancing and Property Ordinance Cap. 219 (“CPO”) to declare that the Property was free from the encumbrance of the Mortgage. It was then answered by SWC’s letter of 30 September 2025 merely enclosing a letter by Messrs Hoosenally & Neo dated 22 December 2014 to Messrs Kevin Li & Co and the latter’s reply thereto dated 17 January 2015. Apparently, Messrs Kevin Li & Co acted for the developer. In their letter of 17 January 2015, they replied that the Memorial No. TP111980 was a pre-intermediate root document and the developer was not obligated to produce it to prove or give title of the Property.

(d)  The requisition was insisted by COYC’s letter of 6 October 2025 in which COYC stated that the Mortgage was an encumbrance and under Clause 6 of the SPA, D has to assign the Property to P free of any encumbrance.

(e)  Further correspondence on this requisition were exchanged between the parties essentially with each party repeating and insisting on his previous stance.

14.  The main contention of D is essentially that because of section 13(1) of the CPO, he is only required to show and give good intermediate title, i.e. show and give good title only up to 15 years before the SPA; and therefore, P is not entitled to raise requisitions on pre-intermediate title.

15.  Section 13(1) of the CPO provides :

“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 Government lease relating to the land sold and—

(a) proof of title to that land—

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

(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.”

16.  It is trite that a vendor has a duty to show a good title before completion and give a good title on completion. Section 13(1) of the CPO provides that, in the absence of contrary provisions, title is proved by the vendor producing to the purchaser, first, the Government lease relating to the property, and second, an assignment, mortgage by assignment or legal charge extending not less than 15 years before the sale and purchase agreement.

17.  Section 13(1) only provides a default position as to how title can be proved, but “the obligation to give a good title would have extended back to the ultimate root of title. This is not affected by section 13.” (Polyson Jewellery Company Ltd & Another v Carlos Liu Song HCA 12666/1997, 18 May 2001, per Kwan J (as the learned VP then was) at p.11).

18.  Therefore notwithstanding section 13(1), a purchaser is not precluded from showing from sources other than the title documents produced by the vendor pursuant to section 13(1) that the pre-intermediate title may be defective, and if so, the right by the purchaser to raise requisitions thereon is not taken away except by legislation or by agreement between the parties (Lo Hung Biu v Lo Shea Chung & Another [1997] HKLRD 721 at 727I per Ching JA (as he then was) and at 729A & H and 731F per Peter Cheung J (as he then was); Polyson Jewellery Company Ltd & Another v Carlos Liu Song (supra) at p.11; Ample Happiness Ltd v Sunrise Enterprises Holdings Ltd [2022] HKDC 1007 at §19).

19.  Here, the Land Register relating to the Property clearly shows that the Mortgage has not been discharged. In fact, there is no dispute that such is so. Evidently, the Mortgage, being an undischarged mortgage, is an encumbrance on the Property.

20.  The contentions that the enforcement of the Mortgage has been statute barred and there is no real risk on the title, in my judgment, do not avail D.

21.  Indeed, prior to 1984, a legal mortgage over a leasehold land was created by the mortgagor assigning, as security, the legal title of the residue of his lease to the mortgagee, subject to a proviso for the mortgagee to re-assign the lease on repayment of the loan. In other words, until there is such a re-assignment upon full repayment, the legal title of the mortgaged property remains with the mortgagee (Sophie Tsui Yuk King (aka Lee Tsui Yuk King Sophie) v Registrar of Companies [2024] 5 HKLRD 480; Fisher and Lightwood’s Law of Mortgage 15th ed §47.51). It was only after the commencement of section 44 of CPO on 1 November 1984 and pursuant to that section that a mortgage of a legal estate may be effected at law only by a charge by deed expressed to be a legal charge. That section would not apply to or affect the Mortgage which was executed before the commencement of that section.

22.  In my judgment and strictly speaking, as the Mortgage remained undischarged, the legal title to the Property remains with the mortgagee of the Mortgage.

23.  Moreover and in any case, I would also apply the views expressed by To J in Siu Wing Yee Angeline v Earning Yield Ltd [2013] 6 HKC 281, and by Recorder Edward Chan SC in Ko Lan v Hoo Man Kuen Martin and Another (HCMP 4416/1998, 19 January 1999).

24.  In Siu Wing Yee Angeline, To J observed at §38:

“38. Mr Chu submits that it is trite law that where the titles are doubtful, the court might apply the “no real risk” test to save the title. But that test is inapplicable where the title is obviously bad. A doubtful title is one where there is some uncertainty as to whether or not the title could be successfully challenged. A bad title is one where there is no uncertainty; a challenge will most certainly be successful. An example of a bad title given by Sihombing and Wilkinson, Hong Kong Conveyancing,Vol 1(B) Division V [199.1] is one where a mortgage or charge has not been properly reassigned, released or discharged.”

25.  In Ko Lan, though the mortgage loan was fully repaid and the bank executed a Release, the signatures on the Release however have not been properly authorized by the power of attorney. The learned Recorder held at §32:

“However the fact that there was no risk of any enforcement action by the Bank does not provide a complete answer in the present case. It must be remembered that under the agreement, the purchaser was entitled to a legal estate in the property agreed to be sold free from encumbrances (see Chen Paul v Lord Energy Ltd. [1998] 1 HKC 702 at 709A; also pages 7 & 12 of the transcript of the judgment of Chief Justice Li in the decision of the same case in the Court of Final Appeal: FACV No. 11 of 1998). Without a valid release, even though the mortgagor had fully repaid the indebtedness under a mortgage by way of legal charge, his interest in the land would still be subject to the legal charge, which is a legal estate. He would not be in a position to assign to his purchaser the legal estate in the property free from encumbrances. No doubt in such circumstances, he would be in a position to call for the legal title by calling for a release. However without such release, the purchaser is entitled to refuse to complete.”

26.  In the premises, I reject D’s contentions, and hold that P has properly raised this requisition, on which D was obligated to give, but has not given, a satisfactory answer, and that the Mortgage remains an encumbrance on the Property and D was unable to execute an assignment of the Property to P free from it and D was therefore in breach of Clause 6 of the SPA. I conclude that based on such holdings alone and even without considering the other matters P now complains of, P is already entitled not to complete and D has wrongfully forfeited the deposit.

The Incumbrance Requisition

27.  In view of my conclusion above which is sufficient to dispose of the parties’ entire dispute on liability, I will be brief in my discussion concerning this requisition.

28.  This requisition arose from the fact that in the assignment dated 19 January 2015 (Memorial No. 15021201730071) whereby D was assigned the Property by the developer (“the Prior Assignment”), it was expressly stated in paragraph 1 that the vendor assigned the Property to D “Subject to and with the benefit of such Deed of Mutual Covenant and such other documents as more particularly set out in Paragraph 3 of the Second Schedule hereto (“the Deed”)”.

29.  Paragraph 3 of the Second Schedule of the Prior Assignment reads:

“3. The Deed

Subject to and with the benefit of a Deed of Mutual Covenant registered in the Land Registry by Memorial No. 15020601760210.

Subject to and with the benefit of a Deed of Mutual Grant of Right of Way registered in the Land Registry by Memorial No. 15011300280061.

Subject to and with the benefit of a Deed of Grant of Easement registered in the Land Registry by Memorial No. 15011300280031.

30.  This requisition concerns the latter 2 deeds so listed, namely the Deed of Mutual Grant of Right of Way with Memorial No. 15011300280061 and the Deed of Grant of Easement with Memorial No. 15011300280031 (collectively, “the Two Deeds”).

31.  It is common ground that the Two Deeds have not been sent to COYC together with the other title deeds on 11 September 2025.

32.  COYC raised a requisition on them in their letter of 15 September 2025 and asked for certified copies of them to be produced for perusal. This requisition together with further repeats of the same request in subsequent letters issued by COYC were all adamantly refused with different reasons and replies by SWC. In gist, SWC said that “it is plain that [the Two Deeds] have cancelled registration on Land Registry”, “they don’t even qualify as a document of title”, “they are void under the Land Registration ordinance” and “a fresh Deed of Mutual Grant of Right of Way with Plan dated 6 September 2021 was registered against the Property by Memorial No. 21092302280095 which superseded [the Two Deeds]” . In one of the replies, SWC repeated to COYC the suggestion of Messrs Hoosenally & Neo to “amend” the Prior Assignment by deleting the references to the Two Deeds in Paragraph 3 of the Second Schedule of the Prior Assignment. As SWC has not actually followed up with this suggestion, this Court would not consider whether this suggested method was even a viable or proper one.

33.  Importantly, and as confirmed by D at the hearing, the Two Deeds have not been sent to COYC prior to D purportedly exercising his right under the SPA to forfeit the deposit on 10 October 2025. Indeed, the Two Deeds were not even in the hearing bundle and only the Deed of Grant of Easement with Memorial No. 15011300280031 was attached to D’s written submissions as Annexure 5.

34.  It is also important to note that the “fresh” Deed of Mutual Grant of Right of Way with Plan dated 6 September 2021 with Memorial No. 21092302280095, which purportedly “superseded” the Two Deeds, has on its face made no mention at all of the Two Deeds.

35.  For the following reasons, I hold that SWC has not satisfactorily answered this requisition.

36.  Firstly, and very evidently, the Prior Assignment from which D obtained title to the Property clearly and expressly stated that the assignment of the Property was subject to the Two Deeds, and therefore whatever that were stipulated in the Two Deeds form part of the title and/or may, insubstantially or very substantially, affect the use and value of the Property. Without producing the Two Deeds to P, P would not actually know. It is the duty of D to show or prove good title. By not even producing the Two Deeds to P for perusal, SWC’s replies in effect were asking P to take their or D’s words for it. They evidently were not showing or proving the matter, but were merely asserting. Such clearly was not a satisfactory way to answer a requisition on title.

37.  It follows that without producing to P the Two Deeds, SWC’s assertions concerning the effect of Land Registration Ordinance and so on regarding the Two Deeds were per se not satisfactory answers, as P was merely asked to blindly accept such answers on the strength of SWC’s words without the means even to consider and verify.

38.  Secondly and further still, as was held by To J in Siu Wing Yee Angeline (supra), with which I respectfully agree :

“32. Registration does not create and has no effect on the creation of interests in land. It merely acts as a record of transactions. The memorial is just a means of providing secondary evidence of the matters contained in the instrument to which it relates. It conveys or assigns nothing. It is the conveyance on sale or the assignment which conveys the interest in land. Vacating the memorial to the Legal Charge does not affect its existence.”

39.  Therefore, SWC’s replies relying on the fact that the registration of the Two Deeds has been cancelled are not good answers.

40.  I thus also conclude that P was entitled not to complete because D failed to answer satisfactorily this requisition.

The Maintenance Fee Requisition

41.  This concerns the obligation of the owner of the Property under the Deed of Mutual Grant of Right of Way with Plan dated 6 September 2021 with Memorial No. 21092302280095 to contribute costs and expenses for the construction and maintenance of the common road way.

42.  It is a relatively minor matter. Mr Tsoi, counsel for P, indicated at the hearing that P would not be seriously pursuing his complaint regarding the failure to answer this requisition. As my above conclusions would dispose of these proceedings, I do not propose to further deal with this.

Quantum of Legal Costs P is entitled to be compensated

43.  P claims by way of damages a total sum of HK$23,085 as legal costs wasted. The evidence supporting this quantum, however, is scanty. P’s affirmations said little save that legal costs were wasted, and a one-page bill of COYC dated 13 October 2025 was exhibited, and that he stands liable to pay COYC such an amount. The bill indicated that COYC charged an apparently agreed fixed fee of HK$25,000 in relation to “Agreement for Sale and Purchase”, without any further details provided. There is thus no evidence that this fixed sum fee was in fact agreed prior to this dispute, nor of actual payment. I also consider the amount excessive.

44.  In the premises, I hold that the quantum as sought is not proved. I would award a reasonable amount. Bearing in mind the relatively large volume of correspondence exchanged prior to D’s purported forfeiture, I would award HK$10,000 as damages by way of wasted legal costs.

Disposal

45.  In the premises, I give judgment to P, and grant the declaration, refund of the deposit and damages in terms as respectively prayed for in paragraphs 1 to 3 of the Originating Summons, save that I will additionally declare in paragraph 1 that the SPA has been duly rescinded by reason of D’s failure to answer satisfactorily the requisitions and the amount of damages in paragraph 3 be changed to HK$10,000.

46.  On nisi basis to be made absolute after the lapse of 14 days from today, I order that D do pay P’s costs of these proceedings, with certificate for counsel, to be taxed if not agreed.

47.  I thank Mr Tsoi for his assistance. I understand D is rather conversant in English, but if he requires this Judgment to be interpreted to him, he may contact my clerk to make the arrangement.