CHAN HONG CHUNG and Another v. MAK KIU

1995 M.P. No. 1961

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. This is a vendor and purchaser summons. It concerns a flat on the 9th floor of a building in Tai Kok Tsui which the Plaintiffs ("the purchasers") agreed to buy from the Defendant ("the vendor") by a sale and purchase agreement dated 13th June 1995. The building in which the flat is situated is on the corner of Poplar Street and Ki Lung Street, and straddles three Kowloon Inland lots.

2. By clause 4(a) of the agreement, the vendor undertook to give a good title to the flat. However, she undertook to do so at her own expense in accordance with section 13 of the Conveyancing and Property Ordinance (Cap. 219). Since section 13 relates to proof of title, what the vendor was also undertaking to do was to prove her title at her own expense. That obligation would only be discharged if she proved beyond reasonable doubt that she was in a position to convey the title to the purchasers without any blot or possibility of litigation. In order to do that, her solicitors provided the purchasers' solicitors with copies of a number of documents. Those documents included three Crown leases made in 1932 in respect of each of the three lots on which the building was constructed, and the assignment of the flat to the vendor in 1966.

3. When they examined these documents, the purchasers' solicitors noticed that according to a plan annexed to the assignment, there were six flats on the 9th floor of the building, and a balcony - 8 feet wide - had been erected outside each flat. These balconies had not been provided for in the Crown leases, and according to the plan annexed to the assignment, therefore, the balconies had protruded into the air space over Poplar Street and Ki Lung Street. Since the vendor's flat overlooked Poplar Street, it was the air space over Poplar Street into which the balcony outside the vendor's flat protruded.

4. On discovering that, the purchasers' solicitors raised a requisition relating to the extent to which the vendor's flat protruded over Poplar Street. They were not satisfied with the answers which the vendor's solicitors gave to that requisition. Accordingly, on 19th July 1995 (which also was the date which the agreement had fixed for the completion of the transaction), the purchasers' solicitors filed the originating summons now before me. It sought, amongst other things, a declaration that the vendor had not shown a good title to the flat. However, on the very day that the originating summons was filed, the purchasers' solicitors arranged for photographs to be taken of the building. Those photographs show that there are no balconies on the 9th floor of the building. Instead, what the purchasers now allege is that the whole of the building from the 1st floor upwards protrudes over Poplar Street and Ki Lung Street.

5. That is the background against which the purchasers' case has had to be viewed. Their case, as skilfully deployed by Mr. Kenny Lin on their behalf, is as follows. The part of Poplar Street and Ki Lung Street over which the building protrudes is unleased land within the meaning of the Crown Land Ordinance (Cap. 28) ("the Ordinance"). Section 4 of the Ordinance provides that unleased land may not be occupied except under a licence or a deed or memorandum of appropriation. The definition of the word "occupy" in section 2 of the Ordinance includes "erect or maintain a structure on or over ... land", and the definition of the word "structure" in section 2 includes "any ... thing erected on or over land". Mr. Lin contends that

(a) the part of the building which protrudes over Poplar Street and Ki Lung Street amounts to a structure erected over Poplar Street and Ki Lung Street,

(b) the erection of such a structure amounts to the occupation of Poplar Street and Ki Lung Street, and

(c) no licence, deed or memorandum of appropriation exists to justify this occupation of Poplar Street or Ki Lung Street.

Accordingly, the protrusion of the building over Poplar Street and Ki Lung Street amounted to a contravention of section 4 of the Ordinance. That is said to have two consequences :

(i) The vendor has no title to that part of her flat which protrudes over Poplar Street.

(ii) The contravention of section 4 entitled the relevant statutory authority to exercise the powers conferred on it by section 6(1) of the Ordinance, namely to require the occupation of the unleased land to cease, which in the case of occupation by part of a building protruding over unleased land would amount to the removal, if it were possible, of that part of the building.

6. I must bear in mind that what the vendor undertook was to prove her title to the property. Accordingly, it is not for the purchasers to prove that the part of Poplar Street over which the building protrudes is unleased land. It is for the vendor to prove that the part of Poplar Street over which the building protrudes is not unleased land. That is not something which the vendor has yet been able to prove.

7. I use the word "yet" advisedly. When the requisition was raised, the point which was being made was that only the balcony of the vendor's flat protruded over Poplar Street. That claim was made on the basis of the plan annexed to the assignment, and it may be that the vendor's solicitors did not think that they would be able to prove otherwise. As it turns out, the plan was wrong, because there are no balconies on the 9th floor of the building. It is possible, therefore, that no part of the building protrudes over such part of Poplar Street which amounts to unleased land. The vendor's solicitors have never investigated that possibility, because that possibility was not something which they were put on notice about until after the originating summons had been filed. In these circumstances, the course that I propose to take is to assume, for present purposes, that the part of Poplar Street over which the building protrudes is unleased land, but to give the vendor liberty to apply to vary such order as I make today if, within 14 days of today, her solicitors notify the purchasers' solicitors and the Court that they wish to prove that the part of Poplar Street over which the building protrudes is not unleased land.

8. I turn to the first of the two consequences of a contravention of section 4 of the Ordinance on which the purchasers rely, namely, that the vendor has no title to that part of her flat which protrudes over Poplar Street. It is here that it is important to identify exactly what the vendor was selling to the purchasers under the agreement. According to clause 1 of, and Part V of the Schedule to, the agreement, the vendor was selling

(a) an equal undivided share in the building, and

(b) the sole and exclusive right to occupy the flat.

Mr. Anderson Chow for the vendor argues that the legal estate which the vendor was selling was the equal undivided share in the building. Since that share was not specified, i.e. since it did not relate to any particular part of the building, the fact that the flat protruded over unleased land did not prevent a good title to that share being passed. To the extent that the purchasers' sole and exclusive right of occupation of the flat would be affected by the Crown's right to occupy that part of the flat which protruded over unleased land, that was a mere right of occupation of the flat, and did not affect title to the equal undivided share in the building, which was the only legal estate which the agreement purported to convey.

9. I cannot accept this argument. The equal undivided share in the building related to the flat which the vendor was selling. The mere fact that the agreement did not identify which part of the building the equal undivided share related to is, in my judgment, irrelevant. What the vendor was selling, and what the purchasers were buying, was the flat, and that flat, plus rights of access to the common parts of the building, was plainly what the agreement was purporting to convey.

10. Mr. Chow did not advance any other argument for saying that the vendor had title to that part of the flat which protrudes over Poplar Street (assuming, of course, that that part of Poplar Street is unleased land). It follows that the vendor has not proved that she had good title to the flat, and the purchasers are entitled to a declaration to that effect. I shall hear from counsel what further declarations are sought, but I should add that I have reached this conclusion with considerable reluctance. That is because I think that the chances of the relevant statutory authority exercising its powers under the Ordinance are so remote that they can be discounted for all practical purposes. The building was built 30 years ago, and so far as the vendor knows, no action has ever been taken or even threatened by the relevant statutory authority in relation to any protrusion over Poplar Street or Ki Lung Street. However, for the reasons I have given, there is, I think, no answer to the narrow point on title upon which Mr. Lin has relied.