CALI ENTERPRISES LIMITED v. CHONGMARK LIMITED

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Headnote

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Conveyancing - Marketable title - Sale of land free from encumbrances - Mortgage in fact not discharged at time of sale - Mortgage subsequently discharged - Estoppel-Feeding the estoppel - Whether subsequent purchaser gets a good title

Exercise of Power of Attorney before 1st October 1972 - Proof of non-revocation.

X assigned his land to Y by way of mortgage in 1940. Without first of all discharging the mortgage, X purported to assign the land to Z free from encumbrances in December 1946. In December 1947 Y re-assigned the land to X free from the mortgage. Z assigned the land to A absolutely in 1980. In January 1986, A's successor in title, B, agreed to sell the land to C, it being a condition of the agreement that B was to show a good title to the property. C objected that B's title was defective because the land was not free from encumbrances when X purported to sell and the effect of the re-assignment in 1947 would have been to re-vest the title in X with the result that Z had no title to pass on to A.

On a vendor and purchaser summons under S.12 of the Conveyancing and Property Ordinance, Cap 219, Held, X was estopped from denying he had passed title free from encumbrances to Z, and the effect of e re-assignment by Y to X was to feed the estoppel. B had a marketable title which C was obliged to accept.

                Where, prior to the coming into operation of S.5 of the Powers of Attorney Ordinance, Cap 31 on 1st October 1972, a donee of a power of attorney purported to exercise it, the question whether the power of attorney had been revoked is one of fact.

1986, No. M. P.106

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

MISCELLANEOUS PROCEEDINGS

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JUDGMENT

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1. This is a vendor and purchaser summons under section 12 of the Conveyancing and Property Ordinance, Chapter 219.

2. By an Agreement in writing made on the 7th January 1986, Cali Enterprises Limited (the plaintiff) agreed to sell certain parcels of land to Chongmark Limited (the defendant) for HK$153 million. In that Agreement, Cali Enterprises Limited was described as "the Vendor". The parcels were described as "ALL THAT the estate right title and interest of the Vendor of and in all that piece or parcel of ground registered in the Land Office as Rural Building Lot No. 409 and the extensions thereto together with the messuages erections and buildings thereon known as No. 67 Repulse Bay Road and the appurtenances thereto and all the estate right title interest property claim and demand whatsoever of the Vendor therein and thereto".

3. Completion has been fixed under that Agreement for the 6th May 1986. It is provided by the Agreement that the plaintiff, as vendor, "shall show a good title to the property". It is common ground between the pasties that the plaintiff must show a marketable title. For the meaning of marketable title, see M.E.P.C. Ltd. v Christian-Edwards (1978) 3 All E.R. 752.

4. The root of title is a grant by the Crown of Rural Lot No. 409 to Chun Tak Kwong in 1938 by Conditions Of Sale No. 3802 for a term of 75 years from 30th May 1938 (renewable for 75 years). By a letter dated 17th August 1940, the Crown granted to the then owner an extension of about 7,450 sq. ft. By another letter dated 27th October 1947 the Crown granted to the then wner a second extension of about 9,000 sq. ft. There is no dispute about the parcels.

5. By an Indenture dated 12th March 1940, made between Chum Tak Kwong as mortgagor and Lord Roberts Brown as mortgagee, Chun Tak Kwong assigned the land to Lord Roberts Brown by way of mortgage subject to a right of redemption.

6. On the 19th August 1946, Chun Tak Kwong granted a power of attorney to Lord Roberts Brown, empowering Lord Roberts Brown to sell the land. That power of attorney, which was under seal, was expressed to be irrevocable.

7. By an Indenture made the 11th December 1946, Chum Tak Kwong assigned the land to Chiu Put Po to hold the premises thereby assigned "unto the Purchaser (Chiu Put Po) absolutely," and covenanted that he had "good right and full power to assign the said premises as aforesaid free from incumbrances. "

8. Instead of being signed by Chun Tak Kwong, that Indenture was signed on Chun Tak Kwong's behalf by Lord Roberts Brown, to whom the power of attorney had been granted.

9. At the time of that conveyance to Chiu Put Po, the land had not yet been re-assigned by Lord Roberts Brown to Chun Tak Kwong.

10. Next, by an Indenture dated 23rd December 1947, made between Lord Roberts Brown and Chun Tak Kwong, (endorsed on the Indenture of Mortgage made the 12th March 1940) Lord Roberts Brown re-assigned the land to Chun Tak Kwong.

11. The land was subsequently conveyed by Chiu Put Po to Colgan Company Limited on 12th May 1980, and Colgan, in its turn, conveyed the land to the plaintiff on 31st December 1983.

12. In a letter dated the 8th January 1986, the defendant's solicitors raised the following requisition with the plaintiff's solicitors:-

"When Chun Tak Kwong assigned the subject property to Chiu Put Po on 11th December 1946 by Memorial No. 175730, the Mortgage from the said Chun Tak Kwong to Lord Roberts Brown under Memorial No. 164708 was still valid and subsisting. The said Lord Roberts Brown assigned the property to Chiu Put Po by Assignment by Memorial No. 175730 in his capacity as the lawful attorney of the said Chun Tak Kwong. He did not assign the subject property as Mortgagee under a power of sale. Hence, it would seem that Chiu Put Po could not acquire a legal estate, but acquired only the equity of redemption, under Assignment Memorial No. 175730. The subject property was later reassigned by Lord Roberts Brown to the said Chun Tak Kwong on 23rd December 1947 by Memorial No. 181538. In the said Reassignment Lord Roberts Brown acknowledged receiving money from Chun Tak Kwong for the purpose of reassignment. By the said Reassignment Lord Roberts Brown revested the legal title back to Chun Tak Kwong on 23rd December 1947. The legal estate of the subject matter would therefore still be vested in Chun Tak Kwong or his successors. "

The memorial numbers referred to in that requisition are the ones shown in the Land Register for the various documents described.

13. The defendant's solicitors raised a further requisition with the plaintiff's solicitors by a letter dated 17th January 1986. That requisition is as follows:-

"We refer to your Vendor's And Purchaser's Summons under the captioned Action and on the advice of Mr. Robert Wei, Q.C., we wish to inform you that we shall raise the point concerning the Power of Attorney from Chun Tak Kwong to Lord Roberts Brown in our affirmation of reply.

 

We have been advised by Leading Counsel that the purchaser needs to be satisfied that at the time of the Assignment executed by Lord Roberts Brown as attorney of Chun Tak Kwong on 11th December 1946, the said Power of Attorney had not been revoked. In this connection, we wish to raise this point here as our formal requisition on title pursuant to the provision in the sale and purchase agreement. "

14. Those two requisitions form the subject matter of paragraph 1 of the summons. The plaintiff seeks a declaration that those requisitions have been sufficiently answered by the plaintiff. In paragraph 2, the plaintiff seeks a declaration that a good title to the property has been shown.

15. I will deal firstly with the requisition in the defendant's solicitors letter dated 17th January 1986, namely, whether the plaintiff can satisfy the defendant that the power of attorney had not been revoked before the Assignment of 11th December 1946. Certainly, no document revoking the power of attorney was registered. Whether the power of attorney was revoked is a question of fact. Three possible ways have been suggested in which the power of attorney might have been revoked: they are death, lunacy and bankruptcy.

16. Regarding the possibility of Chun Tak Kwong being dead by the 11th December 1946, a search of the Register of Deaths for that year shows no entry under his name. A circumstance strongly suggesting that he was still alive in December 1946 is that the mortgaged land was re-assigned to him on 23rd December 1947. There is no suggestion that anyone claiming to be his personal representative has questioned the exercise of the power of attorney on the 11th December 1946. Although there is no presumption of the continuance of life, (see Chard v Chard (1956) p. 259) the court, as a matter of common sense, cannot ignore that only a comparatively short period supervened between the granting of the power of attorney on 19th August 1946 and its exercise on 11th December 1946. There is also the unchallanged evidence of two experienced conveyancing solicitors to the effect that it was conveyancing practice in Hong Kong in 1946 for the solicitor for a purchaser to enquire from the solicitor for a vendor selling through an Attorney whether the power of attorney had been revoked for any reason. The fact that a sale was completed at a time when it was the practice for solicitors for purchasers to make that type of enquiry gives rise to an inference that no such revocation had occurred. The combination of circumstances I have just described in this paragraph leads me to the firm conclusion that the power of attorney had not been revoked by death when the conveyance of 11th December 1946 took place.

17. The possibilities of bankruptcy or lunacy can quickly be disposed of. A search with the Official Receiver in respect of the year 1946 shows there was no entry in respect of Chun Tak Kwong as a bankrupt. There is not the slightest suggestion that he was bankrupt, nor that he was insane. I find as a fact that the power of attorney was not revoked by virtue of either bankruptcy or insanity.

18. My conclusion is that the power of attorney was not revoked for any reason. 

19. For the sake of completeness I will mention in passing that, since the enactment of the Powers of Attorney Ordinance Cap 31 which came into force on lst October 1972, a problem like the one before me could no longer arise if the donee of the power exercised the power after that date (See in particular S.5 of Cap 31).

20. With regard to the requisition about whether the legal estate was still vested in Chun Tak Kwong, I do not think that the reply given by the plaintiff's solicitors in their letter of 9th January 1986, which is as follows, can be improved upon:-

"Although the Assignment by Chun Tak Kwong to Chiu Put Po was dated 11th December 1946 whereas Chun Tak Kwong did not obtain a Reassignment until 23rd December 1947, we are of opinion that Chun Tak Kwong would be estopped from denying that the title to the property, both legal and equitable, passed to Chiu Put Po because he purported to assign the property to Chiu Put Po 'free from encumbrances'. Also, there is authority that Chun Tak Kwong's acquisition of the legal estate by subsequently obtaining the reassignment operated to feed the estoppel. (Cumberland Court (Brighton) Ltd. v. Taylor 1963 2 AER 536). "

21. I have no doubt that the indenture dated 23rd December 1947 re-asigning the land to Chun Tak Kwong well and truly fed the estoppel. As Mr. Cheung felicitously put it, this was no lean and hungry estoppel, but a well fed one.

22. It was not disputed on behalf of the defendant that if the court were satisfied that there had been a proper feeding of the estoppel, it would follow that the plaintiff must be regarded as having a good marketable title.

23. A passage from Williams on Vendor and Purchaser, 4th Ed. (1936) at page 1096, cited in Cumberland Court (Brighton) Ltd. v. Taylor (ante) caused Mr. Wei, for the defendant, some concern. That passage is as follows:-

"As previously explained, if the conveyance to the purchaser contained a precise averment of the vendor's seisin in fee or other right, sufficient to work an estoppel at law, then if the vendor had not the estate specified at the time of conveyance but afterwards acquired it, the same would immediately pass in effect to the purchaser and his successors in title without any further conveyance, by reason of the doctrine that the acquisition of the legal estate 'feeds' the estoppel. An estate by estoppel of this kind would be available in favour of the purchaser and his successors in title, as against all persons claiming the whole or any part of the vendor's after-acquired estate by any title derived from him, whether gratuitously or for value and whether for a legal or, an equitable interest. But the legal estate would not so pass as against any person not bound by the estoppel. "

24. Commenting on that passage, Spencer Bower and Turner on Estoppel By Representation (3rd Edition) at page 19 makes the following observation:

"Though as has been pointed out, the purchaser's title will not in theory be good against all the world, it is good against the vendor, and it is hard to think of any situation in practice, in which it will not avail. "

25. Mr. Wei, as was his duty, thought hard on the topic of situations where, in practice, the defendants title might not avail. He suggested the situation postulated in Bensley v. Burdon 8 L.J. (O.S. ) Ch 85 of a future squatter going into possession. Bensley v. Bunion gives the impression that someone whose title depended on estoppel might encounter difficulties in evicting the squatter. Whatever might have been the position in 1830 when Bensley v. Burdon was decided, I cannot foresee the slightest difficulty for the defendant now before me in ejecting any future squatter. As against a future squatter, the defendants title will be just as good and paramount as if Lord Roberts Brown had re-assigned the mortgaged property to Chun Tak Kwong on or before 11th December 1946, rather than afterwards.

26. Such fanciful possibilities need cause the defendant no concern for his title. The title being offered by the plaintiff is, in my view, every bit as good and marketable as if that re-assignment had occurred on or before 11th December 1946.

27. The plaintiff had yet another string to its bow. Even if the title claimed through Chun Tak Kwong were somehow shown to be defective, the plaintiff had a good possessory title under S.7(2) of the Limitation Ordinance, Cap. 347, based on over 39 years uninterrupted and undisputed possession by Chiu Put Po and his successors in title since 1946. The unchallenged affidavits of Chiu Put Po and James Pei Chun Tien clearly show that. However it is unnecessary for me to go any further into the possessory title issue as I am satisfied for the reasons already given, that the plaintiff has a good marketable title without resort to S.7(2) of the Limitation Ordinance.

28. In view of the foregoing, I grant the plaintiff the declarations it seeks under paragraphs 1 and 2 of the summons to the effect that it has sufficiently answered the defendant's requisitions and objections, and has shown a good title to the property in accordance with the Agreement of 7th January 1986.

29. This Judgment is delivered pursuant to O.42 r. 5B. It has been agreed there should be no order as to costs.