LAM YUNG v. SHEN LOK SZE

DCCJ16281/2001

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO.16281 OF 2001

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JUDGMENT

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1. This is an action instituted by the Plaintiff to seek for inter alia a declaration that the Plaintiff is entitled to rescind the sale and purchase agreement as stated in paragraph 1 of the Statement of Claim ("the Agreement"), the return of deposit in the sum of $122,000 and damages. The Defendant denies that the Plaintiff is entitled to rescind the Agreement and counterclaims for loss and damages. The witness statement of the Plaintiff and the Defendant respectively have been admitted as their evidence in chief and their evidence is not disputed.

2. At the material times, the Defendant was the registered owner of Flat No. 4, 15/F., Block E, Amoy Gardens, Phase I, No.77 Ngau Tau Kok Road, Kowloon, Hong Kong ("the premises"). On or about 19th May 2001, the Defendant entered into a provisional agreement as vendor to sell the premises to the Plaintiff at the consideration of $1,220,000.00.

3. Subsequently, the Plaintiff and the Defendant signed the Agreement on 4th June 2001 incorporating all the terms of the sale. The said provisional agreement is then superceded.

4. The following clauses in the Agreement are relevant to my consideration of the parties' argument:-

a. Clause 6 provides that time shall be of the essence of the agreement;

b. Clause 9 provides that the Vendor (Defendant) shall prove his title to the premises at his expenses and shall at the like expenses make and furnish to the Purchaser (Plaintiff) such copies of any deeds or documents of title wills and matters of public record as may be necessary to prove such title....;

c. Clause 18 provides that any requisitions or objections in respect of the title or otherwise arising out of this Agreement shall be delivered in writing to the Vendor's (Defendant's) solicitors within 7 working days after the date of receipt of the title deeds by the Purchaser's (Plaintiff's) solicitors and any further requisitions or objections shall be raised within 7 working days after the date of receipt of the reply to requisitions otherwise the same shall be considered as waived (in which respect time shall be of the essence of this Agreement) and if the Purchaser shall make and insist on any objection or requisition in respect of the title or otherwise which the Vendor (Defendant) shall be unable or (on the ground of difficulty delay or expense or on any other reasonable ground) unwilling to remove or comply with the Vendor (Defendant) shall notwithstanding any previous negotiation or litigation be at liberty on giving to the Purchaser (Plaintiff) or his Solicitors not less than 5 days notice in writing to annul the sale......";

d. The Schedule provides that completion shall take place on or before 9th August 2001;

e. Clause 30 provides that the Plaintiff shall deliver to the Defendant the draft assignment for approval at least 2 working days before the completion date.

5. Upon execution of the Agreement, the Plaintiff had paid a total of $122,000.00 as deposit.

6. The title deeds and documents of the premises were sent on or about 7th June 2001 by the Defendant's then solicitor, F.H. Ho & Co. to the Plaintiff's solicitor, Ong & Chung. Among the title deeds is the assignment in issue. This is an assignment of the premises dated 3rd July 1997 and executed by one Chan Yuk Fun as vendor, one Spectrasia Limited as confirmor and the Defendant as purchaser ("the Assignment"). Spectrasia Limited is a limited company and the execution clause reads:-

SEALED with the Common Seal	)
of the Confirmor and SIGNED	)
by Chow Kwok Wing, one of	) (sd.)Chow Kwok Wing
its directors for and on behalf of the	)
Confirmor in the presence of :-	)

7. By a letter dated 14th June 2001 from Ong & Chung to F.H. Ho & Co., the Plaintiff raised a number of requisitions on the title deeds of the premises. The 2nd requisition read:-

" Assignment Memorial No.7197465:-

The Confirmor Spectrasia Limited executed its part by one director. Please let us have prove for due execution as s.23 of CPO does not apply."

8. F.H. Ho & Co. replied by letter dated 19th June 2001. In answer to the 2nd requisition, they wrote:-

"We enclose certified copy extract from the Articles of Association of Spectrasia Limited for your perusal."

9. What was enclosed with the letter was page 10 of the Articles of Association of Spectrasia Limited. The letter did not directly answer the requisition or even drawn the attention of Ong & Chung to any particular article. In any event, article 23 attracted the attention of Ong & Chung. Article 23 reads

(a) The Seal of the Company shall be kept by the Board of Director and shall not be used except with their authority.

(b) Every document required to be sealed with the Seal of the Company shall be deemed to be properly executed if sealed with the Seal of the Company and signed by the Chairman of the Board, or such person or persons as the Board may from time to time authorized for such purpose."

10. As stated in his witness statement (paragraph 14), the Plaintiff was advised by Ong and Chung that in view of the relevant extract Articles of Association of Spectrasia Ltd., as the Assignment had been sealed with Spectrasia Ltd.'s Seal and executed by a director as described therein signing on behalf of Spectrasia Ltd. thereon, it could be presumed to have been duly executed under section 23 of the Conveyancing and Property Ordinance ("CPO") in accordance with the judgments in Chan Sai Hung v. Well Develop Ltd. (HCMP916/2000), Grand Trade Development Ltd. v. Bonance International Ltd. (HCMP2342/2000) and The Hong Kong and Shanghai Banking Corporation Ltd. v. Ho Sin Yi (HCMP5420/2000). In such circumstances, neither the Plaintiff nor his solicitor raised further requisition on the 2nd requisition until 6th August 2001.

11. With these as the background, I would analyze the situation in front of me. I would start by asking if the Plaintiff was correct in raising the requisition on the execution of the Assignment. To get the answer, I have to study the cases on the interpretation of section 23 of the Conveyancing and Property Ordinance in greater details. I have been referred to a long history of authority on this issue and I am grateful to the able submission from counsels.

12. Section 23 of the Conveyancing and Property Ordinance provides that "an instrument appearing to be duly executed shall be presumed, until the contrary is proved, to have been duly executed."

13. Ong & Chung in advising the Plaintiff relied heavily on a judgment of Mr. Justice Chung in Grand Trade Development Ltd. His Lordship ruled that in the absence of a requirement to the contrary by the articles of association of the company in question, the mere affixing of a company's seal was sufficient without the presence of witness to make the document binding on the company. The signatures of 2 directors would invoke the deeming article of the company, which is not operative when there is only one director signing. But the sealing is sufficient to bring section 23 of the CPO into operation and the assignment would be deemed to be properly executed. His Lordship did not followed 2 earlier decisions, Li Ying Ching v. Air-Sprung (Hong Kong) Ltd. [1996] 4HKC 418 and Ho So Yung v. Lei Chon Un [1998] 2 HKC 697. These cases have a different conclusion on the effect of execution of a deed when signed by one director only.

14. In the case of Li Ying Ching, on some similar facts, Mr. Justice Cheung (as he then was), came to a different conclusion. The head notes of the case set out the facts:-

The plaintiff agreed to purchase and the defendant agreed to sell certain property. The plaintiff sought requisition of title on an assignment dated 18 July 1988. The second confirmor to that assignment executed the document by affixing its common seal onto it and having it signed by one Judy Hsu as its director. Article 20 of the memorandum and articles of association of the second confirmor provided that every document should be deemed properly executed if sealed with the company seal an signed by the chairman of the Board singly or by any two directors jointly. The plaintiff contended that the assignment was not validly executed by the second confirmor since art 20 of its memorandum and articles of association was not observed. ...The defendant contended that s. 23 of the Conveyancing and Property Ordinance (Cap 219) which provided that an instrument appearing to be duly executed should be presumed until the contrary was proved to have been duly executed applied to this case.

15. In interpreting s. 23 of the CPO, Mr. Justice Cheung agrees with the decision of Godfrey J (as he then was) in Tread East Ltd. v. Hillier Development Ltd. (A907/91 unreported) that when the execution described the signatory in compliance with the article of the company, then s.23 of the CPO would apply. But in this case, Mr. Justice Cheung said "Judy Hsu was not described as the chairman of the company. If she was so described, quite apart from satisfying the requirement of art 20, s.23 of the [CPO] will precluded any demand of proof that she was properly appointed as a chairman. But in this case, she was described as a director. It would, in my view, stretch the ambit of s. 23 to an unacceptable width by saying that one is entitled to presume that she was qualified as a chairman and in fact was appointed as a chairman and that the plaintiff was not entitled to raise requisitions on her appointment. Even if she was so qualified, so were the other directors of the company. If the defendant said that she signed as a chairman, then it is for the defendant to show that she signed as the chairman even though such description did not appear at the execution clause."

16. Clearly, according to Mr. Justice Cheung, when the instrument was not executed in line with the deeming articles of the company, it cannot be said to appear as duly executed. The ruling of Mr. Justice Cheung was adopted by Mr. Justice Suffiad in Ho So Yung. It is true that in both cases, the parties did not seek to argue that the mere sealing is binding on the corporation and the argument is whether signing by one director only would make the instrument "appearing to be duly executed". But there are other authorities on the effect of the sealing of a document by the corporate seal.

17. Mr. Justice Leong (as he then was) has commented on the effect of sealing with the corporation seal in the case of Woo Turhan v. Taiwan Fuji Trading (HK) Ltd. [1995] 2 HKC 481 and his ruling is approved by the Court of Appeal in Grand Trade Development Ltd.

18. The facts of Woo Turhan reads:-

On 10.6.94, the parties entered into a sale and purchase agreement whereby the Defendant agreed to sell and the Plaintiff agreed to buy the premises known as 98/42700 equal and undivided shares of Wing On House together with the right to the sole and exclusive possession of office No. 1708 on the 17/F subject to and with the benefit of the Deed of Mutual Covenant (Memorial No. 2199290). The parties agreed that there was no Sub Deed of Mutual Covenant. A deposit was paid. Completion was to take place on 10.1.95.

...............

Before the formal agreement was signed, the Defendant's solicitors had forwarded to the Plaintiff's solicitors all the title deeds on 2.6.94.

On 29.6.94 and 19.12.94, the Plaintiff's solicitors raised two grounds of objection to title:

a. Defective execution of the Deed of Mutual Covenant.

b. Failure to explain/justify the allocation of the undivided shares.

The reply by the Defendant's solicitors to the first requisition was that the DMC was validly executed under common law and in any event defective execution of the DMC was not relevant...

19. The document in issue is a Deed of Mutual Covenants. One of the signatories is Plusever Ltd. And the execution clause is signed by only one director of that company. Article 20 of the company deals with execution of company documents:-

"The seal of the company shall not be affixed to any instrument except by authority of a resolution of the board of directors, and in the presence of a director and of the secretary or such other person as the directors may appoint for the purpose, and that director and the secretary or other person as aforesaid shall sign every instrument to which the seal of the company is so affixed in their presence."

20. Mr. Justice Leong said that "the general principle is that a document not executed in manner required under company articles is not binding on the company." His Lordship moved on to reconcile a often quoted passage from the decision of Mr. Justice Godfrey (as he then was) in Peking Fur Store Ltd. v. Bank of Communications[1993] 1 HKC 625, and said:-

The defendant relies on the general rule stated by Godfrey J. in the Peking Fur case (at 627):

"The general rule is that a corporation is bound by an instrument under its seal, unless it can be shown that its execution was obtained by fraud or there is some illegality in the transaction"

It also contends that TCB Ltd & Gray and the case of Cope could be distinguished because in these two cases, no company seal was affixed.

In my judgment this general rule is applicable where the execution is in accordance with the articles or if not, enquiries show that the execution is authorized, but not otherwise. Whether or not there was a company seal, the principle in TCB Ltd & Gray and the case of Cope remains to be that execution must be in accordance with the articles or the transaction would not be binding. The case of Peking Fur was decided on the basis that there was a resolution making the risk of challenge remote but execution not in accordance with company articles would still be defective. I hold that the execution of the DMC by Plusever Ltd. was defective.

21. Mr. Justice Leong decided that if the execution is not in accordance with the provision of the execution article or deeming article, there has to be other supportive evidence to prove the due execution. The view of Mr. Justice Leong is very much in line with the ruling of Madam Justice Yuen (as she then was) in Lo Wing Wah v. Chung Kam Wah [2000] 1 HKLRD 227.

22. Here, the predecessor-in-title assigned the property to the vendor by an assignment, which was sealed with the company seal and signed by one Wong Chung Chuen, described as one of its directors. Article 19 of the company provides that the seal of the company shall be kept by the Board of Directors and shall not be used except with their authority. Article 20 provides that every document required to be sealed with the seal of the company shall be deemed to be properly executed if sealed with the seal of the company and signed by the chairman of the board of directors singly, or by any two directors jointly. The purchaser raised the requisition for proof of due execution.

23. Madam Justice Yuen found that Article 19 provides for the use of the seal shall be by the authority of the directors, and that is all. There is no requirement that the seal must be operated with the signature of some officer. This is different from the execution clause of Plusever Ltd. in the case of Woo Turhan. And Article 20 is what Her Ladyship described as a deeming provision. Madam Justice Yuen said the sealing of the assignment is not invalidated even if the requirement of Article 20 is not complied with. The legal estate of the property passed by the sealing. And from other evidence, Her Ladyship found that the company had no intention to assert any claim to the property and there was no risk that it would in future issue proceedings to have the assignment declared invalid. Hence the requisition had sufficiently been answered.

24. But it must be noted that Madam Justice Yuen found there is no evidence that Wong signed as chairman of the board of directors, and therefore not in accordance with Article 20. And s.23 of the CPO does not help the vendor- the deeds does not "appear" to be duly executed since Wong was not described as Chairman.

25. A similar argument faced Deputy Judge Gill in Ho Sin Yi. In considering what is proper execution of a deed by a company, Deputy Judge Gill then followed the ruling of Madam Justice Yuen in Lo Wing Wah and held that the sealing of the deed in [issue] is not, in any case, invalidated, even if the signature part of the article is not complied with. The legal estate of the property passed by the sealing. Deputy Judge Gill found that the requisition has been sufficient answered.

26. It should be noted that in coming to this conclusion, Deputy Judge Gill did not rely on s.23 of CPO. It is only as obita dictum and for completeness, when Deputy Judge Gill said at the end of his judgment that, since the article provides that the directors may determine the person or person to sign with the seal, there was the appearance of due execution and s.23 of the CPO do apply.

27. It can be seen that the Court took a very strict interpretation of section 23 of the CPO. Not until the decision of Mr. Justice Chung in Grand Trade Development Ltd., it has repeatedly been held that the affixing of the seal without following the deeming article is not sufficient to make the instrument to appear duly executed. Some other evidence is required to perfect the title.

28. The Court of Appeal in Grand Trade Development [2001] 3 HKC 137 overturned the decision of Mr. Justice Chung. Madam Justice Le Pichon found s.23 of CPO does not apply, as the director who signed did not purport to be signing as chairman or describe as authorized by the board. The Assignment was signed by only one director and the deeming article of the company does not come in aid. The point is now settled. But at June 2001, I accept that there were conflicting decisions on the issue.

29. The letter from Ong & Chung dated 14th June 2001 only said s.23 does not apply. They did not express why and I was not informed in Court. But if we look at the article 23(a), it says the seal should not be used except with authority of the Board of Directors. The execution clause does not provide that Mr. Chow Kwok Wing used the seal with authority from the Board. In line with the ruling of Mr. Justice Godfrey and Mr. Justice Cheung, s.23 of CPO does not apply. Even in line with the judgment of Mr. Justice Chung, the Plaintiff must be entitled to have copy of the memorandum and article or other evidence to show how the Assignment is properly executed. I found that Ong and Chung were correct and the Plaintiff was entitled to raise the requisition.

30. The next question is whether the requisition has been answered. On or about 19th June 2001, F.H. Ho & Co. responded to the requisition in the following manner:-

"We enclose certified copy extract from the Articles of Association of Spectrasia Limited for your perusal."

31. There could be comments on how F.H. Ho & Co answered the requisition. The obligation on a vendor to show good title included the obligation to answer requisition satisfactorily. If requisition were not answered satisfactorily, it did not matter that the vendor had a good title to the property or not. (see Active Keen Industries Ltd v. Fok Chi Keong [1994] 1 HKLR 396 and Ho So Yung). But I was confirmed by Plaintiff's counsel that the Plaintiff is not relying on this point. And I must say that, while the Defendant did not express themselves proper, they had at least supplied the most important document, i.e. the article of association for the perusal of the Plaintiff. The Plaintiff should not be prejudiced. The requisition has been answered.

32. What happened next is important. Upon receipt of the said letter, Ong & Chung advised the Plaintiff that the assignment could be presumed to have been duly executed under section 23 of CPO (paragraph 14 of the Plaintiff's statement as I quoted hereinabove). Paragraph 15 of the Plaintiff's statement goes to say:-

"In such circumstances, my Solicitors did not pursue the said requisition with the said Defendant's former solicitors until 6th August 2001 when my Solicitors further took issue with the said Defendant's former Solicitor on the said requisition and sent a further requisition letter to the said Defendant's former solicitors therefore on 6th August 2001 in light of the Court of Appeal judgment in the case, Grand Trade Development Ltd. v. Bonance International Ltd. (CA No.1002/2000) handed down on 26th July 2001."

33. Reading the evidence of the Plaintiff in his paragraphs 14 and 15, it is obvious that he accepted the opinion of his solicitor that the assignment is duly executed. Although he did not say so, he must have accepted the title. At least, he had decided, with advice from his solicitors, not to pursue the point and allow the time limit for raising requisition to pass. By the evidence of the Plaintiff, he must have accepted the answer to his requisition on title.

34. The next question is whether the Plaintiff is entitled then, on 6th August 2001 to raise a fresh requisition. It is not disputed that in light of the Court of Appeal decision, the assignment could not be considered as appearing to be duly executed. But the point is whether the Plaintiff by August is deemed to have waived his right to query the titles and not entitled to raise the requisition again.

35. The Plaintiff said he was not. He relied on the judgment of Deputy Judge Cruden (as he then was) in Giant River Ltd.v. Asie MarketingLtd. [1990] 1 HKLR 297. Before I go to the judgment, it is helpful to set out the argument of the Plaintiff's Counsel. He said

a. The requisition went to the root of the title

b. The change in case law or the approach of the Court was beyond knowledge, anticipation or discovery by the purchaser on examination of the title deeds

c. Absent the knowledge of the exact legal consequence of the matter until the Court of Appeal decision in Grand Trade, which provided a definitive and authoritative judgment on the matter, the purchaser could not be said to have waived the requisition.

d. As such the Plaintiff was entitled to further pursue or raise the said requisition

e. The said requisition had not been answered or satisfactorily answered.

36. I shall now take these points one by one. To begin with, there is a long line of authority to say that the parties to a contract may freely bargain on the terms on proving of titles and the Court would give effect to the terms. Mr. Justice Nazareth said in Hillier Development Ltd. v. Tread East Ltd. [1993] 1 HKC 285 :-

"....I did not understand counsel on either side to suggest that an objection or requisition, even one which goes to the root of the title could not be waived. Plainly it can; and in many cases; that precisely is what is done when a calculated risk is taken by a purchaser on possible objections that are thought unlikely to arise. It was no doubt in recognition of this that Miss Chow for the purchaser submitted that such waiver had to be express. But she produced no authority for that proposition, which must be rejected.

37. That is not the ratio in the case but I agree entirely with the view of His Lordship. And this case is very helpful in considering whether the Plaintiff could raise the requisition again. The head note of the case set out the fact:-

The defendant vendor entered into an agreement to sell a property to the plaintiff purchaser. The agreement provided that requisition had to be delivered within five days after delivery of title deeds to the purchaser's solicitors; otherwise title was to be deemed to have been accepted. .....

The property was assigned with other properties in 1984 by a company to one Chan for $125,000. The assignment was sealed with the company's seal and signed by Chan as one of its directors authorized to sign. Chan also executed the assignment as purchaser. Shortly after, Chan sold the property at $450,000. The constitution of the company required that the seal had to be attested by two directors or in such manner as the directors might by resolution determine.

After the agreement had been signed, the purchaser's solicitors raised a requisition requiring a board resolution authorizing Chan to sign on behalf of the company. In their answer on 30 May, the vendor's solicitors referred to Law Society Circular No. 105/90, which stated that a vendor was not required to produce evidence of authorization by a board of directors in order to prove title by virtue of s. 23 of the Conveyancing and Property Ordinance and replied that the assignment in question was deemed to have been properly executed. There was no reply to that answer and further documents were sent by the vendor's solicitors to the purchaser's solicitors.

By a letter dated 23 July, solicitors for the purchaser's mortgagee wrote to the purchaser's solicitors noting that the sale to Chan might be at an undervalue and require, inter alia, sight of board resolution approving the sale to Chan and authorizing Chan to execute for the company, and enquired as to whether there had been proper disclosure of interest by Chan. On 24 July, after the purchaser's had delivered a draft deed of assignment to the vendor's solicitors, the purchaser's solicitors received the mortgagee's solicitors' queries and forwarded the same to the vendor's solicitors. The vendor's solicitor repeated their previous answer but refused to answer any further. The purchaser refused to complete and brought proceedings for recovering the deposits.

38. I shall note that the limitation clause in Hillier Development Ltd. is worded differently from our case. It reads:-

"The purchaser shall be deemed to have accepted the vendor's title if requisition or objection on title is not so delivered to the vendor's solicitors within the times hereinbefore stipulated."

39. But the end result would be the same. If the Plaintiff is deemed to have waived all requisition, then he could not challenge the title and would have to accept the title on date of completion.

40. In Hillier Development Ltd., it was argued that a time limit on the lodging of requisitions was of no effect if the requisition went to the root of the title. The purchaser also relied on the case of Giant River Ltd. It was commented by Mr. Justice Penlington that: -

"The question of the effect of a time limit on requisitions when they go to the vendor's root of title was considered in detail in Giant River Ltd v. Asie Marketing Ltd [1990] 1 HKLR 297. ........I am satisfied that those authorities only go to the proposition that where a vendor [I believe His Lordship meant purchaser], having used due diligence, is unaware of some defect in the vendor's title, the time limit imposed in the agreement does not run against him. [after referring to Re Cox & Neve's Contract and Re Tanqueray-Willaume & Anor] Here, it seems to me, the situation is entirely different in that the matter now complained of, ie the sale by Oliver Paris to one of its own directors at what seems to be an undervalue, was obvious from the papers already in the possession of the purchaser's solicitors at the time the agreement was entered into. .....the purchaser's solicitors were under a duty to make requisition within the time stipulated in the agreement.

41. I do not intend to analyze Giant River Ltd. again in light of the clear ruling that Mr. Justice Penlington has laid down - where a purchaser, having used due diligence, in unaware of some defect in the vendor's title, the time limit imposed in the agreement does not run against him. But when the defect is obvious from the papers already in the possession of the purchaser's solicitors, the purchaser's solicitors were under a duty to make requisition within the time stipulated in the agreement.

42. I would just quote another ruling by Deputy Judge Poon in Wise Mark Technology Ltd. v. Wincome Holding Ltd. [2001] 1 HKLRD 298 that neatly summarized the legal position. In this case there is a similar clause talking about waiver in the sale and purchase agreement. Deputy Judge Poon said:-

"Either the defendant accepted that title was duly proved or raised requisitions on title. If it chose to raise requisition, it must do it within the agreed time-limit."

43. Plaintiff's counsel is not arguing strongly against the said principle. What he contends is that the legal consequence of the defect in the Assignment could not be known to the Plaintiff until the decision of the Court of Appeal in Grand Trade Development Ltd. This is his point b and c.

44. It is conceded by counsel for the Plaintiff that there are conflicting judgments on the application of s.23 CPO before the result of the appeal in Grand Trade Development Ltd. If we look at the judgment of Mr. Justice Penlington in Hillier Development Ltd. again, in his analysis of the cases, he is referring to the facts that has not been disclosed or that the purchaser could not discover by due diligent effort. But he explicitly said "the purchaser's solicitors were under a duty to make requisition within the time stipulated in the agreement." The Plaintiff's counsel tries to argue that the result of the appeal could not be discovered by due diligent effort. He has no authority in support. I am not persuaded.

45. "A requisition as to title is not an occasion for the parties' solicitors to bandy proposition of law: each part must decide for himself, ultimately, what the legal position is, based upon the facts known to himself.." (per Mr. Justice Litton JA as he then was in Active Keen Industries Limited.) There is a duty on the vendor to disclose the relevant documents and facts. There is no requirement for the vendor to advise the purchaser on the interpretation of any law in issue. It is for the purchaser's solicitor to give the advice. I am not blaming his solicitors or suggesting that he was negligent. But I have to determine if the Defendant interest should be affected when the advice of the Plaintiff's solicitor turns out to be wrong. And I say no.

46. The Court of Appeal in Grand Trade Development overturned the decision of Mr. Justice Chung. On the application of s.23 of CPO, Madam Justice Le Pichon found it does not apply, as the director who signed did not purport to be signing as chairman or describe as authorized by the board. The assignment was not appearing to be duly executed. We can see the same consideration is adopted - does the instrument appear to be duly executed. I do not agree that there is a change in law or the approach of the Court. In all cases, it is a matter of whether the document appears to be duly executed. With respect to Mr. Justice Chung, if he made a wrong finding, and was corrected in the Court of Appeal, that could not be regarded as a change in law.

47. Anyway, those advising the Plaintiff must be taken to be aware of the said decision of Mr. Justice Cheung, Mr. Justice Saffiad, and Mr. Justice Leong that I referred to hereinbefore. How they begin to say that they are not aware of the possible result that the ruling of Mr. Justice Chung may not be upheld on appeal?

48. I appreciate that the legal profession would welcome the ruling by Mr. Justice Chung that the seal itself, when the company's article does not require a signatory at the same time, is sufficient to make the document appears to be duly executed. But given that there is a history of judgment in conflict, the burden is on the profession to analyse all the cases before they could advise their client to follow Mr. Justice Chung's ruling. And if they cannot resolve the difficulty, they could always apply for a vendor and purchaser summons, which is to assist the vendor and purchaser on any query on titles that could not be resolved, or in doubt.

49. Is the Plaintiff aware of the defect in title? The immediate answer is "yes". In fact, by letter dated 19th June 2001, the Plaintiff has raised the requisition on the execution problem. They expressly said that s.23 of the CPO does not apply to the Assignment. Even if they had not made such requisition, the defect must be obvious on the face of the document sent to the Plaintiff's solicitors. It is the duty of the Plaintiff's solicitors to advise his client if the execution is defective and if so to raise requisition. That he had done. When the reply was received, it was again his duty to advise his client whether it satisfactorily answered the requisition. It appears that he advised his client not to raise further requisition. Then, the Plaintiff in keeping silence must have waived his right to raise further requisition, provided the situation is covered by clause 18. I shall now come to the interpretation of clause 18.

50. It is not disputed that the time limitation provided by clause 18 of the sale and purchase agreement has lapsed by the time the requisition was revived on 6th August 2001. The next consideration is whether the situation is covered by the wording of clause 18. It is time to read clause 18 again. It provides any requisitions or objections in respect of the title or otherwise arising out of this Agreement shall be delivered in writing to the Defendant's solicitor within the specified time limit otherwise the same shall be considered as waived. It is obvious that this clause cover ever question on title matter including that goes to the root of the title. I found that the matter raised in the requisition on execution of the Assignment is a matter covered by clause 18 an hence, if the Plaintiff did not raise requisition within the time limit, he was deemed to have waived his right and could not raise it again.

51. On the interpretation of "going to the root of the title", I was referred to the judgment of Mr. Justice Nazareth VP in Mexon Holdings Ltd. v. Silver Bay International Ltd. [1999] CPR 506, 511. His Lordship said

"The expression 'which goes to the root of title' is commonly accepted as embracing not only the root, but also intermediate title in the chain of title. Where the intermediate root of title is an assignment or similar transaction, there is no difficulty in accepting it as going to the root of title. But the position is not as clear when what is in question is not of that nature and e.g. may only derogate from the ordinary incidents of the estate or interest to be transferred and acquired.

52. I have some reservation whether the defect in the Assignment goes to the root of the title. It would affect the title. But it is a confirmatory assignment. The legal interest passed directly from the registered owner to the Defendant. This assignment has no problem. The confirmor company (who execution has problem) has no legal interest to pass but to confirm a direction to the owner for transferring the legal interest directly to the Defendant. The beneficial interest would pass when the confirmor signed the sale and purchase agreement in favour of the Defendant. The title is defect but it does not go to the root.

53. For the purpose of this ruling, I assume that it goes to the root of the title and this point is not affecting my finding above.

54. In the circumstance, I found that the Plaintiff is in fact bound by clause 18 in that he had waived the right to raise requisition and on 6th August 2001, he was not entitled to raise further requisition or to revive the requisition. In failing to forward the draft assignment and refusing to complete, he must be in breach of the agreement which entitled the Defendant to accept his repudiation, which he did by a letter dated 9th August 2001 from F.H. Ho & Co to Ong & Chung.

55. For completeness, I would deal with the addition point raised by the Defendant that in any event, the requisition raised is unreasonably late.

56. It is admitted that the revived requisition only reached the office of the Defendant's solicitor at about 3:30 p.m. of 7th August 2001, 2 days before the scheduled completion date. It is submitted by Counsel for the Defendant that the requisition was raised unreasonably late. The Defendant on receipt of the requisition wrote to solicitors acting for Spectrasia Ltd. and was able to obtain a copy of the board resolution on 14th August 2001, after the scheduled completion date. Counsel submitted that had the requisition been raised earlier, the Defendant could comply with the requisition. He referred me to the case of Chan Chik Sum v. Great Peal Industries Ltd. [1997] 1HKC 27. It was found that a requisition raised 2 days before the completion is unreasonably late. The purchaser is not entitled to raise the requisition. The same argument should apply in our case. I agree with his view.

57. The last point taken by the Defendant is that the Plaintiff has been in breach of the agreement in failing to provide a photocopy of the agreement showing it had been properly stamped. If the Defendant intends to rely on this point to support his repudiation, it is a bad point. If it is a breach, it cannot be considered as a fundamental breach. And it has not been relied upon when the Defendant seeks to repudiate the contract on 9th August 2001.

58. In conclusion, I found that the Plaintiff has been in breach of the sale and purchase in failing to complete on time. The Plaintiff's claims are dismissed. The Defendant is entitled to accept the repudiation in which event the deposit is forfeited to the Defendant and the Defendant is further entitled to recover all damages.

59. On 24th September 2001, the Defendant exercised the power of resale conferred on her by Clause 14 of the Agreement and entered into a provisional agreement dated 24th September 2001 for resale of the premises at $1,080,000.00. There is a deficiency in selling price of $140,000. The legal costs for the resale is at $5,000. The Defendant further counterclaims for loss of interest, which arise from the delay in completion in the sum of $37,242.96.

60. I found the Defendant suffer damages in the sum of $182,242.96. Credit has to be given to the deposit forfeited. As a result, I award a sum of $60,242.96 with interest thereon from date of writ until judgment at 8.125% p.a. and thereafter at judgment rate until payment. I would also give an order nisi for costs to the Defendant to be taxed if not agreed with certificate for counsel. The order nisi shall be made absolute within 14 days. Subject to further direction or order, the payment into Court by the Defendant on 1st December 2001 and any interest thereon shall be released to the Defendant after the lapse of the appeal period. Parties are at liberty to apply general or payment out.