EASYKNIT INVESTMENT CO LTD v. YETONCE LTD

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H E A D N O T E

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Vendor and purchaser summons.

In 1978

Agreement between vendor and director named as purchaser. Nomination by which director authorised and requested vendor to assign premises to company. Assignment by vendor to company, reciting that company had agreed to purchase premises and had paid purchase price thereof.

In 1991

Agreement under which company agreed to sell premises. Requisition on title by plaintiff purchaser based on fear that company may hold premises as trustee for director. Test : looking at 1978 agreement, nomination and assignment, would it be fanciful to think that assignment could have taken form which it took if director had ever been anything other than merely an agent for company, even though no express statement of agency appears? Answer : in all the circumstances, it would be fanciful. Result : good title shown.

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. By an agreement dated May 3, 1991, the plaintiff agreed to buy and the defendant agreed to sell Shop G-12 on the Ground Floor of Tai On Building in Shau Kei Wan for $11.7 million.

2. Completion was to have been on or before May 22, 1991.

3. By a letter dated May 8, 1991, the plaintiff's solicitors raised three requisitions on title. The last two have been answered to the plaintiff's satisfaction. I am concerned only with the first. It reads:-

"In nomination memorial No. 1602090 a copy of which is enclosed, the nominator or purchaser Chan Yong Sie did not say or state that she waived or relinquished any of her rights and interests under the relevant sale and purchase agreement or in the above property or that the purchase price was supplied by Wing Mau Investment Co. Ltd., and in fact she stated that Wing Mau Investment Co. Ltd. was to be her nominee. Under the circumstances a resulting (implied or constructive) trust or the presumption thereof would arise and the property would be or is subject to the rights and interests of Chan Yong Sie or Wing Mau Investment Co. Ltd. could not sell or give good title to the above property. We enclose the Law Society's circular 132/90 for your reference."

The penultimate "or" in the penultimate sentence of that requisition must be a mistake for "and".

4. Wing Mau Investment Co. Ltd - to which I will refer as "Wing Mau" - is the defendant's predecessor-in-title.  Madam Chan Yong Sie was one of Wing Mau's two directors, her husband, Mr Wong Wing Lam, being the other.

5. By an agreement dated July 13, 1978, Madam Chan agreed to buy and a Mr Ng Pak Lam agreed to sell the shop premises for $1.72 million, with a payment of $250,000.00 by way of deposit and part payment of the purchase price. In that agreement, Madam Chan is described as the purchaser.

6. Next came a nomination dated August 25, 1978, by which Madam Chan authorised and requested Mr Ng to assign the shop premises to Wing Mau whom she called her nominee.

7. That was done. It was done by an assignment dated September 20, 1978, in which Wing Mau is described as the purchaser, and in which this appears :-

"AND WHEREAS the Vendor hath agreed with the Purchaser for the sale of the said premises to the Purchaser for the price of $1,720,000.00 Hong Kong Currency NOW THIS INDENTURE WITNESSETH that in pursuance of such agreement and in consideration of the sum of DOLLARS ONE MILLION SEVEN HUNDRED AND TWENTY THOUSAND on or before the date hereof to the Vendor paid by the Purchaser (the receipt whereof the Vendor doth hereby acknowledge) the Vendor DOTH hereby assign unto the Purchaser …" the shop premises.

8. The 1978 agreement, nomination and assignment were all prepared by the same solicitor, Mr Leonard lp. I would not commend what went on as ideal conveyancing practice. Nevertheless, even though no express statement of agency appears - in all the circumstances and looking at the agreement, nomination and assignment together realistically - I consider it fanciful to imagine that the assignment could have taken the form which it took if Madam Chan had ever been anything other than merely an agent for Wing Mau. Mr Horace Wong for the plaintiff has suggested that certain observations of my brother Godfrey in the unreported judgment which he delivered on May 2, 1990, in Fulltrend Co. Ltd v. Longer Year Development Ltd, the reference of the record whereof is 1989, No. MP3211, places difficulties in the way of the conclusion which I have just stated. I do not think so. I leave aside the fact that those observations were obiter, since, in this field especially, I would always pay the closest regard to what my brother Godfrey says even obiter. What is important is that those observations were necessarily made in the context of the facts of that case; and each case must depend on its own facts.

9. On the basis which I have already indicated alone, I would be prepared to hold that the defendant has shown good title: proving it beyond reasonable doubt, to borrow that expression from the criminal law, as did Lord Russell of Killowen in M.E.P.C. Ltd v. Christian-Edwards [1981] AC 205 at p.220 C-D.

10. In fact, however, there is evidence from Mr Ip to this effect. Madam Chan signed the 1978 agreement after Mr Wong had handed him, Mr Ip, a cashier's order for the deposit, and had asked her, Madam Chan, to sign the agreement. And on each and every occasion on which he Mr Ip, acted for Wing Mau - this occasion not being the only one - it was Mr Wong rather than Madam Chan who handed him the funds to pay the deposit and the balance of purchase price.

11. That would establish the defendant's title beyond reasonable doubt even if - contrary to my view - it were otherwise in such doubt. It is true that Mr Ip's evidence was not proffered until after the completion date of May 8, 1991, under the agreement between the plaintiff and the defendant. But Mr Horace Wong for the plaintiff has indicated that his client would not take any point on time if the defendant were to succeed on such evidence. In the result, while the defendant would succeed on such evidence if it needed the same, no such need actually arises.

12. I hold that the defendant has shown good title, and determine this summons accordingly.

13. Before concluding this judgment, I would like to express my indebtedness to counsel on both sides, whom I will now hear on costs.

[Submissions on Costs]

14. I am informed by counsel that the parties have agreed that each party bears its own costs. I so order. It Would in any event have been my inclination to leave them to do that.