GOOD LION LTD v. CHUNG SAI WING

HCMP665/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

Miscellaneous proceedings NO.665 OF 2008

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REASONS  FOR  JUDGMENT

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1. On 26 June 2008 I have made a declaration for the plaintiff that :

“The plaintiff has answered satisfactorily Requisition 2 as contained in a letter of the defendant’s solicitors dated 30 July 2007, as repeated or elaborated in the letters of 2 August, 8 August and 13 August 2007 from the solicitors for the defendant to the plaintiff’s solicitors.”

2. Accordingly in my view the plaintiff has shown and proved good title to the Property in issue in accordance with clause 5 of the Sales and Purchase Agreement (“the Agreement”) between the parties here. 

3. The following is my reasons therefor. 

Background

4. The provisional sale and purchase agreement was dated 8 July 2007.  The consideration was $4.56 million.  On 20 July 2007 the Agreement was entered into by the parties herein. 

5. In the aforesaid letters of requisitions of the defendant’s solicitors, one and only one of the requisitions is still outstanding.  That Requisition in issue between the parties is :

“Assignment Memorial No.UB5658019 [dated 29 April 1993] was executed by Dandiluxe Developments Limited.  Its common seal was purported to affix to it.  We notice that the seal read as ‘Dandiluxe Development Limited’ with the letter ‘s’ omitted from ‘Developments’.  This result in doubt as to whether Assignment Memorial No.UB5658019 was actually executed by Dandiluex Developments Limited.  Will you kindly rectify the mistake.  Assignment Memorial No.UB5658019 is returned for your reference.”

6. The Chinese name for the aforesaid limited company was “定運發展有限公司” and that proper name also appeared in the aforesaid seal of the company on the said assignment.  

7. Historically in 1993 the aforesaid Dandiluxe Developments Limited subsequently assigned the Property to two persons and thereafter they assigned the Property to the plaintiff herein in 1996.  

The issue

8. The purchaser’s solicitors herein contended that there is a problem of defective sealing which would render that Assignment null and void.  In any event the omission of the letter “s” would give rise to a reasonable doubt as to whether the seal had been properly adopted by the limited company itself as its seal. 

9. The vendor’s solicitors held a contrary view for the following reasons :

(1)     In the circumstances and despite of the slight discrepancy between the two seals, it is not a case of defective sealing because :

(i)      the Chinese name and the English name of the company as stated in the said Assignment and the preceding assignment of 1996 are the same; 

(ii)     the chops showing for and on behalf of the limited company appearing on the execution pages of the two assignments are the same;

(iii)     the person executed the two aforesaid assignments, namely a “Lee Tai Yan”, as a director of the limited company, is the same;

(iv)    both assignments were signed before a solicitor in Hong Kong;

(v)     the limited company had not taken any action to recover the Property since the execution of the Assignment in 1993; and

(vi)    the discrepancy might be due to oversight, possibly as a result of remaking a replacement common seal.

(2)  Upon the proper construction of the Assignment, the intention of the limited company was to execute the Assignment as a deed.  Thus it would be estopped from denying the due execution of the Assignment.

(3) There was no company known in Hong Kong called Dandiluxe Development Limited.  In any event the chop of the company alongside with the execution clause and the seal both show the correct name of the limited company, namely “Dandiluxe Developments Limited”.

10. Accordingly in all the circumstances of this case and in the absence of any other suspicious evidence to the contrary, Mr Michael Chai, counsel for the plaintiff submitted that the seal appearing on this Assignment belonged to the very limited company.  Consequently there is no real risk of a successful challenge to the title of the Property. 

11. Eventually time for completion was further extended by consent for this issue to be resolved by the present proceedings.

The law

12. Mr Chai for the plaintiff has very helpfully set out his legal basis for the relief sought from this court.  He started with the presumption of the due execution pursuant to section 23A of the Conveyancing and Property Ordinance, Cap. 219, which provides as follows :

“(1)    A deed purporting to be—

(a)   executed prior to the commencement* of section 9 of the Law Amendment and Reform (Miscellaneous Provisions) Ordinance 2003 (14 of 2003) by or on behalf of a corporation aggregate; and

(b)   attested by a signatory or more than one signatory, where the signatory or each of the signatories, if more than one, is a person who could have been authorized under the articles of association or other instruments of the corporation,

shall, until the contrary is proved, be presumed for the purposes of proof of title to any land to have been duly executed by the purported signatory or signatories, as the case may be, with the authority conferred by the articles of association or other instruments of the corporation, whether or not the source of the authority or the means by which such authority was purportedly conferred is apparent from the deed.

(2)     Where any deed is or has been produced by a vendor as proof of title to any land and that deed purports to have been executed by a corporation aggregate not less than 15 years before the contract of sale of that land, it shall for the purposes of any question as to the title to that land be conclusively presumed-

(a)   as between the parties to that contract; and

(b)   in favour of the purchaser under that contract as against any other person,

that the deed was validly executed.

(3)     …”

13. Since the Dandiluxe Assignment was executed in the year 1993, the presumption of execution by a corporate aggregate for not less than 15 years under subsection (2) would not assist the plaintiff as the date of the contract of sale was in July 2007.  But it was very close to it by more than 14 years.  

14. In respect of subsection (1), the Assignment was prior to the commencement of the aforesaid section 9 and it was attested by a signatory, where the signatory is a person who could have been authorised under the Articles of Association of the corporation.  Thus, the presumption of due execution would apply here whether or not the source of the authority or the means by which such authority was purportedly conferred is apparent from the deed.

15. Thus the only issue as submitted by Mr Chai, is whether it is a case of defective sealing which rendered the Assignment to be “a deed purporting to be executed” by and on behalf of Dandiluxe Developments Limited or not.  Put in another way : whether it was a due execution by a proper seal of the company. 

16. In respect of sealing by a company by putting the seal of a limited company on a deed, it was provided under section 93(1)(c) of the Companies Ordinance, Cap. 32 as follows :

“(1)    Every company—

…

(b)   shall have as its common seal a metallic seal on which it shall have its name engraven in legible characters;

…”

17. Mr Chai relied heavily on the case of Westpac Banking Corporation v. Dawson and Anor (1990) 19 NSWLR 614, CA.  In that case the debtor’s name was “ATWA Trading Pty Ltd” and a seal bearing its name was affixed.  However at the time of execution the debtor was actually called “Earthmoving”, though it had always been the intention of company to change its name to ATW.  Mahoney JA said at pp.622G-624B that the intention of affixing a seal of the company was clear.  The usage of a seal with a new name which has not been officially changed would not in his opinion render the execution ineffective.  He said :

“… Each of the seals was a property of the company but, it may be inferred, the intention was that the latter seal was to become formally the company’s seal when formally its name was changed.

… But it [i.e. the new seal] was used with the intention that there should be a sealing of the document as a deed by the affixing of that seal.

…

It could not, I think, have been the intention that every departure from the literal terms of the Act or the articles should go to validity : an accidental misspelling or misnomer in a contract document would not, I think, have that effect.  Such a non-compliance would go to penalty but not validity : see s.218(2).  [This section provided a maximum penalty of A$1,000]

…

…   But, in my opinion, in this case, the company intended that the proper procedure be followed and the error lay in the accidental use of one seal rather than another.  In my opinion that did not render ineffective the execution of the document under seal by the company.”

18. The provision under section 93 of the Companies Ordinance, in my opinion, would have the same effect that the seal of the company means the seal of the company with the name of the company and the name should of course have the proper spelling.  If there was a mis-spelling or misnomer as in the case of Westpac Banking Corporation, it would be a question of fact whether there was the clear intention that the seal, so defective, was intended as the seal of the company which would not render the execution invalid.  In this case, there was no other company by such a name with or without the letter “s” and the Chinese name was the proper Chinese name without any spelling mistake.  I consider that there is a clear intention that at the time of the execution, the seal with a defective spelling was in fact intended to be a seal of the company. 

19. Further, in my opinion, there is also no real risk involved in this case.  It is now settled law that a vendor needs not prove a perfect title and a good title is sufficient as long as he can satisfy the court beyond doubt that the purchaser would not be at risk of a successful assertion against it : see

(1)     MEPC Ltd v. Edwards [1981] AC 205;

(2)     Mexon Holdings Ltd v. Silver Bay International Ltd [2000] 2 HKC 1; and

(3)     Jumbo Gold Investment Ltd v. Yuen Cheong Leung & Another [1999] 3 HKLRD 825. 

20. Since the date of execution on 26 May 1993 there was no challenge to this execution by anyone including any contributories of Dandiluxe Developments Limited.  According to the director of the plaintiff, one Mr Poon Chi Ming, this limited company did not even have any kind of contact with the plaintiff since the plaintiff purchased the flat about 12 years ago.  

21. As this limited company had been dissolved for nearly 10 years, there was no other company by the same name with or without the letter “s”.  Thus, we can safely assume that this limited company had no intention to assert any claim to the flat and in fact, as submitted by Mr Chai, it seems that it even had no intention to carry on any business ever since then for a long time. 

22. Mr Chai cited two further authorities to support his submission that there was no real risk at all in the case here and they are :

(1)     Hui Yuk Chun v. Tang Wai Hang Henry and Lee Yuet Ming (HCMP1/1998 per Hartmann J, unreported); and

(2)     Stanford House Publications (HK) Ltd v. Win Capital Industries Ltd [2006] 3 HKC 534. 

23. By reason of the aforesaid matters, I accept the submission of Mr Chai that the Requisition has been satisfactorily answered and the plaintiff has shown and proven a good title of the Property.  Thus this court made the declarations sought under the originating summons as ordered right away at the end of the hearing. 

24. Further the parties agreed by consent that there should be no order as to costs.