MAK YIU HEI KARL and Another v. HO CHI MING

HCMP 1177/98

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO.1177 OF 1998

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J U D G M E N T

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1. This is a Vendor and Purchasers Summons issued on behalf of the Plaintiffs/Purchasers on 18th March 1998 asking for, inter alia, a declaration that the requisition of the Purchasers in respect of the title to the Property comprised in the Agreement for Sale and Purchase ("the Agreement"), namely, the production of a certified copy of a complete and legible Block Crown Lease of Demarcation District No. 106, ("the Government Lease") has not been sufficiently answered by the Defendant/Vendor, and for a declaration that a good title to the Property has not been shown in accordance with the Agreement and the Purchasers are entitled to rescind the Agreement and for other ancillary reliefs.

2. The subject matter of the Agreement is :

"ALL THAT one equal undivided third parts or shares of and in ALL THAT piece or parcel of ground situate lying and being at Yuen Long New Territories Hong Kong and registered in the Yuen Long New Territories Land Registry as SECTION F OF LOT NO. 1985 IN DEMARCATION DISTRICT NO. 106 ('the Lot') And of and in the messuages erections and building thereon ('the Building') TOGETHER with the sole and exclusive right and privilege to hold use occupy and enjoy ALL THAT the SECOND Floor including Balcony adjacent thereto and the Roof thereof of the Building as respectively shown ..... on the Plans ....."

3. The provisional agreement between the parties was dated 27th November 1997. According to the affirmation of Miss Chan Shuk Yee, Dora, solicitor for the Purchasers, affirmed on 17th March 1998, she deposed in paragraphs 10 to 15 to the following effect.

4. On or about 8th December 1997, her firm obtained a copy of the Block Crown Lease from Yuen Long New Territories Land Registry and found that a substantial portion of the Block Crown Lease was damaged and the material terms and covenants of the Block Crown Lease including the commencement date and the term of the Block Crown Lease were all missing. By letter dated 8th December 1997, she asked North New Territories Land Registry if it had a complete copy of the Block Government Lease and whether there was any other evidence to show that the term of the Block Government Lease was 75 years, renewable for 24 years and the commencement date of the lease was 1st July 1898. Pausing here for one moment, she herself made no reference to the "less three days". She then went on to say that on or about 9th December 1997, Messrs. Josip Ma & Co., ("the Vendor's solicitors") on behalf of the Vendor sent to the Purchasers' solicitors some title deeds and documents in relation to the Property. One of those deeds and documents is a certified true copy of the Block Crown Lease ("the Certified True Copy").

5. It is clear from the copy of the Certified True Copy produced on behalf of the Purchasers [p. 58 of the Bundle] and from the copy of the Certified True Copy produced on behalf of the Vendor [p. 156 of the Bundle] that the certification date was 27th August 1997. Mr Hylas Chung, Counsel for the Vendor, also confirmed that his instructions were that the Certified True Copy sent to solicitors for the Purchasers was certified on 27th August 1997.

6. Turning back to Miss Chan's evidence, she said she received a letter dated 10th December 1997 from the Yuen Long New Territories Land Registry, by Miss Evian Wong for the Land Registrar stating that :

" I refer to your letter dated 8.12.1997 and regret to inform you that Page (sic) 1and 2 of the original Block Government Lease were badly damaged and hence the information contained therein may be incompleted (sic) as noted by you.

Please feel free to contact me to discuss the matter further, if necessary."

Miss Chan then went on to state in her evidence that on about 10th December 1997, she ascertained from Miss Evian Wong, the writer of the letter, that the Land Registry did not keep any other secondary evidence or a complete copy of the Block Crown Lease showing the material terms and particulars in relation to the Lot. After perusing the title deeds and documents sent to her, Miss Chan raised a number of requisitions in relation to the Property in two letters, both dated 12th December 1997.

7. The relevant part of the first one, which is the longer of the two letters dated 12th December 1997, stated that :

" 3. We also refer to our letters dated 8 and 10 December 1997 and we reiterate our view that in order to prove good title to the Property, your client has to provide us a complete and legible certified true copy of the Block Crown Lease of Demarcation District No. 106. We are still awaiting your confirmation as to the provision as to such Block Crown Lease."

In the second of the two letters, which is the shorter one, she said :

" 2. We refer to your previous letter dated 9 December 1997 mentioning about providing a certified true copy of Gazette for the year 1907 as secondary evidence of the Block Crown Lease. Please note that we have conducted searches for the Government Gazettes from late 1904 to 1907 but we are unable to find any information in the Gazette on the Block Crown Lease for D.D. 106. We reiterate that your client must provide a fair and legible certified true copy of the Block Crown Lease of D.D. 106 to prove good title to the Property."

Miss Chan went on to say that on the other hand she also tried to find secondary evidence to prove the contents of the Block Crown Lease.

8. This is a refreshing difference in vendor and purchaser summons cases in that the Purchasers were actively trying to ascertain the contents of the Block Crown Lease.

9. Returning to her narrative, she said that by two separate letters dated 12th December 1997 to the Legal Advisory and Conveyancing Office, Yuen Long and to the District Lands Office, Yuen Long, she asked for confirmation if other Government Leases of the adjoining Lots to D.D. No. 106 issued at the time when the Block Crown Lease was issued contained similar terms as in the Block Crown Lease. Then she exhibited copies of those letters. She also obtained from the Yuen Long Land Registry a copy of the adjoining Lot No. D.D. 103. She produced a copy of the Block Government Lease of D.D. No. 103 which stated that the commencement date of that Lease was 1st July 1898, the term of the Lease was 75 years and renewable for 24 years less three days. She said she had compared the D.D. No. 103 Lease with the Lease for D.D. No. 106 and found that the legible words which appeared on the incomplete copy of the Lease for D.D. No. 106 were the same as those contained in the copy Lease for D.D. No. 103.

10. She then sent two further letters both dated 10th December 1997 to the Legal Advisory and Conveyancing Office, Yuen Long and the District Lands Office, Yuen Long respectively requesting for confirmation and advice if the Block Government Lease would have contained the similar terms as the Block Government Lease of adjoining land in D.D. No. 103 and she produced copies of those letters.

11. In a letter dated 20th December 1997 solicitors for the Vendor wrote stating :

" In the premises, we would like to point out that the term and year of the subject Crown Lease has been stated in the Lend Search Record i.e. 75 years renewable for 24 years commencing from 1st July 1898. We believe your doubt as to the missing term of the Crown Lease has now been removed."

12. Solicitors for the Purchasers responded on the same day by letter dated the same date and the material paragraph dealing with the point stated that :

" In relation to your last paragraph of your said letter, we disagree that the terms of the Crown Lease can be proved merely by the land search records. The terms and the other conditions of the Crown Lease must be proved by the Crown Lease itself and not by a computer printout of the land search records in respect of the Property. This is not acceptable evidence of the terms of the Crown Lease in which your client enter into a Deed of Assignment and to produce the title deeds."

Solicitors for the Purchasers made the obvious point that a computer printout is no evidence because it is, to me, hearsay, if not hearsay upon hearsay.

13. I have set out the background leading up to the Formal Agreement dated 22nd December 1997 because I consider the background to be of vital importance to the determination of the dispute between the parties.

14. Now I come to the Formal Agreement which is dated 22nd December 1997, Clause 6 of which stated that :

" The Vendor shall at his own costs and expenses to (sic) prove and give good title to the Property in accordance with Section 13 of the Conveyancing and Property Ordinance Cap. 219 of the Laws of Hong Kong and at his own costs and expenses make and furnish to the Purchaser such original title deeds if they relate exclusively to the Property and a proper certified true copy of a complete and legible Block Crown Lease of Demarcation District No. 106 and certified true copies of any deeds or documents of title, wills, occupation permit and matters of public record as may be necessary to prove and complete such title." (emphasis added)

15. By the date of the Formal Agreement, neither party appeared to be able to obtain a complete or legible version, not legible in the sense that at least insofar as to the incomplete and missing parts, they are not legible. Against such background, the Purchasers stipulated by Clause 6 for a "proper certified true copy of a complete and legible Block Crown Lease of D.D. No. 106."

16. Clause 6 could only have been made because the Purchasers considered a "complete and legible" Block Crown Lease to be of fundamental importance. The certified true copy itself may or may not need to be complete and legible so long as the original is complete and legible. But what the Purchasers stipulated by Clause 6 were : (1) that there must be a certified true copy; and (2) the certified true copy must be that of a complete and legible Block Crown Lease of D.D. No. 106.

17. In respect of the second requirement stipulated in Clause 6, it is clear that the Vendor had been unable to and have failed to comply with the same. The first and second pages were not complete and therefore not legible, at least in relation to the missing parts.

18. It is significant that the Certified True Copy was certified on 27th August 1997. What the certifying public officer was doing was to certify that the true copy was a true copy of the Block Crown Lease as the officer found it on 27th August 1997. On the evidence before me, it is more probable than not that the Block Crown Lease, in relation to the first two pages, was badly damaged by 27th August 1997. The certified true copy produced is therefore not of "a complete or legible Block Crown Lease of D.D. No. 106" and the Vendor has not complied with Clause 6 of the Agreement. Clause 6 of the Agreement must have been made because the Purchasers considered it to be of fundamental importance and there is, in my judgment, no legitimate ground on which I can deny the Purchasers the benefit of that stipulation.

19. Compare what Godfrey J. (as he then was) said in A. Mayson Development Co. Ltd. v. Betterfit Ltd. [1992] 2 HKC 533 at p.535 B-D and at p.536 C and F-H.

20. The above is sufficient to dispose of this Vendor and Purchaser Summons in favour of the Purchasers and it is therefore not necessary for me to decide whether the secondary evidence is sufficient. As it is not necessary and as it may affect other properties, I prefer not to express any obiter opinion. My concern is to decide the issue as raised by the parties on the basis of the materials before me. For the reasons which I have given, the Purchasers are entitled to declaration in terms of paragraphs 1, 3, 4 and 5 of the Originating Summons but, not in terms of paragraph 2 since I have found it unnecessary to deal with the point. I understand the parties have agreed not to ask for costs so that there is no need for me to make any order on costs.

Order

21. The orders which I make are as follows :

1. A declaration that the requisition of the Plaintiffs Purchasers in respect of the title to the property comprised in the above-mentioned Agreement for Sale and Purchase, namely, the production of a certified copy of a complete and legible Block Crown Lease of Demarcation District No. 106 ("the Government Lease"), has not been sufficiently answered by the Defendant;

3. A declaration that a good title to the property has not been shown in accordance with the Agreement for Sale and Purchase and the Plaintiffs are entitled to rescind the Agreement for Sale and Purchase;

4. An order that upon rescission the Defendant do forthwith repay to the Plaintiffs the deposits and the part payment of the purchase price in the total sum of HK$262,000.00 paid by the Plaintiffs under the said Agreement for Sale and Purchase together with interest (at the rate of 1% over the prime rate(s) charged by the Hongkong and Shanghai Banking Corporation Limited) from 18th March 1998 to the date of judgment;

5. A declaration that upon rescission the Plaintiffs are entitled to a lien on the Property for the return of the deposits and part payment of the purchase price and interest.