DELTA GRAND LTD v. MULTICOM INTERNATIONAL LTD

HCMP 2550/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 2550 OF 2005

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BETWEEN

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J U D G M E N T

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1.  This case concerns the application of Conveyancing and Property Ordinance (Cap.219) (CPO) s.13(4).  The section provides that a statement of fact in a declaration relating to land made not less than 15 years before a contract of sale for the same land shall (unless the contrary is proved) be sufficient evidence of the truth of the statement.

2.  By an agreement dated 9 May 2005 Multicom agreed to sell and Delta to buy the 13th floor of the Shui On Centre.  Delta paid a deposit and completion was to take place on 4 November 2005.

3.  On 25 May 2005 Delta (by its solicitors) made a requisition.  It requested a certified copy of a Supplemental Agreement dated 21 November 1988 between Shui On (as vendor and then owner of the land) and Bonstag (as purchaser).  That Supplemental Agreement was mentioned in a Notice of Termination dated 31 January 1989 which had been issued by Shui On and registered in the Land Registry.

4.  The material part of the Notice of Termination reads as follows:-

“WHEREAS by an Agreement for Sale and Purchase ('the Principal Agreement') ... dated the 21st day of November 1988 and made between [Shui On] as Vendor of the one part and [Bonstag] as Purchaser of the other part as supplemented by an Agreement ('the Supplemental Agreement') of the same date between the same parties (collectively, the 'Agreements') [Shui On] agreed to sell and Bonstag agreed to purchase [the land] NOW TAKE NOTICE that as Bonstag has not complied with the provisions of the Agreements namely to pay [Shui On] before 3:00 pm on the 18th day of January 1989 either the amount of $562,000,000.00 or the amount of HK$300,000,000.00 (being the said amount of $562,000,000.00 after setting off against it the sum of $262,000,000.000 payable by [Shui On] to Bonstag pursuant to the Supplemental Agreement), as a further deposit and in further part payment of the purchase price of the Property, the deposit and further deposit paid by Bonstag to [Shui on] on the 21st day of November 1988 and the 17th day of December 1988 respectively, amounting in total to $50,000,000.00, were on the 18th day of January 1989 absolutely forfeited and the Agreements were on such date terminated by [Shui On], in each case without prejudice to any other claim, right or remedy whatsoever which [Shui on] may have against Bonstag.”

5.  Multicom could not produce a copy of the Supplemental Agreement.  It appears that no copy of the Supplemental Agreement can now be found.  The law firm which handled the subject matter of the Supplemental Agreement has informed Multicom's solicitors that the relevant file has been destroyed due to the lapse of time.

6.  Consequently, Multicom responded to the requisition by observing that, through CPO s.13(4), as between Delta and Multicom, the declaration in the Notice of Termination that the Principal and Supplemental Agreements had been terminated was sufficient evidence of that fact.  It was thus unnecessary (and Multicom had no obligation) to produce a copy of the Supplemental Agreement.

7.  Delta disagreed.  It thought that CPO s.13(4) was not applicable and its requisition had not been properly answered.  It refused to complete and Multicom then treated Delta’s deposit as forfeited. 

8.  By these proceedings, Delta seeks the return of its deposit.  The question is whether Multicom or Delta is right about the relevance or otherwise of CPO s.13(4).

9.  Mr. Kenneth Chan (appearing for Delta) argues that CPO s.13(4) is inapposite since no statement of fact can be deduced from the Notice of Termination.  One cannot infer anything (Mr. Kenneth Chan submits) because the Notice of Termination is simply a unilateral declaration by Shui On.  Neither Bonstag nor its agent has signed the Notice of Termination. 

10.  Further, according to Mr. Kenneth Chan, the situation is “aggravated” as a result of the apparent reduction of the further deposit of $562 million payable by Bonstag by a sum of $262 million said to be payable by Shui On to Bonstag under the Supplemental Agreement.  From the Notice of Termination alone, one can obtain no idea (Mr. Chan contends) of what has happened to Shui On's $262 million obligation.  There may still be (Mr. Kenneth Chan suggests) “potential liability” on the part of Shui On to Bonstag.

11.  In my judgment, the Notice of Termination falls within the terms of CPO s.13(4). 

12.  The Notice of Termination was made more than 15 years before the present contract between Delta and Multicom. 

13.  It declares that as a matter of fact the Principal and Supplemental Agreements have been terminated.  I do not see how the $262 million set-off mentioned in the Notice of Termination renders that declaration ambiguous in any way. 

14.  It seems to me therefore that, by operation of CPO s.13(4), with respect to proof of title, the declaration of the Supplemental Agreement's termination is sufficient evidence as between Multicom and Delta.  It is for Delta, if it believes the contrary, to prove such contention.

15.  Mr. Samuel Chan (appearing for Multicom) further submits that the non-registration of the Supplemental Agreement in the Land Registry means that Delta is adequately protected against adverse claims by Bonstag.  Mr. Samuel Chan argues that, given registration of later transactions relating to the land (including the agreement between Delta and Multicom), then by Land Registration Ordinance (Cap.128) s.4, no notice (whether actual or constructive) of the Supplemental Agreement can affect Delta's priority.  Delta's concerns as to Bonstag being able to assert some superior claim to the land are thus (Mr. Samuel Chan reasons) fanciful.

16.  Mr. Samuel Chan may be right.  But I confess to some doubt as to whether his argument is a good enough answer to a requisition relating to title.  Nonetheless, in light of my conclusion on the application of CPO s.13(4), it is unnecessary to determine this point.

17.  Delta's application is dismissed.  I shall now hear the parties on costs and consequential orders.