EVER FAMOUS LTD v. DONNY INTERNATIONAL LTD

HCA 1507/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1507 OF 1998

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J U D G M E N T

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Introduction

1.  This is a vendor-purchaser dispute.

2.  By a Provisional Agreement for Sale and Purchase dated 25 September 1997, the plaintiff (as vendor) agreed to sell and the defendant (as purchaser) agreed to buy Shop No. 6, 3-5 Fa Yuen Street Kowloon free from encumbrances but subject to the existing tenancy.  The purchase price was $31,000,000.  The vendor abandoned its claim for indemnity for estate agency commission.  Nothings turns on the terms of the provisional agreement.

3.  The provisional agreement was superceded by the formal Agreement for Sale and Purchase dated 9 October 1997 (“the Agreement”). 

The Property

4.  The Property was 20 equal undivided 1,440^th parts or shares of and in Kowloon Inland Lots Nos 6928, 6929, 6930,  6931, 6932, 6933, 6934, 6935, 6936, 6937 and 6938 and of and in the buildings thereon known as Hung Wai Building (“the Building”), together with the sole and exclusive right and privilege to hold use occupy and enjoy Shop No. 6 on the ground floor of the Building which flat was shown and coloured pink on the plan annexed to assignment memorial No. 5740340, subject to such exceptions and reservations as were more particularly described and defined in assignment memorial No. 5740340, together with the benefit of and subject to all easements rights and rights of way and all other appurtenant rights contained described and/or mentioned in assignment memorial No. 5740340 and the Deed of Mutual Covenant memorial No. 2684416 (“DMC”).

5.  Assignment memorial No. 5740340 was an assignment by Chun Wing Investment Company Limited (“the Developer”) with express exception and reservation unto the Developer “the right to the exclusive use occupation and enjoyment of the outer walls … of the said Building (unless otherwise specifically included in the Property)”.  The outer or external walls of the Building were not specifically included.

6.  By virtue of section 1 Clause 1(a) and Part One of the Second Schedule in the DMC, the Developer shall have the full right and privilege to hold use occupy and enjoy to the exclusion of the covenanting owner the external walls of the Building.

7.  Clearly, the external or outer walls of the Building did not form part of the Property.  Indeed, Mr John Hemmings conceded that the purchaser was not buying the external wall of the Building.

8.  Shop No. 6 is rectangular in shape, facing Fa Yuen Street, with a service lane at its back, Shop No. 5 on one side and Shop No. 7 on the other.

The Agreement

9.  The purchase price was $31 million.  The initial deposit and part payment of $0.5 million was paid before the signing of the Agreement.  $2.6 million as further deposit and further part payment of the purchase price was paid upon the signing of the Agreement.  $1.55 million as further deposit and part payment was payable by 25 October 1997 and the balance of $26.35 million was payable on completion (clause 2 and Part IV of the First Schedule).

10.  Completion should take place on 23 January 1998 (Clause 3 and Part III of the First Schedule).

11.  Clause 7 provided that “time shall in every respect be of the essence of this Agreement”.

12.  Clause 8 a) provided that the vendor “shall assign as beneficial owner”. 

13.  Clause 8 c) provided that:-

“The Purchaser and/or his surveyor/mortgagee shall be permitted to inspect the Property twice before Completion upon prior appointment with the Vendor, one such occasion shall be as immediately before Completion as possible.”

14.  Clause 9 provided that:-

“The Vendor shall show and give a good title to the Property in accordance with Section 13 of the Conveyancing and Property Ordinance (Cap. 219) at his own expense and he shall at the like expense make and furnish to the Purchaser such certified copies of any deeds or documents of title, wills and matters of public record as may be necessary to complete the chain of title”.

15.  Clause 11 provided that:-

“(a)   Any requisition or objection in respect of the title shall be delivered to the Vendor’s solicitors within 7 working days after the date of receipt of the relevant title deeds by the Purchaser’s solicitors.

(b)     The Purchaser shall be deemed to have waived the requisition if requisition or objection on title is not so delivered to the Vendor’s solicitors within the times hereinbefore stipulated.

(c)     If the Purchaser shall have made within the times hereinbefore stipulated and shall insist on any objection or requisition either as to title or any matter appearing on the title deeds or otherwise which the Vendor shall be unable or on the grounds of difficulty, delay or expenses or on any other reasonable ground unwilling to remove or comply with, the Vendor shall notwithstanding any previous negotiation or litigation be at liberty to annual the sale by giving at least 7 days’ written notice to the Purchaser and the sale and purchase herein shall, unless the requisition or objection shall have been in the meantime withdrawn, on the expiration of such notice be annulled in which case all deposit or deposits paid hereunder including the initial deposit but without costs or compensation and, if that return is made within 7 days, without interest.  The parties shall bear their own respective costs and expenses for and incidental to the preparation of an Agreement for Cancellation.”

16.  The Property was sold subject to and with the benefit of existing tenancies (clause 16(a)); on an “as-is” basis (clause 18) and together with the furniture, fixture and fittings as described in the Inventory (clause 26).  What was “described” in the Inventory was “Nil”.

17.  Clause 19 provided that in the event of the purchaser’s breach, the vendor was entitled to forfeit 10% of the purchase price and recover any actual loss in excess of the amount forfeited.  Clause 20 provided that in the event of the vendor’s breach, the purchaser was entitled to be repaid all moneys paid together with damages. 

The DMC

18.  Section IV Clause 18 provides as follows:-

“Subject to Clause 19 hereof and without prejudice to the generality of Clause 17 above, no external signs signboards notices advertisements flags banners poles cages brackets flower shelves or other projections or structures whatsoever extending outside the exterior of the said Building shall be erected installed or otherwise affixed or projected from the said Building or any part thereof.”

19.  Section IV Clause 17 provides as follows:-

“Subject to Clause 19 hereof, no Owner shall do or permit to be done any act or thing which may or will alter the external appearance of the said Building.”

20.  Section IV Clause 19 is a provision on signboards and is irrelevant for the purpose of this action.

21.  Section V Clause B (15) provides that the Manager shall have the duty:-

“to remove any structure installation signboard sunshade bracket fitting or other things in or on any part of the Building which have been erected in contravention of the terms of this Deed of Mutual Covenant or of the regulations of the Building Ordinance and/or without the written permission of the Manager (or if such permission has been given upon the expiration or withdrawal of the same) and to demand and recover from the person by whom such structure or other things as aforesaid was erected or installed the cost of such removal and the making good of any damages thereby caused”.

Correspondence and requisitions

22.  Under cover of their letter dated 16 October 1997, Messrs Patrick Chung & Co. (“PC”), former solicitors for the vendor, sent Messrs Edmond H.C. Wong & Co. (“EW”), former solicitors for the purchaser, the title deeds and documents which included the DMC and assignment memorial No. 5740340. 

23.  By letter dated 23 October 1997 EW wrote to PC stating that PC’s letter dated 16 October 1997 was received by them on 17 October 1997; raising certain requisitions and queries and reserving their “right to raise further requisitions upon receipt of your replies to the aforesaid”. 

24.  On the footing that the title deeds were received by EW on 17 October 1997, the purchaser had 7 working days after 17 October 1997 to raise requisitions.  

25.  By letter dated 24 October 1997, PC replied to EW’s letter of 23 October 1997.

26.  Under cover of their letter dated 25 October 1997, EW sent two cheques totalling $1.55 million as further deposit.

27.  By letter dated 29 October 1997, EW commented on PC’s letter dated 24 October 1997.

28.  PC replied by letter dated 10 November 1997 enclosing some certified copy documents.

29.  More than 2 months elapsed, and neither EW nor the purchaser responded to PC’s letter dated 10 November 1997 or raised any or any further concern about title. 

30.  Meanwhile, Messrs Albert Hwang, David Chung & Co. (“AH”) took over from PC as solicitors for the vendor as from about 6 January 1998.

12 January Requisition

31.  2 months and 2 days after PC’s letter dated 10 November 1997, EW wrote to AH by letter dated 12 January 1998 (“12 January Requisition”) as follows:-

“We refer to the sale and purchase of the above property.

Our client has instructed an Architect to make a site inspection to the above property on about the 3rd January 1998 and it was noted that alterations and addition works had been carried out in the captioned Shop 6 as set out in the AP’s report dated 6th January 1998.

Without the production of any approval from the Building Authority, the illegal alteration and addition works unquestionably amount to an irremovable blot on the title of the said property.

We enclose herewith a copy of the said report of the said alterations and addition works for your perusal.

Please let us have your reply hereon within the next two business days as our client intends to clarify the matter before completion.”

32.  The “AP’s report” reads as follows:-

“TO WHOM IT MAY CONCERN

RE:    Shop 6, Ground Floor, Hung Wai Building,

No. 3-5, Fa Yuen Street, Mongkok, Kowloon.

This is to confirm that a recent inspection by this office, revealed that there was an additional structure within the captioned premises, namely a steel frame for supporting an A/C cooling tower being erected to the external wall at the rear of the captioned premises and projecting over the services lane .

In accordance with Sec. 14 of the Building Ordinance, Cap. 123, Laws of Hong Kong, approval and consent are required to be applied for and obtained from the Building Authority for such an alterations and additions work.

Pursuant to Sec. 24(1) of the said Ordinance, the removal of these works and reinstatement to the original conditions would be enforced by the Building Authority who might recover such costs from the owner of the property.

Photographic record are attached for reference.

Signed:-

______________________

Ng Chi Chai

A.P./R.S.E.

Date: 6 January 1998.”

33.  By letter dated 13 January 1998, AH replied as follows:-

“We refer to your letter dated 12th January 1998.

Clause 11 of the Sale and Purchase Agreement dated 9th October 1997 [‘the Agreement’] expressly provides that any requisition or objection in respect of the title shall be delivered to the Vendor’s solicitors within 7 working days after the date of receipt of the relevant title deeds by the Purchaser’s solicitors.  It is further expressly provided that the Purchaser shall be deemed to have waived the requisition if requisition or objection on title has not so delivered within the time stipulated.

Time for raising requisitions have long past.  Your client is deemed to have waived the requisition/objection raised in your said letter of 12th January 1998.  The said requisition/objection is accordingly raised out of time and will not be entertained.

Simply as a matter of courtesy, and entirely without prejudice to our client’s position that your client has already waived or deemed to have waived the requisition/objection presently raised, we would briefly comment on your said letter as follows :-

(a)     Your client has agreed to purchase the Property as identified in the plan annexed to Assignment Memorial No. 5740340 [‘the said Assignment’] and subject to the terms and conditions of the Deed of Mutual Covenant Memorial No. 2684416 and re-registered by Memorial No. 2713656 [‘the DMC’];

(b)     Under both the said Assignment and the DMC, the right to the exclusive use occupation and enjoyment of the external walls of the building was expressly excepted from the owner of the Property.  Indeed under the terms of the DMC, the exclusive right to the use occupation and enjoyment of the external walls was expressly reserved to [the Developer].  This is confirmed by the Schedule to the said Assignment which expressly excepted the outer walls from being included in the Property’

(c)     Our client does not know of the steel frame for supporting the air-conditioning cooling tower [‘the said structure’] as referred to the ‘report’ annexed to your said letter is indeed an unauthorized structure as alleged.  That steel frame was not erected by our client.  If necessary, our client would make investigation to see if the same is indeed an unauthorized structure as alleged;

(d)     However presently our client simply cannot see the need to do so.  The said structure is not erected on the Property and cannot possibly affect the title to the Property.  The said structure is affixed to the external wall of the building which is not part of the Property.  In purchasing the Property, your client is not purchasing the external wall of the building either.  In these circumstances we cannot see how the title of the Property could in any way be affected even on the assumption that the said structure is an unauthorized structure.  If any enforcement action is taken by the Building Authority, it will not be taken against your client.  There can be no possible cause for concern in that regard.

We would re-iterate that the above comments are merely made by us out of courtesy and entirely on an without prejudice basis as aforesaid and that in our view your client is no longer entitled to raise any or any further requisitions on title.  Our comments above shall not affect any of our client’s rights, in particular its right to insist that title has already been accepted by your client.  All our client’s rights are accordingly expressly reserved.”

14 January Requisition

34.  By letter dated 14 January 1998 (“14 January Requisition”), EW wrote as follows:-

“We refer to your letter of the 13th January 1998.

We are of the view that our client is entitled to raise the requisition, the subject matter of our letter to you dated the 12th January 1998, out of time, because it is a requisition which goes to the root of title.  It was only on or about the 6th January 1998 our client was advised by its architect of the matters set out in the report, a copy of which was sent to you under cover of our said letter dated the 12th January 1998.

We understand that the said steel frame was used as a support to an air-conditioning cooling tower, through which cool air is produced at the property.  In the premises, the erection of the said steel frame supporting the air-conditioning cooling tower is solely for the use benefit and enjoyment of the property.

Pursuant to clause 18 of the Deed of Mutual Covenant registered by Memorial No.2684416 and re-registered by Memorial No.2713656 [‘the DMC’], it is stipulated that ‘ …. no external signs … flower shelves or other projections or structures whatsoever extending outside the exterior of the said Building shall be erected installed or otherwise affixed or projected from the said Building or any part thereof.’

In the circumstances, the erection of the said steel frame is undoubtedly in contravention of, apart from the provisions of the Building Ordinance, the said Clause 18 of the DMC.  This being the case, the manager of the Building shall take enforcement action against the registered owner of the said property.

Further, even if the said steel frame might not be erected by your client (which we do not know), your client is said to have adopted the structure by doing nothing to it.

We therefore maintain our requisition as raised in our said letter dated the 12th January 1998.”

Further correspondence

35.  AH replied by letter dated 16 January 1998 as follows:-

“We refer to your letter dated 14th January 1998.

With respect, we do not accept that the requisition raised by you in your letter dated 12th January 1998 goes to the root of title.  Even if it is, it is now well-settled that a matter which goes to the root of title can be waived.  To adopt the words of Nazareth J.A. in Hillier Development Limited v. Tread East Limited (1993) 1 HKC 285, at p.296 B-C:-

‘… 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 …’

We are sure that you are aware that the Hillier case has since been followed in a number of decisions, including most recently in the case of Chan Tak Sing v. Wong Cheung Kong and others (MP941 of 1997) where Deputy Judge Suffiad held, following the Hillier’s case, that a purchaser is bound by the time limit imposed in the contract for raising requisitions even if the matters raised in that requisition goes to the root of title.

The said steel frame with the A/c cooling tower is erected on the external wall of the building and is apparent to any person who cares to visit the site at any time.  The existence of the structure was well known to your client but you have never raised any requisition on the same.  The only requisitions that you have chosen to raise were raised in your letter dated 23rd October 1997 which have all been satisfactorily answered by the letters dated 24th October 1997 and 10th November 1997 from Messrs. Patrick Chung & Co., our client’s previous solicitors.  No other requisitions have been raised until we suddenly received your letter dated 12th January 1998.  That letter came to us almost 2 months after all previous requisitions have been answered.  In these circumstances, clearly title has already been accepted.  The Hillier case, supra, refers.

We note that in your letter under reply you have purported to change the way in which you presented your requisition regarding the said steel frame.  You now allege that the same was in breach of Clause 18 of the DMC.  The DMC was included in the title deeds sent to you by Messrs. Patrick Chung & Co. as early as on 16th October 1997.  Despite this, you have never raised any requisition on the same.  It is now clearly too late for you to start raising such requisitions when title has already been accepted, and the same will not be entertained by our client.

As title has already been accepted, you are reminded that completion shall take place on or before 5:00 p.m. on 23^rd January 1998.  Please furnish us the draft Assignment for our approval in advance of completion.”

36.  By letter dated 19 January 1998, EW persisted in the objection in the following terms:-

“We refer to your letter dated 16th January 1998.

We do not agree that the authority of Tread East Ltd v. Hillier Development Ltd [1993] 1 HKC 285 supports the legal proposition referred to in the second paragraph of your said letter.

As we had pointed out, the alteration and addition works, if not approved by the Building Authority and/or other Government Departments, would amount to an irremovable blot on the title of the property.  We are of the view that the alteration and addition works if not approved would put our client at risk of legal action being taken by the Building Authority and/or by the Government in exercise of its right of re-entry under the Government Lease.  It was only by the report of the architect already forwarded to you that our client was advised of the serious consequences of the existence of such alteration and additional works if the same are illegal.

Further, mere knowledge on the part of our client of the existence of the alteration and additional works, namely the said steel frame with the A/C cooling tower, would not reduce your client’s obligation to prove good title to the property.  In this respect, we would refer you to the case of Giant River Ltd v. Asie Marketing Ltd (MP No.2510 of 1987) where it was held that before a purchaser’s knowledge of facts can prejudice his position he must also be aware of the legal consequences of those facts and even this knowledge would not reduce the obligation to show good title on the date of completion.

We deny that we did change the way in which we presented our requisition regarding the said steel frame as alleged.  As a matter of fact, you answered in your letter dated 13th January 1998 that since ‘the exclusive right to the use occupation and enjoyment of the external walls was expressly reserved to Chun Wing Investment Company Limited’ under the DMC, therefore you ‘cannot see how the title of the Property could in any way be affected even on the assumption that the said structure is an unauthorized structure.’  In the premises, we replied that the Manager of the Building would take enforcement action against the registered owner of the property under the DMC.

In view of the above, our client is entitled to raise the requisition contained in our letter to you dated 12th January 1998, and you are required to let us have the necessary approval for the erection of the said steel frame before completion for our handling.”

37.  AH replied by letter dated 20 January 1998 as follows:-

“Your letter dated 19^th January 1998 refers.

We do not wish to labour what we have already clearly stated in our previous correspondence.  The Judgments of Penlington JA and Nazareth JA in the Hillier case are, in our view, very clear.  You will not fail to note that at p.293 of the report Penlington JA expressly referred to the case of Giant River and refused to follow the same (as the Court of Appeal was entitled so to do), and went on to explain the true basis of the decisions in Warde v. Dixon, Re Tanqueray-Willaume & another and Re Cox & Neve’s Contract.  Your reliance on the decision of Giant River is misplaced.

Your client’s knowledge of the existence of the said steel frame plus its knowledge of the provisions of the DMC (the DMC was delivered to your goodself on 16^th October 1997 together with the other title documents) put your client in a position to raise whatever requisition it may think fit to raise within the time limit stipulated in the contract.  Your client has chosen not to do so and the time limit has long expired.  We are of the view that the judgment of Penlington JA, particularly at p.293 H to I applies with full force to the present case.

In your letter under reply you seemed to suggest that time would only begin to run from the time when your client came to be aware of the legal consequences of the facts.  With respect, this proposition cannot be right.  As Litton JA (as he then was) held in Active Keen Industries Ltd. v. Fok Chi Keung [1994] 2 HKC 67 at 84 E to F.

‘What powers the Building Authority can lawfully exercise is a pure question of law.  The purchaser is in as good a position to form a judgment on that matter as the vendor once he has in his possession the same facts as the vendor’.

Indeed if the proposition contended for by you was right, the purchaser in the Hillier case could have easily claimed that although he had became aware of the facts (upon which he could have raised requisitions within the time allowed by the contract), he was excused from doing so because he did not become aware of the legal consequences until much later.  Such a proposition need only be stated to be shown to be wrong.

Enough has already been said about our client’s position.  Your client has already accepted title and it is now well too late for it to start raising new requisitions.  We repeat what we have already stated before: our client did not erect the said steel frame and the external walls do not belong to our client or form part of the Property subject of the sale and purchase.  Our client will no doubt exercise all its rights under the contract if your client should wrongfully fail to complete the sale and purchase as scheduled.  Please send to us your draft Assignment for our approval as soon as possible.”

38.  By letter dated 23 January 1998, EW persisted in the objection:-

“We refer to your letter of the 20th January 1998.

In reply to your said letter, we are of the view that Penlington JA distinguished the decision in Giant River from the Hillier case because he was satisfied that the requisition in issue ‘was obvious from the papers already in the possession of the purchaser’s solicitors at the time the agreement was entered into.  It certainly became clear to the Mortgagee’s solicitors who were in possession of no more information than the Purchaser’.  There is no suggestion that Deputy Judge Cruden erred in his judgment in Giant River.

This case, just like the case of Giant River is distinguishable from the Hillier case as relied on by your goodselves.  In Hillier, the requisition in issue related to the execution by a company/vendor in an Assignment and sale to director at an undervalue (as opposed to the unauthorised structures in our present case and in Giant River case).  Counsel for the Purchaser tried to argue that the said requisition went to the root of the title, and therefore a time limit on the lodging of requisition was of no effect.  This triggered the Court to consider the Giant River case, and concluded that where a vendor, 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.  But since the complaint regarding sale to director at an undervalue was obvious from the papers already delivered, the purchaser’s solicitors were under a duty to make requisition within the time stipulated.

In view of the above, your reliance on the decision in Hillier, and totally rejected the Giant River case is inappropriate.

We are of the view that our present case is similar to the Giant River case.  In the latter case, the Court held that the risk that the Government would take enforcement action in relation to the unauthorised structures was sufficient to satisfy the Court that the Vendor had failed to show good title to the Property.  The risk of enforcement action was not merely theoretical or fanciful but a practical and real blot on the Vendor’s title.  Further, a requisition going to the root of the title, namely unauthorised structures both in Giant River case and our present case, will not be excluded by a condition purporting to limit the time for making the requisition.

As regards the 3rd paragraph of your said letter, we have dealt with this respect in the 4th paragraph of our previous letter to you dated 19th January 1998.

Lastly, your client denied that the steel frame was erected by them.  We hereby reiterate that your client has adopted the same by taking no action to get rid of it.

In view of the above, your client still fails to show a good title to our client in satisfactorily answer to our said requisition.”

39.  AH responded by letter dated the same date reminding that completion should take place by 5:00 pm that day.

Forfeiture and cross-demand for repayment

40.  Completion did not take place by 5:00 pm on 23 January 1998 or at all.

41.  By letter dated 23 January 1998, AH informed EW that the vendor had forfeited the deposits and reserved the right to claim further damages.

42.  By letter dated 24 January 1998, EW responded by saying that the purchaser had accepted the vendor’s repudiation of the Agreement, demanded the repayment of the deposits in the sum of $4.65 million and damages.

The vendor’s acquisition assignment

43.  The assignment of the Property to the vendor is dated 1 August 1997 and was registered in the Land Registry on 2 September 1997.

Date of issue of writ

44.  On 2 February 1998, the vendor issued the writ in this action against the purchaser.

Documents registered against the Property as incumbrance

45.  The Agreement was registered on 18 October 1997 as an incumbrance.

46.  On 7 March 1998, a “Memorandum of Lien” dated 4 March 1998 was registered as an incumbrance.  I have not been supplied with a copy of the “Memorandum of Lien”.

47.  On 25 October 2004, an Order dated 23 December 2003 made by the Building Authority purportedly under section 24(1) of the Buildings Ordinance, Cap. 123, was registered as an incumbrance.  The Order ordered the vendor to demolish “air-conditioner(s) supporting frame attached to the external wall at the rear” and to “reinstate the part(s) of the building so affected by the building works in accordance with the plans approved by the Building Authority”.

The vendor’s obligation

48.  In Mexon Holdings Ltd v Silver Bay International Ltd (2000) 3 HKCFAR 115, the purchaser queried the architect’s certificate on the partitioning of the 33/F some 5 months after the contractual 7-day period had expired.  The purchaser asserted that the premises contravened Building (Planning) Regulations 41(1), Cap. 123.  The Court of Final Appeal started by considering the vendor’s obligation to show a good title (see pp. 114 – 115).

“The vendor’s obligation under cl.12 of the agreement was to show a good title to the property and ‘to furnish to the purchaser such attested or certified copies of any deeds or documents of title’ as might be necessary to complete such title.  This obligation was discharged in early June 1997 when the necessary documents were delivered to the purchaser’s solicitors.  There is no doubt that on the face of those documents the vendor had shown a good title.”

49.  In this case, the vendor’s obligation under clause 9 of the Agreement was to show a good title to the Property and to furnish to the purchaser such certified copies of any deeds or documents of title as may be necessary to complete the chain of title. 

50.  More than 2 months had elapsed since PC’s letter dated 10 November 1997 and neither EW nor the purchaser responded to PC’s letter or raised any or any further concern about title.  If the documents supplied did not show a good title, the inherent probabilities are that the purchaser would have raised it by the time of the hearing, at the latest.  Mr John Hemmings told me that he had no query on whether the deeds and documents supplied showed on the face a good title. 

51.  I hold that the vendor had discharged its obligation under clause 9 by 10 November 1997 and that on the face of the documents delivered, the vendor had shown a good title.

Two hurdles for the purchaser

52.  In these circumstances, the purchaser had two hurdles to surmount (see Mexon at p. 115):-

“The purchaser, in the circumstances of this case, had two hurdles to surmount: (1) whether it had raised sufficient doubts concerning the vendor’s title, such that it could reasonably have said that the title which the vendor was proposing to convey on completion was not a good title; (2) whether the alleged ‘defect’ raised in the requisition was of such nature and extent that, in law, the time limit in cl.13 of the agreement could be disregarded, or be deemed to be inoperative.

Both points (1) and (2) above focus on the alleged breach of reg.41(1).  There was, unfortunately, not much elaboration of the point in Findlay J’s judgment.  What it boils down to is this: If, because of the way the 33rd floor had been partitioned, there was a real risk that some governmental agency such as the Building Authority or the Director of Fire Services might lawfully have intervened, resulting in the property being saddled with a substantial incumbrance, or causing the owner’s occupation and quiet enjoyment of the property to be substantially disturbed, then the first hurdle at any rate might well have been surmounted.  The question of equity’s intervention, to relieve the purchaser from the consequences of its own bargain, limiting the time for requisitions of title, might then have come into play.”

53.  In this case, both points (1) and (2) focus on the steel frame for supporting an air-conditioning cooling tower and the alleged breach of the then section 14 of the Buildings Ordinance and “clause 18” of the DMC. 

Whether 12 January Requisition went to title

54.  The structure (“the Structure”) complained of was:-

“a steel frame for supporting an A/C cooling tower being erected to the external wall at the rear of the captioned premises and projecting over the services lane”.

55.  The extensive rusting depicted on photographs said to be taken on 3 January 1998 shows that it is more probable than not that the Structure was erected before the vendor acquired the Property by assignment dated 1 August 1997.

56.  It was asserted that approval and consent was required under section 14 of the Buildings Ordinance, Cap. 123, and that:-

“the removal of these works and reinstatement to the original conditions would be enforced by the Building Authority who might recover such costs from the owner of the property”.  

57.  The purchaser went on to assert that:-

“without the production of any approval from the Building Authority, the illegal alteration and addition works unquestionably amount to an irremovable blot on the title of the said property”.

58.  Against such background, it is disappointing that neither the vendor nor the purchaser cited section 24 of the Buildings Ordinance nor made any submission on whether it was a matter which went to title at all, let alone the root of the title.

59.  The relevant statutory provisions were those in force during the period from 25 September 1997 to 23 January 1998.

60.  I raised the matter with counsel.  On 5 October 2006, Mr Kenneth CK Chow came back with limited assistance by showing me an extract from Issue 14 of the loose leaf edition of the Laws of Hong Kong on section 24.

61.  I consulted the 30 June 1997 BLIS version of section 24.  It provided as follows:-

“(1)   Where any building has been erected, or where any building works or street works have been or are being carried out in contravention of any of the provisions of this Ordinance the Building Authority may by order in writing require-

(a)     the demolition of the building, building works, or street works; or

(b)     (Repealed 43 of 1993 s. 6)

(c)     such alteration of the building, building works or street works as may be necessary to cause the same to comply with the provisions of this Ordinance, or otherwise to put an end to the contraventions thereof,

and in every case specify the time within which the demolition, alteration or work required by such order shall be commenced and the time within which the same shall be completed. (Amended 16 of 1966 s. 7; 43 of 1993 s. 6)

(2)     An order made under subsection (1) shall be served, where-

(a)     the building has been erected, on the owner thereof;

(b)     the building works, other than a building, have been completed, on the owner thereof;

(c)     the street works have been completed, on the frontagers; or

(d)     the building works or street works have not been completed, on the person for whom such works are being carried out or his agent.  (Replaced 43 of 1993 s. 6)

(3)     If an order made under subsection (1) is not complied with, the Building Authority may demolish or alter or cause to be demolished or altered such building, building works or street works. (Amended L.N. 283 of 1986; 43 of 1993 s. 6)

(4)     The cost of works carried out under subsection (3) may be recovered from the persons upon whom orders had been served under subsection (2); and where such an order had been served on frontagers the Building Authority shall apportion such cost-

(a)     in the case of private streets, according to the frontages of the premises owned by such frontagers; or

(b)     in the case of access roads, equally.

(5)     (Repealed 43 of 1993 s. 6)

(Replaced 44 of 1959 s. 10)”

62.  “Building works” is defined in section 2 as including:-

“any kind of building construction, site formation works, ground investigation in the scheduled areas, foundation works, repairs, demolition, alteration, addition and every kind of building operation, and includes drainage works (Amended 72 of 1980 s. 3; 41 of 1982 s. 2; 52 of 1990 s. 2)”.

63.  The proper interpretation of the Buildings Ordinance is a matter for me alone to decide.  Assuming that the Structure was erected in contravention of any of the provisions of the Buildings Ordinance, the Building Authority might make an order under section 24(1).  Section 24(2)(b) provided that service of the Order should be effected “on the owner thereof”.  In my judgment, that meant the owner of the completed building works, that is to say the owner of the Structure.  There is no statutory authority for the Building Authority to serve the section 24(1) order on any other person.  Section 24(4) provided that in the event of default in compliance with the section 24(1) order the Building Authority might recover the cost from the persons served under section 24(2). 

64.  There is no allegation that the vendor was the owner of the Structure.

65.  Even if the vendor were the owner of the Structure, it was the vendor who was liable to be served with the section 24(1) order and for costs of compliance.  The Structure was not included in the intended sale by the vendor to the purchaser as part of the furniture, fixture or fittings.  The external or outer wall of the Building on which the Structure was erected did not form part of the Property.  The purchaser was not, and would not on completion of the intended sale become, the owner of the Structure.  Plainly, the Building Authority had no authority to serve any section 24(1) order on the purchaser and no basis to recover any rectification cost from the purchaser. 

66.  Only documents which affect land may be registered and remain registered under the Land Registration Ordinance, Cap. 128, Anstalt Nybro v Hong Kong Resort Co. Ltd [1980] HKLR 76.  It is highly questionable whether any section 24(1) order which the Building Authority might then have made was registrable under the Ordinance.  The order was enforceable only against the persons served under section 24(2).

67.  In my judgment, the 12 January Requisition had nothing to do with title and the purchaser’s objection fails.

68.  The Order dated 23 December 2003 and its registration more than 10 months later on 25 October 2004 do not assist the purchaser.  These events took place long after the contractual completion date. 

69.  Furthermore, it is highly questionable whether the Building Authority had authority to make the Order and whether the Order was registrable as at the date of its registration.  As at 23 December 2003, i.e. the date of the Order, the Buildings (Amendment) Ordinance 2004 (Ordinance No. 15 of 2004) had not yet been enacted.  As at 25 October 2004, i.e. the date of registration, section 21 of Ordinance No. 15 of 2004 had not yet come into effect.

(a)     On 30 June 2004, Buildings (Amendment) Ordinance 2004 (Ordinance No. 15 of 2004) was enacted.

(b)    By Buildings (Amendment) Ordinance 2004 (15 of 2004) (Commencement) Notice 2004 dated 28 October 2004, 31 December 2004 was appointed as the date on which section 21 (among others) shall come into operation.

(c)     Section 21 of Ordinance No. 15 of 2004 amended section 24 of the principal Ordinance to read as follows (new provisions are shown in italics):-

“(1)   Where any building has been erected, or where any building works or street works have been or are being carried out in contravention of any of the provisions of this Ordinance the Building Authority may by order in writing require-

(a)     the demolition of the building, building works, or street works; or

(b)     (Repealed 43 of 1993 s. 6)

(c)     such alteration of the building, building works or street works as may be necessary to cause the same to comply with the provisions of this Ordinance, or otherwise to put an end to the contraventions thereof,

and in every case specify the time within which the demolition, alteration or work required by such order shall be commenced and the time within which the same shall be completed. (Amended 16 of 1966 s. 7; 43 of 1993 s. 6)

(2)     An order made under subsection (1) shall be served on-

(a)     in the case of a building or building works but subject to subsection (2A), the owner of the land or premises on which the building has been erected or on which the building works have been or are being carried out;

(b)     in the case of street works, the frontagers; and

(c)     in the case of building works the subject matter of which is a signboard ...       

(Replaced 15 of 2004 s. 21)

(2A)  Where the building or building works referred to in subsection (2)(a) is or are-

(a)     connected to land or premises (in this section referred to as ‘other land or premises’) other than the land or premises on which the building has been erected or on which the building works have been or are being carried out; and

(b)     occupied or used by the owner or occupier of that other land or premises,

subsection (2)(a) shall not apply and in such a case, an order made under subsection (1) in respect of the building or building works shall be served on the owner of that other land or premises. (Added 15 of 2004 s. 21)

(2B)  References in subsections (2)(a) and (2A) to building works do not include references to building works the subject matter of which is a signboard. (Added 15 of 2004 s. 21)

(2C)  The Building Authority may, upon the service of an order under subsection (2)(a), (b) or (c)(iii) or (2A), cause the order to be registered in the Land Registry against-

(a)     if the order has been served on the owner of any land or premises in accordance with subsection (2)(a) or (c)(iii), the land or premises;

(b)    if the order has been served on the frontagers in accordance with subsection (2)(b), the premises of the frontagers to which the street works relate; or

(c)     if the order has been served on the owner of other land or premises in accordance with subsection (2A), that other land or premises. (Added 15 of 2004 s. 21)

(3)     If an order made under subsection (1) is not complied with, the Building Authority may demolish or alter or cause to be demolished or altered such building, building works or street works. (Amended L.N. 283 of 1986; 43 of 1993 s. 6)

(4)     Subject to subsection (4A), the cost of any demolition or alteration under subsection (3) in relation to the building, building works or street works to which the order relates shall be recoverable from-

(a)     if the order had been served on the owner of any land or premises in accordance with subsection (2)(a) or (c)(iii), that owner;

(b)     if the order had been served on the frontagers in accordance with subsection (2)(b), those frontagers;

(c)     if the order had been served on a person in accordance with subsection (2)(c)(i) or (ii), that person; or

(d)     if the order had been served on the owner of other land or premises in accordance with subsection (2A), that owner. (Replaced 15 of 2004 s. 21)

(4A)  Where the order has been registered with the Land Registry in accordance with subsection (2C), the cost of any demolition or alteration under subsection (3) in relation to the building, building works or street works to which the order relates shall be recoverable from-

(a)     if the order had been served on the owner of any land or premises in accordance with subsection (2)(a) or (c)(iii), the person who, as at the date of completion of the demolition or alteration, is the owner of that land or premises;

(b)     if the order had been served on the frontagers in accordance with subsection (2)(b), the persons who, as at the date of completion of the demolition or alteration, are the frontagers to which the street works relate; or

(c)     if the order had been served on the owner of other land or premises in accordance with subsection (2A), the person who, as at the date of completion of the demolition or alteration, is the owner of that other land or premises. (Added 15 of 2004 s. 21)

(4B)  Where the cost of any demolition or alteration is recovered from frontagers under subsection (4) or (4A), the Building Authority shall apportion the cost ... (Added 15 of 2004 s. 21)

(4C)  A certificate purporting to be under the hand of the Building Authority and stating the date of completion of the demolition or alteration under subsection (3) shall be prima facie evidence of that fact. (Added 15 of 2004 s. 21)

(5)     (Repealed 43 of 1993 s. 6)”

70.  Whether Shop No. 6 would be deprived of air-conditioning is quite beside the point.  That was not the objection or complaint in the 12 January Requisition or the 14 January Requisition.  There is no allegation or evidence that, absent the Structure, Shop No. 6 would be deprived of air-conditioning.

Whether 14 January Requisition went to title

71.  The objection was that:-

“the erection of the said steel frame is undoubtedly in contravention of, apart from the provisions of the Building Ordinance, the said Clause 18 of the DMC.  This being the case, the manager of the Building shall take enforcement action against the registered owner of the said property”.

72.  There is no clause 18 of the DMC as such.  I assume that EW had Section IV Clause 18 in mind.

73.  The proper interpretation of the DMC is a matter solely for me.  My attention has not been drawn to any provision which empowers the Building manager to take enforcement action against the registered owner of the Property.  The powers of the manager are to remove the offending structure under Section V clause B(15) and to recover compliance cost from “ the person by whom such structure or other things as aforesaid was erected” under Section IV Clause 18.  The vendor is not the person by whom the Structure was erected.  More importantly, the purchaser is not the person by whom the Structure was erected.  Plainly, the manager had no authority to recover compliance cost from the purchaser.

74.  In my judgment, the 14 January Requisition had nothing to do with title and the purchaser’s objection fails.

Surmounting neither hurdle

75.  As neither requisition went to title, the purchaser had not raised any or any sufficient doubts concerning the vendor’s title, such that it could reasonably have said that the title which the vendor was proposing to convey on completion was not a good title.  The purchaser has not surmounted the first hurdle.

76.  Even if the purchaser could surmount the first hurdle, the next question is whether the alleged “defect” raised in the requisitions was of such nature and extent that, in law, the contractual time limit could be disregarded, or be deemed to be inoperative.

77.  To quote from Mexon again:-

“A good title does not mean a perfect title, free from every possible blemish.  Whenever a question like this arises, it must be approached from the stand-point of a willing purchaser and a willing vendor, both possessed of reasonably robust commonsense, both intending to see the transaction through to completion in terms of their own bargain.  If the purchaser, in truth, had a real concern over the way the 33rd floor had been partitioned in 1992, it could have written a letter to the Building Authority expressing its concern, upon the assumption that the Building Authority would act in a fair and reasonable manner.  The purchaser’s solicitors’ letter of 6 November said they noticed that the architect’s certificate did not specify that the partitioning did not ‘contravene the fire regulations’.  They did not say when they first noticed this fact.  The director who later on made an affirmation in support of the purchaser’s case did not in turn say when this matter had first come to his notice.  Assuming it was shortly before the letter of 6 November was written, (not necessarily a sound assumption), there was still ample time for the matter to be clarified with the Building Authority.  Instead, the purchaser chose to put forward a case based upon surmise and conjecture as to what the Building Authority might do because of the alleged ‘contravention of reg.41(1)’.  These are hardly the circumstances under which equity would go to the aid of an allegedly aggrieved party.

The Court of Appeal

The Court of Appeal proceeded on the basis that there was a ‘blot’ on the vendor’s title and that the Judge’s finding in that regard could not be disturbed.  For my part, that conclusion is highly questionable having regard to the circumstances as outlined earlier.  Be that as it may, the Court of Appeal went on to conclude that such ‘blot’ was, as Mayo JA puts it, ‘of a peripheral nature’ and that the vendor was justified in declining to entertain the requisition: It was months out of time.  In this regard the Court of Appeal is plainly correct.  Seven working days for the purchaser’s solicitors to scrutinize the title deeds and documents might have been an extremely short time.  But, in entering into the agreement, the parties were separately represented by solicitors.  The purchaser could have bargained for a longer time: completion was not to take place until eight months after the contract.  In principle, courts give effect to bargains freely made: Though, as was observed in Jumbo King Ltd v Faithful Properties Ltd & Others (1999) 2 HKCFAR 279 at p.294, there are undoubtedly cases in the books where a clause restricting inquiries into the vendor’s title has been held not to be a bar to relief when the purchaser discovered from other sources that the proffered title was worthless.  In the circumstances of this case any discussion of the juridical basis of such an approach would be wholly academic.  The so-called defect went nowhere near to the root of the vendor’s title.”  (per Litton PJ at p. 117-118)

“Although it could have asked the Building Authority what attitude he took and then adduced evidence of his response, the purchaser has chosen instead to invite the Court to in effect proceed by way of surmise as to what the Building Authority might do.  I doubt if that is a choice open to a purchaser who is out of time for raising requisitions and who asks the court in effect to relieve him of the ordinary contractual consequences of his lateness.  Nor does the purchaser’s difficulties end there.  It is not adequately explained why its requisition was as late as it was.  One cannot rule it out as a real possibility that the purchaser was watching the property market for a time before deciding to raise its requisition.

Whatever may be the basis and scope of the Court’s jurisdiction to entertain a late requisition it must at least be necessary for there to be a strong case in which the party invoking such jurisdiction has taken all practicable steps in his power to make the position as clear as possible for the Court.  That cannot be said to be the position in the present case.” (per Bokhary PJ at p. 119)

“Clause 13 of the agreement imposes fewer restrictions upon the purchaser than the equivalent considered by this Court in Jumbo King Ltd v Faithful Properties & Others (1999) 2 HKCFAR 279, [1999] 3 HKLRD 757.  Nevertheless, as was pointed out in argument by Lord Cooke NPJ, the disputed requisition was made long out of time and the burden rests upon the purchaser to justify it.” (per Mortimer NPJ at p. 119)

78.  The purchaser had not written to the Building Authority.

79.  AH contended in their letter dated 16 January 1998 that the existence of the steel frame was well known to the purchaser.  The purchaser did not dispute this contention.  By EW’s letter of 19 January 1998, EW argued that “mere knowledge on the part of our client of the existence of the alteration and additional works, namely the said steel frame with the A/C cooling tower, would not reduce your client’s obligation to prove good title to the property”.  The purchaser’s director, Chung Tsi Kuen chose to say nothing in his witness statement or his testimony about when the purchaser or he himself first acquired knowledge about the existence of the steel frame or any illegal structure.  On his own testimony, a surveyor of the bank found an illegal structure and the bank refused to give a loan; and he had also asked a surveyor to assess the value and his own surveyor also reported to him that there was something illegal.  This falls far short of making out a strong case in which the party invoking the court’s jurisdiction to entertain a late application has taken all practicable steps in his power to make the position as clear as possible for the Court.  These are hardly the circumstances under which equity would go to the aid of an allegedly aggrieved party. 

Conclusion on liability

80.  In my judgment, the vendor was entitled to forfeit 10% of the purchase price and to recover any actual loss in excess of the amount forfeited.

Quantum

81.  By Order dated 19 July 2006 (not late August 2006 as Mr Raymond Chung of Messrs Chung, Fong & Co. told me at a hearing on 19 September 2006), Deputy Judge Gill ordered that leave be granted to the vendor to file the valuation report prepared by Chesterton Petty Limited dated 18 July 1998.

82.  The parties agreed that the documents in the agreed trial bundle:-

“(a)    are deemed to be authentic; and

(b)     are agreed (subject to any submissions as to weight) for inclusion and as evidence of their contents.”

83.  The valuation report is included in the agreed trial bundle.

84.  It was prepared by one Alex Hamilton-Meikle, then valuation manager of Chesterton Petty Limited, “for and on behalf of” Chesterton Petty Limited.  In her report, she expressed the opinion that a reasonable period to dispose of the Property would be 6 months from the date of default and she concluded that the open market capital value of the Property as at 23 January 1998 (contractual completion date) was $20 million and as at 6 July 1998 was $14.5 million.

85.  Mr Kenneth CK Chow did not call the maker of the document to give evidence.  Instead, he called one Wan Wai Ming to give evidence. 

86.  Wan Wai Ming’s evidence in chief was that the maker lad left the employ of Chesterton Petty Limited and that he acted “on behalf of Chesterton Petty Limited to give expert evidence in the court”; that he concurred with the approach of the maker; that he concurred with the figures; that he agreed with the “Valuation Conclusions” on page 7 of the report; that he agreed with the valuation conclusion on page 12 under the heading “Time”; and that he agreed with the conclusion on pp. 19 & 20.

87.   Under cross-examination, he said that he had “recently” visited the Property as well as “reviewed” the report; admitted that he did not go there in 1997 or 1998; admitted that he did not compile any part of the report; admitted that he did not actually check for example whether the prices and the saleable areas referred to on p. 14 were accurate and that he “just arithmetically checked” the figures; and agreed that he was making a lot of assumptions himself in relation to the report, assumption that information that it contains and was gathered by somebody else was correct when he did not know whether it was.

88.   In re-examination, he said that his “firm” would accept as correct if a representative of his “firm” had compiled the formal report containing data by way of figures.

89.  Wan Wai Ming’s approach is seriously and fundamentally flawed.  He knew nothing about the location or neighbourhood of the Property as at the dates for valuation.  He did not know whether the transactions chosen as comparables were comparables.  He did not check the accuracy of the data in respect of the transactions chosen as comparables.  Unless he knew about both the Property and a comparable, he would not be able to form an informed view on the adjustment, if any, required.  He did not know whether any transaction not included should have been included as a comparable, having done nothing, or nothing significantly, more than “reviewing” the report and “just arithmetically” checking the figures.  I attach no weight to his evidence as an expert witness.

90.  I asked counsel whether any hearsay notice and counter notice in respect of the report had been served. 

91.  Mr Kenneth CK Chow told me that a hearsay notice dated 14 March 2005 had been served and that there was no counter notice. 

92.  The hearsay notice dated 14 March 2005 reads as follows:-

“TAKE  NOTICE  that the Plaintiff desires to adduce in evidence at the trial of this action, statement admissible in evidence by virtue of Section 47 and Section 49 of the Evidence Ordinance and Order 38 of the Rules of the High Court.  The statement is contained in the following document.

Description

...

25     Valuation Report prepared by Chesterton Petty Limited 18/07/98

...

AND the Defendant is required, should it desires (sic) the maker of the said statement to give evidence in person, to serve a Counter Notice requiring the same upon the Plaintiff’s Solicitors within twenty-one days of the service of this Notice upon it.”

93.  Mr John Hemmings confirmed that the hearsay notice had been served and that no counter notice had been served.

94.  This action was commenced on 2 February 1998.

95.  Evidence (Amendment) Ordinance 1999, Ordinance No. 2 of 1999, was enacted on 21 January 1999.  Section 7 provides that:-

“The principal Ordinance, and the other Ordinances (including subsidiary legislation) amended by this Ordinance, shall apply to civil proceedings which have commenced before the commencement of this section as if sections 2 to 6 and the Schedule had never been enacted”.

By virtue of Evidence (Amendment) Ordinance 1999 (2 of 1999) (Commencement) Notice 1999, Ordinance No. 2 of 1999 came into effect on 1 July 1999.

96.  Neither counsel mentioned or made any submission on the old hearsay regime which applies to this action.

97.  Mr John Hemmings told me that he accepted that the report was admissible and submitted that it was a question as to weight.  He complained that he could not cross-examine the maker of the report as she had not been called.

98.  I do not accept this submission.  If the purchaser had wished to question Alex Hamilton-Meikle, it could have responded to the hearsay notice by a counter notice requiring the vendor to call her.  The purchaser had three and a half years since 14 March 2005 to adduce its own valuation evidence if it had intended to challenge the vendor’s valuation evidence.  It had two months since the Order of Deputy Judge Gill dated 19 July 2006 to adduce its own valuation evidence.  It has not adduced any valuation evidence and has not sought leave to produce any valuation report.  The 2 reports which Mr Raymond Chung sought leave on 19 September 2006 to adduce contained no valuation evidence.  Mr Raymond Chung said on that occasion that the presence of dangerous and illegal structures affected the value.  I must confess I do not understand why the purchaser would wish to put forward a value lower than the values in the vendor’s valuation report – the lower the value, the greater the damage suffered by the vendor by reason of the purchaser’s breach.

99.  I see no reason not to, and I, accept the valuation by the maker.

100.  The period from 23 January 1998, the contractual date of completion and the date of default, to 6 July 1998 is less than 6 months.  In my judgment, it is a reasonable period to sell the Property, given the registrations of the Agreement and the memorandum of lien.

101.  The difference between the contractual price ($31 million) and the open market capital value as at 6 July 1998 ($14.5 million) is $16.5 million.  It exceeds the 10% deposit forfeited ($3.1 million) by $13.4 million.  Giving credit for the further deposit of $1.55 million, the loss is $11.85 million.

Agreements on remedies

102.  Both the vendor and purchaser agreed that if I should find in favour of the vendor, I should order that the registrations of the Agreement and the memorandum of lien be vacated.

103.  They also agreed that costs should follow the event.

Orders

104.  The Order I make is that:-

(a)     A declaration that the defendant purchaser had wrongfully repudiated the Agreement by failing to complete the sale and purchase of the Property in accordance with the terms of the Agreement;

(b)    A declaration that the plaintiff vendor had satisfactorily and properly answered all requisitions or objections in respect of which the purchaser was entitled to raise concerning the title of the Property;

(c)     A declaration that the plaintiff had shown good title to the Property;

(d)    A declaration that the defendant had accepted the plaintiff’s title to the Property;

(e)     A declaration that the defendant was not entitled to raise the 12 January Requisition and the 14 January Requisition (collectively the “purported requisitions”);

(f)     A declaration that the purported requisitions were raised too late or were not raised within a reasonable time after the Agreement or before the date scheduled for completion;

(g)     A declaration that in any event the purported requisitions (or either of them) were entirely without substance and were not requisitions properly raised by the defendant in respect of the title to the Property;

(h)     A declaration that the plaintiff was entitled to, and had validly and effectively rescinded the Agreement by its letter dated 23 January 1998;

(i)      A declaration that the plaintiff was entitled to forfeit the deposits money paid by the defendant to the extent of 10% of the purchase price pursuant to clause 19 of the Agreement;

(j)      An Order that the defendant do pay the plaintiff damages assessed at $11,850,000, credit having been given for $1,550,000 further deposit paid by the defendant and retained by the plaintiff, with interest on $11,850,000 at the judgment rate(s) from the date of issue of the writ to the date of judgment;

(k)     An Order that the defendant’s Counterclaim be dismissed;

(l)      An Order that the registration in the Land Register in the Land Registry on 18 October 1997 of the Agreement by Memorial No. UB7299306 be vacated;

(m)    An Order that the registration in the Land Register in the Land Registry on 7 March 1998 of the Memorandum of Lien dated 4 March 1998 by Memorial No. UB742582 be vacated; and

(n)     An Order that the defendant do pay the plaintiff its costs of the Action and of the Counterclaim to be taxed if not agreed.