BMC INTERNATIONAL LTD v. STAR WIN CO LTD

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

MISCELLANEOUS PROCEEDINGS

-----------------

-----------------

JUDGMENT

-----------------

1. This is a Vendor and Purchaser Summons. The Plaintiff seeks declarations that the Defendant, the vendor, has failed to answer satisfactorily requisitions raised by letter dated the 15th August in respect of title to the property and that good title to the property has not been shown in accordance with the agreement between the Plaintiff and the Defendant dated the 28th July 1995.

2. The agreement of the 28th July provides for the sale and purchase of the property registered in Tai Po Land Registry as Lot 148 in Demarcation District No. 167.

3. The material part of the agreement as regards title reads as follows:-

          "6. TITLE

4. In addition there is no dispute between the parties that good title must be shown because the conditions in Part A of the Second Schedule of the Conveyancing and Property Ordinance have been incorporated under the terms of clause 8.1 of the agreement.

The facts

5. The Plaintiffs complaint is that the Defendant has not provided a copy of the Crown Lease. It points to the provision in Section 13(1) of the Conveyancing and Property Ordinance which specifically provides that unless the contrary intention is shown a purchaser shall be entitled to require from the vendor as proof of title to the land production of the Crown lease relating to the land sold.

6. The Defendant's contention was that a contrary intention was shown by the agreement. The Defendant's argument was that the words Crown Grant appearing in clause 6.1 of the agreement could be either an event or an event coupled with a document. In my view that cannot be correct. I consider that Crown Grant in clause 6.1 of the agreement refers to a document. It might be arguable that it is possible to construe those words as they appear in clause 7 as being an event but at best that is in my view equivocal. Those same words as they appear in the Second Schedule can only refer to a document.

7. The Defendant's argument that clause 6.1, in so far as it refers to Section 13(1)(a) of the Conveyancing and Property Ordinance, excludes Section 13(1) is in my view untenable. If one sought to construe purely the words of sub-subsection (a) without the opening words of Section 13(1), the provision would be close to meaningless.

8. The provisions of clause 6.2 of the agreement are in my view in the first place additional requirements to those in clause 6.1. The Vendor states first of all that the Property is held under the Conditions of Sale referred to in C.S.O. File No. 5914/09 kept in the Public Records Office. Then it undertakes to produce those Conditions of Sale. There is no doubt that the Defendant has produced what is in the Public Records Office under that file. What it shows is that there was a private sale of the lot in question in September 1909. It shows the property, the parties and the purchase price. It is a record from the Assistant Land Officer to the Land Officer informing him of those facts. Those documents do not indicate whether there was a lease or what the terms and covenants of the lease were. The application which preceded that return is slightly more specific as to rent. As was pointed out, under the heading Period of years recommended it is stated 75 years. Although it is true it does not state in that document when the period of years is to run from, I consider, that in view of the standard practice of issuing leases from the 1st July 1898, for the purposes of argument, one could say that in looking at Government records of this nature that was to be implied in the document.

9. The Defendant seeks to say that the sale of such land in 1909 was governed by G.N. 365 of 1906. It may well have been. However that Notice itself commences with the words "It is hereby notified that, until further notice and unless otherwise stated the following general Conditions of Sale will be applicable to all sales of land in the New Territories..." My emphasis. That therefore begs the question. In any event, if the Conditions of Sale are in the G.N. 365 it seems difficult to see that it is correct to say that they are referred to in the C.S.O. File.

10. In my view the simple point is that the Agreement that was signed provided that the Defendant should show title from the Crown Grant. Far from excluding the requirement of Section 13(1) of the Conveyancing and Property Ordinance it, in my view, if anything confirms the requirement for the production of the Crown Lease. Far from following the suggestion of Barnett J. in Gatewood Ltd. v Silver Noble Investment Ltd. [1993] 1 HKLR 248 @ 252 that the vendor should include in the conditions of sale a provision that he not be required to produce the Crown lease, the vendor has in this instance if anything done the reverse.

11. Neither in my view can the vendor rely on the production of a statutory declaration explaining (if it could) why the original Crown lease, or contract incorporating the Conditions of Sale was not available as referred to by Godfrey. J. in Gold Check Investments Ltd. v Star Investment Ltd. M.P. 592 of 1992 at page 5. In the first place, the Statutory Declaration which has been tendered seems to me to prove nothing save hearsay, at best, speculation as to conveyancing practice. In the second place, the conditions have not been produced.

12. In the circumstances, although the property in question may be safe, to the extent that the vendor may have shown a marketable title or a possessory title, the title cannot be considered good in the sense used in conveyancing practice.

13. In the circumstances, I make an order in terms of paragraphs 1,2,3 and 4 of the Originating Summons and I make an order nisi that the Plaintiff do have its costs of the summons to be taxed, if not agreed.