CREATIVE OWL INVESTMENT CO LTD v. JIN KANG

DCCJ 3396/2011

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 3396 OF 2011

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BETWEEN

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DECISION

Introduction

1.  On 27^th May 2011, the Defendant as the vendor entered into a preliminary agreement with the Plaintiff as the purchaser to sell her property known as Flat G, 28^th Floor, Block 2, Coastal Skyline, 12 Tung Chung Waterfront Road, Tung Chung, Lantau Island at $3.72 million. A formal Sale and Purchase Agreement was later signed by them on 7^th June 2011 (“SP Agreement”). Completion was to take place on 6^th July 2011 (“Completion Date”).

2.  The transaction did not go through completion because the Plaintiff alleged that the Defendant failed to prove and give good title to the Property. It commences this action to claim for refund of deposits and damages of the breach of the SP Agreement.

3.  Now before me is an application taken out by the Plaintiff for summary judgment against the Defendant under Order 14 rule 1 of the Rules of the District Court (“RDC”).

The Requisitions

4.  A number of requisitions were raised by the Plaintiff after the signing of the SP Agreement. Of concern to this summary judgment application is the discrepancies in the identification documents and the signature of the Defendant in 3 documents. The Plaintiff has also raised requisition on the due execution of a power of attorney executed by the Defendant.

5.  The Defendant was at all material times a PRC citizen.

6.  By an Assignment dated 11^th June 2009 (“Last Assignment”), the Defendant purchased the Property from the then owner. In the execution clause of the Last Assignment, the Defendant was described to be the holder of The People’s Republic of China Hong Kong and Macau Entry Permit No. W151xxxxx. She signed her name in English in combination of capital and small letters, ie Jin Kang.

7.  However, in the SP Agreement, the Defendant was described as the holder of The People’s Republic of China Hong Kong and Macau Entry Permit No. W486yyyyy. She signed her name in English capital letters, ie JIN KANG.

8.  On 11^th June 2011, the Plaintiff’s solicitors wrote to the Defendant’s solicitors pointing out the discrepancy in signature and invited the Defendant to sign again on the SP Agreement with reference to her signature in the Last Assignment. Surprisingly, the Defendant’s solicitors did not accede to this request of the Plaintiff.

9.  On 21^st June 2011, the Plaintiff’s solicitors, by way of raising formal requisitions, asked the Defendant to clarify the discrepancy in the signature and to adopt the signature in the Last Assignment [Jin Kang] in the subsequent assignment.

10.  The Defendant’s solicitors replied on 28^th June 2011 that the subsequent assignment on completion was going to sign by a lawful attorney appointed by the Defendant under a power of attorney. For that, a copy Power of Attorney dated 3^rd June 2011 (“Original PA”) was enclosed to the Plaintiff’s solicitors. In the First Schedule of the Original PA, the Defendant was said to be holding a Hong Kong Identity Card No. W151xxxxx. But at the execution clause, the Defendant was described to have been identified by production of The People’s Republic of China Hong Kong and Macau Entry Permit No. W486yyyyy and The People’s Republic of China Identity Card No. 110zzzzzzzzzzzzzzz. Further, two signatures were allegedly subscribed by the Defendant in the original PA, namely JIN KANG [same as the SP Agreement] and 金康. Yet, none of the two signatures was the same as that in the Last Assignment [Jin Kang].

11.  This attracted the Plaintiff’s solicitors to raise further requisitions by their letter of 29^th June 2011. They pointed out that there was a substantial discrepancy in the identification documents and the signature of the Defendant among the SP Agreement, the Original PA and the Last Assignment. They therefore did not accept the Original PA. They demanded (1) for a statutory declaration by the Defendant to clarify and explain the discrepancies; and (2) the Defendant’s solicitors to confirm if the Defendant would come to Hong Kong to execute the assignment, or execute another power of attorney.

12.  On 4^th July 2011, the Defendant’s solicitors wrote back and enclosed a power of attorney to the Plaintiff’s solicitors. This power of attorney was in fact the Original PA but with the following amendment/addition:

(1)   a new page 5 was inserted to replace the old page 5 to provide details of the current and previous identification documents of the Defendant that were referred to in the Last Assignment and the SP Agreement;

(2)   an additional signature of the Defendant that resembled the one in the Last Assignment [Jin Kang], was appended on top of the two signatures already subscribed in the Original PA.

For convenience, I shall call this power of attorney the “Amended PA”.

13.  The Plaintiff’s solicitors were not satisfied with the replies and the Amended PA. They demanded for a statutory declaration as well as a properly executed and witnessed power of attorney.

14.  The Defendant did not agree. While they maintained their view that a statutory declaration was unnecessary and that a power of attorney needed not be attested, they nevertheless, on 6^th July 2011 [the Completion Date] at 11.46 am, faxed a letter to the Plaintiff’s solicitors (“Defendant’s 6^th July Letter”). In the letter, they enclosed copies extract of the identification documents mentioned in the Amended PA, each bearing a photograph of the Defendant and showing the same date of birth of the Defendant for the Plaintiff’s reference.

15.  At 16.35 hours of the same day, the Plaintiff sent by hand a letter in reply to the Defendant’s 6^th July Letter. They were not satisfied with the further identification documents sent by the Defendant. They reiterated the necessity for a statutory declaration and demanded proof of due execution of the Amended PA.

16.  It cannot be in dispute that the Defendant’s solicitors made no further reply to this Plaintiff’s letter of 6^th July, nor did the Plaintiff tendered any draft assignment or balance of the purchase price to the Defendant on the Completion Date.

17.  The Plaintiff’s solicitors wrote on the next day, ie 7^th July 2011, that since the Defendant failed to provide satisfactory answers to their requisitions before completion, she was in breach of the SP Agreement. The Plaintiff hereby rescinded the same and demanded return of the deposits of $372,000 already paid. Needless to say, the Defendant did not agree but alleged that it was the Plaintiff who was in breach of the SP Agreement.

Applicable Principles

18.  It is trite law that in order to resist summary judgment application under Order 14, the defendant must show that there are triable issues.

19.  The court has to determine two questions: firstly, whether what the defendant says is believable as opposed to whether its version of events is to be believed; and secondly, if it is, whether what the defendant says amounts to an arguable defence in law. In determining the first question, the court should not embark on a mini trial of the action on affidavit evidence.  The burden of proof is not a heavy one.  It is not the function of the court at this stage to assess if a defence will succeed at trial.  Insofar as the second question is concerned, summary judgment will not be granted if there are arguable defences or serious disputes of law: see Schindler Lifts (Hong Kong) Ltd. v. Ocean Joy Investments Ltd. [2003] 1 HKC 438, per Ma J (as he then was).

Discussion

20.  There is no dispute between parties herein that the Defendant as the vendor in this transaction has the separate duty to show good title before completion and to give good title on completion. It is also trite law that the standard of a vendor to prove that he can convey and transfer a good title is one beyond all reasonable doubt: MEPC Ltd v Christian-Edwards [1981] AC 205.

21.  Mr. William Lee for the Plaintiff submits to me that given the difference in signature of the Defendant in the Last Assignment and the SP Agreement, the Plaintiff has to be sure beyond all reasonable doubt if the two signatures belong to the same person [the Defendant]. He refers me to the decisions of Ma Chun Man v Yung Yu Yuen & Co [1979] HKLR 26 and Liu Moon Ping v Wong Kowk Tung & others [2006] 1 HKLRD 358. He said that the provision of the Defendant’s copy extracts of identification documents in the Defendant’s 6^th July Letter was belated and the Plaintiff was deprived of a reasonable time to consider the same.

22.  Further, Mr. Lee says that since the Defendant purported to sign the subsequent assignment by her attorney, the Plaintiff is entitled to be sure beyond all reasonable doubt that the Amended PA is validly executed. He argues that the Amended PA is not a satisfactory answer or sufficient evidence to prove the Defendant’s ability to convey good title to the Plaintiff beyond all reasonable doubt, because the additional signature of “Jin Kang” was not appended on the date now appeared in the Amended PA, namely 3^rd June 2011; and the said additional signature was in fact not witnessed by the one Tony Chan who was said to have witnessed the first two signatures of “JIN KANG” and “金康”. He therefore concludes that a statutory declaration was required and a power of attorney should be validly re-executed in the circumstance.

23.  It is pertinent for me to say that Mr. H. Y. Lee for the Defendant concedes that the additional signature of “Jin Kang” was not appended on the date which the Amended PA was dated, namely 3^rd June 2011. The additional signature was appended sometime between 3^rd June and 4^th July 2011. Mr. Lee also concedes that the said additional signature was not witnessed by Tony Chan.

24.  However, Mr. Lee submits that it is the defence case that the requisition on identity has been satisfactory answered by the Defendant. By the Defendant’s 6^th July Letter, the Defendant provided copy extracts of all relevant identification documents mentioned in the Last Assignment, the SP Agreement and the Amended PA, each bearing a photograph and same date of birth of the Defendant. These copies, as Mr. Lee puts it, removed any reasonable doubt that the Plaintiff might reasonably have on the identity of the Defendant.

25.  On the due execution of the Amended PA, Mr. Lee relies on the common law position that the validity of an execution does not depend on attestation: Emmet and Farrand on Title, Vol 2, §20.015. This applies to power of attorney under seal: Champhon Industrial Ltd v Hight Projects Industrial Ltd, HCMP 3631/1992.

26.  Mr. Lee submits that the Defendant has raised triable issues before this Court, such as whether the Defendant has proven a good title by sufficiently answered the Plaintiff’s requisition on the identity of the Defendant; whether the provision of the Defendant’s copies of identification documents in the Defendant’s 6^th July Letter was given within a reasonable time in the circumstances. 

27.  I agree with Mr. Lee for the Plaintiff that given the prima facie differences in the identification documents and signature of the Defendant in the Last Assignment and the SP Agreement, one of the issues of this action is: whether the two signatures in the Last Assignment and the SP Agreement belonged to the same person, ie the Defendant. However, one cannot deny that both signatures were said to be subscribed before the same witness, namely Tony Chan of the Defendant’s solicitors. In Lee Yeung Chun v Ng Choi Chun [1990] 1 HKLR 468, Godfrey J (as he then was) read 2 assignments (one of 1976 and the other of 1987) before him. He noted that the signature of one Joe Edward Fook was different in these 2 assignments (one assignment signing as “Joe E. Fook” whereas the other assignment signing as “Joe Edward Fook”). The passport numbers of Joe Edward Fook as appeared in the 2 assignments were also different. The learned Judge held that nothing in the discrepancy between the passport numbers or the signatures raises any reasonable doubt about due execution of these assignments.

28.  I take the view that that the case quoted above, together with the Defendant’s 6^th July Letter, does raise at the very least an arguable issue as to whether the Defendant has satisfactorily answered the requisition on the identity of the Defendant.

29.  It is, however, on the due execution of the Amended PA that the Plaintiff complains most about. Mr. Lee for the Plaintiff is keen in saying that the Amended PA was not duly executed in form and manner (see §22 above).

30.  While I think I can appreciate the frustration of the Plaintiff’s solicitors when they received the Amended PA, whether the alleged “irregular or unusual” circumstances of the additional signature of the Defendant and the replacement of page 5 of the Original PA amounts to an “invalid” execution of the Amended PA and/or a blot on the title of the property in question remains, in my view, an issue to be decided by the trial judge after hearing full evidence and argument on the law.

31.  This is especially so when the common law position is that “no attestation is required in order to prove due execution” : see Champhon Industrial Ltd (supra).

32.  In fact, I also note from Hong Kong Conveyancing Law and Practice, Vol 1(A), Part VI at §151 on p. VI 63 that it is a rule of practice, but not a legal requirement, in Hong Kong that conveyancing documents (not only power of attorney under seal) must be attested.

33.  Further, I do not think parties would seriously dispute that the additional signature of “Jin Kang” in the Amended PA resembles very much with the signature in the Last Assignment.

34.  In the circumstances, I cannot say at this stage that the Defendant does not have an arguable defence that the Amended PA was duly executed.

35.  In saying so, I remind myself of the comment made by Godfrey JA (as he then was) when he dealt with an Order 14 appeal application relating to a conveyancing transaction in Man Earn Ltd v Wing Ting Fong [1996] 1 HKC 225 at p227-228:

“Since the policy which underlies the summary procedure is to prevent the defendant from delaying the plaintiff from obtaining judgment in a case in which the defendant has clearly no defence to the plaintiff’s claim, the procedure should be invoked only where this condition is satisfied.

….

Unless it is obvious that the defence put forward by the defendant is “frivolous and practically moonshine, Ord. 14 ought not to be applied” : see Codd v. Delap (1905) 92 LT 510, per Lord Lindley, at p.511.”

Costs

36.  I have invited parties to give submission on costs in the hearing as well. Mr. Lee for the Plaintiff says that if I am minded to give leave to the Defendant to defend, the proper costs order should be in the cause but no certificate for Counsel should be granted for lack of complexity in this case.

37.  Mr. Lee for the Defendant, however, submits that in this scenario, the Defendant should be granted costs from the date of service of the Defendant’s affirmation on the Plaintiff, namely 4^th November 2011; the costs incurred before the service should be in the cause. This is because by the time when the affirmation of the Defendant was served on the Plaintiff, the Plaintiff became aware of the intended defence of the Defendant and could have then decided not to proceed with this summary judgment application. On Counsel’s certificate, Mr. Lee argues that an Order 14 hearing is a matter of life and death to a defendant and Counsel’s service is thus justified.

38.  In reply, Mr. Lee for the Plaintiff submits that according to Order 14 rule 7 (1) of the RDC, the court may dismiss a plaintiff’s Order 14 summons with costs in two situations only; and the Plaintiff does not fall within either.

39.  I agree with Mr. Lee for the Plaintiff that his client does not fall within any of the ambit of Order 14 rule 7 (1) of the RDC. However, I am not with him that Counsel’s certificate should not be granted for this hearing. I rather accept the submission of Mr. Lee for the Defendant on this point.

Conclusion

40.  Due to aforesaid reasons, I grant unconditional leave to the Defendant to defend. I will make an order nisi that the costs of this summons be in the cause, with certificate for Counsel, to be taxed if not agreed.

41.  The parties should comply with Order 25 rule 1 of the RDC within 21 days from the date of the handing down of this decision of mine to seek further case management directions before a Master.

42.  The hearing bundle is to return to the Plaintiff for re-use. Only the content pages should be kept in the Court file for records purposes.