CHU WING YIP v. LEUNG SIU YUK

1995, No.MP2126

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

MISCELLANEOUS PROCEEDINGS

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J U D G M E N T

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1. This is a Vendor and Purchaser Summons issued by the Plaintiff who was the Purchaser under an agreement for the sale and purchase of the property described in the Agreement. Under the Agreement, completion was due to take place on or before 5 p.m. on 24 July 1995, time being of the essence. At 5:17 p.m., the Purchaser's solicitors gave notice to the Vendor's solicitors demanding the return of the deposit. At 5:18 p.m., the Vendor's solicitors gave notice that the Vendor had forfeited the deposit paid under the Agreement.

2. The issues are :-

(i) whether the Vendor had fulfilled her contractual obligations in respect of making or giving title to the property; and if not, whether

(ii) the Purchaser was estopped from insisting on having a certified copy of the Amended Probate before completion.

The facts

3. The Defendant's late husband was the owner of the property known as Flat B1 on the 24th Floor of Ming Fai Building and the roof thereof, 20-36 Wharf Road, Hong Kong. He died on 13 April 1994 and under his will, the Defendant was appointed the sole executrix and trustee. She was also the sole beneficiary of his residuary estate. Probate of the will was granted to the Defendant on 7 April 1995 under Grant No.1946 of 1995. The Schedule of Property attached to the Probate described the property as 47/9,600th parts or shares of and in the R.P.s of each of Inland Lots Nos.7444 to 7452 (Flat B1, 24th Floor, Ming Fai Building, 20-36 Wharf Road, Hong Kong). It omitted any reference to the roof.

4. By an Assent dated 17 May 1995, the Defendant as sole executrix assented to the vesting in herself absolutely of the property including the roof. By letter dated 26 May 1995, which was several days prior to the execution of the Agreement, the Purchaser's solicitors drew attention to the fact that the Schedule of Property annexed to the Probate had failed to include any reference to the roof. They wrote to the solicitors for the Defendant who was the Vendor to procure to have the Probate amended and re-registered. On 21 June 1995, the Purchaser's solicitors repeated their request that the Probate be amended as requested and repeated the same request by way of requisition and also raised a matter concerning the assent. On 26 June 1995, the Vendor's solicitors replied to the requisition concerning the amended Probate as follows :

"......... We undertake to send you the amended Probate No.1946 of 1995 upon the same has been received by us from Land Registry."

They also responded to the point taken by the Purchaser's solicitors regarding the assent. On 28 June 1995, the Purchaser's solicitors replied to the letter of 26 June 1995 but limited its response to the assent. It made no reference whatsoever to the undertaking regarding the amended Probate.

5. It was not until 17 July 1995 that the Probate that had been lodged with the Land Registry on 2 May 1995 was collected by the Vendor's solicitors. On the same day, they wrote to the Estate Duty Office seeking an amendment to the Schedule by the inclusion of a reference to the roof of the property. Pausing here, there is evidence filed on behalf of the Vendor (which was not challenged) that it normally takes the Land Registry more than two months to have a document registered or "stopped" from registration after delivery. Within 3 days, the Schedule was duly amended by the Estate Duty Office. A copy of the amended Schedule was forwarded to the Purchaser on 20 July 1995, the Vendor's solicitors further stating that the Estate Duty Office had lodged the original Probate and the amended Schedule with the Probate Registry for approval and repeating their undertaking to send the original Probate duly amended after the same had been received by them from the Probate Registry.

6. This prompted a response from the Purchaser's solicitors on 21 July 1995, insisting that the amended Probate be produced by the time of completion.

Title

7. It is common ground that the Vendor has the twin duty of both (i) showing the title agreed to be given and (ii) giving or making good title. As to the first part of the obligation which is to show a good title, it was accepted that good title was shown at the latest when a copy of the amended Schedule from the Estate Duty Office was produced on 20 July 1995. As regards the second part of the obligation, namely to make a good title, counsel for the Vendor appeared to accept that all things being equal, the Purchaser was entitled to have a certified copy of the original amended Probate, being the root of title in this case.

8. It was initially submitted by counsel for the Vendor that the Schedule to the Probate is only relevant for estate duty purposes. Nevertheless, it was accepted that the Schedule did have to describe the property. As to the description, it was submitted that a reference to 47/9,600th shares or parts in the land was all that was necessary, the exclusive right to use the roof being purely a matter of licence between the co-owners which does not affect title.

9. I do not consider that exclusive user can be categorised as an "incidental" right. As counsel for the Purchaser submitted, in determining title, one needs to go back to the subject matter of the sale which is not only the undivided shares in the land but also the right to exclusive possession of the particular flat and the roof.

10. I find that a certified copy of the amended Probate is a document that ought to have been delivered by the Vendor at completion. As it was not, the Vendor was in breach of her obligation to give or make good title to the property.

Estoppel

11. The original Probate was delivered to the Land Registry for registration on 2 May 1995. According to Miss Irene Wong, the solicitor handling the transaction for the Vendor, the solicitors for the Purchaser must have made a land search before the Purchaser entered into the Agreement and must have known that the original Probate was lodged with the Land Registry. In her affirmation, she said that there was no indication at all from the Purchaser's solicitors that they were not prepared to accept the undertaking of the Vendor's solicitors made on 26 June 1995. At paragraph 17 of her affirmation, she stated that had the Purchaser's solicitors responded to her letter dated 26 June 1995 to the effect that they were not prepared to accept her firm's undertaking, she would have acted differently. Rather than letting matters take their natural course, she would have used her best endeavours to obtain the original Probate from the Land Registry and submit it to the Estate Duty Office and the Probate Registry for amendment. Relying on the silence of the Purchaser's solicitors, she did not so act and on that basis, she submitted that the Purchaser ought to be estopped from insisting on having the original amended Probate before completion.

12. Counsel for the Vendor submitted that the only right enquiry was whether Miss Wong was acting reasonably in assuming that her undertaking (made in the letter dated 26 June 1995) had been accepted by the Purchaser. Put differently, was the Purchaser acting unconscionably in insisting on having the amended Probate by the time and date of completion?

13. Five days prior to the Agreement, the Purchaser had already pointed out the need for an amended Probate. At that time, the Vendor's solicitors, having lodged the Probate for registration at the Land Registry some three weeks earlier, were fully cognizant of the length of time this process normally takes at the Land Registry. Yet, no specific provision was inserted by them into the contract subsequently entered into to cater for any delay that might arise. So, it became part of the contractual obligations undertaken by the Vendor that a certified copy of the amended Probate had to be delivered at the time of completion. It can hardly be suggested that the Purchaser was in any way acting unconscionably in entering into the Agreement which did not cater for any possible delay when the Vendor and those advising her did not see fit to include such a provision.

14. Some three weeks after the contract, the Purchaser reiterated the need for an amended Probate by way of requisition. It has to be borne in mind that at that point in time, the Vendor had not yet shown a good title. It is in this context that the Vendor's solicitors' response of 26 June has to be read. They undertook to produce the amended Probate upon receipt of it from the Land Registry. As the Vendor's counsel acknowledged, the letter was a shorthand, if inelegant, way of saying that the Probate, after its return from the Land Registry, would be submitted to the Probate Registry for amendment after which it would be produced and should be so construed.

15. It is to be noted that there was no specific reference to time in the letter, whether the production would be before or after the date of completion. Counsel for the Purchaser submitted that the letter could equally well be construed as an explanation for the delay in answering the requisition when one bears in mind that at this time, the Vendor had not yet shown a good title. But regardless of this ambiguity, the letter was not couched in terms which leave no room for doubt that if the Vendor's solicitors did not hear to the contrary, it would be assumed that the arrangement, namely that the amended Probate would be produced as and when it was received, whether before or after the date fixed for completion, was acceptable to the Purchaser. The question therefore is whether the Purchaser's failure to specifically reply to this offer of an undertaking made it unconscionable for him to insist on having the amended Probate at completion.

16. Counsel for the Vendor relied on Taylors Fashions Limited v. Liverpool Trustees Company [1982] 1 QB 133 and urged the Court to adopt the approach of Oliver J. (at 151H to 152A) directed at ascertaining whether in particular individual circumstances, "[it] would be unconscionable for a party to be permitted to deny that which, knowingly or unknowingly, he has allowed or encouraged another to assume to his detriment than to enquiring whether the circumstances can be fitted within the confines of some preconceived formula serving as a universal yardstick for every form of unconscionable behaviour." This approach was approved by the Privy Counsel in Lim v. Ang [1992] 1 WLR 113 where (at p.117E to F) Taylors Fashions was referred to (with approval) as showing that in order to found a proprietary estoppel, it is not essential that the representor should have been guilty of unconscionable conduct in permitting the representee to assume that he could act as he did : it is enough if, in all the circumstances, it is unconscionable for the representor to go back on the assumption which he permitted the representee to make.

17. Counsel for the Vendor also relied on the Court of Appeal decisions in Lee Kenny v. Wong Kwok Yan [1994] 2 HKC 309 and China Pride Investment Limited v. Silver Pole Limited [1995] 1 HKLR 48 as applications of the principle that inequitable or unconscionable conduct would disentitle a party (in that case the vendor) from insisting on his legal rights. In those cases, on the facts, it was found to be unconscionable on the part of the vendor, in all the circumstances, to have called off the contract and forfeited the purchaser's deposit. The purchaser in those cases was accordingly granted relief from forfeiture.

18. In the present case, all the Purchaser did was not to reply to the letter of 26 June. It is not the Vendor's case that in no circumstances could the return of the document from the Land Registry have been expedited. The fact of the matter is that the Vendor's solicitors chose to do nothing to expedite the Land Registry process, whether before or after 26 June. Viewed objectively, it was not reasonable for the Vendor's solicitors to assume that the Purchaser was not insisting on being provided with a certified copy of the amended Probate by the time of completion. As noted above, the terms of the letter of 26 June were both ambiguous and unclear. It was never categorically stated that the production may not occur until after the date for completion. Nothing in the letter of 26 June suggested that the Vendor's solicitors had not taken any steps to expedite the Land Registry process and were proposing to continue to take a purely passive role, with the consequence that the amended Probate may not be available by the completion date.

Order

19. For these reasons, I will grant a declaration that the Purchaser has rightfully repudiated the Agreement and I order that the Vendor return to the Purchaser the deposit money in the amount of HK$139,000. The Purchaser is also entitled to damages comprising the costs of investigating title, stamp duty in the amount of $20,850 and the agent's fee of $5,000. Simple interest is payable on the amount of the deposit and damages at 11% per annum from 31 May 1995 until the date of judgment and at the judgment rate thereafter.

20. There is to be an order nisi that the Purchaser do have the costs of this action.