HO TSZ LING AND ANOTHER v. LIN HONG KWONG EDMOND AND ANOTHER

DCMP 1504/2005

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS CASE NO. 1504 OF 2005

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JUDGMENT

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1. The plaintiffs were the purchaser of a flat.  The defendants were the vendor.  The price was $1,280,000.  Provisional agreement was signed and initial deposit of $38,400 paid over to the vendor on 4 September 2004. Formal agreement was signed and a further deposit of $89,600 paid over to the vendor on 17 September 2004.  Completion dates were revised and, according to the vendor’s case, was to take place on 23 October 2004.  There were 2 legal charges and 1 loan agreement (pertaining to the 2^nd charge) registered as incumbrances against the flat on the land search record.   

2. The purchaser’s requisition, in his solicitors’ letters dated 9, 14, 16, 21 October 2004 respectively, focused on 2 major aspects:

(1)  Whether a prior power of attorney in the chain of title had been revoked or otherwise;

(2)  The granting of consent to sell by the Housing Society (“HS”). 

3. The purchaser refused to complete because the vendor’s solicitors failed to answer the purchaser’s requisition satisfactorily。The purchaser took out the present originating summons to claim various reliefs. 

4. In regard to the power of attorney, the vendor’s solicitors had prepared a satisfactory draft statutory declaration after discussion with the purchaser’s solicitors.  The purchaser complained that there was no undertaking given by the vendor or his solicitors to sign it before completion or alternatively to avail themselves of the 3-month post-completion period pursuant to section 5(4)(b) of the Powers of Attorney Ordinance, Cap. 31.

4. In regard to the consent of HS, in their requisition, the purchaser’s solicitors recited clause 1, amongst others, of the vendor’s agreement with HS made on 20 July 1999 (“the HS agreement”).  This clause prohibited the vendor from selling the flat without the prior consent of HS.  The agreement stipulated that consent will be given upon full repayment of all loans due to HS and compliance with all other terms of the agreement.    The vendor’s solicitors replied that full repayment will be made upon completion and HS’s consent will then be given.  They referred to HS’s letters dated 21 and 28 June 2004 respectively, where HS was willing to give consent subject to full repayment and the vendor’s compliance with all other terms of the agreement.  They said their client would fully repay HS on completion.     

5. The vendor said that the draft statutory declaration and the vendor’s promise to full repay HS on completion had shown the vendor’s good title at the requisition stage.  The purchaser thought otherwise. 

6. I agree with the plaintiffs’ counsel in that at the stage of requisition section 5(4)(b) of the Powers of Attorney Ordinance, Cap. 31, where the purchaser had expressly focused on this aspect, the vendor’s solicitors had to inform the purchaser whether he would provide actual evidence of non-revocation or cause a statutory declaration to be made.  The fact of a draft statutory declaration having been made would suggest, without more, that the vendor had the intention to adopt that course, other than to provide actual evidence of non-revocation.  However, given that the vendor would have a choice before completion, and an approved draft having been prepared I can see no practical disadvantage or uncertainty to the purchaser if the vendor was to fall back to eventually rely on section 5(4)(b).  That did not seem to me a failure to answer requisition satisfactorily.   

7. The defendants’ counsel submits that there being no evidence either of non-compliance (or compliance) of other terms and conditions of the HS agreement, upon the vendor’s full repayment, HS would give certainly consent at the time of completion.  I disagree with this submission.  HS required both full repayment and compliance of other terms and conditions.  I can see that the consent was a valuable tool on the part of HS to ensure that it had a solid form of security against the vendor for his non-compliance with any terms or conditions in the HS agreement.  The vendor had to satisfy the purchaser that HS would be giving its consent at the requisition stage.  There were no enquiries made to HS.  Save and except by promising to fully repay HS, the vendor’s solicitors had done nothing to convince the purchaser that HS would give consent on the date of completion.  In my judgment it remained a blot on the title.  The purchaser was entitled to reject it. 

8. In the premise, I give judgment to the purchaser.  I will hear counsel address me on the form of order to be made.  

Dated this 12^th October 2005