PANG CHI YEUNG v. LAU YUK CHOI AND ANOTHER

HCA421/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 421 OF 2011

(Transferred from DCCJ Action No. 5722 of 2007)

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BETWEEN

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J U D G M E N T

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1.  In this action the plaintiff (“Mr Pang”) claims that he had entered into an agreement dated 3 October 2000 (the “Agreement”) with the 1^st defendant (“Mr Lau”) to sell him the piece of land known as “All that piece or parcel of ground registered in the Land Registry as Sub-section 15 of Section A of Sub-section 2 of Section A of Lot No. 1180 in Demarcation District No. 30 AND of and in the messuages, erections and buildings erected thereon now known as No. 303 Nam Wai, Tuen Mun, New Territories” (the “Land”).

2.  The 2^nd defendant (“Mr Lung”) signed the Agreement as owner.  It is Mr Pang’s case that, objectively, Mr Lung must have signed it as Mr Lau’s attorney, pursuant to a Power of Attorney executed by Mr Lau in favour of Mr Lung dated 22 April 1997.

3.  The principal terms of the Agreement were that :

(1) Mr Pang would pay $750,000 for the purchase of the Land: $600,000 was to be paid upon signing the Agreement; the remaining $150,000 to be paid within 7 days after issuance of the Certificate of Compliance of the Small House to be erected on it.

(2) Mr Pang would pay $850,000 in stages for the construction of the Small House.

(3) Mr Pang would bear all premium payable to the Government and legal costs in respect of the transfer of the Land.

(4) Upon issuance of the Certificate of Compliance and payment of the purchase price and construction costs, Mr Lung would procure that all the estate, title, rights and interest in the land would be assigned and transferred to Mr Pang.

4.  Pursuant to the Agreement, Mr Pang paid Mr Lung all the money payable under the Agreement.  The Small House was erected and Mr Pang and his family moved into the Small House in early 2004.  They have been living there since without disruption.  Mr Pang, however, was not informed of the issuance of the Certificate of Compliance.

5.  Mr Lung disappeared in around 2007 without causing the Property to be conveyed to Mr Pang. Concerned about the situation, Mr Pang sought advice and commenced this action in November 2007 (originally in the District Court in Action No. 5722 of 2007, which was transferred to this Court in March 2011).  It was only then that Mr Pang came to know that the Certificate of Compliance had been issued on 29 March 2004.

6.  Mr Lau filed a defence and provided some Further and Better Particulars.  He gave discovery but has not taken any part in the action since November 2009.  He has not filed any witness statement nor taken part in the trial.  In his defence, Mr Lau pleads that he had in about April 1997 sold all his interests in the Land and the right to develop it under a Building Licence No. 1900 to a nominee company of Mr Lung and executed documents, including the Power of Attorney, to enable the Land to be developed without his participation.  It is Mr Lau’s case that after selling his rights to Mr Lung and signing the documents, he had no involvement in any dealings in relation to the Land.  In short, Mr Lau’s case is that he was not the owner of the Land and the dealings between Mr Pang and Mr Lung had nothing to do with him.

7.  It is not disputed that Mr Pang dealt with Mr Lung and had never been directly in touch with Mr Lau.

8.  As stated above, Mr Lung had disappeared since around 2007 and has not taken any steps in these proceedings.

9.  Mr Patrick Szeto, counsel for Mr Pang, has taken me through the evidence.  I am satisfied that the Agreement is valid and Mr Pang has acquired the beneficial interest in the Land (which by definition includes the Small House constructed on it) from Mr Lau under the Agreement.

10.  Mr Szeto has drawn my attention to a number of authorities to the effect that the sale, or purported sale, of an interest in a Small House without obtaining the Government’s prior consent does not per se involve any illegally and not contrary to public policy.  In the instant case, there is nothing to suggest that Mr Pang himself was involved in any wrongful conduct.  I accept his submissions.

11.  Taking into account all the materials placed before me, I am satisfied that Mr Pang is the beneficial owner of the Land.  Insofar as Mr Lau remains the registered or legal owner of the Land, Mr Pang is entitled to have the legal title conveyed to him.

12.  For the avoidance of any possible doubt vis-à-vis Mr Lung, I am prepared to grant Mr Pang the declaration that he seeks under Relief para. (1).

13.  Mr Szeto submitted that since Mr Lau could not be located, I should make an order authorizing the Registrar to execute all necessary documents to effect the conveyance.  I accept that I should so order.

14.  There is one possible complication.  Under the Agreement, Mr Pang is responsible for payment of all premium to the Government.  I am given to understand that the Government only requires a premium if the sale or transfer is carried out within five years of the issuance of the Certificate of Compliance.  Here, since the Certificate of Compliance was issued in March 2004, no premium would be payable.  I am prepared to proceed on that basis, so as to avoid incurring any further time or costs if at all possible.  I think it would be best to make the order for specific performance sought but giving Mr Pang liberty to apply, in case he should run into any difficulties with the Government.

15.  I see no reason why Mr Pang should not have his costs of the action against Mr Lau, and I order accordingly.  For the avoidance of doubt, such costs are to be taxed on the High Court Scale.  Mr Pang’s own costs are to be taxed in accordance with Legal Aid Regulations.  I make no order against Mr Lung.