CHAN CHUNG KIT, CHAN DOR MI, the executors of the estate of late CHAN FONG TIN, deceased v. NG TSUN TSEUNG

DCCJ 2413/2018

[2019] HKDC 340

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 2413 OF 2018

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DECISION

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INTRODUCTION

1.  By a summons taken out and filed by the plaintiffs on 13 February 2019 pursuant to Order 19, rule 7 of the District Court, the plaintiffs seek default judgment against the defendant for specific performance of a contract for sale and purchase of a landed property known as Section E of Lot No 2175 in Demarcation District No 76, North New Territories (“the Land”).

2.  Having considered the evidence filed in court by the plaintiffs, I am satisfied that the documents in these proceedings have been duly served on the defendant, who remained absent at the day of hearing.

3.  Based on the averments set out in the Statement of Claim specially indorsed with the Writ, I am satisfied that the court has the jurisdiction to hear this case as the Annual Rateable Value or Rental Value of the Land did not exceed HK$240,000 at the time of filing the Statement of Claim and it is therefore within the Jurisdiction of District Court Ordinance ie Sections 35 & 36 of the District Court Ordinance, Cap 336.

BACKGROUND

4.  The plaintiffs commenced these proceedings on 4 June 2018 by a Writ of Summons with a Statement of Claim indorsed therewith, seeking specific performance for a contract for the sale of land, which was never completed by the vendor.

Order for substituted service

5.  On 11 October 2018, Master S P Yip, who was satisfied that the plaintiffs had exhausted all means to locate the defendant, gave an Order for Substituted Service whereby the service of the said Writ of Summons, together with a prescribed form of Acknowledgement of Service, be deemed to have served and effected on the defendant by advertisement in a local Chinese newspaper Sing Tao Daily and that the time for acknowledgment of service be within 14 days from the date of the said advertisement. 

6.  On 21 December 2018, the said Substituted Service was effected as such advertisement was made on Sing Tao Daily.  Proof of such substituted service was supported by the Affirmation of Service made by Mr Wong Kwong Man, Solicitor for the plaintiffs, dated 4 March 2019.  Mr Wong in his Affirmation affirmed that as at that date, no Notice of Intention to Defend has been served on the plaintiffs or their solicitors by the defendant.

Hearing of the application for default judgment

7.  The application for default judgment is now heard before me.  Prior to the commencement of the hearing, my clerk confirmed that the defendant remains absent after he had made an effort to call for his name or any of his representative, outside my court.  Having waited for 15 minutes after the time appointed for this hearing, with the defendant not turning up, I proceeded with the hearing.

Reliefs sought

8.  The plaintiffs now seek an order against the defendant for specific performance of an agreement (“the Agreement”) for sale and purchase of the Land. 

THE LAW REGARDING DEFAULT JUDGMENT

9.  It is well established that in an application for a default judgment, only the matters pleaded in the statement of claim may be considered and no evidence on merits is admissible^[1].

THE PLAINTIFF’S PLEADED CASE

10.  The plaintiff’s case as pleaded in the Statement of Claim is as follows:-

(1)   On or about 8 August 1959, the late Mr Chan Fong Tin (“the Deceased”) as Purchaser agreed to buy the Land from the defendant who was the Vendor at the price of HK$1500 payable forthwith, whereupon the defendant shall deliver up vacant possession of the Land.  The defendant as Vendor agreed to transfer all his legal and beneficial titles in the Land to the Deceased within a reasonable time (“the Agreement”).

(2)   The Agreement was partly evidenced by a Chinese note dated 8 August 1959 but not signed by the Vendor (ie the defendant).

(3)   The Deceased paid the purchase price of HK$1,500 in cash to the defendant as Vendor on the same day while the defendant delivered up vacant possession of the Land to the Deceased at the same time. 

(4)   Since then, the Deceased kept exclusive control and possession of the Land and regarded himself as the sole beneficial owner of the Land.

(5)   In reliance of the Agreement,

(a)   the Deceased acquired other lands in the vicinity, including, inter alia, sections B & D of Lot 2175, Lot 2176 and remaining part of section A of Lot 2175 in the following years.

(b)   the Deceased had improved and modified these subsequently acquired lands together with the Land for business purposes, including, inter alia, building structures thereon, paving the ground, delineating different areas for different uses.

(c)   the Deceased had paid all government rents and rates for the Lot.

(6)   In breach of the Agreement, the defendant, who had received the purchase price HK$1,500 in cash from the defendant and delivered up vacant possession to him on the same day on 8 August 1959, did not transfer his legal title to the Deceased and he disappeared shortly after the Agreement was made in 1959.  The Deceased looked for the defendant so as to acquire the legal title of the Land but in vain.

(7)   The Deceased had not been able to procure the defendant to transfer his legal title to the Deceased over the years.  Nevertheless, the Deceased kept on using the Land together with other said lots in the vicinity acquired by him until his death in 2015.

(8)   The defendant remains the registered owner of the Land notwithstanding the Agreement. 

(9)   The Deceased passed away in 2015.  Probate having been granted by the High Court to the plaintiffs to administer the estate of the Deceased, they were thereby authorized to start the present proceedings.

(10)   The plaintiffs seek to specifically enforce the Agreement by ordering the defendant to transfer the defendant’s legal title in the Land to the plaintiffs or alternatively, rely on the doctrine of adverse possession to assert their claim on the Land. 

(11)   The Annual Rateable Value or Rental Value of the Land does not exceed HK$240,000, and as such the relief now claims by the plaintiffs are within the jurisdiction of the District Court under sections 35 & 36 of the District Court Ordinance (Cap 336).

11.  As the defendant remains the registered owner of the Land despite the Agreement, hence the issue of the Writ and the present application, seeking the relief of specific performance of the Agreement. 

THE PLAINTIFFS ONLY RELY ON PART PERFORMANCE IN THIS APPLICATION AND NO LONGER PURSUE ADVERSE POSSESSION AS PLEADED IN THE STATEMENT OF CLAIM

12.  At this hearing, counsel for the plaintiffs made it clear that the claim for adverse possession will no longer be pursued in this application even though it has been pleaded as an alternative claim in the pleadings.  

Section 3 of the Conveyancing and Property Ordinance (Cap 219)

13.  At the hearing, counsel for the plaintiffs indicated that the plaintiffs would rely on part performance in this application pursuant to section 3 of the Conveyancing and Property Ordinance (Cap 219) which provides that:-

“3. Land contracts to be in writing

(1) Subject to section 6(2), no action shall be brought upon any contract for the sale or other disposition of land unless the agreement upon which such action is brought, or some memorandum or note thereof, is in writing and signed by the party to be charged or by some other person lawfully authorized by him for that purpose.

(2) This section applies to contracts or other dispositions whenever made and does not affect the law relating to part performance or sales by the court.”

(Emphasis added)

14.   The plaintiffs are now seeking an order for specific performance compelling the defendant to complete the contract for sale and purchase of the Land as set out in the Agreement by “forthwith transfer all his legal title of the lot described in the Statement of Claim to the Plaintiffs at nil consideration, failing which the Registrar of the District Court or such other person as may be appointed pursuant to section 38A of the District Court Ordinance, Cap 336 should execute all such necessary conveyance, contract or other document for and on behalf of the defendant to effect the transfer of his legal title.”

15.   As the Agreement was only partly evidenced by the Chinese note dated 8 August 1959 and not signed by the defendant as Vendor, it is clear that section 3(1) of Conveyancing and Property Ordinance can hardly be complied with. 

16.   Counsel for the plaintiffs thus seeks to rely on the second limb of section 3 of the Conveyancing and Property Ordinance, namely, section 3(2) thereof ie part performance, in the present application.

CONCLUSION

Determination

17.   Having considered the matters pleaded in the statement of claim and the legal principles set out in the cases of Wu Koon Tai v Wu Yau Loi [1996] 2 HKLR 477 & Farrall v Davenport (1861) 3 GIFF 363, in my view, I am satisfied that the acts of the Deceased pleaded in the Statement of Claim are clearly sufficient to support a claim based on part performance.  The Deceased did exercise diligence over the years to seek completion of the sale of the land in question though in vain and the plaintiffs, as executors of the estate of the Deceased, took out the Writ herein within reasonable time of grant of probate.  The plaintiffs are clearly entitled to completion of the Agreement by relying upon the doctrine of part performance, and there is no reason why this court, in exercise of its discretion, should not decree specific performance. Accordingly, this court will make an order in terms of the Summons for Default Judgment, subject to matters set out in paragraphs 19 to 22 below.

18.   The plaintiffs are requested to submit a draft order for approval of the court within 7 days of this hearing, taking into account the matters set out in paragraphs 19 to 22 below.

Service

19.   As the Summons seeks transfer of the legal title forthwith by the defendant, the order of this court will need to be served.  The court will adopt the same method of service as ordered by Master S P Yip.

Costs

20.   As to costs, in the normal course of event, costs of this action, including costs of this application and all costs reserved should be to the plaintiffs with a certificate for counsel as costs should follow the event. 

21.   However, as counsel for the plaintiffs at the hearing made it clear that he would not ask for costs in this proceeding as the defendant is absent and this application is a default judgment in substance.

22.   Thus, there would be no order as to costs.

Note of thanks

23.   Last but not least, I thank counsel for the plaintiffs for his assistance provided to the court.