MANN KAM FOON TERESA v. TOP BRAIN INTERNATIONAL LTD

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JUDGMENT

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1. By the Provisional Agreement for Sale and Purchase dated 14th March 1997 ("Agreement"), the Defendant as Vendor agreed to sell to the Plaintiff as Purchaser Flat A on the 9th Floor ("Flat") and Car Parking Space No. 5 on the Ground Floor ("Car Park") of Manly Mansion, Robinson Road (hereinafter Flat and Car Park referred to collectively as the "Property"). The Purchaser raised requisitions and then contended that the requisitions had not been properly answered and that the Vendor could not show a good title to the Property. The Plaintiff Purchaser therefore brought this present Vendor and Purchaser Summons.

2. The dispute between the parties relates not to the Flat but to the Car Park. In relation to the Car Park, two issues divided the parties at the hearing, namely:-

3. Manly Mansion is one of those old-fashioned buildings in Hong Kong where the division of the flats, the car parking spaces and the roof was somewhat unusual by modern 1997 standards of Hong Kong. The Ground Floor of Manly Mansion consisted of one flat (flat B) and 14 designated car parking spaces (collectively referred to as "Building Parkings"). Each of the 1st to 9th Floors of Manly Mansion was made up of 2 flats (flat A and flat B). There was also a roof at the top of the building. There were 23 undivided shares of and in the land and the building and the 23 shares were made up of:-

The aforesaid division was done in the nineteen fifties. The problem which arose from the aforesaid old fashioned division is whether such division and the devolution of title as described below rendered the present owner of the Property incapable of giving good title to the purchaser.

4. The way the ownership of the Flat and the Car Park devolved onto the Vendor Defendant will explain the problem and the dispute. The chain of title of the Property was described at paragraph 15 of Affirmation of Anthony Loong Pak Kit dated 5th June 1997 and was graphically represented in a chart enclosed in the letter dated 16th May 1997 from Messrs Tang and So to Messrs Yu, Tsang & Loong.

5. It is not in dispute that the Defendant Vendor is the registered owner of one undivided share of and in the land and building together with the right to the exclusive possession of the Flat. It is also not in dispute that the Defendant has the exclusion right to the possession and use of the Car Park. It is also clear that the Building Parkings, namely the whole of the 14 car parking spaces on the Ground Floor which of course include the Car Park, are registered in the name of Marianne Lam. The Defendant Vendor is the lessee of Marianne Lam in respect of the Car Park for the residue of terms of 999 years created by the Crown Lease less the last 6 months thereof. This underlease in respect of the Car Park expires on 24th December 2859, some 862.5 years into the future.

6. The objection of the Plaintiff Purchaser however is not to the length of the underlease in the Car Park but to the fact that it was an underlease. This is the first issue. In order to resolve this issue, it is necessary to consider what it was that the Vendor Defendant had contracted to sell to the Plaintiff Purchaser. It is here to be noted that the Provisional Sale and Purchase Agreement recorded only the Property, namely the Flat and the Car Park without stating in relation to either the Flat or the Car Park, the precise legal estate contracted to be sold, the number of undivided shares that would be assigned to the Purchaser or the length of the residue of the relevant lease or Crown Lease. In the context of sale of property in Hong Kong, these aspects do not seem to matter to a purchaser and no prospective purchaser normally asks about these matters. Mr. Chow for the Defendant in his usually fair presentation, submitted that where the contract is silent as to the nature of the leasehold interest to be sold, then prima facie the vendor is selling the whole interest he has in the land. I accept that submission. The Plaintiff Purchaser therefore acquires by the purchase, all the interests of the Defendant Vendor in the Property, namely the following:-

7. The objection of the Plaintiff to interest (3) above of the Defendant is that the Defendant would not be able to convey a legal estate in respect of the Car Park to the Plaintiff Purchaser. But this is incorrect as the Defendant's leasehold interest being a term of years absolute in land is a legal estate within the meaning of section 2 of the Conveyancing and Property Ordinance. In my judgment, the fact that in respect of the Car Park, the Defendant holds the lease from Marianne Lam and not a lease from the Crown, does not prevent the Defendant from having a good title to the Car Park. On the first issue of underlease, I hold in favour of the Defendant.

8. The second issue is whether in order to have a good title in respect of the Car Park, it is necessary for the Defendant to have any share in the land specifically relating to the Car Park. There does not seem to be any authority directly on point. It is of course accepted by Mr. Chow for the Defendant that the Deed of Mutual Covenant could have been drafted differently so that each car parking space could have been separately allocated a definite number of undivided shares. But Manly Mansion was an old fashioned development and a subsequent purchaser must accept the scheme of sales adopted by the original developer. It is of course true that in relation to the Car Park the remaining terms of years enjoyed by the Plaintiff Purchaser would be 862.5 years while in relation to the Flat the remaining terms of years to be enjoyed would be 863 years but that for me does not seem to render the Defendant unable to give good title in relation to the Car Park. The key question under this second issue is whether there is an obligation on the Vendor in relation to the sale of the Car Park that the Car Park must carry with it a share in land.

9. In the absence of an express stipulation in the provisional purchase agreement on the number of undivided shares in the land, it has never been known for a purchaser to challenge a purchase on the basis that the undivided share was too little. The purchaser takes what the vendor has by way of undivided shares in the land. He cannot say for example I have been given only undivided share rather than say 3 undivided share in the land. If this is the case, does it make any difference on the question of giving good title whether the vendor has 2 shares or one share or no share in the land. The answer must be no. I am not persuaded that in principle, a property must carry a share in land to enable a good title to be given.

10. I therefore turn to the authority cited by Mr. Mui for the Plaintiff Purchaser to see if the position is different. The judgment of Jerome Chan, J. in Lee Tak Chun v East Weal International Ltd. [1994] 1 HKC lays down no proposition of law in support of the Plaintiff's contention. What was said at page 731H-732C relates to the proof of the exact number of shares owned and therefore purported to be conveyed. It does not purport in any way to hold that in law a vendor must have certain share in the land allocated to the property in order to give good title on the sale. Accordingly I do not find that the authority assists Mr. Mui on the second issue.

11. In the circumstances for the reasons given, I must give judgment to the Defendant on the main questions of good title with an order nisi for costs in favour of the Defendant. The parties will prepare a draft minute of the Order to be made by the Court in the light of the above Judgment and if necessary I will hear the parties on the exact form of the Judgment to be entered..