LIU WAI YIN v. FAILIC TRADING CO LTD

HCMP 723/2022

[2023] HKCFI 1295

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 723 OF 2022

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JUDGMENT

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Introduction

1.  By an agreement for sale and purchase dated 28 February 2022 (“2022 Agreement”), the Defendant as vendor agreed to sell and the Plaintiff as purchaser agreed to purchase the Property known as Apartment on the 4^th Floor of Block D and Car Parking Space No.10 on the Ground Floor of 75 Blue Pool Road, Hong Kong (“Property”) at the price of HK$15.8 million. A deposit of HK$1,580,000 was paid upon signing of the 2022 Agreement.

2.  This is the hearing of Plaintiff’s Originating Summons dated 10 June 2022 (“OS”) seeking:

a.  A declaration that the Defendant has failed to show, prove and give title to the Property.

b.  A declaration that the Defendant has failed to answer satisfactorily the outstanding requisition raised by the solicitors for the Plaintiff in their various letters to the solicitors for the Defendant in respect of the Defendant’s title to the Property.

3.  The Defendant is a limited company incorporated in Hong Kong in 1983. Its stance is that it has shown and proved good title to the Property and has answered all the requisitions raised by the solicitors for the Plaintiff satisfactorily.

Undisputed Material Facts

4.  Both counsel have indicated to this court that there is no dispute on the essential primary facts. Rather, their difference lies in the application of the law to those facts.

5.  Ernest Phoon, aka Phoon Wai Tak (“Deceased or Ernest”) had been the registered owner of the Property since 1985. On 9 October 1990, he passed away intestate as a bachelor and without issue. His parents predeceased him. He was survived by his four lawful and natural siblings, Agnes Phoon (“Agnes”), Ronald Phoon (“Ronald”), Audrey Yok Ching Fung (nee Phoon) (“Audrey”), and Kenneth Wai Shing Phoon (“Kenneth”). In accordance with the intestate law, each of the 4 siblings was entitled to the Deceased’s estate in equal share ie 25% each.

6.  In March 1993, Kenneth sworn an affidavit in support of his application for letters of administration of the Deceased’s estate. At the time of Kenneth’s said affidavit, Agnes was 66 years old, Ronald was 64, Audrey was 59 and Kenneth was 57.

7.  Unfortunately, on 16 February 1992, Agnes, domiciled in Hong Kong, passed away. She had made a will. The long and short of it is that Ronald, Audrey and Kenneth’s entitlement to the Deceased’s estate in 1992 became as follows:

Ronald	Audrey	Kenneth
35%	30%	35%

8.  Also unfortunately, on 19 September 1996, Ronald, domiciled in Australia, passed away. He had made a will. The long and short of it is that by then, Audrey and Kenneth’s entitlement to the Deceased’s estate became as follows:

Audrey	Kenneth
30%	70%

9.  The Plaintiff accepts that by the combined effect of Agnes’ and Ronald’s respective wills and Probate, “[a]t the time of the 2000 Assignment[1], in reality only Audrey and Kenneth would benefit from the sale of the Property by Ernest’s estate”: Plaintiff’s affirmation at para 16.

10.  According to the affidavit of Deirdre Elizabeth Phoon (“Deirdre”) dated 28 July 2022 (“Deirdre 1”), the wife of Kenneth, Kenneth and her were married in Australia in 1970 and have resided there until his death in 2022. On the other hand, Audrey has been living in Canada for about 50 years.

11.  On or about 1 December 1994, Audrey from Canada wrote a letter to Kenneth in Australia (“1994 Letter”). The letter stated:

“This is to inform you that I hereby renounce any claim in future for my entitlement to shares in Failic Trading Co. Ltd. under the estates of [Ernest and Agnes] …

in return for total cash of HK$3,155,726 at the mutually agreed unit price of HK$10.2904 per share.”

12.  According to Deirdre 1, in or about 1995, Audrey received the amount in respect of her entitlement to the estate of the Deceased. Deirdre was aware of the negotiations with Audrey when she requested Kenneth and Ronald to give her a lump sum representing her entitlement to the estate of the Deceased. Deirdre was present when Kenneth made the payment to Audrey.

13.  By a letter dated 13 November 1996 from Kenneth in Australia to a solicitor Mr. T Cheung, presumably in Hong Kong (“1996 Letter”), he stated on the 1^st page[2]:

“Dear Mr Cheung,

Thank you for taking my long distance telephone inquiry regarding Surety’s Guarantee. You have been recommended by the Probate and Estate Section of the Hong Kong Shanghai Bank.

My brother, Wai Tak Ernest Phoon, died on 9/10/1990.

He died intestate. He was not married and his brothers and sisters became his only beneficiaries. They were:

1. [Agnes]…

2. [Ronald]…

3. [Audrey] who is alive and well in Canada.

4. (myself) seeking administrator status to my brother Wai Tak’s estate.

As my sister Audrey desired money in 1995, she and I have come to an agreement where I have given her money which she thinks she would have received in the settlement. Hence she is prepared now to confirm she has received just amount from [Ernest’s] settlement if necessary soon as probate is granted. This leaves me as the only ‘active’ beneficiary. I am also the administrator of Agnes’ and Ronald’s wills.”(emphasis added)

14.  Kenneth eventually obtained the letters of administration of the Deceased’s estate on 5 June 1997. According to the Schedule of property of the Deceased annexed thereto, the Property formed part of the Deceased’s estate and was reported to be worth HK$1.6 million while 600,000 shares in the Defendant also formed part of the Deceased’s estate and were reported to be worth about HK$1.5 million.

15.  On 15 March 2000, Kenneth, as administrator of the Deceased’s estate, entered into an agreement for sale of the Property at the price of HK$4.8 million to the Defendant. The Property was assigned to the Defendant on 3 April 2000 (“2000 Assignment”).

16.  At the time of the sale, Kenneth and Deirdre were the only two directors of the Defendant while the shareholders were as follows:

Kenneth	Yeung Kwing Huen	The Deceased’s Estate	Agnes’ Estate
599,999	480,001, but he transferred 399,999 shares to Kenneth on 11 February 2000	600,000	320,000
(599,999 + 399,999)/2,000,000 around 50%	80,002/2,000,000   4%	600,000/2,000,000   30%	320,000/2,000,000   16%

17.  According to Deirdre 1, Audrey had been well informed of the transaction under the 2000 Assignment and had consented to it. As of now, there has been no action taken by Audrey in relation to the Property or any other property belonging to the Deceased’s estate - which is over 22 years from the 2000 Assignment and over 32 years from the death of Ernest.

18.  Deirdre and Kenneth’s son Christopher Michael Phoon (“Christopher”) have lost contact with Audrey in the last decade. According to them, Audrey has developed dementia in her later years and should be in a nursing facility, albeit her present whereabouts is unknown.

19.  If Audrey were still alive, she would be around 88 years old now.

20.  Kenneth passed away on 1 January 2022.

The Requisitions

21.  On 1 March 2022, the Defendant’s solicitors Messrs. Y.L. Yeung & Co. ("YLY") delivered the title deeds of the Property and other relevant documents to the Plaintiff’s solicitors Messrs. S.H. Leung & Co. ("SHL").

22.  On 7 March 2022, SHL raised 3 requisitions on title with YLY. Ultimately, only one is relevant for the present purpose which is Requisition No. 3:

“3. We note Mr. Phoon Wai Shing [Kenneth] was also interested in Failic Trading Company Limited by holding its shares and being one of its directors. There is apparently a conflict of interest in the seller and the buyer. May we have a copy of the Affirmation of the administrator applying for the Grant of Letters of Administration showing the names of beneficiaries, and have their consents for Mr. Phoon Wai Shing to enter into the [2000] Assignment.” (emphasis added)

23.  What follows are the extracts of the solicitors’ correspondence on this requisition.

24.  By letter dated 14 March 2022, YLY replied:

“3. No pre-intermediate root document is required to be provided. Moreover, the said Affirmation is never a title document. Please be advised that your client's interest will not be effected after a lapse of 20 odd years. All potential claim (if any) shall be time barred.”

25.  By letter dated 18 March 2022, YLY stated further:

“…In that Assignment, the Vendor assigned as Administrator [by virtue of a Letters of Administration] the property in favour of Failic Trading Company Limited (a legal entity). The Assignment was dated 3^rd April 2000 some 20 years ago. From the recital in the said Assignment, the Purchaser purchased the Property for value at HK$4,800,000.00…”

26.  By letter dated 22 March 2022, SHL replied:

“3.2 The conflict of interest issue is crystalised in s.55 of the Probate and Administration Ordinance. A sale of property by a personal representative to a company which he is interested in may render the title to the property defeasible. When it is apparent that the personal representative is interested in the purchasing limited company, that will be treated as a constructive notice being given to our client as purchaser, and it is our duty to enquire. The case of Akai Holdings Limited v Kasikornbank PLC [2011] 1 HKC 357 refers.

3.3 In the case of So Mariko v Tse Chun Chung John (2011) CACV No.212/2010, a good conveyancing practice is for all beneficiaries to join in the sale as confirmors in the assignment, and to provide the administrator's affirmation application for letters of administration confirming the identity of all the beneficiaries so the purchaser may verify all beneficiaries are parties to the assignment. In our present case, as the beneficiaries are not party to the assignment, our request for evidence that all beneficiaries agreed to the sale and a copy of the administrator's affirmation to verify the identities of all the beneficiaries is not inappropriate.

3.4 May we refer you to the case of Sun Sek Haw And Others v Au So Kum CACV 215/1998, that case falls squarely on ours. The case confirms our requisition is appropriate and your comment on limitation period is also addressed as no period of limitation is to apply to an action by a beneficiary under a trust to recover trust property from the trustee. Please note in the Sun case, the assignment was made 20 years before the action.” (emphasis added)

27.  By letter dated 29 March 2022, YLY replied:

“The Deceased died intestate without leaving a will. Therefore under the Intestate Estate Ordinance, all beneficiaries therein must be his closest relations who were entitled to share in his estate. It would be unimaginable that one of these persons entitled would not have taken up interest and did not follow up with how the Administrator had done with the Deceased’s estate. The Assignment was dated April 2000, some 22 years ago. The transaction is valid unless and until it is successfully challenged. However, the chance that anyone coming forth now after 22 years and declaring that he was unaware of the sale of the Property (which was quite expensive) is remote and fanciful…

Lastly, it has always been emphasised by the courts that a good title need not be a perfect title. In the assessment as to whether there is any real problem in the title, the matter should be approached from the stand-point of a willing purchaser and a willing vendor with reasonably robust common sense. Thus Litton PJ said in Mexon Holdings Ltd. v. Silver Bay International Ltd. (2000) 3 HKCFAR 109 at 117D-E that “A good title does not mean a perfect title, free from every possible blemish. Whenever a question like this arises, it must be approached from the stand-point of a willing purchaser and a willing vendor, both possessed of reasonable robust common sense, both intending to see the transaction through to completion in terms of their own bargain.” (emphasis added)

28.  By letter dated 4 April 2022, SHL replied:

“We maintain our requisitions 2 and 3 stated in our letter of 7^th March.

…

We agree that we should not inquire into the matters when the personal representative sold estate assets in the course of administration. However, when Mr. Kenneth Phoon executed the 2000 Assignment both as the administrator of the estate as seller and as a director of the company purchaser, this has given constructive notice to us that Mr. Kenneth Phoon had breached s.55 of the Probate and Administration Ordinance. For that reason, it is our duty as the purchaser to enquire, as our client will not be a bona fide purchaser without notice, and will be holding the Property as constructive trustee for the beneficiaries of the estate.

…

You also raised the point that after some 22 years, the beneficiaries must have consented to the 2000 Assignment due to the lapse of time. In Sun case, the Court of Appeal decided that even after 23 years, the risk still persisted. Therefore, you have no legal basis to say or the capacity to rule on that there will be no risk in our present case.

We further accept that a good title need not be a perfect title…We are merely looking for evidence that all beneficiaries consenting to that sale.” (emphasis added)

29.  By letter dated 25 April 2022, YLY replied:

“…Pursuant to section 55 of Probate and Administration Ordinance:

‘If a personal representative purchases, either directly or indirectly, any of the property of the deceased, the sale shall be voidable at the instance of any other person interested in the property sold.’ (emphasis added)

the sale shall be void only if any action has been taken. This kind of transaction is common, particularly if some of the beneficiaries want cash rather than held a Property with all the other beneficiaries and one of them could pay. There is no challenge by any beneficiaries up to date.” (emphasis added)

30.  Lastly, by letter dated 13 May 2022, YLY further replied:

“Requisition No.3

…

Meanwhile, we have obtained further documents and information which will show that the possibility of impeachment of the title, if any, is remote and fanciful. A copy of the following documents is enclosed herewith for your perusal, namely,

(1) Affidavit of Phoon Wai Shing also known as Kenneth Wai Shing Phoon (‘Kenneth’), i.e. the vendor of the 2000 Assignment, in his application for the Grant of Letters of Administration of the estate of the Deceased (‘Earnest’);

(2) Probate of Phoon St. Philomena alias Agnes Lai Ching Phoon alias So Nui (Lai Ching)Phoon alias Agnes Phoon (‘Agnes’);

(3) Probate of Ronald Wai-Yin Phoon (‘Ronald’);

(4) Letter of Audrey Fung (‘Audrey’) to Kenneth dated 1 December 1994;

(5) Letter of Kenneth to Mr. T Cheung, solicitor dated 13 November 1996.

From the contents of these documents, it can be confirmed that:

(1) Earnest died intestate on 9 October 1990, and Agnes, Ronald, Audrey and Kenneth were the only persons entitled to share in his estate.

(2) Agnes died on 16 February 1992, and the trustee in her last Will held her residuary estate in trust for Audrey (1/7 share), Ronald (2/7 shares), Earnest (2/7 shares) and Kenneth (2/7 shares). Since Earnest predeceased Agnes and leaving no issue, his said 2/7 shares accrued to Ronald, Audrey and Kenneth.

(3) Ronald died on 19 September 1996. Save and except various specific monetary gifts, Ronald devised and bequeathed the residue of his estate to Kenneth.

(4) Audrey and Kenneth had come to an agreement that Audrey has received the just amount from Kenneth in respect of her entitlement to the estate of Earnest.

From the aforesaid documents and the fact that no action has been taken by any of the persons entitled to share in the estate of Earnest over 22 years from the 2000 Assignment and over 31 years from the death of Earnest, it can be inferred that the sale and purchase of the Property in 2000 was done openly and no one will come forward to avoid the transaction. In the circumstance, the possibility of impeachment of the title of the Property, if any, must be remote and fanciful.” (emphasis added)

31.  Further correspondence between the two firms of solicitors ensued. Suffice to say that the potential problem on title created by s 55 of the Probate and Administration Ordinance, Cap 10 (“PAO”) was not resolved. Eventually, the parties agreed to postpone the completion date of the 2022 Agreement to 14 working days after the determination of the Vendor & Purchaser Summons to be taken out by the Plaintiff. It was further agreed that each party should bear its and her own legal costs in relation to the said Summons.

32.  The one and only issue in this case is about the potential claim by Audrey over the Property. This is not disputed by Mr Mak.

33.  In the extracts of the solicitors’ correspondence quoted above, this court does not find it helpful to recite and therefore has tried to avoid as far as possible the solicitors’ arguments on the law. These include in particular those relating to the presumption that a personal representative selling part of the deceased’s estate is selling in the course of administration and those relating to time bar. The simple reason is that once the risk of enforcement action against the Property by Audrey is decided on the evidence as only remote and fanciful, which YLY kept on emphasizing in correspondence, it is unnecessary to dwell on the application of the said presumption, the issue of time-bar and the legal niceties of the interaction between ss 7, 20(1)(b), 20(2) and 21 of the Limitation Ordinance and the doctrine of laches.

34.  The sooner the issue about Audrey’s claim is resolved, the sooner the parties can decide to complete or not complete the transaction.

Deliberation

35.  It is trite that a vendor generally is obliged to show good title before completion and to give (or make) good title on completion. The first obligation is to show good title. In Hong Kong, this is done by the vendor sending the relevant documents themselves to the purchaser’s solicitors for perusal: Au Wai Ming & Anor v Kam Tze Ming Alfred & Anor [2010] 1 HKLRD 198 at [32].

36.  The obligation to give or make a good title requires the vendor to show that he alone, or with the concurrence of some person or persons whose concurrence he can compel, can convey the whole legal estate and equitable interest in the land sold, free from encumbrances except for those disclosed by the contract. This is an implication arising from the obligation to make a good title: Jumbo King Ltd v Faithful Properties Ltd [1999] 3 HKLRD 757, 771A-C.

37.  A good title is one which can at all times and in all circumstances be forced upon an unwilling purchaser in an action for specific performance, but the court will not force a doubtful title on a purchaser: Kan Wing Yau & Anor v Hong Kong Housing Society [1988] 2 HKLR 187, 193G-H.

38.  A duty to give good title is distinct from the duty to show good title. It follows that a vendor who has a good title but failed to show good title by answering requisitions is still in breach of the agreement. A purchaser can still rescind in such circumstances: So Mariko v Tse Chun Chung John unrep, CACV 212 of 2010, 15 April 2011 at [29]; Yuen Kwok Leung Eric v Ming Chor Pao [2021] HKCA 476 at [31].

39.  As Mr Mak points out in his skeleton, the central dispute relates to the requisition on title concerning the effect of s 55 PAO on the 2000 Assignment of the Property. The Assignment occurred when Audrey was a beneficiary of 30% of the Deceased’s estate. There is no strict legal proof from Audrey of her consent to the 2000 Assignment or her waiver of her rights towards the Property, which is what SHL has been looking for in correspondence.

40.  The starting point is s 55 of PAO:

“If a personal representative purchases, either directly or indirectly, any of the property of the deceased, the sale shall be voidable at the instance of any other person interested in the property sold.”

41.  This court accepts that SHL has acted responsibly as a competent and reasonably experienced solicitor in raising the requisition in relation to s 55 PAO, in light of the decision of DHCJ Gill in Feerni Development v Daniel Wong [2001] 2 HKLRD 13.

42.  Mr Mak submits that the issue fundamentally boils down to whether the facts and circumstances are so compelling that a court would conclude that it is beyond reasonable doubt that the Plaintiff would not be at risk of a successful assertion by Audrey against him: Active Keen Industries Ltd v Fok Chi Keong [1994] 2 HKC 67, 83D-G, citing MEPC Ltd v Christian-Edwards [1981] AC 205.

43.  Ultimately, the question of risk of enforcement is a question of fact and degree and of common sense: Kok Chong Ho Wong Mui v. Double Value Developments Ltd. unrep, HCMP 2857 of 1990, 19 December 1990, Godfrey J at p 6.

44.  At this juncture, this court should remind itself that the Courts have consistently stressed the need to apply a robust and common‑sense approach to a title dispute of the present kind.

45.  In Mexon Holdings Ltd v. Silver Bay International Ltd (2000) 3 HKCFAR 109, 117 D-E, Litton PJ observed:

“First principles:

A good title does not mean a perfect title, free from every possible blemish. Whenever a question like this arises, it must be approached from the stand‑point of a willing purchaser and a willing vendor, both possessed of reasonably robust common sense, both intending to see the transaction through to completion in terms of their own bargain.”

46.  In Jumbo Gold Investment Ltd v. Yuen Cheong Leung and Another [1999] 3 HKLRD 825, the issue was whether in respect of an established breach of a building covenant, there was a real as opposed to a fanciful risk of enforcement action by the authorities. As Liu JA, in a dissenting judgment, put it at 833D‑G:

“The purchaser demanded proof of a given consent of the Governor-in-Council for a structural height above 35 feet. None was produced. The question before Yeung, J. was whether there was any real risk, not a fanciful one, of Government enforcement of the height-restriction covenant. In cases such as this, concrete proof of Government’s knowledge and attitude is often not easy to find. In a vendor and purchaser Summons under s. 12 of the Conveyancing and Property Ordinance (Cap 219), the court would be considered best guided by the commercial reality as to whether there is any real risk of problems in title. It is not to be troubled by the absence of an absolute risk-free assurance, nor unduly hampered by strict legal proof in matters requisitioned. Conveyancing practice must be geared to uphold bargains. In most cases, unless the obvious commercial reality is shaken by compelling contra-indications, the court would more readily conclude beyond reasonable doubt that risk of Government intervention is remote.” (emphasis added)

47.  Though Liu JA gave the dissenting judgment in the Court of Appeal in that case, the majority’s decision was reversed on appeal by the Court of Final Appeal: (2003) HKCFAR 52.

48.  Further, Liu JA’s approach aforesaid was not faulted by the Court of Final Appeal: (2003) HKCFAR 52. In this respect, at 60D-G, Litton PJ remarked:

“In my judgment the notion that there was a real risk of enforcement in the circumstances of this case is fanciful: Yeung J’s conclusion, supported by Liu JA in the Court of Appeal, is unquestionably correct. In a case like this, where as Liu JA said, ‘concrete proof of Government’s knowledge and attitude is … not easy to find’, the court must look at the larger picture. Nazareth VP, with respect, took far too narrow an approach: He thought that, to show good title, the vendors must show ‘proof of knowledge, i.e. of the breach of covenant’ before the government could be taken to have waived the height restriction in this case. As mentioned earlier, on the available material before the judge, it might well have been open to him to make the finding that the Director had, with knowledge of the breach, waived the restriction, or allowed a modification in some way. He did not do so, and took the safer course of asking the broader question: Is there a real risk of enforcement by the government? As to this, there could only be one answer.” (emphasis added)

49.  The Defendant does not appear to dispute the applicability of s 55 PAO or that the requisition was properly raised.

50.  Repeating in substance the arguments raised in the correspondence, Mr Pun submits that:

a.  The sale under the 2000 Assignment is only voidable and not void. Hence, the transaction thereunder is valid, unless and until it is successfully challenged. It would be for the beneficiaries to bring their action and prove that the sale was without their consent and authority.

b.  The only beneficiary concerned here is Audrey. On the available evidence, she has lost contact with the others for years and cannot now be found. She, if alive, would be around 88 years old by now and has been suffering from dementia for a number of years. She was aware of the death of Ernest and the fact that Kenneth was the administrator of the estate of Ernest. Kenneth had in 1996 confirmed that he and Audrey had come to an agreement and accordingly money had been given to her before the grant of the letters of administration. Hence, the possibility for Audrey to now come forward to avoid the transaction is remote and fanciful.

51.  On the key issue, the undisputed evidence came from a close relative of Audrey viz Deirdre, her sister-in-law. According to Deirdre, Audrey was fully aware of the death of Ernest and the fact that Kenneth was the administrator of the estate of Ernest. This is supported by (i) Audrey’s 1994 Letter to Kenneth about her renouncement of any claim in future for her entitlement to shares in the Defendant, which formed part of Ernest’s estate, in return for HK$3,155,726 in cash as agreed; and (ii) the 1^st page of Kenneth’s 1996 Letter about the settlement of Ernest’s estate with Audrey.

52.  Importantly, in Deirdre 1 at the 3^rd and 4^th sub-paragraphs of para 9, she said this on oath:

“9. The facts recounted below in my own words are from my own personal knowledge having witnessed and been involved in discussions, original documentation and events 20 years ago.

…

At the time of his death, Earnest Phoon had left no will. Probate was eventually granted to Kenneth Phoon on the 15^th April 1997. During the previous 7 years Earnests assets had been managed through the family company Failic as before. Audrey had desired money from the family in Hong Kong earlier in 1994/1995. She was not able to wait until probate had been granted as it had already been 4 years. Audrey wished to be paid out her share in all Hong Kong family interests as she and her husband Benjamin Fung had now lived in Canada for more than 30 years. Audrey, Ronald and Kenneth came to an agreement for her to be paid in advance her estimated share in the estates of Earnest and Agnes Phoon (see copy of document from 13^th Nov 1996), and her residual shareholding in the company Failic which controlled all of the family assets including the properties at Vivian Court as well as others.

I was present during this time and can attest that the family assets which were calculated to include both apartments in Vivian court which had been owned and occupied by Agnes and Earnest, as well as the other properties and assets of Failic...” (emphasis added)

53.  Upon enquiry from the bench, Mr Mak very frankly and properly accepts this is a satisfactory answer to the Plaintiff’s requisition on the risk of enforcement action by Audrey but he queries whether this answer is sufficient to show beyond reasonable doubt. He submits to this court various reasons why this might not be sufficient.

54.  In this respect, Mr Mak’s first point is that Deirdre 1 and the 1996 Letter from Kenneth are self-serving. His second point is that the affidavit was made in the absence of Audrey, or rather without Audrey’s endorsement of its contents. His third point is that there is no evidence that any efforts had been made to locate Audrey.

55.  Applying the robust common sense that the present case calls for, and guided by commercial reality, this court is of the view that it is beyond reasonable doubt that any perceived risk of successful challenge by Audrey to the Plaintiff’s title to the Property would not be a real risk but only a fanciful one.

56.  The reality is that the Deceased had been the owner of the Property since 1985. When he died intestate in 1990 in Hong Kong, all his siblings were in their early 60s (Agnes and Ronald) or late 50s (Audrey and Kenneth). Audrey has been living with her husband in Canada for more than 30 years when the Deceased passed away. By now, Audrey if alive would be in her late 80s.

57.  There is nothing to suggest that Audrey did not know about the passing away of the Deceased or her potential entitlement to the Deceased’s estate, including the Property. There is also no evidence before this court that Audrey was very eager to come back to Hong Kong to make sure she would get the most out of the Deceased’s estate once letters of administration were granted.

58.  In fact, the 1994 Letter suggested otherwise. The evidence is that well before the formal grant of letters of administration in 1997, Audrey wished to be paid her estimated share of the Deceased’s estate, instead of waiting for the grant of the letters of administration. Her wish was granted by her brothers. The settlement of her potential entitlement to the Deceased’s estate was evidenced by Kenneth’s 1996 Letter to Mr T M Cheung and subsequently vouched for by Deirdre’s affidavit.

59.  Of course, the perfect situation is for the Defendant to come up with evidence e.g. a written confirmation of Audrey renouncing her entitlement to the Deceased’s estate and/or giving her consent to the 2000 Assignment. But given Audrey’s old age, her whereabouts is unknown and her dementia, this is practically impossible to come by. Further, given Audrey’s family and Kenneth’s family have been living apart and abroad for many years, it is not surprising that Kenneth’s family have lost contact with Audrey for years.

60.  As Liu JA said in Jumbo Gold Investment Ltd v. Yuen Cheong Leung and Another, the court would be considered best guided by the commercial reality as to whether there is any real risk of problems in title and it is not to be unduly hampered by strict legal proof in matters requisitioned. As far as commercial reality is concerned, there is no evidence of Audrey having been proactively or overly concerned in the administration of the Deceased’s estate. On the contrary, Audrey was quite eager to get some cash without waiting for the grant of the letters of administration or completion of the administration of the Deceased’s estate by Kenneth.

61.  As far as Mr Mak’s 3 points about (i) Deirdre’s affidavit and the 1996 Letter from Kenneth being self-serving, (ii) Deirdre’s affidavit being made in the absence of Audrey or without Audrey’s endorsement and (iii) there being no evidence that any efforts had been made to locate Audrey, they are fair points but as Liu JA said, one should not be unduly hampered by strict legal proof in matters requisitioned.

62.  In these circumstances, taking a common sense look at the evidence as a whole, this court is satisfied that there is now no real risk of enforcement action being taken by Audrey against the Property. In view of this finding, the question whether or not Audrey’s potential claim is time-barred or will be defeated by the doctrine of laches does not fall for consideration.

63.  Further, this court is of the view that the Defendant has answered satisfactorily the outstanding requisition raised by the Plaintiff’s solicitors and so has shown a good title.

64.  In this regard, it is important to bear in mind that from beginning to end, the gravamen of the Plaintiff’s requisition has been whether there is a real risk of Audrey taking enforcement action against the Property in light of s 55 of PAO: see for instance the extracts from SHL’s letters dated 22 March and 4 April 2022. On the other hand, the gravemen of the Defendant’s answer has consistently been that, in view of the passage of time, there was only a remote and fanciful, as opposed to a real risk: see for instance the extracts from YLY’s letters dated 29 March, 25 April and importantly 13 May 2022.

65.  As this court stated earlier, the perfect situation is for the Defendant to come up with evidence e.g. a written confirmation of Audrey renouncing her entitlement to the Deceased’s estate and/or giving her consent to the 2000 Assignment. But that is not the only satisfactory way to answer the Plaintiff’s requisition. In this court’s view, the Defendant’s solicitors did address the Plaintiff’s requisition as best as they could and the gist of their answer is sufficient to enable the Defendant to show a good title to the Property.

66.  Applying the robust common sense that this requisition calls for, and guided by commercial reality, this court considers the Defendant has provided a satisfactory answer to the Plaintiff’s requisition.

Disposition and costs

67.  The OS is hereby dismissed.

68.  On the basis that the only potential defect in title is that raised by the Plaintiff’s requisition aforesaid, this court is prepared to grant a declaration that the Defendant has given and shown a good title to the Property.

69.  There shall be no order as to costs as agreed by the parties.