FONG CHUNG v. WU CHIK CHIN

HCMP 21/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO 21 OF 2016

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JUDGMENT

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1.  The plaintiff is the sole registered owner of the property known as Flat C, 6/F, Pao Hing House, Nos. 240 – 244 Lai Chi Kok Road, Kowloon (“the Property”). In these proceedings the plaintiff by Originating Summons seeks declaratory relief to the effect that a sale and purchase agreement registered in the Land Registry by Memorial No. 1507078 against the Property has been terminated and all obligations thereunder have been discharged. He also requests for an order that the memorial be vacated.

2.  The defendant was ordered to be served by substituted service, which was properly effected.  The defendant has not responded to these proceedings at all.  The hearing proceeded in his absence.

3.  Between 1969 to 1994 the Property was the plaintiff’s family home where he resided with his wife and raised two sons.  In 1975 the defendant and his wife became the plaintiff’s tenants in one of the rooms on the premises for a rental of $100 per month.  The two couples got along quite well at the time.  During this time, the plaintiff introduced his friend, a Mr Yim Yau Ting to the defendant, who had employed the defendant’s wife as a saleslady in his family business for a period between 1975 to 1978.

4.  In 1978, the plaintiff thought of selling the Property to trade up for a larger flat.  The defendant expressed interest to buy the Property.  As a result, the agreement for sale and purchase, the subject of the memorial, was executed, with the plaintiff as seller, the defendant as purchaser, and Mr Yim as the witness.  This agreement has all the hallmarks of a homemade agreement.  It stated the agreed purchase price to be between $120,000 and $140,000, to be fixed by a valuer according to the market price.  It records the acceptance of a deposit in the sum of $25,000 by the seller, but did not fix any completion date.  The agreement was dated 13 March 1978. Without the knowledge of the plaintiff, this agreement was on 12 April 1978 registered in the Land Registry by Memorial No. 1507078 against the title of the Property.  The memorial bears the same signature of the defendant as that appearing on the sale and purchase agreement.

5.  According to the affirmed evidence of the plaintiff, after the execution of the agreement, the defendant started behaving in such a way as to indicate to him that he no longer wanted to purchase the Property. He attempted to negotiate for the lowering of the purchase price to $110,000, below the lower limit of the agreed range, which was turned down by the plaintiff.  He stopped paying rent and became uncommunicative.   He did not discuss with the plaintiff whether he had any difficulties completing the purchase, or what he intended to do if he was not going to complete the purchase.

6.  To avoid the embarrassment of confronting the defendant, the plaintiff asked Mr Yim to return the deposit to him.  The defendant and his wife eventually moved out of the Property without saying goodbye after about two months of signing the sale and purchase agreement.  The plaintiff heard nothing further from the couple, and had no idea where they have moved to.  The affirmed evidence of the plaintiff is uncontested, and there is nothing before me that causes me to believe that it is other than true.

7.  Since 1978 there has been a lapse of time of 38 years, during which the defendant and his wife have not made further contact. I am satisfied that in those circumstances, it was more likely than not that the defendant did receive and had accepted the deposit returned to him through Mr Yim.  By moving out of the Property without any further discussion with the plaintiff, he had clearly indicated that he agreed to rescind from the sale and purchase agreement.  The fact that he made no further contact with the plaintiff about the agreement or the Property strongly fortifies this view.

8.  Mr Yim passed away in 1994, leaving his wife who knew about the aborted sale of the Property.  She affirmed that she knew of the aborted sale, and the return of the deposit through her husband.  Her evidence supports the view I take from the evidence of the plaintiff, the truth of which I have no reason to doubt.

9.  It was in 2015 when the plaintiff discovered that there was an encumbrance upon the Property by the registration of the agreement by memorial.  He has therefore taken out these proceedings to vacate the memorial in order to restore a good title.

10.  Counsel for the plaintiff, Mr Liu, drew my attention to the case of Lee Woon Tong & Anor v Kwan Pui Lui & Ors (unreported) DCMP 3045/2005, 19 December 2005.  That was a judgment given under a vendor and purchaser summons.  The facts are different from this case, but the learned judge relied on the lapse of time of 13 years during which there was no evidence of any assertion or enforcement of a sale and purchase agreement, nor of any evidence as to what happened to the deposit paid thereunder.  The learned judge found assurance in the fact that any claim thereunder would have been time‑barred, and made an order to vacate the registration.

11.  I am satisfied that this is an appropriate case where the orders sought should be made.  I make an order in terms of paragraphs 1 to 3 of the Originating Summons.

12.  It remains for me to thank counsel for his assistance.