Read the full judgment text of CACV 000209/1992 on BabelCite. This Court of Appeal judgment was delivered on 17 June 1993 before Penlington JA, Nazareth JA, Sears J.
Civil law – conveyancing – sale of property – agreement dated 27 April 1990 for $2.9 million – unit in Carson Mansion, 113-123 King's Road, Hong Kong – title derived from 1984 assignment by Oliver Paris (Hong Kong) Limited to its director Chan Bing Fai for $125,000 – assignment signed only by Chan on behalf of company – purchaser's solicitors raised requisition on due execution in May 1990 – vendor's solicitors answered in June 1990 relying on Law Society Circular No. 105/90 and s.23 of Conveyancing and Property Ordinance (Cap 219) – purchaser's solicitors made no further response until forwarding draft deed of assignment on 24 July 1990 – proposed mortgagee's solicitors later raised queries about the undervalue sale and the absence of a board resolution – vendor refused to provide shareholders' resolution – purchaser called off contract on 30 July 1990 – Godfrey J. held purchaser entitled to recover $150,000 initial deposit and to give good receipt for further $140,000 deposit – whether purchaser's solicitors accepted title by forwarding draft deed of assignment – whether five-day time limit for requisitions displaced because requisition went to root of title – whether purchaser entitled to call for shareholders' resolution regarding apparent undervalue sale by company to its own director – Court of Appeal held that purchaser's solicitors accepted title by forwarding draft assignment before the second requisition – mere forwarding of draft conveyance without reference to outstanding requisitions constitutes implied acceptance of title, applying Farrand on Contract and Conveyance and Burroughs v Oakley – five-day time limit under clause 11 of agreement applied because matter complained of was obvious from title documents already in purchaser's solicitors' possession at time of agreement – proposition in Re Cox & Neve's Contract and Re Tanqueray-Willaume and Landau that time limit does not run where vendor unaware of defect did not assist purchaser – s.23 of Conveyancing and Property Ordinance (Cap 219) presumes due execution of instruments – Turquand rule (Morris v Kanssen [1946] AC 459) protects persons dealing with company in good faith from inquiring into internal management – purchaser not entitled to require sight of shareholders' resolution nearly six years after sale – appeal allowed – order of Godfrey J. set aside – vendor entitled to retain deposits and to have costs below and of appeal.
Legal issues: Acceptance of title by forwarding draft deed of assignment · Effect of time limit on requisitions going to root of title · Purchaser's right to call for shareholders' resolution on undervalue sale by company to director
Outcome: Appeal allowed; order of Godfrey J. set aside.
Cited by 1 case