Ample Happiness Ltd v. Sunrise Enterprises Holdings Ltd

DCMP 4328/2021

[2022] HKDC 1007

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 4328 OF 2021

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JUDGMENT

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A.  Introduction

1.This is a vendor and purchaser summons concerning the sale and purchase of a car parking space known as Parking Space No L17 on 1^st Floor, Mai Luen Industrial Building, Nos 23-31 Kung Yip Street, Kwai Chung, New Territories (the “Property”).

2.The primary issue in this case is whether the vendor has satisfactorily answered two requisitions and shown good title to the Property. If the vendor has shown good title, a second issue is whether the purchaser can in any event rely on the “mid-night rule” to say the defendant’s termination of the sale and purchase agreement was pre-mature.

B.  Background

3.On 7 April 2021, the defendant as the vendor, the plaintiff as the purchaser, and World Wide Property Limited as the agent, signed a tri-party provisional sale and purchase agreement (the “Provisional Agreement”) whereby the defendant agreed to sell the Property to the plaintiff at a consideration of HK$1.615 million. The plaintiff paid an initial deposit of HK$80,000 upon signing of the Provisional Agreement. The date of completion was 5 August 2021. Under the agreement, the plaintiff should pay a further deposit of HK$81,500 upon signing of a formal sale and purchase agreement on or before 20 April 2021. On 20 April 2021, although no formal sale and purchase agreement was entered into between the parties, the plaintiff duly paid the further deposit of HK$81,500.

4.On 19 July 2021, Messrs. YM Lawyers LLP (“YML”), solicitors of the defendant, sent a list of title documents in respect of the Property to Messrs. Cheung Fung & Hui (“CFH”), solicitors of the plaintiff.

5.By letter dated 21 July 2021, CFH raised various requisitions concerning the title of the Property. The two requisitions which led to the present proceedings are as follows:

4.1.  Requisition 1(a):

“For the purpose of proving title to the Property, please let us have … the Layout Plan with letter attached Memorial No. TW137126＂ (the “Layout Plan Requisition＂);

4.2.  Requisition 2:

“Please let us have certified true copy of Affirmation by Administrators for the application of Letters of Administration of the estate of Varee Chiraprut Memorial No. 12080902100091 in order to prove that Chailai Chiraprut, Chaichan Chiraprut and Vipa Chiraprut were the only beneficiaries as mentioned in Assent Memorial No.12110702550030” (the “Assent Requisition”);

6.By letter dated 23 July 2021, YML gave the following answers:

43.1.  Layout Plan Requisition:

“The Layout Plan … is pre-intermediate root of title and need not be produced by our client”;

43.2.  Assent Requisition:

“We do not share your view that our client is required, for the purpose of proving title, production of Affirmation by the Administrators leading the grant of the Letters of Administration Memorial No.12080902100091. Your client as a bona fide purchaser is well protected under Section 68(8) of the Probate and Administration Ordinance Cap. 10.”

7.By letter dated 27 July 2021, CFH expressed disagreement with YML's views:

6.1.  Layout Plan Requisition:

“Regarding item (a), we do not share with your view. Your attention is drawn to the case, Sunlink Group (Hong Kong) Limited v Sorrayo Investments Limited (MP No.2113 of 1998) which stated that the Vendor have the duty to provide the Purchaser with the valid and relevant car parking layout plans in relation to the subject car park and such car parking layout plan forms part of the title deeds and documents of the property no matter it was created were more than 15 years or not. In light of the legal authorities, we insist to have certified true copy of item (a)”; and

6.2.  Assent Requisition:

“We do not share with the view that the affirmation by administrators is only relevant to the grant of Letters of Administration ... You are referred to the case, So Mariko v Tse Chun John and Lee So Ling Sirvina (HCA 579/2010) (CACV212/2010). We repeat our requisition.”

8.By letter dated 2 August 2021, YML maintained their stance. However, in respect of the Layout Plan Requisition, YML offered an undertaking to provide the relevant document within 21 days after completion. The relevant answers were as follows.

7.1.  Layout Plan Requisition:

“We do not agree that the pre-intermediate root and very old Layout Plan or a copy of which is required to show that it does not affect title to the Property. On a without prejudice basis and without admitting liability for production of such document as well as a gesture of goodwill only, we undertake to send you the certified copy the Layout Plan Memorial No.TW13712 within 21 days after completion.”

7.2.  Assent Requisition:

“… Section 68(8) of the Probate and Administration Ordinance Cap.10 operates a presumption that the appropriation under the Assent in question shall be deemed to have been made in accordance with the requirements thereof and there is no reason to suspect that the beneficiaries named therein were not the only persons entitled to the estate of Varee Shirapruk, deceased. Our client is not obliged to prove the negative in the absence of some irregularity in the said appropriation. The onus is on your client to prove the contrary should your client take the view that the Assent was made with fault.

Your referring to us the case of So Mariko v Tse Chun Chung John and Another (CACV 212/2010) has no value in support of your requisition. On the contrary the learned Judges upheld the judgement given by Carlson J in the lower court and ruled that the affirmation was not itself a necessary document of title (paragraph 35).

In our present case, the deceased died on 12^th August 2008 and in the intervening 13 years there is no evidencing of any claim by a missing beneficiary of the said deceased’s estate. In the absence of anything to the contrary or any other suspicion features emerging during the said 13 years following the death of the said deceased, these facts and circumstances are so compelling that the court can conclude beyond reasonable doubt that the beneficiaries to the said Assent were the only beneficiaries of the said deceased’s estate and there is no real risk of another beneficiary coming forward to asset a claim to the Property. More importantly, your client is well protected by Section 68(8) of the Probate and Administration Ordinance. Any further challenge against your client's title in respect of the said Assent will not be successful.”

9.By letter dated 4 August 2021, CFH disagreed and replied as follows:

8.1.  Layout Plan Requisition:

“Regarding your undertake to produce a certified true copy of the subject document after completion, with due respect, the same is not acceptable. We trust you should have no doubt that it is the fundamental duty/obligation of your client to prove the title to the Property within a reasonable time before completion and to produce the relevant documents to prove such title to the Property. Thus, it is hard to understand how and why in the subject case, your client would have the right unilaterally to produce the subject document to prove your client’s title to the Property after completion. Of course, should there exist any such law or rule in supporting your view, you may be kind enough to enlighten us the same (original emphasis).

8.2.  Assent Requisition:

“It is quite clear that the Section 68(8) of Cap.10 is subject to the rights of persons entitled to share the estate of the deceased (inter alia, Sections 66(5) and 68(2)(b)(i) of Cap.10). Thus, unless it is proved beyond reasonable doubt that the assignee(s) under the Assent dated 31^st October 2012 Memorial No.12110702550030 (the "Assent") are the only persons entitled to share the estate of Varee Chirapruk (the “Deceased”), the Assent is voidable and subject to the rights of the beneficiaries) entitled to share the estate of the Deceased to set aside the same.

In the premises, it is quite reasonable and logical for the purchaser to enquire whether the assignee under the Assent are the only persons who entitled to share the estate of the Deceased.

…

Of course, you may consider to produce other acceptable conveyancing evidence proving that the assignee(s) under the Assent are the only persons entitled to share the estate of the Deceased instead of producing the requested affirmation. However, up till now, you have produced nothing in relation thereto.

In view of the aforesaid, we have no alternative but to repeat and maintain the subject requisition on title.”

10.On the date of completion on 5 August 2021, YML issued a letter to CFH at 12:27 pm, adopting their previous answers and maintained that they had fully and reasonably answered all the requisitions of the plaintiff. At 2:40 pm, CFH replied maintaining that the requisitions should be answered. At 2:52 pm, CFH issued their 2^nd letter suggesting postponing the completion to 2 September 2021 for the defendant to answer the outstanding requisitions. YML replied at 3:27 pm by issuing their 2^nd letter refusing to postpone the completion. In response, CFH issued their 3^rd letter at 4:25 pm, again, maintaining its views that the defendant had failed to show and prove good title and to answer the requisitions satisfactorily.

11.At 6:13 pm, YML issued their 3^rd letter, putting on record that the plaintiff had “failed (up to our normal time for close of business at 6.00 p.m. on a weekday) to complete the purchase” of the Property. The defendant gave notice to the plaintiff that the defendant regarded the plaintiff's conduct as constituting an anticipatory breach of the Provisional Agreement, which was accepted by the defendant. The defendant therefore exercised its right to forfeit the deposits.

12.By letter dated 6 August 2021, CFH replied that the defendant was not entitled to terminate the Provisional Agreement by reason of the mid-night rule, and that the defendant was in anticipatory breach of the terms and conditions of the Provisional Agreement, which was accepted by the plaintiff. CFH also repeated that the defendant had failed to show and give a good title to the Property and to answer the requisitions properly and satisfactorily.

C.  Legal principles on showing good title

13.The following principles are well-established and not in dispute.

14.A vendor is obliged to show a good title before completion by satisfactorily answering requisitions irrespective of the vendor’s ability to pass/give good title on the date for completion. The standard of proof is high and a vendor has to prove beyond reasonable doubt that the purchaser will not be at risk of a successful assertion against him of an incumbrance: Chau So Man Sue v Chow Wai Fong Alice [2022] HKDC 206 at §§22-23.

15.The court will not force a doubtful title on a purchaser. Whenever a question on ‘whether there is good or doubtful title’ arises, it must be approached from the standpoint 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 bargain: Wong Anita Shu Ting (formerly known as Wong Shu Ting Anita) v Yuen Yiu Chung [2022] HKCFI 209 at §§22-23.

16.The purchaser must be given reasonable time to consider the title of the vendor and his own position – the implied obligation of showing a good title would not have been discharged by disclosure on the day fixed for completion: Active Keen Industries Ltd [1994] 2 HKC 67 at 79A. Where a document needs to be produced by the vendor as proof of title, it is no answer for him to say that the purchaser could easily obtain it himself: Paul Chen and Another v Lord Energy Ltd [1999] 1 HKLRD 205 at 211A.

D.  Layout Plan Requisition

17.There appears to be no dispute that the plaintiff was entitled to raise this requisition. However, as stated above, apart from the undertaking to provide the relevant layout plan after completion, the defendant’s answer (through YML) to this requisition during the stage of solicitors’ correspondence was simply that the document requested was “pre-intermediate root of title and need not be produced”.

18.At the hearing however, the defendant was no longer pursuing the pre-intermediate root argument with any enthusiasm. It is noted that in the written submissions of Ms Karen Wong, counsel for the defendant, the pre-intermediate root argument was not even mentioned in her analysis. I think Ms Wong was right not to seek to advance this point with much vigour. In my view, it is unarguable. I agree with Mr Mike Yeung, counsel for the plaintiff, that the defendant’s simple statement that the layout plan was pre-intermediate root of title, without any explanation on why and how this document would not affect the quality of the title, cannot be a satisfactory answer to the Layout Plan Requisition.

19.It is trite that a purchaser is not prevented from raising proper requisitions upon pre-intermediate root documents. The purchaser does not have a duty to prove defect in the pre-intermediate root title before the vendor has to answer. Whether a purchaser could establish that the vendor’s title is defective is a matter that could only be determined when the matter was before the court. However, if the objections are properly formulated and they show that the pre-intermediate title is defective, the vendor must respond to the requisitions: Lo Hung Biu v Lo Shea Chung and another [1997] HKLRD 721 at 727I-728A, 731F.

20.In Sunlink Group (Hong Kong) Co Ltd v Sorrayo Investment Ltd [1999] 2 HKLRD 468, the court held that ascertaining whether a carparking space was in accordance with the approved layout was a proper concern and that the supplying of a certified true copy of the approved carpark layout plans was necessary. As explained by Yuen J (as she then was):

“The boundary and layout of carparking are easily changed. An unscrupulous developer or subsequent owner can, if space permits, simply by re-drawing some lines on the ground at any time, squeeze say, three car parking spaces in place of two. (at 474D)

…

In any event, a wrongly laid-out car-parking space could not only spell a risk of re-entry (which under general condition (9)(a) could be of the offending part only). If it is (wrongly) laid out on communal area, it would also mean the absence of title to the car-parking space contracted to be purchased. In my view, a purchaser is entitled to see for itself whether the car-parking space which the vendor has contracted to sell is one which had been approved by the lessor. The purpose of verification is bound up with the proof of title. There are therefore not two requisitions, only one. (at 474I)”

21.At the hearing, Ms Wong sought to advance a new point. She submitted that given the close proximity of the date of the First Assignment (31 March 1979) and the Letter of Compliance (20 February 1979), it is highly unlikely that the layout plan in the Assignment would differ from the layout plan as requested by the plaintiff. Further, from the year of 1979 to 2021, for a period of 42 years, there is no evidence of any enforcement action taken by the Government.

22.With respect, the short answer to such contention must be that it was not the answer given by the defendant (through YML) to the Layout Plan Requisition at the material time. YML never addressed the question of likelihood of difference of the plans or real risk of enforcement action. Instead, they consistently maintained that the layout plan was pre-intermediate root of title and therefore not required to be produced.

23.It is trite that, where a purchaser has made a reasonable requisition as to title, the vendor is not entitled to enforce the contract if he has not satisfactorily answered the requisition: Active Keen Industries Ltd; and that, if the requisition is not answered satisfactorily, it does not matter if the vendor does in fact have a good title: Kok Chong Ho v Double Value Developments Ltd [1993] 2 HKLR 423 at 432. Therefore, it does not matter whether the defendant is eventually proven right on these new contentions. If the defendant has not explained why the quality of title would not be affected despite the absence of the layout plan, it has not answered the requisitions properly and has not proven a good title.

24.I now turn to the question of YML’s undertaking to provide the layout plan within 21 days after competition.

25.Apart from the Property, the parties have also entered into a sale and purchase agreement of another car parking space, namely, Parking Space No. L23 on 1^st Floor, Mai Luen Industrial Building, Nos. 23-31 Kung Yip Street, Kwai Chung, New Territories (the “'L23 Property”), which is located on the same floor of the same building as the Property. The completion date thereof was on 2 August 2021, which was earlier than the sale and purchase of the Property (on 5 August 2021).

26.In respect of the L23 Property, the defendant offered the same undertaking to provide a certified copy layout plan within 21 days after completion, which was accepted by the plaintiff. The defendant said it was under these circumstances that YML proposed the same undertaking in respect of the Property by their letter dated 2 August 2021, expecting CFH to agree as it did in respect of the L23 Property.

27.Regarding whether an undertaking by the vendor to produce documents is sufficient, the defendant relies on Chu Wing Yip v Leung Siu Yuk [1997] HKLRD 29 and Ip Fung Yee v Norwegian Missionary Society [1998] 1 HKLRD 94. In both cases, the court held that the purchasers’ refusals to accept the undertakings of the vendors were contrary to normal conveyancing practice between solicitors and also “at variance with the way in which the two sides gave each other to believe that they were to behave.”: Chu Wing Yip at 31I and Ip Fung Yee at 110G

28.However, the mere fact that completion by undertaking may have been expected does not mean that such an undertaking may necessarily be forced on an unwilling purchaser. In Sunlink, the vendor argued that an undertaking to provide certified copies of the car-park layout plans after completion was good enough. Yuen J. (as she then was) disagreed and held that the purchaser was not bound to accept the undertaking. She said that (at 475H):

“The vendor submits that that should have been good enough. But the point is not whether a willing purchaser would have been happy with such an undertaking. The point is whether a title which depends on such an undertaking can be forced upon an unwilling purchaser.

…

However, the purchaser was not obliged to accept such an undertaking. There was nothing in the agreement for sale and purchase, whether express or implied, that bound the purchaser to accept such an undertaking, which gave no indication of the time “after completion” by which the certified true copies would be produced. The fact that the purchaser had, on one previous occasion much earlier on, accepted an undertaking presented in more certain terms does not bind it to accept this one.

The fact that completion by undertaking may have been expected does not mean that such an undertaking may be forced on an unwilling purchaser. In my view, the obiter dictum of Bokhary JA in Chu Wing Yip v Leung Siu Yuk [1997] HKLRD 29 at p.34 has to be read in the light of the estoppel in that case.”

29.In conclusion, I find that the Layout Plan Requisition was not properly answered by the defendant.

E.  Assent Requisition

30.This requisition relates to a conveyance by an administratrix of an intestate’s estate to beneficiaries including herself for no apparent consideration. The background to this requisition is as follows.

31.The Property was assigned to Varee Chirapruk (the “Deceased”) on 9 October 1997. She died intestate on 12 August 2008. Letters of administration was granted to Chailai Chiraprut (the “Administratrix”) on 20 July 2012. By an Assent dated 31 October 2012 (the “Assent”), the Property was assigned by the Administratrix to 3 individuals, namely herself, Chaichan Chiraprut and Vipa Chiraprut (the “Named Beneficiaries”).

32.Mr Leung Wai Pui (“Mr Leung”), a solicitor employed by Messrs Li, Wong, Lam & W I Cheung (“LWL & WIC”) attested to the execution of the Assent.

33.Recital 2 of the Assent stated that the Deceased died on 12 August 2008 “leaving the Deceased surviving the [Named Beneficiaries] as the only persons entitled to share in the Deceased’s estate on her intestacy”.

34.By a conveyance on sale dated 4 March 2019, the Property was conveyed to the defendant.

35.As stated above, the plaintiff’s solicitors CFH requested to have the certified true copy of the affirmation by the Administratrix for the application of Letters of Administration. The plaintiff said it might be at risk of a successful assertion by beneficiary(ies) other than the Named Beneficiaries against it of an incumbrance. It therefore had to ensure the propriety of the conveyance of the Property to the Named Beneficiaries by the Assent because the Administratrix was in fact one of the Named Beneficiaries and the conveyance of the Property to the Named Beneficiaries by the Assent was not made for valuable consideration.

36.In Sun Sek Haw and Others v Au So Kum [1999] 3 HKLRD 12, the property in question had been conveyed by two administrators to one of them without consideration in 1974. The defendant vendors later purchased this property in 1992. The plaintiff purchaser then objected to the defendant vendors’ title to the property when they purported to sell in 1998.

37.The plaintiff’s objection was summarized by Godfrey JA as follows (at 15F):

“As a conveyance by two administrators to one of themselves, it reveals on its face, say the purchasers, a breach of trust, the administrators being trustees for this purpose and bound by what is usually called for convenience “the self-dealing rule”. This prohibits a disposition by trustees to one of themselves, unless the transaction is sanctioned by the court or concurred in by all the persons beneficially interested, being of full age and free from disability. The 1974 conveyance here is liable to be set aside, the purchasers say, at the suit of any of the intestate’s minor children, as against, not only the husband, but also as against any subsequent purchaser of the property; for no such purchaser, having accepted a title founded on a conveyance impeachable on its face, as was the 1974 conveyance here, can claim to be a purchaser for value without notice of the existence of the equity in the minor children of the intestate to have the 1974 conveyance set aside.”

38.The objection was upheld by the Court of Appeal because the facts put a subsequent purchaser on inquiry as to the validity of the transfer (at 18A, 21C).

39.A similar situation occurred in So Mariko v Tse Chun Chung John and another [2011] 3 HKC 174. However, the Court of Appeal reached a different conclusion because there was proper conveyancing evidence to provide a satisfactory answer to the requisition.

40.In that case, the property in question had been conveyed by an administratrix to herself and another for nil consideration by an assignment. The recital to the assignment referred to the beneficiaries of the deceased’s estate as the only persons entitled to share in the deceased’s estate and confirmed that these beneficiaries agreed to the conveyance by the administratrix. The plaintiff’s solicitors raised a requisition for evidence that the beneficiaries were the only persons entitled to the estate as per the recital. The defendants’ solicitors then produced a statutory declaration by the solicitor who handled the conveyance in question which confirmed that the contents of the recital accorded with the instructions given by the administratrix.

41.The Court of Appeal held that:

40.1.  the vendor could not simply rely on the content of the recital in the assignment to establish that the beneficiaries referred therein were the only beneficiaries (at §30);

40.2.  an affirmation made by the administrator on the identities of the beneficiaries would have satisfactorily answered the requisition (at §32);

40.3.  if an affirmation was not available, then it was open to the vendor to provide some alternative evidence to corroborate the statement in the assignment (at §§33-36); and

40.4.  the crucial question was whether there was proper conveyancing evidence to provide a satisfactory answer to the requisition – i.e. whether the facts and circumstances were so compelling that the court could conclude beyond reasonable doubt that the beneficiaries referred to in the assignment were all the beneficiaries of the deceased’s estate and there was no real risk of another beneficiary coming forward to assert a claim to the property (at §39).

42.The Court noted that the gravamen of the requisition was whether there might be any other person who still had a subsisting claim against the estate and thereby to the property. Fok JA (as he then was) noted that (at §42):

“42. With that in mind, the following facts and matters are, in my opinion, relevant to deciding whether the requisition was satisfactorily answered:

(1) Mr Ho died on 10 May 1998 and in the intervening 12 years there is no evidence of any claim by a missing beneficiary of his estate.

(2) LPC acted for Madam Ho in her application for letters of administration and she would have made an affirmation identifying the beneficiaries of Mr Ho’s estate in order to obtain the grant of letters of administration to her.

(3) LPC also acted for Madam Ho in preparing the 2001 Assignment. The purpose of that Assignment was to transfer the Property validly into the names of Madam Ho and Ho Tat Tak. The confirmation of the Confirmors was required for that purpose and it would make no sense for Madam Ho to provide conflicting instructions as to the identities of the beneficiaries of Mr Ho’s estate to those which she gave in respect of her affirmation leading to the grant of letters of administration. Unless LPC were in breach of duty to Madam Ho, there is no reason to think that LPC would not have confirmed the fact that the Confirmors were the beneficiaries of the estate by reference to Madam Ho’s affirmation. This would have been an easy task since the firm had also acted in respect of the grant of letters of administration.

(4) It is in this context that one must read the Statutory Declaration made by Mr Yuen. He refers to the fact that LPC acted for Madam Ho in applying for letters of administration and that he prepared the 2001 Assignment. Unless he was in breach of his duty to Madam Ho in the preparation of the 2001 Assignment, he would have checked his firm’s probate file to confirm that Madam Ho’s instructions to him as to the identities of the beneficiaries of Mr Ho’s estate were consistent with her affirmation leading to the grant of letters of administration.”

43.His Lordship concluded that the vendors had provide a satisfactory answer to the purchaser’s requisition. He said that (at §45):

“45. … Although the wording of the Statutory Declaration could have been more explicit, for example in stating that Mr Yuen actually read the copy of Madam Ho’s affirmation in LPC’s probate file to confirm the contents of recital 2 of the 2001 Assignment, there is no evidence that the Purchaser raised any further questions about the Statutory Declaration in order to obtain comfort that the Confirmors were all the beneficiaries of Mr Ho’s estate. In my view, a willing purchaser in receipt of Mr Yuen’s Statutory Declaration would, if concerned about the wording of that declaration, have asked for further clarification rather than simply assert that ‘[t]he declaration of the handling solicitor of the Assignment is not an acceptable secondary conveyancing evidence of the beneficiaries/confirmors’, as the Purchaser’s solicitors did by their letter dated 24 March 2010. …”

44.Much reliance was placed by the vendor on the said judgment. Ms Wong argued that in light of the principles laid down in that case, the defendant in the present case has provided a satisfactory answer to the plaintiff's requisition because:

43.1.  The Deceased passed away on 12 August 2008, that is, about 13 years ago and there is no evidence of any claim by a missing beneficiary of her estate in the intervening 13 years;

43.2.  LWL & WIC acted for the Administratrix in the application for letters of administration, which was granted on 20 July 2012, and the preparation of the Assent dated 31 October 2012. In both matters, the Administratrix had to identify the beneficiaries of the Deceased. It is unlikely that the Administratrix would give conflicting instructions within such a short period of time as to the identity of the beneficiaries;

43.3.  Unless LWL & WIC were in breach of duty to the Administratrix, there is no reason to think that LWL & WIC would not have confirmed the fact that the Named Beneficiaries were the only beneficiaries of the estate by referring to the affirmation of the Administratrix made in applying for a grant; and

43.4.  Although there is no statutory declaration made by the handling solicitors in LWL & WIC in the present case, the practical effect of the statutory declaration is in fact minimal. Besides, the length of time passed without any claim in the present case is one year longer than that in So Mariko. This factor arguably makes good the lack of a statutory declaration.

45.With respect, I disagree. As acknowledged by Ms Wong, unlike So Mariko, a statutory declaration from the handling solicitor is missing in the present case. I do not agree that its practical effect is minimal. On the contrary, it is clear that the Court of Appeal in So Mariko placed much weight on the statutory declaration and eventually found it to have provided satisfactory alternative evidence to corroborate the recital of the assignment. I do not agree the mere absence of adverse claim for one more year could make good the lack of such a declaration.

46.On the other hand, Ms Wong sought to explain the absence of the statutory declaration in the present case by exhibiting in her written submissions a Law Society circular, which shows that LWL & WIC had ceased practice on 15 February 2019. She submitted that it is therefore “very difficult if not impossible” to locate the solicitors in charge of the case and the case file.

47.I am also unable to accept those submissions. First, that was not the defendant’s stance at the stage of correspondence. If it was, the defendant should have informed the plaintiff in a straight forward manner of such ‘difficulty’ so that the plaintiff could be reasonably confident that all relevant facts had been revealed by the defendant. That is however not what happened. All that the defendant relied on at the time was the lapse of time and s68(8) of the Probate and Administration Ordinance (“PAO”). Second, there is in any event no evidence to show that finding the handling solicitor is indeed “very difficult if not impossible”. In particular, there is no evidence to show that Mr Leung himself (apart from LWL & WIC) has also ceased practice and therefore difficult or impossible to be found. Further, I note that in So Mariko, the handling firm LPC had also been dissolved at the time of the litigation (see §45). However, such a fact had not prevented the vendor in that case to obtain a statutory declaration from the handling solicitor, Mr Yuen, who worked at LPC at the material time.

48.Finally, the defendant argued that the plaintiff would be protected by the presumption under s.68(8) of the PAO insofar as the Assent was concerned to the extent that any challenge against P’s title arising from the Assent would not be successful. Section 68(8) provides as follows:

“(8) If after any immovable property has been appropriated in purported exercise of the powers conferred by this section, the person to whom it was transferred or conveyed disposes of it or any interest therein, then, in favour of a purchaser, the appropriation shall be deemed to have been made in accordance with the requirements of this section and after all requisite consents, if any, had been given.”

49.I agree with Mr Yeung that the plaintiff would not be protected by s.68(8) of the PAO insofar as the Assent was concerned. S.68(8) provides protection to a purchaser if the vendor in the capacity of a personal representative appropriated the property in purported exercise of power conferred in s.68. As there is no evidence pointing to appropriation of the Property in favour of the Named Beneficiaries in purported exercise of the powers conferred on the administrator by s.68 of the PAO, the plaintiff would not be entitled to claim the protection of s.68(8) of the PAO. Mere administration of the deceased’s estate is not evidence of purported exercise of power under s.68 of the PAO.

50.Similar to the present case, in Sun Sek Haw, the defendant vendors claimed that the plaintiff purchaser would be protected by s.68(8) of the PAO. The argument was rejected by the Court of Appeal. Godfrey JA explained that (at 18H):

“In the absence of any evidence of any appropriation in favour of the husband in purported exercise of the powers of appropriation conferred on personal representatives by s.68 of the PAO, no purchaser claiming under the husband can claim the protection of s.68. It was argued before us that the 1974 conveyance reveals there was an appropriation here, made in purported exercise of these powers; but, in my judgment, to construe the words “in the course of administration of the estate of the said deceased and for the purposes thereof” as a purported exercise of the administrators’ statutory powers of appropriation, when there is no recital of any such appropriation, and indeed no other suggestion of any such appropriation, whether in the 1974 conveyance or anywhere else, seems to me to be quite impossible. The purchasers must succeed on this issue, too.”

51.I therefore find that the Assent Requisition has also not been satisfactorily answered.

F.  The mid-night rule

52.Due to my conclusions above, there is no need for me to deal with this issue. However, in deference to counsel’s submissions, I shall deal with this issue briefly.

53.As noted in Sun Champ Investment Ltd v Green Leaves Trade Investment Ltd [2013] HKDC 1461 at §59, the midnight rule was conveniently summarized by the Law Society Circular 89-15 dated 23 January 1989 as follows:

“In Camberra Investment Ltd v Chan Wai Tak otherwise knows as Frederick Chan [Civil Appeal No 75 of 1988], the Court of Appeal, following the decision of the House of Lords in Afovos Shipping Co SA v Pagnan [1983] 1 WLR 195 (HL), held that where a contract of sale and purchase provides for completion to take place on a certain date without specifying the time(s), the time for completion will not expire until midnight on that date.

To prevent the midnight rule from applying, it is necessary to provide specifically in a contract of sale and purchase not only the date but also the time(s) for completion. The following clause is an example:-

‘The sale and purchase shall be completed at the offices of ABC & Co Solicitors, between the hours of [insert usual office hours] on or before [insert date].””

54.I do not think the mid-night rule applies in this case. As submitted by Ms Wong:

56.1.  The mid-night rule has no application in a case of anticipatory breach: Crowning Success Limited v Brightland Corporation Limited & Anor (unreported, CACV 110/2009, 1 April 2010) (CA) at §15 and Sun Champ Investment Ltd v Green Leaves Trade Investment Ltd (unreported, DCMP 706/2013, 25 October 2013) at §63.

56.2.  As a matter of conveyancing practice, it was for the purchasers i.e. the plaintiff to tender the draft assignment to the defendant for approval. By failing to send the defendant a draft Assignment by 6 pm on the date of completion, the defendant was left with no reasonable time to consider the terms of the draft assignment;

56.3.  The plaintiff has persistently refused to accept the defendant's answers on the requisitions;

56.4.  The plaintiff suggested to postpone the transaction on the date of completion;

56.5.  By reason of the above conduct, from the perspective of a reasonable person in the position of the defendant, the plaintiff had clearly shown an intention to abandon and altogether refuse to perform the Provisional Agreement at the material time.

55.In the circumstances, if (contrary to my findings) the defendant had satisfactorily showed a good title to the Property, the plaintiff’s conduct would have amounted to anticipatory breach for which the defendant was entitled to accept at around 6.13 pm on 5 August 2021.

G.  Conclusion and Order

56.For reasons explained above, I hold that the defendant has failed to answer the Layout Plan Requisition and the Assent Requisition and failed to show a good title to the Property. The defendant was in breach of the Provisional Agreement and had wrongfully forfeited the deposits.

57.The plaintiff confirms that it no longer pursues specific performance. It seeks a return of the deposits, and also reimbursement of conveyancing costs, stamp duty and indemnity in respect of payments to be made to the estate agent.

58.The defendant does not dispute that the deposits should be returned, and that it should pay the plaintiff the costs of conveyancing in the sum of HK$9,500. It also has no objection to the grant of an equitable lien on the Property for the deposits.

59.However, the defendant submits that reimbursement of estate agent fees and stamp duty should not be granted to the plaintiff.

60.Clause l l(a) of the Provisional Agreement provides that:

“無論在任何情祝下，若賣方或買方未能履行本合約之條款賣出或買入該物業，則悔約的一方須即時付予代理佣金港幣32,300 作為賠償代理之損失。(In any case, either the Vendor or the Purchaser fails to complete the sale or purchase in the manner herein contained, the defaulting party/ parties shall compensate at once the Agent HK$32,300 as liquidated damages.”

61.The estate agent, World Wide Property Limited, is one of the parties to the Provisional Agreement and is entitled under Clause l l(a) to recover its loss. The defendant submits that the plaintiff does not have a separate cause of action against the defendant on the estate agent commission.

62.In respect of stamp duty, the defendant submits that the plaintiff can apply for a refund under section 29C(5B)(a) of the Stamp Duty Ordinance (Cap 117) ("SDO"). There is no evidence showing the stamp duty of could not be refunded.

63.In Wong Bik Ching v Yu Hon Chung, (Recorder Edward Chan QC) held that (at 49C):

“However in the present case, the evidence does disclose that the purchaser was still pursuing a claim for refund from the Collector of Stamp Duties. Such claim for refund may or may not be successful. If the claim is successful, the purchaser would not have suffered any loss by way of wasted stamp duties.

Apart from the stamp duties, the purchaser also asked for an order that the vendor do indemnify the purchaser in respect of any claim by the estate agent for commission. Again, at this stage, this claim may or may not succeed and it may also be the case that the agent will not make any claim at all.

In these circumstances, I am of the view that I should not make any order that the vendor should pay or indemnify the purchaser of any stamp duty paid or any claim by the estate agent. Instead, I am of the view that the correct order to make is to give the purchaser liberty to apply for assessment of damages arising out of any loss of stamp duties and claim by the estate agent for commission.”

64.I will respectfully adopt the same approach and give the plaintiff liberty to apply for assessment of damages arising out of any loss of stamp duties and claim by the estate agent for commission.

65.I therefore make the following orders:

(1)  A declaration that:

(a)  the defendant has failed to answer the Layout Plan Requisition and the Assent Requisition and failed to show a good title to the Property; and

(b)  the defendant was in breach of the Provisional Agreement and had wrongfully forfeited the deposits.

(2)  An order that the defendant do return to the plaintiff the sum of $161,500, being the total amount of the deposits paid by the plaintiff to the Defendant, together with interest from 6 August 2021 to date of judgment at the rate of HSBC prime plus 1%, and thereafter at judgment rate;

(3)  A declaration that the plaintiff is entitled to an equitable lien on the Property for the said deposits; and

(4)  Liberty to apply be granted to the plaintiff for assessment of damages arising out of any loss of stamp duties and claim by the estate agent for commission.

66.For costs, I will make an order nisi that the defendant should pay the plaintiff’s costs (including any costs reserved), with certificate for counsel, to be taxed if not agreed.

67.Lastly, it remains for me to thank counsel for the assistance provided to the court.

Mr Mike Yeung, instructed by Cheung Fung & Hui for plaintiff

Ms Karen Wong, instructed by YM Lawyers LLP for defendant