Read the full judgment text of HCMP 003979/1992 on BabelCite. This High Court CFI judgment was delivered on 29 January 1993 before Godfrey J.
Vendor and purchaser – requisition on title – execution of mortgage by company – authentication of deeds – common seal – signature of directors – articles of association requiring signature by more than half of existing directors – whether mortgage validly executed by one of four directors – Conveyancing and Property Ordinance ss.23 and 52 – TCB Ltd v Gray – whether title impeachable. Property known as Flat A, 13/F, Jumbo Court, 3 Welfare Road, Aberdeen was sold by the plaintiffs to the defendant for HK$1,950,000 with completion due on 6 November 1992. The title derived from a 1987 assignment by Hang Seng Bank exercising its power of sale under a 1980 mortgage granted by Tri Tronic Limited, which bore the company's seal but was signed by only one of its four directors. Article 13 of the company's Articles required deeds to be sealed and signed by more than half of the existing directors, meaning at least three signatures were required. The purchaser raised a requisition on title concerning the defective execution. The vendors' solicitors advanced three answers, relying respectively on s.23 of the Conveyancing and Property Ordinance (authentication against a third party relying in good faith), the case of TCB Ltd v Gray (effectiveness as a document under hand and estoppel), and s.52 of the Conveyancing and Property Ordinance (improper or irregular exercise of power of sale). The court held that none of these answers met the requisition: s.23 did not cure the internal failure of execution, the document under hand conferred no power of sale on the bank, and s.52 concerned the exercise of the power of sale rather than the validity of the mortgage itself. The court further held that the risk of the title being successfully impeached by Tri Tronic Limited was real and not merely theoretical or fanciful. The court declared that the requisition had not been sufficiently answered and ordered the vendors to pay the purchaser's costs of the application, to be taxed if not agreed.
Legal issues: Validity of mortgage executed by only one director where articles require more than half of existing directors
Outcome: Declaration that the purchaser's requisition on title had not been sufficiently answered; the title offered was held to be impeachable.