Cheng Wing Sze v. Ling Yung Ki

DCMP 995/2026

[2026] HKDC 1878

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 995 OF 2026

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JUDGMENT

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A. INTRODUCTION

1.The dispute herein concerns the sale and purchase of the property known as and situated at the Second Floor and the Roof (“the Property”) of a village house (“the Village House”) situated at 81 Tai Po Tsai Village, Clear Water Bay Road, Sai Kung and erected on a piece and parcel of ground registered in the Land Registry as Lot No 371 (“the Lot”) in Demarcation District No 227 (“DD 227”).  The plaintiff (“the Purchaser”) and the defendant (“the Vendor”) signed a Provisional Sale and Purchase Agreement dated 9 November 2025 (“the PSPA”).  On 21 November 2025, the parties entered into a formal sale and purchase agreement (“FSPA”).  In the FSPA, the completion date was stipulated as 3 February 2026.  However, the transaction fell through.

2.The Purchaser commenced these proceedings against the Vendor on 10 February 2026 by issuing the Originating Summons herein (“the OS”).  In the OS, the Purchaser claims for “[r]eturn of the deposit in the sum of HK$420,000 pursuant to [the Vendor]’s failure to answer [the Purchaser]’s requisition satisfactorily and prove good title……”

3.This is the substantive hearing of the OS.  In this hearing, Ms Yanky Lam represents the Purchaser, and Mr Kung Kin Chung represents the Vendor.

B.   BACKGROUND FACTS

4.By a deed of gift dated 8 July 1980 (“the 1980 Deed of Gift”), the Lot and other pieces of land were assigned from Wan Sing Fat alias Wan Fat to Wan Hing.  In the 1980 Deed of Gift, nothing concerning the Village House was mentioned.

5.By a deed of mutual covenant dated 5 December 1988 (“the 1988 DMC”), exclusive possessions of different parts of the Village House were granted to different co-owners. 

6.By a deed of gift dated 24 April 1989, the Second Floor and the Roof of the Village House (ie the Property) was assigned by Wan Hing to Wan Kwok Kuen.

7.By reason of the aforesaid, the reasonable inference is that the Village House was erected on the Lot at a time after 8 July 1980 (ie the date of the 1980 Deed of Gift) but before 5 December 1988 (ie the date of the 1988 DMC).  To put it simply, the Village House was erected on the Lot in the 1980s.

8.By an assignment dated 2 May 2017, the Property was assigned by Wan Kwok Kuen to the Vendor at the consideration of HK$3.8 million.  The Vendor became the owner of the Property by that assignment.

9.In the conveyancing transaction between the Purchaser and the Vendor, Littlewoods represented the Purchaser, and Cho Mei Ting & Co (“CMT”) represented the Vendor.  As said in the above, the parties entered into the PSPA on 9 November 2025, and entered into the FSPA on 21 November 2025.  The purchase price as stated in the PSPA and in the FSPA is HK$4.2 million.  The total of the deposit paid by the Purchaser is HK$420,000.

10.On 17 November 2025, Littlewoods wrote to CMT and raised the following requisitions:

“1. Please let us have the following title deeds and documents relating to the [Property] for our perusal as proof of title.

(a) Approval Letter issued by the competent authority to permit the re-development;

(b) Letter of No Objection to Occupy (“No Objection Letter”);

(c) Certificates of Exemption in respect of Building Works, Site Formation Works and Drainage Works;

(d)  Consent for opening of side windows.”

11.The requisition in issue is Requisition 1(b) raised by Littlewoods.

12.On 19 January 2026, by their second letter, CMT produced a copy of a Chinese approval letter issued by 西貢理民府 (Sai Kung District Office) dated 21 March 1980 with regard to the Lot (“the Approval Letter”).  The official English translation of the contents of that letter is as follows:

“Dear Sir,

I refer to your letter of 31^st January 1980 and have the pleasure in informing you that there is no objection to your application for redevelopment of [the Lot] subject to the full compliance of the Block Crown Lease and strict observance of the following requirements: -

(1) The total built over area shall not in excess of 870 s.f.

(2) No construction work shall commence until the lot is set out by staff from this office.

(3) For any structure exceeding an area of 700 s.f. or exceeding a height of 25 feet, relevant plan should be submitted to B.O.O.[1] for approval.

(4) No projection, especially balconies shall be constructed protruding over Crown Land.

(5) No bulldozer shall be used during site formation.

(6) No nuisance whatsoever shall be caused to the neighbouring properties during the course of rebuilding.”[2]

13.On 22 January 2026, Littlewoods reiterated the request for the “No Objection Letter”.

14.On 27 January 2026, CMT replied and said, inter alia, that “No Objection Letter” should not be required for proving title.  CMT is of the view that “No Objection Letter” does not form part of the title documents and is unnecessary to be produced, and that in fact “No Objection Letter” has never been issued by the Lands Department because there is no such requirement/clause/condition in the Approval Letter to issue “No Objection Letter” after completion of construction of the Village House.

15.On the same date, by their second letter, CMT produced a letter from District Lands Office/Sai Kung dated 27 January 2026 (“DLO 2026 Letter”).  The material contents of that letter are as follows:

“Please be advised that the “No Objection to Occupy” letter had not been issued to the subject lot (Lot No 371 in D.D. 227, Sai Kung, New Territories) by this office. In addition, I would like to draw your attention to the requirements of [the Approval Letter] in respect of the subject lot.”

16.On the same date, Littlewoods replied.  Littlewoods disagreed and said that “No Objection Letter” would be necessary for proving that there would be no real risk of any enforcement action by the Government for non-compliance (if any) of the terms and conditions as set forth under the Government Grant and/or Approval Letter for the building or construction work in respect of the building erected on the Lot.  Littlewoods stressed that the Purchaser should ensure that there has been no breach of any covenant, term or condition in the Government Grant or the Building Licence including those relating to development or redevelopment as such breach may result in re-entry or other enforcement action by the Government.

17.On 28 January 2026, CMT said that whether or not “No Objection Letter” would be issued depends on whether there is a condition or a clause in the Approval Letter to inspect the building upon completion. CMT further stated that as the Property has existed for more than 45 years, the doctrine of acquiescence will be applicable and there would not be any risk of re-entry enforcement action taken by Government.

18.On 28 January 2026, Littlewoods replied and said that no acquiescence could be inferred as the Government had no actual knowledge of any breach or non-compliance, the time did not run and the Government could not be taken to have acquiesced on the breach or non-compliance.  Littlewoods enclosed an explanatory note published by Lands Department in September 1998 titled “The Purchase of a Village House in the New Territories” (“LD Explanatory Note”) to support their views.  The material terms of that note are as follows:

(1)  §5.3.3 of the Note:

“Following completion of construction, the building would be inspected by the District Lands Officer (“DLO”) (or prior to 1.4.1982, the District Officer (“DO”)). If the building passed inspection, a Certificate of Compliance with conditions of the lease, New Grant or the Building Licence would be issued.

If the building is on land held under a Block Lease or is a redevelopment of a previous building, no Certificate of Compliance would be issued. In that case, a letter confirming there is no objection to occupying the building would be issued. If the inspection revealed minor breaches of the dimensions stated in para. 5.2 above, a letter tolerating the breaches for the life of the building would be required.” (Emphasis added)

(2) §5.3.4 of the Note:

“If the letter of approval stated in para. 5.1 or a letter confirming there is no objection to occupy, letter to tolerate minor breaches (if applicable), or Certificate of Exemption, as appropriate, have not been obtained, the District Land Officer upon payment of administrative fees will issue the letters or certificates retrospectively. ……” (Emphasis added)

19.On 29 January 2026, CMT said that the Government acting through the District Lands Office had actual notice of the matter.

20.On that same date, Littlewoods replied and maintained Requisition (1)(b).  Littlewoods further said that the District Lands Office should have inspected the building and thereafter the District Lands Office would issue No Objection Letter for confirmation of the compliance, and it was a proper conveyancing evidence for proof of the compliance of the building and construction works of the building to request for such No Objection Letter.

21.Neither side could persuade the other side.  Completion did not take place on 3 February 2026 as stipulated in the FSPA.

22.On 4 February 2026, Littlewoods demanded for the return of total deposit of HK$420,000 paid by the Purchaser.  Littlewoods said that the Vendor had failed to prove a good title by failing to produce the “No Objection Letter”.

23.Also on 4 February 2026, CMT said that the Vendor forfeited the total deposit paid by the Purchaser, for the Purchaser had failed to tender the balance of the purchase price on the scheduled completion date.

24.On 10 February 2026, the Purchaser commenced these proceedings.

C.   THE PRINCIPLES

25.It is expressly stated in Clause 7(a) of the FSPA that the Vendor shall prove and give title to the Property in accordance with ss13 and 13A of the Conveyancing and Property Ordinance.  In other words, it is expressly provided in the contract that the Vendor has a duty to show a good title and a duty to give a good title.  It is trite that the duty to show a good title and the duty to give a good title are two separate and independent duties.[3]

26.Good title means that there is no real risk that a third party may assert some right over the property, thereby encumbering it or defeating the title altogether.  It is trite that a good title is not a perfect title, free from every possible blemish.  In considering whether a good title has been shown, the matter should be approached from the stand-point of a willing vendor and a willing purchaser with reasonably robust commonsense. What has to be borne in mind is the commercial reality, not the seeking of an absolute risk-free assurance[4].

27.If the query as to whether a good title is shown is based upon an unwaived condition in the relevant Government Lease, the answer would depend upon whether there is any real risk that the Government may take any enforcement action by taking all the circumstances into account and by looking the larger picture.  See Jumbo Gold Investment Ltd and Yuen Cheong Leung & Another[5].

(1)  In Jumbo Gold, the subject property was in a block erected on a piece of land, which was subject to a height restriction contained in the Crown Lease.  The height restriction was breached.  There was no finding by the first instance judge that the Government had waived the breach.

(2)  In the Court of Final Appeal (“CFA”)’s judgment, Litton PJ said[6]:

“15. From the date when the construction of Block C was completed and the occupation permit issued (June 1955), to the date when the vendors agreed to sell the property (August 1997), a period of over 42 years, no suggestion has ever been made by anyone that the government in its capacity as lessor of subsection 4 of section A of RBL 168 might wish to “enforce” the height restriction contained in the Crown lease.  As to what such “enforcement” might in reality mean, this will be looked at more closely later in this judgment.

…

21. It is common ground that the only “enforcement action” the government could possibly take is re-entry under the lease in respect of the entire piece of land upon which Block C is built: Exercisable by registering a memorial of re-entry under s.4 of the Government Rights (Re-entry and Vesting Remedies) Ordinance, Cap. 126, extinguishing the interest of every owner therein.

22. If the government, in its capacity as lessor, were dealing simply with the developer, that is one thing: The equitable considerations that would arise on a question of relief against forfeiture, under s.8(1)(b) of Cap. 126, would be decided by examining the respective conduct of the two immediate parties: The government as lessor and the developer as lessee.  But where third parties have become involved, acquiring units in the building on the basis that permission to occupy that building for domestic purposes had been granted by the government and that Crown rent had been paid and accepted for many years, to forfeit their interest because of some “fault” of the developer, perhaps way back in the past, is a wholly different matter.  This concerns, of course, not only owners, but tenants as well.  When counsel for the purchaser was asked during the hearing why the government would wish to do that, the answer was: To extract some premium from the owners for relief against forfeiture.  Counsel was unable to point to any precedent where the government has acted in such a harsh and capricious manner.

23. There are scores of Crown leases of Rural Building Lots on the south side of Hong Kong island which contain the height restriction of 35 feet: This, as Liu JA observed in his judgment, is well known to conveyancers – and no less well known to government officials concerned with the development of such lots.  The fact that Block C exceeds 35 feet can hardly be concealed.  Is the government to make itself a laughing stock, in the eyes of the community, by averring that it has only recently become aware that Block C, as originally constructed, contravened the height restriction in the lease?  And how is it to explain to the scores of property owners that their property has, by dint of something that happened many years ago, become forfeited to the government, without compensation?

24. 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)

(3) Bokhary PJ said[7]:

“… the evidence in this case did not exclude a reasonable possibility of an unwaived breach of condition which gives the Government a right of re-entry.  The question is therefore whether, assuming that the Government has that right, there is any real risk that it would actually take the drastic step of enforcing it to the detriment of innocent owners.  I entirely agree with Mr Justice Litton PJ that the correct answer is in the negative.  It is simply not in the nature of good government to harm innocent people unnecessarily like that.  Accordingly it is safe to proceed on the basis that the Government would never do so.” (Emphasis added)

D.   DISCUSSION

D1.  Duty to show a good title

28.I readily accept the following:

(1)  Erecting the Village House on the Lot without the Government’s approval would be a breach of the relevant Block Crown Lease.

(2)  The approval given in the Approval Letter is subject to the “full compliance of the Block Crown Lease” and “strict observance” of the conditions as stated in that letter (“the Conditions”).  Thus, non-compliance with any requirements stated in that letter would render the approval not being valid.

(3)  Notwithstanding the fact that the LD Explanatory Note was only issued in September 1998, it mentioned the practice adopted by the District Lands Office (or prior to 1 April 1982, the District Officer) before September 1998.

(4)  In view of the LD Explanatory House, in the absence of a “No Objection Letter” covering the Village House, there is no evidence showing that all the requirements in the Approval Letter have been complied with.

(5)  The DLO 2026 Letter is not evidence showing that the requirements in the Approval Letter have been complied with. 

29.However, the aforesaid would not necessarily lead to the conclusion that the Vendor has failed to show a good title.  In the light of Jumbo Gold, the Court has to consider whether there is a real risk of enforcement action by the Government in the circumstances.  In the circumstances of this case, I am of the view that the answer to this question is in the negative.

(1)  In considering whether a good title has been shown, one has to apply robust common sense.

(2)  As mentioned in §§4 to 7 above, the Village House was erected on the Lot in the 1980s.  By the time of the PSPA, the Village House has been on the Lot for around 4 decades.

(3)  If a requirement in the Approval Letter is breached, the only enforcement action that the Government could take as a result is re-entry in respect of the Lot upon which the Village House was built by registering a memorial of re-entry under s4 of the Government Rights (Re-entry and Vesting Remedies) Ordinance, extinguishing the interest of every co-owner therein.

(4)  The purpose of Conditions (5) and/or (6) is to ensure that during the construction of the Village House, no nuisance would be caused to the neighbouring properties.  Naturally, if these Conditions were breached during the construction process, complaints would have been made to the Government.  Applying common sense, if Conditions (5) and/or (6) have been contravened, the Government should be aware of the same at the time when the Village House was being constructed, or shortly thereafter.  By the time of the PSPA, around 4 decades have elapsed.

(5)  Ms Lam submits that Condition (5) may also serve the purpose of protecting the environment.  I have no quarrel with this.  However, if any damage to the environment was done due to a breach of Condition (5), that breach would have occurred during the construction process of the Village House.  Further, the damage to the environment would be something which could not be concealed.  The Government would have been aware of this for around 4 decades.

(6)  As to Condition (2):

(a)  As to when the boundaries of the Lot were set out, the Government must have a record of the time.

(b)  The 1988 DMC was received by “District Lands Office, Sai Kung” on 16 December 1988.  The 1988 DMC is a clear document showing that the Village House was already on the Lot by that time.

(c)  At the time of receipt of the 1988 DMC (ie on 16 December 1988), the Government would have known one of the followings:

(i)  Condition (2) had been breached, for the Government had not yet set out the boundaries of the Lot on 16 December 1988; or

(ii)  Condition (2) had probably been breached, for the Government had only set out the boundaries of the Lot shortly before 16 December 1988, and it would be likely that the construction of the Village House had already begun before the Government setting out the boundaries of the Lot; or

(iii)  Condition (2) had not been breached, for the Government had set out the boundaries of the Lot at a time long before 16 December 1988.

(d)  The aforesaid analysis shows that if there had been any breach or potential breach of Condition (2), the Government would have knowledge of the same in around mid-December 1988.  From that point of time until the time of the PSPA, the time interval is around 4 decades.

(7)  As to Conditions (1), (3) and/or (4), these conditions concern the size and the appearance of the Village House.  Breaches of this kind are something conspicuous to the eyes and cannot be concealed.  It would be contrary to common sense to say that the Government has no knowledge of these breaches (assuming that these breaches exist) in the past 4 decades.

(8)  Ms Lam submits that contravention(s) of Conditions (1), (3) and/or (4) may not be easily seen and could only be discovered by a land survey on the Lot.  I am of the following view:

(a)  Only minor deviations from those Conditions (for example, the total built over area is slightly over the limit of 870 sf) may not be easily seen.

(b)  If the Government has conducted some land survey(s) on the Lot in the past 4 decades, the Government would have discovered the deviations as a result of the land survey(s).

(c)  If the Government has not conducted any land survey to inspect the Lot in the past 4 decades, this fact itself shows that the Government did not regard some minor deviations from the Conditions in the Approval Letter as an important matter, so important that the Government may need to exercise the right of re-entry as a result of those minor deviations.  Otherwise, there is no plausible explanation why the Government did not survey and inspect the Lot for 4 decades.

(9)  Ms Lam submits that apart from Conditions (1) to (6), it is also a requirement in the Approval Letter that there should be “full compliance of the Block Crown Lease”.  Without a “No Objection Letter”, it is not known whether there has been full compliance with the Block Crown Lease.  However, Ms Lam could not point to any condition in the Block Crown Lease which may have been breached.  I am of the following view:

(a)  In the circumstances of this case, as to whether a good title has been shown, the proper question asked should be whether there is a real risk of enforcement action (ie by exercising the right of re-entry) by the Government.

(b)  I do not see any potential breach of anything in the Block Crown Lease, which may lead to a real risk of enforcement action by the Government by exercising the right of re-entry after 4 decades in the circumstances of this case.

(10)  The Vendor is not the developer constructing the Village House.  He purchased part of the Village House (ie the Property) in 2017 at the consideration of HK$3.8 million.

(11)  In view of all the above, even assuming that some requirements in the Approval Letter have been breached and the breaches have not been waived by the Government notwithstanding the lapse of 4 decades, applying robust common sense, there is no conceivable reason why the Government would now take a drastic enforcement action by exercising the right of re-entry, forfeiting all the rights of all the co-owners of the Lot.  As to whether there is any real risk that the Government may take enforcement action by exercising the right of re-entry to the detriment of an innocent owner (ie the Vendor), in the circumstances of this case, the answer must be “No”.

(12)  In my view, the analysis set out in the above is in line with the CFA’s decision in Jumbo Gold.

30.Ms Lam submits that the Vendor is obliged to provide a “No Objection Letter” to the Purchaser, and the Purchaser is entitled to have this document.  The Vendor should apply for a retrospective “No Objection Letter” and provide the same to the Purchaser.  After having this document, the Purchaser can be sure that the title to the Property is a good title, and the Purchaser would not have any problem in selling the Property in future.

31.In my view, the core issue is whether the Vendor can show a good title without providing a “No Objection Letter” to the Purchaser.  If the answer is in the affirmative, the Purchaser cannot insist on having a “No Objection Letter” from the Vendor.

32.The reminder given by Litton JA (as he then was) in Active Keen Industries Ltd v Fok Chi Keong should be borne in mind[8]:

“41. …If the matter was self-evident, the purchaser’s solicitor cannot insist upon a fuller reply. But the vendor's solicitor must act with total candour, so that the purchaser can be reasonably certain that there are no facts and material relevant to the requisition known to the vendor which have not been disclosed. A requisition as to title is not an occasion for the parties' solicitors to bandy propositions of law: each party must decide for himself, ultimately, what the legal position is, based upon the facts known to himself: although, obviously, if one party can persuade the other to his own point of view on the law, so much the better.” (Emphasis added)

33.In this case, on 28 January 2021, CMT have already said that “if your concern is about re-entry enforcement action by the Government, it is equally unsustainable because the Property has existed for more than 45 years”.  CMT have disclosed all the facts known to them to Littlewoods in the process of answering the requisition raised.  Whether there is any real risk that the Government may take any enforcement action by reason of absence of a “No Objection Letter” is a question that the Purchaser should consider and make a decision for herself.  At the end, the view adopted by the Purchaser is not the conclusion reached by this Court.  In the circumstances of this case, I disagree with the Purchaser that the Vendor has failed to show a good title by not providing a “No Objection Letter” to the Purchaser.

D2.  Duty to give a good title

34.As mentioned in §2 above, the basis of the Purchaser’s case as set out in the OS is “[the Vendor]’s failure to answer [the Purchaser]’s requisition satisfactorily and prove good title”.  There is no further or alternative basis set out in the OS in support of the Purchaser’s case.  By this reason, I am of the view that the Purchaser is not entitled to put forward a case based upon “failure to give a good title” in this substantive hearing.

35.Without prejudice to the above, even assuming that the Purchase can run the argument that the Vendor has failed to give a good title, in view of the conclusion reached in §§28 to 33 above, that argument must fail.

E.   DISPOSITION

36.By reason of the aforesaid, I dismiss the Purchaser’s case.  I make an order dismissing the OS.

37.Costs should follow the event.  There be a costs order nisi that costs of these proceedings (including costs reserved, if any) be to the Vendor, with a certificate for counsel, to be taxed if not agreed.  Unless there is an application by an inter partes summons for an order varying the costs order nisi within 14 days after the handing down of this judgment, the costs order nisi shall become absolute without a further order.

38.I thank both Ms Lam and Mr Kung for the helpful assistance rendered to the Court.

Ms Lam Yanky instructed by Messrs Littlewoods for the Plaintiff

Mr Kung Kin Chung, instructed by Messrs Cho Mei Ting & Co, for the Defendant