Case Document

100%Judiciary

HCA013764A/1997

HCA 13764/1997

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 13764 OF 1997

____________

BETWEEN
	NEW JADE ENTERPRISES LIMITED	Plaintiff

	AND

	JING YING SHE LIMITED	Defendant

____________

Coram: Deputy High Court Judge Gill in Court

Dates of Hearing: 12, 14 -15 September 2000

Date of Judgment: 22 September 2000

_______________

J U D G M E N T

_______________

1. This is a claim by a vendor in an agreement for sale and purchase of a shop, which agreement did not proceed, for forfeiture of the deposits paid by the purchaser and, in damages, reimbursement of the commission it paid the real estate agent who introduced the parties. The purchaser counterclaims for return of the deposits and, in damages, reimbursement of its conveyancing costs incurred.

Background

2. At all material times the plaintiff, New Jade Enterprises Limited (the vendor), was the registered proprietor of a property which I shall describe, in short, as the shop on the ground floor of a building situated at 79 Tung Choi Street, Kowloon. The vendor promoted the shop for sale and by provisional agreement of July 1997 agreed to sell it to Tiang Yee Co. Limited. That agreement came to be superseded by a formal agreement dated 8 August 1997 in which the purchaser nominated the defendant Jing Ying She Limited (the purchaser) to assume the rights and obligations as purchaser. The agreed purchase price was $18.3 million. The completion date was on or before 5 p.m. on 8 December 1997, a Monday. Deposits totalling $1.83 million were due (and paid) upon signing of the formal agreement. The purchaser incurred conveyancing expenses of $31,625.00. The plaintiff paid the real estate agent $91,500.00.

3. The formal agreement inter alia contained the following clauses:-

"2. The purchase price shall be the sum set out in Part IV of the Schedule hereto ("the purchase price") which shall be paid by the Purchaser to the Vendor in the manner also set out in Part IV of the Schedule hereto.

3. (a) The purchase shall be completed at the office of Messrs. Daniel Wong & Partners ("the Vendor's Solicitors") on the date of completion specified in Part III of the Schedule hereto ("the completion date") between the hours of 9:30 a.m. and 5:00 p.m. if completion shall take place on a weekday and between the hours of 9:30 a.m. and 12:30 p.m. if completion shall take place on a Saturday when the balance of the purchase price shall be fully paid.

(b) In respect of the balance of purchase price, the party making such payment ("the Payer") shall deliver to the party to whom such payment is to be made ("the Payee") on the date on which such payment is required to be made hereunder a cashier order issued by a licensed bank in Hong Kong or a cheque issued by the Solicitors of the Payer or his financier in favour of the Payee for the relevant amount.

(c) Where the balance of purchase price or any part thereof is required to apply by the Payee to discharge an existing mortgage, charge or encumbrance, or to pay any person(s) who will be a party to the subsequent Assignment on completion of the sale and purchase herein, the Payee or his Solicitors shall be entitled, by giving to the Payer or his Solicitors not less than 24 hours prior notice in writing, to require the Payer to split such payment and deliver to the Payee's Solicitors one or more cashier order(s) or cheque(s) issued by the Payer's or his financier's Solicitors in favour of the person(s) or party(ies) entitled to such payment(s) and a separate cashier order or cheque issued by the Payer's or his financier's Solicitors in favour of the Payee for the balance. The provisions of paragraph (b) above shall apply to such cashier orders or cheques.

(d) A Payer shall not be deemed to have discharged the obligation to make payment hereunder unless in making such payment, the Payer also complies with the provisions of this Clause.

8. On the payment of the residue of the purchase price in manner aforesaid (or where the parties have agreed on any applicable undertakings following such payment as aforesaid and in compliance with the applicable undertakings), the Vendor acting in the capacity described in Part I of the Schedule hereto and all other necessary parties (if any) will execute a proper Assignment or other assurance of the said premises sold to the Purchaser or the Purchaser's nominee or sub-purchaser subject as hereinafter appears but otherwise free from encumbrances.

9. (a) Possession, rents and profits will be retained and all outgoings (including but not limited to rates, crown rent and management fees) will be discharged by the Vendor up to but exclusive of the actual day of completion and as from and inclusive of that day possession, rents and profits will be taken and all outgoings (including but not limited to rates, crown rent and management fees) in respect of the said premises will be discharged by the Purchaser and all current outgoings shall if necessary be apportioned between the Vendor and the Purchaser and paid on completion.

11. Any requisitions or objections in respect of the title or otherwise arising out of this Agreement or request for production of documents to prove title shall be delivered in writing to the Vendor's Solicitors within seven (7) working days after all the title deeds and documents in relation to the said premises have been delivered to and received by the Purchaser's Solicitors or otherwise the same shall be considered as waived (in which respect time shall be of the essence). For avoidance of doubt, requisition period in respect of further documents of title required to be delivered by the Vendor to complete title and requested by the Purchaser within the first requisition period as aforesaid shall also be 7 working days after receipt thereof by the Purchaser's Solicitors. If the Purchaser shall make and insist on any objection or requisition in respect of the title or otherwise which the Vendor shall be unable or (on the ground of difficulty delay or expense or on any other reasonable ground) unwilling to remove or comply with the Vendor shall notwithstanding any previous negotiation or litigation be at liberty, at any time such objections or requisitions are pending, on giving to the Purchaser or his Solicitors not less than five (5) working days' notice in writing to annul the sale in which case, unless the objection or requisition shall have been in the meantime withdrawn the sale shall at the expiration of the notice be annulled the Purchaser being in that event entitled to a return of the deposit paid (if any) but without interest, costs or compensation.

12. The said premises are sold for the residue of the term of years for which the said premises are held from the Crown together with (if applicable) all rights or options of renewal contained in the Crown Lease Subject to the payment of the due proportion of the Crown rent and to the performance and observance of the Crown Leasee's covenants and conditions payable and to be performed and observed in respect of the same and also subject to all easements (if any) subsisting therein and with the benefit of and subject to all rights of way (if any) And subject to and with the benefit of the Deed of Mutual Covenant and the Management Agreement (if any) relating to the said premises.

14 (a) .....

(b) The draft Assignment(s) shall be prepared by the Purchaser's Solicitors and shall be delivered to the Vendor's Solicitors for approval on behalf of the Vendor prior to the date of completion.

17. The Vendor shall give and prove good title to the said premises in accordance with Section 13 of the Conveyancing and Property Ordinance Cap. 219 and shall at his own expense prove his title and shall at the like expenses make and furnish to the Purchaser such certified or attested copies of any deeds or documents of title, wills and matters of public record as may be necessary to prove such title. The costs of verifying the title by inspection and examination, including search fees, shall be borne by the Purchaser who shall also, if the Purchaser requires certified or attested copies of any documents in the Vendor's possession relating to other premises retained by the Vendor as well as to the said premises pay the costs of such certified or attested or other copies.

18. Except those title deeds and documents relate to the said premises exclusively notwithstanding the provisions relating to production of title deeds and documents of title in Section 13 of the Conveyancing and Property Ordinance Cap. 219 and anything herein contained or otherwise implied to the contrary, it is hereby expressly agreed:-

(i) that for the purpose of enabling the Purchaser to approve title and raise requisition or objection in respect of title to the said premises, delivery to the Purchaser or his solicitors of photocopies of title deeds or documents of title to which the Purchaser is entitled by law (hereinafter called "the said title deeds") by the Vendor shall be sufficient, provided the Vendor gives an undertaking to the Purchaser to furnish certified copies of the said title deeds within reasonable time, the cost and expense for procuring photocopies and certified copies of the said title deeds shall be borne by the Vendor; and

(ii) that the failure of the Vendor to furnish certified copies of the said title deeds to the Purchaser on the date of completion shall not by itself be a ground for delay of completion by the Purchaser or be treated as or constitute a default or failure on the part of the Vendor to complete the sale and purchase in accordance with the terms of this Agreement.

19. Time shall in every respect be of the essence of this Agreement.

20. Should the Purchaser fail to complete the purchase in accordance with any of the terms and conditions herein contained the Vendor may (without tendering an Assignment to the Purchaser) forthwith determine this Agreement by giving notice of termination in writing to the Purchaser or his solicitors to such effect and the Vendor shall thereupon be entitled to re-enter upon the said premises and repossess the same and the furniture (if any) if possession shall have been given to the Purchaser free from any right or interest of the Purchaser therein and the Vendor shall be entitled to forfeit all the said deposit or deposits or instalments of the purchase price paid to the Vendor absolutely. Upon determination of this Agreement the Vendor may resell the said premises either by public auction or by tender or by private contract or partly by one and partly by the other(s) of such methods subject to such stipulations as the Vendor may think fit and any increase in price and resale shall belong to the Vendor. Without prejudice to the Vendor's right to recover the actual loss which may flow from the Purchaser's breach of this Agreement, on such resale any deficiency in price shall be made good and all reasonable expenses attending such resale shall be borne by the Purchaser and such deficiency and expenses shall be recoverable by the Vendor as and for liquidated damages. On the exercise of the Vendor's right to determine this Agreement as aforesaid the Vendor shall have the right, if this Agreement shall have been registered at the Land Registry, to register at the Land Registry an instrument signed by the Vendor alone evidencing determination as aforesaid of the sale of the said premises and on the signing of the said instrument by the Vendor, the Purchaser shall be deemed to be divested of any interest in the said premises under this Agreement. Upon registration of such an instrument in the Land Registry, a tenant, purchaser, mortgagee or any other person dealing with the Vendor shall not be bound to see or enquire whether the Vendor was entitled to determine this Agreement and so far as regards the safety and protection of such tenant, purchaser or mortgagee or any other person this Agreement shall be deemed to have been duly terminated and the remedy (if any) of the Purchaser shall be against the Vendor in damages only.

21. In the event of the Vendor failing to complete the sale of the said premises in accordance with the terms hereof or failing to observe or comply with any of the terms and conditions herein contained, all moneys paid by the Purchaser to the Vendor pursuant to the provisions of this Agreement shall forthwith be returned to the Purchaser who shall also be entitled to recover from the Vendor forthwith damages (if any) which the Purchaser may sustain by reason of such failure on the part of the Vendor and it shall not be necessary for the Purchaser to tender an Assignment to the Vendor for execution.

25. The said premises is sold subject to such tenancy (if any) as set out in Part VII of the Schedule hereto. If no tenancy is set out in Part VII of the Schedule hereto, vacant possession of the said premises including such furniture, fixtures and fittings (if any) more particularly described in Part IX of the Schedule hereto shall be given to the Purchaser on completion. But for avoidance of doubt and notwithstanding anything to the contrary herein contained, it is agreed that the Purchaser will not be discharged from this Agreement if the Vendor fails to deliver any of the Furniture and is still obliged to complete this Agreement and the remedy then available to the Purchaser shall be for damages only.

38. The parties hereto are aware that the said premises is presently subject to Mortgage/Charge more particularly described in Part VIII of the Schedule hereto in favour of the Mortgagee/Chargee therein mentioned. The Vendor undertake to the Purchaser that the Vendor shall on or before completion of the sale and purchase of the said premises at his own cost and expense pay to the Mortgagee the amount required to obtain a release or discharge of the said premises and the Purchaser agreed to the release of the deposit money to the Vendor. The Vendor shall not after the signing of this Agreement and prior to completion create or cause or permit to be created any further charge and/or second mortgage in respect of the said premises.

The Schedule

PART VII

Existing Tenancy: Subject to and with the benefit of the Tenancy Agreement dated the 16th September 1996 as hereto attached.

PART VIII

Mortgagee/Chargee: HUA CHIAO COMMERCIAL BANK LIMITED

Mortgage/Charge Memorial No. : 6644211 "

4. The Vendor instructed solicitors Daniel Wong and Partners (Daniel Wong) to act for it in the transaction. Yip Tse and Tang (Yip Tse) represented the purchaser.

5. The solicitors corresponded and the terms of the formal agreement came to be settled and the agreement signed and the deposits paid. The shop was all along mortgaged to Hua Chiao Commercial Bank Limited (the Bank). Daniel Wong notified the Bank of the pending sale. The bank engaged solicitors to represent it who by letter of 16 August notified Daniel Wong of the amount required to redeem the mortgage and, on request against the usual undertaking, forwarded the title deeds and other documents of title.

6. By letter of 19 August Daniel Wong forwarded what they described in the letter as "the said title deeds and documents"; so began correspondence between the two firms which, until letters exchanged up to 9 December 1999, I now reproduce in full:-

"DANIEL WONG & PARTNERS
SOLICITORS

19 AUG 1997

Messrs. Yip, Tse & Tang,
Solicitors,
Hong Kong.

Dear Sirs,

Re: Ground Floor, No. 79 Tung Choi Street, Kowloon.

With reference to your letter of 8th August 1997, we now send you herewith on the usual understanding the title deeds and documents relating to the above property as set out in the list hereto attached. The said title deeds and documents are sent to you subject to your undertaking to hold the same to our order and to return us the same on demand.

Please acknowledge receipt by signing and returning the copy of this letter to us.

Yours faithfully,

(Signed)"

"1. Certified Copy Crown Lease of Kowloon Inland Lot No. 2870;

2. Certified Copy Occupation Permit No. K218/60 dated 20th October 1960;

3. Assignment (with Plan) Memorial No. 328905;

4. a copy of Deed of Mutual Covenant Memorial No. 331916;

5. Certified Copy Mortgage Memorial No. 393859;

6. Certified Copy Special Power of Attorney dated 28th October 1982 in favour of David Penketh;

7. Certified Copy Reassignment Memorial No. 2462314;

8. Agreement for Sale and Purchase Memorial No. 3083368;

9. Assignment Memorial No. 3132902;

10. Legal Charge Memorial No. 3132903 together with its relevant Receipt on Discharge Memorial No. 5601794 endorsed thereon;

11. counterpart of Legal Charge dated 24th July 1986 duly registered in the Companies Registry on 31st July 1986;

12. photocopy of Tenancy Agreement Memorial No. 3157085;

13. photocopy of Supplement Agreement Memorial No. 3843856;

14. Certified Copy Order Memorial No. 5516147;

15. Certified Copy Letter of Compliance Memorial No. 5701781;

16. photocopy of Lease Memorial No. 5766360;

17. photocopy of Surrender Agreement Memorial No. 6112050;

18. Certified Copy Tenancy Agreement dated 1st July 1995;

19. Certified Copy Supplemental Agreement dated 20th January 1996;

20. photocopy of Agreement for Sale and Purchase dated 23rd February 1996;

21. Copy Extract of Articles of Association of New Jade Enterprises Limited;

22. Board Minutes of New Jade Enterprises Limited dated 15th May 1996;

23. Assignment Memorial No. 6644210;

26. Agreement for Sale and Purchase Memorial No. 6559251;

27. Certified Copy Cancellation Agreement dated 16th August 1996;

28. Certified Copy Tenancy Agreement dated 16th September, 1996 duly stamped."

"YIP TSE & TANG, SOLICITORS

29th August 1997

Messrs. Daniel Wong & Partners,
Solicitors,
Hong Kong.

Dear Sirs,

Re: Ground Floor, No. 79 Tung Choi Street, Kowloon

Upon perusal of the relevant title deeds and documents, we would like to raise the following requisitions:-

1. Assignment Memorial No. 3132902

The signature of Tam Yan in the above document is different from the one in Assignment Memorial No. 328905. Please let us have the relevant Statutory Declaration confirming Tam Yan's signatures in the said documents;

Copies of the relevant pages of the above documents and the Assignment Memorial No. 328905 are enclosed herewith for your reference.

2. Government Rent

We will be grateful if you would kindly let us have documentary evidence showing that the Government rent has been punctually and duly paid.

3. Please let us have the originals of the following documents before completion:-

(i) Tenancy Agreement Memorial No. 3157085;

(ii) Supplemental Agreement Memorial No. 3843856;

(iii) Lease Memorial No. 5766360;

(iv) Surrender Agreement Memorial No. 6112050;

(v) Tenancy Agreement dated 1st July 1995 (the one you sent us is a certified copy only);

(vi) Supplemental Agreement dated 20th January 1996;

(vii) Cancellation Agreement dated 16th August 1996 (the one you sent us is a certified copy only); and

(viii) Tenancy Agreement dated 16th September 1996 (the one you sent us is a certified copy only).

4. Agreement for Sale and Purchase dated 8th August 1997

Please let us have the original of above document duly stamped (if applicable) and registered as soon as you are in receipt of the same from the Land Registry. In the meantime, please kindly let us have a certified copy of the same for our perusal (the one you sent us is a copy only).

5. Missing documents

We will be grateful if you would kindly let us the following documents for our perusal and approval of title (and to complete the chain of title) as soon as possible (if the documents requested are not immediately available, please kindly let us have plain copies for our perusal first coupled with your undertaking to let us have certified copies/originals (as the case may be) of the said documents):-

(A) Certified copies of:-

(i) Certificate of Compliance in respect of the Lot where the Property is situate;

(ii) Verandah Undertaking Memorial No. 133860;

(iii) Order Memorial No. 313708; and

(iv) Deed of Mutual Covenant Memorial No. 331916 (the one you sent us is a copy only).

We will be grateful if you would let us have your reply as soon as possible.

We hereby reserve our rights to raise further requisitions in respect of title to the Property.

Yours faithfully,

(Signed)

Yip, Tse & Tang "

"DANIEL WONG & PARTNERS
SOLICITORS

Date: 25th November 1997.
Messrs. Yip, Tse & Tang,
Solicitors,
Hong Kong.

Dear Sirs,

Re: Ground Floor, No. 79 Tung Choi Street, Mongkok, Kowloon.

With reference to your letter of the 29th August 1997, we would reply your requisitions relating thereto as follows:-

1. We draw your attention that the Assignment Memorial No. 3132902 was executed by Tam Yan 26 years after the date of Assignment Memorial No. 328905. It is reasonable that the signatures of the said Tam Yan appeared on the said Assignments may be slightly different. We take the view that at the time of execution of the said Assignment Memorial No. 3132902, the said Tam Yan was properly identified by production of his hong kong identity card before a Solicitor, Kenneth W. Leung who satisfied with the identity of the said Tam Yan. In this circumstance, clarification on the signatures of Tam Yan is not necessary.

2. We opine that the payment of crown rent relating to the above property will not affect the title of the above property. It will be apportioned between the parties thereto upon completion.

3. We are of the opinion that the documents required under your requisition 3(i) to (vii) are not parts of title deeds. As the copies thereof had been sent to you for your perusal, we will not supply you with the originals thereof.

We undertake to send you the original Tenancy Agreement Memorial No. 6771839 after completion.

4. We draw your attention that the Agreement for sale and purchase dated 8th August 1997 was made between our respective clients and the original thereof had been sent to you under our letter dated 15th August 1997. We also point out that it is your duty to arrange with the said Agreement for sale and purchase be stamped and registered with the Land Registry.

5. (i) We draw your attention that the above property is held from the Government of Hong Kong under and by virtue of a Government Lease of Kowloon Inland Lot No. 2870 under which there is no requirement for a Certificate of Compliance.

(ii) & (iii) Please note that the Verandah Undertaking Memorial No. 133860 and Order Memorial No. 313708 are pre-root documents and out of the chain of title. We will not supply you with any certified copies thereof.

(iv) We undertake to send you a certified copy of Deed of Mutual Covenant Memorial No. 331916 as soon as we shall have received the same from Land Registry.

In light of our reply as above, we consider that we have satisfactorily answered all your requisitions. Please be reminded of completion of the above property is scheduled on 8th December 1997 before 5:00 p.m. and time is of the essence.

We refer to your letter of the 4th November 1997 and are instructed by our client to inform you that on without prejudice basis, our respective clients are negotiating the terms of postponement of the completion date. We will revert the same to you in due course.

Yours faithfully,

(Signed)"

"YIP TSE & TANG, SOLICITORS

26 November 1997

Messrs. Daniel Wong & Partners,
Solicitors,
Hong Kong.

Dear Sirs,

Re: Ground Floor, No. 79 Tung Choi Street, Kowloon.

We thank you for your letter dated 25 November 1997.

1. The 2 signatures are by no means "slightly different". In the circumstances, the identification Tam Yan by Mr. Kenneth W. Leung by the production of the identity card does not help to clear the doubt that the signatory in the earlier instrument is not of the same person.

2. Failure to pay Government rent entitles the Government to re-enter the land. The requisition remains not satisfied.

3. These documents have been registered at the Land Registry. Our client is purchasing the property with notice of those documents, terms or conditions of which may affect the interests of the property. Your client is obliged to produce them for proof of title. The original Tenancy Agreement Memorial No. 6771839 must be produced to us before completion for proof of title.

5. (i) noted

*(v) & (iv) We do not agree that they are pre-root instruments. Your client is obliged to produce them for proof of title.

(iv) The Deed of Mutual Covenant must be produced to us for proof of title before completion.

Yours faithfully,

(Signed)

Yip, Tse & Tang

*NB - this is clearly intended to be (ii) & (iii). "

"DANIEL WONG & PARTNERS
SOLICITORS

Date: 26th November 1997.

Messrs. Yip, Tse & Tang,
Solicitors,
Hong Kong.

Dear Sirs,

Re: Ground Floor, No. 79 Tung Choi Street, Mongkok, Kowloon.

Further to our letter to you of the 25the November 1997, we send you herewith copies of the following documents for your perusal:-

1. Verandah Undertaking Memorial No. 133860; and

2. Order Memorial No. 313708.

We reiterate our reply 5(ii) & (iii) as stated in our letter dated 25th November 1997 and do not supply you with any certified true copies of the above documents.

Yours faithfully,

(Signed)"

"DANIEL WONG & PARTNERS
SOLICITORS

Date: 1st December 1997.

Messrs. Yip, Tse & Tang,
Solicitors,
Hong Kong.

Dear Sirs,

Re: Ground Floor, No. 79 Tung Choi Street, Mongkok, Kowloon.

We refer to your letter of the 26th November 1997 and would reply your further requisitions as follows:-

1. What we meant was bearing in mind the interval of 26 years person's signature is bound to change a bit, and the so-called discrepancy in question, which is denied, is not such as to create a reasonable doubt on title. The following circumstances should also be considered:-

(a) The documents were duly attested by Solicitors, and produced from proper custody;

(b) The sale transaction by Tam Yan took place in 1986, over 10 years ago, and there is no evidence of any intervening objection or challenge against the title by anybody for such a long period. In all the circumstances, the risk is fanciful. [MEPC Test].

2. Please refer to Law Society circular 293/95 which opined that the duty is on the Purchaser's Solicitor to ascertain on behalf of he Purchaser the outstanding government rent.

3. We draw your attention that copies or certified copies of the documents itemed 3(i) to (vii) in your letter dated 29th August 1997 were sent to you under our letter dated 19th August 1997 for your perusal. As you will see that the said documents related to the tenancies of the above property which were all expired and also the said documents are not parts of title deeds affecting the title of the above property. In these circumstances, we insist that we will not supply you with the originals of the said documents.

We send you herewith the original Tenancy Agreement dated 16th September 1996 (Memorial No. 6771839) for your perusal.

5. We have already sent you the copies of documents itemed 5(ii) & (iii) to prove the said documents are not parts of title deeds and out of the chain of title thereof. We undertake to send you the certified true copy of Deed of Mutual Covenant Memorial No. 331916 pursuant to clause 18 of the Agreement for sale and purchase dated 8th August 1997.

Yours faithfully,

(Signed)"

"DANIEL WONG & PARTNERS
SOLICITORS

Date: 4 December 1997.

Messrs. Yip, Tse & Tang,
Solicitors,
Hong Kong.

Dear Sirs,

Re: Ground Floor, No. 79 Tung Choi Street, Mongkok, Kowloon.

Further to our letter to you of the 1st December 1997, we would remind you that the transaction of the above property is scheduled on 8th December 1997 before 5:00 p.m. and time is of the essence.

We shall be much obliged if you will kindly let us have your draft Assignment relating thereto for our approval without delay.

Yours faithfully,

(Signed)"

"DANIEL WONG & PARTNERS
SOLICITORS

Date: 5th December 1997.

Messrs. Yip, Tse & Tang,
Solicitors,
Hong Kong.

Dear Sirs,

Re: Ground Floor, No. 79 Tung Choi Street, Mongkok, Kowloon.

We refer to your letter of the 5th December 1997.

We emphasize and reiterate our position that all of your requisitions have been answered and dealt with, and that our client has already proved good title to the property. The alleged requisitions which you now still insist are therefore totally unjustified.

Without prejudice to our client's position as stated above, we would comment further on your said letter:-

1. We reiterate the position. We would further point out that you have not been able to demonstrate any reasonable doubt as to the identity of Tam Yan, let alone show any real risk or challenge to our client's title. One should also note that registration of the Assignment Memorial No. 3132902 and the subsequent sale by Assignment Memorial No. 6644210 constitutes notice to the world. If there has been any impropriety, which is denied, the relevant party would have been estopped from making any claim on the subsequent purchaser for value. In the premises, your alleged requisition in this regard is without any substance.

2. You have not shown that Government Rent is outstanding. In any event, pursuant to the Agreement for sale and purchase, all outgoings, including of course any Government Rent (if such is outstanding), would be apportioned on completion. We have already confirmed that this is the position.

3. Clearly the documents you request have no bearing whatsoever on the passing of title, and therefore cannot be insisted as being part of the claim of title. The Vendor's obligation to prove title is only to supply such title deeds and documents as are necessary for the purpose of proving title (see the case of Lee Kim Ha v Yip Moo Chee & another). Notwithstanding the above, we have nevertheless furnished you with certified copies of the said documents, which are as good as the originals pursuant to Section 13(2) of the C.P.O. We therefore fail to see any basis which renders production of the originals necessary or a legitimate requisition.

5. We reiterate our observations in item 3 as stated hereinabove, and repeat that the documents requested are neither necessary nor relevant to the chain of title.

As our client has already proved his title to the property, we would once again remind you that completion is scheduled to take place at or before 5:00 p.m. on 8th December 1997 (Monday). As of now, we have still not received your draft Assignment and Undertaking Letter for our approval.

We therefore hereby expressly reserve our client's rights.

Yours faithfully,

(Signed)"

"DANIEL WONG & PARTNERS
SOLICITORS

Date: 5th December 1997.

Messrs. Yip, Tse & Tang,
Solicitors,
Hong Kong.

Dear Sirs,

Re: Ground Floor, No. 79 Tung Choi Street, Mongkok, Kowloon.

With reference to the above property, please split the balance of purchase price of HK$16,470,000.00 in the following manners upon completion:-

$7,876,208.59 in favour of Hua Chiao Commercial Bank Limited for the A/C of New Jade Enterprises Limited being redemption money;

$2,400.00 in favour of W. I. CHEUNG & CO being costs and disbursements;

$19,410.00 in our favour being costs and dis.;

$8,571,981.41 in favour of New Jade Enterprises Limited being balance of purchase price.

Yours faithfully,

(Signed) "

"YIP TSE & TANG, SOLICITORS

5th December 1997

Messrs. Daniel Wong & Partners,
Solicitors,
Hong Kong.

Dear Sirs,

Re: Ground Floor, No. 79 Tung Choi Street, Kowloon

We refer to your letter dated 1st December 1997.

1. The 2 signatures are too different. Our requisition is insisted.

2. The Law Society is not authoritative in respect of the legal duties of parties to any contract. The failure to pay the Government rent is a breach of the Government Lease. Enclosed please find copy of the Government rent enquiry note. Your client is demanded to settle the Government rent up to the completion date on or before completion.

3. Mere copies are not good enough for proof of title, nor proof of their contents. Without having their certified copies or originals produced for our examination, we simply cannot determine your suggestion that they have "all expired" and "not parts of title deeds". Further, your client is obliged to produce those title deeds and documents relating to the Property exclusively. The production of their originals are therefore insisted.

5. Certified copies of documents items 5(ii) and (iii) are necessary to complete the chain.

Yours faithfully,

(Signed)

Yip, Tse & Tang "

"GOVERNMENT RENT ACCOUNT ENQUIRY

The Treasury
Immigration Tower

Date of Issue: 20/11/1997

YIP, TSE & TANG,
WANCHAI, HK.

Location of Property G/F,

79 TUNG CHOI ST

According to the records of this office, the payment position of Government rent in respect of the lot(s) which are related to the above property is appended below.

Government Rent Reference Lot Description Annual Rent Latest Demand Up to Outstanding Amount

45-861509-000 KIL 2870
79-81 TUNG CHOI ST $11.62 24/06/1994 $58.10

RECEIVED THE SUM IMPRINTED BELOW

DIRECTOR OF ACCOUNTING SERVICES

21/11/97 $86.00 "

"YIP TSE & TANG, SOLICITORS

6th December 1997

Messrs. Daniel Wong & Partners,
Solicitors,
Hong Kong.

Dear Sirs,

Re: Ground Floor, No. 79 Tung Choi Street, Kowloon

We thank you for your letter dated 5th December 1997.

We do not agree that your client have proved good title to the Property and/or have observed all the terms of the Agreement for Sale and Purchase.

1. The risk or challenge is based on existing legal authorities. Estoppel is not applicable in the present situation we are facing;

2. We have produced to you the Government rent enquiry reply showing outstanding unpaid Government rent. The question here cannot be dealt with by apportionment. The question is whether your client is in breach of the Government lease by having failed to discharge all the Government rent.

3. We repeat our requisition number 3 dated 5th December 1997. Without prejudice to that, please note that the documents supplied by you are not all being certified copies.

4. We do not agree to your contention and the requisition is insisted.

Without prejudice to our requisitions herein, please confirm with us that you have arranged the representative of the existing mortgagee to attend you office for the completion of the sale and purchase so as to enable us to advise our client accordingly. Completion will not take place by solicitors' undertaking.

Yours faithfully,

(Signed)

Yip, Tse & Tang "

"YIP TSE & TANG, SOLICITORS

8th December 1997

Messrs. Daniel Wong & Partners,
Solicitors,
Hong Kong.

Dear Sirs,

Re: Ground Floor, No. 79 Tung Choi Street, Kowloon

We refer to our letter faxed to you this morning.

We put on record that we still have not had your reply to our letter.

Yours faithfully,

(Signed)

Yip, Tse & Tang "

"DANIEL WONG & PARTNERS
SOLICITORS

Date: 8th Dec, 1997.

Messrs. Yip Tse & Tang
Solicitors
Hong Kong.

Dear Sirs,

Re: Ground floor of No. 79 Tung Choi Street, Mongkok, Kowloon

We refer to your letter dated 6th December, 1997 but only received by us today on 8th December, 1997 at about 10:30 am.

We note that you have only now, a few hours from the scheduled time for completion, stated that completion will not take place by undertaking. We have to point out that at no time have you made any request for a formal completion herein. At all material times, it has been a term of the agreement between the parties and the intention of the parties that completion shall take place by undertakings.

Without prejudice to the above, please confirm by return whether your client is in the position to attend to completion as scheduled with the balance of purchase price ready and available.

All our client's rights are hereby expressly reserved.

Yours faithfully,

(Signed)"

"DANIEL WONG & PARTNERS
SOLICITORS

Date: 8th December 1997.

Messrs. Yip, Tse & Tang,
Solicitors,
Hong Kong.

Dear Sirs,

Re: Ground Floor, No. 79 Tung Choi Street, Mongkok, Kowloon.

We refer to your letter of the 6th December 1997 which was faxed to us at 10:30 a.m. on today.

1. We maintain what we have said, that the risk is fanciful and does not create a reasonable doubt on title.

2. It's clear that the alleged outstanding rent of $58.10 relates to the whole lot and the amount is minimal. Should you prove there is any outstanding, we can always deal with it by way of apportionment account.

3. We have said that since that our client is selling subject to the existing Tenancy Agreement dated 16th September 1996 and that the previous Tenancy Agreements have all expired they no longer affect the Property and not produceable under Section 13 of C.P.O.

4. We maintain our view.

5. As regard for formal completion, we have dealt with it by separate letter.

Meanwhile all our client's rights are reserved.

Yours faithfully,

(Signed) "

"DANIEL WONG & PARTNERS
SOLICITORS

Date: 8th December 1997.

Messrs. Yip, Tse & Tang,
Solicitors,
Hong Kong.

Dear Sirs,

Re: Ground Floor, No. 79 Tung Choi Street, Mongkok, Kowloon.

We refer to our earlier correspondence in respect of the captioned Property.

We also refer to the Agreement for sale and purchase in respect of the said property dated 8th August 1997 made between our respective clients ("the Agreement").

We write to put on record that your client has failed to make payment of the balance of purchase price and complete the purchase of the captioned property in accordance with the provisions of Clause 3 of the Agreement at the time and on the date for completion stipulated therein, namely at or before 5:00 p.m. on 8th December 1997. We are therefore instructed to give you notice, which we hereby do, that pursuant to Clause 20 of the Agreement and by reason of your client's failure to complete as aforesaid, our client has exercised his right to determine the sale of the captioned property and to forfeit the deposit money in the sum of HK$1,830,000.00 paid by your client under the Agreement.

Our client hereby expressly reserves all its rights under the Agreement to claim against your client for all other losses and damages which it may suffer as a result of your client's said failure including without limitation the deficiency in price on a resale of the property and all expenses for the same. Our client shall further forthwith exercise its right to register at the Land Registry an instrument to rescind the sale of the said property.

Yours faithfully,

(Signed)"

"YIP TSE & TANG, SOLICITORS

9 December 1997.

Messrs. Daniel Wong & Partners,
Solicitors,
Hong Kong.

Dear Sirs,

Re: Ground Floor, No. 79 Tung Choi Street, Kowloon.

We thank you for your letter faxed to us at 17:01 p.m. of 8 December 1997 and refer to your other letter dated 8 December 1997.

There exists no provision in the agreement and it has never been the parties' intention that completion will take place by way of undertaking. Our client will complete the purchase subject to the satisfaction of the requisitions and your arrangement for formal completion to take place. That has been made clear in our previous correspondences.

Since your client has failed to deal with our client's requisitions satisfactorily and have made no arrangement for the completion, completion simply cannot take place. Your failure to do so and your client's purported exercise of the right under clause 3 of the Agreement for Sale and Purchase have amounted to a repudiation of the agreement. We are instructed to accept your client's repudiation and exercise the right to rescind the sale and purchase. Your client is demanded to return the deposit of HK$1,830,000.00 within the next 3 days. We reserve all our client's rights herein.

Yours faithfully,

(Signed)

Yip, Tse & Tang "

7. There was further correspondence, but that takes neither case any further. Needless to say, the transaction did not proceed.

The Pleadings

8. By its writ the vendor seeks declarations that the purchaser was in breach and wrongfully repudiated the formal agreement, that the vendor effectively rescinded the same, and that it is entitled to withhold the deposits of $1.83 million as forfeited. It also sues in damages for the real estate agent's commission it paid of $91,500.00. The purchaser counterclaims for a refund of the deposits, its conveyancing costs of $31,625.00 interest thereon and a lien on the shop pending payment.

9. For the sake of completion, I mention here that the purchaser also issued a writ given the number HCA 13863/97 for the recovery of the deposits and other expenditure. The vendor counterclaimed. By interlocutory order of 17 March 1999 the parties in that writ are to be bound by this judgment save as to costs to be provided for.

The Issues

10. Were the purchaser's requisitions reasonably raised and not satisfactorily answered by the vendor giving the purchaser the right to rescind because the vendor was in breach for failing to prove it could give and show good title?

11. If not, was the purchaser in breach for not completing?

12. The purchaser's requisitions fall into three categories. The first is dissimilarity in the signatures of Tam Yan. The second is that Government rent for the building was in arrears, putting at risk the vendor's rights under its lease. The third is the failure by the vendor's solicitors to produce all the documents of title.

13. I shall deal with them in turn.

Tam Yan

14. According to the documents Tam Yan purchased the Crown Lease of the property of which the shop is now a part and signed the assignment to that effect as purchaser before a Mr G. Stephenson, solicitor, on 16 November 1960. He came to sell his interest and on 24 July 1986 signed the assignment as vendor before a Mr K W Leung, solicitor. It is the dissimilarity of these two signatures about which the purchaser complained.

15. A similar requisition was the subject of a Court of Appeal case National Giant Limited v. Great Wise Development Limited [1990] 1HKC 166, where, in a gap of twelve years, the purchaser who became the vendor signed 'Y S Chan' in the earlier document and 'Chan Yock Sheung' in the later. A handwriting expert opined before the court below that one and the same person signed the documents. The particulars of the parties suggested a common origin, and both signatories were witnessed by a British Proconsul in Boston. Furthermore, section 23 of the Conveyancing and Property Ordinance Cap. 219 (CPO) states:-

"23. An instrument appearing to be duly executed shall be presumed, until the contrary is proved, to have been duly executed."

And it was accepted that there was no possibility Chan Yock Sheung could successfully mount a challenge to recover the property.

16. But the court agreed with the judge below who found that the dissimilarity in the signatures reasonably gave rise to a suspicion which a perspective purchaser could and should seek to have allayed and which in the circumstances had not been allayed. The vendor had not shown good title.

17. By their letter of 29 August Yip Tse called for a 'relevant statutory declaration confirming Tam Yan's signatures in the said documents'.

18. In the circumstances that would not have been possible; it is agreed Mr Stephenson died some years ago. In any event it seems unlikely that a busy practitioner all these years later could by declaration improve on what the documents recite.

19. In considering the circumstances of this case I pay heed to the following:-

(1) the assignments were signed by a Tam Yan before solicitors in each case. I draw the inference that both probably acted responsibly as befitted their calling and satisfied themselves that the signatory was Tam Yan and that title properly vested;

Mr Leung had the added advantage that the signatory presented his identity card;

(2) section 13(4) CPO, states as follows:-

"(4) A recital, statement, and description of any fact, matter or party contained in any document of title, mortgage, declaration or power of attorney relating to any land and dated or made not less than 15 years before the contract of sale of that land shall, for the purposes of any question as to proof of title concerning the parties to that contract and unless the contrary is proved, be sufficient evidence of the truth of that recital, statement and description."

There is nothing to displace the presumption of the accuracy of the recital preceding Tam Yan's signing of the 1960 assignment;

(3) the difference between the two signatures, to my untrained eye, is that on the first occasion the characters were written formally whilst on the second, 26 years later, they were penned more casually; I do not harbour concern that they were not of the same person.

20. In the circumstances I am satisfied the discrepancy did not give rise to a defect in title. The requisition was not reasonable, or alternatively, had been satisfactorily answered.

The Government Rent

21. It is a matter of contract (clause 9(a) of the formal agreement) that the purchaser was entitled to call for evidence of payment of Government rent to date with apportionment of the current rent due. It is a matter of fact (page 19 of this judgment) that the sum of $58.10 was due and outstanding as at the date of completion for four years rent due on the whole building of which the shop is a part, though it is not clear how payment should be apportioned amongst all the owners. It is a matter of common sense that no benign lessor would invoke its powers of re-entry for so footling an amount, little more than a peppercorn rental, against the owners of premises in a multiunit building, one of which (the shop herein) was worth at the time not less than $18.3 million.

22. Daniel Wong's response to the requisition was argumentative and unhelpful. But it does not render the purchaser's requisition any less fanciful, nor make it a reasonable one; I find it was not.

The Documents of Title

23. This comes in two parts.

24. To recap the first; by letter of 19 August Daniel Wong sent 26 documents to Yip Tse purported to be the title deeds and documents of the shop. Some of these were originals, some were copies, some were certified copies.

25. Invoking the provisions of clause 18 of the formal agreement Yip Tse called for the originals of eight documents of which copies or certified copies were forwarded. The first seven of these related to two tenancies and their surrenders which preceded the existing tenancy to which the sale and purchase was made subject. This last was the eighth document. Daniel Wong complied to the extent of forwarding the original of this document (the eighth) by its letter of 1 December (page 14 of this judgment), but declined otherwise because it claimed the documents were not part of the title deeds.

26. The purchaser relies on a judgment at first instance Ng Tim Yee and Another v. Kindbest Investment Limited HCMP 463 of 1998 where the judge found, in a point which was obiter, that in the sale of a shop subject to a tenancy the production of the surrender of a former tenancy was a necessary prerequisite to showing good title.

27. It seems to me that a document registered against the title to the property is a title deed until it becomes apparent from a subsequent registration that it has expired or been surrendered or otherwise has ceased to affect the property.

28. In Wong Bik Ching v. Yu Hon Chung [1997] 4 HKC 38, Recorder Wong Q C found against a vendor who failed to produce a document described as a statutory easement. The judge said at p. 45:-

"Secondly no copy of the statutory easement had ever been supplied. The vendor maintained that this document which was dated as recently as 22 July 1994 and which was registered against the property in the Land Registry, was not part of the title deeds. I do not agree. I am of the view that prima facie when an instrument was registered against the property and it was not apparent from the land search that the document had ceased to affect the property, the document ought to be treated as part of the title deeds which the vendor should make available to the purchaser."

29. I agree. But in this case the previous interests had terminated, as evinced by the documents copies of which Daniel Wong had forwarded on 19 August. It is not clear from the judgment in Ng Tim Yee whether the purchaser was similarly provided; it seems, probably not.

30. In this case Daniel Wong produced a current original tenancy agreement. There was at the time occupancy by the current tenant. To all intents and purposes any former rights evinced by earlier tenancies were dead and buried.

31. There was, in my view, in the circumstances of this case, no obligation on the vendor to produce the originals of the extinct tenancies or their surrenders.

32. I come to the second part.

33. By their letter of 29 August (p. 9 of this judgment) Yip Tse called for an undertaking that they be provided with a verandah undertaking and order memorial.

34. By their letter of 25 November (p. 11 of this judgment) Daniel Wong expressly stated they would not as the documents were "pre-root and out of the claim of title".

35. I do not believe they were entitled to adopt that stance. I reproduce sections 13(1)(a) and (b) and 13(2) CPO:-

"13. Proof of title and recitals

(1) Unless the contrary intention is expressed, a purchaser of land shall be entitled to require from the vendor, as proof of title to that land, only production of the Government lease relating to the land sold and -

(a) proof of title to that land -

(i) where the grant of the Government lease was less than 15 years before the contract of sale of that land, extending for the period since that grant; or

(ii) in any other case, extending not less than 15 years before the contract of sale of that land commencing with an assignment, a mortgage by assignment or a legal charge, each dealing with the whole estate and interest in that land;

(b) production of any document referred to in the assignment, mortgage or charge mentioned in paragraph (a) creating or disposing of an interest, power or obligation, which is not shown to have ceased or expired and subject to which any part of that land is disposed of; and

(c) .....

(2) Where this section requires the production of any document, it shall be sufficient to produce a copy

(a) attested, before 1 November 1984, by 2 solicitors' clerks; or

(b) certified by a public officer or a solicitor,

to be a true copy."

36. There was no contrary intention expressed.

37. Section 13(1)(b) makes no reference to a limitation period when dealing with an interest, power or obligation not shown to have ceased or expired.

38. On the other hand, the vendor did supply ordinary copies of the documents in question. It is clear from a reading of them that they relate to undertakings given to the Crown (and, of course, the Crown's successor) regarding the proper construction of verandahs. These, practically and legally, would not affect the registered proprietor of ground floor premises, including the shop herein.

39. In the circumstances I find that the documents in question are not encompassed by the expression title deeds of the shop, and for that reason the vendor was entitled not to give an undertaking under clause 18(1) of the agreement to provide certified copies of them.

The Outcome

40. The purchaser has failed to show that its requisitions were in every case reasonable and not properly answered. The vendor has established it was able to give and show good title. The purchaser by failing to prepare and forward a draft assignment under clause 14(b) of the agreement and failing to complete the purchase on the date of completion under clause 3(a) thereof was in breach. The vendor was entitled to invoke clause 20 and terminate, and is now entitled to the remedies it has sued for.

41. Judgment follows, with a costs order nisi.

Judgment

(1) I declare:-

(a) the defendant was in breach of and wrongfully repudiated the agreement;

(b) the plaintiff rescinded the agreement;

(c) the plaintiff is entitled to forfeit the deposits in the sum of $1,830,000.00 and any interest earned thereon.

(2) The defendant shall pay to the plaintiff as damages the sum of $91,500.00, together with interest thereon at the judgment rate from the date of this judgment to the date of payment.

(3) Costs, nisi at first instance, shall be to the plaintiff taxed if not agreed.

42. In respect of HCA 13863/97 there shall be no order as to costs.