Mak Ying Cho and Others v. Lam Wan Estates Ltd

HCMP000767/1976

IN THE SUPREME COURT OF HONG KONG

MISCELLANEOUS PROCEEDINGS NO. 767 OF 1976

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Coram: Cons, J.

Date of Judgment: 11th February, 1977.

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JUDGMENT

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1. The plaintiffs in these proceedings are the registered owners of two properties vested in them by virtue of a consent order made in this court in February last year. They hold them as trustees for sale. In November they entered into agreements to sell the two properties to the defendant company. Formal contracts were drawn up between solicitors. Each contract contained a specific clause relating to the character of the plaintiffs. They are in almost the same terms and I need set out only one:

"20. It is hereby declared that the Vendors are only selling as trustees under and pursuant to a Judgment dated the 17th February 1976 given by the Honourable Mr. Justice Cons in High Court action No.1204 of 1974. It is hereby specifically declared that the Purchaser is fully aware of the fact that the Vendors are trustees intending to sale. Parties will take Counsel's advice and if thought fit by the parties, seek court direction as to the propriety of the sale hereby agreed. Should it be subsequently discovered upon Counsel's advice or otherwise that the Vendors should not sell the said property at all, the said deposit will be returned without interest to the Purchaser, in which case this agreement will be discharged. In case, however, upon Counsel's advice and/or court direction, the property can be sold by the Trustees, but at a different price, the Purchaser will have a first priority to purchase the said property at such different price."

2. Accordingly the plaintiffs obtained counsel's opinion. It was a joint opinion from leading and junior counsel and was that in the one case there was no flaw in the plaintiffs' title to the property and in the other that a sale at the intended price would pass a good title.

3. The opinions were passed to the solicitors for the purchasers. They immediately raised the following matters:-

1. As to one property the original Crown lease had already expired and the right to renewal, not yet formally exercised, had not been expressly included in one of the earlier assignments. There was doubt therefore that the further term was vested in the plaintiffs.

2. As to both properties there were conflicting valuations in the valuation reports and there was therefore doubt whether the plaintiffs could sell at the price agreed.

3. And generally it was not intended to obtain the express consent of the beneficiaries under the trust for sale and that therefore, I presume, there was doubt whether the plaintiffs could pass a good title.

4. The first two matters had been dealt with expressly by counsel. The third is not worth comment. Nevertheless the defendants' solicitors suggested that a court order should be obtained. The plaintiffs' solicitors did not at once accede to that suggestion but instead took further opinion from their counsel. It was favourable on all points raised but again apparently failed to impress the solicitors for the defendants. Curiously enough the defendants' solicitors did not seem at that stage to have sought counsel's opinion for themselves. Accordingly the plaintiffs come to this court for certain declarations as to their title under the intended sales.

5. When the matter first came before me the defendants had instructed counsel. He was not able to put before me any argument to support the objections. All he could do was to put them forward naked as they were. To be fair, the lateness of his instruction had left him little opportunity to prepare for that hearing. But at this stage his position is still the same.

6. My initial reaction was to refuse out of hand the declarations asked for. It seemed to me there was no sufficient dispute to warrant a declaration by this court. But since then I have had the benefit of learned submissions from both counsel and they have persuaded me that the circumstances are indeed sufficient, however ill-founded I, and even they, may think the objections to be.

7. The facts in relation to title are simple. The property was demised by the Crown for a term of 75 years as from 12th February 1900, the lease contained these words

"and it is hereby further agreed and declared that the said lessee (etc.) shall, on the expiration of the term hereby granted, be entitled to a renewed lease of the premises .................... for a further term of 75 years without payment of any fine or premium therefor and at the rent hereinafter mentioned;".

The original lessee died and his executors assigned the residue of the lease to one Evaristo Mauricio. That assignment is the one said not specifically to refer to the further term of 75 years. I accept that this is so though I have not seen an actual copy of the assignment. It is to be noted however that the covenants of the lease appear to be mentioned in the recitals. The subsequent history is immaterial until one comes to the vesting order that I have already mentioned.

8. As I understand the law it is elementary that the assignment of a lease includes all the benefits attaching to the lease unless any are expressly excluded by the assignor. I am content therefore to make the first declaration asked for, namely that

"the right of renewal for a further term of 75 years under the Crown Lease in respect of the said Inland Lot No.1533 (the site of No.2 Morrison Hill Road, Hong Kong) is vested in the Plaintiffs;".

9. I am not prepared to make any declaration with regard to the proper price at which either property should be sold lest my decision be mistakenly thought binding on the beneficiaries who are not parties to this action, although in passing I might remark that the plaintiffs do not in the circumstances appear to be acting unreasonably. The other declarations requested are therefore refused. The defendants are to pay the plaintiffs' costs of these proceedings.

Representation:

B. Bernacchi, Q.C., and Patrick Woo (W.K. Poon & Co.) for the plaintiffs.

Richard Mills-Owens (Samuel Soo & Co.) for the defendants.