Chan Oi Ling v. Lam Kin Phung

HCMP001330/1981

Property law - sale of flat - deed of mutual covenant supplied to purchaser (which would bind her) wrongly described premises in relation to plan attached - original of deed in Land Office showed different plan with another mistake - requisitions properly made but not adequately answered - delay in completion not the fault of purchaser.

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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Between

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Coram: Fuad, J.

Date: 3 February 1982

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JUDGMENT

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1. The controversy which divides the parties to this originating summons concerns the sale and purchase of a flat in Sing Woo Crescent, the Plaintiff being the purchaser and the defendant the vendor. In the absence in this jurisdiction of provisions on the lines of section 49 of the United Kingdom Law of Property Act 1925 allowing a "vendor and purchaser summons", in all the circumstances proceedings by way of originating summons seem to me to be both sensible and convenient.

2. The facts are common ground. The parties entered into a sale and purchase agreement (the "Agreement") on the 16th September 1981. According to clause 1 of the Agreement what was to be sold was -

"ALL THAT the estate right title and interest of and in ALL THAT one equal undivided 10th part or share of and in ALL THAT piece or parcel of ground registered in the Land Office as INLAND LOT NO. 7188. And of and in the messuage erections and buildings thereon known at the date hereof as Nos. 1 and 1A SING WOO CRESCENT.....TOGETHER with the right to the use of the GROUND FLOOR of NO. 1A SING WOO CRESCENT....."

3. The purchase price was $1,360,000, of which sum $136,000 was paid on the execution of the Agreement as a deposit and in part payment (clause 2) and the balance was due on completion, the date being the 8th October 1981 (clause 3). Time has expressed to be of the essence of the Agreement (clause 4). The sale was to be subject to "covenants, conditions, stipulations and restrictions" etc. contained in certain specified instruments of which the only one that need concern us was a Deed of Mutual Covenant (clause 5). Provision was made for written requisitions, replies etc, and time limits set (clause 6). It is not necessary to refer to the other clauses in the Agreement but clause 2 also provided for the payment of interest at $670.70 per day on the balance of the purchase price if completion was delayed.

4. It will be convenient here to trace the history of the ownership of the ground floor of No. 1A. The block in which the flat stands was built by a developer, Mr. Wong Sui Wah. He retained one flat for himself and sold all the others during 1956 and 1957, assigning the flat in question to a Madam Yen Kwei Yih on the 22nd May 1956. The property conveyed was described in words identical to those later adopted in the Agreement, no plan being referred to or attached. A Deed of Mutual Covenant affecting the entire block of flats was executed on the 1st March 1957. Madam Yen died in January 1962 and her husband, Mr. Shen Pei Min was duly granted Letters of Administration. In the schedule to the grant the deceased's property was described as "1/loth share of and in Inland Lot No. 7188 (House No. 1A, Sing Woo Crescent") and the memorial registered in the Land Office thus described the property. The defendant (the vendor) bought the flat from Mr. Shen by an agreement dated the 2nd August 1981.

5. The documents sent to the purchaser's solicitors included the Deed of Mutual Covenant. The plan annexed showed the ground floor of No. 1A coloured pink, whereas in the schedule which listed the owners who were binding themselves by the Deed described Madam Yen's flat thus: "Ground floor of No. 1A Sing Woo Terrace as shown and coloured yellow on the said plan". It was also noticed that the schedule of her property annexed to the Letters of Administration made no reference to which floor of No. 1A the document related.

6. Before I refer to the correspondence which ensued between the solicitors for the parties about the requisitions, I should mention here that when the purchaser's solicitors made a search at the Land Office on the morning of the 7th October 1981 (so that her affirmation in support of an ex parte application made later that day for an interlocutory injunction to prevent the disposal of the flat before the hearing of this summons, could be prepared) they discovered that the plan annexed to the copy of the Deed of Mutual Covenant registered in the Land Office differed from that which had been earlier supplied to the purchaser. The matter may best be understood if I were to attempt, as I do, to draw the two plans in the simplest possible diagrammatic form, with the relevant annotations upon them.

The plan supplied to the purchaser

The original plan in the Land Office

7. I would interpolate here that the parties are at one that they intended respectively to sell and buy the ground floor flat on the right - hand side of the plans.

8. At the hearing, Miss Yuen on behalf of the purchaser did not wish to pursue the issue concerning the omission of the words "ground floor" in the schedule annexed to the Letters of Administration. When I read the correspondence exchanged on the requisitions I will also omit the references they contain to the date of completion and to the stand at one time taken by the vendor's solicitors that objection to the title had been waived, for these matters are no longer in issue. On the 22nd September 1981, the purchasers' solicitors wrote as follows -

The reply from the vendor's solicitors, of the 23rd September was in the following terms -

The purchaser's solicitors acknowledged this letter on the 29th September and said -

"The defects which we consider are material defects, patent upon perusing the title deeds. We are not prepared to enter into protracted legal argument as to whether one can consider the defects as immaterial or of any importance. The plain fact is that there are these defects as you yourself admitted. We require your clients to make good the defects prior to completion. Please let us know by return whether you are prepared and able to rectify the defects accordingly."

The final relevant letter, dated 30th September, from the vendor's solicitors was in these words -

"With reference to your letter of 29th September, we do not think there is any defect in the title of the above property. In any case by submitting draft assignment for our approval, there is a prima facie case that you have waived objection to the title of the vendor.

In the circumstances, we would remind you that as time is of the essence of the contract, the deposit of your client will be forfeited to our client if the contract is not completed in time. Meanwhile we return the draft assignment duly approved by us. As you are aware, the owner of the property has already executed the assignment."

9. In view of the final paragraph of that letter it is necessary to record that Mr. Robert Tang for the vendor does not seek to rely on any right to forfeiture or recission the Agreement might have accorded. The parties want the sale to go ahead and so the matter which falls for determination, difficult though it may be, is now within a narrow compass. Were the requisitions justified, and if they were not, is the vendor entitled to the interest for which provision is made in the Agreement on the ground that the delay in completion can be laid at the purchaser's door?

10. Mr. Tang, while not opposing the declarations for which Miss Yuen asked during the hearing (to correct the mistakes) submitted that the vendor was entitled to the contractual interest - a substantial sum in the region of $60,000 is involved - because the requisitions were not justified and the purchaser had no valid excuse for not completing in time. Mr. Tang draws attention to the fact that the assignment to Madam Yen from whom the vendor derived title perfectly described the property and made no reference to a plan. Had the matter stopped there, it could not be said that there was a defect in title. Ground floor flat 1A could be identified and no plan was necessary. It was clear that in the Deed of Mutual Covenant a simple mistake had been made and it was obvious that by that Deed the owners had not intended to affect their individual rights to exclusive possession of their flats. By looking at the first schedule it was apparent that, apart from the mistake, all the flats on each floor numbered 1 were stated to be coloured yellow on the plan, and all those numbered 1A, pink. As Mr. Tang put it, all this plainly indicated that ground floor flat 1A was the "odd man out". There was nothing whatever wrong with the title and the title was one which the vendor could insist should be taken by the purchaser.

11. Mr. Tang referred me to passages in the text books about the effect of plans and when they prevail over a verbal description. He drew my attention to Willis v. Watney ⁽²⁾ where the premises conveyed were described by reference to a plan and colours. A yard was delineated in the plan though not coloured but the parcels were described as follows: "Together with all yards now to the said messuage appertaining ...... "Fry, J. held that the Deed was operative to pass, and did pass, the yard despite the fact that it was not coloured in the plan. Mr. Tang contends that this should be the position here. As regards the plan annexed to the Deed of Mutual Covenant registered in the Land Office, he argues that the only difference between that plan and the one sent to the purchaser is the numbering on the "typical floor plan" - "1A" instead of "1" and "1B" instead of "1A" and he points out that the description "1B" does not appear anywhere else in the Deed; the first schedule in both copies of the Deed being identical. It was the ground floor plan that was relevant (all that was wrong was the colouring) and it did not matter what was written on the "typical floor plan"; that mistake added nothing. But Mr. Tang's fundamental submission was that his client's title derived from the assignment with a proper description and no plan, and not from the Deed - a mistake in the Deed was immaterial for it could not diminish her right to exclusive possession and use of the ground floor. Although Willis v. Watney and the two cases cited to me by Miss Yuen (Horne v. Struben⁽³⁾ and In Re Sparrow and James' Contract⁽⁴⁾ are, of course, of interest, in my judgment they do not assist me in reaching a decision on the issue before me.

12. Althgh it is true that the root of the vendor's title is an assignment that describes the property with no reference to a plan, the purchaser was entitled to be sent a copy of the Deed of Mutual Covenant which would bind her. It seems to me that she was justified in demurring when she saw that there was a discrepancy between the plan and the schedule, and later to insist upon her reservations when she saw that the plan annexed to the Land Office copy of the Deed differed in a material way. While the parties were obviously certain what they were buying and selling, I do not think she was being over cautious in being worried lest trouble might arise in identifying the premises to the satisfaction of a purchaser on a future sale. The position, of course, would have been very different had there been only one flat on the ground floor. In all the circumstances I reach the conclusion that the purchaser was justified in refusing to complete and in bringing these proceedings; and it seems to me that the problems that arose can be resolved by my granting the declarations sought by Miss Yuen and not opposed by Mr. Tang which will have the effect of correcting the first schedule and the plan in the Deed of Mutual Covenant registered in the Land Office. On the view of the merits of the matter that I have been constrained to take, the plaintiff/purchaser must have her costs.

(1)    [1881] 35 Beav 153

(2)     (1881) 51 L.J. Ch. 181

(3)     [1902] A.C. 454

(4)     [1910] 2 Ch. 60

Representation:

Miss Maria Yuen instructed by Fairbairn & Kwok for plaintiff

Mr. Robert Tang instructed by Lau, Wong & Chan for defendant