Re All That 1/96th Part or Share of and in Kwun Tong Inland Lot No. 386

HCMP001996/1988

1986, No. M.P. 1996

IN THE HIGH COURT OF HONG KONG

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HEADNOTE

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Proceedings for a declaration in which the court is asked to decide academic, future or hypothetical questions will not be entertained; and proceedings by ex parts originating summons to obtain, in the guise of a declaration, the opinion of the Court on an intending vendor's title are an abuse of the process of the Court and must be dismissed.

1988, No. M.P. 1996

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

MISCELLANEOUS PROCEEDINGS

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Coram: The Hon, Mr. Justice Godfrey in Court

Date of Hearing: 12th October 1988

Date of Delivery of Judgment: 12th October 1988

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JUDGMENT

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1. This ex paste application in Chambers by way of originating summons for a declaration raises a number of points of practice and procedure, and also a number of conveyancing points, which are of some general importance; not least because from this case, and several other recent cases, before me, it has become apparent that there are some misconceptions prevalent amongst conveyancers about the role of the court in conveyancing matters. These misconceptions need to be corrected.

2. I have decided, therefore, to release this judgment for publication, in the hope that the guidance it is intended to give will come to the notice of the profession. If that guidance is accepted, it should do something to staunch the flow of illegitimate applications to the court which appear to be a feature of conveyancing practice in Hong Kong, and to demonstrate what is really the right way to proceed.

3. The problem of which this case is an example is one of frequent occurrence and arises in this way.

4. An intending vendor instructs a solicitor to act for him on the sale of his property. (The solicitor is sometimes, but not always, the same solicitor, or, at any rate a member of the same firm of solicitors, who acted for the intending vendor when the latter purchased the property originally: in such cases, the solicitor was, as likely as not, then acting for both vendor and purchaser, with the inevitable conflict of interest which that regretable practice creates. ) When the solicitor looks into his client's title, he discovers a defect, or what he thinks a solicitor for an intending purchaser would or might claim to be a defect, in the title. What is he to do?

5. First, of course, he must warn his client of the difficulty (and, if it was one which was created by some act or omission of his own, or of his firm, when acting in the original purchase, he must inform his client of this fact and counsel him to take independent advice from another firm of solicitors).

6. Secondly (assuming he continues to act for the intending vendor) he must consider what, if anything, can be done to resolve the difficulty. In particular, he must consider whether the difficulty can he resolved without the necessity of an application to the court. If, for example, the question arises (as in the present case) on an imperfectly worded passage in some document of title, it may be possible to get over the difficulty by a supplemental or confirmatory deed executed for the purpose by the original parties (or if there has been a death, by the personal representative of the party now dead). If there is nothing that can be done to get over the difficulty, then the solicitor's correct course is to advise his client that there is a blot on the title.

7. If the blot is not serious, the solicitor may advise his client to offer the property for sale, expressly drawing attention, in the contract, to the real or supposed defect in title. The contract can go on to provide that the purchaser shall not be entitled to raise any requisition or objection about the point; if, however, the solicitor considers that such an additional provision would make it difficult or impossible to sell the property at all, he should leave it out of the contract, and should instead provide that the purchaser, at the vendor's expenses, is to be at liberty to apply in a summary way to the court, udder section 12 of the Conveyancing and Property Ordinance Chapter 219, for a decison of the question whether the point in issue prevents the vendor from showing a good title to the property. Of course, further provision should be made, if in the event the decision goes against the vendor, for the purchaser to be entitled to rescind (with all the usual consequences, such as repayment of the deposit, Payment by the vendor of the purchaser's costs and expenses of investigating the title, and etc.).

8. These are the correct steps for the intending vendor's solicitors to take. And they culminate, if necessary, in properly constituted proceedings (which should, incidentally, be set down to be heard by the judge in court, not in chambers) brought before the court by way of a vendor and purchaser summons (this is the colloquial description of proceedings under section 12 of the Conveyancing and Property Ordinance) in which the purchaser is the plaintiff and the vendor is the defendant (it does not in fact matter which way round they appear on the record). In those proceedings, the court declares which of the two of them is right; the vendor, who says there is no defect in title with which the purchaser need be concerned, or the purchaser, who says that there is.

9. What the intending vendor should not do and indeed cannot do is to approach the court, in proceedings to which he has made no one else a party, in order to get the court to declare that he has a good title to the property. Nevertheless, this frequently happens; the idea apparently being that, armed with such a declaration, the intending vendor will then be able to market the property without difficulty.

10. It seems that some restatement of the basic principles which govern the commencement of civil proceedings is urgently needed.

These principles may be stated as follows.

11. The fundamental misconception which underlines such attempts may, I think, be traced to equally fundamental misconceptions as to the purposes and use of the originating summons procedure, misconceptions concerning in particular the purpose of the ex parte originating summons. All civil proceedings must be begun by some sort of originating process. The most important originating process is the writ of summons, by which a plaintiff institutes proceedings against a defendant, setting out briefly his complaint against the defendant in the endorsement on the writ. A writ action, however, can prove cumbersome and expensive; and the Rules of the Supreme Court therefore make provision, in certain cases, for an alternaive originating process, the originating summons, in the hope that, in the sort of case in which use of the originating summons is prescribed or permitted, the originating summons procedure will prove simpler, quicker and less costly than a writ action. But proceedings commenced by a originating summons are just as much an action as proceedings commenced by writ, and can be instituted only by a plaintiff who is seeking some relief against a party whom the plaintiff has named and constituted as the defendant. (There are other originating processes provided for certain special cases, such as proceedings by way of petition and proceedings by way of originating motion : but I need not add to the length of this judgment by examining these comparative rarities here.)

12. But that is not all. The Rules provide not only for originating summonses inter partes (such as I have described above) but also for originating summonses ex parte. There are certain very special cases (see the Supreme Court Practice, 1988 para. 7/1 - 7/3) for which the use of the originating summons ex parte is prescribed by the Rules (for example, to obtain an order for payment out of a fund in court); in such cases there is no need to make anybody a defendant to the originating summons. But it cannot be too strongly emphasised that the proper use of the ex party originating summons is confined to the very special cases in which it is expressly required or allowed by the rules. It is not available for general use as a way of getting the court's opinion (not in proceedings against a defendant with whom the plaintiff is in dispute, but in proceedings to which only the plaintiff is a party) about some point on the plaintiff's title which is troubling him. It is not the function of the court to advise owners of property about the state of their titles.

13. This brings me to the sort of relief the court can grant to a plaintiff in civil proceedings. Providing the proceedings are properly constituted between a plaintiff and a defendant who are genuinely and presently interested to have the court resolve a question over which they differ, the court has the power to grant relief by way of declaration, that is to say, a declaration which makes it clear which of the disputants is right. It has that power both in actions commenced by writ and in actions commenced by originating summons inter partes. It will riot be exercised to decide academic, hypothetical or future questions : and it cannot be exercised by consent, but only on proper proof of the circumstances claimed to justify the making of the declaration. It is a power which is given to the court for the purpose, and only for the purpose, of resolving a question between parties who are in present disagreement about their legal rights. Absent these features, the court has no jurisdiction to grant any declaratory relief and the court will not do so; and it is an abuse of the process of the court to institute proceedings for a declaration in breach of these elementary first principles.

14. I now turn to apply these principles to the present case.

15. In 1977 one Pak Lan-ching (Mrs. Fong) the owner of Flat F. 10th floor, Kai King building, 12 Yuet Wah Street, Kwun Tong (the property) appears to have been minded to give her husband Fong Wai-chow (Mr. Fong) a half interest in it, to the intent that the two of them should become joint tenants (not tenants in common in equal shares) of the property.

16. She went to Messrs. K.M. Lai & Li, solicitors, who drew up a deed of gift to give effect to her instructions. On their advice, on 27th June 1977 Mrs. Fong executed the deed of gift. Doubts have arisen as to its legal effect. Did it constitute Mr. & Mrs. Fong joint tenants, or tenants in common in equal shares, of the property? The answer is not at all clear. Mr. Fong is now dead. The matter could still be cleared up by a confirmatory deed, executed by a duly constituted personal representative of Mr. Fong, acknowledging that the deed of gift was intended to take effect as a gift to Mr. & Mrs. Fong as joint tenants. At present, however, there is no duly constituted personal representative to the estate of Mr. Fong. Whether anybody, other than Mrs. Fong, is beneficially interested in Mr. Fong's estate, I do not know; and there is no evidence before me on the matter. If, in fact, there is no one interested in Mr. Fong's estate other than Mrs. Fong, she will have become entitled to the entire beneficial interest in the property anyway, either because she has inherited Mr. Fong's half share (if the deed constituted Mr. & Mrs. Fong tenants in common in equal shares) or by right of survivorship (if the deed constituted Mr. & Mrs. Fong as joint tenants).

17. The whole matter seems to me to be perfectly capable of resolution without any intervention by the court, although it may be necessary, in order to resolve the matter properly, to constitute a personal representative to Mr. Fong's estate.

18. What has actually happened is that Mrs. Fong has taken out an ex parte originating summons, that is to say, one to which nobody is made defendant, claiming in effect a declaration that she and Mr. Fong were joint tenants and an order for rectification of the deed of the gift to clarify the matter. Such a claim, if made by Mrs. Fong against a duly constituted personal representative of Mr. Fong who refused to concede Mrs. Fong's point, is one which the court could certainly entertain. What it cannot entertain is this misconceived ex parte application, seeking relief which, if granted, would be binding on those beneficially interested in Mr. Fong's estate without giving them any opportunity to argue that the deed created a tenancy in common and not, as Mrs. Fong contends, a joint tenancy.

19. The proceedings must be dismissed. They are an abuse of the process of the Court.

Representation:

Mr. Paul Li of Messrs. K. M. Lai & Li for the Applicant.