Rich Circle Co. Ltd. v. Lucky Time Finance Co. Ltd.

HCMP004202/1992

1992, MP No. 4202

H E A D N O T E

If a purchaser under a contract for the sale of land ("the contract") institutes proceedings for specific performance of the contract but subsequently consents to the dismissal of the proceedings, there is no real risk that a subsequent purchaser will be held bound by the contract, and therefore the court will not uphold an objection to the title on the part of the subsequent purchaser based on the contract.

1992, MP No. 4202

IN THE SUPREME COURT OF HONG KONG

MISCELLANEOUS PROCEEDINGS

HIGH COURT

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IN THE MATTER of an Agreement for Sale and Purchase dated 13th August 1992 between Lucky Time Finance Company Limited of the one part and Rich Circle Company Limited of the other part

and

IN THE MATTER of Section 12 of the Conveyancing and Property Ordinance, Cap.219

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Coram : Godfrey, J

Date of judgment : 29 March 1993

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J U D G M E N T

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1. This is a vendor and purchaser summons.

2. The purchaser claims that a requisition on title contained in a letter dated 9th November 1992 from the purchaser's solicitors to the vendor's solicitors was not sufficiently answered. The vendor claims that the answer given to the requisition in a letter dated 24th December 1992 from the vendor's solicitors to the purchaser's solicitors did afford a sufficient answer.

3. The matter arises in this way.

4. On 2nd August 1991, the vendor entered into an agreement for the sale to Whole Regent Ltd ("Whole Regent") of shops 1 - 12 Ground Floor, Unit C, Hong Ning Court, l 55 Hong Ling Road, Kowloon. The agreement was registered at the Land Office. On 19th September 1991 Whole Regent sub-sold all this property to another company called Cheerich Investment Ltd ("Cheerich"). This agreement also was registered at the Land Office.

5. The transaction between the vendor and Whole Regent did not proceed. On 23rd December 1991 Whole Regent instituted a suit for specific performance against the vendor. However, on 1st June 1992, Whole Regent's action was dismissed by consent. The order reads as follows :

"UPON the joint application of the parties, IT IS BY CONSENT ORDERED that :-

1. The action be dismissed.

2. Each party be responsible for its own costs notwithstanding any order for costs to the contrary."

On 13th August 1992 the vendor agreed to sell shops 6 and 9 to the purchaser; and that is the agreement under which the requisition of 9th November 1992 was raised. That requisition related to the sale to Whole Regent and reads as follows :

"As to the Instruction for Sale and Purchase Memorial No.5002783, please let us have the relevant Cancellation Agreement to show that the same has been cancelled and took no effect, otherwise a Statutory Declaration made by the intended Purchaser, Whole Regent Company Limited showing that the company had relinquished its interest and claim over the said property is required to prove good title thereof."

The answer of 24th December 1992 is in the following terms :

"Whole Regent Co. Ltd ("the company") took out a writ of summons in the Supreme Court under High Court Action No.9841, 1991 pursuant to an Intructions for Sale and Purchase Memorial No.5002783, ("the intructions") which has been subsequently dismissed by Order Memorial No.5294703. Under such circumstances, it is clear that the interest and claim of the company under the Instructions has been relinquished."

With that battle was joined, and I do not think it necessary to consider further the correspondence between the solicitors.

6. The contract between Whole Regent and Cheerich had a similarly chequered history; but, in that action, Cheerich obtained an order for specific performance against Whole Regent on 8th January 1993. This, however, is in my judgment of no relevance to the question which I have to decide, which is whether there is any real risk of Whole Regent successfully contending that its contract of 2nd August 1991 with the vendor is still subsisting. If there is no real risk of such a contention succeeding, then in my judgment it would be correct to say that the requisition raised by the purchaser was sufficiently answered.

7. In my judgment, there is no real risk of any successful proceedings being brought by Whole Regent for the enforcement of its contract of 2nd August 1991. The fact is that it did commence such proceedings but has consented to their dismissal. I am not prepared to say that, in some extraordinary circumstances, it can never be possible for a purchaser who consents to the dismissal of his action for specific performance to have a second bite of the cherry; for example, a consent order may be set aside on the ground that it was obtained by fraud. But that is mere speculation and I have to consider real not fanciful risks. Since I regard as fanciful the risk of any successful proceedings by Whole Regent against the vendor here, I propose to declare that the requisition raised by the purchaser was sufficiently answered. The costs of the vendor must be taxed (if not agreed) and paid by the purchaser to the vendor.

Representation:

Mr Kevin Hon instructed by M/s K.B. Chau & Co for plaintiff

Mr Warren Chan instructed by M/s K.Y. Woo & Co for defendant