Cova Enterprises Ltd v. Ruddy Tjanaka
Read the full judgment text of HCMP 368/2003 on BabelCite. This High Court CFI judgment was delivered on 17 November 2003.
1. This is a vendor and purchaser's summons. These proceedings concern a property described as Apartment A on the 13th Floor of Block AB and Car Parking Space No. 50 of Pearl Gardens, 7 Conduit Road, Hong Kong ("the property").
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HCMP000368/2003 HCMP 368/2003 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE MISCELLANEOUS PROCEEDINGS NO. 368 OF 2003 -------------------
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------------------- Coram: Hon Sakhrani J in Court Date of Hearing: 21 and 22 October 2003 Date of Judgment: 17 November 2003 ____________________________ J U D G M E N T ____________________________ 1.This is a vendor and purchaser's summons. These proceedings concern a property described as Apartment A on the 13th Floor of Block AB and Car Parking Space No. 50 of Pearl Gardens, 7 Conduit Road, Hong Kong ("the property"). 2.The plaintiff is the purchaser of the property under a sub-sale agreement dated 9 December 2002 made between the plaintiff as purchaser and the defendant as vendor whereby the defendant sold the property to the plaintiff at the purchase price of HK$7,960,000 upon the terms and conditions of the sub-sale agreement ("the sub-sale agreement"). The defendant sold as confirmor. By the principal agreement dated four days earlier made on 5 December 2003 between the head vendor, Mr. Irwanto Oentung of Singapore ("the head vendor") and the defendant, the head vendor sold the property to the defendant at the purchase price of HK$5,500,000 ("the principal agreement"). Under both the principal agreement and the sub-sale agreement the date of completion was 20 December 2002. 3.It is plain that the defendant was selling the property to the plaintiff as confirmor under the sub-sale agreement (cl. 1 and Part III of the First Schedule). The two transactions were to be completed back to back with the date of completion of 20 December 2002. By agreement between the parties, the date of completion was extended to 6 January 2003. Prior to 6 January 2003 the plaintiff had paid the total sum of HK$796,000 as deposit and part of payment of the purchase price to the defendant's solicitors as stakeholders under the sub-sale agreement. The balance of HK$7,164,000 was payable on completion. Completion was to be by way of the usual solicitors' undertakings. 4.The transactions appeared to be progressing quite smoothly towards completion on 6 January 2003. By a letter dated 6 January 2003, the plaintiff's solicitors, Messrs Fan Wong & Tso ("FWT") sent the total sum of HK$7,164,000 to the defendant's solicitors by enclosing cheques in the said total sum as particularized in the letter addressed to the defendant's solicitors, Messrs Simon Ho & Co. ("SH"). 5.Although the cheques were sent to SH on 6 January 2003, there was no completion. This was because FWT had received a copy of a letter also dated 6 January 2003 from Messrs Siao Wen & Leung ("SWL") addressed to Messrs Gary Mak, Dennis Wong & Chang ("GMDWC"), solicitors for the head vendor whereby SWL claimed an interest in the property on behalf of a Madam Tjandrawati Sutanta ("Sutanta"). SWL also enclosed a copy of a consent order made in Singapore dated 21 March 2001. 6.As a result of the notice of the adverse claim to the property, FWT, on behalf of the plaintiff, asked for the return of the cheques representing the balance of the purchase price. There is no dispute that completion did not take place. The plaintiff raised its concerns about the adverse claim of Sutanta to the defendant by its solicitors' letter namely, FWT's letter to SH dated 6 January 2003. SH replied to FWT by a letter dated 7 January 2003. 7.FWT also received a copy of a letter dated 6 January 2003 from GMDWC on behalf of the head vendor addressed to SWL. By a letter dated 7 January 2003 FWT expressed the view, inter alia, that the head vendor and the defendant were unable to prove good title and asked for the return of all the cheques and cashier orders tendered on 6 January 2003. 8.By a second letter dated 7 January 2003, FWT stated, inter alia, that as the defendant and the head vendor had failed to prove and to give good title to the property, such failure amounted to repudiation of the principal agreement and the sub-sale agreement which repudiation the plaintiff accepted. The plaintiff's case is that the principal and the sub-sale agreements were rescinded and FWT asked for the return of all sums paid under the sub-sale agreement. 9.There was further correspondence between FWT and SH. By a letter dated 17 January 2003, SH gave notice to FWT that unless the plaintiff completed the transaction by 20 January 2003 they would forfeit the deposit which had already been paid and would claim damages for the plaintiff's breach of the sub-sale agreement. By a letter dated 22 January 2003, SH informed FWT that as the plaintiff had failed to complete by 20 January 2003, the defendant was exercising his right under the sub-sale agreement to give formal notice that the sub-sale agreement was determined and that the deposits paid thereunder were forfeited. 10.The plaintiff's claims are for:
11.The defendant disputes the plaintiff's claim and has counterclaimed for wasted convenyancing costs in respect of the plaintiff's wrongful repudiation of the sub-sale agreement. The amount counterclaimed is HK$10,000. 12.I have been informed that the deposits in the total sum of HK$796,000 have already been paid into court in Miscellaneous Proceedings No. 349 of 2003. The said sum had been paid to the defendant's solicitors as stakeholder under the sub-sale agreement. There is no dispute between the parties that the wasted conveyancing costs on the part of the plaintiff was HK$38,000 nor is there any dispute that the wasted conveyancing costs on the part of the defendant was HK$10,000. 13.The plaintiff's concern arose out of SWL's letter addressed to GMDWC dated 6 January 2003 which was copied to, inter alia, FWT and SH. The said letter of SWL to GMDWC stated as follows :
14.The enclosure to that letter was a copy of a consent order which was signed by, inter alia, the plaintiff in the Singapore proceedings, the head vendor and Sutanta ("the order"). The order appears to have been approved by Lai Siu Chiu J. on 21 March 2001. The enclosed copy order did not contain the title to the court proceedings in Singapore. It is plain from a reading of the order that the 1st defendant was the head vendor. 15.Ms Wong, for the plaintiff, rightly contended that the order provided for two different scenarios. Paras. 1 to 3 of the order dealt with the first scenario. By para. 1, the 1st and 2nd defendants in the Singapore action were ordered to pay the plaintiff and Sutanta the sum of S$1.2 million. Para. 2 provided for the manner of payment which included the sale of two properties, one being in Singapore described simply as "The Aspen Heights property" (para. 2.1) and the other, a property in Hong Kong described simply as "The Pearl Garden property" (para. 2.2). 16.Also by para. 2.2, the head vendor was to appoint Sutanta as his attorney with full power to proceed with the sale of "the Pearl Garden property" at the minimum price of HK$9 million or such other sum as the head vendor should authorize in writing. If the sale was not completed within six months from the date of the order then para. 4 of the order would operate. 17.Para. 4 provided that in the event that either "the Aspen Heights property" or "The Pearl Garden property" could not be sold pursuant to the provisions of para. 2, then paras. 1, 2 and 3 of the order would cease to operate. In substitution thereof, para. 4 of the order would take effect. 18.By para. 4.1 it was provided that the head vendor would sell the Pearl Garden property to Sutanta for the agreed price of HK$6 million. Both the head vendor and Sutanta agreed that they would proceed with the sale and purchase of the Pearl Garden property, the completion of which should take place within three months. By para. 4.2 the head vendor and the 2nd defendant to the action were to pay Sutanta the sum of HK$2.5 million of which HK$1 million would be paid within 14 days of the operation of para. 4. The remaining sum of HK$1.5 million would be paid in fifteen equal monthly instalments commencing on the date of the operation of para. 4. 19.It was also provided by para. 7 as follows :
20.It is to be observed that no further description is given of "the Pearl Garden property" in the order itself. However, there can be no doubt that the parties were referring to the property. There can also be no doubt that paras. 1, 2 and 3 of the order were not carried out, otherwise, the head vendor would not have been able to sell the property to the defendant, and the defendant would not have been able to sell the same as confirmor to the plaintiff. Para. 4 of the order, therefore, evidently came into effect. 21.Ms Wong drew my attention to the fact that Sutanta was not a stranger to the property. By an assignment dated 28 May 1974 the developer of Pearl Gardens, Mutual Faith Investment Ltd. assigned the property to Sutanta for the purchase price of HK$249,160. By an agreement for sale and purchase and an assignment both dated 27 May 1996 the property was sold and assigned by Sutanta to Monaco Developments Ltd., a BVI company, of which Sutanta was a director, at the purchase price of HK$8 million. Thereafter, by an agreement for sale and purchase dated 20 May 1998 the property was sold by Monaco Developments Ltd. to the head vendor at the purchase price of HK$16 million. The assignment to the head vendor was signed by Sutanta as director of Monaco Developments Ltd. 22.There is no dispute that by cl. 13 of the sub-sale agreement the defendant agreed to prove and to procure the head vendor to prove a good title to the property. Ms Wong reminded me of the applicable legal principles which have not been disputed. These can conveniently be summarized as follows :
23.As regards requisitions, it has been held that there is an obligation on the vendor to answer requisitions and objections, that is to say, to bring forward facts and circumstances known to him which might be material to the title which he has contracted to pass to the purchaser on completion (Active Keen Industries Ltd. v. Fok Chi-keong [1994] 1 HKLR 396). And Litton JA (as he then was) said at page 407 :
24.As regards the vendor's duty to answer requisitions, it was also said by Deputy Judge Chu (as she then was) in Guang Zhou Real Estate Development (HK) Co. Ltd. & Another v. Summit Elegance Ltd. [2000] HKLRD 855 at page 864 :
25.It was the plaintiff's contention that the defendant failed to prove good title by the time of completion on 6 January 2003. The requisition raised by FWT was contained in their letter dated 6 January 2003 addressed to SH which stated as follows :
26.The letter dated 6 January 2003 from GMDWC to SWL which was copied to FWT and SH stated as follows :
27.In answer to the plaintiff's requisition, SH replied to FWT by a letter dated 7 January 2003 as follows :
28.SH did not mention the effect of the non-registration of the order under the Land Registration Ordinance in their letter. SH raised the question of the authenticity of the court order. They also expressed the opinion that the order was not binding unless it had been duly registered in the Hong Kong court. They did not, however, expressly assert that the order was not registered under the Foreign Judgments (Reciprocal Enforcement) Ordinance, Cap. 139. They also expressed the view that Sutanta did not have an equitable interest in the said property as the order intended to deal with the proceeds of sale and had nothing to do with the title to the property. 29.The points raised by SH were misconceived. As Ms Wong rightly pointed out, the order made in Singapore proceedings was not enforceable by registration in Hong Kong. One of the conditions for registration under s. 3(2) of the Foreign Judgments (Reciprocal Enforcement) Ordinance, Cap. 319 of a judgment of a superior court of a foreign country is if there is payable thereunder a sum of money, not being a sum payable in respect of taxes or other charges of a like nature in respect of a fine or other penalty. Para. 4 of the order is not a judgment for the payment of a sum of money. The order was, therefore, not registrable under the said Ordinance. 30.It is to be observed that under the Foreign Judgments (Reciprocal Enforcement) Ordinance, even if the order had been registered it was liable to be set aside because the courts of Singapore are deemed not to have jurisdiction over immovable property outside Singapore (ss. 6(1) and 6(3)(a)). 31.The above propositions were not disputed by Mr. Cheung. The points taken by SH in their letter in answering the requisitions were, in my view, misconceived. It was also misconceived to suggest that the effect of para. 4 of the order was to deal with the proceeds of sale and had nothing to do with the title of the property. Para. 4 of the order clearly dealt with the sale of the property. 32.Mr. Cheung submitted that in the light of GMDWC's letter on behalf of the head vendor dated 6 January 2003, good title has been shown. He submitted that the said letter was part and parcel of the package of answers to the requisition raised and that the said letter of GMDWC was a complete answer. He submitted that title had been proved. 33.Mr. Cheung contended, rightly in my view, that by s. 2 of the Land Registration Ordinance, Cap. 128, only judgments or orders of the Court of First Instance, the District Court, and the Lands Tribunal by which judgments or orders any parcels of grounds, tenements or premises in Hong Kong may be affected can be registered. The order, however, was not such a judgment or order. It was a foreign order and was, therefore, not registrable as a judgment or an order under the Land Registration Ordinance. It was, however, his submission that the order also embodied a contract of sale of property in Hong Kong and as such it was registrable under s. 2(1) of the Land Registration Ordinance. The effect of non-registration of a registrable document is that it shall as against any subsequent bona fide purchaser for value be absolutely null and void to all intents and purposes (s. 3(2)). It was submitted that as the order was not registered as a contract of sale under the Land Registration Ordinance, any adverse claim of Sutanta was null and void as against the plaintiff. S. 4 provides that :
34.I am unable to accept Mr. Cheung's submissions. As Ms Wong submitted, the parties in the Singapore proceedings chose to embody their terms of agreement to the disposal of the litigation in Singapore by means of a court order, albeit by consent. It cannot be ignored that it was in fact a court order. As a foreign court order, it plainly was not registrable under s. 2. I accept Ms Wong's submissions. 35.There is also another reason why the order as such could not have been registered against the property. It is clear from the order that the only description of the property was "The Pearl Garden property". No other description is given in the order. It is plain that it could not have been registered against the property. There is no detailed description of the property in the order. The only description given is "The Pearl Garden property". That is clearly insufficient for the purpose of registration. The memorial to be delivered to the Land Registry has to contain, inter alia, a description of the land and premises affected or intended to be affected, including the lot number and address (Regulation 6(1)(a) of the Land Registration Regulations). It is impossible to discern the address of the property from the order itself and the order as such would have been rejected if submitted for registration against the property. 36.It was further emphasized by Ms Wong that the Land Registration Ordinance does not deal with interests in land not created in writing such as, e.g. a beneficial interest under an implied trust. If the equitable interest was unregistrable under the Land Registration Ordinance, the equitable interest would not be absolutely null and void against the plaintiff. Had the plaintiff completed the sale with notice of the adverse claim there is the possibility that the plaintiff would have rendered themselves vulnerable to a potential claim (Lam Sau Wah v. Tam Chi Hung [2001] 2 HKLR 104). 37.Ms Wong submitted that it was not clear whether the order was enforceable by action at common law in Hong Kong. It was not clear if the order was one in personam or in rem. A judgment in rem is a judgment whereunder either possession or property in a thing is adjudged to a person or the sale of a thing is decreed in satisfaction of a claim against the thing itself. If it was an order in rem the court of a foreign country has no jurisdiction to adjudicate upon the title to, or the right to possession of an immovable property situate outside that country (Rule 40(2), para. 14R-099 and 14-100 Dicey and Morris, The Conflict of Laws, 13th Edn.). 38.Ms Wong also drew my attention to s. 5 of the Foreign Judgments (Restriction on Recognition and Enforcement) Ordinance, Cap. 46 which provides that :
39.S. 5 of Cap. 46 displaces a part of the rule of the common law that a foreign judgment does not extinguish the original cause of action in respect of which the judgment is given (para. 14R-018, Rule 35(3) and para 14-034 Dicey & Morris). Thus, if the order is not enforceable or recognised in Hong Kong, proceedings may be brought in Hong Kong for the same cause of action giving rise to the order in proceedings between the same parties and privies so that the usual doctrine of merger does not apply. That being so, in the absence of any information from SH or GMDWC about the Singapore proceedings there was a possibility that a claim against the property was made in the Singapore proceedings which claim could be relitigated in Hong Kong. 40.I accept Ms Wong's submissions. The complaint of the plaintiff is that it has not been given any substantive information about the claim of Sutanta to the property in any answer to the requisition raised. I am satisfied that the answer given by the head vendor's solicitors is not a complete answer at all as suggested by Mr. Cheung. The answer given by SH was also not straightforward. Points were taken which were misconceived. No information whatsoever was given about the claim of Sutanta in the Singapore action. The order refers to the property simply as "The Pearl Garden property". It can reasonably be inferred that the full description of the property must have been given in some court document prior to the making of the order. There might well have been a claim by Sutanta to the property in the Singapore proceedings as the property described as "The Pearl Garden property" was mentioned in the order. 41.There was no information whatsoever given about the Singapore proceedings or the cause of action in the proceedings underlying the order. The answer to the requisition was not satisfactory. I do not see how the plaintiff could be confident by the said letters from SH and GMDWC that all the relevant facts have been revealed to enable it or its solicitors to decide whether the vendor has a good title. It seems to me that the defendant has failed to prove good title by the time of completion on 6 January 2003. 42.In my judgment the defendant has failed to prove good title by the time of completion on 6 January 2003 and the plaintiff was entitled to rescind the contract under the sub-sale agreement. By cl. 19 of the sub-sale agreement all moneys paid by the plaintiff to the defendant should be returned to the plaintiff. The plaintiff is in my judgment entitled to the return of the deposits paid with interest. 43.I give judgment to the plaintiff. I grant :
44.I also make an order that the defendant do return to the plaintiff its deposits in the total sum of HK$796,000 together with interest thereon. The said sum of HK$796,000 has already been paid into court in Miscellaneous Proceedings No. 349 of 2003. I have not heard arguments on the rate of interest and the period for which interest should be paid by the defendant. The parties' legal representatives should be able to agree this. I shall, however, give liberty to the plaintiff to apply on the question of the rate of interest and the period for which interest should be paid by the defendant if agreement cannot be reached as to this. 45.I also make an order that the defendant do pay the plaintiff its wasted conveyancing costs and disbursement in the sum of HK$38,000. 46.I make an order nisi that the defendant do pay the plaintiff the costs of and incidental to this application. I also grant a declaration that the plaintiff is entitled to an equitable lien on the defendant's interest in the property under the principal agreement for the said deposits, interest thereon, the said wasted conveyancing costs and disbursement in the sum of HK$38,000 and the costs of the application. 47.The counterclaim is dismissed. I also make an order nisi that the defendant do pay the plaintiff the costs of the counterclaim.
Representation: Ms Lisa K Y Wong instructed by Messrs. Fan, Wong & Tso for the plaintiff Mr. Earnest Cheung instructed by Messrs. A. Tse & Fung for the defendant |
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