Tahir v. Charles Cheung Wai Bun and Another

HCA004583/1979

Coram: Zimmern, J.

Date of Judgment: 5th November 1980

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DECISION

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1. This concerns an application by Rockville Limited (the applicant) under Section 19 of the Land Registration Ordinance Cap. 129 and the inherent jurisdiction of the Court to vacate a lis pendens registered at the Land Office against its property to name it quite informally Room 1101 on the 11th floor of Tower 1 Admiralty Centre.

2. The application was heard by me in chambers on the 5th November 1980 at the end of which I made the orders sought and said I would give my reasons in writing in open court and this I now do. Counsel for the respondent asked for a stay of the order pending appeal and this was refused.

3. The pending lis is High Court action 1979 No. 4583 wherein the Plaintiff (Respondent) is a person by the name of TAHIR and the Defendant is one Charles CHEUNG Wai Bun.

4. The writ was issued on the 17th December 1979 and by it the Plaintiff claims inter alia "specific performance of an agreement in writing made the 9th October 1979 and made between the Defendant as Vendor and the Plaintiff as Purchaser of the Property known as Room 1101 Admiralty Centre Tower 1". It was lodged with "the agreement" at the Land Office for registration the next day the eventual outcome of which was the Land Office refused to register "the agreement" but registered the writ of summons against the property. The writ was not served till the end of December 1979 and pursuant to an "unless" order of the Registrar the Statement of Claim was served on 17th March, 1980. Pleadings closed fourteen days after 29th April 1980 since when the Plaintiff has taken no further step in the action.

5. There was as expected in a matter of this nature much conflict of evidence and it was not within my province to resolve the factual issues in dispute. I was bound for the purpose of this application to assume everything in favour of the Plaintiff Respondent.

6. It was common ground between the parties that the property was at all material times registered at the Land Office in the name of the applicant company. It had bought it from the Mass Transit Railway Corporation under a sale and purchase agreement dated 29th September 1978. I assumed that at all material times the applicant was completely under the control of the Defendant.

7. I next turn to the agreement a copy of which was exhibited to an affidavit. It is headed V-2 Enterprise Ltd. (Estate Department) - Sale and Purchase Agreement.

8. The signatures are undecipherable and no suggestion was made that the Defendant himself signed as vendor. It is alleged in the Statement of Claim that it was signed by Ivy Chan for Laura Ho and/or V-2 Enterprise Limited acting on behalf of the Defendant. One cannot make this out from the document but once the name Laura Ho is mentioned then one can quite safely say that what purports to be one of the signatures read "SIGN FOR LAURA HO".

9. One Tjia Boen Sien in an affidavit filed on behalf of the Respondent Plaintiff affirmed:

10. This was after the Defendant had filed his affidavit where he affirmed that he had merely asked Miss Laura Ho to negotiate a price for the sale of the property by way of sale of all the shares in the applicant company and that he had never authorised her to enter into any contract or sign any document or agreement on his or on the applicant's behalf.

11. An affidavit sworn by Anthony Richard Taylor, a solicitor and filed on behalf of the Plaintiff on 1st November 1980 vis-a-vis the signature reads:

12. I was not concerned in this application with whether the Land officer was right or wrong in registering the lis pendens and refusing to register the instrument. That registration was challenged by the owner of the land affected.

13. The question for me to decide was whether the Respondent Plaintiff had any hope, chance or prospect of obtaining a judgment for specific performance on the agreement. I decided no and ordered the registration be vacated.

14. The very foundation of the Plaintiff's claim is the agreement. For it to be enforceable against the Defendant it must be signed by the Defendant or by some other person thereunto by him lawfully authorised. (Sec. 5(1) Law Amendment and Reform Ordinance).

15. This agreement was in the printed form of an estate agent where it was signed. There was no suggestion that the Plaintiff ever negotiated with the Defendant and it was common ground that the Defendant himself did not sign.

16. As Romer J. said in Keen v. Mear⁽¹⁾ at 579:

"the mere employment by an owner of an estate agent to dispose of a house confers no authority to make a contract; the agent is solely employed to find persons to negotiate with the owner; but, if the agent is definitely instructed to sell at a defined price, those instructions involve authority to make a binding contract and to sign an agreement."

17. On the Statement of Claim if instructions to sell had been given at all they could have been only to V-2 Enterprise Ltd. or Laura Ho or Milly Chan. Tjia Boen Sien deposed that at the time he signed the agreement Ivy Chan told him she had already asked the Defendant for his approval and got his consent to receive the deposit and to sell the property, but he did not mention who purportedly signed the document for the Defendant. For the Plaintiff to have any chance of suing to judgment the document must bear the signature of one of the three named above as vendor. "SIGN FOR LAURA HO" is not good enough. (See Bells v. Balls (1897) 1 Ch. 663). The agreement has not been signed by anyone authorised by the Defendant and is unenforceable.

18. Further Mr. Fung said the property was and is an asset of the applicant company and the Defendant albeit in complete control of the company had no personal interest in the asset. Macaura v. Northern Assurance Company Ltd.⁽²⁾. Accordingly any sale by the Defendant in his own name could not possibly bind the company which was not sued. Counsel for the Respondent Plaintiff countered by submitting that the Defendant could compel the applicant to convey relying on Harman J.'s dicta in Harold Elliott and H. Elliott (Builders) Ltd. v. Pierson⁽³⁾. In my view the argument was misconceived. As the Privy Council said in the Nybro Case (P.C. Appeal No. 38 of 1978):-

"It is only where the agreement may create some interest legal or equitable in the parcel of ground that the instrument can be the subject of registration under the Ordinance."

The agreement even if effective did not and could affect the parcel of ground registered at the Land Office in the name of the applicant. The vendor had no personal interest of any sort in the land. If the Plaintiff were minded to rely on compellability then it was bound to join the applicant in the action. It did not do so and the applicant also succeeded on this ground.

19. Another ground was that the agreement even if signed by the Defendant was stipulated to be subject to contract. Counsel for the Respondent said the clause "This agreement is provisional only subject to execution of Sale and Purchase agreement signed at the above-mentioned solicitor's office" typed on to a printed contract form meant a contract had come into existence only to be superseded by a formal contract when signed relying on Branca v. Cobarro⁽⁴⁾. In that case the clause used was "This is a provisional agreement until a fully legalized agreement drawn up by a solicitor and embodying all the conditions herewith is signed".

Lord Greene M.R. said at p.858:

"The ordinary meaning of the word 'provisional' I should have thought was something which is going to operate until something else happens. If it was intended to show that the parties regarded themselves as entering into an agreement which was to last only until something else took its place or superseded it the word 'provisional' would be the proper and apt word to describe that intention. An agreement which is only to last until it is replaced by a formal document containing the same terms and drawn up by a solicitor could, I should have thought, be described by no more apt word than the word 'provisional'. When the word 'provisional' is linked up with the word 'until', the whole thing seems to me to fall into shape. My reading of this document is that both parties were determined to hold themselves and one another bound."

20. The above was of no assistance to the Respondent Plaintiff. It is not a "provisional until" clause. Whether the word "provisional" so much relied on is there or not the agreement is still subject to another agreement hence not an agreement for the Sale and Purchase of Land. The agreement as a whole shows this clearly. It provides for forfeiture of deposit should the purchaser fail to attend at the solicitors office to sign the agreement and ascertained damages to be paid by the vendor if he should so fail. On my construction of the document the clause was typed in ex abundanti cautela to make it clear beyond doubt that no binding contract had been formed for the sale and purchase of land. The applicant also succeeded on this ground.

21. Lastly, counsel for the applicant submitted that under Sec. 19 of Cap. 128 the Court might order the vacating of a lis penden if it was satisfied that that the litigation was not prosecuted bona fide or other good cause. Counsel said dilatoriness in the prosecution of the action comes with this citing Thian's Plastics Industrial Co. Ltd. v. Tins' Chemical Industrial Co. Ltd.⁽⁵⁾. Here he said the writ was issued in October 1979 and lodged with the Land Office the next day but was not served till December. The Statement of Claim was not served and filed till March 1980 and only pursuant to an "unless" order. Pleadings closed 14 days after 29th April 1980 yet the Plaintiff had not taken any further step in the action.

22. The registration of a lis pendens secures a right of priority to the Plaintiff and has the effect of a judgment so registered against the land. It is a most valuable right. Correspondingly the owner's land is encumbered. In effect the owner would be unable to sell or mortgage the property. When there is an application by the owner to vacate a lis pendens on the grounds of dilatoriness in the prosecution of the action the interests of both parties must be considered. There is a tendency for plaintiffs after registration in these cases to sit back with self satisfaction as if to say what is the hurry after all I have a security on what I am after. The rules of the Supreme Court lay down a limit for each step up to the summons for directions. Parties between themselves can extend these time limitations and if there is lack of consent Courts have the power to extend time and are on the whole tolerant to the party applying but let this not lead to a belief that they are not vigilant. I have set out the matters complained of by the applicant in this matter. On return date of the application before me the Respondent Plaintiff asked for an adjournment on the grounds that he has had insufficient time to file affidavits in reply. This was granted and time limits were set for the filing of affidavits. The Plaintiff knew that one of the grounds of the application was dilatoriness. The affidavit in reply was sworn by the Plaintiff's solicitors. Under paragraph 11 he said:

"As to paragraphs 12 and 13 the fact that the Plaintiff and certain of the prospective witnesses are resident abroad adds to the difficulty of pursuing this claim on behalf of the Plaintiff."

Under paragraph 13 he said:

"As to paragraph 17 of his affirmation the Defendant appears to be saying that delay is equivalent to lack of bond fides. The position is that Counsel have advised that Madames Lora Ho and Ivy Chan be added as parties to the action; this will be completed as soon as my commitments and those of counsel permit."

23. I was quite unable to accept that the contents of the two paragraphs could amount to reasonable cause for the delay in taking out the summons of directions. Delay of course is not equivalent to lack of bona fides but unless explained could amount to lack of bona fides. The application was not to strike out the Statement of Claim for want of prosecution in which different considerations apply. It was to remove an encumbrance created by an action for specific performance. Was the Defendant bound to sit back and wait whilst the Plaintiff proceeded at his leisure. In my view no.

24. It was argued that the Defendant could have taken out the summons for directions. Certainly a defendant has that right but the rules imposed the duty on the Plaintiff and he cannot rely on the Defendant's right. I was in two minds over this ground when I gave my decision and now having had time to consider I would have allowed the application on this ground also.

Representation:

Patrick Fung (Deacons) for Applicant

A. Allman-Brown (Johnson Stokes & Master) for Plaintiff

(1) (1920) 2 Ch. 574

(2) (1925) A.C. 619

(3) (1948) Ch. 452

(4) (1947) K.B. 854

(5) (1970) H.K.L.R. 498