Ji Shan International Investment Ltd. v. Resources Main Enterprises Ltd and Another

HCA010949/1996

1996, No. A10949

IN THE HIGH COURT OF HONG KONG

COURT OF FIRST INSTANCE

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1996, No. A13602

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Coram: Deputy Judge Beeson in Court

Dates of hearing: 17, 18 , 21 -23 of July, 1997

Date of handing down judgment: 25 August 1997

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J U D G M E N T

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KEY

Brief Outline of Facts

1. These actions related to the sale of a residential property at Hong Lok Yuen. The Vendor (2D) entered a long-term agreement for sale and purchase with the Confirmor (1D). He in turn sold to the Sub- Purchaser (P), but at a loss of $5 million because of the vagaries of the property market at the time he sold.

2. Completion of both sales was fixed for the same day. The Confirmor raised a requisition almost on the eve of the settlement and refused to complete until it was satisfied. At the same time the Confirmor failed to give the Sub-Purchaser instructions as to split cheques on settlement until after the settlement time. He then complained about the ensuing delay of 11/4 hours before the cheques and assignment were delivered and promptly rescinded the agreement and forfeited the deposit.

3. The Sub-Purchaser attempted to settle direct with the Vendor but the Vendor refused to accept a settlement in which the Confirmor did not fulfill his original role. Eventually the Vendor terminated the agreement with the Confirmor and retained his deposit.

4. The captioned actions then ensued. Order 14/Order 86 proceedings brought by the Plaintiff in A10949/96 were not successful and an order was made by Mr. Justice Stone on 5.6.97 that both actions be tried together.

5. In A10949/96 the Plaintiff sought:

1. Specific performance of the Head Agreement and Sub-Sale Agreement in respect of the suit property at Hong Lok Yuen.

2. Damages against the 1st Defendant including damages in lieu of or in addition to specific performance.

3. An Order that the 1st Defendant's solicitors pay to Plaintiff $180,000.00 held by them as stakeholders.

6. In A13602/96 the Plaintiff sought against Defendant Declarations that:

(1) P. was entitled to forfeit $6 million being deposit under the Head Agreement.

(2) the $6 million paid by Defendant to Plaintiff had been forfeited by P. and;

(3) Plaintiff had rescinded the Sale and Purchase Agreement.

7. The facts were essentially undisputed. On 1.3.94 2D, agreed to sell a house at Hong Lok Yuen to 1D for $20 million. A long settlement period was negotiated with completion to be at 12 noon on 31.8.96. 1D paid $2 million deposit on signing the agreement and further payments of $2 million on 30.6.96 and $1 million on 30.9.96 and 31.12.96 - a total of $6 million.

8. The 30% deposit had been negotiated between the parties through the property agent. The 2D who, not unnaturally, wished to have some protection over the 2½ year settlement period originally wanted a 40% deposit, but eventually agreed to the reduction.

9. On 31.3.96 1D entered a Sub-Sale Agreements to sell the property to P. The price agreed was $15.36 million - a 10% deposit was paid and settlement was fixed for 31.8.96 at 11 a.m. The price difference was caused by the market undergoing a period of "correction" at the time the sub-sale was negotiated. This meant that 1D would make a loss of $4¾ million on the deal.

10. This loss was not to 1D's liking. It appears highly probable that he was operating as a property speculator - his attempt to convince the court that he did not have much experience in property dealing were not credible.

11. His stated reason for buying the property was that it was needed as accommodation for Mainland Chinese who intended to come to Hong Kong in 1996/97. This need apparently vanished and thus the sub-sale resulted.

12. Factors that indicated 1D was speculating were that the agent approached the 2D with the offer of purchase and the request for the unusually long settlement period which would be useful breathing space in which to find a sub-purchaser and which would allow some choice about the time of re-sale. Further, the 2D referred in his evidence to finding a number of sales agreements related to 1D in the District Office Records and the court Bundle contained copies of documents in H.C. A12925/95 where 1D appeared as Plaintiff in yet another Hong Lok Yuen transaction.

13. It is against that background that the problems that arose at completion should be considered.

14. On 23.8.96 1D's solicitors produced a surveyors' report which purported to relate to works on the property and which appeared to show the work was not authorised. It became clear later that this report did not refer to the suit property at all but to structures on another property 1D had attempted to buy. Later attempts by P's solicitors to obtain the unaltered original of this letter were unsuccessful, but a comparison of the description of the structures makes it clear that this initial letter did not relate to the suit property at all.

15. Neither party sought formal clarification from the Building Authority at that stage, a strange omission on 1Ds part as he, as director of another company Hoson Ltd., in December 1995 had sued in the High Court for return of his deposit under another ASP for another Hong Lok Yuen property. The basis of that action was that there was an illegal structure, a fence, on the property.

16. It should be noted briefly at this stage that the fence on the suit property was considered by the Building Authority as an illegal structure, although it did not affect the structure of the house in any way whatsoever. It was also clear from the evidence that the Building Authority was most unlikely to attempt to demolish it.

17. On 28.8.96 P. wrote to 1D's solicitor asking how the cheques for the settlement balance should be split. The HA stipulated that settlement was to be by way of undertakings and although the SSA was silent on that point, it appears the parties expected to follow the same procedure and settle by way of undertakings. 1D's solicitor did not reply to P's enquiry, nor to a second letter on 30.8.96 asking the same question. At no stage did 1D's solicitor indicate that settlement by way of undertaking was unacceptable.

18. On the same day 1D's solicitor corresponded with 2D's solicitor about the wall. 2D's solicitor suggested 1D was acting mala fide in refusing to settle unless the "requisition" was answered and demanded completion as scheduled. At 10.41 a.m. 1D's solicitor informed the P that they were disputing the legality of the wall.

19. They 2D gave 1D's solicitor instructions on how the cheques should be split for the balance of the purchase price.

20. The 31.8.96, the settlement day, was a Saturday. 1D's solicitors advised the Vendor that they would settle only when all requisitions, namely the question of the wall, had been settled. This argument by fax continued past the stipulated settlement time of 12 noon.

21. The P. by Saturday still had not been told by 1D how to split the settlement cheque; 1D did not give any such instruction until 11.05 - past the agreed settlement time. The P notified 1D that they would accept the Vendor's title despite the existence of the front wall.

22. At 12.44 p.m. 1D's solicitor complained to the P's solicitor that they had not received the assignment or the balance of the purchase price and alleging they had seen 2 faxes as reminders. The solicitors tendered the balance. However at 12.59 p.m. 1D's solicitors forfeited the P's deposit complaining that payment was 1 hour 15 minutes late. The "warning" faxes and the letter forfeiting the deposit were all faxed together at 12:59 p.m.; although they purported to have been written at earlier times they were not sent when written. The P soilicitors told 1D that the Vendor would extend the completion date to 2.9.96 at 1.00.

23. On that date the P. tendered the assignment and balance of purchase price to 1D but at 12.17 was advised that the sub-sale agreement was at an end as the P. was considered to have repudiated the sub-sale agreement.

24. On 4.9.96 the P wrote to 2D's solicitor offering to complete the sale direct with 2D. This offer was not accepted by 2D who advised that it was only prepared to settle in terms of the Head Agreement and that view they held to.

25. Correspondence and argument continued between 1D and the Vendor over the legality of the wall with the Vendor extending time for completion to 17.9.96, then to 5.11.96, then to 9.11.96. Finally on 13.11.96 the Vendor called off the sale to 1D and forfeited the deposit alleging 1D had repudiated.

26. The underlying contention by the Plaintiff in each action (the Vendor and the sub-purchaser) was that the Confirmor (1D) deliberately tried to escape the consequences of what was, 21/2 years later, a bad bargain for him by resorting to underhand tactics to avoid completion of either transaction.

27. In respect of the Head Agreement 1D refused to complete claiming that good title had not been shown as an illegal structure was on the property. At the same time he rescinded the Sub-Sale Agreement on the ground that P. had delayed tendering the purchase price after the time fixed for settlement despite the fact that his solicitors had delayed instructions past the settlement time knowing that time was stated to be of the essence in each agreement.

28. If the court found for P. in A 10949/ it was clear that the second action would fall away. According, I shall deal with the claim of the sub-purchaser P. in A 10949/97 first.

A 10949/97

29. The P. claimed Specific Performance against the 1st and 2nd Defendant. On P's submission there were only 2 issues:

(1) Whether 1D was entitled to rescind the sub-sale agreement and forfeit the P's deposit of $1,536,000.00.

(2) If not whether P. was entitled to specific performance against 2D and 1D.

1D's case was that he was entitled to rescind because P. was late in tendering the balance of the purchase price.

30. The sub-sale agreement stipulated 11.00 a.m. as completion time, an hour before the time fixed for completion of the Head Agreement. The P. requested instructions both on 28.8.96 and at 10.15 a.m. on 31.8.96 as to how the settlement cheque should be split. As the balance of the price would go to the head vendor and/or the mortgagee this was a proper request.

31. The solicitor for 1D did not reply to the request of 28.8.96 and on 31.8.96 failed to reply until 11.04 a.m. i.e. after the settlement time. In this reply they approved the Assignment and Letter of Undertaking sent by P's solicitors.

32. At the same time 1D was raising requisitions under the Head Agreement about the Head Vendors title. In respect of this action it suffices to say that that requisition:

(1) did not go to the root of the Head Vendor's title.

(2) while showing a technical breach of the Building Ordinance, as permission had not been sought for its construction, did not affect the structure of the house.

(3) was raised mala fide by 1D who was familiar with such features at Hong Lok Yuen as shown by his attempt to rescind an earlier agreement for Sale and Purchase for the same reason.

33. The P., who had been apprised of the requisition by 1D's solicitors, sent with its settlement cheques a letter saying that P. accepted the Head Vendor's title in any event. The cheques arrived at 12.15 p.m. At 12.59 1D rescinded the sub-sale agreement and forfeited P's deposit.

34. 1D contended that there was no obligation to give instructions about split cheques as the SSA made no mention of it and that P. could always have tendered a single cheque for the purchase price.

35. This cannot be correct - the Head Agreement to which the SSA was subordinate, stated that settlement should be by way of undertaking and in the absence of specific instructions the sub-sale would be expected to proceed in the same way.

36. Further, 1D's solicitors on 28th had not stipulated any other form of payment nor did they on 31.8.96. It was not open to 1D to take this point at a later date.

37. The Plaintiff relied on the case of Heisler v. Anglo. Dal Ltd. [1954] 1 W.L.R. 1273 as restated with some force by Deputy Judge Woolley in Million Unity International Ltd. v. Pacific South (Asia) Holdings Ltd. [1997 H.L.L.R.D. 613]. The reliance was on the holding that a party in not taking a point at the time which, if taken, could have been put right, could not later rely on it.

38. As for the contention that a single cheque could and should have been tendered the P. relied on Edward Wang Ltd. V. Johnson Stokes (P.C.) 1984 1 A.C. 296 that the sub-purchaser was entitled to insist on split cheques - an argument of particular force given that the sub-purchaser was obliged to pay before completion of the Head Agreement and where, in addition, there was a mortgage to be discharged.

39. P relied on 1D's lateness in giving instructions as an indication that 1D had extended the time for completion. 1D denied any waiver and said if there had been any extension if could only have been to 12.00 on the same day - the time for completion of the Head Agreement to which the sub-sale was subject.

40. Assuming for this purpose that the delay was not caused by the fault of either P. or 1D then a reasonable time could be substituted; see Hunter J.A. in Camberra Investment Ltd. V. Chan Wai-Tak [1989] 1 H.K.L.R. 568. In that instance 12.15 would certainly be considered by the court as a reasonable time.

41. However, that presupposes a willing sub-purchaser and a willing Confirmor (1D). It is clear to this court that that was not the position. The documents and the evidence shows that by this stage 1D was not a willing purchaser under the Head Agreement, despite his professions through his solicitor that he was.

42. 1D gave evidence that his only concern in pursuing the requisition was to protect the interest of P. He endeavored, unconvincingly, to impress the court with his limited experience in property dealing. On the evidence I was satisfied that 1D was a speculator making his living or a substantial part of it from his property venture.

43. While there is no opprobrium to be heaped on 1D for engaging in what might be considered the biggest cultural interest in Hong Kong after horse racing, there is every reason for a Court to ensure that such a speculator takes the burdens as well as the benefits of such ventures as he chooses to engage in. The Court should not have to be used as referee to ameliorate the effects of 1D's sharp business practices.

44. Here 1D had bought at a price which although high enough to entice the Vendor to sell was, if one accepts the evidence of Mr. Craggs the valuer called by 2D, probably $4 million under what the market would have stood in 1994.

45. No doubt 1D expected the market to continue rising until completion date. He miscalculated and had to sell at a time when the market was going through a period of, what proved to be a temporary, correction. The knowledge that he had sold at a loss to himself of $4.6 million is the most likely explanation for the methods he employed in dealing with the Head Vendor and his own sub-purchaser. By his actions he hoped to avoid a substantial loss on his speculative purchase and by his swift forfeiture action he would "salvage" for himself the deposit paid by the sub-purchaser. A certain loss was thus turned into $1,536,000.00 profit, as long as he could rely on the requisition to upset the Head Agreement.

46. Although 1D is to blame for its own actions the actions of the solicitor then acting for him are called into question as well. No affirmation or evidence from that solicitor was available. No evidence was advanced as to why P's request about the cheque was wholly ignored on 28th and answered only after settlement time on 31.8.96. Further there is no explanation as to why the so called requisition was raised in circumstances where the solicitor must be taken to have known it did not affect the title. The so-called expert's letter produced through the solicitor appears to have been taken from the A12925/95 (an action in which Raymond Tse also acted for 1D) and put forward as relating to the suit property.

47. 1D argued that he had never before 12.00 p.m. on 31.8.96 expressed any absolute intention not to complete the Head Agreement and maintained a willingness to complete provided that 2D answered the reasonable requisitions. In the knowledge that P. had expressly stated it would accept title regardless, 1D's argument is simply dishonest. 1D was clinging to its insistence on an answer to the requisition to avoid the sale and to claw back the $6 million deposit.

48. P. contends that 2nd D. should be compelled to settle directly.

49. P. relied on the purchaser's acquiring a beneficial interest in the land at the time of the agreement and thereafter being able to deal with it.

50. P. contended that it had offered to carry out all 1D's obligations under the Head Agreement as soon as it became clear that 1D was not going to complete with 2D.

51. On the completion date 1D was pursuing his requisition. P. had notified 1D's solicitor that they were prepared to accept 2D's title regardless of the existence of the front wall at 12.15 p.m. when its cheques were tendered. At 1.05 p.m. on 31.8.96 2D's solicitors notified P. they were willing to complete according to the terms of the Head Agreement as long as completion was not later than 2.9.96 at 1.00 p.m. There was no completion on 2.9.96 of either agreement, despite P's re-tendering of settlement cheques.

52. Later, on 4.9.96, P. offered to complete the sale direct with the vendor. 5 days later 2D replied that it would only complete in terms of the Head Agreement and agreed to postpone completion to 17.9.96 if the balance of the purchase price was paid by that date.

53. On 11.9.96 P's solicitors again asked to complete the sale direct with 2D claiming that P. could enforce the agreement against 2D because of privity of estate and threatening to sue 2D. On 25.9.96 P. filed this Writ.

54. Counsel for P. submitted that the effect of the authorities was that subject to the sub-purchaser performing all the obligations of the purchaser he was entitled to specific performance and that this was the case whether it was an assignment a trust, or sub-sale.

55. Counsel for P. and for 2D each relied on Shaw v. Foster (1872) L.R. 5 H.L. 321 to support their client's cases.

56. Their Lordships, in that judgment considered at some length the equitable principle that a vendor of an estate becomes a trustee for the purchaser after the making of a contract of sale.

57. Per Lord Cairns @338

"The vendor was a trustee of the property for the purchaser; the purchaser was the real beneficial owner in the eye of a Court of Equity of the property, subject only to this observation that the vendor whom I have called the trustee, was not a mere dormant trustee, he was a trustee having a personal and substantial interest in the property, a right to protect that interest, and an active right to assert that interest if anything should be done in derogation of it. The relationship, therefore, of trustee and cestui que trust subsisted, but subsisted subject to the paramount right of the vender and trustee to protect his own interest as vendor of the property.

58. P. argued that 1D having failed or refused to settle with 2D they were able to replace 1D in the chain, and require that settlement with 2D go ahead - as long as they tendered the purchase price and carried out the obligations that 1D needed to fulfill.

59. The authorities cited support the proposition that whether it was an assignment a trust, or a sub-sale, the legal effect was the same . In Shaw v. Foster an assignee's right to specific performance was defeated only because the Notice relied on was defective - which is not the position in this case where P's specific demand was communicated to 2D by letter of 4.9.96 and 11.9.96.

60. Counsel for 2D contended that no mention of "trust" was made in the pleadings. It is clear however that P. had fulfilled the requirement of pleading all material facts - in this respect the relevant clauses in the 2 agreements.

Failure to Tender

61. 2D argued that P. in seeking to complete with 2D had failed to tender the outstanding balance of the purchase price. This, according, to 2D was necessary as a matter of law and P's failure to do so, despite an extension of time granted to 1D, meant that P. could not be said to be willing and able to perform the Head Agreement.

62. The correspondence showed the following:

63. P's solicitors wrote on 31.8.96 and 2.9.96 advising that their clients accepted 2D's title. The 2D advised its willingness to complete in terms of the H.A. and P. re-tendered the assignment and settlement cheques to 1D.

64. On 4.9.96, after obstructive letters from 1D's solicitors P. gave 2D notice of its desire to settle in 1D's place and reconfirmed no point would be taken about the fence P. reminded 2D that the draft assignment had already been approved and that subject to necessary adjustment for interest, split cheques could be forwarded. P. gave notice of its intention to take legal action against 1D.

65. On 9.9.96 2D confirmed it would complete only if 1D completed. 2D's letter stated "the said confirmor has been trying to sabotage the completion of the sale and purchase by its requisition". It pointed out that the letter initially relied on by 1D in respect of the wall did not relate to the suit property.

66. The 2D effectively blocked any tender by P. by refusing to advise how cheques should be split or the proper amounts.

67. Mr. Chain for P. argued that as a matter of law no physical tender was required. He relied on the case of Link Brain Ltd. v. Fujian Finance Co. Ltd. [1990] 2 H.K.L.R. 353 where the @ p. 366 Clough J. A. stated

"However the non-performance by the innocent party of a particular obligation under the contract may be excusable in circumstances where such non-performance can otherwise be lawfully justified." His Lordship went on to quote the supporting dictum of Lord Ackner in Fercometal v. Mediterranean Shipping Co. [1989] 1 A.C. 778 @ p. 805G-806A

"Of course, it is always open to A, who has refused to accept B's repudiation of the contract, and thereby kept the contract alive, to contend that in relation to a particular right or obligation under the contract, B is estopped from contending that he, B, is entitled to exercise that right or that he, A, has remained bound by that obligation. If B represents to A that he no longer intends to exercise that right or requires that obligation to be fulfilled by A and A acts upon that representation, then clearly B cannot be heard thereafter to say that he is entitled to exercise that right or that A is in breach of contract by not fulfilling that obligation."

and further at p. 367 said "Similar principles apply where a party seeks the equitable remedy of specific performance. He must satisfy the court that he has performed or been ready or willing to perform all terms and conditions of the contract then to be performed by him and also that he is ready and willing to perform all terms and conditions thereafter to be performed by him." (emphasis added)

"However, the requirement of performance or the tendering of performance is tempered by not being extended by equity to terms of which the defendant has prevented or waived the performance or the non-performance of which has resulted from the neglect or fault of the defendant."

68. In this case it is not possible simply to consider the non-tender. The correspondence reveals the 2D had indicated very clearly that they would complete only with 1D and effectively refused to consider P's offer to stand in 1D's place.

69. Further, the Head Agreement required completion to take place by undertakings and the P. considered (with justification in the light of Edward Wong Finance Co. v. Johnson Stokes P.C. (supra) and Law Society Circular No. 91/82) that it was entitled to split the cheques.

70. This was necessary because of the security aspects the Law Society direction sought to sustain and because adjustments to the figures, including the interest, were necessary by that date. Further, the P. needed instruction on the proper recipient of the additional $176,000.00 that needed to be paid to make up the difference between the settlement balances of the Head Agreement and the Sub-Sale Agreement.

71. 2D's argument was that as the time for the completion under the Head Agreement had passed the P. could not perform 1D's obligation. However, as the 2D had effectively extended the time on several occasions up to the 9.11.96 after which the agreement was terminated, time was no longer of the essence and a reasonable time could be substituted.

72. Accordingly, I reject 2D's point about the alleged failure to tender.

73. Other points raised by the 2D were really a restating in other forms of the tender argument.

74. A further argument by 2D was that if the assignor would not be entitled to specific performance then neither would the assignee. No authorities were relied on to establish this point which in any event goes against rational principles given that the circumstances in which an assignee would need to deal directly with the Vendor would arise in most cases because the assignor, as in this case, failed to perform. It would be an absurdity if an assignor and a vendor could act in concert to defeat the legitimate interest of an assignee.

75. 2D's final point was that a decree of specific performance against P would cause an unjust and inequitable result because:

"1) it would result in injustice to the 2D who was innocent of any breach of the sub-sale agreement."

76. The nature of the injustice was not spelled out, probably because it was not possible to show what such could be, given that a settlement with the sub-purchaser in place of 1D meant that the 2D would get its price under the Head Agreement.

2) "The property (now in 1997 worth $32 million) would be transferred to P. who purchased at $15.23 million resulting in considerable loss to the 2D, who has never received the balance of the purchase price."

77. The hardship to be considered should be that existing at the time of the breach - the current value of the premises is to that extent irrelevant. If the sale and re-sale had occurred as intended the P. would have had the benefit or burden of the market swings in any event. The 2D still has a remedy in damages against 1D.

3) "The Head Agreement had not been performed by the P. although it contends that it was willing and able to do so."

78. This argument cannot be sustained by 2D with any seriousness. The P. unequivocally stated its intention to settle in full under the Head Agreement. The 2D, for reasons which did not appear from the documentary evidence; which were not explained in evidence and which were not alluded to in final submissions; declined to settle on the basis of the Head Agreement. This was done first by what appears to be an irrational insistence on settling only with 1D; irrational because it was obvious to 2D (Letter of 13.11.96 refers MB 195) that 1D had no intention of settling and was avoiding doing so by raising an unreasonable requisition. The 2D also refused to give any of the information e.g. as to splitting the cheques which would have enabled the P. to tender the balance of the purchase price.

79. It is difficult to see how 2D can piously intone that, "He who comes for equity must do equity," when it went to some lengths to ensure that P. could not settle under the Head Agreement which was not terminated by 2D until 13.11.96.

80. For these reasons I find that the P. succeeds in its claim.

81. In light of the decision in respect of A10949/96 there is no point in proceeding further with the claim of the Head Vendor against the purchaser in A13602/96 and the request for Declarations is refused except to the extent that 1Ds deposit is declared to be properly applied to facilitate the transfer of the suit property to P.

82. However it may save time and costs if I make findings of fact on topics related to that case given the evidence that has been canvassed at this trial.

(1) I am satisfied on the balance of probabilities having considered the evidence that 1D deliberately and without reasonable grounds refused to settle with 2D.

In particular the requisition raised by 1D was raised mala fide as it was not a requisition that went to title.

D. knew of the situation regarding the fence if not at the time the Head Agreement was signed then at least by 13.12.95 when he filed a Writ in A12925/95.

In particular he knew that the wall did not affect the structure of the property and that any enforcement action was a very remote possibility.

(2) In respect of the front fence wall I was satisfied on the evidence of DW1 Mr. Cheung Chi-Kuen Senior Building Surveyor with the Building Department.

(a) That the wall was an illegal structure in that no building approval had been sought from the Department of the Building Ordinance - a wall being a "building" as defined in s. 2(1).

(b) That the fence was not an exempted work in terms of s. 41(3) of the Building Ordinance, Cap. 123.

(c) That the fence was some distance from, did not touch and did not affect the structure of the house in any way.

(d) That in the absence of any change in the policy of the Building Authority in force since and in the absence of evidence that the fence was dangerous enforcement action was most unlikely to be taken.

83. As a matter of law I found that the requisition was not one that went to the root of the 2D's title.

84. The present case is easily distinguishable from that of Giant River Ltd. v. Asie Marketing Ltd. [1990] 1 H.K.L.R. where Deputy High Court Cruden commented @ p. 302 in respect of alterations made to and directly affecting the structure of a house, "The scale of the unauthorised structures in both relative and absolute terms is immense" and found that the requisitions raised in that case clearly went to the root of title.

85. The structural modifications there were such that the surveyor considered that the large size of the unauthorised structures made it unlikely the Crown would allow any modification to permit the structures to remain.

86. In the instant case it is clear that the requisition was not properly raised and did not relate to sufficient difficulty. The case of Chan Chik Sum v. Great Pearl Industries Ltd. [1998] 1 H.K.C. concerned a similar requisition relating to iron gates, gateposts, railings and a planter wall in respect of a property at Fair View Park, a multi-dwelling development similar in type, but on a less expensive scale than that at Hong Lok Yuen. The structures did not breach the DMC, but did not have Building Authority approval which properly they should have had.

87. There was surveyors evidence, accepted by the Deputy Judge at first instance, that the railings were non-structural works. The Court of Appeal rejected the submission that the railing was structural which might have gone to the root of the title, or that the purchaser was not in a position to discover the matter in good time. In that case the purchaser had been in occupation for nearly 6 months before raising the requisitions 2 days before the agreed date for completion.

88. Emmell on Title states that if a requisition goes to the root of title a condition limiting the time within which such requisition must be made is of no effect.

@p. 32

"The second basis on which the deputy judge rejected the requisitions, as having been properly made was that they did not relate to a sufficient difficulty because neither the DMC or the regulations were in fact broken. The nature of his reasons has already been indicated. The manifest presence of railings around other houses on the estate plainly entitled him to regard them as a non-existing difficulty."

89. So in the instant case; 2D had the permission of Hong Lok Yuen Management Committee; and although Building Authority approval was lacking it must have been clear that as all the other properties had fences no enforcement action was likely.

90. I find for the Plaintiff in A10949/96 and make the following orders:

1. It is ordered that the Head Agreement dated 1.3.1994 be specifically performed and carried into execution by Douglas Limited transferring the suit property to Ji Shan International Investment Limited within 14 days after payment by Ji Shan International Investment Limited of the balance of the purchase price to Douglas Limited.

2. It is ordered that the 1st Defendants solicitors repay the sum of $180,000.00 to the Plaintiff.

3. It is ordered that there shall be an enquiry on interest and occupation fees in respect of the suit property and an account shall be taken of the same.

4. Liberty to apply generally.

5. There shall be an order nisi for costs in favour of the P. against 1D and 2D in respect of A10949/96 such costs to include the costs of the

91. O. 86 proceedings. In the absence of any dispute on this costs order the same to be considered final at the end of 14 days from the date of this order.

92. In respect of A13602/96 I decline to make the declarations sought by the Plaintiff and the action is therefore dismissed.

93. I make an order nisi for costs in favour of the Plaintiff against the Defendant such order in the absence of any dispute to be considered final at the end of 14 days from the date of this order.

94. I shall hear counsel on the form of the order and costs as required.

Representation:

Mr. Benjamin Chain & Raymond Tsui, instructed by Laurence Pang & Co., for Plaintiff in A10949/96.

Tony Poon, instructed by S. T. Poon & Co., for 1st Defendant in A10949/96 and Defendant in A13602/96.

K. M. Chong, instructed by Ko & Co., for 2nd Defendant in A10949/96 and Plaintiff in A13602/96.