Woomera Co Ltd and Another v. Provident Centre Development Ltd
Read the full judgment text of on BabelCite. was delivered on 29 June 1984.
1. This action was instituted by the plaintiffs under 200 Agreements for Sale and Purchase. The 1st plaintiff, Woomera Company Limited is hereinafter called "Woomera". The 2nd plaintiff, Eskensen Investment Limited is hereinafter called "Eskensen" The defendant, Provident Centre Development Limited is hereinafter called "Provident".
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HCA012647A/1982
BETWEEN
_________ Coram: Hon. Liu J. Dates of Hearing: 21 - 23, 27 - 31 March, 2, 3, 5, 6 & 30 April, 1 - 5, 7 - 11, 14 - 18 May, 1984 Date of Delivery of Judgment: 29 June 1984 ___________ JUDGMENT ___________ 1. This action was instituted by the plaintiffs under 200 Agreements for Sale and Purchase. The 1st plaintiff, Woomera Company Limited is hereinafter called "Woomera". The 2nd plaintiff, Eskensen Investment Limited is hereinafter called "Eskensen" The defendant, Provident Centre Development Limited is hereinafter called "Provident". 2. Provident was the developer of the property blocks known together as the Provident Centre in North Point. The Provident Centre was to be built in two phases with less blocks in Phase I than in Phase II. Phase I would comprise 7 blocks. Woomera purchased from Provident all the hundred flats in Block 3, and Eskensen similarly purchased all the hundred flats in Block 4. 3. The facts and the law are identical in each case. The price for each of the flats in these two blocks differed, but the payment schedule was alike, that is to say, 10% on or before the signing of the agreement, another 10% by 10 equal monthly instalments thereafter and finally the full balance of the purchase price was to be paid upon completion. 4. In each case, $26,598,000 being 20% of the purchase price had been paid. There seemed to have been paid also some interests as a result of late payment of certain instalments in the second 10%. But these interests were presumably not significant enough to be included as part of the multifarious issues in these proceedings. 5. For various alleged causes, Woomera and Eskensen claimed that none of them was obliged to complete under their respective Agreements for Sale and Purchase with Provident and that these Agreements had been discharged by their acceptance of Provident's repudiatory breach in each. Woomera and Eskensen sought the return of the 20% paid or at least the second 10%. 6. On the other hand, Provident's claim was that Woomera and Eskensen wrongfully failed to complete and make good their respective defaults despite a further written notice served by Provident under the said Agreements. Provident counterclaimed that the said Agreements were terminated by such defaults and that Provident was entitled to forfeit the first 20% paid allegedly all as deposit. Provident further claimed $12,883,398 damages against Woomera and $15,561,795 damages against Eskensen. If, in fact, only the first 10% was true deposit and forfeitable, Provident would also seek to deduct from the second 10% instalment payments an amount equal to its respective claim of damages. 7. All the parties, therefore, agreed that their said Agreements were at an end. The difference between them was that Woomera and Eskensen were claiming the return of the 20% already paid under these Agreements and Provident was claiming to retain it. 8. Woomera's and Eskensen's claims against Provident could be summed up under three heads: First, it was alleged that Provident was in breach of the said Agreements by not "showing a good title" under Clause 14 thereof. Alternatively, it was said that Provident was in breach of these Agreements by reason of certain deficiencies in the construction of the blocks. In the further alternative, the claim of Woomera and Eskensen was that if these Agreements still subsisted, no such an occupation Permit envisaged by Clause 4 of the said Agreements had been served as would entitle Provident to call for completion. 9. I will now go more into specific facts: By a letter dated the 6th October 1980, an agent for Provident offered to sell Block 3 to an agent of Woomera, and by a like letter, an offer to sell Block 4 was made to Eskensen. These blocks were to be built by Provident. On the 19th February 1981, a new Crown Lease was granted to Provident in respect to land on which Provident Centre, Phase I and Phase II, was to The new Crown Lease contained, inter alia, a lessee's covenant not to build any building other than one complying in all respects with the Buildings Ordinance and Regulations, and there was a proviso for re-entry for breach. On the 17th March 1981, the offer for sale already accepted on behalf of Woomera was superseded by a formal Agreement for Sale and Purchase on the 7th March 1981, a similar Agreement for Sale and Purchase was entered into between Eskensen and Provident. By the time of the signing of these Agreements for Sale and Purchase (hereinafter called "the Agreements"), the first 10% of the purchase price had been paid by Woomera and Eskensen. Before November 1982, the second 10% had been paid by Woomera,and Eskensen pursuant to the Agreements. 10. The seven blocks in Phase I were completed some 18 months after the Agreements, and on the 8th November 1982, an Occupation Permit in respect of Phase I was issued by the Building Authority to Provident. On the 10th November 1982, Provident gave notice to Woomera and Eskensen under Clause 4 of the Agreements for completion within 14 days. Under Clause 4 of the Agreements in each case, that notice was deemed to have been received a day after posting and, therefore, completion was to fall on the 25th November 1982. 11. Earlier in June 1982, Woomera and Eskensen had shown reluctance in promptly completing the purchase in a falling property market. On the 10th June 1982, upon receiving information of a possible earlier completion of Phase I Provident Centre in September 1982, Woomera and Eskensen wrote on even date requesting for completion to be postponed to the 15th March 1983. In response to such request of Woomera and Eskensen, Provident made, known its preparedness to consider extending completion date for 6 weeks after the grant of the Occupation Permit. The counter proposal of Provident was not accepted, but on the 26th August 1982, Woomera and Eskensen were seeking to keep the matter open for further discussion with Provident. On the 9th September, Provident informed both Woomera and Eskensen that each of them was required to settle payment in accordance with the terms of the Agreements and that no discount could be expected. 12. On the 5th October, that is within a month before the issuance of the occupation Permit, the solicitors of Woomera requested for the general plans, drainage plans and structural plans. Inspection was thereafter allowed, and in November, Vigers, a firm of chartered surveyors, carried out several inspections of Blocks 3 and 4 on behalf of Woomera and Eskensen. 13. One day before the scheduled date for completion, by a letter dated the 24th November 1982, solicitors for Woomera and Eskensen complained of a variety' of contraventions and breaches on the force of the surveyor's preliminary inspection. Woomera and Eskenser further relied on the contraventions then under complaint as having rendered Provident's title defective. Woomera and Eskensen alleged that these contraventions of Buildings Ordinance and Regulations together with breaches of the Agreements amounted to a repudiation Woomera and Eskensen warned that they were entitled to accept such repudiation forthwith but would allow Provident "an opportunity to provide any explanation" by the 2nd December. On the 26th November, Provident replied through its solicitors that the allegations were incorrect and that arrangement was being made for Provident's architects to provide the purchasers with a more detailed rebuttal. At the same time, it was intimated that information from the architiects might not be ready on or before the 2nd December, and Provident reminded both purchasers that it would hold them both to the scheduled completion date and claim interest on the balance of the purchase price. In reply, Woomera and Eskensen extended the time limit arbitrarily imposed upon Provident to the 7th December so as to afford Provident "a further opportunity of giving any further explanation". 14. By a registered letter dated the 4th December 1982, under Clause 16 of the Agreements Provident through its solicitors gave Woomera and Eskensen notice to make good their defaults to complete within 21 days under pain of a threatened determination and forfeiture of the deposit. Two days later, by a letter dated the 6th December 1982 to Woomera and Eskensen, Provident through its solicitors denied the alleged contraventions and breaches. It was disclosed that the street shadow area over Warf Road, the ceiling height, the internal diameter of water-closet traps and the windows in too close proximity with other blocks were all matters covered by modifications granted by the Building Authority. Provident further suggested that the shortfalls in measurement taken on behalf of Woomera and Eskensen were incorrect, on the wrong basis and over-exaggerated. Provident further claimed that the Building Authority had waived these deviations by the issuance of the Occupation Permit. Lastly, Provident explained that there was no real difference between the tiles used on the external walls and those specified in Schedule III and that in any case, Provident had a residual right of substitution under Clause 9 of the Agreements. Having set out the "findings and observations" of Provident's architects, the letter of the 6th December ended in these terms:
15. The very next day, the 7th December 1982, Woomera and Eskensen by their solicitors treated the Agreements as discharged on account of Provident's alleged anticipatory breach. The second and penultimate paragraphs of this letter read as follows:
16. Whilst Woomera and Eskensen had given Provident only until the 7th December to offer explanations and further explanations, Provident allowed Woomera and Eskensen another 21 days from the 4th December 1982 for making good their defaults. Woomera and Eskensen abruptly brought the matter to a close on the 7th December, and the present writ was caused to be issued on the 23rd December 1982. On the same day, Provident supplied to the solicitors of Woomera and Eskensen the Modifications required. 17. Finally, some 4/5 days after the extra 21 days given in Provident's default notice, by a letter dated the 30th December 1982. Provident through its solicitors terminated the Agreements and purported to forfeit all 20%. 18. The complaints of Woomera and Eskensen may be conveniently grouped into three categories:
Legal principles 19. The alleged contraventions of the provisions of the Buildings ordinance and Regulations were said to have rendered defective Provident's title to the properties agreed to be sold, i.e. blocks 3 and 4 of Phase I Provident Centre. As for title, the real concern was not whether these were trulybreaches of the building legislation and consequently the Crown lessee's covenant. The ultimate question to be asked is: "Is the court satisfied beyond reasonable doubt that Woomera and Eskensen as purchasers would not be at risk of a respective successful assertion against them of the Crown's right of re-entry?" See M. E. P. C Limited v. Christian Edwards. (1) 20. It was urged on behalf of Provident that if measurements were properly taken and/or interpreted, there should be no contravention. Provident further argued that whatever real shortfalls there were, they were de minimis and/or insignificant and that the title of Provident could be forced upon an unwilling purchaser as a good marketable one which even a court "would trust its own money upon" See observation of Sir G.J. Turner, V. C. in Pyrke v. Waddingha (2) Mr. Swaine pressed upon this court to accept that in reality, there could have been no reasonable probability of litigation as reflected by the underlying principle in Darvell v. Basildon Development Corporation. (3) Counsel sought to equate the complex nature of building construction with lack of repair in an agricultural lease as in Dowell v. Dew, (4) where too strict or literal an interpretation of a covenant to keep a farm in good repair was disapproved for fear of "an endless war" between the lessor and the lessee. In the same case, Knight-Bruce, V. C. frawned at any fault-finding expedient and at p. 1090C he had this to say: "Let a surveyor be called in as to the state of repairs and a thick volume of defects in and out of the house will be the probable result." As for ulterior motive, the court's attention was directed to Perry v. Chotzner (5) as an illustration of a motive to cause annoyance by relying on falling plastering, cracks in walls and ceiling and nail holes. The self-evident ulterior motive in the instant case was of a different kind. Thus, Mr. Swaine invited this court to judge the alleged contraventions, if substantiated, as equally trivial and unimportant both in character and effect. In the circumstances of this case, I am driven to share Mr. Swaine's sentiments, and I find these authorities good guidelines for my deliberation. 21. Despite these alleged contraventions, so counsel contended Provident's title to the premises agreed to be sold was, in reality, clearly indefeasible and the court should therefore entertain no reasonable doubt that any risk existed of the Crown exercising its right to re-enter or of the purchaser suffering a re-entry. Variations as alleged contraventions covered by Modifications 22. Woomera add Eskensen.also claimed that Provident further failed to show a good title by reason of the untimely production of the Modifications granted under section 42 of the Buildings ordinance only after the date of their acceptance of Provident's alleged repudiatory breach on the 7th December 1982. It was alleged that but for these Modifications, Provident would have.been in breach and their production after the event as proof was too late. It is to be noted that in the Particulars to paragraph 21 of the Re-Re-amended Statement of Claim, Woomera and Eskensen did not seek to rely on any non-production, in time, of the Modification for windows facing too closely the neighbouring blocks, but that would not affect the substance of the purchasers' stance on this aspect. 23. I will deal with the purchasers' contention on these Modifications on the assumption that Provident could not have shown a good title to the premises agreed to be sold except by disproving what would appear to be contraventions by the timely production these Modifications on or before the 7th December 1982. The vendor's obligation of making a good title would be implied, if not expressly provided for, in the contract. See interjection of Jessel, M.R. during counsel's arguments in the case of Cato v. Thompson (6):
24. In an open contract for the sale of a leasehold property liable to forfeiture for breach of covenants, the vendor must also show that rent has been duly paid and covenants performed. See In re Taunton and West of England Perpetual Benefit Building Society and Roberts' Contract (7) This would be proof of a negative, and such proof need only be "such prima facie evidence in affirmative of the performance of the covenants as can be reasonably expected". See Ringer to Thompson (8) where the prima facie affirmative evidence was by way of an affidavit of the lessee. Plainly, for proving any fact in the making of a good title, all forms of satisfactory evidence are acceptable. In In re Wright and Thompson's contract, (9) the fact that the vendors had become mortgagees in possession before a certain statute was established by a statutory declaration. In In re Delany v. Deegan's Contract, (10) the fact that no proceedings to set aside a deed had been taken or threatened was accepted as proved by a solicitor's negative-averment in the circumstances of that case. 25. Obviously, a vendor's title to the kind of leasehold property under discussion is impeachable and unacceptable through breach of covenant, e. g. In re Highett v. Bird's Contract; (11) Barnett v. Wheeler. (12) Needless to say that a defeasible title liable to be forfeited is not a good title. 26. It is only too true to say that a vendor's duties would not be completely discharged until he has finally verified his title. He cannot be relieved from his obligation to verify without a clear and explicit provision. See Southby v. Hutt. (13) Indeed, at p.213 the learned Lord Chancellor observed that "if the (vendor) be not bound to verify any part of it, the deducing and exhibiting a good title upon paper would be mere mockery and delusion". 27. Before leaving this submission, i. e. in these Agreements there would have been contraventions but for a timely production of these Modifications, I ought to take a closer look at the duties of Provident as vendor. I will begin with what are described as the two main duties of a vendor in an open contract: One is to show a good title on the abstract in the sense of setting out "the effect of every instrument which constitutes part of the title of the vendor" as per North J. in In re Stamford, Spalding & Boston Banking Company and Knight's Contract, (14) and the other is to make a good title by proving it. 28. At page 35 of Williams on Vendor and Purchaser 4th edition, these "chief duties" are contrasted:
29. At page 154 of Emmet on Title, 18th edition, the distinction is also made crystal clear:
30. Page 565 of Williams on Title, 4th edition contains this passage:
31. With emphasis on completion, these two main duties are not always portrayed distinctly, and the words "showing", "making" and "making out" are known to have been used with less precision. Moreover, at page 200 of Williams on Vendor and Purchaser, 4th edition, "showing" is said to be susceptible of two different senses, one of "showing a good title on the abstract" and the other of " showing a good title in the sense of completely discharging the vendor's obligation to show or make a good title." In Southby v. Hutt, (15) the learned Lord Chancellor said of "showing a good title" also in terms of the fuller sense:
32. One or the other of two different senses of "showing a good title" is highlighted in passages in the same volume at pages 46, 157 and 233 and also in paragraph 143 42 Halsbury's Laws of England, 4th edition. But in its paragraph 144, the demarcation between "showing" and "making" again re-emerges:
33. What was said of the lesser obligation to abstract a good title of the vendor of registered land, unless otherwise provided for and barring unusual circumstances, is of interest in the light of the effect of our Land Registration Ordinance:
34. A like distinction was drawn in Sherwin v. Shakespeare(16) by Sir John Romilly M.R. who had this to say:
35. It is just as convenient to set out here an observation of Sir John Romilly at p.274:
36. The duties of a vendor in an open contract "depend on the common law, as tempered by the rules of equity. (17) The vendor's duty to prove that he can pass a good title of what he has agreed to sell is said to be "of equitable origin." "The Courts of Equity, in granting to a vendor the extraordinary relief of enforcing specific performance of the contract, considered that it was only fair to impose the condition, that he on his side should prove that he could actually convey what he professed to sell. And the obligation so established in Equity was afterwards held to be equally incident to the contract at law" (18) 37. Great play was made of the correspondence in November/December 1982. Woomera and Eskensen sought to make capital of the timing and tenor of Provident's reply dated the 6th December, on which hinged much of the purchasers' strategy in bringing about a determination of the Agreements. Thus, it was found necessary to thoroughly canvass the meaning of "showing a good title". 38. Despite these narrower and fuller meanings of "showing" in the context of conveyancing and the vendor's "double obligation", there would appear to be two separate stages of first setting out the effect of every instrument which constitutes part of the vendor's title and finally of verification. In addition, as stated before, a vendor of leasehold properties liable to be forfeited for breach of covenant must, in an open contract, also ultimately prove that there has been due performance of the lessee's covenants. I know of no law which permits any departure from the stage-to-stage discharge of these chief duties for a vendor of comparable leasehold properties in a Hong Kong style contract of sale. 39. In Hong Kong, it is quite usual, with searches in the Land Registry possible, to provide the title deeds or attested copies thereof to the solicitors of the purchaser even before the contract is signed. In this case, by two identical letters both dated the 16th November 1982, Provident 's solicitors sent over to solicitors for Woomera and Eskensen the Agreements, in all 200 in number. By a further letter of the same date, "in order to enable (solicitors for Woomera and Eskensen) to prepare the draft Assignment for (Provident's solicitors') approval on behalf of (their) clients", Provident's solicitors sent to the solicitors for Woomera and Eskensen an attested copy of the Crown lease, an attested copy of the Occupation Permit and a sample form of assignment. 40. Clause 14 of the Agreements is couched in the following terms:
41. Counsel for Provident contended that the first sentence in Clause 14 merely enjoined the vendor to show a good title in the preliminary sense equivalent to the English showing of a good title on the abstract. Mr. Swaine referred to the separate provision for "the costs of verification" in the second sentence of Clause 14. If indeed "showing a good title" at the own expense of the vendor in the first sentence had been meant to include verification, it would have been inconsistent to burden the purchaser with costs of verification in the second sentence. The words "to complete such title" in the first sentence also seem to lend some support to Mr. Swaine's contention as these words are closely allied to what has often been said to be "a complete abstract" in the English practice. See Williams on Title 4th edition page 565 and references to the same term in cases like Sherwin v. Shakespeare (16a) and Ogilvy v. Hope Davies. (19) I find Mr. Swaine's submissions on Clause 14 persuasive and I accept them. 42. That, of course, would not relieve Provident from its full obligation to go on to prove title at the time of completion as Provident's obligation to make a good title was implied. See Cato v. Thompson. (6a) 43. Woomera and Eskensen were seeking explanations just a day before the scheduled date for completion. Woomera and Eskensen arbitrarily set their own deadline on the 2nd December and extended it to the 7th December. In its solicitors' letter dated the 6th December 1982, Provident gave explanations which included a reference to the Modifications in question. In the context of the correspondence exchanged between the parties and the circumstances of the case, I cannot read into the sentence in the last paragraph of that letter of Provident dated the 6th December, that is to say, "We do not intend to carry on further correspondence with you on these various matters which you have raised, as, with respect, they are clearly without substance." a meaning that no further answer would be provided or that they would entertain no reasonable request for inspection of the existing materials or production of further documents. As a matter of fact, even in their letter of instant termination dated the 7th December, Woomera and Eskensen requested for copies of these Modifications which were obligingly supplied on the 23rd December. 44. This letter dated the 7th December of Woomera and Eskensen purported to accept Provident's alleged repudiatery breach was equally abrupt. They now complained that these Modifications were not produced in time for inspection, but Provident was given no time for meeting their request, and Woomera and Eskensen halted the transactions before completion. 45. It is on good authority that Provident as vendor had a duty "to make out the title" without any queries being raised by Woomera and Eskensen. See Sherwin v. Shakespeare (16b) 46. Even if, in the showing of a good title in the narrower meaning as envisaged by Clause 14 of the Agreements, disclosure had been deficient without the production for inspection of these Modifications prior to the 7th December 1982, such deficiency was unimportant in the sense that solicitors for Woomera and Eskensen "ought to assume that the gap could be and would likely to be filled in a way in which (they) would expect from the information supplied" as in the underlying principle resorted to in Ogilvy v. Hope Davies. (19) A somewhat brief period was arbitrarily dictated to Provident to offer explanations and further explanations, and when reference was made to these Modifications on the 6th December, Woomerea and Eskensen immediately brought the matter to a close on the 7th December without giving any reasonable opportunity for Provident to produce or allow inspection of these Modifications. Woomera and Eskensen must have known perfectly well that there was no obstacle in gaining access to these documents. However, as will be explained later, I do not accept that there was any deficiency in Provident's showing of a good title. 47. In Re Stone v. Saville's Contract, (20) the vendor had repeatedly ignored a requisition which went to the root of title. The requisition related to an apparent restrictive covenant as to user, which had, in fact, been released long before the open contract of sale. The vendor's notice to complete served after frequent enquiries as to this covenant was held to be sufficient evidence "that the vendor was not going to answer this important requisition". In the instant case, Woomera and Eskensen were not justified in treating Provident's conduct as falling within that category. The indignation of Provident was only to be expected by Woomera and Eskensen who had embarked on their chosen strategy. In reality, the attitude of Provident as a vendor could not be readily assumed as being difficult. Mr. Nelson explained how Provident would have reacted to genuine enquiries. However the main if not the sole concern was whether Provident had shown a good title, that is to say, whether Provident had set out the effect of every instrument forming a link in the title before the 7th December. 48. There was much dispute as to what was agreed between the parties by express or otherwise implied terms. This will have to be decided before I return to the nature of the documents required to show what was agreed to be sold. 49. Provident as Crown lessee covenanted, inter alia, that it "will not erect .... any building other than a building or buildings which shall .... in all respect comply with the Buildings Ordinance any (sic) regulations made thereunder and any amending legislation." By virtue of its registration, if not by its very nature, this Crown lessee covenant would bind all subsequent purchasers. Paragraph (f) of the first recital in each of the Agreements referred to this Crown Lease as "the Crown Grant". Clause 8 of the Agreements made the sale "subject to and with the benefit of the Crown Grant", and by Clause B of the agreements, the assignment to be executed on completion was to be "subject to the Crown Grant". These defined the interest agreed to be sold in each case and explicitly incorporated for observance by Woomera and Eskensen all the Crown lessee's covenants, including that for erecting a building in compliance with the Buildings Ordinances and Regulations. It would be unthinkable that even without any express term in the Agreements, construction of Blocks 3 and 4 of the Provident Centre could have been permitted to contravene such ordinance and regulations in their sale to Woomera and Eskensen who themselves were obliged by these above provisions to continue to observe the aforesaid Crown lessee's covenant. Moreover, it was provided by clause 3(i) (b) of the Agreements that Provident should comply with requirements of the Building Authority. Under section 24 of the Buildings Ordinance, the Building Authority may require any contravention to be removed or rectified. It would seem untenable to argue that whilst Provident had bound itself to comply with requirements of the Building Authority, it was under no obligation to observe the existing provisions of the Buildings Ordinance and Regulations, the contravention of which was to be overseen by these requirements. 50. It is common ground that there was no express term in these Agreements for Provident to erect and complete Phase I including Blocks 3 and 4 in accordance with the Buildings Ordinance. But in substance, there was indeed an indirect stipulation in the Agreements as to how Provident Centre had to be constructed. Clause 3 (i) (c) of the Agreements required Provident Centre to be built in accordance with the approved plans. Paragraph (e) in the first recital of the Agreements defined "the building plans" as "the approved general plans" including "any approved amendments thereto". The third recital recorded Provident's intention to construct and complete Phase I of Provident Centre before the 30th June 1983 "in all respects complying with the building plans". Clause 3 (i) (c) of the Agreements also required Provident to construct and complete Provident Centre Phase I on or before the same date or an extended date. By Clause 9(iii), Provident warranted that the general plans had been duly approved. Clause 9(iii) was to "survive the sale and purchase by the assignment". 51. It must necessarily follow that at least for the main structure, adherence to the approved general building plans with the Building Authority's requirements (if any) would mean compliance with the Buildings Ordinance and Regulations. Section 24 and section 24A of the Buildings Ordinance empowered the Building Authority to require, by order in writing, remedial works to be undertaken by reason of either the contravening nature of the works or the unsafe method of the construction. In practice, matters in the general approved plans would not infringe Governmental regulations. Any deviation from the approved general plans would be subject to the contractual sanction of Clause 3(i)(c) which was an express term in the Agreements to build in accordance with these approved general plans, themselves incorporating all matters of importance. If progress of construction work was carried out in accordance with the approved general plans, one would not expect any contravention of the Buildings Ordinance and Regulations in the main structure. Therefore, as regards the main structure, hardly any need existed for a more explicit term to bind Provident to observe the building legislation, and with such a provision, though indirect, in Clause 3 (i) (c) no implied term for that observance was necessary. 52. But the approved general plans did not include building details. The parties obviously intended to deal with a lawfully constructed building including every detail. For these details not covered by the approved general plans, there was, in my view, an implied term that in the construction of these blocks, Provident should, in all respects, comply with the Buildings Ordinance and Regulations. This conclusion is not inconsistent with either the strict "unworkable" approach of Mr. Swaine or the usual "business efficacy" approach, of which I was constantly reminded by Mr. Ferris as being the general principle enunciated in the Moorcock (21) and Shirlaw v. Southern Foundries (1926), Ltd. (22) However, Mr. Ferris, counsel for Woomera and Eskensen must be right in his submission that the court should ascertain what business efficacy was contemplated by the presumed intention of the parties to these Agreements. 53. Having decided what was agreed by the parties, I turn next to what must be shown by Provident as documents forming a link in its title to the blocks agreed to be sold. In Sherwin V. Shakespeare (16) at pages 275 and 276, Sir John Romilly M.R. explained what must be stated in the abstract as alleged facts in addition to other essential deeds on documents:
54. In essence, the relevant fact in the title necessary to be shown by Provident in its solicitors' letter dated the 16th November 1982 was that there had been no breach of the Crown lessee's covenant in the sense that the provisions of the Buildings Ordinance and Regulations had been complied with. For that, an attested copy of the Occupation Permit was enclosed. 55. Ignoring, for the time being, other allegations of breach except for matters covered by the Modifications, the simple issue was whether verification, if verification was required, of the copy Occupation Permit as a stated document would necessarily bear out the alleged fact that there had been no breach of this Crown lessee's covenant without the production of further evidence i.e. the Modifications. Mention was made of these Modifications on the 6th December, but copies of them were supplied to Woomera and Eskensen only after the 7th December, the date of the purchasers' purported acceptance of Provident's alleged repudiatory breach, i. e. after Woomera and Eskensen had shut out the final stage of completion. 56. Apart from matters covered by these Modifications, Provident's refutation of the purchasers' allegation of other alleged contraventions was all that could reasonably be expected in so far as it was an affirmation of a negative. As an alternative to Provident's denial of these other alleged contraventions not covered by the Modifications, Provident maintained that there was no breach by reason of the de minimis rule, method of measurements, practice or tolerance. 57. For the items covered by these Modifications, what must not be lost sight of is section 21(6)(a) and section 42(1) of the Buildings Ordinance. Section 21(6)(a) confers on the Building Authority a power to refuse to issue an Occupation Permit where there has been any contravention of the provisions of the Ordinance. Under section 42(1), the Building Authority may permit modification of these statutory provisions. Having regard to these provisions, particularly section 42(1), it is evident that an Occupation Permit is prima facie evidence of compliance with all the then current Governmental requirements for the construction of these blocks. Such compliance was all that was demanded by the said Crown lessee's covenant. All this, as an alleged fact in Provident's showing of title, would necessarily appear from a mere verification of the Occupation Permit, without more. The Modifications did not form part of Provident's title, and their production would serve merely as corroboration of the Occupation Permit, either before or when its verification was called for. 58. The terms of the Occupation Permit and, indeed, of the Crown Lease as root of Provident's title were shown by the dispatch of copies documents sent to the solicitors of Woomera and Eskensen on the 16th November 1982. In my view, Provident has thereby discharged the first of its "chief duties" of showing a good title to the blocks agreed to be sold. 59. The Occupation Permit is, of course, only prima facie evidence. It is a good answer to the alleged non-production in time of the Modifications. But for the actual shortfalls that have been proved by Woomera and Eskensen in these proceedings, different criteria would come into play. I would pause here to make one comment: It is virtually unheard of in this territory that any structure substantially completed within the permitted dimensions and volume, for the occupation of which an Occupation Permit has been granted, could be said to be subject to any threat of possible Crown re-entry for some trivial deviations in the building details. 60. In conclusion, I find no substance in the purchasers' contention that Provident had failed to show a good title merely by not having produced these Modifications before the 7th December 1982. Other alleged contraventions 61. I come now to the other alleged contraventions. These are (1) low beam height, (2) chasing and bonding of concrete hollow blocks in the partition walls, (3) inadequate superficial or openable areas for windows and (4) glass mosaic tiles on the external walls. Beam height 62. The proviso to Regulation 24(1) of the Building (Planning) Regulations puts the minimum height measured from the floor to the underside of any beam in each of the flats in these blocks at 2.3 metres. 63. For these flats, Miss Tang, an architect of Provident explained that all the measurements in each individual flat were taken from the same beam crossing the bedrooms, utility, W. C. and kitchen and that as the beam was constructed at one and the same time, the variations in measurements must have been due to the inexact alignment inherent to all construction and finishes. 64. Mr. Mann, a surveyor from vigers produced his measurements in pages 8 to 11 of Exhibit "P1". He took measurements from the four flats on the 1st and the 25th floors of Block 3. His measurements were not specifically challenged. Save for the 1st floor "A," flat in Block 3, Miss Tang measured beam height in other "A" flats on the 6th, 7th, 8th, 9th and 15th floors in Block 3. Miss Tang also took measurements from finished surface to finished surface, and her results were that in some cases beam height was under the requisite 2.3 metres by, at best, 5 mm. On site visit, the beam height of the kitchen of flat "A" on the 13th floor of Block 3 was taken, and it was 2285 mm. i.e. 15 mm below. 65. Mr. Mann was prepared to overlook any deficiency under 1%, and Mr. O'Sullivan acknowledged a tolerance under the de minimis rule of 4 to 5 mm. 66. The measurements taken by Mr. Mann from finished surface to finished surface gave only 2 problem flats, i.e. both "A" flats on the 1st and 25th floors of Block 3. As for flat "A" on the 1st floor, there was only 1 problem beam height in bathroom 2 which had a deficiency of 5.5%. It was only in the "A" flat on the 25th floor that the beam height in 5 different rooms were short of between 70 mm to 120 mm, ranging from 3 to 5% deficiency. Ignoring the single beam in the "A" flat on the 1st floor which has not even been pleaded, there was just one problem flat out of 200 in Block 3 with 5 beam deficiencies ranging from 3 to 5%. 67. Mr. O'Sullivan agreed that in measurements, a common sense approach would have to be adopted having regard to the fact that construction was not an exact science and that a tolerance would be allowed. Bearing that in mind, the beam height deficiencies in 5 out of 10 rooms and one out of 200 flats, ranging between 3 to 5% must be even less significant. There was just one beam running through all. The deficiencies must have arisen from or contributed to by human imperfections in the construction trade. Woomera and Eskensen also adduced no evidence for establishing these deficiency figures produced by Mr. Mann as being truly representative. 68. Mr. O'Sullivan was shown minutes of 36th meeting of the "Building Development Department with Authorised Person Liaison Committee" held on the 18th September 1975. Mr. O'Sullivan was absent but was otherwise a member of that committee. At page 2 of the minutes, under the heading of "Clear Ceiling Height In Buildings", the following was minuted:
69. Mr. O'Sullivan admitted that the old practice previously adopted before this meeting was to measure from structural members to structural members. He was not very certain but from his recollection that this representation was made at that particular meeting with reference to air-conditioning false ceilings or ducts. However, he conceded that after this representation was made, the old practice was revived and followed. He explained that the floor tiles, wooden blocks or tiles as well as coating of plaster and paint on the underside of ceiling beam should be excluded. He maintained, however, that the screed forming part of the structural flooring would be included. 70. Mr. Ng, the Government structural engineer supported the evidence of Provident's architect, Miss Tang that the practice as accepted by the professions and all concerned was to take measurements from one structural member to another structural member. Mr. Ng elaborated that these finishes were also excluded for making structural calculations for superimposed loads. 71. Mr. Roberts also indorsed the same practice as one universally accepted. 72. Extreme examples were put to Miss Tang, Mr. Ng and Mr. Roberts of cases involving substantial finishes on top of the structure, but as Mr. Roberts explained, it was very much a question of degree. We are not concerned with fitting or fixture inches thick nor false ceiling, ornamental frieze, decorative plastering or ducting. We are merely concerned with actual measurements of beam height with usual finishes. 73. Miss Tang advised that an average of 70 mm. should be allowed in the measurements taken from finishes to finishes. For screed, wood or other flooring blocks, coating of plaster and paint, Mr. Mann, though independent, had to be somewhat pressed to agree to a thickness of 44 to 56 mm. for the same finishes. I prefer Miss Tang's more straightforward evidence. She was quite willing and ready to give concessions whenever concessions seemed to have to be made. 74. Miss Tang further explained that a fall for water flow was provided in the kitchen floor thus having thicker screed from 15 to 18 mm. 75. Deducting 70 mm. from the measurements taken from finished surface to finished surface, with the exception of one beam height of bedroom 3 in Flat "A" on the 25th floor of Block 3 (2.13% deficiency) and one beam height in bedroom 2 in the "A" flat on the 1st floor of Block 3 (2.6% deficiency), of the remaining 4 problem beam heights, only 3 would still suffer a deficiency of less than 2% (1.30 - 1.73%). The beam height in the W.C. would have no more deficiency. The kitchen beam height deficiency, if given an extra allowance of the 15 mm. screed for the water flow, would be reduced to 0.65%. Therefore, in the final analysis, only one beam height of bedroom 3 in Flat "A" on the 25th floor of Block 3 was found to have a real 2.13% deficiency. Even that must be subject to imperfections in building construction. The deficiency for bedroom 2 in Flat "A" on the 1st floor of Block 3 was not even pleaded. 76. The deficiency was so minimal that it must fall within the degree of dimensional tolerance allowed in reinforced concrete construction, especially from the same beam. If, in fact, these could be truly regarded as contraventions of the statutory minimum of 2.3 metres in beam height, the deviations were so insignificant in extent and proportion that I am satisfied beyond reasonable doubt that there could have been no risk of the Crown re-entering. Chasing and improper bonding of concrete hollow blocks in the partition walls 77. Regulation 9(4)(e) of the Building (Construction) Regulations prohibits the forming of any chase or recess in these hollow blocks. Regulation 47(a) of the same Regulations requires building bricks in these walls to be bonded and solidly put together with mortar. 78. It was not disputed that the hollow blocks for the partition walls were put together with mortar. The complaint was that the conduit pipes for encasing the electrical wiring in these walls were, in each case, prefixed with hollow bricks subsequently building right up to them. 79. On the photographs in Exhibit "P2", it was suggested on behalf of Woomera and Eskensen that the partition wall should have first been completed but using solid bricks for the area around the location of the conduit pipe and that a groove be cut in this area of solid bricks to receive the conduit pipe. 80. According to Mr. Ng, the Government structural engineer, the method of installing conduits in non-load-bearing partition walls in these proceedings was a normal one. Mr. Ng conceded that another normal way of construction was by putting a conduit into an area of solid blocks suitably chased, but he was critical of its use as being not a mode of well-planned construction. Mr. Ng was of the view that these regulations were not to be applied literally, otherwise no building could have been erected. Mr. Ng concluded that he had no criticism of the method of construction adopted in this case. 81. Mr. O'Sullivan inspected a stripped partition wall with an exposed conduit pipe on the 19th September 1983. He confirmed the construction as described by Mr. Denis, Wing Kwong Lau in paragraph 6 of his affidavit sworn on the 16th June 1983:
82. Mr. Lau further stated in paragraph 9 of his affidavit that "the method of construction of the hollow block internal partition walls in the units of the said Blocks above described did not involve any chiselling nor was any indentation or depression made in the said blocks". With that observation, Mr. O'Sullivan agreed. If that be right, then there was, in fact, no chasing nor hacking. But Mr. Ferris, counsel for Woomera and Eskensen, protested that Mr. O'Sullivan's attention was not specifically drawn to the hacking aspect. 83. Halfing a hollow block was not a subject-matter of complaint. However, Mr. Roberts testified that with thick blocks, it would be quite possible that part of them in the back could be hacked away to fit the condit. He disclosed that he had not in fact seen the back of the partition wall, but he expressed the view that it was unlikely that any hacking had been done in this case as the blocks were not very thick. 84. Mr. Ng also speculated that possibly the hollow blocks could have been chipped by a trowel, but his final remark was: "I would say the way I would build it and the way I look at it, the blocks are built around this conduit rather than chasing." 85. On these conjectures of Mr. Ng and Mr. Roberts, it was sought to be argued on behalf of the purchasers that there was hacking of these hollow blocks and that such hacking was tantamount to chasing contrary to Regulation 9(4)(e). I was not impressed by these arguments. 86. Mr. O'Sullivan was driven to concede that his preliminary impression of chasing in these hollow blocks was erroneous. There was really no evidence of any hacking. I do not find hacking as being established in this case. In my view, there is no substance in the purchasers' contention that there was any contravention of Regulation 9(4)(e). 87. It was also argued on behalf of Woomera and Eskensen that the hollow blocks were not properly bonded contrary to Regulation 47(a). Counsel for the purchasers referred to a passage under the heading "USE" appearing at page 168 of the 2nd edition of Architectural Design by Ernest Pickering, professor of architecture in the University of Cincinnati, U.S.A.:
88. Nothing seems to warrant the adoption of this technical sense given by Professor Pickering, particularly for a non-load-bearing partition wall. Bonding as such does not necessarily include any interlocking or overlapping of the bricks. Mention was made of a checker-board bond and a stack bond; none of these requires the overlapping or interlocking of the constituent blocks. 89. Mr. Ng, the Government structural engineer told us that the lateral restraint on the sides of any partition wall would provide no real structural integrity. Mr. Ng told the court that criss-crossing or overlapping was not necessary for bonding and that bonding was just a common English term. Mr. Ng offered the information that the hollow blocks on top of the conduit pipe would serve as a lintel for both panels on each side of the conduit giving the whole wall support and continuity from the arching effect and that if the conduit pipe stretched from the floor to the ceiling, the underside of the ceiling would provide a similar arching effect. Mr. Ng's opinion was that at the end of the day, what was crucial under Regulation 47(a) was structural integrity of the wall in terms of strength and stability. 90. Mr. Roberts also testified that overlapping was not necessary for bonding under Regulation 47(a) and that, in fact, an Occupation Permit had been granted for Stage I, Phase II of Provident Centre with the same method of construction and after transmission of these complaints of alleged chasing and improper bonding to the Building Authority. 91. Mr. O'Sullivan charged that the gap in the wall, in fact a separation or a straight joint, for accommodating the conduit was worse than chasing. He acknowledged that there was necessarily an absence of bonding where the partition wall met the load-bearing wall of the building, but he maintained that within the partition wall itself, proper bonding must be had. Mr. O'Sullivan made, what appeared a startling concession to a layman that if there had been a concrete pillar instead of the conduit with mortar embedded between hollow blocks on each side, the wall would then have been properly bonded and solidly put together due to the effect of abutting. I do not appreciate any difference between the conduit pipe with mortar and a concrete pillar. I should have thought a conduit pipe would introduce more tensile strength to stability. But at one time, Mr. O'Sullivan was speaking of a wall wedged tight between two concrete columns. Mr. O'Sullivan also agreed that strength and stability were really the true criteria for Regulation 47(a). 92. When one examines photographs (b) and (c) in Exhibit "P2" more closely, they do not appear to have been taken from the same wall. In photograph (b), counting 6/7 courses from the floor and both two bricks to the left of the conduit (but in photograph (c), counting 5/6 courses from the floor, again two bricks to the left of the position of the conduit), there is at the far edge no overlapping at all. But this was not a matter of complaint by any of the purchasers' experts. 93. Mr. Ng, the Government structural engineer summed it up quite realistically:
94. Mr. Ng concluded that having interpreted the regulation in an all-embracing way, he had no criticism to make of the partition walls. 95. In my view, Regulation 47(a) has been complied with in the construction of these partition walls and the accommodation of the conduit pipes. But I really need not go that far. I accept the evidence given by the experts of Provident, in particular the explanation that in addition to being a normal method of construction, it was well planned. In conclusion, I am satisfied beyond reasonable doubt that even if the construction of these non-load-bearing partition walls had in any way violated Regulations 9(4)(e) and/or 47(a), there would have been no risk of any Crown re-entry. Windows (superficial and openable glass areas) 96. The complaints were made of the bay window and the windows in the kitchens and bathrooms. As for the bay windows, Regulation 30(2)(a)(ii) of the Building (Planning) Regulations requires a measurement of not less than one-sixteenth of the floor area for openable glass area from windows, the top of which is at least 1.9 metres above the floor level. The complaint really lied in the facts that the fan light was separated from the bay window below by a concrete transom and that the top of the bay window below was about 1.75 metres above the floor level. In substance, the charge was that the openable glass area was grossly inadequate with a deficiency ranging from 2 to 75%. 97. For kitchen windows, the openable area is governed by the same Regulation 30(2)(a)(ii), but the superficial glass area of the kitchen windows is regulated in paragraph (i) of the same Regulation which requires a measurement of not less than one-tenth of the room area. 98. As for the superficial glass area and openable glass area for bathroom windows, we have Regulation 36(2)(a) and (b) of the Building (Planning) Regulations, which require a mesurement in each case of not less than one-tenth of the floor area. The bathrooms in question all provided toilet facilities. 99. I will first deal with the bathroom windows and kitchen windows: Apart from small discrepancies in actual measurements, Provident included the exhaust fan in the kitchens for glass area calculations, but Provident excluded the ceiling ducts and the concrete backing behind the W.C. for calculating the bathroom floor area. The precise measurements appear in Exhibit "D2". 100. The main difference between Provident and the purchasers can be seen in the summaries of estimate for remedial costs in Exhibits "D9" and "D10". If the exhaust fans were included, so claimed Provident, there would be no infringement for flat "B" and flat "D". When the Building Authority inspected these blocks for the purpose of granting the Occupation Permit, some exhaust fans had been installed and no exception was taken. The estimated remedial costs for removing the exhaust fans from flat "B" and flat "D" was quite insignificant. The estimate on the measurements of Woomera and Eskensen in "D9" was $51,500 and the estimate on the measurements of Provident was $33,500 in "D10". The difference was only $ 17,000 which represented the removal costs for the exhaust fans in these "B" and "D" flats. 101. Provident also maintained that mere removal of the exhaust fans without relocation was all that was necessary for remedying the contraventions and that failure to supply any exhaust fan could only be a breach of contract sounding in damages. The costs for relocating these exhaust fans was estimated to the $260,000. 102. Coming to the bathrooms, there was no difference at all in the $42,000 estimated remedial cost for both parties. 103. The estimate on the purchasers' measurements therefore stood at $353,500 which was only about 0.13% of $265,000,000 being the purchase price of these two blocks. The estimate on Provident's measurements came to $75,500 which is about 0.04% of the same purchase price. The difference is attributable mainly to the relocation costs of $260,000 for the exhaust fans. The 15% rule of thumb 104. In the minutes of the 36th meeting of the Building Development Department with Authorised Persons Liaison Committee, Exhibit "D1", the following passage appears: "4. 2 During subsequent discussion, it was noted that:
105. Provident sought to lean heavily on an alleged practice that if the size of window openings of bathrooms and kitchens were so designed that 85% of it would not be less than 10% of the room floor area, the general plans would be approved. It was suggested on behalf of Provident that on such a design, although the actual window frames subsequently installed reduced the window openings by as much as 23%, it would still be tolerated by the Building Authority. To put it simpler, 85% of the structural design for the window opening would have to be at least onetenth of the room area. 106. Mr. Ferris, counsel for Woomera and Eskensen successfully demonstrated the use of different standards by those advising Provident. Criticisms were specifically levelled at some of the observations made during the course of these proceedings, which could be understood as suggesting an official tolerance of 15% glass area deficiency in the completed window installations as opposed to the test above described. 107. Some of the observations made and questions asked might suggest an attempt to advance a second test, but counsel for Provident was clearly seeking to further assist this court by putting forward a less complex formula for the same yardstick. In my view, the experts of Provident were in essence speaking of the same 15% rule of thumb, i.e. 85% of the designed window opening for the bathrooms and kitchens should not be less than 10% of the floor area. 108. Mr. Mann claimed that he had no knowledge whether the 15% rule of thumb was acceptable. Miss Tang told the court that the rule of thumb was widely known to and generally used by the professions. Mr. O'Sullivan conceded that this was a past practice of B.O.O. and deemed reasonable by the committee, but he maintained that the proposed official acceptance in the minutes was to be subject to the formal approval of the Building Authority. I prefer the version given by Miss Tang that the 15% rule of thumb was well adopted by the professions in Hong Kong. 109. Mr. O'Sullivan and Mr. Mann both recognised certain degree of tolerance in building construction. Provident's own experts admitted that more than 30% usage of a designed window opening would be unacceptable. 110. I find that the use of this 15% rule of thumb was generally accepted by the professions and the Building Authority but that the rule was to be applied in the design, submission and approval stages. This rule would not dispense with the compliance with these regulations, although the Building Authority would tolerate as much as (but not more than) a 30% utilization of the designed structural opening. 111. All the structural window openings of the bathrooms and kitchens in these two blocks are large enough for this 15% rule of thumb except for the bathroom in flat "D", which provides fractionally below 15%. In other words, 85% of it is slightly less than 10% of the room area. More specifically, 85% of the actual window opening for flat "D" bathroom windows is 0.393 square metre whilst the 10% of the room area or the glass area required is 0.4012 metre square. If a smaller frame is used, the statutory requirement could be met. 112. The general approved plans dealt with matters of importance but contained no window details. Plainly, there was no risk of any Crown re-entry on matters of such minimal significance. The shortfalls were trivial in character and insubstantial in magnitude as reflected by the estimated remedial costs of, at the most, only 0.13% of the purchase price. What must not be lost sight of is that the remedial costs estimate was obstained on the basis of removing all deficiency completely without giving any allowance for the Building Authority's expected tolerance for usage beyond the 15%, up to almost 30%. The unimportant nature and extent of such deficiency could not have escaped the appreciation of Woomera and Eskensen. I entertain no reasonable doubt that there was no risk at all of the Crown re-entering or even threatening to re-enter. 113. It is true that the estimate for the remedial costs was not given until the 13th December 1982 (see Exhibit "D11") but the insignificance of these deficiencies in the whole transaction has now been reaffirmed by the estimate. The bathroom windows in Stage I Phase II have been re-designed. But on inspection of the Blocks, no complaint was raised on the windows and the exhaust fans, and the only items which the Building Authority required rectification were those set out in his letter dated the 1st October 1982. It was a relatively full inspection of 30 out of 650 flats and at least one type of bathroom. In his letter dated the 16th March 1984 (Exhibit "D13"), the Registrar General has now confirmed what was the obvious. All these subsequent events have no direct bearing on the matter as it then stood in December and do not really take it further. Bay Windows 114. If the fan lights and the bay windows are to be considered separately, then the deficiency would, as appeared in pages 14 and 15 of the Vigers Report, Exhibit "P1", range from 2% to 75%. I derive no real guidance from the definition in the Shorter Oxford Dictionary for "window" or the decision in the The Holiday Fellowship, Ltd. v. Viscount Hereford. (23) Mr. Ferris placed great emphasis on the concept of one single opening or one frame in the wall. There is no statutory definition of "window". However, it must be accepted that the regulation speaks of one window, but the regulation should not be applied without regard to common sense and the views of the professions. The Holiday Fellowship case was concerned with whether the glass windows formed part of the main walls. It was held that the windows were "distinct from the walls" though they were built in the walls. Here, we are dealing with whether the concrete transom is, in effect, part of the window frame. In my view, the true test is whether the fan light and the bay window were together one window despite the presence of the concrete transom. 115. If the fan light and the bay window are part of and together form one single composite window, then the actual measurement would not contravene Regulation 30(2)(a)(ii). 116. The fan light and the bay window were constructed on different vertical planes, nearly a metre apart. They were being separated by the concrete transom which was substantially constructed and designed as an architectual feature with the functional purpose of a platfrom for accommodating an air-conditioning unit. The purchasers' complaint involved 450 rooms. 117. The evidence of Mr. Roberts was that it would be a question of visual appearance and impact in the light of the functional side of this design. Mr. Roberts himself had used a similar design in one of his buildings. His opinion was that the fan light and the bay window were together one composite window. No challenge seemed to have been made to the suggestion that if the same design had been given one aluminium frame, then it would have formed one whole window complex. There is no conceivable reason why the replacement of a aluminium transom by a concrete transom as that in this case should make any difference. I accept Mr. Roberts' views. My own impression on the site visit should also be recorded: These fan lights and bay windows did strike me as one composite unit. 118. On inspection by the staff of the Building Authority, these windows could not have escaped their attention, but no complaint was made and an Occupation Permit was subsequently issued. 119. I need not, in fact, decide on the conclusion reached by Mr. Roberts. Suffice it for me to say and I do say that this court is satisfied beyond reasonable doubt that there was no risk of any Crown re-entry by reason of this window design. 120. However, what I regard as obvious has now been given confirmation from the Registrar General Department and inferentially the Building Authority. By letters of the 15th and 31st January 1983 to the Building Development Department, solicitors for Woomera and Eskensen supplied full information of their complaints made in their letters dated the 24th, 26th November and 7th December all in 1982 and enclosed their writ of summons in the present case. As for these windows, solicitors for Provident wrote to the Registrar General on the 16th March 1984("D13"), and a reply was received a day before trial from the Registrar General, that is "D14" dated the 20th March 1984, confirming that the Crown would not have re-entered on any of these window deficiencies. 121. Stage I of Phase II of Provident Centre has been completed. The same construction was adopted except for the bathroom windows which had been altered for eliminating any possibility of dispute. The Occupation Permit for Stage I of Phase II was granted in November 1983 with the same bay windows in the living rooms and bedrooms and the same window frames in the kitchens with the same exhaust fans installation. All these reflects the common sense attitude only to be expected of the Building Authority as regards these alleged or actual but minimal contraventions. Tiles 122. Glass mosaic tiles were prescribed for the external walls by the Third Schedule to the Agreements. Clause 9(ii) reads as follows:
123. It was provided by Clause 21(ii) that:
124. The decision to use glass mosaic tiles was made on or about the 28th October 1980, six months before the signing of the Agreements in March 1981. Woomera and Eskensen discovered the change and were given reasons therefor only some time in November 1982. Mr. Nelson explained to the court that the rougher back edges for glass mosaic tiles were better for cement rendering and would, therefore, provide greater durability and also that it was likely to obtain a higher standard of finishing in workmanship. He described the glass mosaic tiles finish as enjoying a more pleasing visual effect. He was also of the opinion that the Italian glass mosaic tiles would not trap dust and would, therefore, be cleaner. 125. Mr. Roberts told the court that the material and workmanship in the finish were good, that these tiles were more resistant to acidity and impurities and that they were 20 to 30% more expensive than Taiwan glass tiles on comparable colour basis at the time. Mr. Roberts also expressed the view that it was unusual to find this type of glass tile finish except in commercial district or high class residential development. 126. It would be perverse, as submitted by Mr. Swaine, for woomera and Eskensen to raise objection to a better finish. Clause 9(ii) is a mere warranty that would provide damages to the purchasers as a result of any alteration in fittings and finishes, though Mr. Ferris submitted that Clause 21(ii) did not restrict the plaintiff to a claim of damages. However, Woomera and Eskensen had not even referred this matter to the Authorised Person for a decision. 127. Mr. Nelson gave reasons for the substitution, a decision of which was made in October 1980. But contractually Provident had committed itself to install glazed mosaic tiles on the external walls in the Agreements, and there was no conceivable reason why the same grounds for the substitution could not be reintroduced and embraced by Provident at the time of the actual installation for avoiding dispute or liability. Provident had in fact already decided to change to glass mosaic tiles long before the signing of the Agreements, and Woomera and Eskensen might possibly have founded some claim on misrepresentation, but that was not pursued. 128. There was no evidence from Woomera and Eskensen as to how they could possibly be prejudiced by this substitution. If, in fact, their complaint had been motivated by any nation of misdescription or misstatement, it could not have been said that the same had so materially affected "the subject matter of the contract that it (might) reasonably be supposed that but for such misdescription, (they) might not have entered into the contract at all." See Flight v. Booth. (24) The substitution of the glazed mosaic tiles by the glass version of at least comparable quality had not in any way so altered the nature of the property that Woomera and Eskensen would not have received what was intended to be sold to them. The substitution was not of any sufficient "materiality as would prevent the purchasers getting substantially what (they) had contracted for." Shepherd v. Croft. (25) 129. Moreover, installation of these mosaic tiles was governed only by a contractual provision. The change could have given rise to no risk of a defeasible title. 130. Nor do I think any of all these contraventions, singly or together, would give Woomera and Eskensen properties of a different nature, which were intended to be acquired by them under the Agreements. Waiver 131. I cannot accept that the issuance of the Occupation Permit constituted a waiver by the Building Authority of any contraventions. Mr. Swaine's submissions on waiver appeared to be somewhat diluted. Counsel relied on waiver "not in a strict legal sense". In effect, the court was asked "to look at the reality and say that there was no risk of Crown re-entry". The Building Authority need not make an inspection. See section 37(1) of the Buildings Ordinance. Section 37(2) relieves the Building Authority or its offices acting under his directions from action, liability, claim or demand in the bona fide discharge of their duties. Under section 24, the Building Authority may require any justified remedial work to be executed. The Building Authority himself would not be irreversibly bound by the Occupation Permit, and an Occupation Permit he issues cannot constitute any waiver. Moreover, the Building Authority and the Registrar General Department wear separate hats, and no occupation Permit from the Building Authority can, in my view, impair the right of the Crown to exercise its power of re-entry. Relief against forfeiture 132. I need not labour on the question of relief against forfeiture. The same argument was sought to be maintained in Pips (Leisure Production) v. Walton (26) but it was held that a hope of expection of ultimately obtaining a good marketable title would not suffice. It has been decided time and again that a defeasible title is not a good title. See Becker v. Partridge. (27) No purchaser should be compelled to incur the hazard of purchasing a law suit. Alleged implied term as to characteristics of the Occupation Permit 133. It was further argued on behalf of Woomera and Eskensen that the validity of an Occupation Permit with reference to Clause 4 of the Agreements was subject to an implied term. If there had been no repudiatory breach by Provident, failure to comply with this alleged implied term would not, so Mr. Ferris submitted, entitle Provident to call for completion under this clause by its notice dated the 10th November 1982 or at all. 134. The alleged implied term sought to establish that an Occupation Permit obtained by Provident for the purpose of Clause 4 must be one applied for from and issued by the Building Authority on accurate representations in respect to premises completed in full compliance with the Buildings Ordinance and Regulations. 135. A Clause 4 Occupation Permit included a Temporary Occupation Permit. Thus, a Temporary Occupation Permit was equally sufficient to trigger off completion of the sale, though it could be fettered in its operation and was liable to be revoked. Consequently, a Temporary Occupation Permit does not invariably signify due compliance in all respects with the Buildings Ordinance and Regulations. The inclusion of a Temporary Occupation would seem to militate against the implied term so advocated. 136. Further, Provident's duty to show and make a good title was regulated by the express term in Clause 14 and its implied obligation arising from the fact of the sale. As for compliance with the Buildings Ordinance and Regulations, at least for matters of importance, Provident's position had crystallised in the approved plans, and in addition Provident was contractually obliged so to comply as regards window details by an implied term. There was no need for these very same matters to be re-ventilated in any implied term for a Clause 4 Occupation Permit. 137. The express provision in Clause 4 was unambiguous and comprehensive in its application. Without more, it set a date for completion by reference to the happening of an event. Circumstances leading or giving rise to that event were unnecessary for merely marking a date for completion. There was no room for implying this alleged term and giving the Occupation Permit these irrelevant attributes. 138. Again, there is no provision for granting a second Occupation Permit. Clause 4 clearly hinged upon the right to occupation stemming from the issuance of a permit as opposed to liabilities for meeting the Buildings Authority's requirements under section 24. It was the occurrence of a designated event which was selected to determine the time for completion regardless peripheral considerations. 139. The Crown has itself also adopted the issuance of an Occupation Permit or a Temporary Occupation Permit as the time for granting a sub-lease to the Colonial Treasury Incorporate. But this is of little assistance as the same issue could have been raised and would have had to be resolved. 140. Also, Clause 3(iv) of the Agreements cannot be relevant if only for the fact that it merely specified how construction time was to be computed. It was quite unconnected with the completion date of the sale. 141. In conclusion, for the purpose of Clause 4, the Occupation Permit was not subject to such alleged implied term. Deposit 142. In the circumstances, Woomera and Eskensen wrongfully refused to complete and were in breach of the Agreements. I come finally to the question of deposit. 143. In each of these 200 Agreements for Sale and Purchase, 20% of the purchase price had been paid. In my view, the first 10% was paid as an earnest of due performance of the contract by Woomera and Eskensen. It was not seriously disputed that Provident as vendor could legitimately forfeit this 10% as soon as Woomera and Eskensen were in default. See Howe v. Smith; (28) Mayson v. Clouet. (29) 144. Basically, it is a question of construction of the terms of any particular contract. Counsel for Woomera and Eskensen invited the court to take into account the "factual background known to the parties at or before the date of the contract including evidence of the 'genesis' and objectively the 'aim' of the transaction". See Prenn v. Simmonds. (30) Thus, so counsel argued, the offers made on behalf of Provident and accepted by Eskensen and the agent of Woomera in letters dated the 6th October 1980 could be looked at as preliminary agreements. In these letters, only the first 10% was described as "booking deposit" as well as "further deposit", and the next 10% payable by 10 equal monthly instalments was included as part of the purchase price. 145. By Clause 2 of the Agreements, the purchase price was payable in the manner specified in the Second Schedule thereto. Under this Second Schedule, (1) the first 10% was payable as "being part payment of deposit of purchase price" on or before the signing of the agreement, (2) the second 10% as "being balance of deposit of purchase price" by 10 equal monthly instalments commencing from the 1st May 1981 and (3) the balance as "being the full balance of the purchase price" was to be paid on completion. Clause 7 enabled the purchaser to claim, on an annulment of the sale for good cause, "a return of the deposit and other sums of money already paid". Under Clause 21( i ), upon termination on no less than 5% variation in the saleable area, the purchaser was entitled to be repaid "all monies paid by him". Clause 27 distinguished "the balance of the purchase price" from "the final instalment of the balance of the purchase price" in the event of an earlier issuance of the Occupation Permit. Clause 2(iii) itself introduced the expression "instalments of purchase price". 146. Counsel for Provident invited the court to concentrate on the Second Schedule, hailed as a provision "tailor-made" for this type of transaction. 147. On behalf of Woomera and Eskensen, it was submitted that "deposit of purchase price" in the Second Schedule was equivocal, that the instalment payments of the second 10% were kept separate from the first 10% deposit in Clauses 2(iii) and 27 and that a like distinction was sought to be drawn between "deposit" on the one hand and other "monies" or "sums of money" in Clauses 21(i) and 7 on the other. 148. Mr. Ferris' analysis of these provisions was formidable. The expressions do seem to give rise to a dichotomy for the first 10% and the instalments of the second 10%. But it is quite unnecessary, in my view, to delve into the true meanings of the expressions in these clauses. Nor do I need to seek guidance from the provisions in the preliminary agreements as an aid of interpretation. The focal point is what precisely could be forfeited. In my view, the answer is to be found in the unobscure language of Clause 16. 149. The material parts of Clause 16 read as follows:
150. The phrase "The balance (if any) of the monies paid by the Purchaser under this Agreement" could not have meant the final 80% full balance of the purchase price which became payable only on completion. Of "the monies paid by the Purchaser under this Agreement" before completion, the first 10% deposit was forfeitable and would not be available for deduction and repayment under Clause 16. The ten equal monthly instalments of the second 10% were the only monies left for meeting these purposes. 151. Earlier in Clause 16 which was designed to regulate the rights and obligations of the parties up to completion, monies payable before completion were classified as "deposit" or "the balance of the purchase price or any instalment thereof". The latter expression referred unequivocally to the second 10%. 152. In this Clause 16, Provident's entitlement to forfeiture was Confined to the "deposit" leaving the other "monies paid by the Purchaser under this Agreement" for meeting deficiency in price and expenses of the resale. 153. In conclusion, regardless of what proper meaning may be ascribed to these terms or expressions, the crucial provision was Clause 16 of the Agreements which restricted Provident's power of forfeiture to no more than the first 10%. This part of the claims of Woomera and Eskensen for this first 10%, therefore, succeeds. 154. Clause 16 also allowed Provident to recover any dificiency on and expenses of a re-sale within 6 months after termination and to deduct the same from the second 10% payment. Provident claimed to have resold 22 Woomera flats within this period suffering an alleged loss of $12,883,389 and 32 Eskensen flats with an alleged loss of $15,561,795. 155. With leave of the court, Provident amended its Defence and Counterclaim so as to include a Clause 16 claim. Woomera and Eskensen took Provident to the Court of Appeal on the addition of this amended claim, and the purchasers were ordered, inter alia, to suspend execution on this second 10%, should they succeed, until the ultimate determination of Provident's aforesaid amended claim. The question of interest on this second 10% will also have to be stood over for further consideration. 156. It remains for me to declare (1) that each of the Agreements has been determined and (2) that each of the 10% deposits paid pursuant to Clause 2 in and paragraph (1) of the Second Schedule to the Agreements has been validly forfeited. 157. I further order:
(1) [1981] A. C. 205 at p. 220 C/D. (2) (1852) 10 Hare 1 at pp. 8 and 9 (3) (1969) 211 E.G. 33 (4) [1843 - 60] A. E. R. Rep. 1084, p.1089 I. (5) (1893) 9 T L. R. 488 (6) [1882] 9 Q. B. D. 616 at 617 (6a) ibid. (7) [1912] 2 Ch. 381 at p.385 per Parker J (8) (1881) 51 L. J. Ch. 42 at 43 per Fry J. (9) [1920] 1 Ch. 191 (10) [1905] 1 Ir. R. 602 (11) [1903] 1 Ch. 287 at p.292 (12) (1841) 7 M & W 364 (13) (1837) 2 My. & Cr. 207 (14) [1900] 1 Ch. 287 at 289 (15) (1837) 2 My. & Cr. 207 at p.211 (16) 17 Beav. 267 at p.275 (16a) ibid at p.272 (16b) ibid at p.274 per Sir John Romilly, M. R. (17) Williams on vendor and Purchaser 4th edition p.34. (18) Williams on Vendor and Purchaser 4th edition p.112. (19) [1976] 1 A. E. R. 683 at p.687 a/b (20) [1963] 1 A. E. R. 353 (21) [1889] 14 p.64 (22) [1939] 2 K. B. 206 (23) [1959] 1 A.E.R. 433 (24) (1834) 1 Bing. N.C. 370 (25) [1911] 1 Ch. 521 (26) 260 Estate Gaz. 601 at p.604 (27) [1966] 2 Q.B.D. 155 at 171 B/C (28) 27 Ch. D. 89 (29) [1924] A.C. 980 (30) [1971] 1 W.L.R. 1381 Representation: Mr. Francis Ferris, Q.C. assisted by Miss Maria Yuen, instructed by M/S Philip K. H. Wong for the 1st and 2nd plaintiffs. Mr. John Swaine, Q.C. assisted by Mr. R. G. Kotewall, instructed by M/S Deacons for the defendant. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||