Kamos Ltd v. Chan Chun Chung Howard
Read the full judgment text of HCA 9184/2000 on BabelCite. This High Court CFI judgment was delivered on 30 December 2004.
1. In June 1997 Mr Chan agreed to purchase Flat 58D (the Property) of the Manhattan Heights development in Kennedy Town from Kamos. Completion was supposed to have taken place around 8 April 2000. But Mr Chan failed to complete. He says that this was because Kamos failed to show good title or answer his requisitions.
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HCA 9184/2000 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO. 9184 OF 2000 ____________ BETWEEN
____________ HCA 9163/2000 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO. 9163 OF 2000 ____________ BETWEEN
____________ (Consolidated by Order of Master Au-Yeung Before: Hon Reyes J in Court Date of Hearing: 16 December 2004 Date of Judgment: 30 December 2004 _______________ J U D G M E N T _______________ I. Introduction 1.In June 1997 Mr Chan agreed to purchase Flat 58D (the Property) of the Manhattan Heights development in Kennedy Town from Kamos. Completion was supposed to have taken place around 8 April 2000. But Mr Chan failed to complete. He says that this was because Kamos failed to show good title or answer his requisitions. 2.Kamos claims damages for breach of the sale and purchase agreement. Mr Chan counterclaims for the return of his deposit. 3.There are 3 issues:-
II. Background 4.By a Provisional Contract (Non-Consent Scheme) dated 26 May 1997 Mr Wong Tit Hung agreed to purchase the Property from Kamos for $8,047,000. 5.On 4 June 1997, under a Provisional Agreement for Sale and Purchase in the standard form of Ong’s Properties Co., Mr Chan agreed to purchase the Property from Mr Wong. The purchase price was $9,330,00. 6.This latter provisional agreement was signed by Mr Chin Yuen Kwong (Mr Chan’s father) on behalf of Mr Chan. At all material times, Mr Chin acted as Mr Chan’s agent. The contract also noted that Messrs. Wong Poon Chan Law & Co. (“WPCL”) would be acting as Mr Chan’s solicitors in the transaction. 7.On 6 June 1997 Mr Wong signed a formal Sale and Purchase Agreement with Kamos. 8.This agreement defined the “Land” on which the development was situated as follows:-
9.The agreement also contained the following provisions:-
10.Schedule 7 listed about 40 documents relating to the title of the Property and the Land on which the development was situated. 11.Kamos did not permit purchasers of units within the development (such as Mr Wong) from sub-selling. It was therefore necessary for Mr Chan to be substituted for Mr Wong as purchaser from Kamos. 12.Substitution was initially effected by a Notice of Amendments to Provisional Contract (the Notice) which Mr Chin signed on Mr Chan’s behalf on 12 June 1997. 13.By the Notice Mr Chan undertook to be bound by the terms of the Provisional Contract between Kamos and Mr Wong. In particular, Mr Chan agreed to be liable to pay the consideration of $8,047,000 agreed between Kamos and Mr Wong. 14.The following were terms of the main part of the Notice:-
15.The Notice included the following rider on an attached sheet:-
16.Mr Chin acting for Mr Chan also signed the attached sheet with its rider clause on 12 June 1997. 17.By letter dated 14 June 1997, WPCL wrote to Messrs. S. H. Leung & Co. (SHL) that they had been instructed to act for Mr Chan. WPCL requested SHL to prepare the requisite Cancellation Agreement between Mr Wong and Kamos and to send a draft of the formal Agreement for Sale and Purchase for the Property which Mr Chan was supposed to enter with Kamos. 18.A Cancellation Agreement between Mr Wong and Kamos was signed on 19 June 1997. 19.On the same day, Mr Chin (acting for Mr Chan) and Kamos concluded a formal Sale and Purchase Agreement (the SPA) for the Property. The SPA was similar in terms to the formal agreement between Kamos and Mr Wong. It included the definition of “Land” already mentioned and contained cls.7 and 11 set out above. 20.On 18 June 1997 SHL sent copies of all but 2 of the documents listed in Schedule 7 to WPCL. The 2 missing documents were the occupation permit and the DMC for the development. 21.In its letter SHL noted that copies (instead of certified copies) of 3 of the documents were being provided at the time, because the originals were being lodged with the Land Registry for registration. The 3 documents were:-
Certified copies of the 3 documents would be furnished in due course. 22.Certified copies of the 3 documents were eventually sent on 5 November 1999. Included with this bundle was a clearer certified copy of the Government Lease for Marine Lot No.245, as that previously supplied had been illegible. 23.As at 3 April 1998 Mr Chan had paid a total of $2,414,100 deposit in accordance with the terms of the SPA. 24.By letter dated 23 March 2000 SHL informed Mr Chan that an occupation permit for the Property had been issued. Pursuant to the SPA, completion was therefore to take place and the balance of the purchase price ($5,632,900) to become payable within 14 days. 25.By letter dated 28 March 2000 WPCL replied to SHL requesting certain title deed and documents, said to have been missing from those previously supplied by SHL. The documents sought were not in fact among those in Schedule 7. 26.SHL responded on 29 March 2000. It drew attention to SPA cls.7 and 11. It expressed the view that, in any event, WPCL’s requisitions were too late and had not been raised within a reasonable time. Nonetheless, in an effort to be helpful, SHL supplied certified copies of some (but not all) documents requested. It explained why, as far as SHL was concerned, the documents not produced were irrelevant. 27.By letter dated 3 April 2000 WPCL asked to see further documents, not among those listed in Schedule 7. 28.In their letter, WPCL raised 4 requisitions. Of these only the 3rd is relevant to these proceedings. That runs as follows:-
29.On 8 April 2000 SHL wrote back to repeat that the requisitions were out of time and could not be raised. Again reference was made to SPA cls.7 and 11. But again, SHL endeavoured, without prejudice to those provisions, to be helpful and to state Kamos’ case on the points raised in requisition. 30.On the 3rd requisition, SHL replied:-
SHL concluded by noting that the date fixed for completion was 8 April 2000 and that under the SPA time was of the essence. 31.By letter dated 8 April 2000 WPCL alleged that Kamos had failed to answer their requisitions. WPCL said that Mr Chan had decided to terminate the SPA in consequence. 32.On 10 April 2000 WPCL wrote that SHL’s letter of 8 April 2000 just mentioned had not been received until 11:27 am of 10 April. 33.On 13 April 2000 SHL alleged that Mr Chan had wrongly repudiated the SPA and Kamos reserved all its rights. 34.Kamos resold the Property on 12 October 2000 for $3,581,000. 35.Completion having failed to take place, Mr Chan claimed a purchaser’s lien over the Property pending the return of his deposit and consequential damages. He refused to vacate the registration of HCA No.9163 (which now stands as Mr Chan’s counterclaim here for his deposit and damages) as a lis pendens. 36.To sell the Property free from encumbrance and mitigate its loss, Kamos therefore paid the amount claimed by Mr Chan ($3,581,000) into Court. Upon payment in, the lis pendens was vacated pursuant to the Order of Master Poon dated 5 October 2000. IV. Discussion A. Considerations of title 37.Mr Chan argues that there is a serious question over Kamos’ title to the Land in which the development (including the Property) is situate. 38.A convenient starting point is a plan attached to an Indenture dated 5 July 1926 between Siu Un and Fok Lau on the one part and British-American Tobacco Company (China) Ltd. on the other. At that time it is clear that the Remaining Portion of Marine Lot No.245 (MLRP 245) comprised messuages or erections known as Godown Nos. 6E and 6F, New Praya Kennedy Town. 39.In due course, on 29 August 1955, MLRP 245 was assigned to Chan King Pong, Chan King Luen and Chan King Hing (the 3 Chans) as executors of the will of Chan Man Din. More particularly, the 3 Chans obtained:-
40.On 15 September 1959 the 3 Chans agreed to sell Godown No.6E on MLRP 245 to Chau Hung Piu (Chau). A copy of the agreement was registered in the Land Registry. A plan attached to the agreement identifies No.6E as “Section E of ML 245” and No.6F as “RP of ML 245”. 41.On 21 October 1960 Chau issued a writ against the 3 Chans for failure to complete the sale of No.6E. The writ refers to the agreement with the 3 Chans for the sale of:-
42.Chau’s writ was registered in Land Registry on 22 October 1960 as a lis pendens. The cover sheet to the relevant memorial identifies the “Premises affected by the Instrument” as “Section E of Marine Lot 245 (known as 6E New Praya, Kennedy Town, Hong Kong)”. 43.On 6 October 1962 Mills-Owens J ordered that the lis pendens dated 21 October 1960 against “Section E of Marine Lot No.245” be vacated. The Order was itself registered. The cover sheet to the relevant memorial again identifies the “Premises affected” as “SECTION E OF MARINE LOT NO.245”. 44.On 20 April 1964 the 3 Chans agreed to sell the “THE REMAINING PORTION OF MARINE LOT NO.245 Together with the messuages erections and buildings thereon known at the date hereof as Nos.6E and 6F New Praya Kennedy Town” to Delight Investment Company Ltd. 45.On 21 September 1964 the 3 Chans assigned “All That piece or parcel of ground registered in the Land Office as The Remaining Portion of Marine Lot No.245 Together with the messuages erections and buildings thereon now known as Nos.6E and 6F New Praya Kennedy Town” to Green Island Cement Company Ltd. Delight took part in the assignment to Green Island as confirmor. 46.On 13 November 1995 Green Island agreed to sell Nos.6E and 6F of the Remaining Portion of Marine Lot No.245 to Kamos. 47.The agreement mentions the references to Section E of Marine Lot No.245 in Chau’s action against the 3 Chans. But the agreement notes that the Crown never determined or apportioned a separate rent for a Section E of Marine Lot No.245. Instead the Crown:-
48.Nonetheless, the agreement states that it will describe MLRP 245 as “Section E of Marine Lot No.245 and The Remaining Portion of Marine Lot No.245”. This is to be done “for better identification of the land conveyed and intended to be conveyed”. 49.By an Assignment also dated 13 November 1995 Green Island assigned the relevant parcel of land to Kamos. 50.The development is partly situated on land formerly known as Godown No. 6E and, later, as Section E. In light of the history just recounted, Mr Chan suggests that there must be a serious doubt whether Green Island ever had title to Section E. Green Island only ever got (Mr Chan says) “The Remaining Portion of Marine Lot No.245”. That may (Mr Chan submits) simply have been the area formerly called Godown No.6F and no more. If Green Island never obtained Section E from the 3 Chans, it could never have conferred title in Section E to Kamos. Mr Chan thus says there are “discrepancies” in Kamos’ title. 51.I am unable to agree. 52.It is plain that, prior to the litigation between Chau and the 3 Chans, a Section E was never formally partitioned from the section of land known as “The Remaining Portion of Marine Lot No.245”. 53.The fact that, for identification purposes, the agreement between the 3 Chans and Chau refers to the premises informally as Section E, would not by itself have constituted a partition of MLRP 245. Nor would the appending to the agreement of a plan, showing the putative Section E and re-designating the area called Godown No.6F as “The Remaining Portion of Marine Lot No.245,” have the effect of a partitioning. 54.Strictly, the agreement and the litigation between the 3 Chans and Chau only concerned them. How they chose to describe the plot of land being conveyed for the sake of their convenience, could not have been binding on the rest of the world. A perusal of the conveyancing deeds shows that the actual position is as recited in the Agreement between Green Island and Kamos Since at least 1926, MLRP 245 has always comprised Nos.6E and 6F, whatever the 3 Chans and Chau may have asserted in their sale agreement and litigation. 55.There cannot have been any doubt as to Green Island’s title to the so-called Section 6E. By the same token, there can be no question over Kamos’ present title to the same area. 56.For completeness, I note that this very question of Kamos’ title to Section 6E was raised in Techtronic Communication Company Ltd. v. Kamos Ltd. HCMP No.5660 of 2000, 27 March 2001. After reviewing the relevant documents, Deputy Judge Gill there arrived at the same conclusion which I have reached. B. Entitlement to requisition 57.Given my conclusion in Section III.A of this Judgment, this issue of requisition falls away. The provision of the title deeds in Schedule 7 would have been more than sufficient to demonstrate Kamos’ good title. 58.The assumptions in requisition (3) mentioned above are incorrect. That requisition assumes that there is doubt over whether the 3 Chans ever assigned Section E to Green Island. For the reasons I have given, there is no doubt. 59.I am also mindful of SPA clauses 7 and 11. The effect of those provisions is that Mr Chan was not entitled to ask for documents additional to those listed in Schedule 7. Nor indeed was there an obligation on the part of Kamos to show good title. 60.Mr Chan argues that cls.7 and 11 operate as exclusion clauses. He says that, because of their draconian effect, Kamos should not be entitled to rely on such clauses since they were never specifically drawn to Mr Chin’s attention when he signed the Notice and SPA on behalf of Mr Chan. 61.Again I am unable to agree. 62.I think that Mr Yin (appearing for Kamos) is correct when he submits that cls.7 and 11 are not exclusion clauses, but define the scope of Kamos’ obligation as vendor. It is always open to vendor and purchaser to agree that the former will not have to show good title to land being sold. 63.Indeed, in contrast to the exclusion clause in Interfoto Library Ltd. v. Stiletto Ltd. [1989] 1 QB 433 (cited by Mr Chan), clauses 7 and 11 can hardly be described as “unreasonable and extortionate” (Bingham LJ at 445G). 64.The law relating to exclusion clauses is not apposite here. 65.Further, neither Mr Chan nor his agent Mr Chin are “innocents abroad”. They are capable adults who should be able to look after their own interests. Mr Chin by his own admission is a businessman. 66.By signing the Notice for Mr Chan, Mr Chin specifically acknowledged by the rider clause that he had perused the formal agreement between Kamos and Mr Wong. 67.Had he so perused the formal agreement, he would have noticed the presence of clauses 7 and 11. He would have been aware that by the terms of the Notice Mr Chan was obligating himself to enter into a similar agreement with Kamos. 68.If Mr Chan did not want to contract on the basis of clauses 7 and 11, Mr Chan (or his agent Mr Chin) should not have signed the Notice. 69.If one did not bother to peruse the formal agreement, one must unfortunately bear the consequences. 70.If father or son had any doubt as to what one was entering into by signing the Notice, either should have asked to see a copy of the formal agreement between Kamos and Mr Wong. Neither did so. 71.It appears that by the time of the signing of the Notice WPCL were instructed to act for Mr Chan. If he did not understand the legal consequences of signing, he should have asked his solicitors. 72.Certainly, by the time that the SPA was signed, WPCL were on board for Mr Chan. 73.Mr Chin himself accepts that he was aware of the clauses 7 and 11 before he signed the SPA. He says that he nonetheless signed the SPA because, having signed the Notice, he was bound to execute the SPA. If he did not do so, Mr Chan would forfeit deposit already paid. 74.Given that Mr Chan acting through Mr Chin as agent signed the SPA fully realising what was there, Mr Chan is bound by what he agreed in the SPA. It is no answer to say that one was already bound by the Notice. 75.In all the circumstances there is nothing unfair, reasonable or unconscionable in Kamos holding Mr Chan to the bargain that was struck. There is no basis for the Court to ignore the plain import of clauses 7 and 11. C. Response to requisition 76.This issue also falls away in light of the analysis in Sections III.A and B of this Judgment. Requisition (3), being based on a false premise, was an improper question. Sufficient documents had previously been provided by SHL on Kamos’ behalf to show good title. 77.Mr Chan attacked Kamos’ reliance on Mr Chow’s statutory declaration as a purported answer to requisition (3). He noted that, contrary to what Chow declared in that document, Green Island had not had uninterrupted possession of the relevant land for upwards of 30 years. On the evidence there had been occasions between 1985 and 1993 when Green Island had allowed Chemco Finance (Hong Kong) Ltd. and Chemical Bank to come into possession in apparent exclusion of Green Island. 78.Mr Yin says that he only relies on Mr Chow’s declaration to show that over more than 30 years no one has claimed title to the so-called Section 6E adversely to Green Island or persons (such as Chemco or Chemical Bank) deriving title from Green Island. That (Mr Yin suggests) should have given comfort to any purchaser from Kamos that there was no real doubt over title to the relevant land. 79.Green Island and Kamos are associated companies within the Cheung Kong group. Mr Chow is a director of Green Island and Kamos. Mr Chow’s declaration does no more than set out his reading of the Schedule 7 deeds and documents provided to Mr Chan. 80.Mr Chow’s declaration, while not in itself evidence of title, is effectively a reply to requisition (3). It explains why the assumptions made by WPCL on Section E were erroneous, by running through the documents filed in the Land Registry over the years. That is all that it does. But, as Section III.A of this Judgment points out, an examination of the documents of the nature conducted by Mr Chow (and now by this Court) shows that there is no basis in the 3rd requisition. 81.In the circumstances, by drawing attention to the detailed reasoning in Mr Chow’s declaration, SHL adequately answered requisition (3). IV. Conclusion 82.By reason of the foregoing, Kamos succeeds. Mr Chan’s defence fails. Mr Chan is not entitled to the return of his deposit. Mr Chan’s counterclaim is dismissed. 83.Kamos is entitled to damages of $2,073,435.60 against Mr Chan. That figure is calculated as follows:-
84.Kamos originally claimed counsel’s fees of $53,500. That was said to have arisen in connection with advice from junior and leading counsel on the resale of the Property. But Mr Yin said that he would not press a claim for those fees as damages. This concession was made without prejudice to the contention that the fees were wholly or partly recoverable on taxation as part of the costs of the action. 85.Interest is to run on the amount of $2,073,435.60 at 1% over Hong Kong prime from the date of the writ in HCA No.9184 to date of judgment. Thereafter, interest is to run on the judgment sum until payment at the judgment rate. 86.I also make the following Orders Nisi:-
Mr Michael Yin, instructed by Messrs. S. H. Leung & Co., for the Plaintiff The Defendant, in person | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Further hearings and rulings under HCA 9184/2000