Cheng Ho v. Chui Man

DCCJ 5508/2008

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 5508 OF 2008

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BETWEEN

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Coram: H.H. Judge Chow

Date of Hearing: 20^th May 2009

Date of handing down Decision : 9^th June 2009

DECISION

1.There are 2 summonses before me to be dealt with, namely, the Plaintiff’s summons for summary judgment against the Defendant under Order 86, rule 1 of the Rules of the District Court (“RDC”), and the Defendant’s summons taken out under Order 14A, rule 1of the RDC, for the Plaintiff’s action to be dismissed.

2.The central questions common to the two summonses are:-

(1)  whether or not it is reasonable for the Plaintiff to raise the requisition to request a written consent of Chan Yau as beneficiary in the present conveyance;

(2)  whether or not the Defendant provided a satisfactory answer to the requisition.

Facts of case

3.A Chan Wan Loi was the first owner of the premises known as the 1^st Floor including the Balcony, No. 123 Ha Wong Yi Au, Tai Po, New Territories (“the Property”).  The Property was subsequently assigned to a Chan Yau in his capacity as an executor.  Chan Yau as an executor then assigned the Property to a Lam Chi Keung and a Lam Po Wa as joint tenants.  In 2005 the Defendant derived his title to the Property from the joint tenants.

4.On 2.9.2008, the Plaintiff as purchaser entered into a provisional agreement for the sale and purchase of the Property with the Defendant as vendor.  On 16.9.2008, the parties reached a formal agreement for the sale and purchase of the Property.  The completion date was 14.11.008.

5.Upon receiving the title deeds from the Defendant’s solicitors, the Plaintiff’s solicitors raised 2 requisitions.  Only the second requisition is the subject matter in this case.  The parties did not complete the transaction by the completion date.  As a result, the Defendant forfeited the deposit paid by the Plaintiff in the sum of $150,000 and rescinded the Agreement.

6.The title deeds of the Property contain a will dated 18.9.1995 of Chan Wan Loi.  In this will, Chan Wan Loi appointed Chan Yau as the sole executor and trustee of the Will and gave, devised and bequeathed the Property to Chan Yau absolutely.  Chan Wan Loi died in 1988.  By a grant dated 17.8.1999, probate was granted to Chan Yau as the sole executor to administer the estate of Chan Wan Loi stated in the will.

7.On 10.4.2001, Chan Yau executed an assignment (“the Assignment”) of the Property to Lam Chi Keung and Lam Po Wa as joint tenants. Recital (6) of the Assignment stated that Chan Yau was acting in the course of administering the estate of Chan Wan Loi deceased.  The Assignment was executed by the lawful attorney of the vendor, being Chan Yau in his capacity as executor of the will.

The requisition

8.The requisition raised on 13.10.2008 is as follow:-

“We note that under the last will of CHAN WAN LOI deceased annexed to the Grant of Probate dated 17.8.1999 (HCAG004723/1999), the captioned property was bequeathed, inter alia, to CHAN YAU as beneficiary.  The said Will also appointed the said CHAN YAU as sole executor limited to the properties mentioned in the said Will.  We are of the opinion that any sale of the said property also required the written consent of the said CHAN YAU as beneficiary in his personal capacity.  However, we note that the Assignment dated 10.4.2001 was only executed by the lawful attorney of the said CHAN YAU as sole executor pursuant to a Power of Attorney dated 2.4.2001, but has failed to be signed by the said CHAN YAU as confirmor in his personal capacity as the sole beneficiary.  In the absence of the written consent of the said CHAN YAU, the said Assignment is voidable.”

(Underlines added)

9.On 30.10.2008, the Defendant’s solicitor replied to this requisition:-

“We refer to your letter of 13^th October 2008.  Please refer to s.54 of the Probate and Administration Ordinance.  Consent by the beneficiary for sale is not necessary.”

10.The Plaintiff was not satisfied with the answer and the requisition was reiterated in the letters of the Plaintiff’s solicitors dated 30 and 31 October 2008.  By a letter dated 3.11.2008, the Defendant’s former solicitors maintained their previous view.

11.In her submission the Plaintiff’s Counsel submits that there is no primary evidence that there was a need for Chan Yau to sell the Property as executor in the course of administration.  There was more than $200,000 cash in the bank accounts; there was no record of debts or liabilities to be discharged by the estate, and the estate was exempted from estate duty.  Hence there is absolutely no reason why the executor needed to dispose the Property in the course of the administration of the estate.  Under the circumstances, it is genuinely reasonable and necessary for the Purchaser’s solicitor to raise the Beneficiary’s Consent Requisition as he did, which was, a requirement of a written consent of the beneficiary in order to show and prove that a good title was passed in the Assignment, from which the Defendant’s legal estate was derived.  Otherwise, there might be a risk that the Property would be liable to be set aside by other people who are interested in it under section 54(5) of the Probate and Administration Ordinance, (“the Ordinance”).  .  Section 54 (4) and (5) of the Ordinance provides:-

“(4)   A personal representative may charge, mortgage or otherwise dispose of any property vested in him, as he may think proper subject to any restriction which may be imposed in this behalf by the will of the deceased and to the provisions of this section.

Provided that an executor may dispose of any property notwithstanding any restriction so imposed, if he does so in accordance with an order of the court.

(5)  The disposal of property by a personal representative in contravention of the provisions of this section shall be voidable at the instance of any other person interested in the property.”

12.The Plaintiff’s counsel could not show me any legal basis  to support the proposition that “a written consent” of the beneficiary was required to be obtained, in order to show and prove that a good title was passed in the Assignment. She referred to the case of Ultra Eternal Ltd. v. Liu Tai Cheong [1997] 1 HKC 258, but that case cannot offer any assistance to the Plaintiff because its ruling is not related to the requirement of any written consent of the beneficiary.  The alleged written consent is unnecessary, and so the requisition in this respect was wrongly raised.  The Defendant’s reply by letter dated 30.10.2008 provided a correct answer to the requisition.

13.In the present case, as a matter of fact, when Chan Yau assigned the Property to Lam Chi Keung and Lam Po Wah, Chan Yau in the capacity of beneficiary (the sole beneficiary) must have consented to such assignment, because he is the same natural person, but merely having 2 different capacities.  There is no need for him to give himself a written consent agreeing to himself to the Assignment.  When he assigned the Property, of course he himself must have agreed to do so.

14.In its letter dated 13.10.2008, the Plaintiff’s solicitors stated that “In the absence of the written consent of the said Chan Yau, the said Assignment is voidable.”  The Assignment could only have been avoided by Lam Chi Keung and Lam Po Wa.  But they never avoided it.  Instead they affirmed it by assigning the Property to the Defendant.  There is no risk that it would be avoided in respect of the Assignment and the absence of any written consent of Chan Yau would not make the Assignment voidable.  Hence the written consent of Chan Yau is not required. 

15.The Defendant has a valid defence to the claim, therefore the Plaintiff’s application for summary judgment against the Defendant under Order 86 of RDC must be dismissed, and I dismiss it.

16.Regarding the Defendant’s summons, the answer to Q(1) is “no”.  The answer to Q(2) is “yes”.  The answers to Q(3)(a) to (h) are all “yes”.  I dismiss the Plaintiff’s action.

Costs

17.I make an order nisi for costs, to be made absolute in 14 days’ time, that the Plaintiff do pay costs of this Action (including the costs relating to the Plaintiff’s summons and the Defendant’s summons), to be taxed, if not agreed, with Certificate for Counsel.

The Plaintiff :  represented by Miss Shera Chan, instructed by M/S. Gary K.W. Tam & Co., Solicitors.

The Defendant:  represented by Mr. Adian Tam, instructed by M/S. S.Y. Chu & Co., Solicitors.