Chan Siu Han v. Tong Yuk Lan

DCCJ 3432/2008

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 3432 OF 2008

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Coram : Deputy Judge R. Yu in Court

Date of Hearing : 16, 17 and 18 November 2010

Date of handing down Judgment : 17 January 2011

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JUDGMENT

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1.The Defendant is and was at all material time the registered owner of the property situated at Flat 5, 2/F, Block A, Hilton Plaza, Nos. 3-9 Sha Tin Centre Street, Shatin New Territories (“the Property”). She entered into a provisional sale and purchase agreement of the Property as a vendor with the Plaintiff as purchaser. The sale price is $1,380,000 and an initial deposit of $70,000 was paid upon execution of the provisional sale and purchase agreement. The Defendant then instructed Messrs. Kenneth C.C. Man & Co. (“KCCM”) to act for her in the sale of the Property. A Formal Sale and Purchase Agreement was executed on 12 July 2008 when a further deposit of $68,000 was paid and completion was scheduled to be on 15 July 2008.

2.For reason hereinafter set out, the Plaintiff refused to complete the sale, claiming that the Defendant has failed to prove and show a good title.  The Plaintiff now seeks to recover the deposit paid and damages.  The Defendant denies that she has been in breach and claims that she is entitled to forfeit the deposit.  Alternatively, if she has to refund the deposit, she claims that the Third Party has been negligent in handling the conveyancing documentation, including failing to arrange registration of title documents in time and shall therefore indemnify her for all loss.

3.To understand the argument of the parties, it is necessary to set out the history of ownership to the Property. I collect the following information from the land search record, and the correspondence between various solicitors in the Trial Bundle, and the evidence of the witnesses.

4.According to the land search record, one Chan Chiu Yung Kalvin became the owner of the Property in 2005 by an Assignment dated 28 October 2005.  Mr. Chan also mortgaged the Property to Mevas Bank, Limited by a Mortgage dated 28 October 2005 registered at the Lands Office by M/N 05112501520021 (“the Mevas Mortgage”).

5.According to the land search record, the Property was assigned by Chan Chiu Yung Kalvin to Lam Wai Man by an Assignment dated 5 February 2008 and registered in the Lands Office on 14 April 2008.  On the same date of the assignment to Lam Wai Man, the Mevas Mortgage was discharged by a Receipt dated 5 February 2008 (“the Mevas Receipt”).  Upon assignment, the said Lam Wai Man mortgaged the Property to the Bank of East Asia by a Mortgage dated 5 February 2008 registered in Lands Office on 29 February 2008 by memorial number 08022903380144 (“the BEA Mortgage”). 

6.According to the land search record, on 12 January 2008, the said Lam Wai Man as a vendor entered into a provisional sale and purchase agreement with the Defendant as purchaser.   It is not in dispute that the Defendant engaged the Third Party as her solicitors in the purchase of the Property.  Messrs. S. T. Poon & Wong acted for the said Lam Wai Man.  The Formal Sale and Purchase Agreement of the Property was signed on or about 28 January 2008.  The Property was assigned by the said Lam Wai Man to the Defendant by an Assignment dated 14 March 2008 and registered in the Lands Office on 11 April 2008 by M/N08041103470144.  Upon completion, the BEA Mortgage was discharged by a Release dated 14 March 2008 (“the BEA Release”). 

7.From the correspondence between the Third Party and Messrs. S. T. Poon & Wong, which are disclosed in the Trial Bundle, the completion of the Property between the said Mr. Lam Wai Man and the Defendant was conducted by way of solicitors’ undertakings.  Messrs. S. T. Poon & Wong should upon completion and within the agreed period of time in the undertaking return all duly executed documents to the Third Party (as an agent and solicitors for the Defendant).  And it is the usual Conveyancing Practice for the solicitors of the purchaser to attend to registration of the last assignment (i.e. the assignment to the Defendant) and the latest discharge/release (i.e. the BEA Discharge).  And in this case, the Defendant has further mortgaged the Property to Bank of China as security for a loan. Accordingly, upon completion of registration, the Third Party should return the complete set of title documents to Bank of China. 

8.It appears from the correspondence between the Third Party and Messrs. S. T. Poon & Wong, the Mevas Receipt had also been sent to the Third Party on completion for them to attend to registration, which I presume with agreement of the Third Party.  The BEA Mortgage was in the course of registration and Messrs. S. T. Poon & Wong undertook to deliver to the Third Party the BEA Mortgage within 7 days of receipt from the Land Registry (in any event not later than 45 days from completion).  The duly executed assignment and the BEA Release were to be delivered within 21 days from completion.

9.The BEA Release was sent to the Third Party on 5 April 2008 and the Third Party shall attend to registration. The BEA Mortgage duly registered was sent to the Third Party for keeping on 15 May 2008.  It is not disputed that the Third Party has not sent the Mevas Receipt and the BEA Release for registration with the Lands Office until late June 2008.  There is no explanation for the delay.

10.In the meantime, the Defendant entered into a Provisional Agreement dated 31 May 2008 as a vendor to sell the Property to the Plaintiff.  The sale price is $1,380,000 and an initial deposit of $70,000 was paid upon execution of the Provisional Agreement.  The Defendant then instructed KCCM to act for her in the sale of the Property.  A Formal Sale and Purchase Agreement was executed on 12 July 2008 when a further deposit of $68,000 was paid and completion was scheduled to be on 15 July 2008.  All these are not in dispute.

11.In order to facilitate completion, the Defendant had to obtain the full set of the title documents.  For this part of the correspondence, parties have kindly assisted me to agree a small bundle (from the documents disclosed in the Trial Bundle) in correct chronological order so that I could understand the action taken by the relevant parties.

12.From the correspondence in the Trial Bundle, KCCM wrote to the Bank of China for the relevant title documents.  Since registration has not been completed, the full set of title documents were kept by the Third Party.  Having been instructed to act for the Bank of China in preparing a release of the mortgage, KCCM wrote on 26 June 2008 to the Third Party for all title documents of the Property.

13.When the Third Party received the request made by KCCM for title documents, they found that the Mevas Receipt and the BEA Release were left on the file and not registered.  They immediate sent the same for registration.  The BEA Release was registered at the Land Registry on 30 June 2008 but until completion, the original had not been returned to the Third Party.  The Mevas Receipt was delivered to the Land Registry for registration but registration had been withheld.  Again, until completion, the documents had not been returned to the Third Party.  As the Mevas Receipt has been typed onto the Mevas Mortgage, the Mevas Mortgage had been physically kept by the Lands Office pending the registration of the Mevas Receipt.

14.On 4 July 2008, the Third Party delivered all the other title documents they had to KCCM who passed on the documents to the Plaintiff’s solicitors.  Requisition was raised on 9 July 2008 on the 3 missing documents, the Mevas Mortgage, the Mevas Receipt and the BEA Release.  (The Mevas Mortgage, the Mevas Receipt, and the BEA Release are hereinafter referred to as “the 3 missing documents”).

15.On 13 July 2008, KCCM forwarded the request of the 3 missing documents to the Third Party. 

16.Copies of a back sheet of the Mevas Mortgage, the Mevas Receipt and the BEA Release had been faxed on 13 July 2008 to KCCM who in term sent to Plaintiff’ solicitors.  On 14 July 2008, the Third Party sent a letter to the KCCM enclosing certified true copy of the Mevas Receipt and the BEA Release.  They also explained that the Mevas Receipt and the BEA Release were kept by the Land Registry for registration. The documents would be sent to KCCM upon receipt from Land Registry.  I note that the Plaintiff’s solicitors admit the receipt of the documents but deny that they have received them on 14 July 2008.   I also note that there is no undertaking offered by the Third Party in this letter.

17.On 15 July 2008, the Plaintiff’s solicitors sent a warning letter to KCCM reiterating that their request had not been answered, meaning the production of the 3 missing documents for proving of title.  They claimed that failure to prove title by completion is a breach of the sale and purchase agreement. 

18.On 15 July 2008, KCCM replied that the 3 missing documents were lodged with the Land Registry for registration and undertook to deliver to the Plaintiff’s solicitors within 7 days after they received from the Third Party the 3 missing documents.

19.By a letter dated 15 July 2008, the Plaintiff’s solicitors rejected the undertaking proposed by KCCM.  They further made an additional requisition.  The BEA Release has been executed by the lawful attorney of the Bank of East Asia.  They asked for production of the relevant power of attorney.  The Plaintiff is not relying on the failure to answer this requisition in support of her claim that the Defendant failed to prove title.

20.By letter dated 15 July 2008, KCCM passed on the complaint of the Plaintiff’s solicitors to the Third Party and asked for clarification and/or assistance.  In the meantime, they replied to the Plaintiff by another letter dated 15 June 2008 (which parties agreed should be 15 July 2008).  KCCM put on record and repeated their undertaking that they were prepared to provide the 3 missing documents to the Plaintiff upon receipt of the same from the Third Party.  They opined that they had satisfactorily answered the Plaintiff’s requisitions.  Further, for the late requisition, they promised to response later. 

21.No completion took place on 15 July 2008.  On 16 July 2008, the Plaintiff’s solicitors wrote again to KCCM arguing that a vendor is not entitled to fulfill her duty to show title by giving an undertaking to provide a title documents after completion unless by mutual agreement.  They also claimed that the Defendant had failed to produce the requested documents (including the 3 missing documents) by completion and there was no agreement that the Plaintiff was bound to accept the undertaking to produce the same after completion.  They were of the view that the Defendant was in breach of the sale and purchase agreement and had failed to show and give a good title to the Property.  The Plaintiff demanded the Defendant to refund the initial and further deposit in a total sum of $138,000. 

22.The Defendant had not refunded the deposit.  The Plaintiff brought this action against the Defendant to recover the deposit.  The Defendant took out Third Party Proceeding seeking an indemnity by the Third Party for the refund of the deposit and any costs she had to pay the Plaintiff.  Both the main action and the Third Party Proceeding had been argued before me and I would cover both actions in this judgment. 

23.In the Statement of Claim, the Plaintiff referred to the following clauses in the Formal Sale and Purchase Agreement in support of her claim –

6.1  under clause 8(a) thereof, that the Defendant shall show and prove good title to the Property at the expense of the Defendant and at the like expense shall make and furnish to the Plaintiff such attested or certified or other copies of any deeds or documents of title wills in accordance with Section 13 of Conveyancing Y Property Ordinance (Chapter 219);

6.2  under clause 9 thereof, that such of the monuments of the title as relate exclusively to the Property will be delivered to the Plaintiff;

6.3  under clause 12 thereof, that any requisition or objection on title shall be delivered to the Defendant’s solicitors within 7 working days after the date of receipt of the title deeds by t he Plaintiff’s solicitors (in which respect time shall also be of the essence of this Agreement);

6.4  under clause 16 thereof, that time shall in every respect be of the essence of this Agreement;

6.5  under Part III of the Schedule thereto, that the completion should be the 15^th day of July 2008 before 5:00 p.m.

24.The Plaintiff claims that the Defendant has failed to show and/or give a good title before completion in failing to provide the 3 missing documents and the certified copy of the power of attorney proving due execution of the BEA Release for their examination. This amounted to repudiatory breach and was accepted by the Plaintiff by the said letter from her solicitors to KCCM dated 16 July 2008 or upon issuance of the writ herein.

25.I believed the facts that I have set out in details are not really in dispute.  I do not intend to repeat the witness statement again.   

26.The following are the agreed issues in dispute and matters to be considered:-

(a) whether the claims of the Plaintiff against the Defendant in the present action should have been dismissed on consideration of the following sub-issue:-

(i)  whether the 3 missing documents are or anyone of them is/are document(s) of title or is/are only document(s) affecting title;

(ii)  whether the Defendant was obliged to produce original(s) of the 3 missing documents or some of them to the Plaintiff ;

(iii)  if the answer to sub-issue (ii) above is in the affirmative, whether such obligation has to be fulfilled before completion or only arises upon completion;

(iv)  In respect of the Plaintiff’s request raised on 9 July 2008 for production of the original of the 3 missing documents, whether the Defendant has satisfactory answered the said requisition by (a) sending copies of such documents by fax on 14 July 2008 and; (b) a letter dated 15 July 2008 enclosing a copy of a letter dated 14 July 2008 from the Third Party explaining that the original of the 3 missing documents were in the course of registration and further authorizing to undertake to deliver the original of such documents to the Plaintiff within 7 days after the Defendant for the receipt of the same from the Third Party;

(v)  Whether the Defendant had been in repudiatory breach of the Formal Sale and Purchase Agreement which entitled the Plaintiff to call off the completion; and

(vi)  Whether by calling off the completion on 16 July 2008 the Plaintiff was herself in repudiation of the Formal Sale and Purchase Agreement.   

27.Before I move on to consider the argument of the parties, it will be convenient at this stage to consider the legal duty upon a vendor to show and give title on completion.  Mr. Au-yeung, counsel for the Plaintiff relied on 2 cases, Liu Tak Kin v. Chan Yiu Kai [1998] 4 HKC 362 and Yiu Ping Fong v. Lam Lai Hing [1999] 1 HKLRD 793.

28.Yuen J. (as she then was) said in her judgment in Yiu Ping Fong’s case that:-

“Unless there are express stipulations exonerating him from so doing, a vendor has an obligation to make or give a good title. There are 2 steps in the making or giving of good title.

The first is to show a good title ……

In Hong Kong, as a matter of practice, no abstracts are produced, and the 2 steps of showing and proving title are telescoped into 1 by the vendor's solicitor sending title deeds and documents to the purchaser's solicitor for his perusal of title.

The proving of title by the production of title deeds and documents is therefore but one step in the making or giving of title, and proving of title is not to be equated with making or giving title. A vendor does not make or give title simply by producing the documents referred to in section 13(1).

The effect of section 13(2) is, in my view, to facilitate the proving of title when the vendor's solicitor sends title deeds and documents to the purchaser's solicitor for perusal after the Formal Agreement for Sale and Purchase is executed. The Vendor's Solicitor can simply send certified true copies of title deeds and documents instead of originals.

Section 13(2) does not, in my judgment, exonerate the Vendor from producing at completion the originals of such title deeds and documents, at least those that relate exclusively to the property being sold.

……

A vendor's solicitor can as part of proof of title under s.13 (1) send certified true copies of title deeds and documents to the purchaser's solicitor for perusal, without having to prove that the originals are lost. However, a vendor cannot make or give good title, by handing over only certified true copies at completion without an adequate explanation as to why the originals cannot be handed over.

The handing over of original title deeds and documents (or at least those whish relate exclusively to the property being sold) is an important part of the vendor's obligation in a sale of land. That obligation is well-established in the common law.

A purchaser of land is entitled as a matter of proprietary right to possession of the original title deeds (Williams on Title, 4th ed. p.547), which is the best evidence of ownership.”

29.Yuen J. in her judgment said a vendor has the obligation to make or give a good title.  There are 2 stages.  The first stage is to show or prove a good title.  This has to be done before completion.   And the vendor may prove title by the common Conveyancing Practice of sending over all the title documents for inspection by the purchaser.  The vendor may also choose to adduce certified true copies in accordance with s.13 of the Conveyancing and Property Ordinance to show the title.  But at completion, a vendor has to make or give good title by handing over the original title deeds and documents (at least those which relate exclusively to the property being sold).

30.Mr. Lee, counsel for the Third Party submitted that the decision in Yiu Ping Fongwas wrongly decided.  He referred me to the judgment of Reyes J. in C & W Watch Co. Ltd. v. Chu Kwok Tai [2005] 4 HKC 78.  But Reyes J only as obiter dictum commented on the ruling of Yuen J that section 13 only applies to the first stage of showing good title is correct.  But Reyes J did not suggest that the vendor needs not to prove his title before completion. 

31.I also refer to the judgment of Deputy Judge Chung in Liu Tak Kin’s case. 

“I find the following to be the correct legal propositions relevant to the determination of this action:

(a) There was a duty on the part of the defendants, as vendors, not only to show good title but also to answer reasonable and relevant requisitions satisfactorily within a reasonable time, and in any event before completion …..

(b) There was a duty on the part of the defendants as vendors to produce certified copies of documents necessary for proving the chain of title : cl 4(a) of the agreement and s. 13 of the Coveyancing and Property Ordinance;

(c)  There was a duty on the part of the plaintiffs, as purchasers, to raise requisitions which have substance.  They must also be formulated with reasonable precession if they were to be effective …

And in this case, clause 8(a) and clause 12 of the Formal Sale and Purchase Agreement must mean that the Defendant has to show she has a good title to the Property. 

32.It is clear that the Defendant as a vendor has the duty, both by contract and by law to prove her title before completion.  And the complaint in this case is, they failed to produce the 3 missing documents for examination by the Plaintiff, and therefore failed to prove her title.

33.I believe it is not disputed that according to Conveyancing Practice, a vendor may prove his title by sending over all the title documents for examination by the purchaser.  Requisition would be raised on any defect.  And in our case, KCCM did send over the title documents to the Plaintiff’s solicitors for their approval of the title.

34.Mr. Lee further submitted that the 3 missing documents are not title documents.  They are only documents affecting title.  He drew the analogy of a tenancy that has expired.  The expired tenancy would not be part of the title documents.  But the issue is whether the 3 missing documents are proof of title.  It should be a convenience juncture to refer to the wordings of section 13 (1) of COP:-

“Unless the contrary intention is expressed, a purchaser of land shall be entitled to require from the vendor, as proof of title to that land, only production of the Government lease relating to the land sold and-

(a) proof of title to that land-

1. ……

2.  in any other case, extending not less than 15 years before the contract of sale of that land commencing with an assignment, a mortgage by assignment or a legal charge, each dealing with the whole state and interest in that land;

(b)  production of any document referred to in the assignment, mortgage or charge mentioned in para. (1) creating or disposing of an interest, power or obligation, which is not shown to have ceased or expired and subject to which any part of that land is disposed of; and

(c)     production of any power of attorney under which any document produced is executed where that document was executed less than 15 years before the contract of sale of that land.”

35.It is the clear wording of the section that the vendor has to produce the government lease and proof of title for not less than 15 years commencing with an assignment, and mortgage by assignment or a legal charge.  It appears from the wordings of section 13(1) that legal charge, and mortgage by assignment are considered to be proof of title. 

36.A mortgage/charge is surely different from a lease, because a lease has a specified period on the document itself.  It would be of no effect by effluxion of time.  A mortgage/charge would only be discharged upon a reassignment in the old days, and in modern by release/discharge executed by the mortgagee.  Accordingly, when a mortgage is registered against a property, it must be read together with the relevant discharge or release to show that the Property is free from that encumbrance.  And it is also provided in the Formal Sale and Purchase Agreement of the Property that the Defendant is obliged to assign the Property free from encumbrances.  The Defendant is contractual obliged to show the earlier encumbrances has been discharge and any remaining encumbrances could be discharged on completion.

37.With the above analysis, I hold the view that in order to prove that the Defendant has a good title to the Property, the Defendant as a vendor must make available for inspection by the Plaintiff all the title documents including the BEA Release and the Mevas Receipt, at a reasonable time before completion. 

38.I should also mention the Mevas Mortgage.  That was discharged by the Mevas Receipt.  The receipt was indeed typed onto the mortgage and executed thereon.  In effect, the term of the Mevas Receipt has to be read together with the Mevas Mortgage.  This would be of relevance when I come to the argument whether the Mevas Mortgage, or any copy, had been effective provided to the Defendant by the Third Party. 

39.Mr. Lee further argued that a vendor is only required to give good title and to handover all the original title documents on completion.  He seemed to suggest that the requisition for original of the 3 missing documents is an unfair requisition by the Plaintiff.

40.But it is obvious from the correspondence between KCCM and the Plaintiff’s solicitors that they have adopted the Hong Kong style of proving of title by delivery the original of the title deeds for inspection.  I agree with Mr. Lee that the Defendant is entitled to rely on section 13 of the CPO to prove her title by providing certified copy of title documents.   The requisition raised by the Plaintiff’s solicitors is that there are missing documents.  If the Defendant has produced certified true copies of the 3 missing documents and the Plaintiff refused to accept, that is unreasonable.  But only copies of the Mevas Receipt and the BEA Release have been produced.  That is not in compliance with section 13 of the CPO and has not sufficiently answered the requisition.

41.An undertaking that the original would be provided after completion on an unspecified day coupled with supply of plain copy would not be sufficient. Mr. Cheung, counsel for the Defendant relied on the agreement that completion is by way of solicitors’ undertaking in accordance with Guide Notes of Law Society.  But the Notes of the Law Society deal with undertaking to return the assignment and discharge and do not apply to other title documents.  Further, KCCM was not the firm who sent the documents to the Law Registry for registration.  They have no control.  The undertaking has no time limit.  There is no reason why the Plaintiff has to accept such an undertaking.

42.Mr. Cheung sought to argue that the inability to give a certified copy of the 3 missing documents does not render the Defendant failed to prove title.  He relied on the fact that copy of the receipt and discharge has been given to the Plaintiff and the Plaintiff knew that the documents were sent for registration.  And a copy of the back sheet of the mortgage was given.

If Mr. Cheung agreed that the mortgage should be provided for inspection, I am sure that the back sheet is not sufficient. 

43.The fact that the documents are in the course of registration is neither here or there.  The registration system in Hong Kong is not a registration of title.  It is only registration of the documents.  Accordingly, to proof title, one has to rely on the chain of title documents.  And to approve the title, it is not sufficient to show that the documents have been registered.  The purchaser’s solicitors should be entitled to check against the terms of each of the documents to ensure that there are no defects in title.  There have been cases when defects in title were discovered in earlier transaction and rendering the latest transaction now avoided. 

44.It is the duty of the Plaintiff’s solicitors to check and advise their client.   And without the title documents, he could not complete his duty.  The purchaser should be entitled to an opportunity of full legal advice based on proper documents provided. 

45.Mr. Lee relied heavily on the case The De Monsa Investment Ltd. v. Whole Win Management Fund Ltd.HCMP 2603/2008.  He referred to para. 32 of the judgment of Justice Yam when His Lordship should commented that:-

“The only significant post-intermediate root documents are the aforesaid Legal Charges dated 30.5.1990 and a Deed of Release dated 12.10.1998. But the original of these documents are not of the same nature as assignments, which could be deposited to create an equitable mortgage (like the missing assignment in Yiu Ping Fong). In any event, an equitable mortgage over land could not be created in Hong Kong by depositing a title document like an assignment unless the same is evidenced in writing signed by the mortgagor in accordance with section 5 of CPO (Cap. 128), as pointed out in OR’s 1^st affidavit, paragraph 7.

An attested or certified copy of a document is enough pursuant to section 13(2) of the CPO.  This copy needs not be an attested or certified copy of the original document as long as it can be traced back up to the chop attesting or certifying that the first attested or certified copy is a true and complete copy of the original.”

46.Mr. Lee seems to suggest by the said passage, the original of the mortgage needs not be produced for completion.  But clearly Yam J. pointed out that certified copy of the mortgage should be provided.  In the present case, the release executed by the Bank of East Asia is of fundamental importance to prove that, before the assignment to the Defendant, the predecessor in title had discharged his encumbrance and therefore, the only encumbrance that the Defendant had to discharge before completion is her mortgage to the Bank of China.  This document has a direct bearing on the Defendant’s contractual undertaking that she is to assign the Property free from encumbrances. Indeed, the same argument could go for the receipt of the Mevas Mortgage which is also a recent discharge.  And the case of Yam J. only concerned with the documents to be adduced on completion, and not on production of certified true copy for approving of the title. It is distinguishable from this action.

47.Mr. Cheung submitted that pursuance to clause 8A of the sale and purchase agreement, the Defendant may show and prove a good title to the Property by making and furnishing to the Plaintiff such attested or certified or other copies of any deeds of documents of title wills in accordance with section 13 of Conveyancing and Property Ordinance.  He tried to persuade me that the clause allowed plain copy to provide.  I am afraid the whole sentence must mean that the Defendant has to provide original, attested copy or plain copy as may be allowed by section 13 of the Conveyancing & Property Ordinance.  As analyzed above, to show and make title, the Defendant has to provide the original, or certified true copies. 

48.With the above conclusion, I find that the Plaintiff had failed to prove her title before completion in failing to produce either the original of the 3 missing documents or certified copies thereof for inspection by the Plaintiff.  With that, I must conclude that the Plaintiff is entitled to refuse to complete.  She would therefore be entitled to treat the breach on the part of the Defendant as repudiation and has accepted them by the letter dated 16 July 2008 and entitled to refund of the deposit. 

49.For the Third Party Proceedings, it is the Defendant’s case that she is entitled to have the original of the 3 missing documents registered on time.  It is the fault or negligence of the Third Party that the originals could not be made available to the Defendant for proving her title. 

50.Following my finding aforesaid, no copy of the Mevas Mortgage has been provided and it makes the certified copy of the Mevas Receipt incomplete.  Accordingly, as for the Mevas Mortgage and the Mevas Receipt, the Defendant has failed to supply the completed copy or certified copy, and surely not the original. 

51.From my analysis above, the Third Party had the Mevas Receipt and the BEA Discharge in April.  No explanation has been offered why they had not attended to registration until June.  And the position would be different if instead of sending the Mevas Receipt and the BEA Discharge for registration in June without consulting KCCM and/or the Plaintiff’s solicitors, but seeking their agreement to send the 2 documents to KCCM who may send the original to the Plaintiff on completion, and for them to attend to registration.

52.Mr. Lee is not really arguing that his client would not be liable to the Defendant on negligence.  He argues that the Defendant has not been in breach of the Formal Sale and Purchase Agreement, which I have dealt with earlier.  In the alternative, Mr. Lee submits that the Defendant suffers no loss.  He invites me to take judicial notice of the fact that the property market has gone up quite a lot since July 2008.  Since the Defendant has not sold the Property, she had made a gain. 

53.Value of real property is a matter for surveyor.  This is not normal for the court to take judicial notice and I declined the invitation of Mr. Lee.  But the main argument is, assuming that as at today, the property market has gone up and the value of the Property on re-sale would be higher, has the Defendant suffered any loss.  My answer is yes.  If she has been able to provide all the 3 missing documents, and if the Plaintiff refused to complete, she would be entitled to forfeit the deposit.  If the market goes down, she may further claim against the Plaintiff for loss for differences in price.  If the market goes up, it is true that the Defendant may not be entitled to claim further damages from the Plaintiff, but she would still be entitled to forfeit the deposit.  Now, by reason of the breach of the Third Party, she could not keep the deposit.  This is her loss and must be recoverable against the Third Party.

54.Accordingly, I found in favour of the Plaintiff that she has effectively rescinded the sale and purchase agreement dated 12 June 2008 and further ordered the Defendant to repay the deposit of $138,000 to the Plaintiff with interest thereon at prime rate from 16 July 2008 until today and thereafter at judgment rate until payment.  It also follows that she would be entitled to damages representing the legal costs of the aborted transaction, and the quantum has been agreed at $5,100.00 There shall also be an equitable lien on the Property for the said sums and interests as claimed.

55.I also found that the Third Party has been negligent as claim by the Defendant and shall indemnify the Defendant for the said sum of $138,000 with interests. 

56.I anticipate some complication on cost order and I would give a direction that the Plaintiff’s solicitors should fix a hearing with half hour reserved before me for submission on costs, if they could not agreed on the terms of the costs order.  For such hearing, attendance by counsel be dispensed with.

Mr Herbert Au-yeung, instructed by Messrs. Tony Kan & Co., for the Plaintiff.

Mr Cheung Kam Wing Adonis, instructed by Messrs. Y. T. Chan & Co., for the Defendant.

Mr Lee Yee Hung, instructed by Messrs. J. Chan & Lai, for the Third Party.