So Mariko v. Tse Chun Chung John and Another
Read the full judgment text of CACV 212/2010 on BabelCite. This Court of Appeal judgment was delivered on 15 April 2011.
1. This appeal arises out of a conveyancing transaction between the plaintiff purchaser and vendor defendants. The issue is whether a requisition raised by the purchaser of the property in question was adequately answered by the vendors so as to show a good title. The purchaser says it was not, the vendors maintain that it was.
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CACV 212/2010 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL CIVIL APPEAL NO. 212 OF 2010 (ON APPEAL FROM HCA NO. 579 OF 2010) ________________________ BETWEEN
________________________ Before: Hon Fok JA, A Cheung and Saunders JJ in Court Date of Hearing: 8 April 2011 Date of Handing Down Judgment: 15 April 2011 ________________________ J U D G M E N T ________________________ Hon Fok JA: Introduction 1.This appeal arises out of a conveyancing transaction between the plaintiff purchaser and vendor defendants. The issue is whether a requisition raised by the purchaser of the property in question was adequately answered by the vendors so as to show a good title. The purchaser says it was not, the vendors maintain that it was. The facts 2.The property is a flat in Taikoo Shing, Hong Kong (“the Property”). The parties entered into a provisional sale and purchase agreement dated 17 January 2010 in respect of the Property by the plaintiff as purchaser (“the Purchaser”) and the defendants as vendors (“the Vendors”). A formal sale and purchase agreement was entered into dated 29 January 2010. The purchase price was HK$4.68 million and a total deposit of HK$468,000 was paid by the Purchaser to the Vendors. Completion was due to take place on or before 26 March 2010. 3.The transaction was not completed. Instead, a dispute arose between the parties as to whether a particular requisition of title had been adequately answered by the Vendors. The Vendors, maintaining that it had, gave notice to rescind the sale and purchase agreement, to forfeit the deposit paid and to reserve their rights to claim damages against the Purchaser. 4.The Purchaser, on the other hand, maintaining that the requisition in question had not been properly answered, claimed to annul the agreement pursuant to clause 14 of the sale and purchase agreement. 5.The Purchaser commenced an action by writ claiming rescission of the agreement, return of the deposit paid and damages for breach of contract. After acknowledgment of service of the writ by the Vendors, the Purchaser issued a summons under RHC Order 14A summarily seeking the relief claimed in the writ. As the Judge rightly observed (at §8 of the Judgment), the better course in the circumstances would have been for the Purchaser to issue a vendor and purchaser summons. The conveyancing history of the Property 6.The Property was assigned to Mr Ho Kwai Lung on 7 May 1982. 7.Mr Ho Kwai Lung died intestate on 10 May 1998 and letters of administration were granted to his widow, Madam Ho Suk Tak, on 19 August 1999. It is material to note that, in her application for the grant of letters of administration, Madam Ho was represented by the firm of Messrs Laurence Pang & Co. (“LPC”). 8.On 5 March 2001, the Property was assigned for nil consideration. The assignment (“the 2001 Assignment”) was made by Madam Ho as assignor to Ho Tat Tak and Madam Ho as assignees, with three individuals named as confirmors, namely Yu Mei Hing, Ho Tat Tak and Madam Ho (“the Confirmors”). 9.The 2001 Assignment was also prepared by LPC and Mr Edmond Yuen Kin Hong (“Mr Yuen”), a solicitor employed by LPC, attested to its execution. 10.The following terms of the 2001 Assignment are material:
11.Ho Tat Tak and Madam Ho then assigned the Property to a Yep Siu Ngor by assignment dated 14 July 2001. 12.Yep Siu Ngor then assigned the Property to the Vendors by assignment dated 8 May 2008. The requisition in issue 13.By letter dated 12 February 2010, the Purchaser’s solicitors (Messrs Bernard Wong & Co.) wrote to the Vendors’ solicitors (Messrs N.K. Tsang & Co.) raising the requisition: “Please let us have evidence that the Confirmors are the only persons entitled to the estate in Recital 2 of the Assignment.” 14.It is accepted on behalf of the Vendors that this was a proper requisition to be raised. 15.The Vendors’ solicitors responded to the Purchaser’s solicitors contending that: “Since the Confirmors in question had duly executed the Assignment and proved by the attesting authority, further evidence you called for does not require” (sic). 16.Further correspondence ensued between the parties’ respective solicitors regarding this requisition. 17.By letter dated 22 March 2010, the Vendors’ solicitors provided a statutory declaration (“the Statutory Declaration”) of Mr Yuen which reads as follows:
18.In addition to this requisition, the Purchaser had originally also raised another requisition relating to the proof of payment of stamp duty but this was abandoned at the time of the hearing below (Judgment §10). The Judgment below 19.The Judge correctly identified the question that arose as the desire of the Purchaser’s solicitors to satisfy themselves that the Confirmors of the 2001 Assignment were the only lawful beneficiaries of the estate of Mr Ho Kwai Lung so that they could validly confirm the assignment of the Property to the two assignees. And, as he noted, the Vendors’ counsel accepted that this was a perfectly proper requisition. 20.The Judge identified the Statutory Declaration as being at the heart of the Vendors’ response to the requisition and noted that there was no dispute that a statutory declaration could stand as evidence of proof of title. He said that the crucial question was to look to the contents of the declaration, particularly in relation to the proximity of the maker to the facts stated in it. 21.The material conclusions of the Judge are set out in paragraphs 31 to 33 of his Judgment, in which he said:
The Purchaser’s contentions on appeal 22.Mr Leo Remedios, counsel for the Purchaser, submitted that the Judge was wrong in finding that the requisition in question had been adequately answered. He submitted that proper conveyancing evidence to answer the requisition would be a certified copy or copy of the affirmation made by Madam Ho and filed in the Probate Registry in support of her application for letters of administration, showing the names of all the beneficiaries entitled to share in the estate of Mr Ho. 23.He submitted that the Vendors’ solicitors were well aware that the affirmation would provide a satisfactory answer to the requisition as demonstrated by their letter dated 10 March 2010 stating that “production [of] the Affirmation is really not necessary”. 24.Mr Remedios submitted that the Judge was in error in relying on “the compelling evidence given on oath in 1999” (Judgment §32) because that evidence was the affirmation of Madam Ho which was not provided in answer to the requisition. He also submitted that the Judge was wrong to find that the recitals in the 2001 Assignment provided any basis for discounting the risk of an adverse claim from another unidentified beneficiary of Mr Ho. 25.As regards the provision of the Statutory Declaration of Mr Yuen, Mr Remedios submitted that this was secondary evidence only and should only be resorted to instead of the best evidence available where there was an explanation as to why that primary evidence was not in fact available or was not being produced in answer to the requisition. 26.In any event, it was submitted that the Statutory Declaration does not in fact provide any evidence to substitute for Madam Ho’s affirmation. Mr Remedios submitted that Mr Yuen did not have personal knowledge of who the beneficiaries might be and that all his statutory declaration does is to recite his instructions. That is doing no more than repeating the contents of the recital in the 2001 Assignment which gave rise to the requisition in the first place. 27.Finally, Mr Remedios submitted that the Vendors never asserted, in purporting to answer the requisition, that the facts and circumstances were so compelling that the court would have no reasonable doubt that the Confirmors were the beneficiaries of Mr Ho’s estate and it was not open to the court to so find. Was the requisition satisfactorily answered? 28.It is trite that a vendor has an obligation to show a good title. 29.It was also not in dispute that, where a purchaser has made a reasonable requisition as to title, the vendor is not entitled to enforce the contract if he has not satisfactorily answered the requisition (see Active Keen Industries Ltd v Fok Chi Keong [1994] 2 HKC 67 at p. 76) and that, if the requisition is not answered satisfactorily, it does not matter if the vendor does in fact have a good title (see Kok Chong Ho v Double Value Developments Ltd [1993] 2 HKLR 423 at p. 432). 30.The Vendors plainly cannot rely on the content of the recital in the 2001 Assignment itself to establish that the Confirmors are the only beneficiaries of Mr Ho’s estate. That recital was the very source of the requisition and, as Mr Remedios submitted, the date of the 2001 Assignment was not more than 15 years before the date of the raising of the requisition so as to bring the provisions of s. 13(4) of the Conveyancing and Property Ordinance, Cap. 221, into play. 31.That, however, was not disputed by the Vendors and it was for that reason that it was rightly accepted the requisition had been properly raised. The issue is whether it was properly answered. 32.It is correct that the relevant form of affirmation that Madam Ho would have made in order to obtain the grant of letters of administration (Form No. L1.2b of the Forms Specified by the Registrar Pursuant to Rule 2A of the Non-Contentious Probate Rules, Cap. 10A) would have required Madam Ho to identify who were the only persons entitled to share in the estate of Mr Ho. A copy of this affirmation would therefore have provided evidence as to the identities of the beneficiaries either to corroborate or contradict the statement in recital 2 of the 2001 Assignment and would have satisfactorily answered the requisition. 33.It is not clear why a copy of this affirmation was not obtained and provided since it would have removed this bone of contention between the parties. Mr C.Y. Li, counsel for the Vendors, informed the court that the Vendor’s present solicitors (not Messrs N.K. Tsang & Co.) had tried to obtain a copy from the Probate Registry but, as non-parties to the probate application, had no right to access the file. He also informed the court that LPC had been dissolved and, hence, a copy could not be obtained from that firm. Be that as it may, and since these explanations were not in evidence before the Judge, I proceed on the basis that the affirmation could have provided the most direct form of corroboration of recital 2 of the 2001 Assignment. 34.I do not, however, accept Mr Remedios’ submission that the affirmation constituted the best and, absent an explanation as to why it was not available, only evidence that could have been supplied by the Vendors by way of answering the requisition. In the first place, the affirmation is not conclusive as to the identities of the beneficiaries since it merely reflects a statement of Madam Ho as to the identities of the beneficiaries and there is always a possibility that she might have omitted, through oversight or otherwise, to name a beneficiary of the estate in her affirmation. 35.Furthermore, whilst the best evidence rule may require an explanation to be given when a necessary document of title (such as a power of attorney necessary to prove proper authority to execute an assignment) is required to be produced to show a good title, that is not the position here. The affirmation is not itself a necessary document of title to the Property but is merely evidence that might corroborate a statement in a recital contained in an assignment of the Property. 36.For these reasons, it was open to the Vendors to provide some alternative evidence to corroborate the statement in recital 2 of the 2001 Assignment. They sought to do so by, amongst other things, the Statutory Declaration of Mr Yuen, the material terms of which I have set out above. 37.Mr Remedios made a number of criticisms of the Statutory Declaration. First, he submits that Mr Yuen does not have personal knowledge of who the beneficiaries of Mr Ho’s estate are. Next, it was submitted that the Statutory Declaration does not state that he saw a copy of Madam Ho’s affirmation and confirmed that the beneficiaries of the estate she identified there were the Confirmors. Finally, it was said that the sum total of the Statutory Declaration was simply a recitation of what Madam Ho’s instructions were as to the identities of the beneficiaries of Mr Ho’s estate so that it was essentially a self-serving statement. 38.It is the case that Mr Yuen does not claim in the Statutory Declaration that he has personal knowledge of the identities of the beneficiaries of Mr Ho’s estate and so it follows that he could not himself provide corroborating evidence as to the matters stated in recital 2 of the 2001 Assignment. Furthermore, the other criticisms of the Statutory Declaration were, in my opinion, fairly made by Mr Remedios and were accepted by Mr Li. 39.However, the question is not whether the Statutory Declaration could have been better worded to corroborate the fact that the Confirmors were the only beneficiaries of Mr Ho’s estate identified in Madam Ho’s affirmation in support of the grant of letters of administration. The answer to that question is that it undoubtedly could. The relevant question is instead whether there is proper conveyancing evidence to provide a satisfactory answer to the requisition. In other words, are the facts and circumstances so compelling that the court can conclude beyond reasonable doubt that the Confirmors were all the beneficiaries of Mr Ho’s estate and there is no real risk of another beneficiary coming forward to assert a claim to the Property: see Active Keen at p. 83D-F applying the test laid down in MEPC Ltd v Christian-Edwards [1981] AC 205 at p. 220C-D. 40.It is also necessary to keep in mind that, when approaching the question of whether a vendor has given good title, the court looks at the situation from the standpoint of a willing vendor and purchaser both possessed of reasonably robust common sense: see Mexon Holdings Ltd v Silver Bay International Ltd (2000) 3 HKCFAR 109 per Litton PJ at p. 117. 41.In answering the question posed, it is important to bear in mind that the gravamen of the requisition is whether there might be any other person who still has a subsisting claim against the estate and thereby to the Property. This was identified by the Purchaser’s solicitors as the concern underlying the requisition: see their letter dated 12 March 2010 (p. 73 of the Documents Bundle). 42.With that in mind, the following facts and matters are, in my opinion, relevant to deciding whether the requisition was satisfactorily answered:
43.Mr Remedios submitted that this reasoning, which (as noted above) the Judge adopted, was not put forward in the answer to the requisition and therefore it was not open to the Vendors to rely upon it now. In this regard, he relied on Kok Chong-ho & Anor v Double Value Developments Ltd [1993] 2 HKLR 423. However, I am satisfied that a fair reading of the letters from the Vendors’ solicitors dated 22 February 2010 (p. 62 of the Documents Bundle), 22 March 2010 (pp. 77-78 of the same) and 23 March 2010 (p. 80 of the same) do put forward this answer to the requisition. Furthermore, in my view, the position in this case is not like that in Kok Chong-ho where the vendor’s solicitors there never addressed the question of a real risk of enforcement action because they consistently denied that the extra flats in that case were unauthorised. In contrast, in the correspondence in this case, the Vendors’ solicitors did address the question of whether there was a realistic risk of some other unidentified beneficiary coming forward to assert a claim against the Property. In the letter dated 22 March 2010, they asserted:
44.I also disagree with Mr Remedios’ submission that it was not permissible to have regard to the purpose of the 2001 Assignment since it was the assignment itself which gave rise to the Purchaser’s requisition. Whilst I agree that recital 2 of the 2001 Assignment cannot be relied upon since that is the source of the requisition itself, the purpose of the 2001 Assignment is clearly one of the factors to be taken into account, together with all the other circumstances I have identified in paragraph 42 above, in answering the question of whether a sufficient answer to the Purchaser’s requisition was given by the Vendors. 45.Applying the robust common sense this question calls for, and assuming a willing vendor and purchaser, I consider the Vendors did provide a satisfactory answer to the Purchaser’s requisition. Although the wording of the Statutory Declaration could have been more explicit, for example in stating that Mr Yuen actually read the copy of Madam Ho’s affirmation in LPC’s probate file to confirm the contents of recital 2 of the 2001 Assignment, there is no evidence that the Purchaser raised any further questions about the Statutory Declaration in order to obtain comfort that the Confirmors were all the beneficiaries of Mr Ho’s estate. In my view, a willing purchaser in receipt of Mr Yuen’s Statutory Declaration would, if concerned about the wording of that declaration, have asked for further clarification rather than simply assert that “[t]he declaration of the handling solicitor of the Assignment is not an acceptable secondary conveyancing evidence of the beneficiaries/confirmors”, as the Purchaser’s solicitors did by their letter dated 24 March 2010 (p. 82 of the Documents Bundle). Disposition and costs 46.For the reasons set out above, I do not consider that the criticisms of the Judge’s reasoning are substantiated and I would dismiss the appeal with costs to the Vendors. Hon A Cheung J: 47.I agree. Hon Saunders J: 48.I also agree. Hon Fok JA: 49.The appeal is therefore dismissed. There will be a costs order nisi that the plaintiff pay the defendants’ costs of this appeal, to be taxed if not agreed.
Mr Leo Remedios, instructed by Messrs Bernard Wong & Co., for the Plaintiff Mr C Y Li, instructed by Messrs Johnnie Yam, Jacky Lee & Co., for the Defendants |
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