Chan Hei Leung Thomson and Another v. Kuo Yu-chien

DCMP 1271/2012

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO 1271 OF 2012

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Before: Deputy District Judge Jonathan Chang in Court

Date of Hearing: 24 August 2012

Date of Judgment: 10 September 2012

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J U D G M E N T

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Introduction

1.This is a vendor and purchaser summons.  The plaintiffs as the purchasers and the defendant as the vendor entered into a sale and purchase agreement dated 19 March 2012 (“2012 Agreement”) for a residential flat known as Flat B on the Seventh Floor of Block 1 of Dragonfair Garden at Queen’s Road West, Hong Kong (“the Property”) at HK$3,380,000.  The plaintiffs paid a total sum of HK$338,000 as deposit.  Completion did not take place as the plaintiffs were not satisfied with the defendant’s answers to two of their requisitions on title, both raised on 23 March 2012.

First requisition

2.The first requisition related to a purported identification issue of the defendant arising from two of the title documents.

3.When the defendant acquired the Property in 2007, he was identified in the assignment (“2007 Assignment”) by his Taiwan passport number.  When the defendant sought to sell the Property to the plaintiffs, he was identified in the 2012 Agreement by his Hong Kong identity card number.  The plaintiffs thus contended this created a reasonable doubt as to whether the two instruments were signed by the same person – a missing link between the 2007 purchaser and 2012 vendor – and they asked for a statutory declaration from the defendant as proof that he is the person who acquired the Property in 2007, even though the defendant was identified in both the 2007 Assignment and 2012 Agreement by the same name.

4.In my view, any missing link must have been bridged by the defendant’s answer to this requisition: the defendant’s solicitors acted for the defendant in both transactions in 2007 and 2012, and it was the same clerk who had interpreted the 2007 Assignment and 2012 Agreement to the defendant and witnessed his signatures on both instruments.  This is in fact self-evident from the execution pages of bothinstruments.

5.Whilst a statutory declaration from the defendant or the clerk who had handled both transactions may be the best answer to the plaintiffs’ requisition, I do not believe anything less must necessarily be insufficient.  Godfrey J (as he then was) in Lam Kin I v Tsui Ming Yee, HCMP 361/1989 (unreported, 24 February 1989) held that circumstantial “pointers” that the two signatories (identified by two identification documents) are the same person will not be sufficient, but he did not go so far to hold that only a statutory declaration made by the signatory, or someone who could speak to the truth of the facts, could satisfy the purchaser that the title is a good one.  What is required to prove good title depends on the facts of each case, and the court has to apply a great deal of common sense.

6.In the vast majority of cases we are concerned not with the identification issue of the subject vendor himself (as in our case), but of his predecessor(s) up the title chain.  The vendor may not be in a position to confirm that such predecessor, who has executed two different instruments under two different identification documents,is the same person sincehe was not privy to the previous transaction.  In such case, a bare confirmation of identity from the vendor or his solicitors hardly carries any weight and may naturally be insufficient. 

7.This is however not our case.  The same firm of solicitors (the defendant’s solicitors), and the same clerk, handled both the 2007 and 2012 transactions for the defendant.  The defendant’s solicitors are thus plainly in a position to confirm – as they did – that the person who acquired the Property in 2007 and who now wishes to sell it to the plaintiffs is the same person, namely the defendant.  This is direct evidence of the identity of the defendant, not a mere circumstantial “pointer” (in Godfrey J’s words), and I fail to see what, if anything, a statutory declaration would add to this.

8.On the facts of our case, there is no reason why the plaintiffs should not take the defendant’s solicitors by their words: they are in a clear position to confirm the defendant’s identity since they acted for him in both transactions in 2007 and 2012, and there is nothing to suggest they may be part of a fraudulent scheme in which the defendant disguises as the real owner of the Property – in any event, the risk that someone other than the defendant (but bearing the same name as the defendant, and at the same time having somehow parted with all the title deeds which are now in the defendant’s possession) would come forward to claim that he is the true owner of the Property is remote and fanciful. 

9.The plaintiffs later shifted the focus of their first requisition to alleged discrepancies in the defendant’s signatures in the 2007 Assignment and 2012 Agreement.  Mr Adrian Leung, counsel for the plaintiffs, in his valiant effort pointed out a number of what he considered as significant discrepancies in the style of the two signatures – which all boil down to the signature in the 2012 Agreement being made in a rather more scribbled manner than that in the 2007 Assignment. 

10.It is telling that the plaintiffs did not see fit to raise this line of challenge when they raised their first requisition on 23 March 2012, but only did so almost a month later (20 April 2012).  This plainly suggested that not even the plaintiffs considered the purported discrepancies to be so significant (if at all) to be worth their immediate query with the defendant.

11.I observe that the two signatures were both made in Chinese language and all three characters of the defendant’s Chinese name were there.  Whilst they are certainly not identical, in the sense of being mirror image of one another, no one could be expected to sign in an identical manner especially when the instruments are 5 years apart.  I fail to see any material discrepancies in the two signatures crying out for suspicion.

12.I agree with Mr C.Y. Li SC, counsel for the defendant, that in such circumstances, the presumption of due execution under section 23 of the Conveyancing and Property Ordinance (Cap 219) applies.

13.In any event, I do not believe the plaintiffs’ challenge on the purported signature discrepancies was sufficient to dispel the defendant’s direct confirmation through his solicitors that the two signatures were both made by the defendant which was witnessed by the same clerk handling both transactions in 2007 and 2012.

14.In my view, approaching the matter from the stand-point of a willing purchaser and a willing vendor, both possessed of reasonably robust common sense and both intending to complete the transaction (in the words of Litton PJ in Mexon Holdings Ltd v Silver Bay International Ltd (2000) 3 HKCFAR 109 at p 117D-E), the plaintiffs ought to have been satisfied that the defendant has satisfactorily answered any concern that they may have in respect of the identification of the defendant in the two instruments.  In the circumstances, I rule that the first requisition has been satisfactorily answered by the defendant.

Second requisition

15.Under the second requisition, the plaintiffs asked for a total of 5 title documents for the purpose of verifying title, and they later asked for a confirmation that the requested title documents were in the defendant’s possession and would be delivered to the plaintiffs on completion.

16.Mr Leung fairly accepted that all 5 requested documents are what we commonly call “pre-intermediate root” documents under section 13(1)(a)(ii) of the Conveyancing and Property Ordinance (the intermediate root being a legal charge dated 4 June 1992) such that the defendant was under no duty to deliver their copies for proving his title, or deliver their originals on completion for giving good title: see Donpower Trading Ltd v Apexcom Ltd [2009] 4 HKLRD 476 at §43 (at p 496) per Saunders J; see also the obiter of Cheung JA when the case reached the Court of Appeal, reported at [2010] 1 HKLRD 915 at §§33-34 (at p 926).

17.Mr Leung however contended that it was insufficient for the defendant to merely tell the plaintiffs that the 5 requested documents were “pre-intermediate root” documents, without at the same time identifying the “intermediate root” document.  Such an answer (Mr Leung reasoned) was made “without total candour” on the part of the defendant.

18.I reject this argument.  There is plainly no obligation for the defendant to teach the plaintiffs how to identify the “intermediate root” document when the same could easily be identified in the land search record of the Property which is a public document.  The defendant has not withheld any material facts from the plaintiffs, and the contention that the defendant has not answered the requisition with full candour was without basis.  In this regard, Mr Li referred me to the following observations of Litton JA (as he then was) in Active Keen Industries Ltd v Fok Chi Keong [1994] 2 HKC 67 at p 79D-F, which I fully echo:

“If the matter was self-evident, the purchaser’s solicitors cannot insist upon a fuller reply. But the vendor’s solicitors must act with total candour, so that the purchaser can be reasonably certain that there are no facts and material relevant to the requisition known to the vendor which have not been disclosed. A requisition as to title is not an occasion for the parties’ solicitors to bandy propositions of law; each party must decide for himself, ultimately, what the legal position is, based upon the facts known to himself, although, obviously, if one party can persuade the other to his own point of view on the law, so much the better.”

19.The second requisition was raised without basis.  In any case, I hold that the defendant has already answered it satisfactorily.

Conclusion

20.I therefore rule that the defendant has satisfactorily answered both of the plaintiffs’ requisitions on title.

21.It follows that the plaintiffs’ claim must be dismissed, and I make an order in respect of the defendant’s counterclaim as follows:

(1) There be a declaration that the plaintiffs have repudiated the 2012 Agreement and the defendant has accepted the plaintiffs’ repudiation.

(2) There be a declaration that the defendant was entitled to forfeit the deposit paid by the plaintiffs in the total sum of HK$338,000.

(3) The registration of the originating summons against the Property in the Land Registry be vacated forthwith.

(4) Damages for breach of the 2012 Agreement and interest thereon to be assessed.

(5) The plaintiffs do indemnify the defendant the estate agent’s commission if and insofar as the same becomes payable by the defendant pursuant to the provisional sale and purchase agreement of the Property dated 6 March 2012 under no.A89370.

22.I make a costs order nisi that the plaintiffs do pay the costs of the defendant, to be taxed if not agreed, with certificate for counsel.

23.I thank both counsel for their assistance.

Mr Adrian Leung, instructed by Huen & Partners, for the plaintiffs

Mr C.Y. Li SC, instructed by Chan, Wong & Lam, for the defendant