IN THE DISTRICT COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
CIVIL ACTION NO 3911 OF 2011
||ASIA WAY INTERNATIONAL INVESTMENTS LIMITED
||HUNG KIN PING
||LAM WAI FONG
|Before : Deputy District Judge Alfred H H Chan in Chambers
|Date of Hearing : 30 March 2012
|Date of Decision : 13 May 2013
1. The present action follows the aborted sale of a unit in Maison Deluxe, No.341 Prince Edward Road West, Kowloon, in which the purchaser’s solicitors raised certain requisitions in respect of the title to the property which they claimed had not been satisfactorily answered. The purchaser did not complete the transaction, and the vendors forfeited the deposits or part payments previously paid by the purchaser. The purchaser issued the present writ claiming for a declaration that the vendors had been in repudiatory breach of the sale and purchase agreement in failing to give and/or show a good title to the property by the date of completion, and for damages for breach of contract. The vendors counterclaimed similarly. The plaintiff purchaser took out an Order 14A summons to have the questions determined: (1) whether the vendors failed to give a good title to the property by failing to provide certain documents requested by the purchaser’s solicitors, and (2) whether the vendors failed to show and prove a good title to the property by failing to answer satisfactorily certain requisitions raised by the purchaser.
The Property and the Partitioning
2. The property in question (“the property”) is one equal undivided 2nd part or share in one equal undivided 27th part or share in Kowloon Inland Lot No.4031, a building known as “Maison Deluxe”, together with the exclusive right to enjoy Portion 1 of Flat C on the 5th Floor of the building. The “half-share” of the 1/27 share came about as a result of a Deed of Mutual Grant dated 4 September 1987, whereby the 2 co-owners of the then Flat 5C divided Flat 5C into 2 portions (Portion 1 and Portion 2), each holding one half-share of the 1/27 part, while at the same time granting each other exclusive possession of Portion 1 and Portion 2 respectively.
3. It was this partitioning of the relevant share in the land along with the physical partitioning of Flat 5C which gave rise to most of the contentions between the parties in this transaction, or what has been called “the Partition Requisition” in this case. The other requisition which has remained contentious is what the parties have called “the Cancellation Agreement Requisition”.
4. The Deed of Mutual Grant contained provisions and covenants governing the relationship between the owners of Portions 1 and 2, while their relationship with the other co-owners of the building would continue to be governed by the previous Deed of Mutual Covenant dated 29 August 1966.
5. The formal sale and purchase agreement (“the Agreement”) dated 8 July 2011 follows an earlier provisional agreement between the parties dated 26 June 2011. Clause 6(a) of the Agreement provides that “[t]he Vendor shall give a good title to the Property in accordance with section 13A of the Conveyancing and Property Ordinance (Cap 219),” and “shall prove and show a good title in accordance with section 13 of the Ordinance …..” Clause 8 provides that “any requisition or objection on title shall be delivered to the Vendor’s solicitors in writing 7 working days after the receipt of all title deeds by the Purchaser’s Solicitors, ….. , otherwise the same shall be considered as waived.” Completion was to take place no later than 5 p.m. on 9 September 2011.
6. Title deeds were delivered to the purchaser’s solicitors on 13 July 2011. By letter dated 18 July 2011, they raised a number of requisitions in respect of the property, two of which remain controversial in this action.
7. The Partition Requisition raised is as follows:
“Occupation Permit No.K28/65 and Deed of Mutual Grant memorial No.3510466
“In the Occupation Permit, it stipulates that only 3 flats per floor are permitted from 1st to 8th floors of the building. All the same, we note that by the above Deed of Mutual Grant, the owners of “Flat C on 5/F” had partitioned & granted to each other, Portion 1 and Portion 2 thereof, without obtaining approval by the Building Authority, so that the 5th floor comprises 4 flats, otherwise than as 3 flats so permitted in the Occupation Permit.
“In regard to such partition, what we were provided is merely an un-dated Architect’s Certificate of Shum Dai Chung, in which it only states that no such partition involved structural alteration and no requirement of such approval was for non-structural alteration.
“In any event, it does not address the cardinal issues as to whether the consequential internal partition of rooms or change of the drainage system of portions 1 and 2 after such partition would affect structure or were exempted from approval by the Building Authority, taking note that the original plan for Flat C in the Deed of Mutual Covenant was constructed with fixed and various rooms therein. Nor did the Certificate confirm that such partition had complied with the Buildings Ordinance, Cap 123, and Fire Services Ordinance, Cap 95, and all their respective regulations. There is also short of the evidence of approval by the manager of the building sent to us.
“In this connection, please let us have the following documents for our perusal:-
1. Approval by the Building Authority of such partition of Flat C on 5th Floor into portion 1 and portion 2, including the internal partition of rooms and change of drainage system therein; or
2. In the absence of the approval by the Building Authority, a fresh Architect’s Certificate of the authorized person duly certifying that such partition (including the internal partition of rooms and change of drainage system therein) had not involved structural alteration AND had complied with in all respects the Buildings Ordinance, Fire Services Ordinance and their Regulations.
“On top of the above documents, please also let us have the approval by the building manager regarding such partition.”
8. The Cancellation Agreement Requisition is as follows:
“Cancellation Agreement Memorial No.06080202440011
The above document purports to have cancelled the Agreement for Sale and Purchase Memorial No.0606270330014, but there is no receipt clause therein by which the purchaser acknowledged receipt of the deposit. As a result, the Cancellation Agreement is defective OR at least it casts a doubt as to whether the purchaser therein still had a lien of the deposit against the vendor on the Property. Please therefore clarify the situation by documentary evidence.
“Besides, please adduce evidence to prove the Cancellation Agreement was duly stamped or exempted from payment of stamp duty thereon.
9. By letter dated 4 August 2011, the solicitors for the vendor replied, in relation to the Partition Requisition, that the certificate issued by Shum Dai Chung as an Architect and Authorised Person, which confirmed that the partitioning did not involve structural alteration and that no approval from the Building Authority was required, was sufficient, and therefore no fresh architect’s certificate would be necessary.
10. In the same letter, the solicitors for the vendor referred to the Cancellation Agreement which stipulated that the sum of $200,000 would be refunded by the then vendor to the purchaser upon the signing of the said Cancellation Agreement. They went on to say that the signing of the Cancellation Agreement itself implied that the refund had been made, and no unpaid lien could have remained.
11. The solicitors for the parties continued the correspondence, essentially repeating their initial positions. I shall further refer to some of the correspondence later. By letter dated 8 September 2011, the purchaser’s solicitors informed the vendor’s solicitors that the vendors would be deemed to be in breach unless the requisitions were satisfactorily dealt with. No completion having taken place, the vendors’ solicitors gave notice by letter dated 9 September 2011 that the purchaser was in breach of the Agreement, and forfeited the deposit.
Cancellation Agreement Requisition
12. The purchaser complains that the Cancellation Agreement dated 5 July 2006 which cancelled an earlier agreement for sale and purchase of the property dated 19 June 2006 provided for the refund of a sum of $200,000 by a predecessor-in-title as vendor to the then purchaser. Yet the Cancellation Agreement contained no receipt clause, and there was...