IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
MAGISTRACY APPEAL NO. 1230 & 1178 OF 1998
(On appeal from ESS 14169 & KTS 10986 of 1998)
Coram : Deputy Judge Gill in Court
Date of hearing : 22 January 1999
Date of judgment : 22 January 1999
J U D G M E N T
1. On 23 November 1998, J Brennan Esquire, magistrate, convicted the appellant for having entered into an agreement for sale and purchase of that property comprising Flat 14, 14th Floor, Block A, Hong Wah Court, Lam Tin, Kowloon, which was void by virtue of Section 17B of the Housing Ordinance, Cap. 283 contrary to Section 27A Cap. 283. The appellant appeals that conviction.
2. Although evidence was adduced at the trial, the facts, are I believe, agreed or otherwise not in dispute. They are as follows:
(1) By deed of assignment dated 5 February 1987, the Hong Kong Housing Authority (HKHA) assigned the property the subject of the charge (the property) to the appellant for consideration.
(2) Clause 3 of the assignment recorded: "It is subject to the terms, convenants and conditions (hereinafter called the said terms, convenants and conditions) mentioned in the schedule to the Housing Ordinance, Cap. 283 and any amendments thereto."
(3) Section 1 of that schedule prohibits disposition of property subject to the ordinance unless 10 years have elapsed since its purchase, and the owner thereof has first made payment of a premium to be assessed by the Director of the HKHA to the HKHA.
(4) Section 4(b)(ii) of that schedule says that the owner thereof may, after 10 years have elapsed since his purchase, enter into an agreement for sale and purchase of the property, even if he has not paid the premium, "providing it is a condition of such agreement that the premium as assessed .... be paid prior to assignment, and within 28 days of the date of the agreement, or within such period as may be otherwise stipulated by the Director of the HKHA."
(5) Clause 17B Cap. 283 renders void any alienation entered into by an owner in breach of the deed of assignment under which he holds the property.
(6) Clause 27A Cap 283 states that the purchaser who enters into an agreement rendered void by Clause 17B commits an offence.
(7) By application received by the HKHA on 25 March 1997, the appellant applied for assessment of the premium payable in respect of the property.
(8) On 16 April 1997, the appellant, as vendor, entered into an agreement for sale and purchase of the property with a purchaser for value.
(9) Clause 31 of the agreement begins:
"The vendor [appellant] and the purchaser hereby declare and confirm that the said premises are sold subject to the terms and conditions contained in the schedule to the Housing Ordinance Cap. 283, which, inter alia, prohibits the sale of the said premises unless the premium calculated ...... has been paid to the Hong Kong Housing Authority."
(10) By letter dated 5 May 1997 the Director of the HKHA notified the assessment of premium to be paid provided that it be paid by 4 August 1997.
(11) By notice to the purchaser dated 24 June 1997 the appellant purported to exercise his right to rescind the agreement.
(12) By letter dated 9 October 1997 the HKHA acknowledged receipt of the premium, as reassessed, paid by the appellant. The appellant was summonsed for alleged breach under Section 27A Cap. 283.
3. The magistrate in his statement of findings said that the appellant had not paid the premium within 28 days of the agreement for sale and purchase of 16 April 1997 and before assignment, and was therefore not in compliance with requirements set out in the schedule to Cap. 283. In any event, as he said, that agreement was rescinded by the appellant. He found that on 16 April 1997, the appellant purported to enter into an agreement for sale and purchase of the flat without first having paid the premium and satisfying the conditions in paragraph 4(b)(ii) of the schedule. He found the purported agreement void under the provision of Section 17B. He found the appellant guilty as charged.
4. I have had the benefit of extensive written arguments from counsel for the appellant and the prosecutor, and gained considerable assistance from this material. Before me both effectively adopt their respective submissions.
5. It seems to me that what is crucial to the prosecution case is not what the appellant did or did not do after the agreement was entered into, but what form the agreement itself took. After all, the offence is alleged to have been committed when the appellant entered into the agreement. If it complied with paragraph 4(b)(ii) then it was not an agreement which offended against Section 17B, and was not under that section void. That sub-section states that the agreement must have as a condition of it that the premium as assessed be paid prior to assignment, and within 28 days of the agreement, or within such period as may be otherwise stipulated by the Director.
6. The purpose of this stipulation, which is a relatively recent addition to the rules governing assignments, is that it allows a Home Ownership Scheme owner to enter into an agreement to sell his property ahead of his payment of the premium. It also protects the HKHA from a sale going through with distribution of the sale proceeds without it having first received payment of the premium.
7. So, the prospective vendor, as I see it, is required to ensure that the agreement he has with his purchaser is conditional upon his obtaining an assessment from the HKHA as to the amount of the premium, and then paying the same to it at or prior to the assignment. If this is not done or arrangements are made and not complied with, then failure of the condition terminates the agreement. In legal terms he is required to make compliance with the obligation to meet the premium a condition precedent in his...