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Recall International Ltd v Panten Ltd

Judgment Cited authorities 8 Cited in Precedent Map Related
Vincent
Judgment Date23 January 2017
Year2017
Judgement NumberHCA1896/2012
Subject MatterCivil Action
CourtHigh Court (Hong Kong)
HCA1896/2012 RECALL INTERNATIONAL LTD v. PANTEN LTD

HCA 1896/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1896 of 2012

__________________

BETWEEN
RECALL INTERNATIONAL LIMITED Plaintiff
(榮晉國際有限公司)
and
PANTEN LIMITED Defendant
(泛捷有限公司)

__________________

Before: Mr Recorder Stewart Wong SC in Chambers
Date of Hearing: 9 November 2016
Date of Decision: 23 January 2017

__________________

D E C I S I O N

__________________


A. INTRODUCTION

1. This is a dispute concerning a property known as Workshop A, 7th floor, Morlite Building, 40 Hung To Road, Kowloon, Hong Kong (“the Property”). I shall call Morlite Building “the Building” herein.

2. In 2012, there was a series of sales and purchases of the Property:

(1) From Gold Era Enterprise Limited (“the Head Vendor”) to the defendant. The provisional sale and purchase agreement was dated 7 February 2012.

(2) From the defendant to the plaintiff. The provisional sale and purchase agreement was dated 23 February 2012.

(3) From the plaintiff to Top Fantasy Limited (“the Sub‑Sub‑Purchaser”). The sale and purchase agreement was dated 30 August 2012.

The latter two were “confirmor” sales.

3. Of course, in strict legal terms, the subject of the sales and purchases is certain undivided shares in the Building, with the owner of those shares subject to and having the benefit of the rights and obligations contained in the Deed of Mutual Covenants of the Building dated 31 December 1977 (“the DMC”). One of those rights is the right to occupy the Property exclusively. A co‑owner of the Building would also have, and the purchaser would therefore be also purchasing (in the words of the Second Schedule to the DMC):

“Full and free right and liberty to go pass and repass over along the entrances, lobbies, staircases, landings and passages in the said building for all purposes connected with the proper use and enjoyment thereof”.

4. Under the provisional sale and purchase agreement between the defendant (as the vendor) and the plaintiff (as the purchaser) (“the Agreement”):

(1) The sale price was stated as HK$13,000,000.

(2) Completion was to take place before noon on 5 October 2012. This was also the completion date under the other two agreements for the sale and purchase of the Property.

(3) “The Purchaser’s solicitors shall have seven working days to peruse the title deeds upon receipt of the same and to raise requisitions or object in respect of the title to the said Premises”.

5. A total of HK$1,300,000 was paid by the plaintiff to the defendant as deposit.

6. Title deeds were provided, and requisitions were raised and answered, between solicitors acting for the defendant and the plaintiff (“SHC” and “TYTW” respectively). No issue arises thereon.

B. THE REQUISITION

7. On 12 September 2012, Wealth Treasure Corporation Limited (“WT”), a co‑owner in the Building, commenced an action in the Court of First Instance (HCA 1658/2012) (“the 1658 Action”) against the other co‑owners (including the Head Vendor as the 7th defendant) and “Persons entering or remaining at the plaintiff’s property without the consent of the plaintiff and other persons trespassing on the said property and preventing the plaintiff from reinstating the external wall” as the 9th defendant. The Incorporated Owners of the Building (“the IO”) was not named as a defendant.

8. In the Statement of Claim specially endorsed on the writ in the 1658 Action, WT alleged that:

(1) It was a co‑owner of the Building having the right to the exclusive possession of inter alia the external wall of the Building facing Hung To Road (“the External Wall”), and “all those areas not meant for common use of the Building (‘the non‑Common Area’)”.

(2) In breach of the approved plans of the Building, and/or the DMC, part of the External Wall had been pulled down to create a void (“the Void”), which was being used as an illegal, unnecessary and extra exit of the Building, when it always had a proper, useable entrance/exit. The pulling down of the External Wall and the creation of the Void was illegal as being a contravention of the approved building plans and/or the Buildings Ordinance.

(3) Land to which it had the right to exclusive possession, being non‑Common Area, thus became exposed by the creation of the Void and being used as a corridor thereto. (I shall call the Void and the corridor as “the Subject Entrance”.)

(4) It wanted to reinstate the External Wall because of inter alia the illegality of the Void but its attempts were being obstructed by the defendants or their agents.

9. WT therefore asked for an injunction restraining the defendants (and their agents etc) from entering remaining or trespassing on its property at the Building.

10. On 3 October 2012, i.e. after the period for the raising of requisitions or objections provided for under the Agreement had expired, and two days before the completion date, TYTW sent a letter to SHC as follows:

“We refer to the Property and given to understand from our client that The Incorporated Owners of the captioned Building is involved in a legal proceeding HCA No. 1658/2012 which may result in the owners of the captioned building becoming liable to pay loss or damage or legal costs.

Please give particulars of such litigation including the nature of the claim, the amount involved, the legal opinion on the likely outcome of such litigation and the amount of legal costs that may have to be borne by the owners of the said Building.

All our client’s rights are reserved”.

It seems clear that TYTW’s description of the 1658 Action was not wholly accurate, as the IO was not involved in that action.

11. On the same date, TYTW received a letter from solicitors acting for the Sub‑Sub‑Purchaser (“TKC”) as follows:

“Meanwhile, it has just come to our notice that a Write [sic] of Summons being Action No. 1658 of 2012 was issued by [WT] and the Head Vendor is the 7th Defendant. A copy of the said Writ is enclosed herewith. Please inform us how your client is going to resolve the claim before completion so the Property will be assigned to our client free from such claim by [WT].

We reserve our right to raise further requisitions and enquiries”.

12. It is not very clear to me what was the sequence of the two letters of 3 October 2012 referred to in §§10 and 11 above. The letter from TYTW did not say that it was told of the 1658 Action by TKC, but by its client. Further, although the letter from TKC enclosed the Writ, the letter from TYTW did not. Also, if TYTW had received the letter from TKC when it sent out its letter to SHC, it would have a copy of the Writ which would have informed TYTW that the IO was not a party, but its letter suggested that it was. These matters suggest to me that the letter from TYTW might have been sent out before it received the letter from TKC. In its Statement of Claim herein, the plaintiff appears to suggest that the letter from TKC came first. However, nothing turns on this.

13. On 4 October 2012, the following day, TYTW sent another letter to SHC as follows:

“Further to our letter dated 3rd October 2012, we now send you herewith copy of Write [sic] of Summons being Action No.1658 of 2012 was issued by [WT] and the Head Vendor is the 7th Defendant. Please inform us how your client is going to resolve the claim before completion so that the Property can be assigned to our client free from such claim by [WT].

We reserve our right to raise further requisitions and enquiries”.

14. SHC replied by fax at 7:32 pm on the same date as follows:

“We enclose herewith a copy 3rd letter of even date from Vendor’s Solicitors, the content of which is self‑explanatory, for your consideration.

We write to put on record that we have not received your draft Assignment and Undertaking up to this moment. As the completion is scheduled on 5th October 2012. Kindly let us have your draft Assignment and form of undertaking for our approval on behalf of our client without any further delay.

Finally, we stress that our client has proved good title to the Property. Please note that time is of the essence in the Provisional Agreement for Sale and Purchase signed by our respective clients dated 23rd February 2012 and your client is requested to complete the purchase of the Property on or before 5:00 p.m. 5th October 2012.

We hereby reserve all our client’s rights under the said Agreement.” [original emphasis]

15. The copy of the letter from the solicitors of the Head Vendor (“CL”) to SHC enclosed by the latter’s letter was also dated 4 October 2012 and stated as follows:

“We refer to your fax to us enclosing a letter from [TYTW] of even date. We would like to remind your client that there is no privity of contract between our client and your client’s sub‑purchaser. Our client is not obliged to address on the matters raised by the said solicitors.

Without prejudice to our previous replies to your requisitions and our client’s stance and legal position, we set out the followings for your kind reference:‑

We note that the said solicitors are still dragging on the only outstanding point relating to the case HCA No. 1658/2012. We repeat our previous reply. We stress that the said case comprises only personal claims against the defendants. There does not involve any issues relating to the Property title. On a close review of the pleadings, you would note that the Plaintiff is asking for injunction order against the defendants personally restricting them to use the subject entrance, etc.. There does not give rise to any issues affecting the Property title. For the said reasons, with due respect, we view the said solicitors’ allegations in their said letter are simply groundless.

We repeat...

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