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Deposit or penalty? The court can order repayment of a penalty that has already been paid.

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Workers Trust & Merchant Bank Ltd v Dojap Investments Ltd ([1993] AC 573, PC) was an appeal to the Privy Council from the Court of Appeal of Jamaica. A purchaser had paid a 25% deposit and this had been forfeited by the vendor when the purchaser failed to complete on time (time being of the essence for completion). The purchaser successfully sought relief from forfeiture of the deposit.

Lord Browne-Wilkinson explained that in general a provision that a party in default is to pay or forfeit a sum of money is an unlawful penalty unless the sum in question can be shown to be a genuine pre-estimate of damages. There is an exception to this general rule in the case of deposits; these can be forfeited even where they bear no relation to the anticipated loss of the innocent party (p. 578).

For a sum to be treated as a deposit it must be a sum that can reasonably be described as a deposit. Since it is difficult to say what sum would be a reasonable deposit, the approach is to accept (without searching for any further explanation) that it is long established custom and usage in the United Kingdom and Jamaica to accept a 10% deposit as being reasonable in those jurisdictions. It is for a seller wishing to rely on any larger sum to show what special circumstances would justify the larger deposit (p. 580). A reference to market practice at the time of the contract does not amount to such a justification (pp. 579 – 580).

Here the vendor had not been able to show why a larger (25%) deposit was justified. As a result, the entire sum (not merely the excess over 10%) was treated as a penalty. The court had jurisdiction to order the vendor to repay the entire sum less the amount of any damage actually suffered by the vendor as a result of the purchaser’s breach (p. 582).

Michael Lower



Delay in accepting repudiatory breach.

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In Cheung Ching Ping Stephen v Allcom Ltd ([2010] 2 HKLRD 324, CA) S and P entered into a provisional sale and purchase agreement. P paid an initial deposit of $1 million. The agreement provided that if S were to fail to complete it would refund the deposit and pay a further $1 million as liquidated damages.

S failed to complete on time. P wrote twice to S, reserving its rights but seeking information as to S’ progress in dealing with the matters that had to be attended to before completion could take place. After two months, P wrote to S to withdraw from the transaction. P sought the return of the deposit and the further sum of $1 million by way of liquidated damages.

The first question was whether P had lost the right to accept the repudiatory breach by waiting for two months. It was held that this delay did not mean that it had lost the right to accept the breach. The question was whether the delay was only consistent with an affirmation of the contract (or perhaps whether something material had happened in the interval between the breach and the acceptance of it) ([21]). P was entitled to accept the breach despite the delay.

P was not entitled to the $1 million by way of liquidated damages. There was nothing to show that this was a genuine pre-estimate of the damage caused by S’ breach. This was an application for summary judgment. There was to be an enquiry as to damages and the question as to whether $1 million was a genuine pre-estimate could be argued at that enquiry.


Unregistered legal charge: void but still an encumbrance

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In Siu Wing Yee Angeline v Earning Yield Ltd ([2013] HKEC 868, CFI) S had agreed to sell property to P. Both parties wanted to proceed. The question was, though, whether S’s title was subject to an encumbrance. S had been a shareholder and director of company H. She had granted a charge to company N, a fellow shareholder in H. H was struck off the register. N was later also struck off the register. There had been no release of the charge granted by S to N.

The District Court had ordered the vacation of the entry relating to the legal charge at the Land Registry so that the charge was now unregistered and so void, as between N and a later bona fide purchaser or mortgagee (Land Registration Ordinance s.3(2)). The shareholders of N had sworn statutory declarations purporting to acknowledge that any action to recover debts due to N from S would be time-barred, The statutory declarations stated that they had no intention of enforcing the charge and had no objection to the entry relating to it from being vacated from the Land Registry.

The Court held, nevertheless, that S’s title was bad. The court order dealt with registration but the legal estate remained in existence. The effect of the order was not (and could not be) to bring the legal estate to an end.  There was no evidence to show when the debts secured by the mortgage would fall due and so the Limitation Ordinance could not help. Although the charge could not be enforced against a subsequent purchaser or mortgagee, it was still in existence. Section 12A of the Conveyancing and Property Ordinance could, potentially, have been of use but there was no information to show what the appropriate payment into court would be.

The risk of enforcement may be low but this is irrelevant when the title is indisputably bad. S had agreed to sell the property free from encumbrances but could not do so.


Adverse possession: land owned by Tong but no evidence of the birth of a new member

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In Wealth Hill International Limited v Wong Kwan Siu ([2013] HKEC 838, CFI) a Tong was the registered owner of land. W had been in adverse possession for the necessary twenty year period. If a new member of the Tong had had been born, the limitation period would have started to run again ([72]). Here, however, there was no evidence of such a birth. W had defeated the Tong‘s title.

Michael Lower


Adverse possession of a common part by a stranger to the DMC: BMO s.34I does not defeat the adverse possession claim

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In Wong King Lim v Peony House (IO) ([2013] HKEC 828, CA) W had been in adverse possession of a lane behind Peony House since 1987. The lane was a common part of Peony House. W was not an owner of Peony House and so not subject to the terms of the DMC. W brought an adverse possession claim in respect of the lane. The incorporated owners argued that any title thus acquired was subject to the covenant implied by section 34I of the Buildings Management Ordinance (a covenant not to convert common parts to private use). The argument was that this restrictive covenant had priority over W’s possessory title (relying on Re Nisbet and Pott’s Contract).

This argument failed. One reason given by the Court of Appeal looked at the purpose of the covenant:

‘The owners of the Building had covenanted only with one another to possess the Lane in common and not exclusively.’ ([34] Yuen JA)

Once the title of all the owners to the lane had been extinguished then there was (so to speak) no covenantee with an interest in land who could enforce the covenant. ([34]) (see also [43] Lam JA). It seems to make no difference that the owners still had title to the rest of the Building and, in that capacity, still had an interest in the enforcement of the implied covenant.

A second reason is given for the proposition that W was not subject to the implied covenant. This is that the right to enforce the covenant had also been defeated by the Limitation Ordinance:

‘[I]n contrast with the position of the covenantee in that case, the Defendant IO’s right under the DMC (and the deemed obligation under the DMC created by Section 34I) has been infringed from the very beginning of the dispossession by the Plaintiff over the portion of the land in question. Thus, the basis of the judgment of Collins MR in that case (viz time should not start to run until the right of the covenantee is affected) has no application to our case. The extinguishment of the title to the land under section 17 of the Limitation Ordinance Cap 347 encompasses the title to enforce the DMC in respect of that portion of the land.’ ([44] Lam JA)

Michael Lower


Disputed possessory title: still good enough to see off a trespasser

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In Bridam Ltd v Sa Sa Cosmetic Co Ltd ([2013] HKEC 1020, CFI) L granted a lease of premises to T. The lease also gave T the right to use the signage on the external wall. L claimed to have possessory title to the signage space. T’s tenancy expired and it gave back possession of the property and the signage space. Shortly afterwards, however, it reinstated its own signage. It did not claim that it had any right to do so but, rather, that L had no title and was not entitled to recover possession. This argument failed and T was ordered to remove its sign.

The fact that L did not have the benefit of a declaration confirming its possessory title was irrelevant; this would declare, not confer, the title ([9] per L Chan J.). In any event, T plainly had no title and allowing it to succeed would be a recipe for chaos ([13]). The court stressed that its judgment had no effect on the rights, if any, of the registered owners ([15]).

Michael Lower


Owners’ meeting: validity of decision to dissolve the meeting and of the proceedings of a ‘break-away’ meeting

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Discovery Bay Services Management Ltd v Hannon Ltd ([2013] HKEC 958, LT) concerned the validity of a decision to dissolve a meeting of the Headland Village Owners’ Committee and of the proceedings of a break-away group of owners who purported to continue the meeting after the chairman had attempted to dissolve it.

There is a DMC for Discovery Bay as a whole and sub-DMCs for the villages within it. There is no owners’ corporation. CM is the manager under the DMC.

CM convened a meeting of the owners of Headland Village to elect the officers of the village owners’ committee for the coming year. The meeting began but was dissolved by the chairman. He dissolved the meeting because he disputed the validity of the appointment of the representative of CM (which was entitled to be present at the meeting and count as part of the quorum  but not to vote). He also contended that the sub-DMC only allowed owners or their spouses or family members to attend and vote. There was no scope to appoint anyone else as a proxy. He contended that the meeting was inquorate if one left ineffective proxies out of account.

A group of owners then went to another room and continued the meeting. They elected new officers. The chairman protested that the meeting was inquorate and its proceedings invalid.

DB sought, and obtained, declarations that the chairman had been wrong to dissolve the first meeting and that the second part of the meeting, and the resolutions passed there, were valid.

The chairman disputed the effectiveness of the letter by which CM appointed an individual to act as its representative at the meeting. The letter had been signed by a director of CM but did not bear CM’s chop or seal. This failed: as a matter of construction, the sub-DMC did not require the company’s chop to be effective. The normal rules for the appointment of an agent were all that mattered and they had been adhered to. In any event, CM had later formally ratified the appointment. This came after the village owners’ meeting but the ratification cured any potential defect in the original appointment.

The chairman contended that the sub-DMC only allowed owners or their spouses or family members to attend and vote. Thus, proxies given to other parties (such as CM) should be ignored. The result was that the meeting was inquorate. The Tribunal confirmed the chairman’s reading of the relevant provisions of the sub-DMC. Even allowing this, however, the meeting was still quorate. (There is an interesting comment at [56] on the idea of a ‘family member’).

Finally, there was the question as to whether the second meeting (or the second stage of the meeting) was quorate. It was. The chairman counted as part of the quorum since he was present even while he vociferously denied the validity of the proceedings. The same was true of the other owners who were of the same view as the chairman.

It was clearly a very lively meeting and there was a police presence nearby for part of it ([72]).

Michael Lower


Common intention constructive trust as a vehicle for an investment agreement

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In Pang Ketian Sally v Tam Yak Hung Annie ([2013] HKEC 990, CFI) P, D and F entered into an agreement whereby each of them was to contribute to the deposit for the purchase of a flat and have a proportionate beneficial interest. D was named as the sole purchaser in the sale and purchase agreement. Completion of the purchase was expected to take place some 18 months later. The parties intended to achieve a sub-sale at a profit before the completion date. The property market deteriorated in the period before completion so that even if a sale had been possible it would have been at a loss rather than a profit. The parties had a second meeting at which P agreed to surrender her interest in the property in return for being released from any obligation to fund the purchase and any other costs associated with it. There was exceptionally clear evidence as to the terms of the original and of the second agreements.

P claimed to be entitled to a 5% share in the property in accordance with the original agreement. This failed since it was found as a fact that she had surrendered her interest as part of the second agreement. The case was expressly dealt with as one of a common intention constructive trust rather than resulting trust ([61]).

The court relied on the first instance judgment in Chan Chui Mee v Mak Chi Choi and the House of Lords decision in Stack v Dowden for statements of the relevant legal principles ([57] – [59]).

Michael Lower



Duty to show and give good title: the MEPC principle as a last resort

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In Xu Xiaoqi v Tsui Yuet Lai Teresa ([2013] HKEC 636, CFI) D agreed to sell a property to P. The agreement required D to show and give good title in accordance with sections 13 and 13A of the Conveyancing and Property Ordinance. One of the assignments forming part of the title had been executed by one tenant in common on behalf of the other under the terms of a Power of Attorney. The sellers were only able to produce a certified copy of the power. D’s solicitors argued that there was no real risk that an adverse interest could have been created as a result of the loss of the original. Nevertheless, on the day before completion they sent P’s solicitors a draft of a statutory declaration that the solicitors who had acted in relation to the power of attorney were prepared to give. P’s solicitors said that they would need time to consider it. D’s solicitors would not undertake to deliver the sworn declaration on completion since the solicitor who was to make the declaration would not give such an undertaking. Completion did not take place and D purported to rescind.

The court held that D had failed in his duty. The power of attorney was a document of title and section 13(1) obliged him to deliver the original to P.

D sought to invoke ‘the MEPC principle’ :

‘In other words, notwithstanding the law that it is a purchaser’s proprietary right to have all the originals of all the title documents (see Yiu Ping Fong, p 798H), in circumstances where there is no reasonable doubt that the missing original document would not affect the title to the property the vendor may be relieved of the obligation to produce it upon completion’. ([28] Anthony Chan J)

The principle can only be invoked, however, where the seller has made all reasonable efforts to produce the original or adequately explain its loss or destruction ([30]). D had not lived up to this responsibility. His solicitors had only produced a draft statutory declaration on the eve of completion having refused to acknowledge the validity of the requisition up to that point nor to explain the loss. There was no undertaking to produce the sworn statutory declaration on completion and P’s solicitors had not been given adequate time to consider it ([31]).

Michael Lower


No hand-written signature to contract where a signature is clearly anticipated

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In Hubert v Treherne ((1842) 3 Man & G 743, 133 ER 1338) the parties entered into a contract that had to comply with the Statute of Frauds (and so had to be signed by them or on their behalf). The parties were identified by name at the beginning of the written contract. The contract ended with the words, ‘As witness the hands’ but no signature followed.

The court held that there was no signature. The problem was that the closing words (‘as witness the hands’) indicated that the parties intended to add hand-written signatures. The lack of such signatures was therefore fatal.

There was a difference of opinion as to whether the outcome would have been the same had those words (‘as witness..’) not appeared. Would it be enough that the names of the parties appeared in the body of the contract? At least two of the judges thought that this would be enough if it was clear that the written contract was a proper and authorised version of a concluded agreement. Another thought that this would not be enough since this degree of tolerance would effectively write the signature requirement out of existence.

Michael Lower


Signature requirement satisfied where written document intended to have contractual effect

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In Leeman v Stocks ([1951] Ch 941) property was sold at auction. The auctioneer got the purchaser to sign a contract. He then reported to the seller on what had happened and the seller did not object. The contract was not signed by or on behalf of the seller. The wording of the printed contract ended with the words ‘As witness the hands of the parties’ and so seemed to envisage hand-written signatures. The seller later refused to proceed and the buyer sought specific performance.

The purchaser succeeded despite the lack of the seller’s signature. It was enough that the written contract was clearly regarded as the authorised and formal embodiment of the parties’ contractually binding intention and that the seller’s name was written in the contract. By requiring the purchaser to sign the contract, the auctioneer (as agent of the seller) was recognizing the name of the seller written in the contract as the seller’s signature.

While the contract seemed to require the parties’ hand-written signatures, this did not matter where there was evidence to show that neither party actually contemplated that there would be such a signature.

Michael Lower


Adverse possession and purchaser allowed into possession where the contract is never completed

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In Lam Chi Keung v Choi Chung Fun ([2013] HKEC 1095, CFI) S agreed to sell property to P. Title to the property was in the name of S’ deceased father. The contract was conditional on S obtaining letters of administration. In the meantime, P paid the full purchase price and went into possession. S and P both died. P’s children sought a declaration that P had acquired title by adverse possession. This succeeded. Since the contract was conditional and S could have refused to complete and refunded the purchase price, S had a right to recover possession that could be lost by virtue of the Limitation Ordinance ([51]).

P’s children’s other claim that they were entitled to specific performance of the agreement failed. Any such right had been lost when the Government resumed the land; this extinguished all rights and interests in the property by operation of law ([30]).

Michael Lower


Possession claims and the Lands Tribunal

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In Chan Kwong Ho v Yeung Chi Keung Eric ([2013] 2 HKLRD 812, LT) the Lands Tribunal ordered Y to give up possession of property to C following the expiry of the lease. It indicated, however, that in future the Lands Tribunal will consider transferring non-landlord and tenant possession claims to other courts that have more appropriate procedures ([30]).

Michael Lower


Donatio mortis causa

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In Estate of Chen Soo King ([2013] HKEC 210, CFI) C was the adopted son of the deceased. He claimed to be entitled to the shares, cash, jewellery and other assets forming the deceased’s estate by virtue of donationes mortis causa (DMC).

The essential elements of the doctrine are:

‘(i)The donor must have made the gift in contemplation though not necessarily in expectation of death.

(ii) He must have delivered the subject-matter of the gift to the donee or transferred to him the means or part of the means of getting at that subject-matter, e.g. delivering a key, like car keys, or a key to a box containing essential indicia of title, intending to part with dominion over the property to which the key relates.

(iii) The circumstances must have been such as to establish that the gift was to be absolute and complete only on the donor’s death so as to be revocable before then. A condition to this effect need not be expressed and will normally be implied from the fact that the gift was made when the donor was ill.’  (Official Administrator v Luk Ho Tong ([2005] 3 HKC 615 per Cheung J).

The burden of proof was on C to show that these requirements had been satisfied([28]). Any claim based on the doctrine must undergo ‘the strictest scrutiny’ ([50]).

Shares can be the subject of a DMC ([40]) and delivery of the share certificates would be sufficient to satisfy requirement (ii) ([48]).

C’s claim succeeded in respect of the shares and other assets which were in a safe deposit box for which the deceased had given him the only keys ([56]). The claim also succeeded in respect of bank deposits where the deceased had given C the passbooks ([59]). The claim failed where the assets (or the means of controlling them) were in the deceased’s flat. It was not enough that he held one of the two sets of keys to the flat.

Michael Lower


Missing title deeds, giving good title and Yiu Ping Fong

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In De Monsa Investments Ltd  v Whole Win Management Fund Ltd ([2011] 4 HKLRD 478, CA) V had entered into an agreement to sell office space in Central to P. V was unable to produce the originals of certain title deeds affecting the property. The relevant facts occurred before 11th July 2008 and so section 13A of the Conveyancing and Property Ordinance did not apply.

The principal question for the Court of Final Appeal was whether there is a common law rule to the effect that:

‘Unless excluded by express contractual provisions, a vendor at completion was duty bound to deliver to the purchaser all original title documents going back to the root of title, however remote, if those documents relate exclusively to the property sold. If, prior to completion, the vendor was unable to provide a satisfactory explanation as to why he would not be able to do this at completion, the purchaser was entitled to rescind.’ ([78] per Litton NPJ)

The Court of Final Appeal decided that this rule is too broadly stated in that there would only be a breach of the duty and a right to rescind if the circumstances were such that the inability to produce the original or to give a satisfactory explanation as to its loss exposed the purchaser to a real risk that some encumbrance might have been created to which he would be subject ([31] per Chan PJ, [45] per Ribeiro PJ and Gleeson NPJ, [107] – [108] per Litton NPJ). The risk must be real and not merely theoretical ([133] per Litton NPJ).

Litton NPJ suggested that the risk here would be that an equitable charge might have been created by deposit of the missing title deeds. If, however, this was accompanied by a written agreement or commitment then this would need to be registered in accordance with the Land Registration Ordinance. Failing this, the purchaser would not be subject to it. The purchaser was still entitled to a satisfactory explanation so that he could be sure that no encumbrance had been created in the very recent past that could still be registered and take priority over the purchaser’s interest. It was inconceivable that an equitable mortgage relying on a purely oral commitment would have priority over the purchaser’s interest ([111] – [120]).

Michael Lower



Injunction to restrain threatened nuisance and trespass

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In Billion Star Development Ltd v Wong Tak Chuen ([2013] 2 HKLRD 714, CA) P owned property within the Mei Foo estate. P had the benefit of a right of way over the estate roads for the purpose of access to and egress from the property. P intended to build a block of flats on the property. Some residents of Mei Foo objected. They organised a protest group. Some of the protest group would block the estate road leading to the property whenever vehicles associated with the construction project attempted to gain access to the property. Some protesters also trespassed on the property. P sought an injunction to restrain future infringements of its rights. The court at first instance found that P had the benefit of a right of way that entitled construction vehicles to use the estate roads to get to the property and that the acts engaged in amounted to nuisance and trespass.

The Court of Appeal had to consider whether it had been appropriate to grant an injunction against one named defendant (D8) who had identified himself as a member of the group belonging to D7:

‘Persons entering or remaining without the consent of the plaintiff at [the Property] and other persons interfering with the plaintiff’s right of way over the private roads in Mei Foo Sun Chuen in connection with the protests against the plaintiff’s proposed development of the said properties.’

D8 argued that there was no basis for the grant of a quia timet injunction to restrain any future breach by him. It was accepted that he personally had not committed any wrongful act in the past. D8 argued that there was no basis for saying that he had threatened a breach in the future. The Court of Appeal disagreed. D8′s participation in these proceedings showed that he had associated himself with D7. P had shown that what was threatened and intended would cause imminent and substantial damage to him. The burden was therefore on D8 to show that he did not intended to participate in future acts that would interfere with P’s rights. D8 had not given any undertaking or made any statement renouncing any such intention and this was relevant ([48] per Fok JA). Identifying himself with D7, by contrast, suggested an intention to be party to future breaches ([51]).

D8′s other defence was that his actions were an exercise of his right of freedom of speech and assembly. Such rights, however, could not justify an infringement of P’s property rights ([62]).

Lam JA commented on whether it was appropriate to address an injunction to a defendant who is defined (as D7 was defined) rather than named. He said that this practice could validly be adopted subject to safeguards:

‘(a) The proper description of the unnamed defendants to satisfy the above test of certainty [the description used must be sufficiently certain as to identify both those who are included and those who are not];

(b) The Court must be satisfied that the nomenclature of defendants in such a manner would not prejudice the rights of those potentially affected by whatever orders the Court may make from being notified about the court proceedings and from appearing in court to defend their rights if they so wish;

(c) Proper directions must be given for proper service of the proceedings and notification to those who may be affected of the time frame for joining in as named parties and to put forward their defences;
(d) If no-one comes forward to resist the application of the plaintiff against a group of unnamed defendants, the Court should consider whether caveats similar to those in O.15 r.12(3) to
(6) should be built into any relief it may grant (including order of costs) other than orders for injunctive relief.’ ([74])

Michael Lower


The duty to convene and participate in management committee meetings

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In Tzeng Li Wen Judy v Tam Lup Wai Franky ([2013] 2 HKLRD 790, LT) one member of a management committee brought proceedings against the chairman complaining that meetings had not been held every three months as required by schedule 2 of the Building Management Ordinance. The chairman sought to have the proceedings struck out on the grounds that the proceedings should have been brought against the management committee as a whole, that there was no business to discuss and there had been an agreement that no meeting was necessary. This striking out application failed. The management committee was not a separate legal entity capable of being sued ([19]). The chairman had a duty to convene a meeting every three months (though of course he could not compel anyone to attend) ([24]) and on the face of it he was in breach of this duty.

The action against the secretary was struck out. The secretary only had a duty to convene a meeting if requested to do so by two committee members and the secretary had received no such request ([27]).

The action against the corporation was struck out since it had no power to convene a meeting of the committee ([28]).

The members of a management committee are under a duty to participate so far as reasonable in the operation of the corporation and part of this duty is to attend management committee meetings ([24]).


Interpretation of clause modifying duty to respond to requisitions concerning unauthorised structures

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In Channel Green Ltd v Huge Grand Ltd ([2013] HKEC 1124, CFI) CG had entered into a contract to buy property from HG. It had paid a 15% deposit. The contract contained a clause to the effect that the property was sold on an ‘as is’ basis. The clause provided that CG could neither raise requisitions concerning unauthorised additions, alterations or illegal structures nor refuse to complete or delay completion on account of any such matters. There were several unauthorised structures at the property. CG raised requisitions concerning these structures and refused to complete. HG elected to terminate the contract and forfeit the deposit as a result.

The question was whether, as a matter of contractual interpretation, the relevant clause meant that CG had no right to raise requisitions nor to refuse to complete on account of the unauthorised structures. The Court of First Instance decided that this was the case ([91] – [98] per Recorder Coleman SC).

The court noted that although the content of pre-contractual negotiations is irrelevant to the process of interpretation, statements of fact made in the course of negotiations are good evidence as to the context or factual matrix and so  are relevant to the construction of the contract ([23]). Thus, the fact that HG had informed CG of the existence of a number of the unauthorised structures before contracts had been exchanged was relevant to the construction of the clause.

The court also considered whether the 15% deposit was a true deposit or whether it could potentially be a penalty and decided that it was a true deposit. While the amount exceeded the conventional 10%, this was justifiable in the context of a lengthy period between contract and completion ([109).

Michael Lower


Good title can be partly possessory

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In Ease Kind Development Ltd v Land Source Investment Ltd ([2013] HKEC 1155, CFI) S had contracted to sell property to P and to give good title in accordance with section 13 of the Conveyancing and Property Ordinance. In respect of part of the property, it had the title deeds up to the assignment of a Government lease to Madam Leung. Madam Leung built a 6-storey residential building on most of the lot covered by the lease and assigned each storey to separate purchasers. The documentary title to the building was complete. Madam Leung had, however, retained title to a strip of land just over four inches wide. In earlier proceedings, it had been established that S and its predecessors had defeated Madam Leung’s title to that strip by adverse possession. In the present proceedings, the Court of First Instance held that S could give good title. The title deeds and the possessory title defeating that established by the deeds were sufficient to amount to a good title.

Michael Lower


Procedure when seeking a vesting order in respect of the property of a dissolved company

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In Fook Tai Investment Co Ltd v Secretary for Justice ([2013] HKEC 1229, CFI) FT sought a declaration that it was the legal and beneficial owner of certain property. Title had been vested in an associated company that had been dissolved. There had in fact been an assignment of the property by the associated company to FT but it appears that this was defective in some respects.

The Court of First Instance approved the following statement of the procedure in such cases:

‘(a) the functions performed in England by the Treasury Solicitor are to be performed by the Attorney General in Hong Kong (there being no such separate official as the Treasury Solicitor);

(b) one of such functions is that, where there is an application for a vesting order in relation to the legal interest in property being vested in a dissolved company (effectively as trustee), the application can be made under the Trustee Act (the equivalent being the Trustee Ordinance (Cap 29) in Hong Kong), and by making the Attorney General as the sole respondent;

(c) the Attorney General is involved in two capacities. First, he represents the government as the person to be divested of the property. Secondly, he is involved in a separate capacity if it is sought to assert on the government’s behalf that the property is bona vacantia;

(d) after having been served with the originating summons, the Attorney General will indicate by letter whether or not the government claims bona vacantia;

(e) it remains necessary for the Attorney General to continue as a party in the first capacity even if there is no claim for bona vacantia;
(f) there is no reason why the Attorney General should be liable for the costs (it being the applicant who seeks the relief for its own benefit), the applicant should thus not only bear its own costs, but also the costs of those required to attend the proceedings.’ ([12] per Andrew Chung J in Chambers).’

Michael Lower


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