Ipsofactoj.com: International Cases [2001] Part 2 Case 15 [CFA]


COURT OF FINAL APPEAL, HKSAR

Coram

Cindy Leung

- vs -

Wu

CHIEF JUSTICE LI

MR. JUSTICE BOKHARY PJ

MR. JUSTICE CHAN PJ

MR. JUSTICE LITTON NPJ

SIR ANTHONY MASON NPJ

27 FEBRUARY 2001


Judgment

Mr. Justice Bokhary PJ

  1. I agree with the judgment of Mr. Justice Litton NPJ subject to my sharing the Chief Justice's view on the qualification referred to by him. All that I would add - and I can do it in a single breath - are my thanks to counsel for their assistance and an acknowledgment, in fairness to the Court of Appeal, that we have received far fuller arguments than those addressed to them.

    Mr. Justice Chan PJ

  2. I also agree with the judgment of Mr. Justice Litton NPJ subject to the qualification referred to by the Chief Justice. I would agree with Sir Anthony Mason NPJ's analysis on the application of s.23 of the Conveyancing and Property Ordinance, Cap.219 and the maxim Omnia praesumuntur rite esse acta.

    Mr. Justice Litton NPJ

    INTRODUCTION

  3. This appeal concerns the sale of a flat in North Point. The appellant is the vendor, the respondent is the purchaser. After the contract of sale was concluded, there were requisitions made on behalf of the purchaser concerning the vendor's title. It is the purchaser's case that the vendor was unable to show a good title to the flat, as required by the contract: a fact denied by the vendor. This led to the litigation in this case.

    BACKGROUND FACTS

  4. The flat in question is Flat E on the 6th floor of Han Palace Building, Nos.441-7 King's Road, Hong Kong. The agreement for sale and purchase is dated 18 December 1998, for completion on 8 January 1999: This was later postponed by agreement of the parties to 28 January 1999.

  5. The vendor derived title to the flat from a company called Bestart Design Ltd ("the company"), by a deed of assignment dated 17 April 1998. The company in turn derived title from a person called Chan Sin Fong, by a deed of assignment dated 28 June 1991. In that assignment, Chan Sin Fong was described as being "of Flat No.14, No. 43 Lai Shiu Fong, Guangzhou, China". The assignment was executed on her behalf by an attorney, one Wong Ching, in the presence of a solicitor Ms Margaret S.F. Chiu.

  6. It appears that after the company had bought the flat in June 1991, the title deeds were kept in a desk drawer at the residence of its manager Law Siu Shing Peter ("Mr. Law"). Mr. Law moved house in March 1997. In December 1997 he found that the title deeds were lying loose in the drawer of his desk (the rubber band holding the documents together having snapped). Amongst the documents missing was the power of attorney by which the assignment of 28 June 1991 was executed on Chan Sin Fong's behalf. The power of attorney was never found. In March 1998 Mr. Law made a statutory declaration deposing to the facts as stated above (presumably in anticipation of the sale of the flat to the present vendor a month later). At about the same time - on 3 March 1998 - the solicitor who had witnessed the execution of the June 1991 assignment made a statutory declaration as follows:-

    1.

    I was the attesting solicitor for the Assignment of the Property prepared by the now dissolved law firm of Messrs. Chan, Tse, Tang & Co. A copy of the Assignment is now produced and shown to me as Annexure hereto.

    2.

    I confirm that prior to execution of the Assignment on 28th June 1991 by Madam Wong Ching ("the Donee") as the lawful attorney of Madam Chan Sin Fong ("the Vendor") named in the Assignment, I had perused a duly executed General Power of Attorney which was given under Section 7 of the Power of Attorney Ordinance, Cap.31 by the Vendor in favour of the Donee and which was dated within a period of one year prior to the date of the Assignment.

    3.

    I verily believe and was satisfied that the Donee had power to enter into and execute the Assignment of the Property as the lawful attorney of the Vendor pursuant to the said Power of Attorney with full binding force and effect.

    HOW THE LITIGATION AROSE

  7. As part of the normal process of completion, the title deeds and documents relating to the flat were sent to the purchaser's solicitors on 28 December 1998. On 5 January 1999 they raised a number of requisitions, amongst which was the following:

    4.

    The Statutory Declaration of Miss Chiu Sai Fong Margaret was made almost 7 years after the date of the Assignment Memorial No. 4894186. We find not much weight can be given to such Statutory Declaration. Please therefore let us have certified copy of the relevant General Power of Attorney authorising the attorney to execute the Assignment Memorial No. 4894186 on behalf of the Vendor. As the said Assignment was executed only 8 years prior to the date hereof, a certified copy of such General Power of Attorney should be obtainable from the relevant file of the Solicitors who prepared such General Power of Attorney. Secondary evidence thereto is not acceptable.

  8. Two days later the vendor's solicitors replied as follows:-

    4.

    We take the view that as (i) the contents of the Power of Attorney was duly perused and stated in the Statutory Declaration of Chiu Sai Fong Margaret, the solicitor attesting the execution of the captioned Assignment and (ii) in the Statutory Declaration of the director of the Purchaser of the captioned Assignment, the circumstances which the captioned Power of Attorney was lost was clearly mentioned therein and all reasonable efforts in locating the same had been made. In light of the above, we opine that the two Statutory Declarations are cogent secondary evidence which is sufficient to proof title to the captioned property. In this regard, we would draw your attention to the case of Woo J. in Yeung Dallah Rudia v Copiluck Limited [1992] 2 HKC575.

  9. Further correspondence between the solicitors ensued. This took the matter no further. Although the purchaser's solicitors suggested in their letter of 5 January that a certified copy of the power of attorney might be obtained from the solicitors who had prepared it, those solicitors were never identified and nothing materialized. The vendor's solicitors brought the firm of Philip Pang & Co. into the dialogue. This was the firm which had acted for the vendor when she bought the flat in April 1998: Not surprisingly Messrs Philip Pang & Co. supported the vendor's view that Ms Margaret Chiu's statutory declaration was sufficient proof of the existence, due execution and contents of the power of attorney, and that the vendor's title was in order.

  10. As mentioned earlier, the date for completion was, by agreement, postponed to 28 January 1999. On 27 January the purchaser's solicitor wrote to say that the requisitions regarding the power of attorney had not been satisfactorily answered and that the vendor had not proved good title to the flat. The letter went on to say that they (the solicitors) had instructions to take out a vendor and purchaser's summons to clarify the question of the title. The vendor's solicitors replied on the same day saying that she (the vendor) had obtained the opinion of counsel to the effect that the two statutory declarations were sufficient secondary evidence of the existence, due execution, contents and validity of the power of attorney and that the donee Wong Ching had duly executed the assignment on behalf of the donor Chan Sin Fong. The letter went on to say that if the purchaser failed to complete the purchase by 5pm on the following day the deposit (amounting to $113,800) would be forfeited and the vendor would seek damages arising from the purchaser's repudiation of the contract.

    THE PROCEEDINGS

  11. The purchaser did not complete. On 30 January 1999, the purchaser initiated legal proceedings seeking reliefs including a return of the deposit. The matter was heard by Mr. Robert Tang, SC, sitting as a Recorder, on 22 June 1999. As he understood the matter before him, there was no real dispute concerning the sufficiency of the secondary evidence: the only issue was whether secondary evidence was admissible in proof of the vendor's title having regard to s.13(1) of the Conveyancing and Property Ordinance, Cap.219. There were conflicting decisions on the issue at first instance. Section 13(1) states:

    Unless the contrary intention is expressed, a purchaser of land shall be entitled to require from the vendor, as proof of title to that land, only production of the Government lease relating to the land sold and -

    (a)

    proof of title to that land -

    (i)    

    where the grant of the Government lease was less than 15 years before the contract of sale of that land, extending for the period since that grant; or

    (ii)

    in any other case, extending not less than 15 years before the contract of sale of that land commencing with an assignment, a mortgage by assignment or a legal charge, each dealing with the whole estate and interest in that land;

    (b)

    production of any document referred to in the assignment, mortgage or charge mentioned in paragraph (a) creating or disposing of an interest, power or obligation, which is not shown to have ceased or expired and subject to which any part of that land is disposed of; and

    (c)

    production of any power of attorney under which any document produced is executed where that document was executed less than 15 years before the contract of sale of that land.

  12. Some first instance judges, prior to the hearing before the Recorder, had construed s.13(1) as requiring the production by the vendor of the documents mentioned in that section so that failure to do so meant that the vendor had failed to prove good title - unless, of course, there were provisions in the contract itself to the contrary.

  13. Other decisions at first instance took a more liberal view of s.13(1): There, emphasis was placed on the word "only" in ss(1) to show that the legislature intended to set out what was the maximum which the purchaser was entitled to demand from the vendor: Failure to produce one of the documents referred to in the subsection did not mean that the purchaser was entitled to rescind, if clear and cogent secondary evidence relating to the missing document was available. The Recorder, faced with two conflicting lines of authority, chose the latter. He followed the reasoning in the English case of Re The Halifax Commercial Banking Co Ltd and Wood [1898] 79 LT 536 and, concluding that secondary evidence was admissible and that the statutory declarations of Ms Margaret Chiu and Mr. Law constituted sufficient evidence of the vendor's title, gave judgment in the vendor's favour.

    THE COURT OF APPEAL

  14. On appeal, the Court of Appeal permitted the purchaser to argue that the secondary evidence relating to the power of attorney was insufficient. There were accordingly two main issues before the Court of Appeal:

    1. The s.13(1) point, as to which the Court of Appeal unanimously upheld the Recorder, thereby overruling the line of first instance cases which had taken the contrary view.

    2. As to the secondary evidence relating to the power of attorney, it is to be noted that Ms Margaret Chiu's statutory declaration said nothing about execution by the donor, beyond saying that it was duly executed: She was the attesting solicitor witnessing the execution of the assignment by both parties, and all she was able to say was that she had perused the power of attorney, it was a general power of attorney made under s.7 of the Power of Attorney Ordinance, Cap.31, it was "duly executed .... by the vendor in favour of the Donee" and was dated within one year of the assignment. As to this, the issue raised before the Court of Appeal was whether a presumption of due execution arose by virtue of s.23 of the Conveyancing and Property Ordinance which states:

      An instrument appearing to be duly executed shall be presumed, until the contrary is proved, to have been duly executed.

  15. The Court of Appeal was unanimous in concluding that there was sufficient evidence regarding the existence and contents of the power of attorney. But, by a majority (Godfrey JA and Ribeiro J, Keith JA dissenting) the Court of Appeal held that due execution had not been sufficiently proved and that the presumption under s.23 did not arise. It found in favour of the purchaser, thereby reversing the Recorder.

  16. Hence the vendor's appeal now before us.

    THE REMAINING ISSUES

  17. As regards the s.13(1) point, counsel for the purchaser no longer seeks to argue that s.13(1) in terms precludes the production of secondary evidence to prove the existence, due execution and contents of the power of attorney: In other words, the purchaser no longer contends that where a vendor fails to produce a power of attorney (or a certified copy thereof) under which an assignment made less than 15 years before the contract of sale was executed, that was necessarily fatal to the vendor's case - unless a contrary intention was expressed in the contract of sale. Rightly so. As Godfrey JA remarked, s.13(1) was enacted to facilitate conveyancing: It is an enabling provision and does not preclude clear and cogent evidence of the existence, due execution and contents of the power of attorney being put forward - unless precluded by the contract itself. Counsel for the purchaser seeks to argue before us that the sale and purchase agreement (in particular clauses 5 and 7) did indeed show a contrary intention. The point was never taken in the solicitors' correspondence nor before the Recorder. It formed no part of the Court of Appeal's judgments.

  18. The matters in dispute before us boil down to this: Whether, having regard to the terms of the sale and purchaser agreement, in particular clauses 5 and 7 thereof, and the provisions of s.13(1), the production by the vendor to the purchaser of the two statutory declarations was a sufficient discharge of her obligation to show a good title to the property.

    THE SALE AND PURCHASE AGREEMENT

  19. The agreement is in standard form. Clauses 5 and 7 provide as follow:

    5.

    The Vendor shall give good title to the Property. The Vendor shall, subject to Clause 7 hereof, prove his title to the Property in pursuance of Section 13 of the Conveyancing and Property Ordinance at his expense and shall at the like expense make and furnish to the Purchaser such certified copies of any deeds or documents of title wills and matters of public record as may be necessary to complete such title. The costs of verifying the title by inspection and examination including search fees shall be borne by the Purchaser.

    7.

    Such of the muniments of title as relate exclusively to the Property will be delivered to the Purchaser. All other muniments of title relate as well as to other property(s), whether or not in the possession of the Vendor will be retained by the Vendor and he will, if required, give to the Purchaser a covenant for production and delivery of copies and for safe custody thereof to be prepared by and at the expense of the Purchaser.

  20. As can be seen the vendor's obligation under clause 5 to prove her title at her own expense is said (subject to clause 7) to be "in pursuance of section 13 of the Conveyancing and Property Ordinance". This eliminates any suggestion that clause 5 as it stands enlarged the vendor's obligations under section 13(1).

  21. As regards clause 7 (to which clause 5 is subject), the first sentence is simply a restatement of the common law position that on completion the documents of title must be delivered to the purchaser who becomes the legal owner thereof. The rest of the clause deals with other documents which relate both to the property sold and other property retained by the vendor. It says nothing about lost documents. The argument that the agreement showed a "contrary intention" in terms of the opening words in s.13(1) is untenable.

  22. The sole issue left for consideration is therefore whether the matters set out in Ms Chiu's statutory declaration give rise to a presumption that the power of attorney was duly executed -  it being conceded that the existence and contents of the instrument have been sufficiently proved. This can arise either by applying the maxim Omnia praesumuntur rite esse acta (the common law presumption of regularity) or by the application of s.23.

    THE SOLICITOR'S STATUTORY DECLARATION

  23. Ms Chiu stated in her statutory declaration that prior to the execution of the assignment on 28 June 1991 she had read through the power of attorney and that it was a "duly executed General Power of Attorney .... given under s.7 of the Power of Attorney Ordinance". This means that the document she saw was in the form as set out in the schedule to the Ordinance and that it appeared to have been signed and sealed by the donor and witnessed in the usual way. It is true of course that Ms Chiu did not see the donor Madam Chan Siu Fong execute that document. The question therefore is this: Does the fact that the instrument appeared to have been duly executed by the donor give rise to a factual presumption that it was duly executed?

  24. As Lopes LJ observed in Harris v Knight (1890) 15 PD 170 at 184, the presumption embodied in the maxim Omnia praesumuntur rite esse acta applies with more or less force according to the circumstances of each case. It is a flexible formula. And, as Lindley LJ said at 179 in the same case:

    The maxim .... is an expression, in a short form, of a reasonable probability, and of the propriety in point of law of acting on such a probability. The maxim expresses an inference which may reasonably be drawn when an intention to do some formal act is established; when the evidence is considered with that intention having been carried into effect in a proper way; but when the actual observance of all due formalities can only be inferred as a matter of probability.

  25. The loss of deeds is not an uncommon event in the experience of the law. Courts have therefore had to deal with it in a variety of circumstances, when positive proof of due execution is not available. Mr. Horace Y.L. Wong, counsel for the appellant, has helpfully referred us to a number of cases. It is unnecessary to refer to them all. In Re Webb (deceased) [1964] 2 All ER 91 the plaintiff sought to have probate pronounced in solemn form for the completed draft of a will, the will itself having been lost. No evidence was adduced regarding attestation. The court allowed the completed draft to be used as secondary evidence to prove the contents of the will; there being an attestation clause in the completed draft the court applied the maxim Omnia praesumuntur rite esse acta to conclude that the will was duly executed - there being nothing in the circumstances of the case to point otherwise.

  26. How, then, does the maxim apply in the circumstances of the present case? Here, we have an owner Chan Sin Fong with an address in the Mainland who appeared in June 1991 to have wished to sell the flat and to have appointed an attorney to act for her generally: an appointment apparently made sometime before 28 June 1991 but within one year. All the title deeds relating to the flat were, it may be inferred, in the hands of the solicitors. It is reasonable to infer that the solicitor Ms Chiu was acting for both parties: At any rate, she witnessed the signatures of both parties. It was her duty to ensure that everything was in order, to give effect to the transaction. She perused the power of attorney and satisfied herself that it was duly executed by the donor. Nothing at that time excited her suspicion; everything pointed to the regularity of the execution of the power of attorney. Formal effect having been given to what the parties apparently intended, the property was assigned to the company and custody of the title documents - including the power of attorney - was transferred to the company. When the title documents were examined by Mr. Law in December 1991 on his appointment as manager they included the power of attorney. Many years then elapsed. In April 1998 the company sold the flat to the present vendor - acting upon the two statutory declarations to convey the title to the vendor. The title documents then came into the hands of the present vendor. There is no suggestion that Chan Sin Fong had ever come forward to say that she knew nothing about the sale of her flat in June 1991 or that her title deeds had been stolen.

  27. In the circumstances as outlined above, what are the probabilities of the case? It can safely be presumed that the power of attorney was duly executed by Chan Sin Fong and that the June 1991 assignment was intended by her to vest title in the company. There being nothing pointing the other way, the legal conclusion follows that the instrument was duly executed.

    SECTION 23

  28. In my judgment, s.23 does nothing more than give statutory form to the common law principle embodied in the maxim Omnia praesumuntur rite esse acta. Section 23 is remedial, to facilitate conveyancing. It must receive a fair, large and liberal construction. The word "appearing" in s.23 cannot be read down as if it said "appearing to the court". For that would, as Keith JA said in his dissenting judgment, prevent s.23 from applying to missing documents altogether. Rather, the matter should be approached broadly thus: Does it appear from all the circumstances of the case that the instrument was duly executed? If the answer is Yes, the section presumes the instrument to have been duly executed, until the contrary is proved.

    CONCLUSION

  29. In my judgment the vendor had shown a good title to the flat by the production of the two statutory declarations together with all the other title deeds. It follows that the purchaser's repudiation was wrongful and her claims to relief were rightly dismissed by the Recorder. I would allow the vendor's appeal, discharge the orders of the Court of Appeal and restore the Recorder's orders.

  30. As to costs I would make an order nisi that the costs in this Court and in the Court of Appeal be paid by the purchaser (respondent), this order to be made absolute unless the parties submit, within 14 days of the date when judgment is handed down, written submissions for a different order: In which event this Court would determine the question of costs on the basis of the parties' written submissions. The appellant's costs should be taxed under the Legal Aid Regulations.

    Sir Anthony Mason NPJ

  31. I agree that the appeal should be allowed for the reasons given by Mr. Justice Litton NPJ, subject to a qualification in the way s.23 of the Conveyancing and Property Ordinance, Cap.219, applies to the execution of the power of attorney.

  32. The only question arising on the interpretation of the section is whether the word "appearing" means, as the majority in the Court of Appeal thought, "appearing to the court on production to the court" or, as Keith JA thought "appearing at any time on its face while it was or is in existence". As Keith JA pointed out, the language of the section does not point in one direction rather than the other.

  33. There are two considerations which favour the second of the alternative interpretations just stated. In the application of the common law maxim Omnia praesumuntur rite esse acta to the due execution of wills lost or destroyed, significance has been attached to the fact that the will "on its face" complies with the requirements for due execution (Harris v Knight (1890) 15 PD 170 at 184, per Lopes LJ; see also In the Estate of CR Phibbs [1917] P 93; Re Webb [1964] 2 All ER 91 at 93, per Faulks J.) In other words, the common law maxim has been applied to a will which has been lost or destroyed where one of the circumstances has been that the will appears on its face to have been duly executed, although it cannot be produced to the court. There is, accordingly, good reason for thinking that "appearing" in s.23 is used in this sense.

  34. The second reason, pointed out by Keith JA, is that the first interpretation would preclude the application of s.23 to lost instruments, a result which, if intended, one would expect to be specifically provided for. Indeed, it would have been a very simple exercise to express the first meaning in appropriate language, had it been intended that the statutory presumption, unlike the common law maxim, should not apply to lost or destroyed documents.

  35. As Mr. Justice Litton NPJ has noted, the section is beneficial and facilitating. So it should receive a liberal construction. Such a construction entails that a rebuttable presumption arises once evidence establishes that the instrument appears at any time on its face to have been duly executed. It is that fact and that fact alone which attracts the statutory presumption. Other circumstances may serve to reinforce the presumption or to rebut it. The other circumstances here serve to confirm the presumption, not to rebut it.

  36. On the other hand, the maxim Omnia praesumuntur rite esse acta is applied, as demonstrated by the authorities already cited, in the light of all the circumstances of the case. So much emerges from the judgments of Lindley and Lopes LJJ in Harris v Knight at pp. 179, 183-184. Accordingly, in the present case, after taking into account the history of the matter from 1991 onwards, the Mainland address of Chan Sin Fong, the role evidently played by Ms Chiu as solicitor acting for both parties and the part by Mr. Law, as well as the statutory declaration of Ms Chiu that the power of attorney appeared to have been duly executed, it is legitimate to apply the common law maxim.

  37. As Phillimore J said in In the Estate of Bercovitz [1961] 2 All ER 481 at 485:

    The force of the presumption or maxim varies with all the circumstances. Where a document is entirely regular in form it may be very strong ....

  38. In other words, the maxim can be applied, like s.23 itself, to a situation in which there is no more than an instrument, whether in existence, lost or destroyed, which appears to have been duly executed. But in most cases there will be additional circumstances, as there are here, which need to be considered before the maxim can be applied.

  39. Though they operate in slightly different ways, it is unlikely that the maxim and the statutory presumption will generate different results.

    Chief Justice Li

  40. I agree with the judgment of Mr. Justice Litton NPJ subject to the qualification as to s.23 of the Conveyancing and Property Ordinance, Cap.219 as to which I agree with the judgment of Sir Anthony Mason NPJ.

  41. The Court unanimously allows the vendor's appeal, discharges the orders of the Court of Appeal and restore the Recorder's orders. As to costs, the Court unanimously makes the order nisi set out at the end of the judgment of Mr. Justice Litton NPJ.


Cases

Re The Halifax Commercial Banking Co Ltd and Wood [1898] 79 LT 536; Harris v Knight (1890) 15 PD 170; Re Webb (deceased) [1964] 2 All ER 91; In the Estate of CR Phibbs [1917] P 93; Re Webb [1964] 2 All ER 91; In the Estate of Bercovitz [1961] 2 All ER 481

Legislations

Conveyancing and Property Ordinance, Cap.219: s.13(1), s..23

Representations

Mr. Horace Y.L. Wong and Ms Diana Cheung for the appellant (instructed by Messrs Chong, So & Co. and assigned by Director of Legal Aid)

Mr. Louis K.Y. Chan for the respondent (instructed by Messrs Simon Ho & Co.)


all rights reserved