Yes Profit Investment Ltd v Mainly Tone Co Ltd

Court of First Instance
High Court Action No 2656 of 2008
Recorder Anderson Chow SC
Land Law
18–21, 24, 28 June, 8 October 2013

Whether defects went to root of title and could not be discovered with due diligence so that purchaser entitled to raise requisitions out of time

The plaintiff (“P”) agreed to purchase from the vendor (“V”) premises as described in the provisional and formal sale and purchase agreements (the “PASP” and “ASP” respectively). But both agreements did not delineate the boundaries of the shop which V had agreed to sell. P raised two requisitions as to whether, first, a toilet in the shop was an unauthorised building work (“UBW”); and second, a uniform, continuous raised floor platform in the shop, which extended beyond the land boundaries, was a UBW which encroached on Government land.

V replied that these were new requisitions raised out of time and accordingly, P was deemed to have waived any objection to title under the ASP. P never completed and V forfeited the initial and further deposits paid. P sought recovery of these sums and damages for loss of bargain, and V counterclaimed that P had wrongfully repudiated the contract.

Held, giving judgment to P, that, inter alia:

Given the surrounding circumstances, it was the parties’ clear intention that the defined description should have included the whole area occupied by the raised floor platform. Thus, V did not have title to part of the property which it agreed to sell.

P was entitled to raise a requisition based on the encroachment out of time. The encroached area was significant relative to the size of the shop and P could not, with due diligence, have discovered it. But while there was a defect with the toilet, it did not go to the root of title. The toilet and the drainage connections could be removed and the shop reinstated without much difficulty or expense.

Accordingly, P was entitled to inter alia an equitable lien on the property for the deposits forfeited and payable by V. However, no award of damages was made for loss of bargain. P had not proved, on a balance of probabilities, that the open market price of the property on 16 August 2007 was higher than the contract price under the ASP.