Hui Kin Sang v Ko Lui Ltd

Court of First Instance
High Court Action No. 1608 of 2011
Deputy Judge Le Pichon in Chambers
Land Law
26 February 2014

Land law — title/sale of land — duty to show and give good title — whether real risk of claim against vendor’s title by residuary beneficiaries

In May 2011, P agreed to purchase from V the ground floor and cockloft of a building (the “Premises”) (the “ASP”). V, represented by S, a solicitors’ firm, had acquired the Premises in 2007. The Premises and the ground floors and cocklofts of two other properties (the “Other Properties”) had formed part of the estate of X, who died in 1989, leaving a wife, a concubine and six sons, including LYK (the “Family”). By his will, X made specific bequests to all the members of the Family of only the ground floors of the Premises and the Other Properties. The cocklofts fell into X’s residuary estate and were bequeathed to the Family in equal shares. However, in November 1991, the executors, including LYK, executed assents of both the ground floors and all three cocklofts to the legatees under the will. The sale of the Premises did not proceed and P brought proceedings against V seeking recovery of deposits paid. V joined S as a third party. At issue, among other things, was whether V had shown or given good title under the ASP and specifically whether there was a risk of challenge by the residuary beneficiaries (other than those who took under the assent of the Premises). Section 20(1) of the Limitation Ordinance (Cap. 347) provides “No period of limitation prescribed by this Ordinance shall apply to an action by a beneficiary under a trust, being an action: (a) in respect of any fraud or fraudulent breach of trust to which the trustee was a party or a privy …”

Held, dismissing P’s claim and D’s claim against S, that:

V had shown and given good title under the ASP. The answer to the issue in dispute was “no”. On the peculiar facts, the risk of challenge to V’s title was fanciful. LYK, as one of the executors executing the assents, was not in a position to complain; and the remaining residuary legatees in question had had the benefit of a share of the two cocklofts of the Other Properties which should have formed part of the residuary estate. In addition, the three cocklofts would have constituted an insignificant part of the overall residuary estate. Further, since the assents, there had been a number of transactions involving the Premises and the Other Properties and as their respective titles devolved from a common source each shared the same “risk”. Yet, no previous purchaser had ever considered there was any real risk. Finally, there was no evidence that the cockloft of the Premises was worth more than the other cocklofts so that a future claim was more likely.

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