[2000] 4 HKC Grand Trade Development Ltd v Bonance International Ltd (Chung J) 57

A GRAND TRADE DEVELOPMENT LTD v BONANCE

INTERNATIONAL LTD
COURT OF FIRST INSTANCE
MISCELLANEOUS PROCEEDINGS NO 2342 OF 2000
CHUNG J
B 16, 31 OCTOBER 2000

Land – Title – Due execution – Assignment signed and sealed by

representative of company – Articles of association providing use of
company seal only with board of director’s authority – Articles also
provided sealed document to be properly executed if signed by chairman or
C persons authorised by the board – Whether assignment duly executed –
Conveyancing and Property Ordinance (Cap 219) s 23

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By an agreement dated 13 April 2000, the plaintiff agreed to purchase and the
E defendant to sell a flat in Bowen Road, Hong Kong. The plaintiff raised
requisitions in respect of the execution of two assignments by two limited
companies. The vendor of the assignment, dated 29 April 1995, was Manibest
Investments Ltd, which executed the assignment by sealing it with the common
seal and signing by a representative of Manibest’s director. The articles of
association provided that the seal of the company should not be used without the
F board’s authority and every document required to be sealed should be deemed to
be properly executed if sealed with the company seal and signed by the chairman
or such person as the board authorised. The second assignment in 1996 by Winkit
Properties Ltd was similar. The plaintiff claimed that the defendant’s title was
defective as it was settled law that the presumption as to due execution
(Conveyancing and Property Ordinance (Cap 219) s 23) only applied when there
G was evidence on the face of the title document that the person who executed it
had been duly authorised to do so. It was submitted that in the absence of such
evidence, there was a blot on the vendor’s title. The plaintiff insisted on seeing
evidence relating to due execution of the assignments. The defendant denied an
obligation to show it. The plaintiff did not complete the purchase and the
H defendant treated it as a repudiation and forfeited the deposit. By summons, the
plaintiff sought the return of the deposit.

Held, dismissing the plaintiff’s claim, with costs:

(1) In the absence of a requirement to the contrary by the articles of
association of the company in question, the mere affixing of a company’s seal
I was sufficient, without the presence of a witness, to make the document binding
on the company. Woo Turhan v Taiwan Fuji Trading (HK) Ltd [1995] 2 HKC 481
and Lo Wing Wah v Chung Kam Wah [2000] 1 HKC 479 considered. Lee Chat v
58 Hong Kong Cases [2000] 4 HKC

China Roll Industries Ltd [1998] 1 HKC 269 and Wong Yuet Wah Mandy v Lam A
Tsam Yee [1999] 3 HKC 268 distinguished. Li Ying Ching v Air-Sprung (Hong
Kong) Ltd [1996] 4 HKC 418 and Ho So Yung v Lei Chon Un [1998] 2 HKC 697
not followed (at 60I-61E, 64F-65B).
(2) Although the defendant could not rely on the ‘deeming’ provisions in the
articles of association of the two companies, it could rely on the presumption as
to due execution under s 23 of the Conveyancing and Property Ordinance B
(Cap 219). Therefore there was no defect in the defendant’s title (at 65C).
(3) The battle lines over the requisitions were clearly drawn. They involved
pure law points. It was irrelevant whether the reasons put forward in the
defendant’s letters for not producing the evidence sought were based on the
correct legal principles. Dicta of Litton JA in Active Keen Industries Ltd v Fok C
Chi Keong [1994] 1 HKLR 396 at 405 applied (at 66I-67D).

Cases referred to
Active Keen Industries Ltd v Fok Chi Keong [1994] 1 HKLR 396
Agar v Athenaeum Life Assurance Society (1858) 3 CB(NS) 725, 27 LJCP 95, D
4 JurNS 211
Hillier Development Ltd v Tread East Ltd [1993] 1 HKC 285, [1992-93] CPR
416 (CA)
Ho So Yung v Lei Chon Un [1998] 2 HKC 697, [1998] CPR 515
Lee Chat v China Roll Industries Ltd [1998] 1 HKC 269, [1998] CPR 397
E
Li Ying Ching v Air-Sprung (Hong Kong) Ltd [1996] 4 HKC 418, [1995-96]
CPR 615
Lo Wing Wah v Chung Kam Wah [2000] 1 HKC 479, [2000] 1 HKLRD 227
Morris v Kanssen [1946] AC 459, [1946] 1 All ER 586, 115 LJ Ch 177
Peking Fur Store Ltd v Bank of Communications [1993] 1 HKC 625, [1992-
93] CPR 456 F
Shears v Jacob (1866) LR 1 CP 513, 35 LJCP 241
Tread East Ltd v Hillier Development Ltd (HCA 907/1991, unreported)
Whole Year Development Ltd v Lung Chiu Yee Julia (MP 966/1993,
unreported)
Wong Yuet Wah Mandy v Lam Tsam Yee [1999] 3 HKC 268, [1999] CPR 600 G
Woo Turhan v Taiwan Fuji Trading (HK) Ltd [1995] 2 HKC 481, [1994-95]
CPR 491

Legislation referred to
Conveyancing and Property Ordinance (Cap 219) ss 13, 23 H
Rules of the High Court (Cap 4) O 42 r 5B(6)
Bills of Sale Act 1854 [Eng] (Repealed by the Statute Law Revision Act 1894)

Other source referred to

Barnsley DG Conveyancing Law and Practice (4th Ed, 1996) p 453 I
Halsbury’s Laws of England (4th Ed) Vol 17 p 118
Williams Vendor and Purchaser (4th Ed, 1936) p 505
 [2000] 4 HKC Grand Trade Development Ltd v Bonance International Ltd (Chung J) 59

A [Editorial note: see also Chan Sai Hung v Well Develop Ltd [2000] 4 HKC 50
regarding a similar challenge to the due execution of an assignment by a
company owner.]

Action
This was an action brought by the plaintiff/purchaser seeking the return of its
B deposit from the vendor/defendant after the purchase of a flat fell through; the
plaintiff claiming that two previous assignments were not properly executed by
the owner companies. The facts appear sufficiently in the following judgment.

Allen Lam (CL Chow & Lam) for the plaintiff.

C Lee Yee Hung (Li Wong & Lam) for the defendant.

Chung J: Introduction
This is yet another action relating to requisitions on title arising from the
manner of execution of title documents by limited companies. The
D background facts are undisputed and are as follows.

The background facts

By a sale and purchase agreement dated 13 April 2000 between the
plaintiff purchaser and the defendant vendor, the parties agreed to convey
E a flat in Bowen Place, Bowen Road, Hong Kong. There were the usual
terms regarding:
1. the vendor’s duty to show and give good title in accordance with s 13
of the Conveyancing and Property Ordinance (Cap 219) (Cl 15.01
F thereof);
2. delivering requisitions and objections to title within seven working
days after the date of receipt of title documents (Cl 16.01).
Requisitions on title were raised subsequent to the date of the sale and
purchase agreement. Those relevant to this action relate to the execution
G of two assignments respectively by two companies (set out below).
The vendor of the assignment dated 29 April 1995 was a Manibest
Investments Ltd (Manibest). Manibest executed the assignment by:
(a) sealing it with the common seal of Manibest;
(b) signing it by one ‘Adrian John King representing FK Directors Ltd,
H [Manibest’s] director’.
The provision in the articles of association of Manibest relating to
execution is Cl 23 which provides:
(a) The Seal of the Company shall be kept by the Board of Directors and
I shall not be used except with their authority.
(b) Every document required to be sealed with the Seal of the Company shall
be deemed to be properly executed if sealed with the Seal of the Company
60 Hong Kong Cases [2000] 4 HKC

and signed by the Chairman of the Board, or such person or persons as the A
Board may from time to time authorize for such purpose.
The situation regarding the assignment dated 20 December 1996 is
similar. The vendor thereof was a Winkit Properties Ltd (Winkit). Winkit
executed the assignment by:
B
(a) sealing it with the common seal of Manibest;
(b) signing it by ‘its director, Chan Siu Kit’.
Winkit’s articles of association relating to execution of documents are the
same as those for Manibest and provide that:
C
20 The Seal of the Company shall be kept by the Board of Directors and
shall not be used except with their authority.
21 Every document required to be sealed with the Seal of the Company shall
be deemed to be properly executed if sealed with the Seal of the Company
and signed by the Chairman of the Board, or such person or persons as the
Board may from time to time authorize for such purpose. D

Was there any defect in title?

Before turning to the actual requisitions and the answers given thereto
(under the heading ‘The requisitions and the answers’ below), I shall deal
first with the arguments raised by the parties’ counsel at the hearing E
regarding the defendant’s title.
Mr Lam for the plaintiff contends that the defendant’s title is defective
relying on the following cases:
1. Wong Yuet Wah Mandy v Lam Tsam Yee [1999] 3 HKC 268;
F
2. Li Ying Ching v Air Sprung (Hong Kong) Ltd [1996] 4 HKC 418;
3. Lee Chat v China Roll Industries Ltd [1998] 1 HKC 269;
4. Ho So Yung v Lei Chon Un [1998] 2 HKC 697.
He submits that by reason of the decisions in Wong Yuet Wah Mandy and
Li Ying Ching, it is now settled law that s 23 of Cap 219 (presumption as G
to due execution) only applies when there is evidence on the face of the
title document that the person who executed it has been duly authorized to
do so. In the absence of such evidence, there is a ‘blot’ in the vendor’s
title.
Save as regards Li Ying Ching and Ho So Yung, Mr Lee for the H
defendant argues that the decisions relied on by the plaintiff are
distinguishable. This will be discussed below.

(1) Execution of documents by companies at common law

Mr Lee submits that in order to properly determine the validity of the I
assignments executed by Manibest and Winkit, it is necessary to examine
how a limited company can validly execute a document at common law.
 [2000] 4 HKC Grand Trade Development Ltd v Bonance International Ltd (Chung J) 61

A In this connection, he refers to Woo Turhan v Taiwan Fuji Trading (HK)

Ltd [1995] 2 HKC 481:
On this question of execution of company documents, extracts from Gore-
Brown on Companies are cited:
Para 5.6 … Where a document has to be sealed, most articles provided that
B this may be done by a director and the secretary or by two directors. The cases
establish that where a document is executed with the signature or signatures
that the articles require, its formal validity cannot be contested by the
company, but where this is not the case, the document is not binding on the
company …
C Para 5.8 … The mere affixing of the seal of a corporation is sufficient
without witness, and unless the articles provided that the directors shall attest,
it is not necessary, though it is customary, for them to do so. Where the articles
have such provision, the signature of the directors is not an attestation in the
ordinary sense, but is part of the execution of the deed, and it would seem to
follow that without such signatures, the execution is not complete …
D (emphasis supplied) (pp 484-485, per Leong J (as he then was)).
Although the learned judge did not expressly approve the above passages,
it appears from the tenure of his judgment that he approached the matter
on the basis that they were legally correct. After having considered the
above passages and those set out below regarding this point, I agree with
E Mr Lee’s submission that, in the absence of requirement to the contrary
by the articles of association, the mere affixing of a company’s seal is
sufficient without witness to make the document binding on the company.
The point was also discussed in Barnsley’s Conveyancing Law and
Practice (4th Ed, 1996) p 453:
F
(f) Execution by corporations
[After referring to s. 1 of the Law of Property (Miscellaneous Provisions) Act
1989 which only applies to individuals] … The execution of a deed by a
corporation aggregate requires the affixing of its seal. This is no mere empty
G formality, since a corporation, for obvious reasons, cannot sign documents
….
In Shears v Jacob (1866) LR 1 CP 513, the manner of execution by a
company was discussed. It must, however, be noted that this was done in
the context of whether the directors and secretary of the company have
H signed as attesting witnesses, thus rendering the document void as a bill
of sale under the Bills of Sale Act. The Court of Common Pleas said:
But I think that there is no pretence for saying that [the directors] attested the
making of this instrument. They have merely put their names to it for the
purpose of authenticating the seal; and the countersigning by the secretary
I was in like manner a mere compliance with the ordinary form of affixing the
seal of a joint-stock company to every document issued by them (emphasis
supplied) (p 517, per Erle CJ).
62 Hong Kong Cases [2000] 4 HKC

The other members of the court (Byles, Keating and Montague Smith JJ) A
considered essentially that the directors signed as directors only, but not
as attesting witnesses within the meaning of the Bills of Sale Act. There
was, however, no discussion about the exact nature of the signatures.
Finally, the learned authors of Williams on Vendor and Purchaser (4th
Ed, 1936) said: B
… In general, while a company is a going concern … the regularity of a sale
can be assured … except … to see that the conveyance to the purchaser is duly
executed by the use of the seal of the company in accordance with the clause as
to the use of the seal in the articles of association … (emphasis supplied)
(p 505). C

(2) Relevant Hong Kong decisions

Having dealt with the common law position regarding how a company
can execute a document, Mr Lee seeks to distinguish the decisions relied
on by the plaintiff in the following manner. D
The relevant article in Wong Yuet Wah Mandy stated:
All deeds … requiring the seal of the Company shall be signed … in such
manner as the Directors shall from time to time by resolution determine.
The distinguishing features are: (1) there was a specific requirement for E
signature and (2) the manner of signing also needs to be determined by
the directors by resolution.
Lee Chat was concerned with the vendor’s failure to supply the articles
of association of the company in question, the court said:
… here the purchaser’s solicitors did not have a copy of the articles of F
association … In fact, they specifically asked to be provided with a copy …
In my judgment, the purchaser were entitled to ask to see a copy of the
articles in order to verify whether it was within the powers of the company to
authorize one director only to sign the agreement … Without them, there is no
question of s 23 being triggered … (at pp 274-275, per Le Pichon J).
G
Mr Lee further argues that the defendant’s case is supported by Lo Wing
Wah v Chung Kam Wah [2000] 1 HKC 479, [2000] 1 HKLRD 227:
Some articles no doubt do expressly provide that the common seal shall not be
affixed to any instrument except in the presence of say, two directors … In
those cases, even the act of affixing the seal would itself not be valid unless it H
was done in the presence of the required number of company officers.
In the present case, however, art 19 provides for the use of the seal with the
authority of the directors, but that is all. Article 20 is a deeming provision
which deems a deed to be properly executed if sealed with the seal of the
company and signed by the Chairman singly, or by two directors jointly.
So I take the view that the sealing of the deed in this case is not, in any I
case, invalidated, even if the signature part of art 20 is not complied with. The
legal estate of the property passed by the sealing (see Peking Fur Store Ltd v
 [2000] 4 HKC Grand Trade Development Ltd v Bonance International Ltd (Chung J) 63

A Bank of Communications [1993] 1 HKC 625) (emphasis supplied) (p 481

(HKC), p 229 (HKLRD), per Yuen J).
I pause to observe that art 20 in Lo Wing Wah is, for present purpose, the
same as the relevant articles of Manibest and Winkit.
However, the latter part of the decision in Lo Wing Wah can be
B understood as supporting the plaintiff’s case:
I find that the signature of the assignment by Wong singly was not in
compliance with art. 20 …
There was no evidence provided by the plaintiffs to the effect … that Wong
… was the Chairman … And since Wong was not described as Chairman on
C the assignment, s. 23 of … Cap. 219 does not help …
However, that is not the end of the line for the plaintiffs. They have
answered the requisition by providing evidence to the effect that the Company
… has been voluntarily wound-up in 1993, six years after the assignment …
and five years prior to this agreement.
… the Company had no assets other than those listed in the statement of
D
assets … and the property in issue was not included … in the list …
… I would hold that … it is clear the Company had no intention to assert
any claim to the property and there is no risk … to have the assignment
declared invalid … (p 230).
Naturally, Mr Lam for the plaintiff argues that the latter part of Lo Wing
E
Wah was correctly decided whereas Mr Lee for the defendant argues that
the former part of Lo Wing Wah was. The learned judge has not stated
whether the part of the judgment regarding the single signature of Wong
was an alternative way of approaching the matter in issue. If so, then Lo
Wing Wah would be a decision which supports Mr Lee’s argument. If,
F however, the learned judge was of the view that due execution by the
company could only be effected by affixing the company seal coupled
with the signature of Wong, then Lo Wing Wah will support Mr Lam’s
argument.
A slightly different approach was adopted in Peking Fur Store Ltd v
G Bank of Communications [1993] 1 HKC 625 at 626, 627. Having found
that the signature of only one director did not comply with the articles of
association, the court said:
… The vendor has produced … a copy of a resolution of the board … which
not only authorized the transaction … but expressly authorized the signature
H … by one director only … The company’s seal was affixed to the assignment
and the legal estate passed accordingly, despite the formal defect in execution.
The general rule is that a corporation is bound by an instrument under its seal,
unless it can be shown that its execution was obtained by fraud, or there is
some illegality in the transaction: Agar v. Athenaeum Life Assurance Society
(1858) 3 CB(NS) 725, 726; 140 ER 927 per Willes J (emphasis supplied).
I
The decision in Agar was summarised in the headnote of the report which
reads:
64 Hong Kong Cases [2000] 4 HKC

A departure from the formalities required by the deed of settlement of a joint A

stock company does not affect the validity of a contract under its common
seal.
It is no defence, therefore, to an action against a joint stock company upon
a debenture sealed with their common seal, that the borrowing of the money
thereby secured was not sanctioned by a resolution of an extraordinary general B
meeting of the shareholders, pursuant to the provisions of their deed of
settlement … .

The argument relating to the need for sanction arose from the signature of
the debenture by only two directors but a provision in the said deed
provided for signature by three directors. Cockburn CJ, Williams and C
Crowder JJ decided the argument on the basis that the provision in the
deed did not cover the debenture. The ‘general rule’ referred to in Peking
Fur Store Ltd was found in the judgment of Willes J in the Agar case.

(3) Decisions in Lo Wing Wah, Li Ying Ching and Ho So Yung D

Whatever may be the true effect of the decision in Lo Wing Wah, the
plaintiff’s argument is clearly supported by Li Ying Ching and Ho So
Yung. The articles of association in those cases are again, for present
purpose, the same as those for Manibest and Winkit. The learned judges E
in those cases decided that the execution of title documents was invalid
when they were signed by one director only.
At one stage Mr Lee seeks to distinguish the said two cases but,
realizing that there cannot be any proper way to achieve that purpose, he
asked me to decline to follow them. Mr Lam naturally asks me not to do F
so.
As stated above, I accept Mr Lee’s argument that a document can be
duly executed by merely affixing the seal of the company. This argument
was apparently not raised by counsel in Lo Wing Wah (insofar as that case
should have decided that both sealing and signing are both required), Li G
Ying Ching or Ho So Yung and was not referred to in those decisions.
Further, the relevant articles of association in Manibest and Winkit are
‘deeming’ provisions as to proper execution which were intended for the
benefit of the company as well as those dealing with it. Hence, when a
document of these companies is sealed and signed by the requisite H
officer(s), the document is deemed to have been properly executed. There
is however no reason to conclude that the articles provide for a ‘reverse
deeming’, that is, the document is deemed not to be properly executed
when it has not been signed in the manner provided for.
I have already dealt with the issue of how a document can be validly I
executed by a company at common law. For the above reasons, I conclude
that I should decline to follow the above decisions.
 [2000] 4 HKC Grand Trade Development Ltd v Bonance International Ltd (Chung J) 65

A (4) Conclusion
By reason of the matters aforesaid, I conclude that:
(a) a document of a company is duly executed if it is affixed with the
company seal, unless other matters are required by the articles of
B association;
(b) I should decline to follow the decisions in Lo Wing Wah (insofar as it
requires a document to be both sealed and signed), Li Ying Ching and
Ho So Yung;
(c) Wong Yuet Wah Mandy is distinguishable on the facts.
C Although the defendant cannot rely on the ‘deeming’ provisions in the
articles of association of Manibest or Winkit, by reason that the two
assignments in question appear to have been duly executed, I find that the
defendant can rely on the presumption as to due execution under s 23 of
Cap 219. There is therefore no defect in the defendant’s title.
D
The requisitions and the answers
The parties also dispute whether the defendant’s solicitors have properly
answered the plaintiff’s requisitions. The relevant correspondence
commenced with a letter dated 3 May 2000 from the plaintiff:
E
The [Manibest] Assignment was executed by only one director … not in
accordance with the sealing provisions. Please prove due execution of the
Assignment.
A similar requisition was raised in relation to the Winkit assignment.

F These requisitions were actually not quite correctly worded because, as

can be seen from the articles of association, the ‘sealing provisions’ only
stated that the company seals ‘shall not be used except with [the Board of
Directors’] authority’. The defendant’s solicitors nevertheless did not
seem to have any difficulty in understanding the requisitions and
G
responded as follows:
Please refer to Law Society’s Circular 105/90 (copy enclosed), in which it was
clearly stated that in situation 2(c) as therein mentioned, we are not required to
produce any authorization as section 23 of [Cap. 219] could properly be
invoked. We consider the situation is still valid … No further proof of due
execution of the subject Assignment is necessary.
H
The same answer was given as regards the other requisition. Para 2(c) of
the Law Society Circular stated:
A conveyancing document may be executed by a corporation … in the
following manner …
I otherwise than in accordance with section 20(I), e.g. by person or persons
authorized by the board of directors for the purpose pursuant to the Articles of
Association …
66 Hong Kong Cases [2000] 4 HKC

The Council has obtained a London Q.C.’s opinion on this matter and the A
opinion is that in all the circumstances set out … above, a vendor is NOT
required, in view of … section 23 [of Cap. 219], to produce evidence of
authorization by the board of directors in order to prove title.
The plaintiff was dissatisfied with the answer and said in the letter dated
4 May 2000: B
We cannot accept your answer. Replying on Wong Yuet Wah Mandy v. Lam
Tsam Yee [1999] 3 HKC 268, we are entitled to the board resolution of the
Vendor in order to satisfy ourselves as to the due mode of execution … .
The defendant responded by a letter dated 4 May 2000: C
We would like to distinguish the case of Mandy Wong … In the said case,
Board Resolutions needs [sic] to be produced where the sealing provision of
the Articles of Association reads [the Clause referred to in Wong Yuet Wah
Mandy was then set out (see above)] … In the present situation, we would
refer to the sealing provision of the Company concerned, where it reads that
[the relevant article (see above) was then set out]. We then opine that the D
execution by one Director … in the capacity of the Vendor … falls within the
meaning of ‘duly executed’, without the necessity of producing a board
resolutions [sic]. Please also refer to the Law Society’s Circular 105/90 … .
Further correspondence regarding this point continued and in a letter
dated 5 May 2000, the defendant said: E

… we would like to stress that there is no requirement as stated in the

company’s sealing provision that the production of board resolution is
necessary to prove authorization of such person by the Board … But in Mandy
Wong case, the sealing provision reads that, ‘ … or in such manners as the
Directors shall from time to time by resolution determine’ which means that if F
a document is executed by one person under seal, … a resolution authorizing
the execution must be produced in order to prove the execution.
It is unnecessary to set out the details of the subsequent correspondence
which in effect repeated the said lines of argument. By 5:30pm on
5 May 2000 (after the extended time for completion has lapsed), the G
defendant wrote and informed the plaintiff that in view of the plaintiff’s
failure to complete, the defendant treated it as a repudiation and
terminated the agreement. The deposit was also forfeited.
Mr Lee fairly accepts that the correspondence between the parties’
solicitors could have been better worded. However, he submits that the H
battle line was sufficiently clearly drawn: the plaintiff insisted that the
defendant should produce evidence relating to due execution of the
assignments whereas the defendant denies such an obligation to do so.
Mr Lee contends that even though the reason(s) given by the defendant
for not producing the evidence asked for might not have been the proper I
ones, this should not affect the outcome of this action. This is because,
first, neither party was in doubt as to what the other side’s stance was.
 [2000] 4 HKC Grand Trade Development Ltd v Bonance International Ltd (Chung J) 67

A Further, he relies on the following observation in Active Keen Industries

Ltd v Fok Chi Keong [1994] 1 HKLR 396, 405:
Obviously, if a purchaser raises a substantial objection as to the vendor’s title
and there are facts within the vendor’s knowledge which, if revealed, might
meet the objection, and the vendor chooses to withhold that … the vendor
B clearly cannot, on the day fixed for completion, turn round and say … Now I
will both show you a good title and make you good title … The purchaser
must be given reasonable time to consider the title of the vendor and his own
position …
… A requisition as to title is not an occasion for the parties’ solicitors to
bandy propositions of law: each party must decide for himself, ultimately,
C
what the legal position is, based upon the facts known to himself: although,
obviously, if one party can persuade the other to his own point of view on the
law, so much the better (emphasis supplied) (per Litton JA (as he then was)).
Mr Lee said in this action the relevant facts were fully known to both
D parties’ solicitors. The requisitions and answers were related to pure
points of law. Provided the battle line was clearly drawn, Mr Lee submits
it is irrelevant whether the arguments put forward in the defendant’s
letters were based on the correct legal principles. In view of the
observations in Active Keen Industries Ltd, I agree with his submission.
The position with regard to requisitions and answers which involve
E
points of mixed fact and law may or may not be different from the
observations in Active Keen Industries Ltd. Since this does not arise in the
present action, it is appropriate to leave the point to be determined in
future should it become necessary to do so.
F Other matters
Having come to the above conclusions, it is unnecessary to deal with the
other points raised by the defendant. I shall therefore only mention them
for completeness.
G Mr Lee argues that the requisitions were not valid because they were:
1. insufficiently specific as to how the execution of the assignments was
allegedly not in compliance with the articles of association;
2. not formulated with reasonably sufficient precision in that they did
not explain how the allegedly improper execution of the assignments
H would affect the defendant’s title.
Mr Lee also raises the point that by virtue of Cl 15.02 of the sale and
purchase agreement, the defendant did not contract to convey any legal
estate in the suit property to the plaintiff.
I Further, Mr Lee argues that the defendant has satisfactorily answered
the requisitions by referring to the ‘internal management’ rule (or the
Turquand’s Rule), relying on Tread East Ltd v Hillier Development Ltd
68 Hong Kong Cases [2000] 4 HKC

(HCA 907/1991, unreported); Hillier Development Ltd v Tread East Ltd A

[1993] 1 HKC 285 (CA).
Lastly, Mr Lee submits that even if the defendant could not rely on s 23
of Cap 219, it could rely on the following long established common law
principles:
(a) omnia praesumuntur legitime facta donec probetur in contrarium (all B
things are presumed to have been legitimately done, until the contrary
is proved);
(b) omnia praesumuntur rite et solemniter esse acta (all things are
presumed to have been done rightly and regularly):
C
Halsbury’s Laws of England Vol 17 (4th Ed) p 118; Morris v Kanssen
[1946] AC 459, 475.

Conclusion
By reason of the aforesaid matters, I find in the defendant’s favour. The D
plaintiff s claim is therefore dismissed.

Relief
Since I have dismissed the plaintiff’s claim, it is also unnecessary to
consider the relief asked for in this action. Without disrespect to counsel, I E
shall not set out the arguments raised by counsel regarding this aspect of
the action.

Costs
There will be a costs order nisi pursuant to RHC O 42 r 5B(6) that the F
cost of this action be to the defendant to be taxed if not agreed.

Reported by Lindy Course