Formalities

Hui Jing
Deeds: s 4 of the CPO

S 3(1) of the CPO

Basis
Documents in Writing
S 3(2): Part Performance

Requirements

Doctrine in Walsh v Lonsdale (1882) 21 Ch D 9

Equitable Lease

Broader Application
 Background

In general, there are two levels of formality for the acquisition and disposal of interests in land: (a) deeds and (b) documents in writing.

According to Lon Fuller, “Consideration and Form” [1941] 41 Columbia Law Review 799, formalities serve thee possible functions: (a)
evidentiary; (b) cautionary; and/or (c) channelling. For our purposes, it is the first two which are more relevant.

Deeds – S 4 of the CPO

The requirement for a deed extends not only to the grant of a legal estate but also its transfer and its extinguishment. A deed is a specific
document that is signed, sealed, and delivered.

Signed
Nor does signature mean signature ordinarily understood. Instead, it has been given an extended meaning so that provided the name of
the party to be charged appears in some form, it will suffice as a signature if that party has shown that he recognizes that document as an
expression of the deed (i.e. intention to be bound). Thus, a document in Morris’s handwriting which begins “I, Morris, agree” suffices
(Knight v Crockford (1794) 1 Esp 190).

Sealed
• At a time when few people could write or sign their names they would use an imprint in wax of their personal emblem, known as a
seal, or, if they had no seal, their thumb print. The chop in China is similar to the seal.
• However, with the development of education, a person’s signature became much more important as an indication that they intended to
be bound by a document.
• The process of sealing, as a result, has become little more than a formality represented merely by a small red wafer or paper spot stuck
onto the deed. This development is reflected in s 19 of the CPO.
• S 19 of the CPO does not abolish the need for sealing but reduces its significance by providing that a document is presumed to be
sealed if it is described as a deed, if it states that it has been sealed, or if there is an impression of a seal or something representing an
impression of a seal.

Delivered
• Delivery is some act or statement by the person executing the deed that shows that he intends irrevocably to be bound by it.
• At one time, delivery would be effected by the use of formal words such as ‘I deliver this as my act and deed’, but delivery is now
usually effected by the act of the handing over the deed to the other party or his agent.

Exception for present purpose: s 4(2)(d) of the CPO

 S 3(1) of the CPO

1. Contract for the Sale of Land

(a) Enforceability
• To be enforceable, a contract for the sale of land must be in writing or it must be evidenced in writing by a memorandum that is
signed by the party against whom enforcement is sought or by his agent.
• An oral contract for the sale of land is not void, but it is unenforceable at common law. Thus, if one party should fail to perform his
obligations under the contract the innocent party cannot go to court to enforce the contract or to obtain damages for its breach.

(b) Sale of Other Disposition of Land

The section applies not only to the sale of a flat or piece of land where the owner is disposing of his whole interest under the Crown
lease, but also to an agreement to create or transfer or extinguish any other interest in land, for instance a lease or mortgage.

2. Unless the agreement or some memorandum or note thereof, is in writing signed by the party to be charged or by some other
person lawfully authorized by him for that purpose

(a) Agreement
The parties’ agreement for the disposition of an interest in land must satisfy the usual requirements of any valid contract.

(b) Memorandum or Note

• The parties’ agreement must be in writing or there must be adequate written evidence (e.g. memorandum) of the oral agreement.
• Many agreements for sale of land are themselves in writing but often, particularly in the early stages of a transaction, the parties
will not have put their agreement in formal written terms but will just have entered into some preliminary correspondence or other
documentation. The memorandum of sale is generally made after the oral agreement.
• The memorandum must provide sufficient evidence of the material terms of the parties’ agreement, for example: (a) the parties
must be named or otherwise identifiable (Rossiter v Miller (1878) 3 App Cas 1124); (b) the property must be sufficiently identified,
not only as to its physical location but also the legal nature of the interests to be disposed of (Cowley v Watts (1853) 17 Jur 172);
and (c) the price or a formula for ascertaining the price must be stated (Dr Li & v Crocus Properties Inc (1982) CA Civ App No 137
of 1981)
• The memorandum may be contained in more than one document provided that the document signed by the party to be sued
contains some express or implied reference to the other documentation to be relied upon or to the transaction itself (Chan Yat v
Fung Keong Rubber Manufactory Ltd [1967] HKLR 365): doctrine of joiner of documents
 (c) Acknowledgement of the Agreement
• The memorandum need not be in any particular form but it should contain some express or implied recognition of the oral contract
(Tiverton Estates Ltd v Wearwell [1975] 1 Ch 146).
• A very common device, therefore, to avoid correspondence constituting an enforceable memorandum is to mark it ‘subject to
contract’ as an indication that the parties have not yet come to a final agreement.

(d) Signed by the Party to be Charged

• The memorandum must be signed by the party who is to be sued since a memorandum will not be enforced against someone unless it
is evident that he acknowledges by his signature that there is an agreement.
• ‘Signed’ not only includes a full signature but any personal acknowledgement of the agreement, for instance, a personalised rubber
stamp (Goodman v j Eban Ltd [1954] 1 QB 550). It is also sufficient if the party to be sued has been merely named in the document
provided that he is named in such a way that it is clear he recognises the document as an expression of the contract (Leeman v Stocks
[1951] Ch 941).
• Signature by a duly authorised agent is sufficient even if that authority is given orally or is implied (e.g. a sale agent or solicitor) by
the nature of the agency.
S 3(2) of the CPO – Part Performance
• The requirement for written evidence of a contract for the sale of an interest in land does not affect the doctrine of part performance.
• Thus, it is not quite true to say that all oral contracts are unenforceable. An oral agreement may be enforceable in equity if supported by
sufficient acts of part performance.

Basic of Part Performance

The Statute of Frauds 1677 was passed to overcome the evidentiary problems in establishing and enforcing an oral contract for the sale of
land, in particular to combat the temptation to give perjured evidence.
For instance, if A and B made an oral contract for the sale of A’s flat to B, it could be very tempting for A to deny the existence of the contract
if he wished to escape from the sale so he could sell his flat for a higher price to someone else.

But the Statute of Frauds 1677 soon gave rise to its own injustice, for a party could deny an oral contract that had been acted on by the other
Party. Clearly equity could not stand by and allow parties to use the statute so unjustly. It soon developed the doctrine of part performance to
prevent the statute itself being made an instrument for fraud.
 Requirement of Part Performance

1. Contract
• There must be a concluded contract between the parties and it must be possible to ascertain its terms.
• The acts of part performance themselves may give no hint of the terms (e.g. sale or lease?), but once they are accepted as sufficient acts to
establish the existence of the contract, oral evidence may be brought of the terms of the contract.

2. Specific Performance
• The contract is only enforceable in equity and is thus dependent on the contract being capable of specific performance. Besides granting
specific performance, s 13A of the Law Amendment and Reform (Consolidation) Ordinance confers upon the court a power to grant
damages in these circumstances.
• Part performance as an equitable doctrine cannot be claimed as of right. The courts may decline to rely upon the doctrine if there has been
discretionary bars (e.g. unclean hands) (Coatsworth v Johnson (1886) 54 LT s 20)

3. Sufficient Acts of Part Performance

• Since the basis of the doctrine is the fraud done to the plaintiff, the acts must be done by the plaintiff with the knowledge of the defendant.
For example, B, following an oral contract to purchase A’s flat, not only pays the purchase price and is let into possession but also carries
out certain renovation and improvement works to the flat. All these acts may be accepted as acts of part performance.
• Test: what act is an acceptable act of part performance?

In Maddison v Alderson (1883) 8 App Cas 467, the Earl of Selboume (at 479) suggested that ‘the acts relied upon as part performance
must be unequivocally, and in their own nature, referable to some such agreement as that alleged’. He (at 476) had also suggested that
it was sufficient if ‘the alleged contract . . . is reasonably to be inferred from the res gestae [Latin: things done] themselves’ , which
suggests a lower standard.

In Steadman v Steadman [1976] AC 536, Lord Reid (representing the majority view) described the test as to ‘take the whole
circumstances, leaving aside the oral contract, to see whether it is proved that the acts relied on were done in reliance on a contract: that
will be proved if it is shown to be more probable than not’. In other words, the fact that there is an explanation for the plaintiff’s conduct
other than the existence of the contract will not be fatal. It is enough that it is the most likely explanation.

4. Sort of Contract
• There was some suggestion in Steadman, notably from Lord Reid, that the acts need not indicate a contract relating to land. It was
sufficient if they merely related to any contract.
• But, subsequently in Re Gonin [1979] Ch 16 the view that the acts relied on must point to a contract relating to land has been reasserted.
 Intervention of Equity: Equitable Lease

1. Failure of Legal Lease

According to s 4 of the CPO, a legal lease for more than three years or taking effect in the future must be granted by deed.
Any purported grant of a lease for more than three years not by deed (i.e. written form or oral) must be void for the purpose of granting a
legal lease.

2. Specifically Enforceable Contract

If the purported grant nevertheless satisfies the requirement of s 3 of CPO (being in or evidenced by writing, or if merely oral it must be
supported by part performance), and the tenant has given valuable consideration, it will be recognised by equity as a specifically enforceable
contract for the grant of a legal lease, provided there is no discretionary bar, where for example, unconscionable conduct, or a bona bide third
party has acquired an interest in the demised premises.

3. Recognition of an Equitable Lease

The purported grant is therefore effective to create an equitable lease.

4. Legal Consequences
• As equity looks on that as done which ought to be done, equity regards the parties as governed by the terms (e.g. promises/covenants)
originally stipulated in the contract for the period as stipulated in such contract, as if a legal lease for the term agreed had been granted.
This is known as the doctrine in Walsh v Lonsdale (1882) 21 Ch D 9.
• The obligations of the parties would be governed by the equitable lease.

5. Broader Application
• The doctrine is framed in the context of leases but it is also applicable to the creation or disposition of other interests in land.
• Thus if A agrees to grant an easement or mortgage to B, B will be regarded as the holder of an equitable easement or mortgage as the case
may be.