Member of Wui objecting to sale

The mere fact that a member of a Wui signs a form consenting to a sale of Wui property does not estop him from lodging objections to the sale with the District Officer (or otherwise bind him to promote the carrying out of a contract entered into by the managers of the Wui for the sale of Wui property). The managers of a Wui are in a trustee relationship with members (they are not the agents of the members). Rectification of a formal agreement to make it conform to the terms of a provisional agreement will only be ordered where there is convincing proof that the provisional agreement reflects the parties’ true intentions while the formal agreement does not.

In Million Way Ltd v To Shing Wo ([2011] HKEC 560, CA) the managers of a Wui negotiated the sale of Wui property to MW. The members of the Wui approved the sale. A provisional agreement for sale was entered into, this was conditional on obtaining the District Officer’s consent to the sale. The provisional agreement gave MW the right to terminate the agreement if the consent was not obtained within a specified time. The formal agreement, by contrast, provided that the agreement would terminate automatically if the consent had not been obtained by the end of the relevant period.  An application to sell the property was signed by the  members of the Wui, including D4.  D4, nevertheless, wrote to the District Officer objecting to the sale and, as a result, the District Officer refused to consent to the sale. When the period specified in the formal agreement came to an end without the consent having been obtained, the Wui’s solicitors claimed that the agreement was terminated. MW sought a declaration that D4 was estopped from acting so as to prevent the necessary consent from being obtained.

On appeal, MW argued that the managers acted on behalf of the members and that each member was bound by the contract (and therefore precluded from acting so as to prevent the consent from being obtained). This was rejected, managers are trustees for, not agents of, the Wui members. The managers personally enter into the contract. MW also sought rectification of the formal agreement so that it reflected the terms of the Provisional Agreement (which gave MW an option as to whether to terminate the contract or not). This also failed. MW had failed to provide convincing proof that the terms of the Provisional Agreement (rather than the Formal Agreement) reflected the parties’ intentions.

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