Conveyancing: Imprecise requisitions: substantial performance

In Continental Zone Ltd v More Glory International Ltd ([2013] HKEC 568, CFI) M had entered into an agreement to sell property to C. In August 2011, C raised the following requisition:

‘Please take instructions from your client and advise us whether there is/are any unauthorized or illegal structure(s) or alteration(s) of and in the Property.’

In December 2011, C followed up by forwarding a report from architects and engineers to the effect that 10% of the net area to be sold encroached into public land. The letter forwarding the report began by making it clear that C was rescinding.

Deputy Judge Keith Yeung S.C. held that the August requisition was too vague to amount to a requisition and so there was no duty to reply ([28]). The December requisition did not suffer from this defect but C purported to rescind before raising the matter ([34]).

Nevertheless, a seller remains under a duty to give good title if the defect cannot be removed by completion or where it has kept the agreement alive ([43] and [51]). There was still a duty to give good title here.

While M could invoke the doctrine of substantial performance ([62]) the burden of proof was on M ([77]) and this burden had not been discharged:

‘The Property would have been a substantially different one both objectively and from Mr. Tsang’s subjective perspective. The Defendant could not have substantially performed the Agreement.’ ([79])

Michael Lower

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