Land Contract and Formalities

Transfer of Property
 How is property disposed
o Gift, sale, etc
 Transfer of chattels – Sale of Goods Ordinance (Cap 26)
o No particular formality required
 Transfer of land –
o Conveyance – transfer of ownership of property between seller and buyer
o Formalities are necessary

Purpose and Function of Formalities

 According to Lon Fuller, “Consideration and Form” [1941] 41 Columbia Law Rev 799,
formalities serve thee possible functions:
1. Evidentiary (i.e proof);
2. Cautionary (i.e. think before selling); and/or
3. Channeling (i.e. shows to the world that the document subject to the
formality is an enforceable promise) (Fuller calls it an “external test of
enforceability”
Insofar as conveyances are concerned, there is also a publicity function (i.e., registration).

Conveyancing of Property
 Conveyances must take the form of a deed.
Section 4(1) CPO
“A legal estate in land may be created, extinguished or disposed of only by deed.”
 legal estate defined in s2
 A deed in Hong Kong must be signed, sealed and delivered.
o Deed: a legal document that is signed and delivered, especially one regarding
the ownership of property or legal rights.
 The requirements of sealing and delivery used to be laid down at common law –
s19(2) CPO
 The requirement of a signature was added by section 19(1) of the CPO
Section 19 - Execution of deed by individual
1. A deed by an individual shall be signed by him.
2. A document shall be presumed to have been sealed by an individual if the document
signed by him—
(a) describes itself as a deed; or
(b) states that it has been sealed; or
(c) bears any mark, impression or addition intended to be or to represent a seal
or the position of a seal.
3. Subsection (1) applies only to documents executed after the commencement* of this
section.
4. Subsection (2) applies to a document executed before or after the commencement
of this section.
5. This section does not affect any other law by which an individual may authorize
another person to sign a deed on his behalf.

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  Company have slightly different requirements – see s 20 CPO
Section 20 – Execution of a deed by corporation
(1) In favour of a person dealing with a corporation aggregate in good faith, his
successors in title and persons deriving title under or through him or them, a deed
shall be deemed to have been duly executed by the corporation if the deed purports
to bear the seal of the corporation affixed in the presence of and attested by its
secretary or other permanent officer of the corporation and a member of the
corporation’s board of directors or other governing body or by 2 members of that
board or body
(2) Where a person is empowered to execute a deed by a corporation, he may execute
the deed as agent by signing the name of the corporation or his own name and by
affixing his own seal.
(3) Where a corporation aggregate is empowered to execute a deed by another person,
an officer appointed for that purpose by the board of directors or other governing
body of the corporation may execute the deed in the name of such other person;
and where a deed purports to be so executed then the deed shall, in favour of a
person dealing with the corporation in good faith, be deemed to have been executed
by an officer duly authorized.
(4) This section applies to transactions wherever effected, but only to deeds executed
after the commencement* of this section; except that, in the case of powers of
appointment of an officer, they apply whether the power was conferred or the
appointment was made before or after the commencement of this section.

Section 128 CO – Execution of deeds by company

Section 127 and Section 128 Companies Ordinance (Cap 622) governs execution by deed by
a company:
1) company may execute a document as a deed by—
(a) executing it in accordance with section 127;
(b) having it expressed (in whatever words) to be executed by the company as a
deed; and
(c) delivering it as a deed.
2) For the purposes of subsection (1)(c), a document is presumed, unless the contrary
is proved, to be delivered as a deed on its being executed in accordance with section
127.
3) If there is any conflict or inconsistency between this section and the provisions of
any other Ordinance, this section prevails over those provisions to the extent of the
conflict or inconsistency.
Compare this with section 20 of CO

Contracts
 The formality requirements for contracts of sale are more complicated. They do not
necessarily have to be in writing but must be evidenced in writing.
 Section 3 does not render an oral contract void altogether but simply precludes the
bringing of an action to enforce it
o The contract is binding, yet unenforceable – can be enforced in other ways
except by action
o

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Section 3 of the Conveyancing and Property Ordinance (Cap 219):
1) Subject to section 6(2), no action shall be brought upon any contract for the sale or
other disposition of land unless the agreement upon which such action is brought, or
some memorandum or note thereof, is in writing and signed by the party to be
charged or by some other person lawfully authorized by him for that purpose.
2) This section applies to contracts or other dispositions whenever made and does not
affect the law relating to part performance or sales by the court.”
o Part performance can be viewed as alternative to s3(1)

This can be compared to the modern English position.

Section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 (Cap 34):
1) A contract for the sale or other disposition of an interest in land can only be made in
writing and only by incorporating all the terms which the parties have expressly
agreed in one document or, where contracts are exchanged, in each.”

Buyer is normally required to pay a 9% deposit of the purchase price if he has paid 1%
deposit on signing a provisional agreement or 10% if he has not
 Once contracts are exchanged, parties bound irrevocably & ready to proceed to the
completion of contract
 A buyer who buys from a developer does not have to pay further deposit when he
signs the sale and purchase agreement but will have to pay stamp duty
 If seller changes mind, buyer can seek an order of specific performance compelling
the seller ot carry out the sale

FORMALITY
For a contract for the sale of land to be enforceable by legal action, certain formalities must
be complied with under s3(1) of CPO
 Subject to section 6(2), no action shall be brought upon any contract for the sale or
other disposition of land unless the agreement upon which such action is brought, or
some memorandum or note thereof, is in writing and signed by the party to be
charged or by some other person lawfully authorized by him for that purpose.

A contract for the sale of land CAN be made orally – made in the same way as any other
contract, however, under s3 of CPO, a contract for the sale of land has to be in writing or
evidenced by a memorandum in writing or supported by past performance – otherwise it
is unenforceable by action
 SO although a purely oral contract is as valid as a written one – it will be
unenforceable
 Can still be enforced in other way except by action – eg. If the buyer paid a deposit
under an oral contract, the seller can keep the deposit if the buyer defaulted as it is
normally an implied term in the contract that a deposit is paid as a guarantee against
breach of contract and can be forfeited on breach
o If s3 rendered oral contract void, deposit would have to be returned, for
there will be no ground upon which the seller can retain the deposit – if there
was no contract at all, the buyer would be able to recover the deposit on the
ground of total failure of consideration under law of restitution

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Under s6(2), nothing in s3 shall affect the creation by parol of leases taking in possession for
a term not exceeding 3 years (whether or not the lessee is given power to extend the term)
at the best rent which can be reasonably obtained without a premium
 the Court of Appeal held that there were sufficient acts of part performance and,
thus, it was not necessary to consider whether the alleged three-year lease was
‘taking effect in possession’. Nevertheless, Cheung JA referred to defence counsel’s
submissions on section 6(2) as follows:
 ... counsel for the defendant argued that the plaintiffs cannot avail themselves
of s6(2) because the plaintiffs were not ‘in possession’ of the lease and the case
of Long v Tower Hamlets London Borough Council [1996] 3 WLR 317 was relied upon.
... One of the issues is whether the lease in question was within s 54(2) of the Law of
Property Act 1925) which is the equivalent of our s 6(2). In that case the landlord on
4 September 1975 informed the tenant that he was ‘prepared to grant’ the tenant a
tenancy to commence on 29 September 1975. The tenant agreed to abide by the
terms imposed by the landlord and moved into the premises on 29 September 1975.
It was held that a lease to commence at a future date was not a lease ‘taking effect
in possession’ within s 54(2). ...

MEMORANDA
 Unlike the modern English provision, s 3(1) of the Conveyancing and Property
Ordinance does not require the contract to be made in writing, only that it is
evidenced in writing (see reference to “memorandum”).
 Its ancestry can be traced to the English Statute of Frauds 1677, which was enacted
to prevent the fraud and perjury that was then endemic.
 Although it thus initially served an evidentiary function, “the defects in the rules of
evidence and procedure have long since been rectified”: English Law Commission,
“Transfer of Land: Formalities for Contracts for Sale etc of Land” (1987).

Should state all the important terms of the contract:

Has to be a written document that shows there is a contract and what that contract is.
(Thirkell v Cambi [1919] 2 KB 590 (CA, Eng) at 597)
The memorandum should state all the important terms of the contract: the names or
descriptions of the contracting parties, a description of the property, the consideration and
any agreed special terms, and should be signed by the party to be charged or by his lawfully
authorised agent.
 the names or descriptions of the contracting parties: Potter v Duffield
 a description of the property: Ogilvie v Foljambe (‘Mr Ogilvie’s House’ was accepted
with parol evidence)
 the consideration: Or the means of ascertaining it: Smith v Jones (‘the controlled
price fixed by the government’ was held to be sufficient)
 and any agreed special terms
o North v Loomes (one party to pay legal fees of the other)
o Tweddell v Henderson (payment by instalments)
o Hawkins v Price (agreed date of vacant possession)
 and should be signed by the party to be charged or by his lawfully authorised agent

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There is no further requirement that the agreement appointing an agent to sell the land has
to be signed. The meaning of signature and the question of an agent’s authority have been
considered in Hoie Sook Fong & Anor v Ismail Halima & Anor.

The memorandum can take many forms, including:

i. a letter and accompanying brochure (Chan Yat v Fung Keong Rubber
Manufacturing Ltd [1967] HKLR 364);
ii. a note in a rent book (Hill v Hill [1947] Ch 231);
iii. a receipt (Evans v Prothero (1852) 1 De GM & G 572); or
iv. even pleadings in a prior action (JN Roland Deneault v Yangtzekiang Garment
Manufacturing Co Ltd [1977] HKLR 320).

Document signed by defendant

Because of the requirement of signature, the starting point will typically be a document
which is signed by the defendant. If this document is either treated as one with another
(e.g. a paper book slipped into a leather cover: Jones Brothers v Joyner (1900) 82 LT 768) or
expressly or impliedly refers to another (e.g. “Dear Sir” in a letter impliedly refers to the
name of the addressee on the envelope: Pearce v Gardner [1897] 1 QB 688)

Two or more memoranda read together

The contract need not be evidenced in a single memorandum. By the doctrine of joinder,
two or more memoranda can be read together, which can be complicated.
 Jenkins LJ put it:
... there should be a document signed by the party to be charged which while not
containing in itself all the necessary ingredients of the required memorandum,
does contain some reference, express or implied, to some other document or
transaction. Where any such reference can be spelt out of a document so signed,
then parol evidence may be given to identify the other document referred to, or
as the case may be, to explain the other transaction, and to identify any
document relating to it.
 Even without any reference, two signed documents can be read together if, when
placed side by side, they obviously refer to the same subject-matter (Studds v
Watson (1884) 28 Ch D 305).
 Where the connection is obvious, some cases have even extended this rule to
instances where only one document is signed (Burgess v Cox [1951] Ch 383).

All the terms

But the rule is that the memorandum or memoranda must contain all the terms of the
contract. Thus, as Gibson J observed in Crane v Naughten [1912] 2 IR 318: “If the
memorandum is not in accordance with the true contract, it is a bad memorandum.”
 Thus, according to Megarry and Wade, The Law of Real Property, 5th edition (1984):
“The omission of a single term, even though a subsidiary one, is fatal; for then the
contract evidenced by the writing is different from the one actually made. Similarly a
subsidiary memorandum that supplies a missing term is ineffective if it also
introduces terms not agreed between the parties.”

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  This means that a memorandum that only evidences the minimum of the three Ps
(parties, property, and price) for contracts for the sale of land is insufficient unless
the parties intended such an open contract.
Where the memorandum does not include all the terms, it will not be sufficient unless the
omitted term can be waived by the plaintiff
 In the case of a contract to grant a lease, the memorandum must also contain the
following terms: the duration of the lease and the date of commencement. If the
parties have not agreed on the duration or the commencement date, there is simply
no concluded contract
 Chan Yat v Fung Keong Rubber Manufacturing Ltd [1967] HKLR 364 at 392; Dolling v
Evans (1867) 36 LJ Ch 474.

When parol evidence can be used to link two documents to form a CPO s.3 memorandum
A document signed by or on behalf of the party to be charged can be linked to another
document to form a memorandum satisfying CPO s.3(1) where the signed document
contains an express or implicit reference to some other document or transaction. When this
condition is satisfied, parol evidence can be introduced to identify the other document or
explain the other transaction.
Elias v George Sahely & Co (Barbados) Ltd ([1983] 1 AC 646, PC) the plaintiff and the
defendant had completed an oral agreement for the sale and purchase of property. The
purchaser’s attorney wrote to the seller’s attorney confirming the oral agreement and
setting out its terms. Enclosed with the letter was a cheque for the 10% deposit. The
purchaser’s attorney asked for a receipt. The seller’s attorney wrote back with a receipt for
the cheque. This confirmed that the money was a deposit for the property ‘agreed to be
sold’. The seller then refused to complete the transaction and pleaded the lack of a written
memorandum. The Privy Council allowed parol evidence to be adduced that linked the
signed receipt with the letter containing the terms of the agreement. It ordered specific
performance.
Lord Scarman held that the modern law on linking two documents together in this way had
been correctly stated by Jenkins LJ in Timmins v Moreland Street Property Co Ltd. A
document signed by or on behalf of the party to be charged can be linked to another
document to form a memorandum satisfying CPO s.3(1) where the signed document
contains an express or implicit reference to some other document or transaction. When
this condition is satisfied, parol evidence can be introduced to identify the other document
or explain the other transaction.

Is completion date an essential term of a standard form contract?

Does the memorandum under section 3(1) have to contain a completion date? Kwan Siu
Man Joshua v Yaacov Ozer has been cited as authority for the proposition that the date of
completion is an essential term of any contract for the sale and purchase of land
 The ratio of Kwan Siu Man Joshua has also been considered in Tam King Hang v Yuen
Lei Gwun, where a Chinese agreement for the sale and purchase of land was
assessed as to whether it lacked conclusiveness and lacked certainty in an essential
term, namely the completion date. It was pointed out by counsel, and accepted by
Deputy Judge B Chu (as she then was) that in the Kwan case, ‘what was said by the
Court of Final Appeal in relation to the completion date being an essential term and
the lack of agreement on the completion date leading to no concluded agreement

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 was said in relation to the oral agreement in that case’. As in the Kwan case, there
was no certainty about the completion date:
 In the Kwan case, there was no agreement at all as to when completion was to take
place. Although in the present case, completion was agreed to be within 3 months
of the signing of the ‘Must Buy Must Sell’ agreement, what was however, uncertain
was when the Litigations would be concluded, and when the ‘Must Buy Must Sell’
agreement was to be signed

Fong Yin Hing v Fong Kwan Pui ([2016] HKEC 740, CFI) concerned an oral agreement by a
brother to sell a flat to his sister. The sister drafted a memorandum of the terms of the
agreement and the brother signed it. The brother later refused to complete and the sister
sought specific performance. One aspect of the brother’s defence was that, following the
Court of Final Appeal decision in Kwan Siu Man v Yaacov Ozer, there could be no contract
where there was no express agreement as to the completion date. To J. rejected this
interpretation of Kwan Siu Man.
It is legally possible to enter into an open contract but the courts should not be too ready to
find that this has occurred in the context of Hong Kong’s volatile property market. ‘In my
opinion, the test is one of intention, i.e. have the parties reached a binding contract for the
sale and purchase of that property at that price. If they have, then the other terms can be
implied.’ ([79]). Here there was ample evidence that the parties had the necessary intention
to be contractually bound.
 Although no completion date was specified, the parties had agreed that completion
would not take place until after their mother had died
 was to be implied that completion would take place at a reasonable time after the
mother’s death. If completion does not take place within that time, the innocent
party could issue a notice fixing a new completion date and making time of the
essence ([80] referring to Behzadi v Shaftesbury Hotels Ltd and Lau Suk Ching
Peggy v Ma Hing Lam). This was not void for uncertainty since it was certain that
the mother would die even though the date of death could not be known ([83]).
 The oral agreement had been formed and the memorandum recorded it. The
memorandum could even be considered as a written agreement. Specific
performance was ordered

Party seeking to enforce a contract can waive an orally agreed term that is to
his advantage
 Where there is a sufficient memorandum of a contract for the sale of land but the
defendant alleges the existence of some special term not covered by the
memorandum, the plaintiff can waive that term if it is a benefit to him and a
obligation on the defendant
North v Loomes ([1919] 1 Ch 378) an oral agreement for the sale of land. The seller gave the
buyer a signed receipt that specified all of the essential terms. The buyer’s solicitor wrote
back to say that there was no need for a draft agreement as the receipt was sufficient. There
had also been an agreement that the buyer would pay the seller’s legal costs but this was
not mentioned in the receipt or the letter. The seller brought proceedings for specific
performance and, among other things, the buyer alleged that there was no memorandum
because of the failure to mention costs in the written documents. The judge referred to

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previous authorities to the effect that the seller could overcome this problem if he chose
not to enforce the term as to costs. He could waive this term since it was to his advantage.

Signature
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 they recognise that
document as an expression of the contract.
 Thus, a memorandum in A’s handwriting which begins “I, A, agree” suffices (Knight v
Crockford (1794) 1 Esp 190).
 In Hoie Sook Fong v Ismail Halima[2007]HKCU 1159, Deputy Judge To held that a
signature “may be created by writing, or by typing or by a chop”.
 The name of sender of an email in the “From” field has been held not to be a
signature in England (J Pereira Fernandes SA v Mehta [2006] 1 WLR 1543) but was
held to be a signature in Singapore (Joseph Mathew v Singh Chiranjeev [2010])

In Hong Kong, an SMS sent by the defendant’s representative, Tim Cheung, which read “Kim
said he’ll give instruction to pig to go ahead with the deal” was held to be unsigned in
Distinct Fortune Ltd v Hyndland Investment Co Ltd [2011] 1 HKLRD 817.
 The plaintiff urged the court to read the Agreement in conjunction with a previous
text message, and argued that the clicking of the send button on the mobile phone
should amount to the signing of the message.
 Deputy Judge Louis Chan (as he then was) rejected the argument: On the question of
signature, I think the SMS is not a signed document for the purpose of s 3 of the
Conveyancing and . I agree with leading counsel of the defendant that there is not
even the expression of ‘(sd.)’. If the clicking of the send button would amount to the
signing of the SMS, then all SMS and e-mails are signed documents. This cannot be
right. This is also not the view of the English Law Commission.
 Furthermore, the correspondence between the parties’ solicitors ‘subject to
contract’, the Agreement’s covering letter stated clearly that nothing was binding
unless and until the Agreement had been signed by both parties. A written
memorandum that refers to an agreement ‘subject to contract’ cannot be a
sufficient memorandum, as there is yet no contract to be evidenced by the
memorandum.
Goo and Lee cite this case to demonstrate that “it is unlikely that an informal text message
would satisfy the requirements of the section” BUT is the case confined to its own facts?
 Compare the view of the English Law Commission, “Electronic Commerce: Formal
Requirements in Commercial Transactions” (2001):
“The name of the signatory (or their initials) may be typed into an e- mail or other
document. Alternatively a system may be set up to add the name (or initials) automatically;
for example, before sending an e- mail. In our view, both are capable of indicating to the
recipient that the signatory had the necessary authenticating intention and are, therefore,
capable of satisfying a statutory signature requirement.”

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Part Performance
The doctrine does not create an otherwise nonexistent or incomplete contract – for equity
to intervene there must be an already concluded but unenforceable contract and the act
of part performance must be sufficient to prove its existence
 Because too limited, equitable doctrine – come with clean hands
 The problem with the formality requirement was that it prevented one form of fraud
(perjury) by enabling the perpetration of another (non- performance).
 Thus, Wilmot J said in Simon v Metivier (1766) 1 Bl W 601:
“Had the Statute of Frauds been always carried into execution according to the
letter, it would have done ten times more mischief than it has done good, by
protecting, rather than by preventing frauds.”
 In Marvin v Wallis (1856) 6 E & B 726, Campbell CJ remarked:
“In my opinion, it does much more harm than good. It promotes fraud rather than
prevents it, and introduces distinctions which, I must confess, are not productive of
justice.”
The doctrine of part performance was developed in equity to deal with the perceived
unfairness in a party reneging on its contract after the other party had acted to its
detriment.

As Lord Simon explained in Steadman v Steadman [1976] AC 536:

“Where ... a party to a contract unenforceable under the Statute of Frauds stood by while
the other party acted to his detriment in performance of his own contractual obligations,
the first party would be precluded by the Court of Chancery from claiming exoneration, on
the ground that the contract was unenforceable, from performance of his reciprocal
obligations; ... Equity would not, as it was put, allow the Statute of Frauds ‘to be used as an
engine of fraud’. This became known as the doctrine of part performance ...”

 It is notable that English law at this stage did not possess a well developed law of
unjust enrichment.
 Unlike the satisfaction of s 3(1) of the Conveyancing and Property Ordinance, which
looks to the defendant’s signature, the doctrine of part performance looks to the
plaintiff’s “performance”.
The doctrine has been variously explained:
i. as equity “decorously disregarding an Act of Parliament”: Spencer v Hemmerde
[1922] 2 AC 507; or
ii. “the defendant is really ‘charged’ upon the equities resulting from the acts done in
execution of the contract, and not ... upon the contract itself”: Maddison v Alderson
(1883) 8 App Cas 467
iii. “the rationale for the doctrine is not that the Statute of Frauds 1677 and equivalent
statutes must not be used as an instrument of fraud. Nor is it that the court enforces
‘equities’ arising from an act of part performance. Rather, the court enforces the
contract itself. The rationale is the imposition of a moral principle despite the
terms of the statute. The historical basis for that rationale for part performance lay
in the 17th century doctrine by which a court would ignore matters falling within the
terms of a statute if they were outside the statute's ‘equity’.” : Pipikos v Trayans
[2018] HCA 39 per Edelman J

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 i. Strictly speaking, the doctrine of part performance is not concerned with
contractual performance so much as it is with detrimental reliance.
ii. As Megarry and Wade, The Law of Real Property, 5th edition (1984) explained: “The
so-called ‘performance’ need not in fact be performance of an obligation imposed by
the contract. Many valid acts of part performance, such as the taking of possession
by a purchaser, or the making of alterations by him for his own purposes, are cases
where he is exercising his rights under the agreement rather than performing his
duties.”

Part performance is strictly speaking no longer available in England and Wales since the
modern formality requirement stipulates that the contract itself must be in writing rather
than evidenced in writing. – still applicable in HK
 The orthodox view was that part performance must be “unequivocally, and in their
own nature, referable to some such agreement as that alleged.”: Maddison v
Alderson (1883) 8 App Cas 467 per Lord Selborne LC.
 But, as James Williams, The Statute of Frauds, Section IV (1932), remarked, “in the
nature of things no act of part performance could be so eloquent as to point
unequivocally to one particular contract and no other.”

Examples of acts that sufficed (or not) as part performance include:

Taking possession of the seller’s property with his consent and making alterations to the
property (farrall v davenport) are classic sufficient acts of part performance

Chan Yat v Fung Keong Rubber Manufacturing Ltd [1967] HKLR 364 at 402, completing the
building and obtaining the occupation permit, allowing the defendant company to install
machinery in the building, permitting the installation of electrical equipment and agreeing
to pay for part of it, permitting the drilling of a well, writing to the owner of the
neighbouring factory of the defendant company to complain about a nuisance, and ceasing
to let the premises and turning away other enquirers were regarded as sufficient acts of part
performance of a contract for a lease.

– Payment of money is generally not regarded as sufficient (Lacon v Mertins) as it can be a

gift, a loan or the discharge of some obligation and does not necessarily point to a contract –
thus sending a letter and 10% deposit in the form of a cheque to the seller’s solicitor was
not a sufficient act of part performance

Payment of money together with other acts such as forbearances in relation to the
matrimonial proceedings between the parties and the sending of a transfer document for
execution can amount to sufficient acts of part performance (Steadman v Steadman)
 The parties’ marriage had broken down. The wife had applied for a declaration that
the matrimonial home was jointly owned and an order for sale. The husband was
making maintenance payments to the wife and he had applied for a variation of the
maintenance order.
 Agreed that the wife would sell her interest in the house to her husband for
GBP1500. He also agreed to pay GBP100 in respect of arrears of maintenance
payments. The agreement was explained to the court which made orders
implementing what the parties had agreed concerning maintenance. The husband

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 paid the GBP100 and his solicitors prepared a deed to transfer the wife’s interest in
the house to the husband. The wife, however, refused to sign the deed and relied on
the English equivalent of s.3(1) of the Conveyancing and Property Ordinance.
 The husband argued that she was legally bound to transfer her interest in the
matrimonial home to him since there had been acts of part performance of the oral
agreement. The husband succeeded.
 Held that part performance is available where the alleged acts of part performance
point on the balance of probabilities to some contract between the parties and
either showed the nature of the contract or were consistent with the oral
agreement alleged. There was some inconsistency of view between the members of
the House of Lords as to whether the acts relied on had merely to point to the
existence of a contract or whether they had to point specifically to the existence of a
contract concerning land.

Taking possession is “the act of part performance par excellence”: James Williams, The
Statute of Frauds, Section IV (1932)
Wu Koon Tai v Wu Tau Loi [1996] 2 HKLR 477)
 Delivery up of possession and receipt of purchase price are the clearest possible acts
of part performance
 a lease of land in the New Territories was granted to Wu Cheong U. He died and, in
1934, his son sold the land. In accordance with Chinese customary law the sale was
effected through a document signed by neither party but by a middleman. The
purchaser paid the price and went into possession. He and his successors remained
in possession. The successor-in-title of the grandson of the seller claimed to be
entitled to the land. Among other grounds relied on were the fact that there was no
contract for sale satisfying CPO s.3(1) (the document had not been signed by the
parties or their authorised repesentative). Lord Browne-Wilkinson held (at 483) that
payment of the purchase pice and giving possession were the clearest acts of part
performance. Thus there was a specifically enforceable contract.

Continuing in possession, however, is not by itself capable of being part performance:

Lincoln v Wright (1859) 4 De G & J 16;

Though continuing in possession together with payment of increased rent could be part
performance: Miller & Aldworth Ltd v Sharp [1899] 1 Ch 622;
I. Was a decision involving the enforcement of an oral lease. In pursuance of and/or in
part performance of an oral agreement, the tenants effected payment of a higher
rent upon the expiry of the earlier lease. The landlord subsequently refused to
execute the lease and relied on the Statute of Frauds. Byrne J held at 626 that the
payment of the adjusted rental placed the matter outside the purview of the
mischief of the statute:
II. ... [W]hat was done could not refer to the old tenancy, but is in my judgment an
unequivocal act referable to some new contract, and that could only be a contract of
tenancy. Evidence must, therefore, be admitted to shew what the contract was.

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The making of expensive alterations or improvements to the property will often be part
performance: Broughton v Snook [1938] Ch 505;
III. the payment of money alone is generally insufficient: Maddison v Alderson (1883) 8
App Cas 467; Pipikos v Trayans [2018] HCA 39; contrast Joseph Mathew v Singh
Chiranjeev [2010] 1 SLR 338.

Unequivocal referability
Pipikos v Trayans [2018] HCA 39
T and her husband bought a residential property (‘the disputed property’) in South
Australia. P, T’s brother-in-law, settled T’s mortgage arrears. There was also an oral
agreement that T and her husband would be co-owners with P of property bought as an
investment (‘the investment property’) in return for P being given a half-interest in the
disputed property.
T signed a hand-written note acknowledging that P had a 50% ownership share in the
disputed property. P lodged a caveat claiming a 50% equitable interest in the disputed
property. T’s husband surrendered his interest in the disputed property to T when the
couple separated.
P brought proceedings seeking a declaration that T held the disputed property as to one half
for him or that he be registered as joint proprietor of the property.
The alleged acts of part performance were:
 P’s payment of the deposit and purchase price in respect of the investment
property;
 payment of money to T’s husband;
 P’s payment of money to settle the mortgage arrears in respect of the disputed
property;
 attempting to enforce the oral agreement through the hand-written note signed by
P; and
 the lodging of the caveat and bringing these proceedings.
P accepted that these acts were not unequivocally referable to the alleged agreement. She
argued, however, that after Steadman, the test had been relaxed and that referability had
only to be proved on the balance of probabilities.
Unequivocal referability confirmed as the test
P failed. The test was still that of unequivocal referability and Steadman v Steadman was not
to be followed to the extent that it suggested otherwise ([66]). There were no sufficient acts
on the facts of the present case to engage the doctrine of part performance ([79]).

Part performance is only relevant where the parties can be held to have concluded an oral
contract, and not before: cf. World Food Fair Ltd v Hong Kong Island Development Ltd
 Parties had been negotiating for the grant of a lease of space in a shopping mall in
Tsim Sha Tsui to be used as a restaurant and food court. The parties had agreed
many terms in the course of their negotiations. A draft letter of intent and tenancy
agreement had been sent to the tenants but had never been signed and the latter
failed to record accurately what had been agreed. Thinking that the negotiations
would succeed, the would-be tenants paid an initial deposit and (with the owner’s
consent) spent a large sum of money on construction works to make the space ready
for its intended use. Then the negotiations broke down.

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  FORMALITIES: there must be agreement concerning the parties, the property and (in
the case of a lease) concerning the starting date and duration of the lease as well as
agreement as to the rent or other consideration to be paid. If there is no agreement
concerning these matters then there is no contract to create or transfer an interest
in land
 PART PERFORMANCE: If there was the court had to decide whether it was
enforceable notwithstanding the failure to comply with s.3(1) of the Conveyancing
and Property Ordinance BUT There was in fact no concluded contract. That being
so, the question of part performance did not need to be considered in the Court of
Final Appeal ([2007] 1 HKLRD 498).
Ribeiro PJ explained that the negotiations had not resulted in a contract at all since there
was no agreement as to the start date of the lease and the rent-free period (an element of
the overall rent calculation) nor as to the length of term to be granted pursuant to the
option to renew that would be contained in the lease.
There was no need to worry about whether the relevant formalities had been complied with
since there was no contract.

As it is an equitable doctrine, it is subject to the usual defences, such as clean hands:

Coatsworth v Johnson (1886) 55 LJQB 220.
 Remedies?

Acts done in contemplation of the making of a contract cannot on the other hand be
sufficient part performance. Some examples are: conducting a survey, instructing a solicitor
to draft a formal contract, making a mortgage application, etc. In Steadman v Steadman,
Lord Reid stated that ‘the rule must be that you take the whole circumstances, leaving aside
evidence about 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’.
Oral contract: You must not first look at the oral contract and then see whether the alleged
acts of part performance are consistent with it. You must first look at the alleged acts of
part performance and see whether they prove that there must have been a contract and it
is only if they do so prove that you can bring in the oral contract.
 In Steadman v Steadman, the HoL’s decision that the plaintiff’s unilateral act in
forwarding a transfer for execution was a sufficient act of past performance, it seems
that the act of past performance must be carried out with the defendant’s
knowledge and consent.
 D’s knowledge of the plaintiff’s forwarding of a document for execution after making
of the contract was probably implied because what the plaintiff did was a common
conveyancing practise

That is also the approach of the CFA Ng Yuk Pui Kelly v Ng Lai Ling Winnie:
In deciding whether the doctrine applies, the court looks at all the acts relied on as part
performance to see whether, leaving aside evidence of the oral agreement, those acts
prove on the balance of probability that they were done in reliance on a contract between
the parties consistent with the contract sued upon by the plaintiff. There is no arguable
basis for suggesting that one must look at each act individually to see if it is ‘unequivocally
referable’ to the contract. Nor is there any basis for the suggestion that one must refrain

13
from assessing the cumulative effect of the acts relied on unless the individual test is
satisfied. The authorities are clearly to the contrary.

Part performance does not make an oral contract enforceable at law, it only makes the
contract enforceable in equity. On the other hand, if the plaintiff can show sufficient
memorandum, the contract will be enforceable at law, and he will be entitled to common
law damages as of right and, in a proper case, will also be entitled to an order of specific
performance.

PAROL EVIDENCE
THE defendants were the owners in fee simple of a beerhouse called "The Jolly Millers" at
Dartford, Kent, and
which the plaintiffs Miller & Aldworth, Limited, held from them as yearly tenants at the rent
of 14l. per annum.
In May, 1894, it was verbally agreed between the landlords and tenants that the former
should grant the latter a
lease of the beerhouse for twenty-one years from June 24, 1894, at the rent of 26l. per
annum, such lease to
contain the usual covenants.
In pursuance and part performance of the agreement the plaintiffs Miller & Aldworth,
Limited, and the purchasers of
their interest, the plaintiffs the Dartford Brewery Company, Limited, remained or were in
possession from June 24,
1897, to the time of the commencement of the present action paying the
increased rent of 26l., which the
defendants accepted.
The defendants refused to execute the lease; the two plaintiff companies brought an action
for specific performance
of the verbal agreement by granting a lease to the Dartford Brewery Company, Limited, or
alternatively to the other
plaintiff company.
The defendants, amongst other defences, pleaded that the payment of the increased rent
was not sufficient part
performance to take the case out of the Statute of Frauds.
THE defendants were the owners in fee simple of a beerhouse called "The Jolly Millers" at
Dartford, Kent, and
which the plaintiffs Miller & Aldworth, Limited, held from them as yearly tenants at the rent
of 14l. per annum.
In May, 1894, it was verbally agreed between the landlords and tenants that the former
should grant the latter a
lease of the beerhouse for twenty-one years from June 24, 1894, at the rent of 26l. per
annum, such lease to
contain the usual covenants.
In pursuance and part performance of the agreement the plaintiffs Miller & Aldworth,
Limited, and the purchasers of
their interest, the plaintiffs the Dartford Brewery Company, Limited, remained or were in
possession from June 24,

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1897, to the time of the commencement of the present action paying the
increased rent of 26l., which the
defendants accepted.
The defendants refused to execute the lease; the two plaintiff companies brought an action
for specific performance
of the verbal agreement by granting a lease to the Dartford Brewery Company, Limited, or
alternatively to the other
plaintiff company.
The defendants, amongst other defences, pleaded that the payment of the increased rent
was not sufficient part
performance to take the case out of the Statute of Frauds.
Once sufficient acts of past performance can be established, it opens the door to parol
evidence of the whole agreement
 The entire contract with all its terms including those omitted from any written
memorandum can be proved by parol evidence – once the contract can be proved,
equity may decree specific performance
 Court has discretion to award damages in lieu of specific performance under the
High Court Ordinance (Cap 4), section 17
 The grant of specific performance or discretionary damages is governed by equitable
principles and if these equitable discretionary remedies are rejected, the plaintiff
cannot claim damages at common law. (BECAUSE PP: EQUITY)

Doctrine of Conversion
 One of the peculiar doctrines of equity is that of conversion.
 If a purchaser of land is entitled to specific performance, then the operation of the
equitable maxim “equity looks upon that as done which ought to be done” effects a
transfer of title in equity as soon as an oral contract is concluded.
 Hence, a purchaser is often said to be the owner in equity as from the date of
contract: Lysaght v Edwards (1876) 2 Ch D 499.
 The vendor, in turn, is a constructive trustee of the legal estate for the purchaser but
the nature of the vendor’s trusteeship is peculiar because he retains some interest in
the land.
This doctrine of conversion is sometimes described as the rule in Walsh v Lonsdale (1882) 21
Ch D 9 but strictly speaking, it predates Walsh v Lonsdale.
 Walsh v Lonsdale in fact applies the rule in the context of an agreement to grant a
lease.
 The “rule in Walsh v Lonsdale” is strictly speaking a further extension whereby the
court permitted the exercise of a common law remedy in respect of an equitable
lease.
The availability of specific performance is key to the doctrine’s operation. The orthodox
common law position is that, because land is unique, damages are inadequate, and
therefore specific performance is generally available: Lever v Koffler [1901] 1 Ch 543;
Wellfit Investments Ltd v Poly Commence Ltd [1996] HKCU 225.
 In Canada (Sinnadurai Paramadevan and Blossom Paramadevan v Bernard
Semelhago [1996] 2 SCR 415), New Zealand (Landco Albany Ltd v Fu Hao
Construction Ltd [2006] 2 NZLR 174), the courts appear to have diverged from this

15
 orthodoxy, refusing specific performance where land was purchased purely for
investment and resale, reasoning that damages were adequate in such cases.

 In Hong Kong, it is not uncommon for a vendor to try to exclude the purchaser’s right
to specific performance should the vendor fail to complete the agreement.
 However, such an exclusion of the right to specific performance will only be effective
if clear words are used because of the contra proferentem rule.
 Words effective to exclude specific performance (Wong Lai-fan v Lee Ha [1992]
HKLR 125): “Should the Vendor ... fail to complete the sale ... the Vendor shall
immediately compensate the Purchaser with a sum equivalent to the amount of the
initial deposit as liquidated damages together with the refund of the initial deposit
and the Purchaser shall not take any further action to claim for damages or to
enforce specific performance”.

Recharacterisation
 There is a further doctrine which applies to grants (or conveyances) rather than
contracts.
 If a grant fails to comply with s 4(1) of the CPO (i.e., made by deed), the doctrine of
Parker v Taswell (1858) 2 De G & J 559 would treat the imperfect grant as a contract
to grant instead.
 This contract would then be subject to the formalities under s 3(1) of the CPO
instead (i.e., evidenced in writing), as well as the doctrine of part performance.
 If the imperfect grant either satisfies the formalities under s 3(1) of the
Conveyancing and Property Ordinance or the doctrine of part performance and is
regarded as specifically enforceable, then an equitable interest arises.

Walsh v Lonsdale
The defendant, Lonsdale, agreed to grant the claimant, Walsh, the lease of a mill for seven
years, the rent to be paid quarterly in arrears with a year’s rent payable in advance if
demanded. The parties did not execute a deed for the grant of the tenancy, but the claimant
moved in and paid rent quarterly in arrears. The defendant then demanded a year’s rent in
advance. The claimant refused to pay.
IV. The claimant argued that under common law rules a lease had to be created by deed
to be legal. This had not been done, therefore the lease was not legal.
V. The Court of Appeal found in favour of the defendant landlord. The Judicature Acts
1873-1875 had fused the two separate legal systems of common law and equity into
one system. In any conflict, the rules of equity should prevail. According to the
equitable maxim ‘Equity looks on as done that which ought to be done’ the parties
were treated as having a lease enforceable in equity from the date of the agreement
to grant the lease. Such a lease was held under the same terms and the court could
order specific performance of it. Lord Jessel stated [at 14-15]:
‘The tenant holds… under the same terms in equity as though the lease had been granted…
He cannot complain of the exercise by the landlord of the same rights as the landlord would
have had if a lease had been granted.’
Consequently the landlord was allowed to distrain the tenant’s goods in satisfaction of the
debt.

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A search at the land registry will normally disclose all the deeds relating to the land and
provide evidence of the devolution of title, such a search does not release the seller from
his duty to provide a good title – the current registration system in Hong Kong is one of
deeds registration which means that registration simply provides evidence of title but does
not guarantee title
 Once the buyer is satisfied that the seller can pass a good title to him, the buyer’s
solicitors will prepare the draft assignment and memorial. Under the Conveyancing
and Property Ordinance, section 4(1), ‘[a] legal estate in land may be created,
extinguished or disposed of only by deed’. One notable exception among those set
out in section 4(2) is that under section 4(2)(d), the grant, disposal or surrender of a
lease taking effect in possession for a term not exceeding three years (whether or
not the lessee is given power to extend the term) at the best rent reasonably
obtainable without a premium, does not have to be by deed. Thus, sale of leasehold
for more than three years must be perfected by a deed. The purchase deeds, when
drafted, are then sent to the seller’s solicitors for approval. The seller’s solicitors will
check the draft purchase deeds and, when approved, return a copy to the buyer’s
solicitors. The buyer’s solicitors will then prepare the actual deed in its final form
(known as engrossing the purchase deed) and obtain the buyer’s signature to it. It
will then be sent to the seller’s solicitors for the seller’s signature.

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