Tutorial Question

Jennifer was in the market to purchase her first home.She hired an estate agent who took her to visit a number of different properties. On 10 November last year, Jennifer and the agent went to inspect a property known as Flat B, 10^th Floor, Block 5, Rosings Villa, 123 Hill Road, Hong Kong ("the Property").

Jennifer was very impressed with the Property and entered into a provisional sale and purchase agreement that day to purchase the property for HK$10,000,000 and completion is due to take place on 31 March this year. Jennifer instructed solicitors to act for her in the conveyance and a formal Agreement for Sale and Purchase (the Agreement) dated 1 December last year has been executed with the Vendor (See Attachment).

When Jennifer first inspected the Property on 10 November, the Vendor was present and showed Jennifer and the agent around. During the inspection, Jennifer noticed that:

• a stone flower rack had been mounted into the external wall of the building. The flower rack looked very heavy and was affixed to the external wall by drills and cement and did not look like it could be removed without damaging the external wall;

• One side of the kitchen wall had been removed to create an "open kitchen" feel.

Jennifer looked around at the external walls of all of the 5 blocks of Rosings Villa. She noticed only five or six other flats out of the 5 blocks (over 100 flats in total) had installed various types of flower racks on the external wall of the building.When Jennifer asked the Vendor about the flower rack, the Vendor said that he did not install them and they were there when he bought the Property. He said that since he had been living there since 2016, no enforcement action had been taken in respect of the flower racks as far as he was aware. He has not noticed any issues with the neighbors with flower racks either.

Recently, Jennifer's best friend (who works in the construction industry) helped her look up the latest approved building plans dated 1^st June 2005 and noted that the flower rack is not included on the plan. Also, the floor plan for the Property indicates that the wall that was removed from the kitchen was a load-bearing structural wall of the Building.

Jennifer immediately informed her solicitors who sent a requisition to the Vendor's solicitors for clarification and evidence of permission for the construction of the flower rack and the removal of the kitchen wall.

Today, the Vendor's solicitors have replied relying on clause 12 of the Agreement that they are not obliged to answer any requisitions.

Discuss whether there has been a breach of the Agreement and what step(s) Jennifer ought to take. (See Attachment)

Attachment

THIS AGREEMENT is made on the 1^st day of December 2020

BETWEEN

1. LEE GORDON of Flat B, 10^th Floor, Block 5, Rosings Villa, 123 Hill Road, Hong Kong (the "Vendor").

1. CHAN JENNIFER of Flat G, 3^rd Floor, Combe Manor, 123 Harbor Road, Hong Kong (the "Purchaser").

IT IS HEREBY AGREED AS FOLLOWS:

1. The Vendor sells and the Purchaser purchases the land described in the Schedule hereto (the "Property") for the residue of the term of years created by the Government lease referred to in the Schedule.

1. The purchase price is the sum of HK$10,000,000.

1. The Purchaser having paid an initial deposit on the signing of the provisional sale and purchase agreement on 10 November 2020, a further deposit of $500,000 shall be paid by the Purchaser to the Vendor on the signing of this Agreement and the balance of the purchase price shall be paid on completion.

1. Completion shall take place at the offices of the Vendor's solicitors or as they may direct on the 31^st day of March 2021.

1. Vacant possession of the Property shall be given to the Purchaser on completion.

1. Time shall in every respect be of the essence of this Agreement.

1. The Vendor shall assign the Property as beneficial owner.

1. The title shall commence with the Government lease.

1. The Property is sold subject to and with the benefit of the Deed of Mutual Covenant affecting the Property.

1. Where they do not conflict with the express provisions of this Agreement, there are incorporated into this Agreement as if they were herein written the conditions respectively on the part of the Vendor and Purchaser set out in Part A of the Second Schedule to the Conveyancing and Property Ordinance.

1. The stamp duty and land registration fees payable on the assignment made pursuant to this Agreement shall be borne by the Purchaser.

1. The Property is sold to the Purchaser in the condition as it stands. The Purchaser expressly declares that the Purchaser has duly inspected the Property prior to signing this Agreement and is fully aware of, satisfied with and accepts the state and condition of the Property. No warranty or representation is given by the Vendor as to the physical state and condition of the Property and the Purchaser is purchasing the Property in its present state and condition and shall not make any objection or requisition in relation to the Buildings Ordinance or any subsidiary legislation.

SCHEDULE

ALL THAT property known as Flat B, 10^th Floor, Block 5, Rosings Villa, 123 Hill Road, Hong Kong.

SIGNED by the Vendor )

(Hong Kong Identity Card No.12345 ) GORDON LEE

in the presence of )

[Witness signature - signed]

SIGNED by the Purchaser )

(Hong Kong Identity Card No.67891 ) JENNIFER CHAN

in the presence of )

[Witness signature - signed]

Received on this 1^st Day of December 2020 )

From the Purchaser the sum of ) HK$500,000

HONG KONG DOLLARS )

FIVE HUNDRED THOUSAND )

being the deposit money mentioned above. )

GORDON LEEthe Vendor