HUNG FAN YUK v. WEE BOON SENG

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

Case No: 1989, No.A670

Mr Yuen, instructed by Messrs So and Karbhari, for the Plaintiff.

The defendant in person.

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JUDGMENT

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The Fects and the Issues.

1. The Plaintiff alleges that he is the owner of a structure on a piece of land known as 16G Shek G Village.  On 3 March 1988, he allowed the defendant to occupy the structure as a licensee, and, on 30 March 1988, he sold the structure, with some furniture and fittings, to the defendant for a price of $160,000.

2. The plaintiff says that the defendant paid the sum of $78,000 as a deposit and part payment, but, notwithstanding requests, he has failed to complete the sale. For this reason, the plaintiff says that he rescinded the agreement and forfeited the payment of $78,000 and, on 31 January 1989, terminated the licence.

3. The Plaintiff claims a declaration that he has effectively reacindedt he agreement and that the sum of $78,000 is forfeited. He also asks for an order for possession of the structure and an award for loss of income, damages and mesne profits.

4. The defendant conducted his case in person and did not have the benefit of legal advice in preparing his defence.  The gist of this defence is that he has paid $98,000 to the defendant, not $78,000, and that he has not completed the sale because the plaintiff could not show proof of ownership of the property sold. To clarify the issues, I asked the defendant to state his position after Mr Yuen had opened on the pleadings. The defendant said that if the plaintiff could show proof of ownership, he would pay the balance of the price. On the other hand, if this could not be done, he understood he could not remain in occupation without paying the agreed price. In that event,he agreed that he should vacate, but he wanted his money back.

The Evidence and My Findings on Forfeiture and Possession.

5. The translation of the agreement of sale dated 30 March 1988 says that the plaintiff 'gives up his own property locate at No. 16G, Shek O Village, i.e. Housing Authority Reference Nos. R/T 893 and 894, together with the telephone, electrical appliances and trade instruments inside' to the defendant.

6. On the face of this agreement, the plaintiff transferred to the defendant the right to undisturbed occupation of the property sold. I put to the plaintiff the complaint by the defendant that the plaintiff was not able to give him title to the property-

7. So, the plaintiff puts his case on the basis that, although he knew well that he was unable to give to the defendant security of tenure, the defendant also knew this, did not care and purchased the property on this basis.

8. Although the plaintiff pleads thathe rescinded the agreement of 30 March and forfeited the payments made, the only written evidence adduced as to the plaintiff's decision is a letter by his solicitor dated 31 January 1989 by which the plaintiff terminated the licence of 3 March 1988.

9. I was not impressed by the manner in which either the plaintiff or the defendant gave evidence; neither of them convinced me by their demeanour, or the way in which they answered questions, that they were telling me the whole truth. Accordingly, I must decide this case on the probabilities.

10. I find it improbable that the defendant would have paid $160,000 for a structure alone, and miscellaneous bits and pieces, accepting that he had no assurance that he would be able to remain in occupation of the land for any particular period. Certainly, I believe it is highly unlikely that the defendant would have said that he would be happy if the place was demolished the day after he bought it. It is common cause that the defendant made some payments under the agreement and then ceased to do so.  No reason has been advanced in evidence or argument for the defendant to do this other than the realisation that the plaintiff was unable to give security of tenure, and this is, indeed, the probable reason for his conduct. If, from the outset, the defendant knew that he was purchasing a mere chance that he would be allowed, at the pleasure of the Crown, to remain in occupation, there is apparently no reason why he should have ceased to make payments.

11. Accordingly, I find that the agreement of 30 March 1988 was such that the defendant was entitled to look to the plaintiff to give him security of tenure, and I reject the plaintiff's case that the defendant was aware that the plaintiff was unable to give this.

12. It being clear that the plaintiff cannot give to the defendant what he bargained for, the defendant is not entitled to retain possession of the premises and also refuse to pay the agreed price. The plaintiff, then, is entitled to an order for possession.

13. On the other hand, the defendant is not entitled to forfeit the payments already made. He is not able to give to the defendant what he contracted to give and so cannot retain any part of the price paid.

Repayment of Money.

14. There is a dispute as to what the defendant has paid towards the purchase price. The defendant says he has paid $98,000 in the following manner-

15. The plaintiff agrees that these payments were made but says that $18,00 of this was repayment of a loan and only $78,000 should be credited to the purchase price.

16. I cannot make a finding on this dispute on the inherent credibility of the parties. As I have said, neither of them impressed me as witnesses. But the documentary evidence assists in reaching a conclusion.  Dishonoured cheques totalling $82,000 issued by the defendant were produced by the plaintiff. The defendant agrees that these cheques were given by him as payment of the purchase price. He says he countermanded payment because he realised that the plaintiff could not fulfil his side of the bargain.  The value of these cheques ($82,000) added to what the plaintiff says was paid earlier ($78,000)would amount to the full purchaseprice of $160,000. On the other hand, on the defendant's version, payment of the total value of the first four cheques ($96,000)and payment of the dishonouredcheques ($82,000) would result in an overpayment of $18,000. In my view, this evidence strongly supports the plaintiff's version and I find, as a matter of probability, that the defendant has paid only $78,000towards the purchase price.

17. Mr Yuen argues that, in any event, I cannot make an award to the defendant of any amount because he has made no counterclaim.

18. As I havesaid, the defendant is not represented in these proceedings and did not have any legal assistance in drawing his pleadings. However, at the beginning of the trial, as well as by reading between the lines of his written defence, the defendant made it perfectly clear that his attitude was that he would take the property and pay the price if the plaintiff could give title, but, if not, he would give up possession against repayment of what he had paid to the plaintiff.

19. Accordingly, the claims and issues were clear and the plaintiff has suffered no prejudice. I feel I am entitled to dispose of this matter as if the defendant had filed a formal counterclaim.  It would serve the interests of no one to find that the defendant is entitled to repayment, but refuse to make an award because there was no written counterclaim filed. The result would be only to encourage the waste of further costs by requiring the defendant to commence other proceedings to recover what I have found is due to him. In so far as it is necessary, I grant leave to the defendant to amend his pleadings to include a counterclaim for repayment of the sum paid by him under the agreement of 30 March 1988.

20. I make an award to the defendant against the plaintiff for repayment of the sum of $78,000.

Loss of Income.

21. The plaintiff makes a claim for loss of income in respect of payments of $830 per month made by a tobacco company in consideration for permission to keep an advertisement on the premises. The evidence in this respect is unsatisfactory. It does seem that the tobacco company ceased making payments to the plaintiff. The defendant says that the company made payments to his wife, who operates the business on the premises. This does seem to be an artificially ingenuous story, but I do not think I have sufficient reliable evidence before me to make a finding upon which an award should be made to the plaintiff.

22. If there is any injustice here to the plaintiff, there will be some compensation, incidentally, from the fact that I do not intend to award to the defendant, any interest in repect of the $78,000 awarded to him. I decline to make such an award as a matter of discretion because the defendant brought his problems on his own head, to a large extent, by his own lack of caution, and because he has had the benefit of the occupation of the premises since March 1988.

Damages and Keane Profits.

23. The plaintiff is not entitled to damage because, on my findings, there has been no breach by  the defendant.  I also find that the plaintiff is not entitled to any mesne profits. The plaintiff would have been entitled to such profits, I believe, only if the plaintiff had tendered to the defendant the money paid under the agreement and the defendant still refused to give up possession.

Awards.

24. In the result, I make an order that the defendant deliver possession of the premises to the plaintiff against payment to him of the sum of $78,000.

25. I also make an award to the defendant against the plaintiff for payment of the sum of $78,000 against delivery by him to the plaintiff of possession of the premises.

26. If the parties are unable to make acceptable arrangements for mutual satisfaction of these awards, they have liberty to apply for directions.

Costs.

27. It seems to me, of the face of it, that the just order as to costs is that each party should pay his own costs.

28. The plaintiff has been successful in obtaining an award for possession of the premises, but it was necessary for the defendant to fight the matter in order to obtain repayment of what was paid under the agreement.  Accordingly, I make an order nisi to this effect.