WONG WAN CHUEN v. WONG HING YEE AND ANOTHER

HCA 4324/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 4324 OF 2003

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BETWEEN

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J U D G M E N T

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1.  This is an application taken out by the Defendants for Order 14 Judgment in respect of their Counterclaim against the Plaintiff. The Plaintiff issued the Writ herein in 2003.

The Plaintiff’s case

2.  This action started in 2003 when the Plaintiff was then represented by Messrs. Or, Ng & Chan. According to the Statement of Claim, the property in issue, Flat A, 7^th Floor, Lee Cheong Building, No. 220 Wan Chai Road, Hong Kong (“the Property”) was originally owned by the Plaintiff solely.

3.  On or about 2 February 1989, the Plaintiff married Madam Chan Oi Lam and the 1^st Defendant is the daughter of Madam Chan. The 1^st Defendant studied in the United States and got married to the 2^nd Defendant in or about 2000. It is the Plaintiff’s case that in January 2001, the 1^st and 2^nd Defendants requested him to transfer the Property to the 1^st and 2^nd Defendants to help the 2^nd Defendant to apply for a Hong Kong permanent resident identity card. On or about 16 January 2001, the Property was conveyed to the 1^st and 2^nd Defendants at the stated consideration of $980,000.

4.  It is the Plaintiff’s case that the said consideration had not paid. It is the case of the Plaintiff that he agreed to the said conveyance on condition that the Defendants were to hold the beneficial interest in the Property on trust for him and to transfer the legal interest back to him thereafter. The Plaintiff may retain the title deeds and have a power of attorney executed by the 1^st and 2^nd Defendants to appoint the Plaintiff to deal with the Property, as security.

5.  As pleaded in the Statement of Claim, in about January 2003, at the request of the 1^st Defendant, the Plaintiff posted the title deeds to the 1^st Defendant to assist her application for a student visa in the United States. And in or about April 2003, the 2^nd Defendant had an argument with Madam Chan and the 2^nd Defendant frightened to sell the Property and demanded the Plaintiff and Madam Chan to move out. The Plaintiff accordingly took out the present proceedings in 2003 for a declaration that the 1^st and 2^nd Defendants hold the Property on trust for him and an order that the 1^st and 2^nd Defendants do assign and vest the Property in the name of the Plaintiff.

6.  On a perusal of the Court file, no Acknowledgement of Service has been filed by the 1^st and 2^nd Defendants. Nothing was filed after the Writ was issued until on or about 22 June 2006 when a Legal Aid Certificate was filed showing that the Plaintiff applied for legal aid. Messrs. Or, Ng & Chan was later assigned by the Director of Legal Aid as the solicitors for the Plaintiff. By a further notice from the Director of Legal Aid, the Legal Aid Certificate was amended to the effect that legal aid was granted for the Plaintiff to commence a new action to recover the ownership of the Property. No further action was taken out in the High Court Action.

7.  According to the Affidavit of the Plaintiff filed on 16 July 2009, after this action had been instituted, the Defendants returned to the United States and could not be found. In May 2006, the Defendants returned to Hong Kong. In January 2007, Messrs. Or, Ng & Chan, I presumed with instructions from the Director of Legal Aid, instituted a new proceeding in the District Court, being DCCJ 198/2007.

8.  Pausing here, I would have thought that it is only proper for the solicitors who had been acting for the Plaintiff throughout to discontinue the High Court action before they start an action in the District Court. And interestingly, sometimes on 22 January 2007, the 1^st and 2^nd Defendants through their then solicitors Messrs. Yau & Lau filed their Notice to Act in this action. But no Acknowledgement of Service has been filed. No application or pleadings has been filed herein by the parties until May 2009.

9.  The Plaintiff lost his legal aid at some stage and is unrepresented in the District Court action. The fact that there are two sets of similar proceedings has been brought to the attention of the District Court. The application by the Defendants to transfer the District Court action to the High Court was dismissed by Master Clement Lee in the District Court. At the same time, Master Lee ordered that by reason of this High Court action and the District Court action having the same claim, the District Court action should be stayed until the High Court action is completed or there are appropriate orders.

10.  This Order of Master Lee was given on 8 May 2009. On the same day, the two Defendants in the High Court action filed their Notice to Act in Person and also a Notice of Intention to Proceed after a Year’s Delay. And on the same day, the Plaintiff has filed his Notice of Intention to Proceed after a Year’s Delay, but without filing a Notice to Act in Person. (He only filed a Notice to Act in Person on 24 June 2009).

11.  On 8 June 2009, the Plaintiff a Notice of Discontinuance. Given that the Plaintiff has not filed his Notice to Act in Person, I put it no higher that this Notice of Discontinuance may have no legal effect. I presume the Plaintiff accepted the position, as he subsequently took out a summons to transfer this action to the District Court (which application has been refused by Deputy Judge Au.)

The Defence and Counterclaim

12.  And on 10 June 2009, the Defendants filed their Defence and Counterclaim. And they took out this Order 14 application for judgment on the Counterclaim.

13.  Before I proceed to hear the Order 14 application, I have brought to the attention of the parties that there is a Notice of Discontinuance in the file. I invited parties to have the Order 14 application adjourned for further clarification of this procedural matter. The Plaintiff, who is now legally represented, further applied for leave to file additional affidavit. The Defendants strongly objected to both the adjournment and the Plaintiff’s application to file further affidavit. Having heard the parties, given that sufficient opportunity had been given to the Plaintiff to adduce his affidavit in opposition to the Order 14 application, I am not convinced that there is sufficient ground to grant leave to the Plaintiff to file further affidavit. Accordingly, I refused the application. As for my concern, I believe this matter could be resolved after the Order 14 application and accordingly, I proceed to hear the Order 14 application.

14.  On the basis of the above, I would presume for the purpose of this Order 14 application that the Plaintiff’s Notice of Discontinuance is defective and the claim by the Plaintiff against the Defendants is still ongoing.

15.  I should now proceed to consider the claim by the Defendants in their Counterclaim. The Defendant denies the claim of the Plaintiff. It is the case of the Defendant that the Plaintiff had repeatedly in or about mid-1999 asked for loans from the 1^st and 2^nd Defendants to cover his losses in stock trading and gambling. When the amount of loans accumulated, the 1^st and 2^nd Defendants worried whether the Plaintiff would be able and willing to repay the loans. And to remove such doubt, the Plaintiff proposed and promised the 1^st and 2^nd Defendants that the loans advanced and to be advanced by the 1^st and 2^nd Defendants to him would be applied as the payment of purchase price of the Property. It is also the case of the Defendants that they had made loans accumulated to over HK$1,000,000.

16.  It is the case of the Defendants that after execution of the assignment at the solicitor firm, they could not pick up the title documents as the assignment had to be sent for stamping and registration. The Plaintiff picked up those documents as he is the attorney of the Defendants and he had sent the title deeds to the 1^st and 2^nd Defendants in the summer of 2001.

17.  In the Defence and Counterclaim, and in the Affidavit of 2^nd Defendant filed on 18 June 2009, it is stated that the Plaintiff made a wrongful accusation against the Defendants herein. He registered the Writ in the Land Registry and took no action for almost 6 years. The Plaintiff’s claim is invalid because all the money paid had proof of receipt. A number of receipts were produced to the said Affidavit. And by assignment dated 16 January 2001 (“the assignment”), the Property was transferred to the 1^st and 2^nd Defendants. Both Defendants lived in the United States until 2006 and moved back to the Property. The Plaintiff refused to vacate the registration of the Writ from the Land Registration. Accordingly, they applied for an order that the registration be vacated.

18.  The 1^st and 2^nd Defendants further claimed that the Plaintiff had lived and stayed in the Property without paying any mesne profits from April 2003 until June 2006. They therefore applied for damages. Further, the Defendants intended to sell the Property but the Plaintiff has registered this High Court Writ in the Land Registry. And there be further damages awarded for wrongful registration of the Writ.

Plaintiff’s Defence to the Counterclaim

19.  In the Affidavit in defence dated 16 July 2009, the Plaintiff submitted that the case should proceed to trial. I did not refer to parts of his Affirmation that I have mentioned hereinabove. He stated that in the District Court, the Defendants had applied for summary judgment and striking out application on a number of occasions. All the applications had been dismissed by the District Court Master or Judges. And I believe the line of defence by the Plaintiff to the counterclaim is set out in exhibit “F” of the Plaintiff’s Affirmation. While this was his submission in an application in the District Court when the Defendant applied to strike out the Plaintiff’s claim, it does set out the various ground of his defence.

20.  The Plaintiff repeated his case as set out in the Statement of Claim that the Property was transferred to the Defendants to assist the 2^nd Defendant to obtain a permanent resident in Hong Kong. On the issue of payment of the purchase price, the Plaintiff states that there is no payment, and argues that there is no evidence that the Defendants did lend him money.

21.  And on the receipts produced by the Defendants showing payment of $300,000 & $400,000 respectively, the Plaintiff claimed that they are forged documents. And on the transfers of money to the joint account of the Plaintiff with Madam Chan, the Plaintiff said the money were the investment of the Defendants in stocks in Hong Kong.

The Issues

22.  The Plaintiff’s solicitor submitted that all the case involved complicated issue on facts. It is not appropriate for this Court to make a finding at the interlocutory stage, and an Order 14 application is not the proper venue to determine factual dispute. Accordingly, the Plaintiff submitted that leave should be granted to Defendants to file his Defence to the Counterclaim.

23.  In reply to the Plaintiff’s Affirmation, the Defendants filed their joint Affidavit on 3 August 2009. They submit that this is a simple purchase contract and they denied holding the Property on trust for the Plaintiff. They have also referred to a number of legal authorities in support of their argument. They submitted that the Plaintiff’s claim is bare assertions with no evidence in support. It is totally unbelievable. They stated that the Plaintiff should be responsible for the contract he signed. And they cited the case Saunders v Angela Building Society [1971] AC 1004.

24.  And on the argument by the Plaintiff that the signatures on the receipts are forged, the Defendants submitted that there were government laboratory reports to prove that the signatures were genuine.

Legal Principles

25.  It is trite law that in an Order 14 application, the burden rests on the defendant (in this case the Plaintiff being the defendant in the counterclaim) to satisfy the Court that there is a valid defence. I need only to refer to a few passages from the Hong Kong Civil Procedure 2009, paragraph 14/4/9, on the guiding principle on how to determine an Order 14 application: -

“The defendant to the counterclaim must show that there are triable issues.  He has to satisfy the court that he has a ‘real or bona fide defence’.  If he makes an allegation, it must be credible or believable in the light of the evidence placed before the court.  As Bokhary J.A. said in Re Safe Rich Industries Ltd ([1994] H.K.L.Y. 183) –

‘The test at the summary stage is indeed as simple as whether the defendant’s assertions are believable.  But it must be recognized – because failure to recognize it would create a debt-dodger’s charter – that whether the defendant’s assertions are believable is a question to be answered not by taking those assertion in isolation but rather by taking them in the context of so much of the background as either undisputed or beyond reasonable dispute.’

On the other hand, it must also be borne in mind that it must be borne in mind that the Court must not embark on a mini trial on affidavits (per Chan J. in Mass International ltd. v. Hillis Industries Limited [1996] 1 H.K.C. 434 at 439.)

Unless it is obvious that the defence put forward by the defendant is ‘frivolous and practically moonshine, O.14 ought not to be applied (Codd v. Delap 91905) 92 L.T. 510)

Summary judgment under this order should not be granted when any serious conflict as to matter of fact or any real difficulty as to matter of law arises (Crawford v. Gilmore 30 L.R. Ir. 238.)”

I also take note of the cases cited by the Defendants in their Affidavit which I do not intend to repeat herein.

Discussion

26.  What the Defendants now seek to counterclaim against the Plaintiff, i.e. for vacation of the registration of the Writ herein and mesne profit turns on one single issue, namely, whether the transfer of the Property is a sale or that it is to be held on trust for the Plaintiff.

27.  From what I read from the pleadings and the Affidavit, the strongest evidence of the Defendants is the assignment. The assignment is undisputedly executed by the Plaintiff in favour of the Defendants. In a normal situation, a document speaks for itself. The strongest argument of the Defendants is that, the Plaintiff has executed the assignment and has acknowledged receipt of the consideration. Accordingly, the document is conclusive.

28.  However, the evidence of the parties does not end with this document. From the evidence now disclosed, it is obvious that the consideration was not paid at the time of the execution of the assignment. Even according to the Defendants, it was made at different stages in the form of loans to the Plaintiff. And it is for the purpose of recording such loans and as security to the Defendants, that the Plaintiff signed certain receipts in favour of the Defendants.

29.  While receipts were produced, the two receipts are disputed by the Plaintiff who claimed that they are being forged. It cannot be disputed that the matter has been reported to Police for investigation. The Defendants tried to rely on the handwriting expert from Police Department who has compared the signatures of the Plaintiff with the two signatures on these two receipts. The Defendants submitted that it proves conclusively that the receipts were signed by the Plaintiff.

30.  If I would refer to Appendix 6 of the 2^nd Defendant’s Affidavit dated 18 June 2009, exhibiting the handwriting expert report. When comparing the two signatures with three out of the four control signatures, the expert was of the view that the signatures on the receipts “were probably written by Wong Wan Chuen”. However, he also commented that when comparing the two signatures with control signature item 5, he could not make a like-with-like comparison. And he could not confirm nor eliminate that the two signatures on the receipts were written by the Plaintiff.

31.  I go no further than observing that there is no conclusion in the report by the expert. Surely the truthfulness of the receipts was challenged by the Plaintiff. This would become a dispute of fact which cannot be concluded without hearing evidence and if necessary to examine the evidence by the expert.

32.  And for the money transferred to the Plaintiff’s joint account with Madam Chan, there is dispute as to the purpose of those remittances. Again, this is not a matter that could be determined. I reminded myself that I should not conduct a mini trial on affidavit.

33.  If the payment is in dispute, there is an arguable case that the Property was transferred to the Defendants without consideration. If the Plaintiff is successful with his claim, that would be a complete defence to the counterclaim.

Conclusion

34.  With the above finding, there is dispute on fact which should go to the trial. And in any event, the Plaintiff’s claim herein has to proceed, as it has not been struck off. This would be an added reason why the case should proceed. And I could not say that the contention of the Plaintiff that he transferred the property to the Defendants to assist the 2^nd Defendant to apply for a Hong Kong Identity Card argument is completely moonshine.

35.  In those circumstances, I concluded that the application for Order 14 application should be dismissed. I therefore grant unconditional leave to the Plaintiff to file a Reply and Defence to the Counterclaim within 21 days from handing down of this Judgment. I further give an order nisi that the costs of the Order 14 proceedings shall be costs in the cause, which shall become absolute within 14 days from handing down of this Judgment.

36.  I also remind the parties of the direction of Deputy Judge Au that they should take out a case management summons for directions on further conduct of this action. I therefore direct the Plaintiff’s solicitors to take out a case management summons within 14 days on filing of the Reply and Defence to Counterclaim and parties shall comply with O. 25 rule 1 to file the questionnaire. All necessary directions for further conduct of this action should be addressed at the hearing of the case management summons.