LEUNG YAT KEUNG v. LEUNG MAN KEUNG

HCMP 909/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO. 909 OF 2004

(ON AN INTENDED APPEAL FROM DCCJ NO. 3972 OF 2003)

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J U D G M E N T

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Hon Rogers VP:

1. This is a renewed application for leave to appeal against a ruling of H H Judge Carlson given on 16 February of this year. The full facts relating to this case can be taken from the ruling of the judge and it is sufficient to say that this case concerns an action between two brothers.

2. The plaintiff in this case is the executor of the estate of the mother and is claiming mesne profits from his brother in respect of occupation of a flat at the corner of Peel Street and Staunton Street. The defendant in this case has brought a counterclaim against the plaintiff and against a company by the name of Ever Wealthy Resources Limited, which is the purchaser of the flat. In brief, he says that the purchase of the flat from the plaintiff who purported to sell it as an executor was a sham. In paragraph 27 of his defence, he says:

"It is specifically denied that the plaintiff is entitled to damages under paragraphs 7 and 8 of the amended statement of claim. The defendant avers that the purported sale and purchase of the property was a sham caused to be entered into by the plaintiff and the 2nd defendant by counterclaim [that is, Ever Wealthy] in order to perpetrate the fraud pleaded in the counterclaim hereof."

3. Just pausing there for a moment, what the pleading says is that the purported sale - and I use that word in deference to this pleader - the purported sale of this flat was illusory and the documents were wholly illusory and there was no intent to sell this flat. It was, in the words of the pleader, a sham. The pleading goes on in paragraph 29 to say that:

"...the purported sale and purchase of the property was vitiated by bad faith on the part of the 2nd defendant by counterclaim."

4. And then skipping down a bit - but not by any means ignoring the rest of the pleading - in paragraph 37 it is pleaded that:

"The defendants by counterclaim have jointly acted in concert and entered into the purported sale and purchase of the property with the 2nd defendant by counterclaim to perpetrate the following fraud."

Then particulars are given. They set out certain suspicious circumstances about the way in which the plaintiff obtained the title deeds to the property, in effect pleading that the plaintiff obtained them by a trick. Then it goes on to say:

"(f) All the conveyancing documents were executed on the same date and completion took place on the same date as well.

(g) The 2nd defendant by counterclaim is a British Virgin Islands company.

(h) The purchase price of the property was below market price.

(i) Both the 1st and 2nd defendants by counterclaim were represented by the same solicitors who were also the same solicitors as acting for the 1st defendant by counterclaim in this action.

(j) Vacant possession was not warranted to be delivered under the purported sale and purchase, but the 1st defendant by counterclaim purportedly undertook to provide all reasonable assistance for the 2nd defendant by counterclaim to obtain vacant possession to indemnify the 2nd defendant by counterclaim all his reasonable legal costs in obtaining an order for vacant possession of the property and for reasonable damages in relation to the loss of the use of the property.

(k) Less than one week after the purported sale and purchase of the property the 2nd defendant by counterclaim gave the plaintiff by counterclaim final notice to surrender the property."

5. Now, it may be that further and better particulars can be sought. It may be that some further and better particulars may have to be given after discovery or interrogatories, but that does not take away from the fact that the basic pleading in this case is that this sale was a sham. In those circumstances, the pleading is perfectly clear enough and, in my view, the judge was quite right in dismissing the application to strike out the counterclaim against Ever Wealthy Resources Limited and to allow the action to go on.

6. It is a very strong thing to strike out an action at the pleadings stage and this court pays great attention to what a judge at first instance has to say about the matter. It is no doubt for that reason that when leave to appeal was first applied before the single judge that was refused and I have no hesitation in saying that at this stage the application for leave to appeal must also be refused because I see no grounds upon which such an appeal would be successful at this stage.

Hon Chung J:

7. I agree and have nothing to add.