TSO YUK YIN v. WAN WAI HUNG

HCA 1578/2016

[2018] HKCFI 2798

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1578 OF 2016

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JUDGMENT

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I.  INTRODUCTION

1.  The defendant (“D”) was an indigenous villager of Cheung Shue Tan Village, New Territories, who now resided in Tsuen Wan, New Territories. The plaintiff (“P”) claimed she was engaged in the development of land at inter alia San Uk Tsai Village, Tai Po, New Territories (“Village”), including Lot No 253 (“Lot253”) at Demarcation District No 19 (“DD19”), and D held out to her agent/intermediary Yau Kwong Wang (“Yau”) that he had concessionary right to apply for the construction of small houses (丁權) at the Village, so pursuant to an intended small house project (a) the title of Lot253 was transferred to D as nominee on P’s behalf, and (b) P through Yau paid $120,000.00 to D.

II.  P’S CLAIM

2.  P claimed that in/about mid-1996 a bank manager Po  Shek  Bun (“Po”) introduced Yau to be her agent for acquiring/developing some land in the Village. P and Yau entered into an agency agreement whereby Yau was appointed as P’s agent to acquire/develop Lot No 83 (“Lot83”) in DD19, but such deal eventually fell through.

3.  In/about July or August 1996, Yau took P to view some land at the Village, and P was interested in inter alia Lot 253. In/about April 1997, Yau as P’s agent contacted/persuaded the owners to sell Lot 253. Yau wrote/submitted for P’s consideration a development proposal for Lot 253 (“Lot253 Proposal”), ie to build 1 small house on Lot253 for estimated total development cost of $6,294,771.00 with the 1^st instalment of $3,694,711.00 payable to Yau. The Lot253 Proposal provided as follows:[1]

“Small House Development Plan
Development Lot of the Plan: Tai Po Lam Tsuen San Uk Tsai Lot 253 in DD19
Lot Area about 6969 SF
No of Development: One Block
Costs Budget:						Estimate $
1.	Land price: ……			……		3,136,050
2.	Fees for the indigenous villager’s concessionary right:			One		300,000
3.	Solicitor’s fees			……		46,000
4.	Surveyor’s fees			……		50,000
5.	Construction costs:			……		1,100,000
6.	Village welfare contribution					200,000
7.	Compensation for removing plants in the Lot					100,000
8.	Payment of premium to the Government					1,300,000
9.	Stamp Duty (2% of the purchase price)					62,721
						6,294,771
10.	Agent’s administration fee					Waived
Note: every item mentioned above are estimated figures and each item shall be confirmed by actual spending and supported by receipt.
Payment schedule:
First phase:		At the beginning of the plan, shall pay $3,694,771 which include land price, villager’s fee, surveyor’s fee, solicitors fee and compensation for removing etc.
Second phase:		When building permit is granted and the construction works begin, construction costs and method of payment to be agreed between Developer and Contractor.
Third phase:		When the approval for the payment of premium is granted by the Lands Department, the Developer shall make direct payment to the Lands Department.
Payment for the first phase: HKD3,694,771
[signature of Yau] Cxxxxxx(x) Agent’s signature acknowledging receipt
Agent [signature by Yau]			Witness [signature by Po]		Developer” _________

4.  It was said that in/about May 1997, P and Yau entered into an agency agreement:

(a)	Yau as P’s agent would develop a small house on Lot253 on P’s behalf, taking all necessary steps and making all necessary arrangements to ensure completion within 2 years;
(b)	Yau would render an account to P whenever P required;
(c)	Yau as P’s agent would seek the consent of the owners to sell Lot253 to P;
(d)	D as nominee purchaser would execute necessary documents for the purchase of Lot253 and would hold such lot as nominee/trustee for P pending D’s application for building a small house on such lot;
(e)	Lot253 together with the small house to be built thereon would be transferred to P when the construction of such small house was completed;
(f)	P was to pay Yau $600,000.00 on 3 May 1997 for the purchase of Lot253 from its owners;
(g)	P was to further pay Yau $3,094,771.00 on/about 11 June 1997 for such purchase.

5.  P claimed that through the introduction by a Chan Wong Sing (陳煌勝), D agreed with Yau to act as nominee to purchase/hold Lot253.[2] On/about 3 June 1998, D agreed to apply in his own name for a building licence in respect of Lot253 at a consideration of $220,000.00 “for the benefits or beneficial interest of a third party ([Yau] or his nominee)”. Yau gave D a cheque dated 5 May 1997 drawn on Yau’s bank account in the sum of $120,000.00 payable to “[D] 代支現金” (“Cash Cheque”), and D duly/expressly acknowledged receipt of such sum (see D Receipt in paragraph 24 below). P claimed Yau indicated to her he would pay D a “service fee” of $220,000.00 on her behalf, but P later discovered only $120,000.00 was paid.

6.  P claimed Yau instructed solicitors Raymond Hung & Co (“RHCo”) to complete the purchase of Lot253 from the owners for $2,439,360.00. By a Deed of Assignment dated 19 June 1997, Lot253 was assigned to D who was/is at all material times holding Lot253 as P’s nominee. At/about the same time at RHCo’s offices, D signed a series of documents in P’s favour (“Series Documents”) the combined effect of which was that Lot253 was held on trust for P but would be transferred back to her upon completion of the development/construction of a small house thereon.

7.  Po rendered an account dated 12 August 1998 to P on Yau’s behalf (“Po Account”) under a cover letter of the same date (“Po Letter”):[3]

“Henry, Regarding the expenses of the Development of Lot 253, I have obtained the information from Ah Yau [ie Yau] and have prepared a list to show the actual amount of the expenses. The list was signed and confirmed by Ah Yau. Today, Ah Yau informed me that Miss Tso [P] would come back to Hong Kong in the near future to manage and solve the matter of the Development of Lot 84. I think it is very good. But remember to inform Miss Tso [P] that Lot 84 is a development cooperated by me and you people. ……
[signature of Po] 12-8-98
	Estimated expenses	Actual expenses	Paid	Balance remarks
Land Price	3136,050		3139360	-----
Stamp Duty	62721.00	36590.00	36590.00	26131.00 (excess) (1.5% of 2439360.00, the price stated in the assignment)
Indigenous villager’s fee	300,000.00	280,000.00	180,000.00	100,000.00
Solicitors’ fee	46000.00	unknown	12000.00	34,000.00
Management & Surveyor’s fee	50000.00	unknown	25000.00	25,000.00ê
Compensation	100,000.00?	100,000.00	100,000.00	------
Total	3694771.00		3492950	201,821.00
Capital received	3694771.00		Possession of capital unused 201,821.00?
Lot253	Balance sheet of the Development Item
Handler:	[signature of Yau]”

8.  P claimed it appeared from the Po Account that out of the monies P paid for the purchase/development of Lot253, $3,694,771.00 was paid for acquiring such lot and for vesting its legal title in D’s name pending completion of the construction of a small house thereon. But in/about late 1998 the application for building a small house on Lot253 fell through because even though (as P later discovered) D applied to the District Lands Office (“DLO”) for such purpose, for reasons unknown to P, neither Yau nor D followed up on such application or on the development of Lot253, or such application might have been discontinued.

9.  P terminated her agency agreement with Yau, but legal ownership of Lot253 was/is still vested in D as P’s nominee. P commenced HCA8154/2000 against Yau to inter alia recover sums paid to him for the purpose of Lot83 and Lot253. P applied for summary judgment for the following reliefs:

(a)	$3,634,555.71 and interest thereon being monies payable by Yau to P pursuant to a cancellation agreement dated 21 September 1998 to cancel the purchase/development of Lot83 as varied by 2 supplemental agreements dated 1 February 1999 and around July/August 1999;
(b)	$262,880.00 being the remaining balance that Yau retained out of the sum of $3,694,771.00 paid by P and not spent towards the purchase/ development of Lot253, and $700,000.00 being what Yau alleged to have been paid as “introduction fee” for the purchase of Lot253 on P’s behalf, but which was not properly supported by documentation and not charged to P’s account.

10.  On 18 April 2001, Master De Souza granted summary judgment in P’s favour in HCA8154/2000, and ordered Yau to pay P (a) $3,634,555.71 with interest thereon at 1.5% per month from 1 May 2000 until full payment (vis-à-vis Lot83), and (b) $962,880.00 with interest thereon at judgment rate from 14 August 2000 until payment (vis-à-vis Lot253) (“Yau Judgment”). The Yau Judgment was upheld on appeal save and except that the sum in (b) above vis-à-vis Lot253 was reduced by $350,000.00 because Kwan J (as she then was) in her Reasons for Judgment dated 7 August 2001 (“Kwan J Reasons”) took the view Yau had already repaid to P $350,000.00 in respect of the alleged “introduction fee”.

11.  Yau was declared bankrupt on 10 December 2007. P claimed Yau did not satisfy the Yau Judgment, and she had not recovered any monies she had paid to Yau for the purchase/development of Lot253.

12.  Further or alternatively, P contended the alleged “development” of a small house on Lot253 was frustrated/nullified by illegality in respect of D’s application, which D and Yau (as P’s agent) ought to have known but which P only discovered later, so the alleged development agreement was null, void and of no effect ab initio or it was frustrated accordingly.

13.  P claimed she made repeated requests/demands to D (via Yau or Po) for repayment of the “service fee” and for transfer of the legal title of Lot253 back to her, but D refused/ignored such requests. P claimed D held Lot253 for her on the basis of (a) resulting trust, (b) trustee de son tort and/or (c) total failure of consideration, and D was unjustly enriched by the value of Lot253. P claimed D ought to return the “service fee” of $120,000.00 paid to him by P via Yau on the basis of (i) unjust enrichment, (ii) total failure of consideration and/or (iii) money had and received without consideration.

14.  P claimed that she by herself or through her former solicitors So, Lung & Associates (“SLA”) repeatedly requested RHCo to provide documentary proof of D’s declaration of trust over Lot253, but RHCo refused/ignored such requests. On/about 4 October 2001, RHCo wrote to inform SLA (“4/10/01 Letter”) that “according to the instructions of [Yau] on 15^th May 1997 [RHCo] have prepared a set of security documents for execution by [D] and [D] has signed those documents accordingly”, and the aforesaid security documents that D executed were a power of attorney, a deed of development, an assignment and a deed (agreement for transfer) (presumably the Series Documents) which P claimed were in relation to Lot253 and in her favour, but despite requests RHCo refused to disclose/ provide such documents to P (who reserved her right to apply for third-party discovery against RHCo where necessary).

III.  D’S DEFENCE

15.  D denied P’s claim, and alleged he was not bound by the agreements allegedly made between P and Yau to which he was not a party. D put P to strict proof that she by herself and by her own means financed the purchase of Lot253 and the “service fee”. D went on to claim (a) he was unfamiliar with the English language, (b) he did not know P and/or Yau as alleged or at all, (c) he never received copies of the Series Documents and had no knowledge of their contents and combined effect, and (d) he never occupied, used and/or disposed of any land allegedly transferred to him by way of the Series Documents as P alleged.

16.  D further averred any possible entitlement to Lot253 which P might have (but which D did not admit) had been time-barred by section 7(2) of the Limitation Ordinance Cap 346 (“LO”), and denied P did not know the alleged illegality and legal consequences of the alleged “development” since both P and Yau were legally represented. Further and/or alternatively, if the implementation of any alleged agreement would ultimately involve making false representation to the Director of Lands and/or the Hong Kong government, D would reserve his right to resist P’s claim for repayment of $120,000.00 on the ground of illegality. D also reserved his right to strike out P’s claim.

17.  Mr Lau, counsel for P, noted D’s Defence as summarised in paragraphs 15-16 above did not put forward a positive defence case apart from denials and non-admissions. He complained that although P pleaded positive allegations against D,[4] D did not admit such allegations (which meant D merely put P to proof of the same),[5] and merely averred he did not know P and/or Yau.

IV.  PROCEEDINGS

18.  On 15 June 2016, P commenced the present action against D. P claimed D still held Lot253 upon trust for her, so he was liable to re-vest all title, rights, benefits and interests thereof/therein unto P, and to repay P the “service fee” of $120,000.00. P sought the following reliefs:

(a)	a declaration that D held Lot253 on trust for P;
(b)	an order that D do take all necessary steps including but not limited to executing all necessary assignment, conveyance, instrument or document to transfer the title of Lot253 to P free from encumbrances within 14 days of the order to be made, or at any time thereafter when called upon to do so, and in default the Registrar of the High Court or Ms Chan Ching Man of P’s solicitors be appointed under section 25A of the High Court Ordinance Cap 4 to execute the same in his stead but at his cost and expense to be taxed if not agreed on indemnity basis;
(c)	repayment of the “service fee” of $120,000.00 to P;
(d)	(further or alternatively at P’s election) damages to be assessed or an account of profits together with interest;
(e)	a declaration that P was entitled to trace her beneficial interest in Lot253 “into the sale proceeds equivalent, if any, of [Lot253] and that [D] holds such proceeds on trust for [P]”;
(f)	all necessary tracing/accounts;
(g)	costs.

19.   On 1 September 2017, P filed her Amended Statement of Claim (“ASoC”). On 23 October 2017, D filed his Defence. On 28 November 2017, D filed his Answer to P’s Request for Further and Better Particulars of his Defence. On 1 November 2017, P filed her Reply. On 27 December 2017, P filed a summons for summary judgment against D for the reliefs set out in paragraph 18 above (“Summons”). On 27 December 2017 and 14 March 2018, P filed her 1^st and 2^nd affirmations in support of the Summons. On 15 February 2018, D filed his affirmation in opposition.

20.   The Summons came before me for hearing on 28 June 2018 (“Hearing”). At the Hearing, Mr Lau confirmed P would not seek summary judgment for the reliefs in paragraph 18(d)-(f) above.

V.  P’S AFFIRMATION EVIDENCE

21.   P claimed in/about May and June 1997, P duly paid to her agent Yau partial payment of $3,694,711.00 to develop Lot253 pursuant to the Lot253 Proposal. P claimed such payment was evidenced by:

(a)	a cashier order dated 3 May 1997 for $600,000.00 sourced from P’s time deposit (“1st CO”);
(b)	cashier order no.101866 for $350,000.00 payable to Yau (“2nd CO”);[6]
(c)	cashier order no 101867 for $2,744,771.00 payable to Yau (“3rd CO”).

In relation to the 1^st CO, P also exhibited the following:

(d)	a time deposit renewal confirmation slip dated 1 May 1997 for deposit no 131 in respect of the principal sum of $4,205,679.44 for “1 day fixed” with contract interest of $547.31 to mature on 2 May 1997 at $4,206,226.75 (“1st Renewal Slip”);[7]
(e)	a time deposit renewal confirmation slip dated 6 May 1997 for deposit no 131 in respect of the principal sum of $3,608,021.74 for “1 day fixed” with contract interest of $432.47 to mature on 7 May 1997 at $3,608,454.21 (“2nd Renewal Slip”). [8]

Although the difference between the time deposits in (d)-(e) above was $598,647.78 (ie less than $600,000.00), P claimed the 1^st/2^nd Renewal Slips showed withdrawal of $600,000.00 and the difference was “…… explained by the interests accrued by the time deposit between 2 May 1997 and 5 May 1997”. Although P was no longer in possession of the time deposit renewal confirmation slip showing the amounts for 2-5 May 1997, she recalled 3 May 1997 was a Saturday and 4 May 1997 was a Sunday, and interest on the time deposits also accrued on Saturdays/Sundays, eg interest was earned on time deposit no 131 for 26 April 1997 (Saturday) and 27 April 1997 (Sunday),[9] and also on 10 May 1997 and 11 May 1997.[10]

22.   Yau duly acknowledged receipt of $3,694,711.00 by signing on a copy of the 2^nd/3^rd COs (“Cashiers Copy”) as follows: “簽收: 已付訂金600,000 ‚本票二張共銀; 3094,771.00 [signature of Yau]”,[11] which same signature also appeared on the Lot253 Proposal.

23.   P said Yau told her he made arrangements for D to act as purchaser to take/hold Lot253 on her behalf pending development of such lot. On 19 June 1997, D signed a Deed of Assignment prepared by RH&Co under Yau’s instructions whereby Lot253 was assigned to D who since held the same as P’s nominee upon trust for her benefit. At RHCo’s offices, D also signed a Power of Attorney, a Deed of Development, an Assignment, and a Deed (agreement for transfer) (ie the Series Documents) in P’s favour to the effect that Lot253 would be transferred back to P upon completion of the development/construction of a small house thereon. P exhibited the 4/10/01 Letter, and copy bills of costs dated 16 May and 18 June 1997 addressed to D by RHCo for services rendered under D’s name in respect of Lot253.

24.   P was later told D did receive a “service fee” of $120,000.00 in cash for executing the Series Documents as arranged by Yau as P’s agent. P exhibited a copy of the Cash Cheque on which D signed his name on 5 May 1997 to acknowledge receipt (and he also noted down his identity card number) (“D Receipt”). P claimed such sum of $120,000.00 was her money for which Yau had accounted to her. The reverse of the D Receipt had a handwritten notation that stated Chan took an “introduction fee” of $60,000.00, which sum together with the “service fee” of $120,000.00 tallied with the sum of $180,000.00 in the Po Account.

25.   P denied she did not have locus standi to sue D. Although she did not sign the Lot253 Proposal, Yau admitted the agency agreement between him and P to develop Lot253 as evidenced by his affirmation filed on 10 February 2001 in HCA8154/2000 (“Yau Affirmation”) and by the Kwan J Reasons. P claimed Yau took money from her, and as a trustee/agent Yau caused it to be paid for the purchase of Lot253 upon trust on P’s behalf and for her benefit.

26.   The Yau Affirmation stated P and her husband Mr Wong (ie Mr Wong Kwong Lee Henry, “Wong”)[12] visited Lot253, and a month after their visit P told him she and Wong were interested in purchasing such lot. Yau agreed to contact the owners and later informed Wong via Po that the “introduction fee” for the sale and purchase of such lot would be $100.00 per square foot. Yau and his wife met Wong, Po and Po’s wife for a meal in which Wong agreed to pay such “introduction fee”. So Po drafted the Lot253 Proposal which was signed by P and Yau, and a sum of $3,900,000.00 was deposited into Yau’s bank account for him to proceed with various preparatory works. The Yau Affirmation went on to state as follows:

“21.   I then on behalf of [P] purchased [Lot253], and paid a purchase price in the sum of HK$2,400,000.00. I also incurred various expenses in the process of proceeding with all the necessary products, which amounts to HK$300,000.00.

22.   I then started with various applications to the Lands Department for erecting small house a [Lot253], and the said application is now still pending for approval. …… The said Application is now being proceeded by the [DLO], Tai Po and an interview in relation to the said Application is scheduled on the coming 13^th February 2001. I on behalf of [P] had an agreement of an indigenous villager for the said Application and that indigenous villager would appear in the coming interview. According to my best knowledge, the coming interview is a routine matter. So far as the identity of indigenous villager is to be confirmed by the [DLO], Tai Po, the said Application would be allowed as a matter of normal practice.

23.   I would say [P’s] claim against me in relation to Lot253 is premature as I have not been in breach of the [Lot253 Proposal]. Accordingly, the claim is relation to [Lot253] should be dismissed.”

27.   The Kwan J Reasons in relation to the appeal against the Yau Judgment held that Yau held an unused balance of not less than $262,880.00. Yau produced a statement of account with an unused balance of $201,821.00 which was identical to a statement sent to Wong under cover of a letter dated 12 August 1998 by Po, but Kwan J (as she then was) was satisfied that the account rendered by Yau on 15 March 2000 with a balance of $262,880.00 held by him was the updated account. As regards P’s claim for $700,000.00, Yau claimed this was paid as an “introduction fee” or “commission” for an under-the-table dealing, and alleged Wong had agreed on P’s behalf to pay such sum (which P and Wong denied), but Yau did not adduce evidence to show he had paid $700,000.00. Kwan J (as she then was) found Yau’s allegation incredible. She noted the revised development proposal for Lot253 stated that a sum of about $700,000.00 (being $100.00 per sq ft for the property with an area of 6,969 sq ft) was to be paid to one of the owners as commission. Yau’s new affirmation stated such sum was paid to an estate agent Wong So Lun which charged an introduction fee of $100.00 per sq ft for introducing Yau to the owner who was abroad, but Wong had since passed away. The learned judge rejected Yau’s allegation of payment to Wong So Lun, who was different from the recipient in the revised development proposal. But Kwan J (as she then was) reduced the claim by $350,000.00 because Yau’s new affirmation showed he had paid such amount to P on 25 May 1999.

28.   As for the Po Account, P agreed the Po Letter was addressed to her husband Wong. She explained Wong helped her in handling matters relating to Lot253, which was why the Po Letter was addressed to him and why his name appeared in some of the documents. Nevertheless, Wong did not have any interest in Lot253, and she (and not Wong) was the “developer” or beneficial owner of such lot.

29.   P claimed the LO had no application because her claim was based on trust. P further claimed that by virtue of section 13 and/or section 20 of the LO, her right of action for the present action did not accrue/continue and should not have so accrued/continued to become time-barred against her as the beneficial owner, either as alleged or at all, in that D expressly admitted “he had never occupied and/or used” Lot 253. Section 20 of the LO provides inter alia that “no period of limitation shall apply to an action by a beneficiary under a trust”. P claimed D should not be allowed to amend his Defence to clearly plead a limitation defence to P’s claim for $120,000.00 as the hearing of the Summons was then imminent.

30.   P claimed D had no defence to her claim for $120,000.00 (a) paid to and acknowledged by him, (b) had and received by him for which there was never any consideration, and/or (c) of which there was never any legitimate consideration to support. P believed there was no defence and/or no reasonable cause of defence.

VI.  D’S AFFIRMATION EVIDENCE

31.   D claimed there were reasonable grounds to believe P was not the purchaser/developer of Lot253, so she did not have locus standi to commence the present action against him:

(a)	The Lot253 Proposal did not bear P’s signature, but if she did enter into an agency agreement with Yau to purchase/develop Lot253 as alleged, she would have signed on the development plan as purchaser as Yau did as agent.
(b)	The 2nd/3rd COs dated 11 June 1997 did not conclusively support P’s case that she had paid $350,000.00 and $2,744,771.00 to Yau pursuant to the Lot253 Proposal since the 2nd/3rd COs only showed 2 sums were paid to Yau at his request, but it did not mean P was the issuer of such cashier orders.
(c)	The 1st/2nd Renewal Slips did not support P’s case that $600,000.00 allegedly paid to Yau on 3 May 1997 came from her time deposit. The difference between maturity of her time deposit on 2 May 1997 and start of her time deposit on 5 May 1997 was $598,649.78 (ie less than $600,000). If $600,000.00 was sourced from P’s time deposit of $4,206,226.75 that matured on 2 May 1997, one would have expected the whole sum less $600,000.00 (ie $3,606,226.75) rather than $3,607,576.97 was renewed on 5 May 1997.
(d)	The Po Letter for the Po Account (which was meant to show expenses incurred for purchase/development of Lot253) showed (i) the Po Account was addressed to one “Henry” and not P (which contradicted P’s pleaded case), and (ii) the developer of Lot253 was “Henry” whereas the developer of Lot 84 of DD19 was P. The name “Henry” also appeared at the top left corner of the Cashiers Copy. According to the Kwan J Reasons, Wong’s English name was “Henry”. D noted that unlike the name “Henry” which appeared in at least 2 documents purporting to be related to purchase/development of Lot253 (ie the Po Account and Cashiers Copy), P’s name did not appear on any such documents.

32.   D claimed there was insufficient evidence to summarily conclude P via Yau had paid him $120,000.00 in cash:

(a)	The Cash Cheque for $120,000.00 purportedly issued by Yau to D had been altered in that D’s name as payee was crossed out and “代支現金” was inserted in its place, so such cheque could not be used as evidence to show $120,000.00 had been paid to D.
(b)	Nothing on the copy Cash Cheque for $120,000.00 indicated (i) such sum had been paid to D in cash, (ii) the identity of the person who gave such sum to D in cash and (iii) the original source of such sum, and if Yau had paid $120,000.00 on P’s behalf to D in cash, such sum would have appeared in the Po Account, but there was no such item therein.

33.   D also alleged P’s claim against him were time-barred. According to the ASoC, by late 1998 P was fully aware of the fact that the development of Lot253 could not be achieved, and D was allegedly holding Lot253 on trust for her, but P did not explain why she only commenced the present action against D in June 2016, ie almost 18 years after having full knowledge of the facts she how relied on for the present action.

34.   D agreed the limitation defence to P’s claim for $120,000.00 had not been clearly pleaded in his Defence, so he would instruct his solicitors to seek leave to amend the same. D believed the proposed amendment at such early stage in the present action would not have caused prejudice to P that could not be compensated by costs.

35.   On the basis of the above matters, D believed there were clearly issues to be tried, and he urged for dismissal of the Summons with costs.

VII.  LEGAL PRINCIPLES

36.   Summary judgment A plaintiff may invoke the procedure under Order 14 of the Rules of the High Court (“RHC”) where there is no valid defence to his claim or otherwise a triable issue. The rationale is set out in Hong Kong Civil Procedure 2019:[13]

“ ...... The underlying policy of the summary procedure is to prevent a defendant from delaying the plaintiff from obtaining judgment in case in which the defendant clearly has no defence to the plaintiff's claim: Man Earn Ltd v Wing Ting Fong [1996] 1 HKC 225.

‘Order 14 proceedings for summary judgment when there is no defence to a claim are an important feature of the legal process. It enables plaintiffs in cases where there is no defence to obtain expeditious summary judgment to avoid unnecessary delay. When applied for, it is for the defendant to show that there is a triable issue or an arguable defence if he is to be allowed his day in court. To deny him his day in court, if he shows a triable issue or an arguable defence, is indeed a fearful injustice. On the other hand, if he has no defence and he obtains leave to defence, equally, there is injustice to the plaintiff’ (Manciple Ltd v Chan On Man [1995] 3 H.K.C. 459 at 466, per Mortimer JA).

The machinery of O.14 works on the basis that if the plaintiff's application is properly constituted, he is prima facie entitled to judgment unless the defendant shows cause to the contrary or the application is dismissed. ......”

37.   In Ng Shou Chun v Hung Chun San,[14] Godfrey J noted it was not appropriate to embark on a mini‑trial of the action on affidavit evidence.[15] The court should ask itself the question whether what the defendant says is credible or believable. If so, he must have leave to defend; if not, the plaintiff is entitled to summary judgment. Hong Kong Civil Procedure 2019 goes on to say that:[16]

“...... ‘In considering whether there are triable issues the Court will, of course, not take the alleged defence on its face value but test it against the evidence disclosed in the affidavit including matters such as contemporaneous documents, whether the alleged defence is inconsistent with the defence previously put forward or whether the defence is only recently raised despite opportunity being given to the defendant to respond earlier. The Court will also consider the inherent probability of the defence. But what the Court should not do is to conduct a mini‑trial on complicated factual issues’: Paul Y Management Ltd v. Eternal Unity Development Ltd (unrep., CACV16/2008, [2008] H.K.E.C. 1359 at [19] per Cheung J.A. ……”

“...... The defence set up need only show that there is a triable issue or question or that for other reason there ought to be a trial; and leave to defend ought to be given unless there is clearly no defence in law such as could have been raised on the former demurrer to the plea and no possibility of a real defence on the question of fact (Jacobs v. Booth’s Distillery Co. (1901) 85 L T 262; Runnacles v. Mesquita (1876) 1 Q.B.D. 416). Where there are unexplained features of both the claim and the defence which are disturbing because they bear the appearance of falsity and disreputable business dealings and questionable conduct, the court should not make tentative assessments of the respective chances of success of the parties or the relative strengths of their good and bad faith, and should not on such an examination grant the defendant conditional leave to defend, but should give unconditional leave to defend: Billion Silver Development Ltd v. All Wide Investments Ltd [2000] 2 H.K.C. 262, applying Extraktionstechnik Gesellschaft für Anlagenbau Gmbh v. Oskar (1984) 128 S.J. 417 ......”

38.   But this does not mean that once a plaintiff invokes the summary judgment procedure, the defendant bears all the burden of showing there are triable issues. In Ju Yan Di Embroidery Genesisy v Yau Wai Han,[17] Cheung JA said as follows:

“14. It is well-established that the burden on the defendant in a summary judgment application is to show that he has a credible defence and he must condescend to give particulars of his defence.  However, this does not mean that once the plaintiff invokes the application and irrespective of the strength of his case, the defendant bears all the burden of showing that there are triable issues in the case.  This is because the starting point in a summary judgment application is that it should only be invoked when there is no defence to the claim.  This means that the plaintiff must in the first place demonstrate that the defendant has indeed no defence.  This requirement is further recognised in the procedural rules which mandate the plaintiff to state his belief in the verifying affidavit that there is no defence to the claim.  This requirement must be kept in proper perspective when assessment is made of the strength of the application, otherwise there is a danger that the attention will be focused solely on what the defendant has said without consideration at the same time of the basic premise of the plaintiff’s claim or its inherent strength and weakness.  In many summary judgment applications, the plaintiff will have no difficulties in demonstrating that there is no credible defence but this case is not one of them.  In my view, the defendant has shown that she has a credible defence to the plaintiff’s claim for which summary judgment is not suitable.” (my emphasis)

39.   This means that as far as the plaintiff’s claim is concerned, (a) the statement of claim must be good and complete in itself, any defect or omission therein cannot be corrected or supplemented by affidavit, and the summary judgment will be dismissed if the defect is of substance, (b) the summary judgment application has to proceed on the case as pleaded, which facts have to be verified on affidavit, and (c) where the plaintiff’s assertions were materially different and/or inherently inconsistent with his pleaded case, he will have failed to verify his claim as pleaded and summary judgment should not be granted.[18]

40.   On the other hand, as far as the defendant’s claim is concerned, a complete defence need not be shown, and the defence set up need only show that there is a triable issue or question or that for some other reason there ought to be a trial; and leave to defence ought to be given unless there is clearly no defence. Whether the defendant’s assertions are believable is a question that should be answered not by taking those assertions in isolation, but rather by taking them in the context of so much of the background as either undisputed or beyond reasonable dispute. Where there are unexplained features in both the claim and the defence, no tentative assessment of strengths should be made, but unconditional leave to defend should be given.[19]

41.   But that said, to raise a triable issue or arguable defence, the defendant cannot be sparing of the particulars of his defence, and then claim that as a result of his own parsimony in details there is an obscurity which must await trial for illumination.^[20] Further, “‘[a] desire to investigate alleged obscurities and a hope that something will turn up on the investigation cannot, separately or together, amount to a sufficient reason for refusing to enter judgment for the plaintiff. You do not get leave to defend by putting forward a case that is all surmise and Micawberism’ (per Megarry V.-C. in Lady Anne Tennant v. Associated Newspapers Group Ltd [1979] F.S.R. 298)”.^[21]

VIII.  DISCUSSION

42.   I agree with Mr Cheng, counsel for D, that for P to obtain summary judgment, she had to demonstrate in the first place D had no defence, and for such purpose she had to show (a) P herself paid the funds for the purchase of Lot253 (ie $2,439,360.00), (b) $120,000.00 allegedly paid to D came from P, (c) the claim against D for repayment of $120,000.00 was not time-barred, and (d) the claim for $120,000.00 on the facts P pleaded established total failure of consideration, unjust enrichment and/or money had and received. As a corollary to the above, Mr Cheng submitted there were 4 corresponding triable issues: (i) whether P was the true purchaser of Lot253 and whether the monies for the purchase of Lot253 originated from P (“1^st Issue”), (ii) whether the sum of $120,000.00 allegedly paid to D came from P (“2^nd Issue”), (iii) whether P’s claim for $120,000.00 had been time-barred (“3^rd Issue”), and (iv) if not, whether the claim for $120,000.00 was established on the facts as pleaded (“4^th Issue”).

43.   On the 1^st Issue, P claimed she was the true investor/developer in relation to the purchase of Lot253. In the ASoC, P claimed she was the one who liaised with and appointed Yau as her agent to acquire/purchase/develop Lot253, and who provided the investment funds. Mr Lau referred to the Lot253 Proposal, 1^st, 2^nd and 3^rd COs, 1^st and 2^nd Renewal Slips, Po Letter, Po Account, 4/10/01 Letter, Cash Cheque, Yau Affirmation and Kwan J Reasons to say there was ample evidence to demonstrate (a) the existence of the intended small house development project for Lot253 with agency agreement drafted by Po and signed by P and Yau and with a sum of $3,900,000 deposited into Yau’s account, (b) Yau had an agreement with an indigenous villager to apply for a small house grant, (c) a person named Wan Wai Hung was used as nominee purchaser of Lot253, and (d) the purchase price for Lot253 had been paid for. Mr Lau submitted there was ample (albeit indirect) evidence to show P was the purchaser of Lot253 and developer of the intended small house development project for such lot, and to further show the purchase price was paid with funds sourced from her.

44.   But Mr Cheng submitted it was telling the Lot253 Proposal, which was prepared by Yau and which set out the various estimated expenses for the purchase/development of Lot253 and also the anticipated stages of development of a small house on such lot, contained the signatures of Yau (as agent) and Po (as witness) but no signature at the space for the “Developer” to sign. The Lot253 Proposal was the key document that pertained to the overall scheme for the purchase/development of Lot253, and yet (a) it did not mention P at all, (b) the “Developer” was unidentified and (c) there was no signature for the “Developer”. Indeed, P’s name did not appear in any document relating to the purchase/development of Lot 253, and P did not offer any or any cogent explanation for such omission despite her alleged direct dealings with Yau as alluded to in the ASoC.

45.   Interestingly, the Po Letter that enclosed the Po Account was addressed to Henry (and not P), and Wong’s name also appeared in the Cashiers Copy on which Yau signed to acknowledge receipt of the 2^nd and 3^rd COs. P suggested Wong was then assisting her in handling matters in relation to Lot253, so his name appeared on such documents. But then the Po Letter was particularly addressed to Wong and not P, and Po particularly reported to Wong “regarding the expenses of the Development of Lot 253” being the Po Account, but noted quite separately that he understood P would come back to Hong Kong in the near future to manage and solve the matter of the development of Lot 84 of DD19.

46.   In my view, on the face of such letter and bearing in mind the annotation of Wong’s name on the Cashiers Copy, and further noting that the Yau Affirmation alluded to Wong’s negotiations with Yau about the “introduction fee” for the sale/purchase of Lot253 and his meeting with Yau/Po and their wives without P’s presence (apart from an initial visit to Lot253 by P and Wong), a respectable argument could be made out that it was Wong who was the developer of Lot253 whereas P was a developer of other lot(s), eg Lot 84 of DD19. This immediately raised doubt as to whether Wong was in fact a principal (which view would be materially different from P’s pleaded case) rather than another agent of his wife in helping her with dealings over Lot253. Whilst it is unnecessary for me at this stage to come to any definitive view about P’s explanation about Wong’s role was nothing more than a self-serving assertion (as Mr Cheng submitted), I find there is a triable issue as to who actually was the purchaser/investor in respect of Lot253. P complained that D’s complaint was thin and desperate, but it must not be forgotten that D was not a party to the arrangements between P and Yau, and could not be expected to come forth with abundant evidence in this respect. What D did was to question the objective evidence that P relied upon, and despite P’s express denial that Wong was the real purchaser of Lot253, I find there was sufficient basis for D to raise a respectable triable issue that ought not to be summarily determined at this stage. Taking this together with the issues discussed below, I find the evidence before me showed such issues could only be resolved at trial.

47.   As for the alleged purchase monies paid to Yau by way of the 1^st, 2^nd and 3^rd COs, Mr Cheng confirmed that for the purpose of the Summons, he was prepared to put aside the 1^st and 2^nd COs because P did put forward some documents and explanations for the same. But P failed to adduce any objective evidence to show she funded the 3^rd CO dated 11 June 1997 in the sum of $2,744,771.00, but one could see the name of Wong on the Cashiers Copy. This was not an insignificant matter because the 3^rd CO represented the bulk of the funds for the purchase of Lot253, without which the value of the 1^st and 2^nd COs (ie $600,000.00 and $350,000.00) would be insufficient to satisfy the purchase price of Lot253.

48.   Mr Lau agreed that apart from P’s affirmation evidence there was no documentary evidence to evidence the 3^rd CO was sourced from P’s monies/funds. Although the Po Account stated the paid “Land Price” was $3,139,360.00, it did not give enlightenment as to the source of such funds, and of itself it did not rebut D’s countervailing contention that even P’s own documents (ie the Lot253 Proposal, Po Letter and Cashiers Copy) raised query as to the identity of the true purchaser/developer.

49.   Mr Lau next referred to the 4/10/01 Letter, but by such letter RHCo only confirmed they acted according to Yau’s instructions to prepare the Series Documents for D’s execution. Given Yau’s admitted status as an agent, the 4/10/01 Letter also did not enlighten as to the identity of the true purchaser/developer as principal. Whilst it was said P was not assisted by RHCo’s failure/refusal to disclose the Series Documents, I note P did not even seek to place the Assignment (which must have been registered against Lot253 at the Land Registry) before this court. Fortunately, in light of Mr Cheng’s submissions, nothing much turned on the Assignment.

50.   Mr Cheng confirmed that for the purpose of the Summons, D would not rely on the limitation defence for P’s claim in respect of Lot253 based on resulting trust. Nevertheless, P still had to establish she was the developer/purchaser who actually provided the purchase price for such cause of action. For the reasons explained above and taking into account the discussions below, I find D had raised triable issue and arguable defence.

51.   On the 2^nd Issue, Mr Cheng at the Hearing helpfully confirmed that for the purpose of the Summons, the court could assume D received the Cash Cheque. So I need not be concerned with the 2^nd Issue. I therefore turn to the 3^rd Issue, which was whether P’s claim for return of the sum of $120,000.00 was time-barred.

52.   According to the ASoC, by late 1998 the application for building a small house on Lot253 fell through because even though (as P later discovered) D applied to the DLO for such purpose, for reasons unknown to P, “the application process was either not followed up or discontinued”, and P terminated her agency agreement with Yau and commenced HCA8154/2000 against him, but the legal title to Lot253 remained with D as P’s nominee. Mr Cheng submitted it was clear from the ASoC that by late 1998 (or at the latest when P commenced legal action against Yau in 2000) P had all the requisite information and knowledge to claim against D for recovery of the sum of $120,000.00. However, P only commenced the present action in June 2016.

53.   According to the ASoC, P’s claim against D for return of $120,000.00 was on the basis of unjust enrichment or total failure of consideration or money had and received without consideration. In short, P’s pleaded claim was a restitutionary claim for money had and received. As Mr Lau put it in paragraph 29 of his written submissions, P’s such claim was “simply based on total failure of consideration”. Mr Cheng submitted that the relevant limitation period should be 6 years as explained by Hobhouse J in Westdeutsche Landesbank Girozentrade v Islington London Borough Council[22] citing Re Diplock’s Estate, Diplock v Wintle:[23]

“In Re Diplock’s Estate, Diplock v Wintle …… the 1939 Act was referred to because a defence of limitation of actions was raised. The Court of Appeal said:

‘We assume … that the words ‘actions founded on simple contract’ must be taken to cover actions for money had and received, formerly actions on the case, and, as such, covered in express terms by the Limitation Act, 1623. The assumption must, we think, be made, though the words used cannot be regarded as felicitous.’

Weak though this statement is, I consider that it can be read as the expression of an opinion that the words must be construed as including actions for money had and received. The word ‘simple’ is used to exclude an action upon a specialty, for which a period of 12 years was prescribed.

The alternative to the view of the Court of Appeal would have to be that the intention of the legislature in 1939 was that there would be no limitation period for any common law action based upon quasi contract. Such an omission would be clearly contrary to the general purpose of the Act; …… In view of what the Court of Appeal have said, the 1939 Act must be regarded as ambiguous and that in turn, under the more liberal approach to the construction of statutes adopted by the House of Lords in Pepper (Inspector of Taxes) v Hart ……

Accordingly, I consider that I should follow the opinion expressed by the Court of Appeal in Re Diplock’s Estate and that s 5 of the 1980 Act should be construed as having the same effect as the equivalent provision in the 1939 Act. It follows that if, which is not the case, Kleinwort Benson were having to rely upon causes of action in money had and received which had accrued more than six years before 3 April 1991 such causes of action would be time-barred.”

54.   Mr Cheng accepted the limitation defence might not have been fully/sufficiently pleaded in response to P’s claim for return of the sum of $120,000.00, but he submitted it was arguable and triable and could be fully arrayed by future amendment of the Defence. I refer to my judgment in Ko Hong and Ko Chi Ching both trading as Wing Yick Chau Chong v Chow Hung Wai and Chow Hung Choi both trading as Man Hung Store,[24] cited in my later judgment in AVC Property Development Company Limited v Joyful Grace Trading Limited & anor,[25] and note that Order 14 rule 4(1) of the RHC provides that a defendant may show cause “by affidavit or otherwise to the satisfaction of the court” and that a defendant is not necessarily bound by his pleaded defence in resisting a summary judgment application. If the affidavit in opposition raises triable issues or arguable defences, it may be open to the defendant to apply for amendment of the defence in due course especially if it is at an early stage of the proceedings. Here, D’s limitation argument was a contention in law premised P’s case, so I see no reason why I should not take such argument into consideration.

55.   In my view, a respectable argument could be mounted for raising a limitation defence to the claim for the return of $120,000.00, which must be a triable issue or arguable defence to be resolved at trial.

56.   As to the 4^th Issue, ie whether the claim for $120,000.00 based on the basis of unjust enrichment, total failure of consideration and/or money had and received could be established, Mr Cheng submitted that even if such claim was not time-barred, it appeared that even on P’s case D had performed what he had been paid for by (a) being the nominated purchaser for P, (b) having signed the Series Documents for the purchase of Lot253, and (c) made application to the DLO to build a small house on Lot253. According to paragraphs 10-13 and 15A of the ASoC,[26] D should have received $220,000.00 for his services, but so far he had only received $120,000.00. Mr Cheng argued there must be a triable issue or arguable defence as to whether $120,000.00 should be returned to P on the basis for total failure of consideration or on the basis of unjust enrichment.

57.   I agree with Mr Cheng’s analysis. Indeed, Mr Lau accepted that in order to make good the claim for return of $120,000.00, P must establish total failure of consideration. But Mr Lau’s answer to the steps taken by D in (a)-(c) in the above paragraph (on the basis of P’s case) was that the application for a small house grant had to be made by an indigenous villager and not others, so the preliminary steps taken by D did not count. I cannot accept such contention because (even on P’s case) the whole purpose of approaching D and giving him a “service fee” was to enjoy his services as an indigenous villager who had a concessionary right to build a small house on Lot253. Otherwise, there would be no point in involving such indigenous villager at all in the intended small house development project.

58.   I note D did allude to illegality in his Defence (see paragraph 16 above). But Mr Cheng did not rely on such contention for the purpose of resisting the Summons, so I will not dwell on the same.

59.   Mr Lau submitted the undeniable reality was that D was/is the registered owner of Lot253. He did not make any outright assertion that he was the actual beneficial owner of such lot, but merely cast doubt as to whether P was the actual purchaser/developer. Mr Lau argued given that the purchase of Lot253 took place over 20 years ago in 1997, and there did not appear to be any claimant other than P to the beneficial interest to such lot, D’s opposition to the Summons was utter moonshine and did not raise any triable issue.

60.   But D could have made a similar complaint about P’s allegation that she was the true purchaser/developer and beneficial owner of Lot253. P as such should be even more anxious in taking action to recover/protect her interests in Lot253 and nothing was done vis-à-vis D until 2016. No cogent explanation was given, and P’s legal action against Yau would not afford any complete answer since she well knew D and not Yau held the registered title to Lot 253. It must be remembered that even on P’s case she and D did not directly deal with each other, and the fact D had the aforesaid concerns that arose from P’s own documents and thus required her to prove her case was not necessarily Micawberism and moonshine. As explained by Cheung JA in Ju Yan Di Embroidery Genesisy, P must first demonstrate that her claim was inherently viable and the defendant had no defence. Whilst such threshold might not be hard to satisfy in some cases, I am satisfied there are enough matters of concern about P’s claim that ought to go for trial. In coming to this view, I bear in mind D need not show a complete defence, but only enough to show there was a triable issue or some other reason for trial.

61.   In my view, apart from the above considerations which have driven me to the conclusion that it is inappropriate to grant summary judgment, I note the subject matter of the present action, ie the alleged/intended small house development project, was over 20 years old. Neither P nor D dealt with each other directly. Yau, whom P said was the intermediary between them, was adjudged bankrupt. Whatever Yau might have contended in HCA8154/2000 would at best be evidence (yet to be tested) in the present action, and would not have been admission binding on D. It was doubtful (or at least unclear) whether any conclusions in the Yau Judgment or Kwan J Reasons would be binding on D. Apart from P’s assertion, the source of the bulk of the funds for the purchase of Lot253 allegedly from P was unclear, and information in the available documents raised more questions than answers.

62.   In my view, there were sufficient peculiar features in this case with a credible basis as explained under the 1^st, 3^rd and 4^th Issues discussed above to show there was some other reason for trial under Order 14 rule 3 of the RHC. As explained in Hong Kong Civil Procedure 2019,[27]

“It sometimes happens that the defendant may not be able to pin-point any precise ‘issue or question which ought to be tried,’ nevertheless it is apparent that for some other reason there ought to be a trial (see, per Megarry J. in Miles v. Bull [1969] 1 Q.B. 258), …… Whenever there are circumstances which require close investigation, there ought to be a trial and judgment should not be given under O.14 ……

……

…… Where it is contended that there are circumstances which require close investigation, such circumstances must be relevant to an issue in dispute: Nice Plan Development Ltd. v. Ke Jun Xiang (unrep., CACV 259/2014, [2015] H.K.E.C. 1222), [19].

Whilst the Court of Appeal in Nice Plan (supra) at [25] said that a defendant relying on “some other reason for trial” is not absolved from the duty to show that his case and his defence are credible, it does not appear that the Court was suggesting that a defendant who relies on “some other reason for trial” to resist summary judgment nevertheless has to show a triable issue in addition; but rather, that a defendant cannot resist summary judgment by claiming that there are circumstances requiring investigation if ultimately he simply does not have any credible basis to resist the claim.”

IX.  CONCLUSION

63.   In the circumstances, I dismiss the Summons. Since the grounds put forward for resisting the Summons (filed after D had filed his Defence) concerned inherent issues in respect of P’s own claim, it is appropriate to dismiss the Summons rather than to grant unconditional leave to defend. I also grant directions that (a) the parties are to respectively file and serve List of Documents within 14 days from the date of this order, and there be inspection of documents within 7 days thereafter, and (b) the parties are to comply with Order 25 rule 1(1) of the RHC within 7 days thereafter.

64.   There is no reason why costs should not follow event. I grant a costs order nisi that P shall pay D his costs of and occasioned by the Summons (including all costs reserved if any) to be taxed forthwith if not agreed.