鄧錦祥 v. SOURCE VIEW DEVELOPMENT LTD

HCA 1611/2019 & HCA 2275/2019

(Heard Together)

[2022] HKCFI 2252

HCA 1611/2019

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1611 OF 2019

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AND

HCA 2275/2019

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2275 OF 2019

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D E C I S I O N

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1.  The plaintiff in HCA 1611/2019 is one of the defendants in HCA 2275/2019 (“Tang”). The defendant in HCA 1611/2019 is the plaintiff in HCA 2275/2019 (“Source View”). This is Tang’s appeal against the decision and order of the master dated 22 N‍ovember 2021.

Background

2.  The dispute concerns Lot No 5059 of DD 51 in Fanling. By the New Grant No 9423 (“the New Grant”), Tang Chung Shau (“TCS”) became the owner of the lot. A 2-storey house was erected on the lot and became known as No 5 Luen Hing Street, Luen Wo Market, Fanling, New Territories. For the present purpose, the lot and the house thereon are collectively referred to as “the Property”.

3.  TCS died on 15 July 1998. Letters of administration were granted to Cheung Yuk Ying (“Cheung”) and Tang jointly on 1 December 2004 in respect of the estate of TCS, which included the Property. The letters were duly registered in respect of the Property at the Land Registry.

4.  In their capacity as joint administrators, Cheung and Tang sold the Property to Source View. By an assignment dated 6 January 2009, Source View became the registered owner of the Property.

5.  Immediately upon the completion of the sale and purchase, a tenancy agreement between Source View as the landlord and Tang for and on behalf of his company, Café Happy Post Limited (“Café Happy Post”), as the tenant of the Property took effect. The tenancy was for a term of 4 years. The tenancy was subsequently renewed in 2013 and then in 2017.

6.  On the ground of various breaches on the part of Café Happy Post as the tenant including non-payment of rent, Source View filed an application in August 2019 with the Lands Tribunal for rent in arrears and possession of the Property upon forfeiture of the tenancy (ie, LDPE 818/2019). Upon his application, Tang and his related companies, namely Happy Post Enterprise Limited (“Happy Post Enterprise”) and Willcocks Limited (“Willcocks”), were subsequently joined as respondents in the proceedings.

7.  In the same month, Tang commenced HCA 1611/2019 against Source View, seeking declaration that the sale and purchase as well as the assignment of the Property to Source View in 2009 was null and void.

8.  By the order dated 21 October 2019, the Lands Tribunal transferred the proceedings before it to the Court of First Instance, which became HCA 2275/2019. The respondents in the Tribunal proceedings became the defendants in the High Court action. Hence Café Happy Post as the 1^st defendant, Tang as the 2^nd defendant, Happy Post Enterprise as the 3^rd defendant and Willcocks as the 4^th defendant. A counterclaim was advanced, which essentially mirrored Tang’s claim in HCA 1611/2019.

9.  In HCA 2275/2019, Source View later took out the following summonses:

(1)  The summons dated 8 November 2021 for striking out the counterclaim of Tang pursuant to O18, r19;

(2)  The summons dated 14 May 2021 for summary judgment against Tang, Happy Post Enterprise and Willcocks for possession and mesne profits pursuant to O14, r1 of the Rules of the High Court (Cap. 4A) (“RHC”); and

(3)  The summons dated 14 May 2021 for an order that HCA 1611/2019 and HCA 2275/2019 to be heard together.

10.  To mirror that, Source View took out 2 summonses in HCA 1611/2019 on 14 May 2021:

(1)  The summons for striking out Tang’s claim pursuant to O18, r19 or alternatively determination of the issues of law raised by Tang pursuant to O14A; and

(2)  The summons for an order that HCA 1611/2019 and HCA 2275/2019 to be heard together.

11.  The above summonses in the two actions have been directed to be heard before the master at the same time. Tang sought to challenge such case management directions of the master, which ended in failure. Application for leave to appeal was also dismissed: see the decisions of DHCJ Tsui dated 29 September 2021 and 12 November 2021.

12.  The above summonses were substantively heard before the master on 22 November 2021. At the end of the hearing, the master made the following orders (“the Decision/Order”):

(1)  In HCA 2275/2019, summary judgment was entered against Tang, Happy Post Enterprise and Willcocks with costs to Source View; and Tang’s amended defence and counterclaim was struck out with costs to Source View. These defendants were ordered to deliver vacant possession of the Property within 28 days and to pay mesne profit at the rate of HK$48,000 per month from 5 January 2021[1] until the delivery of vacant possession.

(2)  In HCA 1611/2019, Tang’s claim was struck out and the action was accordingly dismissed with costs to Source View.

13.  In view of the above result, the master did not make any order for these actions to be heard together.

14.  By notices of appeal filed in these actions on 6 December 2021, Tang appeals against the Decision/Order. The other two defendants subject to the judgment in HCA 2275/2019 did not lodge similar appeal, and there is no basis for supposing or allowing Tang to purport to represent any of them in what is very much his own appeal.

The principles

15.  An appeal from the master to the judge in chambers proceeds as a rehearing of the applications (ie the above summonses in these actions) before the master: see Hong Kong Civil Procedure 2022 (Vol 1) (“HKCP”) at §58/1/2.

16.  O58, r1(5) provides that no further evidence (other than evidence as to matters which have occurred after the date of the decision or order being appealed) may be received at the hearing except on special grounds. By special grounds, it is trite that the three conditions under Ladd v Marshall [1954] 1 WLR 1489 must be satisfied.

17.  The principles governing summary judgment are trite. While it is the plaintiff’s burden to prove the claim, the defendant in a summary judgment application has the evidential burden of showing issues of a bona fide and credible defence that ought to be tried or any other reason that the case should proceed to trial: see O14, r3; HKCP at §§14/1/1-14/4/39.

18.  The principles governing striking out are equally trite. According to the summonses, Source View relies on all the grounds for striking out under O18, r19. Where it is said that the pleaded case discloses no reasonable cause of action or defence, no evidence will be admissible. Proceedings are frivolous when they are not capable of reasoned argument, without foundation or where they cannot possibly succeed. Proceedings are vexatious when they are oppressive or lack bona fides: see O18, r19(1)(b) and (c); HKCP at §18/19/7. A claim which is absolutely groundless or the pleading which is entirely without substance is liable to be struck out for abuse of process: see HKCP at §18/19/9; 18/19/11 and 18/19/20.

Tang’s affirmations

19.  For the purpose of his appeals in both actions, Tang has filed affirmations. Counsel for Source View objects on the ground that they were filed in breach of O58, r1(5) and the principles of Ladd v Marshall mentioned above. However, as counsel also observes, what those affirmations say is repetition of Tang’s contentions adding nothing material in terms of evidence. Those affirmations will therefore be taken into account only to the extent that they are submissions.

The claim in HCA 2275/2019

20.  In HCA 2275/2019, Source View pleaded the various tenancy agreements in respect of the Property entered into by Tang for and on behalf of Café Happy Post as the tenant. The term of the last tenancy agreement in 2017 lasted until 4 January 2021. Performance of the various tenancy agreements by payment of rent, government rent and rates by Café Happy Post for various periods as well as its eventual default were specifically pleaded. Due to default, formal demand was issued by Source View through solicitors in July 2018. Hence the forfeiture of the tenancy. Notice to occupiers was issued in August 2019. As mentioned, proceedings were subsequently filed with the Lands Tribunal.

The defence in HCA 2275/2019

21.  Only Tang has filed the defence in HCA 2275/2019. As to the pleaded claim and its quantification pursuant to the various tenancy agreements, Tang has pleaded no actual defence. What Tang contended was that the sale and purchase as well as the assignment of the Property were effected in breach of the New Grant. He also disputed his own authority as the administrator of the estate of TCS to sell the Property and to execute the assignment of the Property. He also asserted breach on the Source View of an alleged oral agreement at the same time as the sale and purchase whereby he had the alleged option to buy back the Property sometime in the future.

The claim in HCA 1611/2019

22.  As mentioned, the claim by Tang in HCA 1611/2019 mirrored his above defence in HCA 2275/2019. He claimed to nullify the sale and purchase as well as the assignment of the Property.

The defence in HCA 1611/2019

23.  Essentially, Source View denied any issue of non-compliance with the New Grant, as the District Lands Office confirmed in writing in 1972 that all the conditions of the New Grant have been complied with. It also pleaded reliance on sections 35(1)(d)[2] of the Conveyancing and Property Ordinance, Cap 219 (“CPO”) as well as the terms of assignment in confirmation of the capacity of Tang as the administrator of the estate of TCS to enter into the sale and purchase as well as to execute the assignment of the Property. Reference to section 54 of CPO was also pleaded, but it is obvious and made clear in submission, that it was section 54 of the Probate and Administration Ordinance, Cap 10 (“PAO”) that it meant to rely on. No issue was taken as to the mistaken reference to the statute in this rehearing of this matter.

Breach of the New Grant

24.  Tang contended that the sale and purchase of the Property with Source View was in breach of special conditions 2 and 2(a) under the New Grant. Special condition 2(a) provides that “the grantee shall not… assign, underlet or part with possession of or otherwise dispose of the lot or any part thereof or any interest therein or, except with the prior consent, of the District Commissioner, New Territories and in conformity with any conditions imposed by him, enter into any agreement so to do”.

25.  To address the challenge, Source View managed to obtain a letter from the Lands Department dated 29 April 2016. Enclosed with the letter was an earlier letter from the Lands Department dated back on 31 August 1972 which confirmed that “the General and Special Conditions of the Particulars and Conditions of [the New Grant] have been complied with to the satisfaction of the District Commissioner, New Territories”. The fact was that there is no evidence of any indication of enforcement action by the authority on the ground of the alleged breach of the New Grant.

26.  Tang’s contention in this respect has no merit.

Authority of the administrators

27.  The contention in respect of his authority as administrator of the estate of TCS to dispose of the Property was also what Tang emphasized in his oral submission during the present hearing. However, his subjective categorization of his capacity, role and authority as an administrator of the estate of TCS defies understanding as a matter of law.

28.  The real legal situation at the material times was as follows.

29.  Pursuant to section 62 of the PAO, an administrator shall hold the property of a deceased (including immovable property) on trust for sale. Section 54 provides for the power of the personal representatives to dispose of the property, including immovable property, of the deceased. Subject to that, section 65 provides that every contract entered into by a personal representative in the due administration of an estate shall be binding on and be enforceable against and by any other personal representative for the time being of the deceased.

30.  In submissions, reliance was also placed on sections 2 and 13 of the Trustee Ordinance, Cap 29 (“TO”). Where a trust for sale or a power of sale or of property is vested in a trustee, he may sell or concur with any other person in selling all or any part of the property. For the purpose of TO, trustee includes a personal representative (i.e. an administrator) and trust and trustee extend to the duties incident to the office of a personal representative.

31.  The indisputable fact was that the conveyances in the present case were executed by Tang and Cheung as joint administrators. The self-serving query about his capacity and authority to dispose of the Property in 2009 therefore is without merit as a matter of law.

Alleged orally agreed option

32.  Actually, not much, if at all, was said by Tang in respect of this contention for the purpose of this hearing.

33.  The alleged oral agreement between the parties for Tang to buy back the Property, if ever existed, would have been expected to be documented at the same time of the contract for the sale and purchase, which was indeed written. Tang failed to discharge his evidential burden of coming up with proof in this respect as a matter of fact. The allegation is bare assertion.

34.  The alleged orally agreed option in respect of interest in land, being neither by deed nor evidenced in writing, would have been null and void and unenforceable: see sections 3(1) and 4(1) of the CPO; (for instance) Stromdale and Ball Ltd v Burden [1952] Ch 223.

35.  The alleged option, which referred to a time in the future and at a price which, even according to Tang, was up to negotiation, also suffered from uncertainty to be really binding contractual obligation.

36.  Fundamentally, it is difficult to see how Tang may seek to impeach the sale and purchase of the Property whilst at the same time advancing the case of the alleged oral option premised on the completed sale and purchase of the Property. Inherent inconsistency, that is.

37.  The assertion in respect of the alleged orally agreed option to buy back the Property is incapable of belief and does not constitute any valid defence as a matter of law.

Conclusion

38.  As discussed, none of the contentions raised in defence of the claim in HCA 2275/2019 constitute credible and valid defence. Nor do the same constitute any valid claim in HCA 1611/2019, so that such contentions were plainly liable to be struck out for want of a reasonable cause of action, being frivolous and vexatious. Raising causes that were doomed to fail obviously constituted abuse of process.

39.  It is pointed out that Tang was at all material times the alter ego of the other defendants. In any event, amongst other things, the evidence in respect of their shareholdings and directorship cast light on that. That said, it is noted that whilst Tang might intend to advance his claim in his capacity as the administrator of the estate of TCS, the predecessor in title of the Property, in HCA 1611/2019, he did not make that clear when he commenced the action, as its title reveals. As to HCA 2275/2019, Café Happy Post was sued as the contractual tenant. However, Tang initiated the joinder of himself and the other defendants, which was allowed presumably on the basis that they were necessary parties insofar as the relief claimed was concerned. Indeed, on the basis of expiration of the term of the last tenancy agreement in 2017 on 4 January 2021, Source View obtained judgment for vacant possession of the Property and mesne profits payable from 5 January 2021.

Order and costs

40.  The appeals in both actions are dismissed.

41.  Source View asks for costs on an indemnity basis on the ground that the appeals are devoid of merit. I tend to agree. Hence a nisi order that Tang shall pay the costs of Source View of and occasioned by these appeals in the actions respectively on an indemnity basis with certificate of counsel. In the absence of application to vary within 14 days, the nisi costs order shall become absolute without further order of the court. Upon that, Source View shall lodge with the court and serve on Tang a statement of costs within 7 days, and Tang may lodge with the court his comment on the statement of costs (limited to one page of A4 size paper) within 7 days thereafter. Upon receipt of the above documents or the expiry of the time for their lodging, this court shall proceed with summary assessment of costs on paper without oral hearing.

Remark

42.  The present hearing was conducted in Chinese for the benefit of Tang. If requested, court interpreter would be arranged to assist him in the handing down of this decision.