BELMONT LAND INVESTMENT CO LTD v. TANG PAK WING

IN THE HIGH COURT OF HONG KONG

CIVIL JURISDICTION

CASE NO. HCC A5153 OF 1993

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REASONS FOR JUDGEMENT

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1. Away back in 1973 the defendant, Mr Tang, was minded to buy a flat in the Yuen Long area. He had a wife and concubine and wanted somewhere to accommodate his concubine.

2. Mr Tang's friend and clansman, another Mr Tang, operated a tea-house in Yuen Long. The two Tangs often met there for a chat over tea.

3. The clansman mentioned to Mr Tang that he was at that very moment developing a new residential building in Yuen Long; Mr Tang might be interested in that.

4. He was interested, and went to look at the new building which was known as Koon Wong Mansion, at 67 On Ning Road, Yuen Long. Eventually he agreed to buy a flat on the 11th floor for $40,000. That does not sound very much in today's terms but was a substantial sum in 1973 for a modest little flat.

5. Mr Tang paid his friend $10,000 deposit on 5/6/73 and two days later paid a further $10,000. Thus he paid a full half of the purchase price. Both sums were in cash, both these elderly gentlemen did not care much for banks. He moved into the flat to live and has effectively been the owner to this day.

6. But he has never paid another cent towards the balance of $20,000, nor has he legally taken title.

7. How has that extraordinary situation come about? Both parties blame each other.

8. Mr Tang dealt with his clansman in and about the tea house. They were both traditional village gentlemen who trusted one another and who were not too troubled about formalities. They did sign a provisional agreement however. Clansman Tang was a director of the plaintiff company formed to develop the new building. The other two directors were his wife and daughter. The provisional agreement was a brief single sheet printed form entitled "TEMPORARY RECEIPT OF PURCHASE".

9. This recited the price and the deposit paid and it went on -

10. It is immediately apparent this "agreement" was in very loose terms when it came to just how the balance of the price was to be paid. It depended upon the parties fixing a time. Also, one might ask, who were "the solicitors" referred to? They were not identified on the face of the document.

11. Mr Tang said he never did intend to give any mortgage or pay by instalments. He did not operate any bank account and intended to pay full balance in cash. He had the $20,000 in cash "ready at home" and was keen to pay it over and legitimise his title. But every time he raised this at their tea sessions his clansman said not to worry.

12. He says he did worry however. He wanted to pay in full and wrote four formal letters to his friend asking how he should proceed - on

and he kept his copies of all these "for proof".

13. All were addressed to Mr Tang personally not to the plaintiff company. Naturally the company as such has no record of receiving them and probably never did.

14. Afterwards Mr Tang entitled his copies of the letters rather pompously "REMINDER TO PROCEED WITH FORMALITIES (1ST)(2ND)(3RD)(4TH)" respectively and when these proceedings started in 1992 nearly 20 years later he handed them to his solicitors "as evidence".

15. These copy letters are remarkably formal and self-serving and seem almost too good to be true. The plaintiff company naturally queried their authenticity. But I do accept however that the late Mr Tang was issuing reassurances in the tea house to the defendant that there was no hurry to complete and all would be well. And that situation drifted on to the late Tang's death in 1991.

16. The plaintiff company's version is rather different. Unfortunately for the plaintiff its key figure, the late Mr Tang, is now dead. So is a Mr Ko who was the plaintiff's manager at the material time.

17. The plaintiff called the daughter of the late Tang who as I have said was also a director of the company. It also took a statement from his widow, the third director, but at the trial it could not seem to get this lady to court and abandoned her.

18. The young Miss Tang was only about 23 years old at the material time but she did play an active part in the company management, she worked in her father's restaurant on the ground floor of the newly developed building, she handled receipts, papers, and dealt with many purchasers of the flats.

19. This building has no less than 112 residential flat purchasers, and some commercial ones on the lower floors. Many of these purchasers would be little more than names to Miss Tang now. I do accept however that she does recall something of the special case of the defendant, whom she knew as "Uncle Tang" and as a clansman of her father.

20. Miss Tang's evidence, given the circumstances and passing of time, of necessity contained elements of hearsay and mere recollection. But I thought her a very honest witness. She painted a picture of the management structure of the plaintiff company not unlike that of the defendant i.e. that her late father had been very much the dominant director, his wife and daughter were under his general direction, her father was a bit unrestrained when it came to formalities of the company, whatever paperwork went on in the office her father might be out at a tea-house or village elders' meeting gainsaying it.

21. In any event Miss Tang said when it was apparent the defendant had not paid the balance she went upstairs with Manager Ko and knocked on the defendant's door. The defendant's concubine answered and was told to tell the defendant that his deposit would be forfeited if he did not make arrangements to pay the balance.

22. What is more two formal letters were delivered to him, in August and September 1973, threatening to forfeit his deposit and rescind unless he made arrangements to pay the balance. Copies of these letters were produced from the company records.

23. When Miss Tang said "delivered" (in her evidence of 1996) this can now only mean "probably delivered" by manager Ko or left in the building mail box or some such (in 1973). In any event the defendant denied receiving them. I suspect he did, but took little notice of this or any other paperwork relying as he did on his friend in the tea-house.

24. As to the identity of "the solicitors" listed she said the company's solicitor's name was emblazoned all over the colourful prospectus freely available at the ground floor office and elsewhere for all to see. Alternatively the defendant could have appointed his own solicitor, he never did. (The defendant of course said he never saw or bothered about any prospectus, he relied on the tea-house chats).

25. Miss Tang did agree in cross-examination however that her late father was saying to her and to her mother generally of the defendant throughout all this, "give him time" - i.e. when the topic of Mr Tang's non-completion was raised he was saying to his wife and daughter and fellow directors to go easy on the defendant.

26. These proceedings were issued in 1992 after the late Mr Tang's death. The plaintiff company had to do something to rationalize the situation. The plaintiff wants possession, mesne profits and damages, it says Mr Tang's deposit of half the purchase price away back in 1973 must be forfeited and he must now yield up the flat.

27. The defendant counterclaims for specific performance.

28. CONCLUSIONS

29. Both parties claim they were writing careful formal letters to each other in 1973 and they both deny receiving them.

30. Mr Tang appeared to me to be sincere but as his evidence progressed this 77 year-old gentleman became increasingly stubborn and eccentric. I have a suspicion that his late clansman of the plaintiff company may have been of a similar disposition. He conveyed the attitude that as village elders together he and his late friend could do as they wished regardless of papers and other people.

31. Mr Tang lost all creditability for detail when confronted with two affirmations he made in these proceedings in 1993 asserting he had moved out and first let the flat to a tenant about 1990. In evidence he said it was 1979. He gave contradictory or muddled evidence about when he was first persuaded to open a bank account. And he maintained he did not even know and had never seen the plaintiff's witness Miss Tang who spent two days in the witness box. She was a daughter of his clansman, a director of the plaintiff who sold the flat to him, she spent much time on company business in the management office on the ground floor of where he lived, and she worked in her father's restaurant which Mr Tang frequented also on the ground floor. She knew him as "Uncle Tang". I find it near absurd he did not know her, at least by sight.

32. Despite this however I accept the gist of Mr Tang's evidence that his clansman was re-assuring him not to hurry or worry, that all would be well.

33. I accept from the defendant that these two elderly and perhaps slightly eccentric gentlemen reached the position whereby Mr Tang was led to believe there was no need to pay the balance for the flat in the meantime, and this drifted on right up to the clansman's death. The other key figure to their meetings is now dead.

34. As dominant director the deceased had both the real and ostensible authority to be generous to his friend, however uncommercial and irrational that might be from the company's point of view. Even his own daughter accepted the position of defendant Tang as peculiar, the result of some quirk on the part of her father.

35. Mr Tang paid a full half of the purchase price and has been permitted to retain control of the flat for some 20 years before these proceedings were issued. I am satisfied despite the delay that equity dictates he should not now be dispossessed altogether. That means he gets his specific performance.

36. But he must pay something in compensation to the plaintiff as the price of doing so. He has had the benefit of the flat for over 20 years and only ever paid half the agreed price.

37. There are various ways of approaching the situation. I adopt this one. The plaintiff company's largesse to the defendant must be regarded as expiring with the late Mr Tang's death. It was personal from him and no one else of the plaintiff was prepared to extend it. That death was "in late 1991", no-one, not even his own daughter, put the date more precisely than that. I will adopt the end of 1991 as the appropriate date.

38. I have no evidence of the present value of this modest little flat. I suppose it to be something like ten times the $40,000 agreed in 1973. In any event Mr Tang admits he now lets the flat to a tenant for about $1,500 monthly thereby profiting from it. The defendant's own witness, his concubine, contradicts him and says she actually collects $1,300 on his behalf. And the plaintiff's Miss Tang estimates its rental value rather higher than both of them. I will adopt the defendant's own figure in the defendant's own figure in the defendant's favour.

39. The parties each have a 50% equitable interest in that rent. I therefore calculate mesne profits at $750 per month.

40. 1/1/92 to 1/3/97 = 63 months x $750 = $47,250.

41. ORDERS

42. COSTS

43. In one sense the defendant has succeeded (with specific performance) and the plaintiff has failed (with possession). But I do not think costs should merely follow those events. Both parties are guilty of delay. And the reality here is the plaintiff was forced to institute proceedings to regularize the position. Otherwise the defendant might have merely continued to do nothing. There was no evidence he even tendered the $20,000 balance admittedly owing. I hold the defendant partly to blame for the slightly silly imbroglio which has arisen.

44. And most of the first day of trial was spent on rather pointless applications to amend pleadings. I said then, and I record now, that I have not over-looked that.

45. In all the circumstances I make an order nisi that plaintiff pay one half of defendant's costs.

46. Liberty to apply.