FU YUK CHING v. FU CHAK MING

HCA 3817/96

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 3817 OF 1996

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J U D G M E N T

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1. The plaintiff is the sole registered owner of a house in Shatin and two car parks that go with the house. She acquired the premises in November 1990 for the sum of $1,980,000. In the course of 1995 she decided to sell the property, and in October that year found a prospective purchaser but she was then informed by her solicitors that there was registered in the Shatin New Territories Land Registry a provisional sale and purchase agreement dated 3rd December 1991 for the sale of the house by her to her brother, the defendant, for $3.3 million. The date of registration was 24th October 1995. The plaintiff says that this came as a shock because she had never agreed to sell the property to her brother. She was then shown a copy of the agreement which bears what purports to be her signature, as well as that of her brother. She says the document is a forgery, the signature is not hers and believes that her brother is the author of, or prime mover behind, the forgery. She reported the matter to the police and she then instituted these proceedings in April 1996. By this action, she seeks a declaration that the provisional instrument is a false instrument and is void, and also an order that the registration of the agreement be vacated. She also asks for damages because the agreement she made in 1995 for the sale of the premises in the sum of $6 million fell through because of the registration.

2. The story behind her claim is this. About one year after she purchased the property with her own funds, the defendant said that he would like to invest in the property because the market was rising and if he could contribute half of the purchase price he could have a half interest. She agreed that if he jointly footed her mortgage instalments and provided his share that way, he would have the half share. But he never made any contribution, and there the matter lay. Indeed he had some investments in Macau and it was she who contributed to his investments and lost funds in doing so.

3. In July 1992, the defendant went to prison. I am told that he had been convicted of offences of dishonesty. He was released on about 12th October 1995 and contacted his sister, the plaintiff, a few days later, telling her that he had heard that the house was on the market, and that the market had substantially increased and that she had better give him half the proceeds of sale, praying in aid the earlier agreement that he would have a half share. She refused, citing the fact that he had not fulfilled the condition precedent to acquisition of the half share, in that he had contributed nothing. So, according to her account, he issued some unpleasant threats.

4. Shortly after that event, the offer for the house by a third party came in, and the plaintiff discovered the registration which is the cause of this action.

5. The defendant has not appeared for trial. He has filed a defence and counterclaim and there is a witness statement by him, which has been ordered to stand as evidence-in-chief, and there is also a witness statement from a Miss Lo, who was said to have been an estate agent acting for him. This case is in the warned list and has been placed in the warned list on several occasions, and the chronology placed before me shows that it has been taken out of that list on each of five occasions, or four occasions, by reason of steps taken by the defendant. The defendant's solicitors have recently ceased to act for him, and there is before me an affidavit from them showing how frequently they have warned the defendant, who is now in Singapore, to come to Hong Kong for trial. He has left them with no address there, has not put them in funds and has not notified anyone here of his new address. The solicitors for the plaintiff have this week posted at his last known address in Hong Kong notice of the hearing this week. In any event, the practice directions make it clear that it is the duty of the parties to keep note of the position of a case in the running list and to be ready for trial. The defendant self-evidently is concerned to postpone matters and is not taking a keen interest in the progress of this case. The plaintiff, on the other hand, has travelled from the United States of America, where she now resides, for this trial. In all the circumstances, I decided to go ahead with the hearing despite the absence of the defendant.

6. Nonetheless, I have his statement before me as well as that of his witness. It is not verified on oath and is not tested under cross-examination. The defendant's story is different from that of the plaintiff. He asserts that because the plaintiff was in financial straits in 1991, he purchased a flat for her and paid for the flat's decoration and gave her pocket money. She promised that she would pay him rent at the rate of the mortgage instalments but never did. All in all, he estimates that she owes him about $300,000 for all the money he spent on her in this way.

7. In 1990, he says, the plaintiff separated from her husband and someone bought her the house which is the subject of this action. And then, as a result of a change in circumstances, she allegedly wanted to sell the house but could not, so that the defendant told her to sell it to him, the defendant. The sale price was $3.3 million and the money which the plaintiff owed the defendant would be treated as his deposit. It was part of the agreement that when the property was sold the profit would be shared. She agreed, and the defendant and the plaintiff, according to his account, met to sign this provisional sale and purchase agreement which had been drawn by the defendant's estate agent, a Miss Lo. It so transpires that Miss Lo, the estate agent, was also the defendant's girlfriend. She witnessed the agreement.

8. The completion date was set for 2nd June 1997, some five and a half years hence, unusual on the face of it, but understandable according to the defendant because he was pessimistic about the criminal proceedings which he was then facing. He says that he asked the plaintiff to execute a power of attorney in his favour so that he could sell if he found a purchaser. She agreed, which is why he did not register the sale and purchase agreement at that stage. On his own account he has lost the power of attorney, and his solicitors at whose offices it was executed have, he says, ceased business. He asserts that he tried to sell the property once but that failed and he became liable for the forfeiture of a deposit in the sum of $600,000. He says that he told the plaintiff about this when he was released from prison. He denies that the sale and purchase agreement is a forgery. He counterclaims for the return of the deposit of $300,000.

9. I have today heard and seen the plaintiff give testimony. I also posed to her a number of questions. I find her a credible witness. I believe the account she has given. The defendant's absence obviously does not assist in any assessment of his story. It is a story before me which is, as I say, not verified on oath nor tested by cross-examination. Even so, it is not in itself a very credible story, in particular the gap between the sale and purchase agreement and the completion date is inherently very odd. His case is not assisted by the absence of any documentation showing the payments to the plaintiff which, he says, he made over the years, nor by the apparent loss of the power of attorney which must for him have been an important document. There was a power of attorney; the plaintiff has told me about it, but it was not for his benefit, it was for hers. Had it been for his benefit as he suggests, it is less likely, one would have thought, to have gone missing.

10. All that said, in the event I accept the plaintiff's evidence, including the evidence that she was in a position to sell the premises for $6 million in 1991 but that that sale fell through because of the entry of the sale and purchase agreement.

11. It follows that there will be judgment for the plaintiff on the claim and counterclaim, and the counterclaim will be dismissed. I find that the provisional agreement which has been registered is a false instrument, and I shall make the declaration which is sought in the Statement of Claim to that effect, and order that the registration of that instrument be vacated from the Land Registry. It is adjudged further that the defendant shall pay to the plaintiff damages to be assessed by a Master. The defendant will pay to the plaintiff her costs of the claim and of the counterclaim to be assessed, if not agreed.