WING WO LUNG CO LTD v. JAM MOO CHING

CACV 246/2020

[2021] HKCA 1734

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 246 OF 2020

(ON APPEAL FROM DCCJ 4061 OF 2016)

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J U D G M E N T

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Hon Au JA (giving the judgment of the court):

A.  Introduction

1.  By a judgment (“the CA Judgment”)  dated 12 April 2021 ([2021] HKCA 472), this court allowed the plaintiff’s appeal against the judgment of Deputy District Court Judge Hui (“the Judge”)  dated 10 January 2019 (“the Judgment”).

2.  By a Notice of Motion dated 6 May 2021, the defendant applies for leave to appeal against the CA Judgment to the Court of Final Appeal (“CFA”).  Further, on 10 May 2021, by way of a summons (“stay summons”)  and her supporting affirmation filed on the same day, she also asks for a stay of the execution of the CA Judgment[1].  Pursuant to the directions of the Registrar of Civil Appeal dated 7 May 2021, the parties have respectively filed their written submissions.

3.  After reading the Notice of Motion and the written submissions, we agree that this application shall be dealt with on paper.  This is our judgment[2], which should also be read together with the CA Judgment.

B.  Background and the CA Judgment

4.  The relevant facts leading to this dispute have been set out in the CA Judgment, which will not be repeated here.  To put this application in proper context, we shall briefly highlight below the issues raised in the appeal and the court’s reasons for allowing the appeal.

5.  The plaintiff in this action claimed against the defendant for vacant possession of the subject external wall and the locksmith shop pursuant to an agreement dated 12 July 2010 (“the Agreement”)  made between the plaintiff and the defendant, and witnessed by a Mr Lee Hin Lam (who was the tenant of the plaintiff’s predecessor in title)  and one of the defendant’s sons.  Relevantly, it was a material express term of the Agreement that the defendant agreed to deliver vacant possession of the locksmith shop to the plaintiff upon the plaintiff giving three months’ notice.

6.  Before the Judge, the defendant raised the defences that (a)  the Agreement was induced by mistake or misrepresentation, (b)  the defendant did not occupy any part of the external wall of the subject building, and (c)  the locksmith shop was erected on government and public land where the plaintiff had no right to demand the defendant to vacate.  The Judge after hearing evidence rejected all these defences.  However, he also dismissed the plaintiff’s claim on the basis that the Agreement was not supported by valuable consideration and, in any event, the plaintiff had failed to plead the same. See [4] - [14] of the CA Judgment.

7.  The plaintiff appealed against the Judgment.  There was no cross appeal from the defendant.  In the premises, the only live issue in the appeal was whether the Judge erred in finding that the Agreement was not supported by consideration and plaintiff had in any event failed to plead the relevant consideration: [15] - [16] of the CA Judgment.

8.  We allowed the appeal for the following reasons:

(1)  The term in the Agreement requiring the plaintiff to give the defendant three months’ notice before it could obtain vacant possession of the locksmith shop constituted valuable consideration for the Agreement in law: [19] of the CA Judgment;

(2)  Further, the plaintiff had at paragraph 5 of the Amended Statement of Claim pleaded such consideration: [20] of the CA Judgment;

(3)  As a result, the Judge erred in holding that the Agreement was not supported by consideration and that plaintiff had failed to plead consideration, and the appeal was allowed on this basis: [21] of the CA Judgment;

(4)  Insofar as the defendant’s other arguments made in the appeal against the Judge’s various findings and rulings made against her, such as whether the Agreement was a valid document because of the misrepresentation and whether the locksmith shop factually occupied the external wall of the plaintiff’s building, we held that, since the defendant had not filed a Respondent’s Notice cross-appealing against the Judge’s various conclusions made in these respects, it was not open to the defendant to raise these arguments in the appeal: [24] - [28] of the CA Judgment.

C.  Leave to appeal to the CFA

9.  Section 22(1)(b)  of the Court of Final Appeal Ordinance (Cap 484)  provides that this court may grant leave to appeal to the CFA if the question involved in the appeal is one which, by reason of its great general or public importance, or otherwise, ought to be submitted to the CFA for decision.

10.  In the Notice of Motion, the applicant has proposed the following four questions that she says are involved in the intended appeal to the CFA which are of great general or public importance:

(1)  Whether an agreement can remain valid even though both parties have mistaken and / or misstated the true subject matter in question?  The CA held in the positive.

(2)  Whether an owner of an external wall can assert and claim proprietary rights to anything fixed onto the subject wall?  The CA held in the positive and awarded the same to the plaintiff.

(3)  Whether a conditional contractual notice can still be treated as validly served without satisfying the precondition due only to that the parties had not raised the same in the court below?  The CA seemed to hold in the positive.

(4)  Whether the CA is bound to raise and rule on prima facie the true legal effect and consequences of a document laid before it even though the same had not been raised and argued in the court below?  The CA seemed to hold in the negative.

11.  However, at paragraph 28 of her written submissions, the defendant seeks to “improve” the formulation of the questions as follows:

(1)  What is the true test and proper approach to determine whether an agreement can remain valid when fundamental mistakes are prima facie shown in the agreement itself?

(2)  What are the criteria for ascertaining when an object attached by a third party to a land can in law become property of the land owner to the exclusion of the said third party?

(3)  What is the true principle to deal with omissions in pleadings, eg, omitting to plead pre-conditions of a notice to surrender when the same will benefit the pleader while doing injustice to the opponent?

(4)  What is the proper approach for the upper court to raise and rule on the prima facie true legal effect and consequences of a document laid before it even though the same had not been raised and argued in the lower court?

12.  For present purpose, we would treat these questions posed in the written submissions as the ones relied on by the defendant in support of this leave application.

13.  For these questions and in further support of this leave application, the defendant has advanced the following principal contentions in her written submissions and reply submissions:

(1)  This court erred in allowing the appeal and ordering the defendant to deliver vacant possession of the external wall and the locksmith shop to the plaintiff pursuant to the Agreement.

(2)  This is so as the Agreement is void ab initio as it contained a material misstatement or mistake that Mr Lee sub-let or sub-licensed the locksmith shop to the defendant:

(a)  The locksmith shop as a matter of fact was constructed by the defendant.

(b)  Hence, as a matter of law, the locksmith shop was therefore the defendant’s own chattel and thus a “tenant’s fixture” or “trade fixture”.  The plaintiff as landlord has no right to it.

(c)  This is further supported by the fact that even at paragraph 4 of the Amended Statement of Claim, the plaintiff only pleaded that it was the external wall that was sub-let and / or sub-licensed by Mr Lee to the defendant.

(3)  In the premises, the Agreement is invalid because of the mistake or misstatement and thus void ab initio.

(4)  Both the Judge and this court should have but failed to deal with these issues.

(5)  Further, the defendant submits that the CA Judgment was premised on the finding that the plaintiff had proprietary interest over the locksmith shop.  Since the plaintiff did not have such interest, the CA Judgment was also plainly wrong.

14.  In our view, the defendant’s submissions are misconceived.

15.  The principal contentions now raised by the defendant that the Agreement is void ab initio because of the particular alleged mistake of fact were not raised before the Judge or this court.

16.  In this respect, it is important to note that before the Judge the defendant raised the defence that the Agreement should be rescinded as she entered into it under the plaintiff’s misrepresentation or a mistake, in that: (a)  she had no recollection about Mr Lee sub-leasing the shop to her at the annual rent of $1 after her husband had passed away or paying any rent to Mr Lee, and the money she had paid to Mr Lee was only for sharing the electricity bills; and (b)  she had never agreed to the three-month prior notice term: [24] - [25] of the Judgment.  This was rejected by the Judge after hearing the evidence: [26] - [27] of the Judgment.  The underlying basis of this defence of mistake or misrepresentation as advanced before the Judge is entirely different from the one now advanced in this leave application as summarized at [13(2)] above.

17.  In the premises, the present contentions relating to the underlying basis of the alleged particular “mistake of fact” pertinent to the Agreement are entirely new, not pleaded and not raised before the Judge and this court.  The issues raised and the questions formulated relating to them therefore do not arise from the CA Judgment.

18.  In any event, if the defendant argues that her present contentions are in substance the same as that advanced in the court below, which were rejected by the Judge, since she had not cross-appealed those findings, this court was not required to deal with them and has made no determination thereof in the appeal.  In the premises, the issues raised and the questions formulated relating to them also do not arise from the CA Judgment.

19.  On this basis alone, leave to appeal to the CFA should be refused.

20.  Further, and in any event, these contentions are clearly fact-sensitive, and as they will only be raised for the first time in the intended appeal to the CFA, leave should also not be granted under the well-established Flywin principle[3].

21.  As to the defendant’s contention that the CA Judgment is premised on the court’s (erroneous)  finding that the plaintiff had proprietary interest over the locksmith shop, it is also clearly misconceived. This court has made no such finding.  As mentioned above, the plaintiff’s claim for deliver up of possession is based solely on the Agreement and the only live issue in the appeal was whether the Agreement was supported by valuable consideration and whether the said consideration was sufficiently pleaded by the plaintiff.  Hence, the question posed in relation to this contention also does not arise from the CA Judgment.

22.  For all the above reasons, we will not grant leave to the defendant to appeal against the CA Judgment to the CFA as none of the questions formulated by the defendant arises from the CA Judgment.  Further, these questions are in any event all fact sensitive and are not of great general or public importance.  For the same reasons, we also do not see any basis to grant leave on the “otherwise” limb.  We therefore dismiss the Notice of Motion.

D.  The stay summons

23.  As to the stay summons, the defendant has stated in her supporting affirmation that, if the CA Judgment is not stayed, she would suffer irreparable damage and severe injustice.[4]  However, the merit of the stay application must be dependent first on the defendant obtaining leave to appeal to the CFA.  Given that we have refused to grant leave, there is no question that we would grant a stay of execution of the CA Judgment.  We will therefore also dismiss the stay summons.

E.  Costs

24.  We further order that the defendant shall pay the plaintiff’s costs of this application, to be assessed summarily.

25.  In this respect, the plaintiff has submitted a statement of costs dated 2 June 2021, claiming a total sum of HK$353,000.  For the purpose of summary assessment, we direct that the defendant shall file and serve her written comments (of not more than one page)  on the plaintiff’s statement of costs, if any, within 7 days of this judgment.  We will thereafter assess the costs summarily on paper.  If the defendant’s written comments are more than one page, the court would disregard the comments for the assessment.