LAM TIN HING AND ANOTHER v. LAM KWAI CHOI

HCA1531/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1531 OF 2007

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J U D G M E N T

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Introduction

1. This is a dispute over a piece of land used as a garden extension and vehicular access road (“the disputed land”) fronting the plaintiffs’ property.  The legal title of the disputed land is and has been with the defendant.  The plaintiffs’ case is that the disputed land was the subject of an agreement (“the 1990 Agreement”) made in about June 1990 between the plaintiffs and one Lam Pak Ling, acting as the defendant’s agent for the same to be sold to the plaintiffs and that there has been part performance of the June 1990 agreement.  The plaintiffs also rely on proprietary estoppel in the alternative.  They seek a declaration that the disputed land is vested in equity in the plaintiffs and for an order that the defendant do execute a conveyance of the disputed land to the plaintiffs.  The defendant denies that the 1990 Agreement exists.  The defendant has a counterclaim in which he sought various injunctions, an order for vacant possession of the disputed land, and mesne profits or damages for trespass.

Background

2. The scene of the dispute is a village in Tai Po called the Nam Wa Po Village.  At the request of the defendant, I have viewed those parts of the village the parties wished me to see.

3. The first-named plaintiff, Lam Tin Hing, is 72.  He emigrated to England with his wife Tsang Yi Han almost 50 years ago.  They came back to Hong Kong from time to time.  The second-named plaintiff, Tsang Tung Ying, is Tsang Yi Han’s sister.  She too emigrated to England when she was young.  All three of them made their living by working in the kitchen.

4. Lam Tin Hing is related to Lam Pak Ling.  Lam Tin Hing’s paternal grandfather was the natural brother of Lam Pak Ling’s father.

5. Lam Pak Ling is an indigenous villager of Nam Wa Po.  For many years since 1960, he was engaged in the business of a builder of village houses.  He retired in 2004.

6. The defendant, Lam Kwai Choi, is also an indigenous villager of Nam Wa Po.  He is one of the village representatives of the Nam Wa Po village.  He is also related to Lam Pak Ling, although it is not wholly clear to me what their precise relationship is.  It appears that Lam Kwai Choi was abandoned by his father at a young age, and he was brought up by Lam Pak Ling’s grandmother.  Lam Pak Ling admitted in the course of his evidence that he had a very good relationship with Lam Kwai Choi over the years, and that he and Lam Kwai Choi grew up together.

7. The defendant came to inherit many pieces of land in Nam Wa Po.  He had been selling part of that land, and on his own account, he always stipulated that the purchasers must engage Lam Pak Ling to be the builder.

8. One of the properties held by the defendant is a property known as Section C of Lot No. 978 in Demarcation District 9 (“978C”).  There is no dispute that in about May 1989, an agreement was entered into for the sale by the defendant of 978C to the plaintiff, together with the right (called the “ting” right) to build a village house on the land.  There is also no dispute that 978C was the subject of a conveyance made many years later in September 1996 in favour of the plaintiffs.  The stated consideration for the sale in the assignment was $4,500,000.  There are, however, minor disputes.  One dispute was over what was the consideration for the sale, the plaintiff saying it was $400,000 and the defendant claiming (by a late amendment) that it was only $350,000.  Another dispute was whether the defendant was personally involved in showing the land to the plaintiffs, and in the negotiation of the price.  Yet further disputes divide the parties on who initiated the process of the assignment, who instructed the solicitors to draw up the assignment, and who came up with the stated consideration of $4,500,000.

9. The parties are agreed, that whatever was the consideration for 978C, that has been fully paid.  There is no dispute that the plaintiffs did engage Lam Pak Ling to build a three-storey village house on 978C.  This took about 6 months.  Some time after this house was built, Lam Pak Ling also built another village house for Lam Kwai Choi to the immediate east of 978C, on a piece of land designated as Lot 978B.

10. There is also no dispute that around the time when Lam Pak Ling finished building the three-storey village house on 978C, he extended the garden at the front of the house and also constructed a vehicular access road on the disputed land.  A plan drawn by Lam Pak Ling showing the extended garden and the access road has been produced.  This shows the extended garden to have an area of 1,337 sq ft and the access road to be 900 sq ft.  These lie on part of Lot 978 RP of which the defendant is the registered owner.  The access road as constructed abuts the house and garden at Lot 978B.

The 1990 Agreement

11. The plaintiffs’ case is that when Lam Pak Ling was in the final stages of the construction of the house on 978C, he came up with the idea that Lam Tin Hing should buy the disputed land from Lam Kwai Choi so that the house he was building could have a larger garden and a vehicular access road.  Their case is that Lam Pak Ling produced the plan in which he coloured the area of the disputed land in red and stated “紅色是購買多餘地”, meaning that the red coloured portion was the additional land to be purchased.  Lam Tin Hing said that Lam Pak Ling informed him at the time that Lam Kwai Choi was prepared to sell the disputed land for HK$270,000; whereupon the plaintiffs remitted a sum of £20,155 to Lam Pak Ling.  The plaintiffs produced a copy of a receipt by Bank of China dated 11 June 1990 showing a remittance of £20,155 to the account of Lam Pak Ling with Kwangtung Provincial Bank.  The bank statement of Lam Pak Ling’s account with this bank shows a deposit of $260,000 on 21 June 1990.  This appears to be the net amount remitted in HK dollars equivalent.

12. The defendant denies that he has ever agreed to sell the disputed land, whether for the sum of HK$270,000 or at all.  He says Lam Kwai Choi has never asked him to sell the disputed land to Lam Tin Hing; and he maintains that he never received any money for the purchase of the disputed land.  He further denies that Lam Pak Ling could be constituted his agent for the sale of the disputed land.  His case is that neither Lam Tin Hing nor Lam Pak Ling ever approached him for the sale of the disputed land.  He maintained that he was not even aware at the time when the garden extension and access road were constructed that this had been going on.  He said he only found out after the garden extension and access road had been constructed.  This was said to be about the time when the District Lands Office came to mark the boundaries of the house which Lam Kwai Choi proposed to build right next to.  Lam Kwai Choi said that when he asked Lam Pak Ling about this, Lam Pak Ling said to him words to the effect that since he, that is Lam Kwai Choi, had no use for the disputed land, he should allow Lam Tin Hing to use the same; and that if and when Lam Kwai Choi wanted it back, he would then talk to Lam Tin Hing about it.  Lam Kwai Choi said he acquiesced in that state of affairs because of his non-confrontational character and because he always treated Lam Pak Ling with respect and awe.

The issues

13. The issue I am called upon to determine is whether there was an agreement between the plaintiffs and the defendant for the sale of the disputed land.  This in turn requires a determination first of whether Lam Pak Ling did agree on behalf of Lam Kwai Choi to sell the same for either HK$260,000 or HK$270,000; and if so, whether Lam Pak Ling had the authority, whether actual or ostensible, of Lam Kwai Choi in so agreeing.  The burden of proving these issues rest on the plaintiffs.

14. Since what is alleged is an oral agreement involving the disposition of an interest in land, section 3(1) of the Conveyancing and Property Ordinance, Cap. 219 prima facie applies.  That section provides that :

“Subject to section 6(2), no action shall be brought upon any contract for the sale or other disposition of land unless the agreement upon such action is brought, or some memorandum or note thereof, is in writing and signed by the party to be charged or by some other person lawfully authorized by him for that purpose.”

Mr Paul Leung on behalf of the plaintiffs submitted however that a defendant can only rely on this section if it is expressly pleaded.  He relies on Lord Hoffmann’s opinion in Cheung Bing Sum v. Leo Lee [1997] 2 HKLRD 138 at 141, the judgment of Lord Simon of Glaisdale in Steadman v. Steadman [1976] AC 536, 558F and 565F and the judgment of Farwell J in Broughton v. Snook [1938] Ch 505, 511.  Counsel for the defendant did not suggest otherwise.  In any event, the plaintiffs rely on part performance or proprietary estoppel.

15. Before I come to consider these issues, it is convenient to outline the position of Lam Pak Ling.

Lam Pak Ling

16. Lam Pak Ling was called by the plaintiffs to give evidence.  Lam Pak Ling has, before the trial, made a declaration dated 6 July 2007 and two witness statements, one dated 26 July 2007 and the other dated 21 September 2007.  In his declaration and first statement, Lam Pak Ling deposed that he asked Lam Kwai Choi whether he was prepared to sell the disputed land to Lam Tin Hing.  He stated that after Lam Kwai Choi saw the plan he drew, he considered the proposal to be a good one, and after discussing the matter, both he and Lam Kwai Choi considered that the price of HK$270,000 would be a very reasonable price, and Lam Kwai Choi agreed then to sell the disputed land at that price.  In his second statement, Lam Pak Ling said that after he received the sum of £20,155 from Lam Tin Hing and Tsang Tung Ying (which he said was equivalent to HK$270,000), he immediately drew a cheque in the sum of HK$270,000 to Lam Kwai Choi.  The plaintiffs called a solicitor, Miss Ng Siu Ling Rowena, to testify that she was the one who took instructions from Lam Pak Ling in punti and produced a draft of the declaration in Chinese.  She sent the draft declaration to a solicitor in another firm, situated in Tai Po, for the statements to be made by Lam Pak Ling.  The plaintiffs also called the clerk of this Tai Po firm, Mr Cheung Chiu Ping, who testified that before Lam Pak Ling signed on his witness statements, the contents have been read to him line by line in his chosen dialect of Hakka, and that Lam Pak Ling was also given the opportunity of reading them himself.  She testified that the first of the two statements was drafted by her based on the declaration, and that Lam Pak Ling had read every page before he signed.  He spotted an error in the first statement, namely that the length of the vehicular access was wrongly stated in the draft as 900 ft, when it should be 90 ft.  That was duly amended before he signed on the statement.  The second statement was also drafted by her, and, according to her, was the result of the instructions she took from Lam Pak Ling.

17. In his evidence-in-chief, Lam Pak Ling retracted what he said in his declaration and his two witness statements.  He denied that he had asked Lam Kwai Choi to sell the disputed land to Lam Tin Hing, and denied that he paid Lam Kwai Choi either HK$260,000 or HK$270,000; or indeed any sum for the price of the disputed land.  He said he signed the statements because the lawyer asked him to sign and he assumed that the contents were true.

18. I allowed the plaintiffs’ application to treat Lam Pak Ling as a hostile witness.  He was cross-examined on his declaration and witness statements.

19. I should note the following additional matters concerning Lam Pak Ling :

(1) On 16 March 2008, which was some time after Lam Pak Ling made his witness statements, he went over to Lam Kwai Choi’s house and had a conversation with Lam Kwai Choi and his son Lam Chi Hang.  Lam Chi Hang recorded part of the conversation, and an agreed transcript of the recorded part of the conversation was produced in evidence.  In that conversation, Lam Pak Ling told Lam Chi Hang that he did inform Lam Pak Ling that the house for Lam Tin Hing was built larger.  It is also apparent from the recording that Lam Pak Ling resolved to do what he could to assist Lam Kwai Choi’s case in the litigation.

(2) In the course of the trial, Lam Pak Ling produced the bank statements of his account with Kwangtung Provincial Bank, and also the counterfoils of his cheque books.  Whilst Lam Pak Ling admitted receiving the sum of £20,155 in June 1990, he said this was the balance for the construction costs.  He gave an account of the moneys he received from the plaintiffs, and of the moneys he paid to Lam Kwai Choi by reference to the statements and his own handwriting on the back of his cheque counterfoils.  He maintained that he never received any money from the plaintiffs for the purchase of the disputed land, and that he never paid Lam Kwai Choi any money for the same.

Findings

20. The first question is essentially one of credibility.  I find Lam Tin Hing to be an honest and reliable witness.  I accept his evidence that Lam Pak Ling did suggest to him that he should buy the disputed land.  I also accept his evidence that he was told that Lam Kwai Choi was prepared to sell the disputed land at the price of HK$270,000.  I accept his evidence and that of Tsang Tung Ying that the remittance of £20,155 was made for the purpose of paying for the disputed land.  Although there is a slight discrepancy between what these witnesses recall to be the price, and the amount which was ultimately remitted, I do not consider that this affects the credibility or reliability of these witnesses.

21. I also accept the evidence of Miss Ng Siu Ling Rowena that the declaration and witness statements were drafted by her based on the instructions given by Lam Pak Ling.  I further accept the evidence of this witness and that of Mr Cheung Chiu Ping to the effect that Lam Pak Ling was given the opportunity to read the contents of his declaration and his two statements before he signed on them.  This, however, only means that Lam Pak Ling did give those accounts.  That does not necessarily mean that the account he gave on those occasions was the truth.  I reject the evidence given by Lam Pak Ling that he signed those documents based simply on an assumption that they contained an accurate account.

22. I also accept the evidence of Lam Ping Hing, a witness called by the plaintiffs.  He testified that one day in 1989 or 1990, he happened to walk pass 978C and saw Lam Pak Ling working on the vehicular access.  He asked Lam Pak Ling whether the purchase of village house came with a vehicular access.  Lam Pak Ling replied that the vehicular access had to be paid for, and said it cost $270,000.

23. Before coming to the above findings, I have taken into account the bank statements and cheque counterfoils produced by Lam Pak Ling to support the version he gave in the witness box.  Although he purports, with the aid of the documentary evidence, to give a full account of what he received from the plaintiffs and what he paid to Lam Kwai Choi, I have serious doubts as to his overall credibility and do not consider that I can safely rely on his account as full or correct.  I bear in mind that Lam Kwai Choi did have other financial dealings with Lam Pak Ling, in particular, he had to pay Lam Pak Ling for the cost of construction of his house.  The account that Lam Pak Ling gave did not even account for this.

24. The second question is also one of fact.  I find that Lam Pak Ling had the authority of Lam Kwai Choi in offering the disputed land to Lam Tin Hing for sale.  I am satisfied on the evidence that Lam Pak Ling have always enjoyed a very good relationship with Lam Kwai Choi over the years.  That was what Lam Pak Ling himself said.  This is also evident from the fact that Lam Kwai Choi required all those who purchased land from him to engage Lam Pak Ling as the builder.  I find it quite inconceivable that Lam Pak Ling would have commenced construction of the extended garden and vehicular access without first having obtained Lam Kwai Choi’s consent.  I reject Lam Kwai Choi’s evidence as to why he acquiesced in the use of the disputed land by the plaintiffs’ tenants over the years.  On his own evidence, he was aware of the state of affairs since 1990.  He took no action until about June 2007 when he caused a mesh fence to be erected which completely blocked off the vehicular access and forced the occupants of 978C to walk around the house.  His evidence was that Lam Pak Ling simply said to him that since the road and garden had already been completed and since he had no use for the land, he should allow Lam Tin Hing to use it first, and that if in the future, he wanted the land back, he, that is, Lam Pak Ling, would talk to Lam Tin Hing.  This is said to take place at the time when Lam Kwai Choi was just about to have his own house built, and the vehicular access was constructed right in front of this new house.  When he was asked why he would agree to this, Lam Kwai Choi’s explanation was that he has always treated Lam Pak Ling with awe and respect, and did not dare to contradict or confront him.  I do not accept that evidence.  I do not believe that Lam Kwai Choi would suffer the use of his own land to be used by some one he scarcely knew for so many years, just because he would not want to confront Lam Pak Ling.  Over the years, Lam Kwai Choi did not utter a word to Lam Tin Hing about this.  The evidence before me does not suggest that Lam Kwai Choi is a person who suffers injustice being done to him without demur.  That lies ill with the fact that he was one of the village representatives.

25. I am therefore satisfied on the evidence that Lam Kwai Choi did, through Lam Pak Ling, agree to sell the disputed land to the plaintiffs in about June 1990.

Agreement not in writing

26. In my judgment, Mr Leung was correct in his submission that since section 3 of the Conveyancing and Property Ordinancehas not been raised by the defendant in his Defence, that section is not a bar to the enforcement of the oral agreement relied on by the plaintiffs.  It is fair to note, however, that Mrs Chan for the defendant did not seek to rely on the section.

27. In any event, the plaintiffs rely on the doctrine of part performance, and proprietary estoppel.  Section 3(2) of the Conveyancing and Property Ordinance expressly provides that the section does not affect the law relating to part performance.  I take the law from Lord Reid’s judgment in Steadman v. Steadman [1976] AC 536 at 540 :

“If one party to an agreement stands by and lets the other party incur expense or prejudice his position on the faith of the agreement being valid he will not then be allowed to turn round and assert that the agreement is unenforceable.”

28. If necessary, I would have no hesitation in this case in finding that there has been part performance.  Again, it is fair to note that Mrs Chan does not seek to persuade me otherwise.

29. The above suffices for the purpose of deciding on the reliefs sought by the plaintiffs in the action.  It is unnecessary for me to make findings on the other subsidiary disputes between the parties.  Suffice it to say that in general I accept the evidence of the plaintiffs and reject the evidence of the defendant where they are in conflict.

Judgment

30. For these reasons, I would enter judgment in favour of the plaintiffs for a declaration that the disputed land is vested in equity in the plaintiffs, and make an order that the defendant do execute an assignment of the disputed land in favour of the plaintiffs.  I would also grant an injunction in the terms sought in paragraphs 3 and 4 of the prayer for relief.  I make an order nisi that the plaintiffs shall have their costs of the action.  I give the parties general liberty to apply.

Counterclaim

31. I dismiss the counterclaim, with an order nisi of the costs of the counterclaim in favour of the plaintiffs.