PETER YIU SING CHAN v. MADAM LAM YAT WAH

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HEADNOTE

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                It is open to a party to a Tomlin Order who seeks relief directed to the carrying into effect of its terms to seek such relief by way of summons. If the party who resists such relief raises an arguable defence or a triable issue, then it may be appropriate for the Court to direct pleadings, discovery and a trial. Otherwise the relief may be granted summarily.

                Mistake being the basis on which the application here was resisted and there being no triable issue or arguable point on mistake, the relief would be granted summarily.

                Had there been such an issue or point, the relief would not have been granted summarily. Although the party seeking such relief had an argument that laches might have defeated the resistance even if there was otherwise a basis for it, laches would not have availed him on this application since it was not plain or obvious at this stage that the only proper exercise of discretion is one by which the doctrine of laches is applied to defeat the resistance (Anstalt Nybro v. Hong Kong Resort (1980) HKLR 76 applied).

M.P. No. 19 of 1972

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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JUDGMENT

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1. This is a summons taken out by the plaintiff on February 2, 1990, for relief directed to the carrying into effect of certain terms of a Tomlin Order made as long ago as March 18, 1982, in these 1972 miscellaneous proceedings and this 1973 action, which proceedings and action were consolidated in 1980.

2. This morning the parties reached agreement on the form in which the assignment sought by the plaintiff and resisted by the defendants is to be executed if and when such assignment takes place. The form agreed is embodied in the draft - consisting of a text and two plans - initialled by the solicitors for the parties and handed up to me. Today and tomorrow had been set aside for evidence and argument on the plans to be annexed to the assignment. It was believed when the matter was last before me on the 27th of last month that such evidence and argument would be necessary. That, as I have indicated, is no longer so. What I have to decide is whether the plaintiff is entitled to any assignment. If he is then it will be in the form agreed.

3. Given that the plaintiff and the 2nd defendant are brothers and that the 1st defendant is their mother, it hardly needs to be said that this is an unfortunate case even by the standards of family disputes which end up in court.

4. In 1946, Mr Chan Shu Lam - the father of the plaintiff and the 2nd defendant and the husband of the 1st defendant - died domiciled in Hong Kong. It is common ground that the devolution of his estate is governed by Tsing Law, so that his direct male descendants - of which the plaintiff and the 2nd defendant are two and their brother Michael is the third - inherit.

5. Letters of administration of the deceased's estate were granted to the defendants in 1956.

6. The 1972 proceedings pertain to certain shares which the plaintiff said used to belong to his late father and were held by his mother on trust for him and his brothers.

7. The 1973 action is an administration action in which the plaintiff sought administration, damages for breach of trust, accounts and enquires, removal of the defendants as trustees and so on.

8. Eventually in 1982, Jackson-Lipkin, J. made the Tomlin Order to which I have made reference. It compromised - or at least was meant to compromise - this unhappy piece of litigation.

9. One of the things which the defendants had to do under the Tomlin Order was to cause to be conveyed to the plaintiff one-third of certain land in the New Territories forming part of the estate. The parties were required to appoint - and have appointed - surveyors to carve up such land into 3 equal portions, each with independent access. They were to use their best endeavours to agree which portion should be conveyed to the plaintiff. In default of such agreement, the allocation of the plaintiff's portion was to be by way of blind draw.

10. Things did not run smoothly after the carving-up.

11. In March last year - no draw having taken place even by then - the plaintiff took out a summons for an order directing a draw. The defendants resisted that application on two grounds.

12. The first had to do with easements and the like. The Tomlin Order provides that upon carving-up each portion carved out "... shall enjoy all reasonable easements, rights of way and access over the other portions for the reasonable usage and enjoyment thereof." The defendants argued that such easements, rights of way and access had to be determined before any draw could take place.

13. The second was that before any draw could take place it had to be determined whether the parcel of flat land designated "F1" went with the parcel of hillside designated "H1" and so on up to F3 and H3, so that each person entitled to a portion drew only once.

14. On April 21, last year, Godfrey, J. dismissed the plaintiff's summons for an order directing a draw. He did so on the defendant's first ground.

15. The easements, rights of way and access have since been determined by agreement. It has also been agreed that F1 and H1 go together to form one portion, that F2 and H2 go together to form another portion and that F3 and H3 go together to form yet another portion.

16. A draw took place on August 18, last year. The plaintiff drew the middle portion i.e. the one formed by F2 and H2.

17. In substance, what the summons now before me seeks is the assignment to the plaintiff of that portion.

18. The defendants resist the summons on the grounds of mutual, alternatively unilateral, mistake.

19. The graves of the grandparents of the plaintiff, the 2nd defendant and their brother Michael - over which graves none of them would wish to build - are on the land which has been carved up. They are on H3 to be precise.

20. The defendants have filed evidence to this effect: Before the Tomlin Order the 2nd defendant had learned where those graves were and had told the 1st defendant where they were. But he did not concern himself with the details of the compromise embodied in the Tomlin Order. And the 1st defendant forgot what she had been told about the location of such graves so that, in the result, that matter was not in her mind when the compromise was reached or when the Tomlin Order was made embodying the same. It is said on their behalf that the defendants would not have entered into the compromise or consented to the making of the Tomlin Order if they had been conscious of the fact that such graves were on the land to be carved up and divided.

21. The plaintiff does not accept what the defendants say. It is perhaps more accurate to say that he does not accept what the 2nd defendant says since the 1st defendant has not sworn any affidavit or made any affirmation on the matter.

22. For his own part, the plaintiff says that he was aware throughout that such graves were on the land to be carved up and divided. His statement to that effect in his affirmation dated March 13, 1990, was called into question by the 2nd defendant in his affirmation dated March 19, 1990. In his affirmation dated March 22, 1990, the plaintiff said that the 2nd defendant seemed to be under misapprehension as to the basis of his i.e. the plaintiff's knowledge; and he then went into considerable detail as to the actual basis of his knowledge. No evidence challenging such basis has been filed on behalf of the defendants. And despite the fact that Mrs Clough, who appears for the plaintiff, has virtually challenged Mr Fung, who appears for the defendants, to cross-examine the plaintiff, Mr Fung received no instructions to seek leave to cross-examine him. In this connection, Mrs Clough has cited Re Smith and Fawcett Ltd [1942]1 Ch. 304 where Lord Greene, M.R., with whom the other members of the Court of Appeal agreed, made this observation (at p.308) :

"If it is desired to charge a deponent with having given an account of his motives and his reasons which is not the true account, then the person on whom the burden of proof lies should take the ordinary and obvious course of requiring the deponent to submit himself to cross-examination."

23. Of course, it must be borne in mind that the defendants are not asking for a determination in their favour at this stage but only a direction that the matter in controversy must go to a trial following pleadings and discovery.

24. What I first ask myself is this : Taking everything into account, do the defendants appear to have an arguable defence based on mutual mistake? In my judgment - whatever the position may be in regard to unilateral mistake - the answer is "No". It is not sufficient for the defendants to say that discovery may throw up this, cross-examination may throw up that or something else may throw up the other. I place on them a burden no higher than one analogous to the burden - if "burden" is the right word for it - on a defendant resisting an application for summary judgment.  I was going to say "under Order 14", but I think that it would be more appropriate to say "under Order 86" since counsel are agreed - rightly I think - that what the plaintiff seeks is analogous to specific performance. And of course he is seeking it, in effect, summarily. Anyway, light as the "burden" is, I do not think that the defendants have discharged it as far as mutual mistake is concerned. They have not in all the circumstances shown anything approaching reasonable prospects of being able successfully to contradict the plaintiff's denial that he was mistaken.

25. What about unilateral mistake - in other words, mistake on the part of the defendants only?

26. Broadly speaking, the doctrine of unilateral mistake operates to render a contract void in either of two situations. One is where there is such latent ambiguity in the terms of the offer and acceptance that - notwithstanding the general rule that the intention or presumed intention of the parties is to be gathered upon an objective test - one cannot reasonably impute to the parties any consensus ad idem between them. The other is where one party purports to accept an offer in a sense different from the one in which he knows the offeror intended to make it.

27. There is no suggestion - certainly none would be warranted - that somehow the plaintiff knew not only that the 2nd defendant did not concern himself with the details of the compromise but also that the 1st defendant had at the material time suffered a lapse of memory in regard to what the defendants now say is a highly material fact.  Nothing further need be said in regard to the second situation.

28. What about the first? When I consider it, I come to understand even more clearly why Mr Fung emphasised that his case was first and foremost one of mutual mistake. Once the plaintiff is taken not to have been mistaken, what room is there for saying that there might have been such latent ambiguity in the terms of the offer and acceptance underlying the compromise as to deprive it of consensus and render it void? In my judgment, there is none. The parties were not at cross-purposes or anything like it even assuming that what the 2nd defendant says as to his own non-involvment and the 1st defendant's lapse of memory is true. Even on that assumption, they would bead idem as to the subject-matter of the compromise including the land to be carved up and divided thereunder. They would be even if - unknown to the plaintiff - knowledge or recollection of the presence of the graves in question on the land to be carved up was not operating in the defendants' minds when the compromise was entered into and when the Tomlin Order was made.

29. That is all that I need say on the question of mistake as such.

30. I turn now to the point taken by the plaintiff on the question of laches. In connection with laches, Mrs Clough drew my attention to the following passage at p.36 of the 28th edition of Shell's Principles of Equity : -

"Laches essentially consists of a substantial lapse of time coupled with the existence of circumstances which make it inequitable to enforce the claim. Delay will accordingly be fatal to a claim for equitable relief if it is evidence of an agreement by the plaintiff to abandon or release his right, or if it has resulted in the destruction or loss of evidence by which the claim might have been rebutted, or if. the claim is to a business (for the plaintiff should not be allowed to wait and see if it prospers), or if the plaintiff has so acted as to induce the defendant to alter his position on the reasonable faith that the claim has been released or abandoned. But apart from such circumstances delay will be immaterial."

31. The argument is that there has been substantial delay on the part of the defendants in raising mistake and that such delay is coupled with the existence of circumstances making it inequitable to permit that defence to be relied upon.  It is said that the defendants chose to wait and see if the plaintiff would draw the portion containing parcel H3, which is the parcel on which the grandparents' graves are present. Against that, Mr Fung points to the fact that just before the draw the defendants had by their solicitors' letter of August 18, 1989 - which is the date of the draw - stated that " ... the draw of 'H3 + F3' is subject to exchange with the graves encroaching thereon."

32. The doctrine of laches involves an exercise of discretion. The plaintiff's application calls upon me to proceed in a summary fashion. That does not necessarily preclude me from exercising a discretion. Here Mrs Clough cited the decision of the Privy Council in Anstalt Nybro .v. Hong Kong Resort [1980] HKLR 76 - a case of which I have a very clear recollection. What was involved was the vacation of the registration in the Land Office of an agreement containing an option to participate in the development of certain land. Delivering the advice of the Board, Lord Lane said this (at pp81 - 82) : -

33. In the result, their Lordships dismissed the appeal, taking the view that it could be seen even at that stage that attempting to force the parties into a joint venture by decreeing specific performance - as opposed to leaving the appellant to its remedy in damages if any - would result in impasse or chaos, and that no Court would embark on such a course..

34. In the present case, however, I do not think that it is plain or obvious that the only proper exercise of discretion is one by which the doctrine of laches is applied to defeat the defendants. Laches do not, in my judgment, provide a ground on which the plaintiff is entitled to succeed on this application.

35. There is another point which I ought to mention.

36. At an early stage of the hearing before me - which has been spread over three weeks by reason of the adjournments with which it has had to be interspersed - I asked Mr Fung what stance the defendants would adopt if the matter was sent to trial. Would they rely on mistake as something vitiating the Tomlin Order as a whole, as something vitiating the carving-up, as something vitiating the draw or as something which merely operated to hold up the assignment to the plaintiff of the portion which he drew pending some exchange whereby the land on which the graves were would be excluded from what was to be assigned to any one person and put instead into common ownership? Mr Fung never received instructions to give me any answer other than that the defendants "... wish to avoid disturbing the Tomlin Order at this point".

37. It may be that - if a triable issue arose in regard to mistake or the defendants had an arguable point on mistake - they would be entitled to rely on mistake purely as a defence to the claim for an assignment without seeking to disturb any part of the compromise which is no longer executory. Or it may be that such a stance amounts to approbation and reprobation and is therefore not to be countenanced. I do not have to decide the issue; and I do not propose to do so. While she does not concede that the defendants would be entitled to rely on mistake purely as a defence to a claim on so much of the compromise as remains executory without disturbing the rest of it, Mrs Clough did not present any argument that they would not be entitled so to do. She merely reserved the point.

38. Be that as it may, I do think that there is a triable issue in regard to mistake or that the defendants have an arguable point on mistake. Mistake being the basis on which they resist the application for an assignment, such resistence crumbles.

39. I order that the defendants do on or before May 2, 1990, procure the execution by Kent International Holding Inc. of P.O. Box 300, Aiwo Nauru, Central Pacific, of an assignment in favour of the plaintiff in the form agreed. I so order upon the undertakings offered by the plaintiff in the summons on the which I am giving judgment.

40. Before inviting counsel to address me on costs and any other matters which may now arise, I would like to express my indebtedness to both counsel and both firms of solicitors for their assistance. Both sides in this otherwise unfortunate case are at least fortunate in their legal advisors, if I may say so.

41. [The Court then dealt with costs and certain ancillary matters.]