NG LAI KWAN FANNY v. VICO INFANT & GIFT PRODUCTS COMPANY LTD AND ANOTHER

HCA 1188/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1188 OF 2011

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JUDGMENT
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1.  This is a trial concerning a claim by the plaintiff against the defendants for breach of a settlement agreement signed and dated 13 August 2010 (“the Settlement Agreement”) in a District Court action brought by the plaintiff herein against the defendants herein.

Introduction

2.  The entire dispute between the parties revolved around a private car being a Toyota Camry 3.5 2006 model (“the Vehicle”) bearing registration number JN538 (“the Licence”) as well as the entitlements to the Vehicle’s Guangdong Hong Kong and Macau Motor Vehicle Passenger and Drivers’ Driving Permit (“the Permit”) which allows for the Vehicle to cross the border between Hong Kong and Guangdong.

3.  At the material time in 2006, when the Vehicle was purchased, the Vehicle was registered in the name of the 2^nd defendant in Hong Kong.  The Permit allowed the Vehicle to travel across the border into Guangdong.  However, when the Vehicle was in Guangdong, the Permit only allowed the Vehicle to be driven by one registered or approved driver, who at that time was Johnny Ng, the brother of the plaintiff.  It follows therefore that when the Vehicle was in Shenzen, it would be kept and driven by Johnny Ng.

4.  To understand how this dispute arose, it is necessary to go into some family background as this dispute comes about more as a family dispute than a commercial one.

5.  As already indicated, the plaintiff is the sister of Johnny Ng.

6.  Johnny Ng has a daughter by the name of Mandy Ng.  Mandy Ng is a director of the 2^nd defendant and has control over the 2^nd defendant.

7.  The former wife of Johnny Ng is by the name of Tsang Wai Ling.  The relationship between Johnny Ng and his wife turned sour since about 2002.  They separated in about 2006 and ultimately they divorced.

8.  It would appear that the family was thus split into two camps, Johnny Ng and the plaintiff in one camp and his wife and daughter in the other camp.

9.  Before any dispute arose within the family, Johnny Ng was the licence holder, as well as a director and shareholder of one Vico Manufacturing Co Ltd (“Vico”) which ran a factory in Mainland China.  A Guangdong Hong Kong cross border permit was obtained by Johnny Ng with Vico being the permit holder initially for a car GV208 from 1999 to 2000.  Johnny Ng was the approved driver.  In 2000 that cross border permit was transferred to another car DP1180 with Johnny Ng still the approved driver and Vico still the permit holder.  In 2001 the same cross border permit was transferred to yet another car GG1180 with Johnny Ng still the approved driver and Vico the permit holder.

10.  In 2005, the permit holder was changed from Vico to the 2^nd defendant, but the car GG1180 and the approved driver being Johnny Ng remained unchanged.

11.  When the Vehicle was acquired in April 2006 the above cross‑border permit was transferred from GG1180 to the Vehicle and became the Permit.  The 2^nd defendant was the registered owner of the Vehicle in Hong Kong.

12.  The Vehicle was at that time on hire purchase with a finance company, Inchroy Credit Ltd (“Inchroy”) and the Certificate of Registration with the Transport Department in Hong Kong was held by Inchroy.

13.  In May 2007, the plaintiff brought an action in the District Court in case number DCCJ 5260/2007 against the same defendants herein for specific performance of an oral agreement concerning the ownership and entitlements of the Vehicle, the Licence and the Permit.

14.  After a mediation session between the parties in the District Court action, the Settlement Agreement was entered into and signed between them on 13 August 2010.

15.  The terms of the Settlement Agreement are as follows:

“TERMS

The parties agree as follows:

1. The Defendants (‘Ds’) do transfer to the Plaintiff (‘P’) the use and ownership of the private car Toyota Camry vehicle model 2006 with registration no. JN538 (‘the Vehicle’) and the Guangdong Hong Kong and Macau Motor Vehicle Passenger and Drivers’ Driving Permit (‘the Permit’) by the Ds’ all means and efforts to assist the P to transfer the Vehicle and the Permit;

2. All the outstanding monthly installments of the Vehicle be paid by the Ds and all parties will not claim against each other for all monthly installments paid and/or will be paid;

3. The P do settle all expenses of stock payment of the Vehicle paid and/or to be paid and all parties will not claim against each other for all stock payments of the Vehicles paid and/or to be paid;

4. The Ds will provide a valid Permit to the P by the Ds’ own cost and the costs of the transfer of the Permit will be paid by the P’s own costs;

5. The costs of the change of Director of the 2^nd Defendant from the existing Director(s) to the P be the Ds’ own costs;

6. Costs of this action be no order as to costs including all outstanding costs order.”

16.  As a result of the Settlement Agreement entered into between the parties to the District Court action, a Consent Order was also made by the master in the District Court on 5 November 2010 (“the Consent Order”) in the form of a Tomlin Order with the agreed settlement terms set out in the schedule thereto and all further proceedings stayed except for the purpose of carrying out same.

17.  Paragraph 1 of the Consent Order provided as follows:

“1. The plaintiff, and the 1^st defendant and 2^nd defendant shall execute the terms agreed by all parties as in the schedule. The legal proceedings of this case shall be stayed;”

18.  The Schedule to the Consent Order stated as follows:

“ SCHEDULE

(a) Under the circumstances of not admitting liability, the 1^st defendant and the 2^nd defendant shall agree, within one month after the Order assist the Plaintiff to transfer the private car ‘Toyota Camry’ – Car Registration Plate No. JN538 (“the car”) and the Approval Notice to the Driver for Driving in Guangdong‑HongKong‑Macau (‘the approval document’) assist the plaintiff in transferring the foregoing into the plaintiff’s name and the car shall be available for use by the plaintiff; which shall be the settlement agreement for the plaintiff’s claim against the 1^st defendant and the 2^nd defendant, inclusive of any order for costs, and all parties shall not claim against the other party for any unpaid costs and order;

(b) The 1^st defendant and the 2^nd defendant shall pay up any balance of the installment payment for the car, before transferring it into the Plaintiff’s name, and all parties shall not claim against the other party for the previous installment payments or unpaid installments. The 2^nd defendant and its directors also undertake and guarantee that its company shall not have any outstanding debts or debts owed when the 2^nd defendant transfers the position of director to the plaintiff, and the directors of the 2^nd defendant shall also be personally responsible for the related debt before the transfer;

(c) The plaintiff shall be responsible for the warehousing costs of the car and all parties shall not claim against the other party for the warehousing costs of the car;

(d) Within one month of this Order, the Plaintiff agreed to hand over the car to the 1^st defendant and the 2^nd defendant so as to assist the 1^st defendant and the 2^nd defendant in applying for its effective approval document and hand over the car and the effective China‑Hong Kong approval document to the Plaintiff;

(e) The plaintiff shall be responsible for the costs of transfer relevant to obtaining the effective approval document and the costs derived after the effective approval document, and the 1^st defendant and the 2^nd defendant shall be responsible for the costs of change of company name;

(f) Each party has agreed to keep the contents of this settlement agreement confidential; and

(g) The plaintiff has agreed that all liabilities and outstanding sums related to the car after the car has been transferred into her name shall be nothing to do with the 1^st defendant and the 2^nd defendant.  Thereafter the Plaintiff shall be wholly responsible for any recourse claims lodged by anyone against the car or its approval document or Vico Plastic Products Factory in Longxi, Longgang (incorporated in the People’s Republic of China).”

19.  Between December 2010 and March 2011 a number of attempts had been made by the plaintiff through her solicitors to get the defendants to transfer the ownership of the Vehicle and the Permit over to the plaintiff, but up to the time the Writ herein was taken out by the plaintiff on 15 July 2011, all these attempts were unsuccessful.

Plaintiff’s case

20.  It is the plaintiff’s case in a nutshell that the defendants were in repudiatory breach of the Settlement Agreement in that the defendants have failed to transfer to the plaintiff the Vehicle, the Licence and the Permit as they had agreed to pursuant to clause 1 of the Settlement Agreement.

21.  The plaintiff has accepted the defendants’ repudiation of the Settlement Agreement by the issue of the Writ herein claiming for damages for such breach.

22.  In so far as breaches of the Settlement Agreement goes, it is also the plaintiff’s case that there were the following implied terms of the Settlement Agreement:

(a) that the parties shall do all that is necessary to be done on their parts to transfer the Vehicle, the Licence and the Permit within the scope of the Settlement Agreement; and

(b) that the defendants should not do anything to prevent the plaintiff from carrying out the plaintiff’s part under the Settlement Agreement.

23.  The plaintiff also relies on the following conduct of the defendants:

(a) some time before 27 October 2010, the defendants falsely reported to the Hong Kong police and the Mainland authorities that the Vehicle had been lost and applied to the authorities in the Mainland for the Permit to be transferred to the defendants’ own car with registration number LX208; and

(b) in so doing, the defendants knew or ought to have known before 27 October 2010 that it would be impossible for the plaintiff to bring the Vehicle back to Hong Kong.

24.  It is also the plaintiff’s case that when the Settlement Agreement was entered into there was a mutual understanding and agreement that the most proper way to effect the terms of the Settlement Agreement was to transfer the shares and directorship of the 2^nd defendant to the plaintiff.

25.  Within one month after the Consent Order was made, the plaintiff had by various emails requested the defendants to take delivery of the Vehicle at Shenzhen but the defendants refused to do so.

26.  Despite requests by the plaintiff, the defendants also failed to provide any valid Permit to the plaintiff to enable the plaintiff or Johnny Ng to take the Vehicle from Mainland China to Hong Kong for delivery to the defendants.

27.  The defendants also failed to take any steps to arrange for the appointment of the plaintiff as the director of the 2^nd defendant.

28.  Subsequently, the plaintiff discovered that it was impossible for the defendants to comply with the Settlement Agreement due to the fact that the Licence was no longer owned by the defendants and that the 2^nd defendant had applied the Permit to another vehicle owned by the defendant, LX208.

29.  The plaintiff had suffered such loss and damages as particularized in the Amended Statement of Claim.

The defence

30.  The first matter raised by the defendants was that since there was a Consent Order made by the court, the present action should be determined under the terms of the Consent Order instead of the terms of the Settlement Agreement.

31.  On a proper reading of the Consent Order:

(a) paragraph (d) has to be read as a pre‑condition of paragraph (a) in the schedule thereof; and

(b) the delivery of the Vehicle should be in Hong Kong and not in Shenzhen.

32.  The defendants have repeatedly demanded the plaintiff to deliver the Vehicle to the defendants in Hong Kong but the plaintiff failed to do so.  Therefore there is no breach by the defendants of the Consent Order.

33.  It was also the defendants’ case that if at the time of the signing of the Settlement Agreement, it became impossible for the defendants to transfer the ownership of the Licence and the Permit to the plaintiff, both the Settlement Agreement and the Consent Order would be rendered unenforceable and would be void due to the mistake of the parties.  The only recourse would be to revive and continue the proceedings under DCCJ 5260/2007.

34.  It is also raised as a defence by the defendants that the Permit cannot be sold in the market for monetary value and there is no expert or other admissible evidence to show the value of the Permit.

The issues

35.  There are six major issues to be determined in these proceedings:

(a) whether the present action should be determined under the terms of the Consent Order or the terms of the Settlement Agreement;

(b) whether there are implied terms under the Settlement Agreement as pleaded and relied on by the plaintiff;

(c) whether paragraph (d) to the schedule of the Consent Order is a pre‑condition of paragraph (a) thereof;

(d) whether under paragraph (d), the Vehicle should be delivered in Hong Kong or in Mainland China, and whether the defendants are in breach of any of the terms of the Consent Order or the Settlement Agreement;

(e) whether it was impossible for the defendants to transfer the ownership of the Vehicle and the Permit at the time of the signing of the Settlement Agreement; and

(f) whether the Permit can be sold in the market for monetary value and whether the plaintiff can prove the value of the Permit.

The evidence

36.  The plaintiff called two witnesses, namely the plaintiff herself and Johnny Ng.

37.  The defendant called as witness Mandy Ng Tsing Yan who is the director and shareholder of the 1^st and 2^nd defendants as well as being the daughter of Johnny Ng.

The evidence of Fanny Ng Lai Kwan

38.  She is the plaintiff and gave evidence that the Settlement came about as a result of a compromise between the parties in the District Court Action made on 13 August 2010 when that case went to mediation.

39.  Thereafter the Consent Order was entered into to stay the proceedings in the District Court Action.

40.  Between December 2010 until March 2011, she and Johnny Ng had chased after the defendants, through their solicitors and by themselves, for the delivery of the Vehicle and Permit back to her but in vain.  Without the valid Permit and Licence, Johnny Ng could not drive the Vehicle back to Hong Kong from China.

41.  Moreover, since the Permit was held in the name of the 2^nd defendant, it could not be transferred simply by changing the names of the parties on it.  The defendants would have to transfer the shares of the 2^nd defendant to her so as to transfer the ownership of the Permit to her as was agreed between them.

42.  In December 2010 her solicitors received from the defendants’ solicitors Form D4 and D2A signed by the defendants but these forms were not about the transfer of shares in the 2^nd defendant.  Also the defendants provided to her an expired copy of the Vehicle Registration Document which was of no use to implementing what had to be done under the Settlement Agreement.  Nor would those documents enable the Vehicle to be driven back to Hong Kong.

43.  She was always ready to deliver the Vehicle to the defendants for them to transfer the Licence and the Permit to the plaintiff, but without the valid documentation from the defendants, the Vehicle could not be brought back to Hong Kong from China.  As a result she suggested to have the Vehicle delivered to the defendants in Shenzhen so that the defendants could make the applications for transfer of the Licence and Permit into the name of the plaintiff.  However, the defendants insisted on the Vehicle being delivered to them in Hong Kong, knowing full well that it was not possible for Johnny Ng to drive the Vehicle back to Hong Kong.

44.  By 3 March 2011, when there was no breakthrough, she asked her solicitors to demand from the defendants the relevant documents within seven days after issuing the letter.

45.  On 11 March 2011, her solicitors received a reply from the defendant’s solicitors that the defendants would carry out the transfer upon the condition that she would sign a draft consent summons in DCCJ 5911/2006, being another District Court action brought by her against the same defendants.  That not being a term agreed either in the Settlement Agreement or the schedule to the Consent Order, was rejected by her.

46.  Finally a conference was arranged in the office of her solicitors for 25 March 2011.  She was out of Hong Kong, and Johnny Ng attended on her behalf and with her authority.  The defendants attended by their solicitors, one Angus Chung who showed to Johnny Ng documents which showed that the Permit had been transferred to another car with registration number LX208.  It was then suggested that the defendants can lend/loan LX208 to the plaintiff and that the plaintiff can purchase another vehicle, transfer the Permit from LX208 to the new vehicle and then return LX208 to the defendants.  This suggestion was not acceptable to the plaintiff.

47.  Mr Chung did not provide any further documents even though the Registration Document for the Vehicle had expired and because the plaintiff declined to sign the draft consent summons relating to DCCJ 5911/2006, nothing came of that conference.

48.  Further letters were written by the plaintiff’s solicitors on 28‑29 March 2011 asking the defendants for confirmation that they did not report to the police concerning the loss of the Vehicle, with further follow up letters on 30 March and 13 April 2011.

49.  On 14 April 2011, the defendants replied through their solicitors that saying that a report of loss of the Vehicle was made to the police but it was not successful.

50.  Thereafter Johnny Ng made enquiries to the Tuen Mun Police Station and was told that a report had been made both in Hong Kong and in China in 2011 of the loss of the Vehicle.  Further enquiries with the Transport Department revealed that the registration number JN538 had already been allocated by the Transport Department to some other vehicle owned by one Gemini Holdings Limited since 26 March 2009.

51.  In a final attempt, the plaintiff’s solicitors wrote to the defendants requesting for a further meeting and for the defendants to hand over the transfer documents but was told by the defendant’s solicitors that the defendants had given the documents to one Mr Cheng in China and the plaintiff was asked to contact Mr Cheng directly.

52.  The plaintiff felt that the defendants were using delaying tactics and that 10 months had passed without anything being done by the defendants to implement the Settlement Agreement.  She was then advised by her solicitors to take out the present action to claim for damages for breach by the defendants of the Settlement Agreement.

The evidence of Johnny Ng

53.  Johnny Ng gave much the same evidence as the plaintiff, but being familiar with the procedure concerning the application for cross border permits between Hong Kong and Guangzhou, his evidence went further than that of the plaintiff.

54.  It was also the evidence of Johnny Ng that for an application to extend a cross border permit, a vehicle had to be examined in Hong Kong by vehicle examiners appointed by the Chinese authorities.  According to him such examination was only required for obtaining a valid vehicle licence in China.  In this context, he cited the fact that the defendants were able to extend the Permit in 2009 and 2010 without the Vehicle being examined in Hong Kong since the Vehicle could not be driven back to Hong Kong in those two years.

55.  Johnny Ng also gave evidence that since the Permit had been transferred by the defendants to LX208 on 27 October 2010, and that procedure according to the defendants, took half a year to complete, it would mean that the defendant had taken such step to change the Permit from the Vehicle to LX208 before the Settlement Agreement was signed and also before the Consent Order was made.  Thus the defendants must have known that the Vehicle could not be driven back to Hong Kong for delivery to the defendants within one month from the Consent Order, but that transfer of the Permit from the Vehicle to LX208 was only disclosed to the plaintiff and to him by the defendants in February 2011.  The defendants therefore had no intention to comply with the terms as stated in the Consent Order.

56.  Johnny Ng further disputed that there was a pre‑condition that he had to deliver the Vehicle to the defendants to enable the defendants to transfer the Vehicle and the Permit to the plaintiff.  In any event, the defendant had by their conduct made it impossible for the defendants to transfer the ownership of the Licence and the Permit to the plaintiff as they were required to under the Consent Order.

57.  By letter of 11 March 2011, the then solicitors for the defendants said they would deliver the Permit and the documents for transfer of the ownership and use of the Vehicle to the plaintiff but only upon the further undertaking by the plaintiff to sign on another consent summons in respect of another legal action in DCCJ 5911/2007.  This was refused by the plaintiff as being unreasonable.

58.  Johnny Ng also gave evidence relating to the quantum of damages saying that for the period from December 2010 onwards, the plaintiff has suffered the loss of use of the Vehicle and the Permit.  In this respect, he pointed to various newspaper advertisements advertising the cost of obtaining a cross border permit between Hong Kong and Guangzhou.

The evidence of Ng Tsing Yan

59.  Ng Tsing Yan was the only witness called by the defendants.

60.  She is the director and shareholder of both defendants and is also the daughter of Johnny Ng.

61.  She said in evidence that on 22 May 2007, the plaintiff has commenced proceedings against both the present defendants in DCCJ 5260/2007 claiming on an oral agreement between the parties.

62.  At a mediation session the parties in DCCJ 5260/2007 reached a full and final settlement and the Settlement Agreement was signed between them.

63.  Subsequently a Consent Order was made by the court effectively in the form of a Tomlin Order staying the proceedings except for carrying out the terms as contained in the schedule thereto.

64.  It is her evidence that she was advised and verily belief that the present action started by the plaintiff is res judicata.  She goes on to say that the proper procedure for the plaintiff is to enforce the terms contained in the schedule to the Consent Order and not start a fresh action against the defendants by issuing a new writ.

65.  She also gave evidence that the defendants were not in breach of the Settlement Agreement or the Consent Order.

66.  In so saying, it is her evidence that paragraph (d) of the schedule to the Consent Order was a pre‑condition to the carrying out of paragraph (a) thereof and since at all times, the plaintiff failed to deliver the Vehicle to the defendants in Hong Kong, it was the plaintiff who had failed to comply with paragraph (d) of the schedule to the Consent Order.

67.  In this respect, she says that the defendants had repeatedly asked the plaintiff to deliver the keys and the Vehicle to the defendants.  Even as late as 6 December 2010, being the last day to comply with the Consent Order, the solicitors for the defendants had requested from the plaintiff’s solicitors the keys and the Vehicle by letter enclosing therewith:

(a) a copy of the Vehicle Registration Document of the Vehicle; and

(b) a Notification of Resignation of Secretary and Director and a Notification of Change of Secretary and Director (Appointment/Cessation) duly signed by her.

68.  Further by a letter dated 15 February 2011, the defendants’ solicitors provided to the plaintiff’s solicitors the Closed Road Permit dated 5 November 2010 to the plaintiff together with a licence.

69.  However, the plaintiff has all along failed to deliver the Vehicle to the defendant to enable the defendants to effect the transfers of the Vehicle and the Permit.  The plaintiff therefore failed to comply with paragraph (d) of the schedule to the Consent Order.

70.  Instead the plaintiff had by letter dated 8 December from the plaintiff’s solicitors requested the defendants to take delivery of the Vehicle from her office in Shenzhen.  That was already more than one month after the Consent Order.

71.  It was unreasonable for the plaintiff to propose to deliver the Vehicle to the defendants in Shenzhen as it would not be able for the defendants to bring the Vehicle back to Hong Kong since Johnny Ng was the approved driver.  The Vehicle should have been delivered to the defendants in Hong Kong by the plaintiff.

72.  Without the Vehicle being delivered to the defendants, it was not possible for the defendants to transfer the Permit to the plaintiff since:

(1) To extend or transfer the Permit, the Vehicle had to be examined by the Guangdong Public Security Bureau in Hong Kong each year.

(2) If the Permit is not extended each year, the Permit will expire and be revoked by the Guangdong Public Security Bureau.

(3) As the plaintiff did not give the Vehicle to the defendants before or after DCCJ 5260/2007, she had made a report to the police in Hong Kong and the Mainland in about 2007‑2008, before the mediation session, that the Vehicle was driven away by Johnny Ng and the defendants cannot locate same.

(4) The police in Hong Kong and Mainland replied to her that it was a family matter and refused to handle the case.

(5) She had instructed an agent named Welf Cheng to request the Guangdong Public Security Bureau to exercise their discretion to extend the Permit without examining the Vehicle.

(6) The Permit expired again on 10 October 2010 but the Guangdong Public Security Bureau refused to exercise discretion a second time to extend.  Therefore she instructed Welf Cheng to transfer the Permit to another vehicle, LX208 owned by the 2^nd defendant.

(7) It took about half a year to complete the procedure of transfer to LX208 which permit was finally issued on 27 October 2010.

(8) Had the plaintiff delivered the Vehicle to the defendants in Hong Kong, the defendants would have been able to transfer the Permit to the Vehicle in the name of the plaintiff thus complying with the Consent Order.

73.  In relation to the letter dated 11 March 2011 from the defendant’s solicitors, she gave evidence that a global settlement had already been reached in the mediation session by the parties and which included DCCJ 5911/2006 which explains the draft consent summons in that letter.

74.  She also said that it is blatantly untrue that the defendants had refused to receive the Vehicle.  It was due to the failure of the plaintiff to deliver the Vehicle to the defendant that prevented the defendant from making the application to transfer the Permit as well as the ownership and use of the Vehicle to the plaintiff.  The defendant had all along been willing to comply with the Consent Order.

75.  It was impossible for the defendant to apply for registration of the Permit in compliance with paragraph (a) to the Schedule of the Consent Order unless and until the plaintiff delivered up possession of the Vehicle to the defendants in compliance with paragraph (d) thereof.  The defendants were not in breach of the Schedule to the Consent Order as the plaintiff failed to meet the pre‑condition by delivering up the Vehicle to the defendants.

76.  The plaintiff’s claim is not sustainable.

Decision

77.  The first issue that needs to be decided is whether the present case should be determined under the terms of the Settlement Agreement or the Consent Order.

78.  In so far as the Settlement Agreement is concerned, it is only clause 1 thereof that has any direct relevance to the present dispute between the parties.

79.  Clause 1 of the Settlement Agreement simply states that the defendants do transfer to the plaintiff the ownership and use of the Vehicle and the Permit and also provides for the defendants to use all means and efforts to assist the plaintiff to transfer the Vehicle and the Permit.

80.  As for the Consent Order, it is only paragraphs (a) and (d) of the Schedule to the Consent Order which has any direct bearing to the present dispute.

81.  Paragraph (a) of the Schedule to the Consent Order basically reiterates clause 1 of the Settlement Agreement in that the defendants are to assist the plaintiff in transferring the Vehicle and the Permit into the plaintiff’s name and for the plaintiff’s use.

82.  Two additional matters mentioned in paragraph (a) of the Schedule to the Consent Order, but which is not stated in the Settlement Agreement, are (1) that the defendants make no admission as to liability; and (2) the transfer of the Vehicle and the Permit into the plaintiff’s name are to be carried out within one month from the date of the Consent Order.

83.  Paragraph (d) of the Schedule to the Consent Order elaborates on the one month period mentioned in paragraph (a) thereof by saying that within that one month the plaintiff is to hand over the Vehicle to the defendants to assist the defendants to apply (for the change of name of the Vehicle and the Permit) and thereafter (no doubt after the change of name has been effected to both the Vehicle and the Permit) to hand back the Vehicle and the Permit to the plaintiff.

84.  There is therefore no inconsistency between the terms of the Settlement Agreement and the terms contained in the Schedule to the Consent Order, albeit that in the Schedule to the Consent Order there was an additional term for the plaintiff to hand over the Vehicle to the defendants within one month of the Consent Order in order to assist the defendants in applying for the change of name to both the Vehicle and the Permit.

85.  That additional term in the Schedule to the Consent Order was not only agreed to by the parties when they signed the Consent Order but must have been intended by the parties to be the way in which the plaintiff would assist the defendants in effecting the change of names to both the Vehicle and the Permit since the terms of the Settlement Agreement made no mention of how the transfer of the Vehicle and the Permit to the plaintiff was to be effected.

86.  Moreover, there is nothing in the wording of the Schedule to the Consent Summons which would suggest that the terms agreed between the parties and contained in the schedule to the Consent Summons had superseded the Settlement Agreement.

87.  It is also trite law that the Consent Order being in the form of a Tomlin Order, the terms contained in the schedule to a Tomlin Order is not, strictly speaking, part of the order, but merely records the terms agreed between the parties thereto by way of settlement.  The order itself merely stays the proceedings for the purpose of carrying out those terms contained in the schedule and agreed between the parties (see Horizon Technologies International Ltd v Lucky Wealth Consultants Ltd (PC) [1992] WLR 24).

88.  In the circumstances therefore, in so far as the present case goes, I find that the terms contained in the Settlement Agreement as well as the terms contained in the Schedule to the Consent Order are all terms agreed between the plaintiff and the defendants with a view to settling their dispute in DCCJ 5260/2007. Thus the Settlement Agreement and the Schedule to the Consent Order have to be read together as being the terms of settlement between the parties.

89.  Therefore to the extent that the defendants are seeking to rely on paragraph (d) of the schedule to the Consent Order as a possible defence to the plaintiff’s claim herein, they cannot be prevented from doing so and I shall come to the merits of such defence later in this judgment when I deal with it.

90.  A further point raised in the evidence of Ng Tsing Yan is that it was wrong of the plaintiff to commence the present action instead of making an application under the Consent Order to enforce the terms contained in the schedule thereto.

91.  That is a bad point and can be dealt with quickly.

92.  The plaintiff’s case is that because of the repudiation (whether of the Settlement Agreement or the Schedule to the Consent Order) by the defendants, the plaintiff has accepted such repudiation and is claiming for damages for such breach.  The plaintiff is not seeking to enforce the terms agreed to and contained in the Schedule to the Consent Order.  The plaintiff is entitled so to do and in claiming damages for breach, it is incumbent upon the plaintiff to commence a fresh action.  It is therefore not res judicata.

93.  The second issue which I have to decide is whether there are any implied terms under the Settlement Agreement and the terms contained in the Schedule to the Consent Order.

94.  In the case of Mackay v Dick [1881] 6 App Cas 251, Lord Blackburn said at page 263:

“I think I may safely say, as a general rule, that where in a written contract it appears that both parties have agreed that something shall be done, which cannot effectually be done unless both concur in doing it, the construction of the contract is that each agrees to do all that is necessary to be done on his part for the carrying out of that thing, though there may be no express words to that effect. What is the part of each must depend on circumstances.”

95.  As to implied terms relating to prevention of performance, the law is stated by Coulson J in the case of Jerram Falkus Construction Ltd v Fenice Development Ltd [2011] EWHC 1935 (TCC) 138 Con LR 21 where he said:

“The essence of the principle is that the promisee cannot insist upon the performance of an obligation which he has himself prevented the promisor from performing.”

96.  Applying the above principles to our present case, the terms in the Settlement Agreement states that the defendants have “to assist by all means and efforts” the plaintiff to transfer the Vehicle and the Permit.

97.  Likewise, in paragraph (a) of the Schedule to the Consent Order, the defendants are to “assist” the plaintiff in transferring the Vehicle and the Permit into the plaintiff’s name.

98.  In paragraph (d) of the Schedule to the Consent Order, it is also stated that the plaintiff is required to assist the defendants by handing over the Vehicle to the defendants to assist the defendants in applying (for change of names) of the Permit.

99.  Therefore it is clear that by agreement of the parties in both the Settlement Agreement and also the Schedule to the Consent Order that they will co‑operate with each other to effect the transfer of the Vehicle and the Permit from the defendants to the plaintiff.

100.  It follows from this that it must be intended by the parties that each of them will do all that is necessary to be done on their parts to effect the transfer of the Vehicle and the Permit from the defendants to the plaintiff.

101.  Accordingly, it must have been intended by the parties that there was such an implied term in the Settlement Agreement and the Schedule to the Consent Order.

102.  It also follows therefrom that there was an implied term that neither party will anything to prevent the other party from carrying out what has to be done by him.

103.  As for the third issue, whether paragraph (d) of the Schedule to the Consent Order was a pre‑condition of the term stated in paragraph (a) thereof, the answer can only be in the affirmative since it was an express stipulation in paragraph (d) that the handing over of the Vehicle by the plaintiff to the defendants was to assist the defendants in applying for the transfer of the Permit from the defendants to the plaintiff.

104.  Dealing now with the fourth issue, I should deal first with the question whether the Vehicle should be handed over by the plaintiff to the defendants in Hong Kong or in Mainland China.

105.  In that respect, it is to be noted that there were no express stipulation contained in the terms of the schedule to the Consent Order as to the place where the plaintiff was to hand over the Vehicle to the defendants pursuant to paragraph (d) of that Schedule.  The only express agreement between the parties was for the Vehicle to be handed over by the plaintiff to the defendants within one month of the Consent Order.

106.  Given that the plaintiff is a Hong Kong resident, the defendants are Hong Kong registered companies and the Vehicle was initially registered with the Hong Kong Transport Department at the outset (but which had also obtained a cross border permit permitting it to be driven across from Hong Kong to Guangdong Province but being restricted to being driven by the approved driver when crossing the border and when being driven in the Mainland), and that the fact that the litigation from which the Settlement Agreement and the Consent Order came about was a litigation brought in the Hong Kong courts, it would appear that the majority of those factors would point to Hong Kong to be the place where the Vehicle had to be handed over by the plaintiff to the defendant in construing the intention of the parties under paragraph (d) of the Schedule to the Consent Order.

107.  A further factor which I take into consideration in construing this aspect of paragraph (d) of the Schedule to the Consent Order is the fact that the words used in paragraph (d) is for the plaintiff to “hand over” the Vehicle to the defendants.

108.  Since the defendants are both companies registered in Hong Kong, the defendants can sit pretty and say to the plaintiff, “We are based in Hong Kong and it is for you to hand over the Vehicle to us”.  Given that scenario, a fortiori it would be for the plaintiff to deliver the Vehicle to the defendants in Hong Kong and not Mainland China.

109.  The contention put forward by the plaintiff that since the Vehicle could not be driven back to Hong Kong due to the fact that the Permit had been transferred to LX208 and that the registration number JN538 had been allotted to some other vehicle by the Transport Department in Hong Kong were matters that were not known to the plaintiff at the time the Consent Order was entered into.

110.  In construing what was the intention of the parties from the words used in the Consent Order, it is the state of mind and the circumstances known to the parties at the time the Consent Order was entered into.

111.  I therefore find that the proper construction to be put on the wording used in the Schedule to the Consent Order, in particular paragraph (d) thereof is that the Vehicle was to be handed over to the defendants in Hong Kong, not Mainland China.

112.  Before I deal with the question whether there was any breach of the Settlement Agreement and/or the terms contained in the Schedule to the Consent Order perhaps it would be better for me to deal with the question whether it was or became impossible for the terms of the Settlement Agreement and the terms contained in the Schedule to the Consent Order to be performed by the parties.

113.  There is no dispute between the parties that performance of the terms contained in both the Settlement Agreement and the Schedule to the Consent Order became impossible.

114.  The only difference between them is that the plaintiff says that performance of those terms became impossible after the Settlement Agreement was reached and which was due to the conduct of the defendants (unknown to the plaintiff at the time of the Settlement Agreement and Consent Order) making it impossible for the plaintiff to carry out his part of what needs to be done.

115.  On the other hand, the defendants say that the impossibility arose when the Settlement Agreement was signed or even before, due to the circumstances which had arisen by the time the Settlement Agreement was signed.

116.  It is therefore crucial in determining this dispute to decide what was the cause of the impossibility of performance and who, if anyone, is to blame for such impossibility.

117.  When the Settlement Agreement was signed on 13 August 2010, it was common ground that the Vehicle was in the physical possession of Johnny Ng in Mainland China for quite a long time.  The evidence of Johnny Ng was that in 2009 he had tried to renew the Permit with the Chinese authorities but was unable to do so therefore since that time the Vehicle had remained with him in Mainland China.

118.  The first step which needed to be done to implement the Settlement Agreement and the terms in the schedule to the Consent Order was for the plaintiff to deliver the Vehicle to the defendants in Hong Kong.  That first step was never carried out and proved to be the stumbling block to the implementation of the Settlement Agreement and the schedule to the Consent Order.

119.  Much time had been spent in cross examination of the various witnesses as to whether it was necessary for the Vehicle to be brought back to Hong Kong for an examination by the Guangdong Public Security Bureau’s authorized car‑examiner in Hong Kong before the Permit could be renewed.  However, since it was agreed by the parties and made a term in the Schedule to the Consent Order that the Vehicle had to be handed over to the defendants by the plaintiff in order to implement the transfer of and the Permit to the plaintiff, it would not be necessary for me to go into the niceties of those arguments.

120.  What then had prevented the Vehicle from being delivered to the defendants in Hong Kong by the plaintiff or by Johnny Ng on behalf of the plaintiff within one month of the Consent Order? There were a number of factors involved:

(1) the registration of the Vehicle with the Transport Department had not been renewed after its expiry in April 2007;

(2) in her cross examination, Mandy Ng accepted that the 2^nd defendant had not renewed the insurance policy of the Vehicle in Hong Kong as well after expiry of the Vehicle’s licence;

(3) the defendants had made a report to the police both in Hong Kong and in the Mainland of the loss of the Vehicle;

(4) the Transport Department in Hong Kong had by 9 March 2009 assigned the number plate JN538 to another vehicle in Hong Kong although this was not known to the plaintiff (and possibly also the defendants) until Johnny Ng was informed of this at Tuen Mun Police station some time in 2011;

(5) the approved driver in relation to the Permit had been changed from Johnny Ng to Tsang King Wah (the maternal uncle of Mandy Ng) since April 2009; and

(6) the Permit was, on the application of the defendants, in the process of being transferred to LX208 at the date of the Settlement Agreement.

121.  The combined effect of those six factors stated above, had the effect of preventing the plaintiff, or Johnny Ng or anyone else from driving the Vehicle back to Hong Kong from the Mainland.

122.  With the exception of factor (4) above, all the other five factors stated above were the result of the act or omission by the defendants.  Since the 2^nd defendant was the registered owner of the Vehicle with the Transport Department in Hong Kong, the duty was upon the 2^nd defendant to renew the vehicle registration of the Vehicle, the expiry was due therefore to the failure of the 2^nd defendant to renew it.  Likewise the renewal of the insurance policy was a matter for the 2^nd defendant as registered owner to deal with.  The report of loss of the Vehicle was a report made by or on behalf of the 2^nd defendant.  Also the applications to change the approved driver of the Permit to Tsang King Wah and the application to transfer the Permit to LX208 were applications made by or on behalf of the 2^nd defendant with the Mainland authorities.

123.  As for factor (4) above, that was likely a direct result of the failure of the 2^nd defendant to renew the vehicle registration of the Vehicle with the Transport Department upon its expiry in April 2007.

124.  As to knowledge relating to the six factors stated above, at the time of the Settlement Agreement on 13 August 2010, the plaintiff through Johnny Ng knew of the report of loss to the Hong Kong police made by the defendants since Johnny Ng was arrested in or about February 2010 and subsequently interviewed under caution by the Hong Kong police in respect of that report of loss made by the defendants.  Johnny Ng and the plaintiff however did not know of the Permit being transferred to LX208 until Johnny Ng was told about it by the defendants when he was corresponding with either Mandy Ng or Tsang Wai Ling in late December 2010.

125.  There is nothing in the evidence to suggest that the plaintiff or Johnny Ng knew of the expiry or non‑renewal of the Licence and the insurance policy covering the Vehicle at the time the Settlement Agreement and the Consent Order was entered into.

126.  It is the evidence of Johnny Ng, which I accept that when he entered into the Settlement Agreement on behalf of the plaintiff, he did not give any thought to the fact that a report of loss of the Vehicle had been made by the defendants and that he had been arrested in February 2010 for that complaint by the defendants since he was only too happy when the Settlement Agreement was reached with the other side believing that the plaintiff would get back the Vehicle and the Permit as a result of such settlement with the defendants.

127.  The fact that Johnny Ng (who was acting on behalf of the plaintiff) did know of the report made to the police of the loss of the Vehicle at the time the Settlement Agreement was entered into (but without knowledge of the other factors) is neither here nor there in so far as his or the plaintiff’s belief that the Settlement Agreement can be implemented since it was always open to the defendants to withdraw such a report of loss made to the police.  That knowledge alone would not have led Johnny Ng or the plaintiff to think that the Settlement cannot be performed at the time it was entered into.

128.  I also accept the evidence of Johnny Ng that it was only in 2011 when alerted by the police in Tuen Mun Police station that he conducted a search in the Transport Department and discovered that the licence number JN538 had been allocated to another vehicle (which has no connection to the parties in this case) in March 2009 by the Transport Department.

129.  On the other hand, the 2^nd defendant must have known or be taken to know about all the factors stated above as being the cause of the impossibility with the exception of the re‑allocation of the licence number JN538 in March 2009 to another vehicle by the Transport Department at the time the Settlement Agreement was entered into on 13 August 2010.

130.  With such knowledge on the part of the 2^nd defendant of those factors causing the impossibility, the defendants nevertheless entered into the Settlement Agreement and later the Consent Order agreeing to the transfer of the Vehicle and the Permit to the plaintiff as well as making it a pre‑condition for the Vehicle to be handed over to the defendants by the plaintiff.

131.  In so doing, the defendants knew or must be taken to know perfectly well that the plaintiff and/or Johnny Ng will not be able to drive the Vehicle (which by then the defendants knew to be in Mainland China) back to Hong Kong due to the acts or omission of the 2^nd defendant.

132.  It therefore lies ill in the mouth of the defendants for them now to say that the plaintiff has failed to comply with paragraph (d) of the schedule to the Consent Order when it was due to the conduct of the defendants that the impossibility of the plaintiff’s carrying out paragraph (d) of the schedule to the Consent Order came about.

133.  The applicable law to such a scenario is quite clear.  A clear statement of general principle can be found in Chitty on Contract, 31^st edn, vol 1, Chapter 24 at paragraph 24‑033 where it is stated:

“It has also been said to be a general principle of law that, where performance of a condition precedent is prevented by the act or default of one party, the contract is taken to have been duly performed by the other even though the condition has not been satisfied. Thus in Mackay v Dick where a contract of sale of goods was subject to a condition precedent to be performed by the buyer, but which he neglected to perform, the seller was held entitled to sue for the price. This principle, however, is by no means always applicable, and the party not in default may be compelled to treat the prevention of performance as a repudiation of the contract and to sue for damages for the breach.”

134.  In the present case, applying that general principle of law to our case, it was by the conduct of the defendants that the plaintiff was prevented from complying with paragraph (d) of the schedule to the Consent Order.

135.  Up to the time of this trial, and even at this moment, the Vehicle and the Permit has not been validly transferred by the defendants to the plaintiff.  The plaintiff has accepted the repudiation of the defendants and is now suing for damages for breach of the Settlement Agreement.

136.  Accordingly, and for the reasons given above, it follows that the defendant must be in breach of the Settlement Agreement as well as the terms contained in the Schedule to the Consent Order and therefore liable to the plaintiff for loss and damage arising from such breach.

137.  Having decided that the defendants are in breach of the Settlement Agreement and the terms contained in the Schedule to the Consent Order for the reasons given above, there remains several loose ends in the evidence in this case which I should tie up.

138.  Firstly, it is part of the plaintiff’s case that it was the understanding between the parties that the way to go about transferring the Permit and the Vehicle from the defendants to the plaintiff was by way of the transfer of shares and directorship in the 2^nd defendant to the plaintiff.

139.  However, there was no express words in the Settlement Agreement (or for that matter in the Schedule to the Consent Order) requiring the transfer of shares in the 2^nd defendant to the plaintiff, and I do not find that to be a term of the settlement agreed between the parties.  Paragraph 5 of the Settlement Agreement only mentions ‘change of Director of the 2^nd defendant’.

140.  Therefore in deciding that the defendants were in breach of the Settlement Agreement, my decision is not founded on this aspect of the plaintiff’s case relating to transfer of shares in the 2^nd defendant, but only for the reasons given above.

141.  Secondly, as for the Closed Road Permit provided by the defendants’ solicitors under cover of a letter dated 15 February 2011, which has been referred to in paragraph 68 above in this judgment, that Closed Road Permit relates to LX208 and therefore would be wholly useless to the plaintiff and Johnny Ng for them to carry out the plaintiff’s part of the Settlement Agreement or the terms contained in the Schedule to the Consent Order.

142.  Thirdly, even as late as 14 October 2010, after the Settlement Agreement had been entered into between the parties, Mandy Ng, on behalf of the 2^nd defendant, wrote a letter to the Meilin Customs in Mainland China in which it was stated that the Vehicle (identified in that letter by its Guangdong licence plate number of “Yue Z8272 Gang”) had been driven by Johnny Ng (referred to in the letter by his Chinese name, Ng Ping Kit) across the border into the PRC on 5 February 2008 and that both the car and the driver were missing and up to now contact is still in vain.

143.  The statement in that letter is totally untrue as was accepted by Mandy Ng in cross examination.  Her explanation was that she was advised by her agent, Mr Cheng, to write that letter to the Meilin Customs and she did so even with full knowledge that such a statement was wholly untrue.  This highlights the lengths that the 2^nd defendant was prepared to go to and possibly also the acrimony and bad blood between the two camps within the family giving rise to this dispute.

Damages

144.  I now turn to deal with the question of damages.

145.  Totally five items of damages were claimed by the plaintiff as pleaded in the particulars to paragraph 15 of the Re‑Amended Statement of Claim.

146.  I have no difficulty in allowing items 3, 4 and 5 being the rental for a cross‑border permit for seven months from December 2010 to July 2011 at HK$8,000 per month, the rental for another vehicle for the same period at HK$4,350 per month, and the cost of the vehicle registration licence at HK$38,000.

147.  The first item of claim is for the value of the Permit.  The amount claimed for this item is HK$907,500.

148.  I was referred in evidence to a number of advertisements in the newspaper which advertised similar cross‑border permits for sale.

149.  This item is contested by the defendants on the basis that there is no market for the sale of cross‑border permits.  While it may be true that such cross‑border permits are no longer sold directly to the public by the Mainland authorities, and that the direct transfer of such cross border permits between individuals cannot be made with the Mainland authorities, the evidence from Johnny Ng is that the transaction pursuant to such advertisements in the newspaper for sale of cross‑border permits are usually carried out by the transfer of shares of the company holding the cross‑border permits for sale.

150.  As such, there is no illegality involved since shares of companies can freely be transferred.  There is also no evidence before me that the sale of cross‑border permits in such a way as described above is illegal under the laws of Mainland China.

151.  From that evidence, I accept that there is a market for the sale of such cross‑border permit.

152.  The advertisements which I have been referred to shows that such a cross border permit going through Huangguang cost in the region of RMB820,000 but as low as RMB640,000 if the permit is for crossing the border through Shenzhen Bay.

153.  The Permit which had been used for the Vehicle at all times was one which permitted the Vehicle crossing the border at Huangguang.

154.  The amount claimed in item 1 is in the sum of HK$907,500 which translates to approximately RMB726,000 using the present rate of exchange.

155.  Accordingly, I have no difficulty in awarding in full the amount claimed by the plaintiff in item 1.

156.  Slightly more complicated would be the claim for item 2 which is a claim for HK$210,500 being the cost of purchasing a similar 2006 model of a Toyota Camry 3.5.

157.  It is the plaintiff’s contention that a sum equivalent to the secondhand value of a similar model of a 2006 Toyata Camry 3.5 should be awarded due to the fact that the Vehicle, although in the physical possession of Johnny (who likely holds it on behalf of the plaintiff) can do nothing with it.  The Vehicle cannot be driven either in Hong Kong or in the Mainland and it cannot be disposed of by the plaintiff since it has always been registered in the name of the 2^nd defendant.  In those circumstances, the plaintiff says that having physical possession of the Vehicle is as good as not having it.

158.  Although the plaintiff through Johnny Ng still retains physical possession of the Vehicle, that Vehicle is nevertheless still registered in the name of the 2^nd defendant, despite the fact that the annual licence registration has not been renewed since April 2007.  Not only that, but that the original registration number has already been re‑allocated by the Transport Department in Hong Kong to another vehicle wholly unconnected with this case or the parties herein.

159.  Therefore the Vehicle cannot be driven in Hong Kong and probably cannot be driven in Mainland China either since the Permit (which includes the Guangzhou licence plate number) had been transferred to LX208.

160.  Nor can the Vehicle be lawfully disposed of by the plaintiff or Johnny Ng despite being in Johnny Ng’s physical possession since the Vehicle is registered in the name of the 2^nd defendant.

161.  I therefore accept the plaintiff’s contention that the plaintiff is entitled to damages being an amount equivalent to the secondhand price of a similar model as the Vehicle.

162.  From the newspaper advertisements which I have been referred to advertising secondhand Toyota cars, the closest one to the Vehicle is an advertisement for a 2006 Toyota Camry 2.4 with an asking price of HK$149,800.

163.  Bearing in mind that advertisement is for a Camry 2.4, but the Vehicle is a Camry 3.5 and balancing that against the fact that the advertisement is but an asking price.  I would assess damages for item 2 to be at HK$150,000 and not the amount claimed by the plaintiff.

164.  Total damages therefore comes to HK$1,181,950.

Order

165.  Accordingly, there will be judgment to the plaintiff against both defendants in the sum of HK$1,181,950.

166.  Interests will be awarded at 1% over prime from the date of the writ to date of judgment and thereafter at judgment rate.

167.  There will be a costs order nisi that the defendants do pay the plaintiff’s costs of this action to be taxed if not agreed.