MUI SO BING v. WAN CHI SHING AND OTHERS

HCA 1698/2017

[2019] HKCFI 595

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1698 OF 2017

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J U D G M E N T

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I. Introduction

1.  This action is concerned with 2 plots of land situated in Sai Kung, New Territories and registered in the name of the 1^st Defendant and the 2^nd Defendant respectively.  The Plaintiff says the 1^st and 2^nd Defendants had sold and she had purchased the 2 plots of land in 2010 and had paid the purchase price in full.  The Plaintiff also says she has paid for the construction of the 2 houses which were subsequently built thereon.  Nevertheless, the land and the houses were never legally assigned to the Plaintiff.  Instead of making a claim based on contract, the Plaintiff asserts that by the operation of a resulting trust, she has obtained proprietary interest in the land and the houses.  The Defendants’ case is that the 1^st and 2^nd Defendants had sold the same to the 3^rd and 4^th Defendants only in 2017 and that they had never sold the land or the houses to the Plaintiff.

II. Basic Facts

2.  This court shall first set out its findings of the undisputed or indisputable facts.

3.  The 1^st plot ie Section A of Lot No 1208 in DD244 is situated at 68A Ho Chung New Village, Sai Kung, New Territories (“Lot A”).  The 1^st Defendant (“Wan Senior”) is and at all material times was the registered owner of Lot A.  The 2^nd plot ie Remaining Portion of Lot No 1208 in DD244 is situated at 68 Ho Chung New Village, Sai Kung, New Territories (“Lot B”).  The 2^nd Defendant (“Wan Junior”) is and at all material times was the registered owner of Lot B.  Lot A and Lot B (collectively “Two Lots”) adjourn one other.

4.  Wan Senior is the father of Wan Junior (collectively “Wans”).  The Wans are indigenous villagers of Ho Chung Village, Sai Kung.  In their witness statements, they both stated their residential address at Lane 8, No 21 Ho Chung Village, Sai Kung, New Territories.

5.  According to a General Power of Attorney dated 26 July 2008, Wan Senior appointed a friend of his Mr Chan Choi Shing (“CS Chan”) to be his attorney in accordance with section 7 of Powers of Attorney Ordinance, Cap 31 (“PAO”).  According to another General Power of Attorney dated 26 July 2008, Wan Junior also appointed CS Chan to be his attorney in accordance with section 7 of PAO (collectively “2008 Powers of Attorney”).  The 2008 Powers of Attorney were prepared by and, on their face, executed before a solicitor Mr Chow Yiu Cheung (“Mr Chow”), then a consultant solicitor with the firm Quan & Co.  Upon the instructions of CS Chan, the 2008 Powers of Attorney were registered in the Land Registry on 5 November 2008.  Mr Chow told this court that, prior to 2008, he had been instructed by CS Chan to carry out some legal work for him.  Mr Chow also told this court he had known the Wans for no less than 18 years.

6.  According to a General Power of Attorney dated 15 February 2011, Wan Senior again appointed CS Chan to be his attorney in accordance with section 7 of PAO.  According to another General Power of Attorney dated 15 February 2011, Wan Junior again appointed CS Chan to be his attorney in accordance with section 7 of PAO (collectively “2011 Powers of Attorney”).  The 2011 Powers of Attorney were also on their face executed before Mr Chow but they were not registered in the Land Registry.

7.  Under the Small House Policy of the Hong Kong Government, the Wans, as indigenous villagers or “Dings”, can apply for a building licence from the District Lands Office to build one village‑type house, commonly known as “Ding House”, on their land.  As is well‑known, under an express term of such building licences, the Dings are, subject to certain exceptions, not permitted to inter alia assign, part with possession or otherwise dispose of their land or any building thereon or enter into any agreement to do so (“Non‑assignment clause”).  One such exception is when the Dings have obtained the prior written consent of the District Lands Office and upon the payment of the requisite land premium (“Exception”).

8.  As evidenced by the building licences dated 15 February 2011 (“Building Licences”), the District Lands Office had indeed granted licences to the Wans to build 1 Ding House each on their land.  The Building Licences were signed by the Wans whose signatures were witnessed by CS Chan. They were of course also signed by a District Lands Officer.  The Building Licences contained the Non‑assignment clause as outlined above.

9.  Pursuant to the Building Licences, 1 Ding House each was built on Lot A and Lot B (respectively “House A” and “House B”, collectively “Houses”).  On 6 July 2015, the District Lands Office issued Letters of Compliance to the Wans (“Letters of Compliance”).  Given the date of the Letters of Compliance, the construction of the Houses must have been completed prior to July 2015.  On 21 August 2015, the Letters of Compliance were registered in the Land Registry.

10.  On or about 18 January 2017, the Wans applied to the District Lands Office for their consent to remove the Non-assignment clause in the Building Licences.  By letters dated 22 March 2017, the District Lands Office demanded the settlement of the land premium as a condition for the giving of consent (“Consent Letters”). On 18 April 2017, the Wans paid HK$1,893,000 and HK$1,806,200 respectively as land premium whereupon consent of the District Lands Office (“Consent”) was deemed to have been given.  On 8 May 2017, the Consent Letters were registered in the Land Registry.

11.  By 2 provisional agreements for sale and purchase dated 11 May 2017 (“Provisional Agreements”), Wan Senior sold Lot A, together with House A, to the 3^rd Defendant (“Mrs Chan”) while Wan Junior sold Lot B, together with House B, to the 4^th Defendant (“Mr Chan”) at the price of HK$12 million each.  It was an express term of each of the Provisional Agreements that the purchase price should be paid in full by 4 instalments:

(1) HK$1.2 million upon signing of the Provisional Agreement;

(2) HK$1.85 million upon signing the formal agreement for sale and purchase on or before 17 May 2017;

(3) HK$4.95 million on or before 15 June 2017; and

(4) HK$4 million upon completion on or before 22 June 2017.

12.  On 9 June 2017, the stamped Provisional Agreements were registered in the Land Registry.

13.  Notwithstanding the express term in the Provisional Agreements and common conveyancing practice, and notwithstanding the fact that Mr and Mrs Chan as well as the Wans were separately legally represented, they did not proceed to sign the formal agreements for sale and purchase.  Nor did completion take place on or before 22 June 2017.  Instead, the parties proceeded directly to execute the deeds of assignment which were dated 17 July 2017 (“Assignments”).  As of now, the Assignments have still not been registered in the Land Registry.

14.  Meanwhile, the Plaintiff had found out about the Provisional Agreements between the Wans and Mr and Mrs Chan.  By letters dated 7 and 10 July 2017, the Plaintiff’s solicitors, Messrs Fung & Fung (“Fung & Fung”), wrote to Mr and Mrs Chan’s then solicitors, the Wans as well as the Wans’ then solicitors, asserting her claim as a prior purchaser and equitable owner of the Two Lots and the buildings thereon.  Fung & Fung threatened legal action.  

15.  On 19 July 2017, the Plaintiff issued the Writ of Summons herein.

III. The Parties’ Respective Cases

The Plaintiff’s Case

16.  The Plaintiff’s pleaded case is that as early as July 2010, she had reached 2 oral agreements, via her brother‑in‑law Mr Tse Hing Chung (“Mr Tse”), with CS Chan as the Wans’ lawful attorney, to purchase Lot A from Wan Senior and Lot B from Wan Junior at the purchase price of HK$4.3 million each (collectively “Oral Agreements”).  The Oral Agreements provided that, apart from the purchase price, the Plaintiff should also pay for the construction costs of the Ding Houses to be built on the Two Lots, the land premium for obtaining the consent of the District Lands Office and the administrative, legal and various miscellaneous costs.  Thereafter, the Wans should cause the legal title of the Two Lots, together with the Houses, to be assigned to the Plaintiff.

17.  In accordance with the Oral Agreements, other than the land premium, the Plaintiff has made full payment to CS Chan as the Wans’ attorney:

(1)   Purchase price — a total sum of HK$8.6 million by 3 instalments:

 i. HK$1 million by cheque dated 21 July 2010;

 ii. HK$5.02 million by cheque dated 27 July 2010; and

 iii. HK$2.58 million by cheque dated 15 April 2011.

(2)   Construction costs — a total sum of HK$3 million (HK$1.5 million for each Ding House) by cheques between 12 February 2011 and 25 January 2013.

(3)   Legal costs and other miscellaneous costs of the building works on the Two Lots — a total sum of HK$441,433 (HK$220,216.5 for Lot A and HK$221,216.5 for Lot B) by cheques between 27 August 2010 and 23 May 2013.

18.  The said payments were all made by Mr Tse (or his company) on behalf of the Plaintiff and are said to be a loan from Mr Tse to her.

19.  It is further the Plaintiff’s pleaded case that, pursuant to the Oral Agreements, the Wans had applied for and obtained the Building Licences and thereafter, began construction work of the Houses.  After the Wans had obtained the Letters of Compliance, in August 2015, CS Chan handed over the keys of the Ding Houses to the Plaintiff and she had been in possession since.  The Plaintiff had also registered herself as the owner of the 2 Houses with the Rating and Valuation Department, paid government rents and rates, opened an account, via Mr Tse, with CLP Power Hong Kong Limited for the supply of electricity to the Houses and registered with the Water Supplies Department and obtained water supplies to the Houses.

20.  The Plaintiff claims she was unaware that the Wans had obtained the Consent or entered into the Provisional Agreements with Mr and Mrs Chan.  The Plaintiff only found out about the Provisional Agreements in early June 2017.

21.  The Plaintiff’s cause of action against the Wans is not framed as a claim in contract as such.  As can be seen from paragraph 35 of the Plaintiff’s Opening Submissions, her legal advisers take the view that parties to an agreement to sell and purchase Ding Houses before the removal of the Non‑assignment clause are prohibited from enforcing the sale and purchase agreement by reason of illegality.

22.  Instead, the Plaintiff relies on 2 pleaded causes of action viz resulting trust and unjust enrichment.

23.  At paragraphs 27 and 28 of the Amended Statement of Claim, the Plaintiff has pleaded that by resulting trust, the Wans hold House A and House B[1] as bare nominees and on trust for her and that they were in wrongful breach of trust for selling them to Mr and Mrs Chan.  

24.  At paragraphs 29A to 29D of the Amended Statement of Claim, the Plaintiff has pleaded that the Wans have been unjustly enriched at her expense and claims HK$10.107 million from Wan Senior and HK$10.1938 million from Wan Junior, being the purchase price of HK$12 million received from Mr and Mrs Chan each, minus the land premium paid to the District Lands Office.  As stated in paragraphs 63 and 67 of Ms Chong’s Opening Submissions, the claim for unjust enrichment is put on the basis of total failure of consideration.

25.  In the prayer for relief, the Plaintiff claims principally for:

(1) A declaration that Wan Senior holds House A and Wan Junior holds House B on trust for the Plaintiff.

(2) An injunction prohibiting the Wans and Mr and Mrs Chan to proceed with the completion of the sale and purchase of House A and House B respectively.

(3) An injunction compelling Wan Senior to transfer the legal ownership of House A and Wan Junior to transfer the legal ownership of House B to the Plaintiff upon reimbursement of the land premium of HK$1,893,000 and HK$1,806,200 respectively by the Plaintiff.

(4) Alternatively, by reason of their unjust enrichment, the sum of HK$10.107 million from Wan Senior and a sum of HK$10.1938 million from Wan Junior.

The Defendants’ Case

26.  As far as the Plaintiff’s claim is concerned, the Wans’ defence consists largely of non‑admissions and denials.  In particular, they

(1) deny having signed the 2008 or 2011 Powers of Attorney and allege their signatures on them have been forged;

(2) deny having authorised CS Chan to enter into the Oral Agreements with anyone or having any knowledge of them;

(3) deny having received via CS Chan or having authorised CS Chan to receive, any payments from the Plaintiff, whether purchase price, construction costs or otherwise, in relation to the Two Lots;

(4) admit having applied for the Building Licences, appointed CS Chan to be their building consultant and built the Houses but deny that was pursuant to any agreement with anyone;

(5) do not admit the Plaintiff was given the keys to the Houses in August 2015 or was ever in possession of them.

27.  Mr and Mrs Chan are husband and wife and are in their late 20s.  At all material times, Mr Chan assisted in his father’s business while Mrs Chan was a housewife.  They did not know the Plaintiff, and, as far as the Plaintiff’s claim is concerned, their pleaded defence is one of non‑admissions.

28.  The Defendants’ case is that by the Provisional Agreements, the Wans had sold the Houses to Mr and Mrs Chan and that, by 11 July 2017, each of Mr and Mrs Chan had paid and each of the Wans had received the purchase price of HK$12 million in 4 stages.[2] The Assignments were also duly signed and sent to the Wans’ solicitors and were pending registration. The source of Mr and Mrs Chan’s funding was in fact from Mr Chan's father (“Chan Senior”) but that does not detract from the fact that Mr and Mrs Chan had purchased the Houses and paid for them.

IV. The Issues and Witnesses  

29.  The key issues in dispute in this case are:

(1) Whether the 4 sets of Powers of Attorney were signed by the Wans and whether CS Chan was duly authorized by the Wans to enter into the Oral Agreements with the Plaintiff and carry out their terms as alleged? (“Issue 1”)

(2) The existence and the terms of the Oral Agreements and the amount of the Plaintiff’s payments, if any, under them? (“Issue 2”)

(3) Whether the Plaintiff has any equitable proprietary interest in the Houses by way of resulting trust? (“Issue 3”)

(4) Whether the Plaintiff has prior equitable proprietary interest in the Houses vis-à-vis Mr and Mrs Chan or whether Mr and Mrs Chan are bone fide purchasers of the Houses for value without notice of the Plaintiff’s alleged interest? (“Issue 4”)

(5) Whether the Plaintiff is entitled to any remedy against the Wans for unjust enrichment and the amount of the unjust enrichment? (“Issue 5”)

30.  At trial, the Plaintiff called 3 witnesses:

(1) The Plaintiff herself.

(2) Mr Chow.

(3) CS Chan who testified in answer to a Writ of Subpoena.  His testimony was principally on the matters pleaded in paragraphs 9, 13 and 14 of the Amended Statement of Claim for which leave to issue the Writ of Subpoena was granted ie the Plaintiff’s payment to him of the purchase price, construction costs and various legal costs and miscellaneous costs of the building works.

31.  At trial, all the Defendants testified.  

32.  In addition, the Defendants called a Mr Lee King Man (“Mr Lee”).  Mr Lee is the middleman who introduced the Houses to Chan Senior and Mr and Mrs Chan.  According to Mr Lee, he was nearly 100% involved in the sale and purchase transaction between the Wans and Mr and Mrs Chan. 

33.  Mr Lee is a friend of Wan Junior.  According to him, he had lent HK$20 million to Wan Junior in about October 2015 (“Loan”), half of which was guaranteed by Wan Senior.  Mr Lee is also a friend of Chan Senior.  Mr Lee was aware that Chan Senior was looking for a property for Mr and Mrs Chan’s self‑use.  He also knew the Wans intended to sell the Houses in order to repay the Loan.  He therefore informed Chan Senior about this.  When Mr and Mrs Chan expressed an interest, he took them to inspect the Houses a number of times between April and June 2017.

34.  This court has carefully considered the testimony, as well as the demeanour, of all witnesses, and assessed it against the documentary evidence and the known and undisputed circumstances of this case.  This court has in particular considered the inherent probabilities or otherwise of the witnesses’ testimony and assessed their credibility accordingly in order to resolve, in so far as the same is necessary, the material factual disputes between the parties.  

35.  But at the outset, this court wishes to make a few general observations about Mr Lee and Mr and Mrs Chan.

36.  Mr Lee is a straightforward witness.  He testified clearly and firmly.  His recollection of events is clear and his answers to questions are mostly direct and prompt.  His credibility has withstood the test of cross‑examination.

37.  Mr Chan and Mrs Chan’s testimony is mostly uncontroversial.  Their involvement in the present case was limited to inspection of the Houses on a number of occasions, the signing of the Provisional Agreements and other conveyancing documents and the payment of the purchase price by stages (with Chan Senior's money).  Although Ms Chong tried to discredit them and queried their source of funding and suggested that they were not bona fide purchasers for value without notice, this court finds both of them truthful witnesses. Their credibility has withstood the test of cross‑examination.

38.  As for the other witnesses, their credibility will be considered when this court makes the relevant findings of fact below.

V. Validity of the Powers of Attorney and CS Chan’s authority

39.  The Plaintiff’s claim depends on inter alia CS Chan being the lawful attorney of the Wans and was duly authorised to enter into the Oral Agreements on their behalf.  This raises the following factual/legal issues:

(1) Whether the Wans did sign the 2008 and 2011 Powers of Attorney and were legally bound by them?

(2) What was CS Chan authorised to do on behalf of the Wans under the 2008 and 2011 Powers of Attorney?

40.  In their Defences and witness statements, both the Wans denied having signed the 2008 and 2011 Powers of Attorney.  They suggested that their signatures on them were forged and had reported the matter to the police.

41.  When testifying in court, Wan Senior admitted the signature on the 2008 Power of Attorney was his and the ID card number on it was also his.  As for the 2011 Power of Attorney, Wan Senior insisted he had not signed it and suggested it was CS Chan who forged his signature on it.  Wan Senior also accused Mr Chow of lying to this court when he said the 2011 Power of Attorney was signed in front of him.

42.  When testifying in court, Wan Junior retracted from his pleaded case and his witness statement and admitted the signature and the ID card number on the 2008 and 2011 Power of Attorney were his.  Wan Junior however insisted that he did not sign the 2008 and 2011 Power of Attorney in front of Mr Chow — instead, it was CS Chan who gave the documents for him to sign.  

43.  Even without their retraction, this court has no difficulty in finding that the Wans did sign the 2008 and 2011 Powers of Attorney in front of Mr Chow in the circumstances set out in his witness statement.  

44.  Mr Chow’s evidence was that he was the one who prepared the 2008 Powers of Attorney, he had confirmed with the Wans their intention to give full authority to CS Chan to deal with the development and sale of the Two Lots, the 2008 Powers of Attorney were signed by the Wans in front of him and he also signed on them as a witness.  As for the 2011 Powers of Attorney, Mr Chow’s evidence was to similar effect save that by then, he was the sole proprietor of his own law firm and that the 2011 Powers of Attorney were signed by the Wans in a seafood restaurant in Sai Kung when CS Chan was also present.

45.  This court finds Mr Chow a credible witness and accepts his testimony as truthful.  He gave his evidence clearly and calmly and his response to questions were prompt and direct.  His credibility was not shaken by cross‑examination.  Nor can this court see any reason why Mr Chow would lie about this matter.  He had known both the Wans and CS Chan for years and no one suggests he had a personal interest in the outcome of this case.  There is also nothing inherently improbable for Mr Chow to have confirmed with the Wans their intention to give full powers to CS Chan to deal with the Two Lots when they signed the documents.  Mr Chow is an experienced solicitor — there is no reason why he would not have taken the fairly simple step of confirming Wans’ instructions before asking them to sign.

46.  Importantly, the title deeds relating to the Two Lots were at the material time in the possession of CS Chan who later passed them to Mr Chow for safekeeping.  Indeed, during cross‑examination, Wan Senior admitted it was he who gave the title deeds to CS Chan.  This rather supports the fact that the Wans’ intention was all along to give full authority to CS Chan to deal with the sale of the Two Lots on their behalf and amply explains their execution of the 2008 and 2011 Powers of Attorney in favour of CS Chan.  Lastly, if Wan Junior had admittedly signed both the 2008 and 2011 Powers of Attorney, why would Wan Senior only sign the one but not the other?

47.  In light of all the above, in so far as the Wans deny signing the 2008 and 2011 Powers of Attorney in front of Mr Chow or deny having any intention to give full powers to CS Chan to deal with the Two Lots when they signed the Powers of Attorney in question, this court rejects their evidence as utterly untruthful.

48.  As a general observation, this court does not find either Wan Senior or Wan Junior a credible witness.  Their various denials concerning the 2008 and 2011 Powers of Attorney and their assertion of forgery is a clear example of how unreliable their evidence is.  While testifying in court, Wan Senior persisted in his accusation against CS Chan of forgery and went on to accuse Mr Chow of perjury, both accusations this court finds wholly unjustified.  In Mr Sio’s Closing Submissions, the allegations of forgery and perjury are effectively abandoned.

49.  Further, Wan Senior’s and Wan Junior’s evidence is at times self‑contradictory and at times contradicted by contemporaneous documents.  For example, at paragraph 13 of Wan Senior’s and at paragraph 11 of Wan Junior’s witness statement, they both said they did not go to the Sai Kung District Lands Office on 15 February 2011 with CS Chan.  But if one looks at the Building Licences themselves, they clearly show the Wans signed on them and their signatures were witnessed by CS Chan.  The Building Licences were also signed by a District Lands Officer and were dated 15 February 2011.  It seems to this court the inherent probabilities are that the Wans did go to the Sai Kung District Lands Office on or about 15 February 2011 to sign the Building Licences in the presence of CS Chan and then met up with Mr Chow for the purpose of signing the 2011 Powers of Attorney, as stated in Mr Chow’s statement, and shall so find.

50.  If, as found by this court, the Wans did execute the 2008 and 2011 Powers of Attorney in favour of CS Chan, then, as a matter of law, they must be legally bound by them.

51.  It is well‑settled that a person of full age and ordinary understanding is normally bound by his signature to a document, whether he bothers to read or try to understand it or not: Ming Shiu Chung v Ming Shiu Sum (2006) 9 HKCFAR 334 at [84]‑[87].  

52.  In Bank of China (Hong Kong) Ltd v Fung Chin Kan & Anr (2002) 5 HKCFAR 515 at [51], Litton NPJ acknowledged:

“ … the fundamental principle that, generally speaking, when a person signs a legal document, he or she is bound by the act of signature: As a matter of general law, it is no defence to say that he or she did not understand the contents of a legal document; that person takes the chance of being bound by its terms, as he or she can take the simple precaution of not signing until its contents have been fully explained and understood.”

53.  Section 7(1) of PAO provides that:

“ Effect of general power of attorney in specified form

(1) Subject to subsection (2), a general power of attorney in the form set out in the Schedule, or in a form to the like effect but expressed to be made under this Ordinance, shall operate to confer—

(a) on the donee of the power; or

(b) if there is more than one donee, on the donees acting jointly or acting jointly or severally, as the case may be,

authority to do on behalf of the donor anything which he can lawfully do by an attorney.”

54.  Both the Wans testified that they only authorized CS Chan to be their building consultant to manage the construction of the Houses and related legal matters, including the application for the Building Licences, and said they had not authorized him to sell the Two Lots or the Houses.  This court does not find their testimony credible.  In particular, the Wans had failed to explain why CS Chan was in possession of the title deeds if all he was instructed to do was to manage the construction of the Houses.  But in any event, as found by this court, the Wans had signed the 2008 and 2011 Powers of Attorney and their legal effect is clearly set out in s 7(1) of PAO ie CS Chan had authority to do on behalf of the Wans anything which they could lawfully do by an attorney.

55.  What Mr Siu seeks to argue on behalf of the Wans in paragraphs 14 and 15 of his Closing Submissions is this.  The alleged Oral Agreements were entered into between the Plaintiff (via Mr Tse) and CS Chan in July 2010 whereas the Wans paid the land premium and obtained the Consent only in 2017.  Hence, at the time of the alleged Oral Agreements, the Consent had yet to be obtained — the act of selling the Two Lots in July 2010 without paying the land premium and obtaining the Consent was illegal and hence beyond the scope of CS Chan’s authority as granted to him by the Powers of Attorney.

56.  No authority was cited by Mr Siu in support of his argument.  On the contrary, there are authorities which positively contradict it.

57.  In Li Pui Wan v Wong Mei Yin [1998] 1 HKLRD 84 at 88H to 89F, Chan CJHC observed:

“ LEGALITY OF THE CONTRACT

The main issue raised by Mr Wong in the cross appeal, which he also raised as a point of law before the trial judge, is that the parties were in breach of the conditions of grant by entering into the transaction prior to obtaining government approval and before paying the premium. Therefore, the transaction was not in accordance with public policy and the court should deem it illegal and not enforceable.

The trial judge cited the English authorities Euro‑Diam Ltd v Bathurst [1990] 1 QB 35 and Edler v Auerbach [1950] 1 KB 359 from the English Court of Appeal, and concluded as follows:

‘ In my view, the agreement between the plaintiffs and the defendant is merely an agreement for sale and purchase of real estate and is therefore not ex facie illegal. The transaction was in breach of the conditions of grant, but did not involve any criminal or illegal act. The government could only regard the above breach of conditions of grant as a breach of contract, and is entitled to re‑enter upon the land. This breach is in no way different from any civil breach in general. Further, the government would normally raise no objection to the assignment of interest in small house so long as the grantee(s) paid the premium…’

…

Counsel Mr Wong submitted that two aspects in the trial judge’s conclusion were incorrect: First, the breach of conditions of grant should not be deemed as an ordinary civil breach. Secondly, no conclusion should be made in the absence of substantial evidence that the government would normally raise no objection to the assignment of interest in small house so long as the grantee(s) paid the premium.

…

In our opinion, counsel’s argument lacks a factual basis, and is also confusing on legal principles.”

58.  At 89I‑90A, the learned CJHC continued:

“ The purpose of granting of land by the government in accordance with Chinese customary law with additional terms and conditions to New Territories male indigenous villagers is to provide some of the New Territories residents with special care. This situation differs greatly from the principles in the law of contract where the court refuses to make orders to enforce certain contracts because they are against public policy upon formation or performance. The granting of land by the government to indigenous villagers who are male descendents is a measure made under special circumstances. It has nothing to do with the principle under which by virtue of public policy, certain contracts are found illegal by the court. In our view, such measure adopted by the government in the granting of land should not be regarded as a public policy, and is quite different from the principle in common law which requires the court of law to uphold public policy.”

59.  Lastly, at 90E‑I, Chan CJHC concluded as follows:

“ As can be seen from the contract and agreement produced, the parties did not intend to breach the conditions of grant. It can only be regarded as technically ‘jumping the gun’…

Obviously, the contractual parties agreed that the sale and purchase would not be completed until formalities of application to the government for assignment were complete and the premium paid. The parties had no intention of completing the transaction prior to obtaining approval for assignment or payment of premium from the government. In our view, even if government approval had not been given and the amount of premium not settled at the time of formation of the contract, the parties did have the intention to complete the sale and purchase in accordance with the terms and conditions set down by the government. In the circumstances, this transaction of sale and purchase is not against public policy.” (emphasis added)

60.  Li Pui Wan v Wong Mei Yin was applied in a subsequent Court of Appeal decision in Lau Kwai Kiu v Bian Xintian [2012] 2 HKLRD 954 at [62].

61.  It is true that, before the payment of land premium to the Government, CS Chan, on behalf of the Wans, indeed sold the Two Lots to the Plaintiff and built the Houses with the intention to convey them to the Plaintiff.  But according to the terms of the Oral Agreements, the Plaintiff also agreed to pay the land premium in return for removing the Non‑assignment clause in the Building Licences prior to the transfer of the legal title of the Houses to her.  In this regard, the Plaintiff’s intention to pay the land premium is corroborated by Mr Chow who testified that after the Letters of Compliance had been issued in 2015, he met the Plaintiff (together with CS Chan and Mr Tse) for the second time.  At that meeting, CS Chan said to Mr Chow that after paying the land premium, he and the Plaintiff would arrange for a solicitor to handle the legal assignment of the Houses.

62.  The present case is therefore similar to Li Pui Wan v Wong Mei Yin in that the evidence did not suggest the existence of any intention on the part of the Plaintiff or CS Chan to cheat the Hong Kong Government by not paying the land premium eventually.  Like Li Pui Wan v Wong Mei Yin, this is technically a case of “jumping the gun”.  This court is of the view that the Oral Agreements were not illegal and CS Chan was acting within the lawful authority granted to him by the Wans in entering into the Oral Agreements with the Plaintiff.

VI. The Oral Agreements and the Payments

63.  The existence and the terms of the Oral Agreements are supported by the testimony of the Plaintiff and corroborated by that of CS Chan.  The Plaintiff also confirmed that it was Mr Tse who negotiated the terms of the Oral Agreements on her behalf, although in court she did not use the term “agent” to describe Mr Tse.  Further support of the Oral Agreements can be found in Mr Chow’s testimony — Mr Chow told this court that when he met the Plaintiff (together with CS Chan and Mr Tse) for the second time in 2015, CS Chan told him that, from then on, he would no longer be keeping the title deeds of the Two Lots on behalf of CS Chan, but rather on behalf of the Plaintiff.[3] As this court mentioned earlier, on that occasion, CS Chan also told Mr Chow that after paying the land premium, he and the Plaintiff would arrange for a solicitor to handle the legal assignment of the Houses.

64.  This court finds the Plaintiff and CS Chan credible witnesses and has no difficulty in accepting their evidence in this regard.  Indeed, in his Closing Submissions, all Mr Sio did was to make a bare assertion, at paragraph 16, that “there is no evidence supporting the sales and purchases of either the lands [sic] or the houses”.  There was no attempt at all by Mr Sio to persuade this court to reject either the Plaintiff’s or CS Chan’s testimony as unbelievable.  At most, what Mr Sio could say was that “there is no evidence of written agreement supporting the sales and purchases of either the lands [sic] or the houses” since the 2 written agreements pleaded in the Amended Statement of Claim were unstamped and held inadmissible. But that is irrelevant for the present purpose since the Plaintiff is not suing on the 2 written agreements.

65.  As for the payments by Mr Tse on behalf of the Plaintiff to CS Chan pursuant to the Oral Agreements, they are amply supported by documentary evidence ie cheques issued by Mr Tse or his company, bank statements and a written summary (“Summary”) prepared by CS Chan with cheque numbers handwritten by Mr Tse.  The payments were for the purchase of the Two Lots, the construction fees, legal costs and miscellaneous expenses for the construction of the Houses, as confirmed by the Plaintiff.  The total payments as stated in the Summary were HK$12,041,433 ie HK$6,020,216.50 for Lot A and HK$6,021,216.50[4] for Lot B.  CS Chan corroborated the Plaintiff’s evidence.  He confirmed that he received, either directly or through his company, those payments and confirmed that the money was put to use for the purposes stated in the Summary.

66.  To conclude, this court is satisfied that the Plaintiff has proved on balance of probabilities her case of the Oral Agreements and the payments made thereunder to the tune of HK$12,041,433.  For the avoidance of doubt, in so far as Mr Siu submits that the Plaintiff has not made any payments at all because all the monies came from Mr Tse, the submission is wholly misconceived and must be rejected.  It is true that according to the Plaintiff’s evidence, which this court accepts, the source of her funding was indeed Mr Tse but that was a loan from Mr Tse to her.  It is a complete non sequitur to suggest that, because the Plaintiff had borrowed from Mr Tse in order to make the payments under the Oral Agreements, she had made no payments at all under the Oral Agreements.  Equally, in so far as Mr Siu queried in his Closing Submissions that some of the payments were not justified or were not sufficiently supported by documentary evidence, this court has no hesitation in rejecting his submission.

VII. Resulting Trust

67.  In Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669 at 708A‑D, Lord Browne‑Wilkinson set out the law in these terms:

“ Under existing law a resulting trust arises in two sets of circumstances: (A) where A makes a voluntary payment to B or pays (wholly or in part) for the purchase of property which is vested either in B alone or in the joint names of A and B, there is a presumption that A did not intend to make a gift to B: the money or property is held on trust for A (if he is the sole provider of the money) or in the case of a joint purchase by A and B in shares proportionate to their contributions. It is important to stress that this is only a presumption, which presumption is easily rebutted either by the counter‑presumption of advancement or by direct evidence of A’s intention to make an outright transfer … (B) Where A transfers property to B on express trusts, but the trusts declared do not exhaust the whole beneficial interest ... Both types of resulting trust are traditionally regarded as examples of trusts giving effect to the common intention of the parties. A resulting trust is not imposed by law against the intentions of the trustee (as is a constructive trust) but gives effect to his presumed intention.”

68.  Applying the definition of resulting trust set out by Lord Browne‑Wilkinson above, it is difficult to see how the Plaintiff can establish any equitable proprietary interest in the Houses by way of resulting trust.

69.  First, there was no transfer of the Houses by the Plaintiff to the Wans on express trusts: therefore, a resulting trust of type (B) above cannot possibly arise.

70.  At paragraph 53 of her Closing Submissions, Ms Chong submitted that the present case is type (A) resulting trust as defined by Lord Browne‑Wilkinson and that the Plaintiff had to prove:

“ (i) She made voluntary payments to the 1^st and 2^nd Defendants for the purchase of the 2 Houses vested in the name of 1^st and 2^nd Defendants; and

(ii)   It was the parties’ common intention that the 2 Defendants should hold the 2 Houses for the Plaintiff until the passing of the legal title.”

71.  At paragraph 54 of her Closing Submissions, Ms Chong further submitted that the Plaintiff had proved her case with the following evidence:

“ (i) The Plaintiff had via her agent Tse Hing Chung made payments to the agent of the 1^st and 2^nd Defendants, Chan Choi Shing;

(ii) It was not an outright gift to the 2 Defendants. The payments were premised on the agreement and common understanding between the Plaintiff and the 2 Defendants acting via their agent Chan Choi Shing that the money would be used to improve the lands by building 2 Houses.

(iii) Chan Choi Shing indeed applied the money towards the permanent improvement of the lands by building 2 Houses;

(iv) It was the common intention of the Plaintiff and the 1^st and 2^nd Defendants, acting via their agent Chan Choi Shing, that the 2 Defendants would hold the 2 Houses on trust for the Plaintiff until the transfer of legal title;

(v) Pursuant to the common intention:

i. the originals of the Building Licence and Letters of Compliance were passed to the Plaintiff from the 2 Defendants via Chan Choi Shing;

ii. the title deeds of the lands were passed from the 2 Defendants via Chan Choi Shing to the Plaintiff and deposited with the solicitor of the Plaintiff Messrs YC Chow & Co and later Messrs Fung & Fung;

iii. the Letters of Compliance were registered by the Plaintiff against the lands and the registration fee paid by her;

iv. the keys of the 2 Houses were passed to the Plaintiff;

v. it was the Plaintiff who applied to register the 2 Houses for rent and rates payments and for electricity and water supplies, whereas the 2 Defendants did nothing consistent with their ownership of the 2 Houses after completion of the 2 Houses; and

vi.  the Plaintiff employed a watchman to guard the 2 Houses.”

72.  With respect, Ms Chong’s aforesaid analysis and submissions on resulting trust are wholly misconceived.  In this court’s view, the Plaintiff cannot bring herself within type (A) resulting trust and claims equitable proprietary interest in the Houses at all.

73.  As to the first part of type (A) resulting trust ie voluntary payment to the Wans, one must immediately point out that Ms Chong is not claiming for the Plaintiff a resulting trust in respect of the money paid to CS Chan as agent of the Wans — she is claiming a resulting trust in respect of the Houses which means she has to fall back on the second part of type (A) resulting trust by establishing that the Plaintiff had paid for the purchase of property which was vested in the Wans alone.  But on the evidence, the Plaintiff has neither paid for the purchase of the Two Lots nor the Houses which were then vested in the Wans.  The Wans were already the owners of the Two Lots well before the Oral Agreements.  What the Plaintiff had done under the Oral Agreements was to cause to be built the Houses on the Two Lots — she had not separately paid for the purchase of the Houses which were then vested in the Wans.  

74.  It seems to this court what Ms Chong sought to contend for at paragraphs 53 and 54 of her Closing Submissions is a hybrid form of type (A) resulting trust and common intention constructive trust, without adequately analysing the conceptual and legal requirements of the two different types of trust and without sufficient regard to whether the evidence supports either type of trust.  As far as type (A) resulting trust is concerned, this court has already explained why Ms Chong’s reliance on it must fail.  As far as common intention constructive trust is concerned, it was not pleaded and Ms Chong is simply not entitled to rely on it in her Closing Submissions under the Section on “Resulting Trust” as if it were a specie of it.

75.  Time and again, the Court of Final Appeal has stressed the fundamental importance of pleadings to enable every procedural facet of the adversarial system to operate fairly.

76.  In Sinoearn International Ltd v Hyundai‑CCECC Joint Venture (2013) 16 HKCFAR 632, Ribeiro PJ observed at [30]‑[31] and [34] as follows:

“ 30. …A party must raise all the issues he wishes to raise to be dealt with at the trial. Parties are not entitled to have issues recently thought up dealt with separately and piecemeal. The other party is entitled to know from a clear pleading what is the entire case he has to meet so that he can decide whether particulars should be sought; how he should plead in response; what discovery he is entitled to; what evidence he should adduce to meet it; and what points of law should be taken. ...

31. Where a late attempt is made to introduce a new case, it is doubly important that the other side should have a clearly pleaded draft amendment so that proper consideration can be given as to whether objections should properly be made to such amendment and whether an adjournment should be sought.

…

34. Pleadings are not mere formalities. They impose a necessary discipline and are fundamental to enabling every procedural facet of the adversarial system to operate fairly.” (emphasis added)

77.  Again, in Kwok Chin Wing v 21 Holdings Limited (2013) 16 HKCFAR 663 at [21]‑[23], Ma CJ stressed the unacceptability of allowing unpleaded issues to be raised out of evidence.

78.  In her Closing Submissions, Ms Chong relied on 2 cases in support of her contention for the existence of a resulting trust in favour of the Plaintiff.  In this court’s view, neither case assists Ms Chong.

79.  In Kan Wai Chung v Hau Wun Fai [2016] 1 HKLRD 632, one of the preliminary issues to be tried was this: whether the Plaintiffs (Dings) have any interest in the Land Lots and if so, what interest, having regard to the uncontroversial facts that:

(1) the Land Lots were transferred or caused to be transferred to the Plaintiffs from the 1^st and 2^nd Third Parties (property developers) without consideration;

(2) the Ding houses were built and erected on the Land Lots by and at the costs of the 1^st and 2^nd Third Parties;

(3) the payment of premiums for uplifting the non‑alienation clauses in the building licences upon which the Government consented to the sale and purchase of the Land Lots were made by the 1^st and 2^nd Third Parties; and

(4) the Plaintiffs had declared in the Cooperation Agreements that they held the Land Lots upon trust for the 1^st Third Party.

80.  On these simple facts, the Court held at [48] that the Developers had retained a beneficial interest in the Land Lots by operation of law under a resulting trust and that the Plaintiffs were mere nominees holding the legal title of the Land Lots on trust for the Developers.  The reasoning of the Court can be found at [46] of the Judgment and is hardly controversial:

“ 46. Thus, a transferor claiming beneficial interest under a resulting trust is only required to prove that he transferred or caused to be transferred a property to the transferee without consideration from the latter … Once he shows that the transfer is voluntary, the burden is shifted to the transferee to show that the transfer was intended to be an outright gift, either by legal presumption or by proof of actual intention. In the instant case, the relationship between [the Developer] and the Plaintiffs do not give rise to a presumption of advancement. In Tinsley v Milligan, it was the legal owner who pleaded and relied upon the illegality. The House of Lords held that was impermissible. The House of Lords also held that the beneficial owner who established a resulting trust by contributing to the purchase price of the property without relying on the illegality was entitled to claim her beneficial interest in the property. In this respect, [the Developer] is in a much stronger position than the defendant in Tinsley v Milligan because the Land Lots were transferred or caused to be transferred by [the Developer] to the Plaintiffs without any monetary consideration.” (emphasis added)

81.  Hence, what appeared from the facts of Kan Wai Chung v Hau Wun Fai is a straightforward type (A) resulting trust — a resulting trust arose in that case in favour of the Developers since they had transferred or caused to be transferred the Land Lots to the Plaintiffs without consideration.

82.  In Lau Kwai Kiu v Bian Xintian supra, the deceased X was granted a Lot of land in the New Territories under a private treaty by paying a premium to the Government.  The trial Judge accepted that X had received the funds for this purpose from the plaintiff, as X had agreed to apply for the grant in exchange for HK$100,000 from the plaintiff.  A house was subsequently built on the Lot (“Property”).  The trial Judge also accepted that the plaintiff had paid the construction costs.  After a certificate of compliance had been issued, the plaintiff and her family moved in and have been residing there since.  The terms of the grant prohibited X from alienation without first paying an additional premium.  The additional premium was never paid and X never applied to the Government to “formally” transfer the Property to the plaintiff as agreed.

83.  The trial Judge found the plaintiff was the beneficial owner of the Property pursuant to a common intention constructive trust and/or resulting trust.  Essentially, the plaintiff relied on her payment of the premium and construction costs.  That finding was upheld by the Court of Appeal.  As far as resulting trust is concerned, the fact that the plaintiff paid for the grant of the Lot to X again shows that this is a classic type (A) resulting trust situation in which the plaintiff paid for property which was then vested in X alone.

84.  To conclude, this court is not satisfied that the Plaintiff has established any equitable proprietary interest in the Houses by virtue of resulting trust.  Given this court’s ruling against the Plaintiff on Issue 3, Issue 4 becomes wholly academic and it is neither necessary nor fruitful to dwell on it.  Suffice it to say that according to Ms Chong’s Closing Submissions, there is no challenge to the validity of the Provisional Agreements as such. Indeed, Ms Chong accepted at paragraph 59 of her Closing Submissions that, as a matter of law, upon signing the Provisional Agreements, the Wans became bare trustees of the Houses for Mr and Mrs Chan pending formal completion. Further, in view of paragraphs 93 and 94 of Ms Chong’s Closing Submissions, it would appear the Plaintiff did not seriously challenge Mr and Mrs Chan's evidence that they had paid the entire purchase price, albeit it is Ms Chong’s contention that they have not yet acquired the legal title to the Houses as there was no formal completion and/or that they are not bona fide purchasers for value without notice. But since the Plaintiff has failed to establish any equitable proprietary interest in the Houses by virtue of resulting trust in the first place, it is immaterial whether Mr and Mrs Chan had or did not have the requisite notice of the Plaintiff’s alleged equitable proprietary interest.

85.  In these circumstances, this court should go straight to the Plaintiff’s alternative claim in unjust enrichment against the Wans.

VIII. Unjust Enrichment

86.  In Shanghai Tongi Science & Technology Industrial Co Ltd v Casil Clearing Ltd (2004) 7 HKCFAR 79 at [66]‑[68], [75] and [79], Ribeiro PJ summarised the principles of unjust enrichment in the context of a restitutionary claim for total failure of consideration as follows:

“ 66. The common law cause of action asserted by the plaintiff for money had and received where consideration has totally failed is now generally regarded as a species of claim for restitution based upon principles of unjust enrichment: see eg, Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32 at pp 61-64; Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at pp 255-257; Australia and New Zealand Banking Group Ltd v Westpac Banking Corp (1988) 164 CLR 662 at p 673; David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 at p 375; cf Gummow J’s views in Roxborough v Rothmans of Pall Mall (2001‑2002) 208 CLR 516 at p 543 et seq, discussed in Birks, “Failure of consideration and its place on the map” (2002) 2 OUCLJ 1; and in Beatson and Virgo, “Contract, unjust enrichment and unconscionability” (2002) 118 LQR 352.

67. A useful framework for approaching such claims which was adopted by both parties involves asking four questions:

(a) Was the defendant enriched?

(b) Was the enrichment at the plaintiff’s expense?

(c) Was the enrichment unjust?

(d) Are any of the defences applicable?

68. This approach was evolved and is generally accepted in academic writings: see eg, Birks, An Introduction to the Law of Restitution, (1989 Rev ed) chap 1; Burrows, The Law of Restitution, (2^nd ed, 2002), p 15; Goff & Jones: The Law of Restitution (6^th ed, 2002) §1-016; and Hedley and Halliwell, The Law of Restitution, (2002), §1.16; Virgo, The Principles of the Law of Restitution (1999) p 9. It has received substantial judicial support and will be adopted in this judgment: see eg, Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548 at pp 559 and 578; Commissioner of State Revenue (Vict) v Royal Insurance Australia Ltd (1994) 182 CLR 51 at p 75; Banque Financière de la Cité v Parc (Battersea) Ltd [1999] 1 AC 221 at pp 227 and 234; and Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349 at pp 408.

…

75. Tongji’s case on total failure of consideration is put on the basis that it made payment to Casil in anticipation of a contract which did not materialise. The principle relied on is summarised in Goff & Jones: The Law of Restitution (6^th ed, 2002) at §26‑006, as follows:

‘ A plaintiff may have made a payment in anticipation that a contract will soon be concluded; if the parties fail to contract he may be able to recover the payment on the ground of total failure of consideration. In this context the claim is that the consideration is the expected formation of the contract.’

…

79. “Consideration” in the context of a restitutionary claim based on total failure of consideration is the anticipated performance for which the money was paid, or the “basis or purpose” of the payment: see Birks, An Introduction to the Law of Restitution, (1989 Rev ed) pp 223-226 and “Failure of consideration and its place on the map” (2002) 2 OUCLJ 1 at pp 3-4; Burrows, The Law of Restitution (2^nd ed, 2002), pp 324‑326. Thus, in Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32 at p 48, Viscount Simon LC stated:

‘ In English law, an enforceable contract may be formed by an exchange of a promise for a promise, or by the exchange of a promise for an act - I am excluding contracts under seal - and thus, in the law relating to the formation of contract, the promise to do a thing may often be the consideration, but when one is considering the law of failure of consideration and of the quasi‑contractual right to recover money on that ground, it is, generally speaking, not the promise which is referred to as the consideration, but the performance of the promise. The money was paid to secure performance and, if performance fails the inducement which brought about the payment is not fulfilled.’ ” (emphasis added)

87.  On the evidence, this court has no difficulty in finding that the Wans had been enriched at the Plaintiff’s expense to the extent of the Plaintiff’s payments to their lawful attorney CS Chan in the sum of HK$6,020,216.50 in respect of Lot A ie to Wan Senior and in the sum of HK$6,021,216.50 in respect of Lot B ie to Wan Junior.  Further, Mr Sio has not put forward any applicable defence eg change of position on behalf of the Wans in resisting the claim in unjust enrichment.  What remains for this court’s deliberation is the value of the Wans’ enrichment and whether it is unjust.

88.  In the prayer for relief and in Ms Chong’s Opening Submissions, the Plaintiff claims the higher sums of HK$10.107 million from Wan Senior and HK$10.1938 million from Wan Junior.  The claim was put forward on the basis that the Wans had been enriched in those sums as a result of the sale of the Houses to Mr and Mrs Chan and their receipt of the full purchase price of HK$12 million each, minus the land premium paid to the Government.  Effectively, the Plaintiff is seeking to recover the Wans’ profits arising from their sale of the Houses to Mr and Mrs Chan.  No authority has been cited by Ms Chong in support of the way the claim was formulated.

89.  The question thus raised is this: how should a defendant’s enrichment be valued for the purpose of an unjust enrichment claim?

90.  In Benedetti v Sawiris [2014] AC 938, the Supreme Court laid down the principle that value is to be ascertained at the time when the enrichment was received and without regard to subsequent profit accruing.  At [13] and [14], Lord Clarke of Stone‑Cum‑Ebony JSC (with whom Lord Kerr of Tonaghmore and Lord Wilson JJSC agreed) observed:

“ 13 The basic principle is that a claim for unjust enrichment is “not a claim for compensation for loss, but for recovery of a benefit unjustly gained [by a defendant] ... at the expense of the claimant”: NEC Semi-Conductors Ltd v Inland Revenue Comrs [2006] STC 606, para 175, per Mummery LJ; see also Goff & Jones, The Law of Unjust Enrichment, 8^th Ed (2011) (“Goff & Jones”), para 4‑01. Given that Mr Benedetti’s other claims have fallen away, the concern in the present case is not the value of Mr Benedetti’s loss but of Mr Sawiris’s gain. The question is whether an objective or subjective approach should be adopted when calculating that gain.

14 Whichever approach is adopted, it is clear that the enrichment is to be valued at the time when it was received by Mr Sawiris: BP Exploration Co (Libya) Ltd v Hunt (No 2) [1979] 1 WLR 783, 802, per Robert Goff J; see also Goff & Jones, para 4‑34. As appears at para 52 below, in the present case, the services rendered were completed for all practical purposes by 26 May 2005, by which time there was no possibility of, or need for, further services from Mr Benedetti. Similarly, it is clear that, whether an objective or a subjective approach is taken to the evaluation of the benefit, the question is what is the value of the services themselves, not of any end-product or subsequent profit made by the defendant: see eg Cobbe v Yeoman’s Row Management Ltd [2008] 1 WLR 1752, paras 41‑42, per Lord Scott of Foscote.” (emphasis added)

91.  Benedetti v Sawiris was a case where the enrichment was in the form of services.  Where a defendant has received money from a claimant, the learned editors of Goff & Jones The Law of Unjust Enrichment 9^th Ed noted at para 4‑28 that the Court is certain to find that he has been enriched by the receipt of money, and that its face value is a reliable measure of his enrichment at the time when he received it.[5]

92.  As this court indicated earlier, effectively, the Plaintiff is seeking to recover the Wans’ profits arising from their sale of the Houses to Mr and Mrs Chan.  In light of the observation by Lord Clarke in Benedetti v Sawiris at [14], the profits subsequently made by the Wans are irrelevant and the Plaintiff has no valid claim to them.

93.  The next question is whether the Wans’ enrichment was unjust.  As stated earlier, in the case of payment of money, the consideration for the payment is the anticipated performance for which the money is paid or the “basis or purpose” of the payment.  In the present case, that would be the transfer of the legal title of the Houses by the Wans to the Plaintiff.  Since that anticipated performance did not materialise, the consideration for the Plaintiff’s payment has totally failed and the Wans’ enrichment is clearly unjust.  

94.  To conclude, this court is satisfied that Wan Senior had been unjustly enriched at the Plaintiff’s expense to the extent of HK$6,020,216.50 while Wan Junior has similarly been unjustly enriched at the Plaintiff’s expense to the extent of HK$6,021,216.50 and that there are no applicable defences available to the Wans.

IX. Disposition and Costs Order Nisi

95.  To conclude, this court finds in favour of the Plaintiff in respect of her unjust enrichment claim and shall enter judgment against the 1^st Defendant in the sum of HK$6,020,216.50 and against the 2^nd Defendant in the sum of HK$6,021,216.50, together with interest thereon at the commercial rate of prime plus 1% from the date of the Writ of Summons herein to Judgment and thereafter at the judgment rate until full payment.

96.  The Plaintiff’s all other claims against the 1^st and 2^nd Defendants are hereby dismissed.

97.  There shall be an order nisi that costs of the action be to the Plaintiff, to be taxed if not agreed, and paid by the 1^st and 2^nd Defendants forthwith, with certificate for counsel.

98.  All the Plaintiff’s claims against the 3^rd and 4^th Defendants are hereby dismissed.  There shall be judgment in favour of the 3^rd and 4^th Defendants together with an order nisi that costs of the action be to the 3^rd and 4^th Defendants, to be taxed if not agreed, and paid by the Plaintiff forthwith, with certificate for counsel.