LEUNG KWAI LING, L v. MA HO FAI AND ANOTHER

HCA 1567/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1567 OF 2011

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DECISION

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1. This is an appeal by the plaintiff against: (i) the decision of Master de Souza dated 26 March 2012 striking out the plaintiff’s Statement of Claim and dismissing her claim; and (ii) the decision of Master Levy dated 7 March 2012 dismissing the plaintiff’s summons dated 29 February 2012.

2. The plaintiff claims damages and compensation for negligence or breach of trustee’s duty against both defendants who were trustees in the auction sale of a property known as Lai Sing Court which was situated in Inland Lot No 7903 at Nos 13-15, Tai Hang Road, Hong Kong (“the Lot”).

3. The plaintiff has provided very little particulars in the Statement of Claim in support of her claim.  In such circumstances, the best place to start is the affirmation of the 2^nd-named defendant filed on 24 December 2011 (“the Affirmation”), in which the 2^nd defendant gives a detailed account about the defendants’ involvement in the auction sale of Lai Sing Court.

4. According to the 2^nd-named defendant, the plaintiff and one Mr Lee Yiu Kei (“Mr Lee”) were the registered owners of one of the residential units in Lai Sing Court.  In 2003, the plaintiff, together with Mr Lee and other owners of Lai Sing Court, applied to the Lands Tribunal for an order for sale of the Lot pursuant to the Land (Compulsory Sale for Development) Ordinance, Cap 545 (“the Ordinance”).  The Ordinance provides that those owners holding not less than 90% of the interest in any lot of land may apply as the majority owners for the compulsory sale of the lot against those dissenting minority owners if the Land Tribunal is satisfied that the building erected on the lot is justified for redevelopment due to its age and state of repairs.

5. The plaintiff and Mr Lee were amongst the majority owners in the application, and the majority owners were represented by Messrs Johnston, Stokes & Masters (“JSM”).  The application was successful and HH Judge K Y Chan made an order dated 25 November 2004 which provided that: (i) the Lot be sold for redevelopment purpose; (ii) the defendants be appointed as trustees conducting the auction sale of the Lot; and (iii) the reserved price for the sale of the Lot be set at $1,209,000,000.

6. In the Affirmation, the 2^nd-named defendant provides a detailed account as to how the defendants conducted the auction sale.  In short, the Lot was eventually sold to HK Glory Properties Limited (“HK Glory”), which was a subsidiary of Hongkong Land Limited, at a price of $1,710,00,000 which was well in excess of the reserved price.  The Ordinance provides for the method in calculating the shares of proceeds amongst the different owners of the lot.  After paying the necessary expenses, the proceeds of sale were distributed amongst the various owners of Lai Sing Court including the plaintiff and Mr Lee in accordance with the provisions in the Ordinance. By the letter dated 21 February 2005, the defendants’ solicitors wrote to the plaintiff and Mr Lee enclosing a copy of the Statement of the Apportioned Net Sale Proceed (“the Apportionment Statement”) for their reference and confirmation.

7. By the letter dated 21 May 2005 from JSM to the defendants’ solicitors, JSM (still as solicitors for the majority owners including the plaintiff and Mr Lee) delivered a written confirmation of the plaintiff and Mr Lee (“the Written Confirmation”) confirming that they agreed with the Apportionment Statement (subject to the deduction of the management fee in the sum of $1,400) and the release of the Final Net Amount (which represented the share of the plaintiff and Mr Lee in the sale proceeds) to HK Glory.  The Written Confirmation was countersigned by the plaintiff and Mr Lee in the presence of a solicitor of Messrs Fairbairn Catley Low and Kong (“Fairbairn”).

8. Upon such instruction, the defendants released the Final Net Amount (subject to the deduction of the management fee) to HK Glory.  The defendants consider that they have completely discharged their duties to the plaintiff as:

(i)  the plaintiff had verified the Apportionment Statement; and

(ii)  the plaintiff had given express and binding instruction to the defendant to transfer the Final Net Amount to HK Glory and such instruction having been so attested by solicitors acting for the plaintiff.

9. Although the defendants are not concerned about the reason for the transfer of the Final Net Amount to HK Glory, they understand that as between the plaintiff (and along with other majority owners) and HK Glory, there was a development agreement (“the Development Agreement”) with respect to the whole idea of putting up new development on the Lot which allowed the owners of Lai Sing Court to swap their old units in return for newly constructed apartments by HK Glory.  Part of the bargain, as agreed by the plaintiff, was the allotment of a new unit to them in lieu of the sale proceeds they were entitled to in the auction sale.  Further, Fairbairn was acting for the majority owners including the plaintiff and Mr Lee in the course of the Development Agreement.

10. The plaintiff does not dispute the existence and the contents of the Development Agreement, and that she had received a new unit from HK Glory after the completion of the redevelopment project.

11. After considering the contents of the Affirmation, I agree that the defendants have fully discharged their duties towards the plaintiff in the conduct of the sale of the Lot and in distributing the plaintiff’s share of the proceeds of sale in accordance with her instruction.

12. It is true that the plaintiff had not personally received her share of the proceeds of sale.  However, it is clear that, through her solicitors, the plaintiff had given express instruction to the defendants to transfer the proceeds to HK Glory.  In such circumstances, her claim against the defendants is completely groundless.

13. Further, the plaintiff admits in the hearing that she had received her new unit in the redeveloped project from HK Glory, which shows that the transfer of the Final Net Amount was made pursuant to some sort of arrangement between the plaintiff and HK Glory.  Without giving some explanation about the background of the Development Agreement and why she had signed the Written Confirmation, the plaintiff cannot just lodge a claim against the defendants simply because of the transfer of the fund to HK Glory. Apparently, the plaintiff was not quite satisfied with the unit she received from HK Glory or the deal she made with HK Glory, but it is wrong for her to direct her dissatisfaction towards or to lay the blame on the defendants, who had faithfully discharged their duties to the plaintiff.

14. In the course of the hearing, the plaintiff also applies for the defendants to disclose the apportionment statements in respect of all the other units of Lai Sing Court.  In my judgment, there is no basis to support such request.  The plaintiff’s share of the proceeds was calculated in accordance with the provisions in the Ordinance, and there is no single hint of evidence to suggest that the calculation is incorrect.  The plaintiff has also failed to demonstrate how the other apportionment statements are relevant in the calculation of the plaintiff’s share of the proceeds of the sale.  Further, if the figure is incorrect, I would imagine that the plaintiff, with the benefit of legal representation at the relevant time, would have challenged the Apportionment Statement in the first place.  Hence, the plaintiff’s request is groundless.

15. The plaintiff also complains that the defendants have not supplied various other documents relating to the auction sale to her, such as valuation report and notice for the auction sale, etc.  Again the plaintiff cannot demonstrate the relevance of these documents and how these documents can assist her claim.  Without a single hint of wrongdoing or negligence on the part of the defendants, the plaintiff cannot just simply fish for evidence with a view to fabricate a claim against the defendants.

16. Shortly before this hearing, the plaintiff has also taken out the following applications:

(i)  notice of appeal dated 13 August 2012 against the decision of Master Ko on 6 January 2012;

(ii)  notice of appeal dated 13 August 2012 against the decision of Master Levy on 7 March 2012;

(iii)  summons dated 13 August 2012 applying for, inter alia, adjournment of the hearing on 14 August 2012 and the defendants to include certain documents in the hearing bundle.

17. I do not propose to deal with each of these notices of appeal and applications save as to say that all of them are frivolous and without merit.  Further, there is no reason why the hearing has to be further adjourned.  In fact, I refused the plaintiff’s application for adjournment just a few days before the hearing on 10 August 2012, and yet the plaintiff makes the same application again in the hearing.  To me, this is clearly an abuse of the process of the court.

18. I therefore dismiss the plaintiff’s appeal against the order of Master de Souza dated 26 March 2012 and all other appeals and applications returnable before me on 14 August 2012 with costs.