YANG JUNLING v. LEE YIU KEI AND ANOTHER

HCA 1723/2016

[2021] HKCFI 2526

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 1723 OF 2016

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JUDGMENT

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Introduction

1.  This action arose from a conveyancing transaction which has fallen through.  The main disputes are whether the vendors (the two named defendants, Lee Yiu Kei (“Lee”) and Leung Kwai Ling Loretta (“Leung”), and collectively “Ds”) or the purchaser (the plaintiff, “P”) were liable to pay the Special Stamp Duty concerned (the “SSD”), whether there was any binding agreement between the parties in that regard, and whether there had been any related misrepresentations by Ds.  P is suing for repayment of the deposit paid together with liquidated damages.  Ds on the other hand claim that it was P who was in breach, and sue for various remedies.

2.  This is the trial of the parties’ disputes.

Representation

3.  P was during the trial represented by Mr Jeremy Kwong of counsel. Ds appeared in person.  They are husband and wife.  Leung (the wife) did the vast majority of the speaking throughout the trial.   

Pleadings

4.  P’s Re‑amended Statement of Claim (“RASOC”) is dated 31 December 2018.  Ds’ Defence and Counterclaim (“DAC”), settled in person, is dated 5 December 2016 and filed on 8 December 2016.  P’s Reply and Defence to Counterclaim (“RADC”) is dated 2 February 2017.

Parties’ pleaded cases

5.  The property concerned (the “Property”) is Flat B on 22^nd Floor of Tower 2 and Car Parking Space No 36 on L3 Floor of Serenade, No 11 Tai Hang Road, Hong Kong.  It is within a residential development called Serenade (“Serenade”).

6.  The parties on 16 March 2016 entered into a provisional agreement for the sale and purchase of the Property (“PSPA”).  Subsequently, a number of supplemental documents have been signed.  I will loosely call them for convenience the “Supp PSPA”.  There are some aspects of the PSPA and Supp PSPA which are in dispute.  I will come back to them. 

7.  P’s case, in so far as still being pursued[1], is as follows:

(a)  On contract:

(i)     the PSPA together with the Supp PSPA expressly stipulated that the liability to pay any SSD was on Ds;

(ii)    alternatively, and even without the Supp PSPA, the full circumstances of the case support the existence of an implied term that any SSD would be paid by Ds;

(iii)   Subsequently, the PSPA was indeed adjudicated to be chargeable to SSD. Ds failed and refused to pay them.  P became entitled to, and did, rescind the PSPA;

(iv)   Ds are liable to refund the deposits paid (“Deposits”, in the total sum of HK$1,630,000).  Ds failed and refused to, and instead forfeited them;

(v)    Ds are also liable to pay liquidated damages in the same amount;

(vi)   P hence claims refund of the Deposits and liquidated damages in the same amount;

(b)  Alternatively, if the parties had not reached any agreement on the incidence of liability on SSD, that being an important term, the absence of any agreement in that regard means that there was in fact no consensus ad idem between the parties.  The PSPA is therefore not legal binding and Ds are liable to refund the Deposits;

(c)  Alternatively, should the court find that there was a binding agreement between the parties but that there was no express term or implied term concerning the incidence of liability on SSD, P was entitled to rescind on the basis of misrepresentation, in which case Ds are again liable to refund the Deposits.

8.  Ds’ DAC is not entirely easy to comprehend.  It is handwritten, with tight line‑spacing, and repetitive.  At various places, they claim that P has no cause of action against them at all, that it was all P’s fault and breach of the PSPA and Supp PSPA that the balance of purchase price not paid, that they had not failed to show or give title, that they are entitled to forfeit the Deposits, that the Supp PSPA had not been agreed upon or had otherwise been “cancelled by us with effect from 17‑5‑2016 as stated in our letter to P + P sol of 11-9-2016”[2], that no SSD was chargeable to the PSPA, that any SSD only became chargeable to the PSPA as a result of P’s error and negligence, misrepresentation and malice in filing wrong and incomplete information to the Stamp Office, there was no clause in the PSPA for the stakeholding of any SSD, and that P is liable to them for defamation.  They counterclaimed for:

(a)  HK$19 million as damages“for market value and current price”of the Property;

(b)  HK$14.67 million as damages “for defamation and libel statements from P on good title and clean title of our property, in letters from P & P’s solicitor (Sol) of 2016”;

(c)  HK$3.26 million as damages “for defamation and libel statements from P on our proper performance of the [PSPA], wrongly alleging ‘wrongful repudiation of Provisional Agreement …’ in letters …”;

(d)  HK$19 million as damages “for defamation and libel statements from P on our proper performance of the [PSPA], wrongly alleging ‘wrongful repudiation of a Provisional Agreement …’ in Writ of Summons…”;

(e)  damages for breach of the PSPA;

(f)  alternative specific performance of the PSPA,

(g)  HK$3.26 million for some further alleged defamation;

(h)  damages for all expenses, charges and costs in keeping the Property from 16 August 2016;

(i)  alternatively balance of purchase price;

(j)  vacation of the registration of the Writ, and

(k)  interest.

Special Stamp Duty

9.  This case concerns the incidence of liability on SSD.  Certain aspects of the SSD regime are relevant.  I set them out as follows.

10.  Ad valorem stamp duty (“AVD”) has always been payable under the Stamp Duty Ordinance, Cap 117 (the “SDO”).

11.  In November 2010, to curb short‑term speculation, the Government introduced SSD[3]. The enabling Ordinance (the Stamp Duty (Amendment) Ordinance 2011) came into effect on 20 November 2010.  Various provisions have been added into the SDO.  The most relevant ones are sections 29CA and 29DA.

12.  As explained and summarized in the Stamp Office Interpretation and Practice Notes No 5 (Revised) issued in July 2014 (at §5) (the “Practice Note”):

“ SSD is chargeable on a chargeable agreement for sale under section 29CA and head 1(1B) in the First Schedule to the Ordinance or a conveyance on sale under section 29DA and head 1(1AA) in the First Schedule to the Ordinance in respect of any residential property which was acquired on or after 20 November 2010 by the vendor or transferor and resold or transferred within the 24‑month Period or the 36‑month Period (as the case may be) after acquisition.”

13.  Section 29CA(5) of the SDO stipulates that:

“ (5) For the purposes of this section and head 1(1B) in the First Schedule, the vendor acquired the residential property on—

(a) subject to subsections (6) and (9)—

(i) the date on which the vendor made a chargeable agreement for sale that provided for the conveyance of the property to the vendor; or

(ii) (if the chargeable agreement for sale consisted of 2 or more instruments) the date on which the first of those instruments was made; or

(b) in any other case—

(i) the date of the conveyance under which the property was transferred to or vested in the vendor; or

(ii) (if the conveyance consisted of 2 or more instruments) the date on which the first of those instruments was made.”

Section 29DA(5) contains similar provisions in relation to head 1(1AA) in the First Schedule.

14.  The net effect of the above in so far as the date of acquisition for the purpose of SSD, as explained in the Practice Note (at §7), is that:

“ … a person acquires a residential property on the date he enters into a chargeable agreement for sale as purchaser to purchase the property. If there is no such chargeable agreement for sale, the date of a conveyance to acquire the property is the date of acquisition.”

15.  “Chargeable agreement for sale” is defined in section 29A(1) of the SDO as meaning:

“ … an agreement for sale chargeable with stamp duty under head 1(1A) in the First Schedule”.

16.  Same as that for AVD, the vendor and purchaser to the property transaction are jointly and severally liable for paying SSD.

17.  Section 29DA(11) dis‑applies Head 1(1AA) under certain specific circumstances, that (in so far as relevant here):

“ Head 1(1AA) in the First Schedule does not apply to a conveyance on sale of residential property if—

(a) the conveyance on sale is, or is executed pursuant to, any decree or order of any court; or

(b) the property—

(i) was transferred to or vested in the transferor by or pursuant to any decree or order of any court.”

18.  Section 13(1) of the SDO entitles any person upon payment of a fee to require the Collector of Stamp Duty (the “Collector”) to, with reference to any executed instrument, express his opinion upon whether it is chargeable with any stamp duty and if so what amount of stamp duty is chargeable thereon. If the Collector is of the opinion that the instrument is chargeable with stamp duty, he shall assess the stamp duty payable (section 13(3)(b)).  An instrument upon which the stamp duty has been assessed by the Collector shall not, if it is not stamped or is insufficiently stamped, be stamped otherwise than in accordance with the assessment (section 13(4)).

19.  Section 14(1) of the SDO sets out the procedure for appeal against assessment, that:

“ Any person who is dissatisfied with the assessment of the Collector under section 13 or 47L may—

(a) within a period of 1 month from the date on which the assessment is made or within such further period as the court may allow under subsection (5B);

(b) subject to any order of the court under subsection (1B), on payment of the stamp duty in conformity therewith or, where payment of the stamp duty or any part thereof is allowed to be postponed under subsection (1A), on payment of the part (if any) of the stamp duty the payment of which is not thus allowed to be postponed; and

(c) by notice served on the Registrar,

appeal against the assessment to the court and may for that purpose require the Collector to state and sign a case setting forth the question upon which his opinion was required and the assessment made by him.”

20.  Subsequently, the Government further introduced Buyer’s Stamp Duty. Save as a matter of background, we are not concerned with that.

The factual background

21.  The following are gleaned from the documents.

22.  In respect of Serenade:

(a)  Serenade was built upon the redevelopment of a previous residential estate called Lai Sing Court.  Lai Sing Court used to occupy the plot of land (the “Lot”) where Serenade now occupies;

(b)  As part of the scheme of redevelopment, the developer of Serenade entered into a Development Agreement dated 1 May 2001 with certain owners of Lai Sing Court[4]. It provided for the allocation of new units in Serenade to them;

(c)  Ds were two of those previous owners;

(d)  The recital of the Development Agreement records that:

“ The Majority Owners and the Developer have agreed to apply for an order for compulsory sale of [Lai Sing Court] under the Ordinance … and to redevelop the Lot by demolition of [Lai Sing Court] and by the erection of the New Building … on the terms and conditions as contained in this Agreement.”

(e)  By order of 25 November 2004[5], the Lands Tribunal in Land Compulsory Sale Application No 1000 of 2003 ordered inter alia that:

“ (1) all the undivided shares of and in Inland Lot No. 7903 and the Extension Thereto… be sold for the purposes of the redevelopment of the Lot;

…

(4) the sale of the Lot be on the particulars and conditions substantially the same as those in the draft Particulars and Conditions of Sale initialed and approved by the Tribunal;

…”

(f)  According to the Amended First Memorandum of Allocation of Units and Car Parking Spaces of Serenade to Majority Owners of Lai Sing Court dated 15 June 2010[6], the Property was amongst the units within Serenade that were to be allocated to the Majority Owners pursuant to the Development Agreement;

(g)  As shown on the land search records of the Property, Ds became registered owners of the Property as joint tenants on 1 December 2015 pursuant to an “Assignment with Plans” (Memorial number 15121402030010) (the “2015 Assignment”). 

23.  On 16 March 2016, the parties entered into the PSPA.  Ds were the vendors, and P the purchaser.  The estate agent was Midland Realty International Ltd (“Midland”).  Its representative was Mr Yan Hoi (“Yan”).  They all signed it.

24.  The PSPA contained the following material terms:

(a)  The Deposits were required to be paid in 2 equal instalments under clause 2, which P did pay;

(b)  Clause 2(d) stipulated balance in the sum of HK$14,670,000 “shall be paid upon completion on or before 17^thJune 2016”;

(c)  Clause 3 stipulated that formal sale and purchase agreement should be signed on or before 8 April 2016.  As things turned out, and despite that clause, no formal sale and purchase agreement has ever been signed;

(d)  Clause 7 named Wong & Tang (“W&T”) as Ds’ solicitors.  P subsequently appointed Iu, Lai & Li as her solicitors (“IL&L”);

(e)  Clause 9c provided (in both Chinese and English, and only the English version is reproduced here) that:

“ *Special stamp duty (if any) shall be paid by *the Vendor solely / the Purchaser solely. The party responsible for payment of the special stamp duty shall pay any additional special stamp duty and penalty for late stamping (if any) as assessed by the Stamp Office.

   Where the Vendor is responsible for payment of the special stamp duty, the Vendor shall within the prescribed period for payment pay to the Purchaser’s solicitors a sum equivalent to the amount of the special stamp duty payable by the Vendor on timely basis and shall irrevocably authorise the Purchaser’s solicitors to apply the same for the purpose of payment of the special stamp duty.  Breach of this clause on the part of the Vendor entitles the Purchaser to made deduction from the balance of the purchase price and apply the sum so deducted for the purpose of payment of special stamp duty and penalty for late stamping (if any).”

(f)  At the bottom left hand corner of the page where Clause 9c appears is the following note:

“ * To be deleted where inapplicable.”

(g)  On the version produced before this Court, the words “the Vendor solely” (both Chinese and English) are struck‑through[7] (the “Relevant 9c Deletion”).  I will come back to the evidence on how that came about;

(h)  Clauses 10 and 11 provided that:

“ 10. If the Purchaser shall fail to pay any part of the deposits or to complete the purchase in accordance with the terms and conditions herein contained, the deposit(s) paid by the Purchaser or the amount thereof equivalent to 10% of the purchase price (whichever is the lower), shall be absolutely forfeited to the Vendor as liquidated damages and this Agreement shall be terminated and the Vendor shall then be entitled at his absolute discretion to resell the said premises but the Vendor shall not take any proceedings against the Purchaser to claim for further damages or to enforce specific performance of this Agreement.

   11.    If the Vendor shall fail to complete the sale in accordance with the terms and conditions herein contained, the Vendor shall immediately refund the deposit(s) paid by the Purchaser and pay to the Purchaser a sum equivalent to the said deposit(s), or 10% of the purchase price (whichever is the lower) as liquidated damages and this Agreement shall be terminated and the Purchaser shall not take any proceedings against the Vendor to claim for further damages or to enforce specific performance of this Agreement.”

25.  Despite negotiations between the parties, no formal sale and purchase agreement had ever been signed.

26.  On 11 April 2016, and upon the application of IL&L, a Stamp Certificate was issued via e‑stamping (the “Stamp Certificate”)[8]. It shows that P paid AVD in the sum of HK$611,250 on that day.  It also bears two stamps showing that “SPECIAL STAMP DUTY NOT CHARGABLE” and “BUYER’S STAMP DUTY NOT CHARGABLE”.

27.  By letter of 28 April 2016[9], and pursuant to Section 13 of the SDO, IL&L on behalf of P submitted the PSPA to the Stamp Office for adjudication.  In that letter they said:

“ Please confirm whether Special Stamp Duty is chargeable in respect of the [PSPA].

The Property was assigned by HK Glory Properties Limited to the Vendor by way of Assignment on 1^stDecember 2015 (Stamp Office Instrument Reference No. SDO/ADJ‑A 009294).  However, the said Assignment was made in pursuant to the Development Agreement dated 1^st May 2001 made between the Vendor and HK Glory Properties Limited.”

28.  On 3 May 2016, IL&L wrote to W&T and said, amongst other things, that:

“ We note that the [2015 Assignment] was executed by your client on 1^st December 2015. Since there is no chargeable agreement entered between the same parties registered against the Property, the said Provisional Agreement for Sale and Purchase is prima facie subject to Special Stamp Duty.

We write to put on record that according to the estate agent representing our respective clients, your client holds the view that Special Stamp Duty is not chargeable in respect of the [PSPA] based on the reason that your client acquired the Property under a Development Agreement made between your client and the developer of the Property many years ago.  Your client has also agreed that if there is any Special Stamp Duty chargeable, your client will be responsible for settling the Special Stamp Duty payable.”

29.  Also on that day, IL&L wrote to the Stamp Office and chased it for the adjudication of the PSPA and the 2015 Assignment.

30.  On 6 May 2016, IL&L issued another chaser to the Stamp Office. It said therein, amongst other things, that:

“ We trust that the background of the development Serenade (上林) is not unfamiliar to the Stamp Office. 176 owners of Lai Sing Court received allocation of units in Serenade (上林) in the year between 2010‑2015 pursuant to their respective Development Agreements executed in the year between 2001‑2004. The relevant Assignments executed in pursuant of those Development Agreements were submitted to the Collector for adjudication. We are also given to understand that the Collector has already completed adjudication on those Assignment executed in 2010.

In light of the aforesaid, we urge the Collector to speed up the adjudication of [the 2015 Assignment] and the [PSPA] in relation to whether the latter is chargeable with [SSD] and the amount payable (if any).”

31.  On 17 May 2016, the Supp PSPA was signed.  I will come back to the circumstances in which that took place.

32.  Also on 17 May 2016, IL&L wrote to W&T[10] and raised, amongst others, the following requisitions:

“ 5.(i) We noted from the certified copy of the [2015 Assignment] that it is still pending for adjudication for Stamp Duty. Please let us have Stamp Certificate of the said Assignment proving stamp duty have been duly settled at least 14 working days before completion failing which we shall demand a sufficient sum of money be deducted from the balance of the purchase price upon completion and be stakeheld by your firm for settlement of the stamp duty payable on the said Assignment.

…

6.  Special Stamp Duty chargeable on [PSPA]

Your client executed the [2015 Assignment] on 09/12/2015.  We noted that no chargeable Agreement for Sale and Purchase was made by the same parties in relation to the Property prior to the execution of the said Assignment.  The Property was prima facie acquired by your client on 09/12/2015 which is after the date 27/10/2012.  Your client resold the Property to our client under [the PSPA] which is within 6 months from the date of acquisition.  The current sale therefore is prima facie subject to Special Stamp Duty equivalent to 20% of the purchase price as set out in [the PSPA].  Your client has made representation that the Property was acquired by your client well before 27/10/2012 accordingly the sale of the Property to our client under [the PSPA] will not be subject to any Special Stamp Duty.  Your client has also expressly agreed to bear Special Stamp Duty chargeable if any.  In the circumstances, please let us have confirmation in writing issued by Stamp Office confirming Special Stamp Duty is not chargeable in respect of the present transaction at least 14 working days before completion.”

33.  On 23 May 2016, the Stamp Office adjudicated that the PSPA was chargeable with SSD (the “SSD Adjudication”).  In its letter to IL&L on that day[11], it was said, amongst other things, that:

“ Available information shows that, the Development Agreements mentioned in your letter dated 6 May 2016 were adjudicated not chargeable to any stamp duty. Hence the date of the said Development Agreements cannot be regarded as the date of the acquisition of the property by the vendor for the SSD purpose. The [2015 Assignment] is chargeable to ad valorem stamp duty and the date of the Assignment should be regarded as the date of the acquisition of property by the vendor under section 29CA(5)(b) in this case.

In the present case, the vendor disposed of the property by the [PSPA] within 6 months from the date of acquisition of the property (i.e. 1 December 2015), the [PSPA] is therefore chargeable with SSD and the applicable SSD rate is 20%. Pending the valuation given by the Rating and Valuation Department on the residential property and the car parking space separately, SSD is chargeable on the valuation on the residential property and a formal assessment will be issued to the vendor.

   Before a formal notice of assessment is issued, your client is invited to make written representation to me with regard to the above proposed assessment.  Please note that any such written representation must be received by the Stamp Duty Office within 1 month from the date of this letter.”

34.  On the same day, IL&L wrote to W&T and notified them of the adjudication[12]. They also required W&T to stakehold a sufficient sum of money for payment of SSD upon receipt of their (IL&L’s) receipt of the Notice of Assessment from the Stamp Office.

35.  On 27 May 2016, IL&L wrote to the Stamp Office[13] and sought the Stamp Office’s confirmation that the chop bearing “Special Stamp Duty Not Chargeable” affixed on the Stamp Certificate was no longer valid.  They explained why they, when submitting the PSPA for e‑stamping, reported to the Stamp Office that the PSPA was not chargeable to SSD.  That apparently explained why the Stamp Certificate was stamped with “Special Stamp Duty Not Chargeable”.  IL&L said further that subsequently, and upon additional information having been received, they presented the PSPA for adjudication.  They at the end said that:

“ As our client is the purchaser of the present transaction and our client has never agreed to pay SSD on the [PSPA], it is inappropriate for our client to make written representation to you with regard to the proposed assessment.”

36.  On 2 June 2016, the Stamp Office replied and confirmed that the Stamp Certificate was invalid.  It stated further that:

“ Under section 4(3) of the Stamp Duty Ordinance (‘the Ordinance’), if any instrument chargeable with any stamp duty (other than buyer’s stamp duty) is not duly stamped in respect of that duty, all parties executing the instrument and any person who uses such instrument, shall be liable, or jointly or severally liable. Please be informed that a formal notice of assessment dated 3 June 2016 will be issued to both of the Vendor and the Purchaser.”

It also reminded the parties that as the PSPA was not presented for adjudication within the prescribed time limit for stamping, they were liable to pay a penalty under section 9(1) of the SDO.

37.  On 3 June 2016, a Notice of Stamp Duty Assessment & Demand for Payment (the “NOA”) was indeed issued[14]. The one before the court was issued to P.  The Property was assessed to be chargeable with SSD under 1(1B) Part 2(a) of the First Schedule at HK$2,860,000, which was payable immediately.

38.  Also on 3 June 2016, IL&L issued a chaser to W&T in respect of the requisitions that had previously been raised.

39.  By letter dated 3 June 2016[15], W&T replied to IL&L’s letter of 17 May 2016.  In respect of both requisitions 5(i) and 6, W&T answered that:

“ Our client is negotiating with the stamp office for clarification and should revert to you as soon as possible.”

40.  Also on 6 June 2016, IL&L wrote[16] to W&T that:

“ Further to our letter of 23 May 2016 enclosing Stamp Office’s letter dated 23 May 2016, we send you a copy of the [NOA] for your urgent action.

…

Please note that your client is required by the said [NOA] to settle the SSD immediately by making payment to the Stamp Office.

Please be reminded that if you client fails to pay SSD by the due date, your client shall be liable to a late stamping penalty of up to 10 times the amount of the SSD payable …

Please let us have evidence of payment of SSD for our perusal within 3 working days from the date of this letter.”

41.  On 10 June 2016, IL&L issued 3 letters to W&T. Amongst other things, Ds were demanded to pay the SSD, or P will deduct the same from the purchase price.  It was further said that Ds had agreed to pay SSD, and any dispute between them and the Stamp Office as to whether SSD was chargeable was not an acceptable excuse for not settling the same before the completion date[17].

42.  In the letter dated 6 June 2016 from W&T and received by IL&L on 13 June 2016, W&T said that there was no requirement under the PSPA which required them to stakehold any money for the SSD.  The payment of SSD was not otherwise dealt with.

43.  On 13 June 2016, IL&L received two further letters from W&T.  In one of them, the position stated in their letters of 3 and 6 June 2016 was repeated.  The other letter was just a covering letter, under cover of which two letters dated 11 and 12 June 2016 from Ds directly to IL&L were sent:

(a)  In the one dated 11 June 2016[18], signed by Ds and addressed directly to IL&L, Ds gave the following notice to IL&L:

“ Notice of cancellation & revoking of all your authority to stakehold purchase moneys & our funds for sale of [the Property]

We … hereby give you notice that with immediate effect from today & with effect from 16/3/2016 retrospectively, we hereby cancel & revoke all your authority to stakehold purchase moneys & our funds & to deal with & to make payments from our funds & purchase moneys to Stamp Duty Office …

We hereby also give you notice that we hereby … stop you & prohibit you & forbid you to stakehold purchase moneys & our funds & to deal with our funds & purchase moneys & to make payments from our funds & purchase moneys to Stamp Duty Office …”(original emphasis)

(b)  In the one dated 12 June 2016[19], also signed by Ds and addressed directly to IL&L, Ds gave the following notice to IL&L:

“ Our Demand for compensations from you and our demand for payments from you in matters of sale of [the Property]

We hereby give you notice that with immediate effect from today & with effect from 16/3/2016 retrospectively, you are hereby totally disqualified & barred from acting as stakeholder to stakehold purchase moneys & our funds & to deal with & to make payments from our funds & purchase moneys to Stamp Duty Office … due to your conflict of interest, & your serious negligence & your acts of oppression to us, and your errors and omissions & your causing big harm & losses to us in causing high [SSD] bill & high penalties of total of $8.58Million …

               We hold you fully liable & responsible for all our losses of total amount of over $8Million in [SSD] bill & all penalties … & we request full compensations from you at once for total amount of all SSD & all penalties of total of HK $8.58Million … to be paid by you to us at once … on Monday 13/6/2016 before 1 pm.  Very Urgent.”

44.  In their letter of 13 June 2016 to W&T[20], IL&L stated, amongst other things, that despite demands, Ds had failed to pay the SSD, and that it was “absolutely legitimate and reasonable for the Purchaser to require your firm to stakehold a sufficient sum of money for the SSD”.

45.  Under cover of their letter of 14 June 2016, W&T sent another of Ds’ letter to IL&L.  That enclosed letter was again signed by Ds and addressed directly to IL&L.  Amongst other things, Ds demanded IL&L to amend all errors with the Stamp Office and to cancel the SSD assessed.

46.  On 15 June 2016, IL&L reiterated P’s position on the SSD, and stated at §2.7 that in the absence of evidence showing settlement of or security for the SSD, Ds’ title to the Property would be encumbered.  They further stated that P was ready and willing to complete subject to inter alia Ds’ settlement of the SSD or the provision of security money therefor. 

47.  On that same day, W&T sent to IL&L another letter by Ds addressing IL&L directly.  That enclosed letter was dated 15 June 2016, handwritten, signed by Ds, and addressed directly to IL&L.  Ds said therein, inter alia, that (and the emphasis being original):

“ Our Demand for compensation from you and our demand for payments from you in matters of sale of [the Property]

and in the matter of the

Amended copy of Provisional Sale and P Agreement with 2^nd paragraph of 9c clause deleted, as enclosed

See attached from us a signed copy of the amended Provisional Sale & Purchase Agreement with 2^nd paragraph of 9c clause deleted by us vendor, deleted by us on 17-5-2016, and deleted by us, as we were misled and deceived by the agent on that paragraph of 2^nd  paragraph of 9c clause.

We were misled and deceived by the agent, as we did not know such wrong and harmful to us clause existed, and the agent did not mention that paragraph to us, and the agent did not explain that paragraph to us.”

A copy of the PSPA purportedly amended as such was enclosed.

48.  By a letter dated 14 June 2016[21] (which date is clearly wrong as it referred to a letter from IL&L dated 15 June 2016), and received by IL&L on 16 June 2016, W&T stated their instructions that Ds did not agree to pay the SSD, or to W&T or IL&L stakeholding any sum for payment of the same.

49.  By letter of 16 June 2016[22], W&T stated their instructions that Ds denied that SSD was chargeable.  It was said that SSD had been exempted in the Stamp Certificate, that the SSD then chargeable was caused by the mistake of IL&L, that SSD might be exempted in the case of a compulsory sale, that Ds acquired the Property in mid‑2010, and that Ds had been the beneficial owners of the Property since then.

50.  In a letter dated 17 June 2016 from Ds directly to IL&L[23] (sent under cover of W&T’s 2^nd letter of even date), Ds claimed that:

“ - we will not postpone completion date.

- we will not bear any wrong SSD & any wrong SSD penalties, and we will not bear any wrong SSD & any wrong SSD penalties caused by errors of your side.

- we do not agree to deduct any sums from balance of purchase moneys due to us.

- we have full rights to delete the wrong & harmful to us para of 2^nd para in 9c clause, due to being deceived & misled by the agent on that paragraph.

- we deny all wrong SSD & all wrong SSD penalties liabilities, as denied by us in our letter of yesterday & before, and on grounds stated in our previous letters of yesterday & before, & all our grounds are valid & relevant.

- we have full rights to deny all SSD & all SSD penalties liabilities, on grounds stated in our previous letters of yesterday & before, & all our grounds are valid & relevant.”

51.  In the end, completion did not take place, whether on 17 June 2016 or any date afterwards.

52.  On 18 June 2016, further letters were exchanged.  Both sides alleged the other of having breached the PSPA.  W&T alleged that P had failed to complete pursuant to Clause 2(d), forfeited the Deposits and rescinded the PSPA[24]. IL&L on the other hand stated that Ds had been in wrongful repudiation of the PSPA, which P accepted[25].

53.  On 30 June 2016, the Writ herein was taken out.

54.  On 11 September 2016, Ds wrote to IL&L[26] (the “11/9/2016 Letter”) and stated inter alia that:

“ We now give you notice that at once and with effect from 17 May 2016 retrospectively, we have cancelled the Supplemental 9c Clause to Provisional Agreement (Sup 9c PA), as vendor and buyer did not agree on the revised terms revised by us vendor on 17 May 2016, and we vendor insisted that Sup 9c PA must include the revised terms of 9c(viii) & 9c(vii) added by us vendor on 17 May 2016 before we sign.

So the Sup 9c PA never existed …”

The issues

55.  Parties have not been able to put forward a list of agreed issues.

56.  Ds have not formulated any list of issues.

57.  Mr Kwong has identified the following issues:

(a)  What were the express terms of the agreement between P and Ds on SSD (the “Express Term Issue”);

(b)  If there were no express terms, what were the implied terms of the agreement on SSD (the “Implied Term Issue”);

(c)  Whether Ds had acted in breach or wrongful repudiation of the agreement (the “Repudiation Issue”);

(d)  If P is unsuccessful in her contractual claim, whether P is entitled to the return of the Deposits on the ground that:

(i)  the agreement under the PSPA did not amount to a complete and binding contract (the “Incomplete Agreement Issue”); or

(ii)  P was entitled to rescind the agreement on grounds of misrepresentation (the “Misrepresentation Issue”);

(e)  Whether Ds have any valid counterclaim against P (the “Counterclaim Issue”); and

(f)  What relief should be awarded against P or Ds (the “Relief Issue”).

58.  I accept that the list Mr Kwong puts forward adequately covers the issue which this Court may need to consider.

Witnesses

59.  Yan was the only witness for P.  He has given two witness statements (“Yan/1”[27] and “Yan/2”[28]).  He adopted both as his evidence‑in‑chief.  He was cross‑examined by Leung on Ds’ behalf.

60.  Both Lee and Leung gave evidence.  Each has given 3 witness statements (“Lee/1”[29], “Leung/1”[30], “Lee/2”, “Leung/2”[31], “Lee/3”[32], and “Leung/3”[33]). Lee/3 and Leung/3 were put in on the first day of the trial, with leave from this Court, in the absence of objection from Mr Kwong.  Filing of the same was otherwise dispensed with.

61.  Lee and Leung both adopted their statements as their evidence‑in‑chief. They were cross‑examined by Mr Kwong.

Credibility of witnesses

62.  I remind myself when considering a witness’ credibility the importance of considering the inherent likelihood or unlikelihood of the witness’ evidence, the consistency of the witness’ evidence with undisputed or indisputable evidence, with contemporaneous conduct and documents, and the internal consistency of the witness’ evidence.  I need to consider the totality of the evidence.  I warn myself against attaching undue weight on demeanour, though demeanour is obviously relevant when considering credibility.  I also bear in mind that the more serious the allegation sought to be proved is, the more cogent the evidence relied upon to support it must be.

63.  I find Yan to be an honest witness.  His evidence is inherently probable, and is consistent with the contemporaneous documents and correspondence produced.  In particular, I find his evidence that he and his superior had prior to the execution of the PSPA discussed with Ds the question of SSD inherently probable, given the fact that the dates of the 2015 Assignment and the PSPA were less than 6 months apart.  He was cross‑examined at length by Leung.  He was irritated thereby, particularly when he was accused by Leung of having followed and stalked her.  I find his reaction spontaneous.  He accepted that Leung first contacted Midland by phone (as opposed to attending a Midland branch[34]). None of those in my view materially affect his credibility.

64.  I accept Yan’s factual evidence.

65.  Lee is in my view not a reliable witness.  He claimed in Lee/1[35] that before the PSPA was signed on 16 March 2016, he and Leung had never talked about SSD with the agents of Midland.  He confirmed that under cross‑examination.  I find that inherently most improbable.  He claimed that he signed the Supp PSPA without understanding its contents, and that he did so as Leung had already signed it.  I find that also inherently improbable, and indeed incredible, that a co‑owner of a valuable property would have signed a document in the context of the sale of his property without understanding its contents.  I note that Lee is highly educated, holding a master’s degree in Fiber Science and Technology, another master’s degree in Management & Technology from University of Wales, and retired from the Correctional Services Department as Principal Industrial Officer.  Lee was also evasive as a witness.  He was reluctant to give clear and definite answers.  One specific example of his evasiveness is that when he was asked whether anybody on 16 March 2016 said that if the Property was to be sold at that time, SSD would be payable.  To that he gave the curious and evasive answer of  “如果親口同我講嘅人，冇”.  Another example is whether he knew that he would be signing a supplemental sale and purchase agreement on 17 May 2016.  It is also quite obvious that he was prepared to say whatever Leung wanted him to say.  In the course of his cross‑examination, Leung from time to time objected to the questions put to Lee by Mr Kwong, at time even after Lee had answered the questions.  Most of those objections were frivolous and groundless.  But Lee could be observed changing his evidence along the lines of the objections.  One clear example is when he was asked as to whether Leung’s acts had been authorised by him.  His immediate answer was “Of course”.  Leung then objected, claiming that she was not sure what Mr Kwong was talking about.  Then Lee immediately changed his answer, and claimed that the question was too wide. 

66.  I reject Lee’s factual evidence in so far as it is inconsistent with that of Yan’s.

67.  In respect of Leung, I accept Mr Kwong’s submission that she as a litigant was highly disruptive of the court process.  She complained about immaterial matters (examples being page references appearing in the margin of her statement, hole‑punching and quality of photocopying).  I remind myself however such conduct does not make her unreliable as a witness.  The following matters however do.  She was evasive in answering questions, refusing to answer questions directly, and saying at times whatever she wanted.  Her answer in relation to when she allegedly first sent and re-sent LL3[36] is a prime example.  Her evidence that before the PSPA was signed on 16 March 2016, she and Lee had never talked about SSD with the agents of Midland was inherently most improbable.  Her allegations that Yan had followed and stalked her, based as it was upon one chance meeting at Causeway Bay were vicious, but completely baseless.  Her allegations that Yan had made threats to her were also baseless, but equally vicious:

(a)  She relied in that regard heavily on one email of 15 May 2016 at 2:48 pm[37] from Yan (the “15 May 2016 2:48 Email”).  In that email, Yan urged Ds to sign the Supp PSPA as soon as possible, that:

「 李太，公司不接受你再次修改9C補充協議，建議你和李生簽署後，由你寫一個個人聲明一起遞交。

請盡快簽署9C補充協議，買家由於臨約這個問題到現在都申請不到銀行貸款，再糾纏下去對誰都不利呀！我將昨晚你的意思打入email如下 …」

(b)  When giving evidence, Leung completely twisted the meaning of that email and claimed, in my view entirely baseless, that:

「 … 佢嗰啲不斷嘅電話逼我哋，跟住請你睇page 3最尾嗰個電郵，5月15嗰度，佢話『對誰都不利呀』，我睇到呢句我就好驚，佢而家係對我不利，對我家人不利，對我family member不利，好驚喎，仲唔係嚴重威嚇、威逼，你睇TV呀、睇乜呀、news呀，都知道對人不利就係mean有人揦刀捅人，呢個係好驚，睇到呢個就係一個好驚恐嘅威嚇，係一個好嚴重，對我人身傷害嘅威嚇，對我家人人身傷害嘅威嚇，我睇到呢個好驚，喺咁嘅威逼、威嚇底下，我係被逼簽呢個補充協議嘅，咁我亦都喺我嘅證人供詞嗰度有提呢一樣嘢。請睇我證人供詞page 2。」

68.  I do not find Leung to be an honest witness.  I find her evidence unreliable.  I reject her factual evidence in so far as it is inconsistent with that of Yan’s.

Factual findings

69.  In addition to the factual background set out above, which I find, I make the following material factual findings. 

70.  I find that Leung had Lee’s authority to act on his behalf in respect of the sale of the Property.  When asked about this during cross‑examination, Lee’s immediate answer was “Of course”.  I place weight on that answer despite my finding that he is an unreliable witness.

71.  Leung approached Midland to put the Property on sale.

72.  Yan became aware of that approach via the internal computer system of Midland.

73.  P was mostly in the Mainland.  Yan mainly contacted Ms Tsui, a friend of P.

74.  In the course of negotiations, Yan and his superior Dixon Mo had repeatedly asked Leung about SSD.  They showed Ds the explanations on SSD on the website of the Inland Revenue Department.  They also showed Ds the land search record of the Property.  Whilst Yan could not recall the exact words used by Leung in response, I accept his evidence that Leung was very certain that no SSD was payable, because the Property was acquired a long time ago upon redevelopment, that Ds swapped their old residential unit for the Property, that Ds had the documents to prove this, and that that could be verified when the solicitors check the title deeds.  Leung had said so a number of times.

75.  The PSPA was signed by P first.

76.  I have set out the material terms of the PSPA above.  I have highlighted the Relevant 9c Deletion.

77.  At the time when P signed the PSPA, the Relevant 9c Deletion had not been made.  Yan’s explanation is that before P signed on the PSPA, he said to P that Ds’ stance was that no SSD was chargeable, and that even if SSD was chargeable, it would be Ds’ responsibility to settle them[38]. P agreed on the purchase price of HK$16,300,000 on that basis.  He explained further that his hope was that Ds would be able to produce documents to show that no SSD was chargeable when they later signed the PSPA. 

78.  P signed the PSPA on the afternoon of 16 March 2016.  She did so with Clause 9c in its original undeleted form.  Other deletions required to be made at other clauses had however been made, and properly initialed. 

79.  Subsequently, and after P had signed on the PSPA, when Ds came to sign it on the evening of 16 March 2016, Ds unilaterally requested to make the Relevant 9c Deletion.  Leung told Yan that there was no need to mention to P about the deletion, as no SSD would be payable.  The Relevant 9c Deletion was therefore made without P’s knowledge.  P at the time when the deletion was made did not know about it.  P has never initialed the same.

80.  After the execution of the PSPA, Miss Lee Man Wah (李敏華) from IL&L contacted Yan and asked whether the purchaser or the vendors should be paying the SSD.  In reply, Yan told her that Leung had said that no SSD was payable, and that Ds had the documents to verify that.  Several days later, Miss Lee Man Wah called Yan again and notified him that no document was available proving that SSD was not chargeable, and that IL&L had submitted the case to the Collector for his view on the matter.

81.  In addition to the above, Yan’s own view was that as the Relevant 9c Deletion was effected unilaterally, the position was not satisfactory (“不穩妥”).  He therefore made arrangements for a supplemental agreement to be entered into on the issue of SSD.

82.  The preparation of the supplemental agreement was evidenced by a number of emails between Yan and Leung in May 2016[39]. From those emails, one sees that Leung had between 5 and 11 May 2016 repeatedly asked for changes to be made to the terms of the draft Supp PSPA.  According to Yan, which I accept, Leung agreed upon the terms on 11 May 2016.  He emailed his superior Dixon Mo to that effect[40].

83.  On 11 May 2016, Ds then requested P to sign first[41].

84.  On 12 May 2016, Yan informed Leung that Ms Tsui agreed to the draft Supp PSPA, and that she would make arrangement for P to sign the same as soon as possible[42].

85.  Yan went to Guangzhou to meet P.  He presented the document he had prepared to P for her signature (the “Original Clauses”).

86.  The Original Clauses comprised an introductory part, which stated that the parties made certain supplemental provisions in relation to clause 9c of the PSPA on the issue of SSD.  It was then followed by clauses 9c(i) to 9c(vi).  Clause 9c(i) was the most material one.  It stated:

「 9c(i) 跟據賣方 (Vendor) 表述，賣方出售上述物業，並不涉及需要繳付賣家額外印花稅 (Vendor’s Special Stamp Duty)。如政府屆時認定此項出售要繳付賣家額外印花稅(Vendor’s Special Stamp Duty)，則由賣方單獨負責繳付此項賣家額外印花稅 (Vendor’s Special Stamp Duty)；除此賣家額外印花稅 (Vendor’s Special Stamp Duty)之外，賣家(Vendor) 不會支付其他印花稅；賣家額外印花稅 (Vendor’s Special Stamp Duty) 之定義，是根據印花稅條例117章訂明額外印花稅 (Special Stamp Duty) 的定義；…」

87.  The Original Clauses were initialed and signed by P, and witnessed by Yan[43].

88.  By email of 13 May 2016, Yan informed Leung that P had signed the Original Clauses.

89.  After P’s execution of the Original Clauses, Ds requested to make some additions to them. 

90.  I have set out above certain terms of the 15 May 2016 2:48 Email.  Therein, Yan stated that Midland did not accept further change to the Original Clauses. It suggested Ds to insert a declaration after they had signed the same.  A version of the declaration was then set out.

91.  In the course of the next following days, further emails were exchanged.  Different versions of the additions were set out.

92.  As explained by Yan when giving evidence‑in‑chief, he used a copy of the Original Clauses signed by P, and with the aid of certain computer program, inserted the additions (the “Additional Clauses”) which Ds wanted to make at the place between P’s and his signatures and the spaces where Ds’ were to sign (the “Original Clauses with Additions”). 

93.  Those Additional Clauses were as follows:

「 以下段落是由賣方 (Vendor) 單方加入，以補充臨約中9c段條款： 

9c(vii) 如果買方 (Purchaser) Yang Jun Ling出售或轉讓此物業給其他買家 (other purchaser) 或 sub‑purchaser或 nominee，則買方 (Purchaser) Yang Jun Ling要負責繳付所有額外印花稅 (Special Stamp Duty)（如有），當她售賣或轉讓此物業時。

9c(viii) 臨約中之9c段內之第二段 (both中文及英文version) be deleted。

9c(i) 之修改：9c(i) 內之『賣方 (Vendor) 表述』改為『賣方 (Vendor) 之Leung Kwai Ling Loretta表述』。

此9c段補充協議是因應買家 (Purchaser) 要求去處理臨約中之9c段條款。

賣家簽署同意」

94.  Ds on 17 May 2016 signed and initialed the Original Clauses with Additions.

95.  P however did not accept the Additional Clauses.  On the Original Clauses with Additions signed and initialed by Ds, P only initialed again the Original Clauses[44]. She did not initial the Additional Clauses.  She added a further clause at the end[45] recording her disagreement to the Additional Clauses (the “Disagreement Clause”), that:

「 買方 (Purchaser) Yang Jun Ling確認賣方 (Vendor) Lee Yiu Kei, Leung Kwai Ling Loretta必須跟據臨時買賣合約9c段及此補充協議繳付額外印花稅 (Special Stamp Duty)（如有）。

     買方 (Purchaser) 不接納賣方 (Vendor) 單方加入之： 『9c(viii) 臨約中之9c段內之第二段 (both中文及英文version) be deleted。』段落。買方 (Purchaser) 不接受賣方 (Vendor) 單方面刪除臨時買賣合約9c條款第二段英文和中文有關必須由律師樓託管賣方 (Vendor) 負責繳交的額外印花稅條款。」

P signed under the Disagreement Clause.  It was dated 21 May 2016.  Yan signed as witness.

96.  Yan notified Ds of P’s disagreement to the Additional Clauses by email of 21 May 2016[46]. Therein, Yan said that P did not accept that the SSD was not to be stakeheld by lawyers.  A copy of the Disagreement Clause was, together with other documents, attached.

97.  According to Yan, Leung had told him that regardless of whether she was permitted to add the Additional Clauses, Ds would still agree to the Original Clauses.  Yan’s evidence during cross‑examination in this regard, which I accept, was as follows:

「 問： 即係簽個補充協議當晚，我哋有定冇同你講過，我哋同意你嗰啲舊條款喇，即係你話131嗰啲嘅條款，我哋有冇話同意呢啲？就算不加新條款，我有同你講咩？

答： 呢--當然有喇，由於好多嗰啲條款係妳逐個字、逐--逐個字，甚至乎標點符號都改埋㗎嘛，嗰個係改--draft咗之後就改咗好多、好多次嘅，我記得，係好多次。

官： 佢問你話…

答： 係其實意思係按照李女士嘅意思。

官： 佢問你話當晚再簽呢份補充協議嘅時候，就係『當晚』，意思就係你而家見到佢後加，話加--寫住『單方面』後加嗰幾條喇，你知道。咁喺當晚，姑無論之前講過乜，梁女士有冇講過--強--佢係強調幾次話當晚佢有冇講過『即使你唔畀我後加呢一啲條款，以前同意落嗰啲我都仍然會同意嘅』，佢有冇咁講呀？

答： 呢個--呢個係佢答--係有咁講過嗰個意思，但係唔可以話每個字係一樣。

官： 唔。

答： 喀，有嘅。

問： 但係你講唔出我哋點同你講？

答： 我話你哋係接受，係一定接受，由於係--係--根本係妳叫我點樣打、點樣--字眼點樣改㗎嘛，如果妳唔同意嘅話，妳點樣教我改到咁？起碼成--唔知有冇十次定係--唔知有冇超過十次，嗰個--嗰個email係來往咗好多次。

…

問： 咁你見到喺page 132頁，我喺你畫咗畀我簽名嗰個位，我扠咗，我話 ‘not sign here, see below’。咁我當時點同你講㗎？

答： 當其時，即係話『我要後加嗰三個--三個條款吖嘛』，所以要--之前嘅，妳係同意，『但係我要加嗰三個條件』，妳係咁樣講㗎嘛。跟住就褪咗一格，跟住就留空咗多啲位，將嗰三個條款加埋落去，妳先再--下面再簽名吖嘛。

問： 咁係咪我同你講過，我只係要加咗呢啲新條款，我先肯簽，…

答： 冇咁。

問： 所以我不會簽喺上面，因為我要--一定要加完呢啲新條款我先簽？

答： 妳係同意咗上面嗰啲，但係妳要--要求加嗰三句，跟住再簽下面。係咁樣吖嘛，妳係咁講㗎嘛。」

Yan’s evidence in the above regard is confirmed by Lee.  His relevant evidence upon cross‑examination was:

「 問： 係，李生，剛才最後個問題就係話，你哋係有向甄海先生確認，無論你哋嗰啲後加條款是否獲得接受呢，你哋都係同意原本嗰頭六條補充協議條款嘅，同唔同意？

答： 應該同意嘅。

問： 同意。」

The Express Term Issue

98.  I consider first of all the position of the PSPA prior to the execution of the Supp PSPA. 

99.  I accept Yan’s evidence that Ds had prior to their execution of the PSPA repeatedly stated that SSD was not chargeable on the intended sale and purchase of the Property.

100.  I have set out the terms of Clause 9c of the PSPA.

101.  When P signed the PSPA, the Relevant 9c Deletion had not been made.

102.  There was no express agreement at that stage as to who should pay the SSD if it turned out that SSD was chargeable.

103.  I find that the Relevant 9c Deletion was made by Ds unilaterally without any prior agreement between the parties.  It was made without P’s knowledge. The Relevant 9c Deletion was not binding on P.

104.  For the sake of completeness, I state also my view that:

(a)  the evidence does not establish any acceptance of the Relevant 9c Deletion by Yan as P’s agent;

(b)  nor does the evidence establish any express oral agreement at that stage to the effect that Ds would be responsible for any SSD which turned out to be payable.  Whilst Yan had said words to such effect to P[47], what he said was based on his understanding of the position, but was not upon any express agreement between the parties.

105.  I hold that prior to the execution of the Supp PSPA, there was no express agreement between the parties as to who should be responsible for the settlement of SSD if SSD turned out to be payable.

106.  I next considered the positon upon the execution of the Supp PSPA.

107.  I accept Yan’s evidence that Ds had by 11 May 2016 agreed to the Original Clauses.  I accept also his evidence that it was only after Ds’ acceptance of the Original Clauses that he took the trouble of attending P in the Mainland for the execution of the same.

108.  P agreed to the Original Clauses.  She signed and initialed the same.

109.  I accept Yan’s and Lee’s evidence that Leung had told him that whether she was permitted to add the Additional Clauses, Ds would still agree to the Original Clauses.

110.  I reject Leung’s allegations that the Additional Clauses were signed as a result of any stalking, threat, misrepresentation, inducement, or other improper conduct on the part of Yan.  I have considered Ds’ evidence and submissions in these regards.  The allegations are in my view entirely unrealistic, and are not supported by any credible evidence.  The allegations are further not supported by the emails produced.

111.  The Original Clauses recorded Ds’ representation that no SSD was chargeable, and that if SSD was chargeable, the responsibility for the payment of the said would be on Ds.

112.  In effect, the words “the Purchaser solely” in Clause 9c of the PSPA were by the Original Clauses deleted.  In that eventuality, the second paragraph of Clause 9c applied.

113.  The Additional Clauses were unilaterally added by Ds.  As shown by the Disagreement Clause, they were not accepted by P.  The Additional Clauses were not binding on P.

114.  Ds sought to rely on their purported subsequent revocation of the Original Clauses.  They in particular relied on the 11/9/2016 Letter and “LL3”.

115.  There is no valid legal basis for Ds to unilaterally and retrospectively revoke an otherwise valid agreement between the parties.

116.  In any event, I have expressed my views that Leung was evasive as to when LL3 was first sent.  It was on the other hand clear that when Leung claimed that it had been “re-sent”, it was only re-sent shortly before the commencement of the trial.

117.  In Lee/3, Lee alleges that the Supp PSPA was “not my Deed and not my agreement”, on the alleged basis that he did not know or understand its contents before he signed it[48]:

(a)  Ds are in effect seeking to raise non est factum;

(b)  The plea has not been properly pleaded, but was only raised by way of a witness statement put in 10 days before the trial.  That is not permissible;

(c)  I reject in any event Lee’s evidence and allegations that he did not know or understand the contents of the Original Clauses before he signed it.  I find that inherently improbable given his education, and the fact that he clearly knew that he was signing a document in the context of the sale of his property;

(d)  On the applicable legal principles, I have considered Ming Shiu Chung v Ming Shiu Sum (2006) 9 HKCFAR 334, where Ribeiro PJ observed at §84 that:

“ Reliance is universally placed on signatures appended to documents by persons of full age and understanding as signifying the signatory’s assent or adherence to what that document states. Where such a person has signed a document which purports to have legal effect, the law has never regarded it as enough to show that he signed without knowing its contents for the document to be disavowed. It is an everyday occurrence that people sign documents without reading the small (or even the large) print and therefore sign without actually knowing the terms (or all the terms) of the document signed. But they are held to the documents which they have chosen to sign unless there is shown to be a recognized legal basis for concluding that their apparent consent has been in some way vitiated or that reliance on that document by some other person falls into some category of unconscionable conduct justifying relief in equity.”

(e)  On law, any plea of non est factum on the facts of the present case is bound to fail.

118.  I have also considered that the Original Clauses were on parties’ liabilities on SSD.  The Additional Clauses were principally on the issue of stakeholding, which goes to the manner and mode of settlement.  The nature of those 2 sets of clauses is different.

119.  Viewing the matters objectively, and consistent with Yan’s and Lee’s evidence, I am satisfied that the parties reached agreement in terms of the Original Clauses.

The Implied Term Issue

120.  In the light of my conclusion on the Express Term Issue, the Implied Term Issue does not arise.

121.  If necessary, I would rule in favor of P on this issue.  Given my conclusion on the Express Term Issue, I will only give brief reasons.

122.  P’s case^[49] is that it was an implied term of the PSPA (the “Implied Term on SSD”) that:

(a)  Ds will prove with proper documents to the satisfaction of P that the sale of the Property under the PSPA was not chargeable to SSD; and

(b)  in the event that the PSPA is in fact chargeable to SSD, Ds will be responsible for payment of the same.

123.  I have considered the cases cited to me on the proper test for implication of terms.  They include Kensland Realty v Whale View Investment Ltd (2001) 4 HKCFAR 381 at §23, Marks and Spencer plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd [2016] AC 742, at §21, and Lo Yuk Sui v Fubon Bank (Hong Kong) Ltd formerly known as International Bank of Asia Ltd [2019] HKCA 261 at §§24-32.  In Lo Yuk Sui, the Court of Appeal at §32 referred to the more recent decision of the Privy Council in Nazir Ali v Petroleum Company of Trinidad and Tobago [2017] UKPC 2 wherein Lord Hughes (with whom Lord Neuberger, Lord Clarke and Lord Carnwath agreed) summarized the law at [7] as follows:

“ It is enough to reiterate that the process of implying a term into the contract must not become the re‑writing of the contract in a way which the court believes to be reasonable, or which the court prefers to the agreement which the parties have negotiated. A term is to be implied only if it is necessary to make the contract work, and this it may be if (i) it is so obvious that it goes without saying (and the parties, although they did not, ex hypothesi, apply their minds to the point, would have rounded on the notional officious bystander to say, and with one voice, ‘Oh, of course’) and/or (ii) it is necessary to give the contract business efficacy. Usually the outcome of either approach will be the same. The concept of necessity must not be watered down. Necessity is not established by showing that the contract would be improved by the addition. The fairness or equity of a suggested implied term is an essential but not a sufficient pre‑condition for inclusion. And if there is an express term in the contract which is inconsistent with the proposed implied term, the latter cannot, by definition, meet these tests, since the parties have demonstrated that it is not their agreement.”

124.  I have found that Ds had repeatedly stated that no SSD was chargeable on the PSPA.  On that basis, the clear implication is that P (and indeed both sides) agreed to the purchase price on that basis.

125.  If SSD turned out to be chargeable, the amount would be substantial. 

126.  On the above main considerations, I am of the view that it would be reasonable and equitable for the Implied Term on SSD to be implied, that its implication would be obvious, that its implication would be necessary to give efficacy to the PSPA given the amount involved.  No express term would be contradicted thereby, as Clause 9c in its undeleted form contemplated payment of SSD by either the vendor or the purchaser.

127.  I have also considered the line of cases cited by Mr Kwong^[50] on the implication of terms in sale of goods cases relevant to the application for import and export licenses^[51]. Those authorities support the conclusion above.  Ds had the full facts on the circumstances in which they acquired the Property.

The Repudiation Issue

128.  I have set out above the material aspects of the SSD regime.

129.  P was entitled under section 13(1) of the SDO to require the Collector to express his opinion as to whether the PSPA was chargeable with SSD.  IL&L did so on her behalf on 28 April 2016.

130.  On 23 May 2016, the Stamp Office notified IL&L of the SSD Adjudication.

131.  IL&L on that same day notified W&T of the SSD Adjudication.

132.  I refer to the Stamp Certificate.  It was obtained upon the application of IL&L via e‑stamping.  IL&L explained in their letter of 27 May 2016 to the Stamp Office^[52] that it was on the information then available to them that they reported that the PSPA was not chargeable to SSD.  On 2 June 2016, the Stamp Office confirmed that the Stamp Certificate was invalid[53].

133.  In my view, any reliance by Ds’ upon the Stamp Certificate with the wish of showing that the PSPA was not chargeable to SSD was misplaced.

134.  Ds claim repeatedly that the SSD Adjudication was the result of P’s and/or IL&L’s fault, negligence, misrepresentation and malice in providing wrong and incomplete information and documents to the Collector.

135.  I reject Ds’ allegations in those regard.  P was entitled to seek the Collector’s opinion on the matter.  They have made the application according to the provisions in the SDO.  There is no evidence of any of the misconduct or improprieties alleged by Ds.

136.  On the other hand, Ds were entitled to appeal against the SSD Adjudication.  They did not.

137.  Ds seek to rely on the exemption under section 29DA(11) of the SDO.  I have set out the sub‑section above.

138.  To start with, I accept on the evidence before me Mr Kwong’s submissions[54] that the Order dated 25 November 2004 made by the Lands Tribunal (which Ds rely on[55], the material terms of which I have set out above) did not order HK Glory Properties Limited to assign or transfer the Property to Ds.

139.  More importantly, even if there might be reasons for Ds’ disagreement of the SSD Adjudication, the way to address the disagreement was to lodge an appeal.  Ds did not.  It has to be pointed out that even if an appeal had been lodged, and subject to the provisions of section 14(1)(b) of the SDO, the SSD would still have to be settled first.  I accept also Mr Kwong’s submission in this regard[56].

140.  By correspondence (the material parts of which I have set out above), Ds steadfastly denied their liabilities and contractual duties to settle the SSD. They instead made groundless allegations against P and IL&L, and sought to effect various retrospective revocation which they had no rights to make.  I refer in particular to those letters issued by Ds direct but sent under cover of W&T’s letters.

141.  I regard as material that Ds denied their liability to settle the SSD. Their disagreement was not confined to the manner and timing of payment, for example whether the amount concerned should be stakeheld or deducted from the purchase price.   

142.  Given the amount of SSD involved, and given Ds’ denial of their duties and obligation to settle the same, I form the view that Ds’ refusal to settle the SSD amounted to a repudiation of the PSPA and the Original Clauses.  That repudiation was accepted by IL&L for P on 18 June 2016.

The Incomplete Agreement and the Misrepresentation Issues

143.  Given my conclusions on the earlier issues, the Incomplete Agreement and Misrepresentation Issues were not engaged.  I state however that Ds had clearly made the representation that neither parties were liable to pay SSD, which representation was in the light of the SSD Adjudication incorrect.  If necessary, I would also draw the inference and rule that P did rely on that representation.

The Counterclaim Issue

144.  I have set out Ds’ Counterclaim above.  In the light of my findings and conclusions above, the parts of Ds’ Counterclaim based on P’s alleged breach of the PSPA are inconsistent with the evidence, not established, and have no merits.

145.  Given my findings and conclusion that it was Ds who were in breach, the parts of Ds’ Counterclaim for balance of the purchase price and damages for expenses etc in keeping the Property also have no merits. 

146.  In so far as the parts of Ds’ Counterclaim based on defamation is concerned:

(a)  representative of their claim in this regard are the following paragraphs in their DAC, that:

“ 28. … By reason of the said defamatory statement of P of ‘wrongful, repudiation of the Agreement’ in WS registered in our property records in LR, we have suffered losses. By reason of the said defamatory statements from P in letters from P + P sol to us of 2016, stating ‘failing to give or show good title to the property’ and ‘failing to answer Requisition’, we have suffered losses ...”

29.    …

P made highly defamatory and untrue statements on our property title in letters from P + P’s sol, wrongly alleging that we ‘fail to give and/or show a good title on to the Property free from encumbrances’ and that we ‘fail to answer the Requisition’, which caused P not to complete purchase of our property on 17-6-2016, and so caused us to suffer big losses in losing balance of purchase price of over HK$14 million and all other resulting losses and harm to us caused by P, for which we are entitled to claim further damages and interest from P…”

(b)  Given my findings and conclusion that it was Ds who were in breach, the statements which Ds complained about are in my view were true and justified;

(c)  In any event, as held by Deputy Judge Lok (as he then was) in Leung Kwai Ling, L v HK Glory Properties Limited, unrep, HCA 366/2012 & HCA 1324/2012 (20 February 2013) at §37:

“ … no cause of action will lie for defamatory statements, whether oral or written, made in the course of judicial proceedings before a court of justice (see: Gatley on Libel and Slander, 10 ed, at §13.5), and so the plaintiff’s claims for libel against the defendant are clearly hopeless.”

(d)  Ds’ counterclaim based on defamation has no merits whatsoever. 

147.  I dismiss Ds’ Counterclaim in its entirety.

The Relief Issue

148.  Mr Kwong deals with the Relief Issue at §10 of his written closing submissions.

149.  At §(1) of the Prayer, P seeks a declaration that Ds have inter alia repudiated the PSPA and Supp PSPA.  That claim is not repeated at §10 of Mr Kwong’s written submissions.  In my view Mr Kwong is correct in not pursuing that.  I have found that Ds are the parties who were in breach.  P’s claim is for refund of the Deposits and liquidated damages that flow from that.  She does not need the declaration from this Court. 

150.  Given my conclusions on the Issues as discussed above, P is entitled to repayment by Ds of the Deposits in the total sum of HK$1,630,000.  I grant the relief sought at §(2) of the Prayer.

151.  I refer to §11 of the PSPA.  As a result of Ds’ repudiation of the PSPA and the Original Clauses, Ds are liable to P for the stipulated sum of HK$1,630,000 as liquidated damages — see Wong Lai‑fan v Lee Ha[1992] 1 HKLR 125 at §131 (lines 37‑40).  I grant the relief sought at §(3) of the Prayer.

152.  On P’s claim for a declaration of equitable lien over the Property for the above sums, I have considered Lee Fu Wing v Yan Po Ting Paul [2009] 5 HKLRD 513 and Combe v Lord Swaythling [1947] 1 All ER 838 cited therein.  An equitable lien should be granted over the subject property for the deposit almost as of right — Lee Fu Wing at §120 citing Combe v Lord Swaythling.  A purchaser’s equitable lien could also be granted to cover damages if the Court finds it just to do so in all the circumstances — Lee Fu Wing at §128.

153.  In all the circumstances of the case, and bearing in mind in particular the uncooperative and obstructive conduct on Ds’ part (and in particular Leung’s) in the conduct of the proceedings, I find it just to grant a declaration that P is entitled to an equitable lien over the Property for both the Deposits refund and the liquidated damages.

154.  I order further that there be interest on the sums above at 1% above HSBC’s best lending rate from time to time for the period between date of writ and date of judgment, and thereafter at judgment rate until payment[57].

Costs

155.  I make a costs order nisi that P shall have the costs of the action, including for the avoidance of doubt both the Claim and the Counterclaim, to be taxed if not agreed.

Post‑trial hearing communications

156.  Ds have after the trial hearing put in a number of documents and what are in effect further submissions.  This Court has invited submissions from P, who objected to such course.  I agree that there has to be finality to a hearing.  No justification has been made out for any post‑trial introduction of materials or submissions.  I ignore those post‑trial documents and submissions.