HOPE VIEW LTD v. YUE LEE FA

DCMP307/2009

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO. 307 OF 2009

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BETWEEN

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R U L I N G

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1.  In these proceedings the Plaintiff, Hope View Limited, claims possession of the property in question against the Defendant, Madam Yue, by way of Originating Summons under Order 113 of the Rules of the District Court.

2.  Madam Yue has for many years been occupying the property in Ming Yuen West Street in North Point, although the registered owner thereof was her sister-in-law, Madam Lam Yin-sau, who is the wife of Madam Yue’s elder brother.

3.  Madam Yue’s case in these proceedings is that the purchase price of the property had been provided by her parents, and it had been made clear to Madam Yue’s brother and his wife, Madam Lam Yin-sau, by Madam Yue’s parents, that they intended to give a share in the property to Madam Yue.

4.  The issue of Madam Yue’s alleged share in the property had given rise to arguments betweenherself on the one hand, and her brother and sister-in-law on the other. In 2005, Fully Gain Development Limited - now a third party in these proceedings - and its group of companies became interested in acquiring the building in which the property is situated, and a neighbouring building, for the purpose of redevelopment. A member of staff of Fully Gain entered into negotiations with Madam Yue, who, according to Madam Yue, made it clear to Fully Gain that they would have to negotiate with her and the then registered owner, Madam Lam, separately.

5.  In due course an offer was made to Madam Yue which was accepted by her, which offer was, however, subject to Fully Gain being able to acquire the property from Madam Lam. That transaction in the end fell through.

6.  In 2008, Fully Gain revived its attempt at the redevelopment project. On 16 July 2008, Fully Gain signed a Sale and Purchase Agreement with Madam Lam in respect of the property, clause 9(a) of which provides that the property was sold subject to the existing occupancy by some relatives of Madam Lam. In fact, on the same day an assignment was executed by Madam Lam in favour of Fully Gain.

7.  Meanwhile, Fully Gain made an offer to Madam Yue, culminating in an agreement on 8 August 2008, whereby Madam Yue would be paid a sum of money described as a “relocation fee” and/or compensation for her to vacate the premises, while at the same time the agreement purported to grant a licence to Madam Yue to occupy the property for a period of three months from 21 October 2008 to 20 January 2009, an oddly chosen period. The agreement was subject, however, to Fully Gain being able to acquire all the units in the buildings for redevelopment by 30 September 2008. Again Madam Yue accepted the offer.

8.  Then towards the end of September 2008, by mutual agreement, the agreement was extended for three months so that the deadline for complete acquisition of all the units in the two buildings was extended to 30 December, and the period of the licence was amended so that it should commence on 21 January 2009 for a period of three months.

9.  Then, on 2 October 2008, Fully Gain assigned the property to the plaintiff, Hope View Limited, which is a related company in the same group. On 23 October 2008, Fully Gain gave Madam Yue a letter to the effect that Fully Gain was not able to acquire all the units for the purpose of redevelopment, and so Fully Gain terminated the 8th of August agreement, as amended. Madam Yue also returned the deposit or part-payment to Fully Gain.

10.  Then, on 19 January 2009, solicitors for Hope View sent a Notice to Quit to Madam Yue. On 2 February 2009, Hope View issued the Originating Summons which formed the commencement of these proceedings.

11.  The parties having filed their respective affidavit evidence, a direction was given by the court that the proceedings do continue as if begun by Writ, and the affirmations do stand as pleadings in the case, as the Statement of Claim, Defence and Counterclaim, and Reply and Defence to Counterclaim, so that as matters stand, Madam Yue has a Counterclaim against Hope View for declarations in respect of the alleged interest in the property, among other relief sought. She has also issued a Third Party Notice against Fully Gain, claiming similar declarations and relief.

12.  Before the court is a Summons or application by the Defendant to strike out Hope View’s Originating Summons on the grounds that it discloses no reasonable cause of action, it is scandalous, frivolous or vexatious, or otherwise an abuse of the process of the court.

13.  I hope I am not doing the parties any disservice by not repeating here all the helpful arguments put forward by counsel for both parties. Mr Wong, for Madam Yue, argues that Hope View’s case is based entirely on the letter of 23 October 2008 which terminated the 8 August agreement. Hope View alleges that, by virtue of the letter, the licence previously granted by Fully Gain to Madam Yue had been validly terminated when, in fact, the letter itself made no mention of the licence, when the licence had not even commenced. Fully Gain, by 23 October, was no longer the registered owner of the property in any event. And most importantly, Madam Yue’s case need not and does not depend on any licence purportedly granted to her by Fully Gain since her case is that quite independently of her dealings with Fully Gain or Hope View she has a beneficial interest in the property, of which Fully Gain and Hope View had ample notice, and subject to which both Fully Gain and Hope View acquired the property in question.

14.  Miss Lok, for Hope View, makes a simple submission, and that is that her client’s claim under Order 113 is based on its being the registered owner of the property, thereby giving it the right to possession of the premises. That is stated in the Originating Summons itself and in the supporting affirmation. While Hope View’s affirmations do deal with the 8 August agreement and its termination, Miss Lok submits that her client was merely anticipating a possible defence of the grant of a licence by virtue of that 8 August agreement. In any event, she submits, the basis of the claim under Order 113 is that Hope View is the owner of the premises, and it is entitled to possession as against Madam Yue.

15.  I agree with her submission, and I cannot agree with Mr Wong that the Originating Summons discloses no reasonable cause of action on the basis put forward by Mr Wong.

16.  Mr Wong submits, in the alternative, that even if the Plaintiff’s claim is based on its being the registered owner, it is indisputable that Madam Yue has some form of beneficial interest in the property which is binding on Hope View. That, in my view, is a matter for determination by the court at trial. The court, in due course, will have to decide whether Madam Yue’s version of events is to be accepted, and if so whether it gives rise to any beneficial or proprietary interest from which Hope View and Fully Gain could not take free either because of their prior notice or for some other reason. This court cannot at this stage make such a summary determination.

17.  Mr Wong also submits, in effect, that Order 113 is a summary procedure aimed at providing a quick and convenient procedure for the owner of a property to evict a trespasser. When Hope View took out these proceedings, Mr Wong submits, it had full knowledge that Madam Yue was not a trespasser, and therefore these proceedings were, one might say, scandalous, frivolous and vexatious, or an abuse of process. I would agree with Mr Wong, but only to this extent: that it must have been clear to Hope View, when it took out these proceedings, that an Originating Summons procedure in the context of this case would not be appropriate at all as there would be inevitably complicated issues of fact and law which are going to be inter-related. However, I cannot say that Hope View’s case does not fall within Order 113, even though inevitably the matter has to proceed as if begun by Writ, which it has done.

18.  The choice of an Originating Summons as an originating process in this case may or may not have implications on costs, but that is for a much later stage, and certainly not a ground for striking out the Originating Summons in this case.

19.  For these reasons I dismiss the Summons.

(Submissions re costs)

20.  In that case I see no strong reason for departing from the normal rule that costs should follow the event, and I order that the costs of the application to be paid by the Defendant to the Plaintiff in any event, to be taxed if not agreed, with certificate for counsel.

(Submissions re gross sum assessment of bill of costs; objections to the bill of costs)

21.  For item A1, I will allow an amount of 30 minutes. Item no. 2, I will allow that. Item no. 3, I will allow 30 minutes. And items 4 and 5, I will allow 10 minutes each. Item no. 6, I will allow. So that is a total of 290. That will give time costs of $13,533. And brief to counsel, I will say I will allow that. And so that gives a sum of roughly $38,000. Well, it is $38,533. I will allow a sum of $38,000.

(Submission re Order by Registrar Lai and costs re Strike-Out Summons)

22.  So I order that the Defendant do pay the Plaintiff’s costs for this application, summarily assessed at the amount of $38,000, in any event. That order includes the reserved costs for the hearing on 15 December 2009.