WONG WAI LUNG AND ANOTHER v. BONFIELD DEVELOPMENT LTD AND ANOTHER

DCCJ 5617/2005

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 5617 OF 2005

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Decision

1.  I have 3 summonses before me to be dealt with, namely, the Plaintiffs’ application for summary judgment, the Plaintiffs’ application to strike out the counterclaim, and the Defendants’ application to amend the Defence and Counterclaim.

2.  The 2^nd Defendant is the registered owner of the lands known as sub-section 4 of Section B of Lot No. 1077 in D.D. 23 and the Remaining Portion of Lot No. 1101 in D.D. 23, Tai Po, New Territories (“the Land”).  By a contract dated 12^th November 1999 (“the Contract”) signed between the Plaintiffs and the 1^st Defendant, the 1^st Defendant agreed to sell the 2^nd Floor together with the roof thereof of a 3-storey small house to be erected on the Land and to be known as 2/F and the roof, Block 127, Po Fu Garden, Po Sam Pei Tsuen, Tai Po to the Plaintiffs, at a price of $2,200,000.  Pursuant to the Contract the Plaintiffs duly paid a sum of HK$480,000.00 to the 1^st Defendant as deposit.  Up to the date of the issue of the Writ, namely, 12^th November 2005, there is no sign of any development of small house on the Land.  Hence the Plaintiffs claim, inter alias, for the return of the deposit of HK$480,000.00.

The application for summary judgment

3.  The application for summary judgment is based on total failure of consideration, and breach of warranty.  On 4^th July 2003, the Plaintiffs instituted an action in the High Court (HCA 2476/2003) against the 1^st Defendant for the return of the deposit of $480,000, and a further sum of $480,000, being the agreed damages payable to the Plaintiffs arising out of the breach of contract of the 1^st Defendant to the Agreement dated 12^th November, 1999.In their written submission, the Plaintiffs stated, “For avoidance of doubt, I confirm that they would withdraw the other HCA.”

4.  It is not sufficient for the Plaintiffs to say that they “would withdraw” the High Court action, because unless and until that case has been withdrawn, it remains alive, and it is a mere abuse of the judicial process to have two sets of proceedings on the same subject matter against the 1^st Defendant.  The High Court Action was taken out prior to this case in the District Court.  In the premises, the latter should not have been instituted in so far as the 1^st Defendant is concerned.  On this ground alone, the application for summary judgment against the 1^st Defendant must be dismissed.  Even if it is valid for the Plaintiffs to apply for summary judgment, such application would still be dismissed, for the reasons given below.

5.  The Plaintiff submitted that the burden is on the Defendants to show cause by affidavit to the satisfaction of the Court, and that the Defendants must satisfy that the Court that he has a fair or reasonable probability of showing a real or bone fide defence.  The 2^nd Defendant has filed no affirmation.  He has made no explanation why his name appeared in the agreement as “indigenous villager” in the Contract when the 1^st Defendant signed as the authorized person of the 2^nd Defendant’s property.  There is no explanation why, whilst allegedly not a party to the Contract, he sent the building plan to the District Land Office; nor any explanation was given as to why he allowed the 1^st Defendant to sign the Contract as “the authorized person of the property”.  Despite all these criticisms, the basic question to be asked is whether there is a total failure consideration for the Contract.  The Plaintiffs argued that the 1^st Defendant (if not the 2^nd Defendant as well) has the obligation under the “the Contract” to build or cause to be built the small house, and to assign or cause to be assigned the same to the Plaintiffs.  That would necessarily require the 2^nd Defendant to apply for building licence and making declaration.  The Plaintiffs say that in the present case, no false declaration has been made, no building has been applied for or granted, and no building work has been carried out.  The 2^nd Defendant would not proceed further.  The 1^st Defendant would never be able to fulfil the obligation under the “subscription contract”.  Therefore the 1^st Defendant has no basis to continue to keep HK$480,000.

6.  The Plaintiffs’ Counsel did not refer to the ground upon which the 2^nd Defendant is required to make a declaration.  In his written submission, he referred to the case of Chung Mui Teck & Others v Hang Tak Buddhist Hall Association Ltd. & Anor. [2001] 2 HKLRD 471, and stated that:-

‘	In order to proceed to obtain building lience under the Small House Policy, indigenous villagers would have to make declaration to the effect that they
	“	Never have made and have no intention at present to make any private assignments for [his] rights under the Small House Policy to be sold to other individual/a developer.”’

7.  In the 2^nd affirmation of Wong Wai Lung, the 1^st named Plaintiff he said, at paragraph 8:-

‘	I have further been advised by my legal advisers and I verily believe that it is the 1st and the 2nd Defendants’ pleaded case that had the 2nd Defendant proceeded his application he would have made declaration to the effect that he
	“	Never has made and has no intention at present to make any private assignments for [his] rights under the Small House Policy to be sold to other individual/a developer.”’
	and that it is for that reason the 1st and the 2nd Defendants admitted in their Defence (at paragraph 18) that “performance according to the terms [of the Contract] necessarily involves the swearing of false declarations and the making of misrepresentations to the Government”.’

8.  That is a sheer speculation without support by evidence, and that is not the pleaded case as it stands.  The Small House Policy has not been pleaded, and particulars of the Small House Policy have not been given in the Plaintiffs’ affirmations.  They cannot rely on abstracts of the facts relating to Small House Policy as revealed in Chung Mui Teck’s case as if those facts are parts of the facts of the present case.  They have to establish the facts in this case that they require in relation to Small House Policy by means of affirmation/affidavit.  Without those facts in support, there is no basis for the Plaintiffs to say that there is a requirement for the 2^nd Defendant to make declaration.

9.  Time has never been the essence of the Contract.  In November 2000, the 2^nd Defendant forwarded a proposed small house plan for his application and requested the District Lands Office, N.T. to proceed his case as soon as possible.  There is no evidence of any response from the District Lands Office.  Until and unless the District Lands Office approves the application, the construction of the small house cannot commence.  This is beyond the Defendants’ control.  There is no evidence to show that the 2^nd Defendant was required to make any declaration in order to support his application.  It appears from the evidence disclosed to Court so far, there does not seem to be a total failure of consideration on the part of the Defendants.  Therefore the application for summary judgment cannot stand and I dismiss it.

10.  The Plaintiff virtually raised scanty argument on the ground of breach of warranty.  In paragraph 15 of the Statement of Claim, the Plaintiffs claim:-

“	If, it is held that 1st Defendant has no authority to act for the 2nd Defendant, the 1st Defendant is in breach of warranty and the Plaintiffs suffered loss and damage.
	Particulars of Damages
	(1)	agency for to one Wang Hin Realty Co. (宏軒物業代理) HK$12,000.00
	(2)	the sum of HK$480,000.00 paid as deposit

11.  Under paragraph 10 of the 1^st affirmation of Wong Wai Lung, he concluded that “In the premises the 2^nd Defendant is clearly the principal of the 1^st Defendant.”  In paragraph 10 of their written submission, the Plaintiffs say that “Further D1 and D2 have been represented by the same firm of solicitors despite Plaintiff claimed, inter alia, breach of warranty against D1 (that D1 has no authority of D2 to make the agreement).  The only inference is: D1 and D2 have no conflict of interest.  D1 has the authority.”  If that is the conclusion, there would be no breach of warranty.  Hence the ground for summary judgment on the basis of breach of warranty cannot stand.

The application to strike out the Counterclaim

12.  The application to strike out the Counterclaim is simply a mirror of the application for summary judgment.  The latter having failed, the former cannot stand.  Therefore I dismiss the application to strike out the Counterclaim.

Application for amending the defence and counterclaim

13.  Paragraph 18 of the Defence is “…….. the Contract as pleaded by the Plaintiffs is unlawful and unenforceable because performances according to its term necessarily involves the swearing of false declaration and the making of misrepresentation to the Government.”

14.  The Defendants’ solicitor advanced the reason that the application for amending the Defence and Counterclaim was made as a result of having regard to the case of Li Pui Wan v Wong Mei Yin [1998] 1 HKLRD 84 (CA) and the terms of the agreement.  The Plaintiffs objected to the application, contending, inter alias, that the Defendant must have been acting on specific instruction of the Defendant to plead making of false declaration and making misrepresentation to the Government.

15.  The specific instructions of the Defendant may be wrong if he misconceived the applicable law.  I have already adjudged that there is no evidence of fact adduced to show that there is the requirement to make a declaration, because the Plaintiffs cannot rely on the facts (as opposed to legal principles) of Chung Mui Teck to support their case.  Therefore the change of view on law, especially after the Defendants have considered the decision of the case in Li Pui Wan, is a proper explanation to support the application for amendment.  I therefore grant item 1 to 4 of the application to amend the defence and counterclaim.

Costs

16.  I make an order nisi for costs, to be made absolute in 14 days’ time, that the Plaintiffs are to bear costs of the application for summary judgment, the application to strike out the counterclaim and the hearing of the application relating to the amendment of the defence and counterclaim, with certificate for Counsel; the Defendants are to bear the costs of and incidental to the application to amend the defendant and counterclaim.