GREEN LACONIC LTD AND OTHERS v. FAN CHIN WA

HCA 1376/2019, HCA 1377/2019 & HCA 1378/2019

[2021] HKCFI 749

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1376, 1377 and 1378 OF 2019

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D E C I S I O N

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A.   INTRODUCTION

1.  The Plaintiffs (“Ps”) are the owners, co-owners or tenants of a number of lands in the New Territories; and claim to enjoy the right to possession thereof.  They claim that the Defendant (“D”) has been occupying those lands wrongfully.  D contends that it is entitled to occupy the lands on various grounds, in particular, that it is the tenant of some of them; and more importantly, there is an oral agreement whereby it is given the right to occupy them until Ps have settled the outstanding costs of some construction works.

2.  I have before me two applications: first, Ps’ application for summary judgment, or alternatively, interlocutory mandatory injunction; and, second, D’s application for joinder. For ease of reference, I shall adopt the abbreviations used in the pleadings.

B.   THE PLAINTIFFS’ CLAIM

3.  Ps, namely, Green Laconic Limited (“Green Laconic”), Multigreen Limited (“MultiGreen”) and City Palm Limited (“City Palm”) are BVI companies.

4.  This consolidated action concerns altogether 25 pieces of land (“the Subject Lands”), which are very close to each other and form a large area altogether in D.D.76.  Ps claim that they are entitled to possession of the Subject Lands, which are either owned, co-owned or leased by them as follows:

The Subject Lands
The Owned Lands			The Co-owned Lands			Leased Lands
Green Laconic’s Owned Lands	Multigreen’s Owned Lands	City Palm’s Land	Green Laconic’s Co-owned Lands	Multigreen’s Co-owned Lands	Multigreen’s Beneficially Co-owned Lands	Multigreen’s Leased Lands
593SBRP 598RP	648 653 654 655 658 659 660 661 662 663 666SC	641RP	593SA 593SBSS1 595SA 595SB 649	656	596 666SA 603RP	651 666SB

5.  In about November 2012, D entered into a consultancy service agreement (“the Consultancy Service Agreement”) with Smartech Global Group Limited (“Smartech”), an associated BVI company of Ps and acting as Ps’ agent in entering into the said agreement.

6.  At about the same time, D suggested, and Ps agreed, that in furtherance of the Consultancy Service Agreement, the parties should enter into agreements in order to give exclusive possession of the Subject Lands to D. Under this oral agreement (“the Oral Agreement”), the parties would enter into tenancy agreements but Ps shall pay D the amount of money equivalent to rentals payable under the tenancy agreements. In other words, D did not in fact have to be pay any rent. Apart from enabling D to have exclusive possession so as to perform its duties under the Consultancy Service Agreement, the Oral Agreement would prevent any potential dispute if D attempted to claim adverse possession of the Subject Lands later.

7.  Pursuant to the Oral Agreement, Ps and D entered into 3 tenancy agreements dated 1 May 2014 (“1^st Batch TAs”) for the period between 1 April 2014 and 31 March 2015. Towards the expiry of the 1^st Batch TAs, they entered into 3 new tenancy agreements (“2^nd Batch TAs”):

Date	Landlord	Term
30 June 2015	Green Laconic	1 June 2015 to 31 May 2016
30 June 2015	Multigreen	1 June 2015 to 31 May 2016
29 May 2015	City Palm	1 April 2015 to 31 March 2016

4 pieces of land (i.e.666SA, 666SB, 666SC and 651) were not mentioned in the 2^nd Batch TAs but in fact they continued to be leased to D.  Towards the expiry of the 2^nd Batch TAs, again, the parties entered into 3 new tenancy agreements (“3^rd Batch TAs”):

Date	Landlord	Term
30 June 2016	Green Laconic	1 June 2016 to 31 May 2017
30 June 2016	Multigreen	1 June 2016 to 31 May 2017
14 November 2016	City Palm	1 April 2016 to 31 March 2017

Again, the 4 pieces of land were not mentioned in the 3^rd Batch TAs but in fact they continued to be leased to D.  Pursuant to the Oral Agreement, Ps paid to D such amount so that D did not really have to pay any rent.  Ps also allowed D to enter into exclusive possession of the Subject Lands.

8.  Towards the end of the term under the 3^rd Batch TAs, the parties agreed in principle that they ought to enter into new tenancy agreements subject to some modifications. Accordingly, Ps and D entered into 3 tenancy agreements (“the Tenancy Agreements”) for 1 year from 1 June 2017 to 31 May 2018. The modifications were that: first, for the Green Laconic’s Co-owned Lands except 649, D would, as agent for and on behalf of Green Laconic as unnamed principal, entered into tenancy agreements with Tang Kun Yau (“Tang KY”), a co-owner of those lands and Green Laconic would continue to sub-let such lands to D by a new tenancy agreement between Green Laconic and D; second, regarding Multigreen’s Leased Lands, D would, as agent for and on behalf of Multigreen as unnamed principal, entered into tenancy agreements with the registered owner; and Multigreen would continue to sub-let such lands to D under a new tenancy agreement between Multigreen and D.  666SA, 666SB and 651 were not covered by any of the Tenancy Agreements, but in fact, they continued to be leased by Multigreen to D.  Clause 5 of each of the Tenancy Agreements provided that, upon termination of the tenancy, D must demolish or remove all structures on the Subject Lands or equipment or chattels stored thereon.

9.  Pursuant to the above-mentioned modifications, D, on behalf of Green Laconic and Multigreen, in his own name as tenant entered into the following tenancy agreements (“the TAs in D’s name”):

Date	Land	Landlord	The unnamed principal
7 May 2017	Green Laconic’s Co-owned Lands except 649	Tang KY	Green Laconic
1 December 2017	651	Lau Kwan Fat	Multigreen
Undated	666SB	Tang Cheuk Shun Tso	Multigren

10.  Pursuant to the Oral Agreement, on 4 July 2017, Ps paid D the sums of $60,000, $145,000 and $40,000 for D to set-off such rentals to be paid to Ps under the Tenancy Agreements. D enjoyed exclusive possession of the Subject Lands. Other than in furtherance of the Consultancy Service Agreement, D was allowed to use the Subject Lands for his own purposes. In particular, he maintained a personal office at the area covering parts of 654 and 655; kept at the Subject Lands a number of pets; and operated a shop selling reptile pet cages.  D maintained fences, locks and gates over the Subject Lands, keys of which Ps did not possess.  Had D not been further engaged under the Consultancy Service Agreement, Ps would not have paid D the amount of money equivalent to the rentals payable by D. 

11.  Ps claim that D is barred from denying P’s position as the lessor of the Subject Lands by entering into the Tenancy Agreements.  Further, in respect of the TAs in D’s name, upon the termination of the Consultancy Service Agreement, D shall return vacant possession of the relevant lands to P.

12.  By a notice dated 21 September 2017 issued by Smartech to D, the Consultancy Service Agreement was terminated with immediate effect. The parties also agreed that the Oral Agreement and the Tenancy Agreements should also be terminated, and vacant possession of the Subject Lands, including those under the TAs in D’s name, should be returned to Ps. However, as D claimed that he had some tools and constructive materials at the Subject Lands, and he needed time to relocate them, they agreed that D should be given until 30 September 2017 to do so (“the Termination Agreement”).  The Termination Agreement was evidenced in writing by 3 written notices all dated 21 September 2017.

13.  However, in breach of the Termination Agreement, D failed and refused to deliver up vacant possession of the Subject Lands by 30 September 2017 and asked for more time. D still failed and refused to vacate the Subject Lands by 31 May 2018 when the Tenancy Agreements expired.

14.  In the circumstances, since 1 October 2017, or in any event, no later than 1 June 2018, D has been a trespasser occupying the Subject Lands wrongfully.

15.  Hence, Ps claim possession of the Subject Lands and mesne profits.

C.   D’s DEFENCE

16.  D claims that Ps, Smartech and another BVI company called City Breeze Limited were and are controlled by Michael Ying Lee Yuen (“M Ying”) and Claudine Ying Ka Sin (“C Ying”).  They were and are agents, nominees or corporate vehicles used by M Ying and C Ying to hold their interests in these lands.  The Subject Lands plus City Breeze’s lands made up 3 private gardens, namely, Lavender Garden, Wan Fung Garden and Lau Fau Shan Garden.

17.  D himself was and is a contractor providing construction related-services and carrying out construction works.  He has also been involved in businesses relating to reptile pets.

18.  D admitted that he entered into a consultancy service agreement (consisting of the Consultancy Service Agreement with additional oral terms) with Smartech (as agent, nominee or corporate vehicle for M Ying; or alternatively, Ps) on about 30 November 2012.  Accordingly, consultancy services were provided until around September 2017.  

19.  However, D claims that, between 2014 and 2017, M Ying by himself and through various person instructed him to enter into sham lease agreements with Ps (“the Sham Lease Agreements Scheme”).  M Ying knew that building works to be done on the Subject Lands would breach the Squatter Control Policy; by naming D as the tenant, D would assume all potential liabilities, and the involvement of M Ying and his associates could be concealed.  Under the Sham Lease Agreements Scheme, D would purportedly pay rent but a sum in the same amount would first be transferred to D.  To implement the Sham Lease Agreements Scheme, Ps and D entered into the 1^st to 3^rd Batch TAs, and the Tenancy Agreements.

20.  On 21 September 2017, M Ying and D entered into a Demolition of Squatter House Agreement. In short, D agreed to help M Ying to demolish some squatter houses on City Breeze’s lands; but to sever any apparent link with M Ying or its associated companies, D would be removed as consultant of Smartech and the Tenancy Agreements would be terminated earlier. Furthermore, it was agreed that D shall become the main contractor of the building works on the Subject Lands (“Main Contractor Agreement”).

21.  In the circumstances, Smartech served a written notice dated 21 September 2017 to D to terminate the Consultancy Service Agreement, and D tendered written notices for early termination of the Tenancy Agreements. D, on the hand other, demolished squatter houses on City Breeze’s lands.

22.  After that, in November 2017, pursuant to the Main Contractor Agreement, Stephanie Lau and Agnes Au, as agents or nominees of M Ying and C Ying or alternatively Ps, and D entered into a series of building/construction works agreements: First Lavender Garden Agreement, Second Lavender Garden Agreement, Wang Fung Garden Agreement and Lau Fau Shan Garden Agreement (“the 4 Garden Agreements”). Subsequently, in March 2018, the parties entered into the Additional Lavender Garden Agreement.

23.  D claims that he had performed building works and was entitled to payment under these agreements by early 2018.

24.  What is critical for the present purpose is that D claims that, to secure payment of sums payable under the said construction agreements, he had 3 meetings with Stephanie Lau and Agnes Au in May 2018, the first two were held at the Lavender Garden on 1 May and 9 May 2018 whereas the last one was held on 24 May 2018 at Maxim Restaurant, Telford Plaza, Kowloon Bay.  In the meetings, D was assured by the two ladies that their bosses, M Ying and C Ying, would make payments to him as soon as possible. Most importantly, it was orally agreed at the third meeting that: (“the Supplemental Agreement”)

(a)  D shall be paid the outstanding sums under the First Lavender Garden Agreement, the Second Lavender Garden Agreement, the Wan Fung Garden Agreement, the Lau Fau Shan Agreement and the Additional Lavender Garden Agreement as soon as possible.

(b)  D shall continue with the Second Lavender Garden Agreement, the Wan Fung Garden Agreement and the Lau Fau Shan Garden Agreement.

(c)  So long as full payments had not been made under each and every agreement (i.e. the First Lavender Garden Agreement, the Second Lavender Garden Agreement, the Wan Fung Garden Agreement, the Lau Fau Shan Garden Agreement and the Additional Lavender Garden Agreement), D shall be entitled to use and possess the Subject Lands and leave his construction tools and materials thereon.

(d)  Further, D shall be entitled to use the Subject Lands personally by setting up a business office and storage for his reptile business.

25.  D claims that the Supplemental Agreement does not apply to the Green Laconic’s Co-owned Lands (except 649), and Multigreen’s Leased Lands. In respect of the Multigreen’s Leased Lands, he claims that he had entered into tenancy agreements with the owners. In respect of the Green Laconic’s Co-owned Lands (except 649), on 7 May 2017, he entered, in his own capacity, a tenancy agreement with Tang KY for the period between 7 May 2017 and 6 May 2021 at an annual rent of HK$8,000.

26.  D further says that he performed the Supplemental Agreement by continuing to perform the works under the Second Lavender Garden Agreement, the Wan Fung Garden Agreement and the Lau Fau Shan Garden Agreement.

27.  He claims that in breach of the various building works agreements, a total sum of HK$22,928,225.70 has remained outstanding. This sum includes HK$12,729,000 payable under the First Lavender Garden Agreement, the Second Lavender Garden Agreement, the Additional Lavender Garden Agreement, the Wan Fung Garden Agreement, and the Lau Fau Shan Garden Agreement (“the Construction Sum”).

28.  D pleads in §66 of his Defence that:

“By reason of the Construction Sum being in arrears and pursuant to the Supplemental Agreement, Fan was and is still entitled to remain on the Land Holding Companies’ Lands, leave his construction tools and materials thereon and maintain his personal business office and storage for his reptile business until the Construction Sum is received by Fan.”

D.   P’s SUMMARY JUDGMENT AND INTERLOCUTORY INJUNCTION APPLICATION

29.  By summons dated 6 May 2020, P sought summary judgment for possession of the Subject Lands (save and except Multigreen’s Leased Lands) and mesne profits; or alternatively, an interlocutory mandatory injunction compelling D to vacate and deliver vacant possession of the Subject Lands (save and except Multigreen’s Leased Lands) to Ps.  At the hearing, P confirmed that it would not pursue its claim for mesne profits at this application.  What remains in issue is Ps’ claim for possession of the Subject Lands (save and except Multigreen’s Leased Lands).

30.  The principles applicable to summary judgment applications are well-established and need not be repeated (see Hong Kong Civil Procedure 2020, vol. 1, §§14/4/8-14/4/10, pp 315-317).  The principles concerning interlocutory mandatory injunctions are equally well established (see e.g. Music Advance Ltd v Incorporated Owners of Argyle Centre Phase I [2010] 2 HKLRD 1041 at 1046-1047, §11).

31.  Having considered all the evidence and submissions made by the parties, I have come to the conclusion that, although this is not a case for summary judgment, an interlocutory mandatory injunction should be granted.  I shall now explain why. As the case will go to trial, I will only say what I believe to be sufficient reasons to justify my decision; and my views on the merits of the parties’ respective case are provisional views which will not bind or should not influence the trial judge in any way.

32.  To begin with, D challenges Ps’ right to claim possession of the Subject Lands (save and except Multigreen’s Leased Lands).  There cannot be any dispute that, insofar Ps are either the owners or co-owners of those lands, Ps enjoys the right to possession thereof.  What D takes issue concerns Multigreen’s Beneficially Co-owned Lands.  What happened was that by two agreements both dated 6 December 2012, Multigreen agreed to buy from the owners 50% interest in the three pieces of land in question (i.e. 596, 666SA and 603RP). There were 7 vendors.  What should be noted is that one Tang Lai Ping purportedly signed on behalf of 5 of them.  The agreements provided that upon payment of 10% deposit, Multigreen was entitled to enter into possession of the lands.  D argues that there is no evidence that the signatory had been duly authorised by the vendors to sign the agreements.  P explained that the sale and purchase had not yet been completed because of some on-going probate application by the vendors.   Ps, relying on the principle of tenancy by estoppel, argue that D is estopped from challenging the title, and right to possession, of Multigreen. Further, there is no evidence that the vendors have disputed the validity of the sale and purchase agreements, or Multigreen’s right to possession of the relevant lands pending completion.  I am satisfied that Ps enjoy sufficient legal interest to claim possession of the Subject Lands (save and except Multigreen’s Leased Lands).

33.  I take the view that the real issues concern:

(a)  Whether D is entitled to remain in possession of the Green Laconic’s Co-owned Lands (except 649) because it is the tenant in its own capacity instead of as agent for an unnamed principal i.e.  Green Laconic;

(b)  Whether D is entitled to remain in possession of the other lands covered by Ps’ present application because of the Supplemental Agreement.

34.  In respect of the Green Laconic’s Co-owned Lands (except 649), Ps’ case is that they had been let to Green Laconic as an unnamed principal, with D being its agent, by the other co-owner i.e. Tang KY, represented by Tang Yun Loi (鄧潤來), of his share and interest thereof under a tenancy agreement dated 7 May 2017 for the period from 7 May 2017 to 6 May 2021 at an annual rent of HK$8,000.  D’s case is that he rented those lots for his personal use but not as agent for Green Laconic.

35.  Ps contend that D’s claim is unarguable.  First, P referred me to another set of tenancy agreements covering the said lots under which Green Laconic let to D the subject lots for the period between 1 June 2016 and 31 May 2017; and 1 June 2017 and 31 May 2018 (which overlapped with the period under the said tenancy agreement signed between D and Tang Yun Loi).  P asked rhetorically, if D was the tenant in his own right pursuant to the agreement between him and Tang Yun Loi, why it was necessary for D to sign the agreements with Green Laconic.  More importantly, Ps relied on a reimbursement form signed by D in which D claimed reimbursement of expenses from Green Laconic in the sum of HK$8,000. The crucial point is that D explained the sum of HK$8,000 as “鄧潤來租金” in respect of the relevant lots for the period between 7 May 2017 and 6 May 2021.  D claims that, M Ying asked him to sub-lease the lots to him at the same rent of HK$8,000 which he agreed, and therefore he demanded M Ying to pay HK$8,000 by filling in the reimbursement form as a matter of convenience.  D’s assertions are incompatible with the reimbursement form.  Properly and objectively construed, D was asking for reimbursement of the sum of HK$8,000 which he had paid for and on behalf of Green Laconic.  This piece of contemporaneous document supports Ps’ case.

36.  Having said that, D contends in the alternative that, if the Court does not accept that he was the true tenant in his own right in respect of the Green Laconic’s Co-owned Lands (except 649), these lots are nevertheless subject to the Supplemental Agreement.  The main battleground between the parties for the present purpose becomes whether D’s claim that the parties had entered into the Supplemental Agreement, which would potentially apply to all the lands in issue, is arguable or believable in fact.

37.  Ps contend that D’s case on the Supplemental Agreement is unbelievable for a number of reasons. I shall highlight the main reasons as follows:

(a)  First, there is no document whatsoever supporting the existence of the Supplemental Agreement.

(b)  Second, there are differences in how the D described the Supplemental Agreement in, first, the defences filed in DCCJ6062, 6063 & 6064/2018 before they were consolidated; second, the consolidated defence; and third, D’s affirmation.   I note two material differences in particular. First, in the consolidated defence, D claimed that one of the terms was that D shall be entitled to use the lands personally by setting up a business office and storage for his reptile business; but this term was not mentioned in his defences filed in the District Court previously.  Second, in the consolidated defence, D claimed that the Supplemental Agreement were concluded at the third meeting on 24 May 2018 but he said in his affirmation that it was concluded at the first meeting on 1 May 2018. Indeed, D acknowledged in his affirmation that the Supplemental Agreement stated in his affirmation was “slightly different” from the one pleaded in his consolidated defence.

(c)  Third, Ps point out that, it does not make commercial sense that the Supplemental Agreement did not refer to an agreed specific sum which was payable to D; and it is even more absurd that, apparently, D may remain on the lands so long as any sum remained outstanding (which may fluctuate).

(d)  Fourth, on 27 July 2019, D emailed and WhatsApp Ps, M Ying and C Ying asking them to settle various sums totalling HK$9,473,700 within 7 days. In those correspondence, D referred to a meeting with Stephanie Lau and Agnes Lau in Aroma Garden (which was how D described the Lavender Garden) on 1 May 2018 and another meeting in Telford Plaza Maxim’s Palace on 24 May 2018 Chinese Restaurant at which the two ladies accepted and confirmed P’s quotations of various construction works.  However, somewhat curiously, there was no mention about the Supplemental Agreement.

(e)  Fifth, on 29 August 2018, Ps, through solicitors, issued demand letters requiring D to deliver up possession of the Subject Lands by 31 July 2018 (which appears to be a typo) but there was no reply from D.  D said that Ps only exhibited this letter in the affirmation in reply; and hence, he did not have the chance to deal with this piece of evidence.  But D could have sought leave to file further evidence.  At the hearing, D’s counsel simply said that he had been instructed that D had not received that letter.

(f) Sixth, Ps commenced proceedings in the District Court on 31 December 2018. The Supplemental Agreement was mentioned for the first time in D’s defences filed in the District Court on 18 April 2019.  Ps argue that this was an afterthought, and a recent concoction.

38.  I tend to agree that, considering the matter provisionally, these are powerful points; and it seems that D would have a difficult task to prove the existence of the Supplemental Agreement.  That said, I am unable to say that D’s case is so weak that it is not arguable.  I say this for the following reasons:

(a)  First, it is obvious that the parties had a long course of dealings, and their relationships were rather complicated. More importantly, even on Ps’ own case, they had entered into some rather unusual agreements (ie the 1^st, 2^nd, 3^rd batches of TAs, and the Tenancy Agreements).

(b)  Second, in her affirmation, Stephanie Lau merely said that she and Agnes Au did not recall meeting D on 1 or 9 May 2018 at the Lavender Garden.  She produced the logbooks for the use of the companies’ vehicles.  While the logbooks do not contain any record of trips to the Lavender Garden on 1 or 9 May 2018, they show that at about 2pm on 24 May 2018, there was a trip to Telford Plaza.  The date and place of this trip seem to match with D’s alleged third meeting concerning the Supplemental Agreement.

(c)  Third, Ps have not adduced any evidence on whether and how they had replied to D’s said email and WhatsApp dated 27 July 2018. As mentioned, D referred to two meetings on 1 and 24 May 2018 specifically.

(d)  Fourth, Chan Kit Man, a business partner of D, said in his affirmation that, on 1 May 2018, he and D met Stephanie Lau and Agnes Au at the Lavender Garden; and at that meeting, they told D and him that so long as full payments had not been made for the construction works, D shall be entitled to use and possess the lands, to leave his construction tools and materials there, and continue his reptile business including the office and storage thereon.

39.  Having concluded that this is not a case for summary judgment, I move on to consider whether an interlocutory mandatory injunction should be granted.  I am aware that to grant such an injunction would in practice give Ps a very substantial part of the relief which they claim in this action. Nevertheless, I shall apply the following fundamental principle: the Court will and should take whichever course appears to carry the lower risk of injustice if it should turn out that it is wrong.  On the merits, for reasons that I need not repeat, I feel a high degree of assurance that at the trial Ps’ claim for possession of the lands in question would succeed (though not to the extent of justifying a summary judgment).  But putting aside merits, I have considered various relevant discretionary factors which concern the balance of convenience.

40.  D claims that, under the Supplemental Agreement, he was given a contractual licence to occupy that Subject Lands.  He has not suggested that he has any proprietary interest in them, or even the right to exclusive possession thereof.  However, in practice, because of D’s actual occupation of the Subject Lands in the meantime, Ps have been deprived of the use thereof for more than 2 years since the disputes arose.  To be realistic, it is unlikely that the trial of this action can and will take place soon.

41.  On D’s own case, the purpose of the Supplemental Agreement is to give him a contractual licence over the Subject Lands as security for payment of the costs relating to various construction works.  As mentioned, D’s pleaded case is that by reason of “the Construction Sum being in arrears”, he was and is still entitled to remain on the Subject Lands. “Construction Sum” has been defined in D’s defence to be a sum of HK$12,729,000.  It is critical that Ps have offered to pay the amount claimed by D in this respect into court.  At the hearing, Ps, through counsel, reaffirmed that they would be prepared to pay the sum of HK$12,729,000 into court as a condition for granting the interlocutory mandatory injunction.

42.  The sum which Ps have offer to pay into court will undoubtedly serve as a sufficient security for the alleged outstanding construction costs covered by the Supplemental Agreement.  Of course, D will not be able to use any part of the sum paid into court in the meantime.  However, such disadvantage must be considered in context.  First, it is far from clear whether D can prove the existence of the Supplemental Agreement, or even the full amount of outstanding construction costs claimed by him (if any at all).  Second, there is no evidence that D would suffer any serious or irreparable prejudice if D is not paid immediately. In particular, while D would need to incur expenses, including rentals, to move the construction materials and his business to another place, there is no evidence that he cannot afford doing so.

43.  Having considered all relevant circumstances, I decide that this is a case where I should grant an interlocutory mandatory injunction compelling D to vacate the lands which are the subject matter of P’s present application on condition that Ps first pay the said sum of HK$12,729,000 into court.

E.   D’s JOINDER APPLICATION

44.  By summons dated 4 March 2020, D applies to joint M Ying, C Ying and City Breeze as defendants to his counterclaim.

45.  What is most contentious is D's application to join M Ying and C Ying. The basis of the application is that M Ying and C Ying were and are still are the true owners of the Subject Lands; and Ps were only their agents or nominees. Ps, on the other hand, claim that they are limited companies incorporated in the BVI for the purpose of, inter alia, developing the lands for agricultural use; while it is accepted that they are body corporates controlled by M Ying, he and C Ying were not actively involved in the daily operation of the companies.

46.  The principles for joinder applications are, again, not in dispute.  In Ng Chiu Wing v Yip Hoi Ching and another, CACV362/2008 (29 June 2009, unreported), §15, A Cheung J (as he then was) held that: 

“As has been pointed out by the editors of Hong Kong Civil Procedure 2009, Vol 1, para 15/6/6, prima facie, a plaintiff is entitled to choose the person against whom to proceed. It is for the plaintiff to decide whom he wishes to sue. He may or may not be successful in his claim. The fact that the court allows a plaintiff to join a person as an additional defendant does not mean that the court takes the view that the plaintiff is bound to succeed against the additional defendant. That is a matter for trial. At the joinder stage, unless the court takes the view that the intended claim against the person sought to be joined is bound to fail or unless there are other special circumstances, the court should normally allow the plaintiff to choose his defendant.”

More recently, in Advanced Connection Ltd v Able Technology (Hong Kong) Limited and others [2019] HKCA 1092, the Court of Appeal approved the principle that, at the joinder stage, there is no requirement for an applicant to show merits of his case; and the burden is on the party opposing to establish that it is plain and obvious that the plaintiff has no case against the proposed defendant (§§14, 20). At §20, Chu JA held that: 

“We are of the view that the Judge had correctly identified the objective, approach and test to be adopted for an Order 15 rule 6(2)(b) joinder application. He rightly pointed out that the test is whether there is a bona fide claim and a proper question to be tried between the plaintiff and the intended defendant that is necessary or just and convenient for resolution between them as well as between the plaintiff and the defendant in the proceedings. At the joinder stage, the court will not engage itself in a scrutiny of the applicant’s case, or an adjudication of disputed facts.”

47.  D stresses that he is not trying to pierce the corporate veil of Ps.  His case is simply that Ps have been acting as nominees only for and on behalf of M Ying and C Ying who are the true beneficial owners of the Subject Lands.  In law, it is possible that a limited company holds a property as nominee only for and on behalf of the true beneficial owner.  In Prest v Petrodel Resources Ltd and others [2013] 2 AC 415 at 497, §52, Lord Sumption held that: 

“Whether assets legally vested in a company are beneficially owned by its controller is a highly fact-specific issue. It is not possible to give general guidance going beyond the ordinary principles and presumptions of equity, especially those relating to gifts and resulting trusts.”

48.  There is not much evidence concerning in what circumstances Ps became the registered owners of the Subject Lands. This is hardly surprising in view of the interlocutory nature of this application, and the fact that M Ying and C Ying are not before the Court. Bearing in mind that this issue is highly fact-sensitive, I am unable to say that Ps have discharged the burden of proving that it is plain and obvious that D’s potential claim against M Ying and C Ying is bound to fail. Ps contend that D’s joinder application is for the purpose of putting pressures on M Ying and C Ying. While this may be true in practice, I do not think there is sufficient evidence to prove that the application was made in bad faith.

49.  I am aware that to allow D’s joinder application will necessarily delay the present proceedings, which would adversely affect the interest of Ps.  However, having considered the matter anxiously, I am not convinced that I should depart from the usual principle that a plaintiff (including a plaintiff by counterclaim) should be free to choose who he wants to sue.  At least, he should be given a chance to do so.  After the proposed additional defendants are joined, it will be open to them to apply to strike out the claim, and D will need to face the consequences in case such an application succeeds.  To avoid any doubt, I express no view on the merits of D’s claim against the proposed additional defendants.

50.  I will deal with D’s application to join City Breeze briefly. City Breeze was mentioned in D’s defence, being one of the companies which allegedly owed construction costs to D. Ps have not advanced any substantial reason why it may not be joined as a defendant in D’s counterclaim.

51.  For these reasons, I allow D’s joinder application (including its application to amend the Defence and Counterclaim consequential upon the joinder).

F.   CONCLUSION AND ORDER

52.  In respect of Ps’ summons dated 6 May 2020 filed on the same day, I dismiss §1 whereby P sought summary judgment.  As to §2 whereby Ps applied for an interlocutory mandatory injunction, I make an order in terms of sub-paragraphs (a) and (b) save that the draft injunction order should be amended as follow: 

(a)  As to the undertaking under sub-paragraph (2), Schedule 2, the sum that Ps shall pay into court should be HK$12,729,000 and the deadline for payment shall be within 28 days of this decision.

(b)  As to §1 of the injunction, D shall deliver vacant possession of the lands covered by this application within 90 days upon Ps’ compliance with their undertaking under sub-paragraph (2), Schedule 2.  I take the view that D should be given a reasonable time to find another place to store its construction materials and run his business, and to arrange and make the move.

As to the costs of Ps’ summons, I take the view that a fair order is P’s costs in the cause to be taxed if not agreed.

53.  In respect of D’s summons dated 4 March 2020 (filed on 9 March 2020), I make an order in terms of §§ 1 to 13 thereof subject to minor amendments set out in §179(1) & (2) of D’s Skeleton Argument.  I should mention that §13 of summons provides that “costs of this application be in the cause of the Action”.  This is the costs order that I shall make despite D’s submission at the hearing that Ps should pay the costs of this application.

54.  If any party intends to vary the costs orders that I have made in relation to the two summonses, that party shall apply to do so by a written submission not longer than 5 pages within 14 days of this decision; and the other party shall file a written submission in reply within 14 days thereafter. I shall then dispose of the application on paper.