KWAN SO LING v. WOO HARRY KEE YIU AND OTHERS

HCA 1311/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1311 OF 2011

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DECISION

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I.  INTRODUCTION

1.  Woo Wai (“Woo Snr”) and his wife Woo Kam Oi (“Mdm Woo”) had five children. Their eldest son Woo Kay Sin (“Woo Jnr”) and second son Woo Harry Kee Yiu (“D1”) ranked 2^nd and 4^th amongst the 5 siblings.  Woo Snr, Mdm Woo and Woo Jnr passed away in 1998, 2012 and 1994 respectively. Kwan So Ling (“P”) is the widow of Woo Jnr, and they had a daughter and then a son. Woo Derrick (“D2”) is the son of D1.

2.  The dispute in the present action concerns a property known as 2/F, No. 180 Hai Tan Street, Kowloon (“Subject Property”).  The present appeal concerned property valuation expert evidence in respect of the Subject Property.

3.  By the present action, P sought inter alia a declaration that she is the sole legal and/or beneficial owner of the Subject Property, an order that D2 shall convey the Subject Property to her, alternatively a life interest in respect of the Subject Property, equitable compensation, or alternatively an order to set aside the assignment of the Property by Mdm Woo as administratrix of the estate of Woo to D2 on 22 November 2008 (“Assignment”) on the basis that Mdm Woo lacked requisite mental capacity when she executed the Assignment.

4.  D2 claimed he is the legal and beneficial owner of the Subject Property, and he counterclaimed for vacant possession of the Subject Property, an injunction to restrain P from using the Subject Property, and damages.

5.  Before I deal with how the appeal came before me, it is useful to set the scene by turning to the respective pleaded case of P and D1/D2.

II.  PARTIES’ PLEADED CASE

6.  There is no dispute that in/about May 1966, Woo Snr, Mdm Woo and three of their children (including D1 but not Woo Jnr) emigrated to Canada. D1/D2 claimed (but P denied) Woo Snr sent Woo Jnr to live in Mainland China.  D1/D2 averred this was due to Woo Jnr’s opium addiction problem. P admitted Woo Jnr was a drug addict, but denied he was dependent on opium.  She claimed that since 1955 Woo Jnr assisted Woo Snr in his textile business in Hong Kong and was at all material times ordinarily resident in Hong Kong, but she admitted that she and Woo Jnr got married in Mainland China in 1966.

7.  Woo Snr was the former owner of the Subject Property and 1/F, No. 180 Hai Tam Street, Kowloon (“Other Property”).  The Subject and Other Properties are collectively known as the “Properties” in this Decision.

8.  P claimed that in 1966 Mdm Woo on behalf of herself and/or Woo Snr (a) asked P to move to Hong Kong, (b) promised P and Woo Jnr that she and/or Woo Snr would give the Properties to them, and (c) assured them they would be given the Properties, one for their residence and the other for letting out to earn rental income for their livelihood. But D1/D2 claimed neither Woo Snr nor Mdm Woo wanted Woo Jnr to return to Hong Kong because of his addiction problem.

9.  There is no dispute that P moved to Hong King in/about September 1973 and since then resided in Hong Kong with Woo Jnr until he passed away.  P claimed she used to live with Woo Jnr and their daughter, and she still lives with her daughter. But D1/D2 claimed that P lived with her children until her daughter married and left home in the mid-1980s, and P continued to live with her son in Hong Kong.

10.  P claimed that initially their family (ie P, Woo Jnr and their daughter) lived with Woo Jnr’s relatives because Mdm Woo on behalf of herself and Woo Snr represented that vacant possession of the Subject Property had not been obtained yet, but they could move in once vacant possession was obtained.  P further claimed that in/about early 1974 their family moved to live at the Subject Property after Mdm Woo informed them vacant possession had been obtained.

11.  There is no dispute that the Other Property was let out except for a period during which P lived there. From the time P moved to live at the Subject Property until Woo Jnr passed away, they received rental income from the Other Property.  Thereafter P received and still receives rental income from the Other Property.  It is common ground that Mdm Woo, D1 and D2 had actual notice of P’s and Woo Jnr’s occupation and/or use of the Subject Property.

12.  It is also common ground that in 1975 the Other Property was transferred to P and Woo Jnr as joint tenants by deed of gift.  P claimed such transfer was pursuant to the promise set out in paragraph 8 above.  P claimed (and D1/D2 denied) that in/about 1985 Woo Snr returned to Hong Kong and visited her and Woo Jnr at the Subject Property being their matrimonial home, and assured them he had not forgotten about the earlier promise that the Properties were theirs even though he had forgotten to bring the title deeds on that occasion.

13.  P claimed it was the common intention of Woo Snr, Mdm Woo, P and Woo Jnr that she and Woo Jnr should jointly own and have exclusive possession of the Properties.  She further claimed that in reliance of the representation by Woo Snr and Mdm Woo and/or such common intention, P and/or Woo Jnr suffered detriment in that:

(a) P left her parents and siblings in Mainland China and moved to Hong Kong in 1973;

(b) all along until 1991, P, Woo Jnr and their children lived as a family at the Subject Property;

(c) in/about the 1970s and 1989, P moved to the Other Property, and she and/or Woo Jnr spent substantial sums in renovating the Subject Property and converting it into cubicle apartments;

(d) in/about 1993, P and/or Woo Jnr spent a substantial sum in renovating and maintaining the Subject Property and/or the building in which it was situated;

(e) at all material times, P alone or with Woo Jnr maintained and from time to time repaired, redecorated and improved the Properties;

(f) at all material times, P alone or with Woo Jnr paid management fees, government rates and all outgoings/expenses in respect of the Subject Property and as required to be borne by the landlord of the Other Property;

(g) P and her family members resided at the Subject Property from about 1974 to about 1990 during which time the Other Property was let; they then moved to live at the Other Property until 2001 during which time the Subject Property was let; and after P moved out of the Other Property in 2001 the Properties were/are let;

(h) at all material times, P alone or with Woo Jnr managed the Properties including tenancy matters.

14.  P further claimed the detriment she and/or Woo Jnr suffered was known to Woo Snr, Mdm Woo, D1 and D2 through various conversations between P and each of them. Woo Snr and Mdm Woo visited and inspected the Properties in the late 1970s and in 1985, so they were aware that P had improved and/or managed the affairs in respect of the Properties.  In 2002, D1 and D2 came to Hong Kong and visited/inspected the Properties. In a conversation between D1 and P in D2’s presence, P said she had made improvements to the Properties, and D1 acknowledged that the Properties belonged to P whilst the properties left by Woo Snr in Canada belonged to his family members living in Canada.

15.  D1/D2 denied that (a) P and/or Woo Jnr suffered the detriment as alleged, (b) P communicated her right/detriment to Woo Snr, Mdm Woo, D1 and D2, and/or (c) D1 told P he recognised the Subject Property belonged to her and the properties left by Woo Snr in Canada belonged to his family members living in Canada.

16.  D1/D2 claimed that Woo Snr and Mdm Woo were aware of and paid for the improvements to the Subject Property even though it was P who arranged the works.  They also denied it was the intention of Woo Snr and Mdm Woo that P and Woo Jnr should jointly own and have exclusive possession of the Properties.  D1/D2 claimed (and P denied) that when Woo Jnr returned to Hong Kong in the 1970s, he was unfit to work due to his addiction problem, so it was the common intention of Woo Snr and Mdm Woo that (a) Woo Jnr would live in one of the Properties and the other one would be let for rental income to maintain his livelihood, and (b) Woo Jnr and his descendants would become the legal and beneficial owners of the Other Property whilst D1 and his descendants would become the legal and beneficial owners of the Subject Property.

17.  D1/D2 agreed that P and Woo Jnr managed the tenancy affairs of the Properties since 1974, but denied that (a) Mdm Woo made any promise to P or (b) P spent substantial sums on renovating the Subject Property.  They averred (and P denied) that since Woo Jnr never had any gainful employment due to his addiction problem, all along Woo Snr and Mdm Woo paid for the renovation and maintenance of the Properties. In any event, the renovations to the Subject Property benefited only P and her immediate family.

18.  D1/D2 further denied P had either alone or with Woo Jnr managed the Subject Property at all material times:

(a) In/about March/April 2010, D2 received a Fire Safety Direction from the Buildings Department in relation to the Subject Property. D1/D2 both lived in Canada, so upon D2’s instructions D1 telephoned to request P to handle the matter on D2’s behalf, but P told him she would not do so since the Subject Property did not belong to her.

(b) In/about July/August  2010, D2 received a letter dated 25  July 2011 from the Buildings Department about an illegal structure attached to the external wall at the “rear re-entrant of No. 180 Hai Tan Street, Kowloon”. So upon D2’s instructions D1 telephoned to request P to handle the matter on D2’s behalf, but P again told him she would not do so because the Subject Property did not belong to her.

(c) since P failed to manage the Subject Property, relevant orders by the Buildings Department were registered against the Subject Property at the Land Registry.

19.  P admitted that D1 telephoned her on 26 March 2010, but denied the allegations in paragraph 18(a)-(b) above.  By the time of such telephone conversation, P already knew about the purported Assignment of the Subject Property by Mdm Woo as administratrix of the estate of Woo Snr to D2 on 22 November 2008, and accused D1 of improperly dealing with the Subject Property contrary to (a) the common intention alleged by P and (b) D1’s representation in 2002 referred to in paragraph 14 above. P claimed the purported consideration of HK$500,000.00 for the Assignment was grossly undervalued, and D1/D2 did not pay and did not intend to pay any consideration for the purported transfer. D1/D2 denied this, and averred that Mdm Woo told D2 not to pay any consideration for the transfer.

20.  As helpfully summarised by Mr Chai (and with him Mr Liu), counsel for P, P’s pleaded claim was based on inter alia:

(a) promissory estoppel, proprietary estoppel and/or common intention constructive trust;

(b) breach of trust or fiduciary duty by Mdm Woo who, having promised P of her interest in the Subject Property and in any event knowing P’s interest in the Subject Property, purportedly assigned the Subject Property to D2 without P’s knowledge and consent and at a gross undervalue contrary to the promise and P’s best interest;

(c) D1’s dishonest assistance on the transaction;

(d) D2’s knowing receipt and/or dishonest assistance on the transaction.

21.  Apart from the above grounds, P also relied on the following pleaded claims, but such claims do not feature significantly for present purpose:

(a) P claimed (but D1/D2 denied) that Mdm Woo suffered from dementia and did not have the requisite mental capacity to execute the Assignment, which was void and ought to be set aside;

(b) P claimed (but D1/D2 denied) she had been in adverse possession of the Subject Property against Woo Snr, Mdm Woo, D2 and/or anyone deriving title from D2 for over 20 years next before the commencement of the present action, and the title of Woo Snr, Mdm Woo or D2 (if any) to the Subject Property was thereby extinguished under sections 7(2) and 17 of the Limitation Ordinance Cap.347.

III.  SUMMONSES

22.  On 29 June 2012, P filed a summons (“2012 Summons”) seeking inter alia expert directions as follows:

(a) leave to adduce property valuation expert evidence on the valuation of the Subject Property as at 22 November 2008 (ie the date of the Assignment) (“Assignment Valuation Expert Evidence”);

(b) leave to adduce  expert medical evidence as to whether Mdm Woo had requisite mental capacity at the time when she purportedly signed the Assignment (“Capacity Expert Evidence”);

(c) consequential case management directions for obtaining expert reports on the above issues.

23.  Pursuant to the order of Master R Lai dated 13 July 2012, the 2012 Summons was adjourned sine die with liberty to restore.

24.  Mdm Woo passed away in Sept 2012. On 15 May 2013, P filed a summons (“2013 Summons”) seeking leave to (a) restore the 2012 Summons for hearing and (b) amend the 2012 Summons as per the draft annexed thereto (“Draft”). Essentially the effect of the proposed amendments in the Draft was to abandon the application for leave to adduce the Capacity Expert Evidence and to add an expert issue (ie the current market value of the Subject Property) for the application for leave to adduce property valuation expert evidence (“Current Valuation Expert Evidence”). The 2013 Summons was supported by P’s 5^th affirmation filed on 15 May 2013 (“Affirmation”).

25.  On 24 May 2013, Master Ho adjourned the 2013 Summons for argument. The substantive hearing for argument in respect of the 2012 and 2013 Summonses came before Master Au-Yeung on 4 June 2013 (“Master Hearing”). The learned Master granted leave for P to amend the 2012 Summons as per the Draft to the extent of allowing all deletions and directed P to file the amended summons (“Amended 2012 Summons”) within three days. He also dismissed the Amended 2012 Summons with costs to D1 and D2 (including all costs reserved) with certificate for counsel for the Master Hearing to be summarily assessed.  In short, the learned Master allowed P to withdraw her application for leave to adduce the Capacity Expert Evidence, but dismissed her application to adduce the Assignment and Current Valuation Expert Evidence (collectively, “Valuation Expert Evidence”).

26.  Dissatisfied with the aforesaid order of the learned Master (“Order”), on 14 June 2013 P filed Notice of Appeal for leave to (a) amend the 2012 Summons as per the Draft in full and (b) adduce the Valuation Expert Evidence with consequential case management directions for obtaining the relevant expert report(s). The hearing of the appeal came before me on 21 August 2013 (“Hearing”). For the purpose of the appeal, I was not concerned with P’s withdrawal of her application for leave to adduce the Capacity Expert Evidence.

IV.  EVIDENCE                                

27.  P in the Affirmation explained that given the nature of her claim in the present action the Valuation Expert Evidence would be necessary. She explained that she originally intended to obtain Mdm Woo’s Canadian medical records for the medical experts to compile their expert report on the Capacity Expert Evidence. But despite enquiries by P’s legal representatives, no one was willing to represent the estates of Woo Snr and Mdm Woo.  So on 10 May 2013, Master A Ho ordered that the present action shall proceed in the absence of any person representing the estates of Woo Snr and Mdm Woo (ie the 3^rd and 4^th defendants), and that such direction and any judgment/order subsequently given or made in the present action shall bind such parties to the same extent as they would have been bound had their personal representatives been parties to the proceedings. Having further obtained and considered Canadian legal advice, P decided not to seek Mdm Woo’s medical records, and this led to her application in the 2013 Summons to withdraw her application for leave to adduce the Capacity Expert Evidence.

28.  In respect of the application for leave to adduce the Valuation Expert Evidence, P claimed the purported consideration of HK$500,000.00 as stated in the Assignment was grossly undervalued.  Although D1/D2 pleaded that D2 was told by Mdm Woo not to pay any consideration for the transfer of the Subject Property under the Assignment, they expressly denied P’s pleaded case, so the question whether the transfer of the Subject Property was at gross undervalue remained a live issue, and the Assignment Valuation Expert Evidence was therefore relevant.

29.  P reminded that one of the alternative reliefs she sought in the present action was equitable compensation.  She claimed that the Valuation Expert Evidence would be relevant and necessary in the event the court found in her favour on the issue of liability but awarded equitable compensation instead of granting her any interest in the Subject Property or ordering the execution of a conveyance of the Subject Property to her.

30.  P acknowledged it was almost a year before the 2012 Summons was to be amended and restored for hearing.  However, as explained in paragraph 27 above, the decision whether to proceed with the application for leave to adduce the Capacity Expert Evidence depended on whether any one was willing to represent the estates of Woo Snr and Mdm Woo (ie the 3^rd and 4^th defendants) in the present action. P would have proceeded to seek discovery of Mdm Woo’s medical records if there had been someone to represent her estate, but if there was no one willing to do so, she would not apply for such records or apply for leave to adduce the Capacity Expert Evidence. P therefore applied to restore the 2012 Summons shortly after the issue of representation of the estate of Mdm Woo was resolved (see paragraph 27 above).  In any event, the present action had not been set down for trial. Given the importance of the Valuation Expert Evidence to the just and fair disposal of the present action, P urged the court to grant leave to amend the 2012 Summons as per the Draft in full and to grant the applications under the Amended 2012 Summons in their entirety.

31.  Included in the hearing bundle for the Hearing are P’s witness statement dated 29 June 2012 and the witness statements of D1, D2 and Woo Kee Dak (youngest brother of Woo Jnr and D2) dated 7 June and 19 November 2012. Save for the reference to D1’s and D2’s witness statements both dated 7 June 2012 in paragraph 39 below, there is no need to refer to such witness statements in any detail for the present purpose.

V.  RE-HEARING

32.  In his written ruling, Master Au-Yeung declined to grant leave to adduce the Valuation Expert Evidence for the following reasons:

(a) Although P intended to adduce the Assignment Valuation Expert Evidence to show that the transfer of the Subject Property by Mdm Woo as administratrix of the estate of Woo Snr to D2 was at a gross undervalue, at the time she issued the 2012 Summons she would have known from D1’s and D2’s witness statements both dated 7 June 2012 that D2 did not make any payment of the consideration stated in the Assignment, which fact was later confirmed by the amendments to their pleadings in January 2013. The issue of sale at undervalue was therefore no longer a live issue between the parties.

(b) P’s primary claim was for an order for the conveyance of the Subject Property to her, and if such relief were granted her alternative claim for equitable compensation would fall away. Since there was nothing in the pleadings or in the witness statements that suggested any bar to restitution relief, the substitutive claim for equitable compensation, though referred to in the pleadings, was a non-issue. The argument that the court might order equitable compensation if the detriment was considered to be insufficient was misconceived because it was P’s case that she was promised the entirety and not part of the Subject Property. Even if P could rely on proprietary estoppel as a cause of action, which the learned Master doubted, her case would have been dismissed if the detriment she suffered was insufficient. “The court would not assess the detriment and order that she would be entitled to a certain percentage of interest in the [Subject Property] ……”

(c) P had been late in making a new application for adducing the Current Valuation Expert Evidence, and no reasonable explanation had been offered for the delay.

33.  Notwithstanding the aforesaid written ruling, it is trite that an appeal from a master to judge in chambers is dealt with by an actual rehearing of the application which led to the order under appeal, and the judge treats the matter as though it came before him/her for the first time. The judge will give the weight it deserves to the previous decision of the master; but he/she is in no way bound by it.[1]

VI. HEARING

34.  At the Hearing, Mr Cheng, counsel for D1 and D2, informed the court that D1 and D2 had no objection to adducing the Current Valuation Expert Evidence (which he accepted to be relevant, necessary and of probative value in the sense of being helpful to the trial judge in his/her adjudication of the disputed issues) at trial, but contended they should be entitled to costs here and below in respect of P’s application for leave to adduce such expert evidence.

35.  In respect of the Assignment Valuation Expert Evidence, after Mr Chai made his oral submissions at the Hearing, Mr Cheng in the course of his oral submissions made an open admission on behalf of D1 and D2 that the transaction (ie the assignment of the Subject Property by Mdm Woo as adminstratrix of the estate of Woo Snr to D2 on 22 November 2008) was not a genuine transaction for value in the sense that all along such transfer was intended to be and was actually a gift (“Admission”). In view of the Admission and upon taking instructions, Mr Chai informed the court that P would no longer pursue her application for leave to adduce the Assignment Valuation Expert Evidence at trial. However, Mr Cheng argued that D1 and D2 should be entitled to costs here and below in respect of such application.

36.  Mr Chai maintained that P should be entitled to costs of the appeal, but costs below in respect of the application for leave to adduce Valuation Expert Evidence should be varied to be costs in the cause but leaving other costs undisturbed.  As explained above, Mr Cheng argued that D1 and D2 should be entitled to costs here and below. 

37.  It therefore appears that the parties’ main battleground had shifted from the substantive appeal to the issue of costs, but as will be seen below, there is little escape from having to canvass the parties’ substantive arguments for the purpose of determining the issue of costs.

VII.  LEGAL PRINCIPLES ON EXPERT EVIDENCE

38.  Expert evidence must be relevant, necessary and of probative value. Chu J (as she then was) in Wong Hoi Fung v American International Assurance Co (Bermuda) Limited & anor[2] said expert evidence must be relevant in the sense that it is helpful to the court in arriving at its decision on one or more issues to be resolved. The learned judge cited Baring plc (in Liquidation) & anor v Coopers and Lybrand & ors[3] in which Evans-Lombe J said the court can exclude expert evidence if it is of the view that calling such evidence will not be helpful to the court in resolving any issue in the case justly, eg where the issue to be decided is one on which the court can come to an informed decision without such expert evidence.  Whether to grant leave to adduce expert evidence requires an exercise of judicial discretion, and pertinent considerations will include (a) how cogent the proposed expert evidence will be, (b) how helpful it will be in resolving any of the issues in the case, and (c) how much it will cost and the relationship of that cost to the sums at stake.[4]

VIII.  COSTS: VALUATION AS AT 22 NOVEMBER 2008

39.  Paragraph 22 of D1’s witness statement dated 7 June 2012 admitted that:

“…… Notwithstanding the Assignment which stated that the consideration for the transfer was HK$500,000.00, [D2] was told by [Mdm Woo] not to pay any consideration for the transfer.”

Paragraph 10 of D2’s witness statement dated 7 June 2012 stated that:

“In November 2008, [Mdm Woo] as administratrix of the estate of [Woo Snr], transferred the [Subject Property] to [D2]. [D2] did not pay any consideration for the said transfer because [D1 and Mdm Woo] told [D2] not to pay any consideration.”

In January 2013, D1/D2 amended their pleadings to expressly plead that “[D2] was told by [Mdm Woo] not to pay any consideration for the transfer”.

40.  Mr Chai submitted that proof that the Assignment of the Subject Property by Mdm Woo as administratrix of the estate of Woo Snr to D2 was at a gross undervalue would support P’s case of breach of fiduciary duty by Mdm Woo, and such breach would entitle P to inter alia equitable damages against Mdm Woo’s estate. Mr Chai argued that this ground could not be established without the aid of expert evidence as to the value of the Subject Property as at the time of the Assignment, hence the Assignment Valuation Expert Evidence was plainly relevant to a disputed issue on the pleadings and therefore ought to be adduced.

41.  Mr Chai argued that the position would not be changed by the admission by D1/D2 that Mdm Woo told D2 not to pay any consideration for the Assignment of the Subject Property to him, which admission must be scrutinised with care. Significantly, D1/D2 had not admitted that the transaction was not a genuine transaction for value, and indeed they denied plaintiff’s plea that at the material time they did not intend to pay the consideration. Unless D1/D2 were prepared to admit that the transaction was not a genuine transaction for value in the sense that all along the Assignment was intended to be a gift and that the representation apparent on the face of the Assignment that the transfer was for valuable consideration was known to be false when the Assignment was signed, it remained open for D1/D2 to argue at trial that the transaction was a genuine one for value but D1/D2 just failed to pay the price for the above-stated reason.

42.  Mr Chai argued that the pleadings of D1/D2 fell short of suggesting that the invitation by Mdm Woo for not making payment was a waiver supported by consideration or otherwise a promise resulting in detrimental reliance such that D2 was entitled to rely on estoppel.  P was therefore entitled to raise the ground of transaction undervalue in support of her claim of breach of fiduciary duty. The case of D1/D2 that Mdm Woo had asked D2 not to pay was, if the transaction was a genuine transaction for value, just a further breach which was separate and independent from the earlier breach of selling the Subject Property at an undervalue.

43.  In the premises, Mr Chai submitted that the issue on undervalue was still a live issue on pleadings and in substance.  The case of D1/D2 that D2 did not pay is not a valid ground to forbid P from raising undervalue as a separate and independent ground to substantiate her claim for breach of fiduciary duty.

44.  On the other hand, Mr Cheng argued on the basis of the pleadings and witness statements filed by D1/D2[5] that there was no longer any issue between the parties as to whether any consideration was paid under the Assignment, and consequently the further issue of whether the stated consideration in the Assignment was at a gross undervalue would also fall away. He argued that the Assignment Valuation Expert Evidence would not advance P’s case any more than what D1/D2 had already accepted to be common ground between the parties, and that the Admission did not alter the above arguments because P should have realised what was set out expressly in the Admission from the pleadings and witness statements filed by D1/D2.

45.  In my view, whilst Mr Cheng’s arguments may appear attractive in their simplicity, careful scrutiny of the pleadings and witness statements of D1/D2 demonstrate the soundness of Mr Chai’s contentions.  I agree with Mr Chai that the pleadings and witness statements of D1/D2 fell short of any clear admission that the Assignment was not a genuine transaction for value and/or that all along such transfer was intended to and actually was a gift, which Admission was only forthcoming at the Hearing. In their pleadings and witness statements, D1/D2 merely confined themselves to a limited factual assertion that Mdm Woo told D2 not to pay any consideration for the transfer, but it begs the question why Mdm Woo (and D1 as well according to D2’s witness statement) asked D2 not to make payment. It could have been for many reasons: the transfer could have been a gift, but it could well have been the result of set-off against debts owed by Mdm Woo to D2, or it could have been the result of some form of promissory/proprietary estoppel that acknowledged the care D2 rendered in looking after her and/or Woo Snr over the years. The pleadings and witness statements of D1/D2 were silent on any such reasons. That being the case, on the current state of the pleadings and the witness statements of D1/D2, there is a real possibility that D1/D2 may assert that the transaction by the Assignment was a genuine one and/or for value albeit no consideration changed hands.

46.  Since the above issue was a live one prior to the Admission made at the Hearing, I can readily understand why P wanted to adduce the Assignment Valuation Expert Evidence with a view to establish that the consideration stated in the Assignment was grossly undervalued and thereby demonstrate that the Assignment did not represent a genuine transaction. At the Hearing, Mr Cheng accepted that the pleadings of D1/D2 were not as clear as one would have wished. But more importantly, I am of the view that the lacuna in the pleadings and the witness statements of D1/D2 was only filled when Mr Cheng made the Admission on behalf of D1/D2 at the Hearing. In such circumstances, I consider that P was justified in seeking leave to adduce the Assignment Valuation Expert Evidence.

47.  Turning to the causes of action on estoppels, to establish an equity there must be an underpinning element of unconscionability.   A claimant has to establish that it is unconscionable for the promisor or owner of the land to act in such a way as to defeat the expectation that the promisee or claimant has been encouraged to believe that he had.[6] Indeed, the requirement of unconscionability is now regarded as an essential element of any form of estoppel.[7]  A relevant factor for determining whether the promisor’s or owner’s conduct has been unconscionable is whether the detriment is sufficiently substantial, and this is to be tested by whether it will be unjust or inequitable to allow the assurance to be disregarded.[8]  Further, this is to be considered as at the time at which the promisor or owner (ie the person who has given the assurance) seeks to go back on it.[9] The above matters have to be approached as part of a broad inquiry as to whether it is unconscionable in all the circumstances for the promisor or owner to resile from the promise or assurance, and in approaching such broad inquiry the judge has to stand back and look at the matter in the round.[10]

48.  Here, under P’s causes of action on estoppels, the time at which Mdm Woo and D2 as promisors/owners sought to go back on their promises would be the time of the Assignment on 22 November 2008.   In determining whether such causes of action are viable, the court will have to consider on the basis of a broad all round inquiry as to whether as at that time the alleged detriment was sufficiently substantial and whether Mdm Woo’s act of entering into the Assignment (and D1 knowing of the transaction and interpreting for her) was unconscionable. In my view, the fact that Mdm Woo not only transferred the Subject Property to D2 but did so in a way (as P alleged) that purported to appear as an ordinary sale and purchase for valuable consideration when in fact the stated consideration was at gross undervalue and was eventually unpaid must be relevant to the broad inquiry on the matter of unconscionability.

49.  Taking all of the above into account, I am not persuaded that the question of whether or not the stated consideration in the Assignment was at a gross undervalue was already a non-issue before the Admission by D1/D2. I find that but for the Admission and P’s withdrawal of her application for leave to adduce the Assignment Valuation Expert Evidence as a result of such Admission, I would have allowed such expert evidence as being necessary, relevant and of probative value.

50.  Mr Cheng argued that since P ultimately did not obtain any court order for adducing the Assignment Valuation Expert Evidence, costs should follow “event” and D1/D2 were therefore entitled to costs of such application here and below.  In my view, such submission is flawed as it misunderstood what the “event” meant. It is P’s meritorious arguments that led to the elucidation of the precise case of D1/D2 resulting in the Admission and in turn P’s withdrawal of her request for the Assignment Valuation Expert Evidence.  By putting the relevant “event” in context, I see no basis for D1/D2 to resist costs of the appeal in respect of the application for leave to adduce the Assignment Valuation Expert Evidence.

51.  As regards the costs below concerning such application, Mr Chai fairly suggested that such costs be in the cause. I agree that in dealing with case management matters costs are normally in the cause, particularly if the relevant case management issues are resolved quickly at a case management summons/conference or directions hearing. But if a party chooses to resist reasonable case management proposals and fails in such endeavour, there is no reason why they should not bear the costs of their unsuccessful resistance. But given Mr Chai’s concession, I am prepared to vary the Order to the extent of allowing costs concerning such application to be in the cause.

IX.  COSTS: CURRENT VALUATION

52.  As explained above, P relies on both proprietary estoppel and promissory estoppel as her causes of action.

53.  The essential elements of proprietary estoppel are as follows: (a) where the owner of land induces, encourages or allows the claimant to believe that he has or will enjoy some rights or benefit over the owner’s property, (b) in reliance of this belief the claimant acts to his detriment to the knowledge of the owner, and (c) the owner then seeks to take unconscionable advantage of the claimant by denying him the right or benefit which he expected to receive.  This equity gives the claimant the right to go to court to seek relief. The claimant’s claim is an equitable one and subject to the normal principles governing equitable remedies.  The court has a wide discretion as to the manner in which it will satisfy the equity in order to avoid an unconscionable result having regard to all the circumstances of the case, including but not limited to the expectations and the conduct of the parties.[11]

54.  A promissory estoppel may be said to arise where (a) the parties are in a relationship involving enforceable or exercisable rights, duties or powers, (b) one party (the promisor), by words or conduct, conveys or is reasonably understood to convey a clear and unequivocal promise or assurance to the other (the promisee) that the promisor will not enforce or exercise some of those rights, duties or powers, and (c) the promisee reasonably relies upon that promise and is induced to alter his or her position on the faith of it, so that it would be inequitable or unconscionable for the promisor to act inconsistently with the promise.[12]

55.  Although the doctrine of estoppels is a developing area of the law, there is opinion inkling towards the view that there is no real difference between proprietary estoppel and promissiory estoppel.[13]  Indeed, for present purpose, the relevant constituents of these two forms of estoppels are shared.

56.  Here, P claimed she spent substantial amounts on renovations and maintenance of the Subject Property and the building in which such property was situated, in redecorating and improving the Subject Property, and in paying management fees as well as government rates and rent.

57.  Mr Chai submitted that even if P were able to establish liability on the part of the defendants at trial, the trial judge would not be bound to make a declaration of P’s interest in the Subject Property and order a conveyance of the Subject Property to P.  The impossibility of specific restitution of the property in question may (as suggested by the learned Master) in some cases be the reason for ordering equitable compensation instead, but it is not the only basis for ordering equitable compensation. Therefore, even if P were able to establish her claim under the principles of estoppels, it would be open to the court to consider the proportionality of the detriment suffered by P against any benefits she might have had over the years. Mr Chai argued that the current market value of the Subject Property was not only relevant to the quantum of any monetary award that might be made by the Court, but would actually be a relevant factor to be taken into account when the court considered the issue of proportionality.  Mr Chai reminded that D1/D2 did take issue on precisely this matter when they pleaded that in any event the renovations to the Subject Property benefited only P and her immediate family.  That being the case, Mr Chai argued that the Current Valuation Expert Evidence was relevant and necessary for the proper exercise of the court’s discretion in respect of the appropriate relief to be granted in the present action should P succeed on liability.

58.  I agree that the court needs to look at all the circumstances in each case to determine how the equity can best be satisfied, and it has a wide discretion as to the order which it may make.  There are primarily two approaches in moulding the relief for a claim based on proprietary estoppel: an expectation-based approach which gives effect to the expectation of entitlement engendered by the parties’ dealings, and a compensation‑based approach which reverses the unacceptable prejudice suffered.  When exercising discretion in all the circumstances to formulate the relief in terms of the minimum equity to do justice to the plaintiff,[14] there must be proportionality between the remedy and the detriment which is its purpose to avoid.[15]  The essence of the relief is to avoid an unconscionable result.[16] The same approach should be adopted in the case of a promissory estoppel.[17]

59.  It has been suggested that in the category of estoppel cases concerned with promises relied upon to the promisee’s or owner’s detriment, fulfilling his expectation remains the usual measure, but such remedy “might then be reduced, for example, to take into account the value of incidental benefits received by the promisee”.[18]  In short, the court in considering the manner of effecting the relief will not always satisfy the promisee’s or claimant’s expectation by awarding the specific promised or expected interest in the land.[19] Alternatives include a monetary award of the value of the expectation by way of compensation[20] or monetary relief for reasonable value of the expenditure and improvements, with or without security by a charge over the land.[21]  Indeed, if the benefits which the claimant has actually received outweigh the countervailing detriment incurred, then the court may award the claimant no relief.[22]  There is, therefore, much to be said for the relevance of the Current Valuation Expert Evidence to such issues.

60.  On the other hand, Mr Cheng argued that proportionality is not the only consideration in fashioning the relief to be granted if proprietary estoppel is established. I agree that proportionality is not in itself a basis for the grant of relief, but it is plainly a relevant consideration or “a means of tempering the grant of relief”.[23]  But at this interlocutory stage of the proceedings, it would not be right, in my view, to exclude the Current Valuation Expert Evidence when it is a potentially relevant consideration for fashioning the relief in the event that P were able to establish her cause of action on estoppel and when there may be debate as to whether P’s expectation ought to be fulfilled in whole or in part in specie.  Indeed, Mr Cheng acknowledged as much in his oral submissions, and I am convinced this was a major factor that led to the decision by D1/D2 not to resist P’s appeal against the learned Master’s refusal to allow the Current Valuation Expert Evidence.

61.  Given such background and analysis, I am persuaded that D1/D2 should be liable for costs of the appeal in respect of the learned Master’s refusal (a) to allow the proposed amendments to the 2012 Summons as per the Draft in full and (b) to allow the Current Valuation Expert Evidence. There is no reason why costs should not follow event, especially when D1/D2 abandoned resistance to this part of the appeal only in the afternoon on the eve of the Hearing.

62.  However, Mr Cheng argued that the application for leave to adduce the Current Valuation Expert Evidence was made well after the expiry of the court imposed deadline, and D1/D2 were therefore entitled to costs of the appeal in respect of the Current Valuation Expert Evidence by reason of such delay:

(a) On 30 April 2012, Master Ko ordered the parties to take out application for expert directions by 29 July 2012, failing which the defaulting party would be debarred from adducing expert evidence at trial.

(b) The 2012 Summons was issued on 29 June 2012, but such summons sought leave to adduce the Assignment Valuation Expert Evidence without mention of any intention to seek leave to adduce the Current Valuation Expert Evidence.

(c) It was only in the 2013 Summons (which was some 11 months after Master Ko’s order) that P first intimated their intention to seek leave to adduce the Current Valuation Expert Evidence.

(d) P’s explanation relating to the death of Mdm Woo and the seeking of legal advice from Canadian lawyers were not valid and reasonable explanations for the substantial delay.

63.  Mr Chai submitted there was no delay for the reasons set out in paragraphs 27 and 30 above. He noted that D1/D2, knowing of the full circumstances of the matter, made no complaint of delay in relation to P’s handling of the matter in relation to the addition of the 3^rd and 4^th defendants, and the court making the necessary order as to their representation. In fact, the order of Master A Ho was made on a Friday (10 May 2013) and the 2013 Summons was taken out the following Wednesday (15 May 2013) . The next case management conference (“CMC”) in the present proceedings was scheduled to be heard on 11 December 2013. In view of the nature and limited scope of the expert evidence, Mr Chai submitted there was no reason why the relevant expert report could not be prepared in good time for such CMC.

64.  In my view, despite Mr Cheng’s complaint of delay with reference to Master Ko’s order dated 30 April 2012, there is no basis for any suggestion that P was in breach of such order by seeking leave to add the Current Valuation Expert Evidence by way of the 2013 Summons.   Indeed, P, D1/D2 and the learned Master did not regard such application to be any breach of the “unless” order since both parties proceeded to argue and the learned Master entertained such arguments and adjudicated on the substantive merits of such application. Had there been breach of the peremptory provision in Master Ko’s order dated 30 April 2012, there would have been no basis for the parties and/or the learned Master to deal with the substantive merits of the application for leave to adduce the Current Valuation Expert Evidence in the absence of any application for relief against sanction.

65.  Order 2 rule 4 of the RHC provides as follows:

“Where a party has failed to comply with a rule or court order, any sanction for failure to comply imposed by the rule or court order has effect unless the party in default applies to the Court for and obtains relief from the sanction within 14 days of the failure.”

This means that the sanction imposed in any “unless” order takes effect automatically unless relief from sanction is obtained.  In Foshan City Commercial Bank v Chen Yong Yi & ors,[24] Chung J said as follows:

“4. … it has to be borne in mind that the events which occurred since the making of the ‘unless’ order were ‘automatic’ in the sense that default in complying with the ‘unless’ order would (in accordance with the terms of that order) result in the dismissal of this action. …”

More recently, in Daimler AG v Leiduck,[25] Fok JA confirmed that “…… the sanction takes effect immediately and it is for the party in default to apply for relief from the sanction. Only if there is an application for relief from the sanction is the Court required to consider whether, in all the circumstances, it is just to make an order granting relief from the consequences that would otherwise follow”.[26]

66.  In any event, P did take out an application by way of the 2012 Summons to seek expert directions within the time prescribed by Master Ko, and such summons did seek leave to adduce property valuation expert evidence.  At issue here is not the nature or type of expert evidence being sought but the expert issues that set out the scope of the property valuation expert evidence. Whilst it is always a matter of fact and degree as to whether there is compliance with the letter of any “unless” order, and there may be cases in which additional requests are so different as to bring them outside proper compliance of  the “unless” order, I am persuaded this is not one of such cases.  The proposed amendment to include the Current Valuation Expert Evidence does not move the expert evidence sought into any new dimension.

67.  Returning to the issue of general delay, I am not persuaded that this militates against P’s entitlement to costs of the appeal.  I am unable to see (and Mr Cheng rightly did not suggest) any prejudice suffered by D1/D2. I bear in mind that the present action has not been set down for trial, and there is time enough to prepare the expert report for the next CMC. Once it is accepted that the Current Valuation Expert Evidence is relevant, necessary and of probative value, as Mr Cheng did at the Hearing, and there being no real prejudice aside from the disappointment of having to prepare further evidence, the need to take out an application to seek the court’s leave to adduce the Current Valuation Expert Evidence becomes inevitable.  It is then incumbent upon D1/D2 to cooperate with P in the conduct of the proceedings to increase cost-effectiveness and to promote procedural economy.[27]  Yet D1/D2 not only resisted P’s applications to adduce the Current Valuation Expert Evidence and to amend the 2013 Summons for such purpose before the learned Master, they continued to do so right up to the eve of the Hearing on grounds that are now exposed to be unjustified. I bear in mind that in giving effect to the underlying objectives the court shall always recognise the primary aim in exercising the powers of the court is to secure the just resolution of disputes in accordance with the substantive rights of the parties.

68.  D1/D2 should therefore pay the costs of the appeal against the refusal to grant leave to adduce the Current Valuation Expert Evidence and the refusal to amend the 2012 Summons for such purpose. Again, Mr Chai fairly accepted that costs below in relation to such applications should be in the cause.  By applying the reasons set out in paragraph 51 above mutatis mutandis, I am prepared to vary the costs order made by the learned Master to the extent of allowing costs for such applications to be in the cause.

X.  CONCLUSION

69.  I therefore grant the following orders:

(a) on it appearing that expert evidence is necessary on the issues of (i) the open market value of the Subject Property as at 22 November 2008 and (ii) the current open market value of the Subject Property (“Expert Issues”), leave be granted for the parties to adduce expert evidence on property valuation limited to a single joint property valuation expert instructed jointly by P and D1/D2 (“Single Joint Expert”);

(b) P and D1/D2 shall agree on the identity of the Single Joint Expert within 14 days from today, failing which P shall within seven days thereafter apply to a Master for directions;

(c) within 14 days after agreement by P and D1/D2 or after the determination by the court (whichever is appropriate) as to the identity of the Single Joint Expert, P and D1/D2 shall issue joint instructions to the Single Joint Expert to compile his/her expert report on the Expert Issues;

(d) the Single Joint Expert shall compile his/her expert report and deliver such report to P and D1/D2 within 42 days thereafter;

(e) the fees and expenses of the Single Joint Expert shall in the first instance be borne by the parties equally, and such fees and expenses shall ultimately be costs in the cause;

(f) the Order be set aside;

(g) order in terms of paragraph 2 of the 2013 Summons;

(h) P shall file the amended summons pursuant to paragraph 2 of the 2013 Summons (“New Amended Summons”) within three days from today, and service of the New Amended Summons be dispensed with;

(i) costs of and occasioned by P’s application for leave to amend the 2012 Summons and by P’s application to withdraw her application to adduce expert evidence on the expert issue in paragraph 1(b) of the 2012 Summons be paid by P to D1 and D2 (with certificate for counsel for the Master Hearing) in any event to be taxed if not agreed;

(j) costs of paragraphs 1(a), 3-4 and 5-9 of the 2012 Summons insofar as they relate to paragraph 1(a) of such summons, paragraph 1(a) and 3-9 of the Amended 2012 Summons, and paragraph 1 of the 2013 Summons be costs in the cause (with certificate for counsel for the Master Hearing);

(k) D1 and D2 shall pay to P costs of the appeal to be summarily assessed and paid forthwith;

(l) for the avoidance of doubt, there is no certificate for two counsel for the Hearing;

(m) P do within seven days from the date hereof lodge and serve statement of costs not exceeding one page pursuant to Practice Direction 14.3, and D1/D2 do within seven days thereafter lodge and serve succinct summary of objections in bullet-point format of not more than one page, and unless otherwise directed the summary assessment of costs will be by paper disposal;

(n) liberty to apply.

70.  Although I do not doubt that Mr Liu has made contribution to the successful outcome of the appeal in P’s favour, I am not persuaded that the issues in respect of the appeal (even if it were fully argued) are so factually and/or legally complex as to justify involvement of two counsel.