UNIONWARD INVESTMENT LTD v. YEUNG FOON TAI

HCA 136/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 136 OF 2016
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DECISION

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A. Introduction

1.  There are two summonses before me:

(a) the plaintiff’s application for summary judgment; and

(b) the defendant’s application to amend her defence.

2.  In short, the plaintiff claims that it purchased some pieces of land in the New Territories, which were put under the name of the defendant. Hence, the defendant has been holding the lands on resulting trust for it, and is obliged to account for profits that the defendant has made by selling some of the lands. In contrast, the defendant claims that she and her husband merely borrowed monies from the plaintiff to purchase those lands; and therefore, she was and is the beneficial owner thereof.

B.  The plaintiff’s claim

3.  The plaintiff is a Hong Kong company carrying on business as, inter alia, a property investor.

4.  Its claim against the defendant may be summarized as follows:

(a) The defendant is the wife of Li Yau Hing (“Li”).

(b) They acted as land agents in the introduction and/or procurement of sale and purchase of land in the New Territories in return for a fee, and they acted as the plaintiff’s agents in its acquisition of land in the New Territories.

(c) On a day before 25 September 2003, upon the defendant’s introduction, the plaintiff agreed to acquire a piece of land set out in 1^st Schedule of the statement of claim (“the 1^st Schedule land lots”) through the service of the defendant and Li. The 1^st Schedule land lots consist of Lot No 706 in DD No 9, Lot No 708 in DD No 9 and Section B of Lot No 750 in DD No 9, Tai Po.

(d) In 2003, the plaintiff acquired the 1^st Scheduled land lots at $990,000 from Guangdong Materials Co Ltd (“GMC”) and have the same registered in the name of the defendant upon the latter’s representation that GMC would only be willing to sell the same to her.  The particulars of the payment of the purchase price are as follows:

(i) On 25 September 2003, an initial deposit of $200,000 was paid by the plaintiff to the defendant by cheque No 546611 drawn upon the Bank of China (Hong Kong) Ltd (“BOC”) and made payable to Li, which was cashed upon presentation.

(ii) On the same date, the defendant, through one Wifun Foundate Ltd, a company controlled by her, paid Messrs Peter W K Lo & Co, solicitors for the defendant, by cheque No 683660 the said initial deposit.

(iii) On 9 January 2004, a receipt was issued by Messrs Peter W K Lo showing that by a cheque the plaintiff had paid $803,822.50 being the outstanding purchase price and legal costs for the acquisition of the 1^st Schedule land lots.

(e) On 13 January 2004, upon completion, the 1^st Scheduled land lots were registered in the name of the defendant with the plaintiff’s consent.

(f) On 30 September 2003, the plaintiff paid the defendant and Li a sum of $500,000 as their fees for service rendered in the acquisition; it formed part of the $1million being the amount of the cheque No 562785 issued by Chan Tam Wong Investment Co Ltd, the plaintiff’s agent, drawn upon BOC and made payable to Li.  The cheque was deposited into the joint account of the defendant and Li.

(g) Hence, the defendant has been holding the 1^st Scheduled land lots on trust for the plaintiff;

(h) Between 2004 and 2006, without the plaintiff’s knowledge or consent, the defendant, by a number of deed polls, subdivided the 1^st Schedule land lots into subdivisions set out in the 1^st Schedule to the statement of claim.

(i) Further, between 2004 and 2011, without the plaintiff’s knowledge or consent, the defendant sold and assigned part of the 1^st Schedule land lots set out in the 2^nd Schedule to the statement of claim (“the 2^nd Schedule land lots”) to third parties at a total sum of $3,150,000 without accounting the proceeds of sale to the plaintiff.

(j) As a result, the land lots remain registered in the name of the defendant as trustee are those set out in the 3^rd Schedule to the statement of claim (“the 3^rd Schedule land lots”).

5.  On 15 January 2016, the plaintiff issued the writ herein.  On 13 September 2016, it applied for summary judgment for, inter alia, the following remedies:

(a) an order that the defendant doth repay to the plaintiff the sum of $3,150,000 being the proceeds of sale of the 2^nd Schedule land lots;

(b) a declaration that the defendant held, and still holds, her legal title and in the 3^rd Schedule land lots upon a resulting trust and/or constructive trust for the benefit of the plaintiff;

(c) an order that the defendant doth forthwith transfer her bare legal title of and in the 3^rd Schedule land lots pursuant to paragraph 9 of the statement of claim to the plaintiff or at its order and direction; and

(d) damages.

C.  The defendant’s defence

6.  On 4 March 2016, the defendant filed her defence.  She claimed that:

(a) Li and her are husband and wife.  However, they were not land agents, or the plaintiff’s agents in its acquisition of land in the New Territories.

(b) Li and Chan Tam Wong (“Chan”) were business partners.  Li was born in Tai Po and carries on investment business in respect of lands in the New Territories, in particular, Tai Po. Chan was a money lender before his death in about June 2014.

(c) In about mid-2003, Li intended to acquire the following lands for investment purpose: 1^st Schedule land lots; Lot Nos 761, 762, 763, 772, Section A of 776, 793, 796, 817, 833, 1392 all in DD 9, Tai Po (“1^st Portion Land Lots”); and Lot Nos 843, 845, 846, 849, 912, Section B of 913 all in DD 9 (“2^nd Portion Land Lots”).

(d) Due to lack of funds, Li approached Chan who agreed to lend money to Li in the main terms as follows:

(i) Chan would lend sufficient money to Li to buy the 1^st Scheduled land lots and would not charge Li for any interest.

(ii) Li would use his relationship and influence to procure the purchase of the 1^st Portion Land Lots and the 2^nd Portion Land Lots so that Chan or his nominee and Li or his nominee could jointly develop the 1^st Portion Land Lots and the 2^nd Portion Land Lots.

(iii) Chan can Li would each contribute 50% of the purchase price and legal costs as well as disbursements of acquiring both the 1^st Portion Land Lots and the 2^nd Portion Land Lots so that each of them or their nominees would hold 50% of the beneficial interest in the said lands.

(iv) As Li did not have the necessary funding to contribute his 50% of the funds in acquiring the 1^st Portion Land Lots and the 2^nd Portion Land Lots, Chan would further provide sufficient loans to Li to cover the cost of acquiring the said lands and would not charge Li for any interest.

(v) Li would repay the loans to Chan when Li had sufficient money to repay the same.

(e) Pursuant to such agreement, Chan advanced at least $1,003,822.50 to the defendant (being Li’s nominee) as a loan for the purchase of the 1^st Scheduled land lots.

(f) Further, Li, his servants or agents, approached the vendors of the 1^st Portion Land Lots and the 2^nd Portion Land Lots and eventually led to the completion of the sale and purchase of the said names to the nominees of Chan, ie the plaintiff and Panwood Investments Ltd (“Panwood”) and the nominees of Li ie Sino International Investment Ltd and Wifun Foundate Ltd (“Wifun”).

(g) Shortly before the completion of the sale and purchase of the 1^st Portion Land Lots and the 2^nd Portion Land Lots and after negotiations between Chan and Li, they agreed that Chan would cause his nominee, ie the plaintiff and Panwood, to be the legal owners of the 1^st Portion Land Lots and the 2^nd Portion Land Lots whilst Li would still hold 50% of the beneficial interest in the said lands.

(h) Hence, the plaintiff and Panwood were registered as the legal owners of the 1^st Portion Land Lots and the 2^nd Portion Land Lots upon completion of the sale and purchase thereof.

(i) The plaintiff did not pay the defendant or Li any service fee regarding the purchase of the 1^st Schedule land lots. The payment of $500,000 was made by Chan, through Chan Tam Wong Investment Co Ltd, to Li on 30 September 2003 as a loan in carrying out other investment businesses which were unrelated to the transaction in issue.

(j) In the circumstances, the defendant was the beneficial owner of the 1^st Scheduled land lots, and is still the beneficial owner of the 3^rd Scheduled land lots.  She was never a trustee of the plaintiff in respect of the 1^st Schedule land lots.

7.  After the defendant and Li filed affirmations in opposition to the plaintiff’s summary judgment application, on 27 March 2017, the defendant applied to amend her defence.  The amendments may be summarized as follows:

(a) Chan was the plaintiff’s chairman and was in control thereof.

(b) Li was born in Yuen Ling Village, Tai Po.  Apart from investing in New Territories lands, he runs business in operating guesthouses or hotels through Well Fortune Investment Co Ltd.  On the other hand, Chan was a businessman in addition to money lender.

(c) In about mid-2002, Li learned the opportunity of acquiring the lands in Yuen Ling village ie the 1^st Scheduled land lots, the 1^st Portion Land Lots and the 2^nd Portion Land Lots (collectively “the Yuen Ling Lots”) through a middleman, Mr Cheung.

(d) Li had a strong intention to acquire the 1^st Scheduled land lots because of his then existing interest in the adjacent lands lots, namely, Lot Nos 707 and 749 in DD9.

(e) However, the deal with the vendor ultimately fell through.

(f) In about mid-2003, Li learned the opportunity to acquire certain lands in Lung Mei Village (collectively “the Lung Mei Lots”) for investment purposes. As the vendor was only willing to sell the Lung Mei Lots as a whole and lack of funds of Li, Li approached Chan.  Li and Chan orally agreed to jointly contribute to the purchase of the Lung Mei Lots to be held by their sons.  As a result, on about 9 July 2003, Li and Chan respectively contributed $1,675,000 to purchase the Lung Mei Lots which were put under the names of the sons of Chan and Li.

(g) In about mid-late July 2003, the said middleman, Mr Cheung approached Li again in respect of the acquisition of the Yuen Ling Lots.  The price had decreased due to the outbreak of SARS.

(h) However, due to lack of funds after the purchase of the Lung Mei Lots, Li approached Chan in about mid-late 2003.

(i) Chan orally agreed to lend money to Li in the following terms (“the Original Agreement”):

(i) Chan would lend sufficient money to Li or his nominee for his purchase of the 1^st Schedule land lots and would not charge Li for any interest.

(ii) The total amount of the loan would be $13,000,000 of which $1,000,000 would be loaned for the purpose of acquiring the 1^st Schedule land lots to be held by Li or his nominee, and the remaining balance would be set-off against Li’s previous debts to Chan.  Li would procure transfer of 13,750 shares in Well Fortune held by him or his family to Chan or his nominee as mortgage of the entire loan.

(iii) Chan and Li would each contribute 50% of the purchase price and legal costs as well as disbursements of acquiring both the 1^st Portion Land Lots and the 2^nd Portion Land Lots so that each of them or their nominees would then hold 50% of the beneficial interest thereof.

(iv) However, as Li did not have sufficient funds to contribute his 50% of the funds in acquiring the 1^st Portion Land Lots and the 2^nd Portion Land Lots, Chan would further provide sufficient loans to Li and would not charge any interest.

(v) Li would repay the loans to Chan when Li had sufficient money to repay the same.

(vi) Li would use his relationship and influence in Yuen Ling village to facilitate the purchase of the Yuen Ling Lots, and Li and Chan could thereafter co-operate and jointly develop the lands.

(j) After that, Li approached the vendor of the Yuen Ling Lots ie GMC and it was agreed that the considerations for the 1^st Schedule land lots, the 1^st Portion Land Lots and the 2^nd Portion Land Lots should be $990,000, $1,000,000 and $2,000,000 respectively. The purchaser would also pay $1,500,000 consultation fees, of which $500,000 should be paid at the time of signing the sale and purchase agreement and $1,000,000 should be paid within one week after that.

(k) At the same time, it was orally agreed that (i) Chan should be responsible for the consultation fees of $1,500,000 and the transactions fees until further arrangement; (ii) Li’s company, Sino International Investment Ltd (“Sino International”) and Chan’s company, the plaintiff, should be the legal owner of the 1^st Portion Land Lots; (iii) Li’s company, Wifun and Chan’s company, Panwood, should be the legal owners of the 2^nd Portion Land Lots; and (iv) the defendant should be the legal owner of the 1^st Scheduled land losts.

(l) Pursuant to the Original Agreement:

(i) On 25 September 2003, the plaintiff issued the cheque No 546611 in the sum of $1,300,000 to Li, of which $800,000 was for the deposit of buying the Yuen Ling Lots, and $500,000 was for the first instalment of the consultancy fees.

(ii) On the same date, Wifun issued a cheque of $800,000 (No 683660) to Messrs Peter WK Lo for paying the deposit to the vendor.

(iii) On the same date, Li issued a cheque of $500,000 (No 686038) to pay the first instalment of the consultation fees to the vendor or its nominees.

(iv) On 30 September 2003, Chan’s company, Chan Tam Wong Investment Co Ltd, issued a cheque (No 562785) in the sum of $1,000,000 to Li for paying the balance of the consultancy fees.

(v) On 16 Octobr 2003, GMC and the plaintiff and Sino International signed a sale and purchase agreement for the 1^st Portion Land Lot at $1,000,000; GMC and Panwood and Wifun signed another agreement for the 2^nd Portion Land Lot at $2,000,000; and GMC signed another agreement with the defendant for the 1^st Scheduled land Lot at $990,000.

(vi) On 12 December 2003, the defendant and Li’s son and daughter transferred a total of 13,750 shares in Well Fortune to Chan Tam Wong Investment Co Ltd.

(m) Before the completion of the sale and purchase of the Yuen Ling Lots, Li and Chan reached a new oral agreement (“the New Agreement”).  Chan would cause his nominees, the plaintiff and Panwood to be the legal owners of the 1^st Portion Land Lots and the 2^nd Portion Land Lots. If Li had capital in the future, Li could purchase back the 50% interest in them according to the original considerations without interest (“the Buy-back Promise”).  The New Agreement was proposed by Chan as he was to provide the funds for the Yuen Ling Lots; Li accepted as he did not want the entire deal to fall through and believed that Chan would not renege on the Buy-back Promise.

(n) Pursuant to the New Agreement, the plaintiff and Panwood were registered as the legal owners of the 1^st Portion Land Lots and the 2^nd Portion Land Lots.

(o) The plaintiff paid the outstanding balance, being the sum of $803,822.50 for the purchase of the 1^st Schedule land lots.  After completion, Li paid back $3,800 cash to Chan.  Hence, a total sum of $1,000,000 was advanced by Chan through the plaintiff to Li for the purchase of the 1^st Schedule land lots.

(p) Chan was diagnosed to have cancer in about 2005 and dementia in about 2009. Since then, his family members in particular, his son Chan Chee Ling and his wife Lee Suk Yee were in charge of the dealings with Li.

(q) Despite repeated request, the Chan’s family refused to recognize or perform the Buy-back Promise.

(r) In about 2012, it was orally agreed between Li and the representative of the Chan’s family that 50% of the shareholding in Well Fortune held by Chan Tam Wong Investment should be transferred back to Li’s family; Li’s family should transfer some lands in Lung Mei to the Chan’s family; the Li’s family should be granted an option to buy some lands in the 1^st Portion Land Lots.

(s) Pursuant to such agreement, Li transferred its interest in the lands in Lung Mei to the Chan’s family.  But the Chan’s family refused to allow the Li’s family to exercise the said option.

(t) In about mid-October 2013, the Chan’s family reported to the police that the defendant verbally harassed them when she was merely trying to contact Henry Chan in respect of the ownership of the 1^st Portion Land Lots.  Bad blood was developed between the two families.

(u) Before the letter date 25 July 2014 from the plaintiff’s solicitors to Li and the defendant, the plaintiff or the Chan’s family had never alleged that the plaintiff should be the beneficial owner of the 1^st Schedule land lots.

D.  The applicable legal principles

8.  The legal principles concerning Order 14 application are well established and not in dispute.  However, in the present context, it is pertinent to highlight the principle propounded by Ribeiro J (as he then was) in Billion Silver Development Ltd v All Wide Investments Ltd [2000] 2 HKC 262 at 268C-D:

“With respect, this was not the correct approach to the exercise of the judge’s discretion. The importance of there being doubts or suspicion as to the validity of the plaintiff’s case is that such doubts detract from the plaintiff’s right to summary judgment. It was not to the point to dismiss them on the basis that they did not improve the quality of the defence and ‘raise it’ beyond the category of ‘shadowy’. If possibly genuine weaknesses were exposed in the plaintiff’s case, this casts doubt on the plaintiff’s right to invoke the summary procedure in the first place.”

9.  In Li Mingren v Questex Development Inc and another CACV 141/2014 (18 November 2015, unreported), §13, before citing the above passage in Billion Silver, Yuen JA held that:

“The principles guiding the court in deciding whether to give summary judgment are well-known. All that the defendant needs to show is a triable issue. But before the court looks at the defence, one must look at the plaintiff’s case first.”

10.  In Ju Yan Di Emperory Genesisy v Yan Wai Han [2015] 1 HKLRD 822 at 827, §14, Cheung JA held that:

“It is well established that the burden on the defendant in a summary judgment application is to show that he has a credible defence and he must condescend to give particulars of his defence. However, this does not mean that once the plaintiff invokes the application and irrespective of the strength of his case, the defendant bears all the burden of showing that there are triable issues in the case. This is because the starting point in a summary judgment application is that it should only be invoked when there is no defence to the claim. This means that the plaintiff must in the first place demonstrate that the defendant has indeed no defence. This requirement is further recognized in the procedural rules which mandate the plaintiff to state his belief in the verifying affidavit that there is no defence to the claim. This requirement must be kept in proper perspective when assessment is made of the strength of the application, otherwise there is a danger that the attention will be focused solely on what the defendant has said without consideration at the same time of the basic premise of the plaintiff’s claim or its inherent strength and weakness. …”

E.  Analysis

11.  Mr Chong submitted that the plaintiff’s case is clear and indisputable, and that the defendant’s defence is unbelievable.  I shall start by considering the plaintiff’s case.

12.  I agree that there is indisputable documentary evidence showing that the purchase money for the 1^st Schedule land lots came from the plaintiff:

(a) In respect of the deposit in the sum of $200,000, it came from the cheque (No 546611) dated 25 September 2003 drawn by the plaintiff and payable to Li in the total sum of $1,300,000. There is no serious dispute that, after Li received this sum, on the same day, he procured his company Wifun, to draw a cheque (No 683660) payable to Messrs Peter W K Lo in the sum of $800,000.  And out of this sum of $800,000, $200,000 was used to pay the deposit for the 1^st Schedule land lots.

(b) According to the receipt issued by Messrs W K Lo & Co (No 111355) dated 9 January 2004, they received a sum from the plaintiff for the account of the defendant regarding the purchase of the 1^st Schedule land lots by a cheque (No 546636) in the sum of $803,822.50.  On the copy receipt among the accounting records produced by the plaintiff, there are the following handwritten manuscripts “由旺叔付款”.

13.  Although the prayer for relief in the statement of claim refers to both resulting trust and constructive trust, for the present purpose, the plaintiff relies on resulting trust only.  Mr Chong submitted that this is a clear case of resulting trust, and he cited Westdeutsche Landesbank Girozentrale v Islington LBC [1996] AC 669 at 708A-B where Lord Browne-Wilkinson held that:

“Under existing law a resulting trust arises in two sets of circumstances: (A) where A makes a voluntary payment to B or pays (wholly or in part) for the purchase of property which is vested either in B alone …, there is a presumption that A did not intend to make a gift to B: the money or property is held on trust for A (if he is the sole provider of the money…”

Mr Chong submitted that, as there is no suggestion that the plaintiff intended to make a gift of the 1^st Schedule land lots to the defendant, there is nothing to rebut the presumption of resulting trust.

14.  While Mr Chong’s submission appeared to be attractive at first sight, on reflection, I take the view that the matter is not that simple or straightforward.  The critical point is that a resulting trust will only come into existence if the payment by A to B is “voluntary”.  This is the point stressed by the Hong Kong Court of Final Appeal in Big Island Construction (HK) Ltd v Wu Yi Development Co Ltd (2015) 18 HKCFAR 364 at 382, §44 where Tang PJ, after citing the above passage in Westdeutsche Landesbank Girozentrale v Islington LBC, held that:

“Thus, it is only when a payment is voluntary that a resulting trust may arise. If money is provided as a loan, no resulting trust will arise. Since the payments would be at the disposal of the borrower and there would be no identifiable trust fund.”

In §47 at p 383, Tang PJ added that:

“Here, the plaintiff’s case that the moneys were provided as loans (thus at the disposal of the defendants) was incompatible with any resulting trust. They were not voluntary payments in the sense used by Browne-Wilkinson so no resulting trust could arise…”

Sir Anthony Mason NPJ explained in detail, with the support of authorities from England and Australia, why the relationship of resulting trust and loan is inconsistent and incompatible at pp 394-396, §§91-97, of the judgment. He concluded in §97:

“Thus the presumption will be displaced if the person who provides the money intended only to make a loan of money which was to be repaid. In such a case there would be no resulting trust because the common intention is inconsistent with the person who provides the money taking an equitable interest.”

15.  In Underhill and Hayton, Law Relating to Trusts and Trustees (19^th ed., 2016), the authors state in §25.13 at p 481:

“Where the purchase money is provided by a third party at the request of and by way of loan to the person to whom the property is conveyed there is no resulting trust in favour of the third party, for he did not advance the purchase-money as purchaser, but merely as lender.”

16.  In this case, although the indisputable documentary evidence shows that the purchase money was advanced by the plaintiff, it does not, by itself, shows whether it was advanced by the plaintiff “as purchaser” or “as lender”.  The gist of the defendant’s case is that the money was paid by the plaintiff as a loan.  In the circumstances, I take the view that summary judgment should only be granted if it is clear that the money was paid by the plaintiff “as purchaser”, but not “as lender”.

17.  In respect of the plaintiff’s case that it paid the money as purchaser, the natural and immediate question is why, if that was the case, the Property was not acquired in its own name; and why the defendant was named as the legal owner.  Lee Yuk Yee, the daughter in law of Chan, said that it was Chan’s understanding from Li and the defendant that the vendor of the 1^st Scheduled land lots, the 1^st Portion Land Lots and the 2^nd Portion Land Lots were only willing to deal with Li and the defendant. Such explanation is doubtful:

(a) According to the plaintiff’s own pleaded case, the vendor, GMC, was a mortgagee exercising its power of sale.  It is difficult to understand why GMC would be concerned about the identity of the purchaser.

(b) As a matter of fact, in respect of the 1^st Portion Land Lots, Sino International and the plaintiff were named as the purchasers in the sale and purchase agreement dated 16 October 2003; and, as a result of a nomination dated 9 January 2004, the plaintiff became the sole assignee.

(c) Similarly, in respect of the 2^nd Portion Land Lots, Wifun and Panwood were named as the purchasers in the sale and purchase agreement dated 16 October 2003; and, as a result of a nomination dated 9 January 2004, Panwood became the sole assignee.

18.  Second, although the plaintiff has produced voluminous accounting records and documents, there is no express written declaration of trust, or any document indicating that the defendant has been holding the 1^st Scheduled land lots on trust for the plaintiff.

19.  Among the documents produced by the plaintiff is a one-page document which contains copies of two cheques:

(a) the above-mentioned cheque drawn by Wifun (No 683660) payable to Messrs Peter W K Lo in the sum of $800,000; and

(b) a cheque drawn by Li and the defendant jointly with the payee left blank dated 25 September 2003 in the sum of $500,000.

The total amount of these two cheques is $1,300,000, which is exactly the amount of the above-mentioned cheque (No 546611) drawn by the plaintiff in favour of Li on the same day.  These two cheques purport to show how Li made use of the sum of $1,300,000 after receiving it from the plaintiff.  What is noteworthy is that at the bottom of that one-page document, one can see the following handwritten manuscripts in Chinese:

“全數共$1,300,000,- 由旺叔借出” (emphasis added)

20.  There is no dispute that “旺叔” is a reference to Chan.  Mr Chong submitted that this sentence should be construed as meaning that Chan lent $1,300,000 to the plaintiff.  In constrast, Mr Man submitted that it means Chan lent $1,300,000 to Li and/or the defendant.  I am unable to resolve what the proper construction of this sentence is on affirmation evidence only for the following reasons:

(a) The interpretation contended by Mr Chong is not supported by evidence given by the plaintiff.  Lee Yuk Yee said that the handwritten manuscripts were made by one Mr Lee, an accounting staff member working for the plaintiff, on the instructions of Chan and Li.  However, that Mr Lee has not given any evidence; and Lee Yuk Yee does not purport to have any personal knowledge of the matter.

(b) It was plausible that no distinction was drawn between Chan on the one hand, and companies related to him, such as the plaintiff, on the other hand so that monies lent by those companies were simply described as monies lent by Chan in the internal records of the plaintiff.  I note that, in respect of a cheque dated 30 September 2003 issued by Chan Tam Wong Investment Co Ltd (a family company related to Chan) drawn in favour of Li in the sum of $1,000,00, Mr Lee simply wrote down “旺叔出”.

21.  There is also another one-page accounting record produced by the plaintiff, which casts a doubt on the nature of payment made by the plaintiff.  That document purports to set out the particulars of payment in respect of the purchase of the 1^st Scheduled land lots, the 1^st Portion Land Lots and the 2^nd Portion Land Lots.  In respect of the deposit and the balance of the purchase price concerning the 1^st Scheduled land lots, it was stated that “旺叔代付訂金” and “旺叔代付尾數”.  The Chinese character “代” was not used regarding the payment of price for the 1^st Portion Land Lots and the 2^nd Portion Land Lots.  In my view, while this character means “on behalf” literally, it is capable of being used to describe a loan in the context.

22.  The above-mentioned cheque drawn by Li and the defendant jointly with the payee left blank dated 25 September 2003 in the sum of $500,000 is also of some significance.  The plaintiff’s case is that the sum of $500,000 represented consultancy fee paid to Li and/or the defendant as its land agents. However, this cheque suggests that Li and/or the defendant did not actually pocket the sum of $500,000 by themselves; instead, it was paid over to an unknown person.  This casts doubts on whether the role of the defendant and Li was merely land agents as claimed by the plaintiff.

23.  There are the following evidence casting further doubts on the plaintiff’s assertion that the defendant and Li were merely acting as land agents in the acquisition of the 1^st Scheduled land lots and other lands mentioned above:

(a) Li and Easybase Investment Ltd (a company relating to Li) were the owners of the lands adjacent to the 1^st Scheduled Land Lots, namely, Lot Nos 707 and 749 in DD9.  There are documents supporting that, in 2002, there was an unsuccessful attempt by Li (and his associates) to acquire the 1^st Scheduled land lots, as well as the 1^st and 2^nd Portion Land Lots.

(b) In respect of the 1^st and 2^nd Portions Land Lots which were acquired at the same time as the 1^st Scheduled land lots, companies belonging or relating to Li and/or the defendant were purchasers in the sale and purchase agreements (ie Sino International in relation to the 1^st Portion Land Lots, and Wifun in relation to the 2^nd Portion Land Lots), although they did not become the registered owner of the lands at the end.

(c) Li and Chan jointly acquired the Lung Mei Lots.

24.  Lee Yuk Yee said that she had accompanied Chan to meet Li and the defendant on several occasions to demand the defendant to assign the 1^st Scheduled land lots back to the plaintiff but the defendant refused to do so.  However, it was only on 25 July 2014 that the plaintiff made a written demand through its solicitors.  One needs to bear in mind that the 1^st Schedule land lots were acquired back in 2003.  Further, among the lands subdivided out of the 1^st Schedule land lots, one of them was sold to a nephew of Lee Yuk Yee called Chan Chi Wai in about 2008.  Lee Yuk Yee said that the transfer was made after the repeated demands for return of the 1^st Scheduled land lots though it was not accepted as full and final settlement.  The land registry record suggests that the transfer was at a consideration of $150,000.  Nevertheless, if the defendant merely transferred a small portion of the 1^st Schedule land lots in accordance with Lee Yuk Yee’s direction and consent, it is puzzling why, apparently, no formal action was taken to recover the remaining portions until July 2004.

25.  I note that the defendant did not reply to the plaintiff’s demand letter dated 25 July 2014.  One would have thought that the absence of any response should have made the plaintiff more confident in its claim against the defendant.  Yet, the plaintiff only commenced these proceedings on 15 January 2016.  Mr Chong submitted that it took time for the legal team to prepare the legal documents as a large number of lands are involved.  Mr Chong’s submission is however not supported by any evidence.

26.  I also note that Li had stated overtly that Chan lent him the money to acquire the 1^st Scheduled land lots before the plaintiff made the written demand on 25 July 2014 and the commencement of these proceedings. In a police statement made by Li on 23 October 2013, he stated that:

“喺2003年至2004年左右, 我老婆楊寬娣同陳淡旺喺律師樓去一齊買左大埔元嶺村…10多幅約10萬尺既地, 而因為當時我喺鄉事關係, 所以陳淡旺同我地協議買地既錢無需要出先, 先由佢借俾我代我出先…” (emphasis added)

27.  For the sake of completeness, I must of course consider the defendant’s case.  I agree with Mr Chong that there are compelling features suggesting that the defendant’s case that the $1 million loan used to purchase the 1^st Schedule land lots came from the $13 million loan should not be believed.  Suffice for me to highlight the following problematic features:

(a) In the Chinese document dated 1 August 2003 signed by Li, it was stated that Li received “得到” $13,000,000 from Chan between August 2002 and August 2003 as the consideration for 13,750 shares in Well Fortune.

(b) The purchase price for the 1^st Schedule land lots was paid after August 2003.  And this document did not refer to any loan in any event; it referred to an outright transfer.  (I note, however, that the 13,750 shares were transferred back to Li’s family members on 5 December 2012.)

(c) Assuming that $13 million represented a loan, the document does not support that it was related to any of the purchase money for the 1^st Scheduled land lots at all.

28.  I also agree that the defendant’s case contains other curious features as submitted by Mr Chong.  For example, why would Chan agreed to lend money to Li and/or the defendant without any interest? Why was there no repayment of the alleged loan for so many years?

29.  If the defendant’s case is considered in isolation, I may well be tempted to conclude that the defendant’s case is unbelievable.  However, as stated above, this is not the correct approach.  After considering all evidence and submissions, I have come to the conclusion that this is a case where both parties’ cases contain doubts or curious features which call for explanations and cannot be resolved on affirmation evidence only.  As I have decided that this case should go to trial, although I have already highlighted a number of doubtful features in both parties’ cases above, it is inappropriate and unnecessary for me to deal with or consider the merits of these features in detail or exhaustively.

30.  I am under a distinct impression that neither party’s case as set out in their pleadings and affirmation evidence has revealed the whole truth.  The following observation made by Watkins LJ in Extraktionstechnik Gesellschaft Fur Anlagenbau MbH v Oskar (1984) 128 SJ 417 seems apply equally in the present context:

“What is … abundantly clear is that justice cannot possibly be said to be done until the acute issues which have been raised upon the affidavits have been resolved in a contested action. There appears to be ammunition available to both parties capable of inflicting serious wounds. We would not presume to be capable of assessing the chance of success for one as opposed to the other…”

F.  Conclusion and orders

31.  For the above reasons, I take the view that there is a triable issue as to the true nature of the money paid by the plaintiff to the defendant for the purchase of the 1^st Schedule land lots; in particular, whether it was intended to be the purchase price paid by the plaintiff, or merely a loan advanced by the plaintiff to the defendant and/or Li.

32.  I am not satisfied that this is a suitable case for summary judgment.  In respect of the plaintiff’s Order 14 summons, I shall give unconditional leave to defend with costs in the cause.

33.  As to the defendant’s summons to amend her defence, although, as mentioned, I have serious doubts about the facts pleaded in the draft amended defence, as the matter will go to trial, I should leave it to the defendant to decide on how she would like to run her case.  I shall make an order in terms of the defendant’s summons dated 27 March 2017. The defendant has agreed to pay the costs of this summons, which shall be taxed if not agreed.