KWAI TAK MING v. K.S. CAPITAL ONE LTD AND OTHERS

CACV 132/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 132 OF 2016

(ON APPEAL FROM HCA NO 679 of 2012)

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JUDGMENT

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Hon Lam VP (giving the Judgment of the Court):

1.  On 12 June 2017, we handed down our judgment dismissing the appeal brought by the Defendants. By a Notice of Motion of 10 July 2017, the Defendants applied for leave to appeal to the Court of Final Appeal on the basis of three questions which they contended to be questions of great general and public importance [“GPI grounds”]:

“ (1) given that the Plaintiff was legally represented when he signed the formal sale and purchase agreement (“FS&P”) and he had received independent legal advice before signing of the same, and without an allegation of negligence, fraud and/or misrepresentation on the part of the Plaintiff’s legal representative, whether it is open to the Court to find the Plaintiff was subject to the effect of the Defendants’ fraudulent or any type of misrepresentation as to the true nature of the transaction in entering into the FS&P;

(2) further to (1), what are the particulars required in a pleading of fraudulent or any type of “misrepresentation as to the true nature of the transaction” or fraudulent misrepresentation of intention; and whether it is open to the Court to find the same without those required particulars being pleaded with supporting evidence;

(3) whether there is a distinction between “misrepresentation about the contents or meaning of a document which is made with a view to inducing a person to enter into a transaction” and “misrepresentation, made before the document is executed, about the effect which that same document will have once executed.”  If yes, whether the present case fall into the latter type, such that the Court ought to have found that the Plaintiff should still be bound by the misrepresented terms or to terms which have the legal effect that the Defendants promised they would have;”

2.  Further, the Defendants asked for leave to be granted on the “or otherwise” ground in respect of the following question:

“ (4) whether the FS&P shall be rescinded and whether the Defendants shall be entitled to specific performance or damages in their counterclaim, being a question which ought to be dealt with by the Court of Final Appeal for the effective disposal of this appeal.”

3.  In accordance with Practice Direction 2.1, written submissions were filed by the parties and we have read the same.  In the submissions of Mr Cheung (counsel for the Defendants in this application), he clarified that the question under the “or otherwise” limb is not an independent ground.  Instead, it premised on leave being granted on at least one of the GPI grounds and it only raised a “follow-up” issue for full disposal of the matter.

4.  We shall first focus on the GPI grounds.

5.  With respect, the way in which Mr Cheung (who did not appear at the substantive appeal before us) formulated these questions indicated that he did not fully understand the basis on which we upheld the judge’s finding of misrepresentation.  The representation which the Defendants were held to have made was a representation of the then present intention with regard to the true nature of the whole transaction, viz it was not intended to be enforced as an outright sale[1].  Hence, it is not a “misrepresentation about the contents or meaning of a document” or “misrepresentation … about the effect which some document will have once effected”.  The representation does not focus on the document to be executed, viz the provisional agreement and the Formal Sale and Purchase Agreement.  Rather, the representation is about the intention on the part of the Defendants on how these documents would be deployed. 

6.  Hence, the fact that the Plaintiff was legally represented at the time of signing of the Formal Sale and Purchase Agreement is neither here nor there.  The representation on intention stemmed from conversations and conducts extraneous to the document to which the solicitors were not privy.

7.  There is no rule of law which prevents the court from setting aside an agreement procured by misrepresentation simply because it had been executed with legal representation.  The authorities cited by Mr Cheung[2] do not support such a proposition of law. 

8.  Rather, it is a question of fact whether in light of legal representation the party who wishes to set aside the agreement had acted in reliance on the false representation.  It was addressed by us at [88] to [89] of the judgment in light of the evidence summarized at [19].

9.  Thus, we do not regard Question (1) as raising any GPI question.

10.  Question (2) sought to raise a pleading point. We have addressed the same at [78] to [83] of the judgment.  See also [105]. We held that in the circumstances under which the plea was made, the case of the Plaintiff had been made clear to the Defendants.  With respect, we cannot see the basis for suggesting Question (2) as raising a GPI question. 

11.  Further, the complaint of inadequacy of the pleadings is, with respect, somewhat hollow when the nub of the case on misrepresentation is that the Defendants falsely represented to the Plaintiff their intention of not using the agreements by way of an outright sale.  That had been pleaded at para 83A of the Amended Statement of Claim.

12.  Question (3) is difficult to follow.  As we said earlier, the relevant representation is the representation as to the intention of the Defendants in respect of the use of the agreements.  Mr Cheung referred to Cartwright, Misrepresentation, Mistake & Non-Disclosure 4^th Edn paragraphs 3-24 and 10-14.  It is similar to the point raised by Mr Wong SC at the appeal with regard to the distinction between a representation and a contractual promise, discussed at [73] of the judgment.  On the facts, we held that it was a case of representation.  No GPI question is involved.

13.  Hence, there is no basis for the grant of leave on GPI ground.   As such, on Mr Cheung’s own admission, Question (4) could not arise.

14.  We therefore dismiss the Notice of Motion and order the Defendants to pay the costs of the Plaintiff in the motion.  Having considered the statement of costs of the Plaintiff, we are of the view that given that the matter is disposed of on paper, the fees charged by counsel (who has been involved in the matter all along) is on the high side.  We shall fix the costs of the Plaintiff at $143,090.