HOBMAN CO LTD v. NATIONAL SINO LTD

DCCJ 2778/2015

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 2778 OF 2015

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DCCJ 2914/2015

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 2914 OF 2015

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DCCJ 3031/2015

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 3031 OF 2015

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DCCJ 3036/2015

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 3036 OF 2015

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DCCJ 3181/2015

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 3181 OF 2015

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DCCJ 3182/2015

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 3182 OF 2015

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DCCJ 3183/2015

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 3183 OF 2015

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DCCJ 3184/2015

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 3184 OF 2015

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DECISION

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INTRODUCTION

1.  In these eight actions, the plaintiff is Hobman Company Limited.  It belongs to the Wheelock group, a well-known property developer in Hong Kong.

2.  The plaintiff is the registered owner of a number of lots of land in Tung Tsz, Tai Po, New Territories or, more specifically, Demarcation District Nos 12 and 14.  Some of these lots form the subject-matter of the present dispute. 

3.  The eight actions concern eight different groups of lands.  In each action, the group of lands in question (in each case, the “Land”) was licensed by the plaintiff to the defendant of that action pursuant to a licence agreement entered into in either February or March 2015 (in each case, the “Licence Agreement”).

4.  The plaintiff’s claim in each action is straightforward and similar.  The plaintiff as licensor claims against the licensee for vacant possession of the Land and mesne profits, on the basis that the licence expired on 31 May 2015 and the licensee has failed to move out. 

5.  Five of the defendants are companies and three individuals.  All eight of them are presently represented by the same legal team, notwithstanding that some of the defendants are seemingly unrelated.  However, four of them are in fact related and the common link amongst them is Mr Tse Wing Kwai (“Tse”).  I shall refer to these four defendants collectively as the “Tse Camp”.  Their relationship is set out below:-

Action No	Defendant	Relationship with Tse
DCCJ 3182/2015	Tse	–
DCCJ 3183/2015	Bun San San (“Bun”)	Tse’s wife
DCCJ 2778/2015	National Sino Limited	Tse is sole director and sole shareholder
DCCJ 3181/2015	Rich Success Engineering Limited	Tse is one of the directors and one of the shareholders

6.  Across the eight actions, all defendants rely on the defence of misrepresentation.  Further defences are relied upon by individual defendants:-

(a)   The Tse Camp raise two additional defences – economic duress and lack of standing to enter into the Licence Agreement;

(b)   Bun further mounts the defence of undue influence; and

(c)   Lastly, (i) Tse, (ii) the defendant in DCCJ 3036/2015, Shing Kee Building and Construction Limited (“Shing Kee”), and (iii) the defendant in DCCJ 3184/2015, Cheung Chi Wai trading as Man Tung Motors (“Cheung”), all further rely on promissory estoppel.

7.  In order to avoid repetition in this decision, I shall, where appropriate, refer to the plaintiff’s claim, the defendant’s defence, together with other relevant background matter in the singular.  Save as separately indicated, these references shall be taken to mean the claim, the defence and the relevant background raised in each of the eight actions.  I shall also refer to the defendant as “it” below to avoid prolixity.

HISTORY OF THE PROCEEDINGS

8.  The plaintiff issued the writs of summons, each indorsed with a statement of claim, in the eight actions in June and July 2015.  (The statement of claim was subsequently amended, but the amendments are not material for present purposes.)  The defendant filed its defence and counterclaim, which was followed by the plaintiff’s reply and defence to counterclaim. 

9.  In April 2016, the Registrar gave standard directions on discovery and exchange of witness statements and directed the parties to take out any interlocutory application on or before 30 August 2016. 

10.  About six weeks after the deadline, the plaintiff took out a summons in each action primarily seeking:-

(a)   final judgment for vacant possession of the Land; and

(b)   the defendant’s counterclaim for specific performance of an alleged agreement between the plaintiff and the defendant be struck out.  (I shall have to come back to this counterclaim in due course.)

11.  At the call-over hearing of the eight summonses, the usual directions were given for the filing of evidence.  Understandably, given the shared factual background and the similarity of the eight applications, the Registrar made an order that the eight summonses be heard together. 

12.  That was the hearing before this court, at which Mr Derek JY Chan, counsel, appeared for the plaintiff and Ms Eugenia Yang, counsel, appeared for the defendants.

THE PLAINTIFF’S CLAIM

13.  The plaintiff owns various lots of lands in the Tung Tsz area.  Mr Chan informed the court that it had previously entered into 39 licence agreements in respect of these lots and had correspondingly commenced 39 actions to recover them (including the present eight actions).  All the other actions have been concluded in one way or another – summary judgment was obtained in one action (DCCJ 3176/2015) and the others dealt with by consent or by default. 

14.  The plaintiff’s case is as follows.

15.  Prior to 31 May 2014, an individual called Yip Chi Leung (“Yip”) held a licence granted by the plaintiff.  Yip was granted non-exclusive use of the plaintiff’s lots.  In return, he would pay a monthly licence fee.  Yip is referred to in the defendants’ affidavit evidence as the “Village Head”.

16.  Unknown to the plaintiff and without its consent, various occupiers took up possession of the lots, apparently pursuant to some renting arrangement made with Yip in respect of the individual lots.

17.  By a notice of termination dated 23 April 2014 issued by the plaintiff’s solicitors, the plaintiff gave notice to terminate the licence to Yip and requested him to vacate the lots on or before 31 May 2014. 

18.  In addition, the plaintiff’s solicitors affixed notices to quit in Chinese at the entrances of the lots.  By those notices, the plaintiff informed the occupiers of the termination of the licence to Yip and requested them to vacate the lots on or before the same deadline.  Further, the plaintiff demanded that any non-agricultural activities on the lots must immediately cease and all structures erected there must be pulled down. 

19.  Neither Yip nor any of the occupiers complied. 

20.  In about October 2014, the plaintiff appointed a registered surveyor, Wong Chi Wai (“Wong”), as its authorised agent to negotiate with the occupiers with a view to either recovering immediate possession of the lots or entering into short-term licences with the occupiers which would allow them to remain in occupation up to 31 May 2015.

21.  Later that month, Wong had a meeting with the occupiers.  It was arranged with the help of Tse, who had been acting as the liaison person between the plaintiff and the occupiers.

22.  At the meeting, a draft licence agreement in Chinese was discussed.  Some of the occupiers expressed concerns as to how long they could continue to stay on the lots.  In reply, Wong unequivocally informed the attendees that that the plaintiff’s primary objective was to recover possession of the lots but it was prepared to enter into transitional licences to allow the occupiers to remain in the lots on a short-term basis up to 31 May 2015.

23.  After the meeting, arrangements were made between the plaintiff and individual occupiers for the execution of the short-term licences, based on the draft discussed at the meeting. 

24.  In the end, in either February or, as the case may be, March 2015, the plaintiff entered into the Licence Agreement with the defendant.  Under its terms, the defendant was granted non-exclusive use of the Land (retrospectively) from 1 June 2014 and up to 31 May 2015.  In exchange, the defendant had to pay a monthly licence fee. 

25.  In the eight Licence Agreements, the monthly fees range from $500 to $5,000.  The fee for 1 June to 31 December 2014 was however set at a nominal sum of $1.  The defendant also had to pay a deposit as security for the due performance of the Licence Agreement. Across the Licence Agreements, the deposit amounts range from $3,000 to $30,000.

26.  Notwithstanding the expiry of the licence on 31 May 2015, the defendant failed to deliver vacant possession of the Land to the plaintiff.  By a notice dated 1 June 2015 and issued by Harriman Management Service Limited, the plaintiff’s agent, the plaintiff imposed a final 7-day deadline, demanding vacant possession by 7 June 2015.

27.  What happened next was that Harriman received a letter dated 16 June 2016 by post.  It did not bear a signature but was stated to be from the licensees of DD Nos 12 and 14, Tung Tsz, Tai Po.  I shall call it the “Joint Letter”.  It stated, amongst other things, the following:-

(a)   There were many occupiers in Tung Tsz.  It was therefore hard for them to find new places to continue their operations.  The occupiers asked for understanding and approval from Harriman so that they could have more time to vacate the lots.

(b)   The occupiers appreciated that it was fully within the owner’s rights to recover the lots. However, since the majority of the occupiers had been in possession of the lots for a few years, they would ask for the licence to be extended to 31 May 2016.

(c)   The occupiers were all small businesses and had no wish to trespass on the owner’s lots.  They promised they would vacate the lots before the expiry of the licence and they were prepared to sign any document so as to extend the licence.

28.  Notwithstanding the Joint Letter, the plaintiff proceeded to commence the legal proceedings to recover the Land shortly afterwards.

THE DEFENDANT’S CASE

29.  I now turn to the defendant’s case. 

30.  The defendant alleges that there were three meetings held between the plaintiff, acting through Wong, and the occupiers.

31.  The first meeting took place in May 2014:-

(a)   Wong informed the occupiers that the lease to Yip would expire soon and it would not be renewed by the plaintiff.

(b)   The occupiers told Wong that they would have difficulty quitting their respective lots since all of them had been operating businesses there for a long period of time.

32.  The second meeting took place in June 2014:-

(a)   Wong informed the occupiers that the plaintiff would sign lease agreements with the occupiers.

(b)   He assured the occupiers that nothing would change from the past and, further, that the plaintiff would continue to lease the lots to them on the same terms and conditions as those agreed between Yip and the occupiers in the past.

33.  The third meeting took place a few months later:-

(a)   Wong told the occupiers that the plaintiff would execute lease agreements with each of the occupiers for a term of one year and the lease agreements would be renewable on a yearly basis.

(b)   When challenged by the occupiers that the plaintiff would not renew after the original one-year term, Wong assured the occupiers that the plaintiff would not be developing DD Nos 12 and 14 for the next three to five years and that the lease agreements would be renewed after the expiration of the original term on a yearly basis for the next three to five years.

I shall refer to what Wong, acting on behalf of the plaintiff, allegedly said in the third meeting as the “Alleged Representations” below. 

34.  In reliance of the Alleged Representations, the defendant signed the Licence Agreement and duly paid the deposit.  The defendant says that the representations have now turned out to be false and fraudulent.

35.  The defendant also complains that the plaintiff or Wong did not explain the terms and conditions of the Licence Agreement prior to its execution.  Nor did the plaintiff or Wong inform the defendant that it could seek independent legal advice before signing.

36.  Therefore, the defendant had been induced to enter into the Licence Agreement in reliance of the false and/or fraudulent misrepresentation of the plaintiff.  Based on that, it makes a number of counterclaims.  Relevantly for present purposes, it asks for an order of specific performance of the agreement between the plaintiff and the defendant pursuant to which the Land be leased at the original monthly rate for the five years commencing from 2015 (the “Alleged Agreement”).

37.  The above is the factual case common to all the defendants in the actions.  I shall deal with the other defences raised separately by individual defendants in the “Analysis” section below.

LEGAL PRINCIPLES

38.  The principles governing Order 14 are well-settled.  In determining whether the defendant has a defence, the approach is twofold.  First, factually, is what the defendant says believable? Secondly, as a matter of law, even if what it says is believable, does it amount to an arguable defence in law?  See, eg, Schindler Lifts Hong Kong Ltd v Ocean Joy Investments Ltd [2003] 1 HKC 438 at §10 per Ma J.

39.  On the first question, it is not appropriate to embark on a mini-trial of the action on affidavit evidence.  The court simply asks itself whether what the defendant says is credible.  As Godfrey JA put it in Ng Shou Chun v Hung Chun San [1994] 1 HKC 155 at 158:-

“The issue is not whether the defendant’s assertions are to be believed; it is whether those assertions are believable.”

40.  Further, the court will not take the alleged defence on its face value but test it against the evidence disclosed, including contemporaneous documents.  The court will also consider the inherent probabilities (or improbabilities) of the defence: see, eg, Paul Y Management Ltd v Eternal Unity Development Ltd CACV 16/2008, 12 August 2008 at §19.

41.  On striking out, it is only in plain and obvious cases that the court should exercise its summary powers to strike out a claim.  The claim must be obviously unsustainable and it must be impossible, not just improbable, for the claim to succeed before the court will strike it out.  See, eg, Hong Kong Civil Procedure 2017 at 18/19/4.

ANALYSIS

Misrepresentation

42.  Mr Chan submitted that the defence of misrepresentation is unarguable.  First, the Alleged Representations are incapable of belief, as a matter of fact.  Secondly, even if they are believable, they do not give rise to a viable defence as a matter of law.

43.  I agree with Mr Chan’s submissions.

44.  The veracity of the Alleged Representations must be viewed against the relevant contemporaneous documents, namely, the Licence Agreement and the Joint Letter.

45.  The Licence Agreement was in Chinese.  It was only 2½ pages long.  In plain and clear language, it expressly stated that the licence was only for a term of up to 31 May 2015 and that upon termination of the agreement, the licensee was obliged to move out – see clauses 1, 16 and 19. 

46.  The content of the Alleged Representations, ie, the licence being renewable on a yearly basis for the next three to five years, was not reflected in the Licence Agreement at all.  There was no explanation given by the defendant as to, first, why the renewal term was omitted and, secondly, why it was prepared to sign the Licence Agreement in its present form notwithstanding the omission. 

47.  It is not the case that the defendant had at one point requested the incorporation of the term but the plaintiff rejected the request for some specific reason, as a result of which the defendant was left with what is now in the Licence Agreement.  It seems that if, as alleged by the defendant, Wong had explicitly given the assurance that the plaintiff would renew the licence, it is inherently improbable that the defendant would be content with the present form of the Licence Agreement, without raising any objection at all.

48.  For these reasons, I am of the view that the Alleged Representations are inconsistent with the fact that the Licence Agreement was signed in its present form.

49.  Mr Chan submitted that the Alleged Representations also fly in the face of the Joint Letter.  I agree.  I set out in paragraph 27 above its relevant content.  There was no mention at all of the Alleged Representations.  Instead the occupiers asked for understanding and indulgence from the plaintiff.  They even made the suggestion that the licence be extended for one more year to 31 May 2016, as opposed to the alleged three to five years. 

50.  If Wong had indeed made the Alleged Representations to the occupiers, the latter would have asserted what they considered to be their rights to remain in the lots for the next three to five years.  They would not have written the Joint Letter. 

51.  It is true that the Joint Letter was not signed and that on the face of it, the names of the defendants were not expressly stated.  In her oral submissions at the hearing, Ms Yang informed the court that none of the defendants had authorised the issue of the Joint Letter.

52.  However, there is no evidence to that effect at all in the opposing affidavit.  I cannot accept the confirmation from the Bar table as factual evidence that the Joint Letter was not authorised by the defendant.  If there were indeed such rebuttal evidence properly adduced by way of affidavit, it might very possibly give rise to a triable issue as to whether the Joint Letter can be relied upon in the first place.  But there is simply none.

53.  The Joint Letter was exhibited to the affidavit filed in support of the plaintiff’s summons.  It was then specifically referred to in the plaintiff’s reply affidavit, which stated that “[t]he contents of the Joint Letter (being a contemporaneous document) plainly contradict the Defendant’s case”.  Yet, the defendant has made no attempt at all to put in any evidence to rebut the point or state its present position that it had not authorised the issue of the Joint Letter. 

54.  As submitted by Mr Chan, none of the defendants came forward to disavow the Joint Letter. Instead, all of them chose to remain silent in the affidavits.  In the circumstances, it must be taken that the Joint Letter had indeed been sent on behalf of the occupiers, including the defendant.

55.  Lastly, Ms Yang submitted that Wong was a key figure in the present dispute and yet had not come forward and made any affidavit in support of the plaintiff’s application. The defendant’s case is that it was Wong who made the Alleged Representations. The plaintiff categorically denies this and says that Wong unequivocally confirmed that the licence would be up to 31 May 2015 only.  These conflicting versions, submitted Ms Yang, obviously give rise to triable issues and the case ought to be allowed to proceed to trial. 

56.  While I accept that in a summary judgement application, the court ought not to conduct a mini-trial on affidavits, particularly where there are directly conflicting accounts of events or conversations.  However, having evaluated the veracity of the Alleged Representations against inherent probabilities and contemporaneous documents, I am of the view that the allegation is so unbelievable that it should be rejected outright in a summary fashion.

57.  Accordingly, I hold that the defence of misrepresentation is unarguable because the factual premise on which the defence is based is incapable of belief.

58.  For completeness, I should add that I also accept Mr Chan’s submission that even if factually believable, the defence is not legally sustainable.

59.  In short, the Alleged Agreement, being an oral agreement, is unenforceable by reason of sections 3(1) and 5(1) of the Conveyancing and Property Ordinance, Cap 219.  Applying section 6(1), any interest created by the Alleged Agreement has the effect of an interest at will only.  Accordingly, the plaintiff may evict the defendant as it wishes (as it has now done after the original one-year term).  Further, the oral agreement would not fall within the exception provided for in section 6(2).  This is because the licence contemplated in the Alleged Agreement did not “take effect in possession” as that licence would only commence in the future.  In this regard, Mr Chan relied on Best Honour Investment & Development Ltd v Best Sonic Ltd HCA 478/2006, 20 June 2006 at paragraphs 14 to 16.  I agree and so apply the authority. 

60.  For the same reasons, the counterclaim for specific performance of the Alleged Agreement must also fail.  The counterclaim should only be allowed to go ahead if the defendant’s case on the Alleged Representations and the Alleged Agreement is arguable.  I have held otherwise.  The counterclaim ought to be struck out.

Duress

61.  The defence of duress is raised by the Tse Camp.  It runs as follows.

62.  In each of these four actions, some of the lots forming part of the Land were and are in the exclusive possession of Yip or third parties designated by him.  As such, the defendant was and is never in occupation of them.  I shall call these lots “Yip’s lots” below.  In other words, Yip’s lots have nothing to do with the defendant.

63.  Some time after the second meeting in June 2014, Wong and Tse had a telephone conversation in which Tse informed Wong that:-

(a)   Yip had previously sub-leased some of the lots to Tse for many years.  (These lots form part of the Land in the relevant action.)

(b)   Tse had sub-sub-leased these lots to various third parties.  (I shall call them the “sub-sub-leased lots”.)

(c)   If Tse was forced to vacate the sub-sub-leased lots, he would need to break those sub-sub-leases and thus be liable to pay hefty compensation. 

64.  Wong told Tse that he would inform the plaintiff of Tse’s special situation.

65.  Then followed the third meeting in which Wong made the Alleged Representations.

66.  In late February or early March 2015, Wong informed Tse that the licence agreements were ready for execution and that Tse should find different parties to sign them.  Tse said in reply that he did not know who else apart from himself to sign the licence agreements. Wong advised him to instruct his companies (if any) and/or his wife to sign the Licence Agreement in respect of the lots under the sub-sub-leases.

67.  Wong also informed Tse that Yip’s lots should be included in the licence agreements to be signed by Tse or his designated parties, so that Tse could secure these licence agreements with the plaintiff in order not to break the sub-sub-leases.

68.  The defendant now says that this amounts to economic duress exerted on Tse by the plaintiff.  But for such duress, the defendant would not have signed the Licence Agreement.

69.  The plaintiff’s version of events is as follows:-

(a)   Tse had represented to Wong that he was in a position to enter into licence agreements in respect of the plaintiff’s lots, including the Land.

(b)   Wong informed Tse that due to the plaintiff’s policy, it would not be prepared to licence a large portion of its lots to the same person but that it might reconsider if Tse could procure different persons or companies to apply for a short-term licence from the plaintiff.

(c)   Later, Tse contacted Wong informing him that the defendants in the Tse Camp were willing to enter into these licences.  Subsequently, the Licence Agreements were signed.

70.  Ms Yang submitted that even though Tse had nothing to do with Yip’s lots and had no control over them, he was forced to sign the Licence Agreement which covered them, since otherwise the plaintiff would not have granted him or his designates the licence in respect of the sub-sub-leased lots.  If Tse could not secure the grant of the latter licence, he would have to early break those leases and would be liable to pay hefty compensation to the sub-sub-lessees.

71.  In my view, the submission is not valid as it is based on a factually flawed premise.

72.  The defendant has indeed produced copies of the sub-sub-leases.  The majority of them have a term which expires after 31 May 2015.  Two of the sub-sub-leases are to expire as late as in 2023.  On the face of them, therefore, these documents do seem to go to support the defendant’s allegation that it (or Tse) would be liable to pay compensation should there be an early break.

73.  If the Alleged Representations had in fact been made, it would have meant that the licences in respect of the lots would not expire until 2020 (based on a five-year renewal).  In that situation, the defendant’s allegation that it could have avoided paying hefty compensation makes some sense since the majority of the sub-sub-leases would have expired before 2020.

74.  However, I have already found that the defendant’s case built on the Alleged Representations is incapable of belief.  In other words, the factual situation we are looking at is this.  In the negotiation process, Tse knew full well that the licence in respect of the sub-sub-leased lots, if granted, would expire on 31 May 2015. In that case, it would have had to early break the sub-sub-leases on that day anyway.  Therefore, even if Tse had been willing to include Yip’s lots in the licence agreements, that would not have helped his situation.

75.  As a matter of logic, the defendant’s allegation that the plaintiff had exerted pressure on Tse to include Yip’s lots in the licence is therefore unbelievable.  Tse would not have felt any pressure since he was “doomed” as far as the sub-sub-leased lots were concerned, so long as the licence was going to be valid only until 31 May 2015.  The defence of economic duress is therefore bound to fail.  And I so hold.

Lack of standing

76.  Same as the defence of duress, the defence of lack of standing is raised by the Tse Camp.

77.  Under this defence, the defendant says that it was not and is not in occupation of the Land or some of the lots forming part of the Land.  For instance, Yip or his designated parties have all along been in exclusive possession – see paragraphs 62 and 63 above. The Licence Agreement is therefore void ab initio as it was incapable of performance on the part of the defendant.  It is simply impossible for the defendant to perform its obligations under the Licence Agreement, including delivering vacant possession to the plaintiff, as the defendant has never been in possession or control or use of those lots.  Ms Yang submitted that the defendant has no standing to sign the Licence Agreement in the first place.

78.  Mr Chan described this argument as “puzzling”.  He pointed out that Tse and Bun are adults of sound mind and the two corporate defendants are both limited companies incorporated in Hong Kong.  Every one of them clearly had the legal capacity to enter into the Licence Agreement.  The Licence Agreement provides for a non-exclusive licence to use the Land.  However, whether the licensee chose to make use of the it (eg, by evicting the unauthorised occupiers) is another question.  But in any event it has nothing to do with the issue of capacity or standing.

79.  I agree with Mr Chan’s submission.  Even on the defendant’s factual case, namely, that it was Yip or his designates who were in actual occupation of the lots in question, the issue of standing does not arise.  Subjectively speaking, the defendant might find it hard or impractical to take back possession from Yip or his designates, even if it chose to.  However, it is an altogether different matter from lack of capacity.  The defence is simply unarguable.

Undue influence

80.  The defence of undue influence is raised by Bun alone.

81.  According to her opposing affirmation, Bun is an Indonesian who has received education up to Form 3.  She was married to Tse in 1994 and has since been a housewife.  She does not have a good command of Chinese or English.

82.  Her case is that she was never and is not in possession of any of the lots comprising the Land.  In fact, all along she has had nothing to do with the Land.

83.  She claims that on 18 March 2015, Tse told her that he would take her to sign a document the following day.  Therefore, on 19 March 2015, she went with Tse to see Wong. She had never seen Wong before but she was given to understand that Wong represented the plaintiff.  Wong handed to her “a piece of paper” and told her to sign it.  Tse also told her to place her signature on that piece of paper. Bun did not understand what was written on it.  It was only after these proceedings were commenced against her that she came to know that the piece of paper was the Licence Agreement.

84.  Bun complains that Wong did not explain the terms to her and did not inform her that she could seek independent legal advice prior to signing the document.

85.  In her affirmation, Bun described the circumstances in which she signed the Licence Agreement as follows:-

“19. I placed my signature on the License Agreement because Mr Wong Chi Wai and my husband Mr Tse told me to do so, and because I trust my husband Mr Tse. I did ask my husband Mr Tse the contents of the document on which I was going to place my signature on, but he and Mr Wong Chi Wai only tell me to place my signature on the document without saying anything more. I was and am only a simple housewife who relied on my husband Mr Tse for a living. Therefore, whatever my husband Mr Tse told me to do, I would submit to his request for fear that he would be unhappy and would cut my monthly housekeeping money. I say that my husband Mr Tse is the more dominate party in our marriage, and I am the submissive party in our marriage.

20. If I have known the contents of the License Agreement and its effect on me, I would never have signed the License Agreement on 19 March 2015.  If I did not sign the License Agreement, the Plaintiff would not be able to name me as the defendant in these proceedings.”

86.  It was only after these proceedings were commenced against her that Tse told Bun about the background leading to the Licence Agreement.

87.  In her defence and counterclaim, Bun pleads as follows (at paragraph 3):-

“(xviii) In reliance of Mr Wong and/or the Plaintiff’s false and/or fraudulent misrepresentation as outlined in paragraphs 3(vii) to 3(xvii) in this Defence and Counterclaim, Mr Tse was induced to cause his wife the Defendant to sign the License Agreement and/or the Defendant was induce to sign the License Agreement.

(xix) Further, Mr Tse exercised undue influence, domination, influence and control over the Defendant in making the Defendant sign and execute the License Agreement; and the Defendant was induced to sign and execute the License Agreement, and owing to the trust and confidence she imposed on Mr Tse.

(xx) As a result, the Defendant placed her signature on the License Agreement given the undue influence, domination, influence and control exerted on her by her husband Mr Tse.

(xxi) But for the undue influence, domination, influence and control exerted on her by her husband Mr Tse and/or Mr Wong and/or the Plaintiff’s false and/or fraudulent misrepresentation, the Defendant  would not have signed and/or executed the License Agreement.”

88.  At the hearing, Ms Yang confirmed that Bun relies on both actual and presumed undue influence.  She further submitted that the plaintiff knew that she was under undue influence. Mr Chan accepted that given the relationship between Bun and Tse, the former’s assertion that Tse had exerted undue influence on her when she signed the Licence Agreement is arguable.  However, Mr Chan pointed out that there is simply no allegation or particular, let alone any evidence, that the plaintiff in fact had actual or constructive notice of Tse’s undue influence over Bun – see Chitty on Contracts (32^nd edition) at paragraph 8-108.  In the circumstances, the defence of undue influence must be rejected vis-à-vis the plaintiff.

89.  I accept Mr Chan’s submission.  It is trite that in an Order 14 application, the defendant must “condescend upon particulars” and should as far as possible deal specifically with the plaintiff’s claim and affidavit and state clearly and concisely what the defence is and what facts are relied on to support this.  As Ma J explained in Toy Major Trading Company Limited v Hang Shun Plastic Toys Limited [2007] 3 HKLRD 345 at paragraph 12, the defendant is expected to demonstrate a fair probability or reasonable grounds that a bona fide defence exists.  It is by giving sufficient particulars of his defence that a defendant may convince the court there exists a triable issue so that leave to defend is given: see Hong Kong Civil Procedure 2017 at paragraph 14/4/4.

90.  The defendant has not done so in this case to demonstrate that the notice point is arguable:-

(a)   Here, there is no plea or evidence to the effect that the plaintiff actually knew about the undue influence in either the passages quoted above or elsewhere in the pleading or the opposing affirmation.

(b)   The question then turns on whether the plaintiff was put on enquiry as to whether Bun signed the Licence Agreement under undue influence exerted by Tse.  Equally, nowhere in the pleading or the opposing evidence does Bun put forward any factual basis on which the plaintiff ought to be fixed with constructive notice.

(c)   On the contrary, the Licence Agreement, on its face, would appear to be innocuous.  It is not a one-sided transaction.  Rather, the terms appeared to be mutually beneficial to both parties – in return for a modest monthly fee (as well as an initial deposit), the licensee was granted the use of the Land.  When one looks at the nature of the transaction itself, there was really nothing in the Licence Agreement which would alarm or alert a reasonable person to the possibility that there was anything untoward about Bun signing it as a party.

91.  It is a far cry from those cases in which a wife offers to stand surety for her husband’s debts.  In those cases, a bank is generally put on enquiry: Royal Bank of Scotland v Etridge (No 2) [2002] 2 AC 773 at paragraph 44.

92.  Considering the innocuous nature of the transaction and in the absence of particulars or evidence pointing to any factual circumstance which would reasonably put the plaintiff on enquiry, I am of the view that the court is entitled to reject outright Bun’s claim of undue influence. 

93.  Bun’s assertion that she did not understand the Licence Agreement as she did not have a good command of Chinese is irrelevant.  Generally speaking, where a person of full age and understanding signs a legal document, she is bound by the act of signature.  It would be no defence for her to say that she did not understand the contents of the legal document, unless there is separately a recognised legal basis for saying that her apparent consent was in some way vitiated: see, eg, Ming Shiu Chung v Ming Shiu Sum (2006) 9 HKCFAR 334 at paragraphs 84 to 87. Here, even taking Bun’s factual case as true, there is no such vitiating factor that would operate vis-à-vis the plaintiff. 

94.  Accordingly, Bun’s defence is bound to fail.

Promissory estoppel

95.  The defence of promissory estoppel is raised by Tse, Shing Kee and Cheung.

96.  This defence can be quickly disposed of.  Each of the defendant’s case is generally that it had incurred expenditure on the Land, eg, installing electrical facilities or other renovation works, on the strength of the plaintiff’s assurance (given via Wong) that it would renew the Licence Agreement on a yearly basis for the next three to five years.  For that reason, the plaintiff ought to be estopped from demanding the defendant to vacate the Land.

97.  Mr Chan submitted that no documentary evidence was adduced by any of the defendants to substantiate that money was indeed spent on the alleged renovation works.  As such, it is a bare allegation.

98.  That is a valid point. However, more importantly, as I have already held that the Alleged Representations are unbelievable, the defence must fail as the defendant has failed to surmount the first hurdle of establishing the defence of promissory estoppel, namely, a clear and unequivocal promise or assurance made by the plaintiff.

Order

99.  For the above reasons, in respect of each of the summonses, I grant the relief as sought by the plaintiff, as set out in paragraph 10 above.

100.  I also make an order nisi that the plaintiff do have costs of the summonses including all reserved costs, to be taxed if not agreed, on an indemnity basis, with certificate for counsel.

101.  I accept Mr Chan’s submission that indemnity costs are justified in light of the express provisions in the Licence Agreement – see clauses 5, 19 and 20.  Applying the Court of Appeal decision in Bank of China (Hong Kong) Ltd v Twin Profit Ltd [2011] 3 HKC 59 (at paragraph 7), there are no circumstances (the defendants having pointed to none) which would justify the court deviating from the express clauses.