CHUNG CHI KEUNG v. LEE CHING YEE

HCA 3056/1998

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 3056 OF 1998

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J U D G M E N T

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1. This is an action brought by the Plaintiff to set aside a certain deed dated 31 October 1997 under which the Plaintiff had covenanted to pay the Defendant the sum of $500,000. The amount had been paid by a cheque which was dishonoured on presentation. The Defendant counterclaimed for the payment of the sum.

2. The Plaintiff is now 39 years old. He was brought up in Hong Kong and was a graduate of the University of Hong Kong. He obtained a degree in quantity survey. During his course in the University he acquired some basic knowledge of the law of contract particularly engineering contracts, and he was aware that consideration was necessary to support a contract. After his graduation, he worked in the Housing Department for 3 years. His work was mainly concerned with construction work cost control. Since he left the Housing Department, he had worked for various famous property development companies and also for a quantity surveyor consultant firm. His last job was with the Airport Authority who employed him on a one year contract basis. He is currently unemployed.

3. In August 1993, the Plaintiff bought the property known as Flat B on 37th floor, Tower 1 of Greenfield Garden, Tsing Yi (herein after called "the property"). He financed the purchase with the help of a mortgage loan from a bank. The property was assigned to him on 31 August 1993. It is common ground that he paid for the purchase himself and that the mortgage repayments were all made by him with his own money.

4. There was no evidence before me as to when the Plaintiff came to know the Defendant. However their relationship must be very close by the time of the Plaintiff's acquisition of the property. It is also common ground that by October 1993, the Plaintiff and the Defendant lived together as man and wife without any form of marriage. They set up their home at the property. The Plaintiff paid all outgoing in respect of the property, such as rates and other utilities charges. The Plaintiff made provisions for the Defendant and paid the Defendant a monthly sum of $3,000 as household expenses. The Defendant performed the usual household duties of a wife such as cooking and laundry etc.

5. During the time when the Plaintiff and the Defendant were living together, their relationship was very good. The Plaintiff was very accommodating to the Defendant. The Plaintiff promised that the Plaintiff would take care of the Defendant. The Plaintiff's evidence was that he merely mentioned that he would take care of the Defendant without saying expressly that he would take care of the Defendant for life. His evidence in chief was that what he meant at the time was that he would merely take care of her during the time when they were living together. However in cross examination, he agreed that when he and the Defendant were living together, he had promised to take care of the Defendant for life. I am of the view that whether the parties had used the express words "for life" or not, it was plainly the case that at the time when their relationship was good, the parties must have understood that the Plaintiff had offered to take care of the Defendant for life.

6. One day in September 1997, the Plaintiff told the Defendant that he was in love with another woman. The Plaintiff comforted the Defendant by telling her not to worry and he would explain to that other woman that the Plaintiff had been staying with the Defendant for a long time. The Plaintiff again promised to take care of the Defendant. The Defendant was very upset and cried. On 17 October 1997 the Plaintiff sent the Defendant a letter saying that although his love for the Defendant had faded, nevertheless he still intended to keep his promise to take care of the Defendant for life. The letter further went on to say that the Plaintiff felt guilty in seeing that the Defendant was unhappy and hurt. The Plaintiff further expressed the wish to re-establish their love, and he promised that he would only love the Defendant and no other.

7. Between 22 October 1997 and 31 October 1997 the Plaintiff had written a number of notes recording the Plaintiff's promise to make payment or to transfer the property to the Defendant. The Plaintiff's case was that he wrote these notes not out of his free will and that he was forced to write them because the Defendant cried and made threats of committing suicide and that he wrote the notes in order to comfort her. The Plaintiff did not give any evidence in chief on the circumstances of the making of these notes and the detailed circumstances of the making of these notes came from the Defendant's evidence. I note that in cross examination, the Defendant's counsel had not put to the Plaintiff the details of the Defendant's case on these notes. There was no objection raised by the Plaintiff and there was no application to recall the Plaintiff to deal with this part of the evidence. These are matters which I bear in mind when I approach and make my finding on this part of the evidence.

8. On 22 October 1997, the Plaintiff and the Defendant had supper together. After the meal, the Plaintiff again raised the matter of his affairs with the other woman with the Defendant. He told the Defendant that he had decided to leave the Defendant to live with the other woman. The Defendant was very upset. She raised with the Plaintiff his earlier promises to take care of her for life. They had a discussion. At the end the Plaintiff promised that after he had paid off all the mortgage installments, he would pay the Defendant one tenth of his salary for the Defendant's daily expenses. At the request of the Defendant, the Plaintiff wrote recording his promise. This note was written at about 1.40 a.m. on 23 October 1997. According to the Defendant, she asked the Plaintiff to write the note because she felt that the Plaintiff had broken his earlier promise in September that he would only love the Defendant and so she wanted something in writing hoping that the Plaintiff would keep his promise which had been reduced into writing and signed by him.

9. About an hour later, at about 2.40 a.m. on 23 October 1997, the Plaintiff wrote out another note to the effect that the Plaintiff had agreed to go to a solicitor firm with the Defendant to attend to some change of name procedure in respect of the property and that meanwhile before the procedure was completed, the Plaintiff was not to break the news to anyone. According to the Defendant, this note came into existence because after the first note, the parties continued with their discussion. The Defendant raised with the Plaintiff that although the Plaintiff had promised to take care of her and verbally agreed to allow the Defendant to stay in the property, he could go back on his promise and evict her at any time. The Plaintiff then orally agreed to transfer the property to her, whereupon she asked the Plaintiff to write out the note and the Plaintiff did.

10. On the next day, 24 October 1997 the Plaintiff wrote another note the effect of which was that that Plaintiff would give the Defendant $2,000 per month for her daily expenses until the Plaintiff had finished making all the mortgage repayments. The Defendant's evidence was that she said to the Plaintiff that although the Plaintiff had promised to pay her one tenth of his salary before, that payment would not commence until he had completed all mortgage repayments, and she did not know when the payment would be completed. Realising her concern, the Plaintiff agreed to pay her $2,000 per month during the time before he had completed the mortgage repayments and the Plaintiff wrote out this note as evidence.

11. On 29 October 1997 there was a note which was faxed to the Defendant at Yick Woo Trading, which I presumed was the Defendant's employer at the time. This note said :

"I, Mr Chung Chi Keung (I.D.E8835612(6)) hereby agree to give you, Miss Lee Ching Yee (I.D. G258046(1)) a lump sum of HK$500,000.00 ten months later (i.e. in September 1998) provided that you, Miss Lee Ching Yee, would not live/reside in the flat of address flat B, 37/F Block One, Greenfield Garden, Tsing Yi, N.T. thereafter.

Regards

Sd. Chung Chi Keung

29-10-1997"

12. Again the Plaintiff's evidence was very vague on the circumstances leading to his writing this note. His case was simply that he was forced to write this note because the Defendant was very emotional and threatened to commit suicide. I do not accept this part of the Plaintiff's evidence. The note was obviously sent to the Defendant's place of work by fax. It is difficult to accept that the Defendant would have made such a threat and expressed such great emotion that would over-power the free will of the Plaintiff so as to make the Plaintiff to write out this note and to fax it to her office. I find that after the Plaintiff had written out the note saying that the Plaintiff would transfer the property to the Defendant, the Plaintiff had second thought about the matter. He called the Defendant at her place of work on many occasions indicating that he no longer wished to transfer the property to the Defendant but would instead compensate the Defendant by offering to pay this $500,000. The Defendant asked the Plaintiff to record his promise in writing and the Plaintiff therefore sent this fax to the Defendant.

13. After this note was sent, the parties made arrangement for the Plaintiff to deliver a cheque posted dated to 30 September 1998 in the sum of $500,000 to the Defendant. Although she had received the cheque, the Defendant still felt a bit unsecured. She therefore suggested to the Plaintiff that they should sign a document at a solicitors firm. The Plaintiff at the time said that he did not think that it was necessary to make such things so formal, but upon the Defendant's insisting, the Plaintiff told the Defendant to make the arrangement but that he would not pay for the cost. I do not consider that in so saying, the Plaintiff had authorised the Defendant to instruct any solicitor on his behalf. What he said merely amounted to indicating his willingness to execute the document prepared by the solicitors instructed by the Defendant. This is plain from his making clear that he would not pay for the cost because he did not agree to have solicitors to prepare such document. After the conversation, the Defendant made arrangement with Messrs K. B. Chau & Co. for that firm to draw up a formal agreement to embody the agreement made between her and the Plaintiff as evidenced by the fax of 29 October 1997. She sent a copy of the fax and also the cheque she received to that firm to enable the agreement to be drawn up. She then made arrangement with the Plaintiff asking the Plaintiff to go to the solicitor firm to execute the agreement.

14. It is a live issue in this case as to whether K. B. Chau & Co. was acting as solicitors for both the Plaintiff and the Defendant, or just acting as solicitors for the Defendant. Initially the Plaintiff's case was that the solicitors merely acted for the Defendant. The Defendant did not admit this averment. At the trial, after the evidence was completed the Plaintiff asked for leave to amend the Reply and Defence to Counterclaim in effect to seek to withdraw the averment that the solicitors acted for the Defendant only. I allowed the amendment mainly on the ground that this is an important issue in the case and I am of the view that this issue should be properly ventilated and my decision should not be fettered by any error in the pleading.

15. On the evidence before me, I have no hesitation that the solicitors merely acted as solicitors for the Defendant only. The solicitors received instruction only from the Defendant, and were only paid by the Defendant. The Plaintiff's contact with the solicitors was merely in his attending that firm to execute the Deed. No doubt the solicitors did explain to him the contents of the deed, although it is the Plaintiff's evidence that the solicitors had not fully explained every part of the deed. It is nevertheless the Plaintiff's evidence that such parts which had not been explained to him were not important. The Plaintiff did not seek any advice from the solicitors. His attitude was that he merely attended the office to execute the document and would like to finish the whole episode as soon as possible. In coming to this view, I note that after a statement in her witness statement to the effect that she had made arrangement for K. B. Chau & Co. to represent both the Plaintiff and her was put to her, the Defendant did admit in her evidence in cross examination that she had made such arrangement for the solicitors to represent both the Plaintiff and her. However I also accept her explanation that in fact she did not have much idea as to whether the arrangement was for the solicitors to act for her alone or for both parties. I accept her evidence on how the arrangement was made, i.e. she merely sent the fax copy and the cheque to the solicitors to ask them to prepare the document for execution. She further explained that to her mind the solicitors would be acting for both parties when the solicitors would speak to both parties and that if the solicitors would be acting for her alone, then the solicitors would not be speaking to the Plaintiff at all. I accept that it is due to this misunderstanding on her part that led to her saying that she had arranged for the solicitors to act for both the Plaintiff and her.

16. On 31 October 1997, the Defendant went to the solicitors firm. She was received by Mr Lam, a trainee solicitors of the firm. Mr Lam went through with her the document which had been prepared for execution on that day. She was satisfied with the contents. She then waited for about half an hour for the Plaintiff to arrive. When the Plaintiff arrived, Mr Lam asked the Defendant if she wanted to sit together with the Plaintiff to discuss the document. The Defendant did not want to do so. Mr Lam then arranged to meet the Plaintiff in another room. According to the Plaintiff, his meeting with Mr Lam was for not more than 5 minutes. Mr Lam simply explained to him that the deed was an undertaking document (承諾書) and that he has to pay the $500,000 as compensation for the separation. He was also told of his obligation under clauses 4 and 5 of the deed. He fairly admitted that having had the opportunity of going through the deed by the time of the trial, Mr Lam had explained to him the contents of the deeds albeit not fully but that things omitted were not important. The Defendant on the other hand said that Mr Lam had spent about an hour with the Plaintiff. During that time, Mr Lam had come out to take instruction from her on whether the sum of $500,000 could be pay by installments and on the other occasion Mr Lam asked if the clause in the deed providing that the parties could not have direct contact with the other could be deleted. I accept the evidence of the Defendant. The plaintiff is evidently an educated man, and the deed was in relatively simple English. The Plaintiff was well capable of understanding the deed and would hardly require any interpretation from anyone. I am of the view that the Plaintiff did take the opportunity to seek clarification on exactly what was his obligations under the deed, and no doubt he also conducted on his own behalf the negotiation with the solicitors acting for the Defendant.

17. After the deed was executed, the Defendant moved out of the property. On 3 November 1997 the Plaintiff wrote to Messrs K. B. Chau & Co. complaining that the Defendant had removed certain items of furniture and electrical appliances. The letter affirmed the promise made in the deed to make payment of the $500,000 and also the licence given to the Defendant to stay in the Property until 30 September 1998 but further said that if the Defendant should fail to return all the items taken from the property, he would deduct the sum of $100,000 from the $500,000 and would cancel the cheque of $500,000 and issue another one in the sum of $400,000 to the Defendant instead.

18. The Plaintiff's case is that although he did send out the fax of 29 October 1997 and also did execute the Deed of 31 October 1997, he did so not out of his free will, but instead, he was forced to do what he did by the Defendant. The Defendant exerted pressure on him by showing her great emotion in crying and threatening to commit suicide. However there was no attempt to lead any evidence from the Plaintiff on the particulars of the incidents of the Defendant's making such threats. While I accept that it was probable that when the Plaintiff first broke the news of his falling in love with another woman in September and his final decision to leave the Plaintiff in the late hours of 22 October 1997, the Defendant did cry and threatened to commit suicide, I would consider that such threats made by the Defendant did not have such impact on the Plaintiff so as to over power the free will of the Plaintiff. In Chekiang First Bank v. Fong Siu Kin [1997] 2 HKC 302, Litton VP asked the following question in considering whether there was any actual undue influence : "What acts had they performed which could have been construed as coercion, domination or pressure which sapped Mdm Fong's will and induced her to enter into the transaction?" I asked myself the same question. I do not see any evidence before me of any acts which either the Defendant or her solicitors Messrs K. B. Chau & Co. had done which could be construed as coercion, domination or pressure which sapped the Plaintiff's will and induced him to enter into the transaction. In particular, having regard to the fact that the note of 29 October 1997 was not written, and the Deed of Covenant dated 31 October 1997 was not executed, on the spur of the moment in a direct confrontation between the parties, and the fact that 3 days after the execution of the Deed of Covenant, the Plaintiff still wrote to the Messrs K. B. Chau & Co. re-affirming his obligation to pay the sum of $500,000, I do not think that a case of actual undue influence could be made out at all.

19. The Plaintiff however argued that there was presumed undue influence in this case by the acts of Mr Lam of K. B. Chau & Co. By presumed undue influence, the Plaintiff referred Class 2 Undue Influence referred to in the speech of Lord Browne Wilkinson in Barclays Bank Plc v. O'Brien [1994] 1 AC 180 at 189D-H:

"Class 2 : Presumed undue influence

In these cases the complainant only has to show, in the first instance that there was a relationship of trust and confidence between the complainant and the wrongdoer of such a nature that it is fair to presume that the wrongdoer abused that relationship in procuring the complainant to enter into the impugned transaction. In Class 2 cases therefore there is no need to produce evidence that actual undue influence was exerted in relation to the particular transaction impugned : once a confidential relationship has been proved, the burden then shifts to the wrongdoer to prove that the complainant entered into the impugned transaction freely, for example by showing that the complainant had independent advice. Such a confidential relationship can be established in two ways, viz.,

Class 2(A)

Certain relationships (for example solicitor and client, medical advisor and patient) as a matter of law raise the presumption that undue influence had been exercised.

Class 2(B)

Even if there is no relationship falling within Class 2(A), if the complainant proves the de facto existence of a relationship under which the complainant generally reposed trust and confidence in the wrongdoer, the existence of such relationship raises the presumption of undue influence. In a Class 2(B) case therefore, in the absence of evidence disproving undue influence, the complainant will succeed in setting aside the impugned transaction merely by proof that the complainant reposed trust and confidence in the wrongdoer without having to prove that the wrongdoer exerted actual undue influence or otherwise abused such trust and confidence in relation to the particular transaction impugned."

20. As between the Plaintiff and the Defendant, I do not consider that there was any relationship which would fall within either Class 2(A) or Class 2(B). The Plaintiff case was however that there was nevertheless a Class 2(A) relationship between the Plaintiff and Mr Lam because Mr Lam was the solicitor acting for the Plaintiff in the execution of the Deed. I have already held that in my view, Messrs K. B. Chau and Co. simply acted as solicitors for the Defendant. I do not consider that the Plaintiff had ever authorised the Defendant to instruct solicitors to act for him and on the evidence of the Plaintiff which was confirmed by paragraph 14A of the Amended Reply and Defence to Counterclaim, the Plaintiff never realised that the solicitors was also acting for him, and I find that in fact they are not. In these circumstances, I find that there is no presumed undue influence at all.

21. While it is well established that where a person had been induced to enter into a transaction by the undue influence of another, he was entitled to have that transaction set aside as against the wrongdoer (see Chekiang First Bank v. Fong Siu Kin [1997] 2 HKC 302), there does not appear to be the right to set aside a transaction if the undue influence came from a third party except in cases where the third party was the agent of the other party to the transaction or where the other party had actual or constructive notice of the undue influence (see Chitty on Contract 28 edition paragraph 7-070; Chekiang First Bank's case supra, per Godfrey JA at page 310F). Even if I am wrong in holding that the Messrs K. B. Chau & Co. was not acting for the Plaintiff, on the facts of this case, I do not consider that any undue influence which could be presumed to have arisen by virtue of the solicitor and client relationship between the Plaintiff and Mr Lam, would entitle the Plaintiff to avoid the deed. There are 2 reasons for this conclusion. First on that scenario, the wongdoer, i.e. the party exerting the undue influence, was Mr Lam of the solicitors and he must have done so not in his capacity as being the Defendant's agent but as the solicitors for the Plaintiff himself. The transaction which the Plaintiff now sought to impugned was however not a transaction between him and the solicitors. I cannot see how the fact that the Plaintiff had acted under the presumed undue influence of his own solicitors should give rise to a right to avoid a contract he made with the Defendant. Furthermore the evidence was that Mr Lam met and discussed with the Plaintiff and the Defendant separately. In the circumstances, there is also no evidence to show that the Defendant was aware of any undue influence which Mr Lam might have exerted on the Plaintiff. Secondly, it is admitted by the Plaintiff that he was not aware that Mr Lam was also acting for him at all material times. As averred by him in paragraph 14A(a) of the Amended Reply and Defence to Counterclaim, at the time he honestly believed that he was not legally represented. Hence he could not have treated Mr Lam as his solicitor in all the dealing he had with Mr Lam. In my view, the presumption of undue influence where a Class 2(A) relationship existed is only a presumption of fact which could be rebutted. Where there was a solicitor and client relationship, it is fair to presume that the client will look to the solicitor for his advice and protection of his interest and there is thus the basis for inferring that the client would be under the influence of the solicitors. However where the "client" was unaware of the fact that the person he was dealing with had been appointed by someone else to be his solicitor, I do not think that it could be inferred that the "client" would still allow himself to be influenced by the "solicitor". Put it in another way, I consider that the presumption of undue influence in this situation was rebutted by the very fact that the client was unaware that he was dealing with his solicitor because in this rather special circumstances, no inference could be drawn that the client would allow himself to be influenced.

22. The other ground which the Plaintiff would rely on to set aside the transaction was mistake. From the pleadings the mistakes which the Plaintiff would rely on are as follows :

(a) At the time of the execution of the deed, the Plaintiff mistakenly believed that the Defendant, as a mere cohabitee, was entitled to be paid a fee on the separation with the Plaintiff,

(b) At the time of the execution of the deed, the Plaintiff did not realise that the deed would be enforceable against him notwithstanding that there was no consideration moving from the Defendant. In this regard, his case was that the solicitors merely told him that the document was an undertaking document (承諾書) without informing him that it was a deed with the necessary consequence that it would be enforceable even without consideration.

23. It was contended that since the well known case of Kleinwort Benson Ltd v. Lincoln City Council [1998] 3 WLR 1095, it was no longer a bar to setting aside of a contract that the mistake in question is merely a mistake of law and not a mistake of fact. Counsel for the Plaintiff referred me to Chitty on Contract 28 edition paragraph 30-042 :

"Mistake of law : Principles governing recovery. It was held that the questions raised in a claim for restitution of money paid under a mistake of law are the same as those raised in a claim for restitution of money paid under a mistake of fact: was there a mistake, did the mistake cause the payment, and did the payee have a right to receive the sum which was paid to him. Retention of the money is prima facie unjust if the payer paid because he thought he was obliged to do so and it subsequently turns out that he was not...."

24. It must however be noted that the passage relied on by counsel would not have any direct application to the present case because this is not a case that the Plaintiff had made payment and is now trying to recover the money paid on the ground that it was paid under mistake. This is a case whereby the Plaintiff had entered into a contract under seal to make payment and the Defendant is entitled to be paid and to keep any money paid unless the Plaintiff could show valid grounds to set aside the contract. As Waller J held in Citibank N.A. v. Brown Shipley & Co. Ltd [1991] 2 All ER 690 at 700 j :

"First, the type of mistake necessary to give rise to a right to recover under the restitutionary remedy of money paid under a mistake of fact need not necessarily be of the same fundamental character that makes a contract totally void. Thus to point to a case where the plaintiff has succeeded on a restitutionary remedy, would not establish that the plaintiff would also have established a mistake fundamental enough to avoid any contract altogether."

25. It is thus necessary to investigate whether the Plaintiff had indeed made the alleged mistakes and what was the impact of those mistakes on the enforceability of Deed in this case.

26. The Plaintiff has received some basic training on the law of contract, although the extent of his knowledge was not clear from the evidence. The Plaintiff was certainly aware that a contract could not be enforced if it was not supported by consideration. He also frankly admitted in response to the question from the bench that when he wrote out and gave the various notes to the Defendant between 23 October 1997 and 29 October 1997, those pieces of paper were worthless as he knew that the promises contained therein could not be enforced by the Defendant because of the lack of consideration. It was also his evidence that when he delivered the cheque to the Defendant on 30 October 1997, he did not believe that the cheque could be enforceable against him because there was no consideration for the cheque. Further in response to the question from the bench, he said that when he executed the Deed at the solicitors' firm, he believed that the document he executed was legally binding and he was legally bound to perform the terms of the deed. Plaintiff's counsel sought to ask the same question again and the Defendant's counsel objected to the Plaintiff's asking the question on the ground that the question had already been asked by the bench and the Plaintiff had given a clear answer. I allowed the question and in answer to the same question, the Plaintiff resiled from his original answer and said that he did not quite know if the deed was enforceable against him or not. In view of the circumstances of the Plaintiff's being asked for the second time the same question, I am of the view that the Plaintiff must have realised that the answer he gave earlier was not quite so favourable to his case and that was the reason for his resiling from his original position and adopted a more neutral position by saying that he did not really know if the Deed was enforceable against him or not.

27. An examination of the contents of the various notes given before 30 October 1997 would reveal that by those notes, the Plaintiff had made various promises of payment of money and also transfer of the property to the Defendant. Those payments were made after the separation and a termination of the cohabitation relationship. The fact that the Plaintiff was aware that those notes were not enforceable against him because of the lack of consideration would plainly point to the fact that the Plaintiff was aware that upon a separation with the Defendant, the Plaintiff was not obliged in law to make any payment or provision for the Defendant. Counsel for the Plaintiff however sought to argue that the earlier payments promised by the Plaintiff were periodic payments in the nature of maintenance while the lump sum payment provided under the Deed was in the nature of a separation fee and was so explained to the Plaintiff by Mr Lam. However the Plaintiff himself had given no explanation as to why he should draw any distinction between his belief that he was liable to pay separation fee but not maintenance. In all the circumstances, I am not satisfied that the Plaintiff was in fact mistaken and I find that at all material times, even up to the time of the execution of the Deed, he was aware that he would not be liable in law to pay any money to the Defendant arising out of the separation of their cohabitation relationship.

28. However I also accept the Plaintiff's evidence that at the time when he executed the Deed, he believed that it was enforceable. There was no mistake on his part. The liability to pay $500,000 under the Deed was enforceable against him not because he was in law liable to pay any separation fee but was because he had opted to agree to pay such sum by an instrument under seal.

29. It was also argued that the Plaintiff made the mistake in not realising that the provision in the Deed was enforceable against him. In this regard counsel for the Plaintiff criticised Mr Lam for not explaining to the Plaintiff the significance of the agreement being embodied in an instrument under seal. It was suggested that the Plaintiff was misled by Mr Lam who only told the Plaintiff that the document was an "undertaking document" (承諾書) and as such misled the Plaintiff into thinking that the instrument would not be enforceable. It was vaguely argued that the Plaintiff made a mistake because he thought that like the various notes he had given to the Defendant earlier, the deed was likewise unenforceable and that he would not have been prepared to execute the Deed had he been told that on this occasion because the instrument was under seal it would be enforceable against him. I must say that there is something very unattractive in this attitude of the Plaintiff that he would be prepared to execute the instrument only if it would be unenforceable. On the evidence before me, the Plaintiff plainly realised and believed that the document he executed was enforceable against him and I am of the view that whether he knew that the document was enforceable because it was a deed or because of some other reason is immaterial. Plainly he was not under any mistake.

30. In any event, I do not think that the fact that the document of 31 October 1997 signed at the solicitors' office was under seal was crucial to its enforceability. Plainly there was sufficient consideration to support the promises made in that instrument. Clauses 4 and 5 of the instrument embodying mutual promises made by the Plaintiff and the Defendant to one another were plainly sufficient consideration in law to make the instrument enforceable even the same was not under seal. Thus I am also of the view that the fact that the significance of the instrument being under seal had not been explained to the Plaintiff was of no consequence in this case.

31. Furthermore it would appear to me that the mistake, if any, in this case is not a common mistake. If the Plaintiff has made any mistake at all, it is only a unilateral mistake on his part and there is no reason to believe that the Defendant was aware of any mistake on the part of the Plaintiff. Certainly it has not been suggested to the Defendant that she was aware that the Plaintiff had all along been just deceiving her by giving her unenforceable notes and would not have been prepared to execute the deed had he realised that by making a promise under seal he would be obliged to honour his promise. In the circumstances, I am of the view that even if contrary to my view, there was any mistake in this case, the mistake was not of such kind that would entitle the Plaintiff to avoid the contract contained in the deed.

32. It was also argued that the Deed should not be enforced because it was a domestic arrangement and there was no intention to create a legal relationship between the 2 parties. I do not think this argument would succeed. The parties' relationship had come to an end. The parties had gone to the extent of requiring promises to be reduced into writing and for this occasion, the Defendant was serious enough to require the Plaintiff to go to a solicitors firm to execute an instrument under seal. I am of the view that the Defendant certainly intended to create a legal relationship with the Plaintiff and the Plaintiff must likewise be aware of her intention. In fact, I would also find that the Plaintiff too must intend to create a legal relationship with the Defendant by the Deed. Otherwise he would not have written to Messrs K. B. Chau & Co. on 3 November 1997 reserving his right to deduct $100,000 from the $500,000 payable in the event of the Defendant's not returning the items of furniture and electrical appliances.

33. To conclude, I am of the view that the deed was enforceable and under the Deed, the Plaintiff is liable to pay the Defendant $500,000. The cheque given on 30 October 1997 was dishonoured, and thus the Plaintiff has not discharged his obligation. The Plaintiff's claim is therefore dismissed and I will give judgment for the Defendant in her counterclaim for the sum of $500,000. There is no evidence to show that the Defendant has any interest in the property, and the counterclaim for a declaration that the Defendant had an interest in the property is therefore dismissed. In any case, such counterclaim is no longer pursued in the trial. Under Section 48 of the High Court Ordinance I will also award interest on the sum of $500,000 at the rate of 1% above the prime rate of the Hong Kong & Shanghai Banking Corporation from 1 October 1998 to the date hereof. I will order that the Plaintiff to pay the Defendant the cost of this action.