TANG PAK HUNG v. LONGWILL ENGINEERING LTD

HCA2768/2003
and HCA743/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.2768 OF 2003

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AND

ACTION NO.743 OF 2004

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BETWEEN

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(CONSOLIDATED)

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JUDGMENT

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1. The plaintiff has brought these two actions (heard together) against what I will call the 1^st defendant and 2^nd defendant (Simon Tam Ngak Chou and Lee Wing Hie in HCA2768/2003) and the 3^rd defendant (Longwill Engineering Ltd in HCA743/2004) in relation to the joint venture of a development of land in the New Territories.  For ease of convenience I will hereinafer refer to Simon Tam Ngak Chou and Lee Wing Hie collectively as “Tam/Lee” and will refer to Longwill Engineering Ltd as “Longwill”.  The trial of this action has been unnecessarily protracted by the way this litigation was conducted, in particular on the part of the plaintiff and those acting for him.  When properly analysed the fair resolution of this dispute is not particularly difficult.  Before I go on to consider the issues which require to be resolved, it is first necessary to recite the history of the matter.

HISTORY

2. The plaintiff is an indigenous villager from Kat Hing Wai Village, Yuen Long, New Territories (“the Village”) and was desirous of entering into a property development.  The plaintiff himself has no experience in property development and in fact at the start of the story, he did not own any piece of land in his village in Yuen Long to be developed.  He however had identified a piece of land in his village in Yuen Long, Lot No. 363 Remaining Portion (“Land”) which he could acquire for development.

3. The development of village houses in the New Territories is an unique feature of the colonial heritage of Hong Kong.  Basically a male indigenous villager (“Ting”) has the right to build a standard three-storey village house on his land in the New Territories.  This right is the subject matter of the joint venture which has led to the present dispute.

4. The central character in this joint venture and the person who has brought it about is Wong Tit Fong (“Wong”).  Wong was in the business of property construction and development in the New Territories.  In mid-1991, through the efforts of Wong, a deal was brokered by Wong whereby the plaintiff agreed with Tam/Lee to do a joint venture development of the Land with the plaintiff supplying the Land and Tam/Lee doing the development.  The oral agreement was reached in mid-1991 for this joint venture development of the Land into the standard New Territories village houses and this oral agreement was subsequently reduced into writing.  Pursuant to the oral agreement in 1991 for the joint venture, the plaintiff was paid on 16 August 1991 the sum of $400,000 as evidenced by his receipt at page 869.  Further evidence that the oral agreement for joint venture was made can be seen by the loan of $800,000 (to enable the plaintiff to buy the Land) made by Tam to the plaintiff as evidenced by the cheque dated 19 October 1991 and the receipt of the plaintiff at page 870.

5. The Joint Venture Agreement dated 19 October 1991 was made between the plaintiff and Tam/Lee.  This Joint Venture Agreement was varied by a Supplementary Agreement dated 15 January 1992 between the same parties.  For convenience I will hereinafter refer to the 1991 Agreement and the Supplementary Agreement collectively as the “1991 JV Agreement”.  The following are the relevant provisions of the 1991 JV Agreement :

(1) the plaintiff is to supply the Land and the Tings (male indigenous villagers from the village of the Land) to enable this joint venture property development (“JV Development”) to be undertaken;

(2) Tam/Lee are to do the JV Development consisting of 20 houses;

(3) the plaintiff is to have 6 houses from the JV Development when completed;

(4) Tam/Lee are to have the remaining 14 houses from the JV Development when completed;

(5) Tam/Lee would pay for everything in connection with the JV Development, including the fees to be paid to the Tings in the amounts and at the times stated in the 1991 JV Agreement;

(6) the selection and division of the 20 houses would be agreed between the plaintiff and Tam/Lee;

(7) any assignment or transfer of the JV Development by Tam/Lee to any third party would require the written consent by the plaintiff.

6. In 1991 pursuant to the 1991 JV Agreement, the Land was divided into 20 lots and each lot was in turned registered in the name of a Ting from the Village.  In 1991 the 20 Tings registered against each lot, each signed a Power of Attorney in favour of Tam/Lee (“the Tam/Lee 1991 PA”) giving Tam/Lee all power to deal with his lot and with the Land.  The plaintiff caused these Tings to sign such Tam/Lee 1991 PA [page 571] pursuant to the 1991 JV Agreement.  The plaintiff was paid by Tam/Lee as Ting fee the sum of $100,000 on 7 November 1991 as evidenced by DS30.

7. By a Deed of Confirmation dated 23 March 1992 between the plaintiff and Tam/Lee, the plaintiff and Tam/Lee as attorneys of the Tings, confirmed the assignment of the 20 lots to the Tings so registered.

8. By mid-1992, the building license of the JV Development was still to be issued and the question of whether Tam/Lee could carry on with the 1991 JV Agreement was discussed between Wong, the plaintiff and Tam/Lee.  Wong came up with the idea of Longwill (as being much more experienced and substantial property developer) taking over the JV Development from Tam/Lee.  This was agreed to by Tam/Lee and Longwill.  The main dispute at the trial is whether the plaintiff also agreed to that transfer of the JV Development from Tam/Lee to Longwill.

9. The main terms of the oral agreement in 1992 of the transfer from Tam/Lee to Longwill are as follows :

(1) Longwill to pay Tam/Lee $16.8 million for the transfer to be paid by instalments;

(2) Longwill to take on all the obligations of Tam/Lee under the 1991 JV Agreement to develop the Land;

(3) Longwill to pay additional fee of $200,000; and

(4) Longwill to pay an advisory fee of $300,000.

10. The main terms of alleged 1992 plaintiff’s agreement to the transfer from Tam/Lee to Longwill are as follows :

(1) the plaintiff agreed to extend time of obtaining building licence and agreed to Longwill taking over the 1991 JV Agreement from Tam/Lee;

(2) the plaintiff to be paid $1.6 million by Wong with 10% to be paid first and the balance to be paid after completion of the JV Development;

(3) the plaintiff to be paid extra $200,000 for Tings fees;

(4) the plaintiff to be paid an advisory fee of $300,000.

11. On 1 August 1992, pursuant to the oral agreement between Tam/Lee and Longwill, Wong on behalf of Longwill paid to Tam/Lee the sum of $1,000,000 (as first part of the $16.8 million agreed consideration) as evidenced by the Receipt at page 871.  Wong himself was reimbursed by Longwill by two separate payments of $500,000 each on 20 August 1992 and 30 September 1992 (Exhibit D5).

12. On 20 October 1992, which is the most critical day in the whole case, the Tings were brought by the plaintiff to the office of George Mok & Co. Solicitors (“Mok”) so that the Tings could sign two important documents, firstly the termination and cancellation of the Tam/Lee 1991 PA given to Tam/Lee and secondly the new substitute PA signed by the Tings in favour of Longwill (“Longwill 1992 PA”) thereby allowing Longwill full power to deal with the Land, the lots registered in the name of the Tings and to enable the JV Development to be fully realized.

13. Also on 20 October 1992, the plaintiff was paid the following two sums, namely $200,000 in cash as evidenced by F335 and $400,000 which was paid by Wong’s cheque as evidenced by receipt signed by the plaintiff at page 872.

14. The events of 20 October 1992 are critical because the case of Tam/Lee and Longwill is that these were steps taken pursuant to the oral agreements made earlier in 1992 between the plaintiff, Wong, Tam/Lee and Longwill for the transfer of the 1991 JV Agreement to Longwill (so that Longwill would stand in as the developer instead of Tam/Lee).  As strong evidence of this agreed arrangement was the fact that the plaintiff was paid that day two large additional money payments (not entitled under the 1991 JV Agreement neither as to amount nor as to timing), part of which was given to the Tings to sign the new documents so as to enable Longwill to take charge of the JV Development.  The signing by the Tings (who were controlled by the plaintiff) of the Longwill 1992 PA in favour of Longwill and the same day payment to the plaintiff of $600,000 was the heart of the bargain.   The plaintiff disputes the significance of what happened that day and although admitting to the receipt of the moneys by him and the signing of documents by Tings as arranged by him claimed that he was misled and that he knew nothing about the nature of the documents being signed in favour of Longwill and cutting Tam/Lee out of the JV Development.

15. On 24 December 1992, Wong paid to the plaintiff, $760,000 by a cheque.  This payment was not disputed.  Nor was the make-up of the $760,000 disputed.  $760,000 was made up by a sum of $600,000 and a sum of $160,000.  The $600,000 sum was not disputed to be the deposit sum of $100,000 each in respect of the 6 houses of the plaintiff under the 1991 JV Agreement, which Wong on behalf of the plaintiff, sold to speculators/purchasers.  $160,000 was again indisputably the 10% of the sum of $1.6 million which it was agreed should be paid to the plaintiff by Wong for plaintiff’s agreement.  What was disputed by the plaintiff was why he was paid $1.6 million.  While the plaintiff contends that this was his consideration for agreeing to extend the contract period namely to waive the breach of the 12 months’ time period for the obtaining of the building licence, according to Wong, Tam/Lee and Longwill, this sum of $1.6 million (coming out of Wong’s pocket) was for the plaintiff agreeing to the transfer of the JV Development from Tam/Lee to Longwill and the extension of time of the building licence was merely an incidental part of the new arrangement with a new developer Longwill.  There was hardly any room for dispute of the fact that payment of $760,000 was made on 24 December 1992 because at page 873 the very important document can be seen, showing the Cheque in question and two separate Receipts given for the Cheque in relation to the reason for the payment of $600,000 and the reason for payment of $160,000.

16. On 26 March 1993, a cashier cheque of $700,000 was given by the plaintiff to Wong.  This payment is of significance because the sum of $700,000 was not disputed by the plaintiff to be made up of :

(a) $2.08 million being plaintiff’s share of his investment in a new property project of the plaintiff, being payable by the plaintiff to Wong;and

(b) $1.38 millionbeing the balance of the first 10% deposit at the price of $3.3 million for the plaintiff’s 6 houses ($330,000 x 6 or $1.98 million less $600,000 already paid on 24 December 1992) which Wong was to pay the plaintiff.

The net balance of $700,000 payable by the plaintiff to Wong was arrived at by deducting $1.38 million from $2.08 million.  While not disputing the payment or the nature of the payment that he had made to Wong, the plaintiff gave his version of why he was mistaken in making this important $700,000 payment.

17. On 15 July 1993, the plaintiff was given by Wong a cheque of Wong in the sum of $300,000.  This was evidenced by the plaintiff’s receipt at page 875.  There was another payment of $300,000 on 23 July 1993 also made to the plaintiff but this time the payment was made by Longwill (see Exhibit D7) and as evidenced by receipt of the plaintiff at page 877.  It is to be noted that under the 1991 JV Agreement, the plaintiff was not entitled to either of these $300,000 payments in July 1993.  In July 1993, no building license had been issued and no construction work has commenced.  Wong, Tam/Lee and Longwill all said that those payments were made pursuant to the oral agreements in 1992 whereby the plaintiff agreed to Longwill taking over the JV Development from Tam/Lee.

18. The alleged 1992 oral agreement for the transfer of the JV Development to Longwill was made on various terms agreed by the parties and as negotiated by Wong.  But the oral agreement however was not converted to a signed agreement until much later.  Joyce Tang said that she was instructed to prepare the Transfer Agreement back in 1992 and this course was agreed by Tam/Lee, Longwill and the plaintiff.  Tam said it was due to the fact that there were some reluctance by Longwill to make money payments and that is why until the building licence was issued in 1994, the Transfer Agreement was not signed by Longwill and Tam/Lee.  The Transfer Agreement as signed was dated 23 October 1994 and can be seen at page 672.  The plaintiff did not sign this Transfer Agreement and he denied that he was ever shown the document or that he refused to sign.  The evidence from the solicitors was to the contrary.  Joyce Tang gave good evidence that she asked the plaintiff to sign the Transfer Agreement but that the plaintiff did not want to and she reported this to Longwill.  The plaintiff was not apparently pressed too hard by Longwill or Tam/Lee or Mok Solicitors to sign the Transfer Agreement as the plaintiff had more to gain than to lose by signing the Transfer Agreement.  After all Tam/Lee, Wong and Longwill had all got what they wanted out of the plaintiff namely his causing the Tings to sign the Longwill 1992 PA which action amounted to the plaintiff participating in the transfer of the JV Development from Tam/Lee to Longwill.

19. Although the Transfer Agreement was apparently not signed until 1994, a sum of $40,000 was paid on 11 July 1994 by Longwill to Tam/Lee as evidenced by receipt at page 879.  Curiously that Longwill cheque of $40,000 (No. 353330) was originally dated 23 July 1993, the same day of the other Longwill cheque payable to the plaintiff of $300,000 where the receipt referred to the cheque no. as being 353329.  The date of 23 July 1993 on the $40,000 cheque was crossed out and replaced by the date of 11 July 1994 and initialled.  The significance of the payment of $40,000 by Longwill to Tam/Lee is that it represented the balance of the 1^st instalment payment of $5 millionto be made by Longwill to Tam/Lee (Clause 2(a) of the Transfer Agreement).

20. The 2^nd instalment payment of $2.1 million was made by Longwill to Tam/Lee on 15 August 1994 [receipt at page 880].  The 3^rd instalment payment of $2 million was made by Longwill to Tam/Lee on 15 January 1995 [receipt at page 881].  The 4^th instalment payment of $2 million was made in the form of two cheques each of $1 million dated 25 August 1995 and dated 1 September 1995 [receipts at pages 883 and 884].

21. On 19 September 1996, the plaintiff was paid his last Ting fee of $700,000 and it is not disputed that he went up to the office of Longwill to collect that cheque of Longwill from Longwill and gave his Receipt [page 885].

22. The building licence was issued on 6 October 1994 and the building work was completed some time in late 1996.  There was however complication because of the dispute over the positioning of the septic tanks and with the purchasers of the various houses all demanding for completion or at least for being given occupation of the premises they had purchased.  What caused this pressure was that these houses were pre-sold long before completion or even the commencement of building works.  In the euphoria surrounding the early 1990s, the 20 houses were pre-sold very early on.  Apparently by 1992, all the houses of the two joint venture partners namely the 6 houses of the plaintiff and the 14 houses of Tam/Lee and Wong were all sold to speculators/purchasers.  This is why in late 1992, the plaintiff came to be paid by Wong the $600,000 as the initial deposit for the plaintiff’s 6 houses which Wong had sold for the plaintiff to the speculators/purchasers.  At the trial documents were also produced showing the sale of the other houses by Wong.

23. With the JV Partners’ houses all sold to outside purchasers, the selection of what houses should be allotted to each joint venture partner as envisaged in the 1991 JV Agreement took the form of the outside purchasers being interested in the allocation.  Wong told the court how in 1991 at a dinner in a restaurant in Yuen Long there was drawing of the lots by these outside purchasers and the plaintiff was told of this beforehand and the plaintiff agreed to that course although the plaintiff did not attend personally the drawing of the lots.  Joyce Tang in her evidence also said that the plaintiff knew of the selection of his 6 houses and that was much earlier in time than the so-called 1996 alleged information by Jennifer Wong to the plaintiff.

24. When the houses were completed in 1996 disputes apparently arose over the septic tanks trespassing on the land of the plaintiff.  The plaintiff refused to give permission for these tanks to be so sited and eventually these tanks (not all) were moved back.  This together with other problems caused the long delay in the issue of the Certificates of Compliance.  The Certificates were not issued until 17 December 1998 and those only covered the houses of Tam/Lee, Wong and Longwill and not the houses of the plaintiff.  Up to now, the Certificates of Compliance of 6 houses of the plaintiff (except apparently House L) still have not been issued and the consequence of this is that no completion of the sale of these 5 houses belonging to the plaintiff could take place.  House L itself should have been registered by Longwill in the name of the plaintiff to comply with Longwill’s obligation but it was not.  These were the subjects of complaint by the plaintiff.

25. What made the situation even more complicated in 1996 was that although no Certificate of Compliance had been issued, the purchasers were allowed into occupation of the houses in 1996 by Wong who was the builder of these houses.  Wong said that he did this with the permission of the plaintiff but the plaintiff denied this.

26. In 1999, correspondence started between solicitors acting for the plaintiff and solicitors acting for Tam/Lee and solicitors acting for Longwill.  There was protracted correspondence and there were attempts to reach settlement on the dispute.  There was one particular letter dated 12 May 2000 from Mok as solicitors for the plaintiff asking Longwill to execute Power of Substitution and appoint the plaintiff as attorney in relation to the plaintiff’s 6 houses.  However no agreement could be reached between the plaintiff and the defendants eventually proceedings started first by the action against Tam/Lee followed by another action by the same plaintiff against Longwill.  Much of the issues in both actions are common and the trial was treated as one action involving three defendants and one plaintiff.

ISSUES

27. At the trial, the parties agreed that for the fair resolution of the actions, the following are the relevant issues :

I.     did the plaintiff in 1992, agree to transfer the joint venture from Tam/Lee to Longwill and did the Tings sign the Longwill 1992 PA as result of such agreement by the plaintiff;

II.    did the plaintiff in 1993 agree to the drawing of lots for his 6 houses;

III.   did the plaintiff authorize Wong to sell his 6 houses in 1992;

IV.   is the plaintiff entitled against Tam/Lee, Longwill or both :

(a)    to complain about the occupation for 10 years of the plaintiff’s 6 houses; and

(b)   to the conveying of 6 houses and to seek an order from the court that Tam/Lee or Longwill execute the Power of Substitution or such documents to enable the plaintiff to obtain full title to the 6 houses and to complete the sale of the 6 houses to the purchasers;

(c)   to no relief because any aspect of the above claim of the plaintiff is time-barred.

28. The following matters are not in dispute, namely :

(1) there was the 1991 JV Agreement between the plaintiff and Tam/Lee;

(2) the 1991 JV Agreement required building licence to be issued within 12 months from the 1991 JV Agreement and failing which the 1991 JV Agreement was to be cancelled and the Land returned to the plaintiff;

(3) the 1991 JV Agreement required the plaintiff’s written consent for the transfer of the JV Development by Tam/Lee to third party;

(4) there was no building licence issued in 1992 and that by mid-1992 building licence was unlikely to be issued in time;

(5) there was necessity for the plaintiff to agree to extension of time for the building licence;

(6) there was necessity for the plaintiff to agree to Tam/Lee transfer of the JV Development to Longwill;

(7) there was necessity by the plaintiff to agree to allocation of specific houses.

29. Although the trial took much time, at the end of the day when all the evidence had been adduced (including two witnesses from the plaintiff [plaintiff and Mok on subpoena], two witnesses from Tam/Lee [Tam and Miss Joyce Tang], two witnesses from Longwill [Sam Wong and Wong Tit Fong] and a large number of documents, many of which only emerged in the course of the trial) the fair resolution of the trial only turned on the determination of the issues which I had identified earlier.  But before I consider each issue in turn, it is necessary first to state what I find as a fact about the witnesses.

30. There are two key witnesses, namely the plaintiff Tang and the broker, Wong.  Their stories differ in some important aspects and therefore it is necessary for me to decide which witness I prefer.  The plaintiff gave his evidence not only badly but in a most exasperating and protracted manner.  He is not a simple New Territories villager as he liked me to believe.  He is a calculating and greedy person and I have no doubt that his evidence was not reliable when it differed from those of the defendants.  Wong on the other hand, despite all the doubts which might be expected in the circumstances, was a witness who not only gave his evidence well but came over as a witness of truth.  He was undoubtedly the most intelligent of all the 6 witnesses who gave evidence.  But he was more than intelligent.  His evidence made sense and was supported by contemporaneous documents.  I accept his evidence and especially when that evidence conflicts with that from the plaintiff.  There is a 3^rd important witness : Joyce Tang, the clerk of George Mok & Co., who gave her evidence clearly and well (with some minor inaccuracy in connection with the timing of house selection).  I accept her evidence where it effectively destroyed the evidence of the plaintiff that he did not know the purpose of the Tings signing in October 1992 and that he did not know about the contents of the 1994 Transfer Agreement.

ISSUE I — DID PLAINTIFF AGREE TO LONGWILL TRANSFER

31. It was argued that there was no consideration for the plaintiff agreeing to the 1992 oral agreements.  But the issue is not so much as whether there were the 1992 oral agreements and its enforceability against the plaintiff but whether there was under this Issue I and Issue II, any breach of the 1991 JV Agreement.  It was suggested in argument by Mr Chu for the plaintiff that there was no benefit to the plaintiff for him to agree to the transfer of the JV Development to Longwill.  But this is not the case.  The plaintiff’s benefit for agreeing to the transfer is that firstly, he would be getting substantial more money e.g. $300,000 as advisory fee and $1.6 million from Wong and that secondly, (more importantly), he got a stronger partner who would be able to do the development quickly.  The plaintiff has no experience or ability to develop the Land himself and once he was locked into having purchased the Land, the plaintiff had to find someone to develop it and he therefore needed a strong developer to do it quickly.  Longwill was in fact the plaintiff’s first choice as partner and that is why the plaintiff went to Senior Wong of Longwill initially and only when the plaintiff failed to reach agreement with Senior Wong that he ended up with Tam/Lee.  Therefore the transfer to Longwill a stronger developer partner would be definitely to the plaintiff’s benefit.  Furthermore with the buoyant market being shown at the time, there was the good possibility that he could pre-sell and make a very large profit and it made sense for the plaintiff to agree to the transfer.  Mr Chu’s argument that the transfer was of no benefit to the plaintiff has no merit and it shows a lack of appreciation of the weakness of his client’s case.

32. The key to this Issue I is of course the plaintiff bringing the Tings to sign on 20 October 1992 the revocation of the Tam/Lee 1991 PA in favour of Tam/Lee and the Longwill 1992 PA in favour of Longwill.  The excuse given by the plaintiff that he was misled that the Tings were brought there to sign some documents connected with bank mortgage is wholly incapable of belief.  I have no doubt that plaintiff’s evidence on this vital matter (as on many other matters) cannot possibly be accepted.  I find as a fact that the plaintiff did know that the purpose of the Tings being required to go to Mok office on 20 October 1992 was to sign the new PA in favour of the new developer Longwill.  That is also why the Tings were paid such large sums of money (no provision in the 1991 JV Agreement for such Ting payment of $200,000 until the time for issue of building licence under Clause 3(c)(i)(2)) and that is also why the plaintiff got additional money of $400,000 for himself.  This was the price he required to be paid for his agreement to the transfer of the JV Development to Longwill and Wong of course gave him a sweetener in the form of a promise of payment of $1.6 million.  The agreed sum of $1.6 million was not disputed.  What was disputed was whether the $1.6 million was to represent his agreement to transfer and extension of time or only for extension of time.  I find that plaintiff’s assertion of $1.6 million representing only extension of time to be wholly unreal and not capable of belief.  No person would agree to pay that large sum merely for an extension when the object of the exercise was to get Longwill to be accepted to be the new developer.  Further no developer such as Longwill would agree to take on such project if he was not assured that that was with the agreement of all concerned.  The story of the plaintiff made no commercial sense.

33. Once it is accepted that the plaintiff knew the purpose of the new PA (Longwill 1992 PA) which he caused the Tings to sign, it must follow clearly that the plaintiff had agreed to Longwill replacing Tam/Lee as the new developer in the JV Development.  The plaintiff, in my judgment, not only agreed to the transfer to Longwill.  In fact the plaintiff participated in the transfer as he caused the Tings to sign the Longwill 1992 PA.  I have no doubt that the plaintiff by his actions has waived the Clause restricting transfer.  I am also of the view, if necessary, that the plaintiff is estopped from contending that there was no effective transfer.  I have no hesitation in finding against the plaintiff on Issue I.

ISSUE II — DID PLAINTIFF AGREE TO 6 HOUSES ALLOCATION

34. Again this is an issue which is to be determined largely based on credibility and surrounding circumstances.  In the normal circumstances, of course, one would expect the selection of the individual houses to be decided formally and towards the end, when all the houses had been built.  But the facts of this case reveal that in New Territories people did not behave in a formal manner.  Certainly the undisputed pre-sale of practically all the houses, when no building licence had been issued and when no houses had been identified or selected would suggest that we are dealing with people who were all out to make easy money and took such expedient steps as could advance their financial interests.

35. I accept the overwhelming evidence that there were early pre-selling of the houses and even the plaintiff did not dispute that by the time he was paid $760,000 on 24 December 1992, pre-sale of his 6 houses had taken place.  For me pre-sale and allocation of houses go hand in hand.  Once houses been pre-sold, there was bound to be pressure by these purchasers to know which were the houses they had acquired.  The pressure for the drawing of lots to determine who got what, was inevitable and therefore it is wholly credible that there was the restaurant drawing of lots in 1993.  The fact that Wong did well out of the drawing of lots because he drew the best houses does not suggest that such drawing of lots did not take place.  Rather the reverse.  He was the central figure who pulled everything together with this project : from brokering the original deal, to brokering the changed deal with Longwill, to pre-selling the houses, and then to building the houses.  Once there is no serious contrary evidence that the drawing of lots took place in 1993, the only live issue is whether the plaintiff did not know of the drawing of lots or whether as Wong said, not only did the plaintiff know of it but he agreed to that course.  For the plaintiff, the selection of the houses by 1993 was no longer a matter of any great consequence.  He had already pre-sold his 6 houses at $3.3 million each (less $0.5 million for premium) and therefore it was of interest to his purchasers and not to him of what houses were to be drawn by them.  In the same way, the selection of houses was also not of great interest to either Tam/Lee or Longwill for they had pre-sold their houses.

36. On Issue II, I also find against the plaintiff.  I find that the plaintiff did know and had agreed to the drawing of the lots in 1993 and that therefore he cannot complain that there was any breach of contract in respect of his right to agree to the selection of his 6 houses.

ISSUE III — DID PLAINTIFF AGREE TO SALE OF 6 HOUSES

37. There is in fact very little disagreement on this issue.  The plaintiff admitted in evidence that he agreed to the sale of his houses by Wong on his behalf at $3.3 million each and he also accepted that the payment of $760,000 on 24 December 1992 represented as to $600,000 the initial deposit of $100,000 for each house for the first 10%.  The balance of the first 10% was received by the plaintiff on 26 March 1993 when the plaintiff made the $700,000 cheque payment to Wong.  The plaintiff complained that he was misled and that the agreement by him to sell the 6 houses were conditional.  I do not accept the plaintiff’s evidence on this.  I find the plaintiff to be a greedy man.  He was more than happy at that time to have sold through Wong his 6 houses at $3.3 million (less 0.5 million for premium) each.  This was at the time when no building licence had been issued and certainly when no work had yet started when he was already given $400,000 on 16 August 1991, $100,000 on 7 November 1991, $200,000 and $400,000 on 20 October 1992, $760,000 on 23 December 1992 and a further $1.38 million on 26 March 1993.  Why should the plaintiff not be happy to have sold his 6 houses when he did not have to do a thing but was in receipt of large sums and all this was achieved with very little capital (because, even the Land purchase price was largely financed by the loan of $800,000 from Tam/Lee on 19 October 1991).  It is not to be forgotten that even after the above payments which he pocketed by 26 March 1993, the plaintiff was to look forward to more deposits to come in on the 6 houses (second 10%, then third 10%) and that the total sale price when realized of $16.8 million ($2.8 millionx 6), plus $1.6 million from Wong, plus other various sums would bring a very large profit to the plaintiffon this JV Development.

38. Again on this Issue, I find I have no difficulty in rejecting the contrived case of the plaintiff.  Wong gave good and credible evidence against the plaintiff’s case.  I find as a fact that the plaintiff had by 1992 sold through and by the agency of Wong, his interests in the 6 houses to the outside purchasers.  The plaintiff was therefore looking to receive further payments in respect of the sale of his 6 houses from Wong, his agent.  I reject any suggestion by Mr Chu that Wong did not have the authority of the plaintiff to sell his 6 houses.

ISSUE IV — WHAT RIGHT PLAINTIFF HAS RE 6 HOUSES

39. So far as the plaintiff’s right against Tam/Lee is concerned, I find that by the plaintiff agreeing to Longwill replacing Tam/Lee as the developer, he has lost all rights against Tam/Lee in relation to the 6 houses, neither for the occupation nor for the recovery of the titles so to speak.  Tam/Lee are entitled to have a clear judgment in their favour in the action and the action of the plaintiff against Tam/Lee should be dismissed.

40. As for the claim of the plaintiff against Longwill in relation to the 6 houses, what is required to be considered are two aspects, firstly the occupation of the 6 houses for the last 10 years (from 1996 to now) and secondly the recovery of the title of the 6 houses.

41. In relation to the occupation for the last 10 years of the 6 houses, there can be no claim by the plaintiff against anyone, as I accept the evidence of Wong that the occupation was with the consent of the plaintiff who authorized Wong to allow the purchasers of the houses to go into occupation.  I find that it was not Longwill who allowed these purchasers into the houses.  I find that it was the plaintiff who through Wong allowed these purchasers into occupation and in the circumstances, no claim could be made by the plaintiff against Longwill in respect of such occupation.  If the plaintiff wishes to seek remedy for such occupation, he would have to bring direct proceedings against these purchasers/occupiers.

42. The most problematical question at the end of the trial is what remedy the plaintiff has if any, against Longwill in relation to the present unsatisfactory position that the purchasers are in occupation of the 6 houses but have not yet been paid the remaining 70%.  The correspondence shows that it was a combination of the stubbornness of the plaintiff and the lack of proper legal advice and common sense which had led to the position that the balance of purchaser price was not collected by the plaintiff or by Wong on the plaintiff’s behalf from the purchasers of the 6 houses.  This litigation could have been avoided, if appropriate documents including Certificates of Compliance had been secured by Longwill in respect of the 6 houses so that the sale of the 6 houses could be properly completed by the plaintiff and thereby leading to the collection of the outstanding balance of 70% namely 70% of 3.3 million x 6 or $13.86 million less $3 million (for premium) or $10.86 million.

43. The case of the plaintiff on this is that Longwill, having taken over the development, owes a duty to give to the plaintiff the 6 houses so that the plaintiff could be given possession of the 6 houses and be able to dispose of them.  The disputes call for the answer to the following defences by Longwill :

(1) whether Longwill has an obligation to convey to the plaintiff the 6 houses;

(2) whether Longwill has failed to do so, in breach of its obligation;

(3) whether Longwill is protected by time bar in respect of the plaintiff’s claim;

(4) what order should be made to reflect the plaintiff’s right.

Obligation to convey the 6 houses to the plaintiff

44. It was a last minute case when amended of Longwill, that there was no obligation on the part of Longwill under the 1991 JV Agreement as assigned to Longwill or as assumed by Longwill to convey the 6 houses to the plaintiff.  Convey in this context means the delivery of vacant possession of the physical house and the obtaining of the proper title to the house so as to give good title both to the plaintiff as well to enable plaintiff to pass on such good title to the purchasers.  That Longwill has an obligation to build and complete the houses was not in dispute.  It follows that if there was an obligation of Longwill as substituted developer to build and complete the houses that there was a consequential obligation to convey or give to the JV Partner the 6 houses for that was the fundamental obligation of the whole JV Development.  To say that there could be no such obligation in law is to run against the whole purpose of the 1991 JV Agreement or the JV Development.

45. The combination of Clauses 7, 8a, 8c and 9 of the 1991 JV Agreement give rise to me, the clearest obligation on the part of the developer partner Longwill to convey to plaintiff the 6 houses so that the plaintiff could obtain the rights referred to in these clauses, namely that the plaintiff is to have his share of the profits of the JV Development, namely 6 houses the identity of which must be agreed between the plaintiff and the developer Longwill (Clause 7), that the plaintiff is to have the right to have the use and occupation and the sole right to sell and transfer and assign the 6 houses and retain the proceeds of sale of the same (Clause 8a) and that the plaintiff has the right to the transfer of the 6 houses by District Lands Office but subject to the payment of premium or administrative fee for such consent to be paid by the plaintiff for his 6 houses (Clause 8c) and that the plaintiff is to have the sole discretion to sell his 6 houses to prospective purchasers (Clause 9).  In my view, the right of the plaintiff to sell his six units must mean that he be given the right to good title of the 6 houses which he could pass on to purchasers.  What is fundamental to the JV Development is the obligation of Longwill to convey the 6 houses to the plaintiff.  The whole arrangement of the development of these village houses is that the land-owner hands to the developer two things, the Land and the Tings (rather the Ting’s appropriate signatures) and in return the land-owner is entitled to receive back from the developer the houses properly built which he can use and occupy and titles to the houses transferred into the name of the land-owner which he can pass on to purchasers.

46. To suggest as Miss Lau bravely tried to do that there was no obligation on the part of the NT developer to convey the houses when completed to the landowner JV developer is to ignore the reality of the arrangement and the 1991 JV Agreement.  The submission, with respect, is wholly without merit and as I indicated during the hearing has little prospect of being accepted.

Was Longwill in breach of its obligation to convey the 6 houses to the plaintiff

47. The correspondence and the conduct of the litigation indicates that Longwill was contesting its obligation to convey the 6 houses to the plaintiff.  The offer in 2000 by Longwill to execute the Power of Substitution [pages 775 and 778] was not a compliance with such obligation.  Even when the action was started by the plaintiff, there was no step taken to comply with the obligation which is spelt out at paragraph 16 and prayer (ii) of the Statement of Claim of the plaintiff against Longwill [pages 51-2].  At the trial there was no unconditional offer by Longwill to do whatever it could to convey the 6 houses to the plaintiff.  I find therefore that there was a breach of the obligation by Longwill.

48. There was a plea of the plaintiff’s failure to mitigate.  Although the plaintiff was misguided in not taking the best course to protect his interests, Longwill must also bear substantial responsibility in the steps leading to this judgment.  If Longwill had taken the sensible step of conveying the 6 houses to the plaintiff, this litigation could have been avoided or at least minimized between the plaintiff and Longwill.

Was such claim of the plaintiff time-barred

49. The question of time bar in this context depends on when did the obligation of Longwill to convey the 6 houses arise.  In my view, the obligation of Longwill to convey the 6 houses, must arise at the same time as Longwill was able to convey the 12 houses of Longwill which had been pre-sold to its purchasers.  Longwill must treat the plaintiff in the same way as Longwill’s own houses, namely to finish the 6 houses and then to obtain the necessary permits from the Government of satisfactory completion of the houses so that they could be properly occupied, with the titles properly registered in the name of the proper owner (namely the plaintiff or its purchasers) and so that these houses could be properly sold and transferred in the market by the plaintiff and by its purchasers.  The chronology shows that Longwill started completion with the purchasers around mid-1999.  The obligation to convey the 6 houses to the plaintiff could be said to arise at the earliest possibly around 1999 the same time that Longwill started completion of its own houses.  The plaintiff therefore has six years from 1999 to enforce the breach of the obligation.  I find that the plaintiff is not time-barred.          

What order should be made against Longwill

50. There are in the circumstances, two aspects to the order which should be made.  Firstly, there should be an order which compels Longwill to do everything it can to ensure that the plaintiff would acquire good title, at least sufficient title to enable the plaintiff to complete the purchase with the purchasers.  Secondly, as result of the breach of the obligation by Longwill there should be an account of damages suffered.  As the plaintiff has sold the 6 houses, the question might well be whether if the plaintiff was able to obtain earlier completion what would be the loss of interest on the money the plaintiff could have obtained from such earlier completion.  I direct that the parties should attempt to agree on an order to cover both aspects of what I have indicated earlier.  Failing agreement the parties should return to the court not earlier than two months from this judgment for directions on a further hearing to resolve the matter of remedies leading to what precise order should be made against Longwill.

COSTS

51. As for costs, as the action against Tam/Lee is dismissed there must be costs of the whole action in favour of Tam/Lee against the plaintiff.

52. So far as costs between the plaintiff and Longwill is concerned, although the plaintiff succeeds against Longwill, the success was only partial and very much of the court’s time was in fact spent on matters which the court has found against the plaintiff.  In all the circumstances, I am of the view and I exercise my discretion accordingly that the fair order of costs is that the plaintiff and Longwill is each to bear their own costs of the action up to the date of this judgment.  Costs after judgment will largely depend on the parties response to this judgment.

53. George Mok who gave evidence under subpoena has orally and in writing asked for his attendance as subpoena witness to be paid with a special generous order.  Mr Mok struck me as a businessman rather than as a lawyer.  Instead of the expected selfless assistance to the court as an officer of the court and as a former lawyer to the joint venture, Mr Mok’s primary interest was to extract the maximum amount of payment from whatever quarter he could obtain from for coming to court to give evidence.  I regret that I cannot treat Mr Mok any differently from any person in Hong Kong whose time is valuable and who was required to do his civic duty under the law to give evidence under subpoena.  I would award to Mr Mok his reasonable expense which includes his loss of income for one day.  I assess that reasonable expense and I award what I regard as a fair witness attendance expense of $20,000 which sum should be paid by the plaintiff, so as to reflect the fact that the evidence given by Mr Mok was on issues where the plaintiff failed.