LI FUNG KAI v. FUNG SAU LIN

HCMP 919/2013

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 919 OF 2013

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D E C I S I O N

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I. INTRODUCTION

1.  The plaintiff became one of the registered owners of the Remaining Portion of Lot No.801 in DD116 in Yuen Long, New Territories (“Land”) since 1978, and the sole registered owner since 22 October 1988.

2.  By a Chinese “臨時買賣合約” dated 22 April 2011 made between the plaintiff as seller and the defendant as purchaser  in respect of the sale and purchase of the Land (“約16,406 平方呎(以政府註冊為準)”) for the price of HK$8,000,000.00 (“Price”), it was agreed as follows:

「交易條件:

(1) 買方先付臨時訂金港幣伍十萬元正(HK$500,000.-)。

(2) 雙方簽訂臨時買賣合約當天起計14 天查契無誤再加付大訂港幣三十萬元正(HK$300,000.-),連同臨時訂金在內合共一成(10%),雙方到代表律師簽署正式買賣合約。

(3) 當簽訂正式買賣合約當天起計算三十天完成以連租約方式賣出,買方須付清餘額完成交易。

備註: 賣方必須負責上述地段內,所有成交前之費用。

雙方清楚明白上述條件,此乃必買必賣合約,一切以香港法律為依歸。」

3.  There is dispute between the parties as to whether the aforesaid Chinese “臨時買賣合約” is (a) a valid contract for the sale and purchase of the Land (“Transaction”) binding on the parties (as argued by the defendant) or (b) a mere memorandum document or an “agreement to agree” or a document “subject to contract” (as argued by the plaintiff). In the circumstances, I shall refer to the aforesaid Chinese “臨時買賣合約” simply as the “Chinese Document”.

4.  Pursuant to the Chinese Document, the defendant paid (a) the initial deposit in the sum of HK$500,000.00 by her cheque in favour of the plaintiff (“1^st Cheque”), and (b) the further deposit in the sum of HK$300,000.00 by solicitors’ cheque in favour of the plaintiff (“2^nd Cheque”).

5.  On 6 May 2011, the defendant lodged the Chinese Document with the Land Registry for registration against the Land. It has been withheld by the Land Registry, and is now registered at the Land Registry under the category of “Deeds Pending Registration” against the Land under Memorial No. 11050603250210 (“Registration”).

6.  On 30 April 2013, the plaintiff commenced the present proceedings by originating summons for an order that the Registration be forthwith vacated. The originating summons adopted the expedited form in Form 10 in Appendix A of the Rules of the High Court (“RHC”) that gave a fixed return date on 22 May 2013.

7.  On the same day (ie 30 April 2013), the plaintiff filed his own affirmation in support of the originating summons (“P’s Aff”). On 21 May 2013, the defendant by her solicitors Messrs Chan, Wong & Yip (“CWY”) filed (a) acknowledgment of service giving notice of intention to defend and (b) her affirmation in opposition (“D’s Aff”).

8.  On 22 May 2013, Master Au-Yeung made no order as to the originating summons with costs of the application to the defendant in the sum of HK$500.00 payable forthwith. As the defendant pointed out, it was inappropriate for the plaintiff to adopt the expedited form, which is used only when prescribed.[1]

9.  By the orders of Master de Souza and Master Roy Yu dated 11and 25 June 2013 respectively, the plaintiff was granted extension of time until 18 June and 2 July 2013 respectively to file and serve affirmation in reply. However, the plaintiff did not file any affirmation in reply within the prescribed time or at all.

10.  On 5 August 2013, the plaintiff issued a summons for an order that the present proceedings be continued as if they had been begun by the issue of a writ of summons on 30 April 2013 and that service on and acknowledgment of service and notice of intention to defend of the Defendant do stand (“Summons”). By the Summons, the plaintiff also sought consequential orders for filing and serving pleadings.

11.  On the same day, the plaintiff filed his affirmation in support of the Summons (“Support Aff”). On 30 August 2013, the defendant filed the affirmation of his solicitor Mr Chan But Sui (“Oppose Aff”). The Summons came before me for hearing on 3 September 2013.

12.  But before I deal with the Summons, it will be useful to have an appreciation of the parties’ respective case in respect of the originating summons herein as evident from the factual evidence in P’s Aff and D’s Aff.

II.  P’s AND D’s AFF: FACTUAL EVIDENCE

13.  The defendant claimed that through her elder brother’s friend Mr Bally Chan (“Mr B Chan”) she became aware in/about March 2011 that the plaintiff would sell the Land. After negotiations on the terms and conditions of the Transaction through Mr B Chan for almost a month, the parties entered into the Chinese Document. The defendant instructed his solicitors CWY and the plaintiff instructed her former solicitors Wong, Kwan & Co (“WKC”) to handle the Transaction.

14.  On 29 April 2011, CWY wrote to WKC to ask for the draft formal sale and purchase agreement (“Draft FASP”) and the relevant title deeds and documents of the Land (“Title Deeds”) for title investigation.

15.  On 4 May 2011, WKC informed CWY they had no further instructions to act for the plaintiff in respect of the Transaction.

16.  Despite the provisions in the Chinese Document, no formal sale and purchase agreement (正式買賣合約, “FASP”) was executed by the parties whether on 6 May 2011 or at all.

17.  On 6 May 2011, CWY wrote to the plaintiff to refer to the Chinese Document and the initial deposit of HK$500,000.00 already received by the plaintiff, and to say as follows:

“To perform [the defendant’s] obligation under the Agreement [ie the Chinese Document], we enclose [the 2^nd Cheque] for the sum of HK$300,000.00 drawn in [the plaintiff’s] favour being the further deposit and in part payment of the [Price] of the [Land] payable by [the defendant] under the terms of the Agreement [ie the Chinese Document], receipt whereof please kindly acknowledge.

Please let [CWY] know [the plaintiff’s] representing solicitor for and on [the plaintiff’s] behalf and send us the [Draft FASP] together with all the relevant [Title Deeds] of [the Land] for [CWY’s] approval.

Please note that save and except those terms and conditions as set out in the Provisional Agreement for Sale and Purchase [ie the Chinese Document], there is no binding contract between our respective clients.”

18.  By a letter dated 18 May 2011 marked “subject to contract”, the plaintiff’s then (and present) solicitors Zebra HY Kwan & Partners (“ZHYK”) replied to assert that the Chinese Document was not intended to be binding and in its present form it was:

“obviously not a binding agreement, not to say the circumstances and the conduct leading to the signing of the same was very improper and unconscionable (as the same involved serious advantage ad unfair prejudice on the part of our client due to misrepresentation, undue influence and unconscionable bargain) which is obviously unenforceable (even if, which we do not agree or admit, the same is an agreement.”

ZHYK informed the defendant inter alia that the proposed Transaction had fallen through, and returned the 1^st and 2^nd Cheques to her and requested her to acknowledge receipt thereof. ZHYK also demanded the defendant to forthwith vacate the Registration within the following 14 days, and required all future correspondences/contacts be made through ZHYK since the plaintiff did not wish Mr B Chan to keep calling to press him for “proceeding with the said Chinese [Document]”.

III.  SUPPORT AND OPPOSE AFF: FACTUAL EVIDENCE

19.  The plaintiff claimed there was no reply to ZHYK’s letter dated 18 May 2011 to CWY. By a letter dated 27 January 2012, ZHYK wrote to CWYto complain that the Registration, which wrongfully encumbered the title of the Land, was still not vacated after a lapse of eight months, and to state that unless the defendant shall forthwith vacate the Registration within seven days the plaintiff would apply to the court for such relief.

20.  On 30 April 2013, ZHYK sent a pre-action letter to CWY to warn they would issue legal proceedings against the defendant for an order to vacate the Registration. Indeed, the plaintiff commenced the present proceedings and filed P’s Aff on that very day. The defendant filed D’s Aff on 21 May 2013.

21.  On 1 June 2013, ZHYK wrote to CWY to request for further time to obtain counsel’s opinion for the affirmation in reply, and to further request ZHYK’s consent to extend time for the plaintiff to file and serve such affirmation. As confirmed by their letter dated 3 June 2013 to ZHYK, CWY replied that the defendant was only prepared to consent to time extension of 14 days. As explained above, Master de Souza by order dated 11 June 2013 extended time for filing/serving the plaintiff’s affirmation in reply.

22.  On 17 June 2013, ZHYK again wrote to CWY for further time to obtain counsel’s opinion for the affirmation in reply and/or further conduct of the case, and requested for a 21-day extension of time. On 25 June 2013, the plaintiff was granted a second extension of time until 2 July 2013 respectively to file and serve his affirmation in reply.

23.  Two days later, ie on 27 June 2013, ZHYK wrote to CWY to claim that the defendant “has raised a number of factual issues in dispute”. After receiving advice from counsel, they proposed to continue the present proceedings as if the cause or matter had been begun by writ pursuant to Order 28 rule 8 of the RHC, and further proposed consequential directions for the filing of pleadings. It was suggested that because of the defendant’s inaction and failure to give response for the past two years, the plaintiff could not have anticipated the defendant would raise any opposition or factual dispute by the time of the issuance of the originating summons herein, hence the usual costs order (ie costs in the cause) should apply.

24.  On 4 July 2013, CWY replied to say they failed to see any factual dispute as alleged. They claimed that the only outstanding dispute was a matter of law to be decided by the court, ie whether the Chinese Document was a conditional agreement (as the plaintiff alleged) or whether it was a legally binding contract enforceable against the plaintiff (as the defendant alleged) such that the present proceedings should be dealt with under originating summons procedure. They urged ZHYK to obtain an appointment to hear the originating summons, and threatened to apply to dismiss the proceedings if the plaintiff persistently failed and/or refused to proceed.

25.  On 12 July 2013, ZHYK wrote to CWY to disagree that there were no factual issues in dispute. They referred to D’s Aff in which the defendant for the first time (a) gave certain grounds to oppose the plaintiff’s claim, (b) alleged that the Chinese Document was still valid and binding, and (c) asserted she would counterclaim for a decree of specific performance against the plaintiff. ZHYK stated that the plaintiff shall raise inter alia “misrepresentation, undue influence and/or unconscionable bargain (the same has made known to [the defendant] by way of [ZHYK’s] letter dated 18 May 2011) as defence to [the defendant’s] counterclaim”. ZHYK also pointed out that whether or not a declaration ought to be granted to the effect that the Chinese Document was a legally binding contract enforceable against the plaintiff must be a matter of mixed fact and law as the issue could not be decided in vacuum without reference to the factual circumstances. ZHYK therefore suggested it would not be appropriate, and it would not be in both parties’ interest to deal with the action by way of originating summons.

IV. P’s POSITION

26.  The plaintiff claimed there was no reply from the defendant or her solicitors (whether orally or in writing) to ZHYK’s letter dated 18 May 2011 to CWY regarding the Transaction. Had there been any binding agreement and/or had the Transaction not fallen through, the defendant should have come forward to complete the Transaction (which should have taken place on 5 June 2011), but the defendant did not. Hence, the completion of the Transaction did not take place on 5 June 2011, and neither the defendant nor her solicitors tendered the balance of the Price (ie HK$7,200,000.00) to the plaintiff and/or his solicitors.

27.  The plaintiff alleged that the time for completion of the Transaction had lapsed for almost two years, and the defendant (represented by CWY) never responded to ZHYK’s letters relating to the matter. Without prejudice to what was said in ZHYK’s letter dated 18 May 2011 to CWY, at the time of the commencement of the present proceedings the plaintiff believed that the Chinese Document (if it ever had any legal effect) must have been terminated by mutual consent of the parties and/or lapse of time, and the defendant must have also accepted that that was the position.

28.  As a result, the plaintiff thought it was unlikely that the defendant would raise any substantial dispute, and it would be appropriate to commence the proceedings by way of originating summons. He could not have foreseen that the defendant would for the first time raise in D’s Aff the assertion that the Chinese Document was still valid and binding, and that she would seek to counterclaim for a decree of specific performance of the Chinese Document. The plaintiff claimed that in response thereto he would have to put forward his contentions that the Chinese Document was not a binding agreement.

29.  In this respect, without prejudice to the above, the plaintiff claimed that the Chinese Document was not a document properly binding on the parties in that under the Chinese Document the Transaction was subject to three conditions precedent (交易條件) and would fall through if any of them was not met. The plaintiff contended that the Chinese Document was at most a memorandum document or an agreement to agree or a document subject to contract. Further, the Chinese Document would not be enforceable against the defendant for the reason that it had been signed by him under misrepresentation and/or undue influence and/or it constituted an unconscionable bargain, and he had rescinded the Chinese Document as made known to the defendant by way of ZHYK’s letter to CWY dated 18 May 2011.

30.  The plaintiff also argued that the defendant’s intended application for a declaration that the Chinese Document is a legally binding contract which could be enforced against the plaintiff involved substantial questions of fact, especially in relation to the circumstances of the negotiations that led to the signing of the Chinese Document. The plaintiff also claimed that the Registration affected his right and interest in obtaining a grant from the Government to build a small house (丁屋) in Yuen Long, New Territories.

31.  Mr Lee, counsel for the plaintiff, submitted that a series of issues would have to be ventilated and decided in view of D’s Aff, including:

(a) whether there was any agreement for the Transaction;

(b) if there was, what were the terms of such agreement, including when completion should take place thereunder;

(c) whether such agreement, if any, was rendered unenforceable against the plaintiff for want of writing or sufficient memorandum;[2]

(d) whether such agreement, if any, was liable to be set aside by the plaintiff for misrepresentation, undue influence and/or unconscionable bargain;

(e) whether the defendant is entitled to the discretionary remedy of specific performance; and

(f) what would be the amount of damages, if any, which the defendant would be entitled to.

32.  Mr Lee submitted that these fact-sensitive issues were plainly unsuitable for determination by way of originating summons. Pleadings should be filed so that the issues could be properly identified. Witnesses would have to give oral evidence, and their oral testimony would to be tested in cross-examination. Hence, it would be appropriate for an order to be made in terms of the Summons.[3] Mr Lee submitted it was noteworthy that the defendant requested the court “to give directions as to the manner of bringing a counterclaim” (presumably the counterclaim for specific performance) to the originating summons herein.

V.  D’s POSITION

33.  The defendant claimed she had never accepted the plaintiff’s unilateral termination of the Transaction, and it was the plaintiff who failed to instruct any other solicitors’ firm to act for him in the Transaction and/or to provide the Draft FASP and the Title Deeds for title investigation in accordance with the terms and conditions of the Chinese Document. She attempted in vain to approach the plaintiff through Mr B Chan. Since there was no reply from the plaintiff or his solicitors (whether orally or in writing) regarding the Transaction, completion of the Transaction did not take place, so neither the defendant nor her solicitors tendered the balance of the Price (ie HK$7,200,000.00) to the plaintiff or his solicitors. With a view to resolve the dispute, the defendant (through Mr B Chan) urged the plaintiff to proceed with the Transaction pursuant to the agreed terms and conditions specified in the Chinese Document, but was told that as all the Title Deeds were kept by the plaintiff’s sons who objected to the Transaction the plaintiff changed his mind and no longer intended to proceed with the Transaction accordingly.[4] The defendant further claimed that the parties never agreed the completion of the Transaction should take place on or before 5 June 2011. [5]

34.  The defendant argued that the plaintiff’s denial there was a binding agreement between the parties for the Transaction was clearly wrong in law. Since the Chinese Document contained all the essential terms of a binding contract, ie parties, purchase price, subject matter and completion date, it was a binding and enforceable “必買必賣” contract which should continue to be registered at the Land Registry to protect the defendant’s interest in the Land. The defendant further claimed that by reason of the plaintiff’s breach of contract, she suffered consequential loss and damages including legal costs and expenses incurred in connection with the purchase of the Land.

35.  In light of the aforesaid, Mr Chan, solicitor for the defendant, reminded that proceedings in which (a) the sole or principal question at issue was, or was likely to be, one of the construction of any contract or some other question of law, or (b) there was unlikely to be any substantial dispute of fact would be appropriate to be begun by originating summons unless the plaintiff intended in such proceedings to apply for judgment under Order 14 or Order 86 of the RHC or for any other reason considered the proceedings would more appropriately be begun by writ. Here, the plaintiff was not seeking judgment under Order 14 or Order 86 of the RHC.

36.  Mr Chan submitted that the facts referred to in the P’s and D’s Aff were consistent, and the only outstanding dispute was whether the Chinese Document was a conditional agreement or whether it constituted a legally binding contract. Such issue would be a matter of law to be decided by the court. Further, despite two extensions of time, the plaintiff did not file/serve his affirmation in reply before the extended deadline on 2 July 2013 or applied for an appointment to hear the originating summons herein within the stipulated 1 month period under Order 28 rule 2 of the RHC.

37.  Although the plaintiff alleged in the Support Aff that the Chinese Document was not enforceable against him because he signed it under misrepresentation and/or undue influence and/or it constituted an unconscionable bargain, no particulars of the so-called “misrepresentation”, “undue influence” and/or “unconscionable bargain” had ever been provided by the plaintiff. Mr Chan argued that the plaintiff failed to show any likelihood of substantial disputes of fact, and that in the circumstances it would not be just and/or convenient to order the proceedings to continue as if begun by writ.

38.  Mr Chan further argued that in any event, the existence of issues of fact between the parties would not render the originating summons procedure inappropriate. The court has power to direct the taking of oral evidence and the attendance of the deponents to be cross-examined on their affirmations under Order 28 rule 4 (3) - (4) of the RHC.[6] Mr Chan submitted that the Summons ought to be dismissed, and the defendant would be entitled to(a) claim for loss and damages and (b) a decree of specific performance of the Chinese Document or alternatively damages. The defendant urged the court to give directions as to the manner of bringing a counterclaim to this originating summons.

39.  Even if the court granted the reliefs sought in the Summons on the basis that there were substantial factual disputes as outlined in ZHYK’s letter dated 18 May 2011 to CWY, Mr Chan submitted in the alternative that the plaintiff (a) ought not to have adopted the expedited form for the originating summons, and (b) should have anticipated there could be such substantial disputes on the factual circumstances leading to hisallegations of misrepresentation, undue influence and/or unconscionable bargain. The defendant argued that the plaintiff should have known that the originating summons procedure would not be appropriate, hence she should be entitled to costs of the Summons even if the court allowed such application. [7]

VI. DISCUSSION

40.  Under Order 28 rule 8 (1) of the RHC, the court has power to order originating summons proceedings to continue as if the cause or matter had been begun by writ where it appears to the court at any stage of the proceedings that the proceedings should be so continued. The onus is on the applicant to show it will be just and convenient to make the order.[8]

41.  The main reason for originating summons proceedings to be so continued as if begun by writ is that there can be shown on the available evidence genuine and/or substantial issues of fact.[9] In Shum Wah Ming v The Estate of Chen King Ngo, deceased & anor,[10] Cheung J reminded that originating summons procedure was not and was never intended to be a short-cut to resolve disputes which could only be properly dealt with in a writ action.[11] Mayo JA accepted there was no hard and fast principle concerning what cases could properly come within the ambit of Order 28 of the RHC, it was nonetheless necessary to consider whether there were significant factual issues requiring determination, and if there was it would be inappropriate to resort to the originating summons procedure.[12]

42.  But continuing the originating summons procedure as if the cause or matter had been begun by writ is not the only way forward where there are factual issues. Order 28 rule 4 of the RHC provides as follows:

“(2) In any case where the Court does not dispose of any originating summons altogether at a hearing or order the cause or matter begun by it to be transferred to a District Court or some other court or makes an order under rule 8, the Court shall give such directions as to the further conduct of the proceedings as it thinks best adapted to secure the just, expeditious and economical disposal thereof.

(3) Without prejudice to the generality of paragraph (2), the Court shall, at as early a stage of the proceedings on the summons as appears to it to be practicable, consider whether there is or may be a dispute as to fact and whether the just, expeditious and economical disposal of the proceedings can accordingly best be secured by hearing the summons on oral evidence or mainly on oral evidence and, if it thinks fit, may order that no further evidence shall be filed and that the summons shall be heard on oral evidence or partly on oral evidence and partly on affidavit evidence, with or without cross-examination of any of the deponents, as it may direct.

(4) Without prejudice to the generality of paragraph (2), and subject to paragraph (3), the Court may give directions as to the filing of evidence and as to the attendance of deponents for cross-examination and any directions which it could give under Order 25 if the cause or matter had been begun by writ and the summons were a case management summons under that Order.

(5) The Court may at any stage of the proceedings order that any affidavit, or any particulars of any claim, defence or other matters stated in any affidavit, shall stand as pleadings or that points of claim, defence or reply be delivered and stand as pleadings.”

43.  It is plain from the above that it is permissible to receive oral evidence to resolve disputed issues of fact in originating summons proceedings. What the court has to consider is “whether the just, expeditious and economical disposal of the proceedings can …… best be secured by hearing the summons on oral evidence or mainly on oral evidence”. Order 28 rule 4 (4) of the RHC enables the court to give directions for the attendance of deponents of affidavits/affirmations for cross-examination. In Ye Hong-ying v Chan Lup-ying,[13] such procedure was adopted since it was not desirable in the context of that case to significantly delay the resolution of the dispute by ordering that the proceedings should continue as if they had been begun by writ under Order 28 rule 8 of the RHC.

44.  Bearing in mind the above principles, in considering the Summons, the first question is whether there are conflicting affirmations from the parties that raise substantial factual disputes that require oral evidence or trial. The observations of Deputy Judge A To (as he then was) in Ip Kam Wah & anor v Fair City Group Ltd[14] are pertinent to such question:

“8. I accept that, unlike the plaintiff in an O.14 application, the plaintiff in an originating summons procedure bears the burden of proof. When faced with conflicting affidavits from both parties, the court will be failing in its duty if it should take the assertions in the affidavits on their face value in isolation and jump to the conclusion that there is a triable issue without first considering whether the assertions in the affidavits are believable. I bear in mind the test laid down by Bokhary JA (as he then was) in Re Safe Rich Industries Ltd (unrep., Civ App No 81 of 1994, [1994] HKLY 183) that whether the assertions are believable is a question to be answered not by taking the assertions in isolation but by taking them in the context of so much of the background as was either undisputed or beyond reasonable dispute. In an originating summons procedure, it is only when the court is satisfied after having undertaken that exercise that factual disputes could not be resolved on affidavit evidence that oral evidence or trial should be considered.” (my emphasis)

45.  However, when one looks at the factual matters set out in P’s Aff and D’s Aff[15] (or even in the Support and Oppose Aff),[16] there is little factual controversy. According to the affirmation evidence, (a) the parties entered into the Chinese Document, (b) the Chinese Document was registered against the Land at the Land Registry, (c) the plaintiff paid the initial and further deposits by the 1^st and 2^nd Cheques, (d) the defendant chased for the Draft FASP and the Title Deeds, (e) the defendant had not provided the Draft FASP and the Title Deeds to the plaintiff on or before 6 May 2011 or at all, (f) the FASP was not signed, (g) Mr B Chan on behalf of the defendant chased the plaintiff to proceed with the Transaction, (h) the plaintiff claimed the Transaction had fallen through and returned the 1^st and 2^nd Cheques to the defendant on 18 May 2011, (i) on 18 May 2011 and 27 January 2012 the plaintiff demanded the defendant to vacate the  Registration. There is also no dispute that a series of inter partes correspondence passed between the parties’ solicitors during the period from April 2011 to July 2013.

46.  Significantly, whilst ZHYK’s letters dated 18 May 2011 and 12 July 2013 to CWY raised allegations as to circumstances and conduct leading to the signing of the Chinese Document by the plaintiff that were improper and unconscionable, there was no factual evidence before me as to the circumstances and/or conduct that support the bare assertions of “misrepresentation”, “undue influence” and “unconscionable bargain”. Mr Lee conceded as much in his oral submissions, but suggested that I should look at the totality of the affirmation evidence. He claimed that the defendant’s inaction since 18 May 2011, her retention of the 1^st and 2^nd Cheques after return by the plaintiff, and her failure to expressly refute the plaintiff’s claims in ZHYK’s letter dated 18 May 2011 to CWY are portentous indications that all was not what it seemed, and there was likelihood of ill behaviour on the part of the defendant.

47.  I am not persuaded by Mr Lee’s submissions. It must not be forgotten that the underlying factual evidence in the available affirmations are not really disputed. Differing conclusions to be drawn or inferred from such common factual foundation may reflect disagreements between the parties, but they do not amount to substantial disputes of facts. In my view, there is an even greater quantum leap almost into the realm of speculation to suggest that they amount to basic facts that demonstrate “misrepresentation”, “undue influence” and/or “unconscionable bargain”.

48.  Mr Lee argued that a number of matters would have to be ventilated and decided. Be that as it may, it does not necessarily follow from the framing of disputed issues for eventual adjudication that there are substantial factual disputes. On the affirmation evidence before the court, questions as to whether there was any agreement for the Transaction, what were the terms of such agreement (if any) and whether such agreement constituted sufficient writing and/or memorandum under law essentially turn on the construction of the Chinese Document (since the available affirmation evidence does not suggest any other document or conduct that may constitute any agreement for the Transaction). Indeed, it has been suggested that construction of documents is suited for originating summons procedure.[17]

49.  Mr Lee suggested that the defendant’s indication of a counterclaim for a decree of specific performance and/or damages raised factual disputes. But as discussed above, there is commonality between the parties as to the basic facts. Even if a disputed issue is fact-sensitive, it does not mean that there are factual disputes. Rather, it calls for the exercise of discretion based on largely uncontroversial facts.

50.  Mr Lee asked the court to note that the defendant requested the court to give directions as to the manner of bringing a counterclaim (presumably for the remedy of specific performance and/or damages) to the originating summons. But it is nothing more than a requirement under Order 28 rule 4 of the RHC, and I see nothing sinister in the request for directions. In Yeung Kwok Fan & anor v Standard Chartered Bank, DHCJ Gerard McCoy SC said as follows:[18]

“In the course of argument, Mr Kat was agitated that perhaps the Bank might be in a stronger position in relation to indemnity costs, if it now sought to counterclaim under the originating summons. To do so, he drafted in the course of the O 42 r 5B(6) summons today a bare counterclaim pursuant to O 28 r 7(2), which sought only that the defendant have its costs of the originating summons on a full indemnity proceedings. The Hong Kong Civil Procedure 2001 accurately states of O 28 r 7(2) at 28/7/1: ‘This rule lays down no procedure for these cases’ ie a counterclaim by a defendant. Should such a counterclaim be commenced, it appears it may be formulated by affidavit as here, but it must be first the subject of directions: Ng Wing See v Chang Chi Ching [1973] HKLR 170 (FC). See : Atkins Court Forms, Vol.29, p.368 and Form 13 :

"The court may, for example, direct the counterclaim to be made in an affidavit."

But this approach is valid only after directions have been given. There should be an express direction as to how a counterclaim to an originating summons should be prosecuted in every case: Ng Wing See per Blair-Kerr SPJ at 181. Huggins J stated that the court is always obliged to make a direction as to the manner in which a counterclaim is made. McMullin J concurred.”

51.  It is interesting to note that in Ng Wing-see & ors v Chang Chi-ching[19] the plaintiff by way of originating summons procedure sought a declaration that an agreement for the sale of land had been lawfully rescinded, and the defendants filed affidavits in answer and indicated that they were desirous of counterclaiming for specific performance of the agreement. At the hearing of the originating summons, the plaintiff indicated that a defence of laches would be raised when the counterclaim was up for adjudication. The defendants asked for directions under Order 28 rule 7(2) of the RHC. The Court of Appeal held that it was wrong for the first instance court to dismiss the counterclaim at that stage of the proceedings, and directions should have been given as to the manner in which the counterclaim was to be made.

52.  Although the actual facts of the present proceedings are necessarily different from those in Ng Wing-see, the latter case shows that it is not impossible to proceed by way of originating summons for a declaration that an agreement for the sale and purchase of land has been rescinded with a counterclaim for a decree of specific performance under such agreement. It is incumbent on the defendant to seek directions for making the counterclaim in such manner as the court may direct under Order 28 rule 4 or rule 8 of the RHC at the first or any resumed hearing of the originating summons,[20] but it does not mean that the existence of a counterclaim or the need to seek directions in respect of such counterclaim under Order 28 rule 7(2) of the RHC inevitably requires conversion of the proceedings to an action as if begun by writ. Ultimately, it turns on whether there are truly substantial factual disputes that just, expeditious and economical disposal of the proceedings cannot be secured by hearing the originating summons on oral evidence, and that it would be just and proper to continue the proceedings as if the cause or matter had been begun by writ.

53.  In my view and by reason of the above analysis, there is presently insufficient material before me to justify granting the reliefs sought in the Summons.

54.  Both Mr Lee and Mr Chan agreed that should I come to such conclusion, it would be appropriate to grant a last extension of time for the plaintiff to file and serve affirmation in reply on the basis of an “unless” order. They only depart as to the length of the time extension with Mr Lee proposing 21 days and Mr Chan suggesting 14 days. I have no hesitation in concluding that the latter is appropriate, especially when the plaintiff has raised allegations of improper conduct as early as in May 2011 and time has been extended twice for the plaintiff to file and serve affirmation in reply in the present proceedings.

VII. CONCLUSION

55.  I therefore grant the following order:

(a) the Summons is dismissed;

(b) unless the plaintiff do on or before 4pm on 24 September 2013 file and serve affirmation in reply to D’s Aff, the defendant shall be debarred from filing, serving and adducing (i) such affirmation in reply or (ii) any further evidence in the proceedings save and except P’s Aff and Support Aff.

56.  I should note that Mr Chan in exemplary fairness acknowledged that the dismissal of the Summons does not debar the plaintiff from making another application under Order 28 rule 8(1) of the RHC in future if so advised and if sufficient evidence is available to justify such course of action.

57.  There is no reason why costs should not follow event. I therefore grant a costs order nisi that the plaintiff shall pay to the defendant costs of the Summons to be summarily assessed and paid forthwith. For the summary assessment of costs, I further direct that the defendant do within seven days from the date hereof lodge and serve statement of costs not exceeding one page pursuant to Practice Direction 14.3, and the plaintiff do within seven days thereafter lodge and serve succinct summary of objections in bullet-point format of not more than one page. Unless otherwise directed, the summary assessment of costs will be by paper disposal.