CHEUNG CHUNG YEE v. 王慶培 AND OTHERS

DCCJ 4225/2015

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 4225 OF 2015

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DECISION

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Introduction

1. By my decision on 19 October 2016, I dismissed the plaintiff’s applications under O 18 r 19(1)(a) and O 14A of the Rules of the District Court (“RDC”).

2. By a summons dated 2 November 2016, the plaintiff applied for leave to appeal against my decision.

Legal principle

3. Section 63A(2) of the District Court Ordinance provides:-

“(2) Leave to appeal shall not be granted unless the judge, the master or the Court of Appeal hearing the application for leave is satisfied that…

(a) the appeal has a reasonable prospect of success; or

(b) there is some other reason in the interests of justice why the appeal should be heard.”

4. The test of whether an appeal has a reasonable prospect of success under the new statutory provision is the same test as applied before the amendment to Cap 336, ie whether the applicant for leave can show that he has an arguable case with reasonable chances of success on appeal as is laid down in Ma Bik Yung v Ko Chuen [2009] 3 HKC 359.  A reasonable prospect of success means an appeal with prospects that are more than “fanciful” but which do not need to be shown to be “probable”: see Wing Tat Haberdashery Co Ltd v Elegance Development & Industrial Co Ltd, HCMP357/2011, 8/7/2011, unreported.

5. Where the appeal is against the exercise of a discretion, the appellant ought to demonstrate that the decision was plainly wrong, or that the trial judge has taken irrelevant matters into consideration or has ignored relevant matters: see SMM v TWM (Child: Relocation) [2010] 4 HKLRD 37 at p48.

The intended grounds of appeal

6. In this application for leave to appeal, the plaintiff has shifted the battlefield.  I say this because Mr Alvin Chong, counsel for the plaintiff, has rightly conceded that in an application under O 18 r 19(1)(a) of RDC, the court is bound by the four corners of the defence.

7. The plaintiff has raised 10 grounds of appeal.  However, they all boil down to 2 principal grounds and submission of counsel were made along these two lines:-

(1)  The alleged oral agreement conferring interest in land are inadmissible (“Ground 1”); and

(2)  On the basis that the oral agreements are inadmissible, it would not be possible for the defendants to have acquired any proprietary interest in land through investments (“Ground 2”).

Ground 1

8. Mr Chong submitted that the oral agreement is the foundation of the defendants’ claim of beneficial interest in their respective units.  However, oral agreement to contradict written documents is inadmissible in law.  The case of Chu Kit-yuk v Country Wide Industrial Ltd [1995] 2 HKLR 162 is cited in support of the proposition that no extrinsic evidence is admissible to contradict a land contract.  Mr Chong also submitted that an oral agreement to confer interest in land is unsustainable as a matter of law due to ss3, 6 of the Conveyancing and Property Ordinance, Cap 219 (“CPO”).

9. Mr Chong’s submission is premised on the basis that it is the defendants’ case that at the time the parties entered into the licence agreements, they have also entered into an oral agreement whereby the defendants would be given beneficial interest in their respective units for the rest of their life.

10. Paragraph 6 of the defence and counterclaim is pleaded in this way:-

“It was orally agreed (the “Oral Agreement”) between the Plaintiff through Regent and/or its employees as his agent and each of the Defendants separately that in consideration of the Defendants entering into the Licence Agreements, the Plaintiff would:-

(1) Transfer the entire beneficial interest in the Premises to each of the respective Defendants as particularised in paragraph 3 hereinabove upon obtaining all necessary approval and permit from the Government to do the same.

(2) Grant a licence to occupy use and enjoy their respective Premises as particularised in paragraph 3 hereinabove permanently upon the end of the period specified in the Licence Agreements.”

11. Mr Albert Cheung, who is also the drafter of the defence and counterclaim, submitted that the licence agreements are not the complete contract between the parties.  The contracts were partly in writing and partly oral.  In other words, the defendants are not saying that the oral agreements were independent collateral contracts.

12. The parol evidence rule is subject to a number of exceptions: see Chitty on Contracts, Vol 1, 32^nd Ed at 13-100.  The rule has no application until it is first determined that the terms of the parties’ agreement are wholly contained in the written document.  It is therefore open to a party to adduce extrinsic evidence to prove that the document is not a complete record of the contract: see Chitty on Contracts (supra) at 13-101.

13. In the passage quoted by Mr Chong in Chu Kit-yuk (supra) at p167 line 40, Godfrey JA was stating that it was improper for the court to admit oral evidence in order to resolve what was intended by the words used in a written contract.  It is not the authority that extrinsic evidence is inadmissible to prove that the document is not a complete record of the contract.

14. The question remains, however, is whether the alleged contract has complied with the statutory requirement under s3 of CPO, which states that:-

“(1) Subject to section 6(2), no action shall be brought upon any contract for the sale or other disposition of land unless the agreement upon which such action is brought, or some memorandum or note thereof, is in writing and signed by the party to be charged or by some other person lawfully authorized by him for that purpose.”

15. Mr Cheung submitted that unwritten equities, including resulting and constructive trust and proprietary estoppels are not subject to ss 3 to 6 of CPO, citing para 17 in Wing Hang Bank Ltd v Richsun International Investment Ltd, HCMP 52/2002, unreported, 7 April 2004, in support.

16. I think the submission of Mr Cheung is no answer to the very question under consideration.

17. To my mind, the answer to the question depends on whether the licence agreements, if found not to be a complete record of the contract between the parties, can be regarded as sufficient to satisfy the said statutory requirement.  This is of course open to argument.

18. In Chu Kit-yuk (supra), the issue was not argued before the Court of Appeal although Godfrey, JA expressed his opinion in passing.

19. That being the case, I do not think that it is plain and obvious that the defence discloses no reasonable cause of defence.

Ground 2

20. Ground 2 is premised on the basis that the alleged oral agreements are inadmissible.  Mr Chong further submitted that proprietary estoppels by representation must be grounded upon a positive act, be it a representation, encouragement, promise, or expectation created by the landowner.  Knowledge of the defendants must be imputed from the contents of the licence agreements and the alleged oral agreements are inadmissible.  Therefore, there is no room for the defendants to rely upon a representation allegedly given by the landowner.

21. It seems that Mr Chong is, despite his previous concession, again attempting to ask this court to consider the contents of the licence agreements.  Mr Chong is further asking this court to hold that the alleged oral agreements are inadmissible.  For reasons stated at paragraph 29 of my decision dated 19 October 2016, I see no merit on this ground.

Conclusion and order

22. For the above reasons, I do not think the plaintiff has demonstrated a reasonable prospect of success by its proposed grounds nor do I see there is any other reason in the interests of justice that the appeal should be heard.

23. Accordingly, I have to dismiss the plaintiff’s application.

Costs

24. Costs should follow the event.  I order that the plaintiff shall pay the defendants the costs of this application with certificate for counsel, to be taxed if not agreed.