TANG WING HUNG ALBERT FORMERLY KNOWN AS TANG SHUN TAI v. LAW CHAU FAT

CACV 556/2020

[2021] HKCA 1856

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 556 OF 2020

(ON APPEAL FROM HCA No. 929 of 2015)

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REASONS FOR JUDGMENT

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Hon Cheung JA (giving the Reasons for Judgment of the Court) :

I.    The appeal

1.  On the trial of the defendant’s counterclaim in respect of a three‑storey T’ing house known as No. 95 Tsz Tin Tsuen, Tuen Mun, New Territories situated at Lot No. 2057 in Demarcation District 132 (‘the Property’), Marlene Ng J found for the defendant and gave judgment for the following relief :

1)     Subject to the Government’s/lessor’s rights under the New Grant No. 2356, by way of paying the purchase consideration of HK$950,000 for the purchase of the Property on 7 June 1995, the defendant obtained the beneficial interest in the Property by way of resulting trust and/or common intention constructive trust.

2)  Subject to the Government’s/lessor’s rights under the New Grant No. 2356, and without prejudice to Mr. Kwok Wai Ming’s and/or Mr. Leung Fung Hei’s rights (if any at all) under the loan document (Memorial No. 10042602970081) and the sale and purchase agreement (Memorial No. 14112401620457) respectively, specific performance be granted against the plaintiff to execute all relevant legal documents for the conveyance or transfer of the legal title in the Property to the defendant subject to the payment of additional land premium and other relevant charges to the Government by the defendant and subject to the consent of the District Officer.

2.   The plaintiff appealed.  We dismissed the appeal at the conclusion of the hearing.  We now give reasons for our judgment.

II.   The proceedings below

3.  The plaintiff is the registered owner of the Property.  On 13 June 1980, the Hong Kong government (‘Government’) by New Grant No. 2356 (‘New Grant’) granted Lot No. 2057 to him at a reduced or concessionary premium of $3,000 with conditions imposed for the development of the Lot by the erection of a small village house thereon to be completed and fit for occupation before the expiration of 30 months from the date thereof.

4.  Under Condition 5 of the New Grant, the Lot was subject to the restriction that no alienation was permitted unless the District Office consented to such alienation and the restriction was to be removed by way of a modification letter upon the grantee’s payment of additional land premium in a sum determined by the Government with reference to the market value at the material time.

5.  The plaintiff later erected a three‑storey small house or T’ing house on the Lot.  On 25 May 2010, the plaintiff was adjudged bankrupt.  The bankruptcy order was discharged four years later on 25 May 2014.

6.  On 28 April 2015, the plaintiff commenced the present action against the defendant claiming that he was the legal and beneficial owner of the Property, and the defendant had been in wrongful occupation thereof despite the expiration of a 10‑year licence that the plaintiff granted to him by way of an oral licence agreement on 1 June 1995 (‘the Licence Agreement’).  The defendant denied the plaintiff’s claim, and contended that on 1 June 1995 the parties entered into a written agreement for sale and purchase in Chinese (referred to by the Judge as the CASP) by which the plaintiff sold the Property to him and for which he paid the full purchase consideration of $950,000.  Accordingly, the plaintiff was the bare trustee of the legal title and registered owner of the Property without any beneficial interest.  The defendant by his counterclaim sought, amongst other things, an order requiring the plaintiff to complete the sale.  The plaintiff denied there was any sale of the Property to the defendant. 

7.  The Judge struck out the plaintiff’s claim on the ground that because of his bankruptcy, he had no right to bring the claim against the defendant.  The plaintiff did not appeal against the decision to strike out.

III.   Background

8.  The background leading to the present litigation is fully summarized by the Judge which we are happy to adopt :

‘13. D [the defendant] claimed that in/about 1995 CSTang as P’s [the plaintiff] agent orally told him that (a) P (then heavily indebted to his creditor who would have seized the Property pledged by P if P failed to settle his debt) wanted to sell the Property, and (b) CSTang helped P to look (but in vain) for a buyer. D averred that at that time CSTang knew he might be interested in buying a property of his own because he and his wife were then staying with the in-laws, so CSTang asked him if he would be interested in buying the Property for $950,000. D further averred that P through CSTang knew he did not have the financial resources to pay the additional Premium for lifting the Restrictions, so before he entered into any agreement to purchase the Property from P, he and CSTang on behalf of P, upon their common intention, understanding and agreement, agreed that notwithstanding D’s purchase of the Property, the Restrictions would not be removed until D had enough money to pay the additional Premium (“Collateral Agreement”).

14.  D claimed it was P’s agent (ie the wife of P’s 2nd elder brother Tang Lin Sang, “LSTang”) who prepared/drafted the CASP.  On 1 June 1995, P and D entered into and signed the CASP, which provided that P sold and D purchased the Property with the right to use/occupy the Front/Back Yards for a consideration of $950,000 together with provisions to the effect that (a) upon D’s request P would unconditionally assist in effecting/perfecting formal transfer of ownership to vest the Property in the name of D, who would be responsible for all costs for such procedure including payment of the additional Premium for lifting the Restrictions (“Undertaking”) (clause 2), and (b) D shall have the right to use/occupy the open areas at the Front/Back Yards (clause 3):

“立契約人賣方([P])買方([D])以下簡稱甲方乙方玆經雙方同意訂立契約於后:

(一) 現甲方以港幣玖拾伍萬圓正轉讓座落於屯門紫田村第132約2057地段之整幢丁屋與乙方。

(二) 日後乙方要辦理有關該丁屋之轉名手續時, 甲方需無條件協助乙方, 唯一切有關之費用一概由乙方自行負責。

(三) 該丁屋前後之空地均有使用權。

恐口無憑, 立此據為証。

甲方: [P] [signature] Gxxxxxx(x)

乙方: [D] [signature] Cxxxxxx(x)

見證人: 鄧灶生 [signature] Cxxxxxx(x)

             鄧連新 [signature]

一九九五年六月一日”

15.  D claimed Dickie Tsang & Co (“DTC”) was engaged to act for P and D in relation to the Property.  On 7 June 1995, D, on P’s request, bought a cashier order in the sum of $950,000 in favour of DTC, and delivered the same to DTC who received the same on behalf of P.   D alleged that upon such payment the beneficial interest in the Property passed to him.

16.  D further claimed P gave written instructions to DTC to make split cheque payments for disbursement of the purchase consideration of $950,000 that he paid (“Split Proceeds Instructions”) as follows:

“本人羅就發[D]現指示律師[DTC], 將下述銀碼付於指示的人

①$664,682.19付與陳業蘇律師行用以償還鄧穎鴻[P]之欠數。

②$237,317.81付與鄧穎雄(Tang Wing Hung Albert) [P]。

ƒ③$18,000作為律師費雜費。

„④$30,000付給羅就發[D]。

本人鄧穎鴻[P]現授權律師[DTC]將所有文件包括Lot 2057 in DD 132 Tuen Mun [Lot]的屋契[“Title Deed”]，交與羅就發[D]。[“Title Deeds Direction”]

[D’s signature] [ P’s signature]”  

17.  D claimed that as security/assurance for the performance and due discharge of the Undertaking in clause 2 of the CASP, P arranged for DTC to prepare the following instruments in favour of D, which were then executed and delivered to D on 8 June 1995:

(a)  a general power of attorney dated 8 June 1995 (“GPoA”) whereby P appointed D “to be [P’s] lawful attorney in accordance with Section 7 of the Powers of Attorney Ordinance Cap 31 of the Laws of Hong Kong”.

(b)  P’s last will and testament dated 8 June 1995 (“Will”) which (i) revoked previous wills and testamentary dispositions, (ii) declared this to be P’s last will and testament, (iii) appointed D to be the executor and trustee of the Will, and (iv) specifically devised and bequeathed all his share and interest of and in the Property to D for his own use and benefit absolutely.

(c)  a promissory note dated 8 June 1995 (“PNote”) whereby P promised to pay D the sum of $3,500,000 for value received by the following instalments: (i) 1^st instalment of $1,000,000 payable on/before 6 June 1996, (ii) 2^nd instalment of $1,000,000 payable on/before 6 June 1998, and (iii) 3^rd instalment of $1,500,000 payable on/before 6 June 2000, provided that if any of such instalments or any part thereof shall be unpaid at the time and in the manner aforesaid, all outstanding payments then remaining unpaid irrespective of whether the time(s) for payment of such outstanding instalment(s) had arrived or not shall immediately become due and payable.

18.   On their face, P executed (a) the GPoA and the PNote in the presence of DTC’s solicitor Tsang Kwok Fun Dickie (“Tsang”) and under Tsang’s interpretation of the contents thereof to P, and (b) the Will under Tsang’s interpretation of the contents thereof to P who “…… appeared thoroughly to understand this Will and to approve the contents thereof in the presence of both the undersigned who in his presence at his request and in the presence of each other have thereunto subscribed their names as witnesses”, ie Tsang and a clerk of DTC Winnie M L Li.

19.   D claimed that on/about 15 June 1995, notwithstanding the non-removal of the Restrictions, vacant possession of the Property together with its Front/Back Yards was delivered to D, and since then D occupied, possessed and controlled the Property and its Front/Back Yards to the exclusion of P.  Immediately after moving into the Property, D applied for and was accepted to be named as the payee of Government rents/rates for the Property, and thereafter D paid such rents/rates.

20.   On 8 December 1999, the DLO, Tuen Mun by letter dated 3 March 1999 to P c/o DTC enclosed duplicate copies of a modification letter and a demand note for $2,000,090 as additional Premium, and asked for the return of such modification letter upon due execution by P (as grantee of the New Grant) to be witnessed by DTC.  This suggested the DLO was prepared to accept payment of an additional Premium of $2,000,900 for lifting the Restrictions.  But D claimed he still did not have sufficient financial resources to pay such additional Premium, and in the last 20 years P never requested/demanded him to pay any additional Premium for lifting the Restrictions pursuant to the Collateral Agreement.

21.   D claimed that on/about 8 February 2001 he received the full set of the Title Deeds for which he signed an acknowledgment of receipt.

22.   On 26 April 2010, solicitors Hagon Wai & Partners delivered the following documents (collectively, “Loan Documents”) under memorial no 100042602970081 for registration against the Property at the Lands Registry, but such registration was stopped on 15 May 2010 and the Loan Documents remained as deeds pending registration:

(a)  a copy loan letter dated 19 January 2010 signed by P (with copy of his identity card) and witnessed by a person (with specified identity card number) stating “本人[P]現借(郭偉明先生) [“Kwok”] 港幣柒拾萬元正, 現以屯門紫田村164號三樓連天臺作為永久使用權, 直至清還柒拾萬元。才取消[Kwok]永久使用權。每月還款伍萬不能斷! 供款期14 個月不能斷供”;

(b)  a copy loan acknowledgment letter dated 2 October 2009 signed by P (with copy of his identity card) stating “本人[P]現借[Kwok]港幣$陸拾萬元正。定於兩年內, 全數清還。本人[P]如有意外, 本人家人及老婆代還。特立此字”;

(c)  a copy cheque dated 28 February 2020 drawn by Kwok in favour of P in the sum of $180,000 with acknowledgment of receipt signed by P (with his identity card number) thereon;

(d)  a copy cheque dated 3 March 2020 drawn by Kwok in favour P in the sum of $300,000 with acknowledgment of receipt signed by P (with his identity card number) thereon.

The Loan Documents appeared to concern 2 debts P owed to a third party (ie Kwok).  D claimed it was P who caused the purported registration of the Loan Documents at the Land Registry even though they did not appear to affect any property interest in the Property.

23.  The CASP was stamped on 9 June 2010 with payment of stamp duty in the sum of $7,125 and penalty payment for late stamping in the sum of $14,800.  D claimed the CASP (which had been executed/performed save for the Undertaking that was still executory in nature) was binding on P, so D was entitled to and did arrange for registration of the CASP (which affected/concerned the Property) under memorial no 10061701600018 against the Property at the Land Registry on 17 June 2010.

24.  D complained that:

(a)  since about May 2014, without any justification whatsoever, P suddenly and wrongfully demanded D to move out of the House;

(b)  in/about mid-2014, P through his agent (ie his younger sister Tang Kwai Ho, “KHTang”), in wrongful breach of the CASP and without the consent of D as occupier of the Property, placed a large container at the Back Yard for operating a food catering business there, and deprived D of the use of the Back Yard, thereby causing loss and damage (which loss and damage were continuing) to D;

(c)  between May and October 2014, P through his agent LSTang, in wrongful breach of the CASP, sent threatening WhatsApp messages to D to the effect that unless he vacated the Property otherwise “後果自付” (ie D would be responsible for the consequences), so D made a report to the police.

25.  D claimed that since 7 June 1995 P no longer had any beneficial interest in the Property, and was only a bare trustee holding the legal title and registered ownership for him.  But on/about 27 October 2014, P purportedly entered into a written sale and purchase agreement (that was stamped on 22 November 2014, “SPA”) to sell the Property to one Leung Fung Hei (“Leung”) for a consideration of $1,000,000 (of which a deposit of $400,000 was paid upon signing the SPA and for which P acknowledged receipt) with completion and payment of the balance consideration to take place on 27 October 2015.  The SPA dated 27 October 2014 also contained the following terms:

“1.  The Vendor agreed to sell and the Purchaser agreed to purchase subject to the terms and conditions herein contained all that LOT NO 2057 in DEMARCATION DISTRICT NO 132 (No 92 Tsz Tin Tsuen, Tuen Mun, New Territories) together with the messuages erections and building thereon) (hereinafter called “the said Premises”).

2.  The purchase price of the said Premises shall be HK$1,900,000.00 which shall be paid upon the signing of this agreement in the sum of HK$400,000.00.  Balance of purchase price shall be paid upon completion on or before 27 October 2015 at the Vendor’s solicitors in the sum of $1,500,000.00.

3.   The said Premises is to be sold to the Purchaser or its nominee(s), sub-purchaser(s) free from encumbrances.

4.   Upon completion, the Vendor shall deliver vacant possession of the said Premises to the Purchaser.

……

Remarks:

(1) 買賣雙方確認此買賣合約為必買必賣合約, 即買賣雙方必須依約成交，不得悔約。

(2) 賣方負責辦理補地價手續及簽授權書給買方代為辦理向政府補地價手續，補地價由買方支付。

(3) 簽此合約後，賣方不得以該物業抵押或擔保向他人借錢，或向他人簽任何形式文件或書信對該物業之業權造成影響，如有的話，該等文件或書信也將不會被承認有效的。

(4) 賣方聲明和保證現於土地註冊處註冊之Agreement for Sale and Purchase即買賣合約(日期：1995年6月1日及該冊編號：10061701800018)及 Loan Letter 即貸款信件(日期：2010年1月19目及註冊編號：10042602970081)均是無效和不會影響該物業的業權的。賣方承諾會最遲於成交日一個月前正式取消買賣合約及貸款信件在土地註冊處之註冊，令其可有法理依據合法成為絕對無效的，並在法庭取得收樓令向該物業現有的佔用人(如有的話)正式合法收回該物[累]，使賣方可在免除所有負擔或債項之情況下將該物業交吉的業權於成交日轉予買方合法成交(以下簡稱“該等手續”)。為確保賣方會盡快完成該等手續, 賣方於簽此合約後，須立即委託律師進行該等手續的所有法律程序。

(5) 如賣方未能於最遲成交日一個月前的限期內，完成辦理該等手續，而需要多些時間辦理該等手續，則買方有權取消交易再取回訂金或延期成交直至該等手續完成為止。

(6)《物業轉易及財產條例》即香港法例第219章的條文在此適用。”

26.  On 24 November 2014, the SPA was registered against the Property at the Land Registry under memorial no 14112401620457 prepared by solicitors Wong Fung & Co (“WFC”).

27.  D claimed (a) P fabricated his allegations as to the Licence Agreement referred to in paragraph 31 below, which contradicted all contemporaneous documents that P signed/executed, (b) P continued to be the registered owner of the Property because D still had not paid the additional Premium for lifting the Restrictions, (c) P’s sale of the Property to D was subject to P’s Undertaking in clause 2 of the CASP, and (d) D was still in occupation of the Property by reason of P’s sale of such property to him in 1995.’

IV.  The Judge’s decision

9.  The Judge accepted the defendant’s case.  She found that the agreement reached between the parties was a sale and purchase agreement of the Property and not a licence agreement for the defendant to occupy the Property for ten years.  The Judge further found that the plaintiff (as vendor) is a trustee who held the legal title of the Property on trust for the defendant (as purchaser) and that the plaintiff as trustee is required to transfer the bare legal estate in the Property to the defendant as beneficial owner.  The Judge also held no issue of illegality was involved in the transaction when the parties merely ‘jumped the gun’ by entering into a sale and purchase of property subject to restrictions against alienation prior to approval by the District Officer and payment of the additional premium.

10.  There is no appeal by the plaintiff against the Judge’s finding that illegality was not involved.

V.    Grounds of appeal

11.  The plaintiff advanced eight grounds of appeal.  Grounds 1 and 7 are now abandoned.  The rest of the grounds are as follows :

‘ 2. The Judge erred in law in concluding that the defendant’s evidence was more probable, thereby failing to consider properly the evidence put forward by the parties.

  3.   The Judge erred in law in concluding that the transaction between the plaintiff and the defendant made on 1^st June 1995 was a sale and purchase, thereby failing to appreciate properly or at all that the transaction was a licence agreement.

  4.   The Judge failed to appreciate that the CASP was to secure and protect the defendant for recovery of the balance of the licence fee if there was an early termination of the licence agreement by the plaintiff before the expiry of the licence term.

  5.   The Judge erred in law in concluding that the sum of HK$950,000.00 to be paid by the defendant to the plaintiff was the consideration for the defendant’s purchase of the Property from the Plaintiff, thereby failing to consider properly that it was a lump sum licence fee payable by the defendant to the plaintiff for the Property or any loan by the defendant to the plaintiff.

  6.   The Judge erred in law and in principle in concluding that the three documents, namely, the general power of attorney dated 8^th June 1995, the plaintiff’s last will dated 8^th June 1995 and a promissory note dated 8^th June 1995 shed light on the nature of the transaction that the Plaintiff had no beneficial interest in the Property.

  ...

  8.  The Judge erred in law and in principle in concluding that the evidence put forward by the defendant and his witnesses were more believable when compared with the evidence put forward by the plaintiff, while the Judge expressly rejected the evidence of the plaintiff in all aspects.’

VI.     Our view

1)     Overview

12.  Grounds 2 and 8 as framed are brief and couched in general terms, but as it turned out, the written submission of the plaintiff in respect of these two grounds had gone into details and elaborated on why the Judge had erred.  This is not the proper approach.  The plaintiff should have amended the notice of appeal first so as to inform the Court and the defendant the detailed grounds that he was relying upon.  However, as Ms Chan for the defendant did not object to the written submission expanding on these two grounds, we would allow them to be argued.

13.  Notwithstanding the complaint that the Judge had erred in law and principle, the plaintiff had cited no law or any principle in support of his complaint.  The Judge’s finding on the true nature of the transaction between the parties and other related matters are findings of fact.  The grounds of appeal advanced by the plaintiff are challenges against these findings.  It is well-established that in an appeal against a finding of fact by a trial judge the appellate court will interfere and overturn the finding only if the appellant can demonstrate that the finding is plainly wrong.  As frequently said, it is only in a rare case, such as where that conclusion was one (i) which there was no evidence to support, (ii) which was based on a misunderstanding of the evidence, or (iii) which no reasonable judge could have reached, that an appellate tribunal will interfere with it.

14.  Before we consider the specific grounds, it is necessary to take an overview of the case.  In coming to the decision in favour of the defendant, the Judge in her 89‑page judgment had canvassed in detail a wide spectrum of issues which she had listed at [67] of her judgment, namely,

(1)  whether the transaction between the plaintiff and the defendant on 1 June 1995 was a sale and purchase whereby the plaintiff as vendor sold and the defendant as purchaser purchased the Property, or whether such transaction was a licence agreement whereby the plaintiff as licensor granted a licence of the Property to the defendant as licensee;

(2)  whether the CASP was an agreement between the plaintiff and the defendant for sale and purchase of the Property, or whether it was a document to secure or protect the defendant for recovery of the balance of the licence fee if there was early termination of the Licence Agreement by the plaintiff before expiry of the licence term;

(3)  whether the CASP was prepared and drafted by LSTang’s wife as the plaintiff’s agent (according to the defendant) or by the defendant (according to the plaintiff’s pleadings);

(4)  whether or not the plaintiff held the legal estate of the Property for the benefit of the defendant, or in other words, whether or not the defendant held the beneficial interest in the Property;

(5)  what were the purpose and effect of the general power of attorney, the promissory note and the Will that the plaintiff signed;

(6)  who gave the Split Proceeds Instructions to DTC, and whether the Title Deeds Direction was already written on the Split Proceeds Instructions when the plaintiff signed the same;

(7)  whether, and if so, (i) when the plaintiff and/or his agent(s) demanded the defendant to deliver up vacant possession of the Property, and (ii) whether the plaintiff was entitled to make such demand.

15.  This is important because it shows that the Judge had considered the whole of the evidence before she reached her conclusion.  This is to be contrasted with what the plaintiff is trying to do in this appeal.  He merely tries to focus only on some part of the Judge’s findings of fact or conclusion and build up a case from such a narrow basis that the decision is incorrect.  This is clearly not the proper approach.  What needs to be emphasised is that the finding must be plainly wrong before the appellate court will overturn it.

16.  In terms of the assessment of the witnesses, the Judge held that the defendant impressed her as a straightforward and reliable witness.  He was clear and consistent in his evidence.  She held that the events canvassed at the trial spanned decades，so it was of importance to have regard to the contemporary documents and the overall probabilities of the explanations given about them, especially in light of the conflicts in evidence.  Save for a few matters in the defendant’s evidence which the Judge did not accept, she held that the core matters of his evidence did not give rise to concern over his veracity.  She preferred his evidence where it conflicted with the plaintiff’s.

17.  On the other hand, she rejected the plaintiff’s evidence on the core matters.  She held :

‘ 70. ......P’s cross-examination was notable for his flippant and mocking attitude towards Mrs Chan’s questions, which he tried to sidestep by saying they were repetitive and clumsy. Cross-examination did not reveal P in a good light as he displayed an elevated degree of shrewdness in avoiding matters that he perceived might not be to his advantage. My confidence in his testimony was also undermined by the alteration of his account from that in his pleadings and P’s WS (including, eg, the Licence Agreement in respect of the Property) as verified by statements of truth to an account in his oral evidence at trial based on a loan agreement (instead of the Licence Agreement over the Property) that had not been raised previously. As seen in the analysis below, there were clear indicia that P’s evidence was unreliable and self-interested. Some of his evidence defied belief, and he had no or no credible explanation on other matters. The explanations that P saw fit to give were improbable and/or embroidered, and I am unconvinced the inconsistences/lapses in his evidence were due to faded memory. I find P had not been truthful over important matters. Quite plainly, he had convinced himself that he was right, and was reinterpreting some events from that perspective....’

18.  It was not disputed that in 1995 the plaintiff was in financial difficulties and he was unable to repay loans granted by a finance company who repeatedly threatened to sue for the possession of the Property.  It was in that context that the parties’ respective case was considered by the Judge.

19.  In respect of the true nature of the agreement between the parties, the plaintiff had put forward two diametrically different accounts as to the nature of the transaction over the Property.  Initially, he said it was an oral licence agreement, then he claimed that it was an oral loan agreement with permission for the defendant to reside at the Property.  The Judge held that this severely undermined the plaintiff’s veracity, and she was unable to place weight on either version.  She held that the plaintiff could not have any misunderstanding that the two versions were fundamentally different.  If the nature of the transaction was a loan agreement, the loan of $950,000 would have to be repaid in full.  But if the transaction was by nature a licence agreement, there would have been no repayment because the payment of $950,000 would be a lump sum advance payment of the licence fee for the defendant’s licence of the Property during the licence term.  Further, if the transaction was a licence agreement, then the defendant would have no right to remain at the Property after expiry of the licence term and exhaustion of the licence fee, but the plaintiff did not give any straight answer as to whether the defendant could remain at the Property if he failed to repay the alleged loan after 10 years.  She further held :

‘ 92. Moreover, if the transaction over the Property was by nature a loan agreement without D acquiring any ownership and/or equitable interests in the Property, there would not have been any need for the CASP to be worded as an agreement for sale and purchase. After all, P had previous experience of borrowing personal loan from the FinCo upon pledging the Property by way of deposit of the Title Deeds, and there was no evidence that he had signed any agreement for sale and purchase for such purpose. P had not explained why a similar arrangement would not be good enough “protection” for D as lender. Further, given the Government was prepared in April 1995 to issue a no-objection confirmation, P also had not explained why he did not seek to re‑mortgage the Property and use any re-mortgage loan to settle the debt due to the FinCo if the transaction he had in mind was merely a loan agreement.’

20.  In respect of the CASP, the Judge took into account that the plaintiff had acknowledged that he voluntarily signed it in the presence of his two brothers.  She further held :

‘104. ......There was also no persuasive reason why P ’s brothers would have allowed P to sign the CASP and witnessed P’s signature thereto if to their knowledge the transaction was not a genuine sale and purchase of the Property. In my view, the fact CSTang and LSTang were willing witnesses to the CASP went a long way to give credence to their roles as go-between to help put together the sale and purchase transaction where P sold and D purchased the Property for the consideration of $950,000.’

2)     Grounds 2 and 8

21.  The plaintiff addressed these two grounds together.  The plaintiff’s submission is summarised as follows :

(1)  The Judge was wrong to draw adverse inference against the plaintiff in not calling CSTang and LSTang as his witnesses.  This was to be contrasted with her refusal to draw adverse inference against the defendant in not calling Mr. Tsang of DTC as witness.

(2)  The Judge erred in finding against the plaintiff by questioning why the CASP was worded as an agreement for sale and purchase if the transaction was a loan agreement and on the basis that the plaintiff had not explained why he could not have simply pledged his title deeds to secure a loan as he had done in the past, when the plaintiff was not asked for such an explanation in his cross‑examination.

(3)  The Judge erred in saying that the plaintiff had not explained why he could not seek to re‑mortgage the Property to settle his debt owing to the finance company, when the plaintiff had not been asked to explain this.

(4)  The Judge erred in holding that DTC only released the title deeds to the plaintiff in 2001 when they had already received them in 1995.

22.  First of all, what the Judge had held was that because of the adverse finding she had made against the plaintiff, it was not necessary to draw adverse inference against the plaintiff in not calling his two witnesses.  In any event, the Judge went on and explained why adverse inference should be drawn against the plaintiff for not calling CSTang and LSTang.  We agree with her.

23.  As to the defendant not calling DTC, the Judge had considered that DTC had ceased practice and Tsang had given a written account of the events.  Accordingly, the Judge held :

‘ 75. Unlike the situation of CSTang and LSTang who did not give any account/statement, Tsang gave an account of his recollection drawn upon review of the available documents by way of L&L’s letters. The tenor of L&L’s letters was that due to the lapse of time and in the absence of further documents to aid memory, Tsang could only recall what was stated in the account given in L&L letters. I bear in mind that DTC’s account was independently given through L&L and not through D, and that DTC acknowledged they acted for both P and D in 1995 over the Property. Further, since L&L’s letters were disclosed in the course of discovery in the present action, P must have been aware of Tsang’s account well before the trial and could have approached Tsang (whether through L&L or otherwise) as there was no property in witnesses. In such circumstances, I am not persuaded I should draw adverse inference against D for not calling Tsang to give evidence at trial, but I have exercised caution in assessing D’s evidence where it did not sit with Tsang’s account and, as explained below, there were some aspects of D’s evidence that I do not accept although this did not affect his veracity on the core matters.’

24.  It is incorrect that the plaintiff was not asked to explain about the wording of the CASP because the Judge held :

‘ 105. When pressed under cross-examination that the transaction between P and D, if it were a loan agreement, could have been recorded as such in the CASP, P claimed (a) he did not know who wrote the CASP, and (b) D would not have agreed to have the CASP worded as a loan agreement.’

25.  The plaintiff further claimed under cross‑examination that he saw the then unsigned CASP for the first time at DTC’s offices.  The Judge rejected this because this was contrary to what he had stated in his witness statement which was verified by him as being true.  The Judge held that this is another matter which undermined the plaintiff’s veracity.

26.  As to the criticism that the plaintiff was not asked why he did not pledge the title deeds or re‑mortgage the Property instead, clearly the Judge was entitled to draw her conclusion on these matters having considered the whole of the evidence.

27.  As to the late release of the title deeds, the Judge explained :

‘ 147. On/about 8 February 2001, D sought legal advice from DTC, and “[D]收到[P]交來的[Property’s] 所有及完整的[Title Deeds]”. P queried why the Title Deeds were released to D in 2001 and not in 1995. But in my view, this was neither here nor there in light of the Title Deeds Direction given by P. I note DTC acted for both parties, and in my view, when P passed the Title Deeds to DTC pursuant to the Title Deeds Direction, DTC plainly received those Title Deeds on behalf of D, so DTC’s custody of such Title Deeds was on behalf of D, and it mattered not when they were physically delivered to D.’

28.  The Judge further considered at [148] that the plaintiff himself had not attempted to ask for the return of the title deeds.

29.  In our view, there is no substance in Grounds 2 and 8 of the grounds of appeal.

3)     Grounds 3 and 5

30.  The plaintiff accepts that if he fails on Grounds 2 and 8, he would also be bound to fail on Grounds 3 to 5.  Hence, it is not necessary to address these grounds.

4)     Ground 6

31.  Ground 6 deals with the instructions to DTC and the preparation of the promissory note, the general power of attorney and the will.  The Judge made the following findings :

‘ 123. I have found (a) it was D who approached DTC/Tsang about the Property and to seek advice on protection of interests in the Property, (b) P was agreeable to sign documents to so assure D as P wanted to quickly utilise the purchase consideration to reduce/settle his debt due to the FinCo, and (c) P and D jointly instructed DTC/Tsang for such purpose. In my view, it was DTC/Tsang who advised/prepared (and both P and D accepted and thereby instructed) that the PNote, the GPoA and the Will be given/signed by P to protect D’s interests in the Property. In my view, D was an unsophisticated layman, and would not have been able to give specific instructions for the preparation of the PNote, the GPoA and the Will, especially when these 3 documents had no immediate or direct relation to the sale and purchase of the Property as evidenced by the CASP signed by P and D on 1 June 1995. This was especially so when both P and D confirmed there was no genuine loan transaction between them whereby D lent $3,500,000 to P. But as Mrs Chan submitted, it was not uncommon for legal practitioners to adopt similar documents (eg power of attorney and will) with deposit of title deeds for their clients in the context of sale and purchase of small houses or t’ing houses because of various government requirements and restrictions on alienation.

…

128.  On balance, I reject P’s attempts to disavow the PNote, the GPoA and the Will which he willingly signed.  In my view, taking into account all the surrounding circumstances, the parties’ execution of the CASP (as prepared by LSTang’s wife and as witnessed by P’s siblings), D’s payment of the full consideration of $950,000, the deferral of payment of the additional Premium thus leaving P as registered owner of the Property, and D’s subsequent occupation of the Property (see Part XVI below), I find on balance that I am unable to take the 3 documents (ie the PNote, the GPoA and the Will) at face value, especially when it was common ground that there was no loan of $3,500,000 by P to D.

129.  But these 3 documents shed light on the nature of the transaction as they indicated P’s acknowledgment that he had no beneficial interest in the Property. That was plainly the purport of the CASP. Within days after that, P signed the GPoA which enabled D to deal with the Property in future should P turn unhelpful, eg he could as P’s attorney apply to the DO for consent to assign the Property as and when he was ready to pay the additional Premium. As seen in paragraph XVII below, this was what D tried to do in 1999 even though the exercise fell through as D could not afford to pay the then value of the additional Premium.  Further, P’s execution of the Will that bequeathed the Property to D meant D would have been able to acquire the legal title of the Property on P’s death. This also supported D’s case that the transaction was a sale and purchase of the Property for which D had paid the full purchase consideration to P.  I agree with Mrs Chan that P’s failure to revoke or change the Will despite his claims that the transaction was a Licence Agreement or a loan of $950,000 by D to him was telling, and lent support to D’s case that P well knew D as purchaser was the beneficial owner of the Property since 7 June 1995. As for the PNote, bearing in mind it was common ground there was no loan of $3,5000,000 by D to P, I find on balance it was a document made/signed to avoid direct reference to the sale and purchase of the Property in June 1995 which “jumped the gun” without payment of the additional Premium at the same time, but to give credence or an on-the-face reason for the GPoA and the Will in favour of D, which documents would have allowed P to take steps during P’s lifetime to vest or after P’s death would have vested the legal title of the Property in D to protect D’s interests as the beneficial purchaser of the Property.  This was also borne out by the fact that in June 1996 D sought legal advice from DTC, and DTC issued a demand letter dated 22 June 1996 to P alleging that P failed to pay the 1^st instalment under the PNote and demanding P to pay D the entire amount of the PNote in the sum of $3,500,000.  There was no evidence of (a) any response by P to such demand letter and/or (b) any further demand or legal action after such demand letter.  In my view, this was just a purported acceleration of payment of the entire alleged debt under the PNote in order to give credence to the GPoA and the Will, and both P and D knew there was no loan of $3,500,000 by D to P.’

32.  The plaintiff submitted DTC’s account is that in June 1995 DTC was initially retained by the defendant to act for him in an intended purchase of the Property, but a few days later the sale and purchase was not proceeded with, and DTC was retained to act for both the plaintiff and the defendant in a loan transaction with the preparation and execution of the general power of attorney, the promissory note and the will.  Without the oral testimony of Tsang/DTC, the Judge erred in disagreeing that the plaintiff and the defendant instructed DTC/Tsang about a loan transaction whereby the defendant lent $3,500,000 to the plaintiff as suggested in L&L’s letters.  DTC/Tsang would have full knowledge that the loan transaction or $3,500,000 was not a genuine loan.

33.  In our view, the Judge was plainly aware of DTC’s account but as a trial judge, she was clearly entitled not to accept this part of DTC’s account if there was other evidence which she found to be credible and convincing.

34.  The plaintiff then submitted that the Judge had contradicted herself in respect of her views about, on the one hand, the plaintiff’s subsequent agreement to sell the property to Leung and, on the other hand, the three documents.

35.  In our view, there is nothing in this point.  In respect of Leung, notwithstanding that the written agreement stated that it was for the sale of the Property, the plaintiff claimed it was a loan agreement.  It was in such a context that the Judge held that the plaintiff’s own solicitors were unlikely to submit a sham agreement for registration.  However, in respect of the three documents the Judge clearly was entitled to consider that they were documents usually prepared in the context of T’ing house transactions.  We see no contradiction in terms.

36.  The plaintiff criticised the Judge for not considering why the promissory note of a loan transaction of $3.5 million was prepared which was to be repaid in three instalments with an accelerated payment of all the outstanding sum on the plaintiff’s default in paying one instalment.  Further, (as found by the Judge) the defendant had actually issued a demand in June 1996 requiring the plaintiff to pay up the entire $3.5 million on the ground that the plaintiff had defaulted in the payment of the first instalment.  The plaintiff argued that the Judge erred by holding that it was just a purported acceleration of payment of the entire alleged debt under the promissory note in order to give credence to the general power of attorney and the will.

37.  In our view, the Judge was clearly entitled to her view.  The short point is that it was common ground that there was no loan of $3.5 million from the defendant to the plaintiff.  The Judge had clearly explained why the three documents came into existence in [129] of her judgment. 

38.  Finally, the plaintiff submitted that there was insufficient evidence for the Judge to make any finding as to why instructions were given to pay $30,000 to the defendant. She also failed to consider why $30,000 out of the consideration of $950,000 paid by the defendant was instructed by the defendant to be refunded to himself.

39.  In our view, this is clearly an insignificant matter which has no material bearing on the overall assessment of the case by the Judge.

40.  The plaintiff simply failed to show that the judgment was plainly wrong.  It is not necessary for us to address the Respondent’s Notice which supported the judgment on other grounds as well.

VII.   Conclusion

41.  Accordingly, we dismissed the appeal with costs to the defendant (including the Respondent’s Notice).  We will summarily assess the defendant’s costs at $430,000 which included counsel’s fee of $250,000.