MIR, ABDUL REHMAN v. MIR, HEENA

CACV 10/2012

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 10 OF 2012

(ON APPEAL FROM HCMP NO. 1347 OF 2008)

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BETWEEN

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J U D G M E N T

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Hon Fok JA:

Introduction

1.  Relying on a Deed of Gift whereby the respondent transferred a 50% interest in a flat in the Mid-levels to the appellant, the appellant sought an order for sale of the flat under the Partition Ordinance (Cap. 352).

2.  By his judgment dated 14 December 2011,[1] Deputy High Court Judge Houghton SC (now Mr Recorder Houghton SC) dismissed the appellant’s claim, holding that the Deed of Gift was voidable by reason of the exercise of duress by the appellant.  He granted the respondent a declaration that the Deed of Gift had been avoided and also ordered the appellant to pay her damages, including aggravated damages, for assault in the sum of HK$140,000.

3.  This is the appellant’s appeal against that judgment.

Background facts

4.  The appellant carried on a carpet trading business.  In 1983, the respondent began to work in that business.  At that time, she was married to the appellant’s brother with whom she had three children.  The marriage broke down in the 1980’s, after which a relationship between the appellant and the respondent developed.

5.  In 1988, the appellant purchased the flat which is the subject of this action, into which the respondent and her children moved.  The funds for the purchase were provided by the appellant but the flat was conveyed into the joint names of the appellant and respondent as tenants in common, with the appellant having a ¾ share and the respondent a ¼ share.

6.  The respondent has continued to live in the flat since 1988 and, until the end of August 2006, she continued to work for the appellant’s business.  The relationship developed to the point that they planned to marry and, although they did not formally wed, their relationship was celebrated by them with their friends and family members at a dinner reception in June 1997.  The respondent’s involvement in the business in Hong Kong grew to the point she was running it for much of the year, thus enabling the appellant to pursue business interests in other parts of the world.

7.  The appellant fell out with his own children by a previous marriage and, accordingly, he transferred his ¾ interest in the flat to the respondent by a Deed of Gift executed on 5 September 2001.  Although the Deputy Judge rejected this,[2] the appellant contended that, simultaneously with the Deed of Gift, the parties reached an agreement that the respondent was to hold his ¾ share in the flat on trust for him.

8.  The parties’ relationship began to deteriorate over time and did so sharply when, in about May 2006, the appellant discovered the respondent had had an affair.  The appellant returned to Hong Kong and, in the course of their interaction in June 2006, the disputed details of which formed the main focus of the trial below, the respondent was persuaded to execute a Deed of Gift dated 12 June 2006 by which she purportedly re-transferred to the appellant a ½ share in the flat.  It is that Deed of Gift which formed the basis of the appellant’s claim for an order under the Partition Ordinance.

The events of June 2006 and the Deed of Gift

9.  As the Deputy Judge noted, the parties’ accounts of the events in June 2006 and their interaction at that time were almost entirely contradictory.  It was common ground that the appellant had returned to Hong Kong for a visit and met with the respondent at the business during the day on 1 June 2006.  He also met with the respondent at the flat in the evening of 1 June.  What then happened at the flat that evening was, however, hotly disputed at trial and the following is a brief summary of the parties’ respective cases in this regard.

10.  The respondent’s case was that, on the evening of 1 June 2006, the appellant physically assaulted her in the living room and then the bedroom of the flat.  Her case was that she was slapped, punched and kicked by the appellant over a lengthy period of time and that she suffered severe bruising as a result.  The respondent’s domestic helper, Ms Ramos, was in the flat and heard the altercation and unsuccessfully tried to intervene to stop the appellant.  She then telephoned the respondent’s son, Charlie, to come home from work which he did.  He stayed a short time but then returned to work.

11.  On the other hand, although the appellant accepted having a discussion with the respondent at the flat for about an hour during which there was a heated quarrel, in the course of which some pushing took place, he denied the assault.

12.  Be that as it may, it was common ground that the appellant returned to the hotel where he was staying.  The respondent later went to visit him there.  His case was that this was because she pestered him by telephone to allow her to do so.  Her case was that the appellant telephoned her and insisted she go to his hotel.  In either case, it was accepted that the appellant accompanied the respondent back to the flat, after which he went back to his hotel for the night.  The respondent’s case was that the appellant further abused her at the hotel and that when her son came home from work and found her missing he telephoned the appellant’s hotel to speak to the appellant and insist that his mother return home.

13.  It is common ground that the appellant moved back into the flat – on the respondent’s case on 2 June 2006, on the appellant’s case on 3 June 2006 – and lived there until he left for London on 18 June 2006.  During this period, the Deed of Gift was executed by the parties on 12 June 2006.  The respondent instructed the solicitors who prepared the Deed of Gift.

14.  After the appellant left Hong Kong, the respondent wrote a letter to the appellant dated 1 August 2006 resigning from his business with effect from 31 August 2006 “due to personal reasons”.  She also consulted her doctor, Dr Gloria Kim, on 23 August 2006.  Dr Kim’s medical notes record that the reason for the consultation was that the respondent had been assaulted three weeks earlier by her former partner and current business associate.  Dr Kim observed evidence of residual bruising on the respondent’s thighs and she formed the view that the respondent was suffering from anxiety and so prescribed the drug, Xanax, for stress.

15.  Apart from a limited number of e-mail exchanges in 2006 and 2007, the parties had little interaction thereafter.  The respondent continued to live in the flat in the meantime.  After an illness which required him to undergo surgery, the appellant corresponded with the respondent in June and July 2008, initially directly and latterly through solicitors, concerning the flat.  It will be necessary to look more closely at the e-mail exchanges and correspondence in question later in this judgment.

The action

16.  The 2008 correspondence did not lead to any resolution concerning the flat and so, on 18 July 2008, the appellant issued an originating summons claiming to be the beneficial tenant in common of a ½ share of the flat and seeking an order under the Partition Ordinance that the flat be sold.  The basis of the claim to the ½ share of the flat was the Deed of Gift.

17.  The respondent raised duress as a defence to the claim based on the Deed of Gift.  She counterclaimed for a declaration that the Deed of Gift was voidable and that she had avoided it.  She also counterclaimed for damages for assault.  The assault formed the basis of the defence of duress.

18.  Given the factual issues raised, directions were given for the filing of pleadings, discovery and the exchange of witness statements and the action was tried accordingly.

The Judgment below

19.  The three principal issues before the Judge at trial were: (i) whether the appellant assaulted the respondent; (ii) whether the Deed of Gift was procured by the exercise of duress; (iii) whether, even if procured by duress, the respondent affirmed the Deed of Gift.

20.  On the first issue (the assault issue), the Deputy Judge concluded that the evidence of the respondent was more persuasive than that of the appellant.[3] He accepted the overall veracity of the respondent’s evidence so far as the fact of an assault having taken place was concerned.[4]  He found that the respondent had been subjected to a prolonged attack, although no lasting physical damage was caused, and he accepted Dr Kim’s evidence that some residual bruising was still visible on the respondent some three weeks later and that she was patently anxious and stressed at that time.[5]  He concluded that, while the respondent’s evidence overplayed the physical aspects of what took place, it was decidedly closer to the truth than the evidence of the appellant that nothing untoward had taken place.[6]

21.  On the second issue (the duress issue), the Deputy Judge found that, although there was a gap of about 10 days between the physical assault and the execution of the Deed of Gift, the appellant took advantage of the violence which had previously occurred and continued to exert illegitimate pressure on the respondent during this period.  He therefore concluded that there was illegitimate pressure exerted by the appellant which was, at the very least, a contributory factor in the respondent’s decision to enter into the Deed of Gift.[7]

22.  On the third issue (the affirmation issue), the Deputy Judge found that the chain of correspondence between the parties concerning the flat came “nowhere near affirming, in any clear or unequivocal way, the 2006 Deed” and that it remained open to the respondent to refute its validity as she did, at the latest, by the service of her affirmation in these proceedings.[8]

23.  Accordingly, the Deputy Judge held that the appellant’s claims must fail and that the respondent’s counterclaim for an order that the Deed of Gift be set aside succeeded.[9]  He went on to assess damages for the assault in the sum of $100,000 as general damages for pain, suffering and loss of amenities and, in addition, awarded aggravated damages in the sum of $40,000 to reflect the manner and circumstances of the assault and the intangible injury to the respondent’s pride and dignity.[10]

The issues on appeal and the approach of this Court to those issues

24.  The appellant challenges the Deputy Judge’s findings on each of the three issues of assault, duress and affirmation.  He contends that the Deputy Judge should have dismissed the respondent’s counterclaim, allowed his claim for an order under the Partition Ordinance and ordered the respondent to pay occupation rent for the flat.

25.  The Deputy Judge’s findings on the three principal issues are, of course, primary findings of fact and Mr Kenneth CL Chan, counsel for the appellant,[11] accepted that the guiding principles as to when the Court of Appeal might properly disturb findings of fact made by a trial judge identified by the Court of Final Appeal in Ting Kwok Keung v Tam Dick Yuen & Others (2002) 5 HKCFAR 336 were applicable.  In short, he accepted that this Court should not disturb the trial judge’s findings of fact unless “satisfied that his conclusion on the facts is plainly wrong” (ibid. at §42).

26.  Mr Benson Tsoi, counsel for the respondent, also invited us to adopt the approach of Viscount Simon in Watt (or Thomas) v Thomas [1947] 1 All ER 582 at pp. 583G-584C, namely:

“…I desire to make some observations as to the circumstances in which an appellate court may be justified in taking a different view on facts from that of a trial judge. … Apart from the classes of case in which the powers of the Court of Appeal are limited to deciding a question of law (e.g., on a Case Stated or on an appeal under the County Courts Acts) an appellate court has, of course, jurisdiction to review the record of the evidence in order to determine whether the conclusion originally reached on that evidence should stand, but this jurisdiction has to be exercised with caution. If there is no evidence to support a particular conclusion (and this is really a question of law), the appellate court will not hesitate so to decide, but if the evidence as a whole can reasonably be regarded as justifying the conclusion arrived at at the trial, and especially if that conclusion has been arrived at on conflicting testimony by a tribunal which saw and heard the witnesses, the appellate court will bear in mind that it has not enjoyed this opportunity and that the view of the trial judge as to where credibility lies is entitled to great weight. This is not to say that the judge of first instance can be treated as infallible in determining which side is telling the truth or is refraining from exaggeration. Like other tribunals, he may go wrong on a question of fact, but it is a cogent circumstance that a judge of first instance, when estimating the value of verbal testimony, has the advantage (which is denied to courts of appeal) of having the witnesses before him and observing the manner in which their evidence is given. What I have just said reproduces in effect the view previously expressed in this House … that a court of appeal should ‘attach the greatest weight to the opinion of the judge who saw the witnesses and heard their evidence,’ and, consequently, should not disturb a judgment of fact unless they are satisfied that it is unsound.”

27.  Watt (or Thomas) v Thomas was cited in Tam Dick Yuen (at §32) by Bokhary PJ, who regarded the guidance from it as being equally apposite to the role of this Court (see §33). It is therefore guidance of some relevance in the present appeal, particularly in relation to the issue of assault where the Deputy Judge was evaluating the conflicting oral testimony of multiple witnesses.

The assault issue

28.  The first contention advanced by Mr Chan on behalf of the appellant is that the Deputy Judge erred in law in failing to adopt a higher standard of proof in respect of the respondent’s allegations that she had been assaulted, allegations which amounted to very serious criminal offences.  It was also submitted that, since the Deputy Judge did not make any specific findings as to the extent of the assault and the injuries sustained, it was impossible to know the standard of proof adopted and whether the respondent’s case was up to proof.

29.  I do not accept this contention.  These were civil proceedings and it is well established that, even in civil cases in which serious allegations of misconduct such as fraud are in issue, the standard of proof is the civil standard of a preponderance of probability and not any higher standard of proof.  As Lord Hoffmann observed in ADS v Brothers & Others (2000) 3 HKCFAR 70 at p. 78F-G:

“The correct analysis is that the court is not looking for a higher degree of probability. It is only that the more inherently improbable the act in question, the more compelling will be the evidence needed to satisfy the court on a preponderance of probability.”

30.  The Deputy Judge was plainly aware that the allegations of assault were serious allegations.  He had been reminded by the appellant’s counsel at trial (not Mr Chan) that the conduct alleged was more usually encountered in the criminal courts and the case of Faridha Sulistyoningsih v Mak Oi Ling Karen, unrep., DCPI 1575/2005, 4.4.07, on which the appellant relied in this appeal in support of the need for a higher degree of probability,[12] was cited to him in the closing submissions.  There is nothing to indicate that the Deputy Judge erred in relation to the standard of proof to be applied to the respondent’s allegations of assault.

31.  Nor do I consider that the Deputy Judge’s acknowledged inability to be more precise as to the extent of the assault and the injuries sustained (Judgment §57), which was understandable in view of the passage of time since the assault took place, supports a contention that the Deputy Judge erred in his approach to the standard of proof.  The contest was a straightforward contest of conflicting oral testimony of the respondent and her witnesses on the one hand, who alleged that an assault had taken place, and the appellant and his witness on the other hand, who alleged that nothing untoward took place.  The Deputy Judge resolved that conflict of evidence and held that he was left “in no doubt” (Judgment §48) that the evidence of the respondent was more persuasive.

32.  Next, Mr Chan cited Michael Eric Alexander Bos Mak v Wocom Commodities Ltd, unrep., CACV 139/1994, 7.6.95 at §47 in support of the proposition that, where a trial judge failed to make use of his special advantage of actually seeing the witnesses giving evidence because the witnesses’ evidence was vitiated by glaring improbability, this Court is entitled to make its own finding.

33.  It was submitted that, in the present case, the respondent’s version of events was inherently improbable and that the events described by her and her witnesses contained glaring improbabilities such as to justify this Court in interfering with the Deputy Judge’s finding of fact on this issue.

34.  It was also submitted that, the Deputy Judge having found that some of the respondent’s family members had overstated the severity of the assault (Judgment §55), it was incumbent on him to explain why he preferred the respondent’s and her witnesses’ evidence to that of the appellant and his witness.  Yet, it was submitted, the Deputy Judge did not deal with the inconsistencies in the evidence of the respondent and her witnesses.

35.  For the reasons set out below, it is unnecessary to set out at length the matters which it was contended amounted to glaring improbabilities in the respondent’s case.  Nor is it necessary to list the inconsistencies relied upon, many of which are subsumed in the points made as to the inherent improbability of the respondent’s case.

36.  It is apparent from the transcript that the respondent’s witnesses were cross-examined at length as to their evidence that the assault had taken place.  Most, if not all, of the matters said to show the inherent improbability of the respondent’s case and the inconsistencies in her and her witnesses’ evidence were either pursued in the oral evidence at trial or in submissions to the Deputy Judge.

37.  In my view, it is clear from the Judgment that the Deputy Judge had the inherent probabilities of the parties’ respective cases and the inconsistencies in the evidence of the respondent and her witnesses firmly in mind when he assessed the evidence on the issue of assault.  He explained why he was left in no doubt that the evidence of the respondent was more persuasive than that of the appellant as follows:

“49. The Defendant and her witnesses were cross examined in some detail by Mr Raymond Tsui on behalf of the Plaintiff and it is fair to say that he was able to identify a number of inconsistencies in the various versions of events. He was also able to point to a number of rather odd omissions from their actions and reactions to the assault. Although the assault was said to have been severe nobody made any report to the police, and nobody tried to prevent the Plaintiff from returning to live at the flat.

50. Although living at home with his mother and with the Plaintiff after he returned on 2 or 3 June, Charlie did not seem to be unduly worried that there might be further violence towards his mother. Having returned home from work on 1 June after being told by Ms Ramos that there had been trouble, and after seeing that her mother had been ‘roughed up’ he nevertheless simply went back to work.

51. Dr Danny Gohel lived close to Belmont Court but did not make any further visits to see about the welfare of his sister or to see that she took his advice and visited a doctor. Dr Gohel’s evidence clearly corroborates an assault having taken place, but somewhat similarly to Charlie, he does not appear to have viewed this as being as serious as is now suggested. He accepted in the course of his cross examination that perhaps more ought to have been done to protect the Defendant in the circumstances, especially after the Plaintiff returned to live in Belmont Court, but of course this ‘low key’ response could well be consistent with a lesser degree of violence having been used than is now suggested by the Defendant. Neither of the Defendant’s other two brothers who were living in Hong Kong came to visit her during this period either despite apparently having been told by Dr Gohel what had happened.

52. With the benefit of hindsight, and in the context of this litigation, these various omissions do seem surprising and to some extent inconsistent with what is said to have happened. However it is a fact of life that people do not always take the course of action that hindsight or litigation suggests would have been wise or prudent. On balance I do not believe that these matters impeach the overall veracity of the evidence of the assault given on behalf of the Defendant but they do suggest to me that the physical damage inflicted on the Defendant may have been ‘played up’ in the evidence.

53. Also puzzling according to the Plaintiff are the various, apparently caring emails sent by the Defendant to the Plaintiff in the weeks and months following the assault. She sent him birthday greetings by email on 25 June, albeit she says this was at his request. Emails in friendly terms were sent also on 17 July, 19 August and 18 September.

54. It seems to me however that these emails have to be understood in the context of a relationship that had endured between the Plaintiff and the Defendant for about 18 years. The Defendant had, to say the least, the right to be angry at what had happened, but the mere fact that she was able to write civilly, even somewhat affectionately does not persuade me that she must be untruthful in her evidence as to the fact of the fact of the assault.

55. The Defendant is able to corroborate the main elements of her evidence with evidence from (in particular) Melbourne Ramos, and Danny Gohel. It is true to say that all of the witnesses called on behalf of the Defendant are family members or either a long term employee (Ms Ramos) or a friend (Dr Kim). The weight to be given to this evidence has to be reduced accordingly and it is fair to say that I believe I believe the Defendant and one or two of the family members who gave evidence may have overstated the severity of the assault somewhat.

56. This possible embellishment, the close relationship of the witnesses to the Defendant, and the minor inconsistencies in the evidence of the witnesses who were able to speak to the events of 1 June do not, in my view, impeach the overall veracity of their evidence or undermine the gist of that evidence so far as the fact of an assault having taken place is concerned however.

57. The severity of the assault is, in fact, difficult to ascertain. Although this was a prolonged attack according to both the Defendant and Ms Ramos, no lasting physical damage was caused, and the Defendant was able to present herself in public when she returned to work. I accept Dr Kim’s evidence however that some residual bruising was still visible on the Defendant some three weeks later and, perhaps as significant in the circumstances of this dispute, that the Defendant was patently anxious and stressed at that time.

58.       In summary therefore, while I believe that the Defendant’s evidence somewhat overplays the physical aspects of what took place, it is decidedly closer to the truth than the evidence given by the Plaintiff that nothing untoward took place.”

38.  I have set out the above extract of the Judgment at length because one of the grounds of appeal advanced by Mr Chan was that the Deputy Judge had failed to discharge his duty of giving reasons for his decision. Reliance was placed on the discussion in Flannery v Halifax Estate Agencies Ltd [2000] 1 WLR 377 at p.382A-C of the extent of the duty of a trial judge to give reasons for his decision.

39.  In my judgment, there is no substance in this ground of appeal.  As Li CJ held in Oriental Daily Publisher Ltd v Commissioner for Television and Entertainment Licensing Authority (1997-98) 1 HKCFAR 279 at pp.290J-291A, what will amount to adequate reasons for a decision will depend on the context in which the decision maker is operating and the circumstances of the case in question.  Here, as can be seen from the extract from the Judgment set out above, the Deputy Judge expressly addressed himself to the “inconsistencies in the various versions of events” described by the respondent and her witnesses identified by the appellant’s counsel, as well as “a number of rather odd omissions from their actions and reactions to the assault”.  It was not necessary for the Deputy Judge to address separately each of the alleged glaring improbabilities and inconsistencies and I am satisfied that the more significant ones were covered in the paragraphs quoted above.

40.  In this context, the fact that the Judgment was handed down within seven weeks of the conclusion of the trial is a matter supporting the inference that the Deputy Judge had the appellant’s submissions as to improbabilities and inconsistencies of evidence in mind when making his findings of fact.

41.  It is also apposite, in my view, to have regard to Lord Hoffmann’s comments[13] which Bokhary PJ quoted in Tam Dick Yuen at §41, namely:

“The need for appellate caution in reversing the trial judge’s evaluation of the facts is based upon much more solid grounds than professional courtesy. It is because specific findings of fact, even by the most meticulous judge, are inherently an incomplete statement of the impression which was made upon him by the primary evidence. His expressed findings are always surrounded by a penumbra of imprecision as to emphasis, relative weight, minor qualification and nuance … of which time and language do not permit exact expression, but which may play an important part in the judge’s overall evaluation.”

42.  The Deputy Judge clearly had in mind the fact that this assault took place in a domestic context, which would provide an explanation for the reluctance of the victim and her family members to involve the police and escalate the matter so as to put in train a criminal investigation against her partner and also the friendly tone of some of the subsequent correspondence.  He was aware that the respondent’s brother had admitted that, in hindsight, he could have done more.  Nevertheless, in relation to the important events regarding the assault, the respondent and Ms Ramos, who was the only eye-witness to the assault other than the parties themselves, gave evidence corroborating each other to the effect that the respondent was beaten by the appellant.  In addition, some residual bruising remained visible when the respondent was examined by Dr Kim.

43.  Mr Chan submitted that the evidence of Ms Ramos as to the extent of the respondent’s injuries was contradicted by the evidence of Mr Mustaq Ahmad, an employee of the appellant’s, who testified as to his recollection that the respondent was not absent from work after the assault as she had alleged.  It is true that the Deputy Judge accepted his recollection as being genuine but, as he observed, “this is of little assistance in determining whether or not the assault took place” (Judgment §40).  It would be understandable that the respondent would not wish the circumstances of the assault to become widely known to other employees of the appellant’s business and, hence, it is not particularly significant that Mr Ahmad gained an impression that nothing had happened.

44.  Further, Mr Chan submitted that Dr Kim’s evidence as to the cause of the residual bruising was based on what the respondent had told her.  That is correct but, since there was no litigation then pending and no reason for her to invent the story of the assault, the fact that the respondent related to Dr Kim that she had been assaulted by the appellant three weeks previously is consistent and corroborative of the respondent’s testimony.  In any event, Dr Kim’s direct evidence of the residual bruising, regardless of her ability to speak to its cause of her own knowledge, is cogent independent evidence supporting the fact of the assault having taken place.

45.  In all the circumstances, I therefore accept the submission of Mr Tsoi that it was plainly open to the Deputy Judge to come to the conclusion that the assault did take place and I am not persuaded that the finding of the Deputy Judge in this regard was plainly wrong.  On the contrary, I consider that his finding was plainly correct.

The duress issue

46.  The Deputy Judge found that during the time between the assault on 1 June 2006 and the execution of the Deed of Gift on 12 June 2006, “it is not suggested that there was further physical violence nor even any direct threat of further physical violence” (Judgment §61).

47.  There was, however, ample evidence that the appellant was seeking to persuade the respondent to give him a ½ share of the flat.  The subject of the ownership of the flat had been discussed by the parties at their first meeting at the appellant’s business during the day on 1 June 2006 and before the assault in the flat that evening.  It continued to form part of their conversations in the days following the assault.  It led to the respondent and the appellant attending at the respondent’s solicitor’s office to execute the Deed of Gift.

48.  The assault of the respondent by the appellant was a significant act of physical violence towards her and, to the extent that it was used to bring pressure on the respondent to do anything, would clearly provide a basis for a finding of illegitimate pressure.

49.  However, it was contended on behalf of the appellant that, since there was no finding by the Deputy Judge as to the extent of both the assault and the injuries, there could be no evidential basis for any duress because of the assault and the injuries and the Deputy Judge could not find that the appellant “took advantage of the violence which had previously occurred” (Judgment §61).

50.  Mr Chan submitted that the only evidence relied on by the Deputy Judge as to illegitimate pressure was the appellant’s returning to live in the flat after the assault.  He further submitted that that fact could not amount to illegitimate pressure as no one seemed to be particularly concerned about it and no one raised any objection to it.  He relied on the evidence of the respondent that the appellant told her “lovingly and sweetly” to go to her lawyer to prepare a deed of gift for half of the flat and that the e-mail correspondence showed no animosity between the parties.

51.  I do not accept these submissions.  This is a case of duress to the person.  This is significant in terms of the nature of the causation required to vitiate a victim’s consent to an agreement sought to be avoided for duress.  As the editors of Chitty on Contracts (31^st Ed.) Vol. 1 at §7-026 note:

“Causation in duress to the person. In Barton v Armstrong the Privy Council, relying on the analogy of fraud, held that it was sufficient that the threat was a reason for the victim entering the contract: not only it did not have to be the predominant reason, but the victim was entitled to relief even if he had not shown that he would not have entered the contract without the threat. It would be up to the party who made the threat to show that it had not influenced the victim in any way.”

It follows therefore that, where a contracting party proves that threats to the person were made for the purpose of inducing the contract, the burden falls on the counterparty who made the threats to prove that the threats were not even “a” reason why the victim entered the contract.

52.  In the present case, the Deputy Judge found that the illegitimate pressure which began with the assault continued after the appellant moved back into the flat.  In light of the physical assault which had taken place there, the respondent’s evidence that she was in fear of the appellant – as evidenced by her state of anxiety three weeks later when she consulted Dr Kim – was perfectly understandable.  The flat was, after all, her home and where she might otherwise have expected to be safe.  The proximity in time of the assault to the appellant’s requests to the respondent to execute the Deed of Gift reasonably give rise to the inference that the respondent would have had the possibility of a further assault in mind if she were to refuse to give the appellant the ½ share of the flat as he was pressing her to do.

53.  Moreover, contrary to the appellant’s contention, the Deputy Judge did not base his finding only on the fact of the appellant returning to live in the flat.  The relevant passages of the Judgment are as follows:

“61. In the present case there was a gap of time of about 10 days between the physical assault and the execution of the Deed of Gift. During that period it is not suggested that there was further physical violence nor even any direct threat of further physical violence. In my judgment however the Plaintiff took advantage of the violence which had previously occurred and continued to exert illegitimate pressure on the Defendant during this period not least by his decision to return to live with her in the flat at Belmont Court.

62.  The Defendant may have had other motivations in executing the Deed of Gift on 12 June 2006, including perhaps some sense of responsibility for the breakdown of her relationship with the Plaintiff, but this aspect was not really explored in the evidence.  It suffices for present purposes however for me to find that there was illegitimate pressure exerted by the Plaintiff which was, at the very least, a contributory factor in the Defendant’s decision to enter into the Deed of Gift.”

(Emphasis added)

54.  Those passages suggest clearly that the Deputy Judge considered that the combination of the fact of the earlier assault together with the presence of the appellant in the respondent’s home and the ongoing threat posed by the presence of a man who had shortly before physically assaulted her constituted illegitimate pressure vitiating the respondent’s consent to the Deed of Gift.

55.  Mr Chan also submitted, relying on passages in Chitty (supra) at §§7-032, 7-033 and 7-036, that where there is a reasonable alternative, a claim of duress may fail.  He submitted that the reasonable alternative for the respondent here was to seek legal advice from a lawyer to ascertain her rights.

56.  I do not accept these submissions either.  Those passages relied on by Mr Chan concern cases of economic duress where the test of causation is a stricter “but for” test.  Although potentially very relevant in that context, the availability of a reasonable alternative, including the availability of independent advice, will not be relevant in the case of duress to the person where the victim need only show that the threat was “a” cause of the contract: see, in this context, Enonchong Duress, Undue Influence and Unconscionable Dealing (2^nd Ed., 2012) at §4-027 citing Antonio v Antonio [2008] EWHC1199 (QB) at §70.

57.  In my judgment, the appellant has not demonstrated that the Deputy Judge’s finding of duress as a cause of the respondent executing the Deed of Gift was plainly wrong.  As with the finding on the assault issue, I consider that this finding of the Deputy Judge was also plainly correct.

The affirmation issue

58.  This was the main issue addressed in Mr Chan’s oral submissions on this appeal.

59.  As Chitty (supra) states at §7-054:

“Contract under duress is voidable. Despite earlier doubts, it now seems clearly established that a contract entered into under duress is voidable and not void; consequently a person who has entered into a contract under duress may either affirm or avoid such contract after the duress has ceased; and if he has voluntarily acted under it with a full knowledge of all the circumstances he may be held bound on the ground of ratification, or if, after escaping from the duress, he takes no steps to set aside the transaction, he may be found to have affirmed it.”

60.  However, in the case of an innocent party having a choice as to whether to accept a repudiation and treat the contract at an end or to affirm the contract, affirmation requires an unequivocal act from which it may be inferred that he intends to go on with the contract regardless of the breach or that he will not exercise his right to treat the contract as repudiated: see Chitty (supra) at §24-003.  It was not disputed that this principle also applies in respect of affirmation of a contract procured by duress.

61.  Mr Chan stressed that the illegitimate pressure exerted by the appellant on the respondent ended, at the latest, at the beginning of September 2006 when the respondent left the appellant’s employment, which was after the appellant had moved out of the flat.  Mr Chan contended that, in the present case, the respondent had thereafter corresponded with the appellant about the flat thereby acknowledging the Deed of Gift in 2007.  In addition, in 2008, there were negotiations between the parties in correspondence regarding the sale of the flat in which the appellant’s ½ share was recognised.

62.  I turn to address the correspondence to which Mr Chan referred in support of his case on the affirmation issue.

63.  Mr Chan drew attention to an e-mail from the respondent to the appellant dated 24 July 2006 in which, a relatively short time after the assault, the respondent commented on the valuation placed on the flat for the purposes of the stamp duty due on the Deed of Gift.  Although not relied on as an act of affirmation, Mr Chan referred to this e-mail as indicating a change in the conduct of the respondent, at a time when she was no longer under any pressure, fear or influence of the appellant.

64.  Next, in an e-mail from the respondent to the appellant dated 22 March 2007, in response to an e-mail from the appellant in which he gave her a choice of buying his share of the flat or selling the flat in the open market, the respondent said this:

“As for Belmont Court, firstly the building is still under renovation for a few more months and secondly nobody (and I mean nobody) knows you took 50% of the flat back last year in June and do not wish for anybody to know and am in no position to buy you out or wish to sell the flat at anytime.

Under the condition you made me sign the flat over, I really do not want to explain this to anybody. This matter is closed and concluded and you have nothing to worry about.”

65.  On the following day, following the appellant’s e-mail saying he would like to conclude the affair of the flat sooner rather than later, the respondent wrote:

“I sincerely request you to drop this matter for now as I mentioned the renovations are not completed. There is nothing to achieve by pushing me on this.

If you haven’t done so you should mention it in your will as I have your share in the apartment so if there is any dispute any time in the future it is in black and white.

As mentioned I do not have the funds to buy you out or wish to sell the flat at this moment, maybe down the road I may consider buying/selling, once I have a clear direction of what I am doing as far as work is concerned. Please I really do not want things to be stirred up now and your understanding would be much appreciated.

Also I really do not want to have to explain this issue and that is most unnecessary at this or any other time which can bring undue upsetting situation to either or both of us.”

66.  While Mr Chan did not submit that the 22 March 2007 e-mail amounted to affirmation, he submitted that the 23 March 2007 did so.  This was, he submitted, 9 months after the assault and over 6 months since she resigned from the appellant’s business.  The respondent addressed the position of the appellant’s succession and made a positive statement as to the effect of the Deed of Gift.  It was Mr Chan’s submission that the respondent could have taken the stance of staying silent in relation to the flat but that she chose not to and thereby elected to affirm the Deed of Gift by acknowledging the appellant’s interest.  This, he submitted, was understandable in the light of her remorse for her affair.

67.  The 2007 correspondence to which Mr Chan took the Court concluded with an e-mail from the respondent to the appellant dated 27 March 2007, in response to an e-mail from the appellant in which he had indicated that he wanted to conclude his affairs in Hong Kong within three months and that there was no reason for the respondent “to use my share”.  The respondent’s reply stated:

“With all due respect I do not feel I ever used your share, I earned it over 23 years – 3 months is not enough time and will get back to you as things progress. That’s the best I can do.

When you are next in HK and want to sort out your stuff, please let me know and if you would like to leave it for later that’s fine too, just let me know. I do not have [any] issues.”

68.  The next items of correspondence relied upon by the appellant in support of his case on affirmation are dated in June and July 2008.  At this time, the appellant was recovering from surgery and had apparently contacted the respondent through her son, Charlie.  In an e-mail dated 10 June 2008, the respondent wrote to the appellant:

“As for the apartment I am in no position to buy you out and I don’t think you are lacking any money to live a very comfortable life.

When I can I will inform you ASAP. On the other hand you can gift it back to me and the matter will be settled. Think of it as Long Service Payment.

I will not and do not want this to be known how 50% of the flat was taken from me under duress 2 years ago … a memory I can’t forget! It is of no use to pursue this … write it off kindly.”

69.  Mr Chan submitted that this was a reconfirmation of the respondent’s acknowledgement that the Deed of Gift had the effect of transferring the ½ share in the flat to the appellant.

70.  The next item of correspondence relied on as demonstrating affirmation was an e-mail dated 19 June 2008 from the respondent to the appellant, in which she wrote:

“Thank you for giving me the time and your patience. Also the extended time of up to 4 years from this date/month to sort out Belmont Court’s 50% share from the earlier 2 years is appreciated.

As I mentioned during our last conversation on Monday which ever we look at this the matter it has to be if not today, tomorrow, or 6 month to 4 years down the road still has to be sorted. So I have for the past few days being getting valuations, procedures and checking with Banks if they would give me a mortgage and what needs to be done to start the process.

I have spoken to Danny in this regard in total Privacy & Confidentiality and it will not go anywhere further from him, I can rest assure you that I only spoke about the apartment and nothing leading up to this situation more than needed. I have kept everything that should remain private between yourself and me private. He was not inquisitive and we stuck to the points only. I do not and he also agrees that the children should not know about this as long as possible as its not in anyones best interest. I hope I can expect the same from you.

Financial Support

I am very grateful that Danny has without even knowing the full details of why I had to sign over 50% of the flat has given me his full support and has agreed to guarantee me so as to facilitate my application to purchase the 50% of Belmont Court.

Bank Valuations

…

Average Price of

Apartment

HK$15,366,666

Divided by 2 Equal Shares 50% Rehman Mir 50% Heena

Mir HK$7,683,333

…

Having done a careful due diligence and what the banks are willing to lend me on mortgage with a guarantor (namely Danny) as banks are right now being tightfisted due to sub-prime problems and their own careful lending I am able to secure and purchase the 50% of your share of the flat for a fair and just sum of HK$7,000,000.

…”

71.  At this point, the matter was transferred to the parties’ solicitors to handle, which they did in a series of letters marked “Subject to Contract”.  By a letter dated 2 July 2008 to the solicitors acting for the appellant, the respondent’s solicitors indicated that the respondent was then currently liaising with the Bank of China (Hong Kong) Limited for a mortgage “to finance the purchase of the one half interest in the Property from your client”.  The letter, however, went on to indicate that there was a technical difficulty in that the bank was concerned about the bankruptcy provisions “regarding a voluntary disposition by way of the Deed of Gift of the one half share of the Property to your client back in 2006”.

72.  The appellant’s solicitors replied on 4 July 2008 querying the relevance of the bankruptcy aspect.  To this, the respondent’s solicitors replied on the same date stating:

“First of all, the Deed of Gift is a voluntary disposition which may be subject to be rescinded by the Official Receiver if the Donor went bankrupt within 5 years of making the gift. …

…

In the circumstances and given the background of the transaction, our client is of the view that your client asserting pressure is not conducive to drawing a conclusion to this matter. Nevertheless, please be assumed that our client is following up this matter with the Bank with a view of obtaining a mortgage to purchase your client’s interest.

…

Our client has taken a very restrained approach to resolving matters between herself and your client. Given the background of the 2006 Deed of Gift, our client could take this matter further if no amicable resolution can be reached between parties. Of course neither party would wish to see that eventuality and we look forward to receiving your client’s positive response to our client’s proposal.”

73.  The correspondence continued until 12 July 2008 when the appellant’s solicitors issued a letter before action in respect of proceedings against the respondent under the Partition Ordinance.

74.  Mr Chan’s case as to affirmation relied principally on two arguments: first, that the respondent was guilty of unreasonable delay by reason of which it should be inferred she was affirming the Deed of Gift; secondly, that the respondent’s participation in negotiations to purchase the appellant’s ½ share in the flat amounted to affirming the Deed of Gift.

75.  As to the first point, Mr Chan submitted, relying on North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd [1979] 1 QB 705, that the long lapse of time during which the respondent took no step to set aside the Deed of Gift amounted to affirmation. He further submitted that the period of time which had elapsed without the respondent commencing legal action amounted to unreasonable delay, which was capable of constituting a defence to the plea of duress: see Enonchong (supra) at §29-025.

76.  I reject those submissions.  The Deputy Judge addressed the lack of steps taken by the respondent to have the Deed of Gift set aside or to protest about the way she was treated in the period after the appellant left Hong Kong in June 2006.  He said:

“65. The lack of any positive action by the [respondent] to have the 2006 Deed set aside cannot amount to an affirmation of it in circumstances in which the [appellant] was taking no action to enforce his ostensible rights under that Deed, but nor does inaction amount to a repudiation of the Deed either.”

77.  I would respectfully agree with the Deputy Judge’s comments.  Mere inaction on the part of a victim of duress cannot necessarily be taken as an unequivocal affirmation of the contract.  Much will depend on the nature of the contract and the obligations that arise to be performed under it.  The context of the present case is important.  The Deed of Gift was a document that the respondent had unwillingly executed in respect of a flat which was her home and in which she continued to reside.  The appellant had moved out and left Hong Kong, their relationship was over and, being in occupation of the flat, there was no immediate urgency for the respondent to do anything to safeguard her position.  This context is important when considering whether the actions and statements of the respondent amounted to an unequivocal act of affirmation of the Deed of Gift.

78.  North Ocean Shipping is a case which involved the extraction, by the exercise of economic duress, of an additional payment under a contract.  The ship owners, who were the victims of the duress, paid the extra payments but did so without protest.  It was held that by their doing so, and also by their delay from November 1974 until July 1975 before making a claim for the return of the extra payments, the owners had so conducted themselves as to affirm the contract.  It is important to recognise that the decision is one on its own facts as to whether the court (in that case Mocatta J) thought that the owners’ conduct would indicate to a reasonable man that they had affirmed the contract. In those circumstances, it is understandable that the lack of action to recover the extra payments could be regarded as conduct amounting to affirmation.  In contrast, in the present case, as I have said, there was nothing for the respondent to do: she was in occupation of the flat and it was only when the appellant sought to take part of it away from her, by his action under the Partition Ordinance, that she needed to take any positive action to defend the claim by seeking the setting aside of the Deed of Gift.

79.  As to the second point, relying on Ormes v Beadel (1860) 2 De G.F. & J. 333, Mr Chan submitted that voluntarily acting under an agreement with full knowledge could amount to affirmation of a contract procured by duress.  Mr Chan contended that the respondent’s participation in the negotiations over the sale of the appellant’s share of the flat to the respondent constituted such voluntary acts on her part amounting to affirmation.

80.  Turning to the specific correspondence relied upon, I do not consider that this demonstrates a clear and unequivocal affirmation by the respondent of the Deed of Gift as a valid transfer of a ½ share in the flat to the appellant.

81.  As a general observation, when considering the issue of affirmation, one is looking to see what the acts and conduct of one party would indicate to a reasonable man and whether those acts and conduct demonstrate a clear and unequivocal affirmation.  Further, a reservation of rights would in general be inconsistent with an unequivocal statement of affirmation.

82.  The correspondence between the parties here must, in my view, be read as a whole and not in isolation and also in the domestic context in which it came into existence.  These were parties who had been in a close personal relationship for some 18 years, which had come to an end in unfortunate circumstances and led to a physical assault.  There were children and other family members involved and it is easy to understand that the respondent would be reluctant to make those circumstances generally known in her family or community.

83.  It is also important to note that there is a distinction between recognising the validity of a contract and its existence. That distinction is, in my judgment, important and is recognised in a passage from the judgment of Mason J (now Sir Anthony Mason NPJ) in Sargent v ASL Developments Ltd (1974) 131 CLR 634 at p. 655 cited by Cheung JA in Hong Jing Co Ltd v Zhuhai Kwok Yuen Investment Co Ltd [2013] 1 HKLRD 441 at §42.10:

“… A person is said to have a right of election when events occur which enable him to exercise alternative and inconsistent rights, i.e. when he has the right to determine an estate or terminate a contract for breach of covenant or contract and the alternative right to insist on the continuation of the estate or the performance of the contract. It matters not whether the right to terminate the contract is conferred by the contract or arises at common law for fundamental breach — in each instance the alternative right to insist on performance creates a right of election.

Essential to the making of an election is communication to the party affected by words or conduct of the choice thereby made and it is accepted that once an election is made it cannot be retracted (R. v. Paulson (91); Tropical Traders Ltd. v. Goonan (92)). No doubt this rule has been adopted in the interests of certainty and because it has been thought to be fair as between the parties that the person affected is entitled to know where he stands and that the person electing should not have the opportunity of changing his election and subjecting his adversary to different obligations.

           A person confronted with a choice between the exercise of alternative and inconsistent rights is not bound to elect at once.  He may keep the question open, so long as he does not affirm the contract or continuance of the estate and so long as the delay does not cause prejudice to the other side.  An election takes place when the conduct of the party is such that it would be justifiable only if an election had been made one way or the other (Tropical Traders Ltd. v. Goonan (93)).  So, words or conduct which do not constitute the exercise of a right conferred by or under a contract and merely involve a recognition of the contract may not amount to an election to affirm the contract.”

(Emphasis added)

84.  The correspondence in March 2007 was written by the respondent without the benefit of legal advice and it is therefore necessary to read the e-mails in the context of the chain of correspondence and also in the light of her personal circumstances.  In the e-mail of 22 March 2007, the respondent specifically refers to the appellant having taken (“you took”) 50% of the flat from her and the “condition” under which he made her “sign the flat over” clearly alludes to the assault and duress.  It is hardly surprising that the respondent stated she did not want to explain this to anybody.  In her e-mail of 23 March 2007, the respondent was expressly asking the appellant to “drop this matter for now” and declining his proposal to buy him out or to sell the flat.  The tenor of that e-mail read in context, in my view, was one of a reservation of rights under which she left the position of the validity of the Deed of Gift open.  The suggestion that the appellant should mention his share of the flat in his will, in that context, does not constitute an unequivocal statement that the share is valid.  The respondent was not voluntarily assuming the effect of the Deed of Gift for any purpose of her own.  Instead, she was making the point that the appellant had the Deed of Gift and he could make of it what he wished.

85.  In my view, the same considerations apply to the e-mails between the parties in 2008.  Here, however, the respondent expressly referred in her e-mail of 10 June 2008 to the fact that she did not want it known that 50% of the flat had been taken from her “under duress”.  In urging the appellant to “write it off kindly”, it seems to me that she was proposing that he treat the Deed of Gift as ineffective.  In this sense, I am satisfied that the respondent’s e-mail should be read as reserving her right to argue that the Deed of Gift was vitiated by duress.

86.  In my view, the subsequent e-mail dated 19 June 2008 and the inter-solicitor correspondence in July 2008 prior to the commencement of the action by the appellant must be read in the light of that context.  In my judgment, in that correspondence, the respondent was making an offer to compromise the dispute between them by buying out the appellant’s share of the flat.  In negotiating that compromise, it seems to me that she and her solicitors were doing so on the basis that this would be “an amicable resolution”, viz. without prejudice to the respondent’s argument that the Deed of Gift was voidable in the event that a compromise could not be reached.  I do not therefore regard that correspondence as supporting a finding of affirmation on the part of the respondent.

87.  The case of Ormes v Beadel (supra) on which Mr Chan relied is, in my view, distinguishable.  There, the innocent party who had been coerced into a contract, participated in an arbitration pursuant to a clause in the contract.  In those circumstances, it is not difficult to see how the victim of the duress would be said to have affirmed the contract since, by participating in the arbitration, he was voluntarily taking advantage of a contractual mechanism for his own purposes and doing so in circumstances which plainly assumed the validity of the underlying contract.  In the present case, there is no equivalent taking advantage of the Deed of Gift by the respondent.

88.  The Deputy Judge considered the same correspondence that has been relied upon in the arguments advanced to us on affirmation.  He held:

“72. … The [appellant] submits that this correspondence through solicitors shows an affirmation of the 2006 Deed by the Defendant. I do not agree. The letter of 4 July also stated that given the background to the 2006 Deed “our client could take this matter further if no amicable resolution can be reached between parties”. What this correspondence demonstrates, it seems to me, is an attempt by the [respondent] to resolve the matter with the [appellant] albeit largely on his terms.”

And he concluded on this issue:

“74. Looking at this chain of correspondence as a whole, as one must, it is clear to me that the Defendant has come nowhere near affirming, in any clear or unequivocal way, the 2006 Deed. Accordingly it remained open to her to refute its validity as she did, at the latest, with the service of her affirmation in these proceedings.”

89.  For the reasons I have set out above, I would respectfully agree with his conclusion.  It follows therefore that the appellant has not demonstrated that the Deputy Judge’s finding of fact on the affirmation issue was plainly wrong, such that this Court should reverse it.

Quantum

90.  The appellant also sought to challenge the amount of damages awarded by the Deputy Judge.  It was contended that, because he did not make any finding as to the assault or injuries sustained and because there was no expert evidence on the injuries or their effect on the respondent, there was no evidential basis to award any damages to her.

91.  I reject that contention.  As stated above, I am satisfied that the Deputy Judge was plainly correct in his finding that the appellant assaulted the respondent.  The Deputy Judge was aware that the extent of the injuries could not be precisely identified (Judgment §§57 and 58) and the absence of expert evidence (Judgment §81).  However, he took a view on the basis of the evidence he had received, and by reference to other cases cited to him, as to the level of damages to award for the assault.  I see no basis for disturbing his award of damages for pain, suffering or loss of amenities or of aggravated damages.

Conclusion

92.  For the above reasons, I would dismiss this appeal and make an order nisi that the appellant pay the respondent the costs of the appeal, to be taxed if not agreed.

Hon Lam JA:

93.  I agree.

Hon McWalters J:

94.  I agree.