LEE PAK YAN, the Personal Representative of the Estate of LEE CHI YING, deceased v. SHA LO TUNG DEVELOPMENT CO LTD

HCA 2220/2018

[2019] HKCFI 2159

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2220 OF 2018

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JUDGMENT

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APPLICATIONS

1.  By summon dated 20 December 2018 (“the Summons”), the defendant applies for:

  (1)  the striking out of the Statement of Claim dated 21 September 2018 under Order 18, rule 19 of the Rules of the High Court, Cap 4A, on the ground that it discloses no reasonable cause of action, is scandalous, frivolous and/or vexatious, and/or is otherwise an abuse of the process of the Court; and

  (2)  the vacating of the registration of lis pendens against Lots 498, 499, 501, 515, 519, 526, 536, 1238, 1252, 1253 and 1316 in DD 31 (“the Lots”) registered in the name of the plaintiff.

2.  By summons dated 30 May 2019, the plaintiff applies for leave to amend the Statement of Claim as per the Amended Statement of Claim.  I will consider both summonses together and deal with the striking out application on the facts as pleaded in the proposed Amended Statement of Claim.  

MATERIAL FACTS

3.  The defendant’s predecessor acquired 95% of the private lots inSha Lo Tung (“SLT”) from the villagers of Cheung Uk and Lei Uk in order to facilitate a redevelopment project for a golf course and private residence. At the time of acquisition, the ecological value of SLT was unknown.

4.  In one of the development agreements executed in 1979, the following terms are material for these applications:

5.  In a supplemental agreement executed in January 1980, the following terms are material:

6.  In a Conveyance on Sale dated 12 August 1982, it is recorded that:

“ In consideration of $86,248.80 (DOLLARS EIGHTY SIX THOUSAND TWO HUNDRED AND FORTY EIGHT AND CENTS EIGHTY ONLY) this day paid (the receipt whereof is hereby acknowledged) to LI CHI YING of Sha Lo Tung Tai Po New Territories in the Colony of Hong Kong Gentleman as Vendor hereby assigns unto SHA LO TUNG DEVELOPMENT COMPANY LIMITED whose registered office is situate at No.1 Wyndham Street Victoria in the said Colony of Hong Kong as Purchase ALL THAT one equal undivided moiety or half part or share of and in ALL THOSE pieces or parcels of ground registered and known as LOTS NOS. 498 (Area: 0.06 acre), 499 (Area: 0.03 acre), 501 (Area: 0.02 acre), 1252 (Area: 0.04 acre), 1253 (Area: 0.01 acre), 526 (Area: 0.05 acre), 536 (Area: 0.04 acre) and 1238 (Area: 0.08 acre) all in DEMARCATION DISTRICT NO.31 in the New Territories of the Colony for the residue of the term of years created by the Crown Lease thereof subject to the incumbrances mentioned in the Schedule hereto. IT IS HEREBY CERTIFIED that the transaction hereby effected does not form part of a larger transaction or of a series of transactions in respect of which the amount of value or the aggregate amount or value of the consideration exceeds HK$500,000.” (emphasis added)

7.  On the same date, for a consideration of HK$400,000, Mr Li Chi Ying also assigned Lots Nos 515 (Area: 0.02 acre — House), 519 (Area: 0.01 acre — House) and 1316 (Area: 700 sq ft — House) to the defendant.

8.  By an agreement dated 20 February 1989, it is recorded that:

9.  In a supplemental agreement executed in July 1990, it is recorded that:

10.  In the minutes of a meeting dated 11 May 2001 where both Mr Cheung Tin Fook and Mr Lee Wan Choi attended, it is recorded that:

“ 10. Ms Heidi Chan further stated that about 1.97 ha of land had been zoned ‘Village Type Development’ (‘V’) on the approved Sha Lo Tung Development Permission Area (DPA) Plan No. DPA/NE-SLT/2 to demarcate the existing villages and areas suitable for village expansion. District Lands Officer/‌Tai Po (DLO/TP) had advised that there was no outstanding Small House application from villagers of Sha Lo Tung in Sha Lo Tung. Furthermore, DLO/TP was of the view that the proposal could not be implemented under the Small House Policy as Small House Development was not permitted the boundaries of the village ‘environs’ and only indigenous villagers could apply for Small House grant and lots not owned by indigenous villagers would not be considered.

…

17. In response to Members’ enquiries, Messrs. Phill Black and Cheung Tin Fook made the following main points:

…

(c) according to the agreement between the villagers and the Sha Lo Tung Development Company Ltd, in 1979, the latterwas under an obligation to provide village housing for the indigenous villagers if private residential developments were allowed to take place within the valley;

…

25. After further deliberation, the Board decided to reject the application on review and the reasons were:

(a) The proposed development was not in line with the planning intention of the ‘Unspecified Use’ area which wasto conserve the rural characteristics, the existing woodlands,the existing natural features and the amenity of the area.

…” (emphasis added)

11.  In a further supplemental agreement dated 16 November 2004 (“the 2004 Agreement”), it is recorded that:

「	《發展沙螺洞補充協議書》
	本補充協議書於2004年11月16日由以下雙方簽訂 :-
	(1) 甲方：	新界大埔區沙螺洞村張、李兩屋村
		(i) 張屋村村長暨代表：	張天福先生
			張華興先生
		(ii) 李屋村村長暨代表：	李運財先生
	(2) 乙方：	沙螺洞發展有限公司
		授權代表：方標先生
	……
	(七)	甲方村民保証已出售予乙方的屋、農地，要負責交吉。未正式轉名予乙方的屋、農地，要協助乙方完成相關轉名手續。」
	(emphasis added)

12.  In another supplemental agreement dated 29 November 2004, it is recorded that:

「	《發展沙螺洞補充協議書》

關於我倆雙方於2004年11月16日簽訂之《發展沙螺洞補充協議書》，為了消除部份村民的疑慮，我司現僅補充說明如下 :-

“倘若我司未能履行上述補充協議書條款規定的相關責任，則該補充協議書作廢，而我倆雙方於1990年11月4日簽訂之《原協議書》仍然有效。”

    恐口無憑，立此為據。」

13.  The agreement dated 4 November 1990 (“the 1990 Agreement”) contains the following material terms:

14.  In 2018, the defendant made an offer to the representatives of Cheung Uk and Lei Uk but the offer was not accepted (“the Offer”).  The Offer contains the following relevant clauses:

「

《沙螺洞新協議書》

  ……

  事由：

  ……

  (2) 無奈經過數十載的努力，基於種種不同的原因，雙方最初的計劃 (包括其後修訂的計劃) 均無法獲得政府批准，以致雙方過往簽訂的相關協議中基於計劃能成功獲批准才會落實執行的條款變得不合時宜及無效。

  ……

  [條款：]

  (六)   甲方保證村民已出售予乙方的屋、農地，要負責交吉。未正式轉名予乙方的屋、農地，要協助乙方完成相關轉名手續。」

THE AMENDED STATEMENT OF CLAIM

15.  In the plaintiff’s Amended Statement of Claim, the following pleas in §§6, 16, 22, 36, 46, 47 and 52 are material to the striking out application:

“ 6. To facilitate the Defendant to make application to the Government for the Sha Lo Tung Development Plan, the villagers agreed with the Defendant to assign their land and houses to the Defendant. There was a mutual understanding or common knowledge that the Defendant would hold the properties on trust for the villagers and the Defendant would build new house for the villagers.

16. It was an implied term of the Original Agreement (1979) that:

(1) The Sha Lo Tung Development Plan included the rehousingof the villagers within Sha Lo Tung.

(2) The villagers and the Defendant were to make their respectivebest effort in applying to the Government for the approval of the Sha Lo Tung Development Plan and to build new houses at Sha Lo Tung to rehouse the eligible villagers andthe Defendant was to make its best and continuous effort toassist in the application and negotiate with the Government on the villagers’ behalf.

(3) Kai Shun would hold the properties on trust for the villagers.

Particulars

(i) Under the Small House Policy, a small house can be granted by way of Land Grant, Exchange of Land,and Free Building License. After the assignment of the land to the Defendant and the proposed Sha Lo Tung Development Plan, the Plaintiff would not be in a position to apply for a small house.

(ii) Paragraphs 6, 11, 13 and 14 of this Amended Statement of Claim are repeated. It was the intention of the parties that the Defendant old arrange for and construct new small houses for the Plaintiff and the villagers.

(iii) Regardless of the success of the Sha Lo Tung Development Plan, the Plaintiff and the villagers would not be in a position to apply for a small house.

(iv) If the Plaintiff holds land, he may be able to apply for a free building license under the Small House Policy.

22. Further, by reason of the fact that the Deceased was to pay back the Defendant the said HK$400,000 in the form of partial construction cost of two new houses, the Defendant had actual,imputed or constructive knowledge of the said agreement, mutual understanding or common knowledge that the Defendant holds the half share of the House Lots and half share of the five houses on the House Lots on trust for the Deceased.

36. It was an implied term that:

(1) The construction of 160 small houses for the villagers of Cheung Uk and Lei Uk in an area designated by villagers approved by the Government was part and parcel of the Sha Lo Tung Development Plan.

(2) The Defendant and the villagers were to make their best and continuous effort in the application to the Government to build houses for the eligible villagers affected by the Sha Lo Tung Development Plan. Further, the Defendant will include the building of new houses for the villagers when negotiating with the Government.

(3) The Defendant would hold the properties on trust for the Villages.

Particulars

(i) Paragraphs 16(3)(i), (iii) and (iv) of this Amended Statement of Claim are repeated.

(ii) Paragraphs 30, 33 and 35 of this Amended Statement of Claim are repeated. It was the intention of the parties that Defendant would arrange for and constructnew small houses for the Plaintiff and the villagers.

46. The Defendant have [sic] announced that it would accept the Land Exchange. Despite the Defendant having retained approximately 60 hectares of private land in Sha Lo Tung under the Land Exchange, the Defendant has failed to include and/or negotiate any plan to build houses for the affected villagers.

47. In accepting the Land Exchange, the conduct of the Defendant leads a reasonable man to believe that the Defendant: 1) does not intend to fulfill its obligation under the 1990 Agreement to include the construct of houses for the villagers/the Deceased in the Development Plan reached with the Government; 2) does not intend to fulfill its obligation to build houses for the villagers/ Deceased, thereby constituting a breach of contract.

52. In the premises, the Plaintiff is entitled to a vendor’s lien on the half share of the House Lots and half share of the five houses on the said House Lots. The said lien shall be insofar be for the Defendant’s failure to build two new houses for the Plaintiff as set out in paragraphs 30 – 36 (and damages arising as such) in this Amended Statement of Claim.” (emphasis added)

16.  The plaintiff’s primary relief is set out in paragraph (a) of its Prayer which reads:

“ An order by way of specific performance of the 1990 agreement to use its best and continuous effort to assist in the application to the Government to build houses at Sha Lo Tungand to include the building of the two new houses for the Plaintiff when negotiating the Land Exchange with the Government.” (emphasis added)

17.  The Plaintiff also seeks the following relief:

“ (d) A declaration that the Defendant holds the half share House Lots and half share of the 5 houses on the said House Lots on trust for the Deceased.

(e)   In the alternative to (d), a declaration that the Plaintiff is entitled to a lien on the half share of the House Lots and halfshare of the five houses on the said House Lots.”

APPLICABLE LEGAL PRINCIPLES

18.  The legal principles in relation to striking out and amendment of pleadings are well established and are summarised as follows:

  (1)  It is only in plain and obvious cases that the Court should exercise its summary powers of striking out.

  (2)  For the “no reasonable cause of action” limb, the Court is obliged to look at the pleadings without extrinsic evidence anddecide whether, on the assumption that the facts as pleaded are true, the pleadings discloses a cause of action or defence.

  (3)  For the “frivolous or vexatious” limb, the object of the rule is to stop cases which ought not to be launched — cases which are obviously frivolous or vexatious, or obviously unsustainable.  The Court may admit affidavit evidence to determine whether proceedings are frivolous or vexatious.

  (4)  Where an application to amend a statement of claim which was sought to be struck out had been made, it would be more expedient and convenient to deal with the striking-out application on the facts as pleaded in the proposed amended statement of claim.

(See Hong Kong Civil Procedure 2019 at §§18/19/3, 18/19/4, 18/19/7.)

19.  Insofar as vacating of the registration of lis pendens is concerned, the only lis pendens which are registrable are those which affect land.  (See Thian’s Plastics Industrial Co Ltd & others (No 2) v Tin’s Chemical Industrial Co Ltd & another [1971] HKLR 249 at p 252 per Briggs J (as he then was) and at p 256 per Huggins J (as he then was).

20.  Section 19 of the Land Registration Ordinance, Cap 128 provides that:

“ The court or judge before whom any property sought to be bound isin litigation, may on the determination of the lis pendens, or duringthe pendency thereof, where the said court or judge is satisfied that the litigation is not prosecuted bona fide, or for other good cause shown, make an order for the vacating of the registration in the Land Registry of such lis pendens without the consent of the party who registered it, and may direct the party on whose behalf the registration was made to pay all the costs and expenses occasioned by the registration or the vacating thereof, including the costs of the application to vacate, or may make such other order as to such costs or any of them as to the said court or judge may seem just.”

ANALYSIS

21.  It is an express term of the development agreements including the 1990 Agreement that the building of new village houses for villagers is subject to an express condition that the Government’s approval had to be obtained.  Clause 2(1) and 2(12) of the 1990 Agreement specifically provide that the defendant shall, after Government approval was obtained,build 160 new village houses at locations designated by the Government for the villagers of Cheung Uk and Lei Uk, and that the defendant shall commence construction of new village houses within one month of the Government approving the entire development proposal and all relevant plans, legal documents and occupation permit.

22.  It is a fact that the Government rejected the defendant’s redevelopment proposals over the last few decades, particularly after the ecological value of SLT was discovered.  In November 2000,the defendant made a planning application under section 16 of the Town Planning Ordinance, Cap 131, on behalf of the villagers of Cheung Uk and Lei Uk to the Town Planning Board for approval for comprehensive village housing development in SLT.  However, the application was rejected due to, inter alia, ecological concerns.

23.  Over the years from 1980s to 2010s, the defendant submitted various development proposals in respect of SLT to the Government. No substantial progress had been made.

24.  It was not until January 2017 when the Government announced that it is actively considering the long-term conservation of SLT through a non–in-situ land exchange for the private land with high ecological value therein in return for the Shuen Wan restored landfill, and that the Chief Executive in Council had given approval in principle to the non–in‑situ land exchange.

25.  This development is significant because it makes the building of small houses in SLT out of the question.

26.  It is also against such development that the Offer was made.  In the Offer, the defendant made various proposals to compensate the villagers of Cheung Uk and Lei Uk.

27.  Ms Wong SC for the defendant submitted that following the announcement by the Government of the non–in-situ land exchange plan on 15 June 2017, which would require the defendant to surrender approximately 25 hectares of private land in SLT in exchange for the Government granting a piece of land of approximately 50 hectares in Shuen Wan restored landfill, the plaintiff, amongst others, began to carry out trespassing activities in relation to other Lot Nos 513, 1315 and 1320 in DD No 31 owned by the defendant. Accordingly, the defendant applied for an injunction against the plaintiff and other trespassers.

28.  On 25 August 2017, Mr Justice Lok granted an interim injunction against the plaintiff and other trespassers.  The defendants in those proceedings including the plaintiff herein raised a number of defences including (1) easement of necessity, (2) public right of way by dedication and (3) easement by prescription under the doctrine of lost modern grant. Those claims were dismissed by Recorder Whitehead SC on 16 January 2018 and the interim injunction granted by Mr Justice Lok was continued until further order of the court.

29.  Ms Wong SC for the defendant submitted that there was a second round of trespassing and harassing activities starting from November 2018.  On 17 December 2018, the defendant, Green Power Limited and a volunteer representing other workers and volunteers applied for injunctive relief from the court to allow conservation works to be undertaken by green groups at SLT and to protect the workers and volunteers of green groups, who have been victims of serious harassment.  Mr Justice Lok granted an injunction order against several villagers including the plaintiff,restraining them from carrying out trespassing and harassing acts.

30.  Ms Wong SC for the defendant further submitted that the motive of the plaintiff in commencing the present proceedings viewed in context of the trespassing and harassing activities is highly suspicious. It was submitted that the improper motive on the part of the plaintiff in bringing these proceedings is to obstruct the defendant’s negotiations with the Government with the aim to exert undue pressure on the defendant.

31.  However, I am of the view that it is not necessary for this Court to speculate on the motives of the plaintiff in commencing these proceedings.  The key issue is whether the pleas in the present action are properly constituted.  If they are, it does not matter what are the motives behind the commencement of the present action.  If they are not, then this Court should strike them out. 

32.  For sake of convenience, in the Statement of Claim and the draft Amended Statement of Claim, the plaintiff defined “House Lots” to include all the 11 Lots.  However, out of the 11 Lots, 8 of them (Lot Nos 498, 499, 501, 526, 536, 1238, 1252, 1253 in DD 31) are agricultural lots (“Agricultural Lots”) and 3 (Lot Nos 515, 519 and 1316 in DD 31) are house lots (“House Lots”).

33.  Half shares in the Agricultural Lots and House Lots were conveyed by Mr Lee Chi Ying to the defendant by separate conveyances dated 12 August 1982.

Implied trust

34.  I am of the firm view that the plaintiff’s implied trust claim must be struck out as it has no legal basis.  First, it is clear that by reason of the various development agreements, and in particular, the 1990 Agreement,the villagers including the plaintiff had conveyed the title of their land to the defendant absolutely.  I find the plaintiff’s plea that “[t]here was a mutual understanding or common knowledge that defendant would hold the properties on trust for the villagers” unsustainable.

35.  First, Ms Wong SC for the defendant submitted that the reference to “properties” is equivocal.  There is no plea as to what specific “properties” are said to be subjected to the implied trust.  As such, the subject matter of the trust is uncertain and vague.  I am of the view that there is considerable force in Ms Wong SC’s submissions on this point.

36.  If it refers to half of existing lots and houses on the lots, then those properties were clearly conveyed to the defendant.  The Conveyances on Sales dated 12 August 1982 makes it clear that for consideration stated therein title of the subject lots were passed to the defendant.  This can also be gleaned from:

  (1)  the agreement dated 20 February 1989 which, inter alia, reads:

「吾等對於上述交吉費絕對滿意，並同意無條件地放棄上述屋地之一切權益及將該等權益交與沙螺洞發展有限公司。」

  (2)  the agreement executed in July 1990 which, inter alia, reads:

「吾等重申吾等對於上述交吉費絕對滿意，吾等得無條件隨時將該屋交吉與新業主或新業主所指定之人仕，又吾等同時保証當新業主或新業主所指定之人仕派人接收處理該屋時，吾等不得再要求任何賠償或有任何異議。」

37.  The pleaded implied term that the “properties being held on trust” goes directly against the express term of the development agreements that both the legal and beneficial titles were passed to the defendant.

38.  If it refers to future houses to be built in areas designated by the Government, the same cannot be subjected to any trust (see Clause 2(1)of the 1990 Agreement).  It is established law that no trust can be asserted over future, uncertain property.

39.  Secondly, I am of the view that the intention of the parties then must have been to convey the absolute title, both legal and equitable, to the defendant without any trust.  If it were otherwise, the defendant would not have the relevant locus standi as the absolute owner of the relevant lots to apply to the Government for redevelopment.  It is against common and commercial sense that after the conveyancing of the lots to the defendant,an implied trust would nevertheless arise so as to pass or reserve an equitable interest back to the villagers.  I find this unthinkable given that the conveyance was to facilitate the application for redevelopment of SLT.

40.  Thirdly, I agree that the plea that the plaintiff would not be in a position to apply for a small house after the assignment of the relevant lots to the defendant is irrelevant.  That fact itself cannot support the creation of an implied trust.

41.  Fourthly, Ms Wong SC for the defendant rightly referred this Court to section 17 of the Conveyancing and Property Ordinance, Cap 219 which specifically provides that:

“ Unless the contrary intention is expressed in the assignment, an assignment shall operate to assign all the estate, right and interest in the land assigned which the assignor has in that land and which he has power to assign.”

42.  For the above reasons, I am of the view that no implied trust could have arisen from the pleaded facts of the present case.

Vendor’s lien

43.  I am also of the view that the plaintiff’s plea of a vendor’s lien is bad.  The plaintiff’s whole case of a vendor’s lien is premised upon part of the consideration for the assignment of the relevant lots is the promise tobuild small houses in areas designated by the Government, and the defendantfailed to deliver that specific part of the consideration.  (See Sihombing & Wilkinson’s Hong Kong Conveyancing Vol 1 at XII [166].)

44.  This plea is bad because first, the consideration is stated clearly in the various development agreements including the 1990 Agreement and the Conveyances on Sales.  The consideration does not include a future or contingent event provided for in the relevant agreements.  Ms Wong SC for the defendant submitted that a conditional term cannot be part of the consideration as the same lacks the relevant certainty to qualify as an essential term of a contract.

45.  Further, stamp duties were paid according to the specific considerations as stated in the various development agreements.  The various clauses in the agreements as highlighted above which make it clear that the vendors were satisfied with the consideration they received.

46.  Ms Wong SC for the defendant also referred this Court to section 18(1) of the Conveyancing and Property Ordinance, Cap 219 which provides that:

“ A receipt for consideration in the body of an instrument shall be a sufficient discharge to the person paying the consideration and,in favour of any other person acting on the faith of the receipt,shall be sufficient evidence of payment.”

47.  Mr Wong for the plaintiff, however, submitted that a lien is not excluded by the fact that the purchase-deed contains a receipt for the purchase-money.  I agree.  The learned editors of Snell’s Equity (33^rd ed) at §44-007 states:

“ As soon as a binding contract of sale is made, the vendor has a lien on the property for the purchase-money and a right to retain the property until the money is paid. The lien may also secure the performance of the other obligations of the purchaser, e.g. an obligation on the sale of a business to collect the outstanding debtsand account for them to the vendor. Even if the vendor executes anabsolute conveyance and parts with possession both of the propertyand of the title deeds to the purchaser, they still have an equitable lien on the property in respect of any part of the purchase-money which may not have been paid; and the lien is not excluded by the fact that the purchase-deed contains a receipt for the purchase-money.” (emphasis added)

48.  Mr Wong for the plaintiff also referred this Court to Professor Sarah Worthington’s article ‘Equitable Liens in Commercial Transactions’ (1994) 53 CLJ 263 at 267 where the learned author stated:

“ From what has been said, it is apparent the equitable liens willexist only when one party ‘ought’ to deal with the sale property with due regard for the interests of the other party. If the parties themselves indicate that dealings with the sale property are not restricted in this way, then no lien will arise. The vendor’s lien is more likely to be excluded than the purchaser’s. Very rarely will the purchaser perform, paying the price while at the same time indicating that the payment is not conditional on receiving the sale property. Quite often, though, the vendor will transfer sale property and it cannot be said that the purchaser ‘ought’ either to pay the price or return the property. This may happen when the consideration for the transfer is not payment of the price but merely the promise to act; or when it is the vendor’s intention to rely upon alternative security.” (emphasis added)

49.  Mr Wong for the plaintiff relied on the last sentence to advance the submission that the consideration for the various development agreements including the 1990 Agreement consists of (a) the contractual sums as stated therein and (b) the promise to build small houses for the villagers in areas to be designated by the Government.

50.  However, as analysed above, the consideration is not divided into two parts as suggested by the plaintiff.  The sale of the relevant lots was absolute and not subject to any conditions.

51.  Mr Wong for the plaintiff referred this Court to the case of Low Tuck Kwong & others v Dynasty Line Ltd (unrep., HCA 9505/1999, 6 April 2001) where Waung J at §8 said:

“ Equitable lien ‘is an equitable charge arising by operation of law and attaching to property belonging to another until certain specific claims have been satisfied. These claims are those which equity considers the other party is in conscience bound to perform. In the context of a contract of sale, for example, a vendor’s lien over the sale property secures payment by the purchaser of the price‌…. Such liens are founded on a desire to do justice between the vendor and the purchaser.’ (Worthington, Proprietary Interests in Commercial Transactions, 1996, page 223). In the Chapters of the two leading textbooks on the subject of equitable lien:

(a) Chapter 9 on Equitable Security Interests of Worthington; and

(b) Chapter 39 on Equitable Liens — A Search for a Unifying Principle (Palmer & McKendrick on Interests in Goods, 2^nd Edition, 1998)

suggestion was made that the two requirements of equitable lien are specific enforceability and identification of property.”

  ( emphasis added)

52.  It is not at all clear as to what the plaintiff says about specific enforceability and identification of property.  It appears to this Court that as far as future properties are concerned, they are not specifically enforceable and cannot be easily identified.  As far as the relevant and specific lots are concerned, they were absolutely conveyed.

53.  Importantly, I am of the view that a vendor’s lien cannot arise if the contract, expressly or in substance, denies this.  The Conveyances on Sales and the subsequent agreements in 1989 and 1990 have ensured that both legal and beneficial interests have already been passed to the defendant due to the satisfaction of full payment of the purchase price.  If it were otherwise, there would be no basis for the defendant, qua absolute owner of the relevant lots, to apply for development from the Government. Accordingly, I am of the view that there is no scope for the operation of a vendor’s lien or an equitable lien on the pleaded facts of the present case.

54.  Further, Ms Wong SC for the defendant submitted that the plaintiff’s plea of a vendor lien stems from the defendant’s alleged failure tobuild two new houses for the plaintiff.  (See §52 of the Amended Statementof Claim.)  However, even on the plaintiff’s pleaded case, the defendant was only obliged to construct new village or small houses for the villagers after approval was obtained from the Government and at locations designated by the Government (see §§30 and 35 of the Amended Statementof Claim).  Since governmental approval was never granted, it is indisputablethat the defendant’s obligation to construct new village or small houses hadnot accrued or materialised yet.  It is therefore unsustainable for the plaintiff to allege that the defendant had “failed to build two new houses”.  I agree.

55.  For all the above reasons, I am of the view that the plaintiff’s plea in relation to a vendor’s lien is defective and should be struck out.

Registration of lis pendens

56.  I agree that upon the striking out of the implied trust claim andthe vendor’s lien claim, it follows that there is no lis pendens that could affect the interests of the relevant lots.  As such, the registration of lis pendens against the relevant lots should be vacated.

Implied contractual terms

57.  The plaintiff’s pleaded case on breach of the 1990 Agreement is premised upon the breach of an implied term in the 1990 Agreement that “the Defendant and the villagers were to make their best and continuous effort in the application to the Government to build houses for the eligible villagers affected by the Sha Lo Tung Development Plan.  Further, the Defendant will include the building of new houses for the villagers when negotiating with the Government.” (“the Implied Terms”).

58.  First, Ms Wong SC for the defendant submitted that the Implied Terms plea is defective because as a matter of pleading, the plaintiff is in flagrant disregard of the elementary rules of pleading.  It gave no particulars whatsoever of the material facts upon which the Implied Terms are said to arise.  There is only a bare assertion that the Implied Terms arose.  It is unclear as to whether the Implied Terms are implied by necessity or by law or otherwise.  Ms Wong SC submitted that despite complaints from the defendant about the want of particulars to support the plea of Implied Terms, the plaintiff has not sought to propose amendments to include particulars of the material facts upon which the Implied Terms are said to arise.  Hence, it is clear that the Implied Terms are spurious and untenable, to an extent that the plaintiff could not plead any material facts tosubstantiate the same.  I am of the view that Ms Wong SC for the defendant has made a valid complaint.  There are indeed no pleaded material facts to support the Implied Terms.

59.  As a matter of law, where an implied contractual term is pleaded, particulars should be given of the material facts upon which the implied termis said to arise.  (See Hong Kong Civil Procedure 2019 Vol 1 at §18/12/16A.)

60.  In Willy Fine Ltd v Janyet Investments Ltd (unrep., HCA 4430/2001,6 January 2003) Chu J (as she then was) at §21 said:

“ The present proposed amendment is however objectionable in that it contains no particulars of or material facts upon which the implied term is said to rise. It is in fact unclear from the proposed amendment whether the term is implied by business efficacy or operation of law or otherwise. In Wharf Properties Limited & Anorv. Eric Cumine Associates Architects Engineers & Surveyors (a firm) [1989] 1 HKLR 556, 565E, the Court of Appeal, referring to Bruce v. Odham Press Limited [1936] 1 All ER 287, 294, pointed out that a complete cause of action is only pleaded where there is a statement in a summary form of the material facts upon which the party pleading relies for his claim. The proposed amendment is therefore incomplete. If leave to amend is granted, it will only serve to delay the proceedings because there is bound to be requestfor further and better particulars of the plea and probably application for striking out. Considering that the case has been set down for trial in July 2003, the proposed amendment, presently formulated,should be refused. The plaintiff’s application to amend the Statement of Claim is therefore dismissed with costs.”

61.  A fortiori, in the present case, there are no particulars in the proposed Amended Statement of Claim to justify the plea of the Implied Terms.

62.  Secondly, I also agree with Ms Wong SC’s submission that there is no factual or legal basis (and none is put forward) to argue that it is so obvious that it goes without saying or necessary for the business efficacy of the 1990 Agreement for the defendant to be subject to a vague and uncertain obligation which subsists for an uncertain and indefinite period to make a “best and continuous effort” in applying to the Governmentto build houses for eligible villagers and/or that the defendant will include thebuilding of new houses for villagers when negotiating with the Government.

63.  In response to the question posted by this Court as to the period for which the defendant should make the best and continuous effort as pleaded,Mr Wong for the plaintiff submitted that it should be about two generations.  First, it is nowadays unclear how many years constitute a generation. Secondly, it is equally unclear as to why the proper period is two generations. These concerns demonstrate the inherent uncertainty of the terms to be implied.  The fact is that the defendant had made various attempts from 1980s to 2017 and its applications have not been successful.

64.  Mr Wong for the plaintiff submitted that in the event governmental approval cannot be obtained, the outstanding purpose of the 1990 Agreement would fail and the defendant could not deliver the promised consideration.  Remedies should then be awarded to the plaintiff. It was submitted that this is more consistent with common or commercial sense.  I express no view on the case of a failure of purpose of the 1990 Agreement. However, this is not the way the plaintiff pleads his case, whether in the proposed amendments or in the original version.

65.  Finally, I observe from recital 2 of the 2004 Agreement that the village representative duly acknowledged that repeated efforts were made to submit redevelopment proposals for SLT, but the proposals had been repeatedly rejected. 

66.  Accordingly, I am of the view that the Implied Terms plea is also bad and should be struck out.

DISPOSITION

67.  For all the reasons stated above, I make the following orders:

  (1)  The Statement of Claim filed on 21 September 2018 be struck out and the present action be dismissed;

  (2)  The registration of the Writ of Summons of these proceedings as a lis pendens against the properties as set out in Schedule 1 of the Summons dated 20 December 2018 in the Land Registry be vacated;

  (3)  The Summons dated 30 May 2019 be dismissed.

68.  I also make a costs order nisi that:

  (1)  Costs of and incidental to the Summons dated 20 December 2018 and costs of this action to be paid by the plaintiff to the defendant, with a certificate for two counsel, on a party to party basis, to be taxed if not agreed.

  (2)  Costs of and incidental to the Summons dated 30 May 2019 to be paid by the plaintiff to the defendant, with a certificate for two counsel, on a party to party basis, to be taxed if not agreed.

69.  The above costs order nisi will be made absolute unless application is taken out to vary the same within 14 days from the date hereof.

70.  Finally, it remains for me to thank Mr Wong and Mr Chan for the plaintiff and Ms Wong SC and Ms Yuen for the defendant for their helpful assistance rendered to this Court.