XCHRX CHAN YAM CHUEN v. MA WING KWONG and Another

HCA6626/97

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.6626 OF 1997

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D E C I S I O N

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1. This is an appeal from the decision of the Registrar ordering that prayers (a), (c), (d), (e), (f), (g), (h), (i), (j) and (k) of the Statement of Claim be struck out with costs to the 2nd Defendant, although the Registrar did not strike out the Plaintiff's action against the 2nd Defendant.

2. The application to strike out was made on the basis that the Statement of Claim disclosed no reasonable cause of action against the 2nd Defendant, and/or was frivolous and vexatious, or might prejudice or embarrass the fair trial of the action. Accordingly, evidence by way of affirmations from the Plaintiff and the 2nd Defendant, and others, was adduced before the Registrar and was referred to in this appeal.

3. The Plaintiff's case as disclosed in the Statement of Claim and his Affirmations was that in 1995, he had agreed to "lend" his property to the 1st Defendant so that the latter could raise money on it to repay loan sharks as well as the Plaintiff. This is supported by a memorandum exhibited as "CYC-2" said to have been signed by the 1st Defendant, which refers to the Plaintiff "lending" the property to the 1st Defendant.

4. The Plaintiff says on affirmation that he went to a solicitors' office where he was given documents to sign, which he did after he was told by someone from the solicitors' firm that it was for lending the property to the 1st Defendant so that the latter could get a mortgage.

5. Relying on what he was told by the 1st Defendant and the staff of the solicitors' firm, he signed the documents, which turned out to be an Agreement for Sale and Purchase and an Assignment purporting to include a receipt for $350,000 from the 1st Defendant. He was given a cheque which he cashed, but he gave the proceeds to the 1st Defendant. The Plaintiff says however he stayed in possession of the property.

6. The Plaintiff says that he is illiterate and he now asserts non est factum.

7. In 1997, the 2nd Defendant came onto the scene, claiming to be the purchaser of the property from the 1st Defendant. The 2nd Defendant's case is that the 1st Defendant had sold the property to him. He had made 2 visits to the Property: once before signing the Agreement for Sale and Purchase, and the second time between the signing of the Sale and Purchase Agreement on 1 April and completion on 4 April. On both occasions, he was brought there by the 1st Defendant and let in with a key that the 1st Defendant had, and there was no one else in the property.

8. The Plaintiff says that as a retired person, he stayed in the property a great deal of the time and there were no such visits. Further the 1st Defendant never had a key. He says however that he had had a visit from someone asking for the 1st Defendant, and he told the visitor that the 1st Defendant did not live there and the property was not his (the 1st Defendant's). There seems to be a suggestion also that if the 2nd Defendant had visited the property, he (the 2nd Defendant) would have noticed some indicia that the property was occupied by someone other than the 1st Defendant.

9. The Plaintiff's case is based on 2 limbs: (1) the Assignment was void for non est factum, and (2) that the 2nd Defendant did have or ought to have had notice of his interest in the property. In this type of application to strike out before trial, the Court would have to be satisfied that the Plaintiff's case is so inarguable as to be "hopeless " or "spurious".

10. In relation to the first limb, I find that there is enough evidence for an arguable case of non est factum to be put forward. The Plaintiff says he is illiterate. The transaction that he thought he was effecting i.e. a "loan" of his property to the 1st Defendant, was supported by the memorandum from the 1st Defendant ("CYC-2") and by what the Plaintiff says on affirmation he was told by the staff of the solicitors' firm. I take Mr Ling's point that the Plaintiff has not sued the solicitors' firm, but that is a matter that should be taken into consideration by the trial judge when deciding on the credibility of the Plaintiff and the veracity of his case, and cannot affect this decision at this stage.

11. I have also considered Mr Ling's point that a cheque was given to the Plaintiff, which he chose to cash and give to the 1st Defendant. However, the Plaintiff thought that the transaction was one where the property would be lent to the 1st Defendant and returned to him. This was supported by the memorandum and (so the Plaintiff says) the explanation of the staff of the solicitors firm. In my view that is sufficient, at this stage, to show that the document he thought he was signing was of an essentially different substance and kind from the document he was actually signing, i.e. an out and out sale to the 1st Defendant. The incident of the cheque is part and parcel of the transaction, and it will be for the Plaintiff to explain at trial if he can why he could not have simply mortgaged the property himself and lent the money to the 1st Defendant.

12. If the Plaintiff succeeds in his non est factum case, then the assignment is void because it was simply "not his deed", notwithstanding that the 2nd Defendant may have been a bona fide purchaser for value without notice (Saunders v. Anglia Building Society [1971] AC 1004).

13. As for the second limb of the Plaintiff's case, in my judgment, I find there is also enough evidence for the case to go to trial. The particulars of paragraph 13 of the Statement of Claim could have been better pleaded, but the particulars at (a) and (b) go to refute the 2nd Defendant's case that he had visited the property. If that is right and the 2nd Defendant had indeed purchased the property without even visiting it, the Plaintiff might be able to use that as an indication that the purchase was not bona fides or at arms length. The particulars at (c) and (d) themselves do not in my judgment go towards asserting either actual or constructive notice by the 2nd Defendant of the Plaintiff's interest in the property. Mr Bell says that they should have been pleaded in the alternative to (a) and (b), but in any event it seems that some amendment is called for to marry it to the piece of evidence in the Plaintiff's 3rd Affirmation as Mr Bell suggests.

14. In the event, I would set aside the Registrar's Order.

(Following argument on costs)

15. I would order the costs here and below to be to the Plaintiff in any event, with certificate for counsel before the Registrar.

(MARIA YUEN)

Judge of the Court of First Instance
High Court