Lau Mo Choi v. Lau Muk Fat (As the Manager of Lau Shau Wo Tso‘劉壽和祖’)

HCA 1263/2012

[2019] HKCFI 380

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1263 OF 2012

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J U D G M E N T

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A. Introduction

1.The defendant is the manager of the Lau Shau Wo Tso (the “Tso”).  He has been appointed pursuant to section 15 of the New Territories Ordinance, Cap 97.

2.The Tso consists of two branches.  The plaintiff is a member of what has been referred to in the pleadings as Branch A.  The defendant is a member of Branch B.

3.The Tso was the registered owner of various pieces of land in the New Territories (the “Tso’s Lots”).

4.In 1994 to 1995, the Tso entered into an agreement (the “Development Agreement”) with a land developer, Mr Wong Kwok Wa (“WKW”), whereby the Tso’s Lots were assigned to WKW and later various individuals.  Applications were made for the building of houses on the Tso’s Lots, and houses were indeed built thereon.

5.Various litigation relating to the development of the Tso’s Lots arose.

6.In one such litigation (action number HCMP 1760/2009 heard before Deputy High Court Judge L Chan, as he then was, as shown in his Decision dated 13 August 2010) undertakings were given by various parties to take all steps to vest the title and interests of 6 houses that had been built out of the Development Agreement to the Tso or to whom the Tso may direct.  Subsequently, these 6 houses were assigned to the Tso with the defendant as manager (the “6 Houses”).

7.The present proceedings concern an alleged agreement or agreements as to the division of the 6 Houses among the two branches or members of the Tso.

8.A summary of the description of the 6 Houses is as follows: –

(1) Lot No 281 in DD 258, Sai Kung, New Territories (also known as No 285 Wong Chuk Wan, Sai Kung, New Territories) defined as House 1.

(2) Lot No 283 in DD 258, Sai Kung, New Territories (also known as No 282 Wong Chuk Wan, Sai Kung, New Territories) defined as House 2.

(3) Lot No 284 in DD 258, Sai Kung, New Territories (also known as No 280 Wong Chuk Wan, Sai Kung, New Territories) defined as House 3.

(4) Lot No 285 in DD 258, Sai Kung, New Territories (also known as No 281 Wong Chuk Wan, Sai Kung, New Territories) defined as House 4.

(5) Lot No 286 in DD 258, Sai Kung, New Territories (also known as No 279 Wong Chuk Wan, Sai Kung, New Territories) defined as House 5.

(6) Lot No 85 in DD 258, Sai Kung, New Territories (also known as No 271 Wong Chuk Wan, Sai Kung, New Territories) defined as House 6.

B. Main Issues at trial

B1.  The alleged 1994 Agreement

9.Whether there existed the alleged “1994 Agreement” (in which the plaintiff, Lau Ping (“Ping”), being the brother of the plaintiff, and the defendant agreed that the houses to be built on the Tso’s Lots would be divided and shared amongst the members by way of transfer?

10.The plaintiff’s case is that in or about 1994, a series of discussions took place between the plaintiff, the defendant and Ping about developing the Tso’s Lots.

11.As a result, it was unanimously agreed that:

(1) The Tso’s Lots were to be developed by building residential houses thereon;

(2) WKW was to be engaged to build the houses;

(3) After building the houses, there would be a division or sharing of the land and houses by way of transfer or conveyance to the members and/or beneficiaries of the Tso;

(4) The division or sharing would be 50% per Branch of the Tso.

B2.  The alleged 2010 Agreement

12.The plaintiff’s case is that, on 6 August 2010, there was an oral agreement (the “2010 Agreement”) between the plaintiff acting for and on behalf of the members/beneficiaries of Branch A and the defendant acting as the Manager of the Tso and for and on behalf of Branch B that the 6 Houses would be shared and divided equally between the two branches in the following way:

(1) House 2, House 4 and House 5 are to be assigned to Branch A (collectively, the “3 Houses”); and

(2) House 1, House 3 and House 6 are to be assigned to Branch B.

13.The 2010 Agreement was made in the presence of one Wong Shui Sang, and was evidenced by handwritten markings on a sketch plan signed by the defendant and handed to the plaintiff.

14.The defendant denies the existence of the 2010 Agreement and avers, inter alia, that: –

(1) In August 2010 the defendant was informed that the 6 Houses were ready to be vested to the Tso or its nominees.

(2) The defendant intended to consult the plaintiff for his view on how the 6 Houses should be dealt with.

(3) The defendant gave a sketch plan to Wong Shui Sang to pass to the plaintiff.  The defendant denies that the 2010 Agreement as alleged was made in the presence of Wong Shui Sang.

(4) Even if the sketch constitutes an offer, neither the plaintiff nor any member of Branch A signed to indicate acceptance.

B3.  Whether the plaintiff’s claim against the defendant/the relief sought by the plaintiff are sustainable

15.Whether the plaintiff alone (as a member of the Tso) can claim against the defendant, and in any event, whether the plaintiff is entitled to the relief now sought under the pleadings?

B4.  The plaintiff’s share of the liability for expenses

16.Whether the plaintiff should be responsible for the sharing of the expenses and legal costs incurred in the development of the 6 Houses.

C. No Agreement in 1994

17.It is the plaintiff’s case that back in 1994 (during the discussion for the Tso to enter into the Development Agreement with the developer WKW), there existed the alleged 1994 Agreement in which: –

(1) The plaintiff, Ping, and the defendant unanimously agreed that the Tso’s houses to be built would be divided and shared amongst the members by way of transfer or conveyancing.

(2) In reliance on the alleged 1994 Agreement and acting to his “detriment”, the plaintiff consented to the development by allowing the Tso to transfer the Tso’s Lots to the developer.

(3) It’s also the plaintiff’s case (as contained in his witness statement) that the plaintiff’s branch would only want the houses divided, and did not want to sell the houses to outsiders.  The plaintiff’s Branch A only wanted to keep the 3 Houses for the use of the descendants, and had no intention to sell them.

18.As submitted by the defendant, I agree that clearly, even based on the plaintiff’s own evidence, there was no 1994 Agreement at all.  First, it is the plaintiff’s testimony, inter alia, that: –

(1) Back in 1994, he well knew about the terms of the Development Agreement with the developer WKW, for example, the Tso’s Lots would be transferred to the developer for building new houses on it, and the developer and the Tso would be entitled to a 60% and 40% profit share.

(2) There was clear understanding that Branch A and Branch B would in turn be entitled to 50% for each branch.

(3) At that time, the relationship between the plaintiff, Ping, and the defendant was still good, and given the above clear understanding, there was no discussion regarding whether the Tso’s houses must be divided in specie between the 2 branches, or whether the houses must be (or must not be) sold for profits.

C1.   Tso’s previous practice

19.Further, it was established at trial that the Tso’s practice had been that the Tso would sell the land that its members no longer required for profit.  The plaintiff testified to the effect that: –

(1) Since the defendant became the Manager in 1984, the Tso has sold its land for profit and distributed the net proceeds to the 2 branches.

(2) The relevant assignment(s) for the sale were dated 16 May 1989 (for Lot 29, 30, 50 and 61 in Sai Kung DD No 221) and dated 22 December 1994 (for Lot 101 and 104 in Sai Kung DD No 221).

(3) At all material times, the Tso has not distributed or divided any houses or land amongst the members (無試過分屋分地).  The development with the developer WKW had been the first occasion for the Tso to co-operate with a developer, and to apply and build houses on the Tso’s Lots.

C2.  Contemporaneous correspondence

20.Further still, none of the contemporaneous correspondence has ever mentioned that the plaintiff, Ping, and the defendant agreed on the alleged 1994 Agreement for the houses to be divided by members by way of transfer.  To the contrary, the following letters stated to the opposite effect: –

(1) The plaintiff’s solicitors, Messrs Kenneth C C Man & Co (“KCCM”) by their letter dated 16 July 2007 expressly stated that the object of the development of the 6 Houses was “to realize their profits in this project” (as opposed to keeping the houses for own use).

(2) The plaintiff (by KCCM’s letter dated 20 November 2009) stated that he agreed to accept the developer’s “options as set out in the proposals written in Chinese”, ie “分賬方案(2); 支出計算方案(2); 未建屋地段方案一”.  The gist of the said proposals in Chinese was that each of the houses would be sold, and after deducting the cost, expenses, commissions and tax, etc, the net proceeds of sale would be distributed between the developer WKW and the Tso (on a 60% and 40% basis).

(3) The above contemporaneous documents are clearly against the plaintiff’s pleaded case and witness statement evidence that the plaintiff would only want to keep the Houses for the benefit of the descendants; and that the plaintiff definitely disagreed with the defendant’s proposal to sell the houses and then distribute all the net proceeds.

C3.  The plaintiff’s concession that the houses can be sold for profit

21.When being cross-examined as to why the above was so contradictory to his witness statement, the plaintiff frankly admitted that the evidence at both paragraph 9 and paragraph 13 of his witness statement was incorrect (saying that he had not read them carefully).

22.After being further cross-examined more specifically, the plaintiff went so far as to completely changed his original stance (that he only wanted to keep the houses, which was also the Tso’s custom), and he unequivocally admitted that he would agree that all the Tso’s 6 Houses be sold and the net proceeds of sale be distributed between Branch A and Branch B on a 50:50 basis provided that all the “cost and expenses, etc” are well-supported by evidence (“所有使費有證有據”).

23.I agree that this “change of stance” is significant in that: –

(1) All along, the main thrust of the plaintiff’s complaint in this action is that he only wanted to keep the houses (for self-use and for the benefits of the descendants), and he definitely did not want to sell them.  According to the plaintiff, this thinking led to the alleged 1994 Agreement and the 2010 Agreement for the distribution/transfer of the houses to the plaintiff’s branch (as opposed to selling and distribution of sale proceeds), but now the plaintiff has testified the otherwise.

(2) Further, the plaintiff has been discredited in this matter, and his “change of stance” has cast doubt on the “overall credibility” of the plaintiff on other issues.

24.For the reasons stated above, I reject the plaintiff’s case on the alleged 1994 agreement and find that it does not exist.

D. No Oral Agreement in 2010

25.In this regard, the existence of the alleged 2010 Agreement in turn depends on: –

(1) What the parties/witness(es) had actually canvassed and communicated to one another, and hence whether or not an “agreement” had been concluded at the material times.

(2) Whether the plaintiff (and Wong Shui Sang (“WSS”)) had the necessary “authority” to act for Ping.

D1.  Background

26.To determine whether the 2010 Agreement exists, it is the unchallenged background that: –

(1) From around 2005 to 2008, 17 small village houses had been built on the Tso’s Lots (with certificates of compliance issued), and the Tso had selected 6 Houses (as part of its entitlement).

(2) WKW had disputes with his joint venture partners and as a result, WKW was sued in proceedings entitled HCMP 1760/2009; in which lis pendens had been registered against the 6 Houses.

(3) Hence, at the material time, the 6 Houses had not been assigned or transferred to the Tso yet.

(4) The said HCMP 1760/2009 proceedings were heard before Deputy High Court Judge L Chan on 2 and 4 August 2010 (and during the hearing, WKW and others gave the undertaking that they would transfer the 6 houses to the Tso).

27.It is the defendant’s case (which is supported by his testimony) that inter alia: –

May 2010 Meeting with WSS

(1) In around April/May 2010, WSS said he was the lawful attorney of Ping who had asked him to look after his assets in Hong Kong and China.  WSS said both the plaintiff and Ping wanted the 6 Houses divided.  WSS and the defendant then met up.

(2) During the meeting, WSS gave the defendant a plan (“WSS’s Plan”) to show the proposed split.

(3) It is the defendant’s evidence that he told WSS that it was “premature”, as the developer WKW had not allocated the 6 Houses to the Tso yet; and such matter should be discussed later (“都未轉得住”….“之後再傾”…. “等黃國華轉咗之後再算”). 

(4) It is the defendant’s clear testimony that WSS then took away the WSS’s Plan.

The 6 Houses were later ready to be transferred to the Tso

(5) In light of the hearing of HCMP 1760/2009 on 2 and 4 August 2010, it is the defendant’s evidence that on 4 August 2010, the defendant went to the High Court with his then lawyer, namely Mr Norman Yeung of Messrs Norman MK Yeung & Co and his assistant. And they waited at the cafeteria, whilst the assistant was sent upstairs to listen to the proceedings. 

(6) According to the assistant, WKW’s lawyer related that the 6 Houses could be transferred to the Tso soon, and could be transferred to the Tso or its nominees directly.

(7) It was then thought that if the Houses were assigned to its members directly, the Tso could save on tax.

(8) The defendant then quickly called WSS on 5 August 2010, and set up the meeting with WSS on 6 August 2010. 

The August 2010 Meeting with WSS

(9) During the meeting on 6 August 2010, the defendant gave WSS the Sketch Plan (on which the defendant had already written down all the words, the date (ie 6 August 2010) and signature, and coloured it beforehand on 5 August 2010) to inform the plaintiff and Ping about the location of the 6 Houses and to obtain their views on such proposal/suggestion.

(10) The defendant expressly told WSS that if the plaintiff and Ping were interested to have three of the 6 Houses assigned to them, they needed to reply by 13 August 2010 with “signatures”.

(11) Otherwise, the 6 Houses would be transferred to the Tso.

(12) WSS said he needed to discuss the matter with the plaintiff first, and stated that he understood the urgency.

No Reply from WSS / No Knowledge & Authority from Ping

(13) However, WSS failed to respond (within time or at all), and when the defendant called to chase him on the matter, he could not be reached.

(14) The defendant then on 17 August 2010 contacted Ping’s ex-wife Lau Yau Mui and was told that (i) Ping knew nothing about the 6 Houses being distributed; (ii) he would prefer selling the 6 Houses and sharing the net proceeds; and (iii) he had never asked WSS to represent him on the Tso’s affairs at all.

(15) Subsequently, the 6 Houses were transferred to the Tso in August 2010.

28.In light of the above, it is the defendant’s case that no agreement had been reached (whether as alleged or at all) between Branch A and Branch B in relation to the distribution of the 6 Houses; and the defendant would never have arranged the meeting with WSS and made the proposal if he had known Ping’s actual wishes (and also the fact that WSS had no authority to act for Ping). 

29.In light of the unchallenged background, I agree that the defendant’s case is credible and should be preferred.

30.Now the plaintiff alleges that: –

(1) As early as back in May 2010, he called the defendant to propose that the land (with the 6 Houses built on it) would be divided into 2 parts, and the defendant would have the right to make selection first, and the defendant had agreed.

(2) The plaintiff testified that he and the defendant had prior consensus for the defendant to make the selection (“之前已經傾好咗”).

31.I agree that this is simply incredible: –

(1) First, it is not the plaintiff’s pleaded case that prior to the August 2010 meeting, the plaintiff had already made an offer for the defendant to accept (or that the plaintiff and the defendant already had prior consensus).

(2) Such assertion does not make sense in the circumstances.  If the plaintiff and the defendant still had communication(s) back then, and did have such “prior consensus” that the defendant would make the selection first, there was no reason why the plaintiff did not meet the defendant directly (or at least the plaintiff should also come with WSS to meet the defendant) in the May 2010 meeting and the August 2010 meeting.

(3) To the contrary, it is the defendant’s evidence that the relationship between the plaintiff and the defendant had broken down in 2006, and since mid-2006 onwards, they were not on talking terms (with correspondence mainly through lawyers and third parties).

(4) WSS’s testimony also confirmed that the relationship between the plaintiff and the defendant had broken down at some point (“冇計傾”).

32.The plaintiff tried to argue that as the plaintiff and the defendant had already reached the “prior consensus” through WSS, the defendant was only required to consider and accept the same.  I agree that the plaintiff’s contention has no basis: –

(1) First, in the May 2010 meeting with WSS, it is common ground that WSS gave the WSS’s Plan to the defendant.

(2) It is the defendant’s clear and unshaken evidence, which I accept, that he told WSS that it was “premature”, and the developer WKW had not allocated the 6 Houses to the Tso yet; and such matter be discussed later (“都未轉得住”….“之後再傾”…. “等黃國華轉咗之後再算”), bearing in mind that it was a fact that the Tso did not have the titles of the 6 Houses at that time.

(3) Hence, by uttering those words to WSS, the effect was that the defendant had already rejected the proposal or offer (or any of the plaintiff’s purported proposal in relation to the distribution of the 6 Houses).

(4) Second, even based on the plaintiff’s case, at the material time, the defendant was only asked to make the selection first (out of the proposed split of the 6 Houses).  I agree that in law, such only amounted to an “invitation to treat” or an “invitation to make an offer” (but not “an offer” itself).  As stated in Halsbury’s Laws of Hong Kong, 2^nd Edn, Vol 18 Contract at [115.040]: –

“[115.040] Invitation to treat An invitation to treat is a mere declaration of willingness to enter into negotiations; it is not an offer, and cannot be accepted so as to form a binding contract.

In practice, the formation of a contract is frequently preceded by preliminary negotiations.  Some of the exchanges in these negotiations contain no declaration at all, as where one party simply asks for information.  Others may amount to invitations to the recipient to make an offer, these being invitations to treat.”

D2.  Inherently Improbable features of the plaintiff’s case

33.I agree that the plaintiff’s case has the following inherently improbable features.  

34.First, if as contended by the plaintiff, the parties had reached the “oral agreement” on the selection of 6 Houses between the 2 Branches (such that the defendant would transfer the 3 Houses to the plaintiff’s branch), then: –

(1) There was no plausible reason why the plaintiff or WSS did not sign on the Sketch Planto confirm the acceptance (or to put on record that an agreement had been reached), and in particular, it was relatively easy and straightforward for any counter-party to sign to confirm.

(2) When being cross-examined, the plaintiff could only say that he expected the defendant to submit the Sketch Plan to the Lands Department for registration.

(3) Further, there was also no plausible reason why the plaintiff did not write to confirm or to seek to enforce the alleged “2010 Agreement” reached on 6 August 2010.

No mention of the 2010 Agreement in the Contemporaneous solicitors’ correspondence

35.Back then in August 2010, the plaintiff had the legal assistance of KCCM.  It is also WSS’s evidence that he gave the Sketch Plan to the plaintiff, and was told by the plaintiff that the plaintiff had instructed lawyer to issue letter to the defendant to confirm and enforce the 2010 Agreement.

36.Despite the above, and as pointed out in detail at paragraph 24 of the defendant’s Closing Submissions, the plaintiff’s case on the 2010 Agreement was not at all set out in the contemporaneous solicitors’ correspondence.

D3.  Lack of Authority from Ping

37.The plaintiff bears the burden of establishing that the alleged agreement was entered into with the requisite authority.

38.To begin with, it is not in dispute that there is no document to show the alleged “authority” for WSS to represent Ping.  Relating to the alleged 2010 Agreement: –

(1) During cross-examination, it is WSS’s clear evidence that he was not authorised by Ping in relation to the August 2010 meeting with the defendant.

(2) Even though during re-examination, he somehow stated that Lau Yee Wah (Eva), Ping’s daughter, “authorised” him, I agree that: –

(a) It is not the plaintiff’s pleaded case that WSS was authorised through Eva.

(b) It is not WSS’s witness statement evidence that he was authorised through Eva.

(c) It is also not the plaintiff’s witness statement evidence, and Eva’s witness statement evidence that WSS was authorised through Eva.

(d) Hence, WSS’s concession during cross-examination should prevail.

D4.  Visit on 7 February 2017

39.It is also the defendant’s evidence, which I accept, that the defendant and others visited Ping in his care home (in Northern Ireland) on 7 February 2017, and Ping confirmed to him that: –

(1) He had not made the alleged 1994 agreement with the plaintiff.

(2) He had not given any Power of Attorney to, or asked the plaintiff (or WSS) to deal with the Tso’s assets on his behalf.

40.Indeed, it is common ground (and also the firm testimony of the plaintiff and WSS) that Branch A is represented by both the plaintiff and Ping.  In the absence of authority from Ping, the plaintiff alone simply has no authority to enter into the alleged 2010 Agreement.  On this ground alone, the alleged 2010 Agreement must be void for want of authority.

D5.  Pleading Point

41.I agree with the defendant that the defendant has sufficiently pleaded and raised the “lack of authority” issue in his pleadings.  As held in Lee Yuk Shing v Dianoor International Ltd (in Liquidation), CACV 185/2015 (Judgment dated 23/05/06): –

“78. Mr Wong relied on Suen Shu Tai v Tam Fung Tai [2014] 4 HKLRD 436 at §§9.2 to 9.4, which cited this statement of Lord Denning in Re Vandervell’s Trust (No 2) [1974] Ch 269 at 321 to 322: “It is sufficient for the pleader to state the material facts. He need not state the legal result.”

79. I am inclined to agree with Mr Wong that material facts sufficient to support a claim for the return of the purchase price have been pleaded.  Breach of contract is a possible legal consequence arising from these material facts pleaded… But as Cheung JA said in Suen Shu Tai at §9.4, “the extent of the pleading, which serves to identify the issues, must depend on the context of an individual case.”  In this instance, I am not persuaded there was any unfairness to the defendant.

….

81. …There is no suggestion that the parties were unable to focus on the issues that required consideration at the trial, and no suggestion that the evidence might have taken a different course.”

42.As submitted by the defendant, the same principles apply here, the issue of lack of authority has been fully canvassed by the parties at the trial.  I am satisfied that the “lack of authority” issue has been sufficiently raised in paragraph 9 of the Re-Re-Amended Defence and Counterclaim of the defendant.

E. The plaintiff’s claim against the defendant/ the relief sought by the plaintiff are unsustainable

E1.  Ping being a necessary party

43.In any event, I agree with the defendant that Ping is a necessary party in this action (both as one of the joint parties to the alleged 1994 Agreement and the alleged 2010 Agreement, and as the Co-head of Branch A with the plaintiff).  In the absence of Ping, the present action is not properly constituted and is liable to be struck out.  

E2.  1.5 Houses?

44.It is crystal clear that: (i) in the plaintiff’s pleadings, witness statement, and testimony, there is no evidence or assertion whatsoever as to which 1.5 Houses that the plaintiff is entitled to; and (ii) there is no evidence or assertion that as between the plaintiff and Ping, who is entitled to which 1.5 Houses (out of the 3 Houses).

45.Hence, the plaintiff’s claim for an “Order of transfer” must fail.

E3.  No Declaration should be granted

46.I further agree that even taking the plaintiff’s case to the highest, the court should not grant the “declaration” sought (in the absence of Ping as a party).

47.In 曾婉玲v兆隆苑業主立案法團, LDBM 199/2001 (Judgment dated 18 September 2001), HH Judge Lam (as he then was) at paragraph 22 cited the principle as follows: –

“If it can be shown that a declaration would not serve any practical purpose, this will weigh heavily in the scales against the grant of declaratory relief. If, on the other hand the grant of declaratory relief will be likely to achieve a useful objective, the court will be favourably disposed to granting relief. The question of whether or not any useful purpose would be served by granting declaratory relief is therefore of prime importance in determining how discretion should be exercised.” (emphasis supplied)

48.As the learned editors of Zamir and Woolf, The Declaratory Judgment (4th ed)stated at §§6-01 and 6-02: –

“The general rule is that it is desirable that all persons who appear to have a real interest in objecting to the grant of a declaration claimed in legal proceedings should be made defendants. As Viscount Maugham said:

‘The persons really interested were not before the court. It is true that in their absence they were not strictly bound by the declaration, but the courts have always recognised that persons interested are or may be indirectly prejudiced by a declaration made by the court in their absence, and that, except in very special circumstances, all persons interested should be made parties, whether by representation orders or otherwise, before a declaration by its terms affecting their rights is made.’

This is a sensible approach: first, as the court can take into account the interests of anyone who would be affected in reaching its decision as to whether or not to grant a declaration, it is only just that those who may be affected should be given an opportunity to present any argument which they want the court to take into account; secondly, a declaration will only bind the parties to the proceedings. If, therefore, someone who should have been joined as a defendant is not joined, there will be a danger of having to bring fresh proceedings in which he is joined, involving the expense and delay simply to re-determine a question already decided in the previous proceedings and thirdly, it is important that there is someone before the court who will properly contest the issue. …” (emphasis supplied)

49.Applying the above principles, I agree that the declaration sought by the plaintiff should not be granted in any event in that: –

(1) There is no dispute that in principle, the plaintiff (and his 2 sons being members of the Tso) would be entitled to 25% beneficial interest out of the 6 Houses (as a whole) and also to any of the Tso’s assets.

(2) Given the plaintiff is not entitled to an Order for transfer, the grant of the mere “declaration” (that the plaintiff is entitled to half of the interest in the 3 Houses) will not serve much useful purpose, and the declaratory relief shall not entitle him to right of exclusive possession either.

(3) On the other hand, each of the 6 Houses is unique in nature, and/or having different views and location etc (which the plaintiff also accepted in his testimony), any transfer (or declaration of beneficial interest) of 1.5 houses in favour of the plaintiff would be unfair and cause prejudice.

(4) Ping as a necessary party clearly has an interest over the said Houses.  If the declaration is granted in the plaintiff’s favour, Ping’s interest shall be prejudiced and affected.

50.The above has further demonstrated that the present action is not properly constituted for want of a necessary party (ie Ping). 

F. The defendant’s counterclaim: plaintiff’s sharing of the expenses

51.The defendant (as the Tso’s Manager) had incurred expenses in connection with the 6 Houses as pleaded at paragraph 21 of the Counterclaim.

52.By reason of the plaintiff’s admission to the “Agreement for Distribution of Assets” and the “Agreement for Sharing of Liabilities” at paragraph 5(3) and 5(4) of the Re-re-amended Reply and Defence to Counterclaim, the plaintiff cannot deny his liability to share the “total expenses already paid or payable to be assessed”.

53.During his cross-examination, the plaintiff agreed that he had to pay his portion of such expenses and costs (subject to the question of reasonableness), and he had no objection to damages being assessed.  Indeed, in the plaintiff’s Closing Submissions, the plaintiff has raised no objection to such damages being assessed.

54.Clearly, such liability is separate from and regardless of the question whether the defendant is required to assign the houses to the plaintiff.

55.In particular, the plaintiff also accepted that the Tso all along did not and does not have any reserve fund.

G. Conclusion

56.For the reasons set out above, I order that: –

(1) The plaintiff’s claim against the defendant be dismissed.

(2) Judgment be entered in favour of the defendant against the plaintiff in terms of paragraph (1) of the prayer for relief in the Re-Re-Amended Defence and Counterclaim.

(3) The plaintiff do pay all costs of the action to the defendant, such costs are to be taxed if not agreed.

57.The above order as to costs is nisi and shall become absolute in the absence of any application within 14 days to vary the same.

58.Lastly, I express my gratitude to counsel on both sides for their helpful assistance in this matter.

Mr Kevin KH Liu, instructed by Messrs Choi & Liu, for the plaintiff

Mr Billy NP Ma, instructed by Messrs Hong Lee & Co, for the defendant