Kwan Hung Shing As Executor of the Estate of Ho Shuk Ming, Deceased v. Fong Kwok Shan, Christine and Others

HCA 265/2012

[2019] HKCFI 1687

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 265 OF 2012

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Before: Hon Wilson Chan J in Court

Dates of Hearing: 8-11, 14-18 January and 6 March 2019

Date of Judgment: 9 July 2019

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J U D G M E N T

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A. INTRODUCTION

1.This action concerns small house development in the Sai Kung District, New Territories.  The plaintiff is the executor of the estate of Ho Shuk Ming (何淑明), deceased (the “Deceased”). 

2.The Deceased (the original plaintiff in this action) was the registered and beneficial owner of the subject land.  Mr Kwan Hung Shing (“Kwan H.S.”), as her executor, seeks, inter alia, recovery of the subject land from the “dings”, mesne profits against the 1^st defendant, and other consequential injunctive and declaratory relief.  In this Judgment, as appropriate, the reference to the plaintiff refers to both the Deceased and her estate.

B.  FACTUAL BACKGROUND

3.The subject land includes Sections A to H of Lot 104, the Remaining Portion of Lot 104, Lot 391 and Lot 396 all in Demarcation District No. 252 (collectively the “Properties”).

4.At all material times before 4 April 1995, the plaintiff was the registered and beneficial owner of Lot 104.  On or about 29 January 1995, the plaintiff entered into a development agreement entitled “丁屋合作發展協約” with one Kennis Ltd trading as “Green House Property Agency” (of which the 1^st defendant was a shareholder and director) (“Green House”) to build small houses on Lot 104 under the Small House Policy (the “1995 Development Agreement”).  Under the 1995 Development Agreement: –

(1)  Green House was responsible for identifying suitable dings (ie New Territories indigenous inhabitants) to exercise their dings’ rights and apply for licence to build small houses on the Properties (Clause 3).

(2)  The plaintiff should transfer the legal title of the Properties to persons specified by Green House so that they could make the relevant applications (Clause 4).

(3)  Green House would be responsible for paying all the related ding fees, building cost, and land premium (Clause 5).

(4)  The plaintiff would be allocated 2 houses, and the remaining houses would belong to Green House (Clause 8).

5.In 1997, Green House assigned all its rights and liabilities in respect of the development project regarding the Properties to the 1^st defendant.  This led to 2 further development agreements between the plaintiff and the 1^st defendant in 2000, namely: –

(1)  An agreement for joint development of the Properties entitled “丁屋合作發展協約” dated 19 February 2000 (the “2000 Development Agreement”); and

(2)  An agreement entitled “揀樓協約” also dated 19 February 2000, which stipulated that the plaintiff’s 2 houses would be built on Lot 104B and Lot 104C (the “2000 House Selection Agreement”).

6.In 2002, the plaintiff commenced DCCJ 8027/2002 against the 1^st defendant for, inter alia, failing to complete the construction of the small houses within the stipulated time under the 2000 Development Agreement.  DCCJ 8027/2002 was eventually settled and resulted in the plaintiff and the 1^st defendant entering into another development agreement (the “2004 Agreement”).  Under the 2004 Agreement: –

(1)  The 1^st defendant should pay into the account of the plaintiff’s then solicitors (Messrs Wong Hui & Co) a sum of HK$200,000.00 as surety (Clause 2).

(2)  By 1 August 2004, the 1^st defendant must obtain plan approved by the Buildings Department for site formation work or certificate of exemption of site formation work issued by the Buildings Department (Clause 3.1).

(3)  By 1 May 2005, the 1^st defendant must complete the site formation work on the Properties in accordance with the approved plan and should provide a statement of completion of work from an authorized/qualified person to the plaintiff for record (Clause 3.2).

(4)  By 1 May 2006, the 1^st defendant must complete the construction work of the 3-storey small house on Lot 104B and Lot 104C according to the standards eligible for applying for Certificate of Compliance and provide proof of completion of work to the plaintiff for record (Clause 3.3).

(5)  The plaintiff would be entitled to withdraw HK$20,000.00 per month for any breach of any conditions in Clause 3 from the HK$200,000.00 paid-in surety (Clause 5).

(6)  When the paid-in surety had been fully deducted, the 1^st defendant would cause the 2000 Development Agreement to be automatically terminated, and the 1^st defendant should reinstate the Properties into its original state and return the same to the plaintiff; and that the 1^st defendant should procure the relevant dings to transfer the legal title of the Properties back to the plaintiff within 3 months, and to pay the costs thereby incurred (Clause 6).

7.Between 1995 and 2007:

(1)  Green House/the 15^th defendant (of which the 1^st defendant was a director) entered into various Chinese agreements/deeds with the 2^nd to 14^th defendants and the 16^th to 20^th defendants (who are all male indigenous inhabitants of the Sai Kung District).  Under these agreements/deeds, (a) the 2^nd to 14^th defendants and the 16^th to 20^th defendants would apply to the 21^st defendant for building small houses on the Properties under the Small House Policy; (b)Green House/the 15^th defendant was the owner of the Properties, and the 2^nd to 14^th defendants and the 16^th to 20^th defendants would hold the Properties as trustee for Green House/the 15^th defendant; and (c) each of the 2^nd to 14^th defendants and the 16^th to 20^th defendants would receive a fee in return;

(2)  Each of the 3^rd defendant, the 7^th defendant, the 9^th defendant, the 11^th defendant, the 13^th defendant, and the 18^th to 20^th defendants further executed a will, appointing the 15^th defendant as the executor and devising to the 15^th defendant their interests in the respective sections of the Properties held in their names; and

(3)  Each of the 3^rd defendant, the 5^th defendant, the 7^th defendant, the 9^th defendant, the 11^th defendant, the 13^th defendant, and the 18^th to 20^th defendants executed various power of attorney, appointing the 1^st defendant as their attorney to handle their small house applications in relation to the respective sections of the Properties held in their names.

8.On 4 April 1995, a deed poll was executed whereby Lot 104 was divided into 9 sections, namely Sections A to H and the Remaining Portion of Lot 104.

9.Subsequent to the said deed poll:

(1)  The plaintiff, and the 2^nd to 20^th defendants entered into various sale and purchase agreements and assignments in respect of Sections A to H and the Remaining Portion of Lot 104;

(2)  The 13^th defendant surrendered Lot 104F to the 21^st defendant in exchange of Lot 391 in 1998, and the 3^rd defendant surrendered Lot 104A to the 21^st defendant in exchange of Lot 396 in 2005 (“New Grants”); and

(3)  The end result is that the plaintiff ceased to be the registered owner of the Properties, and the 3^rd defendant, the 5^th defendant, the 7^th defendant, the 9^th defendant, the 11^th defendant, the 13^th defendant, and the 18^th to 20^th defendants became the registered owners of the Properties.

10.The 1^st defendant did not complete the construction of the small houses within the stipulated time under the 2004 Agreement.  Therefore, the plaintiff in about March 2005 started withdrawing HK$20,000.00 per month from the surety which was fully deducted by November 2005.  On 29 November 2005, Messrs Wong, Hui & Co, the plaintiff’s then solicitors, wrote to the 1^st defendant demanding her to give vacant possession of the Properties back to the plaintiff forthwith.  Nonetheless, the 1^st defendant has remained in wrongful possession of the Properties, and the 3^rd defendant, the 5^th defendant, the 7^th defendant, the 9^th defendant, the 11^th defendant, the 13^th defendant, and the 18^th to 20^th defendants are still keeping their title as registered owners of the Properties to date.

11.The construction of small houses on Lot 104B and Lot 104C was completed but no certificate of compliance has been issued therefor.  The plaintiff’s case is that 1^st defendant has leased out the said 2 small houses for profit without the plaintiff’s consent since about 2013.

C.  PLAINTIFF’S CASE ON THE PLEADINGS

12.In the Re-Re-Re-Re-Amended Statement of Claim (“Statement of Claim”), the plaintiff’s claim is on various bases: –

(1)  The 1995 Development Agreement, the 2000 Development Agreement, the 2000 House Selection Agreement, and the 2004 Agreement (collectively “the Development Agreements”) are illegal.  Hence, the Development Agreements, the deed poll, sale and purchase agreements, assignments, building licences, letters of permission, deeds of surrender and new grants are void and liable to be set aside.

(2)  All the sale and purchase agreements and assignments are sham transactions in furtherance of the illegal scheme under the Development Agreements.  Thus, the legal and beneficial interest in the Properties remains to be vested in the plaintiff.

(3)  Further or alternatively, the 2^nd to 20^th defendants have held their interests in the Properties on resulting trust for the plaintiff. 

(4)  As against the 1^st defendant only:

(a) Damages for trespass and/or account of profits received by the 1^st defendant; and

(b) If the Development Agreements are legal and enforceable, the plaintiff claims damages for breach of the Development Agreements.

(5)  The plaintiff also seeks an order against the 1^st to 20^th defendants to compel them to remove all fixtures and chattels from the Properties and to deliver vacant possession to the plaintiff.

D.  ISSUES AT TRIAL

13.On the first day of trial, the plaintiff made clear that he claims against the 2^nd to 20^th defendants on resulting trust and against the 1^st defendant on trespass only, and the plaintiff will not ask for the assignments, surrenders and New Grants to be set aside, hence the consequential application by the plaintiff to amend the Statement of Claim which was subsequently allowed by this court.

14.The plaintiff submits that the plaintiff’s case on resulting trust is already established on the basis of the admission by the 1^st defendant/the 15^th defendant that the assignments by the plaintiff of the Properties to the 2^nd to 20^th defendants were without any consideration.  The defendants could not rebut the presumption of resulting trust since in doing so they would have to rely on the illegal development scheme concerning the New Territories Small House Policy (the “Policy”).  The oral testimony of the witnesses does not detract from the said admitted case by the 1^st defendant/the 15^th defendant.  Most, if not all, of the time spent on the cross-examination of the witnesses related only to (a) the plaintiff’s claim against the 1^st defendant in trespass (and the corresponding defence of the 1^st defendant of estoppel) and (b) the 1^st defendant/the 15^th defendant’s counterclaim against the plaintiff for unjust enrichment. 

E.  ILLEGAL DEVELOPMENT SCHEME

15.The disputes herein arise out of the Policy, which has been implemented by the Hong Kong SAR Government since 1972.  A brief outline of the relevant part of the Policy has been summarised by the 21^st defendant as follows.

16.Under the Policy, an adult male indigenous villager (colloquially called a “ding”) of a recognized village in the New Territories (“NT”) may apply to the Director of Lands (the “Director”) for permission to erect a small house in the NT in accordance with the provisions of the Buildings Ordinance (Application to the New Territories) Ordinance, Cap 121.  The Policy aims at preserving the cohesion of the indigenous communities of villages in the NT, and also at improving the housing and sanitary standards in the rural areas of NT, and is concessionary in nature.  For instance, small houses may be built on agricultural lands (which otherwise cannot be used for residential purposes), and are exempted from certain requirements under the Buildings Ordinance, Cap 123 and its subsidiary legislations.  On the other hand, the Policy also imposes constraints on the small houses, such as their design and construction, and mode of alienation.

17.For a ding who already owns a suitable piece of agricultural land, he has to apply to the Director for a building licence to build a small house.  The procedure may be generally described as follows: –

(1)  An applicant is required to fill in a standard application form, which includes a statutory declaration form, and submits it to the District Lands Officer (“DLO”) concerned;

(2)  The statutory declaration form has undergone changes over the years.  As far as the present case is concerned, three versions are relevant:

(a)  The February/May 1993 version[1] (in force until October 1997);

(b)  The October 1997 version (in force until June 2001); and

(c)  The October 2004 version (in force until July 2006);

(3)  If the application is approved, an offer letter will be issued to the applicant with a demand note for the payment of fees;

(4)  After the payment of the fees, a building licence will be prepared and executed by the applicant and the DLO concerned;

(5)  Thereafter, the applicant will apply from the DLO concerned certificates of exemption in relation to the necessary building works, site formation works and drainage works;

(6)  Construction works may be carried out after the requisite certificates of exemption are issued;

(7)  Where construction involves neighbouring Government land (for example, the applicant may have to enter the neighbouring Government land to carry out site formation or drainage works), a “permission letter” would be issued to permit the applicant to do so; and

(8)  After completion of construction works, the DLO concerned will inspect the small house to ensure that all terms and conditions of the building licence are fulfilled, thereupon a certificate of compliance will be issued which entitles the applicant to move in and reside in the house.

18.Sometimes, if the land owned by the applicant is not entirely suitable (for example, because it is of an irregular shape), he may undergo a land exchange with the Government – he will surrender his piece of land and the Government will issue a new grant to him.  The new and former pieces of land largely overlap, but the land under the new grant will have a better shape.

19.For the purpose of these proceedings, the focus is on the requirement imposed on an applicant to submit to the 21^st defendant a standard application form which includes a statutory declaration form. 

20.The relevant legal principles are well-established and summarised by Queeny Au-Yeung J in Tang Teng Hong Tso v Cheung Tin Wah [2014] 2 HKLRD 1032, at paragraph 21 as follows: –

“21. The principles distilled from the authorities are as follows:

(1) Where an agreement is entered into for an illegal purpose, the court will not enforce it. Best Sheen Development Ltd v Official Receiver [2001] 1 HKLRD 866, Maria Yuen J (as she then was); Cheerbond Development Ltd v Tung Kwok Yu [2010] 2 HKLRD 546.

(2) A development scheme that takes advantage of the Small House Policy under which an applicant ting would have to represent himself as the legal and beneficial owner of a piece of land even though he would merely be holding it as a nominee is illegal, as it would necessarily involve making of a false declaration and hence commission of the tort of misrepresentation to the Government. See Best Sheen's case at 874B-C; affirmed in Chung Mui Teck v Hang Tak Buddhist Hall Association Ltd [2001] 2 HKLRD 471 at 477F-H.

(3) It is no answer that no false statutory declaration has yet been made if the implementation of the scheme necessarily involves the making of such a declaration: Chung Mui Teck's case at 477H.

(4) However, a party to an illegality can recover by virtue of a legal or equitable property interest if he did not need to rely on the illegal contract for any purpose other than providing the basis of his claim to the property right: the Best Sheen case at 874D-E.

‘… a declaration that the plaintiff is the beneficial owner of the Land does not amount to enforcement of the illegal contract.

This is because the plaintiff is not forced to rely on the illegal contract for the declarations sought as to its property interests, even though the illegal contract explains why it came about that the bankrupt was registered as the owner of the land. (874C-E)’

(5) A classic example was the claimant's reliance on resulting trust where he provided the consideration for the acquisition of a property and was not the named purchaser or where a voluntary transfer was involved. See the Cheerbond case at [9(b)]; Best Sheen case at 874F-875A.

(6) In respect of an assignment containing a clause acknowledging receipt of the consideration when it was not paid, even if pursuant to s.17 of the Conveyancing and Property Ordinance (Cap.219), the effect was that the plaintiff did not retain a beneficial interest in the land, the plaintiff could recover the land under the doctrine of locus poenitentiae.  Under the doctrine, a party who transferred his property for an illegal purpose can recover his property provided that he has withdrawn from the transaction before the illegal purpose has been wholly or partly performed. Best Sheen case at 875B-E; Cheerbond case at [9(e)].”

(emphasis added)

21.The above principle has been repeatedly applied by the courts in Hong Kong, see: Best Sheen Development Ltd v Official Receiver [2001] 1 HKLRD 866, at pp 874A-875B; Chung Mui Teck & Others v Hang Tak Buddhist Hall Association Ltd & Another [2001] 2 HKLRD 471, at pp 477A-I, 478F-479D; Chan Yau v Chan Calvin [2014] 5 HKLRD 304; and Kan Wai Chung & Ors v Hau Win Fai & Ors [2016] 5 HKC 585, at p 599H.

22.It should be noted that this line of Hong Kong decisions was based on the House of Lords’ decision in Tinsley v Milligan [1994] 1 AC 340: see Best Sheen Development Ltd (supra), at pp 874G-875B.  Tinsley v Milligan has been overruled by the UK Supreme Court in Patel v Mirza [2017] AC 467.  However, Tinsley v Milligan was cited with approval by the Hong Kong Court of Final Appeal in HKSAR v Lau Kam Ying (2013) 16 HKCFAR 595, at §20, and it has been held by the Hong Kong Court of Appeal in Kan Wai Chung (supra), at §8.7 and recently by the Court of First Instance in Tse Chun Wai v Leung Kwok Kin Joseph [2017] 4 HKLRD 563, at §64 that the Hong Kong courts remain to be bound by and would apply Tinsley v Milligan.  Thus, I agree with the plaintiff that the legal principles as summarised in Tang Teng Hong Tso set out in paragraph 20 above remain good law in Hong Kong.

23.For the reasons set out below, I agree with the plaintiff that the statutory declarations made or to be made by the dings in this case must all be false.

24.For the 2^nd defendant, the 4^th defendant, the 6^th defendant, the 8^th defendant, the 10^th defendant, the 12^th defendant, the 14^th defendant, the 16^th defendant and the 17^th defendant: –

(1)  These dings submitted their respective applications under the Policy in 1995 which applications were withdrawn in 1996.  No statutory declaration was ever made by them.

(2)  However, in law, even when no statutory declaration was made by the dings yet, this is no answer to the development scheme being illegal if the implementation of the scheme necessarily involves the making of a false statutory declaration, see: Tang Teng Hong Tso(supra) at §21(3).

(3)  Under the Policy, these dings would necessarily be required to make the statutory declaration. From 1995 to 1996, the applicable version of the statutory declaration forms is the February/May 1993 Version which contained a statement that the declarant was the “sole owner (唯一業權人)”of the land.

(4)  This statement, if made, must be false since:

(a) It has been held that the phrase “sole owner (唯一業權人)” means that the ding was the unqualified sole owner of the land in question, ie both legal and beneficial sole owner of the land, see: Chan Yau v Chan Calvin (supra), at §§86, 89.  Hence, these dings had to declare themselves as both legal and beneficial sole owner of the land;

(b) These dings were never intended to be the unqualified sole owner of the land.  In their Chinese Agreements made with Green House in 1995, there was an express provision (Clause 4) that Green House was the true owner of the land and the dings only held the land on trust for Green House; and

(c) These dings were never the beneficial owner of the land and were mere trustees holding the respective Properties on trust for the plaintiff.

25.For the 3^rd defendant, the 5^th defendant, the 7^th defendant, the 9^th defendant, the 11^th defendant and the 13^th defendant: –

(1)  They made their statutory declarations in May/June/August 1996 in the February/May 1993 Version.

(2)  These statutory declarations contained a statement that the declarant was the “sole owner (唯一業權人)”of the relevant land. 

(3)  This statement must be false because:

(a)  At the time when the respective statutory declarations were made, the respective assignments of the Properties to these dings had not yet been entered into.  Hence, these dings were neither the legal nor beneficial owner of the respective Properties;

(b)  Further, as in the other cases, these dings were never intended to be the unqualified sole beneficial owner of the land.  In the 3^rd defendant, the 5^th defendant, the 7^th defendant, the 9^th defendant, the 11^th defendant and the 13^th defendant’s Chinese Agreements made with Green House in 1996, there was an express provision (Clause 4) that Green House was the true owner of the land and the dings only held the land on trust for Green House.  In the 11^th defendant and the 13^th defendant’s Chinese Agreement made with the 15^th defendant in 1998/1999, there was an express provision (Clause 4) that the 15^th defendant was the true owner of the land and the dings only held the land on trust for the 15^th defendant.  In the 3^rd defendant, the 11^th defendant and the 13^th defendant’s Chinese Agreements made with the 15^th defendant in 1998/1999/2003, there was an express provision (Clause 4) that the 15^th defendant was the true owner of the land and the dings only held the land on trust for the 15^th defendant.  In the 7^th defendant, the 9^th defendant, the 11^th defendant and the 13^th defendant’s Chinese Agreements/Deeds made with the 15^th defendant in 2006/2007, there was an express provision (Preamble 2) that the 15^th defendant owned all the interest in the land and the dings were trustees; and

(c)  These dings were never the beneficial owner of the land and were mere trustees holding the respective Properties on trust for the plaintiff.

26.For the 18^th to 20^th defendants: –

(1)  They made their first statutory declarations on 3 April 2001 in the October 1997 Version.  The declarations contain (a) a statement that the declarant was the “sole owner (唯一業權人)”of the land, and (b) a statement that the declarant “have never made and have no intention at present to make any private arrangements for my rights under the Small House Policy to be sold to other individual/a developer”.

(2)  The 18^th to 20^th defendants made their second statutory declarations in April 2006 in the October 2004 Version.  The declarations contain statements (a) that the declarant was the “sole legal and registered owner (唯一合法註冊業權人)”of the land, (b) that the declarant “have never made and have no intention at present to make any private arrangements for my rights under the Small House Policy to be sold to other individual/a developer”, and (c) that the declarant “have never entered into any arrangements or agreement with any person or persons to transfer, alienate, dispose or otherwise deal with my rights in and over the Lot including but not limited to the right to develop the Lot pursuant to any grant or approval to be issued by the Government”.

(3)  All of the said statements must be false since:

(a) On 3 April 2001, these dings entered into the Chinese Agreements with the 15^th defendant.

(b) These dings were never intended to be unqualified sole owner of the land.  In the said Chinese Agreements, there was express provision (Preamble 3) that the 15^th defendant owned all the interest in the land and the dings were trustees; and

(c) These dings were never the beneficial owner of the land and were mere trustees holding the respective Properties on trust for the plaintiff.

27.In the premises, it is indisputable that in order to implement the subject small house development scheme initiated by the 1^st defendant under the Development Agreements, the dings had to make false declarations to the 21^st defendant and also commit the tort of misrepresentation against the 21^st defendant.  Applying the established legal principles as set out in paragraphs 20 to 22 above, the Development Agreements and the development scheme must be illegal and liable to be set aside.

28.By reason of the matters stated above, the plaintiff is entitled to the following relief: –

(1)  Declarations that the Development Agreements were void and be set aside (see the Re-Re-Re-Re-Re-Amended Statement of Claim (“RRRRRASOC”) paragraphs 1 to 3 of the Prayer for Relief).

(2)  Declarations that all the sale and purchase agreements were void and be set aside (see RRRRRASOC paragraphs 7, 8, 13, 14, 19, 20, 25, 26, 31, 32, 37, 38, 43, 44, 51, 52, 59 and 60 of the Prayer for Relief).  These agreements are part and partial of and are collateral to the illegal scheme under the Development Agreements, and are likewise illegal and liable to be set aside.

F.  RESULTING TRUST: THE 2^ND TO 20^TH DEFENDANTS WERE/ARE TRUSTEES HOLDING TITLE OF THE PROPERTIES ON TRUST FOR THE PLAINTIFF

29.The basis of the plaintiff’s claim is straightforward.  It is common ground that the Deceased assigned the respective Properties to the 2^nd defendant, the 4^th defendant, the 6^th defendant, the 8^th defendant, the 10^th defendant, the 12^th defendant, the 14^th defendant, the 16^th defendant and the 17^th defendant on 4 April 1995.  In the 1^st and 15^th defendants’ Re-Re-Amended Defence and Counterclaim (“D1/D15’s RRAD&CC”), the 1^st and 15^th defendants positively admitted that the Deceased has never received any consideration for the assignments.  Hence, it is not the pleaded case of the 1^st and 15^th defendants that the Deceased has ever received any consideration for the assignments.  The presumption of resulting trust thus arose and the 2^nd defendant, the 4^th defendant, the 6^th defendant, the 8^th defendant, the 10^th defendant, the 12^th defendant, the 14^th defendant, the 16^th defendant and 17^th defendant were holding the respective Properties on resulting trust for the plaintiff, see: Tang Teng Hong Tso (supra), at §21(5).  Further, the 1^st defendant cannot rebut the presumption by relying on the illegal scheme.

30.The 1^st to 20^th defendants never sought to rebut the resulting trust.  Their case is a simple denial of the existence of the resulting trust and the defendants rely on the illegal development scheme and seek to enforce the same.  The development scheme being illegal the court would not assist to enforce the same.  What remains is the resulting trust and the original owner is entitled to recover the land she beneficially owned.

31.The respective Properties were subsequently assigned to the remaining dings and the 15^th defendant at different stages because the 1^st defendant saw it necessary to do so in some cases.  In law, if a trustee misapplies the claimant’s original asset and transfers the same to a third person, a beneficiary may follow the original asset (tracing) and enforce his equitable title to it, see: Snell’s Equity,33^rd ed, at §33-055.  Hence, despite these subsequent assignments, the beneficial interest in the respective Properties has remained vested in the plaintiff, and the remaining dings and the 15^th defendant have been holding the respective Properties on trust for the plaintiff. 

32.The 13^th defendant surrendered Lot 104F to the 21^st defendant in exchange for a new Lot 391 in 1998, while the 3^rd defendant surrendered Lot 104A to the 21^st defendant in exchange for a new Lot 396 in 2005.  Similarly, a beneficiary can trace into the substituted asset in the hands of the trustee and enforce its beneficial title, see: Snell’s Equity,33^rd ed, at §30-055.  The plaintiff is thus entitled to the beneficial interests in the assets, ie Lots 391 and 396 in the hands of the trustees (the 3^rd defendant and the 13^th defendant).  The beneficial interests in Lot 391 and 396 have remained vested in the plaintiff all along, and the 3^rd defendant and the 13^th defendant hold them on trust for the plaintiff.

33.In the premises, the plaintiff is entitled to the following relief: –

(1)  Declarations that the 2^nd to 20^th defendants held/hold the respective Properties on trust for the plaintiff (see RRRRRASOC, paragraphs 9, 15, 21, 27, 33, 39, 45, 49, 53, 57, 61 and 64 of the Prayer for Relief).

(2)  Orders against the 2^nd to 20^th defendants to convey and deliver vacant possession of the respective Properties to the plaintiff (see RRRRRASOC, paragraphs 12, 16, 18, 22, 24, 28, 30, 34, 36, 42, 46, 48, 50, 54, 56, 58, 62, 63A and 65-70 of the Prayer for Relief).

G.  PLAINTIFF’S CLAIM AGAINST THE 1^ST DEFENDANT FOR TREPASS

G.1    The plaintiff’s claim against the 1^st defendant for trespass

34.The legal principles relating to trespass are well established and have been summarised by the plaintiff as follows: –

(1)  Trespass to land involves the unjustifiable intrusion by one person upon land of another.  See: Clerk & Lindsell on Torts, 22^nd ed, at §19-01; and

(2)  Proof of ownership is prima facie proof of possession, meaning a person holding title to the land is presumed to be in possession.  See: Clerk & Lindsell on Torts,at §19-15.

35.In the present case, I agree with the plaintiff’s submission that the cause of action in trespass is made out on the following facts: –

(1)  As held in Section F above, the beneficial interest in the respective Properties has all along remained vested in the plaintiff, and the 2^nd to 20^th defendants were/are mere trustees holding the respective Properties on trust for the plaintiff.

(2)  It is not disputed that by the letter from the plaintiff’s former solicitors to the 1^st defendant dated 29 November 2005, the plaintiff terminated the 2004 Agreement and demanded the 1^st defendant to deliver vacant possession of the Properties back to the plaintiff.  The reason of demand as stated in the said letter was invalid (as the 2004 Agreement is illegal and unenforceable in the first place).  However, in law, if other circumstances justified the termination of the contract and they would have provided a valid reason, the claimant is entitled to rely on that other reason even if he in the letter of termination gave a wrong/inadequate reason or no reason at all, see: Ng Ai Kheng v Open University of Hong Kong [2006] 2 HKLRD 228, at §§47 to 52; and Chitty on Contract, 33^rd ed, at §24-014.  In the present case, subject to the 1^st defendant’s defence based on estoppel which will be discussed below, the plaintiff was entitled to recover possession at the time of the said letter by virtue of the plaintiff’s beneficial interest in the Properties.   

(3)  It is again not disputed that the 1^st defendant has been in possession of the Properties after November 2005 (the only dispute is whether the 1^st defendant’s possession was wrongful):

(a) In D1/D15’s RRAD&CC, the 1^st defendant admits that the defendants have taken possession of the Properties but denies that such taking of possession was wrongful.

(b) In D1/D15’s RRAD&CC, the 1^st defendant’s witness statement and throughout the trial, the 1^st defendant admits that she has continued with the construction on the Properties all along.

(c) In D1/D15’s RRAD&CC, the 1^st defendant’s witness statement and throughout the trial, the 1^st defendant repeatedly asserts that she has the keys of the 2 small houses built on Lots 104B and 104C, and has attempted to give those keys and possession of the 2 small houses to the plaintiff but the plaintiff refused.

(4)  The 1^st defendant’s continued possession of all the Properties despite the plaintiff’s demand for vacant possession would, therefore, constitute wrongful denial of the plaintiff’s right to recover and possess the Properties.  Hence, the 1^st defendant’s continued possession of the Properties constitutes trespass until the present time.

36.It is important to note that the plaintiff’s claim on trespass is not in any way affected by the illegality of the development agreements and scheme: –

(1)  As set out in paragraphs 20 to 22 above, Hong Kong courts have adopted and applied the principle in Tinsley v Milligan.  In Tinsley v Milligan, Lord Browne-Wilkinson held as follows: –

(a)  At 369C-E:

“Neither at law nor in equity will the court enforce an illegal contract which has been partially, but not fully, performed. However, it does not follow that all acts done under a partially performed contract are of no effect. In particular it is now clearly established that at law (as opposed to in equity), property in goods or land can pass under, or pursuant to, such a contract. If so, the rights of the owner of the legal title thereby acquired will be enforced, provided that the plaintiff can establish such title without pleading or leading evidence of the illegality…” (emphasis added)

(b)  At 374D-E:

“…The effect of illegality is not substantive but procedural…” (emphasis added)

(c)  At 376D-F:

“…In my judgment the time has come to decide clearly that the rule is the same whether a plaintiff found himself on a legal or equitable title: he is entitled to recover if he is not forced to plead or rely on the illegality, even if it emerges that the title on which he relied was acquired in the course of carrying through an illegal transaction…” (emphasis added)

(2)  Adopting Tinsley (supra), the Court of Appeal in Kan Wai Chung (supra), at §§7.3-7.7 held that the developers established their title to the land by resulting trust without the need to rely on the illegal co-operation agreements with the dings in question. 

(3)  This is the precise basis of the plaintiff’s claim on resulting trust, ie that the plaintiff retains title (beneficial interest) in the Properties by reason of absence of consideration and hence does not rely on any illegal agreements at all.  Applying Tinsley (supra) to the present case, as the plaintiff’s title in the Properties is derived purely from the resulting trust without being tainted by any illegality.  It follows that the plaintiff’s status to claim trespass is not tainted by illegality.

G.2    The 1^st defendant’s defence of estoppel

37.In D1/D15’s RRAD&CC, the 1^st defendant pleads that since about November 2005, Kwan H.S. encouraged the 1^st defendant to proceed with the construction. Relying on Kwan H.S.’s representations, the 1^st defendant acted to her detriment.  Hence, it is argued that the plaintiff is estopped from claiming loss for the 1^st defendant’s possession of the Properties.

38.I agree with the plaintiff’s submission that the 1^st defendant’s defence of estoppel must fail.  The 1^st defendant has wholly failed to prove that the plaintiff has made any clear and unequivocal promise that the plaintiff would not ask for the return of the Properties. 

39.First, the 1^st defendant’s allegations contradict the contemporaneous documents which are unequivocal on the subject: –

(1)  It is not disputed that by a letter from the plaintiff’s then solicitors to the 1^st defendant dated 29 November 2005, the plaintiff demanded delivery of vacant possession of the Properties forthwith.

(2)  It is not disputed that by the letter from the plaintiff’s then solicitors to the 1^st defendant dated 3 January 2006, the plaintiff reminded the 1^st defendant not to tamper with the Properties.

(3)  It is not disputed that the plaintiff commenced HCA 1748/2006 on 14 August 2006 to claim against the 1^st defendant for possession of the Properties.

(4)  It is not disputed that the plaintiff discontinued HCA 1748/2006 on 26 October 2007 and commenced the present action on the same day (originally DCCJ 4739/2007) to claim against the 1^st defendant for possession of the Properties.

(5)  It is not disputed that by the letter from the plaintiff’s then solicitors to the 1^st defendant dated 31 October 2007, the plaintiff requested the 1^st defendant not to do or continue any construction work on the Properties.

(6)  It is not disputed that by the letter from the plaintiff’s then solicitors to the 1^st defendant dated 3 December 2007, the plaintiff again requested the 1^st defendant not to do or continue any construction work on the Properties.

(7)  It is not disputed that by the letter from the plaintiff’s then solicitors to the 1^st defendant dated 26 February 2008, the plaintiff requested the 1^st defendant to stop the construction works on the Properties.

(8)  It is not disputed that by the letter from the plaintiff’s then solicitors to the 1^st defendant dated 2 April 2008, the plaintiff objected to the on-going construction works on the Properties.

40.The 1^st defendant did not respond to any of the above contemporaneous letters of demand which squarely contradicted the 1^st defendant’s assertion that the plaintiff allowed her to remain in possession of the Properties and continue with the construction work.  Had the objective conduct and/or representation of the plaintiff justified a belief of the 1^st defendant that the plaintiff had promised to let her possess the Properties, the 1^st defendant would surely have objected to the repeated demands stated in the formal letters of the plaintiff’s solicitors.

41.Second, Kwan H.S. gave evidence that he had repeatedly told the 1^st defendant to stop the construction work on the Properties.  I agree that such request is consistent with the said contemporaneous letters and court action:

(1)  In Kwan H.S.’s witness statement, he stated that from about 1 December 2005 to March 2006, he told the 1^st defendant not to continue the construction work on the Properties unless further agreement was reached.

(2)  Under cross-examination, Kwan H.S. further testified that at the site visit on about 20 December 2005 (as recorded in the 3 January 2006 letter), he expressly told the 1^st defendant to stop the construction on the Properties.

42.Third, all the evidence shows unequivocally that during the relevant period the plaintiff and the 1^st defendant were trying to negotiate a settlement which was the reason for further conversations and meetings: –

(1)  In D1/D15’s RRAD&CC, the 1^st defendant admits that since about November 2005, the 1^st defendant has approached Kwan H.S. to negotiate a new agreement and drafts were exchanged.

(2)  It is not disputed that since about November 2005, Kwan H.S. and the 1^st defendant has met on various occasions to negotiate a new settlement agreement.

(3)  It is not disputed that by the letter from the plaintiff’s then solicitors to the 1^st defendant dated 3 January 2006, the plaintiff put on record that all negotiations between the plaintiff and the 1^st defendant “and thereafter, [were] entirely conducted on a totally without prejudice basis”.

(4)  In Kwan H.S.’s witness statement, he explained that he insisted on signing a new agreement with the 1^st defendant upon successful negotiation because (a) the Deceased would otherwise be left unprotected and in a disadvantaged position, and (b) given the breach of the 2004 Agreement, he did not feel confident that he could rely on the mere representations by the 1^st defendant.

(5)  Under cross-examination, Kwan H.S. explained that he continued to negotiate with the 1^st defendant for a new settlement agreement because he did not want to commence any litigation at the time.  Kwan H.S. also explained that he and the 1^st defendant had intended to sign a new settlement agreement on or before 30 June 2006.  Only after the plaintiff and the 1^st defendant failed to reach a new settlement agreement by 30 June 2006, Kwan H.S. instructed the plaintiff’s then solicitors to commence a legal action.

(6)  It is not disputed that draft settlement agreement prepared by the plaintiff’s then solicitors on 12 May 2006 was exchanged but not executed.  Clauses 10 and 12 expressly stated that in the event the agreement was terminated, the Properties have to be returned to their original state and conveyed back to the plaintiff.

(7)  The above shows that despite the negotiation which fell through, the plaintiff had all along been insisting on recovery of the Properties.

43.Fourth, the 1^st defendant’s allegation of an estoppel is based on bare assertions.  For the reasons advanced by the plaintiff, I agree the 1^st defendant is not an honest and reliable witness and her bare assertions must be rejected: –

(1)  Throughout the trial, the 1^st defendant changed her evidence frequently in an attempt to salvage her case and distance herself from the illegal development scheme:

(a)  In the 1^st defendant’s witness statement, the 1^st defendant repeatedly alleges that the 1^st defendant and the Deceased were joint developer (聯合發展商) of the Properties.  However, during the 1^st defendant’s oral opening submissions and the 1^st defendant’s cross-examination, the 1^st defendant changed her story to that Green House/the 1^st defendant/the 15^th defendant were merely acting as an agent for the Deceased.

(b)  In the 1^st defendant’s evidence-in-chief, she amended paragraphs 5, 6, 8, 14, 16, 17 and 18 of her witness statement.  Most of these amendments were to the similar effect that other people from Green House (but not the 1^st defendant) participated in the illegal development scheme.  I agree the 1^st defendant could not have misunderstood her own role when she made her witness statement.

(c)  Under cross-examination, the 1^st defendant explained that the said amendments were due to typographical mistakes (手民之誤).  At first, the 1^st defendant alleged when the 1^st defendant prepared the witness statement, the 1^st defendant told the statement taker the correct version but the statement taker might have heard it wrong or typed out the statement incorrectly, and the 1^st defendant’s only mistake was not reading the draft statement carefully.  Later, the 1^st defendant changed her story to say that she might have told the statement taker wrongly.  It was only after this court’s further query that the 1^st defendant changed back to her earlier excuse.

(d)  In any event, I agree that both of the 1^st defendant’s excuses are unbelievable.  It is quite inconceivable that the same “typographical mistake (手民之誤)” would have occurred in 7 different paragraphs covering 7 different events.  Further, the 1^st defendant’s witness statement was filed back in 2011.  From 2011 to the pre-trial review on 3 October 2018 (when the 1^st defendant was legally represented), the 1^st defendant never made any request for amendment or indicate that her witness statement required amendment.  Even in the 1^st defendant’s written and oral opening, the 1^st defendant did not raise the issue.

(e)  In cross-examination, when asked about the furniture placed in the small houses on Lot 104B and 104C, the 1^st defendant at first alleged that she did not know but agreed that there was staff going in and out of the houses, and she thought there were some furniture inside.  In re-examination, the 1^st defendant changed her story to that she had engaged someone to look at the feng shui (風水) of the houses and was advised to place some furniture there to give an appearance that someone lives there (人氣).  This “feng shui” explanation had never been raised before.

(2)  Throughout the trial, the 1^st defendant repeatedly gave evidence that is contrary to common sense:

(a) In cross-examination, the 1^st defendant admitted that by the deed of settlement signed among the shareholders of Green House in 1997, a number of development projects were assigned to the 1^st defendant personally.  However, apart from the Properties, the 1^st defendant claimed that she did not know the nature of the other development projects.  This is unbelievable particularly in light of (i) the 1^st defendant alleges that she or her father had invested in Futin Limited and Glory Million Industrial Limited, and the 1^st defendant owned interests in the companies; (ii) the 1^st defendant’s alleged dream or ideal (理想) to keep promises and to help others in building houses; and (iii) the 1^st defendant’s assertion that she had invested almost HK$12,000,000.  Without knowing the nature of the other development projects, the 1^st defendant would not know what promises to keep, how to help others to build houses and the potential liability she may incur.

(b) In re-examination, the 1^st defendant alleged that the 1^st defendant’s company had engaged persons to clean the two completed houses and the domestic helpers that spoke with the DLO’s officers might be the persons so engaged.  However, this is inconsistent with what the domestic helpers told the DLO’s officers (ie that their employers had rented portion of the houses for residential purpose).  The DLO’s officers’ evidence was not challenged by the 1^st defendant under cross-examination.

44.Hence, insofar as the 1^st defendant’s testimony contradicts that of the plaintiff and the 21^st defendant’s witnesses and the objective documentary evidence, the same is rejected; and accordingly, I find the following facts to have been proved: –

(1)  In about 1994, Lam Kwok Hung, on behalf of Green House, approached the Deceased and suggested to build small “ding” houses on the Properties.

(2)  At about the same time when the 1995 Development Agreement was signed, Lam Kwok Hung explained to Mr Kwan Yuen Shing (“Kwan Y.S.”) and the Deceased that the procedures to develop small houses involved the following: the Deceased would divide up Lot 104 where Green House would build small houses thereon; premium had to be paid to the 21^st defendant after small houses were built and the Deceased would get 2 houses.  Lam Kwok Hung did not tell Kwan Y.S. and the Deceased that the development scheme would involve dings making false declarations to the 21^st defendant.

(3)  When Kwan Y.S. signed the sale and purchase agreements and assignments on 4 April 1995, the lawyer explained to Kwan Y.S. and the Deceased that the signed documents were for the division of Lot 104 and to transfer the land to other people.  The lawyer did not tell Kwan Y.S. and the Deceased that the development scheme would involve dings making false declarations to the 21^st defendant.

(4)  Both Kwan Y.S. and Kwan H.S. did not know the procedures for developing small houses.  Kwan H.S. expressly denied that in 1995, 2000 and 2004, either Kwan Y.S. or Kwan H.S. knew that the Development Agreements involve the dings making declarations.  Similarly, there is no evidence that the Deceased had any such knowledge.

(5)  After the issue of the 29 November 2005 letter where the plaintiff asked for possession of the Properties, Kwan H.S. met the 1^st defendant on several occasions to negotiate settlement.  In those meetings, Kwan H.S. repeatedly told the 1^st defendant not to continue the construction on the Properties.  Kwan H.S. further informed the 1^st defendant that if the parties could not reach a settlement agreement by 30 June 2006, the plaintiff would seek recovery of the Properties via litigation.

(6)  In early 2006, the 1^st defendant informed Kwan H.S. about blockage of the road to the Properties.  However, the 1^st defendant did not inform Kwan H.S. about HCA 535/2006 and Kwan H.S. was only aware of the same after 30 June 2006 when the attempt to reach settlement failed and he instructed his solicitors to commence legal action against the 1^st defendant.  Kwan H.S. was not aware of the settlement agreement in HCA 535/2006 until about February 2007 when the 1^st defendant sent the settlement agreement to the plaintiff’s solicitors who forwarded the same to Kwan H.S.

(7)  During the period from 29 November 2005 onwards, Kwan H.S. had never made any promise not to recover the Properties or to encourage the 1^st defendant to proceed with the construction works and to incur expenses in settling HCA 535/2006 as alleged.  To the contrary, Kwan H.S. has all along repeatedly requested the 1^st defendant to cease the construction works and to deliver possession of the Properties by various written documents (letters, court actions) and by various oral requests.

(8)  However, the 1^st defendant ignored Kwan H.S.’s repeated requests and continued with the construction works.  After the 2 small houses on Lots 104 B&C were completed, the 1^st defendant leased the same to tenants for residential purpose and earned rental income therefrom.

45.Once the defence of estoppel is rejected, the 1^st defendant’s assertion that she had tried to return the keys to the two constructed houses to the plaintiff’s solicitors in around August 2009 falls apart.  I agree the plaintiff’s clear stance since November 2005 was to terminate the development agreements and recover possession of all the Properties.  Further, acceptance of the keys would amount to an agreement by the plaintiff to continue with the illegal scheme of development.  It was only correct for the plaintiff’s solicitors not to accept the keys.  Therefore, the 1^st defendant’s possession of all the Properties including the two houses since November 2005 was wrongful.

G.3    Assessment of mesne profits

46.By reason of the 1^st defendant’s trespass to the Properties, the plaintiff is entitled to claim mesne profits againstthe 1^st defendant.  Trespass being a tortious cause of action, assessment of loss and damage will be based on the usual tortious compensatory principle, which dictates that the plaintiff should be compensated as if the tort had not been committed, ie what value would have been enjoyed by the plaintiff in possessing and using the Properties.  The usual assessment would be the mesne profits of the Properties.  As for the land on which no houses had been erected, I accept the undisputed expert evidence of the plaintiff’s surveyor on mesne profits since November 2005.

47.Regarding Lot 104B and Lot 104C where 2 houses have been built, the plaintiff’s expert opines that the market rental value of the 2 small houses would not be affected by the absence of certificate of compliance.  This is because a potential tenant in the market in Hong Kong would only be concerned about the decorations and living condition of the house and the land and would not be concerned whether there is any certificate issued at all.  However, in my view, this is not just a valuation question.  I am only prepared to award to the plaintiff mesne profits on the rental value of the land without the houses, otherwise it would put the plaintiff in the position as if the illegal contract had been carried out.

48.Based on the above, the plaintiff’s claim of damages in terms of mesne profits is assessed as follows: –

	Period	Amount (HK$)
Lot 396	From 1.12.2005 to 15.9.2016	46,700
	From 16.9.2016 to 6.3.2019	15,340
Lot 104B	From 1.12.2005 to 15.9.2016	69,185[2]
	From 16.9.2016 to 6.3.2019	16,225
Lot 104C	From 1.12.2005 to 15.9.2016	67,890
	From 16.9.2016 to 6.3.2019	15,930
Lot 104D	From 1.12.2005 to 15.9.2016	80,430
	From 16.9.2016 to 6.3.2019	26,550
Lot 104E	From 1.12.2005 to 15.9.2016	80,430
	From 16.9.2016 to 6.3.2019	26,550
Lot 391	From 1.12.2005 to 15.9.2016	46,700
	From 16.9.2016 to 6.3.2019	15,340
Lot 104G	From 1.12.2005 to 15.9.2016	84,170
	From 16.9.2016 to 6.3.2019	27,730
Lot 104H	From 1.12.2005 to 15.9.2016	73,190
	From 16.9.2016 to 6.3.2019	24,190
Lot 104RP	From 1.12.2005 to 15.9.2016	80,430
	From 16.9.2016 to 6.3.2019	26,550
	Total (HK$):	823,530

H.  THE 1^ST AND 15^TH DEFENDANTS’ COUNTERCLAIM AGAINST THE PLAINTIFF FOR UNJUST ENRICHMENT

49.In D1/D15’s RRAD&CC, they counterclaim against the plaintiff for unjustly enrichment “to the extent of the increased value of the Land after site formation works, and the value of the Plaintiff’s Houses”.  I agree with the plaintiff’s submission that the counterclaim must fail for the following reasons.

50.First, applying Tinsley v Milligan (supra), the court will not assist to enforce any illegal scheme or agreements or claim if the claimant has to plead or lead evidence on the illegality. Further in Chan Yau v Chan Calvin (supra), the court disallowed a restitution claim for money paid by the developer to the ding and to third parties in the implementation of the illegal scheme.  Likewise, in the present case, the 1^st and 15^th defendants’ expenses, if any, were incurred in the implementation of the illegal scheme under the illegal Development Agreements and hence the court would not grant any relief in relation thereof.

51.Further or alternatively, there is no evidence at all, expert or otherwise, on the pleaded particulars of the “unjust enrichment”, namely (1) the increased value of the Properties after the site formation works; and (2) the value of the 2 small houses.  The burden is on the 1^st defendant/15^th defendant to prove the alleged “values”.  The alleged expenditure incurred by the 1^st and 15^th defendants does not necessarily equate with any increased value of the Properties.  The court cannot speculate on matters such as market value.  Thus, the total absence of such evidence is fatal to the 1^st and 15^th defendants’ counterclaim in any event.

52.Further still, there is no satisfactory evidence on the items of expenses stated in the table compiled by the 1^st and 15^th defendants.  There is no evidence as to when, who, how and why the table was prepared.  The 1^st and 15^th defendants have only produced very limited receipts to prove expenses.  In the premises, even if expenses are recoverable, there is no credible evidence to prove such total expenses.

I.  THE PLAINTIFF’S CLAIM AGAINST THE 21^ST DEFENDANT

53.The plaintiff has pleaded no cause of action against the 21^st defendant.  Rather, the 21^st defendant has been joined in these proceedings for the purpose of obtaining relief against the Government (and apparently also for obtaining documents and information).

54.The remedies sought by the plaintiff against the 21^st defendant is further narrowed, by way of an amendment to the Prayer for Relief in the Statement of Claim on 17 Jan 2019 (8^th day of trial), to the following: –

“(17) A declaration that the 1^st Building Licence and 1^st Permission Letter in relation to Section B of Lot No. 104 in Demarcation District No. 252 be void and set aside;

(23) A declaration that the 2^nd Building Licence and 2^nd Permission Letter in relation to Section C of Lot No. 104 in Demarcation District No. 252 be void and set aside;

(29) A declaration that the 3^rd Building Licence and 3^rd Permission Letter in relation to Section D of Lot No. 104 in Demarcation District No. 252 be void and set aside;

(35) A declaration that the 4^th Building Licence and 4^th Permission Letter in relation to Section E of Lot No. 104 in Demarcation District No. 252 be void and set aside;

(41) A declaration that the 5^th Permission Letter in relation to Lot 391 in Demarcation District No. 252 be void and set aside;”

I.1     Whether the Building Licences and Permission Letters are void and ought to be set aside

55.I agree with the 21^st defendant’s submission that, in the present case, even if the court finds that fraud was exercised by the dings against the Director in their respective applications for the Building Licences and Permission Letters, the Licences and Letters were merely voidable at the instance of the Director, not void ab initio.

56.Indeed, the Permission Letters contain terms that the Director may wish to enforce against the grantee.  For example, in relation to the Permission Letter vis-à-vis Lot 104B, there is a term that, in the event that as a result of or arising out of any works done by the grantee (ie the 5^th defendant) or owing to any other reason, any falling away, landslip or subsidence occurs at any time, whether in or from any land, within the area or from any adjacent or adjoining Government or leased land, the grantee shall at his own expense reinstate and make good the same to the satisfaction of the Director.  This Permission Letter is already “spent”, in the sense that the Government land concerned has already been entered upon, site formation work has already been done, and the small house has already been erected.  It may be in the interest of the Director to keep the Permission Letter “alive” so that, should any falling away, landslip or subsidence occur, the Director might look to the 5^th defendant for remedies.

57.Similar terms are contained in the Licence for, for example, Lot 104B.  

58.This provides the legitimate reason why the Director would like to retain his discretion as to what to do with the Building Licences and Permission Letters, after the court has given judgment in the present case.  If this court orders that the Building Licences and the Permission Letters be rescinded for fraud, these documents will be treated in law as never having come into existence in the first place.

59.Further, as submitted by the 21^st defendant, I agree that the declarations sought by the plaintiff are wholly unnecessary. 

60.In his submissions, the plaintiff tried to justify his claim relating to the Building Licences and Permission Letters by saying that these documents are registered in the Land Registry against the pieces of land concerned, apparently suggesting that these documents will adversely affect the title of the land concerned.

61.However, I agree with the 21^st defendant that should the plaintiff succeed in the action herein, and the pieces of land conveyed back to the plaintiff as he requests (see paragraph 33(2) above), there would be no real risk that his title to the land could be challenged by reason of the existence of the Building Licences and Permission Letters.

62.As pointed out by Ribeiro PJ in Kao, Lee & Yip v Lau Wing (2008) 11 HKCFAR 576, at §48:

“… a declaration is a discretionary remedy which the courts will only consider granting where conduct in accordance with the declaration sought can be expected to bring about legitimate and realistic relief.”

63.The court would not grant a declaratory relief that is wholly unnecessary, as in the present case.

64.It is also instructive to note, as pointed out by the 21^st defendant, that in Best Sheen Development Ltd v Official Receiver (supra), the ding involved was adjudged bankrupt, and the plaintiff (the original land owner) commenced proceedings against the Official Receiver for a declaration that the land registered in the name of the ding beneficially belonged to the plaintiff.  He also sought the vacation of a receiving order and an order of adjudication of bankruptcy from the land register.  Yuen J (as she then was) granted the declaration sought, but considered that she had no jurisdiction to vacate the receiving order and the order of adjudication from the land register.  She further observed that, in any event, the registration of the declaration made (ie that the land in question belonged beneficially to the plaintiff) would suffice to show that the land did not fall within the bankrupt’s estate[3]. In other words, it was not necessary to vacate the receiving order and the order of adjudication of bankruptcy from the land register at all.

65.Similarly, in the present case, the remedies that the plaintiff seeks against the other defendants, if successful, are sufficient to protect the plaintiff’s interests.  The remedies sought against the 21^st defendant are wholly unnecessary.

I.2     Conclusion on the plaintiff’s claim against the 21^st defendant

66.For the above reasons, I agree that the remedies sought by the plaintiff against the 21^st defendant are without legal basis, and in any event wholly unnecessary. 

J.  CONCLUSION AND DISPOSITION

67.For all the reasons set out above, I allow the plaintiff’s claim against the 1^st to 20^th defendants, and grant the relief set out respectively at paragraphs 28, 33 and 48 above.

68.I further order that the 1^st defendant do pay to the plaintiff interest on the sum of HK$823,530.00 at half of the Judgment Rate from the date of writ to judgment.

69.I dismiss the counterclaim by the 1^st and 15^th defendants against the plaintiff.

70.I dismiss the plaintiff’s claim for relief against the 21^st defendant.

71.Costs of the action (save those regarding the claim against the 21^st defendant) be paid by the 1^st to 20^th defendants to the plaintiff.

72.The plaintiff do pay the 21^st defendant’s costs of the action.

73.The above orders as to costs are nisi and shall become absolute in the absence of any application within 21 days to vary the same.

Mr Erik Shum and Mr Johnathan Tai, instructed by Messrs Hau, Lau, Li & Yeung, for the plaintiff

The 1^st defendant appeared in person

The 2^nd to 20^th defendants were absent

Mr Simon KC Lam, instructed by the Department of Justice, for the 21^st defendant