Triumph Capital Ltd v. Tang Cham Bun

HCA 1862/2015

[2020] HKCFI 1711

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1862 OF 2015

________________________

________________________

________________________

JUDGMENT

________________________

1.This case concerns a 3-storey small house (“the Small House”) erected on Section F of Lot No 990 in Demarcation District No 83 (“the Land”). The centre of the dispute is a Chinese Agreement dated 4 August 2006 (“the Chinese Agreement”). According to the plaintiff (“P”), the Chinese Agreement is an agreement between P and the defendant (“D”). The Chinese Agreement was signed by P and D as parties to the agreement, and was also signed by Madam Tang Yuk Lan Anna (“Anna”, the elder sister of D) as a witness. According to D, he has never signed the Chinese Agreement.

2.The parties have reached an agreement on several matters concerning the Small House, which are as follows:

(1) D became the registered legal owner of the Land under an assignment dated 13th July 1995.

(2) Building Licence number 88/97 (“the Building Licence”) was granted by the Government on 15 July 1998 to D for erection of an indigenous villager small house.

(3) Building works on the Land for the Small House were completed in July 2007.

(4) Subsequently, the Government issued a certificate of compliance dated 15 August 2008.

3.I would first set out the parties’ respective cases.

P’s CASE

4.P’s pleaded case is as follows:

(1) On 18 November 2005, P was incorporated in Hong Kong.

(2) On a date shortly after 4 August 2006, P and D entered into the Chinese Agreement, by which they have agreed that:

(a) P would construct a 3-storey small house on the Land within 12 months from the date of the Chinese Agreement and shall pay all the construction costs thereof.

(b) P would be entitled to have the 1/F, 2/F and the Roof of the Small House, while D would be entitled to have the G/F together with the garden thereof.

(c) D would execute all the necessary documents for the purpose of creating undivided shares or interests in the Land.

(d) All the agreements entered into between P and D in relation to the Land prior to the execution of the Chinese Agreement, if any, shall be declared null and void.

(3) In the Chinese Agreement, D acknowledged and confirmed that Anna was the beneficial owner of the Land, and D would assign or transfer the G/F of the Small House together with the Garden thereof to Anna.

(4) On 16 November 2009, for the purpose of facilitating the assignment or transfer of the 1/F, the 2/F and the Roof, D appointed Madam Tang Yip Sau Yung as his attorney by signing a General Power of Attorney (“the PA”).

(5) Pursuant to the Building Licence, from 16 August 2013 onwards, D would be at liberty to assign or transfer the 1/F, the 2/F and the Roof to P without the necessity of obtaining the consent of the District Lands Officer (“the DLO”).  However, wrongfully and in breach of the Chinese Agreement, D refused to assign or transfer the said properties to P.

5.P seeks a declaration that D is holding the 1/F, the 2/F and the Roof of the Small House on trust for P, and an order to require D to execute an assignment to transfer these properties to P, and to execute a deed of mutual covenant to implement the Chinese Agreement.

D’s CASE

6.D’s pleaded case is as follows:

(1) D has not signed the Chinese Agreement and has never had any agreement with P.

(2) D denies that Anna was the beneficial owner of the Land.

(3) Anna was D’s elder sister, and was a business partner with D in Mainland China.

(4) After obtaining the Building Licence, D did not proceed to construct a small house on the Land due to insufficient funding.

(5) In 1998, Anna made a proposal to D, and D and Anna reached an oral agreement (“the Construction Agreement”).  They agreed the following:

(a) Anna would pay for all the construction costs of the Small House;

(b) Anna would be responsible for all the construction works;

(c) In return, after completing the construction works and the issuance of the letter of compliance, Anna would be entitled to occupy the G/F together with the garden thereof;

(d) Upon a lapse of 5 years from the date of the letter of compliance, D would assign the G/F together with the Garden thereof to Anna; and

(e) D would retain the 1/F, the 2/F and the Roof.

(6) In or around mid of 2006, Anna told D that she had instructed Leung Kin & Co (“LKC”) to handle the procedural and conveyancing matters and had requested D to attend the office of LKC.  Inside a room in LKC’s office, Anna handed over certain documents to D for his signatures.  At that time, no staff from LKC or anyone else was inside the room except Anna and D.  Anna told D that his signatures on those documents were required for the implementation of the Construction Agreement.

(7) D asked Anna questions concerning the documents. Anna then left the room and approached a female staff member of LKC to ask for explanations.  After hearing the female staff member, Anna returned to the room and met D.  Anna told D that according to that female staff member, the purpose of the documents was to retain LKC as their solicitors, and to authorize LKC to act on behalf of D for the purpose of handling correspondences and the necessary conveyancing matters.

(8) Relying on those explanations, D signed the documents without paying attention to the contents of them.

(9) D denies that the Chinese Agreement was one of the documents signed by him on that occasion.

(10) After the completion of the construction of the Small House in 2007, Anna moved to reside at the Ground Floor of the Small House immediately afterwards.  The 1/F, the 2/F and the Roof were left vacant until 2008.  In 2008, Anna told D that the 1/F, the 2/F and the Roof were rented out.  D misunderstood that Anna was the person renting out those parts.

(11) In or about 2013, D requested LKC and Anna to prepare the assignment and to procure the other necessary conveyancing matters to implement the Construction Agreement, but LKC did not do so.

(12) On 19 August 2015, D wrote to the DLO and stated that LKC no longer represented D (“D’s Letter to DLO”).

7.D claims that the Chinese Agreement is not an agreement signed by him and P cannot enforce the same against him. Alternatively, the Chinese Agreement is illegal and unenforceable, for the implementation of the Chinese Agreement would involve a false declaration made by D.  In the further alternative, the Chinese Agreement should not be enforceable against D by reason of non est factum.  D counterclaims for an order requiring P to deliver vacant possession of the 1/F, the 2/F and the Roof to D, and to account to D for all the rentals received by P.

THE ISSUES

8.The issues to be resolved are as follows:

(1) whether the Chinese Agreement is an agreement signed by D;

(2) whether the Chinese Agreement is unenforceable by reason of illegality; and

(3) whether the Chinese Agreement is unenforceable by reason of non est factum.

9.Obviously, the 2^nd and the 3^rd issues would only arise if I resolve the 1^st issue in P’s favour.

DOCUMENTARY EVIDENCE

10.I would first mention the essential documentary evidence in these proceedings, which is as follows:

(1) The Chinese Agreement dated 4 August 2006

The Chinese Agreement consists of 2 pages.  All the words on the Chinese Agreement are printed, save and except the signatures thereon and the handwritten name “Tang Yuk Lan Anna” and a handwritten HKID No. under that name at the bottom of page 2 of the agreement.  On the face of it, this agreement was signed by someone on behalf of P and by D as parties to the agreement, and by Anna as a witness.  According to P, this agreement was signed by P’s director Madam 羅麗紅 (“Law”) on behalf of P, D himself and Anna.  According to D, he has never signed this agreement and the signatures on the agreement which appears to be his signatures are not his signatures.  D also claims that he does not know whether the signature on the agreement which appears to be Anna’s signature is in fact Anna’s signature.

(2) Statement of Travel Records concerning D issued by the Immigration Department (“the Travel Records”)

According to the Travel Records, D frequently left and re-entered Hong Kong through the Lok Ma Chau Control Point from late July 2006 to mid-August 2006.  D left Hong Kong on 3 August 2006 at about 1340, and came back to Hong Kong on 5 August 2006 at about 0906.  He traveled between Hong Kong and the Mainland several times on 5 August 2006.  He was in Hong Kong on 6 August 2006.

(3) The PA

D agreed that the signature on the PA is his signature.  The PA was interpreted to D by a clerk to LKC, Mr Chan Kam Wun (陳金煥, “Chan”).

(4) A copy of D’s HKID Card (“the HKID Card Copy”)

On this copy, there are some handwritten words.  According to D, save and except the date at the bottom of this document, all the handwritten words are his own handwriting, and the information written down are his residential address, mobile phone number in Hong Kong, and mobile phone number in Mainland China.  Under the words written by D, there is a handwritten date “16/11/09”.  According to Chan, the date is Chan’s handwriting.

(5) Copies of Construction Contract, Progress Reports, Quotations, Invoices, Receipts, Cheques, Accounting Records of Construction Costs of the Small House (“the Construction Documents”)

These are the documents produced by P for the purpose of proving that the construction of the Small House was commissioned and paid by P.

11.According to D, save and except the Chinese Agreement, all the other documents which on the face of the documents bearing D’s signatures are documents signed by him.

THE WITNESSES

12.I would now turn to the evidence given by the witnesses at the trial.  The outcome of these proceedings would very much depend upon my assessment of the live evidence given by the witnesses.  In assessing the evidence, a valuable guidance can be found in Lee Fu Wing v Yau Po Ting Paul[1], in which DHCJ Au (as he then was) said:-

“53. In assessing the credibility of a party’s case on a particular issue, I accept the submissions of [counsel] that the Court should take into considerations the following:-

(1) Whether the party’s case is inherently plausible or implausible.

(2) Whether the party’s case is, in a material way, contradicted by other evidence (documentary or otherwise) which is undisputed or indisputable.

(3) Where it is shown that a witness has been discredited over one or more matters to which he has given evidence using the above tests. This is relevant to the assessment of his overall credibility.

(4) The demeanour of the witnesses.”

13.When a party without a proper explanation fails to call a witness whom the party might reasonably be expected to call, or to disclose documents in respect of which the party is obliged to disclose, the court may draw an adverse inference against the party that the evidence of the witness or the document may not help the party’s case.

(1) In Telings International Hong Kong Ltd v John Ho and Others^[2], Le Pichon JA said:

“78. I turn now to consider the question of the effect of the plaintiff failing to call any witnesses. In his written submissions, [counsel] took the bold stance that

‘[n]o adverse inference could be drawn from the fact that the witnesses were not called. If the witness is not called, these statements are simply disregarded.’

79. I cannot accept [counsel’s] submission. It is contrary to the well-established maxim, omnia praesumunter contra spoliatorem, sometimes referred to as the principle in Armory v Delamirie (1722) 1 Str 505. In Hong Kong and Shanghai Banking Corporation v Chan Yiu Wah [1988] 1 HKLR 457, Fuad JA expounded that principle (at 467). That passage is quoted in full in my judgment in Tullett & Tokyo International Securities Ltd v APC Securities Co Ltd [2001] 2 HKC 713 at 723B-E:

‘285. Failure to produce evidence, as indicating unfavorable tenor of evidence: (1) In general. … The failure to bring before the tribunal some circumstance, document, or witness, when either the party himself or his opponent claims that the facts would thereby be elucidated, serves to indicate, as the most natural inference, that the party fears to do so; and this fear is some evidence that the circumstance or document or witness, if brought, would have exposed facts unfavorable to the party. These inferences, to be sure, cannot fairly be made except upon certain conditions; and they are also open always to explanation by circumstances which make some other hypothesis a more natural one than the party’s fear of exposure. But the propriety of such an inference in general is not doubted.

The non-production of evidence that would naturally have been produced by an honest and therefore fearless claimant permits the inference that its tenor is unfavorable to the party’s cause. Ever since the case of the Chimney Sweeper’s Jewel [Armory v. Delamirie] this has been a recognised principle.’

See also Li Sau Keung v Maxcredit Engineering Ltd [2004] 1 HKC 434 at 443I-444B.

80. While the judge referred (at §73) to

“the practice that where a litigant chooses not to call evidence, the court is entitled to be bold and can draw from the facts or reasonable inferences as to what facts may have been withheld”

and professed to have borne that in mind, it would appear that he did not find it necessary to apply the maxim by reason of his rejection of the testimony of the defence witnesses.

81. However, in thus rejecting the testimony of the defendants, the judge appears to have evaluated their evidence in isolation, without weighing it against any reasonable adverse inference to be drawn from the failure of the plaintiff to call any oral evidence on any particular matter or issue.  Using what appears to be a broad brush approach, the judge simply rejected the defendants’ evidence in its entirety.  In a case such as this, where the plaintiff has failed to call relevant witnesses to give evidence notwithstanding the highly complex and at times wholly unexplained factual backdrop, such an approach serves to emasculate the evidential maxim and cannot be correct.  In my view, every reasonable inference adverse to the plaintiff and in favour of the defendants should be drawn in determining each and every disputed fact.”

(2) See also South China Securities Ltd v Lam Kwen Yuen^[3], in which DHCJ Lisa Wong SC (as she then was) said:-

“7 I was reminded by Mr Leung, and I take note, of the principle that where a person without explanation fails to call as a witness a person who he might reasonably be expected to call, it is open to the Court to infer that that person’s evidence would not have helped that party’s case. See, eg Li Sau Keung v Maxcredit Engineering Ltd [2004] 1 HKC 434, 443E–444C, per Le Pichon JA citing O'Donnell v Reichard [1975] VR 916, 929, per Newton and Norris JJ. The same principle would apply to a failure without proper explanation to produce a document or other real evidence that a party might reasonably be expected to disclose.”

14.With these principles in mind, I turn to the evidence given by the witnesses in this case.  P has called 5 witnesses to give evidence in support of P’s case, namely (1) Mr Tang Kwok Yung (鄧國容, “Tang Senior”); (2) Mr Tang Shiu Hin (鄧肇軒, “Tang Junior”); (3) Mr So Siu Hong (蘇小康, “So”); (4) Chan; and (5) Madam Lee Shui Kiu (李瑞嬌, “Lee”).  D has given evidence in support of his own case.  I would now discuss the evidence given by each witness.

Tang Senior

15.Tang Senior mentioned the following in his evidence:

(1) P is a company owned by Tang Senior.

(2) Tang Senior has known Anna and D for several decades.  As far as he knows, Anna had a business in Mainland China in the past, and D worked for Anna.  D was Anna’s driver, and would drive Anna to Mainland for work.

(3) Another company owned by Tang Senior, The Proper Way Institute Limited, is the owner of The Remaining Portion of Lot No. 989 in Demarcation District 83 (“Lot 989 RP”).  Lot 989 RP is adjacent to the Land[4] .

(4) The Land is surrounded by other pieces of land and there is no public vehicular way allowing access to the Land.  The only public way leading to the Land is a narrow pedestrian walkway.  Only one man can pass the walkway at a time.

(5) In about 2005 or 2006, Anna approached Tang Senior and asked for permission to pass through Lot 989 RP for the purpose of constructing a small house on the Land.  Anna told Tang Senior that the Land was purchased by her, and D would build a small house on the Land. Anna told Tang Senior that D had obtained a building licence.  Anna also said that the small house would be owned by her.

(6) At first, Tang Senior refused to accede to Anna’s request.  Anna repeatedly made the same request, but Tang Senior remained unpersuaded.

(7) After about one month, Anna visited Tang Senior at his office.  This time, Anna proposed a joint venture to Tang Senior, ie after completion of the construction of the Small House, Anna would have the G/F and the Garden, and Tang Senior would have the 1/F, the 2/F and the Roof.  Tang Senior should pay all the construction costs of the Small House, and should allow a vehicular right of way to the Small House over Lot 989 RP. After considering the proposal for some time, Tang Senior accepted the proposal made by Anna.

(8) After that, Tang Senior asked So to follow up the matter.  Tang Senior himself did not know the progress of the joint venture until about 2013.  In about 2013, Tang Junior reported to him that D had refused to sign documents to transfer the 1/F, the 2/F and the Roof of the Small House to P.  Tang Senior therefore contacted Anna.  Anna told Tang Senior that she had asked D to perform the obligations under the Chinese Agreement, but D refused.  Anna said that D would only sign the necessary documents if Anna paid a sum to him.

16.In my view, Tang Senior is a forthcoming and honest witness.  In the light of Tang Junior’s evidence and the documents, the report made by Tang Junior to him concerning D refusing to sign the necessary documents should be made in 2015 and not in 2013.  Save and except this minor discrepancy, I am of the view that Tang Senior’s evidence is reliable and I accept his evidence.

Tang Junior

17.Tang Junior said the following in his evidence:

(1) He is the son of Tang Senior and the General Manager of P.  He does not have any participation in the execution of the Chinese Agreement.

(2) After completion of the construction of the Small House in about July 2017, the 1/F, the 2/F and the Roof were rented out by P.

(3) In about November 2009, he asked LKC to prepare a power of attorney to be signed by D to authorize P’s agent, Tang Yip Sau Yung, to deal with matters relating to the Small House.  As a result, the PA was signed by D.

(4) In 2013, he instructed LKC to make an application to the DLO for consent to allow alienation of the Small House.  On 27 May 2015, the DLO issued a modification letter.  P passed the modification letter to Anna, and asked Anna to pass the letter to D for him to sign.  Subsequently, Anna told Tang Junior that D refused to sign the letter.

(5) Tang Junior has through his secretary contacted Anna and asked Anna to be a witness for P in these proceedings.  However, Anna refused, as D was her younger brother.

18.I am of the view that Tang Junior is also an honest and reliable witness.  I accept his evidence.

So

19.So has given 2 witness statements.

(1) In his first witness statement, he mentioned the following:

(a) So was the Development Consultant working in P from 1994 to 2009.

(b) In about 2005 or 2006, Tang Senior asked him to follow up a development project and to contact Anna.  He then contacted Anna. After knowing the details of the development project, he prepared a draft Chinese agreement to be signed by P and D.

(c) On 4 August 2006, D and Anna came to P’s office upon prior appointment.  So checked their respective identities and made copies of their respective HKID Cards.  However, at the time of preparing his first witness statement, he could only find a copy of Anna’s HKID Card, and could not find a copy of D’s HKID Card in P’s record.

(d) So explained the contents of the draft Chinese agreement to D and Anna.  In the course of explaining the agreement, So discovered that there was a typo in Clause 3(5) of the draft.  So made a correction and asked D to put down his initials next to the amendment.  D did so.

(e) After hearing So’s explanation, So signed the Chinese Agreement.  Then Anna signed the Chinese Agreement as a witness, and Anna put down her own name and HKID No. under her signature.

(f) So also asked D to sign some other documents to facilitate the development project[5] .

(g) Prior to their departure, he reminded them to deliver the title deeds to LKC.

(h) On the same date, he brought the Chinese Agreement to see Law.  So asked Law to put down her initials next to the amendment in Clause 3(5), and signed the Chinese Agreement on behalf of P.

(i) Subsequently, So found out that he had not recorded D’s HKID No. in the Chinese Agreement.  However, he did not think this was a material omission, for D had personally signed the agreement.

(2) In his second witness statement, he said the following:

(a) So and Anna agreed that Anna and D would come to P’s office to sign the Chinese Agreement on 4 August 2006.

(b) On 4 August 2006, So printed out the Chinese Agreement.  Hence, the date of the agreement was 4 August 2006.  On that date, Anna brought the title deeds to P’s office, but D did not come.  Anna told So that D was not in Hong Kong.  So then called Lee and told her that Anna would bring the title deeds to LKC.  So asked Anna to bring D to P’s office to sign the Chinese Agreement and some other documents at a later time.

(c) A few days later, Anna and D came to P’s office, signed the Chinese Agreement and some other documents.

20.Counsel for D submits that So cannot be a credible and reliable witness.  There are material discrepancies between the 2 witness statements made by him.  Neither his first witness statement nor his second witness statement can be the truth.  When he made his first witness statement, D has not yet produced the Travel Records.  After seeing the Travel Records, So tried to change his evidence and made his second witness statement.  As to the omission of D’s HKID No. in the Chinese Agreement, So’s evidence is inherently improbable.  There is a space on page one of the Chinese Agreement for filling in D’s HKID No.  Anna has put down her own HKID No. in the Chinese Agreement.  If there is any truth in So’s evidence, it would not be possible for So to miss to record D’s HKID No. in the Chinese Agreement in the circumstances described by him.  Further, P has not called Law to give evidence in these proceedings.  It is inherently improbable that when Law signed the Chinese Agreement on behalf of P, Law would not notice that D’s HKID No. was missing and the date of the agreement was not correct.

21.There is some force in these submissions at the first glance.  However, for the reasons set out in the later part of this judgment, I come to the conclusion that in the light of all the evidence accepted by this court and D being an untruthful witness, So’s evidence should be accepted.  As said by So, the Chinese Agreement was signed by D on a date shortly after 4 August 2006. 

Chan

22.Chan is a clerk working in LKC.  He said the following in his evidence:

(1) On 16 November 2019, So told him that D would come to LKC’s office to sign a power of attorney to authorize Tang Yip Sau Yung as his attorney for the matters relating to the Land.

(2) On the same date, D came to LKC’s office.  Chan made a photocopy of D’s HKID Card, and asked D to write down his residential address and phone numbers on the copy.  After that, Chan put down the date on the copy.  That copy is the HKID Card Copy mentioned in the above.

(3) After that, Chan interpreted the PA to D, and thereafter D signed the PA.

(4) Chan said that he made the HKID Copy and witnessed D signing the PA on the same date.  Looking at these documents, Chan could now say that the date was 16 November 2019.

23.Chan’s evidence is clear and cogent.  I accept his evidence.

Lee

24.Lee is a clerk working in LKC.  Her evidence concerns a receipt of title deeds dated 4 August 2006 issued by her on behalf of LKC.  On the face of the said receipt, Lee received some title deeds from D on 4 August 2006.  In Lee’s evidence, Lee mentioned that on 4 August 2006, So called her and said that someone would bring D’s title deeds to LKC. D acknowledged that she could not remember who brought the title deeds to LKC’s office on that date.  She had never met D before.

25.I have no reason to doubt Lee’s evidence and I accept her evidence.  In the light of all the other evidence accepted by this court, I find that the person bringing the title deeds to LKC’s office on 4 August 2006 was Anna.

D

26.D said the following in his evidence:

(1) His elder sister Anna and him jointly ran a business in Mainland China in the past.  He was not Anna’s employee and was Anna’s business partner.

(2) After the cessation of the Mainland business, he ran a business by using his own private car to provide transportation to frequent travelers between Mainland and Hong Kong.

(3) He purchased the Land in 1995 by using his own money. Shortly thereafter, he applied for a building licence.

(4) After obtaining the Building Licence in 1998, he did not have sufficient fund to build a small house on the Land.  Since the Land was left vacant, he had paid penalties to the Government for a few years. His sister Anna said to him that it would not be good to pay penalties to the Government continuously.  After discussing the matter with Anna for a few times, Anna and him reached the Construction Agreement orally.  Some family members, including D’s wife, were present in the discussion leading to the Construction Agreement.  The Construction Agreement was not recorded in any document.

(5) He has never visited P’s office and has never signed any document in P’s office.

(6) He has not signed the Chinese Agreement.  The telephone number printed on the Chinese Agreement was not his telephone number.

(7) He was not in Hong Kong on 4 August 2006.

(8) In about mid-2006, Anna brought him to LKC’s office.  Inside a room in the office, Anna asked him to sign some documents.  Only Anna and him were inside the room.  D asked Anna the purpose of those documents.  Anna then left the room and went to ask a female staff member of the LKC.  D stayed inside the room.  After a while, Anna came back to the room and told D that the documents were for the purpose of retaining LKC as his lawyers to handle matters relating to the Land.  D then signed the documents.  However, the Chinese Agreement was not among those documents.

(9) He did not know whether the signature on the Chinese Agreement which appeared to be Anna’s signature was indeed Anna’s signature.

(10) He did not agree that it would not be possible to conduct construction work on the Land if he could not obtain permission to pass through Lot 989 RP.  He said that workers could move building materials into the Land and remove unused stuffs from the Land manually without using any machine.  However, he agreed that no vehicle could reach the Land if there was no permission to use Lot 989 RP as part of the vehicular access. 

(11) He agreed that he had signed the PA, but he denied that he signed the same on 16 November 2009.  He said that he signed the same in mid-2006 while he was in LKC’s office.  The PA should be one of the documents handed over to him by Anna.  He did not know Tang Yip Sau Yung at all.

(12) After the Small House was erected in 2007, Anna and her family moved into the G/F and occupied the same.

(13) In 2008, D noticed that there was light from the 1/F and the 2/F.  Anna told him that the 1/F and the 2/F had been rented out. D thought that Anna was renting out the 1/F and the 2/F.  Since Anna was his elder sister, D did not ask Anna to account the rental incomes to him.  At that time, D thought that perhaps the construction costs were greater than the value of the G/F of the Small House, and hence Anna would need to use the rental incomes as compensation.

(14) In early August in 2015, Anna asked him to go to a restaurant, in which Anna had a discussion with him (“the Restaurant Meeting”).  In that meeting, Anna asked him to sign some documents to transfer the ownership of the 1/F, the 2/F and the Roof of the Small House to P.  D refused.  Anna claimed that D had signed a document inside a car at an earlier time, and that was an agreement with P.  D denied and asked Anna why she required him to sign all those documents.  Anna was unhappy and left the restaurant. After that incident, there was nearly no contact between D and Anna.

27.Having seen and heard D’s evidence, I am of the view that D is not an honest and reliable witness.  His evidence on several material aspects is certainly not the truth.

28.First, D’s evidence concerning the alleged Construction Agreement cannot be true.

(1) In his witness statement, D said that the Construction Agreement was reached between him and Anna in 1998.  D was asked under cross-examination that according to him, the discussion leading to the Construction Agreement was triggered by the fact that he had paid penalties to the Government for a few years after obtaining the Building Licence, for he had left the Land vacant without commencing any building work on the Land.  However, the Building Licence was issued on 15 July 1998.  Hence, it would not be possible for him to reach the Construction Agreement with Anna in 1998.  After hearing the question, D said that the Oral Agreement was reached a few years after 1998.  D then was asked if the Construction Agreement was reached a few years after 1998, why construction works only started in 2006 but not immediately after the conclusion of the Construction Agreement.  There is no satisfactory answer from D on the point.

(2) According to D, some other family members were also present in the discussion leading to the Construction Agreement, including D’s wife.  However, D has not called these family members to give evidence in these proceedings.  If there is any truth in the alleged Construction Agreement, there is no reason not to call these family members as witnesses. In my view, there is no satisfactory explanation for not calling these family members as witnesses in this case.  An adverse inference should be drawn against D on this point.

(3) Further, if there is any truth in the alleged Construction Agreement, Anna’s request made in the Restaurant Meeting would be inexplicable.  If the alleged Construction Agreement is true, Anna would have no reason to ask D to sign documents to transfer the 1/F, the 2/F and the Roof of the Small House to P.  Further, Anna would have no reason to say to D that D had signed an agreement with P in a car at an earlier time.

29.Second, it would be virtually impossible for anyone to construct a small house on the Land without the consent of Tang Senior, for the Land is land-locked and can only be accessed by a narrow public pedestrian walkway.  Naturally, anyone intends to build a small house on the Land would contact Tang Senior for permission to allow vehicles and machines to pass and repass Lot 989 RP for the purpose of carrying out the construction works.  D also admits in his evidence that even up to now, the Small House is still being served by a vehicular access passing through Lot 989 RP.  In these circumstances, to say that the construction of the Small House is something done without the consent of and co-operation from Tang Senior is inherently improbable.

30.Third, although D does not admit that the signature on the Chinese Agreement which appears to be Anna’s signature is in fact Anna’s signature, the Restaurant Meeting mentioned by D has clearly shown that the signature is indeed Anna’s own signature.  Anna must have knowledge of the Chinese Agreement, otherwise Anna would not mention that in the Restaurant Meeting.  In my view, the Restaurant Meeting mentioned by D, coupled with Anna’s signature on the Chinese Agreement, constitute clear evidence that D has signed the Chinese Agreement and this has been witnessed by Anna.  The Construction Agreement alleged by D is simply a pack of lies.

31.Fourth, in relation to the PA and the HKID Card Copy, Chan’s evidence is cogent and unimpeachable.  D’s evidence that he did not sign the PA on 16 November 2009 simply cannot be believed.

32.Fifth, D alleged that after knowing that the 1/F and the 2/F had been rented out, he did not ask Anna for the details, for he thought that Anna might need the rental income as compensation.  This allegation is inherently improbable.

(1) Pursuant to the alleged Construction Agreement, the 1/F and the 2/F of the Small House would be D’s properties.  There is no term in the alleged Construction Agreement allowing Anna to have any rental income from the 1/F and the 2/F in the event that the construction costs are greater than the value of the G/F.

(2) Even if Anna might be able to keep the rental incomes as compensation, D would certainly be interested to know the details, ie the total amount of the compensation requested by Anna, particulars of the rental incomes, when the compensation would be fully paid and from what time onwards the rental incomes could be given to D.  All these concern D’s personal interest, and D would certainly be interested to know all these. However, D did not ask Anna anything concerning the rental incomes.

(3) Taking all these into account, the only natural conclusion is that D’s evidence is not true.

33.I accept that D was not in Hong Kong on 4 August 2006 as shown in the Travel Records.  However, for the reasons set out in [27] to [32] above, the Construction Agreement alleged by D cannot be true.  Further, D’s allegation that he has never signed the Chinese Agreement is also not true.  Taking all these into account, the only reasonable inference is that the Chinese Agreement was signed by D on a date shortly after 4 August 2006 as mentioned by So.

34.D’s evidence is not true on various material aspects.  Save and except the Restaurant Meeting mentioned by D in his evidence which is against his own interest and the fact that D was not in Hong Kong on 4 August 2006, I reject D’s evidence.  As to the Restaurant Meeting, I accept that Anna did ask D to sign documents to transfer the 1/F, the 2/F and the Roof of the Small House to P in that meeting, but D refused.  Anna also told D that D had signed an agreement with P in that meeting.

ISSUE 1

35.By reason of the aforesaid, I find that the Chinese Agreement has been signed by D on a date shortly after 4 August 2006.  My conclusion on this issue is further supported by the Construction Documents produced by P.  These documents show that all the construction works of the Small House are done by contractors retained by P, and all the construction costs are paid by P.  In the light of all these documents, it would not be possible to say that P has nothing to do with the construction of the Small House.  The only reason for P to carry out the construction works must be the Chinese Agreement.

36.Counsel for D submits that adverse inference should be drawn against P on whether the Chinese Agreement has been signed by D, as P has not called Anna to give evidence in the trial.  With respect, I am unable to agree.  Tang Junior has explained in his evidence that he had invited Anna to give evidence in these proceedings, but Anna refused, for she did not want to give evidence against her brother.  I accept Tang Junior’s evidence. In my judgment, P has provided a reasonable explanation as to why P cannot have Anna as a witness in this case.  Further, the Restaurant Meeting mentioned by D is clear evidence showing Anna agreed that D had signed an agreement with P, and D had the obligation to execute documents to transfer the 1/F, the 2/F and the Roof of the Small House to P to perform the agreement.

37.I find that by refusing to execute documents to transfer the 1/F, the 2/F and the Roof of the Small House to P, D has wrongfully breached the Chinese Agreement.

ISSUE 2

38.D argues that even if the Chinese Agreement is signed by him, the agreement is unenforceable by reason of illegality.  The illegality pleaded in the defence is as follows:

“5.1 Without prejudice to foregoing denial, the alleged Chinese Agreement is illegal and is unenforceable. The arrangement necessarily involved the Defendant making a false declaration that he has no arrangement to sell his Ting’s right and he is the sole beneficial owner of the Small House in applying to the Government.”

39.Although D is running the defence of illegality, he has not produced the declaration made by him in his application for a building licence.  Counsel for D submits that notwithstanding the non-production of the declaration made by D, D can still succeed in the illegality issue by reason of the following:

(1) In Kwan Hung Shing v. Fong Kwok Shan & Others[6] , Wilson Chan J has summarized the New Territories Small House Policy.  The learned judge mentioned that:

(a) For a “ding” who owns a piece of agricultural land and intends to apply for a building license to build a small house thereon, he is required to fill in standard application form, which includes a statutory declaration form and submit it to the District Lands Officer[7] .

(b) There are a few versions of the statutory declaration forms over the years[8] :

(i) The February / May 1993 version (in force until October 1997);

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

(iii) The October 2004 version (inforce until July 2006).

(c) Both the 1993 version and the 1997 version contain a statement that the declarant is the “sole owner (唯一業權人)” of the relevant land.

(2) D purchased the Land on 7 July 1995 and the Building Licence was granted on 15 July 1998. Regardless of which version of the statutory declaration D would have had made, he would have had made a statutory declaration that the relevant land was solely owned by him.

(3) In paragraph 2 of P’s reply, it is pleaded that prior to the signing of the Chinese Agreement, Anna told P that the Land was purchased by Anna in the name of D as nominee for building a ting house thereon. Anna used the D’s name in applying for a building licence under the Government’s small village houses scheme as Anna did not quality (given that she is a female) while the Defendant did (as he was an indigenous male villager).  The Chinese Agreement was therefore executed after P had knowledge of the fact that D was a nominee of Anna in respect of the Land and was not the beneficial owner of the same.

(4) To give effect to the Chinese Agreement would involve reliance upon the said illegality, ie the Building Licence was obtained by a false declaration made by D.

40.In my view, there is no factual basis in support of the illegality argument run by D.  The alleged false declaration made by D in his application for a building licence submitted to the DLO is the cornerstone of the illegality argument.  However, D has not produced the application form containing the alleged false declaration made by him.  The standard forms mentioned in the Kwan Hung Shing case cannot assist D.  Each case depends upon its own facts. Without seeing the application form submitted by D to the DLO, one does not know whether that form is same as the standard form or there is any amendment on that form.  Further, D has not produced any correspondence passing between him and the DLO in relation to the application for a building licence.  The correspondence may shed light on the truthfulness of the false declaration now alleged by D.

41.The documents mentioned in [40] above are documents concerning the illegality argument run by D and should be disclosed by D.  However, these documents have not been produced at all.  D has never tried to offer an explanation as to the non-production of these documents, let alone a reasonable explanation.  In these circumstances, I draw an adverse inference against D that these documents would not assist D’s case on illegality.

42.Further, in his own evidence, D has not mentioned that he had made a false declaration to the DLO in the process of applying for the Building Licence.  Taking D’s case at its highest, there is no evidence showing that he has ever made a false declaration to the DLO.

43.In the absence of any evidence showing that D has actually made a false declaration to the DLO in his application for a building licence, the illegality argument does not even get off the ground.

ISSUE 3

44.As to the non est factum argument raised by D, the principle set out by the Court of Final Appeal in Ming Shiu Chung & Others v Ming Shiu Sum & Others^[9] has to be borne in mind.  In that case, Ribeiro PJ said:

“84. … Reliance is universally placed on signatures appended to documents by persons of full age and understanding as signifying the signatory’s assent or adherence to what that document states. Where such a person has signed a document which purports to have legal effect, the law has never regardedit as enough to show that he signed without knowing its contentsfor the document to be disavowed. It is an everyday occurrence that people sign documents without reading the small (or even the large) print and therefore sign without actually knowing the terms (or all the terms) of the document signed. But they are held to the documents which they have chosen to sign unless there is shown to be a recognized legal basis for concluding that their apparent consent has been in some way vitiated or that reliance on that document by some other person falls into some category of unconscionable conduct justifying relief in equity.

85. Thus, in Saunders v Anglia Building Society [1971] AC 1004 at 1016, Lord Reid warned against an approach, like that of the Court of Appeal, which inverts the general rule:

‘We find in many of the authorities statements that a man’s deed is not his deed if his mind does not go with his pen. But that is far too wide. It would cover cases where the manhad taken no precautions at all, and there was no ground forhis belief that he was signing something different from thatwhich in fact he signed. I think that it is the wrong approach to start from that wide statement and then whittle it down by excluding cases where the remedy will not be granted. It is for the person who seeks the remedy to show that he should have it.’

86. And in Bank of China (Hong Kong) Ltd v Fung Chin Kan & Another (2002) 5 HKCFAR 515 at p.533, Litton NPJ acknowledged:

‘… the fundamental principle that, generally speaking, when a person signs a legal document, he or she is bound by the act of signature: As a matter of general law, it is no defence to say that he or she did not understand the contents of a legal document; that person takes the chance of being bound by its terms, as he or she can take the simple precaution of not signing until its contents have been fully explained and understood.’” (Emphasis added)

45.I have ruled that D did sign the Chinese Agreement on a date shortly after 4 August 2006.  I have also found D as an untruthful and unreliable witness and refused to accept his evidence save and except the Restaurant Meeting and that he was not in Hong Kong on 4 August 2006.  In these circumstances, D must be bound by the Chinese Agreement signed by him.  There is simply no credible evidence showing that his apparent consent to the Chinese Agreement has been vitiated on any recognized legal basis.

DISPOSITION

46.In my judgment, P has proved its case against D.  All the arguments raised in D’s defence fail.   I would therefore allow P’s claim and dismiss D’s counterclaim.  I make the following order:

(1) there be a declaration that at all material times D held and still hold the 1/F, the 2/F and the Roof of the Small House on trust for P;

(2) that D shall execute an assignment and all necessary documents (if any) at his own costs to transfer his legal title in the 1/F, the 2/F and the Roof of the Small House to P within 28 days, failing which a solicitor of the law firm representing P in these proceedings[10] be authorized to execute the assignment and all necessary documents (if any) on behalf of D to transfer the legal title to P;

(3) that D shall execute a deed of mutual covenant prepared by P for the purpose of implementing the terms of the Chinese Agreement within 28 days, failing which a solicitor of the law firm representing P in these proceedings[11] be authorized to execute the said deed of mutual covenant on behalf of D;

(4) there be liberty to apply for the purpose of carrying out this order; and

(5) D’s counterclaim be dismissed.

47.Both counsel agree that costs should follow the event.  There be a costs order that costs of these proceedings (including all costs reserved, if any) be paid by D to P, to be taxed if not agreed.

48.I thank counsel for the assistance rendered to the court.

Mr Thomas Lai, instructed by Leung & Lien, for the plaintiff

Mr Stony Chan, instructed by Littlewoods, for the defendant