Yang Junling v. Lee Yiu Kei and Another
Read the full judgment text of HCA 1723/2016 on BabelCite. This High Court CFI judgment was delivered on 31 August 2021.
1. This action arose from a conveyancing transaction which has fallen through. The main disputes are whether the vendors (the two named defendants, Lee Yiu Kei (“ Lee ”) and Leung Kwai Ling Loretta (“ Leung ”), and collectively “ Ds ”) or the purchaser (the plaintiff, “ P ”) were liable to pay the Special Stamp Duty concerned (the “ SSD ”), whether there was any binding agreement between the parties in that regard, and whether there had been any related misrepresentations by Ds. P is suing for
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HCA 1723/2016 [2021] HKCFI 2526 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE HIGH COURT ACTION NO 1723 OF 2016 ____________
____________ Before: Hon K Yeung J in Court Dates of Hearing: 21‑25, 28 September and 18 November 2020 Date of Judgment: 31 August 2021 ____________________ JUDGMENT ____________________ Introduction 1.This action arose from a conveyancing transaction which has fallen through. The main disputes are whether the vendors (the two named defendants, Lee Yiu Kei (“Lee”) and Leung Kwai Ling Loretta (“Leung”), and collectively “Ds”) or the purchaser (the plaintiff, “P”) were liable to pay the Special Stamp Duty concerned (the “SSD”), whether there was any binding agreement between the parties in that regard, and whether there had been any related misrepresentations by Ds. P is suing for repayment of the deposit paid together with liquidated damages. Ds on the other hand claim that it was P who was in breach, and sue for various remedies. 2.This is the trial of the parties’ disputes. Representation 3.P was during the trial represented by Mr Jeremy Kwong of counsel. Ds appeared in person. They are husband and wife. Leung (the wife) did the vast majority of the speaking throughout the trial. Pleadings 4.P’s Re‑amended Statement of Claim (“RASOC”) is dated 31 December 2018. Ds’ Defence and Counterclaim (“DAC”), settled in person, is dated 5 December 2016 and filed on 8 December 2016. P’s Reply and Defence to Counterclaim (“RADC”) is dated 2 February 2017. Parties’ pleaded cases 5.The property concerned (the “Property”) is Flat B on 22nd Floor of Tower 2 and Car Parking Space No 36 on L3 Floor of Serenade, No 11 Tai Hang Road, Hong Kong. It is within a residential development called Serenade (“Serenade”). 6.The parties on 16 March 2016 entered into a provisional agreement for the sale and purchase of the Property (“PSPA”). Subsequently, a number of supplemental documents have been signed. I will loosely call them for convenience the “Supp PSPA”. There are some aspects of the PSPA and Supp PSPA which are in dispute. I will come back to them. 7.P’s case, in so far as still being pursued[1], is as follows:
8.Ds’ DAC is not entirely easy to comprehend. It is handwritten, with tight line‑spacing, and repetitive. At various places, they claim that P has no cause of action against them at all, that it was all P’s fault and breach of the PSPA and Supp PSPA that the balance of purchase price not paid, that they had not failed to show or give title, that they are entitled to forfeit the Deposits, that the Supp PSPA had not been agreed upon or had otherwise been “cancelled by us with effect from 17‑5‑2016 as stated in our letter to P + P sol of 11-9-2016”[2], that no SSD was chargeable to the PSPA, that any SSD only became chargeable to the PSPA as a result of P’s error and negligence, misrepresentation and malice in filing wrong and incomplete information to the Stamp Office, there was no clause in the PSPA for the stakeholding of any SSD, and that P is liable to them for defamation. They counterclaimed for:
Special Stamp Duty 9.This case concerns the incidence of liability on SSD. Certain aspects of the SSD regime are relevant. I set them out as follows. 10.Ad valorem stamp duty (“AVD”) has always been payable under the Stamp Duty Ordinance, Cap 117 (the “SDO”). 11.In November 2010, to curb short‑term speculation, the Government introduced SSD[3]. The enabling Ordinance (the Stamp Duty (Amendment) Ordinance 2011) came into effect on 20 November 2010. Various provisions have been added into the SDO. The most relevant ones are sections 29CA and 29DA. 12.As explained and summarized in the Stamp Office Interpretation and Practice Notes No 5 (Revised) issued in July 2014 (at §5) (the “Practice Note”):
13.Section 29CA(5) of the SDO stipulates that:
Section 29DA(5) contains similar provisions in relation to head 1(1AA) in the First Schedule. 14.The net effect of the above in so far as the date of acquisition for the purpose of SSD, as explained in the Practice Note (at §7), is that:
15.“Chargeable agreement for sale” is defined in section 29A(1) of the SDO as meaning:
16.Same as that for AVD, the vendor and purchaser to the property transaction are jointly and severally liable for paying SSD. 17.Section 29DA(11) dis‑applies Head 1(1AA) under certain specific circumstances, that (in so far as relevant here):
18.Section 13(1) of the SDO entitles any person upon payment of a fee to require the Collector of Stamp Duty (the “Collector”) to, with reference to any executed instrument, express his opinion upon whether it is chargeable with any stamp duty and if so what amount of stamp duty is chargeable thereon. If the Collector is of the opinion that the instrument is chargeable with stamp duty, he shall assess the stamp duty payable (section 13(3)(b)). An instrument upon which the stamp duty has been assessed by the Collector shall not, if it is not stamped or is insufficiently stamped, be stamped otherwise than in accordance with the assessment (section 13(4)). 19.Section 14(1) of the SDO sets out the procedure for appeal against assessment, that:
20.Subsequently, the Government further introduced Buyer’s Stamp Duty. Save as a matter of background, we are not concerned with that. The factual background 21.The following are gleaned from the documents. 22.In respect of Serenade:
23.On 16 March 2016, the parties entered into the PSPA. Ds were the vendors, and P the purchaser. The estate agent was Midland Realty International Ltd (“Midland”). Its representative was Mr Yan Hoi (“Yan”). They all signed it. 24.The PSPA contained the following material terms:
25.Despite negotiations between the parties, no formal sale and purchase agreement had ever been signed. 26.On 11 April 2016, and upon the application of IL&L, a Stamp Certificate was issued via e‑stamping (the “Stamp Certificate”)[8]. It shows that P paid AVD in the sum of HK$611,250 on that day. It also bears two stamps showing that “SPECIAL STAMP DUTY NOT CHARGABLE” and “BUYER’S STAMP DUTY NOT CHARGABLE”. 27.By letter of 28 April 2016[9], and pursuant to Section 13 of the SDO, IL&L on behalf of P submitted the PSPA to the Stamp Office for adjudication. In that letter they said:
28.On 3 May 2016, IL&L wrote to W&T and said, amongst other things, that:
29.Also on that day, IL&L wrote to the Stamp Office and chased it for the adjudication of the PSPA and the 2015 Assignment. 30.On 6 May 2016, IL&L issued another chaser to the Stamp Office. It said therein, amongst other things, that:
31.On 17 May 2016, the Supp PSPA was signed. I will come back to the circumstances in which that took place. 32.Also on 17 May 2016, IL&L wrote to W&T[10] and raised, amongst others, the following requisitions:
33.On 23 May 2016, the Stamp Office adjudicated that the PSPA was chargeable with SSD (the “SSD Adjudication”). In its letter to IL&L on that day[11], it was said, amongst other things, that:
34.On the same day, IL&L wrote to W&T and notified them of the adjudication[12]. They also required W&T to stakehold a sufficient sum of money for payment of SSD upon receipt of their (IL&L’s) receipt of the Notice of Assessment from the Stamp Office. 35.On 27 May 2016, IL&L wrote to the Stamp Office[13] and sought the Stamp Office’s confirmation that the chop bearing “Special Stamp Duty Not Chargeable” affixed on the Stamp Certificate was no longer valid. They explained why they, when submitting the PSPA for e‑stamping, reported to the Stamp Office that the PSPA was not chargeable to SSD. That apparently explained why the Stamp Certificate was stamped with “Special Stamp Duty Not Chargeable”. IL&L said further that subsequently, and upon additional information having been received, they presented the PSPA for adjudication. They at the end said that:
36.On 2 June 2016, the Stamp Office replied and confirmed that the Stamp Certificate was invalid. It stated further that:
It also reminded the parties that as the PSPA was not presented for adjudication within the prescribed time limit for stamping, they were liable to pay a penalty under section 9(1) of the SDO. 37.On 3 June 2016, a Notice of Stamp Duty Assessment & Demand for Payment (the “NOA”) was indeed issued[14]. The one before the court was issued to P. The Property was assessed to be chargeable with SSD under 1(1B) Part 2(a) of the First Schedule at HK$2,860,000, which was payable immediately. 38.Also on 3 June 2016, IL&L issued a chaser to W&T in respect of the requisitions that had previously been raised. 39.By letter dated 3 June 2016[15], W&T replied to IL&L’s letter of 17 May 2016. In respect of both requisitions 5(i) and 6, W&T answered that:
40.Also on 6 June 2016, IL&L wrote[16] to W&T that:
41.On 10 June 2016, IL&L issued 3 letters to W&T. Amongst other things, Ds were demanded to pay the SSD, or P will deduct the same from the purchase price. It was further said that Ds had agreed to pay SSD, and any dispute between them and the Stamp Office as to whether SSD was chargeable was not an acceptable excuse for not settling the same before the completion date[17]. 42.In the letter dated 6 June 2016 from W&T and received by IL&L on 13 June 2016, W&T said that there was no requirement under the PSPA which required them to stakehold any money for the SSD. The payment of SSD was not otherwise dealt with. 43.On 13 June 2016, IL&L received two further letters from W&T. In one of them, the position stated in their letters of 3 and 6 June 2016 was repeated. The other letter was just a covering letter, under cover of which two letters dated 11 and 12 June 2016 from Ds directly to IL&L were sent:
44.In their letter of 13 June 2016 to W&T[20], IL&L stated, amongst other things, that despite demands, Ds had failed to pay the SSD, and that it was “absolutely legitimate and reasonable for the Purchaser to require your firm to stakehold a sufficient sum of money for the SSD”. 45.Under cover of their letter of 14 June 2016, W&T sent another of Ds’ letter to IL&L. That enclosed letter was again signed by Ds and addressed directly to IL&L. Amongst other things, Ds demanded IL&L to amend all errors with the Stamp Office and to cancel the SSD assessed. 46.On 15 June 2016, IL&L reiterated P’s position on the SSD, and stated at §2.7 that in the absence of evidence showing settlement of or security for the SSD, Ds’ title to the Property would be encumbered. They further stated that P was ready and willing to complete subject to inter alia Ds’ settlement of the SSD or the provision of security money therefor. 47.On that same day, W&T sent to IL&L another letter by Ds addressing IL&L directly. That enclosed letter was dated 15 June 2016, handwritten, signed by Ds, and addressed directly to IL&L. Ds said therein, inter alia, that (and the emphasis being original):
A copy of the PSPA purportedly amended as such was enclosed. 48.By a letter dated 14 June 2016[21] (which date is clearly wrong as it referred to a letter from IL&L dated 15 June 2016), and received by IL&L on 16 June 2016, W&T stated their instructions that Ds did not agree to pay the SSD, or to W&T or IL&L stakeholding any sum for payment of the same. 49.By letter of 16 June 2016[22], W&T stated their instructions that Ds denied that SSD was chargeable. It was said that SSD had been exempted in the Stamp Certificate, that the SSD then chargeable was caused by the mistake of IL&L, that SSD might be exempted in the case of a compulsory sale, that Ds acquired the Property in mid‑2010, and that Ds had been the beneficial owners of the Property since then. 50.In a letter dated 17 June 2016 from Ds directly to IL&L[23] (sent under cover of W&T’s 2nd letter of even date), Ds claimed that:
51.In the end, completion did not take place, whether on 17 June 2016 or any date afterwards. 52.On 18 June 2016, further letters were exchanged. Both sides alleged the other of having breached the PSPA. W&T alleged that P had failed to complete pursuant to Clause 2(d), forfeited the Deposits and rescinded the PSPA[24]. IL&L on the other hand stated that Ds had been in wrongful repudiation of the PSPA, which P accepted[25]. 53.On 30 June 2016, the Writ herein was taken out. 54.On 11 September 2016, Ds wrote to IL&L[26] (the “11/9/2016 Letter”) and stated inter alia that:
The issues 55.Parties have not been able to put forward a list of agreed issues. 56.Ds have not formulated any list of issues. 57.Mr Kwong has identified the following issues:
58.I accept that the list Mr Kwong puts forward adequately covers the issue which this Court may need to consider. Witnesses 59.Yan was the only witness for P. He has given two witness statements (“Yan/1”[27] and “Yan/2”[28]). He adopted both as his evidence‑in‑chief. He was cross‑examined by Leung on Ds’ behalf. 60.Both Lee and Leung gave evidence. Each has given 3 witness statements (“Lee/1”[29], “Leung/1”[30], “Lee/2”, “Leung/2”[31], “Lee/3”[32], and “Leung/3”[33]). Lee/3 and Leung/3 were put in on the first day of the trial, with leave from this Court, in the absence of objection from Mr Kwong. Filing of the same was otherwise dispensed with. 61.Lee and Leung both adopted their statements as their evidence‑in‑chief. They were cross‑examined by Mr Kwong. Credibility of witnesses 62.I remind myself when considering a witness’ credibility the importance of considering the inherent likelihood or unlikelihood of the witness’ evidence, the consistency of the witness’ evidence with undisputed or indisputable evidence, with contemporaneous conduct and documents, and the internal consistency of the witness’ evidence. I need to consider the totality of the evidence. I warn myself against attaching undue weight on demeanour, though demeanour is obviously relevant when considering credibility. I also bear in mind that the more serious the allegation sought to be proved is, the more cogent the evidence relied upon to support it must be. 63.I find Yan to be an honest witness. His evidence is inherently probable, and is consistent with the contemporaneous documents and correspondence produced. In particular, I find his evidence that he and his superior had prior to the execution of the PSPA discussed with Ds the question of SSD inherently probable, given the fact that the dates of the 2015 Assignment and the PSPA were less than 6 months apart. He was cross‑examined at length by Leung. He was irritated thereby, particularly when he was accused by Leung of having followed and stalked her. I find his reaction spontaneous. He accepted that Leung first contacted Midland by phone (as opposed to attending a Midland branch[34]). None of those in my view materially affect his credibility. 64.I accept Yan’s factual evidence. 65.Lee is in my view not a reliable witness. He claimed in Lee/1[35] that before the PSPA was signed on 16 March 2016, he and Leung had never talked about SSD with the agents of Midland. He confirmed that under cross‑examination. I find that inherently most improbable. He claimed that he signed the Supp PSPA without understanding its contents, and that he did so as Leung had already signed it. I find that also inherently improbable, and indeed incredible, that a co‑owner of a valuable property would have signed a document in the context of the sale of his property without understanding its contents. I note that Lee is highly educated, holding a master’s degree in Fiber Science and Technology, another master’s degree in Management & Technology from University of Wales, and retired from the Correctional Services Department as Principal Industrial Officer. Lee was also evasive as a witness. He was reluctant to give clear and definite answers. One specific example of his evasiveness is that when he was asked whether anybody on 16 March 2016 said that if the Property was to be sold at that time, SSD would be payable. To that he gave the curious and evasive answer of “如果親口同我講嘅人，冇”. Another example is whether he knew that he would be signing a supplemental sale and purchase agreement on 17 May 2016. It is also quite obvious that he was prepared to say whatever Leung wanted him to say. In the course of his cross‑examination, Leung from time to time objected to the questions put to Lee by Mr Kwong, at time even after Lee had answered the questions. Most of those objections were frivolous and groundless. But Lee could be observed changing his evidence along the lines of the objections. One clear example is when he was asked as to whether Leung’s acts had been authorised by him. His immediate answer was “Of course”. Leung then objected, claiming that she was not sure what Mr Kwong was talking about. Then Lee immediately changed his answer, and claimed that the question was too wide. 66.I reject Lee’s factual evidence in so far as it is inconsistent with that of Yan’s. 67.In respect of Leung, I accept Mr Kwong’s submission that she as a litigant was highly disruptive of the court process. She complained about immaterial matters (examples being page references appearing in the margin of her statement, hole‑punching and quality of photocopying). I remind myself however such conduct does not make her unreliable as a witness. The following matters however do. She was evasive in answering questions, refusing to answer questions directly, and saying at times whatever she wanted. Her answer in relation to when she allegedly first sent and re-sent LL3[36] is a prime example. Her evidence that before the PSPA was signed on 16 March 2016, she and Lee had never talked about SSD with the agents of Midland was inherently most improbable. Her allegations that Yan had followed and stalked her, based as it was upon one chance meeting at Causeway Bay were vicious, but completely baseless. Her allegations that Yan had made threats to her were also baseless, but equally vicious:
68.I do not find Leung to be an honest witness. I find her evidence unreliable. I reject her factual evidence in so far as it is inconsistent with that of Yan’s. Factual findings 69.In addition to the factual background set out above, which I find, I make the following material factual findings. 70.I find that Leung had Lee’s authority to act on his behalf in respect of the sale of the Property. When asked about this during cross‑examination, Lee’s immediate answer was “Of course”. I place weight on that answer despite my finding that he is an unreliable witness. 71.Leung approached Midland to put the Property on sale. 72.Yan became aware of that approach via the internal computer system of Midland. 73.P was mostly in the Mainland. Yan mainly contacted Ms Tsui, a friend of P. 74.In the course of negotiations, Yan and his superior Dixon Mo had repeatedly asked Leung about SSD. They showed Ds the explanations on SSD on the website of the Inland Revenue Department. They also showed Ds the land search record of the Property. Whilst Yan could not recall the exact words used by Leung in response, I accept his evidence that Leung was very certain that no SSD was payable, because the Property was acquired a long time ago upon redevelopment, that Ds swapped their old residential unit for the Property, that Ds had the documents to prove this, and that that could be verified when the solicitors check the title deeds. Leung had said so a number of times. 75.The PSPA was signed by P first. 76.I have set out the material terms of the PSPA above. I have highlighted the Relevant 9c Deletion. 77.At the time when P signed the PSPA, the Relevant 9c Deletion had not been made. Yan’s explanation is that before P signed on the PSPA, he said to P that Ds’ stance was that no SSD was chargeable, and that even if SSD was chargeable, it would be Ds’ responsibility to settle them[38]. P agreed on the purchase price of HK$16,300,000 on that basis. He explained further that his hope was that Ds would be able to produce documents to show that no SSD was chargeable when they later signed the PSPA. 78.P signed the PSPA on the afternoon of 16 March 2016. She did so with Clause 9c in its original undeleted form. Other deletions required to be made at other clauses had however been made, and properly initialed. 79.Subsequently, and after P had signed on the PSPA, when Ds came to sign it on the evening of 16 March 2016, Ds unilaterally requested to make the Relevant 9c Deletion. Leung told Yan that there was no need to mention to P about the deletion, as no SSD would be payable. The Relevant 9c Deletion was therefore made without P’s knowledge. P at the time when the deletion was made did not know about it. P has never initialed the same. 80.After the execution of the PSPA, Miss Lee Man Wah (李敏華) from IL&L contacted Yan and asked whether the purchaser or the vendors should be paying the SSD. In reply, Yan told her that Leung had said that no SSD was payable, and that Ds had the documents to verify that. Several days later, Miss Lee Man Wah called Yan again and notified him that no document was available proving that SSD was not chargeable, and that IL&L had submitted the case to the Collector for his view on the matter. 81.In addition to the above, Yan’s own view was that as the Relevant 9c Deletion was effected unilaterally, the position was not satisfactory (“不穩妥”). He therefore made arrangements for a supplemental agreement to be entered into on the issue of SSD. 82.The preparation of the supplemental agreement was evidenced by a number of emails between Yan and Leung in May 2016[39]. From those emails, one sees that Leung had between 5 and 11 May 2016 repeatedly asked for changes to be made to the terms of the draft Supp PSPA. According to Yan, which I accept, Leung agreed upon the terms on 11 May 2016. He emailed his superior Dixon Mo to that effect[40]. 83.On 11 May 2016, Ds then requested P to sign first[41]. 84.On 12 May 2016, Yan informed Leung that Ms Tsui agreed to the draft Supp PSPA, and that she would make arrangement for P to sign the same as soon as possible[42]. 85.Yan went to Guangzhou to meet P. He presented the document he had prepared to P for her signature (the “Original Clauses”). 86.The Original Clauses comprised an introductory part, which stated that the parties made certain supplemental provisions in relation to clause 9c of the PSPA on the issue of SSD. It was then followed by clauses 9c(i) to 9c(vi). Clause 9c(i) was the most material one. It stated:
87.The Original Clauses were initialed and signed by P, and witnessed by Yan[43]. 88.By email of 13 May 2016, Yan informed Leung that P had signed the Original Clauses. 89.After P’s execution of the Original Clauses, Ds requested to make some additions to them. 90.I have set out above certain terms of the 15 May 2016 2:48 Email. Therein, Yan stated that Midland did not accept further change to the Original Clauses. It suggested Ds to insert a declaration after they had signed the same. A version of the declaration was then set out. 91.In the course of the next following days, further emails were exchanged. Different versions of the additions were set out. 92.As explained by Yan when giving evidence‑in‑chief, he used a copy of the Original Clauses signed by P, and with the aid of certain computer program, inserted the additions (the “Additional Clauses”) which Ds wanted to make at the place between P’s and his signatures and the spaces where Ds’ were to sign (the “Original Clauses with Additions”). 93.Those Additional Clauses were as follows:
94.Ds on 17 May 2016 signed and initialed the Original Clauses with Additions. 95.P however did not accept the Additional Clauses. On the Original Clauses with Additions signed and initialed by Ds, P only initialed again the Original Clauses[44]. She did not initial the Additional Clauses. She added a further clause at the end[45] recording her disagreement to the Additional Clauses (the “Disagreement Clause”), that:
P signed under the Disagreement Clause. It was dated 21 May 2016. Yan signed as witness. 96.Yan notified Ds of P’s disagreement to the Additional Clauses by email of 21 May 2016[46]. Therein, Yan said that P did not accept that the SSD was not to be stakeheld by lawyers. A copy of the Disagreement Clause was, together with other documents, attached. 97.According to Yan, Leung had told him that regardless of whether she was permitted to add the Additional Clauses, Ds would still agree to the Original Clauses. Yan’s evidence during cross‑examination in this regard, which I accept, was as follows:
Yan’s evidence in the above regard is confirmed by Lee. His relevant evidence upon cross‑examination was:
The Express Term Issue 98.I consider first of all the position of the PSPA prior to the execution of the Supp PSPA. 99.I accept Yan’s evidence that Ds had prior to their execution of the PSPA repeatedly stated that SSD was not chargeable on the intended sale and purchase of the Property. 100.I have set out the terms of Clause 9c of the PSPA. 101.When P signed the PSPA, the Relevant 9c Deletion had not been made. 102.There was no express agreement at that stage as to who should pay the SSD if it turned out that SSD was chargeable. 103.I find that the Relevant 9c Deletion was made by Ds unilaterally without any prior agreement between the parties. It was made without P’s knowledge. The Relevant 9c Deletion was not binding on P. 104.For the sake of completeness, I state also my view that:
105.I hold that prior to the execution of the Supp PSPA, there was no express agreement between the parties as to who should be responsible for the settlement of SSD if SSD turned out to be payable. 106.I next considered the positon upon the execution of the Supp PSPA. 107.I accept Yan’s evidence that Ds had by 11 May 2016 agreed to the Original Clauses. I accept also his evidence that it was only after Ds’ acceptance of the Original Clauses that he took the trouble of attending P in the Mainland for the execution of the same. 108.P agreed to the Original Clauses. She signed and initialed the same. 109.I accept Yan’s and Lee’s evidence that Leung had told him that whether she was permitted to add the Additional Clauses, Ds would still agree to the Original Clauses. 110.I reject Leung’s allegations that the Additional Clauses were signed as a result of any stalking, threat, misrepresentation, inducement, or other improper conduct on the part of Yan. I have considered Ds’ evidence and submissions in these regards. The allegations are in my view entirely unrealistic, and are not supported by any credible evidence. The allegations are further not supported by the emails produced. 111.The Original Clauses recorded Ds’ representation that no SSD was chargeable, and that if SSD was chargeable, the responsibility for the payment of the said would be on Ds. 112.In effect, the words “the Purchaser solely” in Clause 9c of the PSPA were by the Original Clauses deleted. In that eventuality, the second paragraph of Clause 9c applied. 113.The Additional Clauses were unilaterally added by Ds. As shown by the Disagreement Clause, they were not accepted by P. The Additional Clauses were not binding on P. 114.Ds sought to rely on their purported subsequent revocation of the Original Clauses. They in particular relied on the 11/9/2016 Letter and “LL3”. 115.There is no valid legal basis for Ds to unilaterally and retrospectively revoke an otherwise valid agreement between the parties. 116.In any event, I have expressed my views that Leung was evasive as to when LL3 was first sent. It was on the other hand clear that when Leung claimed that it had been “re-sent”, it was only re-sent shortly before the commencement of the trial. 117.In Lee/3, Lee alleges that the Supp PSPA was “not my Deed and not my agreement”, on the alleged basis that he did not know or understand its contents before he signed it[48]:
118.I have also considered that the Original Clauses were on parties’ liabilities on SSD. The Additional Clauses were principally on the issue of stakeholding, which goes to the manner and mode of settlement. The nature of those 2 sets of clauses is different. 119.Viewing the matters objectively, and consistent with Yan’s and Lee’s evidence, I am satisfied that the parties reached agreement in terms of the Original Clauses. The Implied Term Issue 120.In the light of my conclusion on the Express Term Issue, the Implied Term Issue does not arise. 121.If necessary, I would rule in favor of P on this issue. Given my conclusion on the Express Term Issue, I will only give brief reasons. 122.P’s case[49] is that it was an implied term of the PSPA (the “Implied Term on SSD”) that:
123.I have considered the cases cited to me on the proper test for implication of terms. They include Kensland Realty v Whale View Investment Ltd (2001) 4 HKCFAR 381 at §23, Marks and Spencer plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd [2016] AC 742, at §21, and Lo Yuk Sui v Fubon Bank (Hong Kong) Ltd formerly known as International Bank of Asia Ltd [2019] HKCA 261 at §§24-32. In Lo Yuk Sui, the Court of Appeal at §32 referred to the more recent decision of the Privy Council in Nazir Ali v Petroleum Company of Trinidad and Tobago [2017] UKPC 2 wherein Lord Hughes (with whom Lord Neuberger, Lord Clarke and Lord Carnwath agreed) summarized the law at [7] as follows:
124.I have found that Ds had repeatedly stated that no SSD was chargeable on the PSPA. On that basis, the clear implication is that P (and indeed both sides) agreed to the purchase price on that basis. 125.If SSD turned out to be chargeable, the amount would be substantial. 126.On the above main considerations, I am of the view that it would be reasonable and equitable for the Implied Term on SSD to be implied, that its implication would be obvious, that its implication would be necessary to give efficacy to the PSPA given the amount involved. No express term would be contradicted thereby, as Clause 9c in its undeleted form contemplated payment of SSD by either the vendor or the purchaser. 127.I have also considered the line of cases cited by Mr Kwong[50] on the implication of terms in sale of goods cases relevant to the application for import and export licenses[51]. Those authorities support the conclusion above. Ds had the full facts on the circumstances in which they acquired the Property. The Repudiation Issue 128.I have set out above the material aspects of the SSD regime. 129.P was entitled under section 13(1) of the SDO to require the Collector to express his opinion as to whether the PSPA was chargeable with SSD. IL&L did so on her behalf on 28 April 2016. 130.On 23 May 2016, the Stamp Office notified IL&L of the SSD Adjudication. 131.IL&L on that same day notified W&T of the SSD Adjudication. 132.I refer to the Stamp Certificate. It was obtained upon the application of IL&L via e‑stamping. IL&L explained in their letter of 27 May 2016 to the Stamp Office[52] that it was on the information then available to them that they reported that the PSPA was not chargeable to SSD. On 2 June 2016, the Stamp Office confirmed that the Stamp Certificate was invalid[53]. 133.In my view, any reliance by Ds’ upon the Stamp Certificate with the wish of showing that the PSPA was not chargeable to SSD was misplaced. 134.Ds claim repeatedly that the SSD Adjudication was the result of P’s and/or IL&L’s fault, negligence, misrepresentation and malice in providing wrong and incomplete information and documents to the Collector. 135.I reject Ds’ allegations in those regard. P was entitled to seek the Collector’s opinion on the matter. They have made the application according to the provisions in the SDO. There is no evidence of any of the misconduct or improprieties alleged by Ds. 136.On the other hand, Ds were entitled to appeal against the SSD Adjudication. They did not. 137.Ds seek to rely on the exemption under section 29DA(11) of the SDO. I have set out the sub‑section above. 138.To start with, I accept on the evidence before me Mr Kwong’s submissions[54] that the Order dated 25 November 2004 made by the Lands Tribunal (which Ds rely on[55], the material terms of which I have set out above) did not order HK Glory Properties Limited to assign or transfer the Property to Ds. 139.More importantly, even if there might be reasons for Ds’ disagreement of the SSD Adjudication, the way to address the disagreement was to lodge an appeal. Ds did not. It has to be pointed out that even if an appeal had been lodged, and subject to the provisions of section 14(1)(b) of the SDO, the SSD would still have to be settled first. I accept also Mr Kwong’s submission in this regard[56]. 140.By correspondence (the material parts of which I have set out above), Ds steadfastly denied their liabilities and contractual duties to settle the SSD. They instead made groundless allegations against P and IL&L, and sought to effect various retrospective revocation which they had no rights to make. I refer in particular to those letters issued by Ds direct but sent under cover of W&T’s letters. 141.I regard as material that Ds denied their liability to settle the SSD. Their disagreement was not confined to the manner and timing of payment, for example whether the amount concerned should be stakeheld or deducted from the purchase price. 142.Given the amount of SSD involved, and given Ds’ denial of their duties and obligation to settle the same, I form the view that Ds’ refusal to settle the SSD amounted to a repudiation of the PSPA and the Original Clauses. That repudiation was accepted by IL&L for P on 18 June 2016. The Incomplete Agreement and the Misrepresentation Issues 143.Given my conclusions on the earlier issues, the Incomplete Agreement and Misrepresentation Issues were not engaged. I state however that Ds had clearly made the representation that neither parties were liable to pay SSD, which representation was in the light of the SSD Adjudication incorrect. If necessary, I would also draw the inference and rule that P did rely on that representation. The Counterclaim Issue 144.I have set out Ds’ Counterclaim above. In the light of my findings and conclusions above, the parts of Ds’ Counterclaim based on P’s alleged breach of the PSPA are inconsistent with the evidence, not established, and have no merits. 145.Given my findings and conclusion that it was Ds who were in breach, the parts of Ds’ Counterclaim for balance of the purchase price and damages for expenses etc in keeping the Property also have no merits. 146.In so far as the parts of Ds’ Counterclaim based on defamation is concerned:
147.I dismiss Ds’ Counterclaim in its entirety. The Relief Issue 148.Mr Kwong deals with the Relief Issue at §10 of his written closing submissions. 149.At §(1) of the Prayer, P seeks a declaration that Ds have inter alia repudiated the PSPA and Supp PSPA. That claim is not repeated at §10 of Mr Kwong’s written submissions. In my view Mr Kwong is correct in not pursuing that. I have found that Ds are the parties who were in breach. P’s claim is for refund of the Deposits and liquidated damages that flow from that. She does not need the declaration from this Court. 150.Given my conclusions on the Issues as discussed above, P is entitled to repayment by Ds of the Deposits in the total sum of HK$1,630,000. I grant the relief sought at §(2) of the Prayer. 151.I refer to §11 of the PSPA. As a result of Ds’ repudiation of the PSPA and the Original Clauses, Ds are liable to P for the stipulated sum of HK$1,630,000 as liquidated damages — see Wong Lai‑fan v Lee Ha[1992] 1 HKLR 125 at §131 (lines 37‑40). I grant the relief sought at §(3) of the Prayer. 152.On P’s claim for a declaration of equitable lien over the Property for the above sums, I have considered Lee Fu Wing v Yan Po Ting Paul [2009] 5 HKLRD 513 and Combe v Lord Swaythling [1947] 1 All ER 838 cited therein. An equitable lien should be granted over the subject property for the deposit almost as of right — Lee Fu Wing at §120 citing Combe v Lord Swaythling. A purchaser’s equitable lien could also be granted to cover damages if the Court finds it just to do so in all the circumstances — Lee Fu Wing at §128. 153.In all the circumstances of the case, and bearing in mind in particular the uncooperative and obstructive conduct on Ds’ part (and in particular Leung’s) in the conduct of the proceedings, I find it just to grant a declaration that P is entitled to an equitable lien over the Property for both the Deposits refund and the liquidated damages. 154.I order further that there be interest on the sums above at 1% above HSBC’s best lending rate from time to time for the period between date of writ and date of judgment, and thereafter at judgment rate until payment[57]. Costs 155.I make a costs order nisi that P shall have the costs of the action, including for the avoidance of doubt both the Claim and the Counterclaim, to be taxed if not agreed. Post‑trial hearing communications 156.Ds have after the trial hearing put in a number of documents and what are in effect further submissions. This Court has invited submissions from P, who objected to such course. I agree that there has to be finality to a hearing. No justification has been made out for any post‑trial introduction of materials or submissions. I ignore those post‑trial documents and submissions.
Mr Jeremy Kwong, instructed by Iu, Lai & Li, for the Plaintiff The Defendants, unrepresented, appeared in person [1] Mr Kwong confirmed in the course of his closing submissions that (1) the implied term pleaded at §5A(i) of the RASOC that Ds would show and give good title and (2) that it was unconscionable for Ds to keep the Deposits (pleaded at §17(ix)) are no longer being pursued. I record further that Mr Kwong has accepted that he is bound by the pleadings, and is no longer seeking to argue that the parties had prior to the Supp PSPA already via emails agreed upon the terms of the Supp PSPA, which he at one stage sought to argue. [2] §15 of DAC, and the letter of 11 September 2016 at [B/221]. [3] Stamp Office Interpretation and Practice Notes No 5 (Revised) issued in July 2014. [4] Extract of which at [C/141-147]. Those 176 owners are called the “Majority Owners” in the Development Agreement. [5] [B/190-192], being “LL8” produced by Ds in their joint 2nd witness statement. [6] [B/193]. [7] The PSPA was signed in triplicates (top copy and 2 original copies). The version before the Court is produced from the original copy kept by P. As accepted by Mr Kwong, although the horizontal lines do not actually strikethrough the relevant words (but are slightly above them), there is no dispute that the lines were intended (by the person inserting it) to strikethrough the English and Chinese words in question. The misalignment was the result of that original copy not having been properly aligned with the top copy when the lines were inserted in hand. [8] [B/188]. [9] [C/110]. [10] [C/136-138]. [11] [C/148-149]. [12] [C/150-153]. [13] [C/154-155]. [14] [C/157]. [15] [C/162], received by IL&L on 6 June 2016. [16] [C/167]. [17] [C/176-177]. [18] [C/180]. [19] [C/181]. [20] [C/182-184]. [21] [C/216-218]. [22] [C/224]. [23] [C/243]. [24] [C/247-248]. [25] [C/244-246]. [26] [B/221], [C/255]. [27] [B/1-112]. [28] [B/135-176]. [29] [B/113-123]. [30] [B/124-134]. [31] Lee/2 and Leung/2 being a joint statement, [B/177-229]. [32] [B/230]. [33] [B/231]. [34] See Yan/2 §9(1). [35] [B/133]. [36] [B/187], a letter in which Ds allegedly objected to certain paragraphs added by P in relation to the Supp PSPA. [37] [B/185]. [38] §(5) of Yan/2, [B/138-139]. [39] [D/1-65]. [40] [D/20]. [41] [D/23]. [42] [D/24]. [43] That signed version has been produced at [C/133-134]. [44] [C/131-132]. [45] [C/135]. [46] [D/60-65]. [47] See §77 above. [48] §2, [B/41/230]. [49] As summarized by Mr Kwong at §6.3 of his closing submissions. [50] §9.15 of his written opening submissions. [51] Which include Chitty on Contracts (33rd ed) at §14-025, H O Brandt & Co v H N Morris & Co [1917] 2 K.B. 784 at p 795, A V Pound & Co Ltd v M W Hardy & Co Inc [1956] AC 588 at pp 602 and 604, Peter Cassidy Seed Co Ltd v Osuustukkukauppa IL [1957] 1 W.L.R. 273 at p 277, and Benjamin’s Sale of Goods (10th ed) at §§18-358 to 18-359. [52] [C/154-155]. [53] See also section 13(10) of the SDO. [54] §7.4(d) of his written closing. [55] [B/190-192]. [56] §7.4(c) of his written closing. [57] See Strong Beauty Ltd v Gain Legend Industries Ltd [2008] 1 HKLRD 570 at §36 and Leung Kai Hong v Sheehan [2007] 3 HKLRD 707 at §76. | ||||||||||||||||||
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