Cho Bik Nung v. Ng Hin Kwong

HCA 268/2018

[2023] HKCFI 2113

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 268 OF 2018

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JUDGMENT

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BACKGROUND

1.This trial is about the plaintiff’s claim and the defendant’s counterclaim for breach of contract.

2.The undisputed/indisputable background is as follows.

3.The defendant is an indigenous villager of Tseung Kwan O Village, Sai Kung, New Territories (“the Village”), and, by virtue of the New Grant (as defined in paragraph 6 below), is the registered owner of a piece of land known as Lot No.852 in D.D.242 (“the Land”), which lies within the Village.

4.As an indigenous villager of the Village, the defendant has a right to erect a small village house (丁屋).

5.In around 2007, the defendant’s application to build a small village house on the Land (“House 852”) was approved by the District Lands Office of the Lands Department.

6.As the defendant did not have sufficient funds to build House 852, he had been looking for a partner in the development of the said house.

7.In around 2009, the defendant was introduced to Chan Yuk Shing (“Chan”) (i.e. the plaintiff’s husband), who was interested in financing the development of House 852.

8.By a New Grant Number 21090 (“the New Grant”), the Government granted to the defendant the lease of the Land for a term of 50 years, commencing on 4 November 2010.

9.One of the Special Conditions of the New Grant provides that the defendant shall complete the development of the Land by the erection of a typical 3-storey small village house within 36 months of the commencement of the grant. Be that as it way, it is also provided therein as one of the general conditions that the Director of Lands would, at such time as he thinks fit or upon the application of the defendant, set out the lot on the ground of the Land, and that the defendant shall not commence any operations for building on the lot until it shall have been so set out by the Director of Lands.

10.There were altogether 41 indigenous villagers of the Village who had been granted permission to build their small village houses in the Village. 41 land lots had been fenced off to form a site (“the Site”) within which the 41 small village houses were to be constructed.

11.A special committee (“the Committee”) had been formed in the Village to facilitate the construction of these 41 houses and the supply of utilities thereto.

12.On 19 March 2011, the plaintiff and the defendant executed a written agreement in Chinese (“the Agreement”) at the office of Messrs. C. P. Cheung & Co, under which it was agreed, inter alia, that:

(1)  The defendant shall deliver vacant possession of the Land to the plaintiff forthwith and shall deliver the original copy of the New Grant to the plaintiff for safe keeping as a collateral;

(2)  The plaintiff would be fully responsible for the erection of a small village house on the Land and shall pay all costs thereof;

(3)  After the construction of the said small village house, the plaintiff will be the owner of all rights and interest of the first floor, second floor and flat roof thereof (“the Subject Property”), and the defendant will be the owner of all rights and interest of the ground floor thereof.

13.On the same occasion, the defendant also executed a will (“the Will”), which provided that the defendant would pass his interest in the Subject Property to the plaintiff upon his death.

14.The setting out of the four corners of House 852 was eventually carried out by the Lands Department in around July/August 2015.

15.The permission for commencement of work for House 852 was issued thereafter in August 2015. Chan then arranged his contractors to start constructing House 852 on 27 August 2015.

16.Apart from House 852, Chan also assisted other indigenous villagers of the Village to build their respective small village houses on Lot 812 (“House 812”), Lot 819 (“House 819”), Lot 850 (“House 850”) and Lot 851 (“House 851”). The owner of House 850 subsequently decided not to rely on Chan’s assistance in building House 850. The term “Houses” will be used in this Judgment to refer to the aforesaid four or five small village houses, as the case may be.

17.Chan had engaged Chan Chiu Ming (“Ming”) to build the concrete structure of the Houses.

18.On 23 December 2015:

(1)  Red paint was poured onto the walls of House 852 and House 851 which were still under construction at the material time;

(2)  A4 leaflets were scattered within the Site alleging that Chan owed unspecified party an unspecified sum of money. The said leaflets stated, among other things: “借錢吾還”, “欠債還$$”;

(3)  Large characters had been sprayed onto the ground of the Site alleging that Chan owed money to others;

(4)  Posters had been posted up onto walls inside the Site and in underpass near the Site alleging that Chan owed money to others;

(5)  The drainage of House 851 and House 852 was found to have been blocked by somebody unknown;

(6)  Posters were posted onto walls inside the Site with the following wordings (“the Deceive Government Posters”):

“村長    吳錫興

聯同村民       吳啟文 吳顯光 吳醒民

勾結

建築商       陳玉成 (BB陳)

非法販賣丁權 !!

欺騙村民 !!  欺騙政府  !!”

(collectively, “the December 2015 Incidents”)

19.In early February 2016, wooden boardings for concrete fillings had been removed on the roof of House 852 by an unknown party (“the February 2016 Incident”).

20.Ming did not resume work at House 852 after the Chinese New Year holidays in 2016[1]. At the time when he stopped working at House 852, all the concrete structures had been erected there except the roof hut. Roof railings were not filled with concrete even though boardings had been erected for the filling. It would only take another day’s work for the concrete filling work to be completed. In other words, it would only take one more day for Ming to complete the last stage of the erection of the concrete shell of House 852.

21.The scaffolding of House 852 was removed in May 2016.

22.Between 2016 and 2017, Ming continued to work for Chan at his new residence in a village known as Mau Wu Tsai which is near the Village.

23.Chan and the plaintiff moved to Mau Wu Tsai in 2017. Before that, they, like the defendant, also lived in the Village.

24.By September 2016, the plaintiff had already paid for all the costs in relation to the construction of House 852 charged by the Committee and the Government.

25.The Lands Department has been extending the deadline on the completion of construction of House 852 every year even up to today.

26.No Certificate of Compliance has been issued in respect of all small village houses within the Site (including House 852) up to now.

THE PLAINTIFF’S CASE

27.The plaintiff’s case may be summarised as follows.

28.Once the defendant had been granted permission by the Director of Lands to start constructing House 852, Chan caused his contractor, Ming, to start the construction work immediately on 27 August 2015.

29.During the construction work of the Houses, there had been interference by triads, who were headed by a person known as Chan Wing Chi (“Chi”).

30.At the material time, there were only three main contractors who were constructing small village houses in the Village, namely, Chan (who was building the Houses), “So Kee” (蘇記) (which was run by a Mr So who was building 12 small village houses) and Wing Tai Construction Company (“Wing Tai”).

31.Wing Tai was a company controlled by triads. It had all along wanted to get an as-big-as-possible share of the construction work of the small village houses in the Village.

32.The December 2015 Incidents were done by the triads led by Chi for exactly the aforesaid purpose. The triads used these tricks to pressurise Chan. As a matter of fact, Chan did not owe anyone money at all.

33.Just before the Chinese New Year in 2016, Mr So’s son was beaten up by the triads led by Chi who wanted to force “So Kee” leaving the Site. As a result, “So Kee” did not continue to build those 12 houses which it had contracted to build, and they all fell into the hands of Wing Tai. Since then, apart from Wing Tai, Chan was the only main contractor who was still building small village houses in the Site.

34.After the February 2016 Incident, Ming told Chan that he could no longer work for Chan as the safety of himself and his family was under threat from the triads. At the end of the day, Ming stopped working for Chan altogether in April 2016.

35.In April 2016, one of the houses which Chan helped to build (House 812) had its pivotal supports to a newly laid concrete ceiling removed and loosened (“the April 2016 Incident”). It could have caused very dangerous latent structural damage to the house which would be difficult to rectify. It could also have endangered the safety of the occupants.

36.On 26 May 2016, Chan, the defendant and some other people had had a meeting at Chan’s home in view of what happened at the Site (“the May 2016 Meeting”). They were worried that if they continued to build House 852, the triads might cause other damage thereto. They therefore orally agreed that they should suspend the construction work thereat and see what the Police could do. They were minded to wait until the situation was stabilised.

37.In early September 2016, Chan found a new local contractor called Lau Fuk Ping (“Ping”) who was willing to take up the construction work of the Houses. Chan informed the defendant immediately, but the defendant told Chan that a new contractor had already been engaged to continue with the construction of House 852. Chan was subsequently told by the defendant’s brother, Ng Sing Man, that the new contractor engaged by the defendant was also controlled by triads.

38.In around Summer 2017, Chan found that there were workers working at House 852. He therefore asked the defendant to have a meeting and discussed the matter. They ended up having this meeting over a meal in a restaurant in Kowloon Bay. The defendant told Chan that he would be reimbursed by the triads of the costs which had been incurred by him in the construction of House 852. Chan disagreed with such an approach.

39.There is no truth in the defendant’s case, namely, that Ming refused to work for Chan anymore in the middle of the construction process by reason of Chan’s non-payment of outstanding construction fees to him. Neither was Chan in financial difficulty at the material time.

40.It was the agreement between Chan and Ming that the construction fees in relation to the Houses would be paid by 5 instalments, with each instalment to be payable upon the completion of each of the 5 stages of construction. At the time when Ming stopped building House 852, Ming had completed stages 1 to 4 of the construction thereof, and in respect of which Ming had been fully paid already. The last instalment of $120,000 in respect of House 852 was supposed to be payable only upon Ming’s completion of stage 5 of the construction, which was still in progress at the material time, and such work could have been completed within one more working day.

41.Ming had continued to work for Chan in the renovation of Chan’s new home in Mau Wu Chai even after Ming had stopped working at House 852.

42.As the suspension of the construction work at House 852 was not due to the fault of the plaintiff/Chan, the defendant had been in breach of the Agreement by engaging another contractor in the construction of House 852.

43.The plaintiff therefore claimed for:

(1)  A declaration that the defendant is holding all the titles, rights and interests of the Subject Property as a constructive trustee for and on behalf of the plaintiff;

(2)  Specific performance of the Agreement or damages in lieu;

(3)  Alternative to (2) above, an equitable lien over the Subject Property;

(4)  Mesne profit from 1 September 2017 until delivery of possession of the Subject Property to the plaintiff.

THE DEFENDANT’S CASE

44.The defendant agrees that Ming had been engaged in the construction of House 852 and that Ming had stopped working thereat in around early 2016.

45.However, Ming’s refusal to work at House 852 was not due to any interference of triads as alleged, but because of the plaintiff/Chan’s failure to pay outstanding construction fees to Ming.

46.The fact that Chan was in financial difficulty at the material time is supported by the December 2015 Incidents, which were done for the purpose of urging him to repay his other creditor(s).

47.Having known that the construction of House 852 had been suspended, the defendant did try to locate Chan, but his effort was in vain.

48.The defendant was only able to get in touch with Chan in late May 2016. They had had a meeting at Chan’s home (i.e. the May 2016 Meeting). During the meeting, Chan requested the defendant to give him another 2 years for the purpose of building House 852, which the defendant refused. At the end of the day, no agreement was reached in that meeting.

49.After the May 2016 Meeting, Chan disappeared again.

50.Having spent much effort in locating Chan but to no avail, and the construction work of House 852 having been left idle for a long time, the defendant decided to contact Pang Chi Keung, who was a respected figure in the Village, for assistance. In around September 2016, the defendant managed to engage another contractor to take up the construction work of House 852. Such a contractor was not “triad-approved” as alleged.

51.The sole reason why the construction work of House 852 was halted was because of the plaintiff/Chan’s failure to pay Ming the construction fees in respect of the 5^th stage of the construction.

52.In the above circumstances, it was the plaintiff who had breached the Agreement in the first place in failing/refusing to complete the construction of House 852 within the stipulated/reasonable time.

53.There was no truth in the plaintiff’s case that the defendant had agreed to the suspension of construction work at House 852.

54.The defendant therefore counterclaimed for:

(1)  A declaration that the Agreement had been validly terminated;

(2)  Damages for use and enjoyment of land, mesne profits and loss of right to sell, all to be assessed;

(3)  In the event the defendant is liable to transfer the Subject Property to the plaintiff, a sum to be assessed on the monies which he had spent thereon;

(4)  Return of the original New Grant and the Will.

THE CORE ISSUES

55.While there are quite a number of factual disputes raised by the parties, it appears to me that the core issues are:

(1)  Why did Ming stop the construction work at House 852 – was it because of Chan’s non-payment of construction fees to him or because of triad interference?

(2)  Did the parties reach any agreement in the May 2016 Meeting to suspend the construction work because of triad interference?

CREDIBILITY OF WITNESSES

General principles

56.In Hu Lan v David Golden [2023] HKCFI 873, this Court held that:

“36. When I consider the credibility of various witnesses who had given evidence in court, I shall take the following matters into account:

(1) Generally speaking, contemporaneous written documents and documents which came into existence before the problems in question emerged are of the greatest importance in assessing credibility;

(2) Importance should be attached to the inherent likelihood or unlikelihood of an event having happened, or the apparent logic of events;

(3) The court will also attach importance to the consistency of the witness’ evidence with undisputed or indisputable evidence, and the internal consistency of the witness’ evidence. The latter type of consistency is often tested by a comparison between the witness’ oral testimony and his or her witness statement;

(4) The court should consider a witness’ motive for deliberately not giving truthful testimony. For example, telling the truth may prejudice his interest, or a just determination of the litigation may affect his interest;

(5) It is essential to have regard to the entirety of a witness’ evidence. A witness can make mistakes, but the mistakes do not necessarily affect other parts of his evidence. Likewise, a witness may lie. However, lies themselves do not mean necessarily that the entirety of that witness’ evidence is to be rejected. A witness may lie in a stupid attempt to bolster his case, but the actual case nevertheless remains good irrespective of the lie;

(6) On the other hand, where it is shown that a witness has been discredited over one or more matters to which he has testified, this fact is relevant to the assessment of his overall credibility;

(7) While the court is entitled to take demeanour into account when assessing testimony, it should be borne in mind that demeanour can be deceptive and is therefore to be approached with care.”

57.I will bear the above matters in mind when I consider the credibility of the witnesses in the present case.

Credibility of the plaintiff’s witnesses

58.The plaintiff has called four witnesses to give evidence at the trial:

(1)  The plaintiff herself;

(2)  Chan;

(3)  Tsang Ka Kau (“Tsang”) – the professional surveyor engaged by the plaintiff as her consultant in the building of House 852; and

(4)  Leong Wing Sum (“Leong”), who had reached an agreement with the indigenous villager who had obtained permission to build House 812 for the financing of the construction thereof, in return for the beneficial interest of 1/F, 2/F and the roof thereof.

59.I find that, generally speaking, the evidence given by these witnesses is credible and reliable.

The plaintiff

60.I agree with Mrs Chan that the plaintiff was a witness who had tried her best to assist the Court by giving truthful answers. Her answers were straight-forward. She appeared to this Court to be an honest witness.

61.Although there were times when the plaintiff could not recall some details of the events, it is apparent that she would frankly admit it if that was the case. In my view, that shows that she was a credible witness, because she would not try to give evidence favourable to her case without caring whether the evidence was true or not.

62.I should also say that, with respect, I do not agree with Mr Chow that the plaintiff had “blindly” supported Chan’s version of events. It should be borne in mind that, as a matter of fact, the plaintiff did not have personal knowledge of many of the relevant events, and much of her understanding of what had happened came from her husband, Chan, who all along was the main person who dealt with the transaction as well as the building of House 852. There was no reason why she would doubt what Chan told her at the material time as to the progress of the construction of House 852. More importantly, it is apparent that she had never hesitated in accepting (if that be the case) that she had no first-hand knowledge of various matters.

63.It seems that Mr Chow was also criticising the plaintiff for pleading matters (and signing statement of truth in respect thereof) in relation to which she had no personal knowledge. With respect, this criticism is misconceived. The party himself/herself does not necessarily have to have personal knowledge of all matters in his/her pleadings. A party can obviously call different witnesses for the purpose of proving different parts of his/her case. In the present action, the plaintiff has done exactly this by calling her husband, Chan, who has personal knowledge on most, if not all, of the relevant matters. Furthermore, if Mr Chow’s submission is accepted, then the same could be said of his lay client, the defendant, who could only rely on hearsay evidence in his attempt to prove that the plaintiff/Chan did not pay Ming who in turn allegedly refused to carry on the construction work for this reason.

Chan

64.Chan was unshaken in cross-examination and his evidence was basically consistent throughout. He could give detailed explanation of various incidents on which he was cross-examined without hesitation. I accept that he was able to do that because he was recounting the truth.

65.I do not agree with Mr Chow for the defendant that I should disbelieve Chan by reason of, among other things, the fact that he had omitted to mention certain matters in his witness statements, and given such evidence for the first time when he was in the witness box. Chan explained that he had not mentioned each and every matter in his witness statements because there were so many of them. Even though I do not agree that Chan’s approach in the preparation of his witness statements is commendable, having considered all the circumstances of the present case, I accept that Chan did not make up false evidence while he was giving evidence in Court.

Tsang

66.Tsang has no interest in the outcome of this action. In my view, there is no reason why he should come to Court to give false evidence in support of the plaintiff’s case. Indeed, Tsang’s credibility is not challenged by Mr Chow for the defendant at all, even though it was emphasised by Mr Chow that much of his evidence was hearsay in nature. However, as I will further explain below, Tsang’s evidence that Chan did tell him certain matters at the material time is not hearsay and is something which the Court can and should take into account.

Leong

67.Leong also has no interest in the outcome of this action. He gave straight-forward and consistent answers while he was cross-examined. Despite Mr Chow’s submission that Leong is not a neutral witness and that he is a long-time acquaintance of Chan, I accept that Leong’s evidence is reliable and should be accepted.

Credibility of the defendant’s witnesses

68.The defendant has given evidence himself. He has also adduced the evidence of Ming.

The defendant

69.I find that the defendant is not a credible nor a reliable witness at all. In fact, he accepted in Court that he signed the statement of truth attached to his pleadings without caring whether the content therein was correct or not.

70.Apart from this, there are various other reasons in support of my finding on his credibility.

71.Firstly, while he was giving evidence in court, there were many occasions when he claimed that he could not remember the incidents concerned, and he had departed from what he pleaded in his Amended Defence and Counterclaim and from his witness statement. To quote a few examples:

(1)  While his pleaded case (which was supported by his witness statement) was that he had tried to locate Chan before late May 2016 but in vain, he confirmed in Court that he in fact did not do so;

(2)  While he stated in his witness statement that (i) he approached Chan in early 2016 and asked him why the work at House 852 was suspended, and (ii) Chan told him that someone attended Lot 852 and collected “tor tei fee” (protection fee to the triads), he stated in Court that (i) it was Chan who called him instead, and (ii) Chan called to ask him whether he knew anyone had come to his lot to collect “tor tei fee” or not;

(3)  While he maintained in his witness statement that his only meeting with Chan after the suspension of construction work at House 852 was the May 2016 Meeting, he accepted that he had also met Chan during the Summer in 2017;

(4)  According to his own pleading, it is undisputed that he had signed a written agreement in 2009 known as “丁屋合作發展意向書” (“the Intention Agreement”) in relation to the construction of House 852. However, he insisted in Court that he had never signed this document. This is unbelievable, particularly when it cannot be disputed that he had received payment pursuant to this agreement;

(5)  While he admitted in his pleadings and witness statement that he had signed the Agreement in 2011, he said in Court that he could not recall executing the document at all;

(6)  While the defendant pleaded that he was informed in March 2011 that the plaintiff executed the Agreement on behalf of Chan (which he repeated in his witness statement), he stated in Court that in fact no one had ever told him so.

72.Secondly, many parts of the defendant’s evidence also defy logic or are inherently improbable, for example:

(1)  While it was the defendant’s evidence that the May 2016 Meeting was held because he wanted to confront Chan for the lack of progress of the construction work of House 852, he said that Chan only asked during the meeting for another two years for the construction work to be done without giving any reason in support at all. The defendant also said that he did not ask Chan why another 2 years were required. This is inherently improbable. I do not accept the defendant’s evidence that Chan had made such a request;

(2)  When he was asked in Court whether he had thought about who would have posted up the Deceive Government Posters, he claimed that he had never thought about it. This is simply unbelievable;

(3)  The defendant claimed that he had tried to locate Chan but in vain. However, it is evident that he had not tried to request Chan for meeting up by way of WhatsApp messages, which, in my view, must be the most convenient way to make such a request;

(4)  The defendant also alleged that Chan had “disappeared”, as if he did not know Chan’s whereabouts. However, the undisputed fact is that the defendant knew where Chan and the plaintiff lived, which was in the same village as his own home (and it was the defendant’s evidence that it would only take 5 minutes to walk from his home to the plaintiff/Chan’s home). If the defendant really wanted to locate Chan, he could have easily done so by visiting Chan’s home directly (not to mention he could have sent him WhatsApp messages as stated above). However, the defendant’s evidence in Court was that he had only visited Chan’s home twice, and on both occasions the domestic helper told him that Chan was not at home. I reject such evidence as unbelievable, when he did not request for a meeting in the first place. In any event, even if he did not think that making a request via WhatsApp was necessary, if he was so eager to look for Chan, it is strange that he only went to Chan’s home twice in all those months, especially when his home was close to Chan’s;

(5)  He also denied that he understood what Chan meant when Chan used an folded-hands emoji (with two palms sticking together) in response to his (the defendant’s) message of “拆晒竹棚” which was sent on 26 May 2016 at 7:01pm together with a photograph of the outlook appearance of House 852 (the photograph showed that the scaffolding thereof had been removed). This is inherently improbable. One does not need any special knowledge so as to understand what the emoji means. In any event, it is evident that the defendant had used this emoji himself in his WhatsApp communications (twice) with Chan on 15 January 2016 when he asked for a loan from Chan. It is a blatant lie on his part to allege that he did not understand the meaning of such an emoji. He made such a denial in Court because he wanted to cover up the fact that Chan thanked him for letting Chan know that the scaffolding had been removed.

73.Thirdly, many parts of the defendant’s evidence are also contradictory to contemporary documents. For example:

(1)  While he denied in Court to have any knowledge of the Deceive Government Posters until early 2016, it is evident that he knew it on the very day of the December 2015 Incident (23 December 2015) because he did send a message to Chan on that day (“比人貼左大字報，指名導 (sic)姓，呃政府”) and asked Chan how to deal with the matter (“有咩計唸(sic)”). He even asked Chan whether he should hide the documents (“啲文件要不要收埋”);

(2)  While the defendant tried to give an impression by virtue of paragraphs 17 and 18 of his witness statement that he could not locate Chan successfully after the December 2015 Incidents for an answer and that Chan only replied to him on 26 May 2016, it is evident that the defendant did, by a WhatsApp message on 31 December 2015, ask Chan for a loan of $10,000 which Chan immediately agreed. It is also apparent from some WhatsApp messages between them on 15 January 2016 that they did meet that night so that Chan could lend him such money;

(3)  The defendant alleged that he had sent WhatsApp messages to Chan after the May 2016 Meeting and queried why he did not resume the construction work but Chan did not reply to him at all. He also alleged that Chan was “out of reach again for quite a long time”[2] after the May 2016 Meeting. However, according to the screen-cap images of Chan’s mobile phone, the defendant did not send any message to Chan at all in the period between 27 May 2016 and 4 February 2019[3];

(4)  While the defendant denied that he had Ming’s phone number, it is evident that Chan did send Ming’s contact number to him on as early as 14 October 2015;

(5)  The defendant had also denied that he had seen a document dated 10 October 2014 (which stated that he had received $30,000 from Chan) even though he accepted that the signature thereon belongs to him. When he was cross-examined as to how he could have signed a document which he had never seen, he could not give any explanation at all. He further stated that he had accepted the authenticity of the said document because the amount stated therein was not large at all. This explanation is not accepted. I have no doubt that he knew and could recognise the document.

74.Fourthly, the defendant had also given contradictory evidence in Court. For example:

(1)  He initially stated that he only knew that House 852 had been poured with red paint after the May 2016 Meeting. However, he changed his evidence subsequently and admitted that he saw the red paint himself during his visit at House 852 in early 2016;

(2)  He had given inconsistent evidence as to when he knew that there was a 36 months’ time limit for the construction of the Houses;

(3)  He had also given inconsistent evidence as to the timing when he engaged a new contractor in place of Chan. Initially he stated that he had done so by September 2016. However, when he was confronted as to why he still issued the October 2016 Notice[4] to Chan/the plaintiff despite such engagement, he changed his evidence and said he only engaged a new contractor in November 2016;

(4)  The defendant initially alleged that Chan had never contacted him since September 2016 and that Chan had not complained about the defendant’s engagement of another contractor for the construction of House 852 until Chan’s solicitors issued a letter to him. However, the defendant conceded subsequently that Chan did invite him for a meal during the Summer in 2017 and discussed about matters concerning House 852. Be that as it may, the defendant said he had forgotten what was discussed. This is totally incredible. In my view, the defendant was only covering up the fact that Chan had made a complaint to him there and then upon knowing that the defendant had engaged another contractor for the construction work.

75.I will further analyse the defendant’s evidence when I consider the core issues below.

Ming

76.As aforesaid, Ming was the contractor engaged by Chan to construct House 852. He was one of the most important witnesses because his evidence supposedly would shed light on the reason why the construction work of House 852 was suspended.

77.It was for this reason that Chan initially asked Ming in the Summer of 2020 to give evidence in this action in support of the plaintiff’s case against the defendant. According to Chan, Ming agreed to assist the plaintiff at first, and Ming in fact had attended the office of the plaintiff’s solicitors for the purpose of giving a witness statement. However, Ming subsequently told Chan that he (Ming) could not be the plaintiff’s witness, because if he did so, his son’s business and his family’s safety would be at risk.

78.I hold that it is more likely than not that what Chan said is the truth: Ming had initially agreed to give evidence in support of the plaintiff’s case that Ming only suspended the construction of House 852 by reason of the threats imposed by triads. Ming only changed his mind subsequently in around September 2020 upon pressure of the triads.

79.I have reached the above conclusion for the following reasons:

(1)  Even Ming admitted that in around late July 2020, he had attended the office of the plaintiff’s solicitors for the purpose of meeting the plaintiff’s solicitors and counsel so that he could give evidence in support of the plaintiff’s claim against an indigenous villager. Even though he said he was not sure whether the meeting at the solicitors’ office was about House 852, there is no evidence that Chan/the plaintiff was involved in any other court proceedings or legal dispute (which Ming had a part to play in);

(2)  Chan’s evidence that Ming told him in September 2020 that he dared not give evidence in favour of the plaintiff’s case is supported by contemporaneous evidence. On 24 September 2020, Chan sent the following WhatsApp message to Ming:

“諒解 知你受敵 家人受威嚇 明白 知你難做 絕對體
諒 將心比己 過去支持 話在心中 感謝萬分”

I do not accept Ming’s evidence that his family was not threatened by anyone and that Chan had made this up in the above message. I do not think Chan would have mentioned about this unless he had been told about this by Ming. In fact, Ming did not reply to this message at all, which I find to be quite strange if Ming thought at the material time that Chan had misunderstood his situation: As admitted by Ming, he knew that by the above message, Chan was showing his care and concern. If there was nothing which Chan had to be concerned at all, it is more likely than not that Ming would have replied and eased Chan’s concern. Ming’s silence upon receipt of Chan’s message above shows that what Chan stated was the truth.

(3)  Ming tried to explain away the above message by saying that while he did approach Chan in around September 2020, he did so only because he had been asked by triads to inform Chan that if Chan would like to continue with the construction of the Houses, he (Chan) should contact the triads. I do not accept this evidence, because it is evident that Ming only informed Chan that the head of the triads wanted to talk to him (Chan) on 27 October 2020[5].

80.In such circumstances, I consider that those parts of Ming’s evidence which are in support of the defendant’s case are unreliable. Indeed, as it can be seen further below, much of Ming’s oral evidence given in Court (particularly on the very important question of when the construction fees were payable by Chan), contradicted his evidence in his witness statement.

Conclusion

81.To conclude, I would prefer the evidence of the plaintiff’s witnesses whenever those evidence contradict those given by the defendant and/or Ming.

DISCUSSION

The reason why Ming stopped working for Chan at House 852

82.It is the plaintiff’s case that the work at House 852 was suspended only because Ming dared not continue with his work as a result of triad interference. On the other hand, the defendant alleged that the suspension was solely caused by the plaintiff/Chan’s failure to pay Ming on time.

83.I have no hesitation in finding that the plaintiff’s case should be accepted.

84.First, while it is the defendant’s case that the plaintiff/Chan should have paid Ming before the commencement of each of the five construction stages, Ming accepted in Court that because he and Chan had been very close friends for a long time, he had agreed with Chan that the latter could pay him upon the completion of each stage of construction.

85.Even though Ming had in the latter part of his oral evidence attempted to clarify that the original oral agreement between him and Chan was that Chan had to pay before the concrete of each floor was laid (in other words, before the commencement of each stage of construction), he accepted that at the end of the day, he did not ask Chan for payment before the commencement of each construction stage. Hence, even if there was any alleged oral agreement as such, Chan and Ming had all along not followed such an agreement. In such circumstances, it is incredible that Ming would all of a sudden change his practice and request for payment before the commencement of the last stage of construction work.

86.The defendant’s case in this regard collapsed right away.

87.Second, the plaintiff’s case was also supported by Ming’s evidence which he gave in Court during cross-examination:

(1)  He accepted that the purpose of those people who painted the red paint, put up the posters, etc. was to stop Chan from continuing with the construction of the Houses;

(2)  He conceded that “part of the reason” that he told Chan before Chinese New Year in 2016 that he could not continue with the construction work was because he and his family was threatened by triads;

(3)  He stated that he did discuss with Chan in March 2016 as to whether the construction work could be resumed, and Chan then gave him the contact number of a police officer who belonged to the anti-triad squad. This clearly supports the plaintiff’s case that the suspension of work was due to triad interference;

(4)  Ming said he also wanted to complete the concrete laying job of House 852 in March – April 2016 and therefore he had to coordinate with Wing Tai. However, his effort was in vain. Such evidence is contradictory to his evidence that the sole reason of suspension of work was Chan’s non-payment of construction fees to him.

88.I should also add that, even if Ming did not make such concessions in Court, as I will further explain below, the overall circumstances show that the plaintiff’s case is inherently probable, and much more likely to be the truth.

89.Third, Ming alleged that Chan informed him in about late 2015 that he was unable to meet the payments for the next stage in respect of the 4 Houses (i.e. House 812, House 850, House 851 and House 852). This is totally unbelievable. This is because, out of those Houses, only House 852 belonged to the plaintiff. The other three houses belonged to Chan’s friend/relative. Hence, it is impossible for Chan to tell Ming that he was unable to make payments in respect of House 812, House 850 and House 851, for Chan could have asked the owners of those other houses to transfer the construction fees to him so that he could pay Ming accordingly. In other words, Chan at most could not pay his own share of the construction fees if he really was in financial difficulty.

90.Fourth, if the reason why Ming stopped constructing House 852 for Chan was because of Chan’s inability to pay construction fees, it is very difficult to understand why Ming continued to work for Chan at his new house in Mau Wu Tsai. This is totally contradictory to the alleged attitude of Ming who stated in his witness statement that:

“[…] If I had seen people working on [Lot 852], I would have immediately confronted those workers and/or [Chan] to ask for my overdue payment […]”[6]

91.Fifth, it is the unchallenged evidence of Chan that:

“Just 1 more day’s work at less than $20,000 costs to [Ming], he would have entitled him to receive $360,000 for the 3 houses which were ready for pouring concrete for Stage 5 of the works. Ming had chosen not to compete (sic) the works as he was in fear of the triads.”[7]

92.In light of the above evidence, in my view, it is inherently improbable that Ming would have suspended his work at House 852 abruptly[8] before the Chinese New Year in 2016 for the alleged reason of non-payment of construction fees.

93.Sixth, if the purpose of Ming suspending his work at House 852 was to force Chan to pay him, it is very unlikely that he would remove the scaffolding erected thereat altogether. He would have left the scaffolding there so that he could resume work once Chan paid him. This demonstrates Ming’s determination of not working at House 852 anymore.

94.Seventh, the defendant also attempted to rely on a notice which he had purportedly posted up on the wall of House 852 on 3 October 2016 (“the October 2016 Notice”) in support of his case that it was the plaintiff/Chan’s fault in the suspension of the construction work.

95.The October 2016 Notice reads:

“本人吳顯光為DD242 LOT 852之持有人

致曹碧濃女仕代為興建之人士DD242 LOT 852 之丁屋建築工程以在建築途中經已停建十個月之久 現通知曹碧濃女仕應負責繼續完成餘下之建屋工程由此通告發出日期七天內復工，否則會追究一切責任和損失權利。

業主姓名: 吳顯光      

日期: 3/10/2016”

96.The defendant explained the reason why he had posted the October 2016 Notice as follows:

“By reason of the persistent failure on the part of Mr Chan and/or the plaintiff to complete the construction of the village house in blatant breach of the Agreement, I had not (sic) choice but to put up a written notice on the unfinished structure on the Land to alert Mr Chan to contact me at once to deal with the unsatisfactory situation.”[9]

97.While he was giving his evidence in Court, the defendant further explained that he really wanted Chan to read the October 2016 Notice, so that Chan would discharge his duty pursuant to the Agreement.

98.The plaintiff’s counsel argued that the October 2016 Notice must have been “a belated addition to this case” and that this was a “late fabrication”, for the posting up of this notice was never mentioned in any of the defendant’s pleadings, and his witness statement even misquoted the content thereof[10].

99.I do not think the Court has to go this far. In my view, even if the October 2016 Notice was really posted up on 3 October 2016 as alleged, the defendant was simply doing it for the purpose of bolstering his own case, in anticipation of court proceedings. He did not intend that Chan/the plaintiff would see it. Neither did the defendant want Chan/the plaintiff to resume the construction of House 852 within 7 days as requested by the October 2016 Notice.

100.My reasons are as follows:

(1)  The October 2016 Notice was admittedly only posted on the wall of House 852. As the defendant knew that Chan had suspended the construction work there, he would not expect that Chan or the plaintiff would have gone back to the construction site of House 852 within 7 days from 3 October 2016;

(2)  If the defendant really wanted the plaintiff/Chan to be informed of his ultimatum, he would have sent such a message to Chan by WhatsApp. Alternatively, he would have delivered a copy of the said notice to Chan’s home which was just nearby;

(3)  According to the defendant’s own evidence, he had engaged another contractor already in September 2016. It lies ill in his mouth to say that he wished Chan to resume construction work there;

(4)  Indeed, the defendant’s reliance on the October 2016 Notice does not sit well with his counsel’s argument that the defendant has accepted the plaintiff’s repudiation of the Agreement and has terminated the same in September 2016.[11]

101.Eighth, it is evident[12] that Chan had informed the defendant on 14 October 2015 that Ming was the person-in-charge of the construction of House 852 and that Chan had given the defendant Ming’s contact number on the same day. If the defendant was really eager to find out why the construction work of House 852 was suspended, he could have asked Ming directly. It is totally unbelievable for the defendant to allege in his witness statement that he only found out from other villagers in June 2017 that the reason why the construction work had halted was because of Chan/the plaintiff’s failure to pay Ming. It is equally incredible for the defendant to say that he was only told by Ming at a social occasion subsequently (after June 2017 – in other words, more than 1 year and 3 months after the suspension of work) that Chan had failed to pay him $600,000 construction fees and that such non-payment was “the sole reason for the cessation of the construction works”[13]. In my view, these alleged conversations had never taken place. As a matter of fact, the defendant’s evidence above contradicted his pleaded case that:

“Upon knowing that the construction of the small house was halted due to Mr. Chan’s inability to pay his contractor, the Defendant tried but was unable to get in touch with (sic) contact Mr. Chan until about May 2016.”[14]

102.Ninth, the plaintiff’s case is also supported by Tsang, who told the Court that:

(1)  Chan did tell him soon after the commencement of the construction of House 852 that there was triad interference at the construction site;

(2)  Ming did tell him in December 2015 that there were threats from triads to stop Ming and his workers from continuing to work for Chan;

(3)  Sometime in 2016, Chan did tell him that the triads did try to take over the construction project of House 852 from Chan, and that the triads had also threatened other contractors;

(4)  Chan did tell him at the material time that the indigenous villager involved in the present case agreed to suspend the construction work;

(5)  In light of the triad interference and Ming’s refusal to carry on, he had had a meeting with Chan, the indigenous villagers who were granted to right to build House 852 (i.e. the defendant), House 851 and House 819 respectively and some other people at Chan’s home in May 2016, during which it was agreed that they would not engage the triad-related contractor to build the Houses, and that they would rather halt the construction works until they could find a new contractor who was willing to work at the Site;

(6)  In about September 2016, Chan informed him that the triads had coerced the defendant to develop House 852 with the triads instead of the plaintiff.

103.As aforesaid, I accept that Tsang is a credible witness and I accept his evidence. Although he was told about the aforesaid matters by Chan as opposed to him having any personal knowledge about the aforesaid matters, his evidence shows that Chan was consistent about what had happened all through these years. Tsang’s evidence that Chan did tell him back in 2016 that the triads wanted to take over the construction of House 852 and that Chan mentioned back then that the indigenous villager in this case (i.e. the defendant) did agree to suspend the construction of House 852 is not hearsay but direct evidence of what Chan did say at the time. In my view, it is more likely than not that what Chan told Tsang at the material time are true. I think it is highly unlikely that Chan would have fabricated stories in front of Tsang back in 2015/2016 in anticipation of these proceedings.

104.Tenth, I accept that it is more likely than not that Ming had been threatened by triads not to carry on with his work at House 852, because otherwise he would not have stopped his work so abruptly. It must be borne in mind that he only needed to do another day’s work so as to earn the construction fees of the last stage of the construction, and that it is unlikely that Ming would have been so strict with Chan (in the sense that he would stop working for Chan so as to force Chan into paying) given their friendship over the years.

105.I have not lost sight of a demand letter issued by Ming’s solicitors dated 28 November 2017, by which Chan was demanded to repay $480,000. However, Mr Chow for the defendant did not refer to this letter at all in his closing submissions in support of the defendant’s case that Chan/the plaintiff was indebted to Ming. This is not surprising. In my view, this is just a self-serving letter, which was issued in a desperate attempt to support the defendant’s case herein.

106.Mr Chow for the defendant reminded this Court that while Ming did stop his work at House 852 completely in around February 2016, he did carry on with the construction work at House 812 and House 819. Insofar as it was submitted that that shows that Ming’s suspension of work had nothing to do with triad interference, that submission is rejected. As admitted by Ming, he had tried to finish the works of House 850, House 851 and House 852 too, just that he could not coordinate with Wing Tai successfully. Ming’s stance is totally understandable – he could get paid with just another day’s work at House 852.

107.Furthermore, Ming also explained that House 812 was attached to the house on Lot 813, whereas House 819 was attached to the house on Lot 818, and as a result, concrete of those attached houses had to be filled at the same time, otherwise it might lead to leakage of water. According to Chan (which I accept), the houses on Lot 813 and Lot 818 were built by the contractor who was controlled by triads. Hence, in my view, the fact that Ming had gone on with his work at House 812 and House 819 could not assist the defendant.

Cause of the December 2015 Incidents

108.For the sake of completeness, I will also make findings on the cause of the December 2015 Incidents.

109.In my view, it is more likely than not that those incidents took place because the organiser behind the scene was minded to give Chan pressure so that he would no longer be a contractor building the Houses. My reasons are as follows:

(1)  The Deceive Government Poster shows that Chan was the target for reason other than money/debt, because various names mentioned in the said poster (the defendant, Ng Kai Man and Ng Sing Man) were the indigenous villagers whose houses[15] were constructed with the assistance of Chan.

(2)  It was not a coincident that the Deceive Government Poster (which was totally unrelated to Chan’s alleged debt) was posted on the same day as the other leaflets, etc. which chased Chan for repayment of money.

(3)  It is undisputed that Chan’s home was not disturbed at all material times. If he was indeed owing anyone money such that debt collectors were engaged to chase him for repayment, there is no reason why and it is most surprising that the posters/leaflets were not posted at his home at all.

(4)  Further, as pointed out by Leong, if the purpose of the distribution of leaflets on 23 December 2015 was really to chase Chan for repayment of debt, the leaflets would at least state the telephone number which Chan should call for discussion of repayment.

110.In my view, even the defendant himself knew that Chan did not owe others money despite the leaflets and red paints which alleged that Chan did not repay his debts to others, because:

(1)  I find that the defendant knew about the leaflets and red paints on 23 December 2015:

(a)   It is undisputed by the defendant’s counsel that the leaflets were scattered and red paint was painted on that day;

(b)   As a matter of fact, the defendant did ask the plaintiff on 23 December 2015 what he should do with the Deceive Government Posters. If the defendant knew about those posters on that day, it can be inferred that he would have seen the leaflets (if not the red paint) on the same day;

(c)  In any event, the defendant stated that he had a lot of relatives living in the Village, and they all knew that Chan was constructing House 852 for him. It can be inferred that at least some of them must have told him about the leaflets and red paints on the same day.

(2)  Despite the defendant’s knowledge on 23 December 2015, he still asked Chan for a loan on 31 December 2015. He would not have done so if he truly believed that Chan was indebted to others.

Was there any agreement to suspend work between the parties

111.Chan explained that in the May 2016 Meeting, it was agreed by the defendant and others that the construction work should be suspended because:

(1)  of the increased severity of the nature of sabotage done by the triads;

(2)  they should wait and see whether the Anti-Triad Unit of the Hong Kong Police could do anything against the triads;

(3)  the construction progress of the Houses was ahead of other houses in the Village.

112.Mr Chow for the defendant doubted Chan’s evidence on what happened in the May 2016 Meeting on the basis, inter alia, that Chan only stated in his witness statement that he had had a discussion with the defendant and his brother Ng Sing Man without mentioning any other people who had attended this meeting, but that he only added in his oral evidence that there were in fact 5 other people attending the meeting.

113.Chan explained that he did not mention other people but only the defendant and his brother because he only put down what was relevant as far as House 852 was concerned.

114.In this regard, it should be noted that Chan did not even mention that the plaintiff also attended the May 2016 Meeting in his witness statement. However, I am of the view that the plaintiff must have been there, because she was a housewife and she lived with Chan. Her presence at the meeting was also supported by Leong. The fact that Chan had not mentioned about the plaintiff’s presence in his witness statement shows that there is indeed nothing in Mr Chow’s criticism.

115.I accept Chan’s evidence that there was indeed an agreement reached to the effect that the construction work of House 852 should be suspended because his evidence is amply supported by other witnesses/circumstantial evidence:

(1)  Ming also accepted that Chan was very worried about the April 2016 Incident. This supports the plaintiff’s case that the April 2016 Incident contributed substantially to the decision made on 26 May 2016 to halt the works so as to avoid dangerous sabotages;

(2)  Leong also gave evidence that agreement had been reached in the May 2016 Meeting;

(3)  When the defendant informed Chan on 26 May 2016 that the scaffolding surrounding House 852 had been removed[16], Chan only responded with an emoji which means “thank you”. In my view, judging from those messages, the parties must have had an understanding beforehand that the scaffolding would be removed, otherwise, it must have come as a shock, and in such circumstances the defendant would have asked Chan right away for an explanation. However, there was no follow-up message from the defendant at all. When the defendant was cross-examined on this, he said he had lost confidence on Chan. I do not accept this explanation, because even if that is true (which I disagree), it is inherently improbable that the defendant would have chosen not even to ask for an explanation. Further, if the defendant was really having the attitude which he said he had at the material time, he would not have sent the photograph to Chan in the first place;

(4)  The said removal of the scaffolding goes a long way to prove that there was a decision made that no further construction work would be done at least for a period of time at House 852. That is consistent with the plaintiff’s case but does not sit well with that of the defendant;

(5)  If the stoppage of the construction work at House 852 was not agreed by the defendant, one would expect that the defendant would chase Chan up as to when such work could be resumed. However, there was no evidence that the defendant had ever done this. The defendant stated that he had tried to locate Chan by going to his home twice but on both occasions he was told by someone who was probably his domestic helper that he was not at home. This cannot be true:

(a)  If he was so eager to locate Chan, he would not have only tried twice to see him at his home, given the fact that they were living so close to each other;

(b)  The defendant could have easily sent Chan a WhatsApp message (just as what he did when he asked Chan to lend him money on 31 December 2015 and when he asked Chan on 15 January 2016 as to how he could get the loan money from Chan) and requested for a meeting or for an update. Yet, there is no evidence that he had ever done any of these.

116.On the other hand, the defendant stated that Chan asked him to wait for another 2 years in the May 2016 Meeting and that since he thought this was unacceptable, he left Chan’s home immediately without any agreement. He also alleged that Chan did not explain why 2 years would be required, and neither did he ask why such a long time was needed. I reject the defendant’s evidence:

(1)  It is inherently improbable that the defendant did not force Chan to give an explanation as to why another 2 years would be required for building House 852 if, as the defendant alleged, he was eager to have the construction work resumed as soon as possible;

(2)  If, as the defendant alleged, the suspension of construction work was caused by Chan’s financial difficulty, then it should be borne in mind that, out of the alleged outstanding sum, only $120,000 would be coming from the pocket of the plaintiff/Chan, whereas the balance would be paid by Chan’s friends/relatives. In other words, if payment of the outstanding amount to Ming could solve all problems, it is inherently improbable that Chan would ask for 2 years to solve the problem;

(3)  It must also be remembered that, as admitted by the defendant, by the time of the May 2016 Meeting, he was owing Chan a total of $60,000 to $70,000, which he had borrowed from Chan in all those years. If Chan was really in any financial problem and had no money to pay Ming, it is difficult to imagine that Chan would not at least enquire with the defendant as to whether the latter could make partial repayment, particularly when any such repayment to Ming would affect the defendant’s interest (timely construction of House 852). However, the defendant stated that Chan did not ask him for repayment of the previous loans at all. This is inherently improbable.

117.Mr Chow also submitted that if any agreement had been reached in the May 2016 Meeting as alleged, Chan would have reduced such agreement into writing, just like what he did in 2009 when the parties initially agreed to enter into the cooperation agreement (the Intention Agreement). Mr Chow also described Chan as a person who had tendency to record agreements in writing.

118.With respect, these submissions are not accepted.

119.First of all, it is undisputed that Chan did not reduce his agreement with Ming into writing when he engaged the latter as his building contractor of the Houses even though the total contractual sum involved was $3 million. The submission that Chan had a tendency to reduce agreement into writing is therefore without basis.

120.Furthermore, it is inappropriate to use the Intention Agreement as a reference, because apparently the plaintiff and Chan had to make sure that the defendant would not proceed to cooperate with someone else in the development of House 852.

121.Moreover, given what had happened in the months preceding the May 2016 Meeting (the December 2015 Incidents, the February 2016 Incident and the April 2016 Incident), I am of the view that it is more likely than not that there was a natural consensus among everyone concerned that no further construction work should be done by Ming for the time being. Indeed, there was no other choice which was realistically open to them at the material time. I do not think Chan would ever imagine that he should “bind” the defendant as such by way of an agreement in writing.

September 2016

122.Chan stated in his evidence that, after much effort, he was able to find a new contractor, Ping (who traded under the name of Shun Sum Construction and Design Limited), who was confident that he could handle the triads and was willing to take up the construction work of House 852. Chan therefore telephoned the defendant in September 2016 and informed him about the good news. However, the defendant replied to Chan that he had already engaged and entered into a contract with another contractor to build House 852.

123.On the other hand, it was the defendant’s evidence that Chan did not call him in September 2016 as alleged.

124.On my part, I am satisfied that, on the balance of probabilities, Chan had indeed located Ping who was willing to take up the construction work at House 852 in around September 2016, that Chan did call up the defendant for the purpose of informing him about that, and that the defendant had informed Chan that he (the defendant) had engaged a new contractor himself:

(1)  Chan’s evidence that he was able to locate Ping who was willing to take up the construction work at House 852 is supported by a quotation dated 13 September 2016 issued by Ping’s company. Mr Chow’s argument that the quotation was not signed by Chan is neither here nor there;

(2)  If Chan was able to secure Ping’s agreement to construct House 852, it is just natural that he would have informed the defendant as soon as possible thereafter, because apparently both Chan and the defendant were eager to have the construction of the house resumed as soon as possible. It is therefore more likely than not that Chan did make the phone call to the defendant as alleged;

(3)  Since it is the defendant’s pleaded case that he had engaged his own contractor in September 2016, it is also natural for the defendant to inform Chan about this when he got Chan’s telephone call.

125.I should also add that whether any binding contract had been reached between Chan and Ping’s company is irrelevant. That was only the background which explained why Chan called up the defendant in September 2016. No matter whether any binding contract was reached, the crux of the matter is that, in light of this Court’s finding that the construction work at House 852 had been suspended by agreement, the defendant was in breach of the Agreement by admittedly engaging another contractor in September 2016 without any consent on the part of the plaintiff/Chan.

126.It should also be noted that it is not open to the defendant to argue that he had not formally engaged the new contractor by September 2016, for it is his own pleaded case that:

“[…] the Defendant was entitled to exercise his rights as owner of the Land to exclusive possession thereof and had resumed construction of the small house in about September 2016 by engaging his own contractors […]”[17]

127.For the sake of completeness, I should also mention that Mr Chow had further argued that if the defendant had indeed communicated his intention to breach the Agreement in September 2016 by the alleged phone call, then surely the defendant “would not have any concerns about trying to ‘cover his bases’ so to speak by putting up the October 2016 Notice”. This argument is simply not open to the defendant in view of the defendant’s pleaded case set out in the preceding paragraph. Indeed, if the defendant had already engaged his own contractor in September 2016, the October 2016 Notice is just a charade.

128.It had also been suggested by the defendant that Chan could have entered into the site of House 852 after September 2016. I accept Chan’s explanation that he did not do so because he had lost the “status” as a builder after the defendant had told him that another contractor had been engaged.

Conclusion on fact finding

129.To conclude, it is this Court’s finding that:

(1)  Ming did not carry on with the construction work at House 852 after Chinese New Year in 2016 because of triad’s interference rather than because of any non-payment of construction fees by the plaintiff/Chan as alleged by the defendant;

(2)  It was agreed between the plaintiff and the defendant in the May 2016 Meeting that the construction work at House 852 should be suspended;

(3)  The defendant had breached the Agreement in September 2016 by engaging his own contractor without the consent of the plaintiff/Chan.

The reliefs claimed by the plaintiff

130.To recap, the plaintiff asked for the following reliefs in the Amended Statement of Claim:

(1)  A declaration that the defendant is holding all the titles, rights and interests of the Subject Property as a constructive trustee for and on behalf of the plaintiff;

(2)  Specific performance of the Agreement or damages in lieu;

(3)  Alternative to (2) above, an equitable lien over the Subject Property;

(4)  Mesne profits from 1 September 2017 until delivery of possession of the Subject Property to the plaintiff.

131.I will consider the above in turn.

Declaration

132.Counsel have helpfully agreed that in the event it is this Court’s finding that the defendant was in breach of the Agreement, the plaintiff is entitled to the following declaration:

“Subject to the Government/lessor’s rights under the Conditions of the New Grant, the defendant holds the 1^st Floor, 2^nd Floor and Roof of the property known as Lot 852 in DD242, Tseung Kwan O Village, New Territories, Hong Kong (‘the Property’) on trust for the plaintiff until the legal title of the Property has been conveyed or transferred to the plaintiff.”

133.I will make this declaration accordingly.

Specific performance

134.Counsel were also in agreement that should the plaintiff succeed, she would be entitled to an order for specific performance in the following form:

“Subject to the Government/lessor’s rights under the Conditions of the New Grant, an order for specific performance of the Agreement be made against the defendant, in particular that the defendant shall facilitate and assist in the conveyance or transfer of the legal title in and of the Property to the plaintiff (including to execute all relevant legal documents for the said conveyance or transfer), subject to the payment of the additional premium and other relevant charges to the Government by the plaintiff and subject to the consent of the District Lands Officer.”

135.I will therefore order accordingly.

Damages in lieu and equitable lien

136.As the Court has ordered specific performance of the Agreement, there is no need to consider damages in lieu nor equitable lien.

Mesne profits

137.The plaintiff claims for mesne profits from 1 September 2017 until delivery of vacant possession of the Subject Property by the defendant to the plaintiff.

138.The basis of the plaintiff’s claim is that if she were allowed to carry on with the construction of House 852, she would have been able to enjoy it from 1 September 2017 (it was her undisputed evidence that she was minded to let her daughter move into the Subject Property). She has therefore lost the use of House 852 from 1 September 2017, and should be compensated by reference to the market rental of the Subject Property.

139.The defendant’s grounds of opposition against this claim are three-fold:

(1)  The plaintiff’s daughter could not have moved into the Subject Property without breaching Special Condition 5(a) which provides that:

“Except as provided in sub-clauses (b), (c), and (d) of this Special Condition, the Grantee […] having obtained this grant by way of private treaty at a concessionary premium, shall not assign, partition, mortgage, charge, demise, underlet, part with the possession of or otherwise dispose of the lot or any part thereof or any interest therein or any building or part of any building thereon or enter into any agreement so to do, whether directly or indirectly […]” (emphasis added)

(2)  It is also not possible for the plaintiff’s daughter to occupy the Subject Property before the issuance of the relevant Certificate of Compliance by the District Lands Officer, because Special Condition 5(d) of the New Grant further provides that:

“Upon certification by the District Lands Officer that these Conditions have been complied with to his satisfaction the Grantee may, with the prior written consent of the District Lands Officer […] part with possession of the lot and the building thereon or part with possession of part of the building on the lot…only to:-

(i) a male person […] descended through the male line […]; or

(ii) a person other than a person referred to in sub-clause (d)(i) of this Special Condition provided the Grantee shall have first paid to the Government an additional premium […], whereupon, such additional premium having been paid and such consent having been obtained, sub-clauses (a), (b), (c) and (d) of this Special Condition shall be null and void and shall cease to have effect.” (emphasis added)

(3)  The expert evidence adduced by the plaintiff on the market rental of the Subject Property was prepared on the assumptions that the property could be disposed of freely without any “non-assignment” restriction and that the premium required for removing any “non-alienation” restriction has been settled. These assumptions are factually incorrect. Therefore, such expert evidence should be rejected. The plaintiff’s claim for mesne profits must then fail in the absence of evidence on the relevant market rental.

140.As Mrs Chan for the plaintiff pointed out, it had never been the defendant’s pleaded case that he should not be liable for mesne profits even if he was in breach of the Agreement in any event by reason of any contravention of the Special Conditions of the New Grant. This Court should therefore not allow him to run this defence at the stage of closing submission[18].

141.In any event, it has been held in Li Pui Wan v Wong Mei Yin [1998] 1 HKLRD 84 that:

“The purpose of granting of land by the government in accordance with Chinese customary law with additional terms and conditions to New Territories male indigenous villagers is to provide some of the New Territories residents with special care. This situation differs greatly from the principles in the law of contract where the court refuses to make orders to enforce certain contracts because they are against public policy upon formation or performance. The granting of land by the government to indigenous villagers who are male descendents is a measure made under special circumstances. It has nothing to do with the principle under which by virtue of public policy, certain contracts are found illegal by the court. In our view, such measure adopted by the government in the granting of land should not be regarded as a public policy, and is quite different from the principle in common law which requires the court of law to uphold public policy.

[…]

[…] A breached contract cannot be categorised as against public policy and declined attention by the court by reason of it being a contract made with the government. In our opinion, there is no difference between the granting of land by the government to male indigenous villagers and a landlord leasing his property to a tenant in the eyes of law.” (at 89I – 90C)

142.I therefore hold that even if the occupation of the Subject Property by the plaintiff’s daughter would amount to a breach of the Special Conditions of the New Grant, this matter would not provide the defendant with a valid ground to oppose the plaintiff’s claim for mesne profits.

143.That being the case, Mr Chow’s submission that the expert evidence adduced by the plaintiff is “flawed fundamentally” is also rejected.

144.According to the plaintiff’s valuation expert[19], the market rental of the Subject Property as at each of the valuation dates below is as follows:

Valuation date	Monthly rental (HK$)
1 May 2017	27,600
1 May 2018	28,200
1 May 2019	28,800
1 May 2020	26,600

145.The total amount of mesne profits for the period between 1 September 2017 up to 30 June 2023 is therefore calculated as follows:

Periods	Calculations	Amount
Sep 2017 – Apr 2018	$27,600 x 8	$220,800
May 2018 – Apr 2019	$28,200 x 12	$338,400
May 2019 – Apr 2020	$28,800 x 12	$345,600
May 2020 – 30 Jun 2023	$26,600 x 38	$1,010,800
Total:		$1,915,600

146.The defendant shall also be liable to pay mesne profits from 1 July 2023 onwards at the monthly rate of $26,600 until he delivers vacant possession of the Subject Property to the plaintiff.

The defendant’s counterclaim

147.By reasons of the aforesaid, the defendant’s counterclaim is hereby dismissed.

ORDER

148.I therefore make the following orders:

(1)  A declaration as per paragraph 132 above;

(2)  An order for specific performance as per paragraph 134 above;

(3)  The defendant be liable to the plaintiff for mesne profits as per paragraphs 145 and 146 above;

(4)  The defendant’s counterclaim be dismissed.

COSTS

149.I make a costs order nisi that the defendant shall bear the plaintiff’s costs of the action (including all costs reserved), to be taxed on party and party basis if not agreed.

150.In her written closing submissions, Mrs Chan invited this Court to award the plaintiff her costs on indemnity basis. On a preliminary basis, I take the view that there is no special feature in this case which justifies an indemnity costs order against the defendant, and that, after all, this is just another case in which the Court prefers the evidence of one side instead of the other.

151.Having said that, I consider that if the plaintiff, having considered the Court’s preliminary observation as expressed above, still considers that she should press such an application, she should be given a chance to make full submissions in this regard, and the defendant should be given a chance to argue in opposition more fully. Hence, the above costs order was made only on nisi basis, which shall become absolute in the absence of application to vary (which, if any, shall be made by letter, and will be disposed of on paper) within 14 days hereof. Time shall run during court vacation.

Mrs Dora K. H. Chan, instructed by Tsang, Chan & Woo, for the plaintiff

Mr Tony Chow, instructed by Cheng, Yeung & Co, for the defendant