Choi Wai Kwong v. Choi Wai Keung

DCCJ 6076/2019

[2023] HKDC 1662

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 6076 OF 2019

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BETWEEN

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DECISION

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Introduction

1.The defendant appeals against the decision of a Master handed down on 27 February 2023. The learned Master was seized of 2 summonses:-

1.1 The plaintiff’s summons dated 7 June 2022 to strike out the Amended Defence, and to enter final judgment on his claim (“P’s strike out summons”); and

1.2 The defendant’s summons dated 26 October 2022 to strike out certain paragraphs of the Amended Statement of Claim (D’s strike out summons).

2.After hearing parties, the learned Master gave the following orders:-

2.1 Both P’s strike out summons and D’s strike out summons be dismissed;

2.2 On the court’s own motion, paragraphs 8, 9, part of paragraph 13, paragraphs 14-16, part of paragraph 22, paragraphs 28(a), (b), (c) and (e) of the Amended Defence be struck out as they disclosed no reasonable cause of action and/or were an abuse of process;

2.3 Judgment be entered in favour of the plaintiff for prayers (1)(b) and (3B) of the Amended Statement of Claim; and

2.4 Costs of and occasioned by P’s strike out summons and D’s strike out summons be to the plaintiff, with certificate for one counsel.

3.The appeal hearing was originally scheduled before Deputy Judge Alexander Tang on 31 August 2023. But on 28 August 2023, the defendant issued another summons for leave to re-amend the Amended Defence (D’s re-amendment summons”). After hearing parties, the learned Judge adjourned the appeal and D’s amendment summons for argument. This is the adjourned hearing.

4.It is necessary to set out the facts to understand how the parties ended up before me.

Lot 527A

5.The plaintiff and the defendant are brothers. Their father passed away in 1995, leaving certain pieces of land as part of his estate. One of such pieces of land is Lot 527A in Demarcation District No 112, which was subsectioned into Subsection 1 of Lot 527A (“527A1”) and the Remaining Portion of Lot 527A (“old 527ARP”). Within the boundary of 527A1 and taking up all the space thereof, a 2-storey building was constructed, and the defendant has been residing there. The old 527ARP completely encircles 527A1. There was another house constructed on 527ARP next to the defendant’s house, in which the parties’ mother, the plaintiff, and the other siblings have been residing.

6.On 24 April 1998, the mother and all siblings (including the parties) entered into an agreement of family arrangement written in Chinese (“Chinese DFA”). It provided, inter alia, that the plaintiff was to succeed Lot 527A; and the defendant was to succeed Lot 527A1. There is no dispute that the reference to Lot 527A was incorrect, as that plot of land was already subsectioned by then.

7.On 12 October 1998, the mother and all siblings executed a Deed of Family Arrangement (“the DFA”) in English. In its original form, the DFA stated that the defendant shall succeed 527A1; the plaintiff shall succeed Lot 527A. Words were subsequently added to the DFA such that the Third Schedule was changed to read that the plaintiff shall succeed the old 527RP. There were signatures of the mother and all siblings next to the amendment, but the evidence does not indicate when these signatures were appended. There is also no evidence to show that all signatories consented to such amendment by deed.

8.On 7 July 2017, the plaintiff (purportedly as the owner of the old 527RP) executed a Deed Poll to subsection the old 527RP into Subsection 2 of Lot 527A (“527A2”), Subsection 3 of Lot 527A (“527A3”), and the Remaining Portion of Lot 527A (“new 527ARP”). 527A2 was a small strip of land running along the northwestern side of Lot 527A; 527A3 encircled 527A1, and was around half of the size of the old 527RP. The new 527RP was formed from the old 527ARP less 527A2 and 527A3.

9.On 22 November 2017, the plaintiff and the defendant entered into a sale and purchase agreement, by which the plaintiff sold 527A2 to himself and the defendant as tenants in common in equal share for a consideration of $55,000.00. There was a similar agreement by which the plaintiff sold 527A3 to the defendant for $270,000.00. Both of these agreements stated that completion shall take place on 30 November 2017.

10.On 1 December 2017, the plaintiff executed an assignment to convey 527A3 to the defendant. The plaintiff acknowledged receipt of $270,000.00 paid by the defendant. Similarly, the plaintiff executed another assignment on 4 December 2017 to convey 527A2 to himself and the defendant, acknowledging the receipt of $55,000.00 as the consideration. I was also shown the instruction letters from the plaintiff and the defendant to the solicitors acting for them in the conveyances, by which the solicitors were dispensed with handling the consideration monies. The plaintiff also confirmed with the solicitors that he had duly received the consideration totaling $325,000.00.

The dispute, as factually understood

11.The parties differ as to the circumstances in which the old 527ARP was subsectioned 2017, and the conveyances of 527A2 and 527A3.

12.The plaintiff claims that some time in 2016, the defendant approached him to see whether he would be willing to sell one-half of the old 527ARP to the defendant, so that the defendant could use it as the garden area of 527A1. The plaintiff agreed, and he thus arranged the old 527RP to be properly subsectioned in the way as described above.

13.The plaintiff further claims that, after the parties entered into the sale and purchase agreements for 527A2 and 527A3, the defendant claimed to have difficulty to pay the consideration by the stated completion date. Upon further negotiation, they agreed that:-

13.1 The plaintiff would assign 527A2 and half of 527A3 to the defendant despite the latter’s inability to pay the respective consideration according to the sale and purchase agreements.

13.2 The defendant would pay the consideration by monthly installments of $10,000.00 each starting October 2018.

13.3 The defendant would, in the interim pending payment, hold 527A2 and his half-share of 527A3 on trust for the plaintiff.

13.4 If the defendant failed to pay the whole of the consideration by installments or otherwise, he would assign 527A2 and 527A3 back to the plaintiff.

14.Since the assignments, the defendant built 2 septic tanks and some other temporary structures on 527A3.

15.It is the plaintiff’s case that the defendant failed to pay any part of the consideration from October 2018, or at any time thereafter. Disputes ensued as to the use of 527A2 and 527A3 by the defendant and/or the inability to use the same by the plaintiff. In the context of this appeal, I do not think it is necessary to go into the parties’ respective pleas on these disputes. By and large, if I come to the conclusion that the defence relating to the ownership of 527A2 and 527A3 should not be struck out, I think there is little dispute that these remaining disputes should survive striking out as well.

16.The defendant’s case can be discerned from the Affirmation of Choi Wai Keung dated 12 July 2022^[1], which was filed in opposition to P’s strike out summons. In paragraph 6(a), when the defendant referred to the DFA, he deposed to the following:-

“(1) Plaintiff’s land was described as “Section A of Lo No.527 in Demarcation District No.112” (which must be a mistake because it included Lot No.527A1 to which I am entitled)

(2) My land was described as “Subsection 1 of Section A of Lot No.527 in Demarcation District No.112” (a mistake because the then Lot 527ARP consisted of the garden (later Lot 527A3) for my house at Lot 527A1 and common vehicular access road (later Lot 527A2) to which I am entitled under [the Chinese DFA]…”

(Emphasis as in the original)

17.The defendant repeated the same alleged mistake when he referred to the Assent conveying the old 527ARP to the plaintiff.

18.The defendant further deposed to the following in the remaining sub-paragraph of paragraph 6, insofar as relevant:-

“(g) Long before and after signing [the Chinese DFA], I have all along been residing at an old house (“1^st House”) built on Subsection 1 of Section A of Lot No.527 in Demarcation District No.112 (“Lot No.527A1”) … and this house situates adjacent to another house (“2^nd House”) in the south built on the then “The Remaining Portion of Section A of Lot No.527 in Demarcation District No.112” (“Old Lot No.527ARP”) …

(h) The land at Old Lot No.527ARP consisted of the respective open spaces and garden areas for the use of the 1^st House and 2^nd House as well as the common vehicular access road intended under [the Chinese DFA].

(i) According to the Chinese DFA, the Plaintiff’s entitlement to the 2^nd House and garden area / open space designated for the use of the Plaintiff was not clearly described by referring erroneously to Lot No.527A (the “Mistake”) but such description could not be taken to mean the entire Section A of Lot No.527 in Demarcation District No.112 (from which Lot No.527A1 and Old Lot No.527ARP…

(j) … I have been in sole and exclusive possession of the garden area (later carved out from the Old Lot 527ARP to be Lot 527A3) and using the portion (later carved out from the Old Lot 527ARP to be Lot 527A2) as common vehicular access road without any dispute or interruption by the Plaintiff or anyone.

…

(l) The Garden (which situates at Lot 527A3) has been intended for the exclusive use and possession of the 1^st House (at Lot 527A1) owned by me …

…

(n) I totally deny the Plaintiff’s allegation of my representation or arrangement to pay him the alleged sums of HK$270,000 and HK$55,000 at all. He and I just signed the Assignments dated 1^st and 4^th December 2017 for effecting and perfecting the distribution of our father’s estate according to what we intended under [the Chinese DFA].”

19.In paragraphs 10 and 11 of the 2^nd Affirmation of Choi Wai Keung dated 28 August 2023, which was filed in support of D’s re-amendment summons, the defendant further deposed as follows:-

“10. The combined effect of paragraphs 14 and 15 [of the DFA] … the Plaintiffs [sic] and the Defendant intended and both were under the common understanding that the Defendant’s Garden was the Defendant’s though it fell within the bounds of Lot 527A RP. The Plaintiff was not entitled to the whole of Lot 527A RP. These two terms [of the DFA] were to allocate rights and obligations between the two of them in recognition of the Defendant’s ownership over the Defendant’s Garden which he worked hard to maintain and beautify at his own costs [sic] and expenses.

11. In signing [the DFA] in 1998, the parties obviously intended under [the DFA] that the Defendant’s Garden belonged to the Defendant notwithstanding that it fell within Lot 527ARP. The parties’ intention did not change even when [the DFA] was rectified in 2001, erroneously or fraudulently describing the land inherited by the Plaintiff as Lot 527A RP.”

20.In short, the defendant claims that he and the plaintiff have always intended him to succeed what now is 527A3, and to have use of what now is 527A2. The Chinese DFA and the DFA should be construed in this way. Insofar as the descriptions of land respectively succeeded by the plaintiff and the defendant not conforming with the alleged intentions, those were written down in those documents by mistake. He further claims that the Assignments conveying 527A3 and the half-share of 527A2 to him were to regularize his inheritance and the plaintiff’s inheritance. Hence, it was always intended that he did not need to pay the respective considerations envisaged in the Assignments; he has not in fact paid anything. Mr Chu, counsel for the defendant, confirms that this is indeed the defence that the defendant seeks to run.

D’s strike out summons

21.D’s strike out summons can be disposed of shortly. The defendant relies on Order 18 rule 19(1)(a) of the Rules of the District Court and seeks to strike out paragraphs 19(4), (5) and 23 of the Amended Statement of Claim as they raise a plea of trust^[2].

22.Paragraph 19(4) and (5) sets out the particulars of the agreement reached by the plaintiff and the defendant, the content of which I set out in paragraph 13 above. These are factual allegations that the plaintiff claims to have happened. If the parties indeed reached an agreement on those specific terms, I cannot see how it is not at least arguable that the defendant did hold 527A3 and half of 527A2 on trust for the plaintiff. This is a matter to be explored at trial.

23.Paragraph 22(3) sets out the conclusion that, subsequent to the agreement between the plaintiff and the defendant and the Assignments conveying 527A3 and half of 527A2 to the defendant, the defendant held those plots of land on trust for the plaintiff. The same logic regarding paragraphs 19(4) and (5) applies equally here.

24.Hence, I agree with the learned Master that D’s strike out summons ought to be dismissed.

P’s strike out summons

25.Mr Pang (together with Ms Cho), counsel for the plaintiff, relies on all 3 grounds under Order 18 rule 19(1) to persuade me that the Amended Defence ought to be struck out.

26.After hearing parties’ submissions, I have come to the conclusion that the learned Master was wrong, and the Amended Defence (or any part of it) ought not be struck out. Since I am allowing the defendant to continue his defence, I should say as little as permissible in order not to prejudice the future conduct of this action. My brief reasons for disagreeing with the learned Master are as follows.

27.First, as I inquired with Mr Pang at trial, the defendant’s factual case, if sufficiently pleaded, would afford a defence which could survive a striking out application.

28.In my view, the defendant did plead the relevant facts in the Amended Defence to put forward his factual case, which I seek to outline above. In my judgment, the following paragraphs in the Amended Defence are relevant.

28.1 Paragraph 5 pleads that the defendant has been living in a house built on 527A1 even predating the Chinese DFA, and another house was built next to it on the old 527ARP. Paragraph 6 then goes on to say that the old 527ARP “consisted of the respective open space and garden areas for the use” of the 2 houses.

28.2 Paragraph 14 pleads that the Chinese DFA made a mistake as to what the plaintiff succeeded from the father’s estate. Rather, it is alleged that the Chinese DFA should be taken to mean that the plaintiff should only get what was subsequently subsectioned as the new 527ARP. Paragraph 15 claims that the subsectioning of the old 527ARP and the Assignments conveying 527A3 and half of 527A2 to the defendant had the effect of rectifying the mistaken reference in the Chinese DFA. Paragraphs 16 claims that the plaintiff did not require the defendant to pay the considerations respectively stated in the Assignments because they were only to rectify the mistake in the Chinese DFA. Paragraphs 8 and 9 set out the defendant’s belief regarding the Assignments, allegedly based on what the plaintiff told him around December 2017.

28.3 Paragraph 22 pleads that 527A3 “has been intended for the exclusive use and possession” of the defendant’s house on 527A1, so that the plaintiff can have no claim against the defendant.

28.4 Paragraph 28(a) pleads that the plaintiff cannot dispute the validity and effect of the Assignments as they carried out the terms of the Chinese DFA.

29.I find the above paragraphs consistent with what the defendant sets out in his affirmations as his defence.

30.As far as I can understand Mr Pang, he submits that the Amended Defence is contradictory because the defendant pleads that he was only to succeed 527A1 from the father’s estate according to the Chinese DFA. Therefore, insofar as the defendant may try to say that the Chinese DFA should be read to mean that he should get what is now subsectioned as 527A3, this contradicts with the defendant’s admission as to his inheritance.

31.I am not persuaded by Mr Pang’s submissions. Mr Pang’s submissions are correct only if one takes the defendant’s plea about his entitlement to 527A1 literally, ignoring what he also pleads in other parts of the Amended Defence. I do not think this is a plain and obvious case in which the defendant’s plea must be read in the way as Mr Pang proposes.

32.Next, Mr Pang complains that it has been difficult to discern the defendant’s case; his case varied at different junctures and were contradictory with one another. He submits, for example:-

32.1 In his witness statement, the defendant states in paragraph 4 that he never executed the DFA^[3]. But by the time when he made his affirmation on 12 July 2022, he claimed that he did not know what he was asked to execute when the plaintiff invited him to attend a solicitors’ firm to sign on some documents. He only knew he executed the DFA when he attended the solicitors’ firm. The defendant further claimed that he thought what he signed was just to formalize the terms of the Chinese DFA.

32.2 When the defendant conveyed 527A1 to himself and a Madam Chan as joint tenants in 2005, the assignment stated that he inherited 527A1 from his father’s estate. No action was done to clarify the boundary of 527A1, or to clarify the defendant’s entitlement by way of inheritance. This, Mr Pang submits, shows that the defendant accepted that he was only entitled to 527A1 literally, until he was sued in the present action.

33.Again, I do not find Mr Pang’s submissions attractive. I do not find the defendant unequivocally stating that the plaintiff’s case of the effect of the Chinese DFA and the DFA as correct in these pieces of evidence. The differences and oddities in the defendant’s evidence, and the reasons why they exist, if any, are matters that a trial judge may assign different weight to after hearing evidence. As such, I do not think one can say that the defence has been embarrassing or is otherwise an abuse of process of the court.

34.In my judgment, the learned Master did not give sufficient consideration to the defence the defendant tries to put forward, and wrongly held that the defendant had no basis to resist the plaintiff’s claim for 527A3. I am of the view that the learned Master’s order to strike out part of the Amended Defence should be set aside, and P’s strike out summons should be dismissed instead.

D’s re-amendment summons

35.I note that D’s re-amendment summons was dated 28 August 2023, and was taken out by MK Lam on the defendant’s behalf, despite the defendant filing his Notice of Act in Person on 26 August 2023. The draft Re-Amended Defence also appeared to be settled by MK Lam.

36.I have much misgiving about the proposed re-amendment.

37.First, throughout the proposed re-amendment, the defendant refers to “the Counterclaim”, and asserts that he has a proper defence as a result of the matters referred to therein. The Counterclaim is a document filed by the defendant on 28 August 2023. From the face of the document, it was prepared by MK Lam, but the backsheet states the defendant was acting in person. Mr Chu informs me that this document was filed by the defendant without the knowledge of MK Lam.

38.The Counterclaim introduces a plea that the defendant has been in adverse possession of 527A2 and 527A3 since 1978^[4], and seeks relief on that basis. Mr Pang is correct to say that the Counterclaim was irregularly filed as a standalone document.

39.In my view, Mr Chu has given no satisfactory explanation as to why the proposed re-amendment did not seek to remedy the irregularity of the Counterclaim as a standalone document, if there has been any genuine intention to pursue it as part of the defence. The propose re-amendment, in contrast, seeks to propagate this irregularity. I do not accept Mr Chu’s submissions that the irregularity is excusable because the Counterclaim was filed by the defendant who is not legally qualified. D’s re-amendment summons was taken out by MK Lam, and at the hearing, Mr Chu still pursues the application on the same basis. There must be plenty of opportunities for the defendant’s legal team to discover the irregularity and to remedy it prior to the hearing before me. In any event, the defendant’s qualification (or the absence thereof) does not affect the legal principles applicable to consider D’s re-amendment summons.

40.So, even without considering the content of the proposed re-amendment, I do not find it proper to allow it.

41.Next, I find the content of the proposed re-amendment equally worrying.

41.1 The proposed paragraph 12A pleads that, because of the mistaken descriptions of the parties’ respective entitlements under the Chinese DFA, the sale of 527A3 and half of 527A2 to the defendant was void and unenforceable. This must necessarily contradict paragraph 28(a) of the Amended Defence, in which the defendant asserts that the Assignments were valid.

41.2 The contradiction is compounded by the proposed paragraph 20A, in which the defendant pleads that the Assignments were “a fraud perpetrated on the Defendant if it were for the stated consideration”. I agree with Mr Pang that such a plea is embarrassing for a lack of particulars. Further, I simply find it untenable and excessive. Given the defendant’s case that the dispute stemmed from the mistaken descriptions of the parties’ entitlements from the father’s estate in the Chinese DFA, I cannot see how everything can be elevated to an allegation of fraud. It seems to me to be the defendant’s tendency, acting through MK Lam or otherwise, to freely assert fraud as an additional or an alternative argument. This unnecessarily complicates the pleadings.

41.3 The proposed re-amendment in paragraph 18, 18A, 18B and 18C seeks to argue that the plaintiff arranged for survey and subsectioning of the old 527ARP for his own agenda of obtaining title to 527A2 and 527A3 despite the true intention of the Chinese DFA. Again, it appears to me to be unnecessary to include this as part of the defence.

42.Based on the matters I set out above, I do not find it right to allow the proposed re-amendment of the Amended Defence. D’s re-amendment summons should be dismissed.

Conclusion and orders

43.As I expressed to counsel during hearing, the parties should focus their efforts to bring this action to trial as soon as practicable. Any further engagement in satellite litigation like the present case, in my view, serves no benefit at all.

44.I set aside the learned Master’s order, and give the following orders nisi:-

44.1 Both P’s strike out summons and D’s strike out summons be dismissed, with no order as to the costs of and occasioned by both summonses before me and below;

44.2 D’s re-amendment summons be dismissed with costs (including all costs reserved) to the plaintiff, with certificate for 1 counsel, to be assessed summarily if not agreed. For the purpose of summary assessment, half of the costs of the hearing before me be apportioned to D’s re-amendment summons.

44.3 Unless otherwise indicated by the next case management conference, parties are debarred from taking out any further interlocutory application or adducing any further evidence by way of witness statement or otherwise.

44.4 The parties shall file an agreed list of issues prior to the next case management conference. If the Master conducting the case management conference considers appropriate, the agreed list of issues or the parties’ dispute on the issues for trial be referred to me for further consideration on paper without prejudice to other case management directions to be given.

44.5 In the absence of any agreement on the plaintiff’s costs in D’s re-amendment summons, the plaintiff shall file and serve his skeleton bill of costs (of no more than 2 pages) within 14 days of this Decision;

44.6 The defendant shall file and serve his written objections (of no more than 2 pages) to the plaintiff’s bill of costs within 7 days thereafter; and

44.7 P’s costs in D’s re-amendment summons be summarily assessed by this court on paper.

Mr Ronald Pang and Ms Linda Cho, instructed by Fongs, for the plaintiff

Mr Chu Ming Tung, instructed by M K Lam & Co, for the defendant