Tang Kwai Cheung v. Yeung Sze Ting

CACV 474/2022, [2024] HKCA 383

On Appeal From [2022] HKCFI 3329

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 474 OF 2022

(ON APPEAL FROM HCMP NO 1287 OF 2020)

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J U D G M E N T

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Hon Chow JA (giving the Judgment of the Court):

INTRODUCTION

1.This is the Defendant’s appeal against the judgment of Recorder Stewart Wong, SC dated 3 November 2022, whereby the Recorder, inter alia:

(1)  adjudged and declared that the Plaintiff was entitled to, and did by letter dated 4 August 2020, rescind an agreement dated 3 November 2017 (“the SPA”) for the sale and purchase of a half share of Lot No 417 in Demarcation District No 125, Yuen Long, New Territories (“the Property”) entered into between the Plaintiff as vendor and the Defendant as purchaser; and

(2)  dismissed the Defendant’s counterclaim against the Plaintiff for rectification and specific performance of the SPA and other relief.

BASIC FACTS

2.The late Tang Siu Wan (鄧紹穩) (“the Deceased”) is the father of the Plaintiff. Prior to his death, the Deceased was the registered owner of a half share of the Property.

3.The Deceased passed away on 10 August 2002 partially intestate. His last will dated 21 May 1992 was proved by the executor (Tang Cheung) named in the will on 2 December 2005, but the will did not deal with the Deceased’s half share of the Property.

4.On 3 November 2017, the Plaintiff, in his capacity as the intended administrator of the estate of the Deceased (“the Estate”), as vendor and the Defendant as purchaser entered into the SPA for the sale and purchase of a half share of the Property for the consideration of HK$1,000,000, with a deposit and part payment of HK$300,000 being paid by the Defendant through Leung Kin & Co (“LK”) to the Plaintiff upon the signing of the SPA.

5.LK acted for both the Plaintiff and the Defendant in relation to the sale and purchase of the half share of the Property under the SPA.

6.Under the SPA, the balance of the purchase price in the amount of HK$700,000 was to be paid by the Defendant to the Plaintiff on or before completion, and completion was to take place within 30 days from the date of grant of the letters of administration of the Estate to the Plaintiff.

7.By Clause 35 of the SPA, completion was conditional upon the grant of the letters of administration of the Estate to the Plaintiff, with the Plaintiff being given a right to rescind the SPA in the event that he should for whatever reasons fail to obtain the letters of administration within the specified timeframe stipulated in that clause.

8.Clause 35 of the SPA states as follows:

“(a) The completion of the sale and purchase of the Property is conditional upon the relevant Letters of Administration of TANG SIU WAN (鄧紹穩) deceased having been granted by the High Court of the Hong Kong Special Administrative Region;

(b) The completion shall take place within 30 days from the date of the Letters of Administration of TANG SIU WAN (鄧紹穩) deceased having been granted by the High Court of the Hong Kong Special Administrative Region; and

(c) If for whatever reasons the Vendor shall fail to obtain the Letters of Administration of TANG SIU WAN (鄧紹穩) deceased from the Court of First Instance of the High Court of the Hong Kong Special Administrative Region within 9 months from the date of signing of the Formal Agreement of Sale and Purchase, the completion shall be extended for not more than 3 months and if the Letters of Administration is not granted within the extended period, the Vendor shall have a right to rescind the Formal Agreement whereupon the deposit paid hereunder shall be returned to the Purchaser by the Vendor in full but without compensation interest (if such return is made within 3 working days from such rescission) or costs and neither party shall have any claim against the other and the parties shall enter into and cause to be registered at the Land Registry an Agreement for Cancellation.”

9.For the purpose of Clause 35(c) of the SPA, the nine-month period for the Plaintiff to obtain the letters of administration of the Estate expired on 2 August 2018, and the extended period of three months for completion of the SPA expired on 2 November 2018.

10.By 2 November 2018, no letters of administration of the Estate had been granted to the Plaintiff. Hence, subject to various contentions raised by the Defendant which we shall discuss below, the Plaintiff first became entitled to rescind the SPA under Clause 35(c) on 3 November 2018.

11.On 7 January 2019, the Defendant paid a further deposit of HK$100,000 to the Plaintiff upon the latter’s request made in early January 2019. Pausing here, it may be noted that in the papers before the Court, the sum of HK$100,000 is sometimes referred to as a further deposit and sometimes as a part payment. Neither party has suggested, however, that it will make any difference to the outcome of the present appeal whether the sum should properly be characterised as a further deposit or part payment.

12.On 24 July 2020, the Government gave notice in the gazette that a portion of the Property with an area of about 5,035 sq ft would be resumed by and reverted to the Government at mid-night on 23 October 2020, leaving an un-resumed portion of the Property with an area of about 1,934.6 sq ft. 50% of the compensation offered by the Government for the said resumption came to HK$3,395,604.

13.By a letter dated 4 August 2020 (“the Rescission Letter”) from the Plaintiff’s solicitors, Tung, Ng, Tse & Lam (“TNTL”), to LK (the Defendant’s former solicitors), the Plaintiff gave notice of rescission of the SPA to the Defendant pursuant to Clause 35(c).

14.In response, by a letter dated 11 August 2020 from the Defendant’s present solicitors, Wong Hui & Co (“WH”), to TNTL, the Defendant contended that:

(1)  The sum of HK$100,000, being a further part payment of the purchase price, was paid upon the following conditions orally agreed upon by the Plaintiff and the Defendant –

(a)  the Plaintiff would use his best endeavours to obtain the letters of administration of the Estate within a reasonable time; and

(b)  completion of the SPA should take place upon reasonable notice given by the Plaintiff to the Defendant that he had obtained the letters of administration.

(2)  It was also an implied term of the oral agreement that Clause 35(b) and (c) of the SPA was to be treated as spent and would no longer have effect.

(3)  The Plaintiff’s notice of rescission of the SPA was a wrongful repudiation of his obligations under the SPA as varied.

(4)  WH had instructions to enforce the Defendant’s right to specific performance of the SPA.

15.On 28 April 2021, the Plaintiff obtained an order from the court in HCMP 286/2021 that he be appointed as the administrator of the Estate. However, no grant had yet been issued to the Plaintiff as at the date of the trial[1].

THE ACTION

16.On 24 August 2020, the Plaintiff commenced an action in the High Court by way of an Originating Summons against the Defendant seeking, inter alia, a declaration that he was entitled to rescind the SPA and did effectively rescind the same by the Rescission Letter. The action was later ordered to be continued as if the cause or matter had been begun by writ.

17.In the Defendant’s Re-Amended Defence and Counterclaim, the Defendant contended, inter alia, that:

(1)  Clause 35(c) was wrongly included in the SPA by LK, and the SPA should be rectified by deleting Clause 35(c) from it (§4 and Prayer (1));

(2)  the Plaintiff, by requesting for and accepting the part payment of HK$100,000, had waived his right to rely on Clause 35(c) or was estopped from seeking to rely on the same; alternatively, Clause 35(c) was spent and no longer enforceable (§6(b)(i));

(3)  the Plaintiff did not validly exercise the right of rescission under Clause 35(c), in that the notice of rescission was not accompanied by a tender of HK$400,000, being the total amount of the deposit/part payment paid by the Defendant to the Plaintiff which should be returned to the Defendant upon rescission of the SPA (§6(b)(ii));

(4)  the SPA contained the following implied terms and/or warranties, namely –

(a)  “Implied Term 13(a)” - the Plaintiff had the authority of all the beneficiaries of the Estate to sell a half share of the Property to the Defendant; and

(b)  “Implied Term 13(b)” - where the Plaintiff would be able to procure completion to take place by any alternative means other than obtaining a grant of representation, he would use his best endeavours to do so (§13);

(5)  the Plaintiff’s request for and acceptance of the part payment of HK$100,000 on 7 January 2019 gave rise to an implied agreement that he “should thenceforth take all reasonable steps with due diligence to procure Letters of Administration of the estate of the Deceased to be granted to him as administrator” (“Implied Agreement”) (§14); and

(6)  the Plaintiff acted in breach of Implied Term 13(b) and the Implied Agreement (§19).

The Defendant counterclaimed for, inter alia, (i) rectification of the SPA, and (ii) specific performance of the SPA or, alternatively, damages for breach of contract in addition to and/or in lieu of specific performance.

THE JUDGMENT

18.The action was tried by the Recorder on various dates in August and September 2022. At the trial, the parties presented a set of agreed facts, which was recited by the Recorder at §2 of his written judgment dated 3 November 2022 (“the Judgment”). In addition, the following witnesses gave evidence at the trial:

(1)  the Plaintiff; and

(2)  the Defendant, and three other witnesses on her behalf, namely –

(a)  Tang Chok Lam (“TCL”) - the Defendant’s husband,

(b)  Ng Ka Yin, Karen (“NKY”) - a clerk of LK who received instructions from TCL to prepare the SPA and attended to the execution of the SPA by the Plaintiff and the Defendant, and

(c)  Leung Ka Ling, Amy – also a clerk of LK and NKY’s assistant.

19.By the Judgment, the Recorder:

(1)  rejected the Defendant’s contention that Clause 35(c) was included in the SPA by “mistake”, and held that there was no basis for rectification of the SPA (§51);

(2)  rejected the Defendant’s contention that the Plaintiff’s right to rescind the SPA under Clause 35(c) had been lost on the ground of waiver or estoppel as a result of his asking for and accepting the sum of HK$100,000 as further deposit in about January 2019, and held that Clause 35(c) remained a right exercisable by the Plaintiff after 7 January 2019 (§61);

(3)  held that the Plaintiff had validly rescinded the SPA on 4 August 2020 (§§69 and 70); and

(4)  held that (i) Implied Term 13(a) was absolutely without merit, and utterly devoid of relevance because there was no allegation that it had been breached (§74), (ii) Implied Term 13(b) could not be implied into the SPA (§75), and (iii) the Implied Agreement, advanced by the Defendant’s counsel as a new or separate agreement and not merely as an implied term, could not have arisen or be implied on the facts of the case; in any event, the Defendant had failed to show that the Plaintiff had breached the alleged Implied Agreement (§§77-81).

20.In the Judgment, the Recorder also explained his reasons for refusing the Defendant’s application, made during the course of the trial after all witnesses (save the Defendant) had given their evidence, to amend the Amended Defence and Counterclaim to plead an alleged family arrangement made before the death of the Deceased pursuant to which the Plaintiff had become the sole beneficial owner of the half share of the Property owned by the Deceased (§§84-85).

21.The Recorder upheld the Plaintiff’s claim, and made the following orders:

(1)  there be a declaration that the Plaintiff was entitled to, and did by letter dated 4 August 2020, rescind the SPA; and

(2)  the Plaintiff do return the sum of HK$400,000 to the Defendant within 28 days from the date of the Judgment, together with interest thereon at the rate of 1% above the best lending rate quoted by the Hongkong and Shanghai Banking Corporation from time to time, from 8 August 2020 to the date of the Judgment (both dates inclusive), and thereafter at the judgment rate from time to time, until full payment.

The Recorder also dismissed the Defendant’s counterclaim.

22.We do not propose to set out the Recorder’s reasons for (i) upholding the Plaintiff’s claim and dismissing the Defendant’s counterclaim, and (ii) rejecting the Defendant’s application for amendment of the Amended Defence and Counterclaim here, but shall refer to the relevant parts of the Judgment in our discussion of the Defendant’s grounds of appeal below.

THE NOTICE OF APPEAL

23.The Defendant’s Notice of Appeal dated 1 December 2022 contains 10 paragraphs. Leaving aside for the time being matters relating to remedies[2], the Defendant advances the following broad grounds of appeal in the Notice of Appeal:

(1)  Ground 1: the Recorder erred in law in failing to order the rectification of the SPA by deleting Clause 35(c) from it on the ground of mistake (§1).

(2)  Ground 2: the Recorder erred in failing to find that the Plaintiff was estopped from relying on Clause 35(c) by requesting for and accepting from the Defendant a further deposit and part payment of HK$100,000 (§2).

(3)  Ground 3: in making his finding that the Plaintiff had validly exercised the right of rescission of the SPA on 4 August 2020, the Recorder erred in law in (a) adopting an approach of literal interpretation and “wrongly [relying] on a literal comparison with a case precedent”, and (b) failing to construe the meaning and effect of Clause 35(c) in the circumstances of the parties’ case at the time when the SPA was entered into (§§3 and 4).

(4)  Ground 4: the Recorder erred in law in holding that Implied Term 13(b) could not be implied (§5).

(5)  Ground 5: the Recorder misunderstood the evidence of the Plaintiff relating to the family arrangement (§§6-8).

GROUND 1: RECTIFICATION

24.In support of her case of rectification of the SPA, the Defendant contends that:

(1)  LK wrongly included Clause 35(c) in the SPA which purported to give the Plaintiff a right of rescission in the event of the Plaintiff’s failing to obtain the letters of administration of the Estate within 9 months from the date of the SPA and an additional 3 months thereafter;

(2)  the parties had not discussed or agreed on such a right of rescission in the course of their negotiations, and neither party had given LK any instructions to provide for such a right of rescission in the SPA; and

(3)  neither party was aware of the wrong inclusion of Clause 35(c) as part of the SPA, and it was not interpreted to, or drawn to the attention of, the Defendant or the Plaintiff prior to their respective execution of the SPA[3].

Hence, says the Defendant, Clause 35(c) was included in the SPA by mistake, and the SPA ought to be rectified by the removal of that clause.

25.In respect of the above contentions of the Defendant, the Recorder made the following material findings of fact:

(1)  The Plaintiff and the Defendant (or TCL) had never met to negotiate or discuss the sale and purchase. On the Plaintiff’s side, it was a nephew of his, Tang Yu Yeung (“TYY”), who made contact with TCL. On the purchasing side, it was TCL who negotiated and decided on all matters relating to the sale and purchase, as well as giving instructions to and dealing with NKY. TCL decided to name his wife (ie the Defendant) as the purchaser on the SPA[4].

(2)  There was no discussion or agreement, and therefore no express instructions given by either the Plaintiff or the Defendant (or TCL) to LK, on the provision in Clause 35(c)[5].

(3)  On 2 November 2017, the Plaintiff and the Defendant/TCL separately went to the office of LK to sign the SPA[6]. NKY attended the Plaintiff and the Defendant/TCL when the Plaintiff and the Defendant respectively executed the SPA[7].

(4)  On a balance of probabilities, NKY did not interpret Clause 35(c) to the Defendant/TCL or to the Plaintiff when the Defendant and the Plaintiff respectively signed the SPA on 2 November 2017[8].

26.Notwithstanding the above findings, the Recorder concluded that Clause 35(c) was a valid and binding provision between the Plaintiff and the Defendant, and the Defendant’s claim that it was included by mistake must be rejected. The Recorder’s essential reasons for this conclusion were as follows:

(1)  In a transaction for the sale and purchase of real property, as a general rule, and in the overwhelming majority of cases, there would be a formal agreement in writing signed by the parties setting out in detail the terms of sale. The agreement would usually contain detailed terms dealing with the rights and obligations of the parties which were of a legal and technical nature, which the vendor and purchaser, especially if they were both not qualified or trained in law, would not have agreed or discussed amongst themselves. They would generally agree on the “basic” terms, such as the subject matter, the price, terms of payment, and completion date, and then leave it to their solicitors to work out (and, if each side has his or her own solicitors acting, to agree on) the detailed terms of the agreement.

(2)  The SPA contains many more provisions than what TCL told NKY, and what NKY told Kerry (a colleague of NKY who was asked to prepare the draft SPA). This was because, as TCL confirmed in cross-examination, he would leave it to LK to decide what were the terms to be included in the SPA, and he would not know about many of the terms of the SPA. He was only concerned with the basic terms of the SPA, and did not care about the technical terms thereof.

(3)  Having so entrusted the drafting of the SPA to LK (via TCL), unless the SPA contained something inconsistent with what was in fact agreed between the parties, or otherwise with an express instruction given, the Defendant must be bound by the terms of the SPA so included. This was especially so as the Defendant confirmed in cross-examination that when she and TCL attended the office of LK to sign the SPA, she could see that the SPA in front of her contained many clauses, but only the most basic terms were explained to them by NKY. Neither the Defendant nor TCL bothered to ask NKY to explain to them the other clauses. The Defendant was happy to sign the SPA because she trusted the solicitors. In such circumstances, the Defendant was bound by what she signed.

(4)  Even though NKY did not explain or interpret Clause 35(c) to the Plaintiff and the Defendant/TCL, that did not mean that Clause 35(c) was included by mistake, or that it was not valid and binding. As LK was entrusted by both sides to prepare the SPA with terms which in LK’s judgment ought to be fairly included, both of them were bound by the terms put in by LK unless the parties themselves had actually agreed not to include a particular provision (rather than simply not having agreed, dealt with or considered a matter themselves at all), or agreed something different, neither of which was the case here. There was no “outward expression of accord” that something like Clause 35(c) should not be included, or that something inconsistent with Clause 35(c) should be included. The parties themselves simply had no common intention or agreement in relation to the subject of Clause 35(c) at all. Clause 35(c) was properly included by someone entrusted and authorised by both parties to include whatever terms it considered fair to do so as long as they were not inconsistent with any express agreements or instructions, and they were bound by it by their signatures.

(5)  In short, Clause 35(c) was included by LK (via Kerry) which was duly authorised by both the Plaintiff and the Defendant to do so. The question of whether there should be a time limit for the Plaintiff to obtain the letters of administration was simply not in the minds of the Plaintiff or the Defendant (or TCL) at all, but Clause 35(c) was put in by LK as their properly instructed solicitors entrusted with the preparation of a proper agreement with terms fair to both sides. Even if, as the Defendant alleged, she signed without knowing about Clause 35(c), she remained bound by it. And so was the Plaintiff[9].

27.Under §1 of the Notice of Appeal, the Defendant contends that the Recorder, in holding that Clause 35(c) was binding on the Plaintiff and Defendant, erred in law for the following reasons:

(1)  A solicitor has no authority to agree on behalf of and bind his client unless he is expressly or implied authorized to do so with the informed consent of his client.

(2)  Clause 35(c) was not of a legal or technical nature that required no input from both parties as lay clients in equal bargaining position. It was inconsistent with the sale under the SPA being a secured and concluded bargain since Clause 35(c) would allow it to be rescinded by the Plaintiff alone after 12 months, a period which NKY considered clearly insufficient for the letters of administration of the Estate to be obtained. As such, it could not be implied that the Defendant had authorized or intended the solicitor to include it in the SPA. In any event, where the parties have delegated to the solicitors acting for both parties the task to work out the detailed terms of an agreement, the solicitor is not exonerated from the primary duty to obtain the informed consent of the parties before it is executed and becomes binding on them.

(3)  The Defendant could not have agreed to or become bound by any terms inserted in the SPA without her knowledge and informed consent, especially when (i) it was plainly to her disadvantage, and (ii) matters highly relevant to the reasonableness or otherwise of the timelines stated in Clause 35(c) were not even explored.

(4)  The proposition that a solicitor acting for both parties in equal bargaining position may be at liberty to include terms binding on the parties without (a) taking instructions, (b) advising thereon, and (c) interpreting them in a language that the parties can understand before they execute the agreement is a novel one, wholly untenable, unsupported by authorities and could lead to an absurd result that both parties may become bound by a term that neither party wants.

(5)  The Recorder wrongly ignored the fact that both parties were represented by the same solicitors, made no mistake about the nature of the SPA but did make the common mistake of including a term in it that they in fact did not know about or agree upon.

(6)  The Recorder’s requirement of the parties to have expressly agreed to Clause 35(c) being excluded before it could be deleted is illogical. Since the parties never had in mind a clause like Clause 35(c), they could not have expressly agreed to it being excluded.

(7)  The Recorder wrongly rejected NKY’s explanation that her colleague Kerry made a mistake in adopting a standard term from an agreement for the sale of land by a Tso/Tong to become Clause 35(c) of the SPA, and in so doing the Recorder failed to appreciate (i) the material difference in nature between a sale of land by a Tso/Tong subject to consent under s 15 of the New Territories Ordinance (Cap 97) and a sale by a beneficiary as intended administrator of the estate of a deceased, and (ii) whether Clause 35(c) was unreasonable should be objectively assessed and not judged by what the Recorder believed to be the subjective view of Kerry that it was fair.

(8)  The Recorder erred in holding that there was no sufficient outward expression of accord.

(9)  The Recorder erred in holding that if Clause 35(c) was included by mistake and was not binding on the parties, almost all if not all of the terms in the SPA would similarly have been included by mistake and would not be binding. Whether a particular clause, which was not explained to the parties, was contrary to the parties’ common intention is matter of degree, and would depend on the nature of the clause in question.

28.The above points are elaborated in the written and oral submissions of Mr Chau which it is not necessary to set out in this judgment. In our view, this ground of appeal has no merits for the following reasons.

29.The fundamental principle of contract law under Hong Kong law is that a party who puts his signature down on a written agreement is held to its terms regardless of whether he has read or understood them before signing, or is aware of the existence, nature or effect of those terms, and regardless of whether the terms are reasonable, or will or may operate to his disadvantage, unless he can establish a recognised legal basis which would vitiate the binding effect of the agreement, or a particular term or terms of the agreement. In Ming Shiu Chung v Ming Shui Sum (2006) 9 HKCFAR 334, at §84, the following legal position was authoritatively stated by Ribeiro PJ –

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

30.Thus, subject to the possible defence of rectification, it is nothing to the point for the Defendant to argue that LK had no authority to agree Clause 35(c) on her behalf or bind her to it, or had no authority to include Clause 35(c) in the draft SPA, or had failed to take instructions or advise her on the nature and effect of Clause 35(c), or interpret Clause 35(c) to her, or otherwise discharge their primary duty of obtaining her informed consent to it before the SPA was executed and became binding on her, or that Clause 35(c) was included by the mistake of a clerk of LK (Kerry) who was tasked to prepare the draft SPA for execution by the Plaintiff and Defendant, or that Clause 35(c) would operate to her disadvantage or was unreasonable, or that the Defendant did not know of or agree to Clause 35(c). The issue in the present case is not whether LK breached their duty of care owed to the Defendant. There is also no question of the Defendant becoming bound by the terms of the SPA because LK agreed to them on her behalf. The provisions of the SPA (including Clause 35(c)) are binding on the Defendant simply because she signed SPA voluntarily on 2 November 2017, thereby signifying her consent to be bound by them.

31.The real issue in the present case is whether the SPA ought to be rectified by the removal of Clause 35(c) from it on the ground of common (or mutual) mistake. As pointed out by Lord Hoffmann NPJ in Kowloon Development Finance Ltd v Pendex Industries Ltd (2013) 16 HKCFAR 336, at §19, in the case of common mistake, the mistake is about “whether a written document correctly reflects what the parties had, on an objective assessment, agreed it should contain”. Lord Hoffmann quoted with approval the following statement by Denning LJ (as he then was) in the well-known case of Frederick E Rose (London) Ltd v William H Pim Jnr & Co Ltd [1953] 2 QB 450, 461: “Rectification is concerned with contracts and documents, not with intentions”. Lord Hoffmann further pointed out that “… the concept of rectification for common mistake involves carrying into effect what the parties appear to have actually agreed that the document should say. And in deciding what the parties have agreed, the common law adopts its usual objective stance, looking at what a reasonable observer would have understood the parties to mean and not concerning itself with their uncommunicated states of mind”.

32.In Swainland Builders Ltd v Freehold Properties Ltd [2002] EWCA Civ 560, at §33, Peter Gibson LJ identified 4 conditions that a party seeking rectification must establish:

(1)  the parties had a continuing common intention, whether or not amounting to an agreement, in respect of a particular matter in the instrument to be rectified;

(2)  there was an outward expression of accord;

(3)  the intention continued at the time of the execution of the instrument sought to be rectified; and

(4)  by mistake, the instrument did not reflect that common intention.

These 4 conditions for rectification were endorsed by Lord Hoffmann in Charterbrook Ltd v Permission Homes Ltd [2009] 1 AC 1101, at §48, and are re-stated in Hodge on Rectification (2^nd Edn), at §4-24[10], which Mr Chau refers to and relies upon.

33.The first 2 conditions for rectification mentioned above are of critical importance in the present case. There is some controversy as to whether they are truly separate, and substantial, legal requirements, or are merely different sides of the same coin (see Kowloon Development Finance Ltd v Pendex Industries Ltd [2012] 5 HKLRD 11, at §35; and Hodge on Rectification, §§4-24 & 4-31). This controversy does not have to be resolved in the present case. What is clear is that in approaching the issue of continuing common intention, the Court should adopt an objective assessment. Thus, in Charterbrook, Lord Hoffmann stated at §60 that -

“Now that it has been established that rectification is also available when there was no binding antecedent agreement but the parties had a common continuing intention in respect of a particular matter in the instrument to be rectified, it would be anomalous if the ‘common continuing intention’ were to be an objective fact if it amounted to an enforceable contract but a subjective belief if it did not. On the contrary, the authorities suggest that in both cases the question is what an objective observer would have thought the intentions of the parties to be”.

34.Further, the continuing common intention necessary to support a claim for rectification must be an intention up to the moment when the parties executed a contract in regard to a particular provision or aspect of the agreement which the contract fails to conform with. In Crane v Hegeman-Harris Co Inc [1939] 1 All ER 662 ([1971] 1 WLR 1390), Simonds J stated the following as being the relevant inquiry:

“… in order that this court may exercise its jurisdiction to rectify a written instrument it is not necessary to find a concluded and binding contract between the parties antecedent to the agreement which it is sought to rectify. The judge held, and I respectfully concur with his reasoning and his conclusion, that it is sufficient if you find a common continuing intention in regard to a particular provision or aspect of the agreement. If you find that in regard to a particular point the parties were in agreement up to the moment when they executed their formal instrument, and the formal instrument does not conform with that common agreement, then this court has jurisdiction to rectify although it may be there was, until the formal instrument was executed, no concluded and binding contract between the parties.”

35.The above statement of principle by Simonds J was approved by Russell LJ (giving the judgment of the English Court of Appeal) in Joscelyne v Nissen [1970] 2 QB 86, at §98 (but with the qualification that some outward expression of accord is required to be shown).

36.In Lloyd v Stanbury [1971] 1 WLR 535, the issue was whether a particular plot of land had been included through a common mistake in a written agreement for the sale of land. On the facts, it was found that, when negotiating the agreement, the buyer had not given any thought to the matter and had no positive intention that the relevant plot either should or should not be included. There was some evidence that the seller intended the plot not to be included, but the evidence was not sufficient for a finding to that effect to be made. Brightman J applied the above principle stated by Simonds J, and held that no common intention to exclude the plot from the land sold had been established and thus rejected the seller’s defence based on rectification of the agreement to the buyer’s claim for damages for breach of contract.

37.In Kowloon Development Finance Ltd v Pendex Industries Ltd [2012] 5 HKLRD 11, a mortgage action brought by a moneylender (plaintiff) against the borrower and guarantors (defendants) was settled by 2 Tomlin orders in 2004 and 2005 respectively. Under the 2004 order, the defendants were to pay 12 monthly instalments to the plaintiff with an annual review of the monthly instalments thereafter. The 2005 order provided that the defendants were to pay 12 further monthly instalments but omitted any provision for further annual review of the monthly instalments thereafter. The defendants contended that upon payment of the 12 further monthly instalments under the 2005 order, the whole outstanding loan was discharged, while the plaintiff contended that the loan was not discharged and the 2005 order ought to be rectified to make it clear that was the position. Johnson Lam J (as he then was), giving the judgment of the Court of Appeal, considered the following to be the relevant inquiry -

“one should examine the evidence (and in the context of this appeal, the evidence of the plaintiff accepted by the Judge) to see whether to a reasonable objective observer the parties had a continuing common intention that the defendants would continue to be liable for the loan after the payment of the instalments in 2004 and 2005. If such continuing common intention existed, it would not matter that the parties gave no thought as to what term was to be inserted in the consent orders.”

On the evidence, it was found that the parties had a continuing common intention that the defendants would remain liable for the loan after the payment of the 2004 and 2005 instalments. The 2005 order was accordingly rectified on the ground of common mistake. The judgment of the Court of Appeal was upheld by the Court of Final Appeal [(2013) 16 HKCFAR 336].

38.In the present case, the parties had explicit discussion and agreement on only some basic terms of the proposed transaction, namely, the identity of the parties (including the fact that the Plaintiff would be contracting in his capacity as the intended administrator of the estate of the Deceased), the subject matter of the sale and purchase, the purchase price, and the amount of the deposit, and that completion would take place after the Plaintiff had obtained the letters of administration of the Estate from the court[11]. Prior to the execution of the SPA at the office of LK on 2 November 2017, NKY had interpreted only a few provisions of the document to the Defendant and TCL[12]. However, it was, and must have been, obvious to both the Defendant and TCL that the document which the Defendant was asked to sign contained many more provisions than what had been expressly discussed and agreed with the Plaintiff (through TYY) and/or interpreted to them by NYK. Nevertheless, neither the Defendant nor TCL bothered to inquire with NKY about those additional provisions, or asked NKY to explain them. As found by the Judge, “the [Defendant] was happy to sign the SPA in such circumstances because she trusted the solicitors”[13]. TCL’s position was that he was only concerned with the basic terms of the SPA, and did not care about “the technical terms” thereof[14]. On an objective analysis, by signing the SPA with full knowledge that it contained many more terms than what had been expressly agreed with the Plaintiff but without making any inquiry into them, the Defendant must be taken to have accepted those terms, and consented to be bound by them. Another way of looking at the matter is that the Defendant must, in the circumstances, be taken to have authorized LK to include all the provisions in the SPA regardless of whether they formed part of the original instructions given to NKY. The same analysis would apply to the Plaintiff. Objectively speaking, there was simply no common intention (or continuing common intention) in regard to the matters covered by Clause 35(c), ie the timeframe for the Plaintiff to obtain the letters of administration of the Estate and the right of the Plaintiff to terminate the SPA in the event that he should fail to obtain the same within the stipulated timeframe, still less any outward expression of accord of such common intention. In our view, the Recorder is correct to hold that there is no basis for rectification of the SPA.

39.There are a couple of other minor points raised by the Defendant that we should deal with in passing. First, the Defendant criticises the Recorder for failing to appreciate that whether Clause 35(c) was unreasonable should be objectively assessed and not judged by what the Recorder believed to the subjective view of Kerry that it was fair[15]. This criticism is misconceived. The Recorder did not find that Clause 35(c) was binding on the Defendant because it was fair, or rely on the subjective view of Kerry to justify the conclusion that Clause 35(c) was fair:

(1)  At §35 of the Judgment, the Recorder referred to NKY’s evidence that “it was for LK, acting for both sides, to include terms which ought fairly to be included … and NKY confirms that it was Kerry who decided, when drafting the SPA on her instructions, to include clause 35(c), so it is at least Kerry’s view that clause 35(c) was a fair clause to be included”, and went on to explain why he considered that Kerry’s view could not be said to be an unreasonable one to take.

(2)  At §47 of the Judgment, the Recorder referred to NKY’s evidence that she did not consider Clause 35(c) to be a fair provision, and contrasted it with the view held by the person entrusted by NKY to prepare the draft agreement (ie Kerry) that a clause like Clause 35(c) ought fairly to be included.

In any event, we do not consider that the question of whether the SPA ought to be rectified by the removal of Clause 35(c) from it is to be answered by reference to the “fairness” or otherwise of the provision.

40.Second, the Defendant contends that the Recorder’s view that if Clause 35(c) was included by mistake and should not be binding, almost all if not all of the terms in the SPA would similarly have been included by mistake and should not be binding, is wrong. The Defendant argues that whether a particular clause in the SPA, which was not explained to the parties, was contrary to the parties’ common intention, is a matter of degree, and would depend on the nature of the clause in question[16]. We do not consider this argument to be correct as a matter of principle. A party seeking to expunge a provision in a written agreement on the ground that it was included by common mistake has to show that the 4 conditions for rectification mentioned in §32 above are satisfied. The inquiry is not a matter of “degree”, and is not dependant on considerations such the significance or importance of the provision in question, or whether it is a technical one. Introducing such qualifications would give rise to uncertainties and undermine the sanctity of a written contract.

GROUND 2: ESTOPPEL

41.The Defendant’s case on estoppel is as follows:

(1)  In making the request for, and accepting payment of, a further 10% deposit about 2 months after the extended deadline under Clause 35(c) had lapsed –

(a)  the Plaintiff impliedly represented to the Defendant that Clause 35(c), if it was once binding on the parties, had ceased to have effect or been spent, and was no longer enforceable; or

(b)  alternatively, the parties acted on a common assumption that Clause 35(c) never existed or was no longer enforceable.

(2)  If the Defendant had known that Clause 35(c) existed and was still binding on her, such that immediately upon or soon after payment of the further deposit, the SPA would be or could be rescinded by the Plaintiff anytime at his absolute discretion (with or without actual refund of deposit being tendered thereupon), the Defendant would not have agreed to pay the same to the Plaintiff, or without requiring a supplemental agreement on terms to the Defendant’s satisfaction such that the Defendant could secure her purchase under the SPA under reasonable conditions[17].

42.The Recorder’s reasons for rejecting the Defendant’s case on estoppel can be found at §§56 and 60 of the Judgment –

“[56] In my judgment, the defendant cannot rely on … estoppel, given that, as I found above, the plaintiff, and, more importantly, the defendant herself and TCL (which is also her own case), were not explained or interpreted clause 35(c) when the SPA was executed. There is no evidence to suggest that any of those three persons had, after the SPA was executed but before the request for and payment of the further deposit, acquired knowledge of clause 35(c). On that basis, whatever was done in January 2019 regarding the HK$100,000 was done by the plaintiff, the defendant and TCL without any reference to, and in ignorance of, the existence of clause 35(c) and the plaintiff’s accrued right to rescind thereunder. TCL confirms in cross-examination that the payment of $100,000 had nothing to do with clause 35(c).

…

[60] The difficulty for the defendant is that, on my findings, and indeed on her own case, clause 35(c) was not in the minds of the plaintiff or the defendant (or TCL) at all in January 2019. It is therefore hard to see how the acts of requesting and accepting the HK$100,000 by the plaintiff, and the payment of that sum by TCL on behalf of the defendant, can be construed or understood as giving rise to any assumption, representation or understanding by any person concerned as to the continued existence or enforceability or otherwise of clause 35(c), or that TCL or the defendant, in paying the HK$100,000, was acting under, or relying upon, any particular assumption or basis induced by any representation by words or conduct made by or on behalf of the plaintiff, in relation to clause 35(c).”

43.The Recorder’s reasoning for rejecting the Defendant’s case on estoppel seems to us to be correct. Regardless of whether the Defendant’s case is put on the basis of estoppel by representation or estoppel by convention, it must be based on the premise that the Plaintiff’s request for and acceptance of the payment of HK$100,000 by the Defendant carried an implied representation or common assumption that Clause 35(c) would no longer be effective, enforceable or binding. However, as found by the Recorder, the request for the payment of HK$100,000 was made by the Plaintiff’s son (Tang Wai Kee) because the Plaintiff “needed money to pay for the month-old celebration of his grandson”, and TCL agreed to the request upon learning that it was made with the Plaintiff’s knowledge[18]. The Recorder further found that what was done by the parties in January 2019 was done without any reference to Clause 35(c) and the Plaintiff’s accrued right to rescind the SPA under that clause. In these circumstances, we are unable to see how the said implied representation or common assumption could arise from the Plaintiff’s request for, and acceptance of, the payment of HK$100,000 by the Defendant in January 2019.

44.In support of Ground 2 of appeal, Mr Chau raises 2 main points. First, he argues that the Recorder erred in finding that there could not be an estoppel because the Plaintiff and the Defendant/TCL did not at the time of the payment have knowledge of Clause 35(c). Mr Chau submits that, unlike the doctrine of affirmation/waiver by election, knowledge of the relevant right is not a requirement for an estoppel to arise[19]. In our view, this is a non-point. This is because, regardless of whether the parties were at that time aware of the existence or effect of Clause 35(c), on the facts as found by the Recorder, the Plaintiff’s request for, and the Defendant’s payment of, the sum of HK$100,000 had nothing whatsoever to do with the Plaintiff’s right of rescission of the SPA under Clause 35(c). The necessary link to give rise to an estoppel against the Plaintiff from seeking to enforce his right under Clause 35(c) was simply not there.

45.Second, Mr Chau argues that the estoppel advocated by the Defendant should be upheld because it would be absurd if the Plaintiff, having requested for and accepted the 10% further deposit when the right to rescind had accrued, is permitted to turn around and terminate the SPA any time in reliance on the accrued right[20]. This argument is based essentially on an appeal to one’s notion of fairness, but not on a principled approach to the doctrine of estoppel. Mr Chau seeks to draw an analogy with those cases where an acceptance of rent by a landlord is held to give rise to a waiver of the right of forfeiture[21]. In the current edition of Woodfall: Landlord and Tenant, Vol 1, at §11.098, it is stated that “[i]t is well settled that acceptance of rent which accrued due after the date on which the right to forfeit arose will waive the right to forfeit for any breach of which the landlord was aware on the date on which the rent fell due.” At §11.098.1, it is further stated that “[w]here the rent which is accepted accrued due before the occurrence of the event giving rise to the right to forfeit, the acceptance of the rent will not amount to a waiver. Similarly, acceptance of rent before the right to forfeit has arisen will not amount to waiver.” Thus, it is clear that for an acceptance of rent to give rise to a waiver of the right of forfeiture, the rent which has been accepted must be future rent, ie rent accruing due after the right to forfeit has arisen. This is because an acceptance of such rent with knowledge of an existing right of forfeiture is an unequivocal recognition of the future continuance of a lease, and inconsistent with a contention that the lease has been determined.

46.The position here is different. The SPA did not expressly impose any time limit for the Plaintiff to exercise the right of rescission under Clause 35(c). Subject to the Defendant’s argument about “Effluxion of Time” which will be considered below, we do not see that the Plaintiff’s request for and acceptance of a further deposit/part payment after the date of accrual of the right to rescind under Clause 35(c) was inconsistent with an exercise of such right at some point of time in future.

GROUND 3: WHETHER THERE WAS A VALID EXERCISE OF THE RIGHT OF RESCISSION

47.Under this ground, the Defendant contends that the Recorder erred in holding that there was a valid exercise of the right of rescission under Clause 35(c) because:

(1)  the notice of rescission was not accompanied by an actual tender of the sum of HK$400,000, and the Rescission Letter should be construed as being an offer to execute a Cancellation Agreement (instead of an actual exercise of the right of rescission) (“the Tender Point”); and

(2)  it was an implied condition that the right of rescission under Clause 35(c) must be exercised within a reasonable period, and the purported exercise of the right more than 1 year and 9 months after the passing of the extended deadline under Clause 35(c) was not a valid exercise of such right (“the Effluxion of Time Point”).

48.The Recorder rejected the Tender Point for the following reasons given in the Judgment:

“[66] The defendant’s case is that the letter of 4 August 2020 only constituted an ‘offer’ by the plaintiff to rescind, and without an actual tendering of the payment of the sum of HK$400,000, and without paying of interest, that letter was not a proper exercise of the right to rescind. The defendant had rightly refused the offer.

[67] As far as I understand, the defendant is not saying that as a matter of law, a rescission of an agreement like the SPA must be accompanied by a tendering of the amount which is to be returned. It is a matter of interpretation of the agreement to see what is the scope of the right to terminate.

[68] Thus, for example, in Looney v Trafigura Beheer BV[22], the relevant clause read as follows:

‘Early termination may only occur on written notice on the basis set out in the Financials. On Trafigura serving written notice and paying the early termination fee the Program will be discontinued and Trafigura and KLA will have no further obligations to the other in relation to the payment or delivery of the Program respectively …’ [Emphasis added]

[69] In such a clause, the payment of the early termination fee is expressly made one of the two conditions (the other being the service of a written notice) that have to be fulfilled before the agreement is validly terminated. This is to be contrasted with clause 35(c), which, as far I can see, does not make the return of the deposit, or a tendering thereof, a condition to be fulfilled before the SPA is validly rescinded. The plaintiff has a right to rescind thereunder, whereupon, i.e. upon the rescission, the deposit paid is to be returned. That is, the return of the deposit is not a condition for rescission, but is a consequence upon valid rescission.

[70] Nor do I read the letter of 4 August 2020 as merely an ‘offer’ to rescind. This does not make sense as the right to rescind is a unilateral right, not dependant upon the agreement or acceptance of the defendant. Nor is the 4 August 2020 couched in terms of an offer. The letter says that the plaintiff decides to rescind, not that the plaintiff decides to offer to rescind and asks for the acceptance of the defendant. The rest of the letter deals with what was to be done upon rescission.”

49.Mr Chau argues that the Recorder, in holding that the Rescission Letter immediately effected a termination of the SPC, failed to take into account the relevant context, including –

(1)  the important fact that the Plaintiff was selling as the intending administrator when on the face of it he had no legal title to, or beneficial interest in, the land he was selling;

(2)  consequently, upon rescission of the SPA, none of the Defendant’s payments of deposit and/or part payment of the purchase price to the Plaintiff would be protected by a purchaser’s lien on the land agreed to be sold under the SPA (as it would have been in the case of a sale by a legal or beneficial owner);

(3)  the requirement of repayment within 3 working days in Clause 35(c) ought therefore to be construed as a condition which must be fulfilled before the notice of rescission could take effect, otherwise the deposit and part payment made by the Defendant would be reduced to a personal, unsecured and interest free loan to the Plaintiff which was never intended by the parties; and

(4)  Clause 35(c) provides that upon rescission “neither party shall have any claim against the other”, which presupposes that rescission is exercisable upon actual return of the deposits.

50.We do not accept this argument, for the following reasons:

(1)  The fact that, at the time of the SPA, the Plaintiff had no legal title or beneficial interest in the half share of the Property, and was selling in his capacity as the intended administrator of the Estate, was a fact well known to both parties. The exercise of the right of rescission of the SPA by the Plaintiff under Clause 35(c) did not change the fact that the Defendant did not have the protection of any purchaser’s lien in any event.

(2)  Clause 35(c) expressly provides that, in the stipulated circumstances mentioned therein, the Plaintiff shall have a right to rescind the SPA “whereupon the deposit paid hereunder shall be returned to the Purchaser by the Vendor in full but without compensation interest (if such return is made within 3 working days from such rescission) or costs” [emphasis added]. This provision is inconsistent with the contention that to be effective, the exercise of the right of rescission must be accompanied by a tender of the amount of the deposit/part payment paid by the Defendant.

(3)  The final part of Clause 35(c), namely, “… and neither party shall have any claim against the other and the parties shall enter into and cause to be registered at the Land Registry an Agreement for Cancellation”, plainly means that upon the exercise of the right of rescission by the Plaintiff, save and except (i) the return of the deposit/part payment within 3 working days from the date of rescission by the Plaintiff, and (ii) the execution and registration of a cancellation agreement, neither party shall have any further claim against the other under the SPA.

51.The Defendant also criticises the Recorder for wrongly adopting a literal interpretation and relying on a literal comparison with a case precedent (ie Looney v Trafigura Beheer BV referred to by the Recorder at §68 of the Judgment). The complaint that the Recorder adopted a mere literal interpretation of Clause 35(c) has no substance. Insofar as the reference to Looney v Trafigura Beheer BV is concerned, the Recorder mentioned it only as an “example” and for the purpose of contrasting it with Clause 35(c). What is significant is that the Recorder approached the issue as “a matter of interpretation of the agreement to see what is the scope of the right to terminate”[23]. It has not been argued, and cannot seriously be argued, that this is a wrong approach.

52.Mr Chau’s further argument that the Rescission Letter should be construed as an offer to execute a Cancellation Agreement plainly has no merit. The letter expressly stated that the Plaintiff had decided to rescind the SPA. In our view, the Plaintiff was either entitled, or not entitled, to rescind the SPA in the circumstances of the present case. If the Plaintiff was not entitled to rescind the SPA but purported to do so, he would be evincing an intention to repudiate the SPA, and it would then be up to the Defendant to either accept, or refuse to accept, the Plaintiff’s repudiation of the SPA. There is simply no scope for the letter to be read as an offer to rescind, or execute a Cancellation Agreement as contended by Mr Chau.

53.Insofar as the Effluxion of Time Point is concerned, the Recorder refused to allow the Defendant to raise it at the trial for the following reasons given in the Judgment:

“[62] Clause 35(c) does not on its terms say when the plaintiff must exercise the right to rescind. It may be argued that: (i) the plaintiff must exercise the right within a reasonable period of time; and (ii) by 4 August 2020, the reasonable period time had expired. However, the aforesaid has not been pleaded.

[63] The defendant submits that she should be allowed to argue that the time for the plaintiff to exercise the right to rescind under clause 35(c) had expired by 4 August 2020, notwithstanding the fact that this point is not pleaded. I decline to do so, because, at least in relation to the question of what is a reasonable period of time, it is fact-sensitive, the answer to which depends on all the factual circumstances of the case, in relation to which the plaintiff is deprived of the opportunity to deal with in a focused manner.

[64] In the premises, there is no basis for me to find that by 4 August 2020, the plaintiff has lost his right to rescind the SPA under clause 35(c)…”

54.Mr Chau argues that the Recorder should have considered the Effluxion of Time Point because the construction of a contract is a point of law, and there is no evidential prejudice since “what constitutes a reasonable time should be determined in the context of the SPA and very general commercial considerations. Further it was incumbent on P to establish as a matter of law and fact that he was entitled to and did lawfully exercise that right”[24].

55.As we see it, not only has the Defendant failed to plead that the SPA contained an implied term concerning the time limit for the Plaintiff to exercise the right of rescission under Clause 35(c), the Defendant has also failed to plead that the Plaintiff’s exercise of the right to rescind was after the lapse of a reasonable time. While the former is a question of law, the latter is a question of fact and its answer is, as pointed out by the Recorder, “fact sensitive”. The Recorder’s refusal to allow the Defendant to rely on an unpleaded issue is an exercise of discretion. The Recorder did not err in approach or principle, and his decision is not plainly wrong. We can see no valid ground for the Court of Appeal to intervene in the Recorder’s exercise of discretion. Once the Effluxion of Time Point is ruled out, there would be no ground to argue that the Plaintiff was not entitled to or did not lawfully exercise the right to rescind based on timing considerations.

GROUNDS 4: IMPLIED TERM 13(B)

56.Under this ground, the Defendant argues that the Recorder erred in holding that Implied Term 13(b) could not be implied, in that he failed to consider that Tang Cheung, or another person who had obtained a grant, could be procured to transfer the half share of the Property to the Plaintiff, who could then complete the SPA[25].

57.It will be recalled that Implied Term 13(b) raised by the Defendant is that: “where the Plaintiff would be able to procure completion to take place by any alternative means other than obtaining a grant of representation, he would use his best endeavours to do so”.

58.The Recorder’s reasons for holding that Implied Term 13(b) could not be implied can be found at §75 of the Judgment –

“The SPA does not just provide for an end result, namely the assignment of the half share of the Property by the plaintiff to the defendant, leaving the manner of how it is to be achieved open. It prescribes the exact manner in which the completion of the sale and purchase is to be achieved: i.e. if and when the plaintiff obtains letters of administration of the Estate. Completion is conditional upon that event, as per clause 35(a). Further, clause 6 of the SPA expressly states that the plaintiff is to assign as personal representative. The alleged implied term suggests that if the plaintiff can work round the condition, and can somehow procure the assignment of the half share of the Property to the defendant, albeit without any grant of letters of administration and so he is not assigning as personal representative, he has a duty to do so. This is, in my judgment, rewriting the SPA, so as to render the condition not a condition at all. This may, arguably, improve the SPA for both parties, who were presumably, before the plaintiff rescinded the same, willing and eager to complete. But this is not what an implied term is supposed to do. Nor can one say that this term is necessary to make the SPA works by catering for the situation where the condition is not or cannot be fulfilled, as the SPA itself already provides for the scenario where the condition is not or cannot be fulfilled. It can also be said that the alleged implied term, by providing for completion by alternative means without the fulfilment of the express condition in clause 35(a), is inconsistent therewith, as well as clause 6.”

59.It is plain that the Recorder had considered the alternative means of completion of the SPA as suggested by the Defendant (namely, the Plaintiff’s procuring Tang Cheung, or another person who had obtained a grant, to transfer the half share of the Property to him who would then transfer it to the Defendant), but rejected the Defendant’s contention that the SPA contained an implied term which would compel the Plaintiff to adopt this alternative means of completion of the SPA because (i) it was inconsistent with the exact manner of performance stipulated in the SPA, (ii) it was inconsistent with Clause 6 of the SPA, which prescribed the capacity in which the Plaintiff was to assign the half share of the Property to the Defendant, and (iii) it would render the condition in Clause 35(a), ie completion conditional upon the letters of administration of the Estate having been granted to the Plaintiff, not a condition at all. The Recorder also considered that the suggested implied term was not “necessary” to make the SPA work by catering for the situation where the condition was not or could not be fulfilled. This must be so because the SPA in fact contemplated that the condition might not be fulfilled and made provisions in Clause 35(c) for that eventuality.

60.Mr Chau has not advanced any submissions to challenge the above reasoning of the Recorder. In the Defendant’s Skeleton Submissions, he argues that in many cases where a contract depends on a condition, there will be an implied obligation as to “best endeavours” to procure the fulfillment of that condition, and it could not have been the parties’ understanding that, if someone else had obtained a grant of representation of the Deceased’s estate during the period of 20 years since the death of the Deceased, the Plaintiff could sit back and do nothing. He says that it goes without saying that the Plaintiff should be obliged to use his best endeavours to seek alternative means[26]. We do not accept this argument. The condition for completion of the SPA under Clause 35(a) is the grant of the letters of administration of the Estate to the Plaintiff. While it may be arguable that there is an implied obligation on the part of the Plaintiff to use his best, or reasonable, endeavours to obtain a grant, we can see no basis to imply an obligation requiring him to use best endeavours to complete the SPA by “alternative means”.

61.In all, Ground 4 is rejected.

62.In passing, we note that in the Defendant’s Skeleton Submissions, Mr Chau also argues that the Recorder erred in ruling that the Implied Agreement advocated by the Defendant did not arise from the circumstances of the payment of HK$100,000[27]. There is, however, no ground of appeal raised in the Notice of Appeal against the Recorder’s rejection of the Implied Agreement. It is thus not an issue open to the Defendant in the present appeal, and we do not propose to deal with Mr Chau’s arguments on this matter in any detail, save to mention that (i) we consider the Recorder was correct in his view that the Implied Agreement could not arise from the circumstances of the payment of HK$100,000 by the Defendant to the Plaintiff in January 2019, and (ii) the Defendant had in any event failed to show that the Plaintiff had breached the Implied Agreement. On the issue of breach, there was evidence before the Recorder about the Plaintiff’s instruction to LK to obtain a grant of representation of the Estate to him, and the substantial difficulties faced by LK in obtaining the grant[28]. The Recorder concluded that the evidence was not sufficient for him to find one way or another whether the whole process could have been completed between 7 January 2019 and 4 August 2020 with the exercise of due diligence[29]. The Defendant’s case on the Implied Agreement is clearly unarguable.

GROUND 5: FAMILY ARRANGEMENT

63.Under this ground, the Defendant argues that the Recorder misunderstood the Plaintiff’s evidence given in cross-examination. The Recorder understood the Plaintiff’s evidence to be that prior to the death of the Deceased, there had been an oral arrangement between the family members as to which member was to be entitled to which properties of the Deceased when he passed away and the half share of the Property was to be given to the Plaintiff[30], whereas, according to the Defendant, the Plaintiff’s evidence was to the effect that “the properties were orally agreed to be and in fact given to his siblings during the lifetime of the Deceased (not to be given to them upon his death as the learned Recorder so misunderstood it)[31]”.

64.This ground can be disposed of briefly:

(1)  Insofar as the relevant part of the Plaintiff’s evidence is said to be relevant to the Defendant’s application to amend the Amended Defence and Counterclaim made during the trial to contend that “the SPA took effect as a sale of the half share of the Property by the plaintiff as the sole beneficial or absolute owner”[32], the amendment application was rejected by the Recorder. The Defendant has not appealed against the Recorder’s order refusing leave to amend. Thus, as observed by the Recorder[33], the Plaintiff’s evidence, even if it was misunderstood by him, cannot assist the Defendant regarding the nature and effect of the SPA and the operation of Clause 35(c).

(2)  Insofar as the relevant part of the Plaintiff’s evidence is relied upon by the Defendant in relation to issues such as part performance, perfecting an imperfect gift, or proprietary estoppel[34], there was no plea or reliance on those doctrines in her pleadings, and the Defendant would not be entitled to rely on them.

(3)  Lastly, insofar as the relevant part of the Plaintiff’s evidence is relied upon by the Defendant in relation to the remedies (namely, specific performance and damages) sought by the Defendant[35], since we have come to the conclusion none of the Defendant’s substantive grounds of appeal has merits, the question of whether the Recorder misunderstood the evidence of the Plaintiff is immaterial.

65.In short, Grounds 1 to 5 of appeal are all rejected. Having reached this conclusion, it is not necessary for us to deal with §§9 and 10 of the Notice of Appeal which concern issues of remedies only.

DISPOSITION

66.The Defendant’s Notice of Appeal is dismissed with costs to the Plaintiff, to be taxed if not agreed. Since the appeal is not complicated, we decline to give certificate for 2 counsel.

67.Mr But submits that the Court may consider making an order of indemnity costs against the Defendant in relation to the “Appellant’s/Defendant’s Supplemental Skeleton Submissions” dated 5 January 2024 which were filed without the Court’s leave. In support of the Defendant’s appeal, Mr Chau lodged two sets of submissions both dated 5 January 2024, namely, (i) the Defendant’s Submissions, and (ii) the Defendant’s Supplemental Submissions, which run to some 27 pages in length (“the Supplemental Submissions”). At §2 of the Defendant’s Submissions, it is stated that the Defendant “also seeks leave to lodge Supplemental Submissions on remedies (which have been lodged together with these Submissions)”. The lodging of the Supplemental Submissions by the Defendant’s counsel without leave was in breach of Practice Direction 4.1. If it was considered that the length of skeleton submissions prescribed by the Practice Direction was not sufficient to deal with all the matters which counsel wished to address the Court in the appeal, counsel ought to have sought the Court’s directions regarding the length of skeleton submissions or leave to lodge supplemental submissions in advance, instead of simply lodging and serving the Supplemental Submissions and then applying for retrospective leave. In view of the fact that we have decided to dismiss the Defendant’s appeal with costs, the Plaintiff will not have to bear any part of the Defendant’s costs incurred in the preparation of the Supplemental Submissions, although it is possible that the Plaintiff might have incurred some extra costs in considering those submissions. Had we come to a different conclusion on the merits of the Defendant’s appeal and decided to order the Plaintiff to bear the Defendant’s costs of the appeal, we would have excluded the Defendant’s costs in relation to or arising out of the Supplemental Submissions. On this occasion, we consider it sufficient to state the Court’s disapproval of the conduct of the Defendant’s counsel without making any special order in relation to costs, while making it clear that in future, a failure by a party’s legal representative to strictly follow Practice Direction 4.1 may result in an adverse costs or other order being made against the legal representative personally. In all, the Plaintiff’s costs of resisting the appeal shall be taxed on a party and party basis if not agreed.

Mr Adrian But and Mr Abel Lam, instructed by Tung, Ng, Tse & Lam, for the Plaintiff (Respondent)

Mr Ian Chau, instructed by Wong, Hui & Co, for the Defendant (Appellant)