Jil Investments Ltd v. Jesus Is Lord Church Ltd
Read the full judgment text of HCA 2689/2016 on BabelCite. This High Court CFI judgment was delivered on 31 March 2026.
5. Analysis of D’s Primary Case
Cites 11 cases
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HCA 2689/2016 [2026] HKCFI 1119 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO 2689 OF 2016 ________________________ BETWEEN
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________________________ JUDGMENT ________________________ 1.Introduction 1.1In these proceedings, the Plaintiff and the Defendant advance competing claims over the ownership of a property known as “The Cinema (referred to as “the Cinema Portion”) comprising the Cinema Auditorium with Foyer, Resting Room, Projection Room and Ancillary Offices and for the purpose of affixing Sign Boards, Bill Boards and Advertising Boards thereon the Exterior Walls of the Cinema Portion, Nam Cheong Commercial Building, No 239 Nam Cheong Street, Kowloon” (“Property” or “Premises”). 1.2The Plaintiff is and was at all material times the registered owner of the Property. It is common ground that, on 14 December 2003, the parties entered into a Lease and Purchase Agreement (“LPA”), by which the Plaintiff (1) as landlord leased the Property (“Lease”) to the Defendant for a term of 12 years commencing on 15 December 2003 and expiring on 14 December 2015 (“Lease Term”) and (2) granted to the Defendant an option to purchase the Property (“Option”). 1.3Ever since the commencement of the Lease Term, the Defendant has, despite the expiry of the term, remained in occupation of the Property for the purpose of operating a church attended predominantly by the Filipino community in Hong Kong. The Plaintiff commenced these proceedings in October 2016 to claim mesne profits and recover possession of the Property, on the bases that (1) the Lease Term had expired and (2) the Defendant had failed to exercise the Option in accordance with the terms of the LPA. The Plaintiff also seeks an order of the deregistration of the LPA and the statutory declaration of Attorney Virginia (defined below) at the Land Registry. 1.4Conversely, it is the Defendant’s case that either (1) it had exercised the Option in accordance with the terms of the LPA (“D’s Primary Case”) or (2) if it did not, the contractual requirements governing the exercise of the Option were not strictly enforceable by reasons of promissory estoppel or collateral contract (“D’s Alternative Case”)[1]. The Defendant essentially counterclaims for a declaration that it is the owner of the Property, an order for the transfer of the Property free from encumbrances, and repayment of the security deposit paid under the LPA for the Lease (“Security Deposit”). 1.5At the trial, I was ably assisted by Mr Jenkin Suen SC (leading Mr Tim Yu) for the Plaintiff and Mr Ambrose Ho SC (leading Mr Jacky Lam) for the Defendant. In the course of the trial, both counsel (sensibly) decided not to pursue certain arguments. I do not intend to exhaustively refer to those abandoned arguments, save only those which have a bearing on my assessment of credibility. 2.Overview of the disputes 2.1Clause 11 of the LPA provides as follows:
2.2Clause 12 of the LPA (“Option Clause”) sets out the contractual requirements for the exercise of the Option. It provides as follows:
2.3Despite suggestions to the contrary made in the Plaintiff’s opening, counsel for the Plaintiff sensibly accepted on the second day of the trial that the consideration for the Option calculated pursuant to LPA Clause 11 at the conclusion of the Lease Term was HK$1 (“Option Consideration”)[3]. As set out in the Annex to the Defendant’s Opening Submissions, the Defendant had over the Lease Term dutifully paid the rental payments, adjusted periodically to reflect the fluctuations in the prevailing interest rates, such that by the end of the Lease Term the formula resulted in a negative figure. (i) D’s Primary Case 2.4Under the Option Clause, the Option is exercisable by, inter alia, the Defendant giving a written notice (“Notice Requirement”). It is the Defendant’s case that the Notice Requirement was complied with, since written notices (“Written Notices”) were given to Mr Stephen Sy Chin Mong (“Sy Senior”), by then a former director of the Plaintiff, at a meeting on 20 October 2015 which less than two months from the expiry of the Lease Term (“20/10/15 Meeting”). 2.5Whether the Written Notices were given by the Defendant to Sy Senior at the 20/10/15 Meeting is one of the main factual disputes (if not the main relevant factual dispute) between the parties at the trial. An important issue to the resolution of the foregoing factual dispute is whether the Plaintiff is permitted to challenge the authenticity of the Written Notices, there being no dispute that the Plaintiff did not serve a notice pursuant to RHC Order 27, rule 4 stating that the authenticity of the Written Notices was not admitted. Mr Suen in closing urged the court to exercise its discretion to release the Plaintiff from the deemed admission. 2.6Even were the Written Notices given to Sy Senior at the 20/10/15 Meeting, there is an additional dispute as to whether Sy Senior had the authority to receive them. Sy Senior resigned as a director of the Plaintiff on 26 March 2024 and was declared bankrupt on 9 May 2014. It is the Plaintiff’s case that Sy Senior lacked authority to accept the Written Notices on behalf of the Plaintiff. 2.7The other contractual requirement under the Option Clause is in respect of the payment of the Option Consideration. The dispute between counsel is predominantly one on the proper construction of LPA Clause 12, there being no dispute that the Option Consideration was only tendered by the Defendant in late March 2016:
(ii) D’s Alternative Case 2.8As clarified by Mr Ho, D’s Alternative Case only arises if the Court agrees with the Plaintiff’s arguments on the construction of LPA, particularly in respect of the timing of the payment of the Option Consideration[4], ie by 14 December 2015[5]. In this scenario, the Defendant relies on promissory estoppel and collateral contract to contend that time was not of the essence with respect to the exercise of the Option, each line of the two contentions premised on the factual assertion that, at the time of the execution of the LPA in December 2003, Sy Senior had stated that (“Sy’s Dec 2003 Assurances”)[6] (1) the Defendant “should not worry” about LPA Clause 12 as it was “merely a formality” and (2) such matters of legal language should be left to Sy Senior’s lawyers to deal with in whom the Defendant should trust. 2.9The Plaintiff says that D’s Alternative Case is untenable on the facts, as Sy’s Dec 2003 Assurances were not given. In any event, even were Sy’s Dec 2003 Assurances given:
2.10For the reasons stated below, I am of the view that the Defendant succeeds on D’s Primary Case. Whilst it is strictly unnecessary for me to deal with D’s Alternative Case, in case this matter goes further, I will set out below the necessary factual findings and provide my brief views on D’s Alternative Case. Had it been necessary, I would have found against the Defendant on D’s Alternative Case. 3.The witnesses 3.1On the Plaintiff’s side, Mr Syed M Ahmed (“Ahmed”), Sy Senior and Mr Sy Lai Yin Sunny (“Sunny”) were called to give evidence at the trial. The Defendant originally had eight witnesses. Eventually, only five of them were called, namely Mr Eduardo Cru Villanueva (“Brother Eddie”), Ms Virginia Salazar Jose (“Attorney Virginia”), Ms Maria Beatriz Curia Itong (“Maria”), Ms Cristeta Barlongo Carbonel (“Cristeta”) and Mr Rene Carmelo S Gonzalez (“Rene”). By agreement between the parties, Mr Efren N De La Cruz (“Attorney Efren”) did not testify at the trial and his witness statement was admitted into evidence. 3.2There is no real dispute between counsel on the approach applicable to the court’s fact-finding exercise and assessment of credibility, namely the credibility of a witness should be assessed by reference to contemporaneous documentation where it exists, as well as inherent probabilities having regard to all the facts that are known. It is also important to bear in mind the internal consistency of the evidence of a witness, which is often tested by a comparison between the oral testimony of the witness on the one hand and his witness statement and pleadings on the other. In addition, the court is also entitled to take into account the amendments of the pleadings, in particular on the explanation given if there is a significant change of case: Esquire (Electronics) Ltd v Hong Kong and Shanghai Banking Corporation Ltd [2007] 3 HKLRD 439 §135, Hui Cheung Fai v Daiwa Development Ltd, HCA 1734/2009, 8 April 2014 §§77-82, and Au Yeung Pui Chun v Cheng Wing Sang [2021] HKCFI 463 §28-29. 3.3As to the drawing of adverse inference, the principles are set out in Pacific Electric Wire & Cable Company Ltd v Texan Management Limited, CACV 91 of 2012, 17 September 2013 at §§106-107 which I will not repeat here. I am able to make the necessary factual findings without resorting to the drawing of adverse inferences. 3.4I have evaluated the witnesses’ evidence and have come to the view that none of the witnesses is so reliable that I can accept his/her evidence in full. 3.5Instead of setting out general comments here (save one aspect which I can deal with shortly), my reasons for coming to the foregoing conclusion will become apparent as I set out my analysis of the evidence below. That short aspect is this. Mr Suen in closing made a scathing attack against Attorney Virginia, as she regrettably remained in court during the cross-examination of Brother Eddie, despite being expressly told by the court and the Defendant’s legal representatives not to do so. Whilst unfortunate, I do not attach any or any significant weight to the incident. Apart from making the criticism, Mr Suen in closing did not point to any indicia that Attorney Virginia tailored her viva voce evidence to match that of Brother Eddie’s. As will be seen below, Attorney Virginia’s in fact gave evidence which undermined the cogency of Brother Eddie’s evidence. 3.6In my fact-finding exercise, I need to bear in mind the caution that a witness may lie but that does not necessarily mean that the entirety of his/her evidence must be rejected. The witness may lie in an ill-considered attempt to bolster his/her case but the actual case may nevertheless remain good irrespective of the lie: Hu Lan v David Golden [2023] HKCFI 873 §36(5), but I of course need to also bear in mind where it is shown that a witness has been discredited over one or more matters to which he/she has testified, this fact is relevant to the assessment of his/her overall credibility: Hu Lan §36(6). 3.7Where I have formed the view that none of the witnesses is so reliable that I can accept his/her evidence in full, the evidence on each contentious topic has to be assessed with care and with reference to the other evidence and overall probabilities: Au Yeung Pui Chun §27. The observation made in Au Yeung Pui Chun is particularly apposite in the present case. Mr Suen (understandably) focused on a number of aspects of the Defendant’s evidence which are subject to (fair) criticisms but I agree with Mr Ho that the evidence has to be assessed wholistically and the overall probabilities kept firmly in mind. 3.8I should also point out that there are many allegations and cross-allegations directed at matters which I do not regard as having an important bearing on the relief pursued. I have carefully considered the submissions made by counsel and will focus on the core facts which I consider as being directly relevant to the resolution of the present disputes. As observed by Mimmie Chan J at Da Vinci (HK) Limited v Wong Chi Sun & Ors [2025] HKCFI 4140 §22, a judgment should not be a transcript or record of the evidence adduced, nor of the arguments made by the parties at the trial. 4.The facts 4.1The parties have helpfully provided a rather comprehensive Amended Agreed Chronology and an Agreed Dramatis Personae. In this section, I will set out the relevant facts largely chronologically, identifying the factual disputes and my findings thereon. Although the analysis is done chronologically, I have considered the evidence overall as a whole in reaching my findings. (i) The Plaintiff and its related parties 4.2The Plaintiff was incorporated on 28 March 2003 under its former name. On 22 September 2003, it was acquired by entities within what may loosely be described as the “Bel Trade Group”, namely Bel Trade Investment Holdings Limited (“Bel Trade”) and Sky Landmark Limited (“Sky Landmark”). The contemporaneous documents show that the letters sent by Bel Trade were printed on stationery with a “Bel Trade Group” logo and the correspondence with the Defendant originated from more than one entity within the Bel Trade Group. Whilst the shareholdings of the entities within the Bel Trade Group were not formally structured under a holding company, they were all related to the Sy family. Other entities within the Bel Trade Group included Noble Regal Limited (“Noble Regal”), Bel Trade Company Limited (“BTCL”) and Global Landmark Limited (“Global Landmark”)[9]. 4.3As set out in the Agreed Dramatis Personae (supplemented by the viva voce evidence):
(ii) The Defendant and its related parties 4.4In June 2000, the Defendant was incorporated in Hong Kong as a company limited by guarantee. Prior to entering into the LPA, the Plaintiff rented various premises as its worship centres in Hong Kong. The Defendant is the Hong Kong chapter of Jesus is Lord Church Worldwide (“JILCW”) based in the Philippines. 4.5As set out in the Agreed Dramatis Personae (as supplemented by the viva voce evidence):
(iii) Late 2002 to August 2003: Identification of the Property and initial discussions 4.6Sometime in 2002, Sy Senior was introduced to Mr Gerry T Vallo (“Brother Gerry”) through a Filipino congressman in Hong Kong. Brother Gerry was at that time a ministerial pastor of the Defendant's church in Hong Kong. I was told by Sy Senior that his connection to the Philippines stemmed from the facts that many of his relatives were located in the Philippines and he used to have businesses there. Bel Trade in fact entered into a transaction (also a lease purchase agreement) with the Filipino Consulate in Hong Kong in respect of the latter’s acquisition of its premises in United Centre, Admiralty. 4.7On 11 November 2002, Sy Senior had a meeting with Brother Gerry, Brother Eddie and his late wife (“Sister Dory”). At that time, given the growth in the size of its congregation, the Defendant was in need of a worship centre with larger capacity. As summarized in Bel Trade’s letter dated 12 November 2002, the meeting was to discuss the financial assistance to be offered by Bel Trade to the Defendant for the purpose of acquiring a property in Hong Kong (at that time identified to be a property also in United Centre, Admiralty):
4.8Thereafter, other properties were considered. For example, by a fax dated 22 January 2003 sent to Brother Gerry, Ahmed (on behalf of another entity called Bel Trade Holding and Investment Ltd) put forward a cinema located in Sham Shui Po for the Defendant’s consideration. 4.9By February 2003, the Property was identified. As recapped in a fax sent by Sy Senior (on behalf of Bel Trade) to the Defendant (addressed to Brother Gerry and copied to Brother Eddie) on 25 February 2003, there were discussions between Sy Senior and Brother Gerry on (1) the anticipated purchase price of the Property in the sum of HK$18 million, (2) the costs associated with the purchase, (3) the different financing options, (4) the transfer of the property holding company at the end of the lease purchase period and (5) the assurance by Bel Trade in passing on proportionate savings if the Property was purchased at a price lower than HK$18 million. 4.10Thereafter, until late August 2003, the parties were in discussion concerning the commercial terms. In particular, on 26 July 2003, Bel Trade proposed to the Defendant (addressed to Brother Eddie) certain terms for a lease purchase agreement and indicated that Bel Trade would proceed to purchase the Property upon agreement of the offered terms. 4.11On 11 August 2003, JILCW responded to Bel Trade (“11/8/03 Letter”) confirming that it accepted inter alia the following terms: (1) the term of the lease would be 144 months and (2) the consideration would be HK$18.5 million. 4.12The 11/8/03 Letter further counter-proposed the following terms: (1) interest rate of prime + 0.5% (as opposed to the offered rate of prime + 1 %), (2) two-month security deposit (as opposed to the offered term of 3 months) and (3) the initial deposit of HK$2 million would be payable in two equal instalments, the first upon the signing of the lease purchase agreement and the balance within 90 days from the first payment. 4.13On 31 August 2003, Mr Bryan Chua (“Bryan”) of Bel Trade circulated a monthly payment schedule which later became the Second Schedule annexed to the LPA, indicating a monthly payment of HK$156,778.41. (iv) September to early October 2003 4.14On 15 September 2003, the Plaintiff and the Defendant entered into an agreement bearing the title “Provisional Agreement for Lease and Purchase” (“Provisional Agreement”). The Provisional Agreement expressly stated that it was based on the 11/8/03 Letter and attached the payment schedule circulated on 31 August 2003. 4.15Although the Provisional Agreement was signed on 15 September 2003, it appears that a draft was circulated earlier. The Provisional Agreement specified the payment of an initial deposit of HK$2 million to be paid in two equal tranches, the first upon the signing of the agreement on or before 10 September 2003 and the second on or before the signing of the formal agreement on 10 November 2003. The first tranche of the initial deposit was eventually paid on 15 September 2003 (ie the date of the Provisional Agreement), not to the Plaintiff but to Bel Trade. This is because the Bel Trade Group only acquired the Plaintiff (under its former name) as a shelf company on 22 September 2003 after the execution of the Provisional Agreement and the Plaintiff’s name was changed to its current name of 30 September 2003. 4.16Under both the 11/8/03 Letter and the Provisional Agreement, there was no mention of any requirement to exercise of an option for the Property to be transferred to the Defendant. Sy Senior accepted that there was no discussion between the parties prior to September 2003 on the need to exercise an option to effect the transfer of the Property. 4.17There is a dispute whether the parties also executed another agreement bearing the title “Provisional Agreement for Lease with Option to Purchase” (“PA With Option”). It is the evidence of Ahmed and Sy Senior in their witness statements that, after the draft Provisional Agreement was circulated, the Plaintiff was told in early September 2003 that the Defendant had difficulty in paying the first deposit of HK$1 million by 10 September 2003. Therefore, on or about 12 September 2003, Bel Trade, concerned about the financial capability of the Defendant, proposed to the Defendant the PA With Option. After the Provisional Agreement was signed and the first tranche of the deposit paid, the Defendant thereafter again informed the Plaintiff that it had difficulty in meeting the second tranche. This allegedly led to a meeting with Brother Eddie in the Philippines in early October 2003 at which the PA With Option was revived. 4.18The Defendant has specifically issued a notice under RHC Order 27, rule 4 to challenge the authenticity of the PA With Option. 4.19I have no hesitation in rejecting the Plaintiff’s evidence on the PA With Option. First and foremost, the evidence given by Ahmed and Sy Senior in cross-examination was far from cogent. They were unable to give consistent evidence on the circumstances under which the PA With Option was purportedly signed by Brother Eddie, oscillating between Brother Eddie signing once (on 12 September 2003) or multiple times (signed again in October 2003) and at different locations (Hong Kong and the Philippines). Secondly, the reason for the Plaintiff proposing the PA With Option, namely that the Plaintiff had difficulty in paying the initial deposit is also inherently improbable. It is inherently improbable that the Defendant would have expressed on or around 10 September 2003 that it did not have the financial ability to meet the first tranche of the initial deposit, only to turn around days later (especially having purportedly signed the PA with Option) that it had the funds. Indeed, under Clause 2 of the PA With Option, the Defendant was required to pay the first tranche “forthwith”. It is therefore unclear how the signing of the PA With Option would alleviate the Defendant’s obligation to pay the first tranche of the initial deposit. 4.20The PA With Option, if signed on 12 September 2003, had to resurrected by reason of the entire agreement clause[10] in the Provisional Agreement indisputably signed on 15 September 2003. The “revival” of the PA With Option in early October 2003 is also inherently improbable. Under the Provisional Agreement, the second tranche was not due until 10 November 2003. As submitted by Mr Ho, it is incredible that the Defendant had already communicated to the Plaintiff in early October 2003 that it had financial difficulty in meeting the further deposit due much later, such that Sy Senior would somehow fly to the Philippines to specifically discuss and make minor handwritten amendments on the PA with Option, without Brother Eddie consulting either Attorney Virginia or Attorney Efren on the document. This is notwithstanding the fact that Plaintiff was not even able to give a consistent or reliable recollection of what actually took place in early October 2003. 4.21Mr Suen in closing did not seek to defend the PA With Option with enthusiasm. As Mr Suen put it in his closing submissions, the disagreement over the PA With Option is a peripheral issue, its apparent relevance being when the Option was first raised by the Plaintiff, the timing being relevant to the factual dispute on Sy’s Dec 2003 Assurances as it is the Defendant’s case that the Option was not discussed between the parties at an early stage. Were it otherwise, if the parties had discussed the Option already in September 2003, it is unlikely that Sy’s Dec 2003 Assurances were only given at the December 2003 Meeting as contended by the Defendant (and not at any other time). I agree with Mr Suen that the PA With Option is at best a peripheral issue, as there can be no doubt that the Defendant was made aware of the Option well before the execution of the LPA. 4.22I find as a fact that between September and 28 October 2003 (see below), only the Provisional Agreement was discussed and agreed between the parties and there was no discussion between the parties on the Option. I also find that LPA Clause 13[11] contains a typographical error, in that the date stated therein should be 15 September 2003[12]. 4.23Pertinently, on 15 October 2003, Global Landmark entered an agreement with the former owner to purchase the Property at a consideration of HK$14.5 million, well below the purchase price of HK$18.5 million stated in the Provisional Agreement. 4.24Further, on 18 October 2023, Sky Landmark, Noble Regal, Sy Senior, Brother Eddie and Sister Dory were appointed as directors of the Plaintiff. (v) Late October to mid December 2003 4.25On 28 October 2003, a draft “Agreement for Sub-Sale and Purchase” was circulated (“Draft LPA”). According to Attorney Virginia, she received the Draft LPA in October 2003 and she was tasked to review the Draft LPA. Sometime between November and early December 2003, Attorney Virginia delivered to Attorney Efren a copy of the draft LPA. Both Attorney Efren and Attorney Virginia made handwritten comments on the draft, including Attorney Efren’s handwritten comment “Take not [of this!]” against Clause 11, which was in materially the same terms as the Option Clause. 4.26On 19 November 2003, Attorney Virginia wrote to Bryan. Amongst other things, she stated that she appreciated Sy Senior’s gesture of extending the payment date of the second tranche of the initial deposit to 15 December 2003 (under the Provisional Agreement it was due on 10 November 2003). As canvassed below, I accept Attorney Virginia’s evidence that the deferment of the payment of the second installment was not by reason of the PA With Option but due to the Defendant requiring proof of ownership of the Property. 4.27By an email dated 12 December 2003 to Bryan, Attorney Virginia raised a number of comments on the Draft LPA. Significantly, there was no request for the deletion or amendment of Draft LPA Clause 11 (“12/12/03 Email”). 4.28Attorney Virginia in her evidence made it plain that prior to the execution of the LPA on 14 December 2003, she had already alerted Brother Eddie of the existence of the Draft LPA Clause 11. (vi) Meeting on 14 December 2003 and Sy’s Dec 2003 Assurances 4.29The main dispute between the parties is whether Sy’s 2003 Dec Assurances were given by Sy Senior at the meeting on 14 December 2003 (“December 2003 Meeting”) at which the LPA was signed by the parties. 4.30Although it is the Plaintiff’s pleaded case that the December 2003 Meeting did not take place, Sy Senior confirmed that it was an error. The December 2003 Meeting was held in Sy Senior’s office and attended at least by Ahmed, Sy Senior, Brother Eddie, Maria and Attorney Virginia. As observed by Mr Ho, the Plaintiff’s evidence is that Sy Senior and Ahmed were unable to recall precisely what happened at the December 2003 Meeting, but the general tenor of the Plaintiff’s evidence is that the December 2003 Meeting was a signing ceremony, a happy occasion at which there was no discussion of the LPA. Sy Senior was adamant that he did not give Sy’s Dec 2003 Assurances at the December 2003 Meeting. 4.31I am unable to accept the Plaintiff’s evidence that the December 2003 Meeting was effectively only a signing ceremony. I accept the Defendant’s evidence that there were discussions at the December 2003 Meeting on the terms of the LPA. The contemporaneous documents show that the LPA contained terms which were not in the Draft LPA and not previously discussed, not even in the 12/12/03 Email sent two days earlier. Significantly, the LPA contains a new clause 8(b), which provides:
4.32As a matter of record, the Property was only assigned by Global Landmark to the Plaintiff at the consideration of HK$18,500,000 on 27 February 2004, well after the commencement of the Lease Term. On the balance of probabilities, I find that the deferral of the payment of the second tranche of the initial deposit was not because of any alleged financial difficulty on the part of the Defendant, but because the Defendant was desirous of proof that the Property was in fact owned by the Plaintiff. 4.33However, my rejection of the Plaintiff’s evidence as to what transpired at the December 2003 Meeting does not mean that I should therefore accept the Defendant’s evidence that Sy’s Dec 2003 Assurances were given, particularly when the burden of showing that they were given rests on the Defendant. 4.34In this regard, it seems to me that significant weight should be attached to how the Defendant’s factual case has evolved over time. 4.35As pointed out by Mr Suen, these proceedings were commenced in October 2016, almost 13 years after the December 2003 Meeting. The case previously pleaded by the Defendant was that unbeknownst to the Defendant, the Option was included as a requirement in the LPA and sought rectification of the LPA. Those pleaded allegations have been abandoned by subsequent amendments. Prior to their abandonment, the pleaded allegations of mistake and rectification were the positions adopted in Brother Eddie’s first witness statement filed in March 2022. It was only in October 2022 that the Defendant filed contrary statements (viz Brother Eddie’s supplemental witness statement and Attorney Virginia’s first witness statement) putting forward its case on Sy’s Dec 2003 Assurances. 4.36It cannot be gainsaid that the Defendant’s previous case of mistake is factually inconsistent with and diametrically opposed to the current case premised on Sy’s Dec 2003 Assurances. Attorney Virginia accepted that she was involved in the preparation of the Defendant’s previous pleadings, and despite being told by her that the case on mistake was factually incorrect, Brother Eddie insisted and chose to advance the case on mistake in his first witness statement. Both Brother Eddie and Attorney Virginia blamed the Defendant’s former legal team. 4.37I have considered Mr Ho’s valiant attempt in salvaging this part of the Defendant’s case. He pointed out that it is plain from the evidence adduced that Brother Eddie and Attorney Virginia held different views, and effectively invited me to accept the evidence given by Attorney Virginia and Brother Eddie in his supplemental witness statement, notwithstanding the contradictory case set out in Brother Eddie’s first witness statement. I have also considered Mr Ho’s submission that were I to reject the Plaintiff’s case that Brother Eddie had agreed to the PA With Option (as I have), the inherent probabilities are that Sy Senior would have given Sy’s Dec 2003 Assurances. He submitted that the inherent probabilities are that Brother Eddie would have questioned the Option Clause at the December 2003 Meeting and Sy Senior would have been anxious to close the deal as by then Global Landmark had already entered into a binding commitment to purchase the Property. 4.38I am unable to accept Mr Ho’s submissions for the following reasons. 4.39First, in addition to the principles applicable to the exercise of fact-finding cited above, Northampton BC v Cardoza [2019] BCC 582 §37 sets out the factors relevant to the evaluation of a witness’s evidence which include: evasive and argumentative answers, tangential speeches avoiding the question, blaming legal advisers for pleading, self-contradiction, internal inconsistency, shifting case, and new evidence. In my view, the foregoing factors apply here and adversely affect the cogency of the explanation proffered by Brother Eddie and Attorney Virginia for the change from the Defendant’s previous case of mistake to the current one premised on Sy’s Dec 2003 Assurances. 4.40Secondly, and related to the above, Brother Eddie in his supplemental witness statement (at §§47-49) stated that having read Attorney Virginia’s witness statement, he agreed with her description of what transpired at the December 2003 Meeting. In Attorney Virginia’s witness statement (at §63), she claimed to be able to “vividly remember” Sy Senior giving Sy’s Dec 2003 Assurances. Attorney Virginia did not point to any documentary evidence which would have “refreshed” her memory on an event which happened almost 19 years ago. 4.41Thirdly, as noted above, in the 12/12/03 Email, despite the fact that Attorney Efren had already commented on Draft LPA Clause 11, Attorney Virginia did not share with the Plaintiff in writing the Defendant’s concern in writing regarding the Option, especially when she was of the view that the Option Clause should be removed altogether. The comments set out in the 12/12/03 Email were not cosmetic in nature and reference was in fact made to the Option (at point 9 thereof), in that Draft LPA Clause 8 (delivery of possession of the Premises by the Defendant upon the expiry of the Lease Term) should be deleted as the Defendant had the Option to purchase the property. Contrary to expressing any concern over the Option, Attorney Virginia’s comment appears to acknowledge and accept the Option. I accept Mr Suen’s submission that Attorney Virginia was unable to offer any good reason why she would not mention the Defendant’s concern in writing at an earlier stage but simply decided to remind Brother Eddie to discuss the matter with Sy Senior at the December 2003 Meeting. 4.42Fourthly, I do not agree with Mr Ho that the inherent probabilities are stacked in favour of the Defendant. It is also inherently probable that no concern was raised because the Defendant did not envisage any difficulties in complying with the Option Clause. On the Defendant’s own case, it was always envisaged that the Property would be paid for by the 144 payments, such that the Option Consideration would be nominal. 4.43For the above reasons, I do not accept the Defendant’s evidence. I find as a fact that Sy Senior did not give Sy’s Dec 2003 Assurances at the December 2003 Meeting. (vii) January 2004 to 2013 4.44The events which transpired during this period are generally uncontroversial. 4.45During this period (if not earlier), Brother Eddie and Sy Senior had developed a close friendship. 4.46The LPA was not registered at the Land Registry. 4.47The Plaintiff entered into two mortgages in respect of the Property and executed rental assignments, first in favour of Dah Sing Bank (discharged on 4 January 2006) and subsequently Wing Hang Bank. 4.48The Defendant spent approximately HK$9.5 million in renovating the Property, engaging a contractor recommended by Bel Trade. 4.49Significantly, on 3 May 2013, Maria had informed Mr Danny Ng (“Danny”) regarding the Defendant’s change of address from Wanchai (“Old Address”) to the Property. Danny was the supervisor of Bel Trade and responsible for issuing monthly receipts on behalf of Bel Trade and the Plaintiff. (viii) 2014 to Mid 2015 4.50There are a number of significant events during this period, including (1) Sy Senior’s resignation as director of the Plaintiff and his bankruptcy, (2) the alleged removal of Brother Eddie and Sister Dory as directors of the Plaintiff, (3) the Plaintiff mortgaging the Property to obtain a loan from Lei Shing Hong Credit Limited (“LSH”) and (4) the legal proceedings commenced by the Department of Foreign Affairs against Bel Trade in respect of the Filipino Consulate’s property in the United Centre (“Consulate Litigation”). (a) Sy Senior’s resignation and bankruptcy 4.51On 26 March 2014, a board meeting of the Plaintiff was purportedly held at Bel Trade’s office in Hong Kong approving Sy Senior’s resignation and the appointment of Ms Sy Wai Shan Sandy (“Sandy”) as director. The minute of that meeting records that (1) Sy Senior chaired the meeting, (2) Brother Eddie and Sister Dory attended the meeting and (3) Brother Eddie and Sister Dory signed the minute (“Impugned Minute”). Sandy is Sy Senior’s daughter. 4.52As Sy Senior explained, his resignation as a director of the Plaintiff was in anticipation of his bankruptcy, which happened less than two months later on 9 May 2014. 4.53In his first witness statement (at §78), Brother Eddie said that he “came to be aware that on or about 26 March 2014 that Sy Senior resigned as a director of the Plaintiff”. In his supplemental statement (at §§60-61), he corrected his evidence and stated that he in fact did not learn about Sy Senior’s resignation or had sight of the Impugned Minute until after the commencement of these proceedings. 4.54The Defendant has issued a notice pursuant RHC Order 27, rule 4 to challenge the authenticity of the Impugned Minute. 4.55The Plaintiff’s witnesses were unable to provide a satisfactory explanation as to how the Impugned Minute with the signatures of Brother Eddie and Sister Dory came into existence and Mr Suen in closing did not attempt to reconcile the contradictory evidence given by Sy Senior and Sunny. 4.56I have no difficulty in finding against the authenticity of the Impugned Minute (insofar as it is alleged by the Plaintiff that Brother Eddie and Sister Doy had signed the Impugned Minute) for the following reasons.
4.57The next question is, on the basis that neither Brother Eddie nor Sister Dory played any part in approving the resolution of Sy Senior’s resignation (as I have so found), whether the Defendant was otherwise made aware of Sy Senior’s resignation and bankruptcy. 4.58On the evidence, the answer is plainly no. Sy Senior accepted that he never told Brother Eddie that he was no longer a director of the Plaintiff or that Brother Eddie should contact someone else as regards matters relating to the Plaintiff. Sandy’s appointment as director was short-lived. According to Sunny, Sandy was reluctant to be appointed and did not even familiarize herself with the Plaintiff’s affairs. She resigned on 15 May 2015, at the same time when Sunny was appointed. Sunny himself admitted that he had never met anyone from the Defendant. 4.59Against the above evidence, Mr Suen in closing was driven to contend that the Defendant had acquired constructive knowledge through the public records (ie obtaining the relevant ND2A recording Sy Senior’s resignation from the Companies Registry or conducting a bankruptcy search). No reason was proffered by Mr Suen as to why such steps ought reasonably to have been taken. Additionally, Mr Suen relies on Danny’s email to Maria on 18 September 2014 requesting Brother Eddie and Sister Dory to sign certain minutes in which Sy Senior was not listed as a director. Mr Suen contended that it was clear from the draft minutes sent to Maria, Brother Eddie and Sister Dory that Sy Senior was no longer listed as a director. I am unable to accept Mr Suen’s submissions. The relevant minutes were entirely administrative (resolving auditor’s remuneration of HK$4,500). I accept the Defendant’s evidence that it would not have known from the draft minutes that Sy Senior was no longer a director. In any event, I note that the draft minutes were couched in terms of a physical board meeting and the resolution could have been passed by a majority present without exhaustive listing all the directors. 4.60A further question is how Sy Senior conducted himself notwithstanding his resignation and bankruptcy. As pointed out by Mr Ho, even the Plaintiff’s own evidence, especially Ahmed’s, makes it clear that Sy Senior was still very much involved as the boss within the Bel Trade Group whom Ahmed was reporting to at least up to 2021. Sy Senior himself accepted that he was involved in the Consulate Litigation which according to Ahmed was only resolved at the end of 2014 or early 2015. On Sy Senior’s own evidence, even after his resignation as the Plaintiff’s director and his bankruptcy, he discussed with Brother Eddie about a business opportunity in growing durian in the Philippines and a proposal for training domestic helpers and nurses in the Philippines for the Hong Kong market. As submitted by Mr Ho, in the circumstances of Sy Senior’s continual discussions of business with Brother Eddie, Brother Eddie would have little suspicion that Sy Senior has retired from doing business for Bel Trade Group or that Sy Senior was made bankrupt. 4.61For the above reasons, I find against the authenticity of the Impugned Minute. I further find that (1) prior to the commencement of these proceedings, the Defendant (especially Brother Eddie) did not have actual knowledge of Sy Senior’s resignation as a director of the Plaintiff or his bankruptcy, (2) there was no attempt on the Plaintiff’s part to bring the same to the Defendant’s notice and (c) there were no factual circumstances (and Mr Suen did not suggest any) to invoke the application of constructive notice (and as a corollary there were no factual circumstances which would have given rise to a duty on the part of the Defendant to inquire into Sy Senior’s resignation or bankruptcy from the public records). (b) Removal of Brother Eddie and Sister Dory/Loan from LSH 4.62On 26 February 2015, the legal charge and rental assignment in favour of Wing Hang Bank were released and discharged. The Property became unencumbered. 4.63Prior to Sunny being appointed as a director on 15 May 2015, he (on behalf of the Plaintiff) had already approached LSH to obtain a loan. LSH issued a letter dated 7 May 2015 to the Plaintiff (for Sunny’s attention), by which LSH granted to the Plaintiff a general credit facility in the sum of HK$30,000,000 (“LSH Loan”) for a term of one year. 4.64After Sunny’s appointment as a director of the Plaintiff on 15 May 2015, the Plaintiff issued a notice for an EGM to be held on 17 June 2015 to vote on the resolution to remove Brother Eddie and Sister Dory as directors of the Plaintiff. The notice was sent to the Old Address, and it is Brother Eddie’s evidence that he and Sister Dory never received the EGM notice. 4.65I am not required to decide whether the EGM was validly held. Instead, the following matters are pertinent, the relevant context being that the LSH Loan obtained at a time which was only months away from the end of the Lease Term:
4.66Despite Sunny’s evidence to the contrary (which is again no more than a bare allegation), I find as a fact that the Defendant was not made aware of the LSH Loan, despite the fact that it was granted before Brother Eddie and Sister Dory were removed as directors of the Plaintiff. 4.67It is true that the Defendant has not challenged the authenticity of the loan documents relating to the Genuine Idea Loan. However, on the evidence, I am far from being satisfied that Genuine Idea was in fact able to advance the loan of HK$32,000,000. (c) The Consulate Litigation 4.68As reported in a news article dated 20 July 2015, the Department of Foreign Affairs in Manila issued a writ in the High Court on 2 June 2015 against Bel Trade, demanding Bel Trade to forthwith transfer and assign the property in United Centre. 4.69The relevance of this event is that, according to the Defendant’s evidence, it provided the impetus to serve the Written Notices to Sy Senior at the 20/10/15 Meeting. (ix) The 20/10/15 Meeting 4.70I now come to the core factual dispute between the parties, namely whether the Defendant took steps to exercise the Option by serving the Written Notices. Two competing case theories were advanced in closing. 4.71On behalf of the Defendant, Mr Ho submitted that the overwhelming probability was that the Written Notices were given to Sy Senior at the 20/10/15 Meeting. The Defendant had over the Lease Term faithfully paid to the Plaintiff the monthly payments under the LPA for the ultimate goal of acquiring ownership of the Property. Given that the Option Consideration payable was only HK$1, there was no good commercial or factual reason why the Defendant would not carry out the necessary (administrative) steps to protect its own interests to obtain the title to the Property. The fact that the Option Consideration was only tendered in late March 2016, Mr Ho submitted, can only be explained by the pleaded representations made by Sy Senior at the 20/10/15 Meeting (“October 2015 Representations”), namely: (1) Sy Senior and/or the Plaintiff needed more time to execute the completion of sale because of financial problems, (2) his chief of staff had "swindled him" of large sums of money but that he did not want to go into the details of his predicament and (3) since it was only October 2015 and the end of the Lease Term was in December 2015, he could use the remaining time to fix the financial situation before complying with the LPA ie assigning and transferring the legal title to the Premises to the Defendant. 4.72Conversely, on behalf of the Plaintiff, Mr Suen emphasized that the present case should not be about sympathy but whether the Defendant had done its part under the LPA to exercise the Option validly. Whilst the Plaintiff accepts that the 20/10/15 Meeting took place, the Plaintiff’s pleaded case is that the Written Notices were not served on Sy Senior at the meeting. He submitted that, on the evidence, by the Defendant’s own inadvertence (or reason beyond the Plaintiff’s knowledge), the Defendant “sleepwalked” past the contractual requirements for the proper exercise of the Option, in that it failed to comply with the Notice Requirement before 14 December 2015 (ie the end of the Lease Term) and only followed up with the Plaintiff about the Option in January 2016, by which time it was too late to take any remedial action to exercise the Option (“Sleepwalk Theory”). 4.73It bears (re)emphasis that where, as is plain from the earlier parts of this judgment, I have formed the view that none of the witnesses is so reliable that I can accept his/her evidence in full, the evidence on each contentious topic has to be assessed with care and with reference to the other evidence and overall probabilities. As a general observation, it is fair to say that the Plaintiff’s evidence on the exercise of the Option is evasive whilst there are inconsistencies in various aspects of the Defendant’s evidence and a lack of documentary evidence to support how and when the Written Notices were prepared by Attorney Virginia and signed by Brother Eddie and Sister Dory. 4.74There are two Written Notices in identical terms, one signed by Brother Eddie and the other by Sister Dory. They are in the following terms:
(a) The parties’ arguments on RHC Order 27, rule 4 4.75An important issue to the resolution of the factual dispute is whether the Plaintiff is permitted to challenge the authenticity of the Written Notices, there being no dispute that the Plaintiff did not serve a notice of non-admission to challenge the authenticity of the Written Notices was not admitted. 4.76RHC Order, 27 rule 4 provides:
4.77As set out at Note 27/4/1 of Hong Kong Civil Procedure 2026:
4.78Mr Suen referred to Hu Lan v David Golden [2024] 1 HKLRD 1252 (“Hu Lan (CA)”):
4.79Mr Suen submitted that it has always been the Plaintiff’s case that the Written Notices were never given to the Plaintiff. Whilst the Plaintiff has not formally served a notice of non-admission in respect of them, the court should exercise its discretion to release the Plaintiff from the deemed admission (insofar as the Defendant says they were prepared contemporaneously), particularly as the Defendant would not be prejudiced as it has dealt with such factual issues in the witness statement. He further submitted that the Plaintiff could not have pleaded a positive case to the authenticity of the Written Notices and the Defendant could hardly have expected the Plaintiff to admit the authenticity of the Written Notices, given Sy Senior’s evidence that he never saw the Written Notices. 4.80I am unable to accept Mr Suen’s submissions for the following reasons.
4.81For the above reasons, I decline to exercise my discretion to release the Plaintiff from its deemed admission of the authenticity of the Written Notices. (b) The Written Notices 4.82In case I am wrong on my determination on the RHC Order 27, rule 4 issue, I set out my findings on the evidence. 4.83The evidence of Brother Eddie, Maria, Cristeta and Attorney Virginia may be summarized as follows:
4.84In addition to the inconsistencies identified above, Mr Suen further relies on a host of matters to attack the cogency of the Defendant’s evidence, the more salient ones are set out below. 4.85First, on the documentary evidence, Sy Senior by email dated 17 October 2015 (Saturday) informed Brother Eddie that he was in Manila to join a wedding party on the next day and asked to catch up with him. On 18 October 2015 (Sunday), Brother Eddie replied Sy Senior that they could meet the following evening (Monday) at JILCW’s new office in Ortigas Centre. On 19 October 2015, Sy Senior informed Brother Eddie that he could not meet for dinner and suggested lunch on Tuesday. Later the same day, Brother Eddie then confirmed to meet at lunchtime on Tuesday (ie the 20/10/15 Meeting). Mr Suen submitted that given the short notice at which the 20/10/15 Meeting was organized, it was doubtful that Brother Eddie did immediately inform Attorney Virginia (or Maria who then informed Attorney Virginia) who then had to prepare the Written Notices at extreme short notice, given that the Lease Term was still some time down the road. 4.86Secondly, the above point is a fortiori since, on the documentary evidence, it was only on 18 November 2015 that Maria emailed a copy of the LPA to Attorney Virginia. 4.87Thirdly, Mr Suen attacked Attorney Virginia’s evidence on the logistics of the preparation and signing of the Written Notices, pointing out the discrepancies in the number of copies made in relation to the version respectively signed by Sister Dory (2 copies) and Brother Eddie (5 copies). 4.88Fourthly, Mr Suen pointed out that the Defendant has adduced no documentary evidence as to how the Written Notices were prepared. He pointed out where it is Attorney Virginia’s evidence that she had emailed the (unsigned) Written Notices to Brother Eddie, the said email has not been adduced into evidence. 4.89Fifthly, it was inherently improbable that Maria took no part in the preparation of the Written Notices given that Maria was the Defendant’s director handling matters relating to the LPA such as payments. 4.90Sixthly, if, as alleged by the Defendant (see further below), Sy Senior was reluctant to keep the Written Notices at the 20/10/15 Meeting, there was no reason for the Defendant did not follow up by emailing the Written Notices to Sy Senior to put things beyond doubt, in which case a paper trail of the service of the Written Notices would have been created. 4.91Seventhly, as confirmed by Maria, the Defendant’s office in Hong Kong did not even receive a copy of the signed Written Notices (whether by fax, email or post) and she had not seen the signed Written Notices at the material time. 4.92For all the above (and other more peripheral) reasons, Mr Suen invited the court to find that the Written Notices were not prepared contemporaneously (ie as stated in the Written Notices on or before 20 October 2015). 4.93I am not persuaded by Mr Suen for the following reasons. 4.94Whilst I acknowledge that Mr Suen was able to “score” a number of points in cross-examination in terms of inconsistencies in the details, the Defendant’s overall evidence on the Written Notices has remained consistent. Unlike the Defendant’s change of case relating to the belated formulation of Sy’s Dec 2003 Assurances, the case on the Written Notices was pleaded even in the original defence and maintained in the witness statements. 4.95I do not regard the inconsistencies in the details have the effect of outweighing the overall probabilities. The effect of the Plaintiff’s evidence, if believed, is that not only did the Defendant not comply with the Notice Requirement by serving the Written Notices, the Sleepwalk Theory necessarily entails a factual finding that the Defendant never contacted the Plaintiff at all regarding the transfer of the Premises before the end of the Lease Term. I am unable to accept that the Sleepwalk Theory is inherently probable. 4.96On the balance of probabilities, the Consulate Litigation, which was reported in the news, would have come to the notice of the Defendant. The subject matter of the Consulate Litigation was not merely a commercial dispute, but was concerned with the office premises of the Filipino Consulate which affected the entire Filipino community in Hong Kong. Once it came to the Defendant’s attention that Bel Trade was sued for failing to transfer the relevant property to the Filipino Consulate, it is unreal to suggest that the Defendant was not alarmed, given that the Lease Term was to expire in the near future and it had faithfully complied with its payment obligations under the LPA for more than 11 years. As will be detailed below, the Defendant was plainly aware that the Lease Term was expiring. 4.97Mr Suen emphasized that the contemporaneous documents only show internal discussions between Maria and Attorney Virginia which took place after the 20/10/15 Meeting. As a matter of timing, Mr Suen is correct. But I do not believe his criticisms are valid in that the Sleepwalk Theory is thereby supported:
4.98Thirdly, and related to the above, I need to put the Plaintiff’s evidence on the scale. The above “inconsistencies” have to be weighed against the evasiveness of the Plaintiffs evidence. It was not until his viva voce evidence that Sy Senior accepted that he attended the 20/10/15 Meeting. His evidence was that at the meeting, nothing about the imminent expiry of the Lease Term was discussed, and by then it was none of his business. I find this to be an entirely implausible scenario, especially given (1) the existence of the Consulate Litigation, (2) Sy Senior’s own evidence that he never told Brother Eddie about his resignation as a director of the Plaintiff and (3) Sy Senior’s own evidence that he did discuss other business opportunities with Brother Eddie. 4.99For the above reasons, whether by reason of my determination on the RHC Order 24, rule 7 issue or by reason of the above analysis of the evidence, I find that the Written Notices were prepared and executed as stated in the documents. (c) What transpired at the 20/10/15 Meeting 4.100Mr Suen relied on a number of the matters to question whether the Written Notices were served on Sy Senior at the 20/10/15 Meeting, the more salient ones are as follows[13]:
4.101Given my findings on the authenticity of the Written Notices, I accept Mr Ho's submission that the overwhelming probability is that they were served on Sy Senior. In relation to the matters relied on by Mr Suen:
4.102I find, as a matter of fact, that the Written Notices were served on Sy Senior’s at the 20/10/15 Meeting. It is also inherently probable that the October 2015 Representations were made by Sy Senior, as contended by Brother Eddie:
4.103I further accept Brother Eddie’s evidence that, upon Sy Senior making the October 2015 Representations, by reason of his close friendship with Sy Senior, he decided not to press the transfer of the Property at the expiry of the Lease Term and he so told Sy Senior. I also accept Bother Eddie’s evidence that Sy Senior initially asked to return the Written Notices but Sy Senior eventually kept them. 4.104Indeed, the Plaintiff’s (in)action at the material time was entirely consistent with the above matters. Following the expiry of the Lease Term, and on the Plaintiff’s case the Option had not been exercised, Sunny contemporaneously did not cause the Plaintiff to return the Security Deposit to the Defendant, did not cause the Plaintiff to ask the Defendant to vacate the Premises and did not ask for payment from the Defendant for its continued occupation of the Property. The Plaintiff’s (in)action is particularly inexplicable, because it is Sunny’s evidence that he took the view at the latest in December 2015 that the Defendant could no longer exercise the Option. It was only on 29 September 2016 that the Plaintiff’s solicitors issued a letter to the Defendant’s solicitors demanding the Defendant to vacate the Property, but that was only after the Defendant made searching enquiries on the legitimacy of the removal of Brother Eddie and Sister Dory as directors of the Plaintiff and the legitimacy of the LSH Loan. 4.105Additionally, I accept Mr Ho’s submissions that, as a matter of inherent probabilities, the making of October 2015 Representations is the only believable explanation for the lack of urgency demonstrated by the Defendant from October 2015 onwards until it ran out of patience after a meeting in early March 2016, whereupon the Option Consideration was tendered in late March 2016. (x) Events after the 20/10/15 Meeting 4.106According to the travel records, Brother Eddie was in Hong Kong between (1) 31 October to 4 November 2015 and (2) 19 to 22 December 2015. There is no evidence from the Defendant that it contacted the Plaintiff to take steps in exercising the Option. 4.107I have already set out above the salient documentary evidence on the exchanges between Maria and Attorney Virginia between the final payment under the LPA in mid-November 2015 and Attorney Virginia’s advice given on 28 December 2015 that a “deed of absolute sale” was required from the Plaintiff. 4.108The documentary evidence shows that Maria prepared a letter dated 14 December 2015 (“December 2015 Letter”) and she and Cristeta signed a cheque also dated 14 December 2015 in the sum of HK$1 for payment of the Option Consideration (“Cheque”). It is common ground between the parties that the December 2015 Letter and the Cheque were only sent to the Plaintiff at the end of March 2016 and received by the Plaintiff on 1 April 2016. It is the Defendant’s evidence that the December 2015 Letter and the Cheque were prepared on or about 14 December 2015. The December 2015 Letter stated as follows:
4.109Although the Plaintiff did not issue a notice of non-admission challenging the authenticity of the December 2015 Letter and the Cheque, it did make an application for specific discovery for the Defendant’s cheque books. What is revealed is that the Cheque (numbered 504697) was the 7th cheque in the relevant cheque book and the preceding 6 cheques were all dated 26 February 2016, and therefore, the inherent probability is that the Cheque was prepared on or after 26 February 2016. Both Maria and Cristeta filed additional witness statements to deal with issue. In these circumstances, I exercise my discretion to release the Plaintiff from the deemed admission. 4.110Having considered the evidence of Maria and Cristeta, I am not satisfied that the December 2015 Letter was prepared by Maria and the Cheque signed by Maria and Cristeta on or before 14 December 2015. As I understand Mr Ho, he did not enthusiastically vouch for Maria and Cristeta’s evidence but submitted that, in view of the common ground that the December 2015 Letter and Cheque were only tendered in late March 2016, the issue of whether they were prepared on or before 14 December 2015 was a peripheral issue and a red herring. Mr Suen unsurprisingly disagreed. He submitted that this lent support that the Written Notices were similarly not prepared contemporaneously. 4.111I do not agree with Mr Suen. Even if the December 2015 Letter and the Cheque were prepared on or after 26 February 2016, it is entirely consistent with the Defendant’s overall evidence, as elaborated further below. 4.112The next documentary evidence in time is an email dated 6 January 2016 from Maria to Danny in the following terms:
4.113Danny replied on the same day:
4.114Three points are immediately of note. First, the timing of Maria’s email is entirely consistent with the October 2015 Representations, namely Sy Senior had told Brother Eddie that he required more time to transfer the Property because of financial problems. As there was no feedback from the Plaintiff and December 2015 had passed, Brother Eddie then asked Maria to and Maira did follow up with the Plaintiff in respect of the transfer of the Property. Secondly, where it is the Plaintiff’s case that Sy Senior took no part in the affairs of the Bel Trade Group after his resignations as director and bankruptcy, Danny did not direct Maria to the person in charge, namely Sunny. Thirdly, given it was Sunny’s position that he formed the view at the latest in December 2015 that the Defendant was no longer entitled to exercise the Option, Danny did not inform Maria that the Defendant should vacate the Premises. 4.115After waiting for about a week, on 13 January 2016, Maria sent another email to Danny in the following terms:
4.116There was no response from the Plaintiff. In the meantime, on 25 January 2016, the LSH Loan was further drawn down and the facility limit of HK$30 million was reached. 4.117As there was no response, Maria sent another email to Danny on 17 February 2016 in the following terns:
4.118There was no immediate response from Danny. On 26 February 2016, Maria sent a Whatsapp message to Danny chasing for a response. Danny told Maria that she “may call Mr Ahmed at [phone number] to ask the details”. This coincides with what is the likely timing of the preparation of the Cheque (see above). On the balance of probabilities. The December 2015 Letter and the Cheque were prepared after Danny’s Whatsapp message to Maria. 4.119According to the travel records of Sy Senior, he was in the Philippines on 1 March 2016. As shown in the email from Maria to one Ms Maritess Reyes dated 1 March 2016, Maria requested Maritess to print out a copy of the LPA as Brother Eddie and Rene were meeting Sy Senior (“March 2016 Meeting”). It is Sy Senior’s evidence that he did not recall attending the March 2016 Meeting. Conversely, it is the Defendant’s evidence that, at the meeting, Sy Senior refused to sign a “deed of absolute sale” (“March 2016 Deed”) for the transfer of the Property. I accept the Defendant’s evidence. 4.120On 31 March 2016, the Defendant posted the December 2015 Letter and the Cheque to the Plaintiff. 4.121Pausing here, it is plain from the above chronology that after the last payment by the Defendant under the LPA on 19 November 2015, the Plaintiff did absolutely nothing to put itself in the position to transfer the Property to the Defendant. The Plaintiff was fully aware that the Defendant had performed the payment obligations under the LPA, having paid in excess of HK$23 million over 144 payments. On Sunny’s own evidence, he never contacted anyone from the Defendant, but conducted himself solely on the basis that a written notice was not served by registered post at the Plaintiff’s registered office. When the Defendant made the last payment on 19 November 2015, he did not utilize the Genuine Idea Loan to pay off the LSH Loan (obtained surreptitiously without the Defendant’s knowledge) then already drawn down (by then HK24 million of the HK$30 million limit), but having formed the view that as there was no written notice by registered post, he continued to draw down the LSH Loan on 2 December 2015 and 25 January 2016. All of the Plaintiff’s actions are sought to be justified by its factual case that the Written Notices were not served on Sy Senior at the 20/10/15 Meeting which I have found against. 4.122I should specifically mention that I do not believe Sunny’s evidence he had the ability to repay the LSH Loan after the draw downs. I have already observed that no evidence has been adduced on Genuine Idea’s ability to advance HK432,000,000 to Sunny. Moreover, the Genuine Idea Loan was secured by a corporate guarantor, namely Multi-Millionaire Investments Limited with the same registered office address of the Plaintiff. There is no evidence to show that the guarantor is an entity of financial substance. 4.123Returning to the chronology, on 24 June 2016, the Defendant registered the LPA at the Lands Registry. As noted above, from July 2016 onwards there were exchanges between the solicitors of LSH and the Plaintiff[14] and the former solicitors on the legitimacy of the LSH Loan and the removal of Brother Eddie and Sister Dory as directors of the Plaintiff. Attorney Virginia’s statutory declaration was registered at the Lands Registry on 11 August 2016. It was only on 29 September 2016 that the Plaintiff demanded the Defendant to deliver vacant possession of the Property. 5.Analysis of D’s Primary Case 5.1I now proceed to analyze D’s Primary Case. Based on the above factual findings, two questions arise as to whether the Defendant had validly exercised the Option: (1) whether the service of the Written Notices on Sy Senior at the 20/10/15 Meeting complied with the Notice Requirement and (2) whether the tender of the Cheque in late March 2016 complied with LPA Clause 12. The first question revolves around whether (as contended by the Plaintiff) Sy Senior by reason of his resignation as director and bankruptcy he no longer had authority to represent the Plaintiff. (i) Authority of Sy Senior 5.2Mr Ho relied on the following legal propositions on Sy Senior’s continued apparent authority to act on behalf of the Plaintiff notwithstanding his resignation as director and bankruptcy. 5.3First, he referred to Bowstead and Reynolds on Agency, 23rd Ed §§10-031 and 10-32:
5.4Secondly, he cited SEB Trygg Liv Holding AB v Manches and Ors [2006] 1 WLR 2276:
5.5I do not understand Mr Suen to have disagreed with the propositions underlined above. 5.6In the earlier part of this judgment, I have already found that Sy Senior was the central figure and the primary decision maker in the Bel Trade Group before his resignation as director and bankruptcy, and notwithstanding his resignation and bankruptcy: (1) internally, staff such as Ahmed continued to report to Sy Senior, (2) externally, Sy Senior continued to discuss matters relating to business with Brother Eddie. 5.7I have also (1) specifically found that, on Sy Senior’s own evidence, he never told Brother Eddie about the resignation and (2) accepted Brother Eddie’s evidence (despite the change in evidence) that Brother Eddie did not know about Sy Senior’s resignation as director and bankruptcy until after the commencement of these proceedings. 5.8There is no suggestion by the Plaintiff that the receipt of the Written Notices was a transaction to which the scope of apparent authority is not applicable. Given the analysis thus far, it is entirely unsurprising that Mr Suen was driven to rely heavily on constructive notice. In my view, the Plaintiff can derive no assistance from this argument. I have earlier found that there were no factual circumstances to invoke the application of constructive notice (and as a corollary there were no factual circumstances which would give rise to a duty on the part of the Defendant to inquire into Sy Senior’s resignation or bankruptcy from the public records). 5.9I refer to LT v RV [2026] HKCFI 1280. The issues of constructive notice and duty to inquire as to agent’s authority are discussed by reference to PT Asuransi Tugu Indonesia TBK v Citibank NA (2023) 26 HKCFAR 1:
5.10As observed earlier in this judgment, Mr Suen in his closing submissions simply invoked the application of constructive notice, without identifying any factual circumstances to support the contention that there were matters known to Brother Eddie which ought to have put the Defendant on inquiry. 5.11For the above reasons, I find that Sy Senior had the apparent authority to receive the Written Notices at the 20/10/15 Meeting. (ii) The parties’ obligations under the LPA 5.12I have already set out the terms of LPA Clauses 11 and 12 above. There is no real disagreement between counsel that the principles applicable to construction of contractual terms are those set out in Eminent Investments (Asia Pacific) Ltd v DIO Corp (2020) 23 HKCFAR 487 §§42-46. 5.13In relation to the Notice Requirement, I have already found that (1) the Written Notices were served on Sy Senior at the 20/10/15 Meeting, (2) Sy Senior was clothed with apparent authority to receive the Written Notices and (3) where LPA Clause 7(f) is only a deeming provision, it does not, as contended in the Plaintiff’s pleaded case, prevent personal service of the Written Notices. 5.14The remaining issue is whether the service on 20 October 2015 is permissible under the LPA. 5.15Mr Suen initially argued that any written notice under LPA Clause 12 could only be given after the Defendant had complied with conditions laid down in LPA Clause 11, namely the due performance of the Lease Term “by paying the rent in full and punctually and observing the terms and conditions herein contained and subject conditional precedent upon the Tenant duly completing the 12 year term of the tenancy”. He reasoned that under LPA Clause 11, the Option would only be granted after the foregoing conditions were satisfied. Therefore the Written Notices, served at the 20/10/15 Meeting prior to the last payment, were premature. 5.16I think in fairness, Mr Suen no longer pursued the above argument in closing. The position set out at his reply written closing submissions §6 aligned with the position advocated by Mr Ho, namely that the Defendant could give written notice before full compliance with the conditions set out at LPA Clause11, but the written notice would not take effect until all the obligations were met. In my view, the foregoing is a correct position. There is nothing in the language of the LPA which would prevent the giving of a written notice before the compliance of the conditions set out in LPA Clause 11. The only requirement, as set out at LPA Clause 12 is that written notice should be given before the expiry the Lease Term. 5.17I am therefore satisfied that the Notice Requirement had been complied with. 5.18The next question is, after the Notice Requirement had been complied with, what were the rest of the obligations imposed upon the parties by LPA Clause 12. Mr Suen initially contended that, in effect, all of the obligations were at first instance upon the Defendant. He argued that, on a proper construction, “completion of the sale of the Premises” had to take place upon the expiry of the Lease Term and the Option Consideration had to be paid by the Defendant by the end of the Lease Term, namely 14 December 2015, and it was only upon the payment of the Option Consideration that the Plaintiff was obliged to transfer the Premises to the Defendant. He argued that completion had to take place at the expiry of the Lease Term, as otherwise there would be a lacuna, in that there would be a period for which the LPA made provision for rental payment. He therefore submitted that the tender of the Option Consideration in late March 2016 was out of time and the Option had lapsed. 5.19I am unable to accept Mr Suen’s submissions. 5.20First, in relation to the timing of the completion of the transfer of the Property, Mr Suen’s argument that it should take place at or before the expiry of the Lease Term is an affront to the language of LPA Clause 12, which provides expressly that the completion of the transfer would take place upon the expiry of the notice, not upon the expiry of the Lease Term. 5.21In any event, as has been pointed out by Mr Ho, Griffith v Pelton [1958] 1 Ch 205 at pages 229 to 230 is an authority for the proposition that there is no inconsistency between a condition to pay rent up to the end of the term and the expiry of an option notice at a later date:
5.22Secondly, I do not accept Mr Suen’s submission that the obligations were all at first instance imposed upon the Defendant, in that the Defendant had to first pay the Option Consideration at or before the expiry of the Written Notices before the Plaintiff came under the obligation to transfer the Property. In all fairness, the argument that all obligations were at first instance on the Defendant was not an argument that Mr Suen pressed in oral closing after considering the arguments and authorities advanced by Mr Ho. In this regard, I accept whether the grantee of an option decides to exercise the option is in that limited sense unilateral, since it is a decision only the grantee can make. However, for the reasons set out below, I agree with Mr Ho entirely that (1) there are obligations imposed upon the grantor even before the exercise of an option and (2) once an option is exercised, new joint obligations arise. 5.23The position advocated by Mr Ho is neatly encapsulated at Spiro 543C-E (similar observations on the arising of joint obligations are set out in Mountford v Scott [1975] 1Ch 258 at 264D-H):
5.24As to the nature of the obligations imposed on a promisor before the exercise of an option, United Dominions Trust (Commercial) Ltd v Eagle Aviation Ltd [1968] 1 WLR 74 observes at 83D-G that the promisor is under an obligation to refrain from putting it out of his power to perform his undertaking in the future:
5.25In terms of the nature of the joint obligations which arose after the exercise of the Option, I accept Mr Ho’s submissions that, in the present case, an apt analogy may be drawn with conveyancing transactions. First, as Spiro observes. the vendor and the purchaser come under obligations to perform as if they had concluded an ordinary contract of sale. Secondly, consistent with the indisputable context of the LPA, namely it was always envisaged that the Defendant’s sole intention was to acquire the Property utilizing the financing provided by the Plaintiff (or Bel Trade Group), the express wording of LPA Clauses 11 and 12 makes reference to the Option Consideration being calculated by a contractual formula to make sure the “Price” of the Property (ie HK$18,500,000 less the initial deposit of HK$2,000,000 plus the financing costs on HK$16,500,000) was paid by the 144 payments (and any shortfall determined by the contractual formula). It therefore seems to me that, once the Option was exercised, the parties’ obligations are those of a seller and a purchaser under a conveyancing transaction. As such, as established by the Privy Council in Chong Kai Tai Ringo v Lee [1997] HKLRD 461 at 466J to 467B, where the vendor cannot deliver an executed assignment by the day of completion, time ceases to be the essence of the contract and the parties have a reasonable time in which to complete:
5.26Further on at 470A, the Privy Council observed:
5.27Applying the above principles to the present case, I have no hesitation in finding that the Defendant’s tender of the Cheque as payment of the Option Consideration in late March 2016 was compliant with the LPA. 5.28In the present case, as the last rental payment was received on 19 November 2015 (there being no argument advanced by counsel that because it was not paid by 15 November 2015 therefore it was a late payment and failed to satisfy the condition imposed under LPA Clause 11), the Written Notices would have come into effect on 19 November 2015 and the one-month period would have expired on 18 December 2015. As I have found above:
5.29In the light of the foregoing, the Defendant was not obliged to pay the Option Consideration on 18 December 2015. Indeed, even after the Defendant tendered the Option Consideration in late March 2016 by the Cheque, the Plaintiff has refused to transfer the Property. 5.30For all the above reasons, I find that the Option was validly exercised. 6.Brief analysis of D’s Alternative Case 6.1As I have found that Sy’s Dec 2003 Assurances were not given by Sy Senior at the December 2003 Meeting, the Defendant has failed to establish the underlying factual premise for D’s Alternative Case. That spells the end to the Defendant’s case on collateral contract, as it is the Defendant’s pleaded case that the collateral contract was formed at around the same time as the execution of the LPA. 6.2As regards the Defendant’s case on estoppel, even if Sy’s December 2003 Assurances were given, it is plain from the above factual findings that the Defendant did not rely on them and did not act to its detriment. The Defendant gave the Written Notices, and on the advice of Attorney Virginia, decided (and as it turned out correctly as a matter of legal analysis) that the payment of the Option Consideration should await a “deed of absolute sale” from the Plaintiff. 6.3Therefore, had it been necessary, I would have found against D’s Alternative Case. 7.Relief 7.1In view of the Plaintiff’s inability to transfer the Property given its indebtedness to LSH, counsel agreed that should I find for the Defendant, I should allow the Plaintiff some time to liaise with LSH on the possibility of the transfer of the Property before the relief is finalized. In the meantime, I should simply indicate the parameters of the relief and leave it to the parties to apply under a liberty to apply provision to finalize the relief. 7.2As I have found that the Option was validly exercised, it follows that the Plaintiff’s claim should be dismissed. Since the Defendant had also performed its obligations under the Lease, the Defendant is entitled to the following relief in principle:
7.3The parties are to jointly propose directions within 7 days hereof the directions for the finalization of the relief. 7.4In the meantime, there is no reason why I should not make a costs order nisi that the Plaintiff is to pay to the Defendant the costs of the action and the counterclaim (including any costs reserved) with a certificate for two counsel, to be taxed if not agreed.
Mr Jenkin Suen SC leading Mr Tim C.H. Yu, instructed by Messrs. Edward C.T. Wong & Co., for the Plaintiff Mr Ambrose Ho SC leading Mr Jacky Lam, instructed by Messrs. Or & Partners, for the Defendant [1] D’s Closing Submissions Section D and P’s Reply Closing Submissions §1 [2] It is common ground that by the time of execution of the LPA or shortly thereafter, the Defendant had paid to the Plaintiff a non-refundable deposit in the sum of HK$2 million as the consideration for the Option as per the Fifth Part of Schedule 1 of the LPA. [3] The Plaintiff had in opening suggested that the Option Consideration was close to HK$7 million: P’s Opening Submissions §34. [4] Although the Plaintiff had at one stage contended that the Written Notices were served prematurely (P’s Closing Submissions §65), I do not understand Mr Suen to have maintained the foregoing contention. The position eventually taken by counsel is that the Written Notices could be given in October 2015, but they would not take effect until all of the Defendant’s obligations set out at LPA Clause 11 were met: D’s Closing Submissions §20(1) and P’s Reply Closing Submissions §6. [5] D’s Closing Submissions §7(2) [6] Re-Re-Re-Amended Defence and Counterclaim (“RRRAD&C”) §31 [7] LPA Clause 13 provides: “This Agreement supplements the Provisional Agreement executed between herein parties date [sic] September 12, 2003”. [8] The Provisional Agreement contains an entire agreement clause which states “This agreement supersedes all prior negotiations, representations, understanding and agreement of the parties hereto.” [9] Accepted by Sy Senior in cross-examination (Day 5 Morning) [10] Footnote 8 above [11] Footnote 7 above [12] RRRAD&C §30A [13] I am cognizant that these matters are also relied by Mr Suen to question the authenticity of the Written Notices and I have duly considered them in that context. For avoidance of doubt, these matters, whether individually or collectively, do not alter my findings on the authenticity of the Written Notices. [14] Both represented by Messrs Edward CT Wong & Co | ||||||||||||||||||||||||||||||||
Cases cited in this judgment