Yu Kam Por v. New Central Ltd

DCCJ7038/2002

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 7038 OF 2002

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BETWEEN

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Coram : Her Honour Judge C.B. Chan in Court

Dates of Trial : 25^th to 27^th October 2004

Date of Handing down Judgment : 10^th January 2005

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JUDGMENT

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1.The Plaintiff is the sole Executor of the estate of Yu Wai Yau (俞維友) (or U) Ka Yu (俞家儒), who died on 3 August 2000 (hereinafter called “the Deceased ”) by virtue of the Letters of Administration granted to the Plaintiff out of the High Court of Hong Kong Special Administrative Region on 2 August 2002 under Grant No. HCAG005136/2002.

2.Prior to the death of the Deceased and before the assignment hereinafter mentioned, the Deceased was the registered owner of a piece or parcel of agricultural land situate in Sai Kung and registered in the Sai Kung New Territories Land Registry as the Remaining Portion of Lot No. 317 in Demarcation District No. 239 which is shown on plan No. 1 annexed to the Re-amended Statement of Claim and thereon coloured yellow (hereinafter called “the Land in Question”).

3.In or about June 1998, the Defendant through its Agent approached the Deceased and caused him to enter into a Chinese Provisional Agreement (hereinafter called “the Provisional Agreement”) for the sale and purchase of the property.

4.It is the Plaintiff’s pleaded case that the Agreement was in fact so signed by the Deceased in the belief that the property to be sold was only a portion of the Land in Question.  The portion which the Deceased intended to sell is shown on plan No. 2 annexed to the Re-amended Statement of Claim and thereon coloured yellow and hatched black having an area of about 300 sq. ft.  The Plaintiff alleges that the Provisional Agreement was signed under a unilateral mistake of fact and the Deceased has never agreed to the sale of the entire piece of the Land in Question.  The whole piece of the Land has an area of about 9,583 sq. ft.  The Plaintiff wants to claim back the remaining portion of the Land i.e. around 9,283 sq. ft.

5.On or about 29 June 1998, a Buy Back Agreement was signed by the Deceased and the Defendant.  It is the Plaintiff’s case that the Defendant knew that the property to be sold by the Deceased was erroneously described in the Provisional Agreement.  The Buy Back Agreement contained these terms:-

(a)     if the Deceased would comply with the terms and conditions of the Agreement and complete the transaction at its solicitors’ office on 30 June 1998; then

(b)     the Defendant undertook that the Deceased or its nominee could before 30 July 1998 upon payment of HK$100 buy back a portion of the Land in Question coloured Pink on the plan therein and the rest of the Land in Question coloured Blue on the plan therein be retained for the use of the Defendant; and

(c)     if the Deceased was unable to complete the sale and purchase of the Land in Question at its solicitors’ office on or before 30 June 1998, the agreement for buy back by the Deceased shall become null and void and the Defendant could ask the Court to complete the conveyance.

6.An Assignment dated 29 June 1998 (hereinafter called “the Assignment”) was signed in the office of Messrs. Y.S. Lau and Partners, solicitors (hereinafter called “the Defendant’s solicitors”), by which the Deceased was expressed to convey to the Defendant the Land in Question for the consideration of HK$120,000.00.  It is not in dispute that Messrs. Y.S. Lau and Partners acted as solicitors for both the Vendor and Purchaser in the Assignment. 

7.By this action the Plaintiff claims:-

(1)    an order that the Assignment dated 29 June 1998 be rectified so as to embody the true and actual agreement made between the Deceased and the Defendant upon the terms the Court shall think proper, in particular that the Deceased only agreed to sell the portion of the Land in Question which is shown on plan No. 2 annexed hereto and thereon coloured yellow and hatched black.

(2)    In the alternative to (1), an order:

(a)    that the Buy Back Agreement be rectified so as to embody the true and actual agreement made between the Deceased and the Defendant upon the terms the Court shall think proper, in particular, that the Deceased could buy back the whole Land in Question excluding the portion marked blue which was to be retained by the Defendant, and

(b)    that the Defendant, pursuant to the Buy Back Agreement assigns the Land in Question to the Plaintiff as executor of the estate of the Deceased excluding the portion marked blue in the Buy Back Agreement.

(3)    Alternatively, but without prejudice to (1) and (2) above, an order enforcing the Buy Back Agreement such that the Defendant is required to assign the part of the Land in Question marked pink in the Buy Back Agreement to the Plaintiff as executor of the estate of the Deceased.

(4)    Alternatively, rescission of the agreement referred to in paragraph 4 above on the ground of unilateral mistake with all proper directions as the Court shall think fit, setting aside of the Assignment dated 29 June 1998 and the registration of the same in the Sai Kung New Territories Land Registry be vacated.

8.The Defendant disputes that there was a mistake on the part of either the Deceased or the Defendant.  It is the Defendant’s case that both parties all along intended to sell and purchase the Land in Question as described in the Provisional Agreement, the Sale and Purchase Agreement and the Assignment.  

The Issues

The Evidence

10.The Plaintiff (PW1) gave evidence and called Chan Ball and Yu Kam Hung to give evidence.  The Defendant’s evidence came from the Director of the Defendant Lam Man Wai.

The Plaintiff’s Evidence

11.Yu Kam Por first came to know of the mistake in September 1999, when he and the Deceased went to the office of Messrs. Vincent T.K. Cheung, Yap & Co. in Tai Po to instruct them to prepare a legal document to transfer the title and interest in and of All That leasehold property known as the Remaining Portion of Lot No. 317 in Demarcation District 239, namely the Land in Question in favour of himself.

12.His solicitors subsequently informed him that upon searching the land record of the Property, it was discovered that the whole piece of the Land in Question had been assigned to the Defendant by an Assignment dated 29 June 1998 and registered in the Sai Kung New Territories Land Registry by Memorial No. 334430.

13.In the light of the aforesaid information, he asked his father whether he had any knowledge of the said assignment.  He remembers his father had clearly told him that he had through the introduction of Chan Ball (陳波) entered into an agreement to sell a small portion of the Land in Question which measured approximately 300 square feet to a purchaser, namely the Defendant and he remembered the aforesaid Chan Ball and Yu Kam Hung had escorted him to attend a solicitors office in Hong Kong to sign some documents but he had no exact knowledge of the contents of the said documents because no one explained the contents to him.

14.His father confirmed it was not his intention to sell the whole piece of the Land in Question and in fact he had not received the whole purchase price.  PW1 stated that he believed there was seemingly a mistake in the sale of the Land in Question and that the solicitors who dealt with the assignment was not prudent in that his father has not been fully advised on this matter in view of his father’s illiteracy and old age being more than 80 years old.  He further believed the Defendant is and was improper in this transaction in that when she signed the Assignment she must have realized the mistake and yet she failed to instruct the relevant solicitors to rectify or deal with the same.

15.His father instructed him to check with the above named persons and the handling solicitors to rectify this matter on his behalf and he also settled a Will naming him as his sole executor and beneficiary so that he could continue to deal with this matter after he passed away.

16.He later, but in September 1999, checked with Chan Ball and Yu Kam Hung about this transaction who both confirmed only a portion of the Property about 300 sq. ft. was sold to the Defendant and PW1 was told that he should directly verify this matter with the handling solicitors, i.e. Messrs. Y.S. Lau & Partners (“Messrs. Y.S. Lau”). 

17.He then went to the offices of Messrs. Y.S. Lau and enquired therein.  He was informed that the assignment only dealt with a small portion of the Land in Question.  He enquired whether there was any partition or division of the Land in Question.  He was informed that it would be difficult and complicated to do so.    

18.Further Chan Ball again confirmed to him that only a small portion of the Land in Question of approximately 300 sq. ft. was involved in this sale and purchase.  Chan Ball gave him a Memorandum confirming that.  A copy of the Memorandum is at page 29 of the BD.  

19.He stated that his father did not know that the property that had been sold to the Defendant was the entire Land in Question.  It was only when he brought his father to the solicitors to sign the Will that the solicitors told his father that the Land in Question had been assigned to the Defendant.  His father thought that only 300 sq. ft. of the Land in Question had been sold to the Defendant.  Or else his father would not have taken him to the solicitors to transfer the Land in Question to him.  

20.Under cross-examination he said that his father did not know of the Buy Back Agreement until he spoke to him about it in 1999 after he went to the Solicitors to prepare his Will.  It was after then when his brother Yu Kwok Hung told his father that he paid the $100 which was required to be paid therein.  He said that he was given a copy of all the Chinese documents by Messrs. Y.S. Lau & Co when he went to see them in 1999.  When he went to see his solicitors Messrs. Vincent T.K. Cheng & Yap, he gave them these documents.   He also informed them that his brother had paid the $100.  He could not explain why in the letter of Messrs. Vincent T.K. Cheng & Yap to Messrs. Y.S. Lau & Co. dated 30 November 1999 there was no mention of the Buy Back Agreement nor payment of $100.  He stated it was a matter of law and he did not understand law.  It was within the realm of the solicitors.  

21.Under cross-examination he stated that after September 1999, he went to look for the Estate Agent Mr. Rudy Chan.  Mr. Rudy Chan confirmed that only a small portion of the Land in Question was intended to be transformed to the Defendant.  He did not locate Mr. Rudy Chan to give evidence in this trial because Mr. Rudy Chan was not willing to help when he looked for him in 1999.  He stated that Mr. Rudy Chan suggested to him to locate a surveyor to do a survey of the land to delineate the land and to ask the Defendant to sell back the rest of the land to him.   However, PW1 did not do that because he stated that it was the responsibility of the Purchaser to employ a surveyor not his responsibility.  

22.After his solicitors wrote the letter to Messrs. Y.S. Lau & Co. he did not receive a reply from them.  He said he had been following it up.  He went to see Ms. Lam Man Wai.  He had been contacting her in order to follow up this matter.  However the Defendant’s Counsel put to him that the next letter written was on 10 October 2002.  Between then no other letters were written.   He stated that there should have been another letter but there is no evidence of such.   

23.PW1 stated that he only had education up to primary 3 but did not complete primary 3.  He could read but could not write.    

Evidence of Mr. Chan Ball

24.Mr. Chan Ball (“PW2”) is a casual labourer.  He has had one year’s education.  He could read some words but could not even read the newspaper.  He stated that in about early June 1998, Mr. Yim Chor Min, a native villager of Hang Hau, approached him and stated that a purchaser intended to purchase a portion of the Land in Question owned by the Deceased.  The part of the Land in Question is the part hatched black in the plan which he annexed to his witness statement at page 42 in the BD and it had an area of about 300 sq. ft.  The purchase price was HK$120,000.00.  Yim Chor Min stated it is the piece of land at the foot of his father-in-law’s houses.  He was approached because he was the son-in-law of the Deceased.  PW2 then approached the Deceased.  The Deceased stated that the small piece of land the Defendant wanted to purchase was located in a slope with limited usage and in any event was only about 300 sq. ft.  He agreed to sell it to the Defendant.  

25.One or two days later, Yim Chor Min gave him HK$20,000.00 as provisional deposit together with a Chinese provisional sale and purchase agreement on which he asked PW2 to arrange Yu Wai Yau to sign.  Later after Yim Chor Min left, the Deceased came to the same Chinese restaurant and PW2 gave him the HK$20,000.00 and the Chinese Provisional Agreement which he signed. 

26.After one to two days later, the Deceased approached him and said he did not wish to sell the portion of Land to the purchaser reason because he understood the Land in Question was not in one piece so that it would be difficult to carve out the required portion for sale to the purchaser.  The Deceased expressed he was willing to return the deposit and further paid HK$20,000.00 as compensation to the purchaser.  PW2 then informed Yim Chor Min of the Deceased’s intention to call off the transaction because of the difficulty to carve out the small portion of land and that the Deceased was willing to pay back the deposit together with another HK$20,000.00 to the purchaser for cancellation of the sale and purchase.  Yim Chor Min refused and rejected his proposal and pointed out that since the Deceased had signed the Provisional Agreement therefore he was bound to sell the small portion of land to the purchaser.  PW2 explained the situation to the Deceased who finally agreed to sell the small portion of Land. 

27.A few days later PW2 escorted the Deceased to the solicitors firm to sign the documents.  Mr. Yu Kam Hung, a son of the Deceased also accompanied his father to the solicitors firm.  At the solicitors office a staff led the Deceased to enter into his room to sign the document.  After a short moment, the Deceased and the solicitor came out and the solicitor said the procedures had been completed and the Deceased said he also received the balance of purchase money by way of solicitors’ cheque.  The Deceased also gave him one of the cheques in the sum of HK$40,000.00.

28.The solicitor mentioned to the Deceased and PW2 about the buying back of the land for the price of HK$100.00 but without mentioning the detail of this buy back of land and he did not ask for anyone to pay the said HK$100.00 nor sign any document.  Since PW2 remembered Yim Chor Min confirmed the sale and purchase only involved 300 sq. ft. of land, he therefore did not pay any particular attention to the buying back matter. 

29.About one week later, he telephoned the solicitors firm and enquired the progress of this matter.  PW2 was told that this matter was still not completed because there were some problems with the carving out of the land.

30.He left the matter unattended until about September 1999 when he came to know the fact that the whole piece of land had been sold to the purchaser.  He believed that was not correct.

31.When cross-examined as to the area of the land sold, he says it is the slope in front of the houses shown at the photograph at page 51 of Bundle B (“BD-B”).    He said that it was purchased by the Defendant to park cars.  

32.He stated that his father-in-law, the Deceased only had 1 – 2 years education.   It was after his father-in-law took the agreement away to read.  His father-in-law stated that it was difficult to carve the land.  

33.He stated that when the solicitor came out of the office with his father-in-law, together with the Deceased and Yu Kam Hung, who went into the solicitor’s office with the Deceased, the solicitor informed him that there was a Buy Back Agreement.  All that was needed was to pay $100.   His father-in-law was slow to take out the money.  He saw Yu Kam Hung put his hand into his pocket to pay $100.   

Evidence of Yu Kam Hung (“PW3”)

34.He is the elder brother of the Plaintiff and a son of the late Mr. Yu Wai Yau.

35.On 29 June 1998, he accompanied his father and Mr. Chan Ball to the office of Messrs. Y.S. Lau & Partners.  His father went there to execute some documents in respect of sale of a portion of the Land in Question.

36.After arrival at the solicitor’s office, he stayed in a waiting room while his father went with the solicitor into another room for the purpose of signing some documents.

37.After a while, his father came back to the waiting room.  He then referred to a plan of the Land and pointed out to Chan Ball that his father only intended to sell a small portion of the Land and that the solicitor should take care not to arrange transfer of the whole piece of the Land.  Mr. Chan Ball then went back to the solicitor’s room to talk to the solicitor.  Sometime later, the solicitor came out and told them that the problem could be solved by his father paying a nominal sum of HK$100.00 and then the solicitor’s firm would arrange carving out the required portion of the Land in Question to his father.  In compliance with this arrangement of the solicitor, he handed over HK$100.00 to the solicitor.  The solicitor said everything was completed and in order.  No receipt was given by the solicitor to him for the sum of HK$100.00.  Neither his father nor he asked for a receipt as they trusted the solicitors’ firm and did not expect any problem.

38.Under cross-examination he was asked whether his brother filed charge against the Defendant.   He stated that his brother discussed it with him.   He disagreed with the statement put to him that he did not tell Yu Kam Por that he paid the $100.   He stated that prior to this case he did not do anything about this matter because he did not know how to do it.   He did not know where to seek help.  He stated that his younger could do it.  

Evidence of Lam Man Wai (“DW1”)

39.She is the Director of the Defendant.   She stated that in about early June 1998, Mr. Chan Wing Chuen also known as Mr. Rudy Chan (“Mr. Rudy Chan”) told her that a piece of agricultural land, namely, the remaining Portion of Lot No. 317 in Demarcation District No. 239, Sai Kung, New Territories, Hong Kong, was for sale at the price of HK$120,000 and that it would be a good bargain for her.  He said it was possible that the usable part of the land could be used for small house development.

40.On the following day, Mr. Rudy Chan brought her to inspect the location of the Land in Question.  She found that it was in a fine location but was not certain about its actual measurement as the site was in an irregular shape.  Mr. Rudy Chan told her that HK$120,000 was not a large sum and it was possible that the usable part of the Land in Question could be used for small house development (丁屋).  Mr. Rudy Chan also promised to assist the Defendant to apply for permission for small house development.  After consideration, she decided to purchase the Property.

41.After signing of the Provisional Agreement, in the morning of 29 June 1998 (i.e. the completion date), Mr. Rudy Chan called her and told her that the Deceased wanted to retain certain part of the Property.  Mr. Rudy Chan suggested that both parties sign a Buy Back Agreement so that the Deceased would have the option to buy back the portion he intended to retain after the completion of the sale and purchase transaction.  She agreed to this suggestion of Mr. Rudy Chan.

42.Mr. Rudy Chan then immediately prepared a document known as Agreement to Buy Back Agricultural Land (農地回購協議) (“the Buy Back Agreement”).  She signed the document on behalf of the Defendant in the office of Mr. Rudy Chan.  Mr. Rudy Chan faxed it to Messrs. Y.S. Lau & Partners for signature by the Deceased.

43.She did not hear anything from Messrs. Y.S. Lau & Partners about the transaction in the following 4 years until about mid July 2002 when Messrs. Y.S. Lau & Partners asked her to attend their office to collect the title deeds.  She attended their office on 19 July 2002.  Even by then no one had requested the Defendant to execute any legal document for transfer of any part of the Land in Question to the Deceased.

44.In October 2002, she received a letter dated 10 October 2002 from Messrs. Vincent T.K. Cheung, Yap & Co. (張葉司徒陳律師事務所).  She was surprised that Mr. Yu Kam Por (俞錦波) had alleged that there was a mistake in the Provisional Agreement for Sale and Purchase and the Assignment and that Mr. Yu Wai Yau had agreed to sell only 300 sq. ft. of the Property to New Central.  Prior to this, the Defendant had not received any complaint about any error or mistake in the Provisional Agreement, the Agreement, the Formal Agreement for Sale and Purchase or the Assignment.  When she signed the Formal Agreement for Sale and Purchase, the Assignment and the Buy Back Agreement, she was not aware of any mistake (whether as alleged or at all) in any of the said documents.  She denies that there has been any mistake in any of the said documents.

45.Prior to perusal of the witness statement of Yu Kam Hung, the Defendant had never been notified by anyone that the Deceased had exercised his option or paid the price of HK$100 to Messrs. Y.S. Lau & Partners.  Neither the Defendant nor its agent has ever received the said sum of HK$100 from the Deceased or his agent.

46.Under cross-examination, with reference to the plan in the Buy Back Agreement DW1 stated that although the Buy Back Agreement stated that the part to be retained by her was the part coloured Blue with the B pointed at it, she stated that she did not notice that.  She stated that she only noticed that she purchased all the Land in Question.  She then only noticed the pink area which was the area to be re-assigned back to the Plaintiff.  She thought that apart from the pink portion, the rest was hers.  When asked what was the size of the area to be sold back, she stated it is one third.  When asked where was the area she intended to develop a village house, she stated that when she decided to develop, she would ask a surveyor to survey the land.  When asked, why she agreed to the Buy Back Agreement, she stated that Mr. Rudy Chan told her that the Deceased would not sign the Assignment without the Buy Back Agreement.  In relation to the pink portion, she said that the Deceased wanted it, so she gave it back to him.   When asked that despite the fact that the land was valuable, she was willing to sell it back at HK$100, she replied, that if he wanted it, how could she refuse as he was the prime mover.   It was put to her that she was willing to sell back the pink portion to the Deceased because she was aware that the Deceased had made a mistake.  She did not give a direct answer but asked why would he sign the agreement then?  It was further put to her that Mr. Rudy Chan got her to sign the Buy Back Agreement because he knew that the Deceased had made a mistake.  She disagreed with that.  The Plaintiff’s Counsel again put to DW1 that when Mr. Rudy Chan coloured the pink area, he was mistaken.  The area the Deceased wanted to get back was all the land except the portion marked blue.  She disagreed.  She agreed that the solicitors acted for both vendor and purchaser.   She stated that no one told her that the HK$100 required to be paid in the Buy Back Agreement had been paid for. 

47.She was asked the question that the fact that Mr. Rudy Chan was willing to prepare a Buy Back Agreement shows that he knew that the Deceased was mistaken about the portion of land to be sold.  Her answer was that she was not clear as far as he was concerned.  The question was put to her that as the Deceased had signed the Provisional Agreement, she as the Purchaser could enforce the Agreement.  She asked whether she could have done that since it was a provisional agreement.  She was asked with words to the effect, “didn’t your solicitors explain it?”  She answered with words to the effect that, “In a purchase whether either party is happy, that is best”.  She was asked, “Do you think the Deceased was happy?”  She answered, “O.K., I think he could accept it.”  She confirmed that Mr. Rudy Chan’s business is closed.  She could not explain why she did not call him to give evidence.  

The Law

48.In relation to rectification for unilateral mistake, Chitty on Contracts 29^th Ed. in para 5-100 headed “Unilateral mistake” at page 424, states,

“unilateral mistake is not by itself a ground for rescinding or rectifying a contract unless the other party knew of the mistake.  It appears that the knowledge must be actual knowledge.  It is not enough that the party against whom rectification is sought may have suspected that a mistake had been made; but if a party wilfully shuts its eyes to the obvious, or wilfully and recklessly fails to make inquiries as an honest and reasonable man would make, that will count as actual knowledge.”    

49.In relation to the exercise of an option, it is for the party who has the benefit of the option to comply strictly with conditions stipulated for the exercise of the option.   The principle is cited in Hare v Nicoll [1966] 2 QB 130 relied on by the Defendant’s Counsel.   The passage cited is at page 141 of the Judgment as follows,

“It is well established that an option for the purchase or repurchase of property must in all cases be exercised strictly within the time limited for the purpose.  The reason for this, as I understand it, is that an option is a species of privilege for the benefit of the party on whom it is conferred.  That being so, it is for that party to comply strictly with the conditions stipulated for the exercise of the option.”

50.A decree for specific performance should not be granted in respect of an option to purchase.  The passage relied on by the Defence Counsel is in the Held 2 at page 319 of the judgment in Alexander v Tse [1998] 1 NZLR 318 as follows,

“A decree for specific performance cannot be granted in respect of an option to purchase.  Equity has never sought to enforce unexercised options by specific remedy, the aim of equity and the law being to enforce contracts not to make them.”  

51.The Defendant’s Counsel relied on World Ford Development v. Ip Ming Wai & Anor [1993] 1 HKC 98 to submit that if the Plaintiff’s argument that the Buy Back Agreement only required the Deceased to make an offer to buy back on or before 30 July 1998 was right, the Buy Back Agreement would become a contract with no deadline for completion or acceptance and it would make the contract voidable for uncertainty of terms.   That judgment at page 107 relied on a statement of Robert Goff LJ in Scandinavian Trading Tanker Co AB v Flora Petrolera Ecuatoriana [1983] QB 529, 540E which state,

“It is of the utmost importance in commercial transactions that, if any particular event occurs which may affect the parties’ respective rights under a commercial contract, they should know where they stand …”

The 1st Issue

52.I find that the Deceased did not intend to sell the Land in Question as described in the Provisional Sale and Purchase Agreement, the Sale and Purchase Agreement and the Assignment.  I find that he only intended to sell a portion of such land as described by the Plaintiff and Chan Ball for the following reasons:

(1)    The Deceased was a villager with only limited education and could hardly read.   He was also aged 80 years of age.   Chan Ball was a casual labourer and had one year’s education.   With such a low level of literacy, it is not easy for them to understand how to accurately describe the portion of land to be sold, or how to ensure that this portion of land is partitioned for sale.    

(2)    According to PW1, the Deceased was not aware that the Land in Question had been assigned to the Defendant.   The Deceased arranged with PW1 to go to their solicitors office for the Deceased to draw up a Will bequeathing the Land in Question to PW1.   It is upon being informed by the solicitors that the Land in Question had been assigned to the Defendant that the Deceased then stated that he thought that only the 300 sq. ft. portion of land at the location stated had been assigned to the Defendant.   He then prepared the Will appointing PW1 as Executor so that PW1 would have the authority to take this action upon the demise of the Deceased.  

(3)    Chan Ball stated that after signing the Provisional Agreement, the Deceased was not willing to proceed with the sale as he stated that the land had to be partitioned and it was complicated.   It was upon persuasion by the Estate Agent that the Deceased proceeded with the sale.  

(4)    It seems that at the office of Messrs. Y.S. Lau Solicitors, the Deceased must have again refused to sign or to proceed with the transaction for it was then that Mr. Rudy Chan prepared the Buy Back Agreement for DW1 to sign and this was then faxed to Messrs. Y. S. Lau Solicitors for the Deceased to sign.   The evidence of DW1 substantiates the evidence that the Deceased refused to sell the Land in Question in its entirety on the date of execution of the Assignment.

(5)    Chan Ball stated that the Deceased told him that the piece of land to be transferred was the 300 sq. ft piece of land in front of the Deceased’s house.   It had previously been used as an area for feeding pigs and was of little use.   PW1 was also told by the Deceased that that was the piece of land that he intended to sell to the Defendant.   This fact is substantiated by the portion of land to be retained by the Defendant as stated in the Buy Back Agreement which pointed with an arrow to a portion of land which appeared to be the triangular portion of land at the bottom of the E-shaped land on the eastern part of 317 RP.

(6)    According to PW1, when he telephoned Messrs. Y.S. Lau Solicitors in about September 1999, Messrs. Y.S. Lau Solicitors informed him that the portion of land to be sold was a part of the Land in Question and not the whole of the Land in Question.

(7)    Mr. Rudy Chan quickly and readily drew up the plan in the Buy Back Agreement with an area to be retained to be coloured blue.   Even though the plan actually signed by the Deceased did not have the colour blue in the area marked B, yet from the plan, it would seem that the area marked B is the same area that PW2, Chan Ball stated, was intended by the Deceased to be transferred by the Deceased to the Defendant.   The plan in the Buy Back Agreement did not have a mark “B” with an arrow pointing to any other part of the portion of the Land in Question apart from this triangular piece of land marked B.  It would seem that Mr. Rudy Chan understood the wishes of the Deceased.

53.The finding of fact in relation to this issue is well substantiated by evidence extrinsic to the evidence of PW1, and PW2 as referred to above.  Such extrinsic evidence supports the evidence of PW1 and PW2 related to this issue.  Hence the finding on this issue is not solely in reliance on the credibility of PW1 and PW2.  However, I find the PW1 and PW2 credible in their evidence in relation to this issue.

2nd Issue

54.The portion of land which the Deceased intended to sell was the part as stated by Chan Ball in his witness statement and evidenced and as shown in the plan coloured yellow hatched black attached to his witness statement.  It is also the same as that marked B in the Buy Back Agreement.  Though by mistake it was not coloured blue in the Buy Back Agreement.        

3rd Issue

55.The burden on the Plaintiff in establishing the Defendant’s knowledge of its mistake is a heavy one, akin to convincing proof, although probably not as high as beyond reasonable doubt (as per Citilite Properties Ltd v Innovative Development Co. Ltd. [1998] 4 HKC).   In relation to this issue, it is a pity that neither party called the key players, Mr. Rudy Chan Wing Chuen, Rudy and the solicitor handling the transaction, at Messrs. Y.S. Lau & Co. Solicitors to give evidence.  Their evidence would have given helpful pointers to the situation. Without their evidence the only evidence that could point to whether DW1 or the Defendant had knowledge of the mistake of the Deceased, in the face of the denial of DW1, is from circumstantial evidence, or to be inferred from DW1’s evidence under cross-examination.     

56.The Plaintiff’s Counsel relies on the fact that the consideration of $120,000.00 was too low a consideration for the large piece of land which according to the valuation report at pages 45 to 64 of BD-2 is valued at $1,629,000.00.   He submits that it is unbelievable that the Defendant would have thought that she could have purchased such a valuable and large piece of land for $120,000.00.                     

57.DW1 stated that his Estate Agent Chan Wing Chuen also known as Rudy Chan, (hereinafter referred to as “Rudy Chan”) brought her to see the Land in Question.   She did not know how large the piece of land is.   She only knew that it consisted of various small parts.  She did not find out how large the area of the Land in Question is because the price was only $120,000.00.   She stated that she purchased the land to develop a village house (丁屋).   When asked under cross-examination whether $120,000.00 was too low a price for land on which a village house could be developed.  She stated that it was not necessarily so.   The building of the house takes $1,000,000.00, have to purchase the right to build on the land from the male heir of a villager, have to pay for the licence.  It is not known if the licence to build would be granted and also have to wait for 5 years.   It’s a bit of a gamble.  

58.She was asked whether she knew where 317 RP was.   She stated that she now knows.  At the time of the purchase she had not seen the plan when she paid the deposit of $20,000.00.   She did not know the how large the area was in terms of square footage.   She stated that the land was in bits and pieces.    She had been brought there to view the land.   However upon cross examination by the Plaintiff’s Counsel as to whether she could identify 317 RP from the photographs attached to the Valuation Report in BD-2, she then said with words to the effect that she could not recognize it as she looked at the site briefly and left.  From this evidence it seems to me that if DW1 only looked at the sight so briefly that she did not even want to see if she could recognize it from photographs of it.  It seems to me that if she had the intention to develop, it is unusual that she did not ask to look at a plan of 317 RP before signing the Provisional Sale & Purchase Agreement.  This is particularly so when the land is in so many different pieces. 

59.The second basis relied on by the Plaintiff’s Counsel was paragraph 2 of the Buy Back Agreement stated that the portion to be retained by her was that marked B coloured Blue.   She should have spotted the portion to be retained by her is the triangular part on the eastern side of 317 RP.  She had agreed in the Buy Back Agreement that that portion was to be retained by her.

60.When cross-examined on this, I have the sense that DW1 was quite defensive.   When she was asked about paragraph 2 of the Buy Back Agreement which stated that the part to be retained by the Defendant was that coloured blue on the plan that is the area marked B-Blue, DW1 stated that she did not notice where the Blue was as she was only interested in how large the pink portion was.  There is no indication that on the plan in the Buy Back Agreement that there is land above the pink portion that was part of 317 RP.   She stated she had never seen a plan at the time of entering into the Provisional Sale & Purchase Agreement.   However under cross-examination she stated that at the time of the execution of the Assignment, Ms. Yim took out a plan and showed her 317 RP on the plan.  She stated that from that plan she knew that there was land belonging to 317 RP above the pink portion.   When asked why there was no arrow pointing to the portion of land above the pink portion showing it to be part of B-Blue, she stated that she did not notice the arrow and there were lots of English letters.  However above the pink portion there is no English letters.  When it was pointed out to her that the arrow with B only pointed to the triangular area below the houses on the plan she stated that she did not notice any other area.   She only noticed the pink area.    As there is no B mark with an arrow pointing to the area above the pink portion showing it to be the area to be retained on the plan attached to the Buy Back Agreement, it is therefore rather strange that she would have come to the conclusion that the area not marked nor coloured that is above the pink portion would be part of 317 RP.   Her repeated answer that she only looked at the pink portion seems to me to be evasive.    

61.The third ground relied on by the Plaintiff’s Counsel is that the DW1 must have known that the Deceased made a mistake in the Provisional Sale and Purchase Agreement and the Sale and Purchase Agreement as DW1 agreed immediately to sign the Buy Back Agreement giving the Deceased the option to buy back a portion of the Land in Question at $100 when on the morning of the 29^th June 2001. 

62.DW1 stated that on the morning of the 29^th June, Mr Rudy Chan telephoned her and said that the Deceased said that he did not want to sell the Land in Question and wanted part of it back.  She stated that she asked Mr. Rudy Chan for his opinion.  As he is the agent, he would know what to do.  Mr. Rudy Chan suggested the Buy Back Agreement.   He then prepared the Buy Back Agreement.   She went to Mr. Rudy Chan’s office then to sign it.   Exh D1 is the Buy Back Agreement.  DW1 stated that at the time when she signed it, the portion marked P was coloured pink.  Mr. Rudy Chan stated that the Deceased wanted that back.   So she gave it back to him.  After she signed the Buy Back Agreement, Mr. Rudy Chan faxed it to Messrs. Y.S. Lau & Co Solicitors.  

63.In relation to the Buy Back Agreement, she stated that she signed that because the Deceased would not sell otherwise.   She was asked that as the land is valuable why would she sell the portion marked P to the Deceased at $100.  She stated that was only a nominal price.  She said that if he wanted it how could she refuse as he was the prime mover.   She was asked whether Mr. Rudy Chan explained to her why he suggested the Buy Back Agreement.  She answered, with words to the effect, “What else could be done.  It was time to sign the Assignment.”   She did not give a direct answer.   When it was put to her that she was willing to sell the pink portion to Mr. Yu because she knew Mr. Yu at the time he signed the Provisional Sale & Purchase Agreement had made a mistake.   She answered with a question to the effect, “Why would he sign then?”    When the Plaintiff’s Counsel put to her that Mr. Yu only wanted to sell the area of 300 sq. ft. she replied with words to the effect, “Of course not, no one would buy 300 sq. ft.”     

64.Having considered the aforesaid evidence, it seems to me that it is highly likely that Mr. Rudy Chan must have known of the mistake of the Deceased and that the Deceased only wanted to sell the area marked B with an arrow pointing to as shown in the plan in the Buy Back Agreement for the following reasons:-

1.    The area to be retained marked B – Blue with an arrow pointing to it is the same area which the Plaintiff says the Deceased wanted to sell.

2.    Mr. Rudy Chan immediately suggested drawing up the Buy Back Agreement in order to preserve the sale and purchase. 

65.However, there is no evidence that Mr. Rudy Chan conveyed this knowledge to DW1 and actual knowledge of the mistake is required.  As there is no evidence of the fact that Mr. Rudy Chan conveyed this knowledge to DW1 the only basis for the finding that she must have known of this mistake is from the fact that she signed and was willing to sign the Buy Back Agreement.  However, there is no evidence that she clearly read and identified the area marked blue when she signed the Buy Back Agreement.  There is no evidence as to what happened when she signed the Buy Back Agreement, such as whether Mr. Rudy Chan explained its contents to her, or asked her to read it carefully before she signed it. Because of the fact that the area marked B was not coloured blue, that portion does not stand out on the plan as the portion marked pink would stand out.  On the evidence, I am not able to find that on the balance of probability she had actual knowledge of the mistake of the Deceased when she signed the Buy Back Agreement as the Buy Back Agreement was fraught with uncertainties.  

66.Having carefully considered all the evidence aforesaid, I am not able to find that there is convincing proof that she had actual knowledge of the mistake of the Deceased.     

The 4th Issue

67.I do not accept the evidence of Yu Kam Hung nor Chan Ball and the Plaintiff that Yu Kam Hung had paid $100 to Messrs. Y. S. Lau Solicitors in respect of the amount stipulated in the Buy Back Agreement.   Yu Kam Hung stated that he told the Plaintiff this fact in 1999.  However this fact was not mentioned in the witness statement of Yu Kam Por dated 28^th April 2003.  Nor was this mentioned in the solicitors’ letters dated 30 November 1999 and 10 October 2002 written by his solicitors to Y.S. Lau & Co. Solicitors and to the Defendant respectively.  Yu Kam Hung stated that he did not ask the Solicitor for a receipt for the $100 paid by him to the Solicitor because he trusted the Solicitor.  He stated that the Solicitor did not give him a receipt.  I am of the view that this is not credible.   I therefore find that Yu Kam Hung did not pay the Solicitor $100 as he alleged and did not comply with this requirement in the Buy Back Agreement.

The 5th Issue

68.Is the Plaintiff entitled to rely on the Buy Back Agreement?   I have found that there has been no payment of the $100, nor tender of the payment.  Paragraph 2 of the Buy Back Agreement states that the Deceased or his nominee can buy back the portion of agricultural land in Lot 317 R.P. D.D. 239 coloured pink in the plan annexed below for the price of HK$100 before the 30^th July 1998.   The time for the exercise of the option to buy back has expired.   The Plaintiff is not entitled to rely on the Buy Back Agreement having regard to the legal principles referred to aforesaid that the conditions for the exercise of an option to purchase has to be strictly adhered to and that it is not possible to obtain specific performance of an option to purchase.  

69.Further as submitted by the Plaintiff’s Counsel, the Buy Back Agreement is void for uncertainty because on the one hand it states that the portion to be retained by the Defendant is that coloured blue when there is no portion coloured blue.  The part where an arrow points to with the marking of “B” is the triangular part at the base of the houses at the bottom of the E-shaped portion of the eastern side of 317 R.P.   As can be seen on the plan attached to the valuation report at page 59 of BD-2, the part coloured pink in the plan on the Buy Back Agreement is only a part of the western portion of 317 R.P.  There is land on the north of the portion coloured pink which is part of 317 R.P.  This part is not indicated in the Buy Back Agreement to be retained by the Defendant.    Nor is it to be subject to the buy back option given to the Deceased or his nominee.  There is no provision in the Buy Back Agreement for that portion in 317 R.P. north of the portion coloured pink on the plan in the Buy Back Agreement.   The Buy Back Agreement is therefore void for uncertainty.   

70.Having so found, it seems to me to be a great pity that the Deceased and his sons did not seek legal advice in the course of the sale and immediately thereafter related to the Assignment and the Buy Back Agreement.   It is regrettable that the  Buy Back Agreement and its plan was drafted by Mr. Rudy Chan in such uncertain terms and he did not colour in blue the portion retained.  It is a pity that the Deceased and his sons did not immediately act on the Buy Back Agreement but took no action.   As a result of this they have now suffered the consequences of their inaction.    

71.I therefore dismiss the claim and grant an order nisi for costs of the action to the Defendant to be taxed if not agreed with Certificate for Counsel.

Representation:

Mr. C.M. Ho instructed by Messrs. Choi & Liu for the Plaintiff.

Mr. Edward Ng instructed by Messrs. Benny Kong & Peter Tang for the Defendant.