Chiu Wai Shing v. Lau Chi Wai and Another

HCA 3013/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 3013 OF 2002

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BETWEEN

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Before : Hon Stone J in Court

Dates of Hearing : 18, 19, 20 and 22 September 2006

Date of Judgment : 1 November 2006

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J U D G M E N T

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Introduction

1.This is a case brought by the plaintiff, a self-employed businessman, against the 1^st and 2^nd defendants, respectively husband and wife, seeking specific performance of a Sale and Purchase Agreement, wherein, on the face of the Agreement at least, the defendants ostensibly had agreed to sell their Home Ownership flat to the plaintiff for a consideration of HK$900,000.

2.However, this is far from the usual run of the mill case wherein an agreement for the purchase of a property is sought specifically to be enforced, with putative vendor and purchaser at immediate loggerheads.

3.To the contrary.  Significant actors in this particular play are not the parties to this action – who have never met – but the younger sister of the 2^nd defendant, one Yip Wai Ming, together with her common law husband, one Fu Fong Ngai, whose relationship with, and indebtedness to, the plaintiff has caused this rather sad tale to unfold and, ultimately, to be played out in costly litigation in the High Court.

4.This court has not heard from Fu Fong Ngai, who now has disappeared, and who is said to be living in Shenzhen.

5.The court did, however, hear evidence from the plaintiff, Chiu Wai Shing, and the defendants, Lau Chi Wai and Yip Wai Lai, and from the latter’s younger sister, Yip Wai Ming, whom during the course of this case was universally referred to by her nickname of ‘Ah Fei’, which appellation I will adopt for the purpose of this judgment.

The factual background

6.There are few if any primary factual matters in dispute, and the story that emerges is tolerably clear, in objective outline at least.

7.The 1^st and 2^nd defendants, Mr Lau and Madam Yip, are, if I may say so, worthy people of relatively modest means.

8.They have lived in their Housing Authority flat at No 8, 19^th Floor, Block D, Choi Ngan House, Choi Po Court, 2 Choi Yuen Road, Sheung Shui, since 1985, when they purchased this property, of some 350 square feet, from the Hong Kong Housing Authority on 9 July 1985 for the sum of HK$110,000.00. 

9.The purchase of this property was subject to the conditions outlined in the Schedule to the Housing Ordinance, Cap.283; in particular, in order to remove any restriction against alienation, the owners of such a flat must apply to the Housing Authority for an assessment of premium before being able to dispose of their property.

10.This flat is the defendants’ only asset of any substance, the $100,000 mortgage for which now has been paid off, so that the title to this flat, in which this couple have brought up two daughters, now vests in the defendants.

11.Mr Lau is a casual manual worker; he drives fork lift trucks at Kwai Chung Container Terminal, and earns, on average, between $10 - $15,000 per month, although the monthly sum earned varies depending upon the amount of work that is available.

12.Madam Yip, his wife, is basically a housewife, although she takes in sewing work from time to time.

13.Madam Yip has a younger sister, the aforesaid ‘Ah Fei’. 

It is clear that these two ladies have a very close relationship.  In evidence Madam Yip said that she “adored” her younger sister, whom basically she had been responsible for bringing up virtually as a surrogate mother, and the closeness of that relationship clearly has continued into adulthood.  For her part, Ah Fei clearly appreciates the manner in which she is regarded by her older sibling.

14.Neither the 1^st or 2^nd defendants, nor indeed Ah Fei, have anything more than about Form 3 education; in fact, the only English that Mr Lau said that he is able to understand are the letters which appear on the side of the containers he loads and unloads, and which he has learned to recognize over the years.

15.At the time material to this case, Ah Fei lived with a man called Fu Fong Ngai; she has two children by him.

16.Mr Fu appears to have been in business for himself, the evidence being that he had a business selling VCD’s, and at one stage he ran a number of shops devoted to this purpose; during her evidence Ah Fei also ventured that Mr Fu’s other occupation was as an illegal bookmaker.

17.It appears that, consistent with the diverse nature of his business interests, Mr Fu had periods during which he prospered, and other periods in which money was in short supply.

18.For example, Ah Fei said in evidence that in the years 1998 to 2000 that “my husband’s business progressed very well”, so much so that she was far better off than her older sister during that period, and indeed lived fairly high; the evidence, which I accept, is that during this time Ah Fei treated her sister to gifts and to overseas trips.

19.There came a time, however, when Mr Fu found himself short of cash, and it is at this juncture that this story really begins.

20.Mr Fu was a long-time friend of the plaintiff, Mr Chiu Wai Shing; apparently they had known each other since they were boys.

21.Mr Chiu, who gave evidence on his behalf, struck me as rather a man of mystery, although on his own case he is a self-made man of not insignificant means; he told the court that he had businesses in Hong Kong and China involving printing and Chinese medicine. 

22.Coincidentally Ah Fei volunteered that Mr Chiu often engaged in betting on horses with her husband, Mr Fu.  This may or may not be true, but in any event it is no more than an incidental detail, which may possibly shed some light on the nature of the relationship between these old friends.

23.However, what seems to have happened, at least as Mr Chiu told it, was that from time to time he was in the habit of lending Mr Fu sums of money, which were repaid on a sort of ‘running account’ basis.  Mr Chiu also told the court that he lent these sums interest free, which I doubt, and in any event I am not minded to accept that the specific sum (or sums) which he says were lent to Mr Fu on the occasion which has given rise to this case was interest free, as was alleged.

24.Be that as it may; perhaps in the overall scheme of things this does not much matter.  In the event the evidence from Mr Chiu was that on a day in early March 2001 Mr Fu had asked him for a loan once again, claiming cash flow problems. 

25.Thereafter, a number of loans from Mr Chiu to Mr Fu were made between March and April 2001, totalling in excess of HK$700,000; Mr Chiu apparently kept a running record of the sums advanced (which record the court has not seen, since Mr Chiu says he now has destroyed this document), and the monies in question were handed over in bundles of cash on each occasion.  Mr Chiu said that Mr Fu had told him that since he, Mr Fu, was in the bookmaking business, it was not convenient to use bank accounts.

26.What then appears to have happened is that Mr Fu found himself unable to repay that which is said to be the accumulated debt. 

27.Mr Chiu said that in April 2001 Mr Fu had told him that the sister of his wife and her husband had a property, and that since he, Mr Fu, was unable to repay the loans, Ah Fei’s sister and brother in law (that is, the defendants in the present action) would be willing to sell their property to Mr Chiu to pay off the loan; Mr Chiu added that he assumed that these were relatives to whom Mr Fu earlier had referred as being “in business together”, although on the evidence in this case I find that this suggestion possesses no basis in fact.

28.Mr Chiu said that he was aware – “it is common knowledge” – that the transfer of a Housing Authority property required the payment of a premium before the property could be alienated, and that Mr Fu then had estimated the premium to be in the region of HK$200,000.

29.Thus, said Mr Chiu, Mr Fu and he agreed that that the transaction would be thus: that the purchase price of the defendants’ property would be HK$900,000, and that the payment of the price by him for this purchase would be effected by Mr Chiu forbearing repayment of the sum due and owing from Mr Fu, that is, $700,000, which then would be treated as a “deposit” placed on the sale and purchase of the property, whilst as to the payment of the relevant premium due to the Housing Authority, estimated to be in or around HK$200,000, Mr Chiu initially would pay the sum, and at completion of the sale and purchase of the flat, the sellers would “give credit to my payment of the premium”, whilst he, Mr Chiu, would be responsible for payment of the legal costs, it having been agreed that both parties would use the same firm of solicitors for the transaction.

30.Mr Chiu said that on 18 April 2001 he had called one Mr Patrick Ha, then of the solicitors firm Messrs Au Yeung, Lo & Cheung, to ask him to handle the sale and purchase for him, and he said also that Mr Fu had said that the estimated completion date was before the end of October 2001, since Ah Fei’s sister and brother in law needed time to look for alternative accommodation.

31.The plaintiff’s witness statement records that on or about 20 April 2001 he attended at the office of Mr Ha to sign the Sale and Purchase Agreement, and that as the premium was yet to be paid, the date of the Agreement had to be left blank, and was to be inserted when it was known; in the event, the Agreement ultimately was dated 29 September 2001 and has registered.

32.For present purposes the ensuing details do not greatly matter; suffice it to say that in the interim prior to the anticipated ‘completion’ on 29 June 2002 Mr Fu is said to have borrowed more money from Mr Chiu, bringing the alleged total indebtedness to in or about $1.233 million, and that it was not until 2 February 2002 that the Housing Authority had assessed the relevant premium at HK$173,773.  Mr Chiu said that he agreed to the anticipated completion date and learned of the premium assessment through Mr Fu; it is common ground that he had never met, or even talked with, the defendant ‘vendors’.

33.Eventually, since there was no payment of premium, and no completed sale and purchase of the property, Mr Chiu caused the present action to be issued.

34.The foregoing account was the perspective offered to the court by the plaintiff.  However, whilst there is a certain amount of common ground in terms of objective dates and facts, the view/understanding of the defendants as to what had been occurring differed substantially.

35.So far as Mr Lau and his wife, Madam Yip were concerned, they said there had been absolutely no intention on their part to sell their property to Mr Chiu, in the manner alleged or at all, and indeed they had not knowingly executed any actionable Agreement for Sale and Purchase of their flat; so far as they were concerned; indeed so far as they were told, the whole ‘transaction’ had been essentially cosmetic.

36.Mr Lau told the court that the first he had known of the sequence of events leading to this action was one day in or about 17 April 2001 when he returned home from work to find his wife’s sister, Ah Fei, and her partner, Mr Fu, visiting at his home with his wife.

37.After exchange of the usual pleasantries, it had appeared that the purpose of the visit was that Ah Fei and Mr Fu wanted to borrow the title deeds to his flat in order to enable them to borrow money from a lender: he had no idea at this stage that this lender, and the alleged putative ‘purchaser’ of the flat, was the present plaintiff, Mr Chiu.

38.At this meeting at the defendant’s home, the defendants reluctantly had agreed to lend the title deeds for the purpose of security for the debt; ultimately Mr Lau, despite considerable misgivings, left the decision to his wife, whom in this regard evidently felt considerably pressured by her younger sibling, Ah Fei. 

39.It is said by the defendants that Ah Fei represented to them throughout that this would be a mere formality and that the Title Deeds would be returned in about six months, and that the defendants’ interest in their property would not be prejudiced.

40.The deeds of the flat subsequently were sent to the plaintiff, or, more accurately, to his solicitors.  There is a dispute of fact as to the circumstances in which this occurred, although in this instance at least I am minded to accept the evidence of Mr Patrick Ha, who said that these documents had arrived at his office reception in a brown envelope, although who had brought them he did not know; in the circumstances the overwhelming probability it was Ah Fei who was responsible for such delivery.

41.The next occurrence of substance took place a few days later, on 20 April 2001, at the solicitor’s office of Mr Ha, Messrs Au Yeung, Lo & Chung.  For the purpose of the present narrative, I confine myself to that which it is accepted to have occurred on that day.

42.The defendants, Mr Lau and Madam Yip, together with Ah Fei, went to the solicitor’s firm for the purpose of signing a document; again the defendants say that they had been told by Ah Fei that the document they were to sign was a “mere formality” and would not prejudice their interest in the property.

43.In fact, they met with Mr Patrick Ha in a conference room and ultimately signed that which now is recognized to be the Agreement for Sale and Purchase, which document forms the foundation of the plaintiff’s claim in this action.

44.This meeting, which took place in a conference room, apparently was in two parts: in the middle of it Mr Ha was asked to leave for a short time, leaving Ah Fei, her sister and husband together, during which period Ah Fei made a telephone call.  When Mr Ha duly was called back into the room, the document which now is said to be an actionable Agreement for Sale and Purchase of the defendants’ flat was executed, and thereafter the defendants and Ah Fei had left.

45.Subsequently, formal applications for assessment of premium were made to the Housing Authority by the defendants, in circumstances to which I hereafter allude, but no premium ever was paid, and no completion of the sale and purchase of the flat has taken place. 

46.Mr Chiu, the plaintiff, and the unpaid lender to Ah Fei’s common law husband, Mr Fu, is dissatisfied; he has not been repaid the monies that are owed to him by Mr Fu, and he does not have the flat that he now says he has ‘bought’ as a consequence of the foregoing events.  Hence these proceedings.

The primary issue 

47.At bottom there is but one issue in this case, namely, was this a genuine sale and purchase transaction?

48.Mr Hung, who appeared for the plaintiff, readily accepted, notwithstanding the legal arguments variously raised, that the decision in this case essentially turns on findings of fact; in short, if this transaction is found to be genuine, his client succeeds; if not, he accepts that his client must fail.

49.Mr Hung’s case was that this indeed was a genuine transaction.

50.In the course of his final submission, he suggested that, of the two versions of events placed before the court, the plaintiff’s case was sensible and logical, whilst the case advanced by the defendants was “repugnant” to common and commercial sense.

51.In rehearsing the objective facts, Mr Hung he argued that the plaintiff’s version of events was simple and straightforward.  After Mr Fu had borrowed money from his client, it was clear that by April 2001 there was little prospect that Mr Fu and/or Ah Fei would be able to repay the sum then due, and Mr Fu, the debtor, had offered to repay the debt by selling the defendants’ property at a price slightly higher than current market, with the initial loan of HK$700,000 being used as ‘deposit’.

52.Thereafter, he said, matters naturally had progressed toward fulfilment of this mutual aim: the defendants duly went up to the solicitor’s office to sign the Sale and Purchase Agreement, albeit in escrow, the defendants thereafter had applied to the Director of Housing for assessment of premium, thus to remove the restriction on alienation (although it is true that no premium was ever paid), and there had been consensual deferment of completion from the end of October 2001 to January 2002, and then further to June 2002 as, it was said, the defendants could not find alternative accommodation.

53.Not unnaturally, Mr Hung laid very considerable stress upon the fact of the signing of the Sale and Purchase Agreement, and he submitted that in light of the evidence of Mr Patrick Ha, the legal executive of Messrs Au Yeung, Lo & Chung, who was the other witness who was called by the plaintiff, it was open to the court to find that the Agreement, or at least its essentials, must have been fully explained to the defendants.  The significance of this, he said, was that if the defendants, with their eyes “wide open”, had signed this Agreement fully appreciating its nature, and which contained within it an acknowledgment that the sum of HK$700,000 already had been received, this must be the end of the defence case.

54.Moreover, Mr Hung argued, in light of the applications made by the defendants for the assessment of premium (in fact finally assessed by virtue of the letter from the Director of Housing dated 7 June 2001), it was difficult to accept that they had not grasped that such assessment was required pursuant to a sale of their property.

55.There is no doubt that Mr Hung had significant arguments on his side, and he marshalled such forces at his command with moderation and common sense.

56.For her part, Miss Wong for the defendants firmly submitted that it was abundantly clear on the facts as they had emerged at trial that her clients had had no intention whatever of selling their property, and nor, for that matter, had the plaintiff, Mr Chiu, ever had any interest in purchasing it.

57.It was plain, she said, that on these very particular facts the execution of the Sale and Purchase Agreement formed an “integral link” in an arrangement – which had commenced with the earlier request by Ah Fei and Mr Fu for the ‘lending’ of the title deeds to the defendants’ flat – which had been made to utilize the flat merely as security for the loan by Mr Chiu to Mr Fu, and that this device amounted to a mortgage or charge on the property, or at any rate an agreement so to mortgage or charge.

58.If this view of the facts was correct, Miss Wong submitted, in such circumstances, wherein a Housing Authority property is sought to be mortgaged/charged without payment of the required premium, such a mortgage/charge or an agreement to do so clearly violated the terms of section 17B of the Housing Ordinance, which, under the head of ‘Void Alienations’, provides that any such mortgage/charge or purported agreement to mortgage/charge, shall be void.

59.In addition, she argued, in light of the fact that self-evidently the defendants had played no part whatever in borrowing from the plaintiff, that they never had agreed to repay the loan to Mr Fu by selling their property, and that they had not received the sum of $700,000 (or any sum from the plaintiff), clearly therefore the plaintiff had furnished no consideration for this transaction.

60.She further noted that the so-called ‘Novation Contract’, as pleaded in paragraphs 3A and 3B of the Re-re-Amended Statement of Claim, was a curious pleading, containing no details as to date, place and form, and that such plea had been inserted only at the re-re-amendment stage over two and a half years after the writ had been issued.  Nor, she added, did the plaintiff’s witness statement make it clear how and when such a contract was entered into between the defendants and the plaintiff; any understanding in the terms specifically pleaded must have been reached exclusively between the plaintiff and the now-missing borrower, Mr Fu.

Decision on the primary issue

61.In terms of the primary issue, on the evidence before the court I have no hesitation in finding as a fact that these defendants had had no intention whatever of selling their property to the plaintiff herein, Mr Chiu.

62.Although in submission Miss Wong has eschewed non est factum (it is not altogether evident why, given that it is as plain as a pikestaff that these defendants had no real idea what was purporting to occur when they signed the ostensible S & P Agreement in the solicitor’s office on 20 April 2001), nevertheless it is abundantly clear on the history of this unfortunate matter (and I so find) that, at its highest, this ostensible transaction between the plaintiff and these defendants never was at any stage any more than a very loose arrangement – conducted through the dubious offices of the 2^nd defendant’s younger sister, Ah Fei and her partner, Mr Fu – whereby the defendants’ flat was to be proffered essentially as temporary security for the loan which had been made by the plaintiff to Mr Fu.

63.I firmly reject the plaintiff’s assertion that this was a genuine sale and purchase, as I firmly reject also that which I regarded as Mr Chiu’s risible assertion in his evidence to the effect that he personally did not understand or grasp the concept of ‘security’.

64.I find that this whole arrangement was a device – initially cooked up between Mr Fu and Ah Fei, who then prevailed on her sister and her husband – to obtain security in favour of Mr Chiu for his outstanding loan to Mr Fu.

65.Indeed, in cross-examination the plaintiff effectively acknowledged as much : when it was put to him that “All the while, you were hoping that Mr Fu would repay the loan, rather than you having to go through the process of enforcing the Sale and Purchase Agreement?”, he answered “Certainly, if he was able to repay the debt, we would have signed a fresh document”; and when further asked to clarify that this meant signing new documents to get rid of the Agreement, he answered “yes, you may say so”.

66.Although Mr Hung strove to deflect the purport of these answers in re-examination, to the effect that when instructions were given to register the Agreement there clearly was no prospect of repayment of the loan by Mr Fu, in my view this did not change the obvious purport of the plaintiff’s initial cross-examination responses.

67.Reduced to its basics, the plaintiff’s case comes down to the following stark proposition : that having lent his old friend, the third party, Mr Fu, a sum of money, and this sum having remained unpaid, Mr Chiu now claims to be entitled to the defendants’ Housing Authority flat in purported satisfaction of such debt pursuant to an ostensible ‘Sale and Purchase Agreement’, the result of which, it seems to me, is that not only will the defendants lose their sole asset, their flat, but it is further envisaged that it may quite possibly cost them additional money into the bargain, given that whilst the premium initially was to be borne by the plaintiff, the defendants ostensibly were subsequently to give the plaintiff ‘credit’ for such payment.

68.In the circumstances, therefore, seriously to put this arrangement forward as a genuine sale and purchase transaction strikes me as absurd.  I find that it was no such thing.  At the time Mr Chiu does not appear to have taken it very seriously either; his evidence was that he signed the document after Mr Ha, the legal executive, left his office and brought it down to him for signature as he sat in his Mercedes S Class saloon at the side of the road.

69.Looked at in the round, it seems to me that this transaction aptly fits the classic definition of a ‘sham’ as described by Lord Diplock in Snook v. London West Riding Investments Ltd [1967] 2 QB 786, at 802 :

“I apprehend that if it has any meaning in law, it means acts done or documents executed by third parties to the “sham” which are intended by them to give to third parties or to the court the appearance of creating between the parties legal rights and obligations different from the actual legal rights and obligations (if any) which the parties intend to create.”

70.I accept the evidence given by the defendants as to the manner in which this saga developed – Mr Lau in particular was an impressive witness of truth and in my view incapable of artifice – and the bewilderment of himself and his wife at the course events subsequently had taken, wherein their flat now apparently was in jeopardy, was plain to see.

71.I accept that at all times during the course of events which have led to this case, in particular at the time of handing over the title deeds in response to the request from Ah Fei, and whilst at the solicitor’s office, when Mr Ha was asked to leave the room and Ah Fei made a telephone call, that the defendants were under the strong impression, and indeed believed, that what was happening would not impact upon or otherwise affect their ownership or security of and in their flat – “a mere formality” and “something Mr Chiu’s boss required” was their understanding of the events at the solicitor’s office, as conveyed to them by Ah Fei, albeit Mr Lau also offered in evidence that throughout this meeting he had been “extremely uneasy” about what was going on.

72.Nor, with respect to Mr Ha’s evidence, do I think that his recollection is accurate as to the manner in which he says that he had explained the position fully to the defendants.  I reject this aspect of his evidence.  Far more likely, in my view, was that Mr Ha, whose client was the plaintiff, was under the impression that the so-called ‘Sale and Purchase’ merely was reflective of a prior arrangement entered into between the plaintiff and the defendants, and thus that in the circumstances prevailing there remained little necessity to fully discuss or explain the position; indeed part of his evidence indicated as much, Mr Ha recalling specifically that he had queried with the defendants and Ah Fei, at the time when he was asked to leave the room so that Ah Fei could make a telephone call, whether they had not reached an “arrangement” with the plaintiff.

73.Accordingly, I find as a fact that the defendants at no time realized the import of the document they undoubtedly signed.  I find also that the applications for premium assessment which were made by the defendants to the Director of Housing were, as Mr Lau recalled, done simply because they had been told also that this was part of the ‘formality’ required, and that it would be against the law not to make such application and that this act in itself did not presage any desire or intention to sell their property.

74.It follows, therefore, that I have concluded, as matter of law, and so find, that the Sale and Purchase Agreement was a “sham” in the sense of that term as described by Lord Diplock in Snook, op. cit., and that the transaction the defendants thought that they were undertaking simply was in the nature of the temporary provision of security or charge for the loan from Mr Chiu to Ah Fei’s partner, Mr Fu, and that as a consequence this arrangement was void pursuant to the terms of section 17B of the Housing Ordinance.

75.I further find that there was no consideration passing from the plaintiff to the defendants for the ‘agreement’ purportedly entered into, and that no ‘novation contract’ capable of enforcement at the behest of the plaintiff was entered into between the plaintiff and the defendants, as has been pleaded in the re-re-amended Statement of Claim (which strikes me as a transparent attempt belatedly to sidestep the obvious consideration difficulty inherent within this factual matrix).

76.It follows from the foregoing that the plaintiff’s claim must be dismissed upon these bases alone.  I so order.

77.In my judgment Mr Chiu, the plaintiff, must be left to his remedy in debt against his old childhood friend Mr Fu.  Although Mr Fu is said to have disappeared, and now is thought to be in Shenzhen, I strongly suspect that in the circumstances Mr Chiu will be able to locate him.

78.However, if and in so far as I am wrong in the conclusions, factual and legal, that I have drawn in this case, I move now to consider two further aspects of this case which seem to me to have engendered a disproportionate amount of time and effort.

79.In this context I refer to that which Miss Wong has referred to as the alternative ‘MUI defence’, which she has informed the court is shorthand for the “parallel” defences of misrepresentation and undue influence which also have been mounted in this case, and which, she says, “rise and fall together”. 

80.Let me briefly refer to each in turn.

Undue influence

81.I see no need to spend a great deal of time upon this particular submission.

82.The manner in which it has been put is thus : that the defendants were pressured into signing the Sale and Purchase Agreement because Madam Yip (and hence, I presume, Mr Lau) was unduly influenced by her younger sister, Ah Fei.

83.Accepting for present purposes that the gravamen of undue influence is, as Lord Nicholls expressed the position in Royal Bank of Scotland Plc v. Etridge (No 2), [2001] 3 WLR 1021, at 1029, as “unacceptable conduct [which] lies in a relationship between two persons where one has acquired over another a measure of influence, or ascendancy, of which the ascendant person takes unfair advantage”, I am nevertheless unable to see how the influence which allegedly was exerted over her sister by Ah Fei can, on the evidence before the court, be attributed to the plaintiff, Mr Chiu.  And, it seems to me, absent any such attribution, this argument does not begin to get off the ground.

84.Accordingly, I reject it, or, more precisely, I would have rejected it had it been necessary to decide the case on this basis.

Misrepresentation

85.This element is a little more promising from the defendants’ viewpoint, and for what it be worth I do not necessarily accept Miss Wong’s submission that if I am against the defendants on undue influence (as I am), then the misrepresentation argument must go the same way.

86.The actionable misrepresentation relied on in this case is that of Ah Fei, who falsely represented to the defendants that the initial loan of the title deeds and the consequent attendance at the solicitor’s office to sign the sale and purchase document that the plaintiff now seeks to enforce was no more than a “mere formality”, and that there was no danger to the defendants in terms of the ownership of their flat being placed at risk.

87.This argument can only be brought home to the door of the plaintiff, in my view, if and in so far as Ah Fei was repeating that which she had been told by the plaintiff and Mr Fu in this regard; in other words, that Ah Fei had acted as the agent for the misrepresentation originating from the plaintiff, and which the plaintiff knew or must have known would be relayed by her in the course of persuading her sister and brother in law to assist in terms of securing the repayment of the loan from Mr Chiu to Mr Fu.

88.I say that this is the only manner in which this submission can get off the ground because it is common ground that the plaintiff and these defendants have never met, and indeed have communicated, if it can be said that they ‘communicated’ at all, through the medium of the third parties Mr Fu and Ah Fei.

89.On the evidence before the court, and in particular the evidence of Ah Fei – whom I accept as a witness of truth in so far as I do not consider that at any time she deliberately was misleading her sister, and that she had accepted what had been told to her by the plaintiff as representing the true position – I am prepared to accept (and so do) that the plaintiff initially had represented to Ah Fei that if this transaction proceeded in the manner envisaged (as in fact it did) that the defendants’ property would not be at risk, that a guarantee document should be signed “as a matter of formality required by his boss” and that he would do nothing with the property and that nothing would happen to the property, and that thereafter the plaintiff had made like representations to Ah Fei when she had interrupted the meeting at the solicitor’s office in order to make (as I find as a fact) a telephone call to the plaintiff in order to reconfirm this position, a reconfirmation which she then had passed on to the defendants who were with her in the office and whom at that time were evidencing unease about what was happening, and who had signed the document specifically and solely in reliance upon such incorrect and wrongful representations.

90.It seems to me that this is the only way in which this aspect of case is able to be put – looked at broadly I think that Miss Wong’s submission, albeit elided with the concept of undue influence, ultimately must amount to this – and if this analysis be correct, then had it been necessary to decide this case on the basis of the misrepresentation of the plaintiff as to the true position, via the agency of Ah Fei, I should have been prepared so to hold that the Agreement as had been signed had been vitiated by such misrepresentation or misrepresentations.

91.Thus, had it been necessary so to hold, the plaintiff’s case would have failed upon this basis also.

Order

92.It follows from the foregoing that in this case the Order of the court is as follows :

a.	The plaintiff’s claim against the defendants is dismissed;
b.	There will be an order nisi that the costs of this action are to follow the event, and are to be paid by the plaintiff to the defendants, such costs to be taxed if not agreed.

93.I have not been addressed by counsel upon any necessary rectification of, or amendment, to the Register in the Land Registry consequent upon any judgment dismissing the plaintiff’s claim.

94.Accordingly, if and in so far as there is disagreement between the parties on this issue, I also give liberty to apply as to the appropriate form of the Order.

Mr Andy Hung, instructed by Messrs Pansy Leung Tang & Chua, for the plaintiff

Ms Abigail Wong, instructed by Messrs Paul C W Tse & Co, for the 1^st and 2^nd defendants