Lam Moon Yuen v. Kin Ming Holdings International Ltd

HCA 216/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 216 OF 2008

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BETWEEN

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Before: Deputy High Court Judge L. Chan in Chambers

Date of Hearing:  12 March 2010

Date of Decision: 18 March 2010

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D E C I S I O N

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1.This is an application for leave to appeal against my order of 26 August 2009 refusing to strike out the statement of claim. Section 14AA(4) of the High Court Ordinance, Cap. 4 provides that I should not grant leave unless I am satisfied that the appeal has a reasonable prospect of success or there is some other reason in the interest of justice that the appeal should be heard. I think I am only concerned with whether that the defendant, Kin Ming Holdings International Limited (“Kin Ming”) has a reasonable prospect of success in showing on appeal that it is plain and obvious that the statement of claim should be struck out.

2.The defendant launched many grounds for striking out the statement of claim. After a 3-day argument, I gave my reasons on 26 August 2009 for not acceding to the application. I do not think it necessary for me to repeat my reasons. The defendant in this application relies on more or less the same grounds.

3.One of the issues raised by Madam Lin in this action is that the Agreement in question was made partly orally and partly in writing. She pleaded the oral part of the Agreement in paragraph 8(g) of her statement of claim as follows:

“(g)  Within two years after the Defendant had returned to the Plaintiff the said funds, if Kin Ming (Xiamen) was in a position to obtain again the Development Rights over the Land, whether on the portion of the Land identified as Lot A4, or on any other portion thereon (the ‘re-granted lot or lots’), the Defendant must co-operate with the Plaintiff to develop the same by building commercial and/or residential units thereon to the extent of the Total Building Area in accordance with the terms of the Agreement.”

4.She raised this issue in this action but not in the earlier proceedings that she instituted in the Mainland. I held in my decision that she should be allowed to argue this issue at the trial of this action and did not strike it out. Kin Ming now repeats its argument that the alleged oral part of the agreement is contrary to the written agreement. Kin Ming further argues that Madam Lin’s failure to raise this issue in the Mainland proceedings shows that it is a recent fabrication. Kin Ming says that for these reasons, the pleading of this issue should be struck out.

5.I have decided against the argument that the oral part is contrary to the written agreement. The oral part could vary the effect of the written part, but it did not contradict the written part. I do not think Kin Ming has provided any ground of appeal on this point that would give it a reasonable chance of success.

6.Regarding the submission of fabrication by Madam Lin, I would refer to the statement of claim in HCA 2350 of 2005 (“the First Action”) which was brought by Kin Ming against Madam Lin where Kin Ming pleaded in paragraph 11 that:

“11.  Prior to entering into the Agreement, the defendant had conducted her own due diligence in relation to the planning status of Lot A4 for the ‘海峽城’ project, as a result of which she became aware or ought to have become aware of the well known fact that the future planning of Lot A4 was likely to be changed to one principally based on public facilities and accordingly, it may not be possible to proceed with the development of the project on the basis of the original planning as stated in the Planning Permission No. 98D253 referred to in clause 1 — 4 of the Agreement.”

7.In the light of this background, I held that Madam Lin should be allowed to raise the alleged oral part of the agreement at the trial. I also did not agree with Kin Ming that the written agreement could exclude the alleged oral part as there was no entire agreement clause in the written agreement. I do not think Kin Ming has shown on the ground of fabrication or the ground of entire agreement in writing that it is plain and obvious that this claim should be struck out.

8.Mr Neoh, leading counsel for Kin Ming, also submitted that I had decided in the default judgment in the First Action that there was just one agreement that was made in writing and that had terminated. He further submitted that because Madam Lin is arguing that the agreement is partly made orally and partly in writing, she should apply to set aside the default judgment and to establish her case on the nature of the Agreement in that action.

9.I have indeed declared in the default judgment in the First Action that the Agreement had terminated. But I have made any particular finding on the nature of the Agreement. Madam Lin had not taken any part in that action. Madam Lin’s current allegation that there was an oral part to the agreement, even if made by her in the First Action, would also not have changed my view on the question of termination though there might been the further question of whether the Agreement had revived. Madam Lin is also not challenging my declaration of termination in that action. She only claims in this action that the agreement has revived. I think the nature of the agreement or whether there was an oral part to it can be determined in this action just as it could have been determined in the First Action. I do not think this attack of Kin Ming can avail it a reasonable prospect of success on the appeal.

10.Another main issue is Madam Lin’s pleading that the meaning of “Lot A-4” or “A-4 Lot” in the written agreement meant and were understood and/or intended by the parties to mean “any portion of Land covering a building area commensurate with the Total Building Area over which Kin Ming (Xiamen) possessed or came to possess any of the Development Rights, including any of the re-granted lot or lots”.

11.Kin Ming argued in the striking out application and repeated in this application that the original A-4 Lot and its development were very much different from the re-granted lot or lots and their development. However, save the very skilful forensic arguments, Kin Ming had not provided any concrete reason to demonstrate why the Agreement cannot apply to the development of the re-granted lot or lots. In the light of the factual matrix, I held that Madam Lin should be allowed to pursue this issue. Kin Ming in this application has still failed to show why it is plain and obvious that this issue is wholly unarguable and should be struck out.

12.Another major issue is whether Kin Ming owes Madam Lin the fiduciary duties as pleaded by her. Madam Lin alleged that by reason of the co-operation project and/or the Agreement as alleged by her and/or the written agreement, the defendant was and is her partner and/or agent and hence owes her a number of fiduciary duties.

13.Kin Ming however argued that there was no such duty as the Agreement was an arm’s length commercial one wherein the parties’ rights and obligations were defined.

14.I said in paragraph 88 of my decision:

“88.  Madam Lin also relies on various obligations of Kin Ming in the Agreement to justify that Kin Ming was and is her agent or partner.  But I think the most important argument is that Madam Lin has agreed under the Agreement to pay Kin Ming RMB 495 million in return for the development rights as defined in the Agreement.  She will have to bear all the risks and be entitled to all the profits of the development to the exclusion of Kin Ming.  Nevertheless, the project in the meantime would be held in the name of Xiamen KM until the final stage when the land certificate would be transferred to her.  Under clause 5 of the Agreement, Kin Ming had to be responsible for this project and to unconditionally co-ordinate with her in its development and construction.  Kin Ming did not assume these duties gratuitously but did so for good consideration.  Her entire rights in the project from time to time are in the hands of Kin Ming until the transfer of the land certificate.  In the light of all these, it is certainly open to her to argue that the circumstances in which Kin Ming has undertaken to act for her have given rise to a relationship of trust and confidence.  Hence, it is arguable that Kin Ming owes her the fiduciary duties as pleaded.”

Kin Ming has not demonstrated any reasonable prospect of showing on appeal that I was wrong.

15.There are also some other minor points mentioned in Mr Neoh’s written submissions. I do not think these minor points can change my view on the merits of this application. I therefore dismiss this application for leave to appeal. I also make an order nisi that Kin Ming do pay Madam Lin the costs of this application. I also direct the solicitors on both sides to fix a 9:30 a.m. hearing before me for the purpose of gross sum assessment of these costs.

Ms Frances Lok, instructed by Messrs Jesse H.Y. Kwok & Co., for the Plaintiff

Mr Anthony Neoh, SC, Ms Barbara Wong and Mr Antonio Da Roza, instructed by Messrs Simon Si & Co., for the Defendant