Lam Mable v. World Place Ltd and Others

HCA 4699/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 4699 OF 2001

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Before: Deputy High Court Judge L. Chan in Chambers

Dates of filing Written Submissions: 16, 22 March and 1 April 2012

Date of Decision: 3 April 2012

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D E C I S I O N

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1.This is the plaintiff’s application to amend her statement of claim.

The plaintiff’s claim

2.The plaintiff claims to be the legal and beneficial owner of a property in Sai Kung.  She is seeking possession of the same from the defendants who are currently the occupiers. 

3.She has pleaded in the original statement of claim that she is the legal and beneficial owner of the property.  She further pleaded that the 1st defendant had entered into an agreement dated 10 June 1994 to purchase the property from the then registered owner Ho Ngau (“Ho”) at HK$8,000,000.  The agreement was negotiated by one Cheung Shek Kong (“Cheung”) on behalf of Ho.  The 1st defendant pursuant to the agreement paid various sums totalling HK$1,600,000 for the purchase.  The construction of the property was completed on 14 March 1997.  It was delivered to the 1st defendant as licensee on 6 March 1998 in return for a part payment of HK$800,000 from the 1st defendant.  The 1st defendant in turn granted a permission/licence to the 2nd and 3rd defendants to have vacant possession of the property. 

4.The vendor’s solicitors gave notice in around September 2000 to the 1st defendant to complete the purchase on about 20 October 2000.  However, the 1st defendant’s solicitors by letter of 20 October 2000 notified Ho and/or Cheung that the 1st defendant was not going to complete the purchase. 

5.The plaintiff then purchased the property from Ho on 30 November 2000 at HK$4,380,000 and the purchase was financed by a mortgage in favour of a Treasure Spot Finance Company Limited.  The plaintiff completed her purchase on 30 November 2000 and was entitled to possession of the property.

6.The vendor also terminated the licence given to the 1st defendant and requested for vacant possession of the property from the defendants.

7.Alternatively, the licences or permissions were deemed to have been revoked by the vendor upon disposal of the property to the plaintiff.

8.However, despite repeated demands and requests, the defendants refused to return the property to the vendor.  The defendants also refused to return the property to the plaintiff despite demands.

The defence

9.The defendants pleaded in their defence that Ho was illiterate and had been deceived or misled into executing the assignment in favour of the plaintiff.  Ho did not intend to do so.  Nobody including the solicitors explained to Ho the purpose of the assignment.  Nothing had been paid to Ho.  The assignment of the property by Ho to the plaintiff was a fraud on Ho, but Ho did not intend to take any action against the plaintiff.

10.The defendants further pleaded that the 1st defendant entered into possession of the property through the 2nd and 3rd defendants and continued to do so after Ho’s apparent repudiation of his contractual obligation to complete the sale of the property to the 1st defendant.  The 1st defendant’s occupation of the property is pursuant to the 1st defendant’s lien which arose out of the part of the purchase price which is kept by Ho.

The plaintiff’s summons to amend

11.By her summons to amend the statement of claim, the plaintiff wants to plead that Cheung was the beneficial owner whilst Ho was merely holding the property as a bare trustee for Cheung.

12.She also wants to add that Ho and/or Cheung had by the letter dated 23 October 2000 not only accepted the repudiation of the agreement by the 1st defendant, but also terminated the licence to the 1st defendant and demanded vacant possession of the property from the defendants. 

13.She also wants to delete a subordinate clause which says that her purchase was financed by a mortgage on the property in favour of Treasure Spot Finance Company Limited. 

The defendants’ opposition

14.The proposed amendments appear to be simple and straightforward, but the 3rd defendant on behalf of the 1st defendant made a 20-page affirmation to oppose the application dated 15 December 2010.  Pursuant to my directions for skeleton submissions, all three defendants filed a one-page submissions on 16 March 2012.  After the plaintiff had filed their brief and general submissions on 22nd March, the defendants applied on 26th March for leave to file a further set of submissions as they only received the plaintiff’s submissions by post in that morning.  The defendants then filed a further set of lengthy submissions on 2nd April pursuant to leave granted.

The 3rd defendant’s affirmation to oppose

15.The 3rd defendant said in her affirmation that the amendments were proposed by the plaintiff with devious intentions and are mala fide.  They are for a strategic manoeuvring to constitute a completely new case as the plaintiff realised that her case as pleaded would not do well.

16.The 3rd defendant then elaborated her opposition. She said the plaintiff had by an affirmation used in an application for summary judgment verified the truthfulness of her original statement of claim.  The plaintiff had also exhibited in an affirmation the assignment by which Ho assigned the property to her and the assignment stated that she had paid Ho, the vendor the price of HK$4,380,000.  The original statement of claim did not say that Cheung had any interest in the property.  The plaintiff merely referred to Cheung as Ho’s attorney in her affirmation.

17.The 3rd defendant then said that the plaintiff, by proposing to amend the statement of claim to plead that Ho was merely a bare trustee of the property whilst Cheung was the beneficial owner, was seeking to withdraw her admissions made in the original statement of claim and her affirmation.

18.I do not think the proposed amendments saying that Ho was a bare trustee and Cheung was the beneficial owner of the property have the effect of withdrawing any admission.  The statement of claim has made no admission to anything said by the defendants. 

19.The proposed amendments can no doubt change the nature of Ho’s previous interest in the property and make Cheung its previous beneficial owner.  That is the background of the plaintiff’s case leading to the plaintiff becoming the legal and beneficial owner.  These proposed amendments do not contradict the original statement of claim.  They are elaborations to the background with a significant change as who vested the beneficial interest of the property unto the plaintiff.  The plaintiff’s cause of action is based on her being the current legal and beneficial owner of the property.  There proposed amendments will not change this cause of action.  I hold that the defendants cannot oppose these amendments on the ground of withdrawal of admissions. 

20.Regarding the proposed deletion of the clause saying that the plaintiff’s purchase was financed by a mortgage of the property in favour of Treasure Spot Finance Company Limited, the 3rd defendant said that this proposed deletion is to omit a material fact which will contradict the plaintiff’s case.  She pointed out that the mortgage is a registered document and has been verified by the plaintiff’s solicitors for public investigation (at the Land Registry).

21.The plaintiff in her affirmation in reply explained that the proposed deletion is to remove an inaccurate detail.  The reason being that her purchase was financed not only by the mortgage in favour of Treasure Sport Finance Company Limited, but also by another mortgage in favour of Allied Capital Resources Limited and her own money.  In the light of this clarification, I see no reason why the deletion should not be allowed.

22.The 3rd defendant then said that the plaintiff, having verified her original statement of claim, cannot make the amended statement of claim with an honest belief in its truthfulness.  I disagree with this for what I have already said above.

23.The 3rd defendant further said that if the amended statement of claim is true and correct, then the action that has proceeded until now on a false basis and the plaintiff has lied on oath.  The action should therefore be struck out as an abuse of process.  I disagree with this for what I have said above.  Furthermore, if the amendment can indeed put right what is wrong, then it should be allowed.

24.The 3rd defendant further said that the proposed amendments are matters that the plaintiff should have brought up before her application for summary judgment.  She further said that if Cheung should be the beneficial owner, then the material times of the case should be traced back to when Cheung had become the equitable owner and Ho the bare trustee.  The fact that Ho was the legal and beneficial owner before his assignment of the property to the plaintiff was supported by the New Grant to the land on which the property was built and by Ho’s agreement of sale and purchase with and assignment to the plaintiff.

25.I however take the view that delay is no ground for disallowing the amendments as the case is still at the early stage.  Discovery and exchange of witness statements have yet to take place. 

26.The defendants are also at liberty to contest the question of whether Ho or Cheung was the beneficial owner if they consider that such contest can assist their defence.  In any case, the defendants are not defending on the basis of a title paramount.  Furthermore, the defendants’ reliance on the 1st defendant’s lien on the purchase price as the ground to retain their occupation of the property is not affected by these amendments. The reason being that the plaintiff has treated the 1st defendant’s dealings with the vendor as dealings vis-à-vis either Ho or Cheung.

27.The 3rd defendant further said that there are still other matters that should be pleaded in the amended statement of claim.  They are the details of the plaintiff’s payments for the consideration of her purchase, how and when did Cheung become the equitable owner, how was Cheung’s equitable interest transferred to the plaintiff and the plaintiff’s intimate relationship with Cheung.  It is also the plaintiff’s case that she had paid the consideration to Ho.  But Cheung has said on affirmation that the purchase money was received by him. 

28.The 3rd defendant also asserted that the alleged payments were purportedly made by the plaintiff in a devious way as there was a sum of HK$1,500,000 borrowed by the plaintiff and Cheung together and secured by a mortgage on the property.  The 3rd defendant said that the transaction of sale to the plaintiff was a sham and the payments were also a sham.

29.If the 3rd defendant should consider that there are further matters that should be included in the amended statement of claim, she and the other defendants are at liberty to seek further and better particulars of the amended statement of claim. 

30.If the defendants should consider the sale of the property by Ho to the plaintiff a sham, then it is open to them to challenge the plaintiff’s capacity to sue on this basis.  In fact, they have already done so in their defence.  They are also at liberty to challenge the plaintiff’s purported payments to show that her purchase was a sham.  However, these are not grounds for refusing the proposed amendments.   

31.The 3rd defendant also said if these proposed amendments should have been pleaded earlier, then they would have affected substantially how the defendants would have formulated their defence.  I do not think this is an argument for refusing the proposed amendments.  If I should grant the plaintiff leave to amend, the defendants will be given an opportunity to amend and reformulate their defence too.

32.The 3rd defendant further argued that allowing the amendments will be to put the defendants on trial for a second time for a completely new case.  I think this assertion is an exaggeration.  The defendants have not been tried on this case and the plaintiff’s amendment does not alter her case that she is the legal and beneficial owner of the property. It is the defendants’ case is that the plaintiff has never been the legal and/or beneficial owner.  The proposed amendments will not prejudice or prevent them from continuing with this line of argument.

33.The 3rd defendant’s next argument is that the plaintiff applied for summary judgment to force the defendants to disclose their evidence before exchange of witness statements and then tailor-made her amended statement of claim according to such evidence.  The 3rd defendant argued that if the amendments should be allowed, then the plaintiff can tailor-made her pleadings whenever there should be new evidence that may defeat her claim and the action will never come to an end.

34.I however take the view that if there is evidence from the defendants which tarnishes the plaintiff’s case and obliges the plaintiff to clarify her case by amendment, then if there is no other reason not to allow the amendment, then I must allow the amendment so that the issues between the parties can clearly be identified.

35.The 3rd defendant further argued that the proposed amendments are embarrassing to the defendants.  She supported this argument by repeating what she has said about the amended statement of claim being incomplete and should be struck out.  She repeated that Cheung’s equitable ownership, the trust between Cheung and Ho, the plaintiff’s legal rights, the plaintiff’s equitable interest and the chain of title should all be pleaded.

36.If the 3rd defendant should consider that there are matters that should be pleaded, she and/or the other defendants can apply for further and better particulars of the same.  This objection cannot stop leave to be granted for the amendments.

37.The 3rd defendant then repeated her argument that the plaintiff has delayed the making of the amendments.  She further said that some documents produced by the plaintiff are difficult for the court to make any sense out of them.  In the alternative, it was highly possible that the defendants might not be able to trace some of the key witnesses or the witnesses are no longer available after a long delay.  However, I do not think it too late to grant the amendments as the action has not even gone passed discovery and the exchange of witness statements.  The defendants’ application to strike out for delay has also been dismissed.

38.Regarding the documents, even if they are difficult to understand, that is not a ground for refusing the amendments. 

39.On the alternative ground about unavailability of witnesses, the 3rd defendant did not specify any witness or the matter that the witness may be able to testify on.  It is just a bare allegation.  I do not think such an allegation can stop the granting of leave for the amendments.  I also cannot see what prejudice will be caused by the amendments to the defendants that cannot be compensated by costs.

40.The 3rd defendant then complained that the action has taken 9 years and has not concluded.  Granting the amendments will give the plaintiff one more opportunity to renew the fight on an entirely different claim and that is extremely unfair to the defendants.

41.I understand that the defendants have tried to strike out the action on the ground of delay.  They failed.  They then appealed, but withdrew the same subsequently.  The action therefore has to proceed.  The purpose of allowing an amendment is to ensure the determination of the real question in controversy.  If the background leading to the plaintiff becoming the legal and beneficial owner of the property is relevant to the merits of her claim, then I should allow her to set forth the whole of her alleged background and for the defendant to challenge that.

The defendants’ skeleton submissions

42.The one-page submissions of the defendants filed on 16 March repeated the 3rd defendant’s arguments of delay and the insufficiency of the proposed amendments.  It also says that the plaintiff’s pleading of the 1st defendant’s agreement to purchase of the property and subsequent repudiation as excessive and redundant.  I do not think so.  The matters pleaded can explain the plaintiff’s case on how the defendants have acquired possession of the property and their basis of keeping there.

43.The defendants’ further submissions are lengthy, but they contain more or less the same arguments as in the 3rd defendant’s affirmation referred to above.  I do not see it necessary to repeat the same analyses again.

Order

44.In the premises, I grant leave to the plaintiff to amend her statement of claim in terms of the draft amended statement of claim annexed to her summons filed on 9 November 2010.

45.I also grant leave to the defendants to file and serve their amended defence to deal with the plaintiff’s amendments within 28 days from today.

46.I further grant leave to the plaintiff to file and serve a reply to the amended defence within 28 days thereafter.

47.I also make a costs order nisi that the costs of and occasioned by the plaintiff’s application to amend be to the defendants in any event save that the defendants do pay the plaintiff the costs of the opposition and the costs reserved in this application in any event.

Mr Kelvin K H Liu, instructed by Choi & Liu, for the plaintiff

The defendants appeared in person