Read the full judgment text of CACV 7/2013 on BabelCite. This Court of Appeal judgment was delivered on 16 October 2013 before Yuen JA, Kwan JA, Chu JA.
Civil appeal – appeal against findings of primary fact – mortgage and legal charge – joint and several covenant to repay all monies due – whether the trial judge's findings of fact should be reversed – standard of review for primary findings of fact – non est factum – misrepresentation – undue influence – unconscionable bargain – collateral or composite agreement limiting liability – Bank of China (Hong Kong) Ltd v Tsang Sheung Bun – property at 10th Floor of Rich Building, 28 Ormsby Street, Tai Hang – legal charge dated 14 November 1997 securing Universal Taxi Ltd's banking facilities. The defendant purchased the Property from Fung Man Yin in 1997 and executed a legal charge in favour of the plaintiff bank as security for Universal Taxi's banking facilities. The defendant raised four grounds of defence at trial: non est factum, misrepresentation, undue influence and unconscionable bargain. The trial judge rejected all four grounds, finding the defendant an untruthful, unreliable and evasive witness who must have known he was signing the legal charge and understood his liability, and preferring the evidence of the solicitors' staff (Leung and Hau) as to their normal practice. Held, appeal dismissed: the Court of Appeal should only reverse a finding of primary fact if it is plainly wrong (Ting Kwok Keung v Tam Dick Yuen; McGraddie v McGraddie; Anderson v City of Bessemer; Housen v Nikolaisen); the trial judge's findings of fact were not plainly wrong. The defence of non est factum failed because the defendant was not under any inability to understand the legal charge, which was explained to him. The defence of misrepresentation failed because there was no basis to disturb the finding that the defendant knew he was signing the legal charge and there was no suggestion CGC was party to any fraud. The defence of undue influence failed because the evidence did not establish the impugned transaction was procured by undue influence; without such a finding, the bank could not be put on constructive notice (Li Sau Ying v Bank of China (Hong Kong) Ltd; Bank of China (HK) Ltd v Personal Representatives of Fu Kit Keung); the mere fact a debtor obtains a surety does not make the debtor the bank's agent (Bank of China (Hong Kong) Ltd v Wong King Sing); manifest disadvantage alone is insufficient without actual or constructive awareness of a relationship indicating risk of abuse (Bank of China (Hong Kong) Ltd v Leung Ngai Hang; Credit Lyonnais v Burch). The defence of unconscionable bargain failed because the legal charge did not shake the conscience of the court and there was no plea the bank knowingly took advantage of any weakness (Chitty on Contracts (31st ed) §§7-133, 7-134). The new contention of a collateral or composite agreement limiting liability to HK$1,160,040 was not permitted on appeal as it was not pleaded or raised at trial (Bank of China (Hong Kong) Ltd v Fung Chin Kan & Anr), and in any event the documents relied on did not support such an agreement as the legal charge secured general banking facilities to an unlimited extent. Costs awarded to the plaintiff on a party and party basis; defendant's own costs to be taxed in accordance with the Legal Aid Regulations.
Legal issues: Whether the trial judge's primary findings of fact should be reversed on appeal · Whether the defence of non est factum is established · Whether the defence of fraudulent misrepresentation is established · Whether the defence of undue influence is established · Whether the defence of unconscionable bargain is established · Whether a collateral or composite agreement limited the defendant's liability to HK$1,160,040
Outcome: Appeal dismissed; plaintiff's judgment for vacant possession and HK$71,174,892.74 with interest upheld, and defendant's counterclaim dismissed
Cited by 13 cases · Cites 3 cases