Mak Ho Fung v. Mak Kai and Others

CACV 246/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 246 OF 2011

(ON APPEAL FROM DCCJ NO 2027 OF 2008)

____________

___________________________

JUDGMENT

___________________________

Hon Cheung JA:

1.I agree with the judgment of Chu JA. The appeal is allowed to the extent set out in paragraph 49 with a costs order nisi as set out in paragraph 50.

Hon Kwan JA:

2.I agree with the judgment of Chu JA.

Hon Chu JA:

Introduction

3.This is the appeal of the 1^st, 3^rd and 4^th defendants (collectively “the defendants”) against the Judgment of His Honour Judge Chow (“the Judge”) dated 10 June 2011.  Leave to appeal to the Court of Appeal was granted by Yeung VP on 8 November 2011.

4.The action in the District Court concerns the beneficial interest in a property situated at Flat A, 4^th Floor, No. 192 Tong Mei Road, Kowloon, Hong Kong (“the Property”).  It was purchased by the 1^st defendant and the late Madam Mak Yun Siu (麥潤笑) (“the deceased”) on 21 February 1974 and held by them as joint tenants.

5.By an assignment dated 12 June 2007 (“the Assignment”), the 1^st defendant and the deceased assigned the Property to the 3^rd and 4^th defendants.  The stated consideration was HK$ 1,000,000.

6.The deceased died on 10 February 2008.  No Letters of Administration has been granted and no personal representative has been appointed to administer her estate. 

7.In April 2008, the plaintiff discovered the assignment of the Property to the 3^rd and 4^th defendants.  On 14 May 2008, he commenced proceedings in the District Court against the defendants and the estate of the deceased (the 2^nd defendant), claiming to be entitled to the beneficial interest of the Property on the basis of proprietary estoppel.  The claim against the 2^nd defendant was subsequently discontinued on 29 April 2009.

8.The Judge found in favour of the plaintiff. He granted three declarations, namely, (1) the plaintiff is the beneficial owner of the Property; (2) the assignment of the Property from the 1^st and 2^nd defendants to the 3^rd and 4^th defendants under the Assignment is null and void and of no effect; and (3) the 3^rd and 4^th defendants hold the Property on trust for the plaintiff[1].  The Judge further ordered the 1^st and 2^nd defendants to execute an assignment to assign the Property to the plaintiff[2].  The 3^rd and 4^th defendants’ counterclaim for delivery up of vacant possession and mesne profits for occupation of the Property was dismissed by the Judge.

The plaintiff’s claim

9.The 1^st defendant was born in 1917. She is a native of Dongguan City (東莞市).  She came to Hong Kong in 1954 and worked as a domestic helper until her retirement in 1980.  She is a spinster and has no children.

10.The deceased was the sister of the 1^st defendant.  She also worked as a domestic helper in Hong Kong until her retirement in 1990.  Similar to the 1^st defendant, she was not married and had no children.

11.The 3^rd and 4^th defendants are brothers.  They are the nephews of the 1^st defendant and the deceased.

12.The plaintiff was born in Guangzhou City (廣州市) in July 1953. His birth parents are譚文開 and 麥志文 (also known as 麥彬彬).  The plaintiff’s name by birth is譚可風 (Tan Kefeng).

13.In about 1971 and 1972, the 1^st defendant and the plaintiff’s mother met in Dongguan and indicated she wanted to take the plaintiff as her foster son (養子).  This was agreed to by the plaintiff and his mother.  Nothing was done at the time to formalize the relationship.  On 5 January 1973 and at the request of the 1^st defendant, the plaintiff moved from Guangzhou to Dongguan and changed his household registration to Dongguan.  He resided with the 1^st defendant’s relative and worked on a farm.  In about 1975 and 1976, the 1^st defendant also had a house built for the plaintiff.  However, as the plaintiff found a job in a rubber factory in Guangzhou, he moved to live in Guangzhou instead.  Throughout those years, the 1^st defendant, who was working in Hong Kong, had remitted money on a monthly basis to the plaintiff for his maintenance. 

14.During the Spring Festival in 1980, when they went together to Dongguan to visit relatives, the 1^st defendant and the deceased requested the plaintiff to formally become the foster son of the 1^st defendant, to change his surname by adopting her surname (i.e. Mak 麥) and also to move to live in Hong Kong as the 1^st defendant’s foster son.  The deceased told the plaintiff that when he had moved to Hong Kong, they could take care of each other (互相照顧).  The 1^st defendant and the deceased further promised the plaintiff that they would give him the interest in the Property.  The plaintiff agreed.

15.As a result of the promise made by the 1^st defendant and the deceased and the agreement he made with them, the plaintiff changed his surname to Mak, assumed the new name of 麥可風 (Mak Ho Fung) and formally became the 1^st defendant’s foster son.  He applied for and was issued by the Notary Office of Guangdong Province two certificates both dated 2 May 1980.  The first is a 出生證明書 (birth certificate) certifying his new name is 麥可風 and the 1^st defendant is his foster mother (養母).  The second is a 親屬關係證明書 (relationship certificate) certifying that the plaintiff has since 5 January 1975 become the foster son of the 1^st defendant. 

16.At about the same time, the plaintiff, with the 1^st defendant’s assistance, made an application to settle in Hong Kong.  In April 1982, the plaintiff was issued a one-way permit.  He came to Hong Kong on 21 April 1982.  At the time, the Property was undergoing renovation.  Later when the work was completed, the 1^st defendant and the deceased told the plaintiff the Property was his.  The plaintiff then moved into the Property and has since been residing in it.   He attended the owners’ meetings of the building in the capacity of an owner and had also incurred some $200,000 on the renovation and maintenance of the Property. 

17.In 1983, the 1^st defendant and the deceased gave the plaintiff $200,000 to start a small business, which eventually did not take off. 

18.In 1986, the plaintiff got married.  The 1^st defendant sent out wedding invitations and presided over the wedding ceremony in the capacity of the plaintiff’s mother whereas the deceased participated as the plaintiff’s paternal aunt (姑媽).  At the insistence of the 1^st defendant and the deceased, the plaintiff’s birth mother was not invited to the wedding.  

19.At the trial, the plaintiff had called Madam Li (李轉璋), who is his wife’s aunt, as his witness.  Madam Li testified that in 1985, the 1^st defendant asked her to introduce girl friend to the plaintiff, saying that she had given the Property to the plaintiff as a gift.  Madam Li felt assured by the fact that the plaintiff had a property; she therefore introduced her niece to the plaintiff and they eventually got married.        

20.After their retirement, the 1^st defendant and the deceased had at the plaintiff’s invitation moved to live in the Property with the plaintiff and his family until they moved to other places.  At the time of the trial, the 1^st defendant was living with one of her nephews.

The defence

21.The 1^st defendant’s case is that the plaintiff is her distant relative from Dongguan.  In 1980, upon the plaintiff’s request to help him to come to Hong Kong as he was starving in the countryside, the 1^st defendant agreed to help and allowed him to live in the Property after he arrived in Hong Kong.  The 1^st defendant denied that the plaintiff is her foster son, or that there was any promise or agreement to give him the interest in the Property.  She did not know when and why the plaintiff changed his surname.  The 1^st defendant said she had demanded rent from the plaintiff but without success as the plaintiff’s income was meagre.  The 1^st defendant also said that throughout the years, the utility bills and the costs of repair and maintenance were all met by her and the deceased. 

22.As to the assignment of the Property to the 3^rd and 4^th defendants, the 1^st defendant’s explanation (as was the case of the 3^rd and 4^th defendants) was that since 1997, she and the deceased had exhausted their savings and had to borrow money from the 3^rd and 4^th defendants for their living.  By 2007, they were indebted to the 3^rd and 4^th defendants for $1,000,000.  For the purpose of repaying and setting off the debt, the 1^st defendant and the deceased executed the Assignment and assigned the Property to the 3^rd and 4^th defendants at the stated consideration of $1,000,000.         

The Judgment

23.The Judge accepted the evidence of the plaintiff and Madam Li and rejected that of the 1^st defendant, in so far as it conflicted with the evidence of the plaintiff and his witness.  The Judge found that the 1^st defendant and the deceased did promise to give the plaintiff the beneficial interest in the Property, and the plaintiff had acted on it in that he had changed his surname to Mak, given up his job and career, family and social circle in Guangzhou City and moved to settle in Hong Kong. The Judge was of the view that these sacrifices amounted to substantial detriment. He held that the plaintiff had made out his claim of proprietary estoppel and gave judgment for the plaintiff.

The grounds of appeal and the Respondent’s Notice

24.The Amended Supplementary Notice of Appeal sets out six grounds of appeal.  Ground 2 was not pursued at the hearing before us. The remaining five grounds are:

(1) The Judge erred in finding it was a sacrifice and detriment to the plaintiff to come from Guangzhou to Hong Kong in 1982 and to change his last name (Ground 1).

(2) The Judge failed to take into account the countervailing benefits received by the plaintiff since coming to Hong Kong and further erred in holding that the $200,000 given to the plaintiff in 1983 was not to cancel the promise made by the 1^st defendant and the deceased (Ground 3).

(3) The Judge erred in finding that the letter dated 17 April 1980 from CP Tsang & Co, solicitors instructed by the 1^st defendant, supports the plaintiff’s case that the 1^st defendant had told him once he came to Hong Kong, he could take care of her and the deceased (Ground 4).

(4) The Judge erred in not accepting that the plaintiff has failed to honour the promise to take care of the 1^st defendant and the deceased (Ground 5).

(5) As the claim against the 2^nd defendant had been discontinued, the Judge should not have granted the declarations and ordered the 1^st and 2^nd defendants to execute an assignment of the Property in favour of the plaintiff (Ground 6).

25.The plaintiff has filed a Respondent’s Notice to affirm the Judgment on four grounds, the first of which relates to the abandoned Ground 2 and is therefore no longer relevant.  The third and fourth grounds are also no longer relevant in light of the submission of Mr Kenneth Chan, who appeared for the defendants, that no challenge is made to the Judge’s findings of fact and assessment of the witnesses’ credibility. 

26.The only ground in the Respondent’s Notice that remains of relevance is the second ground, namely, as part of a broad enquiry, on the totality of the evidence and balancing the detriment suffered by the plaintiff and the countervailing benefits suggested by the plaintiff, the 1^st defendant’s repudiation of her representation to the plaintiff was unconscionable.

Detriment suffered by the plaintiff

27.Grounds 1 and 3 of the grounds of appeal and the second ground of the Respondent’s Notice all relate to the issue of detriment suffered by the plaintiff in reliance on the promise made by the 1^st defendant and the deceased.

28.There is no disagreement between counsel on the relevant law.  It is not disputed that the issue of whether the plaintiff suffered any detriment is to be judged at the time the 1^st defendant and the deceased went back on their promise and assigned the Property to the 3^rd and 4^th defendants i.e. June 2007.  There is also no dispute that in assessing whether substantial detriment has been suffered, the court should take into account any countervailing benefit received by the plaintiff.  It is accepted by both Mr Chan and Mr Chain who appeared for the plaintiff that the court should approach the issue by conducting a broad inquiry as to whether the repudiation of the promise or assurance is unconscionable.  They both rely on the judgment of Robert Walker LJ (as he then was) in Gillett v. Holt [2000] 2 All ER 289 at 308c-e:

“The overwhelming weight of authority shows that detriment is required. But the authorities also show that it is not a narrow or technical concept. The detriment need not consist of the expenditure of money or other quantifiable financial detriment, so long as it is something substantial. The requirement must be approached as part of a broad inquiry as to whether repudiation of an assurance is not unconscionable in all the circumstances.

There are some helpful observations about the requirement for detriment in the judgment of Slade LJ in Jones v Watkins [1987] CA Transcript 1200. There must be sufficient causal link between the assurance relied on and the detriment asserted.  The issue of detriment must be judged at the moment when the person who has given assurance seeks to go back on it.  Whether the detriment is sufficiently substantial is to be tested by whether it would be unjust or inequitable to allow the assurance to be disregarded – that is, again, the essential test of unconscionability.  The detriment alleged must be pleaded and proved.”  

29.The thrust of the defendants’ complaint is that the Judge had erroneously concentrated only on 1980 by comparing the plaintiff’s positions before and after he acted upon the representation and moved to Hong Kong, and had failed to focus on what detriment was suffered by the plaintiff in June 2007 when the 1^st defendant and the deceased executed the Assignment.  Mr Chan submits that the Judge should have taken judicial notice of the difference in the standards of living between Hong Kong and Guangzhou in the early 1980s and concluded that migrating to Hong Kong was not a detriment, but an opportunity to the benefit of the plaintiff.  It is also said that the change of surname was only a relatively minor detriment.           

30.Mr Chan further argues that the plaintiff’s detriment had been offset by the countervailing benefits that he had received, to which the Judge had made no reference in his Judgment.  The matters relied upon as countervailing benefits are: (i) the $200,000 given to the plaintiff in 1983; (ii) free accommodation; (iii) an opportunity to earn more income; (iv) the marriage with his present wife which was arranged by the 1^st defendant; (v) cash assistance that the 1^st defendant and the deceased had given to the plaintiff and his wife; and (vi) the foodstuff that the 1^1st defendant and the deceased put in the refrigerator every two or three weeks in the 10 years that they lived in the Property with the plaintiff.

31.The Judge dealt with the issue of detriment in paragraphs 20 to 25 of the Judgment.  He found that the plaintiff had suffered detriment in the form of having left his family and friends, resigned from a steady job that had a good prospect, emigrated to settle in an unfamiliar city and, very importantly, given up his family name and adopted a new surname.  In my view, these were matters that the Judge could properly refer to and take into consideration because they were what the plaintiff did in reliance of the promise made by the 1^st defendant and the deceased.  The Judge was not undertaking a comparison exercise.  Nor was his mind confined to the plaintiff’s positions in 1980, before and after he moved to Hong Kong. Although the emigration from Guangzhou to Hong Kong and the change of surname took place in 1980, their consequences and their impact on the plaintiff carried on beyond 1980.  This is particularly the case with regard to the change of surname, the impact of which is life-long.  The Judge had found, and I agree, that the plaintiff’s acceptance of the promise and what he did in reliance of the promise had brought important changes to his life.  The changes continued to affect him in 2007. 

32.The living standard of and the economic opportunities in Hong Kong in the 1980s might well have compared more favourably to Guangzhou.  But that does not preclude the Judge from concluding upon a broad inquiry that the plaintiff has suffered substantial detriment in agreeing to move to Hong Kong, undertaking a new life and assuming a new identity.     

33.The Judge was also entitled to give weighty consideration to the plaintiff giving up his family name and adopting that of the 1^st defendant.  I do not agree with the submission that it was a minor detriment to the plaintiff to change his surname.  Family line and family name are matters of importance in Chinese tradition and culture.  As alluded to by the plaintiff in his evidence, the change of surname signifies the giving up of a family line and becoming the member of another family.  The fact that the plaintiff could not have the presence of his birth mother at his wedding is a good illustration of the point.  

34.With regard to the $200,000 that the 1^st defendant and the deceased gave the plaintiff in 1983, the Judge accepted the plaintiff’s evidence that it was not given to cancel the promise with regard to the beneficial interest in the Property (see paragraph 24 of the Judgment).  This is a finding of fact based upon a finding of credibility.  The mere fact that the Property was worth less than $200,000 at the time does not lead to the inference that the payment must be for the purpose of cancelling the promise and/or extinguishing the plaintiff’s interest in the Property. 

35.Mr Chan refers to Jennings v. Rice [2003] 1 P&CR 100 and argues that any equity arising from proprietary estoppel would have been extinguished by the $200,000 since the plaintiff accepted that the Property was valued less than $200,000 in 1983.  The issue in Jennings v. Rice turned on how the court should satisfy the equity where a claim of proprietary estoppel has been established.  The English Court of Appeal considered that the remedy required to satisfy an equity varied according to the circumstances of the case and that the principle of proportionality between remedy and detriment was relevant since the essence of the doctrine of proprietary estoppel was to avoid an unconscionable result.  Robert Walker LJ summarised the law thus (at paras.50 and 51):

“50. To recapitulate: there is a category of case in which the benefactor and the claimant have reached a mutual understanding which is in reasonably clear terms but does not amount to a contract. I have already referred to the typical case of a carer who has the expectation of coming into the benefactor’s house, either outright or for life. In such a case the court’s natural response is to fulfil the claimant’s expectations. But if the claimant’s expectations are uncertain, or extravagant, or out of all proportion to the detriment which the claimant has suffered, the court can and should recognise that the claimant’s equity should be satisfied in another (and generally more limited) way.

51. But that does not mean that the court should not in such a case abandon expectations completely, and took to the detriment suffered by the claimant as defining the appropriate measure of relief. Indeed in many cases the detriment may be even more difficult to quantify, in financial terms, than the claimant’s expectations. … Moreover, the claimant may not be motivated solely by reliance on the benefactor’s assurances, and may receive some countervailing benefits (such as free bed and board).  In such circumstances, the court has to exercise a wide judgmental discretion.”

36.The present appeal is not about how the plaintiff’s equity should be satisfied or whether the relief granted to the plaintiff was disproportionate and should be limited.  The defendants’ primary case is that no substantial detriment had been suffered by the plaintiff and the claim of proprietary estoppel was not made out.  The discussions on the principle of proportionality between detriment and remedy in the judgment in Jennings v. Rice cannot assist the defendants.  The case does not support the defendants’ argument which is to the effect that the equity arising from proprietary estoppel would be extinguished if the claimant had already received from the benefactor a gift that had a greater value than the equity.  Even if the principles in Jennings v. Rice were applicable, given the Judge’s findings that the 1^st defendant and the deceased had unequivocally promised to give the Property to the plaintiff if he was to change his surname and move from Guangzhou to Hong Kong, and that the $200,000 was not to cancel the promise, the plaintiff’s expectation of getting the Property cannot be said to be uncertain, extravagant or out of proportion to the detriment suffered by the plaintiff.     

37.Turning to the other countervailing benefits relied on by the defendants, they are, as Mr Chain observes, primarily familial assistance and support that one would expect from a healthy foster mother-son relationship.  It is also difficult, if not speculative, to compare and quantify the career prospects and economic opportunities available to the plaintiff in Guangzhou and Hong Kong in the period between 1980 and 2007.  More importantly, although countervailing benefits should be taken into account in judging detriments, the court should not embark upon a quantified comparison of the benefits received and the detriments suffered by a claimant.  The issue is to be approached on the basis of a broad inquiry. 

38.In view of the life-changing consequences of the giving up of the family name and the adoption of a new surname, notwithstanding the countervailing benefits relied on by the defendants, the Judge would be entitled in  the exercise of his wide judgemental discretion to conclude that substantial detriment had been suffered by the plaintiff.

The letter dated 17 April 1980                   

39.Ground 4 of the grounds of appeal relates to the letter dated 17 April 1980 written by C P Tsang & Co to the plaintiff on the 1^st defendant’s instruction.  The letter reads:

“Mr. Mak Ho Fung,
No. 3 Hang Fook New Village,
Lai Wan Pak Road,
Canton,
China.

Dear Sir,

We are instructed by your aunt Madam Mak Kai Siu to inform you that due to old age and sickness (Doctor’s certificates enclosed herewith), she wishes you, being her nephew and the only next of kin, will apply to come and stay in Hong Kong to look after her and also to inherit her estate after her death.

Our client is the registered owner of No. 92 Tong Mei Road 4^th floor and she also holds shares in various public companies.

If you agree, kindly apply to the necessary Authority for leave to come to Hong Kong and if successful, please inform us the date and time of your arrival so that our client may come to meet you.”    

40.The Judge was of the view that the letter supported the plaintiff’s case that the 1^st defendant had told him that after he came to Hong Kong, the three of them could look after each other (paragraph 16 of the Judgment).  Mr Chan submits that the Judge had “cherry-picked” parts of the letter and ignored the problems with it.  It is said that the letter only showed the 1^st defendant intended the plaintiff to inherit her estate when she passed away, but contradicted the plaintiff’s case that the 1^st defendant and the deceased intended to give him the Property after he came to Hong Kong.  I do not agree.  The letter began by stating that the 1^st defendant wanted the plaintiff to come to Hong Kong “to look after her and also to inherit her estate after her death”.  It went on to set out the assets held by the 1^st defendant, namely, a property and shares in public companies.  Plainly these assets would form part of the estate that the 1^st defendant would like the plaintiff to inherit upon her death.  I do not read the letter to be in any way contradictory to the plaintiff’s case that the 1^st defendant and the deceased intended that he should have the Property if he were to move to Hong Kong. 

41.As to the discrepancy in the street number between the address mentioned in the letter (No. 92 Tong Mei Road) and that of the Property (No. 192 Tong Mei Road), this is in all probabilities a clerical error.  There was no evidence or suggestion that the 1^st defendant owned a property at No. 92 Tong Mei Road.  It is not to be forgotten that this was a letter prepared by the solicitors instructed by the 1^st defendant.  The discrepancy is an immaterial one and could not reasonably have affected the weight that the Judge placed on the letter.  There is no basis to interfere with the Judge’s reliance on the letter and the conclusion he drew from it.    

Failure to take care of the 1^st defendant and the deceased

42.Ground 5 of the grounds of appeal concerns the Judge’s rejection of the defendants’ submission that the plaintiff had failed to honour the promise to take care of the 1^st defendant and the deceased.  In paragraph 25 of the Judgment, the Judge set out the basis for his view.  Firstly, he accepted the plaintiff’s evidence that when the 1^st defendant and the deceased were still working as domestic helpers and living with their employers, the plaintiff was not in a position to take care of them and there was also no need to do so.  Secondly, when the 1^st defendant and the deceased moved to live with the plaintiff in the Property, there was no special incident (such as illness) that would reflect that the plaintiff had failed to take care of them.  Thirdly, the Judge pointed out that counsel who appeared for the defendants did not, in cross-examination, put to the plaintiff specific examples of how he had failed to take care of the 1^st defendant and the deceased.   

43.Mr Chan submits to us that the Judge was wrong in that he should have found that the plaintiff had failed to honour his promise to take care of the 1^st defendant and the deceased.  It is because the plaintiff accepted in his evidence that after the 1^st defendant and the deceased moved out of the Property, he had not taken care of them, and that he had later lost contact with the deceased.  Reliance is also placed on the evidence of the 3^rd defendant that he took care of the deceased when she was in Dongguan after undergoing an operation and he attended to her cremation in the Mainland upon her death.  Mr Chan further submits that as the plaintiff had not taken care of the 1^st defendant and the deceased and having regard to the benefits that he had already received, the remedy that was ordered in his favour was disproportionate to the detriment that he had suffered.

44.In my view, the submissions have taken an over-simplistic view of the plaintiff’s evidence on this issue.  In his cross examination, the plaintiff agreed that it could be said that after the 1^st defendant and the deceased moved out of the Property, he had not really been taking care of them.  But it is also his evidence that he had made telephone contact with them and that from time to time he and his wife would go to where the 1^st defendant lived and left things for her at the management office.  He explained that the 1^st defendant did not want him to go up to her residence, perhaps because her nephew with whom she was living did not want him to visit her.  As to the period when the three of them were living together in the Property, the plaintiff disputed counsel’s suggestion that he had not cared for the 1^st defendant and the deceased.  In support, he referred to the fact that because of the 1^st defendant’s dietary needs, he and his wife would cook separately for her.  No doubt, the Judge would have regard to the totality of the evidence before him when concluding that it had not been shown that the plaintiff failed to honour his promise to take care of the 1^st defendant and the deceased.   

45.As to the argument based on proportionality between detriment and remedy, this does not form part of Ground 5 in the Amended Supplementary Notice of Appeal.  In any event, when it comes to remedy, the court has a wide discretion to do what is necessary to avoid an unconscionable result.  The Judge has decided to give effect to the plaintiff’s expectation that he would have the beneficial interest in the Property.  In the light of the finding on the promise made by the 1^st defendant and the deceased, he was clearly entitled to do so.  There is no basis upon which this court can interfere with his exercise of discretion.

The declarations

46.Ground 6 of the grounds of appeal is in respect of the declarations and the ancillary order made by the Judge (see paragraph 8 above).  Mr Chan submits that as the plaintiff had discontinued the claim against the 2^nd defendant such that the estate of the deceased was not before the court, the Judge should not have made the declarations and ordered the 1^st and 2^nd defendants to execute an assignment of the Property in favour of the plaintiff. 

47.Mr Chain accepts that, as a general rule and as a matter of prudence and good practice, all persons interested in a declaration should be made parties in the proceedings in which the declaration is sought. In his oral submissions, he further accepts that the second declaration that the assignment of the Property from the 1^st and 2^nd defendants to the 3^rd and 4^th defendants under the Assignment is null and void and of no effect (see footnote 1 above) is problematic.  Mr Chain also accepts that the order directing the 1^st and 2^nd defendants to execute an assignment of the Property to the plaintiff (see footnote 2 above) should be substituted with an order that the 3^rd and 4^th defendants transfer the legal title of the Property to the plaintiff.    

48.I am of the view that the defendants should succeed on this ground.  Both the second declaration and the order directing the 1^st and 2^nd defendants to execute an assignment of the Property in favour of the plaintiff should not have been made when the 2^nd defendant has ceased to be a party to the proceedings.  There is also no practical purpose in directing the 1^st and 2^nd defendants to execute an assignment of the Property to the plaintiff.  The second declaration should be set aside and the order should be substituted by the order proposed by Mr Chain.  

Conclusion

49.For the reasons set out above, Ground 6 of the grounds of appeal should succeed while Grounds 1, 3 to 5 should fail.  I would propose that the appeal be allowed to the limited extent that: (1) the declaration that the assignment of the Property from the 1^st and 2^nd defendants to the 3^rd and 4^th defendants under the Assignment is null and void and of no effect be set aside; (2) the order that the 1^st and 2^nd defendants do within 60 days execute an assignment to assign the Property to the plaintiff be substituted by an order that the 3^rd and 4^th defendants transfer the legal title of the Property to the plaintiff and for that purpose, the parties may have liberty to apply.  The rest of the appeal should be dismissed. 

50.As the defendants have substantially failed in their appeal, I would make an order nisi that they pay 90% of the plaintiff’s costs of the appeal (including the costs of the application for leave to appeal), to be taxed if not agreed. 

Mr Christopher Chain, instructed by C Y Tsang, for the plaintiff (respondent)

Mr Kenneth C L Chan and Mr Edward T C Chan, instructed by K L Leung & Co, for the 1^st, 3^rd and 4^th defendants (appellants)