Yat Tung Investment Co Ltd and Another v. Dao Heng Bank Ltd

IN THE SUPREME COURT OF HONG KONG

APPELLATE JURISDICTION

CIVIL APPEAL NO. 23 OF 1971

(On appeal from O.J. Action No. 969 of 1969)

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Coram: Full Court (Blair-Kerr, S.P.J. and Huggins, J.)

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JUDGMENT

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Blair-Kerr, S.P.J.:

1.  We do not think that it is necessary to go into the matters raised in this appeal in any detail. No point of law arose thereon. The appeal was entirely against the learned judge’s findings of fact.

2.  Clearly it was in the interests of the respondent bank that the building should be completed; and, having regard to their experience with the former owners (who had disappeared) I can well understand how they felt that it would be to their advantage if they were to deal in future with a developer and contractor who were one and the same person.

3.  Be that as it may, the 1st appellant company became the legal owner of the property by virtue of the assignment dated 23rd May 1968, and this company mortgaged the property to the respondent bank under the building mortgage dated 27th May 1968. It is common ground that the money for the purchase of the property came from the bank.

4.  The basis of the plaintiff’s claim was the alleged oral agreement between their managing director (Lai) and an officer of the bank named AU Wai-choi, to the effect that Lai should bid for the property in the auction but only as nominee of the respondent bank; and that in consideration of his doing so, the bank would pay Lai all outstanding construction costs then due as well as future construction costs. Lai’s evidence in regard to this alleged agreement was disbelieved by the trial judge who accepted the evidence of Au and the managing director of the bank, TANG Pang-yuen.

5.  Counsel for the appellants referred to a number of documents which were before the trial judge, documents which were the subject matter of a great deal of cross-examination by counsel for the plaintiffs in the court below. True, they reveal one or two odd features as regards banking practice; but no court could possibly deduce from these documents an agreement between the parties that the plaintiffs should purchase the property as nominees of the bank.

6.  As regards the evidence of Mr. Brassett, if Au had in fact said words to this effect: “The bank are owners of the property”, one wonders how Brassett or his colleague could possibly have used the expression “part-owners”. Au gave evidence that Brassett did ask what the bank had to do with the property and that he (Au) had told him that they were mortgagees.

7.  When the bank received the proceeds of sale of the ground and 14th floors, the sums involved were applied in partial discharge of the plaintiffs’ mortgage debt and the floors were then released from the mortgage.

8.  In his letter of 9th January 1969 addressed to the bank, Lai said:–

“Also, with regard to the 2nd, 3rd and 4th floors for our company’s own use we wish your bank would allow us to pay by instalments over ten years ......”

The appellants laid great stress on this letter. Their argument ran thus: How could Lai have suggested that the appellants “pay by instalments” for the three floors if they in fact owned the entire building?

9.  Au said that this letter was never received by the bank, although he agreed that Lai had told him that he (Lai) intended to use the three floors for his own use as offices; and in evidence Au said:–

“He requested the bank to release the three floors ......”

10.  The bank were mortgagees. They would not have released the floors without a partial discharge of the mortgage debt. To Lai’s lay mind, this would have meant that he had somehow to “purchase back” the three floors before the bank would release them from the mortgage.

11.  Be that as it may, this was merely one of many matters which were carefully considered by the learned judge before coming to his conclusion.

12.  On the whole of the evidence acceptable to him, the trial judge was of the opinion that the plaintiffs never really began to put their case on its feet, and in particular that they failed to show that the assignment and mortgage were sham transactions. We saw no reason to differ from these conclusions; and on 4th February we dismissed the appeal without calling upon counsel for the respondents.

Samuel Leung (D’Almada Remedios & Co.) for 1st and 2nd appellants.

Gittins, Q.C. and Charles Ching (Patrick Poon & Co.) for respondent.