Simsundar Enterprises Ltd v. Kung Man Lung and Others

HCA 2053/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2053 OF 2008

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J U D G M E N T

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1.This is a claim by the plaintiff, a Hong Kong incorporated company, for specific performance of a sale and purchase agreement (“the Agreement”) entered into by it as purchaser with the 1^st – 6^th defendants as vendors on 1 February 1980.  The purchase involved various parcels of land in Yee O, Lantau, New Territories.

2.The present action was commenced by the plaintiff on 20 October 2008, more than 28 years after the Agreement was signed.  The unusually long time interval clearly throws into sharp focus that this is a claim with a rather colourful and chequered history.  By the time the matter came for trial before me, the 1^st, 2^nd, 4^th and 5^th defendants had all died, whilst the 4^th defendant’s son, Mr Kung Ka Wai, obtained a representative order to carry on the defence of the proceedings on behalf of the estate of the 4^th defendant.

3.In his opening, Mr Albert Cheung, counsel for the plaintiff, indicated that the plaintiff would only proceed with the claim against the 3^rd, 4^th and 6^th defendants and that the plaintiff elected not to proceed against the 1^st, 2^nd and 5^th defendants.

BACKGROUND

4.The plaintiff was incorporated in Hong Kong on 31 October 1979 by Mr Keith Lam Hon Keung (“Lam”) and Mr Lai Cheung Yuen (“Lai”) as a joint venture project with the objective of acquiring parcels of land in Lantau for long‑term investment.  Lai was a village representative of one of the villages in Tai O, Lantau. He was apparently well conversant with and knowledgeable about the property market in that area.

5.Lai identified to Lam parcels of land in Yee O village as a suitable target for their joint venture.  In the past these plots of land had apparently been inhabited by the Kung and Lam clans.  Due to an epidemic disease many of the descendants had left the village in the 1940s before the Japanese occupation.  The epidemic had apparently killed many of the inhabitant villagers.  Many of their descendants had since migrated from the village to the urban areas of Hong Kong, leaving the village lands to be largely deserted and abandoned.

6.Lai began to locate to try and establish contact with some of the surviving descendants in late 1979 or early 1980.  He sought to ascertain whether, and if so how many of them, would be interested in selling the parcels of land that they and/or their family members had the right to inherit, but where the succession procedures had yet to be completed.

7.Eventually a total of eight potential vendors (the six original defendants and one Kung Kam Shing and Kung Chi Man as joint vendors) were identified.  It was then arranged for the potential vendors to meet with Lam and Lai at the offices of Messrs MK Lam & Co on 1 February 1980.

8.It is common ground that the Agreement was signed after some discussions between the parties, although the exact nature of the discussions and the understanding reached is a matter of serious dispute.  It is also common ground that the Agreement had Schedules identifying the parcels of land that each of the potential vendors were entitled to inherit and expected to succeed to although it is a matter of contention as to who prepared the Schedules and when they were attached to the Agreement.  The plaintiff claims these Schedules were prepared by the various vendors together with the assistance of Lai and were attached to the Agreement on the day of signing; the defendants on the other hand assert that these were prepared by Lai and that the vendors signed it at a later point in time.  It is common ground that each of the vendors did sign on the Schedule pertaining to each of them, although when they did so is in dispute.  In my view, it is not imperative that I have to make a finding as to when or by whom the Schedules were prepared in order to resolve the real dispute between the parties.

9.The relevant terms of the Agreement stipulated as follows:

“1. The Vendors agree to sell all the title to the land described in the schedule hereto to the Purchasers.

Residential land HK$65.00 per square feet

Agricultural land HK$6.00 per square feet

HK$500,000 being the deposit paid by the Purchaser to the vendors upon signing of this agreement and the balance to be paid upon completion.

2. The Vendors agree as follows:

(a) All agricultural land and residential land and its related buildings shall be delivered to the Purchaser with vacant possession on completion.

(b) If any of the Vendors requires to apply for probate such application shall be made within one week after the signing of this agreement and shall not be delayed.

3. Completion date:

(a) The completion shall take place within one month after the Vendors have fully completed all the probate procedures of the related property and cleared all the mortgages but should not be earlier than 1^st September 1980; or

(b)  Upon the request of the Purchaser, the Vendors should within two weeks complete part of the sale and purchase of their part of the related property or the land.  The price to be paid by the Purchaser shall be calculated proportionally according to the aforesaid sale and purchase price (residential price HK$65.00 per square per feet and agricultural land HK$6.00 per square feet.”

10.In about March 1980, one of the vendors, Mr Kung Kam Shing, managed to complete the succession procedures in relation to the parcels of land that he was selling.  He was however unable to clear the mortgages as recorded in the Government Block Lease as the mortgagees identified therein had either all died or were unable to be located.  Lam and Lai on behalf of the plaintiff apparently agreed to complete this purchase despite the fact that the other vendors had not yet completed the succession procedures in relation to their respective properties and despite the fact that the mortgages had not been cleared.  The plaintiff resolved the issue of the mortgages by identifying them pursuant to section 28 of the New Territories Ordinance (Cap 97) in the Conveyance on Sale under “Particulars of Incumbrances” whereby the plaintiff was completing the sale subject to the mortgages.  Accordingly, the plaintiff completed the sale with Mr Kung Kam Shing on 20 November 1980 upon paying the balance of the purchase price (A/184; C/685‑9). 

11.It transpired that towards the third quarter and the end of 1981 the 2^nd – 5^th defendants wanted the plaintiff to provide them further deposits as although they were not in a position to complete, they were in need of money.  Accordingly a Supplemental Agreement dated 10 September 1981 (the 1^st Supplemental Agreement) was signed between the plaintiff and the 2^nd – 4^th defendants.

12.By the terms of the 1^st Supplemental Agreement the plaintiff provided the 2^nd – 4^th defendants collectively a further deposit of $200,000.  It was agreed by all the parties concerned that once the probate procedures which were ongoing at the time were completed, that completion would take place in accordance with the terms and condition contained in the Agreement or “the completion shall take place partly in respect of the part of the property or the title of the land within two weeks after the request and notice having been given by the Purchaser.”  In the latter event, the sale price would be calculated in accordance with the Agreement.

13.Clause 3 of the 1^st Supplemental Agreement stipulated as follows:

“If the sale and purchase of the title to the land in that Agreement cannot be completed or the Vendors are unable to apply for the probate or the Vendors cannot complete the probate process on or before 30^th September 1982, the Purchaser has the right to notify the Vendors to return to the Purchaser an amount equivalent to three times of all the deposits received by the Vendors within seven days upon receipt of such notice without any delay.

But both parties agree and hereby expressly declare that the Purchaser has the right to postpone the aforesaid date (30^th September 1982) and by then the Vendors shall at that time try their very best to assist and give full authority to the Purchaser [or its representative] to carry out all the matters in respect of the probate in place of the Vendors.

The registered post sent by the Purchaser to the Vendors shall be regarded as evidence of the receipt of the notice by the Vendors.”

14.Clause 4 of the 1^st Supplemental Agreement reiterated that all parties agreed that the contents and conditions contained in the Agreement were still effective (C/694).

15.By another Supplemental Agreement dated 17 December 1981 (“the 2^nd Supplemental Agreement”) the 5^th defendant acknowledged receiving a further deposit sum of $12,000 on top of other sums received from the plaintiff (C/708).  Save as aforesaid, the terms of the 2^nd Supplemental Agreement were identical to the other terms as contained in the 1^st Supplemental Agreement.

16.It is common ground that during the course of 1982 and in any event by 5 August 1983 all the defendants had managed to complete the succession procedures in respect of those parcels of land that they could succeed upon.

17.The plaintiff’s case is that by 30 September 1982, the deadline for completion under the 1^st and 2^nd Supplemental Agreements, none of the defendants apparently informed it they were ready to complete.  Consequently, by a letter dated 12 November 1982, the plaintiff wrote to the 2^nd – 4^th defendants demanding the repayment of $350,000 that was said to be equivalent to three times the deposit sums of money paid to them (D/713‑8).  (This appears to be an error since the total of the deposits paid to these three defendants was $250,000, so arguably three times that sum would amount to $750,000.  No issue was taken about the apparent error during the trial by any of the parties.)

18.On 9 September 1982, the plaintiff proceeded to complete the purchase by one of the other vendors, Kung Chi Man, who had also managed to complete the succession procedures in respect of the parcels of land he had inherited.  The plaintiff agreed to complete this sale despite the fact that some of the parcels of land still had mortgages registered against them that would appear not to have been cleared.  Furthermore this completion was proceeded with despite the fact that the defendants had yet to complete their succession procedures.

19.According to Lam, Lai informed him that the three defendants (the 2^nd – 4^th defendants) had informed him they were unable to pay the deposit sum and instead sought indulgence of further time in order to complete the procedures.  Lam claimed that he and Lai agreed to entertain the request of the 2^nd – 4^th defendants by giving them a further period of three to six months maximum in order for them to complete the necessary procedures and obtain the consent of the District Officer pursuant to section 15 of the New Territories Ordinance (Cap 97).

20.Between 1983 and 1989 no further developments of any significance appears to have occurred, although the plaintiff and the defendants have differing and conflicting explanations for this period of inactivity, which I will address later in this judgment.

21.After six years of inactivity, there then suddenly appears to be a slight flutter of activity by way of correspondence in 1989 as set out below:

(a)  By a letter dated 28 July, Messrs Kenneth CC Man, solicitors then acting for the 1^st defendant only, wrote to the plaintiff stating that the 1^st defendant had completed the succession procedures and asked for completion of the purchase in accordance with clause 3(a) of the Agreement (D/714).

(b)  This prompted a reply letter dated 8 August from Messrs MK Lam & Co, solicitors for the plaintiff, which stated that the plaintiff was only required to complete when all the vendors were in a position to complete, that it was the option of the plaintiff whether to complete partially, that in the circumstances the plaintiff was not obligated to complete and further that it was not prepared to carry out a partial completion (D/715).

(c)  Another firm of solicitors acting for the 1^st defendant, Messrs TC Lau & Co responded on 21 September stating that as the plaintiff failed to complete the purchase on or before 2 September, the deposit paid under the Agreement was forfeited by the 1^st defendant.  It went on to state that the Agreement was thereafter null and void and with no legal effect.

22.Thereafter for almost eight years there would appear to be no overt activity from either side until 24 July 1997 when the plaintiff claims it sent letters by registered post to the defendants and Kung Chi Man inquiring whether all the succession procedures had been properly completed and whether all the mortgages had been cleared (D/716).  There is some dispute whether the letters were received by the defendants and/or whether they were sent to the right addresses of some of the defendants.

23.This was then followed by another letter dated 4 September 1997 from the plaintiff to all the defendants and also Kung Chi Man pointing out that there had been no reply from them to the earlier letter and giving notice that the Purchaser required all of them to complete the sale, even if partial, but clear of all the mortgages and inviting them to suggest dates for completion to be confirmed by the parties (D/716‑7).

24.It is not clear why letters were written to Kung Chi Man in 1997 asking him whether the succession procedures had been completed and to complete the sale of his lands. On the plaintiff’s own case this had already been done back in September 1982.

25.A follow‑up letter was sent by the plaintiff to the defendants (this time not to Kung Chi Man) on 24 October 1997 enclosing the earlier two letters as well (D/716‑11).  There was apparently no response to any of the letters from any of the defendants.

26.The plaintiff appeared to do nothing further for another 13 ½ months.  Then by a letter dated 4 December 1998 the plaintiff wrote to all the defendants pointing out their failure to respond to any of the previous letters of the plaintiff and giving notice purportedly pursuant to clause 3(b) of the Agreement to complete the sale and purchase on or before 16 December 1998.  The defendants were asked to indicate who their appointed solicitors were so that the draft assignment could be sent to them for approval (D/716‑13A).

27.There were no further developments from either side for almost 7¾ years.  Then by a letter dated 1 September 2006 Leung Kin & Co acting on behalf of all the defendants stated that by reason of the failure and/or refusal by the plaintiff to complete, the defendants were terminating the Agreement and forfeiting the deposits paid.  The plaintiff was also asked to vacate the registration of the Agreement in the Land Registry (D/717).

28.There then followed a series of correspondence between the respective solicitors of the parties during the period September to November 2006 (D/718‑1‑7).  The plaintiff’s solicitors were purportedly still inquiring about the status of the succession procedures and whether the defendants had managed to clear the mortgages so that if necessary, partial completion in respect of the parcels of land under the Agreement could take place.  The defendants’ solicitors essentially responded with holding replies stating that they were taking instructions and would revert.

29.Another almost two years then elapsed with apparent inactivity on both sides.  Then by a letter dated 3 October 2008, Messrs MK Lam & Co purported to give formal notice on behalf of the plaintiff to the defendants that the plaintiff elected to complete and in the event of failure by the defendants to comply, they would institute legal proceedings.

30.Receiving no response from the defendants, the plaintiff issued the present proceedings on 20 October 2008 for specific performance of the Agreement and/or damages in lieu and additional thereto.

31.The defendants in their Re‑Amended Defence raised a number of defences:

(a)  Lai on behalf of the plaintiff had assured all the vendors that the plaintiff would deal with all the procedures in relation to succession, clearing of mortgages and/or obtaining any necessary consent from the District Officer, and that the sale would only be in relation to those parcels of land that the vendors were able to manage to complete the succession procedures.  It was upon reliance of such assurances that the defendants agreed to proceed with the sale and signed the Agreement.

(b)  At the meeting on 1 February 1980, and before the signing of the Agreement, both Lam and Lai repeated the aforementioned assurances and it was in reliance of such assurances that the defendants proceeded to sign the Agreement.

(c)  The defendants had done all that was required of them and as asked for by Lai on behalf of the plaintiff in order to complete the succession procedures, and that the plaintiff was at all times fully aware of the progress and status of the succession procedures.

(d)  The 2^nd – 4^th defendants relied on the assurances of Lai on behalf of the plaintiff that the relevant succession procedures would be completed soon so that it would be alright for them to sign the 1^st Supplemental Agreement;

(e)  There should be implied by reason of business efficacy into the Agreement and 1^st and 2^nd Supplemental Agreements that to the extent the plaintiff may have a discretion to postpone completion, such discretion would not be exercised capriciously or in bad faith and in any event would be postponed for only a reasonable period of time.

(f)  Lai, acting on behalf of the plaintiff, was the person responsible and instrumental in arranging for the completion of all the succession procedures and the appointment of some of the defendants as managers of tsos or tongs in relation to the various parcels of land as well as the registration of the Memorials with the Land Registry.  Accordingly, the plaintiff would have had notice and knowledge that by 5 August 1983 at the latest that the various parcels of land covered by the respective Memorials were ready for completion. The plaintiff was said to be estopped from denying such knowledge.

(g)  During the period 1984 – 1988 the defendants had asked Lai to arrange for the completion of the sale and purchase.  However Lai had told them that the plaintiff would no longer proceed with the sale.  Accordingly the plaintiff evinced an intention not to be bound by the Agreement.

(h)  The plaintiff had repudiated the Agreement and the defendants accepted the repudiation by the letter of 1 September 2006 and/or by the service of the defence in these proceedings.

(i)  The issue of proceedings more than 25 years after the plaintiff had acquired knowledge that the defendants were ready to complete in August 1983 was a breach of the implied term referred to in (e) above.

(j)  The plaintiff had waived or was estopped from insisting upon its rights under the Agreement and/or the claim is barred by reason of the Limitation Ordinance (Cap 347) and/or the plaintiff is guilty of prolonged, inordinate and inexcusable delay and/or has caused the defendants to believe that the plaintiff did not intend to claim against the defendants, and thereby causing them prejudice in claiming for specific performance now.

(k)  By reason of the inactivity on the part of the plaintiff since 1983 the plaintiff has effectively abandoned the Agreements disentitling it seek to enforce the same now.

(l)  It was not within the reasonable contemplation of the parties that the completion would be delayed by 25 years by the plaintiff and therefore the Agreements were frustrated and the defendants discharged from performance after such a lapse of time.

(m)  Given the inordinate delay it would be inequitable and unjust to enforce the Agreements now.

32.The defendants also maintain a counterclaim seeking a declaration that the Agreements were rescinded and that the defendants are entitled to forfeit the deposits paid to them.  They also seek a declaration that the Agreements have been frustrated and for an order vacating the registration of the Agreement in the Land Registry.

33.Lam was the sole witness called by the plaintiff.  Mr Cheung, counsel for the plaintiff, informed the court that Lai could not be called because he was apparently not keeping good health.  A typewritten letter dated 3 October 2013 (Exhibit 1A) purportedly signed on behalf of Lai was handed to the court.  The letter simply stated that Lai was living in a home for the aged and that his health was not good with unsteady movements, and that therefore he could not attend court to give evidence.  In view of the fact Lai was not being called, his witness statement was ignored for the purposes of the assessment of the evidence adduced at the trial.

34.The defendants called a total of four witnesses comprising Lee Chi Fung, the Chairman of the Tai O Rural Committee, the 3^rd and 6^th defendants as well as Kung Hok Sing, the son of the 1^st defendant.

REVIEW OF THE EVIDENCE

Evidence on behalf of the plaintiff

35.A lot of matters set out under the BACKGROUND section earlier in this judgment which were non‑controversial were taken from Lam’s witness statement, and is not repeated here.  Lam went on to state that he came to know Lai in the late 1970s.  Lai was apparently a landowner in Lantau Island who was well conversant with the property market there.  Lai had sold some plots of land in Tai O to one of Lam’s other companies back in 1978.  They became friends and business partners following that transaction.

36.With the intention of purchasing further parcels of land in Lantau they incorporated the plaintiff in 1979.  Lai’s role was to try and identify the original villagers or their descendants from Yee O village who were interested and willing to sell the land they owned or were entitled to inherit. Lam claimed that the potential vendors were asked to prepare Schedules of the plots of land that they were entitled to claim inheritance of and that Lai also assisted them in this exercise.

37.His evidence was that the Schedules attached to the Agreement were signed on 1 February 1980 and were prepared by the various vendors, including the defendants, and the correctness and accuracy of the Schedules was in effect confirmed by each of them signing the same.

38.Lam claimed that under the terms of the Agreement there was no time frame within which completion was required to be done.  The vendors had to comply with the conditions stipulated in the Agreement by completing the succession procedures and clearing any outstanding mortgages that may attach to any of the parcels of land.  He explained that he had retained for the plaintiff the option to complete partially in respect of the various parcels of land because he recognised that the vendors may not be able succeed in respect of all the parcels of land the subject matter of the Agreement.  His primary position was that all the vendors had to complete the succession procedures before the plaintiff was obliged to complete, subject to the option that the plaintiff could exercise to complete partially at its discretion.

39.Lam claimed that before the vendors signed the Agreement he had explained the terms to them.  According to him, this was a “simple document” that he believed even a primary school educated person would understand and that the vendors had in any event read it before signing.  He denied that he gave any assurances to the vendors before the signing of the Agreement to the effect that the plaintiff would purchase those parcels of land in respect of which the vendors could manage to complete the succession parcels and/or that those parcels of land where the succession procedures could not be completed would not become the subject matter of the Agreement.

40.Under cross‑examination by Ms Josephine Tjia, counsel acting on behalf of the 3^rd, 4^th and 6^th defendants, Lam stated that if only a minor portion of the succession procedures was able to be completed then he had the option as to whether to proceed with the Agreement and complete in respect of them.  If a majority of the parcels of land could be succeeded to, then he would proceed to complete those where succession was accomplished.

41.He admitted that he did not inform the vendors of his thinking as to when he may or may not complete.  He asserted that he only told the vendors that he had an option but he did not spell out to them what would happen if succession could be obtained in respect of only some of the parcels of land.  Later he contradicted this by saying that he did mention to the vendors about what would happen in the event of only a minority or majority of the succession procedures in respect of the parcels of land was accomplished.

42.He agreed that the vendors did express concerns about the problems associated with successfully completing the succession issue.  When asked if he said anything to allay their fears and concerns he claimed he did not.  When asked whether Lai had said anything in this regard, he initially answered he did not remember.  Then he went on to say “I don’t think so” claiming that this was something that happened “20 odd to 30 odd years ago”.

43.His attention was drawn to the option set out in clause 3(b) of the Agreement and he agreed that although the clause addressed his concern about partial completion, it did not the address the vendors concerns about partial completion.  He was asked whether there was a time frame within which the option could be exercised and his retort was a brazen “Whenever I wanted”.  He explained that he was hoping that the succession procedures could be completed as soon as possible, and ideally within half a year.

44.He agreed that many of the lots were part of a Block Government Lease and many of the mortgages were ancient mortgages.  Therefore whether they could be cleared would depend on whether the mortgagees could be located given the lapse of time.  He agreed that the redemption value of some of the mortgages was insignificant, some requiring just a bucket of rice as payment for redemption of the mortgage.  He said it was a question of using common sense to see whether to complete partially or not, and that this was why he had inserted the option.

45.His attention was drawn to the Conveyance of Sale with Kung Kam Shing in November 1980 (A/184; C/685‑9) and he agreed that the plaintiff completed the sale although there were still outstanding mortgages in respect of 13 lots of land.  He however said the same approach could not necessarily be taken with respect to the lots to be sold by the defendants.  He conceded that the economic circumstances needed to be looked at as well.  The apparent reason why the same approach could not be adopted to the lots of land of the defendants was because they involved larger parcels of land.

46.When asked whether the Schedules attached to the Agreement may have been prepared by Lai, he admitted that he did not know.  He agreed that he trusted Lai as the plaintiff’s representative.  He said that he himself did not check the accuracy of the lot numbers and he assumed as the vendors had each signed on their respective Schedules, that they had checked it.  In answer to a question from the court as to whether Lai had checked the accuracy of the parcels of land set out in the Schedules, he answered he did not know.

47.When asked what proportion of the purchase price was represented by the deposit of $500,000, Lam claimed that this was not the way it was calculated.  Instead he claimed that the total area of the land involved in the sale was about 400,000 sq ft and the deposit was shared amongst the vendors based on the proportionate area of the land they intended to sell.  He claimed that at $6 a sq ft he had sufficient financial resources to buy the parcels of land and that he did not require to make any alternative arrangements for finances.  He said he did not know if Lai needed financial assistance but that even if Lai did, Lam claimed he was in a position to extend to him a loan.

48.He was questioned about the letter he wrote to the defendants in 1997 (D/716‑3) inquiring about the status of the succession procedures and whether the mortgages had been cleared.  It was put to him that there was no need for such an inquiry since by August 1983, Lai had managed to complete the succession procedures and register the relevant Memorials with the Land Registry, and Lai’s knowledge was the knowledge of the plaintiff.  He initially disagreed with this proposition.  However once it was drawn to his attention that the Memorials all recorded that Lai was stated to be the witness, (D/846‑850) Lam then appeared to retreat. He then claimed that Lai did not inform him about the completion of the succession procedures at anytime.

49.When pressed as to why Lai would not have done so, his only response was “I don’t know”.  He then blurted out that although the plaintiff was jointly owned by him and Lai and even if Lai knew the progress of the succession and the status of the mortgages, Lam himself however did not.  During his re‑examination he maintained his stance that he was not aware that the succession procedures were completed in 1983.  I then drew his attention to paragraph 36 of his witness statement (A/142) where he states: “By 5.8.1983 with the help of Lai for about 2 years since 1981, the 1^st–6^th Defendants had basically completed their applications to succeed the interests capable to be succeeded with their qualifying documents available as proof.”  He then reluctantly conceded: “By 1983 should know about it.”

50.Lam complained that after the signing of the Agreement and the 1^st and 2^nd Supplemental Agreements, the plaintiff “lost contact” with the defendants for almost 17 years.  He was asked point blank whether it was the plaintiff’s case that if he could contact them in 1983, he was willing and able to complete the sale for those who had managed to complete the succession procedures.  His answer was quite revealing: “No, I had to review the position of the land. As mentioned by me, they had to clear all the mortgages – first condition; second I had to decide whether I was prepared to complete part purchase of the land.” His answer reflected what a shrewd and calculating businessman Lam was.

51.He was then pressed as to whether if all the succession procedures were completed and the mortgages cleared, the plaintiff was willing to complete.  His response was initially negative claiming that it was set out in the agreement that the vendors had to confirm they had completed procedures.  When I asked him where in the Agreement or the Supplemental Agreements was it so stipulated that the defendants were required to notify him, he took time to study the documents (C/660, 694 and 708).  Eventually he agreed that he was unable to point to any clause that imposed such a requirement on the defendants.  He then attempted to seek comfort in the answer that if they did not notify him how would he know.  He seemed to have forgotten or conveniently ignored his earlier concession that Lai had helped with the completion of the succession procedures and that by 1983 the plaintiff was aware that the succession procedures had been completed.

52.He was asked whether assuming he was aware that all the lots (save and except for the six lots of the 1^st defendant) had all completed the succession procedures and assuming that a small part of the land carried ancient mortgages where the mortgagees could not be located, whether the plaintiff was willing and able to complete in 1983 in respect of all or part of the parcels of land, Lam’s answer is once again quite revealing: “We can complete but not necessarily eager.”

53.Lam agreed that the plaintiff was aware that since 1983 nothing had changed in relation to the succession procedures or the mortgages.  When asked whether between September 1983 and 1997 the plaintiff could contact the defendants if it so wished his response was “I never looked for them.”  When further pressed as to whether the plaintiff sought to look for the defendants between August 1983 and 1997 Lam answered “No.”  When it was put to him that if the plaintiff wished to look for the defendants between September 1983 and 1997 it would have been able to do so by looking at their postal address in the Supplemental Agreements, Lam agreed.

54.These answers of Lam do not sit well with the plaintiff’s pleaded case (Amended Reply paragraph 3: A/118) that for almost 14 years the plaintiff was unable to get in touch with the defendants despite diligent efforts to try and contact them.  When it was put to Lam that Lai had the contact numbers of all the defendants, Lam’s response was that he could not answer on his behalf.  This answer appears to contradict what Lam says in paragraph 39 of his witness statement:

“Lai made further attempts to trace and contact the 1^st to 6^th Defendants in the years that followed, during the period from 1983 to 1997. Lai gave to them phone calls, letters to their last known address, or went to the office of the rural Committee of Tai O for their whereabouts, whose efforts were all in vain.”

55.If Lai did send letters to the defendants during the period 1983‑1997 no copies of these letters were adduced in evidence by the plaintiff.  I also note that Lam’s assertions in the course of his evidence that he was not aware that the succession procedures were completed by August 1983 and/or that Lai did not inform him of the same back then are not matters that find reflection in his witness statement.[1]

56.It was put to Lam that the vendors had not changed their address over the years.  His response was that he did not have their telephone numbers.  It was pointed out to him that Lai would have had their telephone numbers, to which he initially said no, but then said that he did not know, and that it was not necessary for him to know claiming that he was “too busy with other matters”.  His answers here suggested he was being deliberately evasive in his answers in the light of what he asserts in paragraph 39 of his witness statement suggesting that Lai made calls to the defendants but without success.  In my view, this also reflects on whether the plaintiff was any longer interested in completing the Agreement after 1983.

57.He was questioned about the letter dated 28 July 1989 (D/714) from the 1^st defendant’s solicitors indicating that the succession procedures were completed and asking for completion of the sale in respect of the parcels of land inherited by him. He was asked if, as he claimed, the plaintiff was all along ready and willing to complete from the latter part of 1983 to the present day, as to why the plaintiff’s solicitors refused to complete with the 1^st defendant.  His response was quite revealing in that he claimed that as it was not the plaintiff who was exercising the option and if the vendor wanted to complete then he had to comply with all the conditions in the Agreement.  When asked which condition was not completed he said the question of clearing the mortgages.

58.When pressed whether the mortgage question was the only reason why he did not complete in 1989 he then shifted his ground by saying that was not the only reason.  He claimed the vendor was asking to complete but that “whether willing or not to be decided by me.”  When it was pointed out to him that the reply by the plaintiff’s solicitors made no mention of the mortgage issue, but only that all the vendors had to complete the procedures, he then became critical of the solicitors saying they had not done “a good job” and that as professionals “they should find some reasonable reasons to reply.”  All this again is not consistent with the fact that the succession procedures had all been completed by August 1983 to the knowledge of the plaintiff.

59.He then asserted that the vendors had failed to complete all the procedures.  I asked him how he knew that and he then admitted that he himself did not know.[2]  When asked why he agreed to complete with the other two individual vendors but refused to do the same in the case of the 1^st defendant his answer was that their property was much smaller in size.

60.He then claimed that if money was paid and the mortgages could not be cleared then the danger was much more.  But he however conceded that he had not and did not check on the mortgage position of the six defendants.  He then appeared to contradict himself by saying the reason he did not check the mortgages was because these were ancient mortgages and the risk was low.  When pressed further as to why he did not complete with the defendants if the mortgage risk was low, his answer was again revealing: “Whether to buy or not, mind can change anytime.  It was a commercial decision.”  This clearly reflected what was the thinking of the plaintiff at the time and the decision not to complete would appear to be dictated not because the defendants had not complied with their obligations under the Agreement but rather more to do with the commercial exigencies of the situation at the time, which presumably was affected by the prevailing property market conditions.

61.It was pointed out to him that by the letter dated 21 September 1989 (D/716) the 1^st defendant gave notice that as the plaintiff failed to complete on or before 2 September 1989, the 1^st defendant was forfeiting the deposit paid and was thereafter released from the Agreement.  When asked why there was no response by the plaintiff or its solicitors to the letter, Lam initially tried to suggest that there were some reply letters.  He eventually had to accept that the plaintiff had not discovered any such reply letters, given that the plaintiff’s present solicitors were the same as those acting for the plaintiff back in 1989.  He was unable to give any satisfactory explanation as to why the plaintiff made no response to the forfeiting of the deposit by the 1^st defendant and/or the avoiding of the Agreement.

62.He was questioned about the letter of 4 September 1997 (D/716‑7) which he sent to all the defendants as well as Kung Chi Man and asked whether it was the plaintiff’s case that by that date all relevant land comprised in the Agreement had succession formalities completed, mortgages cleared and consent of the Lands officer had been secured.  His answer was “I don’t remember.”

63.His attention was drawn to the letter of 4 December 1998 from the plaintiff (D/716‑13)demanding completion by the defendants on or before 16 December 1998 pursuant to clause 3(b) of the Agreement.  He was asked why he took no further immediate action when the defendants did not respond.  His answer is again quite revealing: “Because I was very busy.  Although this transaction needed to be completed, no need to deal with it immediately.  I had a lot businesses to attend to.”  In fact the plaintiff took no further steps to complete for almost another nine years (see paragraphs 26 – 30 above) until October 2008.

64.In this regard it is patently clear that the plaintiff’s case appears to be riddled with inherent inconsistencies, where at one point in time it asserts that they have all along been willing, ready and able to complete but it was because the defendants were not contactable, it was not able to complete earlier.  Yet Lam himself conceded that if the plaintiff really wanted to contact the defendants it could have done so (see paragraph 53 above) but in fact the plaintiff “never looked for them.”

65.Then again in 1989, despite the 1^st defendant indicating readiness to complete, the plaintiff’s position appears to be that the option to complete with one vendor was for the plaintiff to exercise, and not an option of the vendor and therefore the plaintiff declined to complete.  This is to be contrasted with the position in 1997 when the plaintiff is making inquiries as to whether all the succession procedures have been completed to which they receive no response, which is then followed by the letter of 4 December demanding completion by 16 Decemeber1998.

66.This taciturn and inconsistent stance is further accentuated when in 2006 the plaintiff’s solicitors responded to the letter of the defendants’ solicitors terminating the Agreement.  Here the plaintiff is again apparently attempting to make inquiries of the defendants as to the status of the succession procedures and clearing of mortgages.  If the plaintiff and/or their legal advisers genuinely were unaware of the status of the parcels of land the subject matter of the Agreement, it is then a little difficult to understand why on 3 October 2008 they write a letter formally asking for completion within 14 days.  Then shortly after that deadline lapses, the plaintiff issues a writ claiming for specific performance of the Agreement.  This is apparently done despite Lam still claiming to being unaware whether or not the defendants had completed all the necessary procedures and were in a position to complete, a claim now being made more than 28 years after the parties had signed the Agreement.

67.It is noteworthy that when he was asked why was the plaintiff asking about the status of the property in 2006 and yet did nothing for the next two years, Lam’s response was strange.  According to Lam the plaintiff at that time was “just eager to learn land status but did not say eager to purchase immediately or eager to complete.”  Lam appears to have again forgotten or conveniently ignored his earlier evidence that he and the plaintiff were aware that the succession procedures were completed by August 1983.

68.It was put to him that the Agreement had been terminated by Lai on behalf of the plaintiff in 1984 when he informed the defendants that the plaintiff would not proceed with the Agreement because the property prices had dropped dramatically in 1982/3 in the light of the Joint Declaration talks.  Lam’s response was that Lai did not have the authority to do that, although he conceded that Lai was a director and equal shareholder of the plaintiff at the time.  He then asserted that he did not know what Lai had said to the defendants.  He however agreed that after the Joint Declaration was signed property prices in Hong Kong went into a slump.

69.It was suggested to him that during the period between 1983 until 2008 the plaintiff adopted what I would describe as a “blowing hot and cold” approach to completion under the Agreement, depending on the state of the Hong Kong property market.  His responses were rather evasive - from at one stage saying he was not aware of the land prices in Tai O, to next saying he had not studied whether the land prices had skyrocketed in 1997 before finally agreeing that property prices had fallen in 1998.  When I asked him whether the property prices had appreciated considerably in 2008 his answer was “Not aware value of land in Tai O – did not check everyday.”  I found that rather disdainful answer a little difficult to accept from an experienced and astute businessman with considerable experience in the property market and property investment. On his own evidence he claimed he owned or controlled over 30 companies with each of them owning at least one property.

70.He rejected the suggestion that the reason why the plaintiff sought to revive the Agreement in 2008 was because the land prices had appreciated considerably.  It was then pointed out to him that the total value of the land of the six defendants back in 1980 was about $2.6 million to which he made the surprising response that he had not made any calculation.  It was pointed out to him that the valuation placed by the plaintiff’s own expert on the parcels of land which were the subject matter of the Agreement as of July 2012 was $27.36 million (B/461), to which Lam’s response was “That’s his calculation.”

71.He was taken through an exercise comparing the parcels of land as identified in the Agreement in the various Schedules relating to the various defendants with the Schedules that were annexed to the Statement of Claim.  It was pointed out that the plaintiff was claiming specific performance against one or more of the defendants in respect of parcels of land which they did not own and/or were not so identified in the Agreement’s Schedules or belonged to another Demarcation District or to another defendant.  Lam accepted these were all mistakes.

72.When he was asked to explain on what basis then was the plaintiff claiming for specific performance of land which was either not owned by the defendant concerned or owned by another defendant, he gave what can only be described as a cavalier answer: “If we are able to succeed in specific performance and there is some mistake you will point it out and the Court will only grant specific performance of those we are entitled to.”  He then blamed his lawyers for the mistakes saying they had prepared the Schedules to the Statement of Claim and he just trusted them.

73.It was suggested to Lam that it was the common understanding between the plaintiff and the vendors at the time of signing the Agreement that if the ancient mortgages could not be cleared due to the difficulty of locating the mortgagee the parties would then proceed with completion nevertheless.  He disagreed and asserted “I will decide at the time when to exercise the option.”  It was suggested that on his understanding of his case, the plaintiff could exercise the option after even 100 years.  He answered “In theory if I can live that long.”  He appears to have forgotten that the plaintiff as a corporate entity had no such limitations on its life.

74.It was pointed out to him that according to the Statement of Claim he was asking for specific performance in respect of Lots 63, 87, 170 and 346 in DD 317 despite the fact there were still unredeemed mortgages pertaining to them.  His answer was that because he spent 30 years trying to locate those persons without success, the chance of persons coming up now in respect of the mortgages was very low.  Furthermore he claimed that having waited this long he was prepared to accept the property with the mortgages.  When pressed as to where was the evidence that he had spent 30 years trying to locate the mortgagees, he responded that in 30 years they had not come to collect the money.

75.In my view, Lam, Lai and the plaintiff were at all times fully aware that the risk posed by any of the mortgagees in respect of any these ancient mortgages which were registered in the Block Lease of 1905 (D/846) coming forward in the period 1980 – 2008 was negligible and extremely remote.  This must have been a factor that Lam and Lai weighed in the balance before proceeding to sign the Agreement to purchase these parcels of land from the vendors in 1980.  Looking at the evidence as a whole, it is clear to me that Lam and the plaintiff were using the option for partial purchase not as a shield but more as a weapon in order to brush of attempts by the defendants seeking completion if Lam/Lai or the plaintiff did not perceive the property market conditions as being appropriate and favourable. This enabled them to string the defendants along without committing themselves.

76.It was put to Lam that the plaintiff asked all the vendors to sign letters authorising Lai to handle all succession procedures on their behalf.  Surprisingly Lam denied this saying there was no such thing.  According to him there was just some mentioning that if the vendors had any difficulty then Lai would assist them with the procedures.  When his attention was drawn to the two letters of authorisation from the 2^nd, 3^rd and 4^th defendants (D/857) and by the 5^th and 6^th defendants (D/861) Lam still persisted that he did not know anything about this despite the fact these letters were was also dated 1 February 1980, the date of the Agreement.

77.In re‑examination he was asked whether he followed up with Lai between 1983 and 1997 as to the progress of the land procedures.  Lam gave what can only be described as an evasive answer: “He only referred one land sale in Tai O.  Not very close to Lai.  I was very busy.”  He then claimed that he was not aware by end of 1983 that succession procedures had been completed.  When asked when did he become aware, he gave a vague answer that it was at the time when he saw the stock deed that he became aware whether succession procedures were completed or the mortgages had been cleared, without indicating when that was.  I then pointed out to him what he said in paragraph 36 of his witness statement.  Lam then conceded that by 1983 he should know about it.

78.I found Lam was being less than truthful in his evidence as regards these matters.  He gave me the impression that he was a witness who was circumspect with the truth and was more concerned in saying what would assist the plaintiff’s case, without regard as to whether it represented the truth or not.

Evidence on behalf of the defendants

79.A total of four witnesses gave evidence on behalf of the defendants.  Lee Chi Fong (“Lee”) was the Chairman of the Tai O Rural Committee and was actively involved in the affairs involving the Heung Yee Kuk and village matters in the New Territories generally since the 1960s.  He knew Lai since 1962 and they had worked together in the Tai O Rural Committee.

80.Lee stated that Lai approached him in 1979 claiming that there was a company interested in buying property in Tai O.  Lai did not disclose to him that he himself was a director and shareholder of the plaintiff at the time.[3]  Lee was asked by Lai to see if he could approach the defendants and any other vendors to see if any of them would be interested in selling their interests in the land.  Lee confirmed that he knew all the defendants.  He stated that he contacted the 1^st and 3^rd defendants and they then contacted their relatives about this proposal.  Accordingly Lee arranged for Lai to meet the potential vendors acting purely as an introducer.

81.According to Lee, the vendors raised the question of succession with Lai, as the land was registered in the names of their ancestors.  Lai informed the vendors that due to the succession complications, the vendors would only need to sell those parcels of land that they were able to succeed to.

82.Lee was present when the vendors met with Lam and Lai at the offices of Messrs MK Lam & Co on 1 February 1980.  He acted as a witness to the signing of the Agreement.  He stated that before the signing, the vendors again raised their concerns about the succession issue as to when and how it could be done.[4]  Lai apparently assured them.  He went on to say that both Lai and Lam assured the vendors that only those parcels of land in respect of which they could manage to complete the succession procedures would be the subject of sale under the Agreement.  In respect of those parcels of land where this could not be achieved, they would be excluded from the Agreement.

83.According to Lee, all the vendor villagers had very limited education, and some could only sign their name.  According to him all the vendors signed the Agreement relying on the assurances given by Lam and Lai.  He also stated that Lai informed the vendors that he would be responsible to help them with the succession procedures as he claimed to be quite experienced in this respect.  Lee stated that the vendors signed authorisation letters to this effect in favour of Lai.  He also claimed that he was aware that the vendors went with Lai to the Islands District Office several times to deal with the succession formalities.  He was aware that in 1980 and 1982 the plaintiff had completed with two of the vendors, although the succession procedures in respect of the remaining vendors had yet to be completed.

84.He confirmed that by 1983 he was aware that Lai had managed to complete all the succession procedures in respect of the defendants.  Although the defendants asked Lai to arrange for completion it appeared that neither Lai nor the plaintiff took any steps to complete.  According to him this was because the property market, the economy and the prices had all been affected by the visit of Mrs Thatcher to Beijing in 1982.  There appeared no longer to be any keen interest in purchasing land in Lantau.[5]

85.Lee claimed he bumped into Lai, the 1^st and 3^rd defendant on Tai O Market Street in the first half of 1984.  Lai was asked about the status of the land purchase and his response was that no one would be interested in purchasing land in Lantau then and that the plaintiff was no longer interested in proceeding with the purchase.

86.Lee claimed that he used to meet Lai quite regularly as they had regular monthly Rural Committee meetings.  Lai apparently ceased to be a committee member in and about 1995.  Apart from meeting at the Rural Committee meetings Lee explained that he would sometimes meet Lai at the District office in Tai O when Lai came to purchase groceries.  He confirmed that Lai had never once asked him about the whereabouts of the defendants between 1984 and 1995. He claimed that he last saw Lai towards the end of 1995 or 1996, after which he did not know where Lai had gone.  Apart from the occasion of the meeting in the street in 1984 between Lai, 1^st and 3^rd defendants, Lai apparently never raised or mentioned the Agreement again with him.

87.During cross examination he agreed that he had known all the defendants for a long time, save that as regards the 4^th defendant, he did not know him as well as he did not see him regularly.  He agreed that the vendors expressed concern about two things in particular, succession problems and clearing of the mortgages.

88.According to Lee, the plaintiff was also concerned that if the names could not be changed then the sale would not be able to go through and it was in that context that the vendors said they would sell whatever land they could succeed to.  He was adamant that Lam then gave the assurance to the vendors that whatever they succeeded to, the plaintiff would purchase those parcels of land.

89.He agreed that Lam did read out the Agreement and explained it to the vendors.  He accepted that his presence there was for two purposes, namely to witness the signing of the Agreement and to protect the rights and interests of the vendors, his friends.  He confirmed that he also signed the Supplemental Agreement as a witness but that his signature was only put down later when Lai gave him the documents to sign as a witness.  This was not on the same dates when the plaintiff and the defendants signed the 1^st and 2^nd Supplemental Agreements.

90.I found that Lee gave clear, consistent, credible and reliable evidence.  He was not shaken in cross‑examination.  I bore in mind that although he appeared to have no personal interest in this litigation as such, that he was a close friend of the defendants over many years.  In my view, he gave direct and matter‑of‑fact answers to questions put to him, without in anyway attempting to embellish his story.  Giving due consideration to and bearing in mind the possibility that he may be trying to help his fellow villagers and long time friends, I found nothing in the manner or content of his evidence that causes me to conclude otherwise than that he was telling me his story truthfully and as he remembered it, without it being coloured by any prejudice or favour.  I have no hesitation in accepting his evidence as being a truthful account of the circumstances leading up to the signing of the Agreement and how it came not to be implemented by the plaintiff despite the succession procedures having being completed back in 1983.

91.The 3^rd and 6^th defendants (the only surviving defendants of the original vendors) gave evidence to the similar effect as to the discussions leading up to the signing and the circumstances under which the vendors were persuaded to sign the Agreement.  Both were categorical that when the vendors expressed concerns as to when and how the succession procedures would be completed, that both Lam and Lai assured them that Lai would help them with the succession procedures and formalities.  They stated that Lam or Lai further assured the vendors that they would need to only sell those parcels of land that they were able to complete the succession procedures.  It was in reliance upon these assurances that they claimed the vendors signed the Agreement.

92.According to the 3^rd defendant the Agreement had already been prepared when they went to the solicitor’s office.  His recollection was that the Schedules of property to the Agreement were given by Lai for him and his brothers to sign after they had gone to the solicitor’s office.  At the time they signed he was certain that none of the other vendors were present.

93.In a similar vein, it was the 6^th defendant’s evidence that sometime in 1979 the vendors handed over to Lai the survey lists in respect of the various parcels of land that they had the right succeed.  According to him, the survey list was a document that was issued by the Government for payment of land tax.  Lai apparently then gave the list to a solicitor to do a search.  Later Lai then gave the Schedules to the 5^th and 6^th defendants at the District Office for their signature.  When they signed he claimed that neither Lam nor the other vendors were present.

94.According to the 3^rd and 6^th defendants by late 1983 all the succession procedures had been completed with the help of Lai.  According to the 3^rd defendant when he asked Lai when completion could take place he initially gave various excuses to avoid answering him directly, such as his boss (Lam) was out of town or else he sought to defer discussion of the matter by saying that they could discuss it another time.

95.The 6^th defendant claimed that in late 1983 he had in fact gone to the offices of the plaintiff (which was also the address of Messrs MK Lam & Co) to look for Lam but he was not there.  Lai and Lee were apparently there and he was told that as Lam was not there, nothing could be discussed then.  He also went to the plaintiff’s offices several times in early 1984 but each time Lam again was not there.  He was not sure whether Lam was deliberately trying to avoid meeting him.  He also claimed that in 1984 he used to come across Lai in Tai O during festivals or at Chinese New Year.  Whenever he inquired about the status of the completion, Lai would simply avoid discussing the topic with some excuse or the other and managed to deflect giving him a direct answer.

96.Both the 3^rd and 6^th defendants confirmed that sometime in 1984 Lai informed Lee, the 1^st and 3^rd defendants that the plaintiff did not intend to proceed anymore with the purchase of the lands.  In light of this they believed that transaction had been terminated or fallen through in 1984.

97.The 3^rd defendant confirmed that he still lived and operated a stall at 14 Market Street in Tai O, and has been doing so since 1976.  He apparently also operated another shop at 11 Market Street selling dried seafood products.  He asserted that if the plaintiff or Lai really wanted to contact him they should have had no difficulty in doing so.  Neither he nor his brothers, the 2^nd and 4^th defendants, had left Hong Kong between 1984 and 1997 for any extended period of time.  He explained that Lai also had his telephone number and could have contacted him anytime, if he wanted.  He stated that his telephone number had not changed over the years.

98.In relation to the notices that were shown in the photos that were said to have been put up by the plaintiff (A/176‑183), the 3^rd defendant claimed he had not seen them before between 1980 till the present.  He claimed he often cycled past the lands owned by him and his brothers.

99.Under cross‑examination he admitted that he had a long time relationship with Lee having known each other for a long time and that they met frequently.  This, it seems to me, is unsurprising as the 3^rd defendant lived in Tai O and Lee was the Chairman of the Rural Committee there.  He agreed that Lee played a significant role in the community affairs of Tai O and he and the vendors all trusted him.  They also relied on Lee to protect the interests of the villagers and that was why they had asked him to be present when the Agreement was signed.

100.He rejected the suggestion that Lai told the vendors at the meeting that if they cannot complete succession or clear the mortgages then the deal would fall through.  He maintained that what Lai assured them was that they only had to sell those lands to which they could secure succession; for those mortgages that could not be cleared then they would possibly not be included in the sale.

101.It is noteworthy that what was put to the 3^rd defendant in this regard is inconsistent with what Lam himself said about this, namely that he did not spell out to the vendors what would happen if the succession could not be completed or the mortgages cleared or the circumstances in which he would exercise the option (see paragraphs 40‑41 above).  In my view Lam was clearly playing his cards very close to his chest as befitting an astute and obviously successful businessman.

102.He agreed that clause 3(a) and (b) of the Agreement was not in accord with what the defendants say were the assurances given by Lam and Lai.  When asked why he did not ask Lai or Lam to amend it, the 3^rd defendant’s answer was that all the vendors trusted Lai.  Further, Lai had said that he had started the succession procedures and that he would purchase those parcels of land where succession could be completed.  He further stated that Lai was aware at that time that some of mortgages may not be able to be cleared because they were either too ancient, or some documents were missing or some of the offspring could simply not be located.

103.In answer to a question by the court as to whether this was discussed by the parties before the signing, the 3^rd defendant confirmed that it was.  He further indicated that at the time of the signing of the Agreement, the vendors themselves were not aware which parcels of land were subject to mortgage and which were not, and this was why they did not ask for clause 3 to be deleted or amended.  According to him, the core issue as far as the plaintiff and the vendors were concerned was whether the defendants could manage to complete the succession procedures so that they could sell.

104.He explained that this was why all matters relating to the succession were handed over to Lai for handling, and as to which of them could or could not be completed, only Lai knew.  He denied that the vendors had an obligation to inform the plaintiff when all procedures were completed stating that this was something for Lai to do so as he was the one who knew when these procedures could be and were completed.  I note that in the 1^st and 2^nd Supplemental Agreements the emphasis is on completing probate or succession procedures and there is no mention of clearing the mortgages.  This perhaps reinforces the understanding by all the parties at the time that succession would be easier to achieve than being able to clear all the mortgages for the reasons explained in paragraph 102 above.

105.The 3^rd defendant denied he ever told Lai in 1983 that he needed to seek the approval of the beneficiaries of the tongs or tsos before seeking the consent of the District Officer.  He however confirmed that when he received the letter dated 12 November 1982 from the plaintiff (D/713‑6) demanding three times the deposit he did approach Lai and asked for further time to complete the procedures.  He and his brothers simply did not have the money to pay the plaintiff that sum of money.

106.According to him, when Lai told him in 1984 that the plaintiff would not proceed with the sale he realised that the plaintiff did not want the land and since they had abandoned the Agreement, then he and his brothers would not sell it.  He and his brothers were angry about it.

107.He admitted then when he was preparing for the trial he came across some letters written by the plaintiff in 1997/8.  He simply ignored them because as far as he was concerned the plaintiff had in 1984 already indicated that they were abandoning the Agreement.

108.In contrast, the 6^th defendant claimed he did not receive any of the 1997/8 letters.  According to him, if as claimed by Lam, letters were sent to the Tai O Rural Committee office, he believed that he would have received it as the village representative had his telephone number.  He pointed out that the address stated in the letters dated 24 October 1997 (D/716‑12) and 4 December 1998 (D/716‑13B) were wrong, as he lived in Ting Tai Building and not On Tai Building, as recorded in those letters.  He further stated that Lai always had had his number, and in 1982 when he changed his number, he gave that to Lai as well.

109.The 6^th defendant echoed the 3^rd defendant’s evidence that Lai never told the vendors that if the defendants could not succeed to the properties or the mortgages could not be cleared, then the deal would fall through.  Instead he maintained that Lai and Lam both assured them they would purchase whatever land the vendors were able to successfully succeed to.  To his understanding and thinking he and the other vendors had to trust what Lam/Lai said.

110.Both the 3^rd and 6^th defendants spoke about approaches made in the 1990s and 2006 by prospective purchasers.  They left the discussions to be handled by Kung Hok Sing (“Kung”), the son of the 1^st defendant.  It transpired however that the prospective buyers cried off when they saw that the plaintiff had registered the Agreement at the Lands Registry.  The 6^th defendant went on to explain that the reason why he did not take any steps to vacate the registrations against the various parcels of land was because he did not have the financial resources to instruct lawyers to do so.

111.The last witness called for the defendants was Kung who gave evidence that his father, the 1^st defendant had died in 1998.  He was not directly involved with the initial negotiations and discussions leading up to the signing of the Agreement.  He stated that therefore much of his knowledge emanated from what his father had conveyed to him as to the circumstances under which the various vendors had agreed to sell the lands they had inherited but where the succession procedures had yet to be completed.  By and large his understanding of what the parties had apparently agreed and understood largely accorded with the evidence given by Lee and the 3^rd and 6^th defendants.

112.He explained that he came to know that although his father and the other vendors had managed to complete the succession issues sometime in 1983/4 it transpired that the purchaser had decided not to proceed with the transaction.  His understanding was that the Agreement transaction had therefore fallen through.

113.He explained that in 1989 his father (the 1^st defendant) told him that as he was ageing, he wanted to transfer the title of the land to Kung and his younger brother to manage the properties.  Kung then caused some company searches to be done to know more about the purchaser.  It was then that he discovered that Lai was also one of the major shareholders and a director of the plaintiff, which came as a surprise to him, because he was under the impression that he was just acting as the middleman between the vendors and the plaintiff.

114.He touched upon the letter from Messrs Kenneth CC Man & Co on 28 July 1989 (D/714) asking the plaintiff to complete by 2 September 1989.  As completion did not take place as stipulated, his father’s solicitors then wrote a letter forfeiting the deposit and declaring the Agreement of no further effect.

115.He stated there were discussions in 2006 with potential purchasers who were interested in developing some of the parcels of land.  He then arranged for a letter to be sent by Leung Kin & Co on 1 September 2006 informing the plaintiff that the Agreement had been terminated due to their failure to complete (D/717). However due to the registration by the plaintiff against the parcels of land, the intended transaction with the prospective purchasers fell through again.

116.Under cross‑examination Kung stated that he had asked his father in and about 1985 as to what had happened in relation to the Agreement and his father informed him that Lai apparently did not want the lands anymore.  Kung therefore believed that the transaction had fallen through and that the plaintiff had unilaterally terminated the Agreement.  When asked whether his father (the 1^st defendant) was angry about this, he responded that he “appeared to be helpless … other party did not want it and he could do nothing about it.”

117.He explained that although he believed that the Agreement had been terminated unilaterally by the plaintiff by 1984, the reason why Messrs Kenneth CC Man wrote the letter of 28 July 1989 (D/714) was because the solicitor advised them that a letter be written to the plaintiff to see what they say.  His father took the view of giving the plaintiff one last chance to see if the plaintiff would purchase the lands.

118.He was questioned as to the failure by any of the defendants to vacate the registration in the Lands Office between 1990s and 2006.  Kung stated that he tried to make inquiries from the Government (by which I believe he is referring to the Lands Office) to understand the effects of the registration and what could be done about it.  He was given to understand that only the person who had caused the registration could remove it, and if that person was unwilling, then there was little else that could be done.

119.It was suggested to him that they could have gone to court to vacate the registration.  He claimed that he did not know back then that they could do that.  In re‑examination he clarified to say that in 2006 when they had instructed Messrs Leung Kin & Co to write a letter to the plaintiff informing them that the Agreement was terminated, they had discussed with the solicitors about the procedures for removing the registration.  He explained that they understood that to initiate such a procedure would involve litigation.  After considering their options Kung explained that they decided not to pursue the litigation option as they did not have the money to fund the litigation.

120.I found the 3^rd and 6^th defendants and Kung to be simple and at times naïve villagers who gave their evidence in a simple and direct manner.  I was impressed with the fact that they attempted to answer questions directly without any attempt to embellish or colour their evidence.  I found them to be basically honest, truthful and reliable witnesses. On the material matters where Lam’s evidence was at variance with theirs, I preferred and was prepared to accept and act on their evidence.

121.I am satisfied that because the plaintiff was keen on purchasing these parcels of land back in 1979/1980, that in order to persuade the vendors, including the six defendants to sign the Agreement, that it was more probable than not that Lam and Lai gave these vendors the assurance that they only needed to sell those parcels of land that they were able to complete the succession procedures of and that Lai would assist them in that exercise.  In reality Lai did assist them eventually complete the succession formalities.  I find it difficult to accept that when the vendors were openly expressing concerns about being able to completer the succession procedures that Lam and Lai did not say anything to assuage their fears and concerns.

122.I also find that for its own commercial reasons the plaintiff decided not to go through with the completion of the Agreement after the succession formalities were completed by August 1983.  The plaintiff did this by giving various excuses for desisting from proceeding to completion. I also believe and find that Lai did tell Lee and the 1^st and 3^rd defendants in about 1984 that the plaintiff was not interested to proceed with the purchase, and not surprisingly, the defendants believed that from that point in time, the Agreement had come to an end by the actions or inactions of the plaintiff.

REVIEW OF SUBMISSIONS

123.Ms Tjia submitted on behalf of the defendants that the plaintiff’s claim for specific performance was in shambles.  She pointed out that the lots that specific performance was being sought, whether under the Amended Statement of Claim or the Re‑amended Statement of Claim, were different from the Schedules attached to the Agreement and/or the Lots as registered in the Lands Office in respect of completed succession.

124.She highlighted various parcels of land that the plaintiff was claiming specific performance of but which had been deleted in the records of the Lands Registry.  She went through a detailed exercise of identifying these considerable and glaring discrepancies.  I do not feel that it is necessary or useful to fully set out these discrepancies here.  Suffice to say I have taken on board the thrust of the point being made in this regard and find it is a point of some substance.  Unsurprisingly Mr Cheung, on behalf of the plaintiff, did not seriously attempt to challenge this or suggest that there was solution to resolve the inconsistency between the pleaded case and the evidence.

125.She argued that the onus was on the plaintiff to present cogent, coherent and credible evidence that clearly demonstrated that it was entitled to claim the equitable remedy of specific performance.  It was not for the defendants or the court to help the plaintiff make its case if they are unable to properly and accurately present it to the court for its adjudication.  She submitted that there was simply no credible explanation that was put forward by the plaintiff to either explain away or help resolve these discrepancies.

126.Ms Tjia further argued that there has been exceptional delay on the part of the plaintiff of almost three decades before attempting to seek enforcement of the Agreement and the Supplemental Agreements.  In the course of this long and unexplained delay, it was argued that the factual basis of the plaintiff’s case had also changed.  Further that the defendants have also been prejudiced as the 1^st, 2^nd, 4^th and 5^th defendants have in the interim all died, and although the plaintiff has disavowed any intention to seek specific performance against them, nevertheless the delay has caused general prejudice to the defendants as a group.

127.It was argued for the defendants that the plaintiff’s originally pleaded case was that it was “prevented from completing” due to the failure by the defendants to notify it of the completion of the succession procedures (A/13 para 16).

128.In my view, this aspect of the plaintiff’s case is difficult to understand or accept.  On the plaintiff’s own case and evidence, Lai was the person who was instrumental in assisting the defendants in completing the succession procedures by November 1983 at the latest.  Lai was a director of the plaintiff at the material time and his knowledge that the succession procedures had been completed must be imputed to Lam and the plaintiff as well.  It is difficult to understand what further notification did the plaintiff require from the defendants as vendors in order to complete the sale, assuming the plaintiff was genuinely interested in completing the purchase at that point in time.  Lam’s taciturn evidence in this regard gives support to the view and the conclusion that I arrive at that it was the plaintiff that was avoiding to proceed with completion of the Agreement. 

129.Mr Cheung on behalf of the plaintiff in his closing submissions attempted to resurrect the need for an implied term in the Agreement that imposed an obligation on the defendants (vendors) to notify the plaintiff when they had successfully completed the succession procedures and discharged all the outstanding mortgages.  I believe he was stretching the implied term argument to its limits when he went so far as to suggest that if any officious bystander would suggest these terms be recorded in the Agreement, that all the parties concerned would simply say “oh of course, that it goes without saying.”

130.In this regard I do not accept Lam’s evidence that such a requirement was to be implied under the Agreement.  Given that he was the person who drafted the Agreement, and bearing in mind his considerable experience as a property investor with some familiarity with the law, it appears to me untenable to contend that if the plaintiff really required the defendant vendors to notify it of the completion of the succession procedures that this would not be reflected in the Agreement he was instrumental in drafting.

131.I also found Lam’s attempts in his evidence to suggest that Lai had no authority to bind the plaintiff and that he, Lam, had the greater authority because he had lent money to Lai, both disingenuous and a rather feeble attempt to belittle the authority or power of Lai to act on behalf of the plaintiff.  I found such evidence a blatant attempt to tailor his evidence in order to suit the plaintiff’s case.

132.I would observe that the plaintiff’s case was that they were unable to contact the defendants after 1983 until 1997 despite persistent and diligent attempts by Lai to do so.  I would draw attention to the matters set out in paragraph 55 above and footnote 1, which in my view tends to further undermine the plaintiff’s case on this aspect.

133.In the course of the trial, and in particular in the course of Lam’s evidence, the plaintiff’s complaint about the failure of notification would appear to have been metamorphosed into an assertion by Lam that the plaintiff had the right to exercise its option to delay completion until the succession procedures by all the defendants had been completed, a right which Lam suggested apparently entitled the plaintiff, at its discretion and option to postpone completion indefinitely.

134.Lam’s view would appear to be that even if the succession procedures had been completed it was his option as to whether, and if so when, he may decide to purchase the lands from the defendants, and by then relying on their failure to clear the ancient mortgages as a reason for not proceeding to completion.  In effect he was saying that the defendants were required to sell to him at 1980 prices, even if he decides only in 2008 to exercise his option to enforce the Agreement, because it suited his purposes to do so then.  He appeared to be totally unabashed to state and believe that this was his prerogative and entitlement under the Agreement, and in expecting the court to confirm that belief and to give the plaintiff relief accordingly.

135.Although Ms Tjia did not make specific reference to any of the legal defences identified in paragraph 31 above in her closing, she did not indicate she was abandoning the defences raised therein.  These were in effect the pleaded defences raised in the Amended Defence filed on behalf of all the defendants (A/92).

136.She also invited the court to draw adverse inferences by the failure of the plaintiff to call Lai as witness, despite filing a witness statement and an affirmation by him.  She contended that Lai was the one person who directly dealt with all the defendants and was instrumental in forging the Agreement between the plaintiff and the various vendors.

137.She questioned the absence of any medical report explaining why Lai was unable to attend court to give evidence.  She complained that the letter produced at the beginning of the trial purportedly from Lai was not even signed by him.  The implication of the thrust of her argument was that Lai was presumably not being called because he would/may not now be supportive of the plaintiff’s case on the crucial issues.

138.Mr Cheung, in his closing submissions on behalf of the plaintiff, accepted the proposition that in the absence of a good explanation proffered as to why a party did not call a witness at the trial, the court was entitled to draw adverse inferences against that party.  He however contends that the fact that someone else had to sign on behalf of Lai was perhaps a reflection of how unwell he must have been.

139.I am not impressed with this argument because the plaintiff and its legal advisers would have been well aware of the trial dates.  In undertaking preparations for trial it would be natural for them to contact the witnesses well in advance to ensure they will be available during the trial dates.  If Lai was unwell to the extent now contended for, then the plaintiff and its solicitors had ample time to ensure there was a proper medical report speaking to Lai’s health condition and ability or otherwise to attend court to give evidence.

140.Although I have my reservations as to why Lai was not called to give evidence during the trial, I do not intend for present purposes to draw inferences either way by reason of his absence.  I believe I have other materials by way of direct evidence or inferences upon which I can safely and reliably draw upon, in coming to a decision on the crucial issues in this case.

141.It was the plaintiff’s primary case that under the Agreement and the Supplemental Agreements the discretion to postpone the completion vested in the plaintiff was unfettered so long as the defendants had not completed their obligations of completing succession procedures and clearing all the mortgages.  It was therefore argued that given the plain language of clause 3 of the Agreement there was no basis to imply into the Agreement any limitations on the period for which the plaintiff could postpone completion such as not to act capriciously or in bad faith or that any postponement should be only for a reasonable period of time and not indefinitely.

142.The inherent fallacy of this contention in my view is that, if correct, it is tantamount to this: the vendors who signed the Agreement in 1980 to sell their lands based presumably at the then prevailing market prices can be kept stringing along for almost 30 years by a purchaser (who has in the intervening period been blowing hot and cold about completion) and can today demand completion of the sale under the Agreement at the same prices as prevailed when the parties bargained over 30 years ago.  Stripped of all the hype, this is what the plaintiff is essentially asking the court to grant in terms of equitable specific performance.

143.When expressed so starkly, I am of the view that the plaintiff’s contention in this regard is simply untenable.  This is particularly so when the plaintiff is demanding enforcement of an Agreement that on Lam’s own evidence he was hoping that the succession procedures could be completed as soon as possible, and ideally within half a year.

144.In my view, at around the time of signing the Agreement the common expectation of Lam and Lai on behalf of the plaintiff on the one hand and the vendors including the defendants on the other, was (subject to how smoothly or otherwise the succession procedures took), they expected the sale to be completed within a reasonably short time frame.  I am fortified in arriving at this view by Lam’s own expectation as set out in the above paragraph as well as by the following matters:

(a)  the fact that the plaintiff completed the purchase with Kung Kam Shing on 20 November 1980, despite the fact that the other vendors had yet to complete their succession procedures and the mortgage incumbrances on his properties had not all been cleared (C/685‑9);

(b)  the fact that the plaintiff also agreed to complete with Kung Chi Man and Kung Chi Kuen (who had apparently completed their succession procedures in or about May 1982) on 9 September 1982 when the other vendors had not as yet completed their succession procedures and where similarly the incumbrances on some of the parcels of land had also not all been cleared (D/713‑5); and

(c)  the fact that the plaintiff was prepared to give the 2^nd– 5^th defendants further deposits in 1981 upon a condition that if they did not complete by September 1982, they were required to pay three times the deposits paid to them.

145.All these events clearly suggest to me that Lam or Lai were still interested in the purchase of the properties in 1982 and possibly in 1983.  Further that they were not concerned about the ancient mortgages that had not been cleared in respect of the properties of these two vendors. By August 1983, all the completion procedures that were required to be completed were carried out by the defendants with Lai’s assistance.  Against that backdrop, I find it difficult to accept that the defendants having finally managed to complete all the succession procedures would then suddenly make themselves scarce so that neither the plaintiff and/or Lai were able to get in touch with any of them between 1983 and 1997. 

146.It occurs to me that if anyone would be eager and anxious to complete and receive the balance of the purchase price, one would have thought it would have been the vendors. Yet Lam seeks to project a scenario of persistent and diligent attempts being made by the plaintiff through Lai but all of which were fruitless and in vain because the defendants suddenly chose to become incommunicado (A/143: para 39).  The extent of interest or disinterest the plaintiff had in purchasing these lands after 1983 is perhaps best reflected by the fact that the Agreement was not sought to be registered by the plaintiff with the Island New Territories Land Registry until 1997.  This was the first time the plaintiff had taken any documented action towards seeking to enforce or revive the Agreement after a hiatus of almost 14 years.

147.There was some activity in 1989 prompted by the letters from the 1^st defendant’s then solicitors, as set out in paragraph 21 above.  The response from the plaintiff’s solicitors (who have remained the same for the last three decades) is in my view particularly noteworthy in that they appear to assert that the plaintiff was only obliged to complete when all the vendors have completed the succession procedures (D/715).

148.Given that Lam acknowledged eventually in his evidence that the succession procedures were all completed by August 1983, this response is, to put it as neutrally as possible, an attempt to distract the 1^st defendant and/or his legal advisers.  If the plaintiff was genuinely interested in completing the sale in 1989, one would have thought that the natural response would have been to point out that the plaintiff has been diligently trying to get in touch with all the defendants for the last six years and to ask where the other vendors were and/or for the details of their contact numbers in order that the plaintiff can re‑establish the alleged lost contact and to enable the plaintiff to directly ascertain from them if they were ready to complete. There is also no mention in 1997 flurry of letters from the Plaintiff to the defendants that it has been trying to contact them for the last 14 years without success.

149.I am also not impressed with the plaintiff’s arguments that the defendants had failed to establish that they had complied with the requirement under the Agreement of having cleared all the outstanding mortgages pertaining to the various parcels of lands.  Further that the defendants had failed to demonstrate that they were in a position to complete and therefore the plaintiff was accordingly not under any obligation to complete unless and until the defendants had fulfilled what was required of them.

150.Having heard and carefully reviewed all the evidence, I am left with the deep impression that when the parties entered into negotiations in 1979/1980, their primary concern was whether, and when, the various vendors would be able to complete the succession procedures.  Although they were aware that there were some ancient mortgages registered against some of the parcels of land, given the passage of time, this did not pose nor was it seriously considered by the parties, and in particular the plaintiff to be an obstacle to the sale and its completion.

151.I am fortified in this impression and belief by the following:

(a)  The plaintiff completed the sale with Kung Kam Shing on 20 November 1980 despite the fact that mortgages on his parcels of land had not been cleared.[6]

(b)  The plaintiff again completed the sale with Kung Chi Man and Kung Chi Kuen on 9 September 1982, despite the fact that there were still outstanding mortgages registered against some of the parcels of land which were yet to be cleared.[7]

(c)  It is noteworthy that Lai was a witness to both these Memorials being registered and therefore both he and the plaintiff would be aware that registration of the sale could take place even though there may be outstanding ancient mortgages.

(d)  When the plaintiff signed the 1^st and 2^nd Supplemental Agreement with the 2^nd, 3^rd and 4^th, and 5^th defendants in September and December 1981 respectively, there is no reference to clearing mortgages in them.  Instead the focus is on completing the succession procedures.

(e)  The fact that the plaintiff was claiming specific performance now despite the fact that there were still outstanding mortgages is a reflection of the fact that the mortgages were not really an issue that would pose a stumbling block to the completion of the sale between the parties.  As Lam himself put, he was “willing to take them regardless because these were ancient mortgages and the risks were very small.”  This presumably was his and the plaintiff’s thinking back in 1980 and 1981 when they completed the sale with three of the other vendors, despite there being outstanding mortgages in respect of some of the lots involved.

152.I am left with the clear and compelling impression that Lam and the plaintiff were taking advantage of the naivety of the defendants.  They were also arrogating to themselves the discretion of deciding whether, and if so when, to complete the Agreement depending on the then prevailing property market conditions, and using various excuses to deflect the defendants when they took the initiative and were pressing to complete, when it did not suit the plaintiff’s convenience or give it any advantage.

153.I am also satisfied that it was the prevailing market conditions that dictated the decision by Lai or the plaintiff to deflect any inquiries or attempts by the defendants to try and complete after the succession procedures had been completed in August 1983.  The impression and conclusion one gathers from the evidence as a whole is that the different periods of inactivity by Lai or the plaintiff between 1983 and 1997, then activity in 1997/8, followed by inactivity until 2008 all seem to mirror fluctuations in the property market.

154.Perhaps the most telling point here is that Lam conceded in his evidence that there was nothing further that was required by the plaintiff or Lai of the defendants between August 1983 and the present in respect of the parcels of land comprised in the Agreement, once the succession procedures had been successfully completed.

155.This simply reinforces my view that having for their own reasons decided to equivocate and show disinterest in 1983/4, 1989 and 2006 towards completing the sale, it now lies ill in the plaintiff to at this stage unilaterally and suddenly demand specific performance of the Agreement almost 30 years on that it had otherwise showed disdain and general abandonment in the past.

156.In this regard the following passage on the law of abandonment in Chitty on Contracts (31^st ed) para 22‑027, succinctly sets out the applicable principles:

“It is open to the court to infer that the parties have mutually agreed to abandon their contract where the contract has been followed by a long period of delay or inactivity on both sides. The party seeking to establish abandonment of a contract must show that the other party so conducted himself so as to entitle him to assume, and that he did assume, that the contract was agreed to be abandoned sub silentio.”

157.In this regard I would point out that I have found Lee, who spoke to attempts to get the plaintiff or Lai to complete the sale but without success in 1983/4 as being a truthful and reliable witness.  This further reinforces the inference that the plaintiff had for all intents and purposes abandoned the Agreement back in 1983/4 by either overt representations of Lai on its behalf and/or also by the plaintiff’s own inactivity and inertia from 1983 to 1997, and then again from about 1998 until 2006, followed by another period of inertia until 2008.

158.In the present case, the delay is serious and very long.  There has been no good explanation proffered by the plaintiff to either explain or justify this delay.  Some of the original vendors have since died.  The surviving vendors and/or the representatives of the deceased ones have long ago come to believe that the plaintiff was no longer going to keep its end of the bargain.  This would explain why they were trying to source for other potential buyers, but without success, due to the plaintiff having registered the Agreement in the Lands Office.

159.I am satisfied on the evidence I have heard that in the light of the plaintiff ignoring the defendants’ requests for completion after August 1983 and/or raising puerile reasons for not completing, that the defendants were made to believe that the plaintiff did not intend to proceed with the sale under the Agreement.

160.In my view, by reason of its actions or inactions, the plaintiff is estopped from coming around now more than 30 years after the Agreement and to try and seek specific performance of the Agreement.  The plaintiff cannot at this late and unreasonably delayed point in time unilaterally attempt to resurrect the Agreement which it had by its actions and/or representations of Lai indicated they were no longer interested in and for practical purposes had repudiated and/or abandoned.

161.I find that the plaintiff in coming to court to seek equitable relief must come with clean hands.  I am not satisfied that this plaintiff comes to court with clean hands in the circumstances of this case.  The conclusions I have arrived at above are sufficient to dispose the main issues in this action.  I do not believe I need to address the various other defences raised by the defendants for present purposes.  I believe many of them have been answered and subsumed in the conclusions that I have arrived at on the evidence in this case.

162.I would therefore dismiss the plaintiff’s claim for specific performance of the Agreement.  I find that the plaintiff has repudiated and/or abandoned the Agreement by failing and/or refusing to complete the sale under the Agreement.  This was despite the fact that the defendants had complied with the principal requirements under the Agreement and had completed the succession procedures and were ready and willing to proceed with the completion by August 1983.  I also find that the plaintiff was aware that the succession procedures were completed by August 1983 as Lai, one of its directors was the one who helped the defendants to successfully complete them.

163.Although clearing of the ancient mortgages was a term of the Agreement, I find that both by common understanding of the parties and by conduct, the plaintiff was principally concerned with the completion of the succession procedures.  The clearing of the mortgages was known by all parties to be a difficult, if not impossible task, as the mortgagees have all long since died, and the nature and value of the mortgages was such that they were not realistically a clog on the title to the lands in question.  The risk or likelihood that any mortgagee would turn up to seek redemption of the mortgage was remote at best, and highly unlikely in reality.

164.As regards the counterclaim by the defendants, I would order the following:

(a)  a declaration that the deposits paid by the plaintiff to the various defendants are forfeited by reason of the plaintiff’s repudiation and/or abandonment of the Agreement; and

(b)  an order that the plaintiff forthwith arrange for the registration of Memorial No IS238395 to be vacated at its own expense.

165.There is a claim for damages by the defendants.  However no evidence has been adduced before me as to what, if any, has been the damages sustained by the defendants in the circumstances of this case.  In my view, it was incumbent upon the defendants to adduce the appropriate evidence in support of their damages claim.

166.This saga has been going on for far too long and I do not believe it is in the interests of anyone that it should be allowed to be further protracted by a satellite litigation by ordering an inquiry as to damages.  I therefore dismiss the claim for damages by the defendants as this has not been properly formulated or presented before me.

167.By reason of the foregoing I dismiss the plaintiff’s claim and make an order nisi of costs in favour of the defendants.  This order nisi will become absolute unless within 21 days either party seeks a variation in writing of the nisi costs order.

168.Finally I would like to thank counsel for the able assistance they have rendered throughout the course of this trial.

Mr Albert KH Cheung, instructed by MK Lam & Co, for the plaintiff

Ms Josephine Tjia, instructed by YC Lee Pang Kwok & Ip, for the 3^rd, 4^th and 6^th defendants

1^st, 2^nd, and 5^th defendants was not represented and did not appear