HCA940/2012 WONG CHI PING AND ANOTHER v. HO MEI YUK - LawHero
HCA940/2012
高等法院（民事訴訟）Deputy High Court Judge Seagroatt29/6/2015
HCA940/2012
A A
HCA 940/2012
B B
IN THE HIGH COURT OF THE
C HONG KONG SPECIAL ADMINISTRATIVE REGION C
COURT OF FIRST INSTANCE
D D
ACTION NO 940 OF 2012
E ________________ E
F BETWEEN F
G WONG CHI PING 1st Plaintiff G
LIU PUI HAN 2nd Plaintiff
H H
and
I I
HO MEI YUK Defendant
J J
________________
K K
Before: Deputy High Court Judge Seagroatt in Court
L L
Dates of Hearing: 29 May – 4 June 2015
M Date of Judgment: 30 June 2015 M
N N
JUDGMENT
O O
P INTRODUCTION P
Q 1. The plaintiffs who are husband and wife, respectively 69 and Q
60 years of age, are the owners of Lot 2067 in Demarcation District
R R
No 17 in Yuen Long. A house has existed on the lot for over 25 years
S and there is a photograph of it in the extensive bundles of documents S
which shows features of some importance.
T T
U U
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A A
B B
2. It is clearly a house of three levels with balconies on the 1st,
C
2nd and 3rd levels. These balconies extend the whole width of the house C
and by so doing lend a balance architecturally even to the untrained eye.
D D
The other feature to be noted is the entrance door which is at the middle
E front of the building (see p 538). In fact, there appear to be two front E
doors, one almost in the middle and the other on the extreme left as one
F F
faces the building from the roadway. The latter gives access to the
G staircase leading to the upper floors. G
H H
3. A relatively minor footnote to this period is a letter from the
I District Lands Office dated 15 January 1998 to the plaintiffs. Described I
as a “Toleration Letter” it pointed out that the width (or depth) of the
J J
balcony was 0.13 metre in excess of that approved and that the breach of
K condition would be tolerated only for the life of the existing building. In K
the event of further development the conditions would have to be
L L
complied with strictly. The plaintiffs had paid a fine in respect of the
M breach committed. M
N N
4. In April 2006, the plaintiffs had decided to redevelop their
O site by demolishing their existing house and building a new one, more or O
less along the same lines in terms of accommodation and units (floors)
P P
but with some change of style and features.
Q Q
5. A location plan prepared by Ted Chan and Associates
R R
Limited highlighted two features in particular. One was the septic tank
S but, the other, more important to this case, was the balcony which was the S
full length of the proposed new house (at 9.205 metres) and its width
T T
U U
V V
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A A
B B
(1.22 metres) complied with the original condition set out in the 1998
C
“Toleration Letter”. C
D D
6. A sketch for the redevelopment reflected these details with
E
measurements and a side view of the proposed building. The balcony E
was clearly shown running the length of the building on both levels (1/F
F F
and 2/F).
G G
7. A dimension plan dated March 2006 (also by Ted Chan &
H H
Associates) also shows the balcony running the full length of the house as
I
it was its original house. I
J 8. The final document of interest before the development J
agreement of June 2009 is a letter from the District Lands Office dated
K K
29 March 2007 (p 297/8) giving notice of the plaintiffs’ application to
L L
redevelop their Exempted House. It was not a guarantee of permission
M
but gave the opportunity to anyone affected by the development to make M
written representation. The site plan prepared by the Lands Department
N N
gave basic details of the proposed house. They included “Proposed
O
Balcony — length 2.205m (the stated length of the house) x O
width 1.22 metres”.
P P
Q
9. Unfortunately some neighbour did object to the development Q
and although we have not been concerned with the basis of his objection,
R R
right or wrong, it was this that triggered a situation bringing the plaintiffs
S into contact with the defendant and her allies, Ho Yuk Ching (her brother) S
and Ho Yun Fat (another brother) who happened to be the village head,
T T
eventually leading to a Joint Venture Agreement.
U U
V V
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A A
B B
THE PRELIMINARY DISCUSSIONS OF MARCH/APRIL 2009
C 10. According to the 1st plaintiff these took place between C
himself and Ho Yuk Ching, essentially the latter in effect representing the
D D
defendant. The points of discussion were set out in an undated,
E E
unsigned document in which the plaintiffs were referred to as Party A and
F
Ho Yuk Ching as Party B. F
G 11. There were six points itemised as raised by Ho Yuk Ching, G
only four of which were accepted by the plaintiffs (those excluded being
H H
1 and 5). It was suggested on behalf of the defendant that there was no
I I
reference in that discussion document to the matter of the full-width
J
balcony and the position of front door access. I do not consider that a J
valid point. The discussion or negotiation, however described, was on
K K
points of principle, the commercial enterprise, not detail of design or
L features. Mr Wong Chi Ping was not prepared, he said, to come to a L
development agreement with Mr Ho Yuk Ching himself but was willing
M M
to allow him to sort out any persisting problem with the difficult
N neighbour. N
O O
12. It seems to me that Ho Yuk Ching must have had a copy of
P the original plan submitted to the District Lands Office. The idea that P
there would have been such a preliminary discussion without knowledge
Q Q
on the part of Ho Yuk Ching of the plans submitted, particularly since
R there had been some local objection to the plaintiffs’ application, is not R
realistic.
S S
T T
U U
V V
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A A
B B
THE ORAL PROMISES
C 13. As the plans submitted by the 1st plaintiff to the Lands Office C
indicated, he wanted a full length balcony on the new house together with
D D
a frontal access to the staircase which would lead to the 1/F and 2/F.
E E
This simply replicated the situation in his existing house except that in
F
that house the access to the staircase was on the left front, and the access F
door to the ground floor was in the middle at the front.
G G
14. His evidence was that, on viewing the local house shown in
H H
the photograph on page 304, Ho Yuk Ching said he could have what
I I
features he wanted and his clear indication was that he wanted the
J
position to be that which obtained on the house to be demolished. He J
wanted the access to the staircase to be at the front of the house and a
K K
full-length balcony.
L L
15. He also liked the style of the house viewed and he wanted
M M
the new house to reflect that style specifically in respect of the four
N
corners described as pillars. It reflected a traditional western (perhaps N
colonial) style. He understandably relied upon the promises made by
O O
Ho Yuk Ching as agent for the defendant who was to become the actual
P party in the development agreement. The interior of the house was not P
visited but its external appearance was the real subject of interest.
Q Q
R
16. In fact, as a matter of simple common sense, or R
reasonableness or as an aspect of a joint venture agreement (and the
S S
defendant and her brother both spoke of the spirit of cooperation) the
T 1st plaintiff’s desire in respect of such features was bound to be reflected T
(unless technically impossible to achieve).
U U
V V
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A A
B B
17. Throughout what followed the plaintiffs’ submitted plans to
C
the defendant which reflected what he wanted and what he believed was C
the understanding and what was promised.
D D
E
18. The evidence of Ho Yuk Ching in respect of the E
conversation with the plaintiff at, and/or following the visit to the stylised
F F
house was confused, contradictory and unconvincing.
G G
19. At the start of his cross-examination by Mr Jackson Poon,
H H
for the plaintiffs, he said:
I “He [the 1st plaintiff] would not have a say in the design of the I
new house … he could design the layout of the 1 st and
J 2nd floors … he was entitled to that only. That was my J
understanding.”
K K
Later on he said:
L L
“I was negotiating with him. I did not know whether he had
any say or not.”
M M
N
20. This conflict he was not able to resolve but other aspects of N
his evidence made in my judgment, the position quite clear:
O O
“We merely took a look there [at the house in photo page 304].”
P P
“When he saw the house he said something about the four
pillars, the top of the house and the colours.”
Q Q
“I saw the entrance to the 1 st and 2nd floors was not on the front.
I told him the entrance was on the left side.”
R R
“I said, if our cooperation was to work, the entrance [of the new
house] would be on the [right] side facing the village office.”
S S
“I asked him — ‘is there any problem with it?’”
T T
“I said it looks as if the balcony is 2/3m length.”
U U
V V
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A A
B “He said fine, no problem? B
He said ‘outward style’ should look like the house in photo
C p.304.” C
“The opening of the staircase in [his] old house was on the
D front so I was just asking if he was ok with it.” D
E E
21. Although he was saying at first that the 1st plaintiff was
F entitled only to decide upon the layout of the 1/F and 2/F and that they F
merely looked at the specimen house, they did not go inside the house so
G G
never saw what the internal layout of that was. One gained the
H impression that if the 1st plaintiff was to have no say in the design of the H
proposed house that the visit must have been a complete waste of time.
I I
However the new house as substantially finished reflected very accurately
J the external style of the specimen house in general save as to the J
balconies and access to the staircase. One also gained the impression
K K
that in the course of his evidence Ho Yuk Ching had forgotten what he
L was supposed, or required to say — hence the inconsistencies. L
M M
22. I am satisfied that in that meeting and visit with
N Ho Yuk Ching the 1st plaintiff was assured that he could have what he N
wanted as to the length of the balcony and the siting of the front door
O O
access to the staircase. The contrary does not make sense and would be
P inconsistent with the staircase access of his old house as well as with all P
the plans submitted and available to date. He was also assured that the
Q Q
external style of the new house would reflect that of the house they
R visited. Any suggestion that his choice was limited to the layout of R
certain floors flies in the face of common sense.
S S
T 23. The notion that he was willing to have a side door as access T
to the staircase and the building as a whole is so unreasonable as to render
U U
V V
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A A
B B
unnecessary further consideration of this aspect — save that it obviously
C
persisted in the thinking and unreasonable stance of the defendant as the C
matter progressed.
D D
E
24. I am satisfied that the plaintiff made clear his requirements E
as to access and the length of the balcony and that these were to be
F F
incorporated in the new house, these oral assurances formed terms of the
G
agreement. G
H The joint venture agreement of 22 June 2009 H
I 25. The parties to this agreement are the plaintiffs and the I
defendant. No-one else became a party to it. This is important, in
J J
view of the defendant’s misconceptions as to the rights encompassed
K by it. K
L L
26. It was prepared by solicitors and both parties had solicitors
M advising them. The preamble is important especially clause (2) which M
I set out:
N N
“Party A [The Plaintiffs] submitted an application for
O reconstruction of the property to the DLO, Yuen Long in O
September 2005. At the time, Party A had appointed a
P surveyor to prepare suitable plans and had submitted that plan P
to the DLO.”
Q Q
The only obstacle, repeated in the agreement, was the objection of an
R indigenous villager, also named Ho. R
S S
27. Party B [The defendant, not Ho Yuk Ching] indicated in the
T preamble, clause (4), that she was confident of peacefully resolving the T
villager’s objection and was interested in carrying out the reconstruction.
U U
V V
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A A
B B
28. It is beyond argument that the defendant knew of the
C
existing plans, clear reference having been made to them in the C
Agreement and that she had access to them at the District Lands Office.
D D
She could also have obtained them from the plaintiff, if necessary. It
E would no doubt have been easier. It is also inconceivable, in my E
judgment, that the defendant would have become a party to the
F F
Agreement in the ignorance of the submitted plans.
G G
29. The purpose of the agreement, essentially the consideration
H H
for the contract was set out under “Allocation of interests”.
I I
30. Following construction and after receipt of the appropriate
J J
certificate of “No obligation to occupy” from the District Lands Office,
K the plaintiffs were to have title to the 1st and 2nd floor units including the K
roof whilst the defendant was to have title to the ground floor unit.
L L
M
31. The second part of this “allocation of interest” is a somewhat M
curious and vague provision. After the completion of the construction
N N
“the relatives [unidentified] of Party B [the defendant] were to have
O
“priority” to purchase the 1st floor unit from the plaintiffs at a price of O
HK$1,200,000” to be exercised within three months of completion.
P P
Thereafter the plaintiffs would be free to exercise their right without
Q inhibition. This clause is unenforceable. The relative (or relatives) is Q
not identified. It is not a party to the agreement. There is no
R R
consideration moving from a party to it. The 1st plaintiff in his evidence
S was concerned about the possible effect upon his right in respect of the S
1st floor unit and was assured by his solicitor that it did not impose an
T T
obligation upon him to sell if he did not wish to do so.
U U
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A A
B B
32. The solicitor was correct and the 1st plaintiff rightly assured.
C
Even if it had been an enforceable term with an identified party to the C
agreement and due notice given it was no more than a priority, ie if the
D D
owner (the plaintiffs) wanted to sell that unit within three months of
E completion, he had to do no more than offer it to the party (if identified) E
for first refusal at that price. It was not an option to purchase which the
F F
plaintiff would be obliged to meet if exercised within the three-month
G period. There is no further mention in the agreement of any such G
priority.
H H
I 33. Clause 9 deals with the specifications of the new house. I
The style of the exterior is to accord with the photographs of the house
J J
visited by the plaintiff and Ho Yuk Ching.
K K
34. The plaintiff can choose the exterior layout design and
L L
materials for the building other than the ground floor.
M M
35. Although earlier in the agreement there was an express
N N
allocation of the interest of the defendant in the building, clause 10(3)
O
suggests that is by no means settled because it says: O
“If in the future [the Plaintiff] assigns the ground floor unit to
P P
[the defendant][‘in the future’ is repeated][the defendant] must
pay the stamp duties etc. for the unit.”
Q Q
There are other provisions relating to the liability for various incidental
R R
costs (with the plaintiff shouldering at the very least half of these
S (see clause 4(1)(b) and (c), and clause 5.1(a) and (b). S
T T
U U
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A A
B B
36. The defendant is to pay all the costs of demolishing the old
C
house and constructing the new one, the latter at a minimal cost (applying C
the then current average standards) of HK$1,200,000 (HK$1.2 million).
D D
E
37. There is also a liquidated compensation provision E
(HK$1,000,000) in the event of either party being in breach of the
F F
agreement and causing loss to the other.
G G
38. Finally, if construction work is delayed by factors other than
H the plaintiff’s failure to provide certificates of exemption etc, then the H
I
defendant can postpone construction. I
J The interim period J
K 39. Almost two years elapsed between the signing of the K
agreement and the handing over by the plaintiff of the keys to the old
L L
house for the defendant to obtain possession of the site and demolish the
M old house — 7 May 2011. M
N N
40. At a meeting with the building contractor hired by the
O defendant, the plaintiff made it clear that the balcony should be full O
length and the staircase access/entrance at the front. He handed over
P P
plans that illustrated this quite clearly. Ho Yuk Ching who was present
Q raised no query about it. This was on 26 April 2011. The contractor Q
similarly accepted what the plaintiff wanted in this regard.
R R
S 41. The plans of 28 May 2011 submitted by the 1st plaintiff to S
the contractor and/or the defendant unarguably show the plaintiff’s
T T
wishes as to the balcony and front door access (pp 586-588).
U U
V V
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A A
B B
42. Once in possession of the keys and the site for development
C
the defendant proceeded, and ignored the promises and terms relating to C
the balcony and frontal access. Despite repeated instance on these
D D
features by the plaintiff, the defendant continued construction in June and
E July 2011. That construction, in the material respects which are the E
principal issues in this action, ignored the oral promises and consistent
F F
requirements as represented by all the plans supplied by the plaintiff
G which themselves replicated the plans supplied to the District Lands G
Office.
H H
I 43. Before the construction reached its final stage it was I
apparent from the photographs of the progress of the construction that the
J J
contractor himself did have regard for the plaintiff’s requirement as to
K frontal access to the staircase. The photographs taken by the 1 st plaintiff K
on 15 November 2011 (page 532-20-4) clearly showed that at the front of
L L
the building on the right hand site, there was a doorway opening fully
M framed, from top to floor level. The proper inference is that the M
contractor was aware of the plaintiff’s wish. However shortly
N N
afterwards it was bricked up from the floor level to halfway — also
O illustrated by a photograph (page 532-5-bottom photograph). O
P P
The incident of 15 November 2011
Q Q
44. The 1st plaintiff and his wife on seeing the front opening
R half-bricked up eventually decided in their frustration to make their point R
more effectively. They took a long handled lump hammer to the
S S
building and the 1st plaintiff demolished the brick structure. There are
T photographs illustrating what turned out to be a confrontation with the T
defendant’s brother (and agent) Ho Yuk Ching. Unfortunately the
U U
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A A
B B
2nd plaintiff appears to have thrown a piece of brick at Ho Yuk Ching
C
which caused some minor soreness. C
D D
45. The 2nd plaintiff was convicted of assault. The 1st plaintiff
E
was convicted of criminal damage to what was to become his property on E
his land. I regard that as a travesty of justice. He was fined HK$2,000.
F F
Although he sought to review this conviction, he was not allowed to and
G
there was no appeal. G
H H
46. The 1st plaintiff had however demonstrably made his point.
I
Nevertheless the defendant blocked up the door opening again to about I
half-way and a window frame took up the remaining part of the opening.
J J
She proceeded with her own scheme of things which entailed two French
K windows on the front for the unit which she was to acquire. The K
plaintiffs were left with an inconvenient, unattractive kind of
L L
“tradesman’s” entrance down the side of the building with a gap of a little
M over 3 feet, between that entrance and a stone wall, in which to effect an M
entry.
N N
O
The aftermath O
P
47. By letter of 2 June 2011 the solicitors originally acting for P
the plaintiffs (John Chan & Co) sent two plans for the proposed
Q Q
rebuilding. These clearly set out the plaintiffs’ provisions for the full
R
length balcony and the front door access. The defendant’s reply to that R
letter was to the plaintiffs.
S S
T
48. The defendant’s reply of 28 June contained the following: T
U U
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A A
B “In accordance with clause 9.3 of the Agreement, it is specified B
that you only have the right to choose the internal layout design
C and finishing materials for the units on the 1 st and 2nd floors C
with the roof, but not the staircases location. I provide the
draft plan to you again …”
D D
E
49. It was an unpleasant threatening letter. It made no mention E
of the full width of the balcony which was clearly indicated on the
F F
plaintiffs’ plans.
G G
50. The next letter of importance is from the plaintiff’s new
H H
solicitors, Hagon Wai & Partners and is dated 17 June 2011. It
I
re-iterated the position of the staircase access as on the front at the side I
and that the building was to be constructed in accordance with the plans
J J
which had been supplied by the previous solicitors. If rejected the
K defendant’s request that the plaintiff sign and approve another plan: K
“I enclose a photo of the front side of the entire house …
L L
That … shows that the front side of the house is not the
entrance of the 1 st and 2nd floors and the length of the balcony
M is about two-thirds of the length of the house. Therefore the M
length of the balcony had the indication map of the ground
floor staircase on that plan will not be adopted.”
N N
O 51. In those two letters by way of her response, is, I conclude the O
key to this case. The defendant showed herself to be high handed,
P P
unreasonable and in breach of the terms of the agreement, whether they
Q be express or implied, or both. Q
R R
52. This clearly did not support the description of the agreement
S whether it be joint venture or cooperation. She was determined that her S
own preference would prevail both in relation to the balcony and the front
T T
access.
U U
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A A
B B
53. At this time the development had scarcely began but by
C
15 July 2011 she wrote directly to the plaintiffs: C
“-- (Your) plan for balcony and ground floor entrance … do not
D D
match the photos in clause 9.2 of the Agreement, therefore the
length of balcony and ground floor indication plan will not be
E adopted … E
I will build the house according [to] the plan submitted by
F contractor and the photos contained in the Cooperation F
Agreement.”
G G
54. I have no doubt that she was seeking to construct the new
H H
house, and had embarked upon that construction (although little by way
I of actual construction had been achieved by them) on the basis of her I
fixed desire to have it built as she wanted, given her interest in the ground
J J
floor and her potential indirect interest in the first floor unit. She thus
K excluded from her contemplation what had previously been agreed, in K
writing and by way of oral promises. Quite simply I do not believe her.
L L
She was obdurate, unreasonable and acted highhandedly.
M M
55. The building of the house went ahead in complete disregard
N N
of the plaintiffs’ requirements and, as I find them to be, the terms of the
O contract, both oral and written. Certainly the spirit of the joint venture O
was discarded and it is at least arguable that there was implied term that
P P
full account would be taken of the plaintiffs’ interests as persistently
Q expressed. The plaintiff does not need this as an additional finding but Q
the implied term meets the condition expressed by Lord Simon of
R R
Glaisdale in BP Refinery (Westport) Pty Ltd v Shire of Hastings
S (1977) 180 CLR 266 which Lord Hoffmann adopted in Att. Gen. of Belize S
Telecom Ltd (PC) (2009) l WLR 1988:
T T
U U
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A A
B “… not as a series of independent tests which must each be B
surmounted, but rather as a collection of different ways in
C which judges have tried to express the central idea that the C
proposed implied term must spell out what the contract actually
means.”
D D
Those conditions were:
E E
(i) it must be reasonable and equitable;
F F
(ii) it must be necessary to give business efficacy to the contract,
G so that no term will be implied if the contract is effective G
without it;
H H
(iii) it must be so obvious that “it goes without saying”;
I I
(iv) it must not contradict any express term of the contract; and
J (v) it must be capable of clear impression. J
K K
56. As to the latter condition the following would meet the
L situation and thereby illustrate the appropriateness of such an implied L
term:
M M
“The parties will have full regard for and implement where
N possible, all reasonable and practical requirements of each N
other as to the form of the building, in accordance with the cost
provided for in the joint venture.”
O O
There is no doubt that wording could be improved upon.
P P
Q 57. The plaintiffs allegation of breach of fiduciary duty is a valid Q
alternative approach, though it does not have any advantage over the
R R
above implied term argument.
S S
T T
U U
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A A
B B
Summary of findings
C 58. There were breaches of the express oral terms in the form of C
the breaking and/or ignoring of the promises made to the plaintiffs.
D D
E 59. Clause 9.2 of the Agreement does not preclude the plaintiffs’ E
requirement as to the length of the balcony and position of the door
F F
access to the staircase. The word is “style” not “form” or “structure”.
G G
60. The preamble at (2) of the background governs the essential
H H
structural feature in outline. The defendant knew what these plans
I showed, and thereby they were incorporated in the agreement. I
J J
61. The defendant is in breach of contract. She proceeded on
K an arbitrary unilateral basis in the face of clear requirements by the other K
party.
L L
M 62. She is liable to construct full length balconies and alter the M
side access to frontal access at her own expense at the plaintiffs’
N N
insistence. Alternatively she is liable to pay them damages for the said
O breaches which would take the form of payment to the plaintiffs to enable O
them to have the remedial work carried out. Those damages can be
P P
assessed only when such costs are known. The question of the
Q liquidated damages will need to be resolved at a later stage. By reason Q
of the breach the defendant is not entitled to the transfer of title to the
R R
ground floor unit to herself, until she has fully remedied the breaches
S S
and/or the plaintiffs have been compensated for them.
T T
U U
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A A
B B
63. The unnamed relative in clause 2.1 has no legal entitlement
C
to the first floor unit not being a party to the contract and not having C
provided any consideration. In any event the interest as expressed is no
D D
more than a prior opportunity to purchase at a figure which is almost
E certainly irrelevant after this lapse of time. E
F F
Judgment
G 64. The defendant is in breach of the agreement. G
H H
65. There will be an order requiring the defendant to build full
I length balconies on the 1st, 2nd and 3rd floor levels as there had been on I
the original house and frontal access to the staircase, and carry out the
J J
necessary removal of the side door access.
K K
66. Alternatively the defendant do pay to the plaintiffs as
L L
damages the costs of effecting the said requisite construction work, such
M costs to be assessed. M
N N
67. The defendant’s counterclaim is dismissed with costs to the
O plaintiffs. O
P P
68. The defendant shall pay to the plaintiffs their costs of this
Q action including future costs incurred as a result of rectifying the Q
defendant’s breaches of the Agreement.
R R
S 69. In re-enforcement of the undertaking given in evidence by S
the defendant to hand over to the plaintiff all relevant documentation,
T T
certificates etc to enable them to obtain all government approvals and
U U
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A A
B B
licenses etc and register title to the said lot and house, I make an order to
C
this effect. C
D D
70. There will also be liberty to apply to perfect any of these
E
orders where necessary. E
F F
G G
H (Conrad Seagroatt) H
Deputy High Court Judge
I I
Mr Jackson Poon, instructed by KY Lo & Co, for the 1st and 2nd plaintiffs
J J
Mr Kenneth YF Wong, instructed by Wong, Hui & Co, for the defendant
K K
L L
M M
N N
O O
P P
Q Q
R R
S S
T T
U U
V V
A A
HCA 940/2012
B B
IN THE HIGH COURT OF THE
C HONG KONG SPECIAL ADMINISTRATIVE REGION C
COURT OF FIRST INSTANCE
D D
ACTION NO 940 OF 2012
E ________________ E
F BETWEEN F
G WONG CHI PING 1st Plaintiff G
LIU PUI HAN 2nd Plaintiff
H H
and
I I
HO MEI YUK Defendant
J J
________________
K K
Before: Deputy High Court Judge Seagroatt in Court
L L
Dates of Hearing: 29 May – 4 June 2015
M Date of Judgment: 30 June 2015 M
N N
JUDGMENT
O O
P INTRODUCTION P
Q 1. The plaintiffs who are husband and wife, respectively 69 and Q
60 years of age, are the owners of Lot 2067 in Demarcation District
R R
No 17 in Yuen Long. A house has existed on the lot for over 25 years
S and there is a photograph of it in the extensive bundles of documents S
which shows features of some importance.
T T
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2. It is clearly a house of three levels with balconies on the 1st,
C
2nd and 3rd levels. These balconies extend the whole width of the house C
and by so doing lend a balance architecturally even to the untrained eye.
D D
The other feature to be noted is the entrance door which is at the middle
E front of the building (see p 538). In fact, there appear to be two front E
doors, one almost in the middle and the other on the extreme left as one
F F
faces the building from the roadway. The latter gives access to the
G staircase leading to the upper floors. G
H H
3. A relatively minor footnote to this period is a letter from the
I District Lands Office dated 15 January 1998 to the plaintiffs. Described I
as a “Toleration Letter” it pointed out that the width (or depth) of the
J J
balcony was 0.13 metre in excess of that approved and that the breach of
K condition would be tolerated only for the life of the existing building. In K
the event of further development the conditions would have to be
L L
complied with strictly. The plaintiffs had paid a fine in respect of the
M breach committed. M
N N
4. In April 2006, the plaintiffs had decided to redevelop their
O site by demolishing their existing house and building a new one, more or O
less along the same lines in terms of accommodation and units (floors)
P P
but with some change of style and features.
Q Q
5. A location plan prepared by Ted Chan and Associates
R R
Limited highlighted two features in particular. One was the septic tank
S but, the other, more important to this case, was the balcony which was the S
full length of the proposed new house (at 9.205 metres) and its width
T T
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A A
B B
(1.22 metres) complied with the original condition set out in the 1998
C
“Toleration Letter”. C
D D
6. A sketch for the redevelopment reflected these details with
E
measurements and a side view of the proposed building. The balcony E
was clearly shown running the length of the building on both levels (1/F
F F
and 2/F).
G G
7. A dimension plan dated March 2006 (also by Ted Chan &
H H
Associates) also shows the balcony running the full length of the house as
I
it was its original house. I
J 8. The final document of interest before the development J
agreement of June 2009 is a letter from the District Lands Office dated
K K
29 March 2007 (p 297/8) giving notice of the plaintiffs’ application to
L L
redevelop their Exempted House. It was not a guarantee of permission
M
but gave the opportunity to anyone affected by the development to make M
written representation. The site plan prepared by the Lands Department
N N
gave basic details of the proposed house. They included “Proposed
O
Balcony — length 2.205m (the stated length of the house) x O
width 1.22 metres”.
P P
Q
9. Unfortunately some neighbour did object to the development Q
and although we have not been concerned with the basis of his objection,
R R
right or wrong, it was this that triggered a situation bringing the plaintiffs
S into contact with the defendant and her allies, Ho Yuk Ching (her brother) S
and Ho Yun Fat (another brother) who happened to be the village head,
T T
eventually leading to a Joint Venture Agreement.
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A A
B B
THE PRELIMINARY DISCUSSIONS OF MARCH/APRIL 2009
C 10. According to the 1st plaintiff these took place between C
himself and Ho Yuk Ching, essentially the latter in effect representing the
D D
defendant. The points of discussion were set out in an undated,
E E
unsigned document in which the plaintiffs were referred to as Party A and
F
Ho Yuk Ching as Party B. F
G 11. There were six points itemised as raised by Ho Yuk Ching, G
only four of which were accepted by the plaintiffs (those excluded being
H H
1 and 5). It was suggested on behalf of the defendant that there was no
I I
reference in that discussion document to the matter of the full-width
J
balcony and the position of front door access. I do not consider that a J
valid point. The discussion or negotiation, however described, was on
K K
points of principle, the commercial enterprise, not detail of design or
L features. Mr Wong Chi Ping was not prepared, he said, to come to a L
development agreement with Mr Ho Yuk Ching himself but was willing
M M
to allow him to sort out any persisting problem with the difficult
N neighbour. N
O O
12. It seems to me that Ho Yuk Ching must have had a copy of
P the original plan submitted to the District Lands Office. The idea that P
there would have been such a preliminary discussion without knowledge
Q Q
on the part of Ho Yuk Ching of the plans submitted, particularly since
R there had been some local objection to the plaintiffs’ application, is not R
realistic.
S S
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THE ORAL PROMISES
C 13. As the plans submitted by the 1st plaintiff to the Lands Office C
indicated, he wanted a full length balcony on the new house together with
D D
a frontal access to the staircase which would lead to the 1/F and 2/F.
E E
This simply replicated the situation in his existing house except that in
F
that house the access to the staircase was on the left front, and the access F
door to the ground floor was in the middle at the front.
G G
14. His evidence was that, on viewing the local house shown in
H H
the photograph on page 304, Ho Yuk Ching said he could have what
I I
features he wanted and his clear indication was that he wanted the
J
position to be that which obtained on the house to be demolished. He J
wanted the access to the staircase to be at the front of the house and a
K K
full-length balcony.
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15. He also liked the style of the house viewed and he wanted
M M
the new house to reflect that style specifically in respect of the four
N
corners described as pillars. It reflected a traditional western (perhaps N
colonial) style. He understandably relied upon the promises made by
O O
Ho Yuk Ching as agent for the defendant who was to become the actual
P party in the development agreement. The interior of the house was not P
visited but its external appearance was the real subject of interest.
Q Q
R
16. In fact, as a matter of simple common sense, or R
reasonableness or as an aspect of a joint venture agreement (and the
S S
defendant and her brother both spoke of the spirit of cooperation) the
T 1st plaintiff’s desire in respect of such features was bound to be reflected T
(unless technically impossible to achieve).
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B B
17. Throughout what followed the plaintiffs’ submitted plans to
C
the defendant which reflected what he wanted and what he believed was C
the understanding and what was promised.
D D
E
18. The evidence of Ho Yuk Ching in respect of the E
conversation with the plaintiff at, and/or following the visit to the stylised
F F
house was confused, contradictory and unconvincing.
G G
19. At the start of his cross-examination by Mr Jackson Poon,
H H
for the plaintiffs, he said:
I “He [the 1st plaintiff] would not have a say in the design of the I
new house … he could design the layout of the 1 st and
J 2nd floors … he was entitled to that only. That was my J
understanding.”
K K
Later on he said:
L L
“I was negotiating with him. I did not know whether he had
any say or not.”
M M
N
20. This conflict he was not able to resolve but other aspects of N
his evidence made in my judgment, the position quite clear:
O O
“We merely took a look there [at the house in photo page 304].”
P P
“When he saw the house he said something about the four
pillars, the top of the house and the colours.”
Q Q
“I saw the entrance to the 1 st and 2nd floors was not on the front.
I told him the entrance was on the left side.”
R R
“I said, if our cooperation was to work, the entrance [of the new
house] would be on the [right] side facing the village office.”
S S
“I asked him — ‘is there any problem with it?’”
T T
“I said it looks as if the balcony is 2/3m length.”
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B “He said fine, no problem? B
He said ‘outward style’ should look like the house in photo
C p.304.” C
“The opening of the staircase in [his] old house was on the
D front so I was just asking if he was ok with it.” D
E E
21. Although he was saying at first that the 1st plaintiff was
F entitled only to decide upon the layout of the 1/F and 2/F and that they F
merely looked at the specimen house, they did not go inside the house so
G G
never saw what the internal layout of that was. One gained the
H impression that if the 1st plaintiff was to have no say in the design of the H
proposed house that the visit must have been a complete waste of time.
I I
However the new house as substantially finished reflected very accurately
J the external style of the specimen house in general save as to the J
balconies and access to the staircase. One also gained the impression
K K
that in the course of his evidence Ho Yuk Ching had forgotten what he
L was supposed, or required to say — hence the inconsistencies. L
M M
22. I am satisfied that in that meeting and visit with
N Ho Yuk Ching the 1st plaintiff was assured that he could have what he N
wanted as to the length of the balcony and the siting of the front door
O O
access to the staircase. The contrary does not make sense and would be
P inconsistent with the staircase access of his old house as well as with all P
the plans submitted and available to date. He was also assured that the
Q Q
external style of the new house would reflect that of the house they
R visited. Any suggestion that his choice was limited to the layout of R
certain floors flies in the face of common sense.
S S
T 23. The notion that he was willing to have a side door as access T
to the staircase and the building as a whole is so unreasonable as to render
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unnecessary further consideration of this aspect — save that it obviously
C
persisted in the thinking and unreasonable stance of the defendant as the C
matter progressed.
D D
E
24. I am satisfied that the plaintiff made clear his requirements E
as to access and the length of the balcony and that these were to be
F F
incorporated in the new house, these oral assurances formed terms of the
G
agreement. G
H The joint venture agreement of 22 June 2009 H
I 25. The parties to this agreement are the plaintiffs and the I
defendant. No-one else became a party to it. This is important, in
J J
view of the defendant’s misconceptions as to the rights encompassed
K by it. K
L L
26. It was prepared by solicitors and both parties had solicitors
M advising them. The preamble is important especially clause (2) which M
I set out:
N N
“Party A [The Plaintiffs] submitted an application for
O reconstruction of the property to the DLO, Yuen Long in O
September 2005. At the time, Party A had appointed a
P surveyor to prepare suitable plans and had submitted that plan P
to the DLO.”
Q Q
The only obstacle, repeated in the agreement, was the objection of an
R indigenous villager, also named Ho. R
S S
27. Party B [The defendant, not Ho Yuk Ching] indicated in the
T preamble, clause (4), that she was confident of peacefully resolving the T
villager’s objection and was interested in carrying out the reconstruction.
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A A
B B
28. It is beyond argument that the defendant knew of the
C
existing plans, clear reference having been made to them in the C
Agreement and that she had access to them at the District Lands Office.
D D
She could also have obtained them from the plaintiff, if necessary. It
E would no doubt have been easier. It is also inconceivable, in my E
judgment, that the defendant would have become a party to the
F F
Agreement in the ignorance of the submitted plans.
G G
29. The purpose of the agreement, essentially the consideration
H H
for the contract was set out under “Allocation of interests”.
I I
30. Following construction and after receipt of the appropriate
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certificate of “No obligation to occupy” from the District Lands Office,
K the plaintiffs were to have title to the 1st and 2nd floor units including the K
roof whilst the defendant was to have title to the ground floor unit.
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M
31. The second part of this “allocation of interest” is a somewhat M
curious and vague provision. After the completion of the construction
N N
“the relatives [unidentified] of Party B [the defendant] were to have
O
“priority” to purchase the 1st floor unit from the plaintiffs at a price of O
HK$1,200,000” to be exercised within three months of completion.
P P
Thereafter the plaintiffs would be free to exercise their right without
Q inhibition. This clause is unenforceable. The relative (or relatives) is Q
not identified. It is not a party to the agreement. There is no
R R
consideration moving from a party to it. The 1st plaintiff in his evidence
S was concerned about the possible effect upon his right in respect of the S
1st floor unit and was assured by his solicitor that it did not impose an
T T
obligation upon him to sell if he did not wish to do so.
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32. The solicitor was correct and the 1st plaintiff rightly assured.
C
Even if it had been an enforceable term with an identified party to the C
agreement and due notice given it was no more than a priority, ie if the
D D
owner (the plaintiffs) wanted to sell that unit within three months of
E completion, he had to do no more than offer it to the party (if identified) E
for first refusal at that price. It was not an option to purchase which the
F F
plaintiff would be obliged to meet if exercised within the three-month
G period. There is no further mention in the agreement of any such G
priority.
H H
I 33. Clause 9 deals with the specifications of the new house. I
The style of the exterior is to accord with the photographs of the house
J J
visited by the plaintiff and Ho Yuk Ching.
K K
34. The plaintiff can choose the exterior layout design and
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materials for the building other than the ground floor.
M M
35. Although earlier in the agreement there was an express
N N
allocation of the interest of the defendant in the building, clause 10(3)
O
suggests that is by no means settled because it says: O
“If in the future [the Plaintiff] assigns the ground floor unit to
P P
[the defendant][‘in the future’ is repeated][the defendant] must
pay the stamp duties etc. for the unit.”
Q Q
There are other provisions relating to the liability for various incidental
R R
costs (with the plaintiff shouldering at the very least half of these
S (see clause 4(1)(b) and (c), and clause 5.1(a) and (b). S
T T
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36. The defendant is to pay all the costs of demolishing the old
C
house and constructing the new one, the latter at a minimal cost (applying C
the then current average standards) of HK$1,200,000 (HK$1.2 million).
D D
E
37. There is also a liquidated compensation provision E
(HK$1,000,000) in the event of either party being in breach of the
F F
agreement and causing loss to the other.
G G
38. Finally, if construction work is delayed by factors other than
H the plaintiff’s failure to provide certificates of exemption etc, then the H
I
defendant can postpone construction. I
J The interim period J
K 39. Almost two years elapsed between the signing of the K
agreement and the handing over by the plaintiff of the keys to the old
L L
house for the defendant to obtain possession of the site and demolish the
M old house — 7 May 2011. M
N N
40. At a meeting with the building contractor hired by the
O defendant, the plaintiff made it clear that the balcony should be full O
length and the staircase access/entrance at the front. He handed over
P P
plans that illustrated this quite clearly. Ho Yuk Ching who was present
Q raised no query about it. This was on 26 April 2011. The contractor Q
similarly accepted what the plaintiff wanted in this regard.
R R
S 41. The plans of 28 May 2011 submitted by the 1st plaintiff to S
the contractor and/or the defendant unarguably show the plaintiff’s
T T
wishes as to the balcony and front door access (pp 586-588).
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B B
42. Once in possession of the keys and the site for development
C
the defendant proceeded, and ignored the promises and terms relating to C
the balcony and frontal access. Despite repeated instance on these
D D
features by the plaintiff, the defendant continued construction in June and
E July 2011. That construction, in the material respects which are the E
principal issues in this action, ignored the oral promises and consistent
F F
requirements as represented by all the plans supplied by the plaintiff
G which themselves replicated the plans supplied to the District Lands G
Office.
H H
I 43. Before the construction reached its final stage it was I
apparent from the photographs of the progress of the construction that the
J J
contractor himself did have regard for the plaintiff’s requirement as to
K frontal access to the staircase. The photographs taken by the 1 st plaintiff K
on 15 November 2011 (page 532-20-4) clearly showed that at the front of
L L
the building on the right hand site, there was a doorway opening fully
M framed, from top to floor level. The proper inference is that the M
contractor was aware of the plaintiff’s wish. However shortly
N N
afterwards it was bricked up from the floor level to halfway — also
O illustrated by a photograph (page 532-5-bottom photograph). O
P P
The incident of 15 November 2011
Q Q
44. The 1st plaintiff and his wife on seeing the front opening
R half-bricked up eventually decided in their frustration to make their point R
more effectively. They took a long handled lump hammer to the
S S
building and the 1st plaintiff demolished the brick structure. There are
T photographs illustrating what turned out to be a confrontation with the T
defendant’s brother (and agent) Ho Yuk Ching. Unfortunately the
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2nd plaintiff appears to have thrown a piece of brick at Ho Yuk Ching
C
which caused some minor soreness. C
D D
45. The 2nd plaintiff was convicted of assault. The 1st plaintiff
E
was convicted of criminal damage to what was to become his property on E
his land. I regard that as a travesty of justice. He was fined HK$2,000.
F F
Although he sought to review this conviction, he was not allowed to and
G
there was no appeal. G
H H
46. The 1st plaintiff had however demonstrably made his point.
I
Nevertheless the defendant blocked up the door opening again to about I
half-way and a window frame took up the remaining part of the opening.
J J
She proceeded with her own scheme of things which entailed two French
K windows on the front for the unit which she was to acquire. The K
plaintiffs were left with an inconvenient, unattractive kind of
L L
“tradesman’s” entrance down the side of the building with a gap of a little
M over 3 feet, between that entrance and a stone wall, in which to effect an M
entry.
N N
O
The aftermath O
P
47. By letter of 2 June 2011 the solicitors originally acting for P
the plaintiffs (John Chan & Co) sent two plans for the proposed
Q Q
rebuilding. These clearly set out the plaintiffs’ provisions for the full
R
length balcony and the front door access. The defendant’s reply to that R
letter was to the plaintiffs.
S S
T
48. The defendant’s reply of 28 June contained the following: T
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A A
B “In accordance with clause 9.3 of the Agreement, it is specified B
that you only have the right to choose the internal layout design
C and finishing materials for the units on the 1 st and 2nd floors C
with the roof, but not the staircases location. I provide the
draft plan to you again …”
D D
E
49. It was an unpleasant threatening letter. It made no mention E
of the full width of the balcony which was clearly indicated on the
F F
plaintiffs’ plans.
G G
50. The next letter of importance is from the plaintiff’s new
H H
solicitors, Hagon Wai & Partners and is dated 17 June 2011. It
I
re-iterated the position of the staircase access as on the front at the side I
and that the building was to be constructed in accordance with the plans
J J
which had been supplied by the previous solicitors. If rejected the
K defendant’s request that the plaintiff sign and approve another plan: K
“I enclose a photo of the front side of the entire house …
L L
That … shows that the front side of the house is not the
entrance of the 1 st and 2nd floors and the length of the balcony
M is about two-thirds of the length of the house. Therefore the M
length of the balcony had the indication map of the ground
floor staircase on that plan will not be adopted.”
N N
O 51. In those two letters by way of her response, is, I conclude the O
key to this case. The defendant showed herself to be high handed,
P P
unreasonable and in breach of the terms of the agreement, whether they
Q be express or implied, or both. Q
R R
52. This clearly did not support the description of the agreement
S whether it be joint venture or cooperation. She was determined that her S
own preference would prevail both in relation to the balcony and the front
T T
access.
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B B
53. At this time the development had scarcely began but by
C
15 July 2011 she wrote directly to the plaintiffs: C
“-- (Your) plan for balcony and ground floor entrance … do not
D D
match the photos in clause 9.2 of the Agreement, therefore the
length of balcony and ground floor indication plan will not be
E adopted … E
I will build the house according [to] the plan submitted by
F contractor and the photos contained in the Cooperation F
Agreement.”
G G
54. I have no doubt that she was seeking to construct the new
H H
house, and had embarked upon that construction (although little by way
I of actual construction had been achieved by them) on the basis of her I
fixed desire to have it built as she wanted, given her interest in the ground
J J
floor and her potential indirect interest in the first floor unit. She thus
K excluded from her contemplation what had previously been agreed, in K
writing and by way of oral promises. Quite simply I do not believe her.
L L
She was obdurate, unreasonable and acted highhandedly.
M M
55. The building of the house went ahead in complete disregard
N N
of the plaintiffs’ requirements and, as I find them to be, the terms of the
O contract, both oral and written. Certainly the spirit of the joint venture O
was discarded and it is at least arguable that there was implied term that
P P
full account would be taken of the plaintiffs’ interests as persistently
Q expressed. The plaintiff does not need this as an additional finding but Q
the implied term meets the condition expressed by Lord Simon of
R R
Glaisdale in BP Refinery (Westport) Pty Ltd v Shire of Hastings
S (1977) 180 CLR 266 which Lord Hoffmann adopted in Att. Gen. of Belize S
Telecom Ltd (PC) (2009) l WLR 1988:
T T
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A A
B “… not as a series of independent tests which must each be B
surmounted, but rather as a collection of different ways in
C which judges have tried to express the central idea that the C
proposed implied term must spell out what the contract actually
means.”
D D
Those conditions were:
E E
(i) it must be reasonable and equitable;
F F
(ii) it must be necessary to give business efficacy to the contract,
G so that no term will be implied if the contract is effective G
without it;
H H
(iii) it must be so obvious that “it goes without saying”;
I I
(iv) it must not contradict any express term of the contract; and
J (v) it must be capable of clear impression. J
K K
56. As to the latter condition the following would meet the
L situation and thereby illustrate the appropriateness of such an implied L
term:
M M
“The parties will have full regard for and implement where
N possible, all reasonable and practical requirements of each N
other as to the form of the building, in accordance with the cost
provided for in the joint venture.”
O O
There is no doubt that wording could be improved upon.
P P
Q 57. The plaintiffs allegation of breach of fiduciary duty is a valid Q
alternative approach, though it does not have any advantage over the
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above implied term argument.
S S
T T
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A A
B B
Summary of findings
C 58. There were breaches of the express oral terms in the form of C
the breaking and/or ignoring of the promises made to the plaintiffs.
D D
E 59. Clause 9.2 of the Agreement does not preclude the plaintiffs’ E
requirement as to the length of the balcony and position of the door
F F
access to the staircase. The word is “style” not “form” or “structure”.
G G
60. The preamble at (2) of the background governs the essential
H H
structural feature in outline. The defendant knew what these plans
I showed, and thereby they were incorporated in the agreement. I
J J
61. The defendant is in breach of contract. She proceeded on
K an arbitrary unilateral basis in the face of clear requirements by the other K
party.
L L
M 62. She is liable to construct full length balconies and alter the M
side access to frontal access at her own expense at the plaintiffs’
N N
insistence. Alternatively she is liable to pay them damages for the said
O breaches which would take the form of payment to the plaintiffs to enable O
them to have the remedial work carried out. Those damages can be
P P
assessed only when such costs are known. The question of the
Q liquidated damages will need to be resolved at a later stage. By reason Q
of the breach the defendant is not entitled to the transfer of title to the
R R
ground floor unit to herself, until she has fully remedied the breaches
S S
and/or the plaintiffs have been compensated for them.
T T
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A A
B B
63. The unnamed relative in clause 2.1 has no legal entitlement
C
to the first floor unit not being a party to the contract and not having C
provided any consideration. In any event the interest as expressed is no
D D
more than a prior opportunity to purchase at a figure which is almost
E certainly irrelevant after this lapse of time. E
F F
Judgment
G 64. The defendant is in breach of the agreement. G
H H
65. There will be an order requiring the defendant to build full
I length balconies on the 1st, 2nd and 3rd floor levels as there had been on I
the original house and frontal access to the staircase, and carry out the
J J
necessary removal of the side door access.
K K
66. Alternatively the defendant do pay to the plaintiffs as
L L
damages the costs of effecting the said requisite construction work, such
M costs to be assessed. M
N N
67. The defendant’s counterclaim is dismissed with costs to the
O plaintiffs. O
P P
68. The defendant shall pay to the plaintiffs their costs of this
Q action including future costs incurred as a result of rectifying the Q
defendant’s breaches of the Agreement.
R R
S 69. In re-enforcement of the undertaking given in evidence by S
the defendant to hand over to the plaintiff all relevant documentation,
T T
certificates etc to enable them to obtain all government approvals and
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B B
licenses etc and register title to the said lot and house, I make an order to
C
this effect. C
D D
70. There will also be liberty to apply to perfect any of these
E
orders where necessary. E
F F
G G
H (Conrad Seagroatt) H
Deputy High Court Judge
I I
Mr Jackson Poon, instructed by KY Lo & Co, for the 1st and 2nd plaintiffs
J J
Mr Kenneth YF Wong, instructed by Wong, Hui & Co, for the defendant
K K
L L
M M
N N
O O
P P
Q Q
R R
S S
T T
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