|
CACV 197/2017
[2018] HKCA 200
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF APPEAL
CIVIL APPEAL NO 197 OF 2017
(ON APPEAL FROM DCCJ NO 181 OF 2014)
__________________________
|
BETWEEN
|
| ASGAIN COMPANY LIMITED |
Plaintiff |
| and |
| CHENG KA YAN (鄭嘉恩) |
Defendant |
__________________________
| Before: Hon Cheung CJHC, Lam VP and Poon JA in Court |
| Date of Hearing: 7 March 2018 |
| Date of Judgment: 7 March 2018 |
| Date of Reasons for Judgment: 12 April 2018 |
____________________________________
REASONS FOR JUDGMENT
____________________________________
Hon Lam VP (giving the Reasons for Judgment of the Court):
Introduction
1. After a 5-day trial, on 19 December 2016, Deputy District Judge Tracy Chan (“the Judge”) handed down a judgment in favour of the Plaintiff. She ordered the Defendant to pay the Plaintiff the sum of $683,000 with interest in respect of the unpaid purchase price of an industrial unit at Kwun Tong [“the Workshop”] pursuant to an agreement of 30 August 2010.
2. With leave granted by Lam VP, the Defendant appealed against that judgment.
3. We heard the appeal on 7 March 2018. At the end of the hearing, we granted leave to the Plaintiff to amend the Reply and dismissed the appeal, maintained the order as to costs below but made no order for costs of the appeal. Here are our reasons for the dismissal of the appeal.
Background
4. For the purpose of this judgment, it is sufficient to take the factual background from [2] to [6] of the judgment below:
“ 2. The non-controversial facts on the background are these. In 1992 when Cheng Koon Ming (“Ming”) was holding the Plaintiff’s shares with two other persons whose identities are unimportant in these proceedings, 4 industrial units including the Workshop and its neighbouring workshops number 5, 6, 7 of 8th Floor were acquired in the name of the Plaintiff. After some transfer of shares in the years that followed Ming became the sole shareholder of Plaintiff. The Workshop is the only property relevant in these proceedings. It is to be noted that since its acquisition back in 1992, the Workshop had been leased to the company of Mr Cheng Koon Hoi (“Hoi”), elder brother of Ming, to conduct his school uniform trading business.
3. People involved in the present proceedings are relatives. Hoi is not only brother of Ming but also father of Cheng Yuk Nam (“Nam”) and the Defendant. In other word, the Defendant is the niece of Ming. Nam at the time of the Transaction was the other director of the Plaintiff.
4. In about 2007 it was decided that the Plaintiff’s assets including all the workshops were to be sold. After selling 3 workshops in March 2007 and in July 2009, the Workshop was the only one remaining.
5. On or about 30 August2010, the Memorandum was executed between the Plaintiff, as the vendor, and the Defendant and Ming, as the purchasers. Under the Memorandum, the total purchase price of the Workshop was $1,500,000. Subsequently, on or about 31 January 2011, the relevant parties executed the Assignment. As a result, the Defendant has thereby become one of the registered owners of the Workshop and is holding 50% share as tenant-in-common with Ming.
6. On the same day the Assignment was executed, the Defendant got a mortgage loan secured by the Workshop from China Construction Bank (Asia) Corporation Limited (“CCB”) for $750,000 (“the Mortgage Loan”). The mortgage deed was executed by CCBCL as the lender; the Defendant as the borrower, and Ming and the Defendant as mortgagors. The Mortgage provided that:-
(1) The Defendant’s share of the interest of the Workshop was subject to the mortgage;
(2) Ming’s share of the interest of the Workshop was also subject to the mortgage; and
(3) Ming and the Defendant jointly and severally covenanted with CCB to repay the facility arranged by CCB.
The said $750,000 was drawn down and transferred to the Defendant’s personal account directly on 31 January 2011.”
5. At the trial, the primary case of the Defendant was that she had paid $750,000 for the acquisition of her interest in the Workshop. That case was rejected by the Judge who found that the alleged payment of $750,000 as particularized by the Defendant had not been made. Instead, the Judge found that part payments in the total sum of $67,000 for the payment of the purchase of such interest (as set out at [19] of the judgment) were made by the Defendant on diverse dates between 1 February and 14 September 2011. The Judge rejected the Defendant’s case that these payments were not related to the purchase and were loans made to Ming.
6. There was no appeal against the findings of fact by the Judge. In this appeal, Mr Ho for the Defendant focused on the effect of the Receipt Clauses in the Memorandum of Agreement of 30 August 2010 and the Assignment of 31 January 2011. The Receipt Clauses were as follows:
(a) Clause 1 of the Memorandum of Agreement:
“ 1. The Vendor shall sell as beneficial owner and the Purchaser shall purchase all that property described in the First Schedule hereto (“the Property”) on the following terms and conditions:-
|
|
(a) |
Purchase Price: |
HK$1,500,000.00 |
|
(b) |
Manner of Payment: |
HK$1,500,000.00 being the purchase price has been paid by the Purchaser to the Vendor DIRECT (receipt whereof is acknowledged) PRIOR TO the signing of this Memorandum of Agreement for Sale and Purchase. |
|
(c) |
Completion: |
31st January 2011 |
|
(d) |
The Property shall be sold on an “as is” basis. |
|
(e) |
Costs: |
All costs and expenses of and incidental to preparation of this Agreement and the Assignment shall be borne by the Purchaser absolutely. |
|
(f) |
Stamp Duty: |
To be borne by the Purchaser absolutely ” |
(b) Endorsed at the end of the Memorandum of Agreement:
“ RECEIVED on or before the day and year first above written of and from the Purchaser the above mentioned HK$1,500,000.00 being the full payment of the purchase money payable to me as abovementioned).
[Signatures of Plaintiff and Defendant]”
(c) Clause 1 of the Assignment:
“ 1. IN CONSIDERATION OF the sum of HONG KONG DOLLARS ONE MILLION AND FIVE HUNDRED THOUSAND ONLY (HK$1,500,000.00) paid by the Purchaser to the Vendor (receipt whereof is hereby acknowledged) the Vendor as Beneficial Owner ASSIGNS to the Purchaser the land described in the Schedule hereto (“the Property”) TO HOLD the same unto the Purchaser as Tenants in Common in Equal Shares for the residue of the term of years created by the Government Lease referred to in the Schedule Subject to the payment of the due proportion of yearly Government rent payable in respect of the Property and the covenants conditions and provisos contained in the Government Lease AND SUBJECT to and with the benefit of a Deed of Mutual Covenant registered in the Land Registry by Memorial No. UB3627048 (“the said Deed of Mutual Covenant”) And Subject to and with the benefit of a Management Agreement registered in the Land Registry by Memorial No. UB3627049 (“the said Management Agreement”) so far as the same relates to or affects the Property.”
7. Mr Ho advanced two submissions on the effect of these Receipt Clauses, either of which can, he contended, bar the claim by the Plaintiff. First, he submitted that these Receipt Clauses gave rise to a contractual estoppel in favour of the Defendant. Second, he submitted that the Defendant can defeat the claim by virtue of section 18(1) of the Conveyancing and Property Ordinance Cap 219 [“CPO”].
Contractual estoppel
8. The Judge considered the argument based on contractual estoppel at [64] to [76]. After referring to the authorities cited by counsel, the Judge rejected that argument on two bases:
(a) There was no agreement between the parties as to the effect of the Receipt Clauses because Ming was not aware of the same and the Defendant’s own case was that she did not make full payment when she signed the Memorandum, as such the clauses in the Memorandum were not there to acknowledge payment;
(b) There was no reliance on the Receipt Clauses as, according to the finding of the Judge, the Defendant made part payments after execution of the Assignment on 31 January 2011.
9. Mr Ho submitted that the Judge erred in holding that the Receipt Clauses did not have effect despite the signing of the Memorandum and the execution of the Assignment when there was no attempt by the Plaintiff to vitiate the binding nature of the clauses by raising any case of mistake, misrepresentation, illegality or fraud. He relied on the following authorities to support his submission in this respect: Ming Shiu Chung v Ming Shiu Sum (2006) 9 HKCFAR 334 at [84]; DBS Bank v Sit Pan Jit, HCA 382 of 2009, 2 April 2015, [193], [321], [382] and [384]; Wong Lai Ling v Lam Kin Chung, HCA 828 of 2011, 10 Aug 2012 at [28].
10. There is considerable force in this submission. For present purposes, we can take the applicable legal propositions from the judgment of Ribeiro PJ at [84] of Ming Shiu Chung v Ming Shiu Sum, supra:
“ … Reliance is universally placed on signatures appended to documents by persons of full age and understanding as signifying the signatory’s assent or adherence to what that document states. Where such a person has signed a document which purports to have legal effect, the law has never regarded it as enough to show that he signed without knowing its contents for the document to be disavowed. It is an everyday occurrence that people sign documents without reading the small (or even the large) print and therefore sign without actually knowing the terms (or all the terms) of the document signed. But...
| 
