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Cheung Yuk Fung v Yip Chi Keung And Another

Judgment Cited authorities 2 Cited in Precedent Map Related
Vincent
JurisdictionHong Kong
Judgment Date16 May 2023
Neutral Citation[2023] HKCA 665
Year2023
Subject MatterMiscellaneous Proceedings
Judgement NumberCAMP471/2022
CourtCourt of Appeal (Hong Kong)
CAMP471/2022 CHEUNG YUK FUNG v. YIP CHI KEUNG AND ANOTHER

CAMP 471/2022, [2023] HKCA 665

On Appeal From [2022] HKDC 266

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO. 471 OF 2022

(ON AN INTENDED APPEAL FROM DCCJ NOS. 259 & 306 OF 2019)

________________________

BETWEEN
CHEUNG YUK FUNG (張玉峰) Plaintiff
and
YIP CHI KEUNG (葉志強) 1st Defendant
BTB BUILDERS LIMITED 2nd Defendant

________________________

Before : Hon Kwan VP and Cheung JA in Court
Date of Judgment : 16 May 2023

__________________

J U D G M E N T

__________________

Hon Cheung JA (delivering the Judgment of the Court) :

I. Leave to appeal

1. This is the renewed application by the 1st defendant and 2nd defendant for leave to appeal from the judgment of Deputy District Judge George Lam dated 31 March 2022 who ordered the defendants jointly and severally to pay the plaintiff the sum of $97,618 with interest and costs. The Judge had previously refused leave. We will deal with the application on paper.

II. The facts

2. We will adopt the summary by the defendants of the facts of the case as found by the Judge :

1) On 29 May 2018, the plaintiff and the 1st defendant reached an Oral Agreement that :

(1) Both parties should be equal shareholders and directors of a new joint venture company to be acquired to carry out a property agency business.

(2) The parties should each contribute $400,000 to the new company as initial capital.

(3) $5,000 of the contribution from each party should be used as the share capital while the remaining $395,000 would be used as working capital.

(4) The new company would be renamed ‘OOne Property Group Limited’ (‘the Company’).

2) Pursuant to the Oral Agreement, on 15 June 2018, the plaintiff paid $400,000 to the 1st defendant and the 2nd defendant (a company owned and controlled by the 1st defendant). Specifically, the sum was paid at the 1st defendant’s direction into the 2nd defendant’s bank account pending for use as the working capital of the new company.

3) There was no dispute that the 1st defendant agreed to, and did, contribute his share of $400,000’s worth of renovation. The dispute only concerned the $400,000 contributed by the plaintiff. The Judge found that the 1st defendant failed to account for the use of $79,618, in addition to a shortfall of $18,000, out of the plaintiff’s contribution making a total sum of $97,618.

III. The judgment

3. The plaintiff relied on two causes of action namely, breach of contract and breach of a Quistclose trust. The Judge rejected the trust claim. He held that the defendants’ failure to apply the plaintiff’s funds to defray the new company’s expenses, constituted a breach of the Oral Agreement, with the result that the funds ought to be returned.

IV. Proposed grounds of appeal

4. The defendants relied on two grounds of appeal :

1) The Judge erred in law by granting any relief for breach of contract against the 2nd defendant which was not, even on his findings, a party to the Oral Agreement.

2) There was no valid legal basis for the Judge to order a refund of $97,618 by the 1st defendant and the 2nd defendant to the plaintiff, purportedly representing the unaccounted for portion of the plaintiff’s total investment of $400,000 towards the Company’s working capital, in circumstances where :

(1) The Judge dismissed the claim based on a Quistclose trust on the basis, inter alia, that there was no agreement or restriction that the funds were not at the free disposal of the 1st defendant or the 2nd defendant;

(2) The plaintiff failed to (i) plead any relevant breach of any contractual obligation on the part of the 1st defendant or the 2nd defendant to ensure that the all funds were used as the Company’s working capital, or (ii) show that any loss was sustained by the plaintiff when he was irrevocably committed to investing $400,000 in return for a 50% share in the Company under the Oral Agreement;

(3) The order is not supported by any other valid, pleaded cause of action for unjust enrichment or otherwise.

V. Our view

5. It is logical to deal with the second ground first.

1) Ground 2(1)

6. As to ‘the plaintiff got what was agreed and he must pay the agreed price for it’ argument, the Judge had specifically found that it was agreed that the $400,000 would be used for the working capital of the Company and part of the $400,000 had never been applied by the defendants as the Company’s working capital. Hence, there was a breach of contract. There is no merit in this ground.

2) Ground 2(2)

7. As to Ground 2(2)(i), on the lack of pleadings, the Judge had dealt with this point and found the matter was sufficiently pleaded. We agree.

8. As to the Ground 2(2)(ii), the defendants argued in the written submission that the Judge’s order of...

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