Your World of Legal Intelligence
 Hong Kong | 1-800-335-6202

Ip Fung Kuen v Sam Kee Frozen Meat Co Ltd And Others

Judgment Cited authorities 5 Cited in Precedent Map Related
Vincent
Judgment Date19 December 2016
Year2016
Judgement NumberCACV107/2016
Subject MatterCivil Appeal
CourtCourt of Appeal (Hong Kong)
CACV107/2016 IP FUNG KUEN v. SAM KEE FROZEN MEAT CO LTD AND OTHERS

CACV 107/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 107 OF 2016

(ON APPEAL FROM HCA NO 1897 OF 2009)

________________________

BETWEEN
IP FUNG KUEN (葉鳳娟) Plaintiff
and
SAM KEE FROZEN MEAT COMPANY LIMITED
(森記凍肉有限公司) 		1st Defendant
YIP KING WAH ENTERPRISE COMPANY LIMITED
(神秘人企業有限公司)		 2nd Defendant
YIP KING WAH (葉景華) 3rd Defendant
(by Original Action)

________________________

AND BETWEEN
SAM KEE FROZEN MEAT COMPANY LIMITED
(森記凍肉有限公司) 		1st Plaintiff
YIP KING WAH ENTERPRISE COMPANY LIMITED
(神秘人企業有限公司)		 2nd Plaintiff
and
IP FUNG KUEN (葉鳳娟) 1st Defendant
COLOURMAX DEVELOPMENT LIMITED 2nd Defendant
(by Counterclaim)

________________________

(Action transferred from the District Court by the
Order of Master C Lee dated 18th August 2009)

Before: Hon Cheung, Yuen and Kwan JJA in Court
Date of Hearing: 6 December 2016
Date of Judgment: 6 December 2016
Date of Reasons for Judgment: 19 December 2016

________________________

REASONS FOR JUDGMENT

________________________


Hon Cheung JA:

1. I agree with Kwan JA’s Reasons for Judgment.

Hon Yuen JA:

2. I agree with Kwan JA’s Reasons for Judgment.

Hon Kwan JA:

3. This is an appeal brought by Yip King Wah Enterprise Company Limited, the 2nd defendant in the action (“D2”), against the judgment of B Chu J handed down on 6 April 2016 (“the Judgment”) after a trial which lasted 15 days. D2 is the registered owner of a commercial property known as Shop F, M/F, Nam Wing Building, 49 to 51A Sing Woo Road, Hong Kong (“the Happy Valley Property”). It sought to challenge that part of the Judgment in which the Happy Valley Property is declared to have been held by D2 on trust for the sole benefit of the plaintiff Madam Ip Fung Kuen (“P”) absolutely since 8 November 2004.

4. At the conclusion of the hearing, we dismissed D2’s appeal with costs to P, and ordered P’s own costs to be taxed in accordance with the Legal Aid Regulations. These are my reasons for dismissing the appeal.

Relevant background and findings

5. I will use the same abbreviated terms as in the Judgment.

6. This is a dispute between the siblings in a traditional Chinese family. The main protagonists are P (the second eldest daughter) and Yip King Wah (the eldest son; “D3”). D2 and Sam Kee Frozen Meat Co Ltd (“D1”) are companies set up and controlled by D3. D1’s principal business has been in the trading of frozen meat, while D2 was used by D3 to operate a sushi restaurant (“the Sushi Restaurant”) and to hold commercial properties. The father, mother and their six children are collectively referred to as “the Family Members”.

7. In a thorough and comprehensive judgment of 161 pages, the judge gave a very detailed account of the evidence which led to her findings. For the purpose of this appeal, it is not necessary to go into all the background matters and findings. Nor do I propose to relate the family history and activities of the Family Members in their business dealings and property transactions over the years. Mr Benny Lo, who appeared for P at the trial and on appeal, has given the court a helpful summary of the relevant matters and findings. Mr Jeremy Cheung, who appeared with Ms Candy Tang, for the defendants at the trial and for D2 on appeal, has not challenged the accuracy of Mr Lo’s summary. I will adopt Mr Lo’s summary, leaving out the references in his footnotes.

8. P has little formal education, having only completed primary 5 at an evening school when she was 14. She helped in the family business since her early teens. In contrast, D3 had completed secondary education and later attended courses in book-keeping and business administration. He joined the family business when he was 19 and gradually took over the management. The judge formed the view that as compared to D3, P is “less worldly or sophisticated”. The parents had not been actively running the business since 1983. The father passed away in March 2006.

9. P’s claim in this action comprises 3 parts: (a) the Debt Claim (against Ds); (b) the Property Claim (against D2); and (c) the Employment Claim (against D1 and D2). P failed to establish the Debt Claim. She succeeded on the Property Claim and the Employment Claim. While this appeal relates only to the Property Claim, some of the findings in respect of the other two claims are also relevant for present purpose.

(a) The Debt Claim

10. On the Debt Claim, the judge found that Ds (acting via D3) had borrowed various sums from P from 1987 to 2003, and “8 Loan Cheques” totalling $1,030,000 were given to P as security for repayment. As of the date of the last of the 8 Loan Cheques being 23 September 2003, P was owed a total sum of $1,030,000.

11. In 2004, as P was demanding D3 for repayment of the outstanding sums, D3 proposed to repay part of the loans by helping her pay part of the purchase price of a shop unit, i.e. the Happy Valley Property. This was the set-off arrangement under “the Acquisition Proposal”, which was accepted by P.

12. The judge found that even after part of the outstanding loans was applied towards P’s payment for the purchase of the Happy Valley Property in 2004, there was still an outstanding amount due to P under the loans, which D3 promised to pay P at the meeting of P, D3 and some of the Family Members on 10 August 2006 (“the Family Meeting”).

13. P’s case on the Debt Claim was based only on an “Oral Acknowledgment” which D3 was alleged to have made at the Family Meeting. By the Oral Acknowledgment, D3 acknowledged to P that the then outstanding amount of the loans due to her, after the set-off arrangement under the Acquisition Proposal, was $350,000.

14. The judge found there was not sufficient evidence that D3 had made the Oral Acknowledgment as alleged, and the amount of the loans outstanding after setting off the amounts paid towards the balance of the purchase price of the Happy Valley Property was “not exactly clear”. So on that basis, the Debt Claim was dismissed.

(b) The Property Claim

15. The judge found that in about August 2004, D3 made the Acquisition Proposal on behalf of himself, D1 and/or D2 for P to acquire the Happy Valley Property, in the terms set out by P. And on the completion day of the purchase (8 November 2004), D2, via all its six directors and shareholders (D3, P, the father, and three other Family Members), executed the “Letter of Ownership” (擁有書) in Chinese, declaring that P was the sole beneficial owner of the Happy Valley Property, and that D2 was only managing the Property on P’s behalf.

16. Ds did not plead that D2 did not have the capacity to hold the Happy Valley Property on trust for P and did not take any issue with the Letter of Ownership itself at the trial. Their only pleaded case was that the Letter of Ownership was subject to an oral agreement made between P and D3/Family Members prior to the signing of the Letter of Ownership (“the Happy Valley Agreement”). One of the terms of the Happy Valley Agreement was a condition precedent that P should first transfer her half share in a property in the South Horizons (“the South Horizon Property”) to D2 or one of the other family companies before the Happy Valley Property would be transferred to her, and unless and until the condition precedent was fulfilled by P, D2 would retain the whole beneficial interest in the Happy Valley Property. The condition precedent was not fulfilled. The Happy Valley Agreement was alleged to be evidenced by two Chinese memoranda signed by P, D3 and some of the Family Members dated 2 July 2006 (“the 1st Memo”) and 29 September 2006 (“the 2nd Memo”).

17. The judge found the Happy Valley Agreement did not exist, after a most detailed analysis of the evidence in §§287 to 371 of the Judgment.

18. As regards the purchase price of the Happy Valley Property of $3.4 million, the judge found that:

(i) P paid $980,000 as part of the initial payments by the three “2004 Cashier Orders” dated 26 August 2004, 30 September 2004 and 25 October 2004;

(ii) P paid the balance of the initial payments in the region of $310,620 by way of a set-off against such part of the loans due to her;

(iii) the balance of the purchase price was funded by a bank loan of $2.2 million arranged by D3 in D2’s name and secured on a mortgage of the Happy Valley Property executed by D2 and by the joint and several guarantee of each of the directors of D2, including P and D3;

(iv) the monthly repayment of the mortgage loan was met in part by the rental income of the Happy Valley Property and the balance of $4,300 was met by deducting from P’s monthly remuneration of $9,500 for working at the Sushi Restaurant of D2; the deductions from P’s remuneration were made from January 2005 until July 2006, when she stopped working at the Sushi Restaurant when its business was transferred to an outsider.

19. Having come to the conclusion there was no Happy Valley Agreement and having considered the contents of the Letter of Ownership, the judge found the common intention of D2 (through all its directors) and P on 8 November 2004 was that the Happy Valley Property was to be held by D2 under an express trust for P’s sole benefit absolutely (§376 of the Judgment).

20. Alternatively, if there was no express trust, having considered all the factors and circumstances (set out in §§377 to 387 of the Judgment), the judge found it was the common intention of D2 through its directors and P that P was to be the sole beneficial owner of the Happy Valley Property and there was a common intention...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT