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HCA 2003/2013
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
ACTION NO 2003 OF 2013
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| BETWEEN |
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LAW PAK FUN and LAW RAYMOND PAK YING
persons appointed to represent the estate of LAW (or LO) CHAK (or CHEK) TONG, deceased |
Plaintiffs |
AND |
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TAI LEE FAT INTERNATIONAL LIMITED |
1st Defendant |
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PANG WANG KEI |
2nd Defendant |
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LAW YUEN PING |
3rd Defendant |
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| Before: Hon Ng J in Chambers |
| Date of Hearing : 11 December 2014 |
| Date of Judgment: 23 July 2015 |
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JUDGMENT
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Introduction
1. There is before this court an application by the 1st Defendant (“TLF”) for:
(1) A determination in the affirmative of the following question of law under RHC O 14A:
“Whether Law (or Lo) Chak (or Chek) Tong (“the Deceased”), who entered into a Memorandum of Agreement dated 5 June 1998 and a Supplemental Agreement dated 30 January 2002 (“the Agreements”), which were prepared by solicitors acting for the Deceased, was in pari delicto in regard of the illegality of the Agreements.”
(2) An Order striking out the entire Amended Statement of Claim on all grounds set out in RHC O 18 r 19.
2. The application is opposed by the Plaintiffs.
The principles
3. Before examining the merits of the application, this court should remind itself the governing legal principles.
4. RHC O 14A r 1 provides:
“(1) The Court may…determine any question of law…where it appears to the Court that–
(a) such question is suitable for determination without a full trial of the action; and
(b) such determination will finally determine (subject only to any possible appeal) the entire cause or matter or any claim or issue therein.
(2) Upon such determination the Court may dismiss the cause or matter or make such order or judgment as it thinks just.”
5. In order to invoke RHC O 14A, it must be shown that this is a suitable case for the procedure and the determination of the question of law is one which will finally determine the entire cause or matter (or any claim or issue therein). The court will not make such a determination if, for instance, the court’s decision will not have the effect of finally resolving the controversy between the parties, or there are serious disputes of fact: B + B Construction Ltd v Sun Alliance and London Insurance Plc (2000) 3 HKCFAR 503, 507I-508A; Shell Hong Kong Ltd v Yeung Wai Man Kiu Yip Co Ltd (2003) 6 HKCFAR 222, 230C-J.
6. It is only in plain and obvious cases that the court should exercise its summary power to strike out. There should be no trial upon affidavits and importantly disputed facts must be taken in favor of the party sought to be struck out. Where the legal viability of a cause of action is sensitive to the facts, an order to strike out should not be made. The power to strike out is exercisable only when the claim is obviously unsustainable and that it must be impossible, not just improbable, for the claim to succeed: Hong Kong Civil Procedure 2015 Vol. 1 para. 18/19/4; E (A Minor) v Dorset County Council [1994] 3 WLR 853, 865 (Sir Thomas Bingham MR); X (Minors) v Bedfordshire CC [1995] AC 633, 771 (Lord Browne-Wilkinson); Yue Xiu Finance Co Ltd v Dermot Agnew [1996] 1 HKLR 137, 141 (Litton VP).
Facts
7. The following background facts are set out for the purpose of the present application only. Save where otherwise indicated, they are taken from the Plaintiffs’ pleadings and affidavit evidence.
8. The Deceased was, prior to 26 July 1999, the registered and beneficial owner of a piece of land situated at Sub-section 1, Section A, Lot No. 1564, D.D.76 (“Lot”) in the New Territories. The Lot is situated at Kan Tau Tsuen (“Village”), Fanling, New Territories where the Deceased used to live. The Deceased was once the Resident Representative of the Village.
9. The Deceased passed away in December 2005. The Plaintiffs, Mr Law Pak Fun and Mr Law Pak Ying Raymond, are his sons.
10. In 1998, Mr Wan Han Ping, a director of TLF, approached the Deceased and other residents of the Village and proposed that they provided their land to TLF for the development of village type houses on the basis that TLF would be responsible for (i) making all necessary applications, (ii) construction of the houses, and (iii) all the costs and expenses of the development. Eventually, the Deceased and some other villagers agreed to TLF’s proposal. It was the first time the Deceased had participated in such a development.
11. By a Memorandum of Agreement dated 5 June 1998 (“MOA”), the Deceased, as owner, and TLF, as developer, agreed to develop the Lot by erecting four village type houses on it. The MOA was prepared by Messrs Donald Yap, Cheng and Kong (“DYCK”) and executed before Mr Donald Yap (“Yap”), a partner of DYCK. The Plaintiffs said DYCK was TLF’s solicitors. TLF said DYCK acted for both the Deceased and itself. DYCK’s fee note for inter alia the preparation of the MOA only named TLF as its client.
12. The material terms of the MOA are:
(1) The Deceased shall provide the Lot to TLF for the development of four 3-storey village type houses (clauses 1 and 2).
(2) TLF shall at its own costs and expenses instruct a surveyor to survey the land and draw up plans to divide the land into such number of parcels, each suitable to erect a 3‑storey village type house, and such strip of land suitable to be used as a road (clause 3).
(3) Each parcel of land will be assigned to a suitable indigenous villager who shall make the necessary application to the District Lands Officer North for a building licence to erect thereon a 3-storey village type house. All legal costs, stamp duty and expenses etc. shall be the responsibility of TLF. Any parcel of land which cannot be granted a building licence shall be retained by the Deceased and TLF for the common use by the other parcels of land (clause 4).
(4) On the completion of the development, each party shall be entitled to have two houses (clause 7).
(5) After the issue of the Certificates of Compliance, TLF shall be entitled to apply in the name of the building licence holders [i.e. the indigenous villagers] to the said District Lands Officer for consent for alienation of the parcels of land and houses thereon to which TLF is entitled and to be wholly responsible for the premium payable to the Government, legal costs and expenses. The Deceased shall be responsible for any government premium, legal costs and expenses if he should apply for alienation (clause 8).
(6) The Deceased shall at all times use his best endeavour to assist TLF in completing the development. TLF shall be responsible for all costs and expenses required and incurred in the development (clause 11).
13. Pursuant to the MOA, the Deceased executed a deed of assignment dated 26 July 1999 assigning the Lot to TLF. The assignment was also prepared by DYCK. The assignment took the form of an assignment on sale and stated at clause 1 that the consideration for the assignment was HK$1 million, the receipt of which was acknowledged by the Deceased. The Plaintiffs said the consideration for the assignment ie the HK$1 million was never paid or intended to be paid by TLF. This was not admitted by TLF in its Defence. In his affirmation, Mr Tiu Sum Fat (“Mr Tiu”), a director of TLF, said he was unable to confirm or deny whether TLF had paid the HK$1 million to the Deceased.
14. By a Deed Poll also dated 26 July 1999, TLF divided the Lot into six separate and distinct portions known as Section A, Section B, Section C, Section D, Section E and Remaining Portion (“sub-lots”).
15. At the request of TLF, the Deceased signed a Supplemental Agreement dated 30 January 2002 (“SA”) with TLF to vary the Deceased’s entitlement under the MOA. Under the SA, the Deceased exchanged his entitlement to two houses to be built on the Lot for another house to be built on Lot No. 1573B/2 in DD 76 and another plot of land situated at Lot No. 1573B/4 in DD 76.
16. Other than signing the MOA, the deed of assignment and the SA, the Deceased played no part in the development on the Lot. The Deceased had no knowledge of the progress of the development.
17. By two assignments both dated 15 July 2005, TLF assigned Section B of the Lot to the 2nd Defendant and Section C of the Lot to the 3rd Defendant. Both the 2nd and 3rd Defendants were indigenous villagers in the New Territories. The consideration of HK$200,000 stated in each of the assignments was never paid by the 2nd or 3rd Defendant to TLF.
18. The aforesaid assignments by TLF to the 2nd and 3rd Defendants were for the purpose of enabling them to apply for building licences from the Government. According to TLF, the Government granted to the 2nd Defendant in December 2008 and the 3rd Defendant in October 2009 licences to build a village type house on their respective sub‑lots. Judging from the application numbers, the 2nd and 3rd Defendants’ applications for building licences were made in 2007, after the Deceased had passed away.
19. Condition 3(a)(iv) of both licences provides:
“The Licensee expressly warrants, represents and declares that he has never entered into any arrangements or agreement with any person or persons to transfer, alienate, dispose or otherwise deal with the lot or any part thereof or any interest therein or his rights in and over the lot, including but not limited to the right to develop the lot or any part thereof.”
20. By a letter dated 6 May 2013, the Plaintiffs indicated their refusal to provide any further assistance to TLF regarding the development of the Lot and their withdrawal from the MOA and SA (“Agreements”), on the ground that they were tainted with illegality.
21. By a writ of...
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