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Pako Enterprises Ltd v Tse, Yuet Toa

Judgment Cited authorities 2 Cited in Precedent Map Related
Vincent
Judgment Date13 May 2020
Neutral Citation[2020] HKCFI 773
Judgement NumberHCA2239/2018
Subject MatterCivil Action
CourtCourt of First Instance (Hong Kong)
HCA2239/2018 PAKO ENTERPRISES LTD v. TSE, YUET TOA

HCA 2239/2018

[2020] HKCFI 773

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2239 OF 2018

________________________

BETWEEN

PAKO ENTERPRISES LIMITED Plaintiff
(栢嘉企業有限公司)

and
TSE, YUET TOA (謝悅陶) Defendant

________________________

Before: Deputy High Court Judge MK Liu in Chambers
Date of Plaintiff’s submissions: 24 April 2020
Dates of Defendant’s submissions: 20 April and 4 May 2020
Date of Decision: 13 May 2020

________________________

D E C I S I O N

________________________

1. This is the defendant (“D”)’s appeal against the summary judgment granted by Master Chow dated 12 December 2019 (“the Judgment”), pursuant to which final judgment was entered against D on the basis of the plaintiff (“P”)’s “Counterclaim to Counterclaim” (“CC-to-CC”). On 22 January 2020, Master J Wong granted a stay of execution of the Judgment pending the outcome of this appeal.

2. Originally, the appeal was fixed to be heard on 7 April 2020. Due to the General Adjourned Period, that hearing did not take place as scheduled. The parties have agreed that the appeal be disposed of on paper without an oral hearing. The parties have provided detailed written submissions to the court, and I have considered the same.

Essential Facts

3. The dispute between the parties concerns the ownership and possession of a property known as Flat B on the 1st Floor (including the Flat Roof), No. 36 Hillwood Road, Kowloon (“Property”).

4. P’s pleaded case in the statement of Claim (“SoC”) is as follows (“the bare licencee case”):

(1) One Ma Yuk Wan (“Ma”) acquired the Property in 2004 and let it to Lee Pui Wah (“Lee”).

(2) Lee arranged for her daughters Cheung Sau Lam (“Cheung”) and Joey Tong (“Tong”) to move into the Property.

(3) Cheung had a close relationship with D. Therefore, D was also allowed to live in the Property as a bare licencee[1].

(4) Lee used P as a corporate vehicle to acquire the Property in 2008 from Ma.

(5) Since then, D was allowed to continue to live in the Property in the same way and capacity as before due to her close relationship with Cheung at the material times[2].

(6) When the relationship between Cheung and D fell through in mid-2018, D was required by P to leave the Property. But D refused.

5. D’s pleaded case in her the defence is as follows:

(1) Ma purchased and held the Property on trust for Lee, Cheung and D pursuant to an agreement amongst them (“the Agreement”). According to the Agreement, Lee owns half of the beneficial interest in the Property whereas Cheung and the Defendant own the remaining half of the beneficial interest in the Property.

(2) D’s parents contributed HKD$259,500 (ie 15%) of the purchase price of the Property and transferred their interest to D. At all material times, P and Lee knew about D’s interest in the Property.

6. D has raised a counterclaim, seeking a declaration that D is a 25% beneficial owner of the Property and an order requiring P to make D as a registered owner of the Property having 25% interest in the same, or to pass 25% of the sale proceeds to D after selling the Property.

7. After D has filed and served the defence and counterclaim, P provided to the court and served on D a document called “Reply, Defence to Counterclaim, and Counterclaim to Counterclaim”.

8. In the CC-to-CC, P adopts the facts pleaded in SoC [3] to [12][3]. However, immediately thereafter, P avers that in the event of D succeeding in any part of the counterclaim, P would proceed to claim against D on the basis that both P and D are co-owners of the Property, and P is entitled to have joint possession of the Property with D, and P should be entitled to mesne profits, damages, occupation rent and/or compensation until joint possession is given (“the co-owner case”).

9. Master Chow allowed P’s application for summary judgment on the basis of the matters pleaded in the CC-to-CC, ie both P and D are co-owners of the Property and P is entitled to the reliefs claimed in the CC-to-CC.

Analysis

10. It is trite that an appeal hearing under Order 58 is a de novo hearing. The hearing before me is an actual rehearing as if the application came before me for the first time[4].

11. “Summary judgment, if it is to be given, is to be given on the pleaded case.”[5] In my view, P is not entitled to rely upon the co-owner case pleaded in the CC-to-CC to obtain summary judgment. With respect, the learned master erred in granting the Judgment to P.

12. P’s case as pleaded in the SoC is that D was staying in the Property as a bare licencee and that licence has been revoked. In the premises, P ought to deliver vacant possession and also pay mesne profits and damages to P. However, P has put forward another case in the CC-to-CC, ie both P and D are co-owners of the Property. On this basis, P is claiming joint possession of the Property. These are diametrically opposite cases. In my judgment, P is not entitled to put forward a different case in the CC-to-CC while the SoC remains intact.

(1) Order 18 rule 10(1) provides:

“A party shall not in any pleading make any allegation of fact, or raise any new ground of claim, inconsistent with a previous pleading of his.”

The bare licencee case and the co-owner case are clearly two different and inconsistent cases. Without amending the SoC (in which D is alleged to be a bare licencee), I cannot see how P can put forward a case in the CC-to-CC alleging that D is a co-owner of the Property. In my view, the CC-to-CC has offended Order 18 rule 10(1).

(2) Further, by seeking reliefs on the basis that D is a co-owner of the Property, P in fact is putting forward a new cause of action. P cannot do so without amending the SoC. As said by Lam J (as he then was) in Magic Score Limited v. The Hong Kong and Shanghai Banking Corporation Limited and Another[6]:-

“20. Thus, it is not appropriate to raise in the reply a new cause of action (see Hong Kong Civil Procedure 2006 Paragraph 18/3/2). A plaintiff who wishes to pursue an additional or alternative cause of action should do so by amending the statement of claim.

21. This is not simply a technical rule. A defendant to an action is entitled to know from the writ and statement of claim what are the precise limits of claims he is faced with. He should focus on the same and then put forward his case in his defence and prepare for the evidence accordingly. He should be able to conduct the litigation and arrange his affairs on the basis that all the relief and remedies claimed against him have been set out in the statement of claim, subject to any amendments that might be made to that document. He could, for example, consider whether to make any payment into court or any offer for settlement based on this. He could also decide what is the proportionate time and costs that he should spend...

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