A A

HCA 1486/2014
B [2020] HKCFI 2689 B

C C

D D

E E

F F

G G

H H

I I

J J

K K

L L

M M

N N

O O

P P

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A A

B IN THE HIGH COURT OF THE B

HONG KONG SPECIAL ADMINISTRATIVE REGION

C C
COURT OF FIRST INSTANCE

D
HIGH COURT ACTION NO 1486 OF 2014 D

E E
LI YAN PING Plaintiff
F and F

G MULTI ELITE LIMITED 1st Defendant G

H FUNG SING MARKETING LIMITED 2nd Defendant H

(formerly known as FLOURISH PROPERTY
AGENCY LIMITED)
I I

(by original action)

J J

K AND K

L BETWEEN L

M MULTI ELITE LIMITED Plaintiff M

and
N N

LI YAN PING 1st Defendant

O O
nd
FUNG SING MARKETING LIMITED 2 Defendant
P (formerly known as FLOURISH PROPERTY P
AGENCY LIMITED)
Q Q
(by counterclaim)
R R
_______________________

S S
Before : Hon Marlene Ng J in Court
T Dates of Hearing : 4-10 July 2018 T

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A A

Date of Handing Down Judgment : 22 October 2020

B B

________________
C C
JUDGMENT
D ________________ D

E I. INTRODUCTION E

F 1. Max Rainbow Enterprise Limited (“Max Rainbow”) was the F

former registered owner and the 1st defendant Multi Elite Limited (“D1”) is
G G
the current registered owner of ALL THOSE 55/30167th parts or shares of
H and in ALL THOSE pieces or parcels of ground registered in the Land H

Registry as the TSUEN WAN TOWN LOT NO 236 AND THE

I I
EXTENSION THERETO at Tsuen Wan in the New Territories of
J Hong Kong (collectively, “Lot”) and of and in the messuages erections and J

buildings thereon known as Shop No 4 (“Shop 4”) and Yard adjacent

K K
thereto (“Shop 4 Yard”) (collectively, “Shop/Yard 4”) on Ground Floor
L L
(“G/F”) and Store No 4 (“Store 4”) on Cockloft Floor (“C/F”) of Phase 2

M
(“Phase 2”) of the Commercial Development (“Development”) of Allway M
Gardens (“Buildings”), Nos 187-195 Tsuen King Circuit and Nos 2-22 On
N N
Yat Street, Tsuen Wan, New Territories, Hong Kong (collectively,

O “Property”). Max Rainbow was the registered owner of the Property from O
2 January 2008 until D1 became the registered owner thereof on 31 May
P P
2013.
Q Q
2. The present action arose from a sub-sale and sub-purchase
R R
transaction in respect of the Property in 2012-2013 whereby D1 as

S purchaser purchased the Head Property referred to in paragraph 3 below S

(including the Property and the Other Property referred to in paragraph 6
T T

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below) and as confirmor/vendor1 re-sold the Property to the plaintiff (“P”)

B B
as sub-purchaser with completion to take place on 31 May 2013. The
C 2nd defendant (“D2”) was a realty estate agent who acted for both P and D1 C

in respect of such sub-sale and sub-purchase, and its handling employee

D D
was Mr Eric Tong Chun Lung (“Tong”), who was himself a licensed estate
E agent. For convenience, D1 and D2 are collectively referred to as “Ds” E

below.
F F

G 3. By a provisional agreement for sale and purchase (“PASP”) G

dated 9 November 2012, Max Rainbow as vendor agreed to sell and Ho

H H
Chi Yung (“Ho”) or his nominee as purchaser agreed to purchase ALL
I THOSE 2030/30167th parts or shares of and in the Lot And of and in the I

Buildings together with the sole and exclusive right and privilege to hold
J J
use occupy and enjoy ALL THOSE PORTIONS of the Development of the
K Buildings comprising PORTION ON LOWER GROUND FLOOR OF K

PHASE 1, GROUND FLOOR OF PHASE 1, SECOND FLOOR OF

L L
2
PHASE 1, GROUND FLOOR OF PHASE 2, and COCKLOFT FLOOR
M OF PHASE 23 (collectively, “Head Property”) subject to existing M

lettings/tenancies (if any) for a consideration of $350,000,000 with

N N
completion to take place on or before 31 May 2013 (“Head PASP”). The
O O
relevant terms of the Head PASP are set out in Schedule 1 to this

P
Judgment, and I adopt the abbreviations therein. On 27 November 2012, P
the Head PASP was registered at the Land Registry under memorial no
Q Q

R 1
a vendor signs an agreement to purchase landed property from the owner and before R
completion thereof agrees to sell such property to a sub-purchaser
S
2
which portion was shown coloured pink on the G/F Plan of Phase 2 annexed to the S
Assignment registered at the Land Registry by memorial no 08020102520014
3
which portion was shown coloured pink on the C/F Plan of Phase 2 annexed to the
T T
Assignment registered at the Land Registry by memorial no 08020102520014

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12112700840065 dated 21 November 2013 that was prepared by D1’s

B B
former solicitors Wilkinson & Grist (“W&G”).
C C

4. The Head Property comprised inter alia a large number of

D D
shops/units at a shopping mall at Phase 1 and shops/units at Phase 2 of the
E Development of the Buildings. D1 intended to purchase and sub-divide the E

Head Property into individual shops/units, and to sub-sell such shops/units

F F
to different sub-purchasers with a view to make profit gain.
G G

5. By a Nomination dated 22 November 2012, Ho inter alia

H H
nominated D1 as his nominee for entering into the formal agreement for
I sale and purchase (“FASP”) in respect of the Head Property free from any I

trust whatsoever to the intent that D1 shall take up the assignment of the
J J
Head Property as the absolute and legal owner thereof, which nomination
K was also confirmed by D1 (“Head Nomination”). On 28 December 2012, K

the Head Nomination was registered at the Land Registry under memorial
L L
no 12122802390014 dated 28 December 2012 that was prepared by W&G.
M M

6. By a PASP dated 22 November 2012 in the printed standard

N N
form of D1’s estate agent Midland Realty (Shops) Ltd (“Midland Realty”),
O D1 as confirmor/vendor agreed to sub-sell and P as purchaser agreed to O

sub-purchase Shop No 6 (“Shop 6”) and Yard adjacent thereto (“Shop 6

P P
Yard”) (collectively, “Shop/Yard 6”) on G/F and Store No 6 (“Store 6”) on
Q C/F of Phase 2 of the Development of the Buildings (collectively, “Other Q

Property”) subject to lettings/tenancies (if any) for a consideration of

R R
$11,523,960 with completion to take place on/before 2:00 pm on 31 May
S 2013 (“Shop 6 PASP”). The relevant terms of the Shop 6 PASP are set out S

T T

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in Schedule 2 to this Judgment,4 and I adopt the abbreviations therein. P

B B
paid $500,000 to D1 as initial deposit under Clause 2(a) of the Shop 6
C PASP. C

D D
7. By a PASP dated 28 November 2012 in D2’s printed standard
E form, D1 as confirmor/vendor agreed to sub-sell and P as purchaser agreed E

to sub-purchase the Property subject to lettings/tenancies (if any) for a

F F
consideration of $15,247,980 with completion to take place on/before 2:00
G pm on 31 May 2013 (“Shop 4 PASP”). The relevant terms of the Shop 4 G

PASP are set out in Schedule 3 to this Judgment, and I adopt the
H H
abbreviations therein. P paid $300,000 to D1 as initial deposit under
I Clause 2(a) of the Shop 4 PASP. I

J J
8. Under Clauses 6 and 17 of each of the Shop 6 and Shop 4
K PASPs, (a) D1 as vendor sold as confirmor and not as registered owner of K

the Other Property and the Property, and (b) D2 was the estate agent for
L L
both D1 and P in the sub-sales and sub-purchases of these properties.
M M

9. On the day before the Shop 4 PASP was signed (ie

N N
27 November 2012), D2 faxed Henry Chiu & Partners (“HCP”) to confirm
O that P’s then solicitors were HCP and D1’s then solicitors were W&G. O

P P
10. On 4 December 2012, HCP wrote to W&G (a) enclosing copy
Q Shop 4 PASP, (b) asking for the draft FASP for the sub-sale and sub- Q

purchase of the Property for their approval together with certified true
R R
copies of the Head PASP and the Head Nomination, and (c) asking for all
S S

4
the terms of the Shop 6 PASP were similar to those of the Shop 4 PASP referred to
T T
in para 7 below (see Schedules 2-3 to this Judgment)

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title deeds and documents of the Property (“Title Deeds”) for their perusal
B B
on usual undertakings.
C C

11. On 12 December 2012, W&G sent to HCP copy Head PASP.

D D

E 12. On 4 January 2013, W&G wrote to HCP (a) stating they were E

taking D1’s instructions on the terms of the draft FASP for the sub-sale and
F F
sub-purchase of the Property, which draft would be provided to HCP for
G approval as soon as possible, and (b) asking for payment of the further G

deposit in favour of W&G pursuant to the Shop 4 PASP.

H H

I 13. HCP delivered the Shop 4 PASP to the Land Registry under I

memorial no 13010801340066 dated 7 January 2013, and such documents

J J
were received by the Land Registry on 8 January 2013.
K K

14. On 8 January 2013, HCP wrote to W&G stating they still had
L L
not received the draft FASP, but enclosing a cashier order for $1,224,798 in
M favour of W&G in payment of the further deposit. By such letter, HCP also M

asked W&G about the undivided share of the Property which information
N N
was necessary for registration of the Shop 4 PASP at the Land Registry,
O and warned W&G that D1 would be liable for P’s loss/damages, if any, due O

to inability to register the Shop 4 PASP at the Land Registry upon D1’s
P P
failure to advise the undivided share of the Property.
Q Q

15. Thus, P had paid to D1 a total sum of $1,524,798.00 as initial/

R R
further deposits under Clause 2(a)-(b) of the Shop 4 PASP (collectively,
S “Deposits”). In the end, D1 and P did not enter into and/or sign any FASP S

for the sub-sale and sub-purchase of the Property.

T T

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16. On 4 February 2013, the Land Registry informed HCP that

B B
memorial no 13010801340066 for the Shop 4 PASP and memorial no
C 13010801340070 for the Shop 6 PASP were withheld from registration, C

and such memorials/instruments were returned to HCP for amendment and

D D
clarification on matters raised in the scrutineer’s notes as follows:
E E
“Please complete, amend or add as indicated below:-

F (1) Please specify the Property Reference Number(s) F

[‘PRN(s)’] of the affected premises in the memorial in
accordance with Reg (6)(1)(eb) of the Land Registration
G G
Regulations.

H (2) Please specify the undivided share of the premises H

affected in the memorial.”

I I
17. By a Nomination dated 20 February 2013, P nominated Yan
J J
Yau Investment Limited (“Yan Yau”) as her nominee to be the purchaser

K
and to take up the assignment of and in the Other Property to the intent that K
all of her estate right title benefit and interest of and in such property under
L L
the Shop 6 PASP be vested in Yan Yau, and P as the nominator and also on

M behalf of Yan Yau signed to confirm the nomination (“Shop 6 M

Nomination”). On 13 March 2012, the Shop 6 Nomination was registered
N N
at the Land Registry under memorial no 13031301560165 dated 7 March
O 2013 that was prepared by HCP. O

P P
18. By a Nomination dated 20 February 2013, P nominated Win
Q Yan Investment Limited (“Win Yan”) as her nominee to be the purchaser Q

and to take up the assignment of and in the Property to the intent that all of
R R
her estate right title benefit and interest of and in such property under the
S Shop 4 PASP be vested in Win Yan, and P as the nominator and also on S

behalf of Win Yan signed to confirm the nomination (“Shop 4

T T

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Nomination”). On 13 March 2012, the Shop 4 Nomination was registered

B B
at the Land Registry under memorial no 13031301560190 dated 7 March
C 2013 that was prepared by HCP. C

D D
19. On 25 February 2013, the Land Registry by its letter to HCP
E noted (a) the Shop 4 and Shop 6 PASPs and their memorials had not been E

re-delivered to the Land Registry, and (b) urged HCP to re-deliver the duly
F F
amended and/or clarified instruments/memorials as soon as possible
G together with the additional registration fees. G

H H
20. On 28 February 2013, HCP replied by enclosing the Shop 4
I and Shop 6 PASPs with cheques for payment of the additional registration I

fees.5 HCP went on to explain that the vendor (ie D1) had not yet advised
J J
the undivided shares of the Other Property and the Property, so they were
K unable to specify the undivided shares and/or the PRNs for the K

corresponding memorials. HCP therefore asked the Land Registry to “……

L L
stop again [their] registration and return the documents to [them] for [their]
M further action and to withhold any further disincentive fee therefor”. M

N N
21. On 1 March 2013, HCP wrote to tell W&G they had delivered
O the Shop 4 PASP to the Land Registry for registration so as to secure P’s O

interests, but were unable to fill out details required for the corresponding
P P
memorial due to D1’s failure to advise the undivided share of the Property
Q despite their earlier requests for the same, so the Land Registry withheld Q

registration of the Shop 4 PASP and P had to pay a disincentive fee /

R R
additional registration fee of $200. By such letter, HCP held D1 liable for
S such (and any further) disincentive fee / additional registration fee, and S

5
the Land Registry acknowledged receipt of such additional registration fee on
T T
1 March 2013

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A A

urged W&G to advise the undivided share of the Property as soon as

B B
possible.
C C

22. On 20 March 2013, W&G wrote to HCP saying the Title

D D
Deeds were available, and asking for settlement of their fee note in the sum
E of $4,179 for preparing certified copies of various title deeds and E

documents.
F F

G 23. On 28 March 2013, W&G wrote to HCP enclosing (a) the G

draft FASP for the sub-sale and sub-purchase of the Property for approval,
H H
and (b) the copy tenancy agreements of the Property dated 21 March and
I 5 November 2012 for reference. W&G (i) stated that if HCP approved the I

draft FASP they could treat it as engrossment for P’s signature and return
J J
the signed FASP to W&G for D1’s signature, but (ii) reminded that W&G
K were still taking D1’s instructions on the terms of the draft FASP, so there K

might be further revisions and D1’s rights to make such revisions were
L L
expressly reserved.
M M

24. On 9 April 2013, HCP replied to W&G’s letter dated

N N
20 March 2013 by noting P was not obliged under “clause 8 of the Chinese
O supplemental agreement for sale and purchase dated 28 November 2012”6 O

to pay any fees for the Title Deeds, and urging W&G to let them have all
P P
the Title Deeds for their perusal.
Q Q

25. On 3 May 2013, W&G replied saying that even though the
R R
purchaser should pay for preparation of the certified copies of the Title
S S
6
this referred to Clause 8 of the appendix to the Shop 4 PASP that provided “分契費
用及公契費用由賣方負責支付” (English translation: “(8) Costs of Sub-Deed of
T T
Mutual Covenant and the Deed of Mutual Covenant shall be paid by the Vendor”)

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A A

Deeds, they had conveyed P’s objections to D1 and were awaiting D1’s
B B
instructions. But on without prejudice basis W&G loaned and forwarded
C the copy Title Deeds to HCP against their undertakings (a) to hold them to C

W&G’s order, (b) to forthwith return them on demand, and (c) not to make
D D
any certified copy unless with W&G’s express written consent.
E E

26. Thus, despite Ds’ non-admission in their pleadings, it

F F
appeared W&G did lend the Title Deeds (or at least copies thereof) to HCP
G for their perusal. G

H H
27. On 3 May 2013, HCP wrote to W&G putting on record that
I (a) notwithstanding their letters dated 8 January and 1 March 2013 W&G I

still had not advised the mode of allocation of undivided share of the
J J
Property, which information was necessary for them to approve the draft
K FASP, and (b) P’s interests in the Property were prejudiced because P could K

not register the Shop 4 PASP at the Land Registry. By such letter, HCP
L L
pressed D1 to provide without further delay documentary evidence to show
M the mode of allocation of undivided share of the Property, and all P’s rights M

were reserved in the meantime.

N N

O 28. On 8 May 2013, HCP wrote to W&G raising a series of O

requisitions on title after perusal of the Title Deeds, including the

P P
following:
Q Q
(a) “[since] [D1] has partitioned the [G/F] and [C/F] into numerous
R smaller units, please let [HCP] have documentary evidence to show R
that the partitioning has not breached clause 4 of Section IV of the
Deed of Mutual Covenant No TW358241 [“DMC”] ……”;
S S

(b) “[as] mentioned in [HCP’s] letters dated 8th January 2013, 1st March
T T
2013 and 3rd May 2013, [HCP has] not received from [W&G] any

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A A

documentation to show the mode of allocation of undivided share of

B the Property up to the present. Please let [HCP] have certified copy of B
the said document without further unnecessary delay.”
C C

D D

29. On the same day, HCP wrote to W&G saying they still had
E E
not received W&G’s written reply to the requisitions raised, and “[since]
F completion is imminent and [D1] as vendor is obliged to prove good title F

of the property at his own expenses, [HCP] are pleased if [W&G] would
G G
let [HCP] have [W&G’s] satisfactory reply to [HCP’s] requisitions without
H further delay or the completion will not be taken place in time and further H

[W&G’s] attention is drawn to the judgment of Yeung Sau Chuen v Chung

I I
Chun Ting and another [MP No.4080 of 1992]”.
J J

30. On 10 May 2013, W&G enclosed copy draft Sub-Sub-Deed of

K K
Mutual Covenant (“Sub-Sub-DMC”) as approved by “LACO, Lands
L Department” (which showed that Shop/Yard 4 and Store 4 of C/F at Phase L

2 of the Development of the Buildings were allocated 31 and 24 undivided

M M
shares respectively) for HCP’s perusal, and further enclosed a proforma
N assignment for HCP’s reference. By such letter, W&G asked for HCP’s N

draft assignment as early as possible for approval by HCP and by Max

O O
Rainbow’s solicitors.
P P

31. On the same day, W&G sent copy assignment floor plan of
Q Q
7
the Property for HCP’s perusal.
R R

S S

7
presumably to be certified by an Authorised Person and to be attached to the
T T
Assignment of the Property upon completion in due course (see para 40(a) below)

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32. On 15 May 2013, W&G sent (subject to usual undertakings)

B B
certified copy of the approval letter dated 9 May 2013 for the Sub-Sub-
C DMC issued by the Lands Department. C

D D
33. On 23 May 2013, W&G replied to the requisitions raised by
E HCP’s letter dated 8 May 2013 stating inter alia as follows: E

F (a) “[please] be informed that the sub-division of the [Property] is in F

accordance with the approved building plans. [W&G] would also like
G to draw [HCP’s] attention to [the Waiver Clause]8 of the Appendix to G
the [Shop 4 PASP] [“Shop 4 Appendix”] made between [D1 and P].
In view thereof, [HCP’s] requisition will not be further entertained”;
H H

(b) copy draft Sub-Sub-DMC had been sent to HCP earlier, and W&G
I I
were prepared to give HCP their undertaking (to be included in HCP’s
completion letter) to send HCP certified copy of the duly registered
J Sub-Sub-DMC within 14 working days after HCP’s receipt of the J
same from the Land Registry.
K K

L L
But as seen in further detail below, P complained that W&G’s aforesaid
M reply to HCP’s requisitions failed to disclose the Alleged UBWs (referred M

to in paragraph 37 below).
N N

O 34. On 24 May 2013, HCP wrote to W&G asking them to O

confirm/advise in writing the undivided share allocated to the Property,

P P
and to clarify why the proforma assignment did not include Store 4.
Q Q

35. On 27 May 2013, W&G replied that in accordance with the

R R
draft Sub-Sub-DMC approved by the Lands Department, the number of
S undivided shares allocated to the Property were 55/30167th shares (see S

T T
8
see Clause 3 of the Appendix to the Shop 4 PASP

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paragraph 30 above), and went on to remind that it was for HCP acting for
B B
the sub-purchaser to prepare an assignment that duly set out the full
C particulars of the Property for W&G’s approval, but W&G gave a full C

description of the Property in such letter to assist HCP.

D D

E 36. In May 2013, P commissioned a survey report of the Property E

by RHL Surveyors Limited (“RHL”). RHL carried out site inspection on

F F
24 May 2013, and rendered its report dated 27 May 20139 on the condition
G of the Property (“RHL Report”) as follows: G

H “i. According to the building plans (B.O.O. ref. No. H

2/9086/75II(P)59) approved by the Buildings Department
[“BD”] on 8 June 1978 and the site inspection on 24 May
I 2013, we confirm that the existing layout of the I
[Property] is different from the approved building plans.
J There were two sub-divided units at the G/F; namely a J
hardware store on the left hand side (west side) [“Unit
4(A)”] and a real estate agency on the right hand side
K (east side) [“Unit 4(B)”] when viewed from Tsuen King K
Circuit. Entry to the real estate agency office was denied
L
for our site inspection. However from the cockloft [ie L
Store 4] and hardware store we noticed some
Unauthorized Building Works [“UBWs”] as shown
M below:- M

a) Steel security cage for windows type air conditioners

N on the cockloft windows at rear N

O
b) Canopies at hardware store on G/F at rear yard O

ii. The subject building is a 35 years old 25-storey tenant

P building constructed with reinforced concrete frame, P
floor slabs and roof. We consider that the premises was
generally constructed and maintained in a fair condition.
Q Q
iii. According to the land registry records on the subject
R
property searched on 27 May 2013, there are no other R
subsisting orders registered against the title of the
premises. (Appendix C)
S S

9
signed by a senior consultant of RHL’s Department of Project Management &
T T
Building Consultancy John Y K Ho

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A A

……
B B
Caveats

C …… C

 Any parts of the building which are covered, unexposed

D D
or inaccessible, could not be inspected and it is therefore
not possible to report such parts are free from defects.”
E E

On the same day, RHL issued invoice no 11203 to P for the RHL Report in
F F
the sum of $7,000 (“RHL Invoice”).
G G

37. So P claimed (but Ds denied) that on/about 27 May 2013 (ie

H H
4 days before the date scheduled for completion of the sub-sale and sub-
I purchase of the Property pursuant to the Shop 4 PASP) she discovered I

from the RHL Report there were UBWs at the Property that (according to
J J
P but denied by Ds) D1 was at all material times aware of but failed to
K disclose despite earlier requisitions raised by HCP (“Alleged UBWs”): K

L (a) steel security cage for widow-type air-conditioners on the rear L

windows of Store 4 on C/F (“Cage UBW”);

M M
(b) the presence of canopies at the rear yard of the hardware store at Unit
N 4(A) (ie the Shop 4 Yard) on G/F (“Canopy UBW”). N

O O

P 38. On 30 May 2013, HCP replied to W&G’s letter dated 23 May P

2013 inter alia by (a) asking W&G to enlighten how the Waiver Clause in
Q Q
the Shop 4 Appendix10 could be an answer to their requisitions when such
R clause related exclusively to the Property but HCP’s requisitions related to R

the sub-division of G/F of Phase 2 of the Development of the Buildings,

S S

10
the appendix to the Shop 6 PASP also contained a Waiver Clause identical to that in
T T
the Shop 4 Appendix

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A A

(b) reiterating their requisitions, and (c) pointing out it would be a breach
B B
of clause 4 of section IV of the DMC if there was no document to evidence
C approval of the sub-division of the Property. C

D D
39. Further, HCP enclosed with such letter a copy of the RHL
E Report stating that some UBWs were found at the Property, and asked E

W&G to “enlighten [HCP] what step [D1] is going to take to reinstate the
F F
defect condition in order to ensure the Property would be sold free from
G encumbrance”. HCP also reserved the right to raise further requisitions, G

and to “…… put on record that [W&G] have not provided good title of the
H H
Property up to the present. [P] is not obliged to proceed with the
I completion of purchase of the Property unless and until good title of the I

Property had been proved”.

J J

K 40. On 30 May 2013, W&G replied inter alia as follows: K

L (a) The sub-division (of G/F of Phase 2 of the Development of the L

Buildings – see paragraph 35 above) was in accordance with the
M approved building plans from the BD (copy enclosed), and the then M
10 commercial units on G/F of Phase 2 and the then 7 units on C/F
N
were in existence before the DMC, so there was no further sub- N
division of shops/units. Further, the assignment plan (to be certified
by an Authorised Person and attached to the Assignment in respect of
O O
the Property) corresponded with the approved building plans.
P (b) As regards the internal layout of the Property, the Waiver Clause of P

the Shop 4 Appendix was applicable. But without prejudice to D1’s

Q rights under such clause, even if there was any unauthorised Q
alteration/structure (which W&G denied and put P to strict proof),
R there were cases that held the existence of minor/trivial unauthorised R
structure would not pose real risk to the title and would not enable the
S
purchaser to rescind.11 S

11
W&G referred to Queen Energy Ltd v Chan Shu Keung [2000] 3 HKLRD 152 and
T T
Gladson China Ltd v Lam Alexander Chen June [2001] 1 HKC 318

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A A

B (c) “As regards the “[UBWs]” in the [RHL Report], [W&G] reiterate that B
the [Waiver Clause] applies and [W&G] repeat [their] view stated in
C [(a)-(b)] above. [P] has accepted the present condition and [D1] has C
no obligation to take any reinstatement action.”
D D

E E
In such letter, W&G asserted (i) D1 had properly satisfied all HCP’s
F requisitions and had proved good title to the Property, and (ii) D1 was F

ready, willing and able to complete the sub-sale of the Property on the
G G
following day in accordance with the Shop 4 PASP.
H H

41. The completion of the sub-sale and sub-purchase of the Other

I I
Property took place on 31 May 2013. By an Assignment of such date
J among Max Rainbow as head vendor, D1 as confirmor/vendor and J

Yan Yau as sub-purchaser, and in consideration of $11,523,960 paid by

K K
Yan Yau to D1, Max Rainbow as beneficial owner and D1 as confirmor
L assigned and confirmed to Yan Yau the Other Property subject to and with L

the benefit of inter alia (a) the DMC, the Sub-DMC and the Sub-Sub-
M M
DMC of the Buildings insofar as they related to or affected the Other
N Property, and (b) the existing lettings/tenancies of the Other Property (if N

any) (“Shop 6 Assignment”). On 26 June 2013, the Shop 6 Assignment

O O
was registered at the Land Registry under memorial no 13062601140107
P dated 20 June 2013 that was prepared by HCP. P

Q Q
42. On 31 May 2013, the sub-sale and sub-purchase of the
R Property between D1 as confirmor/vendor and P as sub-purchaser fell R

through, but the sale and purchase of the Property between Max Rainbow
S S
as head vendor and D1 as purchaser were completed. By an Assignment of
T such date, and in consideration of $9,329,212.52 (being the apportioned T

U U

V V
 - 18 -
A A

consideration for the Property) paid by D1, Max Rainbow as beneficial

B B
owner assigned to D1 as purchaser the Property subject to and with the
C benefit of inter alia (a) the DMC, the Sub-DMC and the Sub-Sub-DMC of C

the Buildings insofar as they related to or affected the Property, and (b) the
D D
existing lettings/tenancies of the Property (if any) (“Shop 4 Assignment”).
E A floor plan signed by an Authorised Person showing the layout of G/F E

and C/F of Phase 2 of the Development of the Buildings was annexed to

F F
the Shop 4 Assignment (“Assignment Plan”).12 On 27 June 2013, the Shop
G 4 Assignment together with the Assignment Plan were registered at the G

Land Registry under memorial no 13062701440106 dated 26 June 2013

H H
that was prepared by W&G.
I I

43. As evident from the land search records of the Other Property
J J
and the Property, the Sub-Sub-DMC was signed/sealed on 31 May 2013
K and was registered with the Land Registry on 25 June 2013. K

L L
44. On 7 June 2013, W&G wrote to HCP stating P had failed (a)
M to pay the balance of the purchase price of $13,273,182 and (b) to M

complete the sub-purchase of the Property before 2:00pm on 31 May 2013

N N
in accordance with the Shop 4 PASP, and W&G had not received the
O balance of the purchase price from P even up to the time of such letter. O

W&G went on to say in such letter that because of P’s breach D1 as

P P
purchaser had to make last-minute legal/financial arrangements to take up
Q the Property from Max Rainbow as head vendor by way of the Shop 4 Q

R R

S 12
the Assignment Plan showed the sub-divided shops/units of G/F and C/F of Phase 2 S
of the Development of the Buildings, including the Other Property that comprised
Shop 6, Shop 6 Yard and Store 6, and the Property that comprised Shop 4, Shop 4
T T
Yard and Store 4

U U

V V
 - 19 -
A A

Assignment, and as a result extra costs/expenses were incurred. Such letter

B B
then stated as follows:
C C
“[W&G] are instructed by [D1] to hereby give [P] notice through
[HCP] that, unless [P] shall pay the balance of purchase price
D and complete the purchase of the [Property] within 21 days from D
the date of this notice (of which time shall be of essence), [D1]
will enforce its rights under the [Shop 4 PASP] to determine the
E E
[Shop 4 PASP], and to forfeit the sums paid by [P] to [D1] under
Clause 2(a) and (b) of the [Shop 4 PASP] by way of deposit.
F Upon determination of the [Shop 4 PASP], [D1] may proceed to F
resell the [Property] and recover from [P] any deficiency in the
resale price and all expenses incurred in connection with such
G G
resale.

H …… H

All [D1’s] rights under the [Shop 4 PASP], at common law, in

I equity or otherwise are expressly reserved.” I

J J
45. On 13 June 2013, P’s new solicitors Chak & Associates

K
(“C&A”) wrote to W&G (a) saying that as at the date for completion of the K
sub-purchase of the Property (ie 31 May 2013) and thereafter, D1 was in
L L
breach of the Shop 4 PASP by failing to prove good title of the Property, so

M P would not proceed with the completion of the sub-purchase of the M

Property, and (b) demanding D1 to return the Deposits P had paid for the
N N
sub-purchase of the Property within 7 days, failing which C&A had
O standing instructions to sue D1. O

P P
46. On 28 June 2013, W&G replied that they had answered all
Q requisitions raised by HCP,13 and that HCP had not raised further Q

requisitions after receipt of W&G’s letter dated 30 May 2013. W&G went
R R
13
including acceding to HCP’s alleged unreasonable requests such as sending certified
copies of the tenancy agreements (when copies thereof had been provided on
S 28 March 2013 and when W&G were only informed by HCP on 30 May 2013 that S
those copies were insufficient) and copies of approved building plans obtained from
the BD (even though they were not necessary for proving title given the production
T T
of a copy of the Assignment Plan prepared by an Authorised Person)

U U

V V
 - 20 -
A A

on to say it was on 31 May 2013 (ie the scheduled date for completion)
B B
that C&A sent a letter stating they had replaced HCP as P’s solicitors but
C without raising other requisitions, and nothing was heard further until C

C&A’s letter dated 13 June 2013. W&G went on to say as follows:

D D

“[W&G] would also like to point out that [P] was also the
E purchaser of Shop No 6 on the [G/F] of Phase 2 of the above E
estate (‘Shop 6’), who before completion nominated [Yan Yau] to
take up the Assignment thereof. From [W&G’s] company search,
F F
[W&G] note that [P] is the sole director of Yan Yau. [HCP]
representing Yan Yau, had raised similar requisitions as those in
G respect of the [Property] to which [W&G] sent the same replies G
as those of the [Property]. Yan Yau had accepted title to Shop 6
and completed the purchase thereof on 31/5/2013.
H H
[W&G] reiterate [D1’s] instructions as set out in [their] letter to
I
[C&A] dated 7 June 2013. I

[W&G] also reiterate that all [D1’s] rights under the [Shop 4
J PASP] in respect of the [Property] made between [W&G’s and J
C&A’s] respective clients dated 28/11/2013, including the right
to claim damages against [P] for breach of contract, are hereby
K expressly reserved. K

L
Should [P] choose to institute legal proceedings against [D1] for L
the refund of the deposit despite of [P’s] breach, [W&G] have
instructions to accept service. In any event, [D1] shall have no
M hesitation to claim all legal costs incurred in respect of [P’s] M
preposterous claim.”
N N

47. On 3 July 2013, W&G wrote to C&A referring to their letter

O O
dated 7 June 2013, and noting P had not made good her default. W&G
P stated that P’s breach (in failing to pay the balance of the purchase price P

and/or to complete the sub-purchase of the Property within 21 days from

Q Q
the date of W&G’s letter dated 7 June 2013, which time was of the
R essence) amounted to repudiation of the Shop 4 PASP, which repudiation R

was accepted by D1 as vendor. W&G on D1’s instructions gave notice to P

S S
through C&A “under common law (i) to determine the [Shop 4 PASP]
T forthwith; and (ii) to forfeit absolutely the [Deposits] …… already paid by T

U U

V V
 - 21 -
A A

[P] under the [Shop 4 PASP]. The [Shop 4 PASP] is thus determined and
B B
the [Deposits are] forfeited accordingly”. W&G therefore claimed D1 was
C entitled to re-sell the Property without further notice to C&A and/or P, and C

in the event of a resale of the Property, any deficiency in price and all
D D
expenses incurred in connection with such re-sale shall be recoverable
E from P by D1 as and for liquidated damages. E

F F
48. On 5 July 2013, D1 registered W&G’s letters dated 7 June and
G 3 July 2013 to C&A with the Land Registry under memorial G

no13070601160121 dated 4 July 2013 that was prepared by W&G.

H H

I 49. D2 claimed neither D1 nor P paid to D2 any commission as I

provided in the Shop 4 PASP.

J J

K 50. On 14 March 2014, C&A wrote to D2 in relation to D2’s K

invoice dated 30 November 201214 stating that “…… due to the

L L
misrepresentation (fraudulent, negligent or otherwise) and/or material non-
M disclosure of defects in the [Property] on [D2’s] part (in respect of M

unauthorized structures, etc), [D2’s] request for payment in the sum of

N N
HK$56,300.00 is hereby declined. In fact, [P] is considering taking legal
O proceedings against the Vendor and, if the circumstances require, will join O

[D2] as a co-defendant or a third party (as the case may be). In the
P P
meantime, all [P’s] rights and remedies against [D2] are hereby reserved”.
Q Q

51. On 19 May 2014, C&A wrote to D2 referring to their letter

R R
dated 14 March 2014, and stating they were instructed to put on record that
S S

T T
14
it was unclear from such letter what was the subject matter of the invoice

U U

V V
 - 22 -
A A

before the Shop 4 PASP was signed (a) there was never inspection of the
B B
interior condition of the Property, and (b) D2’s estate agent represented to
C P the “as is” basis in the Shop 4 PASP referred to the external and not the C

internal condition of the Property. “If [D2] deem otherwise, please kindly
D D
revert within seven (7) days from the date of this letter. In the meantime,
E all [P’s] rights and remedies are hereby reserved”. E

F F
II. PARTIES’ RESPECTIVE CASE
G G
52. As between P and D1, P claimed she was unwilling to
H complete the sub-sale and sub-purchase of the Property due to (a) the H

existence of the Alleged UBWs at the Property, and (b) W&G’s allegedly
I I
unsatisfactory answers to HCP’s requisitions in relation to the Alleged
J UBWs.15 D1 denied liability, putting P to proof of (a) above but denying J

(b) above. D1 further alleged P was precluded by the Waiver Clause in the
K K
Shop 4 Appendix from complaining about the Alleged UBWs and from
L refusing to complete the sub-purchase of the Property on such basis. L

M M
53. As between P and D2, D2 claimed that since May 2011 P had
N engaged D2 to be her estate agent for purchase(s) and re-sale(s) of various N

commercial/industrial units. P claimed that by an oral agreement with Tong

O O
on behalf of D2 in/about October or November 2012, P engaged D2’s
P services as estate agent to seek vendor(s) willing and able to sell P

commercial unit(s) to her for commission payable by her at approximately

Q Q
1% of the purchase price in the event D2 introduced such vendor(s) to her
R (“Agency Agreement”). P’s claim against D2 was based on (a) D2’s R

S S

15
see HCP’s requisitions at para 39 above and W&G’s answers thereto at para 40
T T
above

U U

V V
 - 23 -
A A

alleged breach of contract,16 (b) D2’s alleged breach of duty of care, (c)
B B
D2’s alleged breach of fiduciary duties, and (d) Tong’s alleged
C misrepresentation (for which D2 was allegedly vicariously liable) as to the C

existence of UBWs at the Property and the meaning/effect of the Waiver

D D
Clause in the Shop 4 Appendix (see the 1st and 2nd Representations in
E paragraph 75 below). D2 denied (i) Tong ever made such alleged E

representations to P, (ii) D2 knew or ought to have known the Property had

F F
illegal structures and/or UBWs, and/or (iii) D2 had been reckless as
G alleged or at all. G

H H
(a) Site inspections
I I
54. P claimed that several days before 28 November 2012, D2’s
J Tong accompanied her to view the exterior of the shops/units at inter alia J

G/F and C/F of Phase 2 of the Development of the Buildings, so P viewed

K K
the exterior of the Property (of which Shop/Yard 4 was then occupied by
L tenants – see paragraph below), but she was unable to gain access to and/or L

to inspect the interior of the Property. P further claimed D2/Tong did not
M M
make arrangements with such tenants for her to access/inspect the interior
N of the Property before she signed the Shop 4 PASP, so she could/did not N

know there were alterations in such shops/units.

O O

P 55. The occupancy status of the Other Property and the Property P

shown in the Price List referred to in paragraph 56(d) below was as

Q Q
follows:
R R
鋪 樓價 內部 總面 分 租客 租金 租期 總租金 呎租 建議售價 建議
號 樓層 積 鋪 (較為進取 呎價
面積 估計價)
S IFA* S

16
ie the oral Agency Agreement, and the written Shop 4 PASP signed by P as
T T
purchaser and Tong on behalf of D2 as estate agent

U U

V V
 - 24 -
A A
(sq
ft)
B … B
4 G/F 1,511 2,649 4A 李曉梅 $14,500 4.3.2012-3.3.2012 $32,500 $12.3 16,942,200 8200
4B Midland $18,000 18.10.2012-17.10.2014
Leasing
C (xx) Ltd C
M/F 1,138 M/F 交吉 - - 4000
…
6 G/F 1,142 2,002 G/F Ho $19,800 15.3.2011-14.3.2013 $19,800 $9.9 12,804,400 8200
D Cheung
D
Ltd
M/F 860 M/F 交吉 - - 4000
E E

F F
56. On the other hand, D2 averred that:
G (a) In/about mid-November 2012, D1 engaged D2 to be its estate agent G
for seeking confirmor sub-sales of the shops/units at inter alia G/F
H
and C/F of Phase 2 of the Development of the Buildings, which was H
part of the Head Property that D1 purchased from Max Rainbow
under the Head PASP with completion of such purchase to take place
I I
on 31 May 2013.
J (b) In/about mid-November 2012, D2 through its senior account J

manager Tong asked P whether she would be interested to purchase

K from the confirmor/vendor shop(s)/unit(s) at inter alia G/F and C/F K
of Phase 2 of the Development of the Buildings, and P replied in the
L affirmative. L

M (c) On/about 20 November 2012, Tong accompanied P to inspect various M

shops/units at inter alia G/F and C/F of Phase 2 of the Development
of the Buildings.
N N

(d) During such inspection on 20 November 2012, Tong provided P with

O O
the following documents supplied by D1 to D2: (i) copy floor plans
of the shops/units at Phases 1 and 2 of the Development of the
P Buildings (C/971-978, “Floor Plans”),17 and (ii) copy price list of P
those shops/units which also set out the particulars of the then known
Q existing lettings/tenancies (C/986, “Price List”).18 I pause to note it Q
was common ground that P countersigned the Phase 2 Floor Plans.
R R
17
Mr Lau, counsel for P, confirmed D2 gave the Floor Plans to P for her intended
purchase of the Other Property, which meant P already had the Floor Plans before
S she signed the Shop 4 PASP S
18
Mr Lau confirmed that D2 gave the Price List to P for her intended purchase of the
Other Property, which meant P had the Price List before she signed the Shop 4
T T
PASP

U U

V V
 - 25 -
A A

B (e) As most of the shops/units on G/F and C/F of Phase 2 of the B

Development of the Buildings were tenanted, the inspection on
C 20 November 2012 “took place outside those shops/units”, but P did C
not ask Tong to arrange any inspection of the interior of those
D shops/units. D

E
(f) P knew or ought to have known from such inspection on E
20 November 2012 and also from the Floor Plans and the Price List
that there had been alterations to the shops/units (or to some of them)
F F
at G/F and C/F of Phase 2 of the Development of the Buildings,
including “internal partitioning and alterations in the locations of the
G staircases leading from [G/F] to the shop(s)/unit(s) on [C/F]”. G

H (g) After such inspection on 20 November 2012, P informed Tong she H

was interested to purchase Shop No 5 on G/F (“Shop 5”) and Store
I No 5 on C/F (“Store 5”) of Phase 2 of the Development of the I
Buildings, which were subject to tenancy, but Tong later found out
J
from D1 that Shop 5 and Store 5 had already been sub-sold, so he J
informed P accordingly.
K K
(h) On/about 21 November 2012, P informed Tong she was interested to
purchase the Other Property (of which Shop/Yard 6 was subject to
L tenancy) for the price of $11,523,960 with completion on/before L

2:00 pm on 31 May 2013, so Tong prepared the Shop 6 PASP that

M included an appendix (“Shop 6 Appendix”). M

N (i) At a meeting between Tong and P on/about 21 November 2012, Tong N

explained to P and went through with her the terms of the Shop 6
O
PASP including the terms in the Shop 6 Appendix (that were O
identical to those in the Shop 4 Appendix).
P P
(j) Tong informed P that (i) D1 drafted the terms in the Shop 6 Appendix
for incorporation as an appendix to each PASP in respect of its
Q confirmor sub-sales of the shops/units on inter alia G/F and C/F of Q

Phase 2 of the Development of the Buildings so as to conform with

R the terms of the Head PASP, and (ii) D1 would not sign any such R
PASP without such terms/appendix, so Tong asked P whether she
S needed to seek advice/assistance from independent professional(s) S
referred to in the Waiver Clause of the Shop 6 Appendix.
T T

U U

V V
 - 26 -
A A

(k) P did not require advice/assistance from independent professional(s),

B so she signed the Shop 6 PASP (including the Shop 6 Appendix), and B
delivered to Tong her cheque for $500,000 drawn in favour of D1 for
C payment of the initial deposit for her sub-purchase of the Other C
Property.
D D
(l) Tong for and on behalf of D2 signed the Shop 6 PASP, which was
E
subsequently signed by D1 and dated 22 November 2012.19 E

(m) On/about 28 November 2012, Tong asked P whether she was also
F F
interested to purchase the Property, and P replied in the affirmative.

G (n) On/about 28 November 2012, Tong prepared the Shop 4 PASP G

(including the Shop 4 Appendix), and informed P the standard terms

H of the Shop 4 PASP (including those of the Shop 4 Appendix) were H
the same as those of the Shop 6 PASP (including the Shop 6
I Appendix). Indeed, the Waiver Clause of the Shop 4 Appendix was I
identical to the Waiver Clause of the Shop 6 Appendix. P signed the
J
Shop 4 PASP (including the Shop 4 Appendix) after reading the same J
herself, and she delivered to Tong her cheque for the sum of
$300,000 drawn in favour of D1 in payment of the initial deposit for
K K
the sub-purchase of the Property.

L (o) Tong for and on behalf of D2 signed the Shop 4 PASP, which was L

subsequently signed by D1 and dated 28 November 2012.

M M

N N

57. P averred (but Ds did not admit) that at/about the end of
O O
December 2012 D1 arranged site inspection for P who gained access to
P Store 4 but not Shop/Yard 4 (which was then occupied by tenants). P P

further averred (but Ds did not admit) that at RHL’s site inspection on 24
Q Q
May 2013, RHL’s surveyor only gained access to Unit 4(A) (which was
R occupied by a hardware store) and Store 4 (see paragraph 36 above), but R

S 19
P and D1 did not sign any FASP, but proceeded to completion of the sub-sale and S
sub-purchase of the Other Property on 31 May 2013 pursuant to the Shop 6 PASP
whereupon Yan Yau (nominated by P to take up the assignment of the Other
T T
Property) became the registered owner of the Other Property

U U

V V
 - 27 -
A A

not Unit 4(B) (which was occupied by Midland Leasing (xx) Ltd
B B
(“Midland Leasing”)20).
C C

(b) Sub-sale and sub-purchase of the Property

D D
58. P claimed (but Ds did not admit) it was an implied term of the
E E
Shop 4 PASP that D1 shall (a) give good title to the Property in accordance
F with section 13A of the Conveyancing and Property Ordinance Cap 219 F

(“CPO”) and (b) prove and show good title to the Property in accordance
G G
with section 13 of the CPO at its own expense, and D1 shall at like
H expense make and furnish to P such certified/attested copies of any deeds H

or documents of title, wills and matters of public record as might be

I I
necessary to complete such title.
J J

59. P averred the Partition Clause of the Shop 4 Appendix

K K
disclosed the presence of an unauthorised internal partition wall that
L divided Shop 4 into Unit 4(A) and Unit 4(B), but the Shop 4 PASP did not L

disclose the Alleged UBWs, so P claimed D1 was in breach of (a) the

M M
implied covenant to give good title and (b) Clause 4 of the Shop 4 PASP by
N failing to disclose all defects in title in respect of the Property of which it N

was aware.
O O

P 60. P further averred D1 was not entitled to rely on the Waiver P

Clause in the Shop 4 Appendix to avoid answering HCP’s requisitions

Q Q
raised by letters dated 8 and 30 May 2013 (see paragraphs 28-29 and 38-39
R above), but W&G by their replies dated 23 and 30 May 2013 failed to R

disclose the Alleged UBWs and wrongfully relied on the Waiver Clause
S S

T T
20
see the Price List and para 55 above

U U

V V
 - 28 -
A A

with respect to the presence of the Alleged UBWs (see paragraphs 33 and
B B
40 above).
C C

61. P therefore claimed that:

D D

(a) notwithstanding repeated requests, D1 failed to answer P’s

E requisitions concerning the presence of any UBWs (including the E
Alleged UBWs) satisfactorily or at all;
F F
(b) by virtue of the presence of the Alleged UBWs which at all material
G times D1 was aware but repeatedly failed to disclose to P, D1 was not G
entitled to and was precluded from relying on the Waiver Clause in
H
the Shop 4 Appendix to prevent P from objecting to the title; H

(c) further or alternative to (b) above, D1’s duty to give good title was
I I
independent of such Wavier Clause;

J (d) further or alternative to (c) above, pursuant to the Shop 4 PASP, P had J

not waived her right to raise requisitions concerning any UBWs;

K K
(e) further or alternative to (d) above, the language of such Waiver Clause
L was not sufficient to preclude P from objecting to title; L

M
(f) further or alternative to (e) above, such Waiver Clause being M
inconsistent with Clause 4 of the Shop 4 PASP had no effect or was
not binding;
N N

(g) since D1 failed to show good title to P, P was entitled not to complete
O the sub-purchase of the Property pursuant to the Shop 4 PASP. O

P P

Q Q
62. Further/alternatively, P averred (a) the Wavier Clause of the
R Shop 4 Appendix (which should be construed contra proferentum) was R

inconsistent with the implied term of the Shop 4 PASP that good title had
S S
to be shown and proved, so P was not debarred from raising requisitions in
T respect of Alleged UBWs, and (b) D1 wrongfully refused to answer T

U U

V V
 - 29 -
A A

requisitions on title in relation to such matters, which requisitions

B B
remained outstanding as at the date for completion of the sub-sale and sub-
C purchase of the Property. C

D D
63. On the other hand, D1 denied P’s case:
E E
(a) D1 did not admit the Property had illegal structures not authorised by
the Building Authority (“BA”), but if and insofar as necessary, D1
F F
averred (i) the trivial or minor Alleged UBWs would not give rise to
any real risk of enforcement and/or would not enable P to rescind the
G Shop 4 PASP, but (ii) even if the presence of the Alleged UBWs had G

the effect of causing any defect in title (which D1 denied), such effect
H was de minimus. H

I (b) D1 claimed P’s requisitions in relation to the Alleged UBWs did not I
go to the root of its title to the Property, and reiterated (i) it did not
J
have knowledge and/or it was not aware there was any illegal J
structure at the Property, and (ii) the Waiver Clause of the Shop 4
Appendix was included in the Shop 4 PASP to provide for the
K K
possibility that there was.

L (c) D1 claimed P should have discovered the Alleged UBWs much earlier L

because (i) P had inspected the Property under the arrangement and in
M the company of D2’s Tong before she signed the Shop 4 PASP, (ii) the M
Alleged UBWs were patent upon any inspection of the Property, and
N (iii) P had an opportunity to seek professional advice in respect of the N
Property before she signed the Shop 4 PASP.21
O 21
in reply to D1’s averments, P denied she could have discovered the Alleged UBWs O
much earlier: (a) P was provided with an opportunity to only inspect the exterior of
P the Property, and she did not inspect the interior of the Property before she signed P
the Shop 4 PASP, (b) P was not professionally qualified to ascertain the
existence/nature of the Alleged UBWs upon any inspection of the Property, so the
Q Alleged UBWs were not patent upon any such inspection, (c) it was impossible for P Q
to discover the Alleged UBWs, so she relied on D1/D2 to disclose them, (d) whether
R
the Alleged UBWs were patent upon any inspection of the Property would not R
absolve D1 from proving and showing good title to the Property, (e) P did not have
any opportunity to seek professional advice in respect of the Property before she
S signed the Shop 4 PASP, and she only discovered the Alleged UBWs from the RHL S
Report on 27 March 2013, and (f) insofar as it was suggested professional advice
referred to in para 63(c)(iii) above meant D2’s professional advice, D2 failed to
T T
provide P with any information regarding the Alleged UBWs despite P’s express

U U

V V
 - 30 -
A A

B (d) Further, if and insofar as necessary, D1 would rely on (i) Clause 6 of B

the Shop 4 PASP that provided D1 was selling as confirmor and that
C the Shop 4 PASP was subject to the terms of the Head PASP dated C
9 December 2012 made between D1 and Max Rainbow in respect of
D the Head Property (including the Property), (ii) the Head Nomination D
by which Ho nominated D1 to be the assignee of the Head Property
E
under the Head PASP, and (iii) Clause 27 of the Head PASP that E
provided “[Ho or his nominee] has accepted the physical condition of
the [Head Property] even if any unauthorized or illegal structure or
F F
alteration exists in the [Head Property] and/or any part or parts
thereof; and [Ho or his nominee] shall …… have no right to rescind
G the agreement …… for the aforesaid reason”.22 G

H H

I I
64. Further, D1 disagreed it failed to answer or satisfactorily

J answer P’s purported requisitions on title in respect of the Alleged UBWs, J

and claimed it was not obliged to deal with such requisitions by virtue of
K K
the Waiver Clause in the Shop 4 Appendix, so P could not refuse to
L complete the sub-purchase of the Property under the Shop 4 PASP: L

M (a) D1 claimed such Waiver Clause was an express, clear and M

unequivocal provision that excluded liability for “any” (任何) UBWs
N in the Property and “any” (任何) defect in title arising from “any” (任 N
何) illegal structures.23
O O

request
P P
22
in reply to D1’s averments, P claimed (a) the effect of Clause 6 of the Shop 4 PASP
was not that she had to accept the physical condition of the Property, but (b) if
Q Clause 6 of the Shop 4 Appendix had such effect (which P denied), then by virtue of Q
the Control of Exemption Clauses Ordinance Cap 71 (“CECO”) and/or the
Misrepresentation Ordinance Cap 284 (“MO”), D1 could not rely on Clause 6 of the
R Shop 4 PASP and/or Clause 27 of the Head PASP to restrict or limit its liability R
since such clauses were unreasonable in the circumstances
S 23
“盡管該鋪位存有任何未經屋宇署授權改建或加建部分及盡管屋宇署或其他政 S
府部門有權對任何未經授權改建或加建部分做出追究, 而令任何未經授權改建
或加建部分構成上述物業的物權瑕疵, 買方仍願意接受該鋪位業權 ……” (my
T T
emphasis)

U U

V V
 - 31 -
A A

(b) D1 denied such Waiver Clause (ie a general clause pertaining to any
B and all illegal structures that might affect title to the Property) was B
inconsistent with the Partition Clause in the Shop 4 Appendix (ie a
C specific clause in relation to the internal partition wall at Shop 4), and C
claimed that the specific Partition Clause by its nature would not
D qualify the general Waiver Clause. D

E
(c) Further, D1 claimed such Waiver Clause expressly addressed the E
possible legal consequences of any presence of UBWs at the Property,
ie the possibility that the BD or other Government authorities might
F F
take enforcement actions that might lead to defect in title.24

G (d) D1 averred (i) such Waiver Clause was written in easily understood G
Chinese which P was and/or was expected to be familiar, (ii) P and D1
H were of equal bargaining power, (iii) clauses such as the Waiver H
Clause that excluded the purchaser’s right to complain about UBWs
I were commonplace in Hong Kong, (iv) P was experienced in property I
transactions regarding similar properties, and (v) P had completed the
J
sub-purchase of the Other Property (located near to the Property) J
from D1 pursuant to the Shop 6 PASP (that contained a term identical
to the Waiver Clause of the Shop 4 Appendix) at the price of
K K
$11,523,960.25

L (e) D1 therefore claimed P entered into the Shop 4 PASP with full L
knowledge not only of the possibility of there being, as a matter of
M fact, UBWs at the Property in addition to that stated in the Partition M
Clause of the Shop 4 Appendix, but also the possible legal
N consequences and particularly the implications on title of the Property N
caused by the existence of any such UBWs at the Property.26
O O
(f) D1 also (i) claimed it had already discharged its duty to make full and
frank disclosure about the Property insofar as it had any knowledge,
P P
(ii) denied any knowledge of the existence of the Alleged UBWs, (iii)

Q
24
“屋宇署或其他政府部門有權對任何未經授權改建或加建部分做出追究 , 而令 Q
任何未經授權改建或加建部分構成上述物業的物權瑕疵”
25
in reply to D1’s averments, P claimed that by virtue of the CECO and/or the MO,
R R
D1 was precluded from relying on the Waiver Clause of the Shop 4 Appendix to
restrict/limit its liability since it would be unreasonable in the circumstances, and
S that the following were irrelevant: (a) P’s alleged experience in property transactions S
regarding any properties whether similar or not, (b) P’s purchase of the Other
Property, and (c) the Shop 6 PASP and its contents
T T
26
in reply to D1’s averments, P denied having any such knowledge

U U

V V
 - 32 -
A A

averred Clause 6 of the Shop 4 PASP stipulated D1 was to sell the

B Property as confirmor and D1 was not aware of any illegal structure B
in the Property, so (iv) such Waiver Clause was included in the Shop 4
C PASP to provide for the eventuality that there was any illegal structure C
at the Property.
D D
(g) D1 therefore asserted (i) such Waiver Clause in the Shop 4 Appendix
E
gave rise to a waiver in relation to any possible title defect that might E
be caused by the Alleged UBWs, which were in any event trivial and
would not give rise to any real risk of enforcement, and (ii) by virtue
F F
of such Waiver Clause P had waived all requisitions on any/all illegal
structures at the Property with full knowledge of the legal
G consequences of such waiver.27 G

H (h) On such basis, D1 claimed P was obliged to complete the sub- H

purchase of the Property pursuant to the Shop 4 PASP.
I I

J J

65. D2 pleaded that the meaning/effect of the Waiver Clause in

K K
the Shop 4 Appendix was P acknowledged:
L L
(a) she should satisfy herself of the existing structural condition, physical
condition and internal partition of the Property before she signed the
M M
Shop 4 PASP;

N (b) she should seek advice/assistance from independent professional(s) N

before she signed the Shop 4 PASP;
O O
(c) if the Property had any unauthorised alterations/additions, the BD or
P other Government authorities would be entitled to take action(s) on P
the same, which would constitute defect in title in respect of the
Q
Property; Q

(d) she had accepted title in respect of the Property even if there were any
R R
such unauthorised alteration or addition, and had agreed not to raise
any requisition/objection or to seek any compensation from D1 in
S respect thereof. S

27
in reply to D1’s averments, P denied having any knowledge of any legal
T T
consequences of the Waiver Clause

U U

V V
 - 33 -
A A

B B

C C
(c) P’s claim against D1
D D
66. P claimed that by reason of the matters in paragraphs 58-62
E above, D1 was in breach or in anticipatory breach of the Shop 4 PASP in E

failing to (a) satisfactorily answer requisitions on title raised by HCP in

F F
respect of the Property, and (b) show/prove good title to the Property in
G accordance with the Shop 4 PASP, and by reason of the matters in G

paragraph 52 above, P was entitled to return of the Deposits paid under the
H H
Shop 4 PASP on the ground of total failure of consideration.
I I

67. P claimed that on 13 June 2013 she (through C&A) accepted

J J
D1’s breach or anticipatory breach of the Shop 4 PASP and demanded
K refund of the Deposits (see paragraph 45 above), but on 3 July 2013 D1 K

(through W&G) wrongfully forfeited the Deposits (see paragraph 47

L L
above). P averred that by reason of D1’s breach or anticipatory breach of
M contract, she was entitled to refund of the Deposits in the sum of M

$1,524,798, and to claim for loss/damages being wasted expenditure

N N
incurred in the course of investigating title to the Property (ie $7,000 paid
O or payable in respect of the RHL Invoice). O

P P
68. P did not plead any cause of action against D1 based on
Q misrepresentation even though she claimed to have been misled by the Q

Waiver Clause. Mr Lau, counsel for P, confirmed P’s claim against D1

R R
essentially rested on D1’s failure to sufficiently answer P’s requisitions, ie
S whilst D1 disclosed the existence of the partition wall at Shop 4, it did not S

T T

U U

V V
 - 34 -
A A

disclose the existence of the Alleged UBWs, so it was said D1 could not
B B
rely on the Waiver Clause of the Shop 4 Appendix.
C C

69. On the other hand, D1 denied P’s allegations, and claimed that
D D
(a) on 13 June 2013 P (through C&A) wrongfully demanded the refund of
E the Deposits that P had paid under the Shop 4 PASP and wrongfully E

repudiated the Shop 4 PASP, and (b) on 3 July 2013 D1 (through W&G)
F F
properly forfeited the Deposits. D1 averred it was P who was in breach of
G the Shop 4 PASP, and who wrongfully refused/failed to complete the sub- G

purchase of the Property on the basis of the requisitions which she raised
H H
concerning the Alleged UBWs but which in fact she was not entitled to
I raise. I

J J
(d) P’s claim against D2
K K
70. P claimed that in order to give business efficacy and by virtue
L of the relationship between P and D2, it was an implied term of the Agency L

Agreement that (a) D2 would (i) comply with P’s instructions and/or (ii)
M M
use all reasonable endeavours or all due care and skill to do so, and/or (b)
N D2 owed P duty of care and/or fiduciary duty to the same effect. D2 N

admitted it owed P duty of care that a reasonable estate agent would owe to
O O
his/her client.
P P

71. As for P’s claim against D2 for breach of contract, P averred

Q Q
D2 wrongfully and in breach of the Agency Agreement:
R R
(a) failed to provide P at her express request information concerning the
S
Alleged UBWs; S

(b) failed to ensure its employee Tong provide at P’s express request
T T

U U

V V
 - 35 -
A A

information concerning the Alleged UBWs;

B B
(c) failed to arrange inspection of and accompany P to inspect the interior
C of the Property before P signed the Shop 4 PASP; C

D (d) failed to explain to P the terms of the Shop 4 PASP and to ensure P D
was made fully aware of her rights and obligations under such
E
contract (particularly the effect of the Waiver Clause of the Shop 4 E
Appendix) when the Shop 4 PASP/Appendix were signed in the
absence of legal representatives acting for P;
F F

(e) failed to ensure Tong be refrained from making misrepresentation

G concerning the existence/status of the Alleged UBWs (see the G

1st Representation referred to in paragraph 75 below).

H H

I I

72. As for P’s claim against D2 for breach of duty of care, P

J J
further/alternatively averred D2 owed P a common law duty of care to act
K with reasonable care and skill expected of an estate agent (a) to provide K

services/opinions based on knowledge, training, qualifications and

L L
experience in the real estate business, (b) to provide services to P in the
M course of its business with honesty, fidelity and integrity, (c) to exercise M

due care and due diligence in fulfilling its duty as an agent of P, and (d) to
N N
ensure P was protected at all material times against fraud,
O misrepresentation or any other unethical practices in connection with the O

sub-sale and sub-purchase of the Property. P claimed D2 failed to exercise

P P
any or any reasonable care and skill expected of an estate agent, and
Q Q
instead it was negligent and in wrongful breach of the aforesaid duty of

R
care (see paragraph 71 above and paragraphs 76-77 below). R

S 73. P also claimed that in breach of the duty of care and/or in S

breach of the Agency Agreement D2 failed to (a) use reasonable diligence

T T

U U

V V
 - 36 -
A A

and/or due care/skill to make suitable enquiries, (b) disclose the Alleged
B B
UBWs to her, and (c) stop her from entering into the Shop 4 PASP without
C deletion of the Waiver Clause of the Shop 4 Appendix (especially as the C

facts stated in such clause were false/untrue or alternatively inaccurate /

D D
misleading in that D2/Tong well knew P did not inspect the interior of the
E Property before she signed the Shop 4 PASP – see paragraph 54 above). E

F F
74. As for P’s claim against D2 for breach of fiduciary duties, P
G further/alternatively averred that such fiduciary duties were implied by law G

by reason of the nature of the relationship between P and D2, and at all
H H
material times during the term of its agency D2 owed P (a) duties of
I fidelity, loyalty and good faith, and (b) other duties as referred to in I

paragraph 72(a)-(d) above, but D2 was wrongfully in breach of such

J J
fiduciary duties (see paragraph 71 above and paragraphs 76-77 above).
K K

75. P claimed that during inspection of the exterior of the

L L
Property before 28 November 2012 (see paragraph 54 above), she could
M not gain access to view the interior of the Property, so she specifically M

asked Tong whether there was any UBW in the Property to which he
N N
st
replied there was none (“1 Representation”). P also claimed that at the
O time when she signed the Shop 4 PASP (including the Shop 4 Appendix to O

which Tong appended his signature for and on behalf of D2), Tong
P P
explained to her (a) the provisions therein (including the Wavier Clause in
Q the Shop 4 Appendix) were standard terms, and (b) P’s right to demand D1 Q

R
to prove/give good title in respect of the Property would not be R
nd
circumscribed (“2 Representation”).
S S

T T

U U

V V
 - 37 -
A A

76. But P claimed at no time or at all did D2/Tong tell her that by
B B
agreeing to the Waiver Clause in the Shop 4 Appendix, she would risk
C waiving her right to raise objection to title in respect of the Property C

concerning UBWs, including the Alleged UBWs, even though D2 with its
D D
experience in relation to sale and purchase of commercial/other properties
E would or ought to have known that by enticing P to enter into and sign the E

Shop 4 PASP P could be compelled to purchase the Property with

F F
defective/imperfect title.
G G

77. P averred that:

H H

(a) it was incumbent upon D2/Tong as professional agents whom she

I I
engaged to act on her behalf to explain to her the full meaning/effect
of such Waiver Clause before she entered into the Shop 4 PASP,
J especially when Tong knew or ought to have known she would rely J
on him and would be induced thereby to sign the Shop 4 PASP;
K K
(b) Tong was in breach of the duty of care for which D2 was vicariously
L liable by failing to explain to P (i) the meaning of the words in the L
Waiver Clause, and (ii) the Waiver Clause mis-stated inter alia the
fact she inspected the Property (interior or otherwise) (see
M M
paragraphs 73 and 75-76 above);
N N
(c) she did act on the 1st and 2nd Representations (collectively,
“Representations”) and was induced thereby to sign the Shop 4 PASP
O and to pay the Deposits when in truth and fact the Representations O
were untrue/false or inaccurate/misleading;
P P
(d) P accepted D1’s breach of the Shop 4 PASP when on 13 June 2013
Q she demanded D1 to refund the Deposits (see paragraph 67 above). Q

R R

S 78. So P claimed she suffered loss/damages by reason of D2’s S

breach of contract (ie the Agency Agreement), breach of common duty of

T T

U U

V V
 - 38 -
A A

care, breach of fiduciary duties and/or misrepresentation: (a) the Deposits

B B
she paid to D1 in the sum of $1,524,79828 or damages in such sum or such
C other sum to be assessed, and (b) wasted expenditure incurred in the course C

of investigating title in respect of the Property (ie $7,000 paid or payable in

D D
respect of the RHL Invoice) to be assessed.
E E

79. On the other hand, D2 referred to the matters in paragraph 56

F F
above, and denied Tong/D2 made the Representations. D2 claimed
G D2/Tong properly discharged their duty of care owed to P and were not G

negligent, and P agreed to the terms of the Shop 4 PASP (including those
H H
of the Shop 4 Appendix) and signed such contract without relying on any
I representation by D2/Tong as alleged or at all. In any event, it was said I

Tong and P well knew the meaning/effect of the Waiver Clause in the
J J
Shop 4 Appendix.
K K

(e) Reliefs P sought against D1

L L

80. P sought the following reliefs against D1:

M M

(a) a declaration that D1 was in repudiatory breach of the Shop 4 PASP

N by inter alia having wrongfully forfeited a sum of $1,524,798.00 N

being the Deposits and part payment of the purchase price that P had
O paid to D1 under the Shop 4 PASP; O

P (b) a declaration that P was not precluded from raising requisitions P

concerning the presence of any UBWs, and that such requisitions had
Q not been satisfactorily answered by D1; Q

(c) a declaration that D1 failed to prove good title to the Property

R R
pursuant to the Shop 4 PASP;
S S
(d) an order that D1 do repay to P the sum of $1,524,798.00 being the
28
P claimed she accepted D1’s breach of the Shop 4 PASP on 13 June 2013 when she
T T
demanded D1 to refund the Deposits (see para 67 above)

U U

V V
 - 39 -
A A

Deposits and part payment of the purchase price that P had paid to D1
B under the Shop 4 PASP; B

C (e) a declaration that as security for the sum due from D1 under (d) C
above, P was entitled to an equitable lien on such interest which D1
D possessed in the Property; D

E
(f) further/alternatively to (d) above, damages.29 E

F F

G (f) P’s claim against D2 G

H 81. P claimed against D2 for inter alia damages (see footnote 29 H

above).
I I

J (g) D1’s counterclaim against P J

K
82. D1 repeated its defence to P’s claim, and counterclaimed K
against P for a declaration that the Shop 4 PASP was terminated by P’s
L L
repudiatory breach and the Deposits paid thereunder were validly forfeited

M by D1. M

N N
(h) D2’s counterclaim against P

O 83. As for D2’s counterclaim against P, I need to explain the O

P
procedural history of the present action. P through C&A commenced the P
present action against Ds on 4 August 2014, and P’s Re-Re-Amended
Q Q
Statement of Claim was filed on 7 February 2017. D1 and D2 gave notice

R
of intention to defend by their respective solicitors W&G (D1) and Tai, R
Tang & Chong (D2). On 19 March 2015 D2 filed its Amended Defence
S S
29
Mr Lau confirmed that apart from the return of the Deposits the only other damages
P intended to claim were the sum of $7,000 being the amount of the RHL Invoice
T T
paid or payable by P

U U

V V
 - 40 -
A A

and Counterclaim, and on 19 June 2015 P filed her Reply to D2’s

B B
Amended Defence and Defence to D2’s Amended Counterclaim. On
C 14 April 2015, D1’s new solicitors Kok & Ha filed Notice of Change of C

Solicitors. On 7 March 2017 D1 filed its Amended Defence and

D D
Counterclaim against P and D2, and on 5 April 2017 P filed her Amended
E Reply to D1’s Amended Defence and Defence to D1’s Counterclaim. On E

1 June 2015, D2 filed its Defence to D1’s Counterclaim.

F F

G 84. On 26 May 2016, D2 filed Notice of Change of Name giving G

notice it had changed its name to Fung Sing Marketing Limited. Pursuant
H H
to the order of Master Chow dated 22 September 2016 and the certificate
I under Order 67 rule 6(1)(c) of the Rules of the High Court (“RHC”) filed I

by Tai Tang & Chong on 14 October 2016, such solicitors ceased to act for
J J
D2 in the present action. Thereafter, D2 failed to appear at the case
K management conference heard on 11 April 2017, so Master Ho K

provisionally struck out D2’s counterclaim against P pursuant to Order

L L
25 rule 1C(2) of the RHC.
M M

(i) D1’s counterclaim against D2

N N

85. D2 did not appear at the trial. From the various affidavits of
O O
service filed by P and D1, I am satisfied D2 had been properly served with
P the relevant papers, and it had been properly notified of the trial. On the 1st P

day of the trial, I granted leave for D1 to withdraw its counterclaim against
Q Q
D2 with no order as to costs.
R R

86. Thus, the remaining claims before the court at the trial were
S S
(a) P’s claim against Ds, and (b) D1’s counterclaim against P.
T T

U U

V V
 - 41 -
A A

III. ISSUES
B B

(a) Issues between P and D1

C C
87. P submitted the disputed issues between P and D1 were as
D D
follows:
E E
(a) whether D1 knew about the Alleged UBWs prior to the date for
completion of the Shop 4 PASP;
F F

(b) whether D1 failed to show P good title to the Property by failing to

G satisfactorily answer P’s requisitions about the Alleged UBWs; G

H (c) (i) whether D1 could rely on the Waiver Clause in the Shop 4 H
Appendix, and (ii) if so, whether D1 could refuse to answer P’s
I requisitions about the Alleged UBWs. I

J J

K 88. D1 submitted the present action essentially turned on the issue K

in paragraph 87(c)(i) above, ie (a) whether the Waiver Clause in Shop 4

L L
Appendix was drafted in such clear and wide terms that it would cover the
M Alleged UBWs and would alert a reasonable and ordinary purchaser of M

risks as to title of the Property, and (b) if so, whether such clause would
N N
preclude P from raising objections to D1’s title to the Property on the
O ground that the Alleged UBWs were or might have been UBWs. D1 O

accepted the issue in paragraph 87(c)(ii) above as to whether D1 was

P P
entitled to answer requisitions raised by P over the Alleged UBWs by
Q relying on the Waiver Clause in the Shop 4 Appendix would essentially Q

stand or fall with the court’s construction of such clause. Indeed, if the
R R
court’s determination on the construction of such clause under
S S
paragraph 87(c)(i) above would favour D1’s contention, D1 suggested the

T
issues in paragraph 87(a)-(b) above would essentially fall away. T

U U

V V
 - 42 -
A A

(b) Issues between P and D2

B B

89. P contended the essential issues between her and D2 were (a)
C C
whether D2 was in breach of the implied term under the Agency
D Agreement (see paragraphs 70-71, 73 and 76-77 above), (b) whether D2 D

was in breach of “…… the implied duty of care and/or the fiduciary duty
E E
owed to [P] under the [Agency Agreement] and [the Shop 4 PASP]” (see
F paragraphs 70, 72-74 and 76-77 above), and (c) whether D2 was liable to P F

for misrepresentation by way of the Representations made to P (see

G G
paragraphs 75-77 above).
H H

IV. WITNESSES, PLANS AND PHOTOGRAPHS

I I

(a) Witnesses
J J
90. P gave evidence at trial and adopted her witness statement
K K
dated 13 October 2016 (“P’s WS”) as part of her evidence, but she did not
L call other witness(es). Mr Wong Yee Ho Gabriel (“Wong”), D1’s property L

manager,30 gave evidence at trial on behalf of D1 and adopted his witness

M M
statement dated 18 August 2016 as part of his evidence. D2 was absent at
N the trial, and did not call any witness to give evidence. N

O O
91. Various aspects of this case fell to be decided on the facts, so
P the question of witnesses’ credibility/reliability became relevant. In P

assessing witnesses’ credibility, I bear in mind not only their demeanour in

Q Q
court but also the intrinsic value of their evidence upon considering the
R R
30
Wong explained that since about 2010 he worked at the property investment
department in Ho’s company, that many estate agents would try to interest Ho and/or
S his company to invest in real property, and that his main duties were to “…… 睇咗 S
個樓盤喇, 計咗裡面嘅數, 值唔值得投資喇, review 晒所有嘅, …… 負責係去到
過濾, 去到分析邊一啲項目係值得投資嘅, 或者係應該會係有好回報, 就介紹畀
T T
[Ho]”

U U

V V
 - 43 -
A A

totality of their evidence against the pleadings, chronology of events,

B B
documentary evidence and inferences based on inherent probabilities
C and/or undisputed facts.31 C

D D
92. Cross-examination of P was a revealing process, particularly
E when it required her to face intensive questioning over various topics/ E

documents. In my view, P did not present herself as a trusting purchaser

F F
who (as she alleged) was guided by Tong and who would sign PASP
G without appreciating the contractual significance of the terms therein. Her G

poor attempt to portray herself as an uninformed and inexperienced

H H
property investor failed to hide her commercial shrewdness and brashness
I as a dealer in properties with penchant for profit return upon quick I

turnaround purchase and sale notwithstanding known or suspected

J J
commercial/property risks. I find P was not above embroidering her
K testimony and/or sidestepping matters that she perceived might not be of K

advantage to her case. In my view, much of P’s evidence was self-serving

L L
and unreliable, and sought to put a positive but hopeless spin on the
M situation. In all, I find her to be an unsatisfactory witness, and except for M

the matters I accept in the discussion below, on balance I reject her

N N
evidence on the core matters.
O O

93. On the other hand, Wong presented himself as straightforward

P P
and open in his dealings and evidence. He was a confident executive and
Q 31
see Star Glory Investment Ltd v Kai Tuo (HK) Technology Ltd & ors Q
HCA3523/2002, Chung J (unreported, 13 August 2005) para 12 (see also Four Seas
R
Fishballs Co Ltd v Yeung Hung Sin & anor HCA4159/2003, Chung J (unreported, R
25 August 2006) para 20, Esquire (Electronics) Ltd v Hong Kong and Shanghai
Banking Corp Ltd [2007] 3 HKLRD 439, 494, Lee Fu Wing v Yan Po Ting Paul
S [2009] 5 HKLRD 524, Hui Cheung Fai & anor v Daiwa Development Limited & S
ors HCA1734/2009, DHCJ Eugene Fung SC (unreported, 8 April 2014) paras 76-83,
and Hua Tyan Development Ltd v Zurich Insurance Co Ltd [2012] 4 HKLRD 827,
T T
835-836)

U U

V V
 - 44 -
A A

witness, and was unshaken under cross-examination. He was clear in his

B B
recollection and was well-reasoned, and he gave credible and convincing
C account of the commercial considerations that drove the deals for D1 in C

respect of the Head Property as well as the Property. I find his evidence on
D D
the core matters honest and reliable.
E E

(b) Plans
F F

94. The Assignment Plan and the Floor Plans showing inter alia
G G
shops/units on G/F and C/F of Phase 2 of the Development of the
H Buildings were adduced at trial. From such plans, the following were H

evident:
I I

(a) There was a row of 10 street-level shops (including the adjoining

J Shops 4-6) on G/F of Phase 2 of the Development of the Buildings. J

The front parts of these shops faced Tsuen King Circuit. At the rear
K parts of each of Shops 4-6 was an open air yard that abutted the open K
passage or rear lane (“Rear Lane”).
L L
(b) On C/F above Shops 4-6 were Stores 4-6. Stores 4-6 were
M
correspondingly connected to Shops 4-6 by internal staircase. M

N N

O (c) Photographs O

P 95. The photographs adduced at trial were taken by D1 on 4 April P

2018 (C/958-962) and by P in late April to early May 2018 (C/963-967):

Q Q

(a) The photographs at C/958-959 showed the front parts of Shops 4-6
R and Stores 4-6 facing Tsuen King Circuit, and both Mr Lau and R
Ms Cheung, counsel for D1, agreed such photographs reflected the
S physical state in 2012/2013 save that such shops were occupied by S
other tenants.
T T

U U

V V
 - 45 -
A A

(b) The photographs at C/960-961 showed the rear parts of Shops 4-6
B from the vantage of the Rear Lane. B

C (c) The photograph at C/962 showed the rear parts of Shop 6 from the C
vantage of the Rear Lane with a corrugated metal sheet canopy seen
D at the Shop 6 Yard. D

E
(d) The photographs at C/963 and 965-966 showed the Rear Lane at the E
back of the shops on G/F of Phase 2 of the Development of the
Buildings with a gate where the Rear Lane joined the public pavement
F F
(“Rear Lane Gate”).

G (e) The photographs at C/964-967 showed (i) metal security cage for G

window-type air-conditioner at a rear window of Store 4 that faced

H the Rear Lane, and (ii) concrete canopy at the Shop 4 Yard. H

I I

J V. LEGAL PRINCIPLES J

K (a) First principles K

L 96. The vendor has an obligation to show good title even if the L

agreement is wholly silent on the question of objections and requisitions as

M M
to title. The vendor also has an obligation to answer requisitions and
N objections within a reasonable time to enable the purchaser to satisfy N

himself on the matter, get his money ready and complete on the date fixed.
O O
If the vendor fails to satisfactorily answer requisitions and objections that
P are properly raised, he fails to show good title even if he has in fact good P

title.32
Q Q

R 97. But the vendor and purchaser are free to make and modify R

such obligations in their conveyancing contract, eg a vendor may by

S S

T T
32
see Active Keen Industries Limited v Fok Chi-kong [1994] 1 HKLR 396

U U

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 - 46 -
A A

contract preclude the purchaser from raising any objection or requisition as

B B
to title in relation to UBWs:
C C
“An agreement to sell and convey an interest in land is, like any
other contract, a matter for the parties themselves. Generally
D speaking, the court would give effect to the parties’ intentions as D
evidenced by their agreement. …… the obligation to make a
good title ‘requires the vendor to show that he …… can convey
E E
the whole legal estate and equitable interest in the land sold, free
from encumbrances except for those disclosed by the contract’
F …… This is an implication arising from the obligation to make a F
good title: an obligation which the parties are free to modify by
their own agreement.” (see Jumbo King Ltd v Faithful Properties
G G
Ltd & ors [1999] 3 HKLRD 757, 770-771)

H “24. ….. The parties to a contract for the sale and purchase of H
land are free to agree to any term they like. The parties
are free to agree to the sale and purchase of a property
I with defective or imperfect title and the purchaser may I
agree to waive his right to raise requisition in respect of
[UBWs]. ……the question is what have the parties
J J
agreed in the light of the surrounding circumstances and
the factual matrix.” (see Ip Kam Wah & anor v Fair City
K Group Ltd [2005] 4 HKLRD 168, 182-183) K

“27. As with any other commercial contract, the parties to a

L conveyancing transaction are free to make their own L
agreement and, in particular, to modify any obligation
M regarding the title to be shown and given by the vendor M
and the requisitions that may be raised by the purchaser
……
N N
28. …… it is not in dispute that it was open to the parties to
reach an agreement in advance that would have the effect
O O
of precluding such requisition and imposing on the
plaintiff notwithstanding the defect in title. ……” (see
P Long Life Chinese Health Food Ltd v Luen Fat Air P
Condition (HK) Trading & Engineering Co Ltd [2015] 3
HKLRD 511, 520)
Q Q

R (b) Construction of a waiver clause R

S
98. The ambit and effect of a waiver clause in a conveyancing S
contract turn on its construction. The applicable principles of contractual
T T

U U

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 - 47 -
A A

construction are trite, and they have been helpfully summarised by

B B
Ms Cheung and Mr Lau as follows:
C (a) Lord Hoffmann NPJ in Jumbo King Ltd explained at pages 773-774 C
that:
D D
“…… The construction of a document ……. is an attempt to discover
E
what a reasonable person would have understood the parties to mean. E
And this involves having regard, not merely to the individual words
they have used, but to the agreement as a whole, the factual and legal
F F
background against which it was concluded and the practical objects
which it was intended to achieve. …… If the ordinary meaning of the
G words makes sense in relation to the rest of the document and the G
factual background, then the court will give effect to that language,
H even though the consequences may appear hard for one side or the H
other. The court is not privy to the negotiation of the agreement -
I evidence of such negotiations is inadmissible - and has no way of I
knowing whether a clause which appears to have an onerous effect
was a quid pro quo for some other concession. Or one of the parties
J J
may simply have made a bad bargain. …… the overriding objective in
construction is to give effect to what a reasonable person rather than a
K K
pedantic lawyer would have understood the parties to mean.
Therefore, if in spite of linguistic problems the meaning is clear, it is
L that meaning which must prevail.” (my emphasis) L

M (b) Le Pichon JA in All Ports Holdings Ltd v Grandfix Ltd stated that “in M
construing a contract all parts must be given effect where possible,
N and no part of it should be read as inoperative or surplus. This is the N
presumption against redundant words”.33
O O
(c) A contract should be construed objectively, but not in disregard of its
factual context and purpose. Accordingly, the subjective intention of
P P
one party to a contract, even if communicated to the other party
before the contract is made, will not usually be a relevant
Q consideration. This explains why evidence of the parties’ subjective Q
intention is inadmissible.34
R R
(d) Lord Hoffmann NPJ at page 776 in Jumbo King Ltd further explained
S that “…… the courts will be very reluctant to construe such a term [ie S

33
[2001] 2 HKLRD 630, 642
T T
34
see Lewison, The Interpretation of Contracts 6th ed para 2.03 at pp 34-41

U U

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 - 48 -
A A

a waiver clause] as enabling a vendor to mislead the purchaser”:

B B
“…… As is stated in Farrand, Contract and Conveyance (4th ed.) at
C p.93, such conditions are “subject to the overpowering principle that C
the vendor must not mislead the purchaser in any way; this means
D that a sufficient indication of the risk must be given before the D
contract is made.” …… for my part I think it is better regarded as a
E
matter of construction. Thus it is inconceivable that a term will be E
construed as enabling a vendor to impose upon a purchaser a serious
defect in title of which he actually knew. No purchaser would sign a
F F
contract which was bare-faced enough to stipulate expressly that the
vendor need not disclose serious defects in title of which he had
G actual knowledge and, even if there was no objection on grounds of G
public policy, nothing less than the most express language would do.
H On the other hand, the position is different if the vendor did not H
actually know of the defect but had the means of knowledge, or if the
I matter was technically a defect in title but something which a I
purchaser might reasonably be prepared to accept. Prima facie, it is
the duty of the vendor to deduce and then convey a good title and if
J J
he relies upon the terms of the contract to shift the risk of any defect
in title to the purchaser, the language must clearly do so. As Farrand
K K
says, the question is whether the purchaser would have been aware of
the risk he was being asked to take. ……” (my emphasis)
L L
(e) Godfrey JA in the Court of Appeal in Jumbo King Ltd made a similar
M point in relation to UBWs as follows:35 M

N “ “Unauthorised structures” are all too common in Hong Kong and N

present a real problem for conveyancers. A vendor whose title is, or
may be, open to objection because there is, or may have been, erected
O O
on the property of which he is granting exclusive use to his purchaser
some unauthorised structure is well advised to protect himself by
P P
precluding his purchaser, by contract, from raising any requisition or
objection to the title based on an “unauthorised structure” point. Of
Q course, if the vendor's contract is tricky or unfair; if by concealment Q
or non-disclosure, he misleads the purchaser about the matter, it will
R be held that he has disqualified himself by his conduct from relying on R
any such provision.” (my emphasis)
S S

T T
35
[1999] 3 HKLRD 231, 244

U U

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 - 49 -
A A

B B

C
99. Where “the vendor did not actually know of the defect but had C
the means of knowledge” (see paragraph 98(d) above), the relevant
D D
questions as identified by Godfrey Lam J at page 520 in Long Life Chinese

E
Health Food Ltd are as follows: (a) whether the waiver clause imposes E
“subject matter limits” on the vendor’s obligation to show and give good
F F
title and the purchaser’s entitlement to raise requisitions and objections,

G and (b) whether the “defect in title” complained of falls clearly within such G

“subject matter limits” as understood by a reasonable and ordinary

H H
purchaser.
I I
(c) Relevance of vendor’s actual knowledge, if any
J J
100. There was dispute as to whether D1 had actual knowledge of
K K
the Alleged UBWs. But as seen below, I find D1 had no such actual

L knowledge. Nevertheless, in case I am wrong, I shall briefly discuss the L

issue of the vendor’s actual knowledge and any non-disclosure.
M M

N
101. The starting point is that a waiver clause cannot be tricky, N
unfair or (by concealment or non-disclosure) misleading, and the vendor
O O
cannot refuse to disclose serious “defect in title” of which he has actual

P knowledge (see paragraph 98(d)-(e) above and paragraph 111(c)-(d) P

below). But that said, “[the] courts will be very reluctant to construe such a
Q Q
term [ie a waiver clause] as enabling the vendor to mislead the
R purchaser”.36 R

S S

T T
36
see Jumbo King Ltd at p 776

U U

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 - 50 -
A A

102. Subject to the primary principles in the above paragraph, the

B B
authorities show that even if a vendor has actual knowledge of a “defect in
C title” that the purchaser is complaining of, if a waiver clause on proper C

construction clearly covers such defect, the vendor can still rely on such
D D
waiver clause:
E E
(a) Anderson Chow J in Join Union Investment Ltd v China Tree
F
Investment Ltd cited Hoffmann NPJ’s observations in Jumbo King Ltd F
(see paragraph 98(d) above), and went on to say as follows:37
G G
“60. In the context of a simple contract for the sale and purchase of
land in Hong Kong, the vendor’s duty, in general, is to prove and give
H a good title. It is not a defence for the vendor to say that he did not H
have knowledge of any defects in title at the time of the making of the
I contract. The issue of knowledge becomes relevant, however, when I
the vendor seeks to rely on a contractual provision limiting the title to
J be proved or given. In such a case, the proper inquiry is whether, J
upon the true construction of the limitation provision, it is intended to
K
apply to the relevant defect in title notwithstanding the vendor’s K
knowledge of it at the time of the making of the contract ……
L L
61. There is no general rule that only “actual knowledge” of the
relevant defect in title on the part of the vendor is relevant to this
M inquiry. Whether the vendor will be debarred from relying on a M
contractual provision limiting the title to be proved or given by reason
N of actual, or some lesser degree of, knowledge of the defect in title N
would depend on the true construction of the contractual provision in
O question. O

62. For the reasons mentioned above, the proper question is not
P P
whether the defendant failed to make disclosure of defects in title of
which it was aware, but whether the defendant is entitled to rely on
Q Q
the relevant contractual provisions limiting the title to be proved or
given notwithstanding its knowledge of such defects in title. This
R raises an issue of construction of the contract ……” (my emphasis) R

S (b) In Ni Tiee Bor Robert & anor v Golden Crane Industries Limited, S

T T
37
[2016] 2 HKLRD 901, 917-919

U U

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 - 51 -
A A

Recorder Edward Chan SC again cited Hoffmann NPJ’s observations

B in Jumbo King Ltd (see paragraph 98(d) above), and went on to say as B
follows:38
C C
“32. …… In my view, it is important to note that …… at the end of
D the day, …… the real question was not whether the vendor had the D
knowledge or not. The real question was whether the clause relied
E
upon by the vendor on its true construction could protect the vendor E
from this challenge to the title. If the wordings were wide and clear
enough, there is no rule of law to say that the vendor may not rely on
F F
the clause simply because he was aware of the defects which the
clause is designed to cover.” (my emphasis)
G G

H H

(d) Subject matter limits

I I

103. The first of the 2 key questions explained in paragraph 99

J J
above concerns the “subject matter limits” of a waiver clause. As referred
K to paragraph 98(d) above, Lord Hoffmann NPJ at page 776 in Jumbo King K

Ltd said as follows:

L L

“…… Prima facie, it is the duty of the vendor to deduce and

M then convey a good title and if he relies upon the terms of the M
contract to shift the risk of any defect in title to the purchaser, the
N
language must clearly do so. As Farrand says, the question is N
whether the purchaser would have been aware of the risk he was
being asked to take. ……” (my emphasis)
O O

I agree with Ms Cheung that a waiver clause has to identify a “defect in

P P
title” and not a mere “defect”, and that “defects in title” “are those defects
Q Q
which detract from the vendor’s good right to convey the estate he is

R
selling, i.e., they affect his ownership itself”.39 R

S S

38
HCMP4407/1998, Recorder Edward Chan SC (unreported, 21 March 2000)
T T
39
see Emmet and Farrand on Title 19th ed para 4.023 at p 4/28

U U

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 - 52 -
A A

104. But must the vendor itemise all “defects in title” that come
B B
within the ambit of the “subject matter limits”? Deputy Judge A To at
C page 179 in Ip Kam Wah referred to Godfrey JA’s observations in Spark C

Rich (China) Ltd v Valrose Ltd,40 and said as follows:

D D

“18. …… In any event, I do not think that by ‘full disclosure

E of the problem’ Godfrey JA meant a full identification of E
each and every unauthorised structure, fixture, fitting or
erection which did not comply with Building Ordinance
F F
(Cap.123) [‘BO’] or its subsidiary regulation or any
related legislation. If a vendor can make a full list of all
G possibly offending structures or fixtures, it would of G
course be most ideal, but that is not essential. As a matter
of conveyancing law and practice, there is nothing to
H prevent the parties from agreeing to the sale and H
purchase of a property with a defective or imperfect title
I or to agree to waive any right to raise requisition in I
respect of any unauthorised works whether they
constitute any blot in title. Indeed, not every unauthorised
J structure constitutes a blot on title or goes to title. ……” J
(my emphasis)
K K

105. In Jumbo King Ltd, the relevant waiver clauses were

L L
clauses 18(e) and 19 of the written agreement for sale and purchase. Litton
M PJ at page 771 helpfully summarised those provisions as follows: M

N “…… N

(3) By cl. 19 the purchaser declared that it was purchasing

O the property in its present state and would make no O
objection as to title in connection therewith: the property
P
was sold on an ‘as is’ basis. P
(4) One then comes to cl. 18(e) which clearly contemplates
Q that there might be structures on the property not erected Q
in compliance with the [BO] and its subsidiary legislation
…… The clause in plain terms passes the risk of
R government action being taken in relation to such R
structures to the purchaser.”
S S

T T
40
CACV249/1998 (unreported, 9 March 1999)

U U

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 - 53 -
A A

Although clauses 18(e) and 19 did not specifically identify unauthorised

B B
cocklofts as their subject matter which would debar the purchaser from
C raising objections to the vendors’ title, Litton JA at page 771 was of the C

view that “the vendors would have been entitled to reply [to any objection
D D
to title based on the (alleged) unauthorised nature of the cocklofts] that, by
E virtue of cl. 18(e), the purchaser was not entitled to take that objection to E

the title”.
F F

G 106. I note Rogers VP at the Court of Appeal in Jumbo King Ltd G

approached the matter differently by saying clause 18(e) failed to identify

H H
the cocklofts with sufficient particularity (pages 251-251):
I I
“I bear in mind that the clause contains more than simply a
general exclusion of liability in respect of a broad range of
J defects but specifically refers to any erection or structure which J
might be in contravention of the [BO]. As I have indicated
K above, this goes further than being a reference to defects in title K
but draws attention to structures. A cockloft is clearly an erection
or structure but although I have had my doubts about it, I have
L come to the conclusion that the wording of the clause does not L
identify the cocklofts with sufficient particularity to take it out of
the general exceptions category.”
M M

N But seen in the above paragraph, Litton PJ in the Court of Final Appeal N

disagreed, and found such reasons “difficult to follow” (page 770). Lord

O O
Hoffmann NPJ at page 777 clarified the position as follows:
P P

“…… In the present case, however, the language of cl. 18 (e)

Q was entirely apt to cover the cocklofts. No one who had read that Q
clause and saw the cocklofts could have failed to appreciate that
he was being asked to bear the risk that they were unauthorised
R R
structures. The language seems to me perfectly clear. And
therefore, in the absence of any evidence that the vendor actually
S knew that they were unauthorised, the purchaser was in my S
opinion bound by the clause.” (my emphasis)

T T

U U

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 - 54 -
A A

107. Thus, a waiver clause has valid “subject matter limits” if it

B B
identifies a category of possible “defects in title”, eg “structure in or to any
C part of the property which is in contravention of the [BO] and/or its C

subsidiary legislation” in clause 18(e) of the written agreement in Jumbo

D D
King Ltd.
E E

108. This is to be contrasted with clause 19 of the written

F F
agreement in All Ports Holdings Ltd which provided as follows
G (page 641): G

H “The ‘Purchaser’ agrees and accepts all existing condition/states H

of the property and shall not rely upon any pretext to refuse to
complete the transaction or to raise any objections.”
I I

J Le Pichon JA noted the issue in that case was whether such clause was J

capable of being construed as including “illegal unauthorised structures”,

K K
and at page 642 the learned judge concluded as follows:
L L
“30. [Counsel for the defendant] accepted that prima facie, the
M phrase ‘all existing condition/states of the property’ M
would not extend to illegal structures. It is really saying
no more than that the property was being sold ‘as is’.
N …… N

31. …… no ambiguity arises. It is the vendor’s case that the

O O
parties understood between themselves that ‘condition/
states’ included ‘illegal structures’. That is not evident
P from a reading of cl.19. It is dependent on parol evidence P
that is not admissible save where there is an ambiguity on
the face of the document. If none arises, that is the end of
Q the matter.” Q

R R
109. Mr Lau strongly relied on Long Life Chinese Health Food
S Ltd, so I will say a few words on the facts of that case. In that case, the sale S

T T

U U

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 - 55 -
A A

was aborted because the purchaser raised and maintained requisitions

B B
relating to a notice and subsequently a demolition order issued by the BA
C concerning a UBW addressed to the vendor’s predecessor-in-title C

(collectively, “UBW Order”). The question was whether condition 2 in the

D D
annex to the PASP, which was also expressly incorporated in the FASP,
E limited the vendor’s obligation to show title and precluded the purchaser E

from raising requisitions about the UBW Order. Godfrey Lam J held the
F F
purchaser was not debarred by condition 2 from raising such requisitions.
G G

110. The starting point in Long Life Chinese Health Food Ltd is
H H
that the vendor had actual knowledge of the UBW Order, which must be
I contrasted to D1 in the present action, who (as I find below) had no actual I

knowledge of the Alleged UBWs.

J J

K 111. Mr Lau drew my attention to condition 2(A)41 in Long Life K

Chinese Health Food Ltd that referred to 3 specific aspects of the condition
L L
of the property and showed the parties paid particular attention to these 3
M matters in terms of unauthorised works, but did not mention the UBW M

Order even though the vendor was aware of its existence. It was held at
N N
page 527 that “…… [a] reasonable potential purchaser might be led into
O thinking that there was nothing other than the three matters specifically O

mentioned that the vendor knew as a fact to be unauthorised. The express

P P
mention of certain unauthorised works in the clause makes it all the more
Q surprising that an actual demolition order relating to a different Q

R
unauthorised structure was not disclosed”. Also, conditions 2(B)-(E) would R
41
“(A) The Purchaser declares that it has conducted an on-site inspection of the
S Property in person, and clearly knows of and accepts all the internal and external S
fitting condition of the shop premises and clearly knows of (a) cockloft(s)
constructed within the shop premises, (a) staircase(s) connecting the cockloft and the
T T
ground floor shop, and the existing extended area of the cockloft.” (p 515)

U U

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 - 56 -
A A

not assist the vendor as they referred to general matters, eg “existing state”,
B B
“relevant condition” and/or “existing condition” rather than specific
C categories of “defect in title”, and thus were too ambiguous to cover the C

UBW Order (pages 527-529):

D D

(a) Condition 2(B)42 – The purchaser knew that part of the relevant
E E
condition of the property had not been authorised, but there was no
evidence and no basis to suggest that the purchaser knew of the UBW
F Order. F

G (b) Condition 2(C)43 – The vendor gave no warranty as to whether or not G

the relevant condition amounted to unauthorised or illegal works, but
H the purchaser did not have to rely on a warranty in order to object to a H
title defect. After all, the PASP provided that the property was to be
sold free from encumbrances, and the FASP provided that the vendor
I I
had to give good title to the property. Condition 5 of the annex also
stated the basis of the contract was the title being in good
J J
order. Further, there was no contradiction between condition 2(C) and
clause 19 of the FASP whereby the vendor warranted that the property
K was not adversely affected by any liability of which he was aware, K
other than those disclosed in the agreement and those of which the
L purchaser was aware and could have ascertained on reasonable L
inspection of the property.
M M
(c) Condition 2(D)44 – Such provision did not mean the purchaser was
prepared to assume liability under any existing enforcement order
N N
against the vendor of which the latter was aware. “The “most express
language” is required if a vendor wishes to shift to the purchaser risks
O arising from serious defects in title of which the vendor had actual O

knowledge but which he had not disclosed to the purchaser. In my

P view sub-cl. (D) does not mean that the [purchaser] was prepared to P
assume liability under any existing enforcement order against the
Q [purchaser] of which the [vendor] was aware. To have that meaning Q
the sub-clause would have to be much clearer and more explicit than
42
“(B) The Purchaser knows of no application has been made to the Government or
R relevant authorities in respect of part of the relevant condition.” R
43
“(C) The Vendor gives no warranty as to whether or not the relevant condition is
S amounting to unauthorized alteration, illegal or non-compliant project, or related S
matter.”
44
“(D) After consideration, the Purchaser has decided to accept the existing condition
T T
and is willing to undertake the liability of retaining the existing condition.”

U U

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 - 57 -
A A

B B

C
112. From the above authorities, I agree with Ms Cheung that what C
is not permissible is a general and/or sweeping statement that serves as a
D D
general exclusion clause without identifying specifically by “most express

E
language” a category of potential “defects in title”. E

F F
(e) Relevance of purchaser’s knowledge

G 113. The next considerations (which form part of the factual matrix G

to be considered when construing a waiver clause) are:

H H

I
(a) whether the vendor must particularise in the contract the specific I
“defect in title” in question to bring it within the knowledge of the
purchaser before the vendor can rely on the waiver clause on the basis
J J
that by reason of such disclosure the waiver clause is not regarded
tricky, unfair or misleading;
K K
(b) if the purchaser has actual knowledge, whether he has contracted on
L the basis there may be potential “defects in title” and therefore cannot L
complain of having been misled into thinking he was contracting for a
M clean title. M

N N

O 114. On these issues, it is necessary to look more closely at the O

trilogy of cases, ie Ip Kam Wah, Channel Green Ltd v Huge Grand Ltd46
P P
and NieTiee Bor Robert & anor before returning to the principles laid out
Q by the Court of Final Appeal in Jumbo King Ltd. Q

R R
45
“(E) The Purchaser and its legal representatives shall not raise any requisition on
S title and/or claim compensation and/or seek a reduction in purchase price by reason S
of the existing state of the Property and/or the aforementioned condition, and shall
also not refuse to complete the transaction by reason thereof.”
T T
46
[2015] 1 HKLRD 655

U U

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 - 58 -
A A

115. Issue in paragraph 113(a) above In Ip Kam Wah, the PASP

B B
was accompanied by a collateral agreement which provided that (a) the
C property was to be sold “as is”, (b) the vendors gave no warranty that there C

was no unauthorised or illegal structure, and (c) the purchaser confirmed

D D
he had inspected the property or had been afforded such opportunity before
E entering into the PASP so he would make no objection to title and would E

not refuse to complete if there was an unauthorised or illegal structure

F F
(page 172). The purchaser subsequently raised requisition concerning an
G illegal structure covering the first floor terrace facing the main entrance. G

H H
116. It was argued on behalf of the purchaser that (a) the collateral
I agreement lacked particularity as to the unauthorised structure in question, I

and (b) in order for the waiver to be binding on the purchaser, he had to
J J
know in respect of which particular unauthorised structure it was agreeing
K to waive its right to raise requisition, and a general description would not K

be sufficient. Deputy Judge A To rejected such argument (see

L L
paragraph 104 above), saying that the reference to “full disclosure of the
M problem” by Godfrey JA in Spark Rich (China) Ltd does not mean full M

identification of each and every unauthorised structure, fixture, fitting or

N N
erection that does not comply with the BO or its subsidiary legislation or
O O
any related legislation, and it is ideal but not essential to make a full list of

P
all possibly offending structures or fixtures, especially as not every P
unauthorised structure constitutes a blot on title or goes to title. The
Q Q
learned judge next turned to (a) clause 18(e) in Jumbo King Ltd, which (i)

R was similar to the collateral agreement in Ip Kam Wah, (ii) was “equally R
unspecific and lacking in particularity as to the unauthorised structures”,
S S
and (iii) covered “virtually any structure or fixture which is in
T contravention of the law” (page 180), and also to (b) Godfrey JA’s T

U U

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 - 59 -
A A

conclusion (approved by the Court of Final Appeal – pages 181-183) that

B B
the vendors were entitled to rely on clause 18(e) to debar the purchaser
C from objecting to the title based on the (alleged) unauthorised nature of the C

cocklofts as well as Godfrey JA’s guidance set out in paragraph 98(e)

D D
above (page 180). Deputy Judge A To in Ip Kam Wah went on to say at
E page 181 as follows: E

F “21. It appears that Godfrey JA did not approach the duty of F

disclosure on the basis of any specific principle
applicable to property transactions. He approached that
G G
issue on the basis of general principle in contract and in
construction of contract. He must be of the view that the
H sale and purchase of property is a matter of agreement H
between the parties and that it is open to the parties to
agree to the sale and purchase of a property with
I defective or imperfect title or for the purchaser to agree I
to waive his right to raise requisition in respect of
J unauthorised building works. He considered the duty of J
disclosure in the context of the effect of non-disclosure, ie
whether the contract was tricky or unfair and has the
K effect of misleading the purchaser. I do not think his K
Lordship has laid down any principle in Spark Rich
(China) Ltd v Valrose Ltd (unrep., CACV No 249 of 1998,
L L
[1999] HKEC 847) that in order that a waiver may be
valid the unauthorised structures must be particularised
M in the contract in which a purchaser agrees to waive his M
right to raise requisition.” (my emphasis)
N N
117. In my view, there is no dichotomy in Deputy Judge A To
O O
saying on the one hand that the collateral agreement was unspecific and

P lacking in particularity as to identification of the unauthorised structure in P

question, and on the other hand concluding that the collateral agreement
Q Q
“is capable of constituting a waiver of the [purchaser’s] right to raise
R requisition on the unauthorised structure” (page 183). The learned judge at R

page 183 explained as follows:

S S

“25. …… The question is what the parties meant by

T ‘unauthorised or illegal structures’ in the Collateral Agreement T

U U

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 - 60 -
A A

and whether the [purchaser] was in any way misled if the court
B should give effect to that construction. The words ‘unauthorised B
or illegal structures’ are ordinary words and must be given their
ordinary and plain meaning. It must include the unauthorised
C structure which covered the terrace on the first floor of the C
Property converting the open terrace into roofed
D accommodation. Giving these words their ordinary plain D
meaning, the [purchaser] must have agreed to waive its right to
raise objection to title in respect of the said unauthorised or
E illegal structure in question.” (my emphasis) E

F F
The above showed it was not essential for the waiver clause in that case to
G specifically identify the particular unauthorised/illegal structure covering G

the first floor terrace facing the main entrance (being the specific “defect in
H H
title” in question) so long as it identified the relevant category of “defects
I in title”, ie the category of “unauthorised or illegal structures” expressly I

adopted in the collateral agreement was in its ordinary and plain meaning
J J
sufficient to cover the very “defect in title” that was in issue (see also
K paragraphs 107 and 112 above). Likewise, the unauthorised cocklofts K

being the “defects in title” in question in Jumbo King Ltd were covered by
L L
the category of “any structure in or to any part of the property which is in
M contravention of the [BO]” in clause 18(e) in its ordinary and plain M

meaning.
N N

O 118. In Channel Green Ltd, clause 30 of the agreement for sale and O

purchase provided that the property was sold on an “as is” basis; the
P P
purchaser had inspected the property and understood its existing state; and
Q the purchaser could not raise any requisitions or refuse to complete or Q

delay completion on the ground that there were any unauthorised

R R
additions, alterations or illegal structures. The issue was whether clause 30
S covered requisitions raised by the purchaser concerning breaches of 2 S

special conditions of sale under the government lease, ie car park spaces in
T T

U U

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 - 61 -
A A

the forecourt had become occupied by stalls, and some shops had extended
B B
into the areas required not to be built over. Upon construing clause 30 in its
C natural and ordinary meaning, it was held that the vendor was entitled to C

rely on such clause (pages 667-671):

D D

(a) “Illegal structure” means any structure erected against the law
E E
whether in breach of the BO, the terms of the Government lease or the
DMC. “Unauthorised additions” or “unauthorised alterations” can
F include those in breach of the Government lease or the DMC, F
irrespective of their status under the BO. Further, “unauthorised
G additions or alterations” are wide enough to encompass physical states G
of the property occasioned by additions or alterations which do not
H involve the erection of a structure, so whether stalls-on-wheels could H
be regarded as structures was not important.
I I
(b) The plain meaning of clause 30 was that it applied to any
unauthorised physical state of the property irrespective of whether
J J
authorisation by the relevant authorities could have been obtained as a
matter of law. As regards breaches of the BO, the BA is not
K empowered to authorise any illegal structure. K

L (c) Further, “unauthorised alterations” include alterations by way of L

converting car park spaces into stalls or common areas into part of a
M private unit. The substance of the requisitions, read in their proper M
context, was the same whether based on the presence of unauthorised
additions, alterations or illegal structures or on the non-provision of
N N
car park spaces and conversion of common areas. There was no sound
reason to confine the effect of clause 30 to one facet of the underlying
O source of the problems and not another. O

P (d) Taking into account the factual background, a reasonable person P

would have understood the parties to ascribe the ordinary and natural
Q meaning to clause 30. There was no reason not to give effect to that Q
language.
R R

S S

T T

U U

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 - 62 -
A A

119. From the above, it is clear a waiver clause should be given its
B B
sensible, ordinary and plain interpretation, and a narrow and legalistic
C approach should be avoided. Ms Cheung fairly accepted there are no hard C

and fast rules as to what “full disclosure” entails (where the vendor has
D D
actual knowledge of the “defect in title”) and/or what “clear and express
E language” drafting requires. I agree that ultimately it is a matter of E

common sense construction in the relevant factual matrix and surrounding

F F
circumstances and, as Ms Cheung suggested, in the spirit of encouraging
G completion as explained by Litton JA at page 413 in Active Keen G

Industries Ltd:
H H

“…… The contractual duty to answer requisitions properly is not

I an onerous one. All that is required of the vendor is candour and I
commonsense. The purchaser is not an adversary. The parties
J have already arrived at an agreement and, normally, it is as much J
in the purchaser’s interest as it is in the vendor’s that completion
should take place. A good title, or a good marketable title, does
K not mean a perfect title. If there are, or might be blemishes upon K
it, these should be faced squarely. ……”
L L

Nazareth JA at pages 414-415 associated himself with the above

M M
observations, saying that “the time has come for Hong Kong conveyancers
N to cease magnifying difficulties that are really non-existent and that N

frequently keep apart parties themselves eager to conclude their bargain”.

O O

P 120. Issue in paragraph 113(b) above Mr Lau noted Godfrey P

Lam J at page 529 in Long Life Chinese Health Food Ltd distinguished Ip
Q Q
Kam Wah and Channel Green Ltd. The question is whether these cases can
R be distinguished on the ground that, as Mr Lau suggested, the purchasers in R

those cases were found to have knowledge or to have been told of the
S S
UBWs in question.
T T

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 - 63 -
A A

121. Turning first to Ip Kam Wah, it was true the central question
B B
of fact in that case was the purchaser’s own knowledge of the “defect in
C title”, ie he knew the unauthorised structure in question existed before he C

signed the collateral agreement so he could not have been misled, but in
D D
my view such issue of fact was significant in that case because the
E purchaser raised an argument of misrepresentation against the vendor, E

which Deputy Judge A To eventually rejected at pages 172 and 176:

F F

“3. …… it would not be difficult to note that this transaction

G is typical of a speculative transaction with a very long G
completion period of nine months and with a very small
initial deposit of about 1% of the purchase price paid
H H
while the balance of usual 10% was paid by a third
party. This transaction is the first of a series of five
I transactions of very valuable property entered through the I
same estate agent on similar terms. It is obvious that this
transaction is not an ordinary consumer sale but one
J J
made by a dealer in real property for speculative
purposes.
K K
……

L 12. Chan [ie a purchaser] said that he had no chance to L

inspect the Property as it was tenanted, but he did not
deny he had inspected the exterior of the Property with
M M
Lai [ie the estate agent] on at least two occasions. Chan
did not seek to respond to Lai’s affirmation. From the
N photographs taken from outside the Property, the N
unauthorised structure is readily visible even from an
external inspection of the Property. It is hardly credible
O that Chan did not notice the unauthorised structure while O
he was viewing the Property from the outside with Lai.
P Not only that, Chan confirmed in the Collateral P
Agreement that [the purchasers] had inspected the
Property or had been afforded the opportunity to inspect
Q the Property prior to entering into the Provisional Q
Agreement. In the Collateral Agreement, the [vendors]
refrained from warranting there were no unauthorised
R R
structures while the [purchasers] undertook not to raise
objection to title by reason of any unauthorised
S structures. It is amply clear from the Collateral S
Agreement that the parties knew there were unauthorised
structures appertaining to the Property. Chan was
T T
obviously carrying on the business of trading in real

U U

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 - 64 -
A A

property on the [purchasers’] behalf, if not on his own.

B He is experienced in the business of trading in real B
property in Hong Lok Yuen and is very familiar about
unauthorised structures in the houses in the development.
C This makes his allegation all the more incredible. In the C
light of the incontrovertible evidence, Chan’s allegation
D that he had not inspected the Property or afforded the D
opportunity to inspect and had no knowledge of the
unauthorised structure is incapable of belief.
E E
13. Taking into account what Chan said in his affirmation in
the context of so much of the background which is
F F
undisputed or beyond reasonable dispute, such as the
photographs, that he was a dealer in real property and the
G contents of the Collateral Agreement he signed, I G
consider Chan’s assertions in his affirmation are
practically moonshine and incapable of belief, while
H Lai’s affirmation is believable. I do not think this is a case H
which involves any genuine and substantial disputes on
I facts. I am satisfied with the evidence filed on behalf of I
the [vendors] and reject the evidence filed on behalf of
the [purchasers]. I am satisfied that Chan had inspected
J the Property from outside and had knowledge of the J
unauthorised structure before he signed the Collateral
K
Agreement. I also reject his evidence that he signed the K
Collateral Agreement as a result of the
misrepresentation.” (my emphasis)
L L

122. Turning to the waiver clause in the collateral agreement,

M M
Deputy Judge A To at pages 182-183 emphasised the guidance given by
N N
Lord Hoffmann NPJ in Jumbo King Ltd that this is a matter of construction

O
such that if the ordinary meaning of the waiver clause makes sense in O
relation to the rest of the document and the factual background, then the
P P
court will give effect to that language, even though the consequences may

Q appear hard for one side or the other. “It is only a rule of construction that Q
the court will avoid construing a contract in such a manner as would
R R
enable a vendor to mislead the purchaser. The duty of disclosure is to be
S understood in this light. Thus, ultimately, …… the question is what have S

T T

U U

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 - 65 -
A A

the parties agreed in the light of all the surrounding circumstances and the
B B
factual matrix”.
C C

123. As explained in paragraphs 115-117 above, the learned

D D
judge’s decision primarily turned on the construction of the waiver clause
E in the collateral agreement, ie the category of “unauthorised or illegal E

structures” in the collateral agreement in its ordinary and plain meaning

F F
covered the particular illegal structure in question. As for the “next
G question” of “whether the [purchaser] was misled if the [collateral G

agreement] should be given that construction” (page 183), the learned

H H
judge turned to view such construction against the relevant factual matrix
I in respect of the purchaser’s knowledge and experience as explained in I

paragraph 121 above, ie the purchaser was a “dealer in property” who had
J J
purchased other properties in the same property development and who had
K inspected the exterior of the subject property before purchasing the same, K

which served to reinforce that the purchaser “had knowledge of the

L L
unauthorised structure before he signed the Collateral Agreement”, and
M could not have been misled about effect of the collateral agreement, so the M

purchaser clearly waived its right to raise requisitions in respect of the

N N
unauthorised structure in question.
O O

124. Secondly, the vendor in Channel Green Ltd had disclosed the
P P
unauthorised structures in question prior to the PASP, so the purchaser had
Q knowledge of the potential problem and was not misled. Lam VP at pages Q

R
663-664 held that the purchaser with its substantial experience could not R
have been misled by the waiver clause as it must have been aware of the
S S
possible “defects in title” being the subject matter of its complaint:

T “16. …… T

U U

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 - 66 -
A A

……
B B
(2) The transaction in question was a sale and purchase of
substantial value and Ms Ho [ie the purchaser] was a
C person with substantial commercial experience.  She did C
not come into the picture at the last minute shortly before
D
the signing of the provisional agreement. She had been D
involved from an early stage when she participated at
two presentations by the agent on 5 January and 2 March
E 2011. The Property was one of the properties presented E
on 2 March and at that presentation there were specific
discussions about the use of the forecourt by the stalls-
F F
on-wheels as opposed to the provision of parking
spaces. …… it defies logic and common sense that
G Ms Ho would not seek information from Mr Leung and G
that Mr Leung [ie the estate agent] would withhold the
relevant information from Ms Ho; ……” (my emphasis)
H H

I 125. The effect of such finding was to show there was no “fact or I

matter in the factual background which indicates something had gone

J J
wrong in the language of cl. 30. In particular, there was nothing [the
K purchaser’s counsel] could pinpoint to dictate a different meaning to be K

given to the clause as opposed to the plain and natural meaning as analysed
L L
by [the Court of Appeal] above. In other words, this is a case where a
M reasonable person, taking into account the factual background, would have M

understood the parties to ascribe a meaning which is the same as the

N N
ordinary and natural meaning of cl. 30 ……” (page 671). More
O importantly, Lam VP went on to say as follows at pages 671-672, which O

again emphasised it is ultimately a matter of construction:

P P

“39. Once we reach this conclusion, it is quite beside the point

Q whether the Judge was entitled to have regard to the Q
potential problems with SC7 and SC8 [ie the specific
‘defects in title’ in question] to reinforce his conclusion.
R R
There is simply no reason why full effect should not be
given to the plain and natural meaning of cl. 30 which,
S as we have held, covers breaches of the Government S
Lease, the DMC as well as the [BO].
T T

U U

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 - 67 -
A A

40. In any event, we are of the view that the judge was
B entitled to take into account of the knowledge of the B
[purchaser] as evidence of the ‘genesis’ and the ‘aim’ of
the transactions …… [the obligation of the vendor to
C show and give good title] is defined by cl. 30 and the C
Court could have regard to the objective fact that the
D [purchaser] was aware that there were problems about D
the physical state of the property stemming not only from
the [BO] ……” (my emphasis)
E E

F
126. In Ni Tiee Bor Robert & anor, the vendor and the purchaser F
entered into a PASP and a side agreement. The property was full of
G G
unauthorised structures and alterations of which the vendor was aware, and

H the very purpose of the side agreement was to make sure the purchasers H

would not be able to take objection to those structures and refuse to

I I
complete (pages 17-18).
J J
127. Recorder Edward Chan SC adopted the guidance by the Court
K K
of Final Appeal in Jumbo King Ltd that this is a matter of construction of
L the contract such that the real question is whether the waiver clause relied L

upon by the vendor on its true construction can protect the vendor from
M M
challenge to the title, and it was held that if the wordings are wide and
N clear enough, there is no rule of law to say the vendor may not rely on the N

clause simply because he was aware of the defects which the clause is
O O
designed to cover (page 22). On construction of the side agreement, its
P effect was clear, ie “that the purchasers were still bound to accept the P

assignment of the property even though there were illegal structures or

Q Q
unauthorized alterations to the property and even though there were
R enforcement orders directed at those alterations” (pages 16 and 24). It was R

said that the width of the language adopted in the side agreement “had the
S S
effect of making the purchasers bear the full risks of the existence of any
T unauthorized or illegal structures even though they were not aware of those T

U U

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 - 68 -
A A

structures and the requirement to rectify them because a Government

B B
notice requiring rectification had been served on the vendor” (page 25).
C Thus, it was further said at page 25 that: C

D “In light of the width of the side agreement, I am of the view that D
the purchasers are not entitled to raise any requisition or
objection to title on account of the presence of any unauthorized
E alterations or illegal structures which had been found and E
identified by [the architect]. Even though these structures existed
F and were unauthorized, the purchasers must still complete the F
sale and purchase. Accordingly the side agreement was a
complete answer to the purported requisition raised by the
G purchasers in relation to these unauthorized alterations and G
illegal structures.”
H H

128. As for the purchasers’ knowledge, the learned judge held that
I I
they were probably aware through their own observation at the inspection
J that there were alterations other than those they had been told. They were J

fully aware of the risk of enforcement against unauthorised structures. So

K K
even though the purchasers were unaware of some of the extensions or
L alterations, “the question is whether in light of what [the purchasers were] L

told and shown, which formed part of the matrix of facts for the
M M
construction of the side agreement, the terms of the side agreement were
N such that would prevent the purchasers from raising any objection to the N

existence of all these alterations and would bind them to complete the sale
O O
and purchase despite the presence of these alterations” (my emphasis)
P (pages 22-23). It was held that since the purchasers were found to be aware P

of the consequences of the unauthorised alterations or illegal structures (ie

Q Q
government enforcement actions that would render the title defective), it
R did not detract from the “express wordings of the contract” that “the R

purchasers were bound to complete notwithstanding the presence of these

S S
unauthorized alterations or illegal structure ……” (pages 25-26).
T T

U U

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A A

129. Although Mr Lau reminded that Long Life Chinese Health

B B
Food Ltd distinguished Ip Kam Wah and Channel Green Ltd, it does not
C follow that because the purchasers in Ip Kam Wah, Channel Green Ltd and C

Ni Tiee Bor Robert & anor had actual knowledge of the defects in title, the
D D
corollary (ie a waiver clause will be ineffective merely because the
E purchaser had no knowledge of the particular UBW or “defect in title” in E

question) is true. Quite apart from Godfrey Lam J’s admonition at

F F
page 529 in Long Life Chinese Health Food Ltd that each case has to be
G decided on its own facts, the above authorities clearly showed that even G

though the courts found the purchaser had the relevant knowledge,
H H
ultimately the decision turned on the construction of the waiver clause, and
I the purchaser’s knowledge merely formed part of the relevant factual I

matrix to be considered for the purpose of the construction of the “express

J J
wording” of the waiver clause.
K K

130. This was the essence of the guidance of the Court of Final
L L
Appeal in Jumbo King Ltd (see paragraph 98(a) and (d) above). As to the
M factual situation in that case at the time when the parties entered into the M

agreement, “the evidence was neutral as regards the vendors’ knowledge.

N N
The purchaser on its part made no inquiries. Both parties must have been
O O
well aware of the possibility that some or all of the cocklofts were

P
unauthorised structures. The parties were contracting on that basis”, and P
hence the purchaser could not have been misled (page 769). This shows
Q Q
that the purchaser’s knowledge (whether actual or constructive) or

R otherwise, which goes to the matter of whether he can credibly claim to R

have been tricked or misled, is but part of the factual matrix to aid the
S S
ultimate question of construction. As Ms Cheung submitted, it flied against
T the basic canons of construction of contract to say that a contractual party’s T

U U

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 - 70 -
A A

subjective/actual knowledge is more than relevant factual matrix for

B B
ascertaining the proper meaning of the contractual term.47
C C

131. I should also add that Mr Lau sought to distinguish the above
D D
authorities on the basis that whilst the purchasers in those cases had actual
E knowledge of the “defects in title” that were in issue, P in the present E

action was not specifically informed about the Alleged UBWs, and hence
F F
could not be said to have actual knowledge. As seen below, I find that even
G though P had no specific knowledge of the Alleged UBWs before she G

signed the Shop 4 PASP, she contracted on the basis that there might be
H H
UBWs at the Property and that she knew and understood from the Waiver
I Clause in the Shop 4 Appendix (in respect of which she had a bit longer I

discussion with Tong) as to the possible existence of UBWs. In my view, P,

J J
like the purchaser in Jumbo King Ltd, was well aware of the possibility of
K UBWs at the Property. I also bear in mind that P’s case against D1 did not K

rely on any misrepresentation by D1 or Tong/D2 on behalf of D1. In the

L L
end, Mr Lau in his oral closing submissions conceded P’s contention that
M she had no actual knowledge of the Alleged UBWs (due to Tong’s alleged M

default) would be immaterial in P’s case against D1.

N N

O VI. P’S RELATIONSHIP WITH TONG O

P 132. I find on balance P came to know Tong (a licensed estate P

agent working for D2) when he cold-called her in/about January 2011.
Q Q
Since then Tong took the initiative to keep P regularly informed about the
R Hong Kong property market by (a) updating her by telephone several times R

a month on the latest news/developments concerning the property market,

S S
th
47
see Lewison, The Interpretation of Contracts 6 ed para 2.03 at pages 34-41 and
Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1
T T
WLR 896, 912-913

U U

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 - 71 -
A A

and (b) furnishing her with information about property market trends,
B B
transaction records, and other property-related news. P admitted in
C evidence that Tong “教咗[P]好多嘢嘅”, and that she never refused his C

telephone calls or his offers of property-related information.

D D

E 133. P said at the beginning her relationship with Tong was one of E

principal and agent, but as Tong managed to find and introduce to her
F F
properties with good investment returns (see, eg, the 1st, 2nd and
G 3rd Properties referred to in paragraphs 135, 136 and 143 below), P G

gradually treated him as a friend, and from time to time they talked about
H H
other matters.48 Tong introduced his then girlfriend (who also worked for
I D2 at the time) to P, and even consulted P on whether he should change his I

job.49
J J

K 134. In my view, as time went by, P and Tong got along very well. K

They became friends, and looked after each other in property investment
L L
endeavours. P introduced Tong to her “investment partners” and to her
M younger brother Mr Li Wai Keung (“Li”), and she and Tong collaborated in M

property investment with a view to make profit gain. I find on balance that
N N
notwithstanding P’s denial, she (supported by her estate agent Tong/D2)
O became a seasoned and adventurous dealer in real property with a number O

P
of property purchases/sales under her belt: P

Q
(a) As seen in paragraph 132 above, P welcomed and received regular Q
monthly updates on property market trends, property transaction
R R
48
eg P learned that Tong was divorced, that he lived with his mother and his
3 children, and that his younger brother did not live with them, and P felt Tong was a
S filial son S
49
P claimed she had a long talk with Tong about his intended career move, and Tong
eventually decided to stay with D2 who subsequently promoted him to a managerial
T T
post

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 - 72 -
A A

records and property-related information, and from such updates she

B gained knowledge and insight into the property market. In my view, P B
never refused such information from Tong because she was an active
C and avid dealer in real property. C

D (b) As seen below, within a period of 3 months from April to June 2011, P D
purchased the 1st, 2nd and 3rd Properties for investment purpose by way
E
of resale/letting. She even introduced Tong to Li and interested Li into E
purchasing the 4th Property referred to in paragraph 137 below, which
was directly above the 2nd Property that she bought. Then in
F F
September 2011, she again explored possible purchase of the 5th
Property referred to in paragraph 149 below, but was eventually out-
G bid by other potential purchasers. G

H (c) P’s property acquisitions were made with various “investment H

partners” (including Tong and his colleague) using different corporate
I investment vehicles to acquire different properties, but each such I
corporate vehicle would only hold one investment property. P well
J
understood this more sophisticated means of purchasing real property J
would facilitate (a) joint investment by several “investment partners”
some of whom held company shares whilst others “冇落名”, and (b)
K K
flexibility in any re-sale by sale of company shares or sale of the
property itself. P appeared to be the front person who took charge to
L act on behalf of the “investment partners” for establishing the relevant L
corporate vehicles, and for liaising with Tong as estate agent to handle
M the conveyancing transactions. M

N (d) As P said, she and Tong looked out for each other. P (and presumably N
her “investment partners” as well) was eager to make property
O
investments with a view to earn profit gain, and Tong was equally O
eager to identify investment opportunities to meet P’s interest (and
thereby earn commission income for D2 if a deal was struck), and at
P P
times he even collaborated with P in property investment for profit
gain himself. Thus, when P claimed Tong struck her as honest and
Q hard-working, I find on balance this merely reflected Tong’s diligence Q
in introducing property investment opportunities and in providing
R property-related information to P, his collaboration in making R
property investment with P, and also his willingness to facilitate
S investment by his colleagues(s). S

T
(e) In my view, P was a venturous property investor who was into non- T

U U

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 - 73 -
A A

consumer property dealing and who was not shy of entering into
B potentially risky property ventures, eg she was quite prepared to (i) B
purchase property with significant UBWs (such as the 2nd Property) or
C possible UBWs (such as the Other Property and the Property), and (ii) C
enter into property investments with “investment partners” who were
D unknown strangers (such as Tong’s mother for the 3rd Property and D
Tong’s colleague for the Property).
E E

F F
ST
VII. 1 PROPERTY
G G
st
135. The 1 property that P purchased through Tong/D2 was Unit
H No 36, 2nd Floor, Shing Yip Industrial Building, Nos 19-21 Shing Yip H

Street, Kowloon (“1st Property”). On 28 April 2011, P for and on behalf of

I I
Promise Goal Investments (HK) Ltd (“Promise Goal”) signed a PASP to
J purchase the 1st Property for a consideration of $7,190,000. Promise Goal J

K
was as corporate vehicle established for the sole purpose of acquiring / K
st
holding the 1 Property for investment purpose. Although Promise Goal
L L
was a company founded by P and her “investment partner” Mr Ngai Chi

M
Hon (“Ngai”), in fact there were 3 “investment partners”, ie P, Ngai and a M

Mr Tsui who “…… 係冇落名嘅”. P said the 1st Property was purchased
N N
in the name of Promise Goal because “…… 呢個物業有三個 partner 喺入
O 面嘅, 如果[P]用[P]自己個名 …… 嘅話, [P]點同番啲人交代, 同埋嗰個 O

誠信問題”. In short, the purchase of the 1st Property was a “合夥投資”

P P
(ie partnership investment). The 1st Property was ultimately re-sold.
Q Q

VIII. 2 ND PROPERTY
R R

136. The 2nd property that P purchased through Tong was 12th
S S
Floor, Union Industrial Building, No 116 Wai Yip Street, Kowloon (“2nd
T Property”). On 28 May 2011, P signed a PASP to purchase the 2nd Property T

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A A

for a consideration of $6,280,000. The 2nd Property was acquired under a

B B
PASP (in D2’s printed standard form) in P’s name for 5 “investment
C partners” (including P herself). Clause 5 of such PASP provided that “[the] C

Vendor is selling as Confirmor and this Agreement is subject to the terms

D D
and conditions of the principal agreement made between the Vendor and
E the Head Vendor”. P clearly understood such sub-sale and sub-purchase of E

the 2nd Property was known colloquially as “confirmor transaction” or

F F
“…… 摸貨形式嘅買賣, …… 即係當賣畀[P]嗰個人係轉售者嚟㗎喎”,
G “…… 有人買咗, 再轉手賣畀[P]嘅意思囉, 唔係原業主”, and the sale G

H
and purchase of such property between the owner and the vendor and the H
sub-sale and sub-purchase between the confirmor/vendor and the purchaser
I I
would be completed within the same day. The 2nd Property was eventually

J
taken up and acquired via another corporate vehicle called Joy Star J
Investments Limited (“Joy Star”), which P established to take up the
K K
assignment of and to hold the 2nd Property.

L L
nd
137. On the same day that P purchased the 2 Property, Li
M M
purchased the unit on the 13th floor directly above the 2nd Property

N (“4th Property”). The interior of 2nd and 4th Properties were physically N

connected by a staircase that passed through an opening at the ceiling slab
O O
of the 2nd Property and the floor slab of the 4th Property. Tong took the
P initiative to disclose to P such unapproved alteration when he brought her P

to inspect the 2nd and 4th Properties, but this was merely telling P the
Q Q
obvious because she could see for herself the opening/staircase between
R the 2nd and 4th Properties upon site inspection. R

S S
138. Tong told P (a) “……. 買番嚟之後, 叫[P]可以封番個頂 …
T …” at a cost of about $100,000-$200,000, and (b) “如果再唔還原，有 T

U U

V V
 - 75 -
A A

機 會 釘 契 囉 ” (ie there might be a problem with the title of the 2nd

B B
Property), which “…… 咁[P]估賣唔出啩 ……” (ie it would adversely
C affect P’s ability to re-sell the 2nd Property). I find on balance that by then C

(if not earlier) P knew an unauthorised alteration or addition to a property

D D
could be a blot on title, and could result in inability to re-sell the property.
E E

139. Nevertheless, P was still prepared to purchase the 2nd Property

F F
and she finally did so because (a) she managed to get the vendor to give a
G $700,000 discount on the sale price (ie “即係[the vendor]開嗰個價, [P]還 G

H
嗰個價, [P]計埋嗰個數值落去, 減咗人哋$700,000 囉”) that took into H
nd
account the cost of potential reinstatement of the 2 Property, and (b) Tong
I I
told her the 2nd Property was well sought-after and would make a good

J return if sold in the market (ie “…… 呢啲係特色單位, 係非常之罕有嘅, J

反而好多人鍾意”, “…… 係罕有嘅單位, 係好搶手嘅”). So despite the

K K
known risk of title issues (ie “釘契”) and the possible need for property
L reinstatement, P regarded the 2nd Property as a good investment with L

probable profit return, and decided to purchase such property. In my view,

M M
P learned from this transaction (if not earlier) that if a property with
N unauthorised alterations and/or UBWs was a worthwhile investment, she N

could still make a good deal from purchasing such property by negotiating
O O
a discount for the purchase price.
P P

140. P did not reinstate the opening/staircase between the 2nd and
Q Q
4th Properties because the tenancy for the 4th Property had not expired,
R “…… 郁動人哋嘅時候 , 係影響到人哋嘅” . About a year later, by a R

PASP dated 27 April 2012, Joy Star sold and Mr Leung Chung Ming or his
S S
nd
nominee(s) purchased the 2 Property. P definitely made profit gain from
T the 2nd Property as she secured a discount in price from the vendor but did T

U U

V V
 - 76 -
A A

not incur the cost to reinstate such property for re-sale. Clause 21 of such
B B
PASP stated “See Rider (附件二) ……”, and Clauses 1-2 of Appendix 2 to
C such PASP (which P countersigned on behalf of Joy Star) provided that: C

D “1. 賣買雙方同意於簽妥正式買賣合約後, 該大廈或該物 D

業單位出現任何突發事故, 例如大廈維修、失修或其他
屋宇署之新指令, 賣方將不會負責, 而買方亦不會因此
E E
取消買賣.

F 2 買方明白該物業現有的連接 12/F 同埋 13/F 自建樓梯 F

並未入則, 而賣方並不負責該自建樓梯將來可能引伸
的任何費用及責任.”
G G

H 141. P at first tried to (a) shy away from the fact that Clauses 1-2 of H

Appendix 2 of such PASP were by nature waiver clauses that she imposed
I I
on the purchaser upon re-sale of the 2nd Property to protect her interests as
J vendor, and (b) say such clauses only “…… 如實去話番畀人聽囉, 由佢 J

自己決定買定唔買喇 ”. But when pressed under cross-examination, P

K K
confessed she understood the meaning of such clauses, ie under Clause 1
L L
“…… 係新嘅指令[P]先唔負責之嘛, 舊嘅指令要負責㗎嘛”, and under

M Clause 2 “…… 係個買家係視察完, 確實有呢個樓梯, 係披露呢件事實, M

佢 認 為 冇 問 題 先 至 買 , 所 以 [P] 係 唔 負 責 咁 嘅 意 思 ” , and she also

N N
understood the reference in Clause 2 to “將來可能引伸的任何費用及責
O 任” (ie future costs and obligations) meant “咪釘契同埋嗰度要維修番-- O

即係等於[P]買嗰時候, 知道 …… 釘契同埋要維修番條樓梯嘅責任囉
P P
……” (ie title problem and reinstatement cost), so she was constrained to
Q Q
agree that the effect of Clauses 1-2 of Appendix 2 to such PASP was to

R
ensure the purchaser could not claim against the vendor and/or could not R
refuse to complete the purchase by reason of such unauthorised alterations
S S
and/or UBWs, which clauses were necessarily for protecting P’s interests

T as vendor. T

U U

V V
 - 77 -
A A

142. P said when the purchaser inspected the 2nd Property, he was
B B
able to see for himself the staircase that connected the 2nd and 4th
C Properties, which UBW Joy Capital as vendor “ 如 實 披 露 ” (factually C

disclosed) and would not be liable. Under cross-examination, when

D D
queried as to whether Joy Capital as vendor would be liable for the
E opening/staircase as unauthorised alterations and/or UBWs if the purchaser E

declined to inspect the 2nd Property before he signed such PASP, P frankly
F F
admitted she understood Clause 2 of Appendix 2 of such PASP meant “買
G G
之前[P]通知咗, 佢接受, 咪就 …… 佢負責囉”, “…… 佢唔睇樓佢嘅事

H 喇 , …… [P] 有 要 求 佢 睇 ” . Thus, in my view, P well knew from this H

transaction (if not earlier) that (a) a waiver clause was for protecting the
I I
vendor’s interests, (b) if a purchaser was duly informed of the existence of
J unauthorised alterations and/or UBWs at the subject property by the terms J

of the PASP that the purchaser signed to accept they were within the
K K
“subject matter limits” of the waiver clause, the vendor would not be
L responsible for and the purchaser could not complain about such L

unauthorised alterations and/or UBWs, and (c) the position in (b) above
M M
was still applicable even if the purchaser chose not to inspect the property
N because he was already notified about such unauthorised alterations and/or N

UBWs by the terms of the PASP.

O O

P IX. 3 RD PROPERTY P

Q 143. On 9 June 2011, P signed a PASP (in D2’s printed standard Q

form) to purchase Unit No 16, 7th Floor, Wah Shing Centre, No 11 Shing
R R
Yip Street, Kowloon (“3rd Property”) for a consideration of $6,210,000. P
S said under cross-examination her impression (even though she did not S

remember clearly) was that the 3rd Property was purchased directly from
T T

U U

V V
 - 78 -
A A

the owner “…… 因為 …… [Tong]話同業主買嘅”. But Clause 5 of such

B B
PASP provided that “[the] Vendor is selling as Confirmor and this
C Agreement is subject to the terms and conditions of the principal C

agreement made between the Vendor and the Head Vendor”, and I find on
D D
balance it was a “confirmor transaction” with P as the sub-purchaser.
E E

144. Again, the 3rd Property was a partnership investment, but P’s
F F
evidence was unclear as to who exactly was her “investment partner”. P’s
G WS stated that P purchased the 3rd Property together with Tong who shared G

half of the purchase price, but P testified that from the beginning Tong told
H H
her “同[Tong]個媽媽合夥投資嘅, 但係[Tong’s mother]用[P]個名啫, 都
I 係 合 夥 投 資 ” . When pressed on such discrepancy, P professed not to I

J
know who her “investment partner” was, ie “ 其 實 [P] 都 唔 知 㗎 ， … … J

[Tong]咁講, [P]就係咁聽㗎咋”, “因為 …… 第一, [P]冇見過[Tong’s

K K
mother], 但係[Tong]話叫[P]同[Tong’s mother]合作買。咁其實嘅時候, 究
L 竟係[Tong]吖, 定係[Tong’s mother]呢? 咁 …… 要問番[Tong]先清楚囉。 L

…… [P]理解, 就應該係[Tong]想買, 但係[Tong]唔方便出名, 所以用

M M
[Tong’s mother]個名嚟買 ……” P claimed it was inconvenient for Tong
N N
to be named as the purchaser “…… 因為[Tong]做地產囉 ……”, “……

O 有個同事個客已經決定買㗎喇, 如果用[Tong]個名, 畀[Tong’s]同事知道 O

就唔好”, “…… 咁就叫[P]買咗佢先, 咁就賺咗錢之後, 就寫番[Tong’s

P P
mother]個名, 開票畀[Tong’s mother]”.
Q Q

145. This was the first time P made property investment jointly
R R
with Tong (or Tong’s mother), and she claimed she decided to help Tong
S S

T T

U U

V V
 - 79 -
A A

(or Tong’s mother) buy half share of the 3rd Property (even though Tong
B B
himself would be embarrassed should his colleague find out) “…… 因為
C 好熟 ……, 同埋我覺得[Tong]好叻囉, 同埋對[P]都冇影響”, and P felt C

“…… 一買入, 賣出, …… 都係會賺錢嘅, 所以冇乜嘢所謂喇, ……”

D D

E 146. I find on balance P’s “investment partner” was Tong and not E

Tong’s mother, but Tong put forward his mother as the nominal
F F
“investment partner” to avoid embarrassment as he would be earning profit
G from the assured eventual sale of the 3rd Property to the client of his G

colleague. This sat well with my finding above that P and Tong looked out
H H
for each other over property investment opportunities. Moreover, P was
I I
assured of profit gain by way of the assured re-sale of the 3rd Property to

J
the client of Tong’s colleague, which probably explained why she was J
unconcerned over who exactly was her “investment partner” for such
K K
property investment. This, in my view, underlined the fact (which on

L balance I find) that P was an venturous property investor prepared to L

overlook basic prudence50 if opportunity arose for making quick profit gain
M M
from property dealings.
N N
rd
147. Shortly after P bought the 3 Property, Tong told her it was re-
O O
sold to the client of Tong’s colleague, but P in her evidence did not give
P particulars of such re-sale except that a quick profit of about $110,000 was P

made upon such re-sale, and she shared such profit with Tong who asked
Q Q
her to issue a cheque in the sum of about $55,000 payable to his mother.
R R

S 50
eg finding out who exactly her “investment partner” was, speaking to and getting to S
know her “investment partner” whether nominal or otherwise, ascertaining the
financial ability and holding power of her “investment partner”, and getting details
T T
of the assured re-sale of the property

U U

V V
 - 80 -
A A

148. P claimed the 1st and 3rd Properties had no illegal structures,
B B
and P’s WS stated she was able to sell such properties “without having to
C deal with any enquiries relating to any unauthorized structures of any kind C

from the purchasers’ solicitors”. In my view, such statement plainly

D D
demonstrated that (quite irrespective of the existence or otherwise of any
E UBW) P knew purchaser’s solicitors could raise requisitions about UBWs E

in respect of the property being the subject matter of the conveyancing

F F
transaction, and I find P’s denial of such knowledge specious.
G G

X. 5 TH PROPERTY
H H

149. P said in/about September 2012 she again teamed up with

I I
Tong with a view to jointly invest in the purchase of a unit at East Sun
J Industrial Building in Kwun Tong (“5th Property”). Tong was eager for J

such investment, and telephoned to tell P “…… 嗰個價錢係抵買嘅”, so

K K
P “畀咗張支票[Tong] …… 去 bid 價 ……”, but “…… bid 唔到”, “即
L L
係 …… [P]聽番嚟就話好多個 agent 去爭, 嗰個價𢲲到好高, 個價太高

M 喇，[Tong]話唔值得買, 咁[Tong]就話冇買到囉”. In short, the deal fell M

through because of fierce competition from other potential purchasers, and
N N
as a result P/Tong could not achieve the purchase price they had in mind.
O O
XI. HEAD PASP
P P
150. Before Ho as purchaser signed the Head PASP, Wong/Ho also
Q Q
reviewed the terms of the Head PASP which was in Midland Realty’s

R
printed standard form together with an appendix that set out the occupancy R
status of the shops/units at the Head Property, including:
S S
(a) Units 4(A) and 4(B) were respectively leased to 李曉梅 at $14,500
T per month (from 4 March 2012 to 3 March 2013) and to Midland T

U U

V V
 - 81 -
A A

Leasing at $18,000 per month (from 18 October 2012 to 17 October

B 2014); B

C (b) Shop 6 was let to Ho Cheung Ltd at $19,800 per month (from 15 C
March 2011 to 14 March 2012);
D D
(c) vacant possession would be delivered for Store 4 and Store 6.
E E

F F
151. Then on 9 November 2012, Ho entered into the Head PASP to
G G
purchase from Max Rainbow the Head Property which comprised a large

H
number of shops/units at Phase 1 and Phase 2 of the Development of the H
Buildings (including the Other Property and the Property) for a
I I
consideration of $350,000,000 (without apportionment of the overall

J consideration for each individual shop/unit). The estate agent who J

brokered the deal was Midland Realty.

K K

L 152. Ho intended D1 (of which Ho was a director) to eventually L

take up the assignment of the Head Property (including the Other Property
M M
and the Property), hence the purchaser in the Head PASP was described as
N Ho or his nominee. D1 was incorporated in 2012 as a corporate vehicle for N

(a) acquiring only the Head Property (and not any other property or
O O
project), (b) arranging sub-division of the Head Property with allotment of
P undivided shares for individual shops/units, and (c) sub-selling such sub- P

divided shops/units for profit return or letting any unsold shops/units to

Q Q
tenants for rental return. D1 did not have any employees, so operationally
R Ho (i) assigned 3-4 employees of his other companies to handle such R

project in relation to the Head Property, and (ii) instructed Wong to

S S
supervise and handle such project. By the Head Nomination dated 22
T T

U U

V V
 - 82 -
A A

November 2012, Ho formally nominated D1 to enter into the assignment

B B
for the purchase of the Head Property from Max Rainbow.
C C

153. Wong fairly agreed that:

D D

(a) in principle the existence of any illegal structure(s) and/or UBW(s)

E might cause difficulty for D1 as confirmor/vendor to sub-sell the E
affected shop(s)/unit(s);
F F
(b) there was no interested potential sub-purchaser of the shop(s)/unit(s)
G of the Head Property (yet to be formally sub-divided) when Ho as G
purchaser signed the Head PASP, so it was unknown for how long
H
after D1’s acquisition of the Head Property it would have to hold such H
shop(s)/unit(s) if they had illegal structure(s) and/or UBW(s);
I I
(c) if any such shop(s)/unit(s) had illegal structure(s) and/or UBW(s) and
could not be sub-sold in the short term, it/they would have to be let
J for rental return with consequent risk that (i) the BD might impose J
orders requiring demolition or rectification of the illegal structure(s)
K and/or UBW(s), and (ii) D1 might have to incur expenses (the amount K
of which was then unknown) to carry out any such works.
L L

M M
154. Nevertheless, Ho/D1 agreed to Clause 27 of the Head PASP
N N
which provided as follows:
O O
“The Purchaser has accepted the physical condition of the
Premises even if If any unauthorised or illegal structure or
P alteration exists in the said premises and/or any part or parts P
thereof, and the Purchaser shall without prejudice to any other
claims and remedies which he may have have no right to rescind
Q Q
the agreement to purchase the said premises for the aforesaid
reason”.
R R

Wong agreed the original intent of the printed term of this clause was to
S S
protect Ho/D1 as purchaser should unauthorised or illegal structures be
T found at the Head Property, and he understood the handwritten T

U U

V V
 - 83 -
A A

amendments meant Ho/D1 as purchaser accepted the then condition of the

B B
Head Property, and “even if” illegal structures and/or UBWs were found at
C the Head Property, Ho/D1 as purchaser would have no right to terminate C

the Head PASP.

D D

E 155. Mr Lau submitted that: E

F (a) D1 had ample opportunity to inspect the physical condition of the F

Head Property (including the Property);
G G
(b) it was difficult to conceive of D1 purchasing the Head Property in the
H
course of its property investment business would blindly accept the H
physical state of the Head Property (i) without knowing its actual
condition, (ii) without inspecting or engaging professional surveyor to
I I
inspect the Head Property for illegal structures and/or UBWs, and (iii)
with consequent risk of loss due to the presence (if any) of illegal
J structures and/or UBWs; J

K (c) the circumstances as a whole suggested D1 knew of the existence of K

the Alleged UBWs, but as P did not plead any particulars of D1’s
L actual knowledge of the Alleged UBWs, she essentially relied on L
circumstantial evidence to urge the court to infer knowledge on the
M
part of D1. M

N N

O 156. Wong frankly agreed that as property investors he/D1 had O

healthy suspicion that the investment properties they looked into

P P
(including the Head Property) might have illegal structures and/or UBWs,
Q ie “…… 其實我哋嚟到做物業投資 ……, 每一件物業我哋都 …… 會懷 Q

疑過 …… 裡面有冇 …… 僭建物呢樣嘢 ……”

R R

S 157. According to Wong (and on balance I accept), D1 appreciated S

and took the commercial risk that there might be illegal structures and/or
T T

U U

V V
 - 84 -
A A

UBWs at the Head Property such that it might have to acquire/hold the
B B
affected shops/units and not be able to quickly sub-sell or re-sell them, but
C this was not their core business concern when deciding whether or not to C

invest in and purchase the Head Property.

D D

E 158. Wong explained (and on balance I find) that as a property E

investment company D1’s commercial/business approach towards

F F
acquiring the Head Property were as follows:
G G
(a) When the estate agent gave Wong information/offer concerning the
Head Property, he/Ho would review the asking/offer price (and it was
H H
Wong’s practice to calculate the price per square foot and the rental
yield on the basis of such asking/offer price) to see whether it was
I I
reasonable.

J (b) A land search was done for the Head Property, and Wong “…… 見到 J

裡 面 係 冇 任 何 嘅 僭 建 物 嘅 釘 契 … … ” Ho/Wong then became

K interested, especially as “…… 我哋嘅 strategy 嘅話, 我哋唔係自己 K
用, 我哋都係分契買出”.
L L
(c) Thus, Wong/Ho paid a visit to check out the Head Property (ie “視察
M 過 商場 就一 定有 ” ) with focus mainly on, say, the customer flow M
and the general environment/condition (ie “譬如好似呢個商場[at the
N Head Property]咁計嘅話, 嘅人流、有幾多間鋪營運緊喇, 有幾多間 N
鋪吉咗喺度。係喇, 呢個就係[D1]上去睇嘅主要原因”) rather than
O
on the exterior/interior of the Head Property (including the Other O
Property and the Property) to look for illegal structures and/or UBWs.
P P
(d) During the visit, Wong/Ho was more concerned with Phase 1 rather
than Phase 2 of the Head Property:
Q Q

(i) “…… 一期個商場裡面, 原因因為可能裡面涉及有好多公家嘅

R 位置喇。…… 因為佢係一個商場, 係一個商場裡面嘅鋪, 同埋嘅話, R

又有個泵房, 又有個電錶房, …… [Ho/D1]都會去了解清楚究竟嘅

S 話個--啲電錶、個泵房究竟啱唔啱, 同埋 …… 當其時嗰個業主立 S
案法團佢哋傾過, 呢啲嘅話係咪關於公家定係關於個商場,
T [Ho/D1]會了解清楚呢啲嘢嘅。…… 就係話[Wong]當其時嘅話, 以 T

U U

V V
 - 85 -
A A

[Wong]嘅認知, [Wong]嘅 alert 嘅話, 反而係 more focused 喺一期,

B B
關於啲大型泵房, 大型電--嗰啲變壓嗰個位置 ……”;

C (ii) “…… 一期[Wong]自己睇過, …… 係一個商場, 變咗有好多啲 C

[Wong]自己認為[Wong] unknown 嘅嘢[Wong]唔知道, 就係可能會
D 涉及啲大型嘅電嘅變壓器或者嘅所有嘅來去水嘅大型嘅泵、消房 D
嘅花灑, 呢樣嘢係—[Wong]係 unknown, …… 呢樣[Wong]係 ……
E 比較 alert 少少, 因為呢啲喺[Wong]嘅認知裡面, [Wong]覺得可能 E
真係會牽涉一個比較龐大嘅一個金額, …… 如果一期係違規嘅
F 話 ， … … [Wong] …… 會 覺 得 一 期 會 比 較 多 啲 [cost of F
rectification]”;
G G
(iii) Wong/Ho upon visit to Phase 1 before Ho signed the Head PASP
“…… 都係視察公家嘅位置, …… 唔係入鋪裡面” as Wong was
H H
more concerned to check “…… 商場個人流、吉鋪、環境, …… 即係
譬如 …… 有茶餐廳, [Wong]就會入去飲杯茶睇一睇個環境，……
I I
喺一期嘅話, [Wong]會咁樣呢? 因為一期嘅話, 啲商戶比較大少少,
又有惠康喇, [Wong]可以自己入到去裡面睇, 又有 Seven Eleven, 便
J J
利店喇, 又有茶餐廳, 又有酒樓, …… [Wong]可以真係自己入去裡
面度幫襯, 嚟到睇睇個人流又「盛」…… 以方便[D1]做決定 ……
K ”; K

L (iv) but in the end, in respect of “一期 ……所謂嘅電、pump 嗰啲”, L

“…… 咁點知睇完之後, 發覺嘅話, 呢啲係 standard, 喺個圖則裡面
M 係有咁嘅款, 咁變咗個安心咗少少喇 …… 咁換言之即係順利過渡 M
喇，…… 第一期嗰度”.
N N
(e) During the visit, Ho/Wong was less concerned with Phase 2 which
O
essentially comprised street-level shops and cockloft stores: O

(i) “…… 因為二期嗰面 …… 全部都係啲街鋪嚟, …… [Wong]就覺

P P
得嗰邊嘅話, 反而係比較 minor 少少對[Wong]自己嚟講。…… 至於
其他喺二期嗰度 …… 每一個鋪係獨立嘅, 咁唔會涉及有 …… 咁
Q Q
大型嘅泵或者咁大型嘅電錶房嘅話, 會影響到咁多間商戶, 咁所以
呢 …… [Wong]個人就覺得比較 minor 少少嘅嘢”;
R R

(ii) Wong checked the Phase 2 Floor Plans, and on his visit to Phase 2
S “…… 只不過係喺側邊行過望一望咁樣”, “…… [Wong]行過第二 S
期, 每一間嘅話都係一間獨立鋪、獨立錶、獨立水，咁變咗嚟計嘅
T 話, [Wong]覺得冇乜嘢咁嘅必要嚟到做一個咁深入嘅調查”, so he T

U U

V V
 - 86 -
A A

did not inspect the individual shops/units;

B B

(iii) the main purpose of Wong’s visit to Phase 2 “…… 就真係視察

C 個環境, [Wong]自己個 purpose 嘅話, 個人流, [Wong]知道有呢啲鋪 C
existing 喺度, …… 嗰陣時係[Wong]諗法 …… 其中有一間 …… 小
D 食部, [Wong]入去裡面有幫親佢, 望一望個鋪面。…… 同埋應該有 D
一間, 如果[Wong]冇記錯係, 吉咗, 佢開咗閘, [Wong]有望過嘅 …
E … 地鋪 ……其他就冇喇 ……”; E

F (iv) “…… 喺[Wong]個角度就係, [Wong]都 check 咗個 land search, F

都冇任何嘅違規釘, 咁[Wong]就會覺得呢啲係 okay”.
G G

H H
159. On balance, I find D1 did not inspect the Head Property
I I
(and/or its individual shops/units such as the Other Property and the

J
Property) to see whether or not there were illegal structures and/or UBWs, J
which was a considered commercial decision despite risk of possible
K K
presence of illegal structures and/or UBWs at such shops/units.

L L
160. The Shop 4 PASP did not refer to Units 4(A) and 4(B), and
M M
the Phase 2 Floor Plans only depicted a single Shop/Yard 4, but the street

N
view of Shop 4 and the Price List showed it was divided into Units 4(A) N
and Unit 4(B). I find on balance that up to the date for completion
O O
Wong/Ho did not ask for entry into the Property to check whether or not

P there were illegal structures and/or UBWs, “…… [Wong]係完全冇做過呢 P

個 嘅 , 冇 認 真 嘗 試 過 入 去 ” , especially as Units 4(A) and 4(B) were

Q Q
tenanted by a hardware/plumbing store and by Midland Leasing (even
R though Midland Leasing was related to Midland Realty who was Ho’s / R

D1’s agent for the Head PASP) respectively.

S S

T T

U U

V V
 - 87 -
A A

161. Wong disagreed the partition wall between Units 4(A) and
B B
4(B) was an illegal structure: “…… 將個鋪頭分開咗嚟間, 嗰個有機會係
C 一個 drywall 牆, 唔係一個有結構性牆嚟嘅, …… 係咪可以拆咗佢, 因 C

為呢個原先, 亦都係上手我買落嚟已經係存在嘅嘢 …… 已經係分隔,

D D
已經係簽訂咗 …… 個租約嚟㗎喇。…… 咁[Wong]自己個人覺得有機
E E
會裡面可能只係 drywall 牆分隔 …… 開兩個鋪 …… [Wong]自己個人

F 覺得係唔會涉及到僭建呢樣嘢”. But Wong fairly accepted that if such F

partition wall were an illegal structure (which he disagreed), then (a) the
G G
tenants of Shop 4 would be affected if the new owner decided to remove
H such illegal structure and/or (b) D1 might have to acquire/hold the H

Property and not be able to re-sell the same. But still Wong considered it
I I
unnecessary to inspect the Property because this was an acceptable
J commercial risk that Ho/D1 had taken into account in deciding to purchase J

the Head Property for the consideration of $350,000,000 (see paragraphs

K K
157-159 above and paragraphs 162-164 below), (ie “…… 即只係知道有
L 個分隔牆喺度喇? 仍然係覺得就唔緊要喇, 就唔使檢查, 到時有事嘅話 L

M
就當唔好彩喇, …… 咁樣 …… 咪當自己失策 ……”). M

N N
162. Wong explained (and on balance I accept) there was no need

O for particular inspection of the Property because “第一, [Wong]諗[Wong] O

唔會去自己告自己公司, 話 …… 呢個係僭建。當其時, [Ho/D1]買番嚟

P P
已經呢兩個租客喺度, 佢哋亦都冇投訴, …… 雙安無事 ……。因為
Q [Ho/D1]買嗰陣時, [Wong]係睇過個 …… land search 係冇 …… 投訴, Q

冇僭建呢樣嘢, 理論上。咁變咗嚟計嘅話, 如果你話買咗之後會構成咁

R R
嘅款又「盛」, [Wong]唯獨是嚟講嘅話, 係[Wong]個 investment 嘅失策”.
S In other words, Wong/D1 acknowledged this was a commercial risk that it S

T
was well aware, that it took into account, and that it was prepared to bear T

U U

V V
 - 88 -
A A

in coming to the decision to purchase the Head Property (including the

B B
Other Property and Property), and such investment risk was factored and
C internalised in Ho’s/D1’s decision to buy the Head Property at the C

consideration of $350,000,000.
D D

E 163. Ho’s/D1’s business strategy was to sub-divide the Head E

Property and to sub-sell the sub-divided individual shops/units rather than

F F
to hold them for self-use, so although the presence of illegal structures
G and/or UBWs was a commercial risk to be factored into such business G

decision, there were other more significant commercial considerations for

H H
D1’s commitment to the Head Property project:
I I
“…… 反而嘅話, [Wong]同[Wong’s]老闆[ie Ho]都覺得, ……
[Ho/D1]就會比較係 …… 唔擺得咁著眼點, 喺個投資度。……
J J
點解呢? 因為[Ho/D1]買呢個物業返嚟, 原先都係諗住將佢分
契嚟到賣出。如果賣唔出嘅話, 銀行亦都估到價, 可以上到會。
K [Ho/D1] check 過 land search …… 即係 …… 冇釘契或者 … K
…冇任何僭建呢樣嘢, 咁對於[Ho/D1]已經成立喇。如果你話
賣唔出呢個單位, 銀行都上到會囉, 咁變咗銀行 check 過呢啲
L L
嘢上到會, 就應該冇問題㗎喇。因銀行上會 , …… 佢都要
check 有冇畀人釘契㗎嘛, 所以喺[D1]角度就會覺得就算係賣
M 唔出咁嘅款, 銀行上到會咪自己收租囉。…… 即係相對地講, M
個風險比較低啲 ……”
N N

164. Thus, the salient factors Ho/D1 for deciding to purchase the
O O
Head Property would include the price offered and the price per sq ft, the
P land search (eg whether any building order or litigation was revealed), P

whether any bank was willing to grant mortgage for payment of the
Q Q
purchase price as well as the customer flow, environment and condition of
R the property: R

S “…… [Ho/D1]決唔決定買一個物業, 最主要嘅話就當然睇個 S

現任業主開價開幾多錢。[Ho/D1]會計個呎價, [Ho/D1]會問銀
行呢件物業上唔上到會, [Ho/D1]會睇 land search, 究竟會唔會
T T

U U

V V
 - 89 -
A A

有任何嘅訴訟喺裡面, 然之後[Ho/D1]就會去 site seeing, 睇下

B 個人流、睇下個環境符唔符合 agent 拎上嚟個 description。咁 B
[Ho/D1] 自 己計 過晒 數 , 以上 嗰 幾 點嘅 話 , 都 成立 到嘅 話 ,
[Wong]諗已經係[Ho/D1]都會係開票去還價㗎喇, 已經係, 即
C C
係有意欲去買呢件物業㗎喇, 已經係。”

D D
165. For like reasons, I also find on balance Ho/Wong did not
E inspect the Rear Lane even though Wong would have realised from the E

Phase 2 Floor Plans the presence of this open passage at the back of the
F F
street shops on G/F of Phase 2 of the Development of the Buildings. In
G fact, it was only in/about 2014 (ie after the issuance of the writ of G

H
summons in the present action on 4 August 2014) that Wong/D1 accessed H
the Rear Lane whereupon Wong discovered steel security cage for
I I
window-type air-conditioner at the rear window of Store 6 and metal sheet

J
canopy at the Shop 6 Yard (see Part XXIII below). Thus, I find on balance J
that at the time (a) when/before Ho signed the Head PASP and/or (b) up to
K K
the time when HCP disclosed the RHL Report to W&G, D1 had not

L inspected the Other Property and/or the Property, and D1 did not have L
actual knowledge (i) whether there were any illegal structures,
M M
unauthorised alterations/ additions and/or UBWs at the Head Property, and
N if so, the extent of any such illegal structures, unauthorised N

alterations/additions and/or UBWs, and (ii) whether the Alleged UBWs

O O
were in existence at the Property. In the circumstances, there was no
P deliberate non-disclosure or concealment of the Alleged UBWs from P by P

D1.
Q Q

R 166. Wong agreed that as property manager he was alerted by R

Clause 27 of the Head PASP that there might be illegal structures and/or
S S

T T

U U

V V
 - 90 -
A A

UBWs at the Head Property, but for reasons explained above D1 did not on
B B
its own or engage surveyor to check whether there were in fact illegal
C structures and/or UBWs at the Head Property. Wong also understood that C

under Clause 28 of the Head PASP Max Rainbow agreed to permit Ho/D1
D D
or their authorised agents to view the Head Property and/or any part(s)
E thereof at all reasonable times of the day before completion (a) upon prior E

notice being given to Max Rainbow, (b) subject to the consent of the
F F
tenant(s), and (c) subject to a maximum of 5 times. But Wong said (and on
G balance I accept) that for reasons explained above D1 did not make G

arrangements with Max Rainbow for appointment to inspect the Head

H H
Property.
I I

167. In my view, for all the reasons discussed above, Ho/D1 was
J J
not commercially concerned over the terms of Clause 27 of the Head
K PASP, and did not exercise the right to seek inspection under Clause 28 of K

the Head PASP. On balance, I further find D1 as property investor was also
L L
comforted by the protection afforded by the Waiver Clause that it intended
M to impose on sub-purchasers by way of a standardised appendix to be M

annexed to all PASPs for sub-sales of the individual shops/units of the

N N
Head Property. But more of this later.
O O

168. In the circumstances, D1 as property investor bought the Head

P P
Property with a view to sub-divide the same for sub-sale of the individual
Q shops/units. Although D1 checked the land search records, it did not Q

R
inspect the Property. So I come to the inevitable conclusion that D1 did not R

S S

T T

U U

V V
 - 91 -
A A

have actual knowledge of the existence of the Alleged UBWs, which

B B
meant P’s claim against D1 would essentially turn on the construction of
C the Waiver Clause in the Shop 4 Appendix, ie whether it was so expressly C

wide and clear to cover the Alleged UBWs, or whether it was tricky, unfair
D D
or misleading. At the end of the day, this would be a matter of
E construction. E

F F
XII. SUB-SALE OF HEAD PROPERTY
G G
169. Soon after Ho entered into the Head PASP and pending sub-
H division of the Head Property, D1 began to sub-sell the individual H

shops/units to different sub-purchasers. Wong had no impression of having

I I
met Tong. He confirmed that any party (or the estate agent of any such
J party) interested to purchase any individual shop/unit of the Head Property J

could have approached Ho instead, but he had not heard Ho mention about
K K
having met Tong.
L L

170. There was no dispute that through the services of D2, D1 sub-
M M
sold and P sub-purchased the Other Property and the Property under the
N Shop 6 and Shop 4 PASPs, but D1 (including Wong) and P had not met N

before such PASPs were signed or indeed at any other material times.
O O

P 171. I find and accept that after the transaction in relation to the 5th P

Property fell through (ie in/about November 2012), Tong introduced to P

Q Q
inter alia Phase 2 of the Development of the Buildings, and asked if she
R would be interested to purchase from the confirmor/vendor any of the R

shop(s)/unit(s) thereat.51 I also accept Tong told P that Phase 2 of the

S S
51
P understood/knew from Tong (a) D1 was not the registered owner of the Shop 5 /
Store 5, Other Property and the Property, (b) such shops/units were part of the Head
T T
Property acquired by D1, and (c) D1 sub-sold such shops/units as confirmor (see

U U

V V
 - 92 -
A A

Development of the Buildings was situated in an ideal location in Tsuen

B B
Wan opposite a wet market, and that the then asking/offer price was very
C attractive making it one of the best deals. P was interested, so shortly C

thereafter but before P entered into the Shop 6 and Shop 4 PASPs (which
D D
date D2 averred was 20 November 2012 – see paragraph 56(c) above),
E Tong arranged for a site inspection of the shops/units at Phase 2 of the E

Development of the Buildings.

F F

G XIII. INSPECTION IN NOVEMBER 2012 G

H 172. At such inspection in November 2012, Tong accompanied P H

to view the exterior of the street-level shops on G/F of Phase 2 of the

I I
Development of the Buildings that faced Tsuen King Circuit. Tong also
J gave P the Price List and the Floor Plans, which showed inter alia the J

Other Property, Shop/Store 5 and the Property, and which P countersigned.

K K
In my view, the Phase 2 Floor Plans were straightforward drawings with
L little complexity, and clearly showed Shops 4-6 and Stores 4-6 with their L

front parts facing Tsuen King Circuit and their rear parts (including the
M M
Shops 4-6 Yards) facing the Rear Lane. Indeed, P was able to read the
N Phase 2 Floor Plans easily during cross-examination by identifying in the N

middle of the Phase 2 Floor Plan for G/F the larger rectangular shapes as
O O
Shops 4-6 and the adjoining smaller rectangular shapes at the back as
P Shops 4-6 Yards. I find on balance P did read and understand the Floor P

Plans, including the layout of the Other Property and the Property, which
Q Q
was why she countersigned the Phase 2 Floor Plans.
R R

173. On balance, I do not accept (a) P’s assertion that she signed
S S
the Floor Plans without any understanding of their contents (“睇唔到, [P]
T T
also Clause 6 of each of the Shop 6 and Shop 4 PASPs)

U U

V V
 - 93 -
A A

唔識睇”), (b) her claim that she only noted the Shops 4-6 Yards on the
B B
Phase 2 Floor Plans at trial and not when she signed the Shop 6 and/or
C Shop 4 PASPs, and (c) her belated explanation in re-examination that Tong C

did not explain the Floor Plans to her when he gave her a bundle of
D D
documents comprising the Floor Plans / Price List and merely told her to
E countersign the Phase 2 Floor Plans. E

F F
174. P’s WS stated Tong told P (a) there was an unauthorised
G partition wall that divided Shop 4 into Units 4(A) and 4(B), which units G

had been rented out so she could not inspect the interior of Shop 4, and (b)
H H
D1 had rented out Store 4 as a makeshift warehouse so she could not
I inspect the interior of Store 4, hence she did not have any opportunity to I

inspect the interior of the Property before she signed the Shop 4 PASP. But
J J
P testified under cross-examination that at the inspection in November
K 2012 she took the initiative to request inspection of the interior of the K

Property, and Tong replied it could not be arranged.

L L

M 175. On balance, I find Tong did not arrange for P to inspect the M

interior of the Property, but in my view P was content with that and did not
N N
take any initiative to request for inspection of the interior of the Property at
O all: O

P P
(a) In my view, at the time of the inspection in/about November 2012, P
did not have the Property in mind as yet as a target property to be
Q acquired/purchased for investment purpose. This was borne out by the Q
fact that even after such inspection P did not express interest in the
R Property. Instead, according to D2’s pleadings (although I accept there R
was no direct evidence), P informed Tong after such inspection she
S was interested to sub-purchase Shop/Store 5 subject to S
lettings/tenancies, but it transpired such shop/unit had already been
sold. Further, even on P’s own case, after such inspection in/about
T T

U U

V V
 - 94 -
A A

November 2012, she expressed interest to sub-purchase the Other

B Property rather than the Property. Indeed, it was only in the morning B
of 28 November 2012 (ie the very day when P signed the Shop 4
C PASP) that Tong telephoned to urgently ask P to sub-purchase the C
Property in order to help his colleague who was interested in
D purchasing Store 4, so P confessed in evidence that the Property D
“……主要都唔係講話呢個投資物業, 主要就係睇[P]能唔能夠可以
E 幫[Tong]嗰個同事 ……” (see paragraph 191 below). E

But even if I were wrong and P was already interested in the Property
F F
at the time of the inspection in/about November 2012, for reasons
explained in (b)-(d) below, I find it improbable that P would have
G taken the initiative to ask for inspection of the interior of the Property. G

H (b) During the inspection in/about November 2012, P viewed the exterior H
of inter alia the Property or its frontage that abutted Tsuen King
I Circuit (C/970). It would have been patently obvious from such I
viewing that Shop 4 had been partitioned into Units 4(A) and 4(B),
J
and they were respectively tenanted/occupied by a hardware/ J
plumbing store and by Midland Leasing. So quite apart from the
Partition Clause in the Shop 4 Appendix, P must have seen for herself
K K
and must have known there was a partition wall that separated
Units 4(A) and 4(B), and Units 4(A) and 4(B) were tenanted (which
L fact was also obvious from the Price List). L

M (c) As Wong testified52 (and I agree), had P been truly interested in the M
interior of the Property, she could have posed as a potential customer
N to enter the hardware/plumbing store and Midland Leasing as both N
shops were open to the public for business. There was no suggestion
O
of any impediment for P to enter these shops at Units 4(A) and 4(B) in O
such manner.
P P
(d) Whilst it was true that posing as a customer to enter Units 4(A) and
4(B) would not have enabled P to access the non-customer areas at the
Q Q
back of the shops (which Wong agreed “…… 都係要問 …… [the
tenant] 批准, 因為嗰個租客嚟㗎嘛”) and/or to access Store 4, the
R reality was P did not even make any attempt to enter the 2 shops on R

S
52
Wong said under cross-examination that “…… 鋪面嘅位置當然你可以裝作一個 S
客人係去到入去再視察喇”, “…… 譬如嚟講, 你入去話你要入去裡面 …… 買
五金嘅嘢, 我相信個老闆會畀你入去㗎喇。佢係一間美聯物業, 你話去裡面睇, 你
T T
話問物業資料, 我相信美聯物業亦都 welcome 畀你入去裡面㗎”

U U

V V
 - 95 -
A A

G/F of the Property to have a look around.

B B
(e) But again if I were wrong and P only raised the request to inspect the
C interior of the Property when/after Tong (on 28 November 2012) C
asked her to sub-purchase the Property in order to help his colleague
D who was interested in purchasing Store 4 (see paragraph 191 below), D
I still find it improbable that P would have taken the initiative to ask
E
for inspection of the interior of the Property. In my view, P would not E
have done so because (i) Tong told her the Property would be sub-
divided into Shop/Yard 4 and Store 4, (ii) she was unconcerned with
F F
the condition of the sub-divided Store 4 which Tong assured her
would be taken up and acquired by his colleague whatever its
G condition, (iii) she knew from Tong and from her own observation G
that Units 4(A) and 4(B) were tenanted, (iv) she was buoyed by
H Tong’s assurance that the sub-divided Shop/Yard 4 could be quickly H
and easily sold on its own for quick profit return, and (v) she was to
I urgently sign the Shop 4 PASP on the same day (see paragraphs 191- I
193 below).
J J

K K
176. P in her pleadings claimed that “[during] the said viewing”, ie
L the inspection in/about November 2012, she specifically questioned Tong L

M
whether there were any UBWs at the Property, and Tong told her there M
st
were none (ie the 1 Representation). But P’s WS (which P adopted at trial)
N N
stated that P questioned Tong whether there were other UBWs “concerning

O
the Property in addition to the unauthorised partition” to which Tong O
st
replied there was none (which presumably referred to the 1
P P
Representation made at the inspection in/about November 2012), and

Q further added that Tong told her there were some unauthorised alterations Q

located “on the outside” (ie “外圍”) but none was related to the Property
R R
(ie “就話有啲未經授權嘅更改, 不過佢哋全部都係喺外圍嘅, 而就唔關
S 4 號 鋪 [ie Property] 事 ” ). Again, for the reasons set out in paragraph S

175(a) above, I am not persuaded that at the inspection in/about November

T T

U U

V V
 - 96 -
A A

2012 P had any particular interest in the Property and/or Tong would have
B B
told P there were no unauthorised alterations that related specifically to the
C Property. C

D D
177. Interestingly, when P was questioned under cross-examination
E whether Tong pointed out to her the unauthorised alterations that he said E

were “on the outside”, P testified that “[Tong]話如果之嘛, …… [Tong]話

F F
如果有呢啲, …… 有機會喺外圍有僭建 …… 所以[P]就冇追問落去實
G 在係乜嘢僭建 …… 因為呢個係唔確定㗎嘛”, and that “如果[Tong]個 G

H
講法唔係話「如果有機會」, 如果[Tong]講法話「外圍係有僭建㗎喎, … H
… 不過就唔係喺呢個物業[ie Property]裡面嘅, 但外圍有」”, and then
I I
went on to say she would have followed up and asked Tong about the
J illegal structures “on the outside”, but she did not do so during the J

inspection in/about November 2012 because Tong did not affirmatively say
K K
there were illegal structures “on the outside”.
L L

178. Such testimony, of course, did not sit well with P’s WS that
M M
claimed Tong did tell her there were (and not there were possibly) some
N unauthorised alterations “on the outside”. When P was confronted with N

such discrepancy, P baldly said the statement in P’s WS was wrong (even
O O
though it was verified by her own statement of truth and she adopted it in
P her evidence), and disagreed she learned from Tong there were in fact P

illegal structures (and/or UBWs) “on the outside” of the shops/units of the
Q Q
Buildings.
R R

179. P then tried to explain away the discrepancy by saying “……

S S
因為[Tong]話呢個係分拆嘅好大 lot, 咁[Tong]話喺公眾地方可能有一啲
T T

U U

V V
 - 97 -
A A

水喉或者係釘導致有人 …… 去投訴嘅話, 所以嘅就要簽呢一份嘢, 確

B B
保可以成交得到呢個物業”. I find such explanation poor and unreliable
C as (a) P was all along talking about illegal structures “on the outside”, and C

it was only after she realised the discrepancy in her evidence that she tried
D D
to switch attention to pipes/nails in the common parts of the Buildings
E (which areas were not necessarily “on the outside”), and (b) P E

acknowledged in evidence that notwithstanding her awareness of the

F F
“possible” existence of illegal structures (and/or UBWs) “on the outside”,
G she still signed a document to confirm she would proceed with completion G

of the sub-purchase of the Property, which in my view plainly referred to

H H
the Shop 4 Appendix that P signed as purchaser and that contained the
I I
Waiver Clause. I pause to note here the Alleged UBWs were “on the

J
outside” of the Property. J

K 180. In my view, P’s evidence in relation to Tong’s alleged K

L
representation about UBWs (other than the partition of Shop 4 into Units L
4(A) and 4(B)) at the inspection in/about November 2012 was inherently
M M
unreliable and unconvincing. On balance, I do not accept that at such

N
inspection in/about November 2012, Tong made the 1st Representation to P N
and/or told her there were no unauthorised alterations and/or UBWs that
O O
related to the Property.

P P
181. I further note C&A wrote to W&G on 19 May 2014 to put on
Q Q
record that “[prior] to signing of the [Shop 4 PASP], [Tong] represented to

R [P] that the “as is” basis refers to the external condition, not internal, of the R
[Property]” (see paragraph 51 above), but such letter did not assert Tong
S S
represented to P that none of the unauthorised alterations located “on the
T T

U U

V V
 - 98 -
A A

outside” related to the Property. Rather, P’s recognition of the “as is”
B B
condition that related to the external (not internal) condition “of the
C [Property]” was not inconsistent with the fact that the Alleged UBWs were C

“on the outside” of the Property. On balance, I find it was not at the
D D
inspection in/about November 2012 but just “[prior] to signing the [Shop 4
E PASP]” when (as seen in paragraphs 198-199 below) P had a bit longer E

discussion with Tong about UBWs and the Waiver Clause in the Shop 4
F F
Appendix that Tong told her there were unauthorised alterations (and/or
G UBWs) “on the outside” (see paragraph 200 below), but (as P herself G

acknowledged in paragraph 179(b) above) even though P was aware of

H H
such unauthorised alterations (and/or UBWs) “on the outside”, she was
I prepared to and did sign the Shop 4 Appendix with the Waiver Clause to I

confirm she would proceed to complete the sub-purchase of the Property.

J J
In my view, by the time P signed the Shop 4 PASP she knew that there
K unauthorised alterations (and/or UBWs) “on the outside”, and that she had K

L
to accept the external condition of the Property “as is”. L

M 182. P also claimed under cross-examination that at the inspection M

in/about November 2012 Tong did not bring her to see the rear parts of the
N N
53
Property, and that she did not know to ask or did not think of asking Tong
O O
to bring her to the Rear Lane marked as “OPEN PASSAGE” on the Phase

P
2 Floor Plans. For the reasons explained in paragraphs 172-173 above, I P
find on balance P did read the Floor Plans, and was aware of the existence
Q Q
of the Rear Lane from such floor plans. But similar to my view that P did

R not request to inspect the interior of the Property (see paragraph 175(a) R

above), I find on balance P did not ask to go to the Rear Lane to have a
S S
look at the Property.
T T
53
it was common ground that the Alleged UBWs were at the back of the Property

U U

V V
 - 99 -
A A

183. P also testified she did not know whether she could have
B B
accessed the Rear Lane even if she had asked Tong, but she later agreed
C with Ms Cheung’s suggestion during cross-examination that “…… 如 果 C

[P]嗰日去視察環境嘅時候 [ie the inspection in/about November 2012],

D D
[P]係同[Tong]講「我想去埋條[Rear Lane]睇喎」, 條[Rear Lane]係公家
E E
路嚟嘅, [P]係可以隨時入到去去睇”. P claimed in re-examination she

F
was in fact unaware of the Rear Lane at such inspection or at any time F
st
before she signed the Shop 4 PASP, and the 1 time she became aware of
G G
the Rear Lane was in/about April or May 2018 when C&A asked her to

H accompany D1 for a site visit to take photographs for the trial, and “……. H

[P]搵咗好耐先知道有條[Rear Lane], …… 先至知道有條路入到去, 其

I I
實係唔知嘅, 嗰次係第一次”.
J J

184. Whilst I do not doubt P would not necessarily know how to

K K
go/walk to the Rear Lane, I have found she knew of the existence of the
L Rear Lane from the Phase 2 Floor Plans at the time of the inspection L

in/about November 2012. But I accept on balance she was not concerned at
M M
the time to check out (and actually she did not check out) the rear parts of
N the Property, and she did not even try to go to the Rear Lane at all. Not N

having made such attempt at the time of the inspection in/about November
O O
2012, I find on balance P would not have known whether she could have
P accessed the Rear Lane via the Rear Lane Gate, via the small path next to P

Shop No 10 of Phase 2 of the Development of the Buildings (“Shop 10”)

Q Q
or via any other means, and her evidence otherwise under cross-
R examination was merely an unintended slip on her part. Further, there was R

S S

T T

U U

V V
 - 100 -
A A

no clear evidence before me to show that in/about November 2012 the

B B
Rear Lane was accessible to the public via the Rear Lane Gate, and indeed
C Wong discovered it was locked when he visited in/about 2014 (but C

sometime after the issuance of the writ in the present action in August
D D
2014) (see paragraph 265 below). Indeed, Wong was only able to access
E the Rear Lane on that occasion via a small path next to Shop 10 because he E

had the fortuity of being given directions by someone at a nearby “賣小食

F F
嘅餐廳” (see paragraph 265 below).
G G

XIV. DECISION TO SUB-PURCHASE OTHER PROPERTY AND

H H
SHOP 6 PASP
I I
185. After the inspection in/about November 2012, P expressed

J
interest to sub-purchase the Other Property of which Shop 6 was subject to J
letting/tenancy for the price of $11,532,960. P said she decided to sub-
K K
purchase the Other Property because Tong told her it was a good
L investment (ie “…… [Tong]曾經介紹過呢一個係一個好嘅投資物業喇 L

”) being a property with an independent staircase which was quite rare in

M M
the property market (ie “…… 呢個鋪罕有嘅自建 …… 獨立樓梯嘅, 同埋
N 市 場 上 罕 有 嘅 物 業 ” ). Although “…… [Tong] 就 冇 話 [the Other N

Property] 分 開 嘅 ” (ie Shop 6 and Store 6 would be sub-divided), he

O O
suggested Store 6 could be turned into a residential unit and let out
P P
separately from Shop 6. P said her purchase of the Other Property was in

Q
fact a joint investment of several “investment partners” including P and Q
Fung Po Yin.
R R

S
186. Tong then prepared the Shop 6 PASP with the Shop 6 S
Appendix that contained the Waiver Clause54 and other terms, and such
T T
54
P admitted she knew the Shop 6 Appendix contained the Waiver Clause

U U

V V
 - 101 -
A A

appendix was drafted, according to Wong, by D1 and its solicitors for

B B
incorporation into all PASPs for confirmor sub-sales of the shops/units on
C G/F and C/F of Phase 2 of the Development of the Buildings. Then on 22 C

November 2012, D1 as confirmor/vendor and P as purchaser entered into

D D
the Shop 6 PASP whereby D1 sub-sold and P sub-purchased the Other
E Property for a consideration of $11,523,600 with completion to take place E

at 2:00 pm on 31 May 2013.55 By the Shop 6 Nomination, P nominated

F F
Yan Yau (of which P was a director, and P and Fung Po Yin were the 2
G shareholders) to take up the assignment and to complete the sub-purchase G

of the Other Property.

H H

I 187. Clause 6 of the Shop 6 PASP provided that “[D1] is selling as I

Confirmor and this Agreement is subject to the terms and conditions of the
J J
principal agreement made between [D1] and [Max Rainbow]” (ie the Head
K PASP). P initialled against such clause on the Shop 6 PASP at Tong’s K

request, and she confirmed under cross-examination that she understood

L L
the meaning of such clause. It was unsurprising that P well understood the
M meaning and effect of such clause as the very same clause also appeared in M

the PASPs for the 2nd Property (see paragraph 136 above) and the 3rd
N N
Property (see paragraph 143 above) in respect of which P took no issue. In
O O
the circumstances, I find that even if P did not have actual knowledge of

P
the terms of the Head PASP, by Clause 6 of the Shop 6 PASP P confirmed P
and acknowledged she would be bound the terms in the Head PASP
Q Q
(including the restriction imposed by Clause 27 of the Head PASP – see

R paragraph 154 above). Given that P signed the Shop 6 PASP, that she well R
understood the meaning of Clause 6 of the Shop 6 PASP, and that there
S S

55
P also admitted she knew she had to pay the balance of the price and to complete the
T T
sub-purchase of the Other Property on/before 2:00 pm on 31 May 2013

U U

V V
 - 102 -
A A

was no suggestion of misrepresentation or other vitiating factor by D1

B B
and/or Tong/D2 on behalf of D1, P was bound by such clause even if she
C did not care to read the contents as explained by the Court of Final Appeal C

in Ming Shiu Chung & ors v Ming Shiu Sum & ors as follows:56

D D

“84. …… It is in law highly immaterial to ask how or why the

E father nevertheless signed the documents. Reliance is E
universally placed on signatures appended to documents
by persons of full age and understanding as signifying the
F F
signatory’s assent or adherence to what that document
states. Where such a person has signed a document which
G purports to have legal effect, the law has never regarded G
it as enough to show that he signed without knowing its
contents for the document to be disavowed. It is an
H everyday occurrence that people sign documents without H
reading the small (or even the large) print and therefore
I sign without actually knowing the terms (or all the terms) I
of the document signed. But they are held to the
documents which they have chosen to sign unless there is
J shown to be a recognized legal basis for concluding that J
their apparent consent has been in some way vitiated or
K
that reliance on that document by some other person falls K
into some category of unconscionable conduct justifying
relief in equity.
L L
……
M 87. The vitiating factors at common law include fraud, M
mistake, misrepresentation, non est factum, duress, undue
N
influence and lack of mental capacity: ……” N

O 188. I pause to note here that Ms Cheung did not seek to rely on O

Clause 27 of the Head PASP to debar P from raising requisitions in respect

P P
of the Alleged UBWs at the Property and/or to require P to complete the
Q sub-purchase of the Property notwithstanding the Alleged UBWs. P was Q

content to rely on the Waiver Clause in the Shop 4 Appendix. But in my

R R
view, P’s understanding of Clause 6 of the Shop 6 PASP showed she was
S unconcerned about possible existence of illegal structures and/or UBWs at S

T T
56
(2006) 9 HKCFAR 334, 361-362 – not cited by Mr Lau or Ms Cheung

U U

V V
 - 103 -
A A

the Other Property (if she knew the contents of Clause 27 of the Head
B B
PASP) and/or about possible restrictions in the Head PASP that might be
C imposed on her as sub-purchaser of the Other Property (if she did not C

know the contents of Clause 27 of the Head PASP). This reinforced my

D D
view that P would not have taken the initiative to raise queries with Tong
E for him to make and/or reiterate his 1st Representation. E

F F
189. “另見一份附件” was written beneath Clause 20 of the Shop
G 6 PASP with P’s initials next to it. The annexure referred to the Shop 6 G

Appendix that P as purchaser countersigned. Under cross-examination, P

H H
(a) said she asked Tong about the Shop 6 Appendix, (b) confirmed she
I understood the contents of the Shop 6 Appendix including the provisions I

of the Waiver Clause, and (c) understood the Waiver Clause to mean “……
J J
買方, 即[P], 嗰陣時就係需要接受 6 號鋪[Other Property]狀況, 儘管嗰
K K
個鋪位裡面係可能會有僭建㗎喎”.

L L
190. Ms Cheung submitted (and on balance I agree) P’s sub-
M M
purchase of the Other Property was significant in 2 ways:

N N
(a) The sub-sale and sub-purchase of the Other Property reinforced the
fact that P was a seasoned dealer in real property (see paragraph 134
O above), particularly as P proceeded to sub-purchase the Property O
(which was near to the Other Property separated only by Shop/Store
P 5) in the same Phase 2 of the Development of the Buildings 6 days P
later on 28 November 2012 by entering into the Shop 4 PASP with
Q D1. Q

R
(b) The Shop 6 and Shop 4 PASPs in D2’s printed standard form R
contained similar/identical terms (see Schedules 2-3 to this
Judgment), and annexed thereto were the Shop 6 and Shop 4
S S
Appendices. The Shop 4 Appendix contained terms identical to those
in the Shop 6 Appendix, eg the Waiver Clause, which terms were
T imposed by D1 for incorporation into all PASPs for sub-sales of the T

U U

V V
 - 104 -
A A

shops/units of Phase 2 of the Development of the Buildings.

B B

C C

XV. DECISION TO PURCHASE PROPERTY AND SHOP 4 PASP

D D

191. Then in the morning of 28 November 2012, Tong telephoned

E E
to tell P his colleague wanted to purchase Store 4, and to ask her “「妳可唔
F 可以要埋嗰個地下嗰度[ie Shop/Yard 4]? 買咗返嚟, 分契番畀[Tong]嘅 F

G
同事」, [Tong] …… 話畀[P]聽可以分契轉讓畀[Tong]嘅同事”. Tong G
said his colleague wanted very much to have Store 4 for himself, and
H H
“…… [Tong]同[P]講就係買咗返嚟, …… 臨去簽大訂嗰陣時候, 咁就分
I 契, 可以喺簽完大訂嗰陣可以分契, 就轉讓番畀[Tong]同事, [Tong’s]同 I

事就買閣樓[ie Store 4]”. Thus, the Property “…… 主要都唔係講話呢個

J J
投資物業, 主要就係想睇[P]能唔能夠可以幫[Tong]嗰個同事，因為
K [Tong]嘅同事有心想買入呢一個嘅閣樓 [ie Store 4] ……” Consequently, K

it was not intended for P to sub-purchase the Property, and then to re-sell
L L
Store 4 to Tong’s colleague; rather “[Tong’s]意思係要一齊買, …… 用[P]
M M
間公司買, 買完返嚟, 跟住先至分契, 先至獨立[Store 4]畀[Tong’s]同事
N ”. N

O O
192. P therefore understood that after Shop/Yard 4 and Store 4
P were sub-divided, Tong’s colleague would take up and acquire Store 4 at P

the original purchase price apportioned in like ratio as the recommended

Q Q
prices for Shop/Yard 4 and Store 4 set out in the Price List, “…… 係有獨
R 立兩個價錢出嚟嘅, …… 閣樓[ie Store 4]同地鋪[ie Shop/Yard 4]有獨立 R

價錢”. According to the Price List, the recommended price for Shop/Yard
S S
4 was 1,511 sq ft x $8,200 = $12,390,200, and that for Store 4 was 1,138
T sq ft x $4,000 = $4,552,000, totalling $16,942,200 for the Property (see T

U U

V V
 - 105 -
A A

paragraph 55 above). But P claimed the prices Tong gave her were
B B
different, ie “閣樓[ie Store 4]總額係四百幾萬, 地下[ie Shop/Yard 4]係一
C 千一百幾萬, 加埋係一千五百幾萬”, which total price for the Property C

was about $1,000,000 odd less than the recommended overall price for the
D D
Property in the Price List, “…… 同呢度有啲出入”. In my view, this was
E unsurprising because the ultimate purchase price in the Shop 4 PASP was E

F
$15,247,980, which was less than the recommended price in the Price List F
of $16,942,200.
G G

193. P claimed that apart from asking P to help his colleague, Tong
H H
“……都會再同[P]分析番嗰個地方[ie the Property]嗰個優勢, 同埋都會
I I
重 新 講 一 次 嗰 個 地 方 嘅 好 處 … … ” But when pressed under cross-
J examination, P agreed the Property might lose “…… 嗰個地方嗰個優勢 J

……” if Store 4 was transferred to Tong’s colleague (bearing in mind that

K K
for the Other Property P purchased Shop/Yard 6 together with Store 6). But
L in the end P agreed to sub-purchase the Property because, according to P, L

Tong told her that (a) after the sub-division of the Property “[Tong] could
M M
make arrangement to let [P] have the title of Shop 4 only, and let his
N colleague to have the title of [Store 4]”, and she could easily re-sell N

Shop/Yard 4 to some willing purchaser to earn quick profit or investment

O O
return, (b) she had to help him otherwise his colleague would not be able
P to acquire Store 4, and (c) there was some urgency as the customer of P

another colleague of his was on the way to give D1 a cheque with a view
Q Q
to sub-purchase the Property.
R R

194. It was evident from P’s above account that from the very
S S
beginning P never intended to take up the assignment of the title to Store 4.
T Further, as Ms Cheung submitted and consistent with P’s modus operandi T

U U

V V
 - 106 -
A A

when she purchased the 2nd Property, P was content not to meet with or
B B
speak to Tong’s colleague. Indeed, P confessed she did not even know the
C name or financial ability of Tong’s colleague who was supposed to acquire C

the title to Store 4 after the sub-division when she had to commit first to
D D
sub-purchase the Property by signing the Shop 4 PASP. More importantly,
E even though P said it was orally agreed via Tong that his colleague would E

take up and acquire Store 4 from her at the purchase price apportioned on
F F
the basis set out in the Price List, ie “…… 個單價有寫㗎, [Tong]畀嗰份
G 價單[ie Price List]裡頭閣樓[ie Store 4]同地鋪[ie Shop 4] …… 已經有個 G

H
價 錢 … … 閣 樓 [ie Store 4] 係 四 百 幾 萬 ” , there was no written H
record/confirmation of such agreement at all.
I I

J
195. When pressed as to why she was comfortable in dealing with J
a stranger whose name she did not know, whom she had never met, and
K K
who had not given any written confirmation to take up and acquire Store 4

L at an agreed price, P said “[P]都覺得講出嚟都覺得好好笑, 自己 ……”, L

“…… [Tong]講乜嘢[P]都信囉…… [Tong]講咩嘢[P]都信, [P]覺得自己

M M
好傻, 當時唔覺㗎 ……” Plainly, as P was constrained to accept, there
N was no commercially sensible reason for P to “help” Tong’s colleague, and N

I find on balance that in agreeing to sub-purchase the Property P was

O O
largely motivated by her belief that this was a not-to-be-missed investment
P opportunity with promise for profit return from a re-sale of Shop 4 upon P

quick turnaround and with the comfort of reduced financial exposure since
Q Q
she thought Tong’s colleague would take up and acquire Store 4. Indeed,
R P’s experiences with the 1st, 2nd, 3rd and Other Properties showed she was R

keen on property investment (ie property purchases and re-sales via Tong)
S S
with an eye to making profit on quick turnaround, and in my view her
T previous investment successes also led her to look forward to a similar T

U U

V V
 - 107 -
A A

beneficial outcome with respect to the Property, which expectation put

B B
caution to the winds over unknowns about Tong’s colleague discussed in
C the above paragraph. C

D D
196. Thus, on the very same day of 28 November 2012, D1 as
E confirmor/vendor sub-sold and P as sub-purchaser sub-purchased the E

Property for a consideration of $15,247,980, and they signed the Shop 4

F F
PASP that (like the Shop 6 PASP) was in D2’s printed standard form as
G well as the Shop 4 Appendix that contained inter alia the Waiver Clause G

and the Partition Clause. P knew that under the Shop 4 PASP she had to
H H
pay the balance of the purchase price and to complete the sub-purchase of
I the Property on/before 2:00 pm on 31 May 2013. By the Shop 4 I

Nomination, P nominated Win Yan (another of P’s property investment

J J
corporate vehicles that was bought off the shelf from an accounting firm
K and that was used solely for acquiring the Property) to take up the K

assignment and to complete the sub-purchase of the Property. P said the

L L
Property was a joint investment by several “investment partners”, ie P,
M Fung Po Yin, a Ms Tang, a Mr Or and Tong’s colleague. M

N N
197. Clause 6 of the Shop 4 PASP was similar in terms to Clause 6
O of the Shop 6 PASP (see paragraph 187 above) with the impact of O

Clause 27 of the Head PASP on P as explained in paragraphs 187-188

P P
above. Then, Clause 20 of the Shop 4 PASP stated “另見附件一份” with
Q Q
P’s initials next to it. The annexure referred to the Shop 4 Appendix that P

R
as purchaser countersigned. P confirmed under cross-examination that she R
had read the Shop 4 Appendix (which terms were imposed by D1 for
S S
incorporation into the Shop 4 PASP), including the Waiver Clause (that

T was the same as the Waiver Clause in the Shop 6 Appendix) which she T

U U

V V
 - 108 -
A A

understood to mean “…… 4 號鋪[ie Property]裡面或者外面可能係會有

B B
僭建嘅呢” (see paragraph 217 below).
C C

198. P in re-examination said she had a bit longer discussion with

D D
Tong over parts of the Shop 4 Appendix that pertained to UBWs and the
E Waiver Clause (ie “…… [P]係…… 有細節嘅, 就係嗰個附件嗰個僭建嗰 E

度, [P]同[Tong]會傾得耐少少”, “咁[Tong]叫[P]睇完之後, …… 就[P]

F F
問[Tong]個問題, 嗰度嘅係耐少少時間, 其他 …… 啲就係簽名啫, 冇 …
G G
… 解釋過 ……”). In my view, since (a) P had a bit longer discussion
H with Tong over the Shop 4 Appendix that pertained to UBWs and the H

Waiver Clause, and (b) P well understood the meaning of the Waiver
I I
Clause, Tong must have properly explained the meaning of such clause to
J her, which led to her full and correct understanding of the meaning and J

effect of such clause. I have also found that Tong told her during of such
K K
discussion that there were unauthorised alterations (and/or UBWs) “on the
L outside”. L

M M
199. P claimed that (a) she again “…… 咪問 …… [Tong]囉 ……
N 「喂, 佢話有僭建喎, 究竟有冇㗎?」” to which Tong replied there was N

none (ie the 1st Representation) and reiterated “…… 係外圍嘅嘢, 唔關個
O O
單位事嘅, 咁囉 ……”, and (b) “…… 反而係嗰個附件[Tong]有解釋過
P P
係例行, …… 嗰個都要簽㗎喇, …… 唔簽唔買得 [ie 2nd Representation]

Q ……所以呢度嘅時候, [P]會 …… 問[Tong]問多少少, 就係呢一度啫 … Q

… ” But in light of the discussion and analysis in paragraphs 176-181

R R
above and paragraphs 219-225 below, I find on balance that Tong did not
S make and/or reiterate to P the 1st Representation that there were no S

unauthorised alterations and/or UBWs in relation to the Property, and I

T T

U U

V V
 - 109 -
A A

also reject P’s evidence that even though she well understood the meaning
B B
and effect of the Waiver Clause she still signed the Shop 4 PASP because
C “…… [Tong]同[P]講話 4 號鋪[ie the Property]裡面冇僭建嘅 ……” In C

my view, as seen in paragraphs 189 and 197 above and paragraph 217
D D
below, it was obvious P well understood the Waiver Clause of the Shop 4
E Appendix meant “…… 4 號鋪[ie Property] 裡面或者外面 可能係會有僭 E

F
建嘅呢” (my emphasis). Given P’s clear understanding of such meaning F
and effect, and the fact she/Tong had not inspected the interior of the
G G
Property, I find it implausible for Tong to have made the 1st Representation

H
knowing that such representation was contradicted by the Waiver Clause H
(as well understood by P) that expressly left open the possibility of
I I
unauthorised alterations or additions at both the interior and exterior of the

J Property. Further, even if Tong did make the 1st Representation (which I J

disagree), I am not persuaded P would have been induced to rely on the 1st
K K
Representation when she clearly understood the meaning and effect of the
L Waiver Clause when she signed the Shop 4 Appendix. L

M M
200. As seen in Part XVI below, and given (a) P’s experience with
N and understanding of waiver clauses in relation to the 2nd Property and (b) N

her understanding of the meaning and effect of the Waiver Clauses in the
O O
Shop 6 and Shop 4 Appendices, she must have known such Waiver Clause
P in the Shop 4 Appendix were for protecting the vendor’s interests by P

requiring her as purchaser to complete the sub-purchase of the Property

Q Q
even if “…… 4 號鋪[ie Property]裡面或者外面可能係會有僭建嘅呢”.
R In such circumstances, I also find it implausible Tong would have made the R

2nd Representation that the provisions of the Shop 4 Appendix (including

S S
the Waiver Clause) were mere formality that would not circumscribe P’s
T right to require D1 to show/prove good title to the Property, which alleged T

U U

V V
 - 110 -
A A

representation was contrary to the obvious meaning and effect of the

B B
Waiver Clause that P confessed she well understood. Even if Tong did
C make the 2nd Representation (which I disagree), I also do not accept P C

would have meekly accepted such representation and would have been
D D
induced thereby to enter into the Shop 4 PASP and to countersign the Shop
E 4 Appendix without challenging Tong given her understanding of the E

meaning and effect of the Waiver Clause. On balance, I find it more likely
F F
than not that in the course of the bit longer discussion between P and Tong
G on the Shop 4 Appendix with focus on the Waiver Clause and UBWs, Tong G

mentioned about unauthorised alterations “on the outside” but did not
H H
make the Representations, and such discussion resulted in P’s
I understanding of the meaning and effect of the Waiver Clause. I

J J
XVI. WAIVER CLAUSE
K K
201. Wong explained (and on balance I accept) D1 imposed the
L inclusion of the Waiver Clause concerning unauthorised alterations or L

additions and/or UBWs in all PASPs for the sub-sales of shops/units of the
M M
Head Property to align with Clause 27 of the Head PASP, so the Waiver
N Clause was included in the Shop 6 and Shop 4 Appendices annexed to the N

Shop 6 and Shop 4 PASPs. Wong said (and on balance I also accept) D1
O O
would not have agreed to sub-sell the Property to P without the Waiver
P Clause in the Shop 4 Appendix. P

Q Q
(a) Construction of the Waiver Clause
R R
202. Ms Cheung submitted that (a) the language and ambit of the
S Waiver Clause in the Shop 4 Appendix was abundantly wide and clear, (b) S

on proper construction any reasonable and ordinary purchaser would

T T

U U

V V
 - 111 -
A A

understand such Waiver Clause covered any unauthorised alterations or

B B
additions at the Property57 as well as liability therefrom being
C encumbrance/blot on title,58 and (c) there was nothing “tricky or unfair” or C

“misleading” about such Waiver Clause that would trick/mislead any

D D
reasonable and ordinary purchaser as to its effect, so the Waiver Clause
E sufficiently/clearly shifted the burden of possible existence of unauthorised E

alterations or additions onto P. Ms Cheung contended the above

F F
construction was reinforced by the relevant factual matrix, but more of that
G later. G

H H
203. On the other hand, Mr Lau submitted that given Tong’s
I 1st Representation to P (ie the partition wall in Shop 4 was the only I

unauthorised structure with no further UBWs at the Property), it was not

J J
unreasonable for P, upon considering the Shop 4 Appendix as a whole and
K taking note that the Partition Clause immediately followed the Waiver K

Clause, to perceive that the unauthorised structures, alterations or additions

L L
mentioned in the Waiver Clause merely referred to the partition wall in
M Shop 4, so P could not “be said to have known about the risk that she was M

going to take in accepting the Waiver Clause”. On such basis, it was said
N N
the Waiver Clause was “tricky or unfair” or “misleading”, so D1 could not
O O
rely on it as answer to the requisitions raised about the Alleged UBWs, and

P
consequently D1 failed to show/give good title to the Property, and P was P
entitled to rescind the Shop 4 PASP.
Q Q

R
204. It is useful to note again (a) I have found D1 did not have R
actual knowledge of the Alleged UBWs, (b) I have found Tong did not
S S
57
“…… 存有任何未經屋宇署授權改建或加建部分 ……”
58
“…… 儘管屋宇署或其他政府部門有權對任何未經授權改建或加建部分作出追
T T
究，而令任何未經授權改建或加建部分構成上述物業的業權瑕疵 ……”

U U

V V
 - 112 -
A A

make the Representations to P, and (c) it was common ground there was no
B B
misrepresentation given to P by Tong/D2 as agent for D1, so the vitality of
C the Waiver Clause essentially turned on its construction, and the court C

would look to see (i) whether its language was expressly wide and clear,
D D
and (ii) whether the Alleged UBWs fell within its “subject matter limits”,
E ie whether its language was sufficiently and expressly clear to E

disclose/cover any unauthorised alterations or additions at the Property

F F
(including the Alleged UBWs) and/or any “defects in title” caused by
G enforcement actions that might be taken by the authorities. G

H H
205. I start by saying I agree with Wong that the Waiver Clause
I was written in explicit and easy to understand language. This was obvious I

from the fact that P well understood the meaning and effect of the Waiver
J J
Clause (see paragraph 217 below). This was also obvious from the Waiver
K Clause itself which, for convenience, I adopt Ms Cheung’s breakdown of K

such clause as follows:

L L

(a) 買方聲明事前已親身視察該鋪位並已諮詢獨立專業人士有關該鋪
M M
位的現時結構、狀況及內部間隔。
N N
(b) 買方滿意該鋪位目前狀況，儘管該鋪位存有: (i) 任何未經屋宇署
授權改建或加建部分及 (ii) 儘管屋宇署或其他政府部門有權對任
O 何未經授權改建或加建部分作出追究，而令任何未經授權改建或 O

加建部分構成上述物業的業權瑕疵，
P P
(c) 買方仍願意接受該鋪位業權，並將不會對該鋪位任何未經授權改
Q 建或加建提出業權上的質詢或反對，亦不會向賣方要求任何賠 Q
償。
R R
(d) 基於該舖位以現狀交易，若屋宇署、消防署或其他政府部門或該
舖位所屬樓宇的業主立案法團或管理機構在上述物業交易日或以
S S
前發出任何命令／通知或通過任何決議，要求賣方身為該舖位的
業主為該樓宇的公共地方及設施進行任何維修及翻新工程，或有
T 關工程付款，全部均由買方負責履行並負責因此而產生的費用及 T

U U

V V
 - 113 -
A A

開支。
B B

C C

206. In my view, the Waiver Clause (a) clearly identified the

D D
possible “defects in title” that might exist at the Property, ie any alterations
E or additions not authorised by the BD (“任何未經屋宇署授權改建或加建 E

F
部分”), and (b) clearly spelled out the possible legal consequences of any F
unauthorised alterations or additions that would impact on the title to the
G G
Property, ie the relevant authorities might “ 作 出 追 究 ” (ie take
H enforcement actions) which consequently might constitute blots on title of H

the Property (ie “儘管屋宇署或其他政府部門有權對任何未經授權改建

I I
或加建部分作出追究, 而令任何未經授權改建或加建部分構成上述物
J 業的業權瑕疵”). J

K K
207. In my view, the construction of the “subject matter limits” of
L the Waiver Clause in paragraphs 205(b)(i) and 206(a) above in their plain L

and ordinary meaning as apparent to any reasonable and ordinary

M M
purchaser should be clear and wide enough to cover any and all
N unauthorised alterations or additions to the Property. After all, alterations N

or additions not authorised by the BD encompass actual structures (or

O O
physical states of the property occasioned by alterations or additions which
P P
do not involve the erection of structure(s)), that are not authorised by the

Q
BD and in breach of the BO (since the BD is not empowered to authorise Q
any alteration or addition in breach of the BO) (see paragraph 118 above).
R R
In my view, the Alleged UBWs (which were actually structures) fell

S comfortably into such plain and ordinary construction of “unauthorised S

alterations or additions” (“…… 未經 …… 受權改建或加建部份”).

T T

U U

V V
 - 114 -
A A

208. But Mr Lau argued the Waiver Clause of the Shop 4 Appendix
B B
was “misleading” as it did not identify particular unauthorised alteration(s)
C or addition(s) at the Property when the Partition Clause of the Shop 4 C

Appendix specifically disclosed the existence of the partition wall between

D D
Units 4(A) and 4(B), so reading the Waiver and Partition Clauses in the
E Shop 4 Appendix as a whole would give a reasonable and ordinary reader E

the misleading impression that the “unauthorised alterations or additions”

F F
in such Waiver Clause only referred to the partition wall, which “situation
G was more like the circumstance in Long Life, where Lam J held that the G

aspects mentioned in the clause showed that the parties paid particular
H H
attention to these aspects, the fact that the agreement had failed to disclose
I the demolition order would render the clause not able to preclude the I

purchaser to raise requisition in relation to the demotion order”.

J J

K 209. I find myself unable to agree with Mr Lau’s contentions. First, K

the Waiver Clause and the Partition Clause in the Shop 4 Appendix were
L L
drafted not as a single clause but as 2 separate clauses. The Partition
M Clause debarred P as sub-purchaser from raising requisitions/objections in M

relation to the partition wall between Units 4(A) and 4(B), and required P
N N
to take possession of Shop 4 in its “as is” condition at completion (ie “ 若
O O
該舖位因現時租客已將與其相鄰的舖位之間之分間牆拆除, 買方仍須
P 按完成交易時之狀況接收該舖位, 買方不得藉有關之分間牆狀況向賣 P

方提出任何業權質詢或反對”). Ms Cheung referred to the presumption

Q Q
against redundant words (see paragraph 98(b) above), and suggested that,
R where possible, all parts of a contract must be given effect, and no part of it R

should be treated as inoperative or surplus. I agree. Here, if the “subject

S S
matter limits” of the Waiver Clause were only referable to the partition
T wall that was already covered by the Partition Clause, then the Waiver T

U U

V V
 - 115 -
A A

Clause would become redundant as the Partition Clause already provided

B B
for waiver in relation to the partition wall. Indeed, P had no difficulty in
C appreciating that the Partition Clause specifically referred to the partition C

wall, and that the Waiver Clause generally referred to unauthorised

D D
structures.
E E

210. In my view, upon common sense, reasonable and sensible

F F
reading of the Waiver and Partition Clauses by a reasonable and ordinary
G purchaser, it was clear the “subject matter limits” of the Waiver Clause G

would not be confined to the partition wall referred to in the Partition

H H
Clause. In paragraph 207 above, I have explained what “unauthorised
I alterations or additions” encompassed/included, which plainly showed the I

ambit of the Waiver Clause was much wider than just the partition wall. As
J J
Ms Cheung submitted, such construction was also bolstered by express
K references to “現時結構、狀況及內部間隔” and “未經屋宇署授權改建 K

L
或 加 建 部 分 ” in the Waiver Clause (see paragraph 205(a) and (b)(i) L
above). I cannot see how the Waiver Clause in its plain and ordinary
M M
meaning would be limited to the partition wall and not extend to other

N possible unauthorised alterations or additions. In my view, to adopt the N

interpretation P advocated would impossibly strain the clear and wide
O O
language of the Waiver Clause.
P P
211. The above conclusion would be sufficient to deal with the
Q Q
construction point, but as Mr Lau drew support from Long Life Chinese

R Health Food Ltd, I will deal with this shortly. Mr Lau’s submissions in R

paragraphs 203 and 208 above focused on condition 2(A) of the annex to
S S
the PASP in that case (see paragraph 111 and footnote 41 above). Godfrey
T Lam J at page 527 held that condition 2(A), which was a single clause that T

U U

V V
 - 116 -
A A

particularly referred to 3 specific aspects of the condition of the property,

B B
might lead a reasonable potential purchaser into thinking that by
C acknowledging he “clearly knows of and accepts all the internal and C

external fitting condition of the shop premises” there was nothing other
D D
than the 3 matters specifically mentioned “in the clause” that the vendor
E knew as a fact to be unauthorised. This was considered misleading because E

there was no express language to make clear the 3 specific aspects were
F F
not an exhaustive list of all UBWs of the property. But here there was no
G subject matter limitation in the general Waiver Clause to any particular G

unauthorised alteration(s) or addition(s), which was in contra-distinction to

H H
the Partition Clause being a specific clause. In short, the plain and ordinary
I meaning must be that the Waiver Clause covered all possible unauthorised I

alterations or additions at the Property. In my view, such clause was not

J J
tricky, unfair or misleading, and a reasonable and ordinary purchaser
K would not have been misled. This was also borne out by the relevant K

L
factual matrix discussed below, including P’s understanding from her L
property investment experience (see paragraph 134 above), and P’s
M M
understanding of the meaning and effect of the general Waiver Clause and

N
the specific Partition Clause (see paragraphs 217-228 below). N

O O
(b) Relevant factual matrix

P 212. I now turn to the relevant factual matrix. On balance I am not P

persuaded D1’s conduct could in any way be described as tricky, unfair or

Q Q
misleading. It must be remembered that (a) pursuant to Clause 6 of the
R R
Shop 4 PASP D1 was selling as confirmor and not as registered owner, (b)

S
the Property was part of the Head Property (ie shops/units in Phase 1 and S
Phase 2 of the Development in the Buildings that D1 purchased pursuant to
T T

U U

V V
 - 117 -
A A

the Head PASP for investment purpose by way of sub-sale and failing
B B
which by way of letting), and (c) completion for the purchase of the Head
C Property and sub-purchase of the Property was to be done on the same day C

(ie 31 May 2013). Thus, when D1 and P entered into the Shop 4 PASP,
D D
Max Rainbow’s sale and D1’s purchase of the Head Property (which
E included the Property) was still in its infancy. D1’s confirmor sale of the E

Property should have alerted any reasonable and ordinary sub-purchaser of

F F
the Property that D1 not being the registered owner might not have full and
G complete information of any illegal structures and/or UBWs at the G

Property (which was tenanted) in contra-distinction to, say, a re-sale of

H H
property that had been owned/held (and occupied) by the vendor for some
I time. I

J J
213. Further, for reasons canvassed in paragraphs 155-168 above,
K D1 as property investor was more concerned with the asking/offer price, K

customer flow, environment etc of a potential commercial investment

L L
property than with illegal structures and/or UBWs of individual shops /
M units, especially those of street-level shops, which were regarded as M

“minor” matters to be factored as part of the investment risk to be taken

N N
into account in deciding whether or not to purchase such investment
O O
property. D1 in deciding to purchase the Head Property (including the

P
Property) did not inspect the Property at all on/before the date for P
completion even though Ho/Wong visited Phase 1 and Phase 2 of the
Q Q
Development of the Buildings before Ho signed the Shop 4 PASP. Thus, I

R have found D1 only knew of the partition wall between Units 4(A) and R
4(B) (see the Price List at paragraph 55 above and paragraph 150 above),
S S
but had no actual knowledge of the Alleged UBWs. Nevertheless, D1 as a
T reasonable and prudent confirmor/vendor alerted P as purchaser that the T

U U

V V
 - 118 -
A A

Shop 4 PASP was a confirmor sale (see Clause 6 of the Shop 4 PASP) and
B B
that there were possibly unauthorised alterations or additions at the
C Property (see the Waiver Clause of the Shop 4 Appendix), which clauses C

were clearly worded and well understood by P (see paragraph 217 below).
D D
On balance, I find D1’s reliance of the Waiver Clause in the Shop 4
E Appendix could not to be said to be tricky, unfair or misleading. E

F F
214. P confirmed she understood the meaning and effect of the
G Waiver Clause in the Shop 4 Appendix (see paragraph 217 below), so she G

must have been aware of the possible presence of unauthorised alterations

H H
or additions at the Property. Further, I am not persuaded that in the factual
I matrix analysed below, (a) P was tricked or misled as to the meaning and I

effect of the Waiver Clause in the Shop 4 Appendix and/or (b) D1’s
J J
reliance on such clause was unfair to her.
K K

215. I have found P to be a seasoned property dealer who received

L L
regular updates on property market trends and transaction price records
M from Tong. In 2011, she purchased the 1st, 2nd and 3rd Properties in M

collaboration with other “investment partners” for investment purpose

N N
(which were eventually re-sold with profit gain) using different corporate
O vehicles for different investment properties (with appreciation of the O

benefits of using companies to hold such investment properties to facilitate

P P
multi-party investments and convenient re-sale by sale of either shares or
Q property). P did not shy from purchasing the 2nd Property even though she Q

R
knew full well there were illegal structures and/or UBWs. In my view, her R
overriding consideration was to secure good property investment with
S S
probable profit return upon quick turnaround. This driving consideration

T
led her to become close with Tong whom she thought was quite smart in T

U U

V V
 - 119 -
A A

finding properties with good investment returns for her, and to ignore
B B
cautionary prudence such as knowing the identity and/or financial ability
C of her “investment partners” for, say, the 3rd Property and the Property. C

D D
216. Plainly, P purchased the Other Property and the Property for
E investment purpose, ie to re-sell such properties with a view for profit gain, E

except for Store 4 which was to be transferred to Tong’s colleague at

F F
apportioned cost. P also knew D1 sub-sold the Other Property and the
G Property to her as confirmor/vendor, and she well knew the nature of G

confirmor transactions (see footnote 51 and paragraph 212 above).

H H

I 217. P admitted she understood the contents of the Shop 4 I

Appendix, and in particular she understood the Waiver Clause in the Shop
J J
4 Appendix to mean “…… [P]買之前[P]睇咗㗎喇 ”, “…… 4 號鋪[ie
K Property]裡面或者外面可能係會有僭建嘅呢”, “…… 可能有僭建, … K

L
… 所以好有可能會受到屋宇署或者政府部門有呢個命令或者佢會作 L
出追究 ……”, “…… [P]買咗[P]就唔可以就話唔買, 或者嘈㗎喇”.
M M
She also understood the Waiver Clause of the Shop 6 Appendix (which was

N in identical terms to the Waiver Clause of the Shop 4 Appendix) to mean N

“…… 買方, 即[P], 嗰陣時就係需要接受 6 號鋪[Other Property]狀況, 儘

O O
管 嗰 個 鋪 位 裡 面 係 可 能 會 有 僭 建 㗎 喎 ” . In short, P knew that by
P agreeing to the Waiver Clause she categorically declared (a) she had P

personally inspected the Property and had consulted independent

Q Q
professionals in relation to the structure, condition and the internal
R partitions of the Property prior to entering into the Shop 4 PASP, (b) there R

might be unauthorised alterations or additions at the interior or exterior of

S S
the Property, (c) the BD or other Government departments might take
T enforcement actions in relation to any such unauthorised alterations or T

U U

V V
 - 120 -
A A

additions, and (d) she would not take issue with or refuse to complete the
B B
sub-purchase by reason of any such unauthorised alterations or additions.
C In light of (b) above, I reject P’s evidence that whilst she understood the C

contents of the Waiver Clause, she did not appreciate the Property might
D D
have illegal structures or unauthorised alterations/additions. I also find P
E also understood that the presence of unauthorised alterations or additions at E

the Property (if any) could constitute a blot on title (see also paragraph 138
F F
above).
G G

218. P claimed the Waiver Clause in the Shop 4 Appendix did not
H H
reflect the truth because before she signed the Shop 4 PASP (a) she did not
I inspect the interior of the Property and (b) she did not seek professional I

advice from, say, solicitors or surveyors. But I cannot see how such
J J
argument would assist P. Under the doctrine of contractual estoppel, where
K the terms of the agreement assume or stipulate a certain state of affairs to K

be the case, the parties will be bound to proceed on the basis that this is the
L L
position for the purposes of the agreement, whatever the true state of
M affairs may be as a matter of actual fact. In Nokia Corporation v TCT M

Mobile Limited,59 Barma JA referred to the English cases of Peekay

N N
60
Intermark Ltd v Australia and New Zealand Banking Group Ltd and
O O
Springwell Navigation Corporation v JP Morgan Chase Bank,61 and said

P
as follows: P

“21. In Peekay, Moore-Bick LJ said, at paragraph 56 of the

Q Q
judgment:

R ‘There is no reason in principle why parties to a contract R

should not agree that a certain state of affairs should form

S
59
CACV191/2014 (unreported, 6 March 2017) – not cited by Mr Lau and Ms S
Cheung
60
[2006] 2 Lloyd’s Rep 511
T T
61
[2010] 2 CLC 705

U U

V V
 - 121 -
A A

the basis for the transaction, whether it be the case or not.

B For example, it may be desirable to settle a disagreement B
as to an existing state of affairs in order to establish a
clear basis for the contract itself and its subsequent
C performance. Where parties express an agreement of that C
kind in a contractual document, neither can subsequently
D deny the existence of the facts and matters upon which D
they have agreed, at least so far as concerned those
aspects of their relationship to which the agreement was
E directed. The contract itself gives rise to an estoppel.’ E

22. In Springwell Navigation, Aikens LJ pointed out (at

F F
paragraphs 143 and 144 of the judgment) that there was
no reason in principle why parties should not agree what
G they liked, subject to any principle of law or statute to the G
contrary, and gave examples of warranties as to the
existence of a state of affairs by the assured in marine
H insurance contracts, and conclusive evidence clauses in H
sale contracts. He regarded such provisions as being
I commercially useful, in that they enabled the parties to I
know precisely the basis on which they entered into their
contractual relationship. He concluded (at paragraph 169
J of the judgment) that the principles stated in Peekay as J
good law, which should be followed.
K K
23. In Hong Kong, the concept of a contractual estoppel has
been accepted (albeit obiter) by DHCJ J Pow SC in DBS
L Bank (Hong Kong) Ltd v San-Holt Industrial Company L
Ltd [2013] 4 HKC 1.62
M 24. Mr Yan suggested that the concept was one which was M
relatively new, and had been criticised in academic
N
writings, and submitted that it should not be accepted as N
good law at this stage. With respect, I do not agree. The
concept is, in my view, now quite firmly established in
O English law, and it seems to be (as it did to Aikens LJ) O
that there are sound reasons for it to be adopted in
Hong Kong, as it would promote certainty in contractual
P P
relationships, and reduce the scope for disagreement and
disputes in the working out of the contract. I would
Q therefore accept Mr Sussex’s argument that on the proper Q
construction of the contract in this case, the parties have
agreed that the plaintiff’s patents are essential for the
R manufacture of mobile telephones meeting the GSM, R
GPRS and UMTS standards, and that it is not open to the
S defendant to contend otherwise in these proceedings.” S

62
see also DBS Bank (Hong Kong) Ltd v Sit Pan Jit HCA382/2009 (unreported, 2
T T
April 2015) paras 312-352

U U

V V
 - 122 -
A A

219. Here, P and D1 by the Waiver Clause agreed to a state of

B B
affairs as set out in paragraph 205(a) above, which P fully understood and
C agreed to. P chose to sign the Shop 4 Appendix to confirm and C

acknowledge to D1 the terms of the Shop 4 Appendix including the Waiver

D D
Clause which meaning and effect she well understood, and in my view D1
E could not be faulted for holding P to such agreed state of affairs E

notwithstanding the matters in paragraph 218(a)-(b) above (which P also

F F
well knew). There was no vitiating factor, eg misrepresentation by D1 or
G by Tong/D2 on behalf of D1, to suggest any unfairness. In any event, I G

have found Tong did not make the Representations. Further, when P re-
H H
sold the 2nd Property to Mr Leung Chung Ming, she understood that similar
I waiver clause she imposed on the purchaser was still valid and effective I

even if he chose not to inspect the 2nd Property (see paragraph 142 above).
J J
I have also found that for the reasons set out in paragraph 175 above P did
K not ask to view the Property at the inspection in/about November 2012. In K

L
my view, all of the above matters showed (and on balance I find) that P L
was prepared to accept the shifting of risk of possible unauthorised
M M
alterations or additions (and/or UBWs) at the interior or exterior of the

N
Property to her without actual inspection of the Property, and that she was N
therefore unconcerned over agreeing to the state of affairs set out in the
O O
Waiver Clause in paragraph 205(a) above. There is no merit in this

P complaint. P

Q Q
220. Further, even though P engaged HCP to handle the

R conveyancing transaction for the sub-purchase of Property on her behalf, R

even up to the time when the sub-sale and sub-purchase of the Property fell
S S
through, she did not ask HCP about the Waiver Clause in the Shop 4
T Appendix and/or about whether there were illegal structures, unauthorised T

U U

V V
 - 123 -
A A

alterations or additions and/or UBWs at the Property. P claimed she did not
B B
know she could ask HCP to check with D1 whether the Property had any
C illegal structures and/or UBWs. But as explained in paragraph 148 above, C

P herself claimed that she as vendor was able to sell the 1st and 3rd
D D
Properties “without having to deal with any enquiries relating to
E unauthorised structures of any kind from the purchasers’ solicitors. As I E

have found, this clearly showed P knew a purchaser could via his solicitors
F F
raise requisitions about UBWs with the vendor via his solicitors (see
G paragraph 148 above). I find on balance P did not so raise requisitions G

about possible unauthorised alterations or additions at the Property referred

H H
to in the Waiver Clause because she well knew the meaning and effect of
I the Waiver Clause, ie she could not take issue with the existence of I

unauthorised alterations or additions (and/or UBWs) (if any) at the exterior

J J
or interior of the Property, and she had to complete the sub-purchase of the
K Property notwithstanding the existence of such unauthorised alterations or K

L
additions and/or UBWs (if any). Indeed, it was only quite shortly before L
the date for completion of the sub-sale and sub-purchase of the Property
M M
that P commissioned RHL to carry out a survey of the Property, but I will

N
deal with P’s motivation for such survey below. N

O O
221. P tried to shy away from the effect of the Waiver Clause of the

P
Shop 4 Appendix which she well understood by claiming Tong told her P
that the Waiver Clause was included in the Shop 4 Appendix because the
Q Q
Head Property had to be sub-divided into individual shops/units for sub-

R sale and there were unauthorised alterations at other parts of the Head R
Property. Whilst I have found Tong did mention to P about unauthorised
S S
alterations “on the outside”, I cannot see how the sub-division of the Head
T T

U U

V V
 - 124 -
A A

Property would have any relevance to the Waiver Clause. On balance, I

B B
reject P’s evidence in this respect.
C C

222. Indeed, P was not unfamiliar with the use of waiver clauses in
D D
the sale and purchase of properties with illegal structures and/or
E unauthorised alterations/additions. A waiver clause was incorporated by E

the vendor in the PASP when P purchased the 2nd Property, and she later
F F
incorporated a waiver clause in the PASP when she re-sold the 2nd
G Property. P was well aware such waiver clauses (including the Waiver G

Clause in Shop 4 Appendix) was to protect the interests of vendors

H H
(including D1 as confirmor/vendor under the Shop 4 PASP), and she well
I understood from her re-sale of the 2nd Property that the effect of such I

clauses (eg Clauses 1-2 of Appendix 2 to the relevant PASP) was to shift

J J
the risk of potential consequences of the illegal structures and/or
K unauthorised alterations/ additions (ie title problems, difficulty in re- K

selling, and reinstatement cost) to the purchaser, who would thereby be

L L
bound to complete the purchase of the property despite any failure to carry
M out inspection and/or despite the existence of such illegal structures or M

unauthorised alterations/additions.
N N

O 223. Although I have found P was not specifically aware of the O

existence of the Alleged UBWs from the inspection in/about November

P P
2012 and/or also in December 2012 (see Part XVIII below), she was
Q specifically alerted to the possibility of there being unauthorised alterations Q

R
and/or UBWs “on the outside” (外圍) before she signed the Shop 4 PASP. R
Indeed, P claimed she would not have signed the Shop 4 PASP if Tong had
S S
not repeatedly assured her the unauthorised alterations were “on the

T outside” (外圍). P complained against Tong that “…… 因為你啲嘢要清 T

U U

V V
 - 125 -
A A

楚, 同埋嗰個僭建嘅位置同埋要使幾多錢, 同埋嗰個風險, 你一要解釋

B B
畀[P]聽先得㗎嘛 ……”, “…… 你去買之前要知道呢一件事吖嘛, 譬如
C 講[P]係次貨, 一件衫嘅, 唔係呢個價錢吖嘛, 合唔合理呀?” But even if C

Tong had made the 1st Representation (which I disagree), there was no
D D
suggestion at all that they were made on behalf of D1. In any event, the
E fact P did not inspect the interior of the Property was neither here nor there E

F
because the Alleged UBWs were located “on the outside” ( 外 圍 ) of the F
Property.
G G

H
224. P said she asked Tong why the Waiver Clause formed part of H
the Shop 4 PASP, and Tong told her every sub-purchaser of an individual
I I
shop/unit of the Head Property would have to sign an appendix like the

J
Shop 4 Appendix which was just a formality, and P reiterated in re- J
examination that at the time when she signed the Shop 4 PASP, “…… [P]
K K
嘅理解係係必須要簽 [Shop 4 Appendix], …… 例行手續囉, 咁所以我會
L 問多句[Tong], 就「有冇問題㗎？」[Tong]答[P]「冇, 呢啲例行嘅啫, 好小 L

事嘅啫, 妳簽喇, 冇事㗎」…… [P]都覺得自己真係好傻”. This was akin

M M
to (but not exactly) the 2nd Representation averred in P’s pleadings that (a)
N the provisions in the Shop 4 PASP (including the Waiver Clause in the N

Shop 4 Appendix) were standard terms, and (b) P’s right to demand D1 to
O O
prove/give good title in respect of the Property would not be
P circumscribed. On balance, I do not accept Tong made such representation, P

especially in light of P’s overall lack of credibility and when Tong well
Q Q
knew (i) P’s experience with and understanding of the imposition of
R Clauses 1-2 of Appendix 2 annexed to the PASP for the re-sale of the 2nd R

Property (which were waiver clauses) was for protection of P as vendor,

S S
and (ii) P understood the true meaning and effect of the Waiver Clause in
T T
the Shop 4 Appendix through their bit longer discussion on the same. In

U U

V V
 - 126 -
A A

any event, D1 could not be faulted on this when there was no suggestion
B B
that Tong made the 2nd Representation (which I disagree) on behalf of D1.
C C

225. In short, what it boiled down to was that P alleged she signed
D D
the Shop 4 PASP and the Shop 4 Appendix (that included the Waiver
E Clause) because she trusted Tong whom she thought was honest, reliable E

and responsible from past dealings (which transactions were problem-free)

F F
even though she understood the meaning and effect of the Waiver Clause
G in the Shop 4 Appendix as explained in paragraph 217 above, and further G

understood the purpose of such Waiver Clause was to protect D1 and not
H H
her. But on balance, whilst I accept Tong and P looked out for each other
I over property investments, I do not agree P entered into the Shop 4 PASP I

and the Shop 4 Appendix merely because she trusted Tong. I find that
J J
whilst she understood the meaning/effect of Shop 4 PASP and the Shop 4
K Appendix (including the Waiver Clause and the Partition Clause), she was K

commercially encouraged by the expectation that Tong’s colleague would

L L
take up and acquire Store 4 from her and that she would make a quick
M profit/investment return from easy eventual re-sale of Shop/Yard 4, which I M

find to be the reason why P (and her “investment partners”) committed

N N
themselves to sub-purchase the Property despite awareness of the possible
O O
existence of unauthorised alterations or additions and/or UBWs in relation

P
to the Property and their legal consequences. P

Q 226. In my view, Wong could not be faulted in thinking that by Q

R
signing the Shop 4 Appendix P as sub-purchaser accepted the risk of R
possible unauthorised alterations or additions and/or UBWs at the
S S
Property, that P’s refusal to complete the sub-purchase of the Property by

T
reason of the Alleged UBWs flied against her acknowledgment/waiver in T

U U

V V
 - 127 -
A A

the Waiver Clause in the Shop 4 Appendix, and that D1 should not be held
B B
liable to P who was precluded by such Waiver Clause from complaining
C about the Alleged UBWs or using the Alleged UBWs as excuse not to C

complete the sub-purchase of the Property.

D D

E 227. In my view, there was nothing tricky, unfair or misleading for E

D1 to rely on the Waiver Clause in the Shop 4 Appendix which (as P

F F
understood) disclosed that there might be unauthorised alterations or
G additions at the interior and exterior of the Property, which might lead to G

enforcement actions by relevant Government departments, and which

H H
confirmed that P as sub-purchaser would be debarred from raising
I requisitions/objections regarding possible unauthorised alterations or I

additions. I further find P’s subjective contentions would not sway against
J J
such conclusion in light of her relevant experience and the objective
K factual matrix. K

L L
XVII. PARTITION CLAUSE
M M
228. P agreed the Shop 4 Appendix (including the Partition Clause)
N was to protect the interests of the vendor, and she knew the Partition N

Clause was by nature a waiver clause. P understood the partition wall at

O O
Shop 4 was unauthorised, and the Partition Clause meant “[P]買之前[P]睇
P 咗㗎喇, ……. 可能會有呢個未經授權嘅分隔牆㗎, [P]買咗[P]就唔可以 P

Q
就 話 唔 買 , 或 者 嘈 㗎 喇 ” , but I find she was unconcerned over such Q
provision and was prepared to complete the sub-purchase of the Property
R R
notwithstanding the presence of the partition wall between Units 4(A) and

S 4(B). S

T T

U U

V V
 - 128 -
A A

XVIII. DECEMBER 2012

B B

229. P claimed that after she signed the Shop 4 PASP, she asked
C C
Tong if she could inspect the interior of the Property, but he replied he did
D not have the keys. But Tong arranged for a Ms Ho of Midland Realty D

(“Ms Ho”), ie the estate agent for the registered owner Max Rainbow, to
E E
accompany P to inspect the Property. P claimed under cross-examination
F that at the end of December 2012 she (with “…… [P]唔識嘅業主、嗰個地 F

產何小姐[ie Ms Ho]帶[P]去”) inspected Store 4 but not Shop/Yard 4, but

G G
she could not remember whether she was told beforehand that only Store 4
H and not Shop 4 could be viewed. P’s WS stated that P could not gain access H

to “the shops on the [G/F] during the visit as the [G/F] was still occupied
I I
by the tenants”. In my view, since the reason (as given by P) for being
J unable to inspect Shop/Yard 4 was that “it was still occupied by the J

K
tenants”, the only reason must be that consent was not forthcoming from K
the tenants, especially when the inspection was arranged by the estate
L L
agent of Max Rainbow, the registered owner and landlord of such tenants,

M
which showed Max Rainbow did not stand in the way of inspection of the M

Property. Indeed, I note that even when RHL carried out their survey. On
N N
24 May 2013, Midland Leasing still refused entry to Unit 4(B). In the
O circumstances, I find P’s complaint about not being able to inspect the O

interior of the Shop/Yard 4 before signing the Shop 4 PASP would not take
P P
her case against D1 any further when even up to December 2012 no
Q consent was forthcoming from the tenants for such inspection. Q

R R
230. Interestingly, neither Tong nor his colleague who was
S interested to take up and acquire Store 4 attended the inspection in S

December 2012, and there was no evidence that P ever asked Tong why he
T T

U U

V V
 - 129 -
A A

and/or his colleague did not attend such inspection. Anyway, by the time of
B B
such inspection, P had already signed the Shop 4 PASP and expected
C Tong’s colleague to take up and acquire Store 4 (whatever its condition) C

from her, so she did not expect to be the ultimate owner of Store 4. Thus, P
D D
confessed she inspected Store 4 merely out of curiosity and the focal
E purpose of such inspection was to view the Other Property, “…… 冇理由 E

睇 6[ie Other Property]唔睇 4[ie Property], 順便已經去到嗰度囉, 八卦,

F F
咁咪睇埋咁解囉。同埋佢話畀我聽, …… 每一間鋪, 個樓底 …… 即係
G G
個閣樓嘅高度都會爭少少, 咁我話「爭少少, 夠唔夠企到一個人以上?

H 即係一個人企到上去㗎?」佢話一定夠, 咁[P]咪去睇一睇囉。安排咗好 H

耐 …… 先至有機會睇到”. But quite strangely P said Store 6 could not

I I
be inspected on that occasion even though there was no tenant at Store 6
J and vacant possession would be delivered upon completion. Importantly J

and in any event, I find on balance that P did not intend to check out any
K K
possible UBWs because she understood and was content with the terms of
L the Waiver Clause. In my view, she was unconcerned with the physical L

state of the Property, and merely had a look at Store 4 out of curiosity and
M M
to have an idea of the height of the ceiling. Indeed, it appeared Tong’s
N colleague was also unconcerned and did not attend the inspection as, N

according to P’s understanding, he would take up and acquire Store 4

O O
whatever its condition.
P P

231. In my view, this explained why P only had a cursory look at

Q Q
Store 4 just for a few minutes. She knew from the Price List vacant
R possession of Store 4 would be delivered upon completion, but noted R

S
“…… 擺滿晒所有嘅雜物响度 …… 得番個細細嘅中間位可以企人 S
喇” even though it was not let (ie “…… 雖然[Store 4]有雜物又好, 定有
T T

U U

V V
 - 130 -
A A

咩嘢都好, [Store 4]其實係冇租客”). P recalled she could see the front

B B
windows of Store 4 from across the street during her inspection in/about
C November 2012. At the inspection of Store 4 in December 2012, P realised C

there were windows at the front and rear parts of Store 4, but she claimed “
D D
基本上好似[P]話上到去係睇唔到窗嘅, …… 擺到滿晒㗎, [P]係 ……
E 睇唔到嘅, 得番中間個位置㗎咋”, and she could not see any Cage UBW E

(which was said to be affixed to the rear window of Store 4) because “……
F F
呢個份體冷氣機同埋 …… 閣樓[is Store 4]外嗰個鐵籠 …… 因為擺滿
G G
晒雜物, 得番中間位, 因為 …… 佢[ie Ms Ho]同[P]講嗰個就借咗畀業主
H 個朋友擺雜物”. In my view, this was significant because even if P had H

inspected Store 4 before she signed the Shop 4 PASP (which she did not),
I I
she would not have found out about the Cage UBW. I am not persuaded
J that P’s complaint about not being able to inspect the interior of Store 4 J

before 28 November 2012 took her case against D1 any further. Further,
K K
even though P testified that Tong already told her “…… 或者係有機會喺
L 外圍有僭建喇嘛”, she did not ask Ms Ho “「可唔可以畀我睇下, …… L

M
我想睇一睇出面個情況係點樣，…… 因為我有啲擔心係關於僭建 M
喎 」 ” . In my view, P’s evidence supported my finding that she was
N N
unconcerned with unauthorised alterations or additions and/or UBWs at

O
Store 4 and/or the Property because she well understood the meaning and O
effect of the Waiver Clause to which she agreed.
P P

Q
XIX. TONG’s COLLEAGUE RESILED FROM STORE 4 Q

232. Tong’s colleague never contacted P after she signed the Shop
R R
rd
4 PASP, and as in the case of the 3 Property in which P never met her “co-
S S
investor” being Tong’s mother, P had no idea who Tong’s colleague was

T
and had never met him. P’s intended “transfer” of Store 4 to Tong’s T

U U

V V
 - 131 -
A A

colleague for about $4,000,000 odd (but P never gave a precise amount in
B B
her evidence) upon sub-division of the Property fell through.
C C

233. In paragraph 29 of P’s WS, P claimed that (a) in/about

D D
February/ March 2013 Ms Ho telephoned to inform her there were still
E certain problems concerning the sub-division of the Head Property without E

specifying the nature of the problem, and Ms Ho was also uncertain

F F
whether this would affect the completion of the sub-sale of the Property,
G and (b) even in April 2013 P was still asking Ms Ho whether the problems G

with the sub-division would affect the completion date.

H H

I 234. Under cross-examination, P explained why she communicated I

with Ms Ho and not Tong on the sub-division issue. P said Tong told her
J J
arrangements would be made for sub-division of the Property after she
K signed the Shop 4 PASP, so after signing the Shop 4 PASP P telephoned K

Tong “…… 問番嗰個進度, 幾時 …… 落大訂 …… 問[Tong]幾時簽

L L
[FASP]喇。...... [P]諗番起, [P]有問[Tong]咁 …… 幾時分契, [Tong]話
M M
「完成咗[FASP]後分契」, 咁[P]話「幾時完成呀？」[Tong] …… 一路都

N 拖緊係「未知, 唔知, 妳打畀[Ms Ho]問幾時可以分到契簽[FASP]」。 N

……”, “但係一直都簽唔到嗰個[FASP] ……” P also said under cross-

O O
examination that “ 因 為 一 直 … … 成 lot 嗰 個 物 業 , 譬 如 好 似
P 1、2、3、4、5、6、7、8 咁喇, 佢係分唔到契, 有機會成交唔到, 咁[P]打電話 P

畀[Tong], …… [P]問[Tong]分好契未, 咁[Tong]就答[P]未分好契, 叫[P]

Q Q
直接就打畀[Ms Ho], [Ms Ho]先會清楚能唔能夠分到契, 成唔成交得到
R R
嘅。咁一路[P]都有聯絡, 問下嗰個情況點樣嘅情況, 究竟我[P]唔買到呢?

S 其實都未知之數 …… 如果分唔到契, 有機會買唔到呢個物業嘅。因為 S

佢分唔到契, 之後就唔到呢個叫做咩嘢話？買賣合約”.
T T

U U

V V
 - 132 -
A A

235. P then testified that “…… 咁又隔多一輪, [P]唔知幾時, ……

B B
” (which P later said was about 2 months (or possibly 2-3 months) before
C the date for completion, ie about March/April 2013), C

D (a) Tong telephoned to tell her “…… 因為大業主到而家都 …… 未分到 D

契, [Tong]話 …… 佢成 lot 嘅分契喇, 咁就跟住就係, 佢就分唔到閣
E 樓同地鋪嘅契, 所以[Tong]個同事就買唔到嗰個[Store 4]。咁就同 E
[P]講「妳可唔可以要埋佢[ie Store 4]?」” (and P later clarified that
F when she said “…… 佢就分唔到閣樓同地鋪嘅契, 所以[Tong]個同 F
事就買唔到嗰個[Store 4] ……” she only meant “…… 有機會做唔
G 到成交”). G

H
(b) “…… 唔知[P]打畀[Tong]定[Tong]打畀[P], 傾開計就話「嗰度律師 H
話分唔到契, 所以我個同事要唔到, 妳要埋佢喇, 好唔好?」[P]話
I
「吓? 哦。」同埋 …… 傾下啲閒計，…… 佢工作上嘅嘢喇 ……”, I
“…… 諗番我都覺得好奇怪，我自己都覺得 ……”
J J

236. P agreed that any delay in the sub-division of the Head

K K
Property could affect the completion of the sub-sales and sub-purchases of
L both the Other Property and the Property on 31 May 2013, but such delay L

would have more impact on the Property as Tong’s colleague was

M M
supposed to take up and acquire Store 4 from her. P also agreed she
N understood Tong’s suggestion to mean she had to become the owner of N

O
both Shop/Yard 4 and Store 4 upon completion of the sub-purchase of the O
Property as Tong’s colleague would not take up and acquire Store 4, but as
P P
she had already signed the Shop 4 PASP she did not have much choice, ie “

Q 冇得揀, 都要願意㗎喇 ……” Q

R R
237. But later on 9 May 2013, the Lands Department approved the

S Sub-Sub-DMC and the sub-division of the Head Property. The Property S

was allotted 55 undivided shares of which 31 and 24 undivided shares

T T

U U

V V
 - 133 -
A A

were allotted to Shop/Yard 4 and Store 4 respectively (see paragraphs 30,

B B
32 and 35 above). W&G informed HCP of such successful sub-division on
C the following day (see paragraph 30 above). At first P claimed that even up C

to mid-June 2013 when completion finally fell through HCP/C&A did not
D D
tell her whether the sub-division of the Head Property was successful, but
E she later agreed “…… [P]有少少混淆 …… 尾後分契成功喇” before E

the date for completion.

F F

G XX. RHL G

H 238. After P learned that the sub-division of the Property was H

successful, she notified Ms Ho to arrange for RHL to inspect the Other

I I
Property and the Property, and on 24 May 2013 RHL’s surveyor carried out
J inspection on his own in the absence of P. In my view, P did not give any J

satisfactory reason for commissioning such professional survey at such a

K K
late stage.
L L

239. In paragraph 30 of P’s WS, P said “[because] of these

M M
complications regarding the status of the Property” (ie the uncertainty over
N sub-division of the Property), she realised in May 2013 that she had to N

arrange for a surveyor report to be prepared on the condition of the

O O
Property. But under cross-examination, P agreed (and on balance I find)
P that by the time she approached RHL (who only carried out inspection of P

the Other Property and the Property on 24 May 2013, ie about a week
Q Q
before the date for completion) (a) she “…… 應該係知道分契成功” (ie
R R
the sub-division of the Property was successful), and (b) during the period

S
from when she first learned that the sub-division of the Head Property was S
successful until she approached RHL she was unaware of any other
T T

U U

V V
 - 134 -
A A

problem that would have prevented completion of the sub-sale and sub-
B B
purchase of the Property between her and D1. In such circumstances, P
C should have been quite relieved because the only outstanding hurdle that C

might have prevented the completion of the sub-sale and sub-purchase of

D D
the Property had been overcome, and she could have comfortably awaited
E completion of such sub-purchase. E

F F
240. In my view, P’s decision to commission RHL to conduct a
G survey of the Property was quite inexplicable on her own case, and I find G

on balance that she was not relieved by the successful sub-division

H H
because:
I I
(a) all along she never intended to take up and sub-purchase the entire
J
Property as she anticipated that Tong’s colleague would take up and J
acquire Store 4;
K K
(b) she had not expected Tong’s colleague to resile from the
understanding that he would take up and acquire Store 4;
L L

(c) but when Tong’s colleague resiled from such understanding, she knew
M she had no choice under the Shop 4 PASP but to take up and sub- M
purchase the entire Property (including Store 4), which was against
N her original intent and she was reluctant to do so; N

O (d) the delayed sub-division fortuitously gave her hope of a convenient O

excuse not to complete the sub-purchase the Property (including Store
4);
P P

(e) such hope was dashed when the sub-division was successful by 9 May
Q Q
2013;

R (f) she then because anxious to see whether there could be any other R
excuse to ground her intention not to sub-purchase the Property (as
S she all along did not want to take up or acquire/hold Store 4), so she S
engaged RHL to check the physical state of the Property;
T T

U U

V V
 - 135 -
A A

(g) had she been genuinely concerned with the physical state of the
B Property, she would have commissioned surveyor inspection much B
earlier than 1 week or so before the date for completion (eg at least by
C December 2012 (if not earlier) when she herself carried out C
inspection).
D D

E E
241. The above finding is, in my view, consistent with P’s
F F
admission under cross-examination that the only reason why she did not
G complete the sub-purchase of the Property was because she commissioned G

RHL to conduct a survey of the Property, and the RHL Report reported the
H H
Alleged UBWs at the Property.
I I

242. P also engaged RHL to conduct a survey of the Other

J J
Property, and said under cross-examination that RHL’s surveyor could not
K gain access to the Other Property (including Store 6), “[RHL]亦答[P]入唔 K

到, 咁[P]話算喇, 由佢喇。咁因為[Ms Ho]嘅時候[P]都有問過, [P]話 6 號

L L
[ie Other Property]有冇事呀? [Ms Ho] …… 答[P]冇, 咁嘅時候, [P]嘅專
M 注嘅時候, [P]就係睇 4 號[ie Property]為主”. When asked to clarify in M

re-examination whether RHL told her it had no access to Store 6, P said

N N
“…… [P]唔記得咗喇, 因為嗰時候 …… [Ms Ho]話[Other Property]冇事,
O O
咁[P]係順便想睇埋[Other Property]嗰啲嘢, 睇一睇嘅啫，順便，驗開
P [the Property]”. P

Q Q
243. I find P’s explanation about why RHL could not inspect Store

R 6 quite unreliable. After all, P made arrangements for inspection directly R

with Ms Ho who acted for the registered owner / head vendor, and the
S S
Price List showed that vacant possession of Store 6 was to be delivered
T upon completion of the sub-sale and sub-purchase of the Other Property in T

U U

V V
 - 136 -
A A

a week’s time. Further, even if inspection of Store 6 could not be arranged

B B
initially, there was no sensible reason why P just accepted Ms Ho’s
C assertion that the Other Property had no problem and did not press for a C

proper inspection when RHL found the Alleged UBWs at the Property and
D D
told her they suspected there were UBWs at the outside of the Other
E Property (ie “[RHL]話睇到外圍嗰度, 懷疑有 ……”). In my view, the E

real reason and one that was consistent with my findings in

F F
paragraphs 239-241 above was that, as P said, she asked RHL to focus
G primarily on inspection of the Property, and “…… 順 便 想 睇 埋 [Other G

H
Property]嗰啲嘢, 睇一睇嘅啫, 順便, 驗開[the Property]”. In my view, H
whilst P had every intention to complete the sub-purchase of the Other
I I
Property so there was no need to see for herself (via her agent RHL) the

J physical condition of the Other Property, P was keen to check the physical J

state of the Property for an excuse not to complete the sub-purchase, so she
K K
liaised with Ms Ho to let RHL inspect the Property.
L L
244. When pressed under cross-examination on whether RHL
M M
reported any UBWs were observed in relation to the Other Property, P
N testified that “[RHL]話睇到外圍嗰度, 懷疑有 ……”, and said “…… 有 N

個鐵皮搭咗上去 …… 喺後面” and nothing else, “…… 但係佢冇證據

O O
肯定佢有” because “[RHL]冇入到去, 所以[RHL]唔敢肯定, 所以咪冇
P 證據囉”. So P was at least aware there was at least a canopy at the Shop P

6 Yard that was similar to the Canopy UBW albeit made of metal sheet
Q Q
rather than concrete.
R R

245. Further, Wong said (and on balance I accept) that when he

S S
went to the Rear Lane to view the rear parts of the Other Property and the
T Property in/about 2014 shortly after P commenced the present action on T

U U

V V
 - 137 -
A A

4 August 2014, he discovered the Other Property had structures similar to

B B
the Alleged UBWs which P found objectionable, ie steel security cage for
C window-type air-conditioner at the Store 6 rear window and canopy at the C

Shop 6 Yard. Whilst the metal sheet canopy at the Shop 6 Yard was still
D D
there when photographs were taken in April 2018 (see paragraph 95(c)
E above), the steel security cage similar to the Cage UBW was no long E

evident in April 2018.

F F

G 246. P had not met RHL’s surveyor. At first she said she had not G

spoken with him by telephone, but later said she could not remember
H H
whether she did so or not, and still later said she had a telephone
I conversation with him after his inspection. However, although RHL I

reported to her about the observations in paragraphs 242-244 above, she

J J
did not (a) ask whether RHL took any photographs of the canopy and the
K suspected UBWs “on the outside” of the Other Property, and if so, whether K

she could view such photographs, and/or (b) ask to visit the Other Property
L L
to view the canopy structure at the Shop 6 Yard for herself, especially
M when RHL reported that its surveyor could not enter the Other Property at M

all and could not be certain whether there were any UBWs (although RHL
N N
suspected there were). But even more interestingly, P did not take issue
O O
over (i) the canopy structure at the Shop 6 Yard and/or (ii) other suspected

P
UBWs at the Other Property (eg possibly the Cage UBW at the rear P
window of Store 6), and instead proceeded to complete the sub-purchase of
Q Q
Other Property on 31 May 2013.

R R
247. When pressed on why she completed the sub-purchase of the
S S
Other Property, P said “…… 因 為 [Ms Ho] 冇 提 過 6 號 鋪 [ie Other

T Property]有問題, 同埋嘅時候我覺得係如果有事嘅時候, 嗰個損失會 … T

U U

V V
 - 138 -
A A

… 減低好多, 一個石屎[ie the concrete Canopy UBW at the Property]或

B B
者一個鐵皮 ……” On balance I reject P’s explanation. As explained in
C paragraph 243 above, there was no sensible reason why P simply accepted C

Ms Ho’s assertion that the Other Property had no problem when RHL
D D
found the Alleged UBWs at the Property and told her they suspected there
E were UBWs at the outside of the Other Property (ie “[RHL]話睇到外圍嗰 E

F
度 , 懷 疑 有 … … ” ). In any event, RHL told her there was a canopy F
structure in the open rear yard of both the Other Property and the Property
G G
(irrespective of their construction materials), and it appeared even on P’s

H own case she was not really concerned over the existence of such canopy H
structures but over the economic cost of possible reinstatement. In my
I I
view, P took such view because she was well aware and understood the
J meaning and effect of the Shop 6 Appendix (including the Waiver Clause), J

and decided not to take issue with such structure at the Other Property.
K K

L 248. As for the Property, RHL’s surveyor likewise found a canopy L

at the open area of the Shop 4 Yard (ie the Canopy UBW). P said for the
M M
Canopy UBW at the Property “…… [RHL]話係石屎吖嘛” even though
N the RHL Report made no mention of its construction material. Again, P did N

not ask RHL for photographs (if any) of the Alleged UBWs, and she did
O O
not ask for personal inspection of the same.
P P

249. And yet P relied on the Alleged UBWs to refuse completion

Q Q
of the sub-purchase of the Property (even though she well understood the
R meaning and effect of the Waiver Clause in the Shop 4 Appendix and she R

would complete the sub-purchase of the Other Property), and the reason
S S
she gave under cross-examination was as follows:
T T

U U

V V
 - 139 -
A A

“…… 因 為 係 嗰 個 業 主 叫 [Ms Ho] 話 畀 [P] 聽 4 號 鋪 [ie

B Property]有問題吖嘛。…… 大概喺 5 月左右喥喇,[P]唔記得係 B
5 月 頭 定 係 5 月 中 … … [but P could not remember exactly
when] …… 係大概嗰個交界嗰陣情況, 因為[P]同[Ms Ho]接觸
C C
嘅時候, [Tong]就叫[P]問[Ms Ho], [Ms Ho]係負責嘅。…… [P]
同[Ms Ho]接觸嗰陣時, 因為傾緊嗰陣時嗰個進度[about sub-
D division], 問[Ms Ho]嘅時候 …… 咁[P]傾開, [P]話上面個閣樓 D
[ie Store 4]好大, 4 號鋪, 咁其實 …… 可唔可以分間做寫字樓
E 呢? [P]咁樣傾囉。…… 其實傾下閒計, [Ms Ho]話「唔得, 前面 E
嗰度中空㗎, 要拆咗佢先得㗎」, 咁[P]覺得「咦，點解要拆咗
佢呀?」咁[P]就覺得 …… 好奇。…… 咁 …… [P]就問[Ms Ho],
F [Ms Ho] …… 答[P]「係中空」, [P]話「咩嘢中空呀?」[Ms Ho]講 F
完, 但係[P]都唔明白咩嘢叫「中空」。…… 後來我哋唔知講開
G 乜嘢, 呢個時候 …… 即係 …… 嗰個附件嗰度, [P]就問[Ms G
Ho], 「 咦 ， 點 解 我 哋 會 簽 嗰 份 嘢 [ie the Shop 4 Appendix]
嘅？」, Ms Ho 話「係, …… 我教個業主寫㗎」。…… 咁我覺
H H
得--嘅時候, 我突然間覺得好唔舒服, 個心”.

I I
250. P’s allegation that she declined to complete the sub-purchase
J of the Property because Ms Ho told her there were “problems” with the J

front part of the Property (ie “前面嗰度中空㗎, 要拆咗佢先得㗎”) only

K K
came about in her evidence under cross-examination, and was not found in
L P’s WS at all. Obviously, the Cage UBW “on the outside” of the rear L

window of Store 4 could not affect the internal layout of Store 4. When Ms
M M
Cheung tried to get P to clarify under cross-examination how her other
N complaint (ie the Canopy UBW) would affect the layout of the Property, P N

O
reiterated “[Ms Ho]話係前面嘅中空 …… [Ms Ho]講緊前面嘅中空”, O

which P understood Ms Ho to mean “…… 個鋪前面對上嗰度係一個 …

P P
… 中空嘅位置, 要拆咗佢, 類似係咁嘅意思喇, 其實點樣嘅情況, ……
Q [P]唔太清楚咩嘢叫做中空, …… [P]能力係理解到呢度咋”, but P was Q

sure Ms Ho was talking about the front part of Store 4 (ie “…… 前門呢一
R R
面嘅 前面喇 ” ). In my view, it was obvious from such explanation that
S S
what Ms Ho said about Store 4 could not be used as an office because “中

T 空嘅位置, 要拆咗佢” had no relation at all to the Canopy UBW located T

U U

V V
 - 140 -
A A

outside Store 4 in the open area of the Shop 4 Yard, and when pressed P
B B
was constrained to accept this. Anyway, when on P’s case Ms Ho told P
C over the telephone “…… 前面嗰度中空㗎, 要拆咗佢先得㗎 ……”, P C

had not yet even engaged RHL so she was unaware of the Alleged UBWs
D D
at the time. Nevertheless, P claimed “…… 係兩樣加埋嘅時候令到[P]更
E 加驚”, “…… 諗番轉頭覺得[Tong] …… 之前鋪排嘅嘢, [P]覺得越嚟越 E

F
有可疑, 令到[P]心更加唔舒服, 更加驚 ……”. In my view, when P said F

by May 2013 “[P] 心 更 加 唔 舒 服 ” , this reflected her reluctance to

G G
complete the sub-purchase of the Property, which led her to commission
H RHL for the survey of the Property for the reasons explained in paragraphs H

240-241 above.
I I

J 251. However, P did not explain why, after hearing what Ms Ho J

said about “…… 前面嗰度中空㗎, 要拆咗佢先得㗎 ……” and not

K K
clearly understanding what Ms Ho was referring to, she did not ask (a)
L RHL to particularly check with Ms Ho (who arranged RHL’s inspection of L

Store 4) and to inspect this at Store 4 on 24 May 2013, (b) Ms Ho to let her
M M
personally inspect the Property (or at least Store 4) herself in the
N circumstances, and (c) Tong and/or HCP to follow up on this with D1 on N

her behalf. P said she did not liaise with her own estate agent Tong on this
O O
“…… 因為當時, …… [P]個心已經覺得好唔舒服喇, …… [P]已經起疑
P 心喇, 點解會咁樣呢?” I am not persuaded by P’s explanation. With an P

Q
imminent date for completion, any sensible purchaser would try to find out Q
and raise concerns with his own estate agent and his solicitors to see if the
R R
issues could be resolved. In my view, P did not do so because she was

S
reluctant to complete the sub-purchase of the Property, and was content to S
seize on any available excuse not to complete.
T T

U U

V V
 - 141 -
A A

252. When P was shown photographs of the Alleged UBWs (ie the
B B
Cage UBW and the concrete Canopy UBW) under cross-examination, she
C testified that she suspected there were other UBWs at the Property, but C

gave no grounds for such belief. I am not satisfied on balance that there
D D
were any other structures and/or UBWs that could be the subject matter of
E complaint. Further, on balance, I reject P’s evidence that Ms Ho told her “ E

中空嘅位置, 要拆咗佢”, and that this amounted to any justification not

F F
to complete the sub-purchase of the Property. HCP did not raise any
G requisition about this, and P did not rely on this in her pleadings. G

H H
XXI. ALLEGED UBWS
I I
253. Mr Lau in his closing submissions argued that as a matter of
J fact the Alleged UBWs being “unauthorised structures” constituted a blot J

on title and justified P’s rescission of the Shop 4 PASP. When asked how
K K
he would define “unauthorised structures” for the purpose of establishing
L the same as a matter of fact, Mr Lau submitted they would be structures L

that were not permitted under the BO and not authorised by the BD and/or
M M
BA.
N N

254. Mr Lau agreed (as he must since the court had not granted any
O O
expert directions) the RHL Report was not any expert evidence, but
P suggested it was still evidence for the court to consider along with all other P

evidence as a whole to demonstrate that the Alleged UBWs were

Q Q
“unauthorised structures”, so the burden fell on D1 as the confirmor/
R vendor to show good title to the Property, and the court should consider R

S
whether it was established beyond reasonable doubt that P as purchaser S
would not be at risk of any successful action against her by the BD and/or
T T

U U

V V
 - 142 -
A A

BA and she might safely be advised to disregard the risk.63 Mr Lau also
B B
noted the observations by Rogers J in Citiward Ltd v Tai Ping Wing64 that
C even if the risk of enforcement in relation to the unauthorised structures is C

low, the purchaser is entitled to be cautious, and good title may not have
D D
been made out.
E E

255. Ms Cheung took a pleading point on the basis that there was
F F
no plea by P that as a matter of fact the Alleged UBWs were “unauthorised
G structures” that constituted a blot on title and therefore justified rescission G

of the Shop 4 PASP. I prefer to deal with the matter in substance.

H H

I 256. The only evidence before the court that had any relevance to I

this issue was the RHL Report and the photographs referred to in
J J
paragraph 95 above, but the photographs were not taken
K contemporaneously. Mr Lau did not articulate how the Alleged UBWs K

infringed the BO (indeed Mr Lau did not refer me to any provision in the
L L
BO that was said to have been infringed), and did not explain how they
M were not authorised by the BA or BD, which presumably meant they were M

not in accordance with the approved building plans. Although W&G

N N
provided copies of the approved building plans to HCP (see paragraph
O 40(a) above), they were not adduced at trial. In the end, Mr Lau in his oral O

closing submissions acknowledged that on the existing evidence it would

P P
be difficult for the court to find the Alleged UBWs were “unauthorised
Q structures”. Q

R R
257. Ms Cheung noted that even if the Alleged UBWs were found
S to be “unauthorised structures”, not all “unauthorised structures” are S

63
see Spark Rich (China) Limited at paras 10-11
T T
64
[1995] 2 HKC 181, 185

U U

V V
 - 143 -
A A

encumbrances or liabilities. She drew attention to Litton JA’s observations

B B
at page 407 in Active Keen Industries Ltd as follows:
C C
“In this case, the purchaser’s solicitors, in their letter of
22nd October 1992 stated that according to the decision in Giant
D River v. Asie Marketing Ltd. (supra) ‘the existence of D
unauthorized structures renders the title of a property defective’.
If they had paused to consider the proposition, they would have
E E
realized that, stated in such wide terms, it must be wrong. Were it
otherwise there can be no sale and purchase of flats in buildings
F where there are illegal structures on the roof, or where there are F
unauthorized balconies ……”
G G
258. Active Keen Industries Ltd explained at pages 407-409 that an
H H
unauthorised structure will only “go to title” if, say, the BA, BD or other
I government department seeks to exercise its powers under the BO “with I

regard to unauthorised works belonging to individual owners”, eg a

J J
demolition order, which therefore constitutes a potential encumbrance as
K being a claim, lien or liability attached to the property. Thus, the mere K

existence of “unauthorised structures” is insufficient, so the true question is

L L
whether there is a real risk of enforcement so as to constitute an
M encumbrance on the vendor’s title. However, Mr Lau in his closing M

submissions failed to explain how the existence of the Alleged UBWs

N N
(even if they were “unauthorised structures”) amounted to “defects in title”
O of the Property, and there was paucity of evidence, whether expert or O

factual, before this court as to (a) any enforcement action that had been
P P
taken in resepect of the Alleged UBWs by the BA, BD or any other
Q Government department in respect of the Alleged UBWs, and (b) the risk Q

of future enforcement action in respect of the Alleged UBWs.

R R

S 259. More importantly, the issue of whether the Alleged UBWs S

were in fact “unauthorised structures” that would constitute encumbrance

T T

U U

V V
 - 144 -
A A

on D1’s title to the Property was in fact neither here nor there because D1
B B
was content to assume the Alleged UBWs were “unauthorised structures”
C for the purpose of construction of the Waiver Clause in the Shop 4 C

Appendix. If the Alleged UBWs were “unauthorised structures”, they

D D
would clearly fall within the “subject matter limits” of such Waiver Clause,
E and as discussed above, the Waiver Clause would have precluded P from E

raising objections/requisitions over the Alleged UBWs and/or from

F F
declining to complete the sub-purchase of the Property by reason of the
G Alleged UBWs. Indeed, Litton PJ at page 771 in Jumbo King Ltd said that G

ultimately the focal issue was the construction of the Waiver Clause, and
H H
“[it would burden this judgment unnecessarily by considering whether the
I presence of unauthorised structures within the premises agreed to be sold I

constitutes an “encumbrance”, so as to affect the vendors’ obligation to

J J
pass a good title. …… No ready answer can be given. …… Assuming the
K matter did go to title, …… Godfrey JA and Mortimer V-P are plainly K

L
correct when they found for the vendors on the basis of cl. 18(e)”. L

M XXII. SUB-PURCAHSE OF PROPERTY FELL THROUGH M

N 260. I accept P did not have actual knowledge of the Alleged N

UBWs until they were revealed in the RHL Report. But P alleged Tong as
O O
estate agent acting for her and D1 must have known there were UBWs at
P the Property beyond the unauthorised partition wall at Shop 4, and Tong P

betrayed her trust by deliberately withholding information on the Alleged

Q Q
UBWs from her and choosing to lie to her about the Alleged UBWs. P
R R
claimed she confronted Tong who ignored her complaints, “[Tong]唔答[P]

S 囉, 避而不談囉, 問[P]嘅時候, [Tong]答[P]「我相信業主, 我唔知道, 我 S

都係畀佢呃咗」”. On balance I reject P’s allegations. I have found that

T T

U U

V V
 - 145 -
A A

D1 did not have any actual knowledge of the Alleged UBWs. In my view,
B B
there was also insufficient evidence to show Tong/D2 had any actual
C knowledge of the existence of the Alleged UBWs, and hence there was no C

basis to say Tong/D2 deliberately withheld information on the Alleged

D D
UBWs from P.
E E

261. In my view, D1 was sincere in its intention to complete the

F F
sub-sale of the Property, but for reasons explained above, the same could
G not be said for P. On 30 May 2013, HCP wrote to W&G to enclose the G

RHL Report that referred to the Alleged UBWs, and to complain that D1
H H
failed to satisfactorily answer HCP’s requisitions on title and failed to
I show/prove good title to the Property. Had P still wanted to complete the I

sub-purchase of the Property but was concerned, as she said, with the
J J
economic cost of reinstatement of a concrete canopy at the Shop 4 Yard in
K contra-distinction to the metal sheet canopy at the Shop 6 Yard, there was K

no sensible reason why P did not even attempt to negotiate a discount of

L L
the purchase price or at the very least to ask D1 through Tong and/or C&A
M for a discount as an alternative to demolition/removal of the Alleged M

UBWs when D1 offered a further 21 days until end of June 2013 for P to
N N
complete the sub-purchase of the Property.
O O

262. P claimed “…… [P]有問[C&A]咁嘅情況應該係點樣處理”,

P P
“…… [P]有叫律師問[D1]嘅情況。…… 係律師同律師 …… 係有, ……
Q Q
有問過[D1]嘅律師 ……”, but claimed she did not ask for a discount
R because “…… 冇 , 唔 識 ” . I find such allegation specious as P had R

experience of negotiating for and achieving a significant discount in the

S S
purchase price for the 2nd Property due to the presence of unauthorised
T alterations and/or illegal structures. P then claimed she negotiated for a T

U U

V V
 - 146 -
A A

discount in price before she signed the PASP for the purchase of the
B B
2nd Property, and she did not know she could still ask for a discount after
C she signed the Shop 4 PASP, “…… 係有分別嘅 , 呢兩個” , so all she C

could do was “…… 問番業主應該點樣處理番 ……” On balance I do

D D
not accept such explanation. The need for discount in price turned upon
E discovery of alleged UBWs and not on whether the price had been agreed E

by signing a PASP. After all, if the parties reached agreement on a

F F
discounted price, it would overtake the original agreed price. On P’s case,
G she discovered the Alleged UBWs 4 days before the date for completion, G

H
and in my view there was no reason for P with her past experience not to H
ask for a discount in price had she wanted to complete the sub-purchase of
I I
the Property on the fixed date or on the extended date. Whilst HCP by their

J
letter dated 30 May 2013 (see paragraph 39 above) did ask W&G “what J
step [D1] is going to take to reinstate the defect condition to ensure the
K K
Property would be sold free from encumbrance”, I find neither P nor C&A

L pursued this further in June/July 2013 because P in fact knew she was L

precluded from raising complaint about the Alleged UBWs by reason of

M M
the Waiver Clause of the Shop 4 Appendix, which terms/effect she well
N understood, but she merely put forward the Alleged UBWs as an excuse N

not to complete the sub-purchase of the Property.

O O

P 263. P claimed she also asked Tong “…… 咁呢 度係 點 樣 處理 , P

[Tong]凈係叫[P]成交, 直頭迴避所有 …… [P]問[Tong]嘅嘢, 完全係冇

Q Q
答[P], 係避, 凈係好簡單, 畀到 21 號最後限期[P]成交, 但係[P]問[Tong],
R [Tong]從來都冇答過我任何嘢, 係避而不談”. I accept on balance Tong R

was embarrassed and tried to avoid P because Tong’s colleague failed to

S S
take up and acquire Store 4, but Tong was correct in saying that D1 gave P
T another 21 days to complete the sub-purchase of the Property. In my view, T

U U

V V
 - 147 -
A A

Tong was also correct in urging her to complete the sub-purchase of the
B B
Property because the existence of the Alleged UBWs and the requisitions
C raised by HCP on her behalf were insufficient to justify not completing the C

sub-purchase of the Property. In my view, they were nothing more than a

D D
poor excuse for P to try to resile from the Shop 4 PASP.
E E

XXIII. SUBSEQEUNT MATTERS

F F

264. Wong/D1 learned about the Alleged UBWs (presumably from

G G
W&G) after P failed to complete the sub-purchase of the Property on
H 31 May 2013. H

I I
265. On 4 August 2014, P commenced the present action.
J Sometime thereafter in 2014, Wong went for a site visit and walked to the J

Rear Lane. Wong agreed the Rear Lane was shown on the floor plan “……
K K
但係[Wong]唔會用心睇個後巷 ……” He did not go to the Rear Lane
L via the Rear Lane Gate which he checked was locked on such visit. L

Instead, “…… [Wong]係入去其中一間 …… 餐廳, 賣小食嘅餐廳, ……

M M
最先[Wong]係有 request, 話可唔可以畀[Wong]入去裡面睇睇, 佢唔得,
N N
「不過如果我想入後巷點呀?」係佢話畀[Wong]知 …… 嗰度入到去”, “

O …… [Wong]係由 …… 10 號鋪, 幼稚園後面入去嘅”, so Wong “…… O

唔係入咗 10 號鋪裡面, 喺 10 號鋪側邊就有條路仔入, 行到入後面㗎喇

P P
”. Wong confessed he would not have known how to go to the Rear Lane
Q himself, and “…… 至起碼 …… 都要靠佢講[Wong]先知道有條窿路 Q

喇”. There was also no sign to show the Rear Lane led to where.
R R

S 266. In my view, this was the first time Wong/D1 had a serious S

look at the Property and could see for themselves the Alleged UBWs. In
T T

U U

V V
 - 148 -
A A

my view, Wong/D1 had no actual knowledge of the Alleged UBWs prior to

B B
the scheduled date for completion, and hence there was no deliberate non-
C disclosure or concealment of the Alleged UBWs from P. C

D D
267. In/about May 2016 (ie almost 3 years after the date of
E completion), P lodged a formal complaint against the Estate Agents E

Authority, which complaint she claimed was still under investigation when
F F
she made P’s WS. P did not say what was the outcome of such
G investigation when she gave evidence at trial. G

H H
XXIV. CONCLUSION ON P’s CLAIM AGAINST D1
I I
268. I have found neither D1 nor P had actual knowledge of the
J Alleged UBWs before the signing of the Shop 4 PASP, but even if D1 did J

have such actual knowledge (which I disagree), it was ultimately a matter

K K
of construction of the Waiver Clause, and I have found it was expressly
L wide and clear to any reasonable and ordinary purchaser with L

understanding of the relevant factual matrix that it would cover the

M M
identified “defect in title” being any unauthorised alterations or additions
N and/or UBW at the Property (which would include the Alleged UBWs). P N

understood the meaning and effect (including the effect on title to the
O O
Property) of the Waiver Clause and the Partition Clause in the Shop 4
P Appendix which were in clear and unequivocal language, and P with P

experience of non-consumer property transactions was not tricked or

Q Q
misled. In my view, it was reasonable in the circumstances for P to assume,
R which she did by signing the Shop 4 Appendix, the risk of unauthorised R

alterations or additions and/or UBWs (including the Alleged UBWs) at the

S S
Property.
T T

U U

V V
 - 149 -
A A

269. By reason of all of the above matters, it was clear the

B B
commercial risk that there might be unauthorised alterations or additions
C and/or UBWs at the Head Property (including the Property) was shifted to C

D1, and the commercial risk that there might be unauthorised alterations or
D D
additions and/or UBWs at the Property was shifted to P. Both parties
E contemplated there might be such at the Property, and the Waiver Clause in E

the Shop 4 Appendix was binding on P. In my view, D1 was entitled to rely

F F
on the Waiver Clause as complete answer to the requisitions on title raised
G by P in relation to the Alleged UBWs. P repudiated the Shop 4 PASP when G

she refused to complete the sub-purchase of the Property on 31 May 2013

H H
and/or within 21 days thereafter, so D1 was entitled to forefeit the
I Deposits. I

J J
XXV. P’s CLAIM AGAINST D2
K K
270. There was no dispute that D2 was the estate agent acting for
L D1 and P in respect of the sub-sale and sub-purchase of the Property (see L

Clause 17 of the Shop 4 PASP), that Tong was D2’s employee at the
M M
material time, that D2 owed P duty of care as estate agent, and that D2
N would be vicariously liable for any breach of such duty of care committed N

by its employee Tong.

O O

P P

Q Q

R R

S S

T T

U U

V V
 - 150 -
A A

(a) P’s case against D2

B B

271. Mr Lau summarised P’s case against D2 for breach of its duty
C C
of care owed to the P as follows:
D D
(a) Tong/D2 failed to use reasonable diligence and/or due care and skill
to make reasonable, sufficient and proper enquiries and disclosure in
E E
relation to the Alleged UBWs to give accurate replies to P’s enquiries.

F (b) Tong/D2 failed to arrange for and accompany P to inspect the interior F

of the Property. When asked by the court how inspection of the

G interior of the Property would be relevant when the Alleged UBWs G
were “on the outside”, Mr Lau suggested P would have noticed the
H Alleged UBWs if she were able to visit the interior of the Property. H

I
(c) Tong/D2 failed to properly and correctly explain to P the full meaning I
and effect of the Waiver Clause, particularly that by agreeing to such
clause P might risk being precluded from raising requisitions in
J J
relation to UBWs, including the Alleged UBWs. In his oral closing
submissions, Mr Lau accepted Tong/D2 had no obligation to
K volunteer explanation of the Waiver Clause to P, and submitted their K

duty was to be accurate if they replied to P’s enquiry or if they chose

L to volunteer such explanation to P. L

M (d) Tong/D2 wrongfully and misleadingly told P the Waiver Clause was M
standardised and mere formality, and P’s right to demand D1 to
N
show / give good title to the Property would not be circumscribed (ie N
2nd Representation).
O O
(e) Tong/D2 knew P was unable to view/inspect the interior of the
Shop/Yard 4, but “still enticed [P] to agree on the Waiver Clause of
P which the statements contained therein were inaccurate and not true”. P

Q Q

R R

S S

T T

U U

V V
 - 151 -
A A

(b) Legal principles

B B

272. “The standard and scope of care and skill expected of the
C C
agent depends on the nature of the contractual relationship with his
D principal. …… The test is stated in Midland Bank Trust Co v Hett Stubbs D

& Kemp (a firm) to be “… what a reasonably competent practitioner would

E E
do having regard to the standard normally adopted in his profession”. If a
F professional agent is engaged for reward, there arises an implied F

contractual duty to exercise reasonable care and skill on behalf of his

G G
client. The standard of care applied to professional agents is not to be
H applied with the benefit of hindsight. The sophistication of a professional H

agent’s client may affect the applicable standard of care and skill …… The
I I
scope of a contractual agent’s duty of care should be determined by the
J terms of the contract and, accordingly, a tortious duty of care that is more J

extensive than set out in the contact itself should not be imposed. ……”65
K K

L 273. Mr Lau drew my attention to the Code of Ethics (1 February L

2007) (“Code”) published by the Estate Agents Authority as follows:66

M M

“3.2.2 Estate agents and salespersons should keep themselves

N informed of any laws, government regulations, essential N
facts and developments in the real estate market in order
O
to be in a position to advise their clients in a responsible O
manner. They should strive to provide services and
opinions based on knowledge, training, qualifications and
P experience in the real estate business. P

3.3.1 Estate agents and salespersons shall, in the course of

Q business, provide services to clients with honesty, fidelity Q

R R
65
see Chitty on Contracts: Hong Kong Specific Contracts 6th ed para 1-132 at pp 63-
64 (and see Midland Realty (Comm. & Ind.) Limited v NCF (HK) Limited
S HCA1830/2013, DHCJ Nicholas Cooney SC (unreported, 22 May 2015) paras 74- S
75)
T
66
see Midland Realty (Comm. & Ind.) Limited paras 76-77 citing Chiu Wai Ling v T
Chan Yau Chi [2002] 2 HKC 154

U U

V V
 - 152 -
A A

and integrity. They should protect their client against

B fraud, misrepresentation or any unethical practices in B
connection with real estate transactions.
C …… C

3.5.1 Estate agents and salespersons shall, in fulfilling their

D D
duties, exercise due care and diligence.”

E E
274. In Jopard Holdings Ltd v Ladefaith Ltd & anor, the purchaser
F sought rescission of a PASP and return of the deposit after the purchaser F

pulled out of a deal to buy a flat upon finding out through another party
G G
that the vendor’s son fell to his death from it. It was held that the agent had
H not undertaken reasonable enquiry before giving assuring replies to the H

purchaser’s queries, and was accordingly in breach of his duty under

I I
contract and tort as the purchaser’s agent. Recorder B Yu SC said as
J follows:67 J

K “36. A professional agent engaged for reward is under an K

implied contractual duty to exercise reasonable care and
L
skill on behalf of his client …… Such duty arises both in L
contract and in tort. …… What is expected of the agent in
the present case is …… the passing on of accurate and
M reliable information about the property concerned. M

37. The standard of care and skill is that possessed by a

N person of ordinary competence exercising the same N
calling ……
O O
……

P 39. However, in the present case, the purchaser specifically P

raised a query with the agent. The agent did not answer
the query by simply disclaiming any knowledge. As
Q stated above, I find that [the agent] assured [the Q
purchaser] that there was nothing unusual about the
R property. R

40. It was one of the express terms of the Estate Agency

S Agreement between the purchaser and the agent that the S

67
[2005] 1 HKLRD 317, 326-328 (see also Midland Realty (Comm. & Ind.) Limited
T T
para 78)

U U

V V
 - 153 -
A A

agent would obtain information concerning the property

B for the purchaser. It must be implied that the agent would B
exercise reasonable care and skill when providing such
information. The relationship between the parties is also
C such that the law would impose that duty in tort. [The C
agent] must have known [the purchaser] would rely on
D the information he was providing, and it was certainly D
foreseeable that the purchaser may suffer loss and
damage if the agent did not exercise reasonable care and
E skill in the collection and passing on of information E
concerning the property.”
F F

275. In Shum Kong & anor v Chui Ting Lin Teresa & anor,68 the
G G
village house stood on a concrete terrace with 3 fenced sides and a
H concreted slope at the back, and access to the house was by steps from the H

road with a garage next to the steps. Any potential purchaser looking at the
I I
property would naturally assume it consisted of the house with garden and
J garage, but in fact the garden and garage were not part of the property. The J

purchaser was not told about this (page 22), and the agent also did not
K K
know this when he got the purchaser to sign the PASP (page 23).
L L

276. However, it was held that by showing the purchaser the

M M
property without telling him it only comprised the house, the vendor and
N the agent made misrepresentation by conduct, which the purchaser relied N

to enter into the PASP (page 24). Although the agent did not have actual
O O
knowledge, there were express contractual duties under the written agency
P agreement on the part of the agent (a) to “make reasonable enquiries” and P

“to assist in entering into a [FASP]”, and (b) to “act bona fide in
Q Q
performing its services” and “use its best endeavours to ensure that all
R reasonable representations it makes are accurate” (pages 26-27). It was R

also held “there would be an implied term in the agreement that the
S S

68
HCA16227/1999, DHCJ Muttrie (unreported, 6 June 2001) (see Midland Realty
T T
(Comm. & Ind.) Limited para 79)

U U

V V
 - 154 -
A A

Agency would exercise reasonable care, skill and diligence in acting for
B B
the Purchasers. Reasonable enquiries should …… have included
C investigation of the Rectification Agreement shown on the land search. C

This …… shows properly the relationship of the house, garden and slope.
D D
It would have put [the estate agent] on his inquiry if he had seen it.
E Ultimately therefore, …… [the estate agent] is certainly liable to the E

Purchasers as their agent” (page 27).

F F

G (c) Alleged failure to conduct proper enquiries and/or to give accurate G

replies to P
H H
277. P gave evidence as to her enquiry with Tong as to whether
I there were any other unauthorised structures at the Property to which Tong I

gave the 1st Representation that there were none, and added that there were
J J
some unauthorised alterations all of which were all located “on the
K outside”, but none of those related to the Property. Mr Lau submitted such K

L
representations were wrong given the existence of the Alleged UBWs. L
st
However, I have rejected the 1 Representation and found Tong did not tell
M M
P that the unauthorised alterations or additions “on the outside” were not

N
related to the Property (see paragraphs 176-181 and 198-200 above). N

O O
278. Mr Lau suggested that an estate agent is under a duty of care

P
to provide accurate information to the purchaser as to the physical state of P
the property, including whether the property had any unauthorised
Q Q
structures. Mr Lau submitted that (a) if Tong knew of the existence of the

R Alleged UBWs, then he was in breach of his duty of care in failing to R

reveal this upon P’s request, but (b) if Tong did not know of their existence
S S
when P raised query about UBWs, then as a professional estate agent he
T should have exercised reasonable care and due diligence under rule 3.5.1 T

U U

V V
 - 155 -
A A

of the Code to make proper enquiries to ensure accurate/correct reply was

B B
given to P, so D2 was vicariously liable for Tong’s breach of duty as
C aforesaid. C

D D
279. As a starting point, there was no evidence (from those within
E the estate agency profession or otherwise) before this court as to the E

standard expected of estate agents, ie whether they had to keep themselves

F F
informed as to whether any properties they introduced to their clients had
G any unauthorised structures, especially in the context where the relevant G

PASPs contained waiver clauses the meaning and effect of which the
H H
clients well understood. Mr Lau prayed in aid rule 3.2.2 of the Code, but
I when read as a whole I cannot see how this rule dictates a positive duty on I

the part of Tong/D2 to keep themselves informed about unauthorised

J J
alterations/additions of the Property. In the end, Mr Lau conceded that
K Tong/D2 were only required to give an accurate answer about UBWs if K

asked or if they chose to volunteer information. But given my findings of

L L
fact referred to in paragraph 277 above, there was no breach of duty by
M Tong/D2. Further, given my finding that P was able to read and understand M

the Floor Plans (see paragraphs 172-173 above), even if Tong/D2 (as Mr
N N
Lau submitted but I disagree) failed to properly explain to P the contents of
O O
the Floor Plans (which on balance I disagree), such alleged breach had no

P
material causative relevance. P

Q (d) Failure to arrange for and to accompany P to inspect the interior of Q

the Property
R R
280. There was no dispute that P made 2 inspections, ie in/about
S S
November 2012 before she signed the Shop 6 and Shop 4 PASPs (when
T she had a street view of the frontage of the street-level shops of Phase 2 of T

U U

V V
 - 156 -
A A

the Development of the Buildings), and in/about December 2012 after she
B B
signed the Shop 4 PASP (when she visited Store 4 with Ms Ho and not
C Tong). P did not inspect the interior of Shop/Yard 4 at all although she C

could have posed as customer to enter Unit(s) 4(A) and 4(B).

D D

E 281. Mr Lau repeated the complaint that at the inspection in/about E

November 2012 Tong did not explain to P the contents of the Phase 2 Floor
F F
Plans, and she did not know how to read them, but I have rejected such
G evidence (see paragraphs 172-173 and 279 above). It was also said that P G

requested inspection of the interior of Shop 4, and that there was no

H H
evidence Tong/D2 made enquiries/arrangements for inspection of the
I interior of Shop/Yard 4. I have found that P did not make such request to I

Tong at any time before she signed the Shop 4 PASP (see paragraph 175
J J
above). Further, I have found P could not have inspected Shop 4 because
K when despite liaising directly with Ms Ho, the estate agent of Max K

Rainbow (ie the registered owner, head vendor and landlord of the tenants
L L
at Shop 4), for a long time to arrange the inspection in December 2012,
M inspection could not be arranged for the tenanted Shop/Yard 4 (see Part M

XVIII above). As for Store 4, I have explained that non-inspection before P

N N
signed the Shop 4 PASP had no material causative relevance because P
O O
would not have been able to see the Cage UBW at the rear window even if

P
she had inspected Store 4 (see paragraph 231 above), and that being the P
case, she would not have seen the Canopy UBW in the Shop 4 Yard
Q Q
outside and below such rear window.

R R
(e) Breaches in relation to the Waiver Clause
S S
282. Mr Lau submitted that an estate agent’s failure to fully explain
T the contents of an agreement or the meaning of the clauses therein may be T

U U

V V
 - 157 -
A A

breach of duty of care owed to the client. He referred to Midland Realty

B B
(Comm. & Ind.) Ltd v NCF (HK) Ltd.69
C C

283. In that case, the vendor entered into a PASP to sell the
D D
property to the 1st purchaser through the 1st estate agent, but the escape
E clause in the PASP was deleted. The vendor then entered into another E

PASP to sell the property to the 2nd purchaser through the 2nd estate agent at
F F
a higher price, but the escape clause was also deleted. The vendor could
G not rescind the 1st PASP and later rescinded the 2nd PASP, but did not G

compensate the 2nd estate agent. The vendor settled the 2nd purchaser’s
H H
claim for damages, and complained that the 2nd estate agent induced him to
I enter into the 2nd PASP by telling them the 1st PASP could be cancelled and I

the deposit under the 1st PASP could be surrendered.

J J

K 284. The court found that (a) the vendor told the 2nd estate agent K

about the 1st PASP but the 2nd estate agent without having sight of such
L L
st
agreement remarked to the vendor that the 1 PASP could be rescinded
M (paragraphs 39-41), and (b) the vendor showed the 1st PASP to the M

2nd estate agent, who did not care to properly consider the same and just
N N
told the vendor it could be rescinded (paragraph 43). It was held that the
O vendor relied on such misrepresentations by the 2nd estate agent in entering O

into the 2nd PASP (paragraphs 69-73). The court considered a competent
P P
professional estate agent would understand the effect of deleting an escape
Q clause in a PASP (ie the PASP could not be rescinded) (paragraph 81), and Q

R
would not have acted as the 2nd estate agent did, ie when he knew about the R
st st
1 PASP he still told the vendor/client the 1 PASP could be rescinded
S S
without reading the same, and when the vendor showed him the 1st PASP

T T
69
HCA1830/2013, DHCJ Nicholas Cooney SC (unreported, 22 May 2015)

U U

V V
 - 158 -
A A

he still told the vendor the deposit could be surrendered (ie pronouncing
B B
the effect of the 1st PASP) without taking care to properly consider the 1st
C PASP (paragraph 82). It was said that “[by] making false representations C

without verifying or making reasonable enquiries in relation to the

D D
accuracy of the representations, [the 2nd estate agent] was in breach of his
E duty as an estate agent to the [vendor]” (paragraph 83). The court also held E

that the 2nd estate agent was liable for negligent misrepresentation
F F
(paragraphs 87-89).
G G

285. Mr Lau submitted that in explaining the Waiver Clause in the

H H
Shop 4 Appendix to P Tong represented that every sub-purchaser of the
I sub-divided shops/units of the Head Property would have to sign an I

appendix like the Shop 4 Appendix which was just a formality (ie 2nd
J J
Representation), that the Waiver Clause was included in the Shop 4
K Appendix because the Head Property had to be sub-divided before K

individual shops/units could be sub-sold, and that whilst there were

L L
unauthorised alterations in other parts of the Head Property they did not
M relate to the Property (ie the 1st Representation). M

N N
286. Mr Lau submitted the Waiver Clause in providing that “儘管
O 該舖位存有任何未經屋宇署授權改建或加建部分及儘管屋宇署或其他 O

P
政 府 部 門 有 權 對 任 何 未 經 授 權 改 建 或 加 建 部 分 作 出 追 究 ” 70 had P
nothing to do with the sub-division of the Property, so Tong’s explanation
Q Q
to P was incorrect and/or inaccurate. Moreover, P claimed Tong did not tell

R her the core feature of the Waiver Clause in the Shop 4 Appendix, ie P R
would have to accept title to the Property despite any UBWs, and would
S S
70
English translation: “despite the fact that there are any alterations or additional
structures not authorized by the [BD] and despite the fact that the [BD] or other
T T
government department may hold the owner liable”

U U

V V
 - 159 -
A A

have to give up the right to raise requisitions or objections as to title in

B B
relation to any UBWs and/or to demand compensation from D1, so Tong’s
C explanation in relation to the Waiver Clause was not true or accurate. C

Mr Lau argued that (a) if Tong knew the meaning/effect of the Waiver
D D
Clause, the fact he conveyed a false meaning to P amounted to breach of
E the duty of care owed to P, but (b) if he did not know or was not sure about E

the meaning/effect of such clause, he should have made proper enquiry to

F F
ascertain the true meaning before giving explanation to P, so D2 would be
G vicariously liable for Tong’s breaches of duty. G

H H
287. In my view, the short answer to such contentions is that I have
I rejected P’s evidence (including the Representations) on the matters set out I

in paragraph 285 above (see paragraphs 176-181, 197-200 and 217-225

J J
above).
K K

(f) Summary of P’s claim against D2

L L

288. I find on balance that P had not sufficiently shown Tong/D2 to

M M
be in breach of contract, in breach of duty of care and/or in breach of
N fiduciary duty, and/or that Tong/D2 made any misrepresentation to her. In N

the circumstances, Tong/D2 should not be held liable for her loss and
O O
damages (if any) in relation to the subject transaction.
P P

XXVI. CONCLUSION
Q Q

289. In the premises, P’s claim against D1 and D2 are dismissed. In

R R
respect of D1’s counterclaim, I grant judgment in favour of D1 against P
S for a declaration that the Shop 4 PASP was terminated by P’s repudiatory S

breach, and that the Deposits paid thereunder were validly forfeited by D1.
T T

U U

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 - 160 -
A A

290. There is no reason why costs should not follow event. I

B B
therefore grant a costs order nisi that P shall pay D1 and D2 their costs of
C the action, including costs of D1’s counterclaim and all costs reserved if C

any, to be taxed if not agreed. Although D2 had not appeared at trial, they
D D
were previously legally represented and had taken steps in its defence
E which was ultimately successful. E

F F

G G

H (Marlene Ng) H

Judge of the Court of First Instance

I High Court I

J J
Mr Kenny Lau, instructed by Chak & Associates, for the plaintiff by
K
original action and the 1st defendant by counterclaim K

Ms Prisca Cheung, instructed by Kok & Ha, for the 1st defendant by
L L
original action and the plaintiff by counterclaim

M The 2nd defendant by original action and counterclaim, acting in person and M

absent
N N

O O

P P

Q Q

R R

S S

T T

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 - 161 -
A A

Schedule 1 – Head PASP

B B

C No N/ICI/SP/SA 0000222 C
[logo of Midland Realty (Shops) Ltd]
D D
PROVISIONAL AGREEMENT FOR SALE AND PURCHASE
E E
Vendor This AGREEMENT is made on 9/11/2012 BETWEEN
the first party Max Rainbow Enterprise Limited ……
F F
(hereinafter called “the Vendor”); and

G Purchaser the second party Ho Chi Yung or his nominee(s) …… G

(hereinafter called “the Purchaser”); and

H H
Agent the third party MIDLAND REALTY (SHOPS) LTD
I …… (hereinafter called “the Agent”). I

J NOW IT IS HEREBY AGREED as follows: J

Premises 1 The Vendor agrees to sell and the Purchaser agrees

K K
to purchase, through the Agent subject to the terms
and conditions herein contained, all that 地址見附
L L
頁 71 ref: MR000016-CM (hereinafter called “the
said Premises”).
M M

Consideration 2 The purchase price of the said premises shall be

N and payment HK$350,000,000.00 which shall be paid by the N
Purchaser to the Vendor in the manner as follows:
O O
(a) Initial deposit in the sum of HK$10,000,000-
P
shall be paid upon signing of this Agreement. P

(b) Further deposit in the sum of

Q Q
HK$25,000,000- shall be paid on or before
27-11-2012.
R R

……
S Completion (d) Balance of purchase price in the sum of S
date HK$315,000,000- shall be paid upon
T T
71
English translation: “see attached for address”

U U

V V
 - 162 -
A A

completion on or before 31-5-2013 at the

B Vendor’s solicitors. B

C Stakehold The deposits payable under (a) and (b) and (c) C
deposit above shall be paid to the Vendor’s solicitors as
D stakeholder who may release the same to the D
Vendor provided that the balance of the purchase
E
price is sufficient to discharge the existing charge / E
mortgage against the said premises.
F F
Formal 3 Formal agreement for sale and purchase shall be
agreement for signed on or before 22-11-2012.
G sale and G
purchase
H Encumbrances 4 The said premises shall be sold to the Purchaser, H
its nominee or sub-purchaser free from
I encumbrances. I

J
Vacant 5 Upon completion, …… The Purchaser agrees to J
possession / purchase the said premises subject to the existing
Existing tenancy.
K K
Tenancy
……
L Solicitors 7 The Vendor and the Purchaser agree that they shall L

separately appoint their own solicitors.

M The Vendor shall be represented by Messrs TONG M
& TSOI
N whereas the Purchaser shall be represented by N
Messrs 其指定72.
O O
……
P
As is basis 14 The said premises is sold to the Purchaser on an P
“as is” basis.
Q Q
……
Appointment of 18 It is hereby declared that the Agent is the Agent for
R Agent both the Vendor and the Purchaser …… R

S …… S
Remarks 21
T T
72
English translation: “to be appointed”

U U

V V
 - 163 -
A A

Notice to the 22 Save and except those mentioned in this

B Purchaser and Agreement, any staff of the Agent below branch B
the Vendor manager has no authority to give or make any
C promise, warranty or representation for and on C
behalf of the Agent.
D D
23 另有 25-32 項之另加條款詳情另文。 74

E E
[Max Rainbow’s chop [chop of Midland Realty [signature]
with signature] (Shops) Ltd with
F F
signature] Signed by the
Signed by the Vendor Purchaser:
G G
Name of signatory: Signed by the Agent Name of Signatory:
ID No: Name of signatory: Ho ID No:
H Wai Sun H
Licence No: Sxxxxxx
I I
Received from the Purchaser the initial deposit in the sum of
J HK$10,000,000- …… Cheque No 010386 Bank 中國銀行75 J
Acknowledge receipt by the Vendor [signature] 若訂金支票未能兌現, 賣
K 方有權終止本合約及向買方追討賠償。76 K

L
Ref: MR000016_CH L
日期: 2012 年 11 月 9 日77
美聯物業臨時買賣合約附件78
M M

N 73
English translation: “See attached for details of tenancy agreement. Vacant N
possession to be partially delivered. The Vendor shall agree to assist the Purchaser in
O
carrying out the matter of the sub-deed and all matters relating to the [DMC]. The O
[illegible] shall be responsible for paying all Sub-Deed costs and [DMC] Costs.
After the signing of the [FASP] and prior to completion, the Purchaser has the right
P to sign tenancy agreement commencing after completion with the existing tenant or P
a new tenant without the Vendor’s consent. [Illegible] tenancy agreement shall
include a clause stating that if the Purchaser fails to complete this Agreement, it will
Q Q
result in the termination of the tenancy agreement.”
74
English translation: “See schedule for additional terms of clauses 23-32”
R 75
English translation: “Bank of China” R
76
English translation: “If the cheque for the deposit is not honoured, the Vendor shall
S have the right to terminate this Agreement and claim damages from the Purcahser” S
77
English translation: “Date: 9 November 2013”
78
English translation: “Schedule to Midland Realty Provisional Agreement for Sale
T T
and Purchase”

U U

V V
 - 164 -
A A

物業臨時買賣合約 No N/ICI/SP/S/A000022279
B B

物業地址80: All Those (i) Portions of Commercial Development

C comprising Portion on the Lower Ground Floor of Phase 1, C
Ground Floor of Phase 1, 2nd Floor of Phase 1, Ground
D Floor of Phase 2, Cockloft Floor of Phase 2 of the D
Commercial Development …… of Allway Gardens, Nos
E
187-195 Tsuen King Circuit & Nos 2-22 On Yat Street, E
Tsuen Wan, New Territories (以下稱「該物業」81)
F F
(一) 租約詳情如下: 賣方已盡力查証下述租表資料之準確性, 但賣方不
保証下述租表有否錯誤, 成交前若有任何租客終止租約, 賣方只須將有
G G
關單位交吉。82
H H
……
Allway Gardens Phase 2
I Floor level Unit Tenant Monthly Term I
rent (HK$)
J J
……
K M/F 4 Vacant - - K
G/F 4A 李曉梅 $14,500 4/3/2012 –
L
3/3/2013 L

G/F 4B Midland $18,000 18/10/2012 –

M M
Leasing 17/10/2014
(XX) Ltd
N …… N

G/F 6 Ho Cheung $19,800 15/3/2011 –

O O

P P

Q Q
79
English translation: “Property [PASP] No N/ICI/SP/S/A0000222”
80
English translation: “Property Address”
R R
81
English translation: “hereinafter called “the said Premises””
82
English translation: “(1) Details of tenancy agreement as follows: The vendor has
S used best endeavours to verify the accuracy of the information in the tenancy S
schedule below but the Vendor does not guarantee that there are no errors in the
tenancy schedule below, if any tenant terminates the tenancy agreement prior to
T T
completion, the vendor shall only deliver vacant possession of the relevant unit.”

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 - 165 -
A A

Ltd 14/3/2013
B M/F 6 - Vacant - B

……
C *買賣成交完成時, 租金按金以不扣除形式轉交新買家。83 C

D (二) 此合約為必買必賣, 雙方不得取消合約。84 D

E [Max Rainbow’s chop [chop of 美 聯 物 業 ( 商 [signature] E

with signature] 鋪 ) 有 限 公 司 86 with
F signature] 買方簽署接受 F
賣方簽署接受 簽署人姓名88
G
簽署人姓名85 代理簽署接受 G
代理姓名87
H H
23 The said premises are to be sold to the Purchaser subject to and with
the benefit of the existing tenancies in respect of the sub-divided units
I I
as set out in the Annexure attached hereto (“the sub-divided units”).

J …… J
26 The Vendor shall be responsible for the payment of all ……
K reinstatement, repair …… costs in respect of the said premises and/or K
any part or parts thereof and/or the Building and/or any contribution
L to be made by the owner of the said premises and/or any part or parts L
thereof of any notice or order of such …… reinstatement, repair ……
M
and/or contribution exists or …… shall have been issued or served on M
or before the completion date by the Government, the manager and/or
the Incorporated Owners of the Building or other similar or
N N
competent authorities.

O 27 The Purchaser has accepted the physical condition of the premises O

even if any unauthorised or illegal structure or alteration exists in the
P said premises and/or any part or parts thereof, and the Purchaser shall P
…… have the no right to rescind the agreement …… for the aforesaid
Q Q
83
English translation: “* Upon completion of the sale and purchase, the rental deposit
shall without any deductions be transferred to the new purchaser”
R 84
English translation: “(2) This Agreement is must-buy and must-sell, both parties R
cannot cancel the Agreement”
S
85
English translation: “Signed and Agreed by the Vendor Name of Signatory” S
86
English translation: “Midland Realty (Shops) Limited”
87
English translation: “Signed and Agreed by the Agent Name of Agent”
T T
88
English translation: “Signed and Agreed by the Purchaser Name of Signatory”

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 - 166 -
A A

reason. [“Clause 27”]

B B
Agreed and confirmed by:
C C
[Max Rainbow’s chop [signature] [no signature]
D with signature] D
Signed by the Signed by the Ahent
E Signed by the Vendor Purchaser E

F F

G G

H H

I I

J J

K K

L L

M M

N N

O O

P P

Q Q

R R

S S

T T

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 - 167 -
A A

Schedule 2 – Shop 6 PASP

B B

C [D1’s logo] C
萊斯物業89
D D
PROVISIONAL AGREEMENT FOR SALE SB No 028865
E
AND PURCHASE E

Vendor This AGREEMENT is made on 22 Nov 2012

F F
BETWEEN
the first party Multi Elite Limited …… (hereinafter
G called “the Vendor”); and G

H Purchaser the second party LI YAN PING or its nominee …… H

(hereinafter called “the Purchaser”); and
I I
Agent the third party Flourish Property Agency Ltd ……
J (hereinafter called “the Agent”). J

NOW IT IS HEREBY AGREED as follows:

K K

Premises 1 (a) The Vendor agrees to sell and the Purchaser

L L
agrees to purchase, through the Agent subject to
the terms and conditions herein contained, all
M that Shop no 6 AND YARD ADJACENT M
THERETO ON GROUND FLOOR AND
N STORE No 6 ON COCKLOFT FLOOR OF N
PHASE 2 OF COMMERCIAL
O DEVELOPMENT ALLWAY GARDENS, NO O
187-195 TSUEN KING CIRCUIT & 2-22 ON
YAT STREET TSUEN WAN NT (hereinafter
P P
called “the said Premises”).
Q Q
Consideration 2 The purchase price of the said Premises shall be
and payment HK$11,523,960.00 which shall be paid by the
R Purchaser to the Vendor in the manner as follows: R
[“Clause 2”]
S S
(a) Initial deposit shall be paid upon signing of this
T T
89
English translation: “Flourish Property”

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A A

agreement in the sum of HK$500,000.00.

B [“Clause 2(a)”] B

C (b) The formal agreement for sale and purchase C

shall be signed on or before 13 Dec 2012.
D Further deposit in the sum of HK$652,396.00 D
shall be paid on or before 13 Dec 2012.
E
[“Clause 2(b)”] E

……
F F
Completion (d) Balance of the purchase price shall be paid upon
date completion on or before 31 May 2013 ( 下 午 )
G G
1400 前 90 at the Vendor’s solicitors in the sum
of HK$10,371,564.00.
H H
……
I Encumbrances 4 The said Premises is to be sold to the Purchaser or its I
nominee(s), sub-purchaser(s) free from
J encumbrances. [“Clause 4”] J

K
Vacant 5 Upon completion, the Vendor shall deliver vacant K
possession / possession of the said Premises to the Purchaser /
Existing The Purchaser agrees to purchase the said Premises
L L
Tenancy subject to the existing tenancy as set out in the
schedule attached hereto.
M M

Selling as 6 The Vendor is selling as Confirmor and this

N confirmor Agreement is subject to the terms and conditions of N
the principal agreement made between the Vendor
O and the Head Vendor. [“Clause 6”] O

P
Solicitors and 7 The Vendor and the Purchaser agree that they shall P
stamp duty separately appoint their own solicitors.
The Vendor shall be represented by Messrs
Q Q
Wilkinson & Grist Solicitors & Notaries
Whereas the Purchaser shall be represented by
R Messrs 其指定91. R

Each party shall pay its own legal costs, subject to

S clause 8 hereof, all stamp duty shall be borne by the S

90
English translation: “before pm 1400”
T T
91
English translation: “to be appointed”

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 - 169 -
A A

Purchaser solely.
B B
……
C Agent’s 10 In consideration of the services rendered by the C
Commission Agent, the Agent shall be entitled to receive
D HK$115,230.00 from the Vendor and D
HK$115,230.00 from the Purchaser as professional
E
service charge. Such service charge shall be paid on E
or before the date of signing the formal agreement
for sale and purchase.
F F

……
G As is basis 12 The said premises is to be sold to the Purchaser on G

an “as is” basis. [“Clause 12”]

H H
……
I Appointment 17 It is hereby declared that the Agent is for both the I
of Agent Vendor and the Purchaser …… [“Clause 17”]
J J
……
K
Remarks 20 此合約為必買必賣, 此單位地鋪連租約出售, 租客: K
HO CHEUNG LTD, 租金: HK$19,800-, 租期: 15-3-
2011 [illegible], 閣樓位置交吉交易, 由於上址單住
L L
未處理分契手續, 買賣雙方知悉及明瞭有用之分
契費用業主出支, 另見附件一份(sd)
M M

[D1’s chop with [D2’s chop [signature]

N signature] with N

signature] Agreed by the Purchaser:

O Agreed by the Vendor Name: [P] O
Name: Ho Chi Yung Agreed by the ID No: Cxxxxxx(x)
P ID No: Exxxxxx(x) Agent P
Name: Tong
Q Chun Lung Q
Licence No:
R
Sxxxxxx R
Received from the Purchaser the initial Signed by the Vendor
deposit in the sum of HK$500,000.00 [signature]
S S
Cheque No 9390 Bank HSBC Name:
ID No:
T 臨時買賣合約附件92 T

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A A

物業臨時買賣合約 No 2886593
B Shop No 6 AND YARD ADJACENT THERETO ON B
物業地
94
址 : GROUND FLOOR AND STORE NO 6 ON COCKLOFT
C FLOOR OF Phase 2 of Commercial Development, Allway C
Garden, Nos 187-195 Tsuen King Circuit & Nos 2-22 On Yat
D Street, Tsuen Wan, New Territories (以下稱「該物業」95) D

E (一) 買方得知此物業仍未分契, 正式附圖及業權分配, 需於成交前給予 E

買方。
F
…… F
(三) 買方聲明事前已親身視察該鋪位並已諮詢獨立專業人士有關該鋪
位的現時結構、狀況及內部間隔。買方滿意該鋪位目前狀況，儘管該
G G
鋪位存有任何未經屋宇署授權改建或加建部分及儘管屋宇署或其他政
府部門有權對任何未經授權改建或加建部分作出追究，而令任何未經
H H
授權改建或加建部分構成上述物業的業權瑕疵，買方仍願意接受該鋪
位業權，並將不會對該鋪位任何未經授權改建或加建提出業權上的質
I 詢或反對，亦不會向賣方要求任何賠償 ……96 [“Waiver Clause”] I

J (四) 若該舖位因現時租客已將與其相鄰的舖位之間之分間牆拆除，買 J
方仍須按完成交易時之狀況接收該舖位，買方不得藉有關之分間牆狀
K 況向賣方提出任何業權質詢或反對。97 [“Partition Clause”] K

L (五) 該舖位將以現有狀況出售。 L

M M
92
English translation: “Schedule to [PASP]”
93
English translation: “[PASP] No 28871”
N N
94
English translation: “Property Address”
95
English translation: “hereinafter called “the said Premises””
O 96
English translation: “The purchaser declares that the purchaser had inspected the O
shop and sought independent professional advice as to the current structure,
P
conditions and layout of the shop. The purchaser is satisfied with the current P
conditions, despite the fact that there are any alternations or additional structures not
authorized by the [BD] and despite the fact that the [BD] or other Government
Q department may hold (the owner) liable for any alternations or structures which Q
constitute defects in the title to the above premises, the purchaser is still willing to
accept the title to the shop and shall not raise requisition or objection on title in
R R
relation to any alterations, and shall not demand compensation from the vendor
……”
S 97
English translation: “Even if the partition wall between the shop and adjoining shop S
has been demolished by the existing tenant, the purchaser still needs to take
possession of the shop as is at completion. The purchaser shall not raise any
T T
requisition or objection on the title arising from the condition of the partition wall.”

U U

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 - 171 -
A A

……
B [D1’s chop with [D2’s chop [signature] B
signature] with
C signature] 買方簽署接受100 C
賣方簽署接受98
D 代理簽署接 D
受99
E E

F F

G G

H H

I I

J J

K K

L L

M M

N N

O O

P P

Q Q

R R

S S
98
English translation: “Signed and Agreed by the Vendor”
99
English translation: “Signed and Agreed by the Agent”
T T
100
English translation: “Signed and Agreed by the Purchaser”

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 - 172 -
A A

Schedule 3 – Shop 4 PASP

B B

C [D1’s logo] C
萊斯物業101
D D
PROVISIONAL AGREEMENT FOR SALE AND SB No 028871
E
PURCHASE E

Vendor This AGREEMENT is made on 28 Nov 2012

F F
BETWEEN
the first party Multi Elite Limited …… (hereinafter
G called “the Vendor”); and G

H Purchaser the second party LI YAN PING or its nominee …… H

(hereinafter called “the Purchaser”); and
I I
Agent the third party Flourish Property Agency Ltd ……
J (hereinafter called “the Agent”). J

NOW IT IS HEREBY AGREED as follows:

K K

Premises 1 (a) The Vendor agrees to sell and the Purchaser

L L
agrees to purchase, through the Agent subject to
the terms and conditions herein contained, all
M that Shop no 4 ON COCKLOFT AND Shop No M
4 on GROUND FLOOR OF PHASE 2 OF
N COMMERCIAL DEVELOPMENT ALLWAY N
GARDENS, NO 187-195 TSUEN KING
O CIRCUIT & 2-22 ON YAT STREET TSUEN O
WAN NEW TERRITORIES (hereinafter called
“the said Premises”).
P P

Consideration 2 The purchase price of the said Premises shall be

Q Q
and payment HK$15,247980.00 which shall be paid by the
Purchaser to the Vendor in the manner as follows:
R [“Clause 2”] R

S (a) Initial deposit shall be paid upon signing of this S

agreement in the sum of HK$300,000.00.
T T
101
English translation: “Flourish Property”

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 - 173 -
A A

[“Clause 2(a)”]
B B
(b) The formal agreement for sale and purchase
C shall be signed on or before 8 Jan 2013. Further C
deposit in the sum of HK$1,224,798.00 shall be
D paid on or before 8 Jan 2013. [“Clause 2(b)”] D

E
…… E
Completion (d) Balance of the purchase price shall be paid upon
date completion on or before 31 May 2013 下 午
F F
1400 前 102 at the Vendor’s solicitors in the sum
of HK$13,723,182.00.
G G

……
H Encumbrances 4 The said Premises is to be sold to the Purchaser or its H
nominee(s), sub-purchaser(s) free from
I encumbrances. [“Clause 4”] I

J Vacant 5 Upon completion, …… The Purchaser agrees to J

possession / purchase the said Premises subject to the existing
K
Existing tenancy as set out in the schedule attached hereto. K
Tenancy
Selling as 6 The Vendor is selling as Confirmor and this
L L
confirmor Agreement is subject to the terms and conditions of
the principal agreement made between the Vendor
M and the Head Vendor. [“Clause 6”] M

N Solicitors and 7 The Vendor and the Purchaser agree that they shall N
stamp duty separately appoint their own solicitors.
O The Vendor shall be represented by Messrs O
Wilkinson & Grist.
P
Whereas the Purchaser shall be represented by P
Messrs 其指定103.
Each party shall pay its own legal costs, subject to
Q Q
clause 8 hereof, all stamp duty shall be borne by the
Purchaser solely.
R R

……
S Agent’s 10 In consideration of the services rendered by the S

102
English translation: “before pm 1400”
T T
103
English translation: “to be appointed”

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 - 174 -
A A

Commission Agent, the Agent shall be entitled to receive

B HK$152,470.00 from the Vendor and B
HK$152,470.00 from the Purchaser as professional
C service charge. Such service charge shall be paid on C
or before the date of signing the formal agreement
D for sale and purchase. D

E
…… E
As is basis 12 The said premises is to be sold to the Purchaser on
an “as is” basis. [“Clause 12”]
F F

……
G Appointment 17 It is hereby declared that the Agent is for both the G

of Agent Vendor and the Purchaser …… [“Clause 17”]

H H
……
I Remarks 20 此合約為必買必賣, 此單位地鋪連租約出售 , 租客 I
(4A) 李 曉 梅 租 金 $14,500, 租 期 4-3-2012 至 3-3-
J 2013, 租 客 (4B) Midland Leasing (xx) Ltd 租 金 J
$18,000.00 租期 18-10-2012 至 17-10-2014, 閣樓位
K 置交吉交易, 另見附件一份(sd) K

L
[D1’s chop with [D2’s chop with [signature] L
signature] signature]
Agreed by the Purchaser:
M M
Agreed by the Vendor Agreed by the Name:
Agent ID No:
N N
Name: Tong
Chun Lung
O Licence No: O
Sxxxxxx
P Received from the Purchaser the initial Signed by the Vendor P
deposit in the sum of HK$300,000.00 [signature]
Q Cheque No 114087 Bank HSBC Name: Q
ID No:
104
R
臨時買賣合約附件 R
物業臨時買賣合約 No 28871105
S
物業地址106: Shop No 4 on Cockloft AND Shop No 4 on Ground Floor S

104
English translation: “Schedule to [PASP]”
T T
105
English translation: “[PASP] No 28871”

U U

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 - 175 -
A A

of Phase 2 of Commercial Development, Allway Garden,

B Nos 187-195 Tsuen King Circuit & Nos 2-22 On Yat Street, B

Tsuen Wan, New Territories (以下稱「該物業」107)

C …… C
(三) 買方聲明事前已親身視察該鋪位並已諮詢獨立專業人士有關該鋪
D 位的現時結構、狀況及內部間隔。買方滿意該鋪位目前狀況，儘管該 D
鋪位存有任何未經屋宇署授權改建或加建部分及儘管屋宇署或其他政
E 府部門有權對任何未經授權改建或加建部分作出追究，而令任何未經 E
授權改建或加建部分構成上述物業的業權瑕疵，買方仍願意接受該鋪
位業權，並將不會對該鋪位任何未經授權改建或加建提出業權上的質
F F
詢或反對，亦不會向賣方要求任何賠償 ……108 [“Waiver Clause”]
G G
(四) 若該舖位因現時租客已將與其相鄰的舖位之間之分間牆拆除，買
方仍須按完成交易時之狀況接收該舖位，買方不得藉有關之分間牆狀
H 況向賣方提出任何業權質詢或反對。109 [“Partition Clause”] H

I (五) 該舖位將以現有狀況出售。 I
……
J [D1’s chop with [D2’s chop with [signature] J
signature] signature]
K 買方簽署接受112 K
賣方簽署接受110 代理簽署接受111
L L

M
106
English translation: “Property Address” M
107
English translation: “hereinafter called “the said Premises”
108
English translation: “The purchaser declares that the purchaser had inspected the
N shop and sought independent professional advice as to the current structure, N
conditions and layout of the shop. The purchaser is satisfied with the current
O conditions, despite the fact that there are any alternations or additional structures O
not authorized by the [BD] and despite the fact that the [BD] or other Government
department may hold (the owner) liable for any alternations or structures which
P constitute defects in the title to the above premises, the purchaser is still willing to P
accept the title to the shop and shall not raise requisition or objection on title in
Q
relation to any alterations, and shall not demand compensation from the vendor Q
……”
109
English translation: “Even if the partition wall between the shop and adjoining
R shop has been demolished by the existing tenant, the purchaser still needs to take R
possession of the shop as is at completion. The purchaser shall not raise any
S
requisition or objection on the title arising from the condition of the partition wall.” S
110
English translation: “Signed and Agreed by the Vendor”
111
English translation: “Signed and Agreed by the Agent”
T T
112
English translation: “Signed and Agreed by the Purchaser”

U U

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 - 176 -
A A

B B

C C

D D

E E

F F

G G

H H

I I

J J

K K

L L

M M

N N

O O

P P

Q Q

R R

S S

T T

U U

V V