Professional Documents
Culture Documents
In The High Court of The Hong Kong Special Administrative Region Court of Appeal
In The High Court of The Hong Kong Special Administrative Region Court of Appeal
In The High Court of The Hong Kong Special Administrative Region Court of Appeal
COURT OF APPEAL
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CIVIL APPEAL NO 14 OF 2021
G G
(ON APPEAL FROM HCA NO 1584 OF 2012)
H H
BETWEEN
I I
YU MAN FUNG ALICE (于文鳳) Plaintiff
J and J
L L
AND
CACV 15/2021
M M
BETWEEN
R R
YU MAN FUNG ALICE (于文鳳) Plaintiff
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and
U (Heard together) U
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E E
REASONS FOR JUDGMENT
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H
Introduction H
us, we dismissed her appeal in each action with costs to Mr Chiau, with a
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certificate for two counsel. These are the reasons of the court for
Q dismissing the appeals. Q
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2. Ms Yu’s main claim (in HCA 1584/2012) is for 10% of the
S profits in respect of the property known as 12 Pollock’s Path, The Peak, S
Hong Kong (“House 12”). Her other claims (in HCA 1243/2017)1 are for
T T
1
The writ in HCA 1243/2017 was issued as a reaction to the point made by Mr Chiau in his witness
U statement in HCA 1584/2012 dated 10 March 2017 that there had been other investments which he U
made and yet for which Ms Yu had made no claim. See Judgment, §§150, 372.
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I
Mr Chiau to make gifts to Ms Yu of 10% of his property I
3
investments .
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(3) Mr Chiau had intended to retain House 12 for his self-use
R from the moment he acquired the property (“Skyhigh R
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I
(5) Even under the Notional Sale Term, as the evidence showed I
that it was always the intention of Mr Chiau to live in his
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“dream house” to be built on the Skyhigh Property from the
K
time he successfully bid for the property in 2004, the value K
of the Skyhigh Property was the same as the auction price
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and there could have been “no profit”. And even that
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5
S Judgment, §§336 to 356, 359, 382(3), (6) S
6
I.e. where Mr Chiau had decided not to sell the investment but instead to retain it for his own use,
upon the making of that decision or upon taking any step consistent only with a decision to retain
T rather than sell, the 10% share of profit was to be paid and the calculation would be by reference to T
a notional sale to a third party. See Judgment, §230(1)(b).
7
Judgment, §§317 to 335
8
U Judgment, §§382(4), (5) U
9
Judgment, §§340, 357, 382(7), (8)
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BH Properties, it could not be said that Ms Yu was the person who really
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brought about the investments in these properties12. As for the Fund, the
K fundamental and fatal problem for the claim is that the investment is in a K
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10
Judgment, §§48 to 52, 360 to 369, 382(9)
11
Judgment, §§384, 386
12
U Judgment, §§370 to 372, 385 U
13
Judgment, §§155, 156, 386
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These appeals
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and the Canadian Supreme Court and adopted by the United Kingdom
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Supreme Court in McGraddie v McGraddie [2014] UKSC 12 at §§3 and
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4 are particularly pertinent:
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the members of this court, as none of us have ‘lived’ with the case and
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our perception on reading the papers may be shaped or narrowed by the
H focused challenges on appeal to particular parts of the evidence. The H
K
the hope that three judges in the Court of Appeal might be persuaded to K
reach a different view. This huge cost in diversion of judicial resources is
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not likely to contribute significantly to the accuracy of fact determination.
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8. In exercising their appeal as of right to challenge findings of
N fact of the primary judge, litigants should bear in mind that the trial N
before the judge would be “the main event” and not a “tryout on the
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road”. As stated by Lam VP (as he then was) in To Pui Kui v Ng Kwok
P Piu & Ors, CACV 281/2012, 21 August 2014 at §§12 to 16, and in China P
evidence.
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U U
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known film actor, producer and director. She comes from a well-off
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family, and had pursued a career in financial services. They remained on
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relatively good terms until around mid-2011.
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11. In early 2002, Ms Yu left her job in the investment
J companies in which her brother was a partner and began to provide J
sole shareholder and director of which is his sister May Chow (“May”)).
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By that agreement, through Loncham Ms Yu was engaged as a financial
P consultant to provide consultancy services to Mr Chiau at $20,000 a P
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T T
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13. From May 2007 to 2011, Ms Yu was paid various sums
G reflecting approximately 10% of the profits made by Mr Chiau on certain G
legally binding agreement or the promise of a gift) and the first occasion
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that payment was requested and made was in 2007. Except for Payment
M 1, they were made by May personally from her personal bank account M
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company that held the relevant property. At the trial and on appeal,
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heavy reliance was placed by Ms Yu on these payments as evidence of
C subsequent conduct of the parties pointing to the existence of the Oral C
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15. Mr Chiau formed a joint venture with Raymond Hu (“Mr
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Hu”) of Ryoden Property Development Co Ltd (“Ryoden”) on a 50-50 K
basis to redevelop the Skyhigh Property into four independent houses. It
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was agreed that the partners would each retain a house for self-use and
M the other two houses would be sold. Mr Chiau chose House 12 and Mr M
Hu chose House 10. Ryoden acted as the project manager for the
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development. Most of the project manager’s dealings with Mr Chiau
O went through Ms Yu and she had particular involvement to oversee the O
19
U The decoration and furnishing cost for House 12 was vastly in excess compared to the other three U
houses, see Judgment at §124.
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Offshore Holdings Ltd (“TOHL”) was the trustee. From time to time, the
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Fund made capital calls from its subscribers to make contribution and
G also made distributions to them. Up to June 2020, TOHL made total G
breached the Oral Agreement as regards the Fund and did not seek
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immediate monetary relief but a declaration as to her entitlement to profit
K sharing upon the liquidation of the Fund or Mr Chiau’s realisation of the K
by them since that time. Mr Chiau moved into House 12 towards the end
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of 2011 with members of his family and has since kept it as his residence.
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19. On 27 February 2012, Mr Chiau paid Ms Yu $10 million
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under cover of a note that the cheque was in “appreciation for [her]
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friendship and support over the years”. She responded that the $10 U
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million was an advance payment of the 10% net profit sharing on House
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12.
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21. This claim accounted for most of the damages for $80
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million. Ms Yu’s case on the Oral Agreement went through many
H different versions. The version of the re-amended statement of claim H
(“RASOC”) relied on at the trial was the sixth iteration 20. The relevant
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paragraphs read as follows:
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“3. Shortly before or after Christmas 2002, during a
telephone conversation between the Plaintiff and the
K Defendant, the Defendant agreed to pay the plaintiff a K
ten percent (10%) share of net profits (“the Agreed
Profit Share”) made on all successful investments
L recommended to the Defendant by the Plaintiff (“the L
Agreement”). Immediately thereafter, the Agreement
M was confirmed in an exchange of SMS messages M
between the Plaintiff and the Defendant, in which the
Plaintiff sent the Defendant and SMS setting out the
N terms of the Agreement and requesting the Defendant to N
confirm his agreement, and the Defendant responded
confirming his agreement. The Plaintiff can no longer O
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access these SMS messages.
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4. On a true construction of the Agreement (alternatively P
as a matter of necessary implication therein):
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20
The six iterations were analysed in the Judgment at §§228 to 251
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the sale (“Actual Sale Term”); or (b) where Mr Chiau decided not to sell
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an investment recommended by Ms Yu but instead to retain it for his own
C use, upon the making of that decision or upon taking any step consistent C
only with a decision to retain rather than sell – the calculation being made
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21
by reference to a notional sale to a third party (“Notional Sale Term”) .
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follows:
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21
Judgment, §230
22
The document relating to Payment 7 referred to in the notice of appeal was captioned: “Re: Sale
S of Pollock Path No. 16 & 18”, it was not in respect of Pollock Path No. 12. S
23
The profit figure mentioned in this document was $298,840,022 (half share being $149,420,011
and 10% of which in Payment 7 was $14,942,001). The figure of $298,840,022 (provided by Ms
T Yu to Mr Chiau’s employee Brenda Cheung (“Brenda”)) came from the profit and loss account T
document of The Star Royale Ltd, the company which held the Skyhigh Property, for the years
from 2002 to 2009 and the stated accumulated profit figure for December 2009. As noted by the
U judge, the accumulated profit of the company is not the correct figure for calculating the profit U
made on House 16 and House 18 upon their sales. See Judgment, §§202, 204.
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Flywin Co Ltd v Strong & Associates Ltd (2002) 5 HKCFAR 356 at §§37
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to 39 and must be wholly impermissible. This new case is also wholly
G unpleaded. We agree with him. G
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26. The contention in §10(5) of the notice of appeal is that Ms
I Yu’s entitlement to payment under the Oral Agreement was not limited to I
one of the two situations as pleaded in RASOC being the Actual Sale
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Term and the Notional Sale Term, but might arise “upon demand and
K irrespective of whether or not the Defendant’s net profit had been K
which the parties recognised as having been successful without being the
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subject of any Defendant’s sale transaction.” This alleged term is clearly
O outside the ambit of the Actual Sale Term and the Notional Sale Term. O
T T
U U
24
With Mr Keith Lam
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28. We do not think this paragraph would assist him. The
H alternative case pleaded was “an agreement on the same terms (ie those H
Besides, it was pointed out in the Judgment at §234 that the alternative
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case pleaded in §7 of RASOC (that an agreement in the same terms as the
L Oral Agreement was made by conduct) was “not really pursued at trial L
(even if not formally abandoned)”, that this alternative case was “always
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at best a very difficult case to make out, and focus was understandably on
N the Oral Agreement”. The alternative case was therefore formally N
P
29. The seventh attempt to reformulate the case of Ms Yu on the P
Oral Agreement in the notice of appeal must be rejected. Her claim in
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respect of House 12 could only rest on the Notional Sale Term, as it must
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be accepted there has not been an actual sale to date. R
regarding House 12 must fail, for the reasons given by the judge as
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summarised at the outset of this judgment. There is no appeal against the
U judge’s finding of fact that it was always Mr Chiau’s intention to retain U
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House 12 for his own use from the time he acquired the Skyhigh
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Property. Even if the Oral Agreement were made and even if it were
C legally binding, House 12 was not an “investment” within the Oral C
dismissal of the claim based on House 12. These other grounds are in
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common with the claim based on the BH Properties and the Fund and will
I be considered below. But insofar as the claim in respect of House 12 is I
be legally binding – are prolix and discursive. Much time and costs must
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have been incurred in the preparation of the grounds and for the opposing
P side to digest the same. It is not helpful to make lengthy submissions in P
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(1) General criticisms regarding the assessment of evidence
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33. The principles for the appeal court to disturb the findings of
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fact of the trial judge are well settled. Palpable errors, whether of law or
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inferences of fact drawn from primary facts (unless the finding is based
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purely on inferences or otherwise has nothing to do with the witnesses’
I demeanour or the trial judge’s having received the evidence at first hand), I
and findings of mixed fact and law, or an issue on which the judge had to
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come to a judgmental conclusion after taking a number of factors into
K account. The correct approach in reviewing such a conclusion is to treat K
the judge’s decision with utmost respect, and refrain from interference
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unless satisfied that it proceeded upon some erroneous principle or was
M plainly wrong. It is similar to an appeal against an exercise of M
discretion25.
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Oral Agreement was made. Complaint was made in §7 that the judge
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erred in not undertaking “adequate or comprehensive analysis” of the
S “post-Discussion conduct” of the parties, and in brushing aside the S
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Judgment (being the evidence of Mr Hu, the evidence of May and Brenda
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regarding the accounting records of Mr Chiau’s personal investments, Mr
E Chiau’s inability to recall events, his “post-Discussion conduct” and his E
factual context and subject of the discussion which gave rise to the Oral H
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Agreement was of a “commercial character”. §10 contended that the
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meaning of the words used in the discussion being “recommended” and
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“successful investments” is unambiguous and the form of words used in J
the discussion and their commercial purpose was clear.
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36. The above submissions are not valid in law. The “relevant
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factual context” in §5 is a selective presentation of the findings in the
M Judgment, they were shown in the light of the plaintiff’s interpretation of M
the events and without regard to other findings and matters considered by
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the judge. The complaints in §§5, 7 and 8 are in substance complaints
O that the judge failed to give as much weight as the plaintiff contended O
was appropriate, as the judge was clearly aware of those matters and had
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mentioned them specifically in the Judgment. How evidence should be
Q assessed and considered against other evidence and what is the Q
appropriate weight to be given are matters entirely for the trial judge. In
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the absence of identifiable errors that are sufficiently material to
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undermine the judge’s conclusions, there is just no basis for the appeal
court to intervene. No palpable error of the judge has been identified (we T
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will deal with the alleged errors of law in the subsequent paragraphs).
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The contentions in §§6, 9 and 10 must be rejected.
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38. The judge has clearly recognised that for the purpose of
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determining the parties’ intention at the material time of the Oral
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Agreement in 2002, evidence of their subsequent conduct is admissible.
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He noted “the fact that the transaction was performed on both sides may I
point to an intention to enter into legal relations, and the same might
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apply to partly executed transactions”26. Significantly, he also mentioned
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that evidence of subsequent conduct and that the transaction was K
performed “is but one factor in the consideration of the question, the
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answer to which will, of course, very much depend on all the other
39. The judge has cited RTS Ltd v Molkerei Alois Müller GmbH
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& Co KG [2010] 1 WLR 753 at §54 in which Lord Clarke of Stone-cum-
P Ebony JSC, who was giving the judgment of the Supreme Court, referred P
26
S Judgment, §35. The judge cited Blue v Ashley [2017] EWHC (Comm) at §64; Jones v Padavatton S
[1969] 1 WLR 328 at 336H; Euro Search (Hong Kong) Ltd v Snow Lake Capital (HK) Ltd [2018]
HKCFI 402 at §§33 to 36.
27
T Judgment, §36 T
28
These statements of Steyn LJ were particularly relied upon by Mr Barlow: “The fact that the
transaction was performed on both sides will often make it unrealistic to argue that there was no
U intention to enter into legal relations … Clearly, similar considerations may sometimes be relevant U
in partly executed transactions.”
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540G, 541E to 542A, 558E to G, 570E to H; World Food Fair Ltd & Anr
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v Hong Kong Island Development Ltd [2005] 1 HKLRD 665 at §§7, 14,
N 107 to 11030; and Ng Yuk Pui Kelly v Ng Lai Ling Winnie (Executrix) & N
Ors [2021] HKCA 724 at §§33 to 40. Reliance was also placed on cases
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involving collateral oral warranties in J Evans & Son (Portsmouth) Ltd v
P Andrea Merzario Ltd [1976] 1 WLR 1078 at 1081F to H, 1083D to H and P
1085E; and Bank of China (Hong Kong) Ltd v Fung Chin Kan (2002) 5
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HKCFAR 515 at §§55, 69 to 71.
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41. It is clear that the judge has not made any error of law. He
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was rightly guided by the approach of Lord Clarke in RTS Ltd. The fact
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29
No complaint of this alleged error of law was made in the grounds of appeal, it featured only in
the skeleton argument of Mr Barlow.
30
U On appeal to the Court of Final Appeal, the ruling that a binding oral agreement for a tenancy was U
made was overturned, (2006) 9 HKCFAR 735.
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purpose of the oral discussion31, the nature and tone of the conversation 32,
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33
the lack of commercial sense in the terms discussed , the vagueness of
E the language used34, the contrast with the formal written agreement in the E
J
conclusion in the absence of any material error which would warrant J
intervention as in the situation of an appeal against an exercise of
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discretion.
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42. The judge also noted that the Percy Trentham case and the
M British Steel case were “factually very different from the current case”. M
contract for the disposition of land. Nor do we think the situation where
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parol evidence may be admissible to establish a collateral warranty or
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31
T Judgment, §§292, 293 T
32
Judgment, §§294, 295
33
Judgment, §§296 to 302
34
U Judgment, §§303 to 306, 315 U
35
Judgment, §307
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profit share due under and arising from a legally binding consultancy
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contract”37. Mr Barlow argued to the contrary and set out various matters
I in §7 of the grounds of appeal to support his contention that the “post- I
relevance, significance and weight of the evidence. The judge had given
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cogent reasons for the views he reached. He had explained why the
Q documents relating to the payments are consistent with Mr Chiau’s case. Q
He was entitled to accept the evidence of Brenda and Mr Chiau about the
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documents, including the reason why “income and expenditure
S statements” were generated by Brenda38 and her adoption in those S
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H H
45. There is no proper basis to challenge the judge’s inference
I from primary facts that Ms Yu was willing to assist Mr Chiau in his I
relationship. The judge also took into account that Ms Yu had sufficient
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private means not to have to worry greatly over her income generated by
M employment41. The judge has put it neatly in this way: “As was perfectly M
natural, she wanted to help and, as was also perfectly natural, he was
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happy for her to do so.”42
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asserts that no legal effect was intended and the onus is a heavy one,
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Edwards and Skyways Ltd [1964] 1 WLR 349 at 355 and New World
C Development Co Ltd & Ors v Sun Hung Kai Securities Ltd & Anr (2006) C
objective observer would have concluded that the Oral Agreement, like
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the Loncham Agreement, was of a commercial character.
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48. The above contentions are clearly without merit.
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family context (Jones v Padavatton; Ho Lai King v Kwok Fung Ying &
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Anr) and the commercial context (Edwards and Skyways Ltd; New World
N Development Co Ltd & Ors v Sun Hung Kai Securities Ltd & Anr) merely N
shift the evidential burden. So in the family context, the onus lies on the
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party who contends there was intention to create legal relations to
P establish such an intention. Conversely, in the commercial context, the P
onus lies on the party who contends there was no intention to create legal
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relations to establish the absence of such intention. The legal burden of
R establishing there was a binding agreement in that the parties had an R
U U
43
Judgment, §§26 to 40
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50. We agree with the judge that it is not profitable to consider
E the strength of any presumption of fact, nor will considering who bears E
the intention to create legal relations. What would satisfy the court in a
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particular case must depend on all the circumstances.
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judge took into account five matters which the law deems irrelevant
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being: (1) whether the Oral Agreement was void for uncertainty when no
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such plea had been made in the defence; (2) the unpleaded trade customs
I
of estate agents when the plaintiff was not an estate agent; (3) the I
adequacy of the consideration supporting the Oral Agreement, which
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should not be a concern of the court; (4) inapplicable case law concerning
K
married couples and/or blood relations; and (5) whether the plaintiff had K
paid tax on the profit share of 10%.
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N 54. As to (1), the judge did not find that the Oral Agreement was N
void for uncertainty. He took into account the vagueness of the language
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used in the discussion and important terms that were missing as relevant
P factors in determining whether an agreement was made and whether there P
45
U Judgment, §§79 to 80 U
46
Judgment, §§291 to 316
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under the terms of the Oral Agreement for which she was to receive a
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10% share of the profit.
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56. As for (3), the judge did not find that the consideration for
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the Oral Agreement was insufficient or inadequate. He took into account
E the lack of commercial sense of the alleged agreement as suggesting that E
H H
57. The case law on married couples and blood relations in (4)
I
are relevant to romantic relations by analogy. I
J 58. As to (5), the judge took the view that the tax treatment of J
the eight payments by the payer and payee and the non-payment of tax is
K K
relevant as these matters indicate strongly, on an objective basis, that
L nobody involved in these arrangements considered them to be truly L
stocks and properties, when obviously she was not. And we do not think
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the statement of Megaw J in Edwards and Skyways Ltd at 357 provides
P any support for Mr Barlow’s arguments. The statement cannot be P
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59. In §20(2) of the grounds of appeal, the plaintiff sought to
T rely on Ming Shiu Chung & Ors v Ming Shiu Sum & Ors (2006) 9 T
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thoroughly considered the documents and was entitled to give them such
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48
weight as he thought fit .
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for a contractual reward and that reward49. We think that must be right.
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The result of the reasoning would be the same, whether it is by way of the
E construction of terms or the implication of terms. Ms Yu did not E
challenge the findings of fact that her “recommendations” did not bring
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50
about the investments in the Skyhigh Property and the BH Properties .
G G
63. For all the above reasons, the contentions in the grounds of
H H
appeal are of no merit. We therefore dismissed the appeals brought by
I Ms Yu with costs. I
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K K
N N
O Mr Barrie Barlow SC and Mr Chan Pat Lun, instructed by Lee Law Firm, O
for the Plaintiff (Appellant)
P P
Mr Bernard Man SC and Mr Keith Lam, instructed by Anthony Siu &
Co, for the Defendant (Respondent)
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R R
S S
T T
49
U Judgment, §361 U
50
Judgment, §§367, 371
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