FOOK KWOK INVESTMENT CO LTD AND ANOTHER v. CHAN YING LUN

bjbj HCA003499/1980 IN THE SUPREME COURT OF HONG KONG HIGH COURT ACTION NO. 3499 OF 1980 ----------------- BETWEEN Fook Kwok Investment Co. Ltd. 1st Plaintiff Sun Hung Kai Properties Ltd. 2nd Plaintiff CHAN Ying Lun Defendant ----------------- Coram: Hon. Fuad, J. in Court. Date of Judgment: 29th September, 1980. ----------------- JUDGMENT ----------------- In this action the plaintiffs seek to pray in aid the jurisdiction of the court in equity to rectify a written agreement relating to the sale and purchase of a factory unit. The defence is that the document in question accurately reflects the common intention of the parties who executed it, and specific performance of the agreement as it stands is sought. Mr. Martin Lee appeared for the plaintiffs, with Mr. Wesley Wong. Mr. K.J. Cheung represented the defendant. Both plaintiff companies belong to what is commonly referred to as the "Sun Hung Kai Group of Companies". The first plaintiff company is a wholly owned subsidiary of the second, which is a public company and one of the largest land developers in Hong Kong. The "Yip Fung Industrial Building", within which the unit with which we are concerned is to be found, is erected on land of which the first plaintiff is the Crown grantee. The second plaintiff provided finance for the development. Both were parties to the agreement; the first plaintiff as vendor, the second plaintiff undertaking not to call back any loans until the whole development had been completed. The defendant is the sale proprietor of a metal works and has been in business since 1973. In December 1979 his application to the Public Works Department of the Government to be included in the approval list of supplies and specialist contractors for undertaking certain categories of work was accepted. These categories included the provision of steel and aluminium windows; architectural metal work; and rolling, siding and folding shutters and doors. The story begins on 25 April 1980. The defendant, who needed more factory space to expand his operations, went to the site of a new development at Kwai Chung where he was told that a unit on the ground floor was still available. He inspected the premises, decided to buy them, and what was called a "temporary receipt" recording the agreement to sell and buy was drawn up. He thereupon paid a deposit $3,000. This document, which was signed by the developers' salesman and the defendant, was then sent in the usual way to Messrs. Johnson, Stokes and Masters who were acting for the vendors. There a sale and purchase agreement was prepared and on the 30 April, after it had been translated to the defendant, it was duly executed by him. This agreement was in similar terms to over 100 other agreements drawn up for the sale of the units at Kwai Chung. All that needed to be done, in respect of the unit bought by the defendant, was to fill in the blank spaces with details applicable to it and to annex the relevant plan. The plan and the information necessary for this purpose had been supplied by the developers. I should perhaps mention that although the agreement is dated 24 April, there is no dispute that it was in fact executed on 30 April. The material parts of the agreement relevant to this action recited the following - that the purchaser would be acquiring 32 equal undivided 1,000th parts or shares of the whole property; that he was buying workshop No. 2 on the ground floor as shown on the plan attached; that the "saleable" area of the workshop was approximately 2,653 square feet; and that the purchase price was $1.9 m. On 5 June 1980 the defendant attended the offices of Messrs. Johnson, Stokes and Masters and was invited to sign an agreement cancelling the one executed on 30 April, and to sign a new sale and purchase contract which would have recited that 26/1000 undivided shares were involved; that the saleable area was 2,128 square feet, and which would have substituted a new plan showing that the whole of workshop No. 2 was not being sold and bought. This plan divided the workshop into Workshop No. 2 and workshop No. 2A. The defendant declined to sign either document. Hence this action was instituted. Mr. Mak Hon Ting is employed by the second plaintiff company in their sales department. He told the court that on 25 April 1980, shortly after 12 noon, the defendant came to the site office of the new development at Kwai Chung, enquiring about the possibility of buying a unit on the ground floor. The defendant was informed that only one unit on that floor was available and this was Workshop No. 2. He was shown the ground floor plan on the first page of one of the sales brochures which showed that only part of the workshop was for sale. The witness had himself (acting on instructions for head office) marked on the plan that portion which was to be excluded. In answer to a query by the defendant about the excluded part, the witness explained that that part, together with the whole of the first floor, had been reserved. Whereupon the defendant asked to see the unit, and Mr. Kwong Tim Wah, an assistant foreman of Sun Hung Kai used a piece of chalk to mark on two pillars the starting points of the lines which divided the area which was for sale from that which was not. The defendant made his own measurements with a tape measure he had with him (this is not mentioned in Mr. Kwong's evidence), expressed satisfaction about the area he would be buying and repaired to the sales office with Mr. Mak to sign the temporary agreement, according to the usual procedure. This document, which has been agreed and is before the court, is dated 25 April and records, inter alia, the defendant's name, address and telephone number; the fact that unit No. 2 on the ground floor of the Yip Fung Industrial Building; with a "construction area" of 2,786 feet (sic) was being sold and bought for $1.9 m. ; that the purchaser had paid an initial deposit of $3,000; and the terms of payment of the balance of the purchase price. Mr. Mak who filled in these details on a printed form, stated that he had obtained the necessary information from head office. The defendant left the site office at about 1 p.m. In his evidence, the defendant (Mr. Chan) testified that during the whole of the visit, at no time was he given any indication or information that the whole of workshop No. 2 was not available; although he was given a copy of the brochure, the plan of the unit on page 1 had not been marked in ...(illegible) ; he took no measurements of his own; and never even saw the assistant foreman, Mr. Kwong. He had only spent half an hour at the most with Mr. Mak, leaving at about 12 noon. Mrs. Helen Kwok is a solicitor in the firm of Johnson, Stokes and Masters and has been with them for about three years, including the time when she was in article. She explained about the notional division of the property into equal, undivided shares or parts and how the "construction area" of a particular unit was calculated. In accordance with common practice, the "construction area" was calculated in accordance with a formula approved by the Registrar-General (and defined in such sale and purchase agreements) and was always less than the "construction area". Although one of her clerks would have inserted the appropriate details of a particular sale in a copy of the sale and purchase agreement, Mrs. Kwok knew where the necessary information would come from. Documents provided by her clients would supply the number of shares allocated and the saleable area. The plan to be annexed to the agreement would also be provided. The purchase price, method of payment and information about the purchaser would be culled from the temporary receipt. Mrs. Kwok gave evidence that Mr. Chan was brought before her on 30 April. She satisfied herself that the agreement had been translated to him and, after Mr. Chan had signed, she witnessed his signature. He had been the first of the parties to sign. All the material terms in the agreement accurately reflected the information they had been supplied by the developers about the particular unit, and the plan which formed part of the agreement showed workshop No. 2 as an entire unit with no portion excluded. According to the evidence of Mr. Gary Koo (a conveyancing clerk with Johnson, Stokes and Masters) and of Mrs. Kwok, on about 3 June 1980 their firm received instructions to proceed with the necessary documentation in connection with the sale and purchase of "workshop No. 2A" on the ground floor of the Yip Fung Building. They had been sent a temporary receipt (dated 2 June 1980). This was the first that either of them knew of any division of workshop No. 2 as shown on the original plan, and after enquiring from their clients, they were supplied with a new plan indicating the division of the unit into workshop 2 and 2A; and with information relating to the re-allotment of undivided shares and the saleable areas of each unit. An agreement was then prepared to cancel the old agreement, and another to reflect the true position as understood by the solicitors. After being contacted on the telephone, Mr. Chan called at the offices of Johnson, Stokes and Masters on 5 June. There he first saw Miss Chow, a clerk in their employ, and Mr. Chan asked why he had been called to sign new documents. Miss Chow testified that she explained that the original documents, including the plan, had certain mistakes in them. Mr. Chan asked why he should be the first to sign the two new agreements, and enquired what the position would be if he went ahead, only to find that Sun Hung Kai later refused to sign them. Miss Chow said that there was no such possibility. According to Miss Chow, Mr. Chan then enquired whether part of workshop No. 2 had been sold to another, together with the whole of the first floor. Miss Chow replied that this had not happened. Mr. Chan then enquired how it was that the net useable area he would be getting was less than 80% of the construction area - this was not in line with other property he had bought in the past. Miss Chow explained that she did not know about such matters, but if Mr. Chan were still dissatisfied she would take him to Mrs. Kwok. Mrs. Kwok then takes up the story. She said that she showed Mr. Chan a copy of the original agreement with the original plan attached to it. She then showed him the new plan, indicating that workshop No. 2 had been divided into 2 and 2A, and asked him if it were true that when he bought workshop No. 2 and signed the temporary receipt, he was aware that an area of workshop No. 2, shown as 2A on the new plan, was to be excluded. The defendant then asked to see a copy of the brochure, turned to page 1 showing the ground floor plan and compared the plan of the unit with the new plan. The brochure showed no sub-division. Mr. Chan then traced his finger on the brochure plan, stating that in respect of the part he had indicated, the salesman had told him at the time that it had been intended to be sold off to someone who would also be buying the entire first floor. Mrs. Kwok said that she then told Mr. Chan how the mistake in the original agreement had been made, and after explaining the two new agreements to him, and placing both before him, she invited him to sign each one. Mr. Chan asked why he should be the one to sign first, and what would happen if, after he had signed them, the other side refused to do so. He was told it was a matter of convenience and, if he so desired, arrangements could be made for the developers to execute the documents before he did. Mr. Chan then turned to another point. He had noticed that the measurements on the brochure plan were in feet and inches, whereas the new plan showed metric measurements. Mr. Chan, having said that he wanted to confirm the measurements, was advised by Mrs. Kwok to go to the main office of the developers who would be in a better position to advise him. This was about 10.30 - 11.30 a.m. and, according to Mrs. Kwok, Mr. Chan said he would do as suggested, and if satisfied with the explanations he received he would return that afternoon to sign the new documents. He took with him a copy of the new plan. Mrs. Kwok did not see the defendant again. Mr. Chan's version of the meetings with Miss Chow and Mrs. Kwok on 5 June is very different. When Miss Chow asked him to sign the new documents, he replied that he simply did not understand what it was all about. She explained that Sun Hung Kai had made some mistakes, and went on to itemise the differences between the original, and the proposed new, agreement. He told her he had wanted to buy 2,600 sq. feet of resemble area, pointing out that this was very different from the area which would be shown in the new agreement. He had refused to sign and had been taken, at his request, to see Mrs. Kwok. After Miss Chow had told Mrs. Kwok that Mr. Chan would not sign the documents, Mrs. Kwok had explained the mistake made by Sun Hung Kai, whereupon he had expressed surprise that such a mistake could have been made by so large an organisation. He had denied knowing anything about any sub-division and had refused to sign the new agreements. Although he had asked Mrs. Kwok for photo-copies of these, she had not given any to him. He remembered being given a copy of new plan showing units 2 and 2A. Mr. Mak told the Court that he had spoken to Mr. Chan twice on the telephone - this was clearly after the interview between Mrs. Kwok and the defendant - inviting him to go to Johnson, Stokes and Masters to rectify the mistake. On the first occasion he said that he would go as soon as he had time; on the second (about two days later) that it was not his mistake and he was being put to a lot of trouble. He had decided to hand the matter over to his solicitors. Mr. Chan, in his evidence, speaks of only one telephone conversation with Mr. Mak during which he had told him that he intended to instruct solicitors. Mr. Chow Yu Shing also gave evidence. He is the sales supervisor employed by the Sun Hung Kai group of companies. He testified that acting on instructions for head office, sometime in the middle of May this year, he had telephoned Mr. Chan and enquired whether he would be interested in buying a further portion of workshop No. 2. He could have the additional part for $550,000, which would be $100,000 less than it would have cost another buyer. Mr. Chan said he would need a few days to think the matter over and would ring back. Since he did not return the call, Mr. Chow rang him again three days and so later when he was told by Mr. Chan that he could not consider buying the additional portion for the time being as he was short of money. Mr. Chow explained why what might be called this special offer, was made to Mr. Chan. There were a number of reasons; partition walls would not be needed; no new architectural plans would have to be prepared; and a separate lavatory would not have to be built. Mr. Chan denied that he had ever spoken to Mr. Chow on the telephone. Since the alleged phone calls were made during working hours on working days, he would never have received them because he left home early each day, and came back late. On 10 June 1980 Johnson, Stokes and Masters sent a letter to the defendant by registered post. Its author was Mrs. Kwok. In view of the importance attached to this letter by learned counsel on both sides, I set it out in full - " We refer to your purchase of Workshop 2 in the above premises and to your recent meeting at our office with our Mrs. H. Kwok on the morning of 5th June, 1980. On 25th April, 1980, prior to your paying the initial deposit of $3,000.00 for the purchase of the above-mentioned Unit, it has been made clear to you by Mr. Mak Hon Ting, one of the sales officers of the vendor, that (a) the Unit being sold to you was the area coloured pink on the attached plan (i.e. excluding the area marked Workshop 2A), (b) the purchase price of such Unit would be HK$1,900,000 and (c) the gross floor area of the said Unit being sold was 2,786 sq.ft. The gross floor area of the unit being purchased and the terms of payment are set out very clearly in the temporary receipt dated 25th April, 1980 which you have countersigned. For your reference, we are enclosing a copy of the temporary receipt. Due to a mistake on the part of the vendor in failing to provide us with a plan for workshop 2 showing its proper sub-division into workshop 2 and workshop 2A, the wrong plan was attached to the Sale & Purchase Agreement dated 24th April, 1980 made between yourself and the vendor and the other details included in the agreement covered the combined workshops 2 and 2A. At your recent meeting at our office, you confirmed to our Mrs. H. Kwok that you were well aware, prior to your counter-signing the temporary receipt, that the area marked "Workshop 2A" on the plan enclosed herewith was not intended to be comprised in the premises which were then being sold to you by the Vendor. Furthermore, you have indicated to our Mrs. Kwok that you were aware that the area marked "Workshop 2A" on the plan was intended to be sold off by the vendor as a separate unit. It is clear on the facts that there has been a mistake which would be rectified on application to the Court. Any such application would mean the incurring of additional expenses which would ultimately be for your account. We strongly recommend that you come to our office immediately upon receipt of this letter to execute a Cancellation Agreement of the existing agreement and a fresh Sale & Purchase Agreement with the correct plan attached. Unless the Cancellation Agreement and the fresh Agreement for Sale & Purchase are executed within 7 days from the date hereof, the Vendor will have no alternative but to apply to the Court for rectification and any expenses regarding this and any damages suffered by the Vendor (which could be substantial) will be for your account." The defendant's solicitors replied by letter dated 18 June saying that they had just received instructions from Mr. Chan, and asking for four 4 days so that detailed instructions could be obtained for a full reply. Johnson, Stokes and Masters replied on the following day. Mrs. Kwok explained in evidence that by this time she had realised that a conflict of interest had arisen and thought it would be not be right for her firm to continue to act for the vendors - she therefore decided to hand the matter over to Messrs. Woo, Kwan, Lee and Lo. The letter of 18 June explains the position. The next letter in this exchange is from the defendant's solicitors to Mr. Lo asking for copies of the old and the proposed new agreements, so that they could properly advise their client. The copies were sent, and in his letters of 21 and 23 June, Mr. Lo sets out what the essential features of the proposed new agreement would be, if the defendant agreed to execute it. There is no further relevant correspondence between the solicitors to the parties, and the plaintiffs' writ was issued on 30 June 1980. I have already referred to some of the defendant's evidence in my summary above. He told the court that he decided to buy the new workshop because he had only 900 sq. feet available previously and this was insufficient both for his present, and his anticipated future, needs. His workshop could not accomodate all his machines. His potential out put was considerably greater and he needed about 2,500 - 3,000 more square feet. This the Yip Fung workshop would have provided. When he had met Mr. Mak at the site sales office and had been shown the plan in the brochure depicting workshop No. 2 as a whole, Mr. Mak had assured him that the net useable area of the workshop was about 2,700 sq. feet. The ground floor had not been completed and when they had gone to see the workshop, Mr. Mak had indicated where the remaining walls would be built. They had discussed the removal of one of the "male" lavatories and Mr. Mak said this could be done. He had always had in mind the sort of area the whole workshop would have given him and so, after only 5-6 minutes, they had returned to the office, where the temporary receipt was drawn up and signed. The copy of the brochure he had been given (which showed workshop No. 2 as an entire unit) had turned up after this hearing had begun. It had been found amongst his children's play things, and he had only looked for it seriously after he had realised its significance upon listening to the evidence led by the plaintiffs. He had found it on 17 September and handed it to his solicitors on the following day. Mr. Chan was certain about the time he had left the Yip Fung Building. He could say that he must have left it at about 12 noon, because precisely at 12.15 he was stopped, not far from the site, by a lady traffic police officer, and was "booked" for an offence. His evidence as to the time was very clearly supported by W/Sgt. Chan Kwong Lai. She indicated the place in Lai King Shan Road, where she had stopped Mr. Chan on a map which is on the reverse of the front cover of the brochure - and Mr. Chan had been driving south, away from the Yip Fung Building, as he had testified. Mr. Chan also gave evidence about certain contracts (6) he had entered into between 26 January - 5 September this year to indicate the volume and nature of his work. Mr. Chan was adamant that had he known he was buying less than the whole of workshop No. 2, he would never have concluded the bargain, because he needed the whole area; no less would have sufficient. As part of their case, the plaintiffs called evidence to establish that they could never have deliberately sold the whole of workshop No. 2 to the defendants. The printed price list prepared for the sale of all units showed that workshop No. 2 on the ground floor had a "construction area" of 3490 feet (sic) for which the asking price was $2,450,000, and while it was originally intended that this unit should be sold complete and undivided, as a result of negotiations which were going on to settle a dispute between the second plaintiff company and certain Japanese clients of Messrs. Chu and Lau, that part of the workshop which is the subject of the present litigation, was under offer to the Japanese company right up until 14 May. The negotiations which were protracted had begun in September 1979. At one stage the second plaintiffs had filed an action against the Japanese firm, but a later offer, not involving the Yip Fung Building had been accepted and the action withdrawn. While the offer was still open, it was within the contemplation of the parties that the Japanese company might take the whole of the first floor of the building as well as part of workshop No. 2 on the ground floor. Instructions had been given to the sales department not to sell the part under offer without reference to head office. When the part of workshop No. 2, by then workshop 2A, became available, it was sold for $600,000 on the 2 June 1980 to a Mr. Ng Kai Cheh. Only when the temporary receipt and the new plan was received in the offices of Johnson, Stokes and Masters was the mistake discovered. There were suggestions by the defence that some of the documents produced in support of this evidence had been specially prepared for the purposes of this action, in particular the memo sent by Mr. Leung Sing to the sales department dated 8 April 1980 instructing them that the original plan of unit No. 2 on the ground floor of the Yip Fung Building had been altered in accordance with a plan that was attached, that the construction area of the part which was for sale was 2,786 feet, and that the selling price was 1.9 m dollars. There can be no real doubt that the developers did not intend to sell the disputed part of unit No. 2 to the defendant. Nor can there by any doubt as to how the mistake (so far as the second plaintiff company was concerned) came to be discovered. However we are not concerned solely with their intention. If Mr. Mak had not received instructions to sell only part of unit No. 2, or having received them, neglected those instructions, the developers would be bound by the agreement reached between Mr. Mak and the defendant at the Yip Fung Building on 25 April 1980. Mr. Mak was clothed with all the necessary authority and if by anything he said or did he gave the defendant to understand that he was buying the whole unit, then in its most important particulars, the agreement signed on the 30 April was accurate and there would be nothing to rectify. Now where does the truth lie? The defendant is in a very strong position. The agreement signed on 30 April was drawn up by a highly competent firm of solicitors and it speaks wholly in his favour. All the witnesses called by the plaintiffs were either employees of the developers who might be anxious to cover their mistakes, or were connected with the transaction in such a way as to deny them the status of wholly independent and disinterested witnesses. The defendant declined to sign the new documents when they were presented to him on 5 June and has testified that the original contract was accurate in all the terms that had been agreed. Morever he was able, although belatedly, to produce a copy of the brochure which he said had been given him by Mr. Mak, which showed workshop No. 2 as an entire unit. On the other hand, the evidence led by the plaintiffs presents an apparantly formidable case. If the defendant is telling the truth, then the Sun Hung Kai Group have mobilised their very considerable resources, in collusion with a leading firm of solicitors who often act for them, to cheat a comparatively humble business man of his rights. I would remark at this stage that the evidence given by the defendant about the volume of his work and the additional space he needed to enhance his business, fell short of that which would have been necessary to demonstrate that nothing less than the whole of workshop No. 2 would have been sufficient for his needs. After hearing the evidence called by both sides, I am left in no doubt that the plaintiffs have not presented a false case to cover a costly mistake. I was particularly impressed with Mrs. Kwok. I am satisfied that she told the truth to the Court about the vital meeting between her and Mr. Chan on 5 June. She made a most impressive witness and, to some extent but in important particulars, her evidnece is supported by Miss Chow who was no less impressive. I accept that on that occasion Mrs. Kwok was mindful of the fact that she was acting for both parties to the original agreement and that she did her duty most conscientiously to protect the interests of the defendant. I believe that she did show Mr. Chan the original and the new plans of the workshop and ask him if he had been aware of the exclusion, as shown on the new plan, of workshop 2A. I accept that the defendant asked to see a copy of the sales brochure which showed the workshop undivided, and traced with his finger the excluded portion, which in fact coincided with the part marked 2A on the new plan, adding that the salesman had told him that that part was not for sale and might be sold, together with the first floor units, to another buyer. I also believe Mrs. Kwok's account of the exchange that then took place. The defendant's original concern was what would happen if the developers were to go back on the arrangement after he himself signed the new agreements. He then began to wonder about the precise dimensions of the area he had bought because the brochure, unlike the new plan, gave them in feet and inches around the edges of the ground floor plan. I accept that the defendant promised to come back later that day "if he was satisfied with [ the developers'] explanations." I have no doubt that Mrs. Kwok did not attempt to pressurise Mr. Chan into signing the new agreements. Mrs. Kwok has been criticised because she wrote her letter of 10 June which I have set out above. Although we are not here concerned with matters of professional conduct, I feel I should deal with this letter in view of the aspersions made. With hindsight one might ask whether she might not have been wiser, there and then, to have handed the matter over to another firm of solicitors, for the facts I have taken, Mr. Chan had acknowledged that he was aware that he was not buying the whole workshop. Mrs. Kwok freely admitted that when she wrote the letter she realised there was a possibility that a conflict of interest might arise, and I would only say that someone with greater experience might well have written a somewhat different letter or have left the task of writing the kind of letter she did write, to another firm. On the other hand, had Mr. Chan acted upon it, it would have saved everyone concerned some time and money. It might be convenient here to deal with a matter which arose during the cross-examination of the defendant. After consulting with his counsel, Mr. Chan waived the privilege the law gives him regarding disclosure of the instructions he gave his solicitors after he had received Mrs. Kwok's letter. He was cross-examined at some length as to how it could possibly be that if he had, as he had testified, told the whole story he was relating to the court to his solicitors, the statements of fact contained in Mrs. Kwok's letter, so adverse to his case, and remained unrefuted until he was met by the statement of claim in the action. Mr. Lee placed great reliance on this failure in his closing address to the court. In all the circumstances, while there are, of course, merits in Mr. Lee's submissions, I felt it would be safer not to draw any inferences against the defendant from what the relevant exchange of correspondence did, and did not, contain. In relation to matters such as this, a court navigates in troublesome waters, and I would prefer to content myself by remarking that nothing in the defendant's favour emerged out of the correspondence which passed between the solicitors, or out of his answers in cross-examination on this part of the case. If, as I have found, Mrs. Kwok's evidence is reliable and can safely be acted upon, then the defendant could not have been telling the truth about the events which took place on 25 April when he went to the development site Kwai Chung. I was fortified in making my assessment of Mrs. Kwok's testimony by my view of the evidence of Mr. Mak, Mr. Kwong and Mr. Chow. They, too, made impressive witnesses. I believe that Mr. Chan was shown the precise limits of the part of the workshop which was then available for sale, and the later telephone conversation with Mr. Chow is consistent only with the defendant being well aware that he had not bought the whole of workshop No. 2 on 25 April. In weighing the evidence led by both sides, I took into account in his favour, the very important fact that Mr. Chan was able to produce a copy of the brochure which showed workshop No. 2 as an entire unit, while Mr. Mak had stated that the copy he had handed over on 25 April, showed a part of the workshop hatched by his own hand. Mr. Chan was most evasive in cross-examination about the brochure being in his possession when he first went to seek legal advice, and I believe the copy he produced was not the copy he was given by Mr. Mak. I have now to consider whether, even on the evidence I have accepted, there is any possibility that some confusion might have arisen when Mr. Chan inspected the site due to the fact that some of the walls on the ground floor had still to be built. It will also be recalled that on Mrs. Kwok's evidences Mr. Chan had queried the measurements and only promised to return to sing the new agreements if he were satisfied with the developers' explanations. I am quite sure that no such possibility exists. The defendant has himself indicated to us which walls were already up, and accepted that Mr. Mak had shown him where the other walls would be. As regards the curved outer limits of the workshop, it was the defendant who explained that he knew where the enclosing wall would be erected because the level of the workshop was higher than the pavement outside. As regards the excluded portion the lines to be drawn were vertical and horizontal and ran at right angles from the middle of pillars which were there; vertically to a completed wall and horizontally to the mid-point of the pillar at the outer edge of the unit. As a result of his own inspection, and the information given to him by Mr. Mak, assisted by Mr. Kwong, I am satisfied that the defendant knew exactly what area he was buying. It will not be convenient to deal with two objections as to the admissability of certain evidence made by Mr. Cheung during the hearing. I undertook to say something more about the reasons why I was constrained to rule against him, on both occasions. When Mr. Lo was giving evidence about the negotiations over the settlement with the Japanese Company, Mr. Cheung submitted that the exception to the rule that no extrinsic evidence could be admitted to explain or vary the terms of a written agreement extended only to evidence anterior to or contemporaneous with the material date (which was the date of the execution of the agreement sought to be rectified, here the 30 April) to show the intention of the parties. And Mr. Cheung reminded me most courteously about his submission at various other times during the hearing. In my view, while it is clear that the extent of the rectification must be clearly revealed by such evidence, this is not to say that other evidence which is not rendered inadmissible by any rule of evidence may not be received. In such matters, it seems to me, it is not the date of the agreement that affects the position, but the relevance and admissibility, under the ordinary rules of evidence, of the evidence sought to be adduced. In my opinion all the evidence about the negotiations which resulted in the formerly excluded part of the unit becoming available for sale was admissible as was the evidence of the ultimate sale of that part to Mr. Ng. The plaintiffs' case could not otherwise have been understood. Mr. Cheung's other submission was made during the evidence of Mr. Chow Yu Shing, when he was telling us about the offer he had made to the defendant on the telephone to buy the originally excluded portion of the workshop for $550,000 after it had become available. Mr. Cheung submitted that since this was a rectification case, the fact of the telephone conversation between Mr. Chow and Mr. Chan, being a material fact, should have been pleaded; and as this had not been done, this evidence was inadmissible. It was my view that this was not a "material fact" within the meaning of the relevant rule. It was rather a matter of evidence which, as I understand the rule, expressly should not have been pleaded. Learned counsel agreed about the law applicable in a case such as this, except perhaps on one point. While accepting that a very heavy burden rested upon his shoulders, Mr. Lee did not agree that proof beyond reasonable doubt was required. Mr. Cheung cited to me Lloyd v. Stanbury [1971] 1 Ch. 535 which was a first instance case heard by Brightman, J.. In his judgment, at pp. 542 - 543, the learned Judge adopted the approach laid down in Joscelyne v. Nissen [1970]2 Q.B. 86, and referred to an extract from the judgment of Simonds, J. in Crane v. Hegeman - Harris Co. Inc [1939]1 All E.R. 662 which had been read by Russell L J in delivering the judgment of the court in Joscelyne's case. It is in this passage that the expression "beyond reasonable doubt" occurs, and they are, of course, the words of Simonds, J. Brightman, J. then goes on to quote an extract from Russell, L.J.'s judgment in which he stated - " we do not wish to attempt to state in any different phrases that with which we entirely agree, except to state that it is in our view better to use only the phrase 'convincing proof' without echoing an old-fashioned word such as 'irrefragable' and without importing from the criminal law the phrase 'beyond reasonable doubt.'" I respectfully adopt the same approach. On the view of the facts that I have taken, the plaintiffs' have amply discharged the very heavy burden of proof cast upon them. Indeed, I would say that their case was overwhelming. They have called cogent and compelling evidence providing convincing proof that the common intention of the parties was that the vendor would sell and the purchaser would buy only part of workshop No. 2 on the ground floor of the Yip Fung Industrial Building. with a "construction area" of 2786 sq. feet, with a clearly defined portion excluded, for $1.9 m. This common intention, reached on 25 April, continued unchanged up to the time that the agreement was executed on 30 April. As I have said above, the portion the defendant did not buy is clearly ascertainable; I have no doubt that the plan which is Schedule III to the statement of claim accurately reflects the true demarcation agreed on 25 April between Mr. Mak and Mr. Chan. There is no suggestion that if the plan is correct, the figures sought to be substituted for those appearing in the original contract in relation to the undivided shares or to the saleable area would be otherwise than accurate. No grounds have been argued before me that would justify the court to decline from exercising it's jurisdiction in the plaintiffs' favour. I therefore give judgment for the plaintiffs, ordering rectification as prayed. The counterclaim is dismissed. I will now give an opportunity to counsel to address me on costs, if they so wish. (K.T. FUAD) Judge of the High Court Representation: Martin Lee, Q.C. and Wesley Wong (Woo, Kwan, Lee & Lo) for Plaintiffs. K. John Cheung (Arthur Au & Co.) for Defendant. PAGE 1 - PAGE - &`#$ &`#$ HCA003499/1980 FOOK KWOK INVESTMENT CO. LTD. AND ANOTHER v. CHAN YING LUN Normal Kodak Microsoft Word 9.0 Judiciary Hong Kong SAR Judiciary Hong Kong SAR HCA003499/1980 FOOK KWOK INVESTMENT CO. LTD. AND ANOTHER v. CHAN YING LUN Title Microsoft Word Document MSWordDoc Word.Document.8 HCA003499/1980 FOOK KWOK INVESTMENT CO. LTD. AND ANOTHER v. CHAN YING LUN Normal Kodak Microsoft Word 9.0 Judiciary Hong Kong SAR Judiciary Hong Kong SAR HCA003499/1980 FOOK KWOK INVESTMENT CO. LTD. AND ANOTHER v. CHAN YING LUN Title