Lee Po Chu Feona v. Joyce Chan & Co. (A Firm)
Read the full judgment text of HCA 2421/2016 on BabelCite. This High Court CFI judgment was delivered on 31 January 2023.
1. The dispute in the present action arose out of the failed landed property deal by way of sale and purchase of the shares of its corporate owner in 2015. The plaintiff (“Lee”) was the purchaser. Treating Lee as in repudiation, the vendor terminated the deal and forfeited the deposits which she has paid. Following that, the estate agency company involved in the deal commenced action against her as the party in default for compensation representing the commission which it should have received fr
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HCA 2421/2016 [2023] HKCFI 295 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO 2421 OF 2016 _________________
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_________________ J U D G M E N T _________________ 1.The dispute in the present action arose out of the failed landed property deal by way of sale and purchase of the shares of its corporate owner in 2015. The plaintiff (“Lee”) was the purchaser. Treating Lee as in repudiation, the vendor terminated the deal and forfeited the deposits which she has paid. Following that, the estate agency company involved in the deal commenced action against her as the party in default for compensation representing the commission which it should have received from the parties to the deal, ie HCA 2054/2016. Subsequent to that, Lee commenced the present action against the defendant (“JC”), which was the solicitors’ firm acting for her in the deal, for professional negligence. Pursuant to previous direction of the court, the present action was tried immediately before HCA 2054/2016 before the same judge. This court now hands down judgments in both cases at the same time. BACKGROUND 2.Lee was about 54 years old at the material time. She has studied in the United States and obtained a degree in business administration. After returning to Hong Kong, Lee has worked for international corporations and reached the position of managing director. She was once an executive director of a listed company and a director of a number of other companies. She started her own business in textiles trading in 2000. Lee started investing in real estates in Hong Kong since the late 1980s, and has purchased quite a number of properties in Hong Kong for residence or investment. A number of those sales and purchases were completed through the introduction of the estate agents of Centaline Property Agency Limited (“Centaline”), particularly Mr Stanley Tso (“Stanley”) and Mr Gary Tso (“Gary”) who are brothers. 3.JC is a solicitor’s firm in Hong Kong. Mr Lawrence Tse (“Tse”) was and is a partner of JC. He was admitted as a solicitor in Hong Kong in 1993. He has mainly a conveyancing practice, having handled about 150 transactions during the 5 years prior to the transaction in the present dispute. Apart from sale and purchase of properties in the usual manner, those transactions also included sale and purchase by way of transfer of shares in the corporate owner of the properties, of which about 10 involved British Virgin Islands (“BVI”) companies. JC and Tse have not been the subjects of any professional negligence claim or disciplinary proceedings. 4.In April 2015, the agents, and this time also another agent of Centaline, Mr Simon Shea (“Shea”), got in touch with Lee with a view to introducing a residential property to her. Lee has resided in Regalia Bay, Hong Kong before, and was minded to acquire a property in its neighbourhood. After viewing and considering a number of options, she commenced negotiation through the agents, primarily Shea, which eventually led to her offer to purchase the property in question, namely House D5 with 2 car parking spaces at Regalia Bay, 88 Wong Ma Kok Road, Hong Kong (the “Property”). 5.The registered owner of the Property was Winning Streak Group Ltd (“WSGL”), which was in turn owned by Unique Focus Holdings Ltd (the “UFHL”). Both are BVI companies. In this judgment, these counterparts of Lee in the deal will simply be referred to as the vendor, unless otherwise specified. Centaline acted for both sides of the deal. On the vendor’s side, it was a Mr Tam (“Tam”) whom the agents liaised with. 6.The Property would be sold and purchased by way of transfer of shares in WSGL between its shareholder UFHL as the vendor and Lee as the purchaser. Lee first signed a provisional sale and purchase agreement dated 7 May 2015 offering to buy the entire issued capital and the related shareholder’s loan of WSGL at HK$105,000,000 (“PSPA”). 7.In the meantime, Gary introduced Tse to Lee to act as her solicitors in the deal. Prior to his formal engagement, Tse upon the request of the agent has commented on the transaction and suggested 6 rider provisions (“the Riders”) to be incorporated by way of schedule to the PSPA. This was done, and the same attached to the PSPA signed by Lee were sent to Tam and the vendor’s solicitors, Messrs Leung & Lau (“L&L”). The PSPA together with the Riders, engrossed with the agreed amendments, and then was signed by the vendor. 8.The PSPA, signed by both sides of the deal, contained, amongst others, the following terms in English and Chinese:
9.The terms of the Riders provided:
10.Amongst others, the time for the delivery of the documents relating to WSGL under clause 3 of the Riders was amended from 14 days from the date of the PSPA proposed by Lee’s side to 28 days proposed by the vendor. Lee and the vendor initialled next to such amendment. 11.On or about 11 May 2015, Lee paid the 1st deposit of HK$2,520,000 (“the 1st Deposit”). 12.It was on or about 12 May 2015 when JC was formally instructed by Lee to act for her in the transaction. No written retainer was signed. JC forthwith informed L&L of its instruction to act. It also requested for all the books, records, accounts and documents of WSGL, including but not limited to all the title deeds and documents of the Property, for its perusal. 13.On 19 May 2015, JC sent a draft formal sale and purchase agreement to L&L. Exchanges between the two sides through their solicitors ensued in respect of its terms. 14.On 29 May 2015, JC requested Lee to put it in funds for HK$5,350,000 for the further deposit in the sum of HK$5,250,000 (“2nd Deposit”) and its legal costs in the sum of HK$100,000. Lee was not amenable to paying legal costs on account, but she did put JC in funds in the sum of HK$5,250,000 for the 2nd Deposit. 15.The time for the delivery of the documents relating to WSGL pursuant to clause 3 of the Riders was due to expire on 4 June 2015 (28 days after 7 May 2015). The vendor failed to comply with that. 16.On 5 June 2015, L&L returned to JC the draft formal agreement with proposed amendments. 17.On 6 June 2015, JC returned to L&L the draft formal agreement with further proposed amendments. JC also put on record that based on the conversation between the solicitors of both sides on that day, it understood that the vendor was collating necessary information and documents for the preparation of the latest audited account of WSGL and such accounts would only be available later. 18.On the same day, JC reported the above to Lee by email together with the draft formal agreement with its proposed amendments mentioned above. As the terms of the formal agreement were yet to be finalized, it was suggested that the date of signing the formal agreement would have to be postponed. Indeed, the formal agreement was not signed on 8 June 2015. 19.There is dispute as to whether there was a telephone conversation between Lee and Tse of JC on 7 June 2015 regarding her rights and risks consequential upon the vendor’s failure to comply with clause 3 of the Riders as mentioned above. There is also dispute as to whether there was another telephone conversation between Lee and Tse on the following day, 8 June 2015, regarding the fixing of a new deadline for the delivery of the corporate documents of WSGL in the formal agreement being finalised. 20.However, there is no dispute that later on 8 June 2015, Lee released the 2nd Deposit enabling JC to make the payment on her behalf to L&L. The agents, Shea and Gary, were also informed of the payment of the 2nd Deposit. It was also agreed between JC and L&L on the telephone that the date of signing the formal sale and purchase agreement should be postponed to 12 June 2015. 21.On 10 June 2015, JC sent to L&L a further revised draft formal sale and purchase agreement whereby it was proposed under clause 17.1(9) that the vendor should deliver the corporate documents of WSGL within 14 days of the signing of the formal agreement, and under clause 3.1(3) that the 3rd Deposit should be paid on or before 8 July 2015 (in other words, the same as that provided under clause 3(b) of the PSPA). 22.On 11 June 2015, L&L sent to JC a further revised draft formal sale and purchase agreement whereby it proposed that the time for the vendor to deliver the corporate documents under clause 17.1(9) should be within 3 calendar months after the execution of the formal agreement, and it agreed that the 3rd Deposit should be paid on or before 8 July 2015. In its email to JC in this connection on that day, L&L again explained that the vendor needed more time to make available the corporate records, particularly WSGL’s accounting and bank documents. 23.Later on the same day, 11 June 2015, JC by email to L&L indicated acceptance of the above latest revised draft formal agreement proposed by L&L but expressly subject to agreement. 24.On 12 June 2015, appointment was made by Lee and Tse for the former to attend the latter’s office for the signing of the formal sale and purchase agreement on the following Monday i.e. 15 June 2015. The date for that was further postponed to 17 June 2015 with the vendor’s agreement through L&L to postpone the signing. 25.On 17 June 2015, Lee attended JC’s office and met with Tse. There and then, she signed the formal sale and purchase agreement. Lee also signed another document from JC called Declaration by Client for Client Identification and Verification and Matter Due Diligence (Individual Client) (“the Declaration”) confirming, among other things, that her purpose of the transaction was self-use and the source of funds for the subject transaction was her own savings within the local jurisdiction. 26.What happened during that meeting between Lee and Tse at JC’s office on 17 June 2015 is in dispute. The key dispute lies in what was said as well as how she came to agree to sign the Formal Agreement, containing in particular clause 17.1(9) in relation to the time for the vendor’s delivery of the corporate documents of WSGL, and how she came to sign the Declaration. 27.However, there is no dispute that after their meeting, JC sent the formal agreement executed by Lee to L&L. On 22 June 2015, L&L returned the same executed by the UFHL to JC. 28.The formal sale and purchase agreement executed by both parties to the deal and dated 22 June 2015 (“the Formal Agreement”) contains, amongst others, the following terms:
29.Soon after the execution of the Formal Agreement, JC chased L&L by email on 2 July 2015 for the time when the financial statements and the title deeds would be available and for the latest mortgage loan statement showing the amount of mortgage loan outstanding in respect of the Property. The request was later answered by L&L’s letter on 7 July 2015 enclosing the mortgage loan statement relating to the Property issued by HSBC. Tse copied the same to Lee by WhatsApp. 30.On 3 July 2015, JC requested Lee by email for the deposit of the sum of HK$5,250,000 on account for the payment of the further deposit (“3rd Deposit”), which would be due on 8 July 2015 pursuant to the Formal Agreement. Tse repeated the request by WhatsApp to Lee on the same day. 31.On 6 July 2015, appointment was made by WhatsApp between Lee and Tse for their meeting on the following day. They did meet on 7 July 2015. However, there is dispute as to what was conversed between the two at the meeting, including specifically the instruction of Lee in respect of her stance including that regarding the forthcoming deadline for the payment of the 3rd Deposit. 32.The fact was that after the meeting, JC did write on the same day to L&L, conveying what was said to be Lee’s instruction to request to postpone the payment of the 3rd Deposit until 22 September 2015, which was the deadline pursuant to the Formal Agreement for the vendor to deliver all documents relating to WSGL for the due diligence review. 33.By letter dated 8 July 2015, L&L rejected JC’s request, and held Lee onto the obligation to pay the 3rd Deposit on that day pursuant to the Formal Agreement on the basis that time for that was of the essence. Tse forwarded to Lee by WhatApp a copy of that letter and the relevant page of the Formal Agreement showing that failure to the 3rd Deposit on that day would constitute breach of the Formal Agreement, giving the vendor the right to forfeit the 1st and the 2nd Deposits. He asked Lee to transfer the 3rd Deposit to JC’s client account before 1pm on that day for the payment. Tse also alerted Shea of the same by WhatsApp, and expressed concern about whether Lee would pay the 3rd Deposit. 34.Later that day, by way of WhatsApp, Tse chased Lee for instruction and reiterated the risk of breach and forfeiture of the deposits already paid. He also relayed the same by WhatsApp to Shea. Indeed, Lee did not pay the 3rd Deposit on 8 July 2015. 35.There was apparently attempt by the estate agents, Shea and Gary, to liaise with Tam of the vendor’s side during the following days with a view to saving the deal by extending the time for the payment of the 3rd Deposit on terms. 36.On 20 August 2015, L&L informed JC that it would release the 1st and 2nd Deposits in hands to its client as the mortgagees had confirmed that the balance of the price would be sufficient to discharge the then existing mortgages. In forwarding the same letter to Lee, Tse explained that the issue of further postponement of the deadline for the payment of the 3rd Deposit mentioned above was still awaiting confirmation by the vendor’s side. 37.The vendor apparently was willing to extend the time for the payment of the 3rd Deposit but to 18 September 2015 only. In fact, on 16 September 2015, L&L sent an ultimatum to JC that unless the 3rd Deposit was paid by noon of 18 September 2015, its client would treat the Formal Agreement as terminated and forfeit the 1st and the 2nd Deposits. Tse immediately informed Lee of the same by WhatsApp and sought her instruction. Gary by way of WhatsApp voice message also urged upon Tse that Lee’s instruction was necessary. 38.Tse managed to talk to Lee on the telephone in the morning of 18 September 2015 before the deadline imposed by the vendor’s side expired. There is dispute as to what were conversed between them, including that in respect of her stance and whether she gave instruction to seek further postponement of the time for paying the 3rd Deposit. 39.However, in his WhatsApp to Lee later in the same morning, Tse recounted her instruction to request the vendor to extend the time for payment of the 3rd Deposit to a date after she was satisfied with the result of the due diligence review, despite his advice that according to the Formal Agreement, the two were independent obligations. He also pointed out to Lee the likelihood that the vendor would forfeit the deposits paid if she failed to pay the 3rd Deposit by the deadline imposed by the vendor’s ultimatum. Shortly later, Gary by WhatsApp to Tse also asked Tse to follow Lee’s instructions to try to delay the matter whilst acknowledging the difficulty. 40.Indeed, JC issued a letter to L&L on the same day suggesting to postpone the payment of the 3rd Deposit to a date after the vendor had delivered the corporate documents of WSGL and Lee was satisfied with the due diligence results. It also suggested that Lee would need more time to arrange for a mortgage of the Property and the completion should be postponed. Tse copied the letter to Lee and Gary. 41.On 19 September 2015, L&L on behalf of the vendor communicated to JC their instruction to accept Lee’s repudiation, terminate the Formal Agreement and forfeit the 1st and 2nd Deposits. JC immediately informed Lee of the same by email. At the same time, Tse stated his understanding from Gary that the vendor might still be prepared to extend 7 days for payment of the 3rd Deposit until 25 September 2015 even though, as Tse noted, Lee apparently did not find that suggestion to be acceptable the day before. Anyway he requested Lee to confirm if she wished him to find out from L&L if the vendor would indeed be willing to do so. Tse also repeated the same to Lee by way of WhatsApp. He also called but failed to reach her. 42.On 21 September 2015, Tse emailed to Lee putting on record that he was unable to reach her on the telephone. He also relayed what Gary told him that the director of the vendor would be willing to meet her to discuss the settlement of the matter on 23 September 2015. He asked Lee to confirm her willingness to do so on that day. 43.On 22 September 2015, Tse chased Lee for a reply. According to the estate agents, the vendor was likely prepared to proceed if Lee could pay the 3rd Deposit on the following day. He was however unable to reach her, and therefore asked her to reply urgently. 44.However, by letters dated 23 September 2015, Howell & Co informed JC and L&L respectively that it had instructions to act for Lee instead. JC’s retainer was terminated. On 29 September 2015, JC sent all relevant documents to Howell & Co. 45.On 6 October 2015, by post and by email, JC issued a bill of costs dated 29 September 2019 in the sum of HK$50,680 to Lee. Lee did not settle the bill. This becomes the amount JC claims by way of counterclaim herein. 46.There is dispute as to whether there was further communication between the two sides of the deal through the estate agents thereafter, though there were indeed WhatsApp messages in October 2015 between Shea and Tam. Lee however disputes the WhatsApp messages between her and the estate agent. The fact was that the deal was never revived. 47.There is no evidence of any material, if at all, development since then, including that between Lee and Howell & Co or between Howell & Co and L&L in respect of what happened between Lee and the vendor in the property deal. Until nearly a year later, on 8 August 2016, Centaline, as mentioned, commenced HCA 2054/2016 against Lee for outstanding commission. Lee then commenced the present action against JC on 20 September 2016. THE CLAIM 48.Lee claims against JC for breach of contract and/or negligence in that the latter:
49.Lee contends that JC failed to do what a reasonably competent solicitor would have done in the circumstances, namely:
50.Lee contends that but for JC’s breach, she would not have signed the Formal Agreement but would have accepted the repudiation on the part of the vendor and terminated the PSPA. Upon that, she would have been entitled not to pay further deposits but would have been entitled to the return of the deposit already paid. It was JC’s breach of duties which caused her the loss of the 1st and the 2nd Deposits in the total sum of HK$10,500,000. ISSUES IN DISPUTE 51.The main dispute is whether JC had exercised its reasonable care, skills and diligence required of a reasonably competent solicitor firm in acting for Lee as a purchaser in the circumstances of this case. Subsidiary to this main issue are the following sub-issues, which the parties summarized in their agreed list for the purpose of the trial:
52.Of the above, issue (8) is not in real dispute. JC accepts that a solicitor is subject to the usual duty of care under the retainer and in tort to exercise the reasonable degree of skill and care to be expected of a competent and reasonably experienced solicitor: see Yip Kin Kwan Kenneth v Rich Well Finance Ltd [2020] HKCFI 456 at §59. 53.The remaining issues may be further categorized into the following two major areas:
54.As to the relief, JC accepts that if Lee succeeds in her claim (both breach and causation), she should be entitled to the amount claimed. Further, albeit without a written retainer, Lee admitted in the trial that she had orally agreed with Tse on the quoted fee of HK$200,000. Subject to liability, there is no real challenge against the quantum of the counterclaim for the lesser sum of legal costs as per the bill of JC issued to her back in 2015. WITNESSES 55.Lee and Tse gave evidence. Contrary to her stance at the case management stage and accordingly previous direction of the court, counsel for Lee indicated when the trial commenced that she preferred to give evidence in English. So she did. 56.The issues set out above turn on factual dispute or dispute partly in fact and partly in law. Insofar as factual dispute is concerned, the principles governing the assessment of credibility of witnesses have been summarized by the court in different terms on numerous occasions, including recently and comprehensively in Yu Man Fung Alice v Chiau Sing Chi Stephen [2020] HKCFI 2923 at §§53-62. They are not in dispute. 57.In applying the above principles, one must take into account, amongst other things, the background and experience of the witnesses. However, as an overview, counsel for JC point out, and I agree, that Lee impressed no one as a person incapable of exercising caution and meticulousness. She is certainly not submissive nor a simple follower of others by their words. I also find that her evidence in court was objectively less than sensible and reasonable at times. As to Tse, he was by no means impeccable in his oral evidence. However, he gave no impression that he ever attempted to hide that. He was forthcoming to the extent his recollection permitted him to be. That marks a material difference between them as witnesses. 58.Relevant to the assessment of the witnesses’ oral evidence are also the contemporaneous documents. They serve as records of the events and evidence of the circumstances surrounding disputed events. This is as one would expect in a dispute like this. What needs to be specifically mentioned however is that Lee challenges the authenticity of various attendance notes of Tse in respect of his various telephone conversations and meeting with her mentioned above. As those documents came about by the hands of Tse, the challenge could only be understood to be that they were fabricated by Tse for the purpose of litigation instead of his true contemporaneous records. In other words, the allegations against Tse is not only negligence but also dishonesty in the court of law. 59.It is trite that he who alleges must substantiate by evidence of cogency commensurate with the seriousness of the allegation: see Re A Solicitor (2008) 11 HKCFAR 117 at §§61-66. No doubt the allegation of fabrication of evidence knowingly by an officer of the court is serious. The parties’ oral evidence in respect of these alleged telephone conversations and meeting will have to be assessed and tested against the other evidence including that of the circumstances surrounding the times when those documents allegedly came about. PROFESSIONAL NEGLIGENCE 60.A solicitor is under the duty to exercise the reasonable degree of skill and care to be expected of a competent and reasonably experienced solicitor, not a particularly meticulous or conscientious solicitor: see Yip Kin Kwan Kenneth (above) at §59; Whale View Investment Ltd v Kensland Realty Ltd [2000] 2 HKLRD 261 at 273 B-D. The exact duty and the manner in which it should be discharged may be affected by the experience or inexperience of the client: see Foshan Hau Da Industrial Co [1999] 1 HKLRD 418 at p 425G. 61.Lee has the burden of proof, which includes that of the following elements of her claim:
See Yip Kin Kwan Kenneth (above) at §54. 62.Allegations of professional negligence must be precise: see Ng Yuk Ha v Yip Siu Keung, HCPI 1167/2002 (19 July 2005) at §§14-21. SIGNING OF THE PSPA 63.Lee first signed the PSPA. Albeit for the sale and purchase of the shares and the related shareholders’ loan of the corporate owner of the Property, she did so without any specific provision in respect of due diligence review and the production of documents by the vendor for such purpose. She was prepared to do so together with her cheque in making her offer to purchase the Property which she knew by signing the agreement would be effected by way of transfer of shares in the corporate owner of the Property. 64.What happened was that the estate agent also enquired with Tse, who was willing to assist and indeed proposed the Riders to be incorporated into the PSPA. In court, Tse explained the basis for his proposal, which could only be actuated by his concern about the interest of Lee as the prospective purchaser. By then JC was yet to be formally instructed by Lee. UPON THE VENDOR’S FAILURE TO COMPLY WITH CLAUSE 3 OF THE RIDERS OF THE PSPA 65.Clause 3 of the Riders of the PSPA required the vendor to deliver all the documents relating to WSGL within 28 days, ie by 4 June 2015, to facilitate the due diligence review to be conducted by Lee. The vendor did not do so. According to Lee, she was not aware of that until her meeting with Tse on 17 June 2015. 66.Putting aside whether or not JC was reasonably expected to, or in fact did, contact those acting for the vendor in relation to the documents by 4 June 2015 even when JC was yet to be formally instructed, there is no objective evidence of any enquiry made by Lee about the situation by then, despite her insistence from the outset that this was very important to her, and her knowledge about the obligation of the vendor pursuant to clause 3 of the Riders. 67.However, Tse did learn from L&L on 6 June 2015 the reason for the vendor’s failure. In his email to L&L later that day, Tse put on record the explanation that the vendor was still collating necessary information and documents for the preparation of the latest audited account. According to JC, Tse informed Lee of the same when he managed to talk to her on the telephone on 7 June 2015. This however is disputed by Lee. 68.JC produced Tse’s attendance note of the telephone conversation with Lee on 7 June 2015 (“7/6/2015 Note”), which recorded:
69.The 7/6/2015 Note recorded that Lee was informed of the failure of the vendor to comply with clause 3 of the Riders, and that she was advised of not only her rights but also her risk in deciding whether or not to proceed with the deal. Upon that she indicated her intention to proceed. 70.Lee disputes the existence of the telephone conversation, and for that matter the authenticity of the 7/6/2015 Note. In other words, she contends that the note did not exist as a contemporaneous record but a subsequent fabrication. 71.As mentioned, testing the conflicting evidence of the parties in this respect against the other evidence of the circumstances at the relevant time would cast light on whether the telephone conversation took place as alleged. 72.First, there is no dispute that on the same day, Shea enquired with Tse by WhatsApp about whether appointment had been made with Lee for the signing of the formal sale and purchase agreement, and provided Lee’s mobile phone number to Tse for that purpose. Tse’s subsequent response to Shea by WhatsApp later that afternoon was that he had called her already. There is no allegation or evidence that Tse lied to Shea. Nor was there any reason for Tse to do so. 73.Second, as mentioned, Tse was given to understand, and indeed cared to put on record with L&L, the explanation by the vendor for its failure to comply with clause 3 of the Riders. It is most unlikely that Tse would somehow withhold the same from Lee when he had the chance to talk to her precisely about the situation and her position on 7 June 2015. As recorded in the attendance note, that was what Tse reported to her. 74.Third, the content of the telephone conversation recorded in the attendance note in fact went beyond the mere issue of the vendor’s breach of the PSPA and Lee’s instruction as to whether to proceed. The discussion recorded also included Tse’s request for instruction in respect of the payment of the 2nd Deposit and the date for the signing of the formal sale and purchase agreement which would not be ready on 8 June 2015 as agreed under the PSPA. Such record of a multi-subject discussion sounds only natural. The same would have been unnecessary for the purpose of the alleged fabrication for JC’s purpose, and the same tends to manifest inherent reliability and relative likelihood of truth. 75.Fourth, the dispute in respect of what happened on the following day is also relevant. According to JC, Tse managed to talk to Lee on the telephone again on 8 June 2015 before the 2nd Deposit was paid. The attendance note of Tse of that date produced by JC (“the 8/6/2015 Note”) recorded the following points covered by that conversation:
76.Lee challenges the authenticity of the 8/6/2015 Note. Again, the challenge is that the note was not a contemporaneous record but a subsequent fabrication. What then does the evidence of the circumstances surrounding tends to suggest? 77.In his WhatsApp to Gary in the afternoon of 8 June 2015, Tse mentioned that he had talked to Lee on the telephone and there should be no problem. The problem, according to Tse and the record in the 8/6/2015 Note, related to the need to pay the 2nd Deposit on that day pursuant to the PSPA. There is no allegation or evidence that Tse would somehow lie to Gary. Nor was there reason for him to do so. 78.On the same subject, the fact was that Shea did mention to Tse by WhatsApp later on that day about the payment the 2nd Deposit. Later in the evening of that day, Tse confirmed to Shea by WhatsApp about the payment of the 2nd Deposit to L&L, and informed Gary as well by WhatsApp of the same. In court, Lee indeed admitted that when she paid the 2nd Deposit, she knew the vendor’s non-compliance with clause 3 of the Riders. 79.According to JC, Tse also communicated with L&L on 8 June 2015 on the telephone, the subject of which was recorded in Tse’s attendance note of the same date:
80.There is no allegation or evidence that this attendance note was a fabrication. What was recorded evidences the discussion between the solicitors whereby Tse obtained the confirmation of L&L for the vendor in respect of first, the question of annexing the audited account of WSGL to the formal sale and purchase agreement, and second, that of postponing the date for the signing of the formal agreement. This echoes what was mentioned in the conversation between Lee and Tse according to the record in the 8/6/2015 Note. Similar information was mentioned in the 7/6/2015 Note which echoes what JC put on record in its previous letter to L&L dated 6 June 2015 and what JC informed Lee of by way of email on the same day as mentioned above. 81.Last, it should be noted that some of the attendance notes, including those to be discussed below, were apparently written on clean paper while some were written on re-used paper. Like how one sees the record of the multi-subject discussion in the notes mentioned above, any suggestion that these were parts of the conscious design of Tse in the alleged fabrication is simply unconvincing. 82.Once this court is satisfied that the attendance notes discussed above are genuine and reliable evidence of what were conversed between Lee and Tse on those two days, they must be preferred as more reliable evidence than that of Lee in the same respect, about which her oral evidence was actually uncertain at times. 83.In the circumstances, I find that Tse did inform Lee at least on 7 June 2015 of the vendor’s failure to comply with clause 3 of the Riders and advise her of her rights and risk of whether or not to proceed with the deal in the circumstances. Lee’s instruction on 7 June 2015 to proceed with the deal created the pretext of the further telephone conversation between Tse and her on the following day, during which various questions in relation to the payment of the 2nd Deposit and the preparation of the formal sale and purchase agreement were discussed. Later on the same day, the 2nd Deposit was paid and the date for the signing of the formal sale and purchase agreement was fixed at 12 June 2015. THE ADVICE GIVEN 84.Lee takes issue that the advice of Tse in respect of her rights consequential upon the vendor’s failure to comply with clause 3 of the Riders was incorrect. 85.Insofar the legal position, and thus the rights, of Lee vis-à-vis the vendor is concerned, the issue taken by Lee is immaterial. As the vendor saw it, Lee did proceed with the deal. 86.As a matter between Lee and JC, what Lee contends is that Tse failed to advise her unequivocally to terminate the PSPA and to recover the deposit paid in view of such breach on the part of the vendor, which a reasonably competent solicitor would have done. Had she been correctly advised of the legal position, she would have decided not to proceed and saved herself from the consequence of breach vis-à-vis the vendor and thus her loss. 87.The starting point must be to consider the state of the relevant law apprehended by a solicitor of reasonable competence at the relevant time: see Charlesworth & Percy on Negligence (14th ed) at §10-256 to 10-257. A solicitor will be liable in negligence only if he gives incorrect advice on a point of common occurrence where the law is clear: see Jackson & Powell on Professional Liability (8th ed) at §11-161. Where advice is given in relation to a point of law which is open to argument, the legal professional is supposed to advise his client of the risk involved in the argument: see Charlesworth & Percy (above) at §10-258. 88.It is obvious from the record in the attendance note dated 7 June 2015 that Tse did advise Lee of her rights and the risk of whether to take issue of the vendor’s breach of clause 3 of the Riders or whether to proceed with the deal. According to Tse, he did that according to his understanding of the relevant law at the time. 89.Lee’s counsel relies on, amongst other authorities, Team Eight Group Limited v Lo Yuk Yee [2021] HKCFI 1010 where it was indeed held that time was of the essence in respect of a clause like clause 3 of the Riders in the PSPA so that breach of that amounted to repudiation. 90.Team Eight Group Limited was a judgment handed down by the court on 20 April 2021. A reasonably competent solicitor would not have had the understanding of the state of the law in this respect on the basis of such judgment as at the relevant time, ie June 2015. Assessment of whether the solicitor should have given advice in line with what the court so decided could not be based on hindsight: see Foshan Hau Da Industrial Co v Johnson Stokes & master (a firm) [1999] 1 HKLRD 418 at 425H. 91.JC refers to Okachi (Hong Kong) Co Ltd v Nominee (Holding) Ltd [2007] 1 HKLRD 55 where the court had this to say (at §53) about the general principles in this respect:
92.Short of specific research within the short time or specific authority in mind prior to his conversation with Lee on 7 June 2015, Tse advised her of the state of law not differently in terms of substance from the above principles set out in Okachi (Hong Kong) Co Ltd (above), namely that Lee’s decision whether to proceed with the deal in view of the vendor’s breach of clause 3 of the Riders would be a matter of her right as well as risk. 93.Other than Team Eight Group Limited (above), counsel for Lee do not suggest that at the relevant time, there were other authorities which authoritatively, if at all, held that time would be of the essence for the obligation like that as stipulated in clause 3 of the Riders. What counsel put to Tse were a number of authorities which suggested that time was of the essence in provisional agreements for sale and purchase of land. Tse acknowledged them. However, none went as far and specific as Team Eight Group Limited (above) did. 94.For instance, Lee’s counsel refer to Wong Wai Chi v Cheung Kwok Fung [1996] 3 HKC 287 where the court held (at p 290D-I) that in the absence of special circumstances, it will usually be the case that a provisional agreement for sale and purchase in the common form in use in Hong Kong will be treated as one of which time is of the essence, although no express provision in that behalf is contained in the agreement. That said, the context in which the court said that was that time ceased to be of the essence when the vendor’s solicitors failed to come up with the agreement for signature by the purchaser on the specified date, and thereafter, no complaint could legitimately be made about the purchasers’ conduct in that case. The court acknowledged all depended on the circumstances of the case. 95.Lee’s counsel also refer to Sun Lee Kyong Sil v Jia Weili [2010] 2 HKC 117 where the court endorsed what the court said in Wong Wai Chi (above). However, the context in which the court there did that was the fact that completion was to take place within a relatively short time (9 weeks) from the date of the provisional agreement. 96.In Team Eight Group Limited, the court affirmatively held (at §25) that the principles propounded in the previous cases mentioned above should apply by analogy to a term for delivery of corporate documents for due diligence exercise like clause 3 of the Riders not without regard to the circumstances of the case. The court took into account the nature of the transaction which was the sale and purchase of a company with the property being highly valuable commercial property, the volatility of the property market in Hong Kong generally, and the relatively short timeframe (less than 4 months) between the date of the provisional agreement and the completion date during which the vendor had to prove and the purchaser had to be satisfied with the company’s title to the property in the usual manner but further, the vendor had to facilitate and the purchaser had to conduct a due diligence review on various aspects of the company and be satisfied with the results. 97.In the present case, the purpose of clause 3 of Rider 3 was to facilitate the carrying out of the due diligence review by Lee. The review was expected to start with the examination of the documents relating to the corporate body up to the sorting out of any matters raised by Lee’s requisitions to her satisfaction. Clause 2 provided that completion shall be conditional on the completion of the due diligence review and proof of good title. Completion was fixed to take place on 19 November 2015. That would be 6 months after the PSPA or 5.5 months after the delivery of the corporate documents of WSGL pursuant to clause 3 of the Riders. 98.As at the time of the PSPA, whether such time would suffice for the purpose of completing the due diligence review by the completion date would depend on the circumstances. The circumstances known by then, and admittedly subject to verification by the review, were that the only business of WSGL was holding the Property, which was also its sole asset without liability except for the loan covered by the sale and purchase: see clauses 2 and 8 of the PSPA. 99.As mentioned, Tse was given the explanation by the vendor of why clause 3 of the Rider was not complied with in early June 2015. It was that the vendor did not manage to do so as it was still collating the information and documents to prepare the latest audited accounts. There was no suggestion or evidence that a reasonably competent solicitor should have been alerted to any risk that the vendor would default in this respect or at all given the time before completion. 100.Lee has not adduced independent evidence to demonstrate that a reasonably competent solicitor in the circumstances would have known or contemplated and therefore advised her at the time that the remaining time would not suffice for the purpose of completing the due diligence review. Now even with hindsight, she still has not adduced independent evidence to demonstrate that as a matter of fact. 101.What Lee seeks to rely only on is that she had allegedly been told by a banker that at least 4 months would be necessary. She identified the banker, who did not testify. In any event, the banker that she refers to could not have testified in respect of the substance of what she allegedly said in respect of the time required for scrutiny of a property transaction involving BVI company. That would have been opinion evidence, which she did not have leave to adduce. The qualification of the banker to give such evidence is also unknown but doubtful. Such evidence apparently would have been based on the banker’s understanding which, according to Lee, was dated back in early May 2015. Therefore, even assuming that the banker has given Lee such advice, that would not have had any probative value of the true state of affairs when the completion was not to take place until November 2015. 102.As to the questionnaire for information in respect of a BVI company, its exact significance is unclear insofar as whether JC was in breach of its duty is concerned. It was not that JC has failed to act promptly in asking for information and documents relating to the vendor’s side. Tse did so immediately after he has been formally instructed to act for Lee. The vendor through L&L did respond and explain the delay on the vendor’s part, and the same was relayed by Tse to Lee on 7 and 8 June 2015 before the payment of the 2nd Deposit. As mentioned, there is no allegation or evidence that the delay and thus failure of the vendor in this respect on 4 June 2015 connoted its inability or unwillingness to perform and to complete in 5.5 months’ time. 103.In the present case, the state of the law in respect of the breach of a provision in a provisional sale and purchase agreement like clause 3 of the Riders could be viewed as arguable in the circumstances of the case as at 7 June 2015. Reasonable competence and prudence of a solicitor call for an advice on the pros and cons of pursuing argument on an arguable point instead of an unequivocal advice as alleged by Lee: see Charlesworth & Percy (above) at §§10-256 to 10-258. That was Tse’s advice as recorded in his attendance note. He never left out of mention Lee’s rights while he also mentioned risk in connection with whether to take issue of the vendor’s non-compliance with such rider provision or to proceed with the deal. 104.JC also questions causation. Indeed, it is for Lee to prove that had Tse advised her on the basis that time for compliance with clause 3 of the Riders was of the essence unequivocally as opposed to the advice rendered on 7 June 2015, she would not have decided to proceed with the deal as a matter of fact. 105.The positive stance of Lee, as evidenced by the record of her discussion with Tse on 7 and 8 June 2015, does not sit well with her present contention that she would have acted differently as a matter of fact but for the lack of unequivocal advice from Tse in respect of her rights. She was keen about the deal, which did not seem to have changed by early June 2015. Notwithstanding the time under clause 3 of the Riders, she was apparently prepared to consider extension of a reasonable time. As mentioned, the failure of the vendor, which was explained through L&L, was relayed by Tse to her and did not objectively connote lack of intention to perform and to complete. Completion was still months away. Her contention on the basis of concern about mortgage application, as discussed below, is rejected. So is her contention that time would be insufficient to complete due diligence and mortgage processing. She should also be aware, as Tse expressly advised, that clause 2 of the Riders would still entitle her to terminate the deal and to recover the deposits paid in the event that she was eventually not satisfied with the result of the due diligence review, be it on the ground of the substance or adequacy of the documents produced, before completion. 106.In the circumstances, I see strength in JC’s argument that Lee has failed to prove on balance that she would have sought to terminate the PSPA even if she had been advised more conclusively than what Tse did about her rights, upon the failure of the vendor to comply with clause 3 of the Riders. ENTERING INTO THE FORMAL AGREEMENT 107.Proceeding to the Formal Agreement, Lee criticizes JC for failing to obtain her approval before committing on her behalf to the terms of the Formal Agreement, in particular the provision of 3 months from the date of the Formal Agreement to deliver the documents relating to WSGL. That, she complains, left her with insufficient time for the due diligence review before the payment of the 3rd Deposit or even completion. But for Tse’s guarantee that the vendor would deliver the documents relating to WSGL before the 3rd Deposit became due and payable as well as his threat that refusal to sign the Formal Agreement would constitute repudiation and cost her the deposits already paid, she would not have agreed to sign the Formal Agreement in those terms. 108.According to Tse, when he prepared the first draft of the Formal Agreement, it was stipulated that the latest audited accounts of the company should be annexed to the Formal Agreement. The premise must be that the documents were assumed to have been provided by the time when the Formal Agreement would be executed. If that was not the case, as it turned out to be, so that a specific time for the delivery obligation on the part of the vendor was to be proposed, Tse would need to take instruction from Lee. This, as found above, Tse did on 7 and 8 June 2015 upon learning that the audited accounts would not be ready as anticipated for the reason given by L&L 109.As at 7 and 8 June 2015, when Tse reported to Lee the situation, there were still months away from completion in November 2015. It was on this basis that the time for the delivery of the documents by the vendor was gauged, and the deadline for doing so was to be fixed for the Formal Agreement. As evidenced by the 8/6/2015 Note, Lee accepted Tse’s advice that 1 month before completion would be the bottom line, and she was minded to execute the agreement by the end of that week. 110.That said, Tse, apparently having the interest of Lee in mind, started by proposing 14 days after the execution of the Formal Agreement for the delivery of the documents. The draft containing such proposed term under clause 17.1(9) to L&L with proposed signing of the agreement on 12 June 2015 was copied to her. Had that been contrary to her understanding or instruction, she would have raised objection. Nothing like that happened. 111.The vendor through L&L returned with counter-proposal for 3 months after the execution of the Formal Agreement for delivery of the documents, which far exceeded the time proposed by JC. The negotiation in respect of the terms of the formal sale and purchase agreement reached 11 June 2015 when JC indicated to L&L its agreement to the terms of the latest revised draft of the agreement, including the time proposed under clause 17.1(9) for the vendor to deliver the documents. According to JC, it did so upon Tse’s consideration of the counter-proposed timetable still not exceeding the bottom line last ascertained from Lee on 8 June 2015. Most importantly, it did so expressly subject to agreement between Lee and the vendor. 112.In other words, JC never agreed or committed to the terms of the Formal Agreement on Lee’s behalf, and none of the terms of the agreement was binding on her unless and until she actually signed it. 113.There is no dispute that the parties met, and in fact for the first time, at JC’s office on 17 June 2015 for the purpose of signing the Formal Agreement. According to Lee, that was when she first came to realise that the documents from the vendor were yet to come. This allegation is rejected as a matter of fact, in view of what happened by that date as discussed above. 114.Lee also alleges that she objected to clause 17.1(9) of the Formal Agreement which provided 3 months for the vendor to deliver the documents relating to WSGL. She nevertheless signed it upon Tse’s guarantee that JC would receive the documents relating to WSGL prior to the due date for the payment of the 3rd Deposit. Lee alleges that Tse relied on his acquaintance with the handling solicitor of L&L as the basis for his assurance. However, whether or not such alleged acquaintance existed at the time as a matter of fact, it is hard to understand how Tse would therefore believe that he was in a position to guarantee the performance on the part of the vendor in less than a month, which was contrary to what the vendor’s own solicitors earlier conveyed to him to be his client’s instruction as to the time necessary for the compliance with such obligation. Lee’s allegation is inherently and on balance incredible. 115.JC produced the attendance note of Tse in respect of the meeting on 17 June 2015 (“the 17/6/2015 Note”), which recorded:
116.Whilst Lee effectively contends that the 17/6/2015 Note was a fabrication, her effective admission of knowledge and even argument with Tse about the terms of the Formal Agreement was actually in line with her having been taken through its essential terms as it was recorded in the note. It should be noted that the 17/6/2015 Note also recorded two other matters, namely Tse’s reminder that no mortgage of the subject matter of the sale and purchase and her objection to the terms of JC’s retainer. By their nature and level of details, these records were most unlikely fabrication. Nor is it likely that these were parts of Tse’s conscious design of the alleged fabrication for the purpose of litigation. The existence and accuracy of the 17/6/2015 Note, I find, are inherently believable. 117.Regarding the mortgage consideration, Tse’s advice is not surprising where the subject matter of the sale and purchase was legally the UFHL’s shares in WSGL. Whether or not the Property would be put up for mortgage would be a matter for its new corporate owner, ie Lee upon acquiring its shares. In any event, by the Declaration also signed by her on 17 June 2015, Lee declared that the source of funds for the transaction was “own savings”. 118.In court, Lee claimed that Tse filled out the Declaration contrary to her instruction at the time. Serious allegation like that should have been made known at least by way of witness statement. At one point, Lee also explained that she believed “own savings” also included loans from bank so that it was not entirely misleading. That defies reasonable understanding. Where, as the 17/6/2015 Note recorded Tse’s advice that mortgage was normally not possible in a share transaction and Lee confirmed that that would not be necessary, it would be odd for her to instruct Tse otherwise at the same time as she alleges when coming to sign the Declaration. Tse also explained that the Declaration is a protocol required by the Law Society to curb money laundering. Hence the expected serious treatment of that by its members. Had he been instructed that mortgage was taken out, he would have ticked the box “Loan from Bank” as the source of Lee’s funds and stated next to “Please state the name of such Bank” the answer “TBC” (ie to be confirmed). 119.According to Lee, she has indeed enquired with banks about mortgage arrangement. That will be discussed below. Suffice at this juncture to point out that timing of such enquiries, if at all made, does not seem to fall at a point before the signing of the Formal Agreement. 120.Finally, Lee contends that she would have been better off without entering into the Formal Agreement. Insofar as the idea is that the deal would have proceeded in the absence of a formal sale and purchase agreement but in accordance with the PSPA, the contention is difficult to understand. 121.Where the vendor has failed to comply with clause 3 of the Riders but the deal continued, say, without a formal sale and purchase agreement, Lee would still have been bound by the obligation to pay the 3rd Deposit on 8 July 2015 and the completion would still have had to take place on 19 November 2015 pursuant to the PSPA. Those are terms which would not have been subject to unilateral variation by Lee. It will be stretching the present case unreasonably far by considering whether Lee in that case might have made any further time for the delivery of the documents for due diligence review under the PSPA of the essence and whether any further breach of that by the vendor then might have entitled her to terminate the deal. SINCE THE SIGNING OF THE FORMAL AGREEMENT 122.The situation seems to have changed soon after the signing of the Formal Agreement. 123.On 3 July 2015, JC and Tse reminded Lee by email and WhatsApp to put it in funds to pay the 3rd Deposit which would be due on 8 July 2015. The response of Lee was her request on 6 July 2015 for a meeting with Tse on the following day, 7 July 2015. The request was made before JC received from L&L the letter from the vendor’s mortgagee bank in respect of the outstanding mortgage indebtedness concerning the Property. Therefore, Lee’s evidence in court referring to such letter as a surprise to her and therefore a cause for her request for the meeting could not be true. 124.What was discussed in the meeting on 7 July 2015 is in dispute. JC produced the attendance note of Tse, which recorded the following points discussed at the meeting (“the 7/7/2015 Note”):
125.Lee disputes the record in the 7/7/2015 Note. 126.Lee denies the discussion in respect of her loss in stock market. She claims that she did not trade in the stock market at the material time. She produced some documents in support of her case, but none of them comes close to serving such purpose other than casting further doubt on her selective disclosure. 127.Lee apparently does not dispute that as a matter of fact the stock market in both the Mainland and Hong Kong suffered very significant crash days before she requested the meeting on 7 July 2015. Worth noting is Shea’s WhatsApp to Tam on 9 July 2015, which said “…宜家客人係因為私人問題所以才希望延期支付餘下5% 訂金…”. In other words, he tried to explain to Tam that Lee sought to postpone the payment of the remaining 5% deposit owing to what was said to be her personal problem. 128.At this juncture, one may return to consider Lee’s case on her intention to arrange mortgage in respect of the Property. As mentioned, she claims to have made enquiries with a couple of banks. She referred to Chiyu Bank, but only for the first time in court and naturally without any documentary proof. She referred to ICBC Bank, the documentary evidence in connection with that was not forthcoming, despite JC’s request for discovery back in 2020. However, some documents in this connection were produced only when the trial began. Those documents, which apparently led to no actual mortgage application, on their face only suggest what happened after the signing of the Formal Agreement. It will be seen below that at some point later, even Tse came to be given to understand her intention to arrange mortgage, be that genuine or not. 129.The picture appears to be this. In view of what was discussed when Lee signed the Formal Agreement, as recorded in the 17/6/2015 Note, and the Declaration, there was no issue of mortgage arrangement at the time. If anything, such issue came about, as the evidence of Lee at best tends to show, after that. JC suggests the possibility of Lee’s liquidity problem when the investment market crashed. That was what was recorded in the 17/6/2015 Note. Lee’s strenuous denial of that aside, the key is not so much whether or not JC manages to prove her loss in the stock market, which caused her to consider the need for mortgage, as a matter of fact. If the evidence of such representation having been made and the surrounding circumstances suggesting the absence of such intention before the signing of the Formal Agreement, JC’s case should be preferred to that of Lee. 130.Lee’s own case is that she insisted that she would pay the 3rd Deposit only if the vendor delivered the documents for the due diligence review, and she denies any instruction to Tse to negotiate the postponement of the time for paying the 3rd Deposit. However, once she has committed herself to the terms of the Formal Agreement, there was no question of her being in a position to insist on subjecting the performance of her obligations to extraneous conditions precedent. This was the case of the obligation to pay the 3rd Deposit on 8 July 2015. What was recorded in the 7/7/2015 Note was simply the correct legal advice a reasonably competent solicitor would have given in the circumstances. 131.In the circumstances, the written request by JC to L&L later on the same day attempting for an agreed variation of the time for the payment of the 3rd Deposit subject to the delivery of the documents, on balance, could not have been made in the absence of the instruction of Lee as recorded in the 7/7/2015 Note. There is no reason for believing that JC would have done so, including effectively misrepresenting to L&L, if there were no such instruction from Lee. 132.Further, on 8 July 2015, Tse reported by WhatsApp to Lee the response of L&L, which did not come as surprising in the circumstances. He also reminded Lee that failure to pay the 3rd Deposit on that day would be seen as breach of the Formal Agreement entitling the vendor to forfeit the deposits already paid. As mentioned, the evidence shows that JC kept on chasing Lee for instruction. Lee admitted that she did receive these messages but did not reply. Her explanation was that Tse did not live up to his guarantee about obtaining the documents for the due diligence review by then and he requested for variation of the payment terms without her instruction. She was most dissatisfied. Had that been the case, one would have expected that she reacted accordingly in view of the repeated chasers from Tse. She did not. Further, when she was informed by Tse in August 2020 of L&L’s notice of release of the 1st and the 2nd Deposits to the vendor, she allegedly felt that it was wrong for Tse not to have somehow stopped that. Yet the fact was she did not act accordingly by communicating her instruction to Tse. Instead, in response to Tse’s chaser on 20 August 2015 for instruction in respect of postponement of the payment of the 3rd Deposit, Lee said “That’s my concern. Please follow up with the landlord’s lawyer…”. That fell far short of what one would have expected from her when she allegedly had all those grievances and complaints about Tse. THE VENDOR’S ULTIMATUM AND TERMINATION OF THE FORMAL AGREEMENT 133.Then came the ultimatum from L&L on behalf of the vendor on 16 September 2015, fixing noon on 18 September 2015 as the last date for the payment of the 3rd Deposit. Tse reported the same by WhatsApp to Lee and sought her instruction. According to her, her dissatisfaction with Tse has by then reached the point that she decided to instruct another solicitor, Mr Stephen Ho of Messrs Howell & Co. However, there is no objective evidence of immediate termination of JC’s retainer. Indeed, Tse called and managed to talk to her on 18 September 2015 before the deadline imposed by the vendor expired. JC produced Tse’s attendance note in respect of such telephone conversation (“the 18/9/2015 Note”)
134.Lee disputes the content of the 18/9/2015 Note in part. According to her, she just refused to pay the 3rd Deposit until receipt of the documents relating to the vendor, and did not instruct Tse to seek any time extension for completion. 135.The fact was that JC did issue a letter to L&L on 18 September 2015 conveying what was said to be Lee’s request that the date for paying the 3rd Deposit be postponed until the vendor had delivered all the corporate documents and the result of the due diligence was satisfactory, and the completion date be extended as she needed more time to arrange for mortgage. Before sending this letter, Tse even put on record by WhatsApp to Lee such instruction and the issuance of the letter afterwards. 136.Had all the above been done without Lee’s instruction, it would have indeed been quite bold for Tse to do so and even with notice to her. One would also have expected outrage on her part fairly spontaneously. She did express that in her evidence, and claimed that she told Tse that she would sue him. Had that been done when she was put on notice of what Tse was about to do, she would have been expected to stop him. If she was referring to any time afterwards, one would have expected immediate termination of the retainer and legal action sooner than later. None of those happened that way. 137.Lee takes issue that JC should have advised her of her right to terminate the Formal Agreement by the time of the vendor’s ultimatum on the ground that the vendor should have complied with its obligation to deliver the corporate documents of WSGL within 3 months pursuant to clause 17.1(9) of the Formal Agreement. In other words, she complains that JC caused her to lose out on the race in holding the other side of the deal in repudiation of the Formal Agreement. 138.JC points out that this issue was left out of the parties’ agreed list of issues. That aside, the fact was that the Formal Agreement was dated 22 June 2015 and vendor could not be said to be in repudiation of the Formal Agreement for breach of clause 17.1(9) until 22 September 2015 whereas Lee was already in repudiation by failing to pay the 3rd Deposit on 8 July 2015 and evincing the intention to do so only on her terms contradictory to the terms of the Formal Agreement. The vendor was entitled to send the ultimatum on 16 September 2015 making time for the payment of the 3rd Deposit of the essence and thereby securing its right to terminate the agreement in the event of further default. 139.On 19 September 2015, the vendor indeed exercised its right to terminate the Formal Agreement and to forfeit the 1st and 2nd Deposits. As mentioned, Tse reported the same to Lee and tried to get in touch with her but in vain. Her explanation in court of her state of mind and action, or the lack of it, is hardly convincing, objectively considered. The retainer of JC was terminated only on 23 September 2015 with Messrs. Howell & Co. taking over. However, the opportunity was somehow not seized of for the purpose of putting on record her complaint and intended legal action against JC, which, if her assertions were genuine, would have accumulated to the boiling point well before then. The fact, as evidence by the WhatsApp messages, was that there appeared to be further effort to salvage the deal between the estate agents and the vendor, though eventually leading nowhere with remark by Tam that Lee did not seem to be acting in good faith. AFTER THE TERMINATION OF THE FORMAL AGREEMENT 140.If Lee’s assertions were accepted, it would have been yet another bold and shameless move on the part of JC to issue its feenote to her on 6 October 2015. That was allegedly the reaction of Lee but the fact was that there was no action by her through her new solicitors. Another 5 months later, Centaline commenced action against her. Apparently even that did not suffice to excite her, now advised by her new solicitors, to react by, amongst other things, holding JC as ultimately liable for all the consequences of her default vis-à-vis the vendor in the deal as a result of what she always believed to be JC’s professional negligence. She did commence the present action but only months afterwards. By then, there has yet to be a pre-action letter stating her case against JC. CONCLUSION 141.All evidence considered, including those discussed above, I prefer the evidence of JC to that of Lee wherever they are in conflict. In respect of the major areas of dispute in the present case, I find that JC did inform Lee of the vendor’s breach of clause 3 of the Riders as well as advise her of the consequential rights and risks of taking issue of that or whether to proceed with the deal at least on 7 June 2015 and also by 8 June 2015 (Issues (1) to (5) above). Tse gave such advice which a reasonably competent solicitor would have given in accordance with the state of the relevant law and the circumstances at the time. 142.In any event, Lee was minded and did decide to proceed with the deal and therefore paid the 2nd Deposit and sign the Formal Agreement. I find that JC never committed or agreed on her behalf to the terms of the Formal Agreement proposed by the vendor without her approval, in particular clause 17.1(9) in relation to the delivery of the corporate documents of WSGL. I find that she signed the Formal Agreement knowing its terms but in the absence of the alleged guarantee or assurance by Tse that the documents of the vendor would be delivered before the deadline for the payment of the 3rd Deposit pursuant to the agreement (Issues (6), (7) and (9) above). 143.There could be no doubt that Lee’s loss of the 1st and the 2nd Deposits was the result of her failing and refusing to pay the 3rd Deposit unless on her terms contrary to the Formal Agreement, which the vendor was entitled to treat as repudiation on her part and thus ground for termination of the agreement and forfeiture of the 1st and the 2nd Deposits. Such loss was not occasioned by the breach of duty on the part of JC through Tse as her solicitors as alleged or at all. 144.Lee’s claim should therefore be dismissed, and there is no reason why JC should not be entitled to its counterclaim. ORDER 145.Lee’s claim is dismissed. 146.Judgment is entered on JC’s counterclaim for the sum of HK$50,680 with interest thereon at 1% above HSBC prime rate from the date of writ until judgment. Interest thereafter runs at the judgment rate until full payment. 147.Following the event, I make a nisi order that Lee shall pay JC’s costs of defending this action and those of its counterclaim, including any costs reserved, to be taxed, if not agreed, with certificate for two counsel. In the absence of application in 14 days to vary, the nisi order shall be become absolute without further order.
Mr Jeevan Hingorani, Mr Lawrence Cheung and Mr Micky Yip, instructed by K B Chau & Co, for the plaintiff Mr Paul Lam SC and Mr Bryan Lee, instructed by Reynolds Porter Chamberlain, for the defendant | ||||||||||||||||||||
Cases cited in this judgment
Further hearings and rulings under HCA 2421/2016