Kam Ping Kwong and Another v. Chiu Sun and Others

Case No.HCMP 3317/1994

Court

High Court CFI

Date14 Oct 1997

Judge—

Case Document

100%Judiciary

HCMP003317/1994

IN THE HIGH COURT OF HONG KONG
COURT OF FIRST INSTANCE
MISCELLANEOUS PROCEEDINGS

MP 3317 of 1994

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BETWEEN
	KAM PING KWONG	1st Plaintiff
	MAN KAM YIN	2nd Plaintiff
	AND
	CHIU SUN	1st Defendant
	TSE SUET FONG	2nd Defendant
	HANG SENG CREDIT LIMITED	3rd Defendant

	and

	T.L. IP & CO. (a firm)	1st Third Party
	MICHAEL JOHN CRAWFORD and RODERICK MILLER formerly trading as CRAWFORD, MILLER & CO.	2nd Third Party

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Coram: The Hon. Mr. Justice Waung in Court

Dates of Hearing: 13 and 14 October 1997

Date of Delivery of Judgment: 14 October 1997

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JUDGMENT

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1. Mr. and Mrs. Kam, the 1st and 2nd Plaintiffs ("the Kams") purchased Flat D on the 5th Floor of Block 10, Whampoa Garden Site 11, Kowloon ("the Flat") in 1991. The 3rd Defendant, Hang Seng Credit Limited ("the Bank") financed the purchase and became the mortgagee of the Flat. The Kams rented out the Flat and every month the rental income from the Flat assisted in the payment for the monthly mortgage instalments. In 1994, the Flat became vacant. A man purporting to be Mr. Wong Yue Sang but later found out to be a crook ("Crook One"), became interested in renting the Flat. On the excuse that the rental for the tenancy was to be paid by his employer who had to be given the relevant documents, Crook One requested for copies of the Identity Cards of the Kams, their Mortgage Repayment Advice and Demand Note for the Rates. The Kams innocently supplied these copies and the Flat was rented out to Crook One.

2. Unknown to the Kams, Crook One together with two other accomplices (one posing as Mr. Kam and another posing as Mrs. Kam):-

(1)	placed the Flat for sale with a property agent, resulting in Mr. and Mrs. Chiu, the 1st and 2nd Defendants ("the Chius") coming to see the Flat;
(2)	agreed with the Chius to sell the Flat to the Chius for $3.25 million;
(3)	created false Identity Cards in the name of the Kams;
(4)	opened in the name of the Kams, a bank account at Standard Chartered Bank with the false identity cards;
(5)	caused two firms of solicitors, Messrs T. L. Ip & Co. and Messrs Crawford, Miller & Co. to act for them as the Vendor of the Flat;
(6)	eventually obtained from the Chius and from the Bank, being also the new mortgagee of the Chius, through their solicitors Messrs. S.T. Poon & Co., a net sum of some $2.3 million, being the difference between the purchase price of $3.25 million less the then outstanding balance of about $900,000 under the Kams' mortgage with the Bank, which the Bank then discharged as being redeemed. The money from the proceeds of sale was paid into the aforesaid Standard Chartered Bank Account opened in the name of the Kams;
(7)	obtained quickly the funds in the said Standard Chartered Bank Account by causing them to be transferred out of the said Account.

3. The Kams first found out that their Flat had been "sold" in November 1994 upon Mrs. Kam inquiring from the Bank why the monthly mortgage debit from their bank account was not taking place and was then told by the Bank that the Flat had been "sold" and that the Kams' mortgage had been discharged. The fraud was then discovered and the police was brought in. Eventually the culprits were found. At the trial in the District Court before Judge Britton, extensive evidence was given and by his Reasons for Verdict dated 27th November 1995, the learned Judge convicted Crook One and Crook Two (a lady who posed as Mrs. Kam.) of conspiracy to defraud.

4. The present Action commenced in 1994 and I regret to say that it had taken three years to come to Trial. What had partly dragged the progress of this Action were two complications, namely:-

	firstly,	the second Action issued by the Bank against the Chius for the money advanced to the Chius and
	secondly,	the claim by the Bank and the intended claim by the Chius against the various firms of solicitors.

When the hearing started yesterday, I indicated that the aforesaid complications must be dealt with another day and that the Action by the Plaintiffs against the three Defendants, which is simple and straightforward, must be heard and decided immediately. This was done.

5. I have heard the evidence of Mr. and Mrs. Kam (and read their witness statements) and also that of the Police officer in charge of the criminal Trial and I accept their evidence. The Bank also tendered three Bank officers who were involved in the granting of the 2nd mortgage loan to the Chius and the discharge of the Kams' mortgage and they confirmed the truth of their Witness Statements. Their statements and evidence although of interest are not essential for the determination of the Action and because of the implications arising out of the future proceedings, I indicated to Mr. Pow and Mr. Vaughan that it would not be necessary for these Bank witnesses to be cross-examined and that it would be sufficient for the cross-examination to be reserved for some future occasion. This was accepted and accordingly the evidence of the three Bank officers were taken, recorded and there was no cross examination of these Bank witnesses.

6. On the basis of the documents I have read and the evidence I have heard, specially those adduced by the Plaintiffs I find as a fact that the Kams did not agree to sell the Flat to the Chius and had never signed in 1994 or at any time any Purchase and Sale Agreement or Assignment selling the Flat to the Chius. I also find as a fact that the Kams did not in 1994 or at any time request or authorise the Bank to discharge the Kams' mortgage. Accordingly therefore I find that the purchase documents of the Chius and the Mortgage document of the Chius are void and invalid. It follows therefore that the Chius were not and are not the owners of the Flat and had and have no right to mortgage the Flat to the Bank. The Chius who have been occupying the Flat for close to three years, must give up possession of the Flat to the rightful owners, namely Mr. and Mrs. Kam. Mr. and Mrs. Chius, the 1st and 2nd Defendants like the Bank must seek their remedy against those solicitors involved in the transactions in 1994.

7. The parties addressed me on the reliefs which should be granted and with good will on all sides, there was a large measure of agreements on the form of the orders which should be made. Having considered carefully all the circumstances, the orders I make in favour of the Plaintiffs are as follows:-

(1)	A declaration against all the Defendants that the Purchase Agreement entered into by the 1st and 2nd Defendants dated 6th October 1994 registered in the Land Registry by Memorial No. 6158037 ("the Agreement") was and is null and void on the ground that the 1st and 2nd Plaintiffs did not enter into the said Agreement and that the purported signatures of the Plaintiffs on the Agreement were forged;
(2)	A declaration against all the Defendants that the unregistered Assignment dated 1st November 1994 purporting to convey the Flat to the 1st and 2nd Defendants ("the 2nd Assignment") and/or any Assignment of the Flat executed pursuant to the said Agreement was and is null and void on the ground that the Plaintiffs did not execute any Assignment of the Flat and that any purported signatures of the 1st and 2nd Plaintiffs on any Assignment were forged;
(3)	A declaration against all the Defendants that the unregistered Mortgage of the Flat dated 1st November 1994 executed by the 1st and 2nd Defendants in favour of the 3rd Defendant ("the 2nd Mortgage") was and is null and void on the ground that the 1st and 2nd Defendants did not and do not have any title to enter into the 2nd Mortgage;
(4)	An Order against the 1st and 2nd Defendants that they do cause the registration of the said Agreement at the Land Registry under Memorial No. 6158037 to be vacated from the Land Registry;
(5)	An Order against all the Defendants that they do deliver all original copies of the said Agreement, the 2nd Assignment or any Assignment of the Flat executed pursuant to the Agreement and the 2nd Mortgage to the Plaintiffs' solicitors;
(6)	A Declaration against the 3rd Defendant that the 3rd Defendant is now holding all title deeds in relation to the Flat pursuant to the terms and conditions of the Facility Letter dated 4th June 1991 and the Mortgage of the Flat dated 5th July 1991 and registered in the Land Registry by Memorial No. 4927757;
(7)	An Order of Possession of the Flat against the 1st and 2nd Defendants;
(8)	Against the 1st and 2nd Defendants, payment of mesne profits at the rate of HK$14,500 per month from the 1st of November 1994 to the date of delivery of vacant possession together with a sum of HK$52,335.70;
(9)	Costs of Action to the Plaintiffs against the 1st, 2nd and 3rd Defendants, to be taxed if not agreed.

	William Waung
	Judge of the Court of First Instance

Representation:

Mr. Jason Pow instructed by Messrs Lau Chan & Ko for the Plaintiffs

Mr. Joseph Vaughan instructed by Messrs Chan & Tsu for the 1st & 2nd Defendants

Mr. Peter Ng instructed by Messrs Johnson Stokes and Master for the 3rd Defendant