Ma Chun-man v. Yung, Yu, Yuen & Co (A Firm)
Read the full judgment text of HCA 3451/1977 on BabelCite. This High Court CFI judgment.
1. The plaintiff, MA Chun-man, claims damages in this action against the defendant firm of solicitors in respect of what he claims to have been a breach of contractual duty arising from what he regards as negligence in the conduct of his affairs in dealing with certain documents relating to an assignment of land.
Cited by 2 cases
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HCA003451/1977
----------------- Coram: McMullin, J. in Court. Date of Judgment: 14th December, 1978. ----------------- JUDGMENT ----------------- 1. The plaintiff, MA Chun-man, claims damages in this action against the defendant firm of solicitors in respect of what he claims to have been a breach of contractual duty arising from what he regards as negligence in the conduct of his affairs in dealing with certain documents relating to an assignment of land. 2. The premises with which we are concerned in the present suit is known as Apartment E, on the 8th Floor, Lung Man Building, Ho Man Tin Street, Kowloon. That flat was owned prior to 1969 by a person called CHOI Man-bor and on the 4th of February 1969 it was assigned to CHAN Tat-cheong. I do not know whether at that date Mr. Chan was resident in Hong Kong but his whereabouts have loomed importantly in this case and it is clear that at the time of commencement of the events which have resulted in the present action he was no longer living here and was then a resident of Canada. On the 20th of March 1972 Mr. Ma, the plaintiff, in the present action purported to give a power of attorney to a Mr. CHAN Yee-pong in Hong Kong concerning these premises. In October 1972 the plaintiff, MA Chun-man, consulted the defendant solicitors concerning the sale of the premises and the power of attorney to which I have referred together with the other documents of title were presumably then produced to the lawyers who dealt with him. Mr. WONG Ting-him of that firm dealt with the plaintiff and the assignment was put through, the documents being signed by the attorney on behalf of Mr. CHAN Tat-cheong. No question was raised at that stage about the propriety of those documents. Mr. Ma, the plaintiff, entered into possession of the premises and continued to use them as proprietor thereof for another four years. Then in September 1976 he was minded to sell this flat and entered personally into negotiations with a lady by the name of Madam LEE Siu-bing. She was at that time advised by a firm of solicitors, It was at this point that he had drawn to his attention the deficiency in the documents of transfer which is the origin of the dispute between the parties in this case. It was observed, presumably by Messrs. Ford & Kwan, though they are no longer in the picture, that the assignment to Mr. CHAN Tat-cheong bore a signature which was in appearance wholly different from, the signature which appeared upon the power of attorney purportedly given by Mr. Chan in March 1972 to his attorney in Hong Kong. The signature upon the assignment to Mr. Chan is a scrawled holograph, the name T.C. Chan being clearly recognizable, whereas upon the power of attorney which appears by way of signature is the name CHAN Tat-cheong written in a fair round hand. Upon being apprised of this difficulty the plaintiff went back to Messrs. Yung, Yu, Yuen & Co. and asked for their opinion. Mr. Wong, who had dealt with him originally, reassured him and told him that the title was in order and that the signatures were sufficient. Prior to that the plaintiff's wife and mother had approached the bank with the same documents of title in order to raise a mortgage and had been refused upon the ground that there was a doubt as to these signatures. Although he had been reassured by the defendant firm, Messrs. Yung, Yu, Yuen evidently took the matter seriously enough to endeavour to get in touch with Mr. CHAN Tat-cheong in Canada. On the 4th of December they wrote a letter to the plaintiff informing him that they had tried to do so but that the then whereabouts of Mr. Chan in Canada were not known and they asked him to come and collect the deeds of title which he had left with them. The plaintiff did so and then, since there was no further help to be had from that quarter, he repaired to his present lawyers, Messrs. H.H. Lau & Co., to take advice. On the 3rd of January Messrs. H.H. Lau wrote to the defendant saying, amongst other matters, that it may be necessary, ultimately, to seek a declaration from the court to establish the validity of the title passed to the plaintiff. On the 14th of January there was a meeting at the offices of the defendant solicitors at which those in attendance were a clerk of Messrs. H.H. Lau, the plaintiff and Mr. Wong of the defendant solicitors firm. Once again Mr. Wong reiterated his opinion that the papers had been in order and that there should therefore be no present cloud upon the title. There was some difficulty at this point in contacting the solicitors in Canada who had dealt with the making of the power of attorney which had been used in the assignment to the plaintiff and it was necessary to contact the Registrar of the Supreme Court of Toronto and ultimately the address of the attorney was obtained. The Canadian lawyers were Messrs. Kan & Mark. On the 4th of February Messrs. H.H. Lau wrote to that firm asking for an affidavit which would identify the T.C. Chan who had signed the power of attorney. A reply was received to that on the 22nd of February and an affidavit was attached to that reply. This affidavit was a slight further amplification of the form of affidavit originally appended to the power of attended by Mr. Mark in Canada at the time of the making of that power. In the subsequent affidavit he purported to identify the person who had attended at his chambers on that occasion as a person known to him as CHAN Tat-cheong with whom he had had previous business dealings. On the 2nd of March Messrs. H.H. Lau wrote to Mr. Mark in Canada informing them, amongst other matters, that it might be that a declaration would be required if the lawyers then acting for the purchaser wished for such a thing. It is not clear just who were the lawyers were who were then acting for the purchaser or whether at that stage Messrs. Ford & Kwan had already disappeared from the picture. Nor is there any evidence to show that any lawyer who was at that stage acting for the purchaser, Madam Lee, or for the prospective vendor had suggested obtaining a declaratory order. Then on the 28th of March Messrs. Yeung & Ko, the lawyers who since then have been acting for the purchaser, come into the story and a letter of that date repeats to Messrs. H.H. Lau the terms of the original arrangement made between Mr. Ma, the plaintiff, and Madam Lee viz.: an offer to purchase of the premises for a sum of $238,000. On the 31st of March Messrs. H.H. Lau replied saying that these terms were acceptable and with that letter there were sent various documents of title and also the second affidavit made by Mr. Mark in Canada. Then on the 4th of April a letter was sent by Messrs. Yeung & Ko to Messrs. H.H. Lau which is somewhat remarkable in that it notes, as though it were for the first time, that they have seen the discrepancy in the signatures and saying that the affidavit sent by Mr. Mark from Canada in February does not appear to them to eliminate the difficulty. In this letter they positively require a declaration by the court. On the 14th of April Messrs. H.H. Lau wrote to Messrs. Yeung & Ko and it is of some interest to note that in this letter they are taking what might be described as the Yung, Yu, & Yuen line inasmuch as they say that they are advised by counsel that in the executing of a power of attorney it is not necessary for the person attesting the donor signature to verify the donor's signature and that all that is necessary is to ensure that the person executing the power of attorney is in fact the person he purports to be. They develop that theme at a little further length and conclude by saying that since the second affidavit sent by Mr. Mark has now been registered in the Land Office they regard the title of the prospective vendor, Mr. Ma, as not capable of being impugned. I should perhaps add that in a later letter they do nevertheless take issue with a suggestion, made by the Canadian solicitors, that too much of a fuss is being made about the affair and they support the attitude of Messrs. Yeung & Ko in respect of the difficulty encountered over the signatures. Then on the 2nd of May Messrs. H.H. Lau wrote again to Mr. Mark in Canada saying that Messrs. Yeung & Ko insist upon a declaration and they asked that they should be given the address of Mr. CHAN Tat-cheong. A similar letter was sent by them on the same day to Messrs. Yung, Yu, Yuen and one in somewhat similar terms to Messrs. Yeung & Ko suggesting that, in view of the possibility that service out of the jurisdiction will be necessary if a declaratory order is to be sought, a further two months delay in finalising matters may be expected. On the 11th of May Mr. Mark wrote to Messrs. H.H. Lau suggesting that very much is being made over a matter of not great importance. This is the letter to which I have already referred and which drew from Messrs. H.H. Lau a rejoinder that they did not agree with that view. On the 28th of May Messrs. H.H. Lau wrote to Messrs. Yeung & Ko informing them that a writ had been issued claiming a declaratory order and suggesting that instead of that procedure a more convenient and less expensive method of overcoming the difficulty would be to obtain a confirmatory assignment from Mr. CHAN Tat-cheong in Canada. That is the date upon which, as I understand it, for the first time this alternative method was suggested. A letter was written by Messrs. H.H. Lau on the same day to Mr. Mark in Canada suggesting a confirmatory assignment. On the 3rd of June Messrs. Yeung & Ko agreed in principle to this suggestion and this fact was conveyed to Mr. Mark in Canada on the 4th of July by Messrs. H.H. Lau. On the 11th of July Mr. Mark replied on behalf of Mr. CHAN Tat-cheong agreeing to the suggestion subject to certain qualifications. On the 23rd of July Messrs. H.H. Lau wrote to Messrs. Yeung & Ko sending with that letter the draft confirmatory deed and informing them that their client will pay for the costs thereof and will later claim back such costs from the present defendants. In September on a date not established Mr. Mark sent a signed confirmatory agreement together with a form of certification to Messrs. H.H. Lau. Then on the 3rd of October Messrs. Yeung & Ko sent to the solicitors of Madam Lee an assignment drawn up by them together with a cheque for $238,000. On the 6th of October that is returned to them by Messrs. H.H. Lau duly executed. There is then a letter of the 14th of October from Messrs. H.H. Lau to the present defendant claiming re-imbursement of loss and expenses incurred by the delay in selling the property and this draws a response on the 18th of October which is in effect a total denial of liability. 3. That is the outline of the circumstances behind the present dispute. As a preliminary observation it must be said that in the end all was well. The CHAN Tat-cheong who had written the name upon the power of attorney turns out to be the same T.C. Chan who had affixed that signature to the assignment in 1972. Nevertheless as a mere sequence of cause and effect it is clear that this year's delay between the first treating between Madam Lee and the plaintiff and the final assignment to Madam Lee was occasioned by the discrepancy in the signatures. The question remains whether the failure to inquire into that discrepancy and to resolve it by effective means if possible amounts to such an act of negligence as to found an action for breach of the contractual duty to take reasonable care. 4. The plaintiff gave brief evidence confirming, on the major points, the facts I have already outlined and which appear from the correspondence. No evidence was given on behalf of the defence. Because of this Mr. Mumford for the plaintiff says that it is not now open to the defendants to put their case on the basis of a conscious discounting of the discrepancy between the signatures rather than upon the ground of oversight. If there was an oversight then, on counsel's view, cadit quaestio, there must have been negligence. This argument if it were accepted it at its extreme would in effect eliminate a great deal of Mr. Chang's reply in defence of his client. That argument turns upon what counsel maintains a reasonable solicitor would have done, and would have been entitled to do, confronted with documents of the kind already described and also aware of the discrepancy between the signatures on the assignment and on the power of attorney. Now I think Mr. Mumford is right when he asks me to hold on the balance of probabilities that the failure to take action in respect of the two differing signatures in 1972 was the result of oversight and was not a conscious choice by a professional man taking the view that the differences were immaterial. 5. As to the signatures themselves there is no question that they are very different in character and that even the most cursory examination of the documents upon which they appear must have brought the difference to the attention of any person who was even moderately attentive to the details of those documents. Nevertheless I think the argument of Mr. Mumford goes too far. Clearly, it may be said that any oversight implies some degree of negligence but the question confronting this court is whether there is negligence of such a degree as to ground a claim in damages for breach of that contractual duty which, by common assent of all parties, is the duty of a solicitor to take reasonable care and to exert reasonable diligence in dealing with his client's affairs. To put the matter in another way, can it be said that the discrepancy which existed between the signatures was one of such materiality to the title of the purporting vendor as to justify the hesitations of all the subsequent solicitors who dealt with the parties. Even if I must assume, as indeed I do, that there was an oversight, the defendants are not to be made liable for all subsequent detriment of which that oversight was the initiating factor unless the plaintiff shows that the consternation which that oversight caused and the remedial steps taken in respect thereof were justified and necessary. 6. Now it has been argued by Mr. Chang, indeed I think it may be said that it was his fundamental contention, that in the circumstances of this case the question of the signatures was of comparative unimportance. Primarily, he said, what was important in respect of the power of attorney was that the Canadian lawyer should have satisfied himself as to the identity of the person presenting himself before him and purporting to issue such a power in favour of a named person in Hong Kong. I cannot agree with that view and I should say at once that in my view this discrepancy of signatures was one both of importance and materiality to the validity of the plaintiff's title. A power of attorney is a powerful and effective document to affect proprietary rights. In circumstances such as the present it constitutes one vital link in the transmission of valuable property. All persons, but particularly qualified solicitors, charged with the necessity of examining such a power in preparation for drawing up documents of assignment should be careful to satisfy themselves as to the material parts thereof and in particular as to the identity of donor and donee. Thus even if I were to say that the defendants' solicitor in 1972 had been aware of the discrepancy and had made a positive decision to discount it the question would still arise whether that amounted to a negligent act in the failure to bring this discrepancy to the attention of his client and either advise counsel's opinion or take his client's advice as to whether counsel's opinion should be sought. On that matter counsel on both sides referred me to a passage in Charlesworth on Negligence, 6th Edition, at page 603 in paragraph 1007:
Mr. Chang's argument goes as follows: he points out that the power of attorney has appended to it the original affidavit of Mr. Mark put there in 1972 specifically identifying the person before him as the donor of the power; secondly, he says that it is the identity of the donor and not the nature of the signature which is the matter of importance; thirdly, he says in any event it is not always invariably essential to have the signature of an assignor upon an assignment; forthly he says that in these circumstances where the donee turns up in Hong Kong clad with all the indicia of proper title: the title deeds, the power of attorney and the affidavit, the possibility of fraud must be remote. He points out, that in any event, counsel at one stage instructed by the plaintiff's solicitors was also of the opinion that the identity of the donor and not the nature of the signature was what mattered. 7. It was a careful and well articulated argument and I think much of what was said therein may be telling on the question of quantum of damage. But I think the answer to it is the answer given by Mr. Mumford when he points out that here, upon the documents before the solicitors in 1972, there was a patent cloud which could affect the title which was sought to be passed. It is not, he says, merely a question of being satisfied that the attesting authority before whom the power of attorney is made is himself satisfied as to the identity of the person before him. What is important, according to counsel, is that on the very papers presented for the purpose of this important transaction there appears a contradiction in the form of an assertion that a particular person is said to be the donor of the power and is identified not merely by the affidavit which accompanies the power but by a particular form of signature appearing on the power itself, purporting to be that of the donor, while in the document of assignment, consulted at the same time, a wholly different and discrepant signature appears. That to my mind is the root of the matter. Had this discongruence been then observed I cannot believe that it would not have been questioned. It may well be, as Mr. Chang says, that signatures may vary with the passage of time and moreover that, especially in Hong Kong, different forms may be employed to render in English the romanized version of a Chinese name. For all that, a personal signature bearing as it does the special impress of its user's identity, retains, under all variations of custom or usuage, its essential significance as the pre-eminent authenticating mark. The failure to note the plain dissimilarity in the signatures and the possible danger it might pose to good title can be said to amount to that "crassa negligentia" referred to by Lord Ellenborough in the passage quoted in paragraph 1006 of Charlesworth to which counsel have referred. I am not disposed to say that the three separate firms of solicitors who later were involved with Mr. Chan and Madam Lee and their affairs were unreasonable in seeking to have this doubt cleared up. For these reasons, therefore, I hold that there was an actionable degree of negligence involved in the passing of the documents and the conclusion of the transaction in 1972 arising from the failure to notice a defect which was patent upon the documents and which might legitimately be made the subject of question by any later purchaser and which was in fact so made. 8. The question, however, which is of more difficulty concerns damages. What is claimed is claimed by way of special damage. The writ does display a claim for general damages but that was not pursued and in the circumstances no such claim would, I think, be viable. 9. What is claimed is, firstly, interest on the purchase price of $238,000 from the 1st of October 1976 - the approximate date of the original offer to purchase - up to the 30th of September 1977 at 8%. At this point I must refer again to certain of the matters stressed by Mr. Chang in the background of the affair. 10. Firstly, there is the fact that the plaintiff was in undisputed occupation of these premises for a period of four years following upon the negotiation involving the use of the suspect power of attorney and it might therefore reasonably be said that the likelihood of fraud having occurred was, at that point in time, not very great. I think that is of importance in relation to the kind of steps that might reasonably have been taken by any of the solicitors who were later involved with the further transfer of those premises bearing in mind such reasonable apprehensions as they may have had as to the solidity of title. 11. Secondly, it must be said that the remedial action which was eventually taken was, in all the circumstances, somewhat drastic. At one point it is clear that Messrs. H.H. Lau were themselves sanguine of the possibility that a simple form of affidavit would clear up the whole matter. To my way of thinking that was a very reasonable attitude to take. In the event a form of affidavit was solicited which was not accepted by Messrs. Yeung & Ko and I think Mr. Chang himself would not argue that it had had put the matter very much further. Indeed, it was part of his argument that that affidavit did not greatly amplify the force of the original affidavit appended to the power of attorney. What was lacking, and what I think might readily have been produced, was a form of affidavit by Mr. CHAN Tat-cheong himself. It should not have been too difficult to deal convincingly with the apprehensions of the lawyers in Hong Kong. Such an affidavit would have dwelt upon the reasons for using the signature which he had put to the power of attorney; identifying that as his, and affording information which would assist further in the identification of himself with the registered proprietor of the premises in Hong Kong; referring, perhaps to any identity card of which there was record in Hong Kong and including a variety of possible information bearing on his connection with the Colony which would have been sufficiently ample and clear to satisfy the fears of even the most meticulous solicitor and the most nervous purchaser. 12. Thirdly, it is to be noted that, in the end, the deed of confirmatory assignment, itself a comparatively simple form of procedure, was only contemplated some six or seven months after the difficulty had arisen. It is true that there was some initial difficulty in discovering the whereabouts of Mr. CHAN Tat-cheong but there never has been a suggestion that he was in hiding or he was in any way a furtive or fugitive person. I am satisfied that he could have been speedily located and I cannot believe that had any of the solicitors who were concerned in this matter on behalf of the plaintiff been quick to consider a simple method of confirming the validity of the power of attorney that that could not have been done by either of those methods, either by an ample affidavit or by a confirmatory assignment, within a comparatively short period. 13. Fourthly, as Mr. Chang points out, the plaintiff moved out of the premises very early; I think sometime in September 1977. He need not have done so and thus put himself to the necessity of finding alternative accommodation once it was apparent that there was to be a delay of uncertain duration arising from the hesitations of the lawyers. I think there is substance in that. There is also the fact that at a certain stage in the proceedings an offer was made to Madam Lee to move into the premises upon paying a deposit. One realises, of course, that affecting that offer was the stated apprehension that in doing so she might commit herself to approving a title which later might turn out to be unreal. I do not think that that was an insuperable objection since, in my opinion, by the time that offer was made the likelihood of a fraudulent plot coming to light must have seemed fairly remote. For these reasons therefore I do not think that the measure of damage can be anything like that which has been claimed and making the best I can of it I take the view that following from what I have deemed to have been the negligent act of the defendants it would be reasonable to allow, from the time that the first query was raised, a period of about three months during which the steps that I have referred to might well have been taken by any one of the various solicitors firms which had become by then concerned with the arrangements between Madam Lee and the plaintiff. 14. I allow therefore three months under the first head of claim as the period during which it may be said that the plaintiff was held out of the purchase price of $238,000 and I allow interest on that sum at a rate of 6%. This comes to a figure of $3,570. A figure of $2,833 is agreed between counsel under the third head of damage viz.: Legal expenses. This with the other smaller claims for which there are now also agreed figures, differing from those claimed, comes to $3,372.84. On this latter figure only interest will be allowed at a rate of 6% from the date of the writ.
Representation: E.C. Mumford, instructed by (H.H. Lau & Co.) for the plaintiff. Dennis Chang & D. Yam, instructed by (David Y.Y. Fung & Co.) for the defendant. |
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