Cheung Pik Wan and Another v. Tong Sau Ping and Others
Read the full judgment text of HCA 3867/1984 on BabelCite. This High Court CFI judgment.
1. This unfortunate case concerns the ownership of Flat 5, and the Flat Roof on the First Floor of Union Building, 160 Sha Tsui Road, Tsuen Wan (the flat). The 2nd plaintiff has taken no active part in the proceedings and I have seen no document explaining her presence. So I shall call the 1st plaintiff the plaintiff. The plaintiff seeks the avoidance of an assignment of the flat by the 1st defendant to the 2nd and 3rd defendants jointly dated 1st February 1982, and of the contemporaneous mortga
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HCA003867/1984 1984, No. 3867 IN THE SUPREME COURT OF HONG KONG HIGH COURT ________ BETWEEN
_____________ Coram: Hon. Hunter, J. Dates of hearing: 10th, 11th, 14th-16th, 21st-23rd, April 1986. Date of delivery of judgement: 23rd May 1986 ___________ JUDGMENT ___________ 1. This unfortunate case concerns the ownership of Flat 5, and the Flat Roof on the First Floor of Union Building, 160 Sha Tsui Road, Tsuen Wan (the flat). The 2nd plaintiff has taken no active part in the proceedings and I have seen no document explaining her presence. So I shall call the 1st plaintiff the plaintiff. The plaintiff seeks the avoidance of an assignment of the flat by the 1st defendant to the 2nd and 3rd defendants jointly dated 1st February 1982, and of the contemporaneous mortgage by the 2nd and 3rd defendants to the 4th defendant. The 1st defendant left for the United States when trouble broke and has taken no part in the suit. The 4th defendant has settled its dispute with the 2nd and 3rd defendants on financial terms, and has offered no active resistence to the plaintiff. What remains in issue is the ownership of the flat of which the 2nd and 3rd defendants claim to be bona fide purchasers for value without notice. 2. The basic facts are these. The plaintiff came to Hong Kong from Mainland China in 1964. She is illiterate: has received little or no education: and then spoke only her native Fu Chow dialect and no Cantonese. She worked and saved, and with such savings bought the flat on 30th January 1973. She married a seaman, who some years ago seems to have jumped ship in the U. S. A. Their children likewise went to the U.S.A. in circumstances not fully explained. In 1978 she resolved to try to visit the United States in order to see them. 3. She was introduced to a travel agency, Mayfair Enterprises Co. at 554/556 Nathan Road. This was run by the late Lo Cho Lim (Lo) and his 2nd wife, the 1st defendant. Lo and the 2nd defendant are half brothers, being respectively the children of their mother's 1st and 2nd marriages. To comp1ste the relationships, the 3rd defendant is an English speaking Chinese woman from Singapore who married the 2nd defendant on 2nd April 1982. 4. It was bluntly suggested to the plaintiff in cross-examination by counsel for the 2nd and 3rd defendants, that she went to this agency in the hope and expectation that it would procure her illegal entry into the U.S.A. This she denied. The 2nd defendant returned to Hong Kong in March/April 1979, having comp1sted his education in England by graduating with a degree in Applied Economics. He was unable to find a regular employment as a teacher until November 1980. During the intervening period (save for one specific tour) he denied that he had worked for the agency. But it is clear that he spent a good deal of his time there 'helping out' and must have learnt much about it. He also denied that the agency was indulging in illegal activities, and that this suggestion had been put on his instructions. Beyond noting that the agency in fact later procured, unknown to her, the entry of plaintiff illegally into the U.S., I must take it that its business was basically legitimate. 5. The basic history of the flat and of the parties' dealings with it following the plaintiff's introduction to the 1st defendant was never seriously in issue and the main events in the story can be summarised as follows:-
6. In these circumstances the issues of fact and law which arise for determination and which I will consider in turn can be formulated as follows:-
1. Fraud 7. I have no doubt at all that the 1st defendant was fraudulent. I think she recognized the plaintiff as a simple uneducated woman, who was isolated by her illiteracy and very limited ability to understand or to make herself understood in Cantonese. She could readily be influenced or imposed upon. The 1st defendant and Lo had, I think, little difficulty in persuading the plaintiff initially to part with her deeds upon the pretext that they were needed to demonstrate her wealth and good standing to the United States Immigration Authorities. These deeds represented to the plaintiff her life savings and her future security. In parting with them I suspect that she made clear to the 1st defendant both her simplicity and gullibility, her apprehensions and the deeds' value. I am satisfied that the 1st defendant obtained possession of the deeds on the second occasion on the simple excuse that they were needed to 'process' the plaintiff's application and would be carefully preserved and returned. There was no truth in this. In reality the 1st defendant's intention was to use them to obtain money for herself. The speed with which she took the comp1sted Power to her bankers: and the total absence of any need for such a Power, and of any attempt to make legitimate use of it really speak for themselves. 8. Conversely there is no evidence directly to implicate the 2nd defendant in this fraud. I think during his period of unemployment he was much closer to the agency than he admitted. I further find that he in fact drove both the plaintiff and the 1st defendant to the airport on 1st January 1981 because on his mother's evidence there was ample time for him to do that and to visit his father's grave. But association with the business, and with this particular fraud, are two very different things. 2. Non est factum 9. This raises difficult questions of fact and the law. On the facts there was a comp1ste conflict between the evidence of the plaintiff and of the three members of the solicitors' firm who were concerned with the preparation and execution of the Power of Attorney. This has not been easy to resolve. The plaintiff made a mixed impression in the witness box. I did not doubt the truth of the hard core of her evidence, but her palpable anxiety and limited experience and education, raised some serious questions on points of detail. To the members of the firm this was a piece of transient business conducted seven years ago. None had, nor could be expected to have, any direct recollection. They were forced to try to reconstruct the events with the assistance of the file and their then usual practice. Counsel for the 2nd and 3rd defendants was unable in cross-examination of the plaintiff to start to canvass the full differences between the two accounts because lamentably no proper proofs were then in her possession. A lot of relevant questions were either not asked or misdirected. 10. The fundamental difference and conflict between the two accounts emerged as one of timing. The firm's account was that the whole operation occupied the best part of two hours on the day in question, 11th September, during the whole of which time two women said to be the plaintiff and the 1st defendant were present in the firm's offices. There were four stages to it namely:-
11. By contrast the plaintiff's account corresponded with this in time and content only at Stage 3. She said that she was persuaded to agree to sign what the 1st defendant called a 1stter of guarantee, which was to ensure that when all the procedures associated with her trip were comp1sted her documents would be returned to her. This was at the agency. She then accompanied the 1st defendant to an office across the road where she remembered seeing a man behind a desk in his office who must have been Mr kwan, the solicitor. A piece of paper, by which she later showed she meant a document similar to the Power of Attorney folded so that the last page was exposed, was put before her which she signed. There was little or no conversation with the man: and she was emphatic in rejecting any suggestion of receiving any explanation or translation from a woman. Shortly after this she left without recollecting seeing anyone else sign and leaving the 1st defendant behind. 12. Upon a consideration of the whole evidence I have, for a number of reasons, reached the conclusion that the plaintiff is right when she says that she was in this office basically for the brief period of execution only. First, this whole affair was being stage managed by the 1st defendant, and this is exactly what she would want to bring about. She would wish to reduce to a minimum the chances of the plaintiff discovering the true nature of the document. Secondly both Miss Li and Miss So conducted their conversations in Cantonese. The bulk of these must have been beyond the plaintiff's understanding. In particular any sort of translation or explanation of a document as complex as this would have been valueless to her in Cantonese. If the plaintiff had attempted to speak to them in Cantonese she must, I think, have revealed her Fu Chow dialect and limited understanding. But very unfortunately this did not happen. I am not persuaded that the ladies' reconstructed recollection is right when they say they receive instructions from and spoke to not the 1st defendant alone, but the plaintiff and the 1st defendant together. They were conscious they said of the importance of receiving the plaintiff's instructions as donor and of her understanding the contents of the document. I simply do not see how this could have happened in fact either with the plaintiff being totally silent or without her dialect being revealed. 13. Thirdly it is not, I think, without significance that all the information recorded in Miss Li's memorandum could have come from the 1st defendant alone and from the deeds she then had in her possession. The falsity of the plaintiff's recorded address is significant. Miss Li said that this came from the 1st defendant. I accept that, but I cannot believe that at the time she regarded this as an accommodation address for the plaintiff but as a residential address for the 1st defendant. The giving of this address by the 1st defendant is calculated to have involved the use of comparatively simply Cantonese which the plaintiff might have understood. This suggests to my mind that she was not there to hear it, and the presence of this address in the memorandum and later in the Power of Attorney points to lack of understanding on the plaintiff's part. Fourthly the Power of Attorney itself and the solicitor's account were, I am sure, taken and kept, and the latter paid, by the 1st defendant. This is consistent with the plaintiff's account of leaving at the end of Stage 3. 14. On the whole of the evidence, I am satisfied that when the plaintiff put her signature upon this Power of Attorney, which she could not read, she had no idea of its true contents because she had given no instructions for its preparation and had received no translation or explanation she could understand. By reason of the fraud of the 1st defendant, whom she then trusted, she thought she was doing no more than signing a document which safeguarded the future return of her documents. I am therefore satisfied that the first essential ingredient in a plea of non est factum as set out in Gallie v. Lee (1971) AC 1004 is made out, because the document she signed bore no relation at all to that which she thought that she was signing. In the words of Lord Wilberforce: 'the element of consent to it is totally lacking'. p. 1026. 15. This brings me to the much more difficult question which Lord Wilberforce describes as the laws 'dilemma' when it is faced with persons who are 'illiterate or blind or lacking in understanding' p. 1027. His conclusion is that: 'the law ought ....... to give relief if satisfied that consent was truly lacking but will require of signers even in this class that they act responsibility and carefully according to their circumstances (my emphasis) in putting their signature to legal documents'. The narrowness of this plea has frequently been emphasized. This limitation readily defeats the man who could have read the document but in fact chooses or fails to do so: Avon Finance Co. Limited v. Bridger (a 1979 decision) (1985) 2 All E.R. 281. It might also operate against a blind man who spoke the same language as the draftsman or proferor of the document, but chooses to ask no questions. I have to consider this question of carelessness in a very particular context, which I suspect was not remotely in their Lordship's minds, of the doubly disabled lady who could neither read the document nor understand the draftsman's Cantonese. Was she careless in failing to make any real inquiry of anyone other than the 1st defendant? Was she careless in trusting the 1st defendant and in allowing herself to be guided solely by her? 16. In Gallie v. Lee Lord Pearson approved two directions to juries given in 19th century cases, p. 1037. First in Vorley v. Cooke (1857) 1 Giffard 230, 236-237, Stuart V-C said: "He was deceived, as anyone with the ordinary amount of intelligence and caution would have been deceived, and he is therefore entitled to be relieved". In Lewis v. Clay (1898) 67 L.J.Q.B. 224, 225, Lord Russell of Killowen C.J. left this question to the jury : "Was the defendant, in signing his name as he did, recklessly careless, and did he thereby enable Lord W.N. to perpetrate the fraud?" It is my belief that a jury so directed here would conclude that it was not careless, or 'recklessly careless' of this plaintiff to be deceived by the 1st defendant, and I so hold. 17. It follows in my judgement that this plea succeeds and that both the Power of Attorney and the assignment of 1st February 1982 are void. Although this conclusion suffices for the determination of this case, I think it right to proceed to express my views upon the last question. 3. Bona fide purchase 18. Notwithstanding my finding that the 1st defendant procured the execution of the Power of Attorney by fraud, the document would then be voidable only, and the assignment of 1st February 1982 to the 2nd and 3rd defendants would be valid if they were bona fide purchasers for value. They plainly gave value by their discharge of the Kwangtong Provincial Bank mortgage out of their borrowings from the 4th defendant. What is in issue is their bona fides. More particularly what is in issue is the bona fides of the 2nd defendant. The 3rd defendant left all arrangements to him and he throughout was dealing with the matter for both. Notice to him is notice to both. An inquiry into bona fides here raises not only the absence of notice; "genuine and honest absence of notice" but the whole conscience of the buyers, per Lord Wilberforce in Midland Bank Trust v. Green (1981) AC 513, 528. 19. Having very carefully considered the whole of the evidence I have reached the conclusion that the 2nd and 3rd defendants cannot be regarded as bona fide purchasers and I so hold. I shall now attempt as shortly as I can to summarise my reasons for so concluding.
20. I am not satisfied by this evidence. I do not accept that this sale was agreed at $240,000. I think it was probably agreed at a sum very much closer to that required to discharge the 1st defendant's liability under the first mortgage. It was a considerable benefit to her to be relieved of this liability. Why the 2nd defendant took the risk of this transaction I do not know. The flat was cheap, and he may perhaps have believed that which he later asserted in an affirmation in the District Court proceedings dated 16th July 1984, namely that the statutory declaration and section 5(4) of the Powers of Attorney Ordinance combined to operate "conclusively" in his favour. 21. Accordingly in my judgement this defence fails. I will hear counsel upon the appropriate relief. 22. I cannot leave this case without referring to procedure. When it was first called on three bundles of documents were handed in labelled respectively plaintiff's documents, 2nd and 3rd defendant's documents and 4th defendant's documents. The defendants' bundles were each substantial and there was massive duplication between them. Each bundle was differently put together. None, as I recollect it, was done properly, namely, simply and consistently in chronological order. 23. The court should not have repeatedly to have to emphasize that it is the duty of all solicitors concerned in a case to co-operate in the preparation before the hearing of one single bundle (if necessary in more than one part) containing all documents, the authenticity of which is not in dispute, and assembled in chronological order. This simple mechanical exercise is a practical necessity, because almost invariably it leads to a quicker understanding and resolution of the problem, and therefore to a saving in costs. 24. The duty in this case was wholly ignored. Counsel's opening with three different bundles was made very difficult: the calling of evidence which involved sensible reference to documents was impossible. I then made two orders:
25. On the second day I was presented with a single composite bundle. Duplicates had been removed from this, but unbelievably no one had started to assemble the residue in chronological order. The solicitors concerned had either not listened to or not understood what had been said on the first day; and counsel had apparently made no contribution. Thereafter everybody had to suffer the considerable inconvenience of this bundle for the rest of the trial. In these circumstances, the first day's costs were thrown away to very little purpose. The least I can do is likewise to disallow all costs incurred in the preparation of this composite bundle. But I wish to make it clear that should this occur again I shall seriously consider ordering those responsible personally to pay the costs thrown away. 26. This may be symptomatic of a deeper problem. This was a running list case. The documentation was not the only manifestation of lack of proper preparation and readiness for trial. Nor was this an isolated example. I do respectfully urge the professions to address themselves to the problems of running list cases coming on for trial in a state which is no credit to them or fair to the litigants.
Representation: Mr. Wesley Wong instructed by M/S Wing Sum Lo & Co. for Plaintiffs. 1st Defendant absent. Miss Sze Kin instructed by M/S Howell & Lo for 2nd and 3rd Defendants. Mr. K.M. Chong instructed by M/S Alfred Lau & Co. for 4th Defendant. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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