Wong Hung Yuen v. John Fang

HCA011795/1999

HCA11795/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO.11795 OF 1999

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Coram: Deputy High Court Judge S. Kwan in Chambers

Date of Hearing: 17 November 2000

Date of Handing Down Judgment: 14 December 2000

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J U D G M E N T

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1. This is an appeal from the decision of Master Johnson Lam made on 22 August 2000 whereby he ordered that the Statement of Claim endorsed on the Writ of Summons be struck out on the ground that the plaintiff's cause of action was time-barred under the Limitation Ordinance, Cap.347. The master's order was made as a result of a summons taken out by the defendant on 16 June 2000 in which the defendant sought determination of two questions of law under O.14A of the Rules of the High Court, namely :

(1) whether the plaintiff's cause of action was time-barred under section 4 of Cap.347; and

(2) whether the plaintiff's cause of action was time-barred under section 31 of Cap.347.

In the event these questions were answered in the defendant's favour, the defendant sought an order that the action be dismissed. Alternatively, the defendant sought to strike out the Statement of Claim as being frivolous or vexatious or an abuse of the process of the court on the ground that it set up a cause of action which was time-barred by section 4 and/or section 31 of Cap.347.

2. Prior to the hearing of this appeal, the plaintiff has been acting in person. For this appeal, he was represented by Mr Albert Yau on a pro bono basis on the Free Legal Service of the Bar Association. Mr Walter Lee of the defendant's solicitors appeared for the defendant in this appeal and before the master.

3. The background matters and undisputed facts may be given as follows.

4. On 19 April 1988, the plaintiff signed an agreement for sale and purchase ("the Agreement") with Mr Chau Wing Sang whereby the plaintiff agreed to sell and Mr Chau agreed to purchase the property known as Flat C, 9/F, Capital Building, 89 Un Chau Street, Kowloon ("the Property") at HK$520,000.00. The defendant, who had acted for both the plaintiff and Mr Chau in the sale and purchase of the Property, prepared the Agreement. Completion was to take place on 9 June 1988. On the signing of the Agreement, 10% of the purchase price, being HK$52,000.00, was paid by Mr Chau to the defendant as stakeholders.

5. The Agreement contained, inter alia, the following provisions :

"4. Time shall in every respect be of the essence of this Agreement.

....

6. (a) The Vendor [the plaintiff] declares that Messrs J. Fang & Co. [the defendant] are the Vendor's Agents for the purposes of receiving all monies payable to the Vendor pursuant to this Agreement including the balance of the purchase money payable upon completion and (where necessary) for the purpose of applying monies so received for the redemption of any existing mortgage or charge.

(b) The Vendor further declares that the payment to such Agents of any deposit, instalments of the purchase monies and the balance thereof (if any) shall be a full and sufficient discharge of the Purchaser's [Mr Chau's] obligations hereunder.

....

19. The parties hereto are aware that the Property is presently subject to a Mortgage/Charge more particularly described in Part VIII of the Schedule hereto in favour of the Mortgagee/Chargee therein mentioned. The Vendor undertake to the Purchaser that the Vendor shall on or before completion of the sale and purchase of the Property pay to the Mortgagee the amount required to obtain a release of the Property and the Purchaser agrees to the release of the deposit money to the Vendor/Messrs J. Fang & Co. ('the Solicitors') shall write or have already written to the Mortgagee enquiring for the amount payable to obtain a release of the Property and the deposit or deposits paid hereunder shall be held by the Solicitors as stakeholders pending confirmation by the Mortgagee of the amount so payable to the Mortgage. Upon receipt of confirmation from the Mortgagee of the amount so payable .... the Solicitors shall (if necessary) continue to retain pending completion the said deposit or deposits or part thereof in the stakeholder's account to ensure that such sums so retained plus the balance of the purchase price payable by the Purchaser on completion are sufficient to pay off the amount payable to the Mortgagee to obtain a release of the Property ... The said deposit or deposits or the balance thereof which need not be so retained in the said stakeholder's account shall forthwith be released to the Vendor.

20. (a) The parties hereto are fully aware that Messrs J. Fang & Co. ('the Solicitors') have not yet perused the title deeds and documents in respect of the Property. The parties hereto agree that the deposit paid on signing of this Agreement ... shall be held by the Solicitors as stakeholders pending the perusal of such title deeds and documents.

....

(c) If the Solicitors shall be satisfied with the Vendor's title, then subject to Sub-Clause (d) of this Clause 20, the deposit shall be released to the Vendor.

(d) If the Property shall be found to be subject to a Mortgage or Charge, the Solicitors shall write to the Mortgagee or Chargee to enquire about the amount payable on redemption of the said Mortgage or Charge. Upon receipt of confirmation from the Mortgagee or Chargee of the amount payable on redemption .... the Solicitors shall (if necessary) continue to retain pending completion the said deposit or deposits paid hereunder or part thereof in the stakeholders' account to ensure that such sums so retained plus the balance of the purchase price payable by the Purchaser on completion are sufficient to pay off the amount payable on redemption of the said Mortgage or Charge .... The said deposit or deposits paid hereunder or the balance thereof which need not be so retained in the said stakeholders' account shall forthwith be released to the Vendor.

....

23. The Vendor undertakes to obtain the discharge of the Charging Order as more particularly described in Part V of the Schedule hereto and to pay all the costs and expenses of and incidental to obtain such discharge and will keep the Purchaser indemnified from and against all actions, suits, expenses, claims and demands whatsoever on account of the failure to obtain the discharge of the Charging Order."

It was provided in Part VIII of the Schedule to the Agreement that the Property was mortgaged to a bank to secure an amount of HK$250,000.00. It was provided in Part V of the Schedule that the Property was subject to a charging order. It was not stated in the Agreement what was the amount of the judgment debt for which the charging order was imposed.

6. The plaintiff requested the defendant to release the deposit of HK$52,000.00 to him, but the defendant refused to do so. Completion did not take place on 9 June 1988 as scheduled. On 23 June 1988, the defendant wrote to the plaintiff stating that they were instructed by Mr Chau to give him notice that Mr Chau would attend the defendant's office on 27 June 1988 for "putting through the transactions herein" and requested the plaintiff to attend. The plaintiff attended the defendant's office as requested. He was asked to complete the transaction for sale and purchase and he refused to do so.

7. Mr Chau issued a writ against the plaintiff on 27 April 1990 seeking specific performance of the Agreement. By then, Mr Chau was represented by new solicitors and the plaintiff was also represented by new solicitors and counsel. The plaintiff resisted Mr Chau's claim for specific performance. Judgment was given by Godfrey J (as he then was) on 9 August 1993 in favour of Mr Chau. Godfrey J rejected the defence put up by the plaintiff of a verbal collateral agreement made between him and Mr Leung King Kong ("Mr Leung"), the defendant's clerk, on behalf of Mr Chau. According to the plaintiff, the collateral agreement was to the effect that Mr Leung promised to release the deposit to him within seven or at most ten days' time of the signing of the Agreement. The judge was not satisfied that there was a collateral agreement to this effect.

8. Two days after judgment was delivered, the plaintiff applied for legal aid to appeal against the judgment. He made repeated applications for legal aid notwithstanding refusal by the Legal Aid Department. This resulted in a letter from the Legal Aid Department to the plaintiff dated 7 November 1995 whereby the Director of Legal Aid exercised his power under section 11 of the Legal Aid Regulations as it had appeared to the Director that the plaintiff's conduct had amounted to an abuse of the facilities provided by the Ordinance, and the Director ordered that no consideration should be given to any future application for legal aid by the plaintiff within three years of the date of that letter.

9. The plaintiff took his complaint elsewhere and approached the ICAC and the Law Society. Between 1993 and 1998, he refused to comply with the court order and to execute an assignment of the Property in favour of Mr Chau. Eventually, an assignment dated 21 May 1998 was executed by the Registrar of the High Court on behalf of the plaintiff in favour of Mr Chau. Notwithstanding the execution of the assignment, the plaintiff refused to deliver up possession of the Property and Mr Chau had to invoke the assistance of the court bailiff in November 1998 to recover possession of the Property. Possession was only recovered by Mr Chau on 17 May 1999.

10. In 1998, the plaintiff once again renewed his application for legal aid to appeal against the judgment of Godfrey J upon expiry of the three-year period imposed by the Director of Legal Aid. When his application was refused, he decided to act in person because he learned that a litigant could use Chinese to conduct proceedings in the High Court. He lodged an application to the Court of Appeal in 1998 for leave to appeal out of time against the judgment of Godfrey J in 1993. His application was dismissed by a single judge of the Court of Appeal on 24 December 1998. He renewed his application for leave to appeal out of time to the Court of Appeal and his application was heard by Chan CJHC (as he then was) and Liu JA on 26 February 1999. His application was again refused. In dismissing the plaintiff's application, the Chief Judge made the observation that the plaintiff might consider directing his complaint against the defendant and the defendant's clerk Mr Leung on the basis that they had failed to remind him of the relevant provision in the Agreement relating to the deposit and his rights and obligations under the Agreement. The plaintiff might also allege that the defendant had failed to release the deposit to him and had insisted instead he should complete the sale notwithstanding that the deposit was not released to him. The Chief Judge ended by saying that if the plaintiff had any legal basis for his loss and damage, he might have to pursue his remedy against the defendant and Mr Leung. The actual words in the judgment, which is in Chinese, are as follows :

" 很明顯原審法官對於這些事實已經過詳細考慮並已作出裁決。申請人所要投訴的可能是律師行及梁競港先生，據指稱他們作為代表他的律師沒有提醒他買賣合約有關訂金的條款及他的權利和責任，又沒有將訂金交給他，反而要他履行合約。根據買賣合約，周先生是可以要求成交。如果他堅持要收樓，亦只是履行買賣合約，而且必須要支付樓價的尾數。如果申請人有任何法理依據的損失，可能須要向律師行及梁競港先生追討。"

11. The plaintiff sought leave from the Court of Appeal to appeal to the Court of Final Appeal against the decision of the Court of Appeal on 26 February 1999. On 4 May 1999, the Court of Appeal refused to give leave. As mentioned earlier, Mr Chau successfully recovered possession of the Property on 17 May 1999. On 2 June 1999, the plaintiff applied for legal aid to pursue a claim against the defendant. This application was refused.

12. The writ in this action endorsed with the Statement of Claim in Chinese was issued by the plaintiff on 22 July 1999. The plaintiff claimed damages against the defendant in the sum of HK$3,869,767.13. The basis of his claim against the defendant, as pleaded in the Statement of Claim, would appear to be as follows :

(1) The defendant had failed to explain the terms of the Agreement to the plaintiff before the plaintiff signed it, in particular, the provision stating that the defendant could withhold the deposit and not release the money to the plaintiff in certain circumstances. As the plaintiff was in urgent need of money when he agreed to sell the Property to Mr Chau, he would not have agreed that the defendant should retain the deposit and not release the money to him.

(2) After the Agreement was signed, Mr Leung King Kong, the defendant's clerk, had repeatedly promised the plaintiff that in about a week and at most in ten days' time, he would release the deposit of 10% to the plaintiff. In breach of this promise, the defendant did not release the deposit to the plaintiff. Moreover, even on the scheduled completion date, the defendant had still failed to release the deposit.

(3) As the defendant had failed to explain to the plaintiff the terms of the Agreement and had failed to honour the verbal promise about the release of the deposit, the delay and neglect of duties had led to the dispute between Mr Chau and the plaintiff, and had caused the plaintiff to suffer serious financial loss.

(4) The plaintiff brought this action on the basis of the "suggestion" made by the Chief Judge on 26 February 1999.

13. At the hearing of the appeal, Mr Yau advanced a somewhat different case as to the wrongful act or omission of the defendant on which the plaintiff's claim is founded. There was no application to amend the Statement of Claim and the alleged wrongful act or omission of the defendant was made for the first time in Mr Yau's written submissions. He submitted that the wrong done by the defendant was not so much that the defendant had given the indication to the plaintiff that he would receive the deposit in about seven to ten days from the signing of the Agreement when the defendant should not have done so. The wrongful act or omission of the defendant, in the submission of Mr Yau, was in three respects :

(1) When the plaintiff indicated to the defendant that since he could not receive the deposit he would treat the contract as terminated, the plaintiff was not adequately advised by the defendant as to the legal consequence of his termination of the Agreement. He was not told by the defendant whether he was entitled in law to do so and if not, what would be the legal consequence that he would expose himself to.

(2) The defendant did not advise the plaintiff as to the right or the absence of the right of Mr Chau to complete when (a) there was apparently no payment of the 10% deposit at all and (b) time was stated to be of the essence in every respect of the Agreement.

(3) When the plaintiff demanded payment of the deposit or the release of the deposit by the defendant to him, the defendant failed to correct the plaintiff's belief as to his entitlement to the deposit.

14. The way in which the plaintiff puts his case in negligence and what specific act or omission he is complaining about as the basis of his claim against the defendant are obviously relevant to the question of knowledge under section 31 of Cap.347. As the case now advanced on behalf of the plaintiff is different from the plaintiff's case as presented to the master, it would not be of relevance or of assistance to me to consider the master's reasoning. Besides, the arguments advanced on behalf of the plaintiff in this appeal must have been very different from the submissions made to the master by the plaintiff in person.

15. In summary, Mr Yau's argument was that it is inappropriate to determine whether the plaintiff's cause of action was time-barred under section 31 of Cap.347 using the O.14A procedure. He submitted that this question should be tried as a preliminary issue under O.33 so that the issue of requisite knowledge under section 31 of Cap.347 is to be adjudicated upon, not purely as a question of law or a question to be decided on undisputed factual basis as the defendant has sought to do, but that the issue is to be determined after hearing evidence from the plaintiff on the state of his knowledge at the material stages.

16. Before dealing with Mr Yau's submissions in detail, it may be appropriate to deal with certain matters which are common ground. It was conceded by Mr Yau that the plaintiff's cause of action in contract, which accrued on the date of breach of contractual duties by the defendant in not rendering advice to the plaintiff as alleged, was time-barred. Further, it was not in dispute that as the plaintiff's cause of action in negligence was not yet barred by the Limitation Ordinance by 1 July 1991, being the date when section 31 came into operation, this provision is applicable to the present case. Lastly, it was accepted on both sides that where a defendant seeks to strike out a claim on the ground that it is frivolous, vexatious and an abuse of the court's process by raising a limitation defence, this procedure is only appropriate in a "very clear case" (Ronex Properties Ltd v. John Laing Construction Ltd [1983] QB 398 at 405) or "in cases in which on the face of the pleadings it is beyond argument that the cause of action is statute-barred" (Bell v. Peter Browne & Co. [1990] 2 QB 495 at 506A).

17. I should mention that although the plaintiff's case in negligence has been put differently by Mr Yau and there was no application to amend the plaintiff's pleading, I propose to treat the plaintiff's case as advanced in Mr Yau's written submissions as a sufficiently definite version of the plaintiff's case. There was no suggestion from counsel that further time would be required or that further instructions had to be taken for the plaintiff to frame his complaint against the defendant properly .

18. There is yet another matter I should deal with before I examine section 31 and that is when did the cause of action in negligence accrue. In the Defence, it is pleaded that the plaintiff's cause of action must have accrued about seven to ten days after the signing of the Agreement on 19 April 1988, according to the allegations of wrongful act or omission in the Statement of Claim. The plaintiff has now altered his allegation of wrongful act or omission as stated above. In a claim in negligence, the cause of action would have accrued when the plaintiff suffered actual damage in consequence of the defendant's negligence. Where a plaintiff alleged that he had suffered economic loss in consequence of a solicitor's negligent advice, actual damage occurred and the plaintiff's cause of action was complete when in reliance on that advice the plaintiff acted to his detriment by incurring a contingent liability which was capable of monetary assessment (Forster v. Outred & Co. [1982] 1 WLR 86). Mr Yau informed the court that he would not argue that the actual damage was not suffered by the plaintiff until judgment was given by Godfrey J against the plaintiff on 9 August 1993. He simply made no submission as to when did the cause of action in negligence accrue, stating that he was reserving his position on this matter and that he was making no concession whether the cause of action had accrued in 1988 (as pleaded by the defendant) or at any other time.

19. It is probably unnecessary for me to make a ruling whether the cause of action in negligence had accrued in 1988. Mr Yau has not contended that the writ issued on 22 July 1999 was within "6 years from the date on which the cause of action accrued", i.e. within section 31(4)(a). His submission in this appeal was that the action was not time-barred because the writ was issued within "3 years from the date of knowledge" under section 31(4)(b). If it were necessary to make a ruling as to when the cause of action in negligence had accrued, I would rule that the cause of action was complete in late June 1988 or early July 1988 when the plaintiff made known to Mr Chau that he would treat the Agreement as terminated and had thereby exposed himself to a liability to Mr Chau for breach of contract.

20. I turn to consider section 31 of Cap.347, the material provisions of which may be set out as follows :

"31. (1) This section applies to any action for damages for negligence, other than one to which section 27 applies, where the earliest date on which the plaintiff or any person in whom the cause of action was vested before him first had both-

(a) the knowledge required for bringing an action for damages in respect of the relevant damage; and

(b) a right to bring such an action,

(referred to in this section as the 'date of knowledge') falls after the date on which the cause of action accrued.

....

(3) An action to which this section applies shall not be brought after the expiration of the period applicable in accordance with subsection (4).

(4) That period is either-

(a) 6 years from the date on which the cause of action accrued; or

(b) 3 years from the date of knowledge, if that period expires later than the period mentioned in paragraph (a).

(5) In subsection (1) 'the knowledge required for bringing an action for damages in respect of the relevant damage' means knowledge-

(a) of such facts about the damage in respect of which damages are claimed as would lead a reasonable person who had suffered such damage to consider it sufficiently serious to justify his instituting proceedings for damages against a defendant who did not dispute liability and was able to satisfy a judgment;

(b) that the damage was attributable in whole or in part to the act or omission which is alleged to constitute negligence;

(c) of the identity of the defendant; and

(d) if it is alleged that the act or omission was that of a person other than the defendant, of the identity of that person and the additional facts supporting the bringing of an action against the defendant.

(6) Knowledge that any acts or omissions did or did not, as a matter of law, involve negligence is irrelevant for the purposes of subsection (1).

(7) For the purposes of this section or section 33, a person's knowledge includes knowledge which he might reasonably have expected to acquire-

(a) from facts observable or ascertainable by him; or

(b) from facts ascertainable by him with the help of appropriate expert advice which it is reasonable for him to seek,

but a person shall not be taken by virtue of this subsection or section 33 to have knowledge of a fact ascertainable only with the help of expert advice so long as he has taken all reasonable steps to obtain (and, where appropriate, to act on) that advice."

21. It was submitted on behalf of the plaintiff that he did not have knowledge that the damage he suffered was attributable to the acts or omissions of the defendant until he was "advised" by the Chief Judge in the judgment on 26 February 1999 that the plaintiff might consider looking to the defendant for redress of his grievance. That was indeed the plaintiff's assertion in his affirmation filed in opposition of the defendant's present application on 7 July 2000.

22. In applying section 31, it is "of the greatest of importance to identify, precisely, the nature of the damage, which coupled with the negligent act or omission is alleged to constitute the cause of action" (Oakes v. Hopcroft, English Court of Appeal, 27 July 2000, para.16 of the judgment, per Lord Woolf CJ). What then was the damage allegedly suffered by the plaintiff? According to Mr Yau, the damage suffered by the plaintiff was in two respects. Firstly, the plaintiff had lost the right to forfeit the deposit paid by Mr Chau, assuming that the deposit was at some stage after the signing of the Agreement releasable by the defendant to the plaintiff. Secondly, the plaintiff was exposed to the risk of litigation which might occur and, if it did occur, might succeed against him, and this damage had become crystallized after the judgment of Godfrey J on 9 August 1993. The crucial question here is whether there is sufficient material before the court at this stage to make a proper determination if the plaintiff did realize that the damage he suffered in the respects as set out above was attributable in whole or in part to the act or omission of the defendant which was alleged to constitute negligence.

23. In considering knowledge for the purpose of section 31, it is necessary to consider the actual knowledge of the plaintiff as well as constructive knowledge because it is apparent from section 31(7) that constructive knowledge of the plaintiff of the relevant matters will suffice, even if the plaintiff does not have actual knowledge.

Actual knowledge

24. On the question of actual knowledge, Mr Yau has referred me to the judgment of Brooke LJ in North Essex District Health Authority v. Spargo [1997] 8 Med LR 125 at 129-130 in which the relevant principles were succinctly set out. The principles as stated by Brooke LJ had been applied in a number of subsequent decisions concerning section 14A of the Limitation Act 1980 (equivalent to section 31 of Cap.347) and section 14 (equivalent to section 27 of Cap.347 which deals with the time limit for actions for personal injuries). The principles as stated by Brooke LJ are as follows :

"(1) The knowledge required to satisfy section 14(1)(b) is a broad knowledge of the essence of the causally relevant act or omission to which the injury is attributable;

(2) 'Attributable' in this context means 'capable of being attributed to', in the sense of being a real possibility;

(3) A plaintiff has the requisite knowledge when she knows enough to make it reasonable for her to begin to investigate whether or not she has a case against the defendant. Another way of putting this is to say that she will have such knowledge if she so firmly believes that her condition is capable of being attributed to an act or omission which she cannot identify (in broad terms) that she goes to a solicitor to seek advice about making a claim for compensation;

(4) On the other hand she will not have the requisite knowledge if she thinks she knows the acts or omissions she should investigate but in fact is barking up the wrong tree; or if her knowledge of what the defendant did or did not do is so vague or general that she cannot fairly be expected to know what she should investigate; or if her state of mind is such that she thinks her condition is capable of being attributed to the act or omission alleged to constitute negligence, but she is not sure about this, and would need to check with an expert before she could be properly said to know that it was."

25. In this case, it was submitted on the plaintiff's behalf that he should come within the fourth principle as set out above. He did not have the requisite knowledge as he had overlooked the "real culprit" and he had kept barking up the wrong tree. Mr Yau pointed out that in the judgment of Godfrey J in August 1993, the judge did not say anything about any act or omission of the defendant that might form the basis of a complaint against the defendant. After the judgment was delivered, the plaintiff had made repeated applications for legal aid to appeal against the judgment and when that was unsuccessful, he applied in person for leave to appeal to the Court of Appeal in 1998 and 1999. Throughout that time, it would appear to be the plaintiff's thinking that he had suffered an injustice as a result of the judgment in August 1993 and it had not occurred to him that the defendant might be held responsible for the damage that he suffered. As I have stated earlier, the plaintiff had said in his affirmation filed in opposition of the defendant's application that it was not until he had read the judgment of the Court of Appeal in February 1999 that he came to realise the defendant might be responsible for his damage in that the defendant had not explained the terms of the Agreement to him.

26. I propose to analyse what would go to make up the requisite knowledge and the provisions of sections 31(5), (6) and (7) when I consider constructive knowledge. I do not think it is appropriate to make an adjudication on the actual knowledge of the plaintiff on the materials before me and, indeed, the defendant has not suggested otherwise. I understand from Mr Walter Lee that the defendant's position throughout is that the plaintiff does have constructive knowledge of the matters in section 31(5) and that is the basis for the striking out application.

Constructive knowledge

27. It is apparent from the wording in section 31(5)(a) that as knowledge is of such facts about the damage in respect of which damages are claimed as would lead a "reasonable person" to consider it sufficiently serious to justify bringing proceedings against a defendant who did not dispute liability and was able to pay, the test is an objective one. It is also apparent from the wording of section 31(7) that there is imputed to the plaintiff the knowledge he might "reasonably have been expected" to acquire (a) from facts observable or ascertainable by him or (b) from facts ascertainable by him with the help of appropriate expert advice which it is "reasonable" for him to seek, but a person shall not be taken by virtue of section 31(7) to have knowledge of a fact ascertainable only with the help of expert advice so long as he has taken "all reasonable steps" to obtain that advice and, where appropriate, to act on it. Again, the test in section 31(7) of knowledge of the matters in section 31(5) is objective (see Oakes v. Hopcroft, supra. at paras.9 and 14).

28. On behalf of the plaintiff, it was submitted that although the test of constructive knowledge is objective, there are aspects surrounding this issue that can only be decided after hearing evidence from the plaintiff who said that he did not have the requisite knowledge as it is necessary to know why the plaintiff had overlooked the "real culprit" and why he had kept barking up the wrong tree. In applying an objective test, a reasonable person would have to be put in the plaintiff's position.

29. On the defendant's part, it was submitted that the individual characteristics of the plaintiff should not be taken into account in assessing whether he had constructive knowledge. Hence, in deciding whether the plaintiff did have constructive knowledge, it was not necessary to examine what was in the mind of the plaintiff.

30. That would appear to be two lines of cases on this question.

31. The first line of cases applied the test formulated by Purchas LJ in Nash v. Eli Lilly & Co. [1993] 1 WLR 782 at 799 and is as follows :

"Section 14(3) [the equivalent provision for present purposes is section 31(7) of Cap.347] which deals with 'constructive knowledge', applies generally not only to the nature of the injury under subparagraph (a) but also to attributability, to the knowledge of the nature of the cause of action in (b) and the question of identification of the defendant in (c). It is convenient at this point to consider the two main sources from which constructive knowledge can be imputed to a prospective plaintiff. Subsection (3)(a) is straightforward and covers a plaintiff's lack of appreciation of observable data or failure to acquire ascertainable data from which the plaintiff should have realized or obtained the relevant facts. On this basis, in our judgment, the proper approach is to determine what this plaintiff should have observed or ascertained, while asking no more of him than is reasonable. The standard of reasonableness in connection with the observations and/or the effort to ascertain are therefore finally objective but must be qualified to take into consideration the position, and circumstances and character of the plaintiff. Turning to subsection (3)(b), this subsection deals with facts ascertainable with the help of advice from outside expert sources, which, in the circumstances of the case, it is reasonable for the plaintiff to seek. As the whole of this section is dealing with claims for personal injury the specific reference to medical advice is understandable; but it clearly extends to other experts whom it would be reasonable to expect the plaintiff to consult. In considering whether or not the inquiry is, or is not, reasonable, the situation, character and intelligence of the plaintiff must be relevant." (emphasis supplied)

32. The second line of cases is founded on the decision of the English Court of Appeal in Forbes v. Wandsworth Health Authority [1997] QB 402. All three members of the court considered Nash and expressed difficulty in applying a standard of reasonableness that was to take into account not only the plaintiff's position and circumstances but also his personal characteristics. I set out the relevant extracts as follows :

" Like Roch L.J. I have difficulty in seeing how the individual character and intelligence of the plaintiff can be relevant in an objective test. Similar problems have arisen in the criminal law in relation to the defence of provocation and duress. In both these cases there is a dual test : the subjective one - was the accused in fact provoked or overborne by threats to act as he did? - and the objective one - would an ordinary person sharing the characteristics of the accused be provoked to act as he did, or, in the case of duress, would an ordinary person of reasonable firmness, sharing the accused's characteristics, have given way to the threats? This objective test has given rise to considerable difficulty in recent cases, especially in the case of duress, as to what characteristics are relevant and what are not. The mere fact that an accused is more suggestible, vulnerable or timid than a normal person of his age and sex is not relevant because it undermines the objective test which requires him to be of reasonable firmness of mind: see Reg. v. Hurst [1995] 1 Cr.App.R. 82. The jury have to consider how a person sharing a characteristic of the accused, for example, as a young person, a pregnant woman or a person suffering severe personal or mental disability, would react, since the jury may think that such people in general may be more vulnerable to pressure: see Reg. v. Bowen [1997] 1 W.L.R. 372. It does not seem to me that the fact that a plaintiff is more trusting, incurious, indolent, resigned or uncomplaining by nature can be a relevant characteristic, since this too undermines any objective approach." (at 414D-G, per Stuart-Smith LJ.) (emphasis supplied.)

" By this standard [i.e. an objective standard], it seems to me that it was reasonable for the deceased to obtain a second medical opinion in the circumstances of this case. This is primarily because of the seriousness of the injury and the history of treatment which he had undergone. I doubt, however, whether it is appropriate to regard this issue in terms of a decision, made consciously or unconsciously by the deceased, whether to accept his lot or to consider making a claim. If the question is whether, objectively and reasonably, he could be expected to have obtained further advice, then I do not see that his actual mental processes are relevant at all.

This leads to the disquiet expressed by Stuart-Smith and Roch LJJ as to the statement in the judgment of this court in Nash v. Eli Lilly & Co. [1993] 1 W.L.R. 782, 799: 'In considering whether or not the inquiry is, or is not, reasonable, the situation, character and intelligence of the plaintiff must be relevant.'

As to situation, there is no difficulty. The reasonable man must be placed in the situation that the plaintiff was. The references to character and intelligence, however, suggest that regard should be had to personal characteristics of the plaintiff, and this I find difficult to square with the application of an objective and, therefore, equal standard. ...

If this qualified objective approach was held in Nash v. Eli Lilly & Co. to be the correct interpretation of the subsection, then, of course, the decision is binding on us; but I do not read the judgment as going that far. There is only the one-line statement, already quoted, and no indication in the report that this particular nuance of meaning was argued in that appeal. It may also be possible to give the references to character and intelligence a limited meaning, for there could be circumstances where the nature of the alleged negligence was such that those attributes of the 'reasonable man' might be relevant in applying the objective test. No such considerations arise in the present case." (at 422H-423D, per Evans LJ.) (emphasis supplied)

33. The majority of the Court of Appeal in Forbes applied a wholly objective test. The dissenting judge Roch LJ declined to do so as he regarded that the court was bound by Nash. Nevertheless, he expressed difficulty in applying the objective test in taking into consideration not only the plaintiff's position and circumstances but also his character. In the subsequent case of Smith v. Leicester Health Authority [1998] Lloyds Rep. Med. 77 at 87, Roch LJ came down more firmly with a wholly objective test in this statement :

"Whether it was reasonable for the [plaintiff] to seek such advice depends on the facts and circumstances of each case, but excluding the character traits of the individual [plaintiff]."

34. In a case of striking out, it would be inappropriate for me to attempt any reconciliation or find any solution of the difficulties posed by the two lines of authorities. What I propose to do is to adopt a generous approach and ask myself whether, on any sort of objective test, it can be established that the plaintiff in the particular circumstances here did have constructive knowledge of the requisite matters in section 31(5).

35. It is pertinent to bear in mind the following :

(1) Knowledge that any act or omission did or did not, as a matter of law, involve negligence is irrelevant, see section 31(6).

(2) A plaintiff did not need to know that the defendant's act or omission was capable of being attributed to some fault on the defendant's part. The only function of the words "alleged to constitute negligence" in section 31(5)(b) is to " point to the relevant act or omission to which the [damage] was attributable" or to "identify the facts of which the plaintiff must have knowledge without implying that he should know that they constitute a breach of a rule, whether of law or some other code of behaviour". (Broadley v. Guy Clapham & Co. [1993] 4 Med LR 328 at 333, per Leggatt and Hoffmann LJJ.)

(3) The level of knowledge required is a low one. It is the policy of the legislature to give a plaintiff who has the requisite low level of knowledge three years in which to establish by inquiry whether the identified damage was indeed probably caused by the identified act or omission and whether the act or omission amounted to actionable negligence (Spargo, supra. at 131).

(4) "Attributable" in this context is a much less rigorous test as compared to the test of the proof of causation. All that it means is "capable of being attributed to" in the sense of being a real possibility (Spargo, supra. at 131). It should also be noted that under section 31(5)(b), the knowledge required is that the damage was attributable in whole "or in part" to the act or omission which is alleged to constitute negligence.

36. With the above, I turn to the available evidence in this case.

37. It is not necessary for the plaintiff to have knowledge that he may have a cause of action in negligence against the defendant, or that the alleged wrongful act or omission of the defendant was capable of being attributed to some fault on the defendant's part. It is true that Godfrey J's judgment did not expressly deal with the question whether any damage sustained by the plaintiff in having to complete the transaction as ordered by the court was attributable in whole or in part to any act or omission of the defendant, because that was not an issue that the court had to decide in the proceedings between Mr Chau and the plaintiff. Nevertheless, in the judgment of Godfrey J, he set out the relevant provisions in the Agreement being Clauses 6(a) and (b), 20(a), (c) and (d). The judge rejected the plaintiff's case that there was an oral contract collateral to the Agreement. Having regard to the clauses of the Agreement which the judge set out in extenso in the judgment (the effect of which was contrary to the oral collateral contract), the judge found that the plaintiff was not entitled to terminate the Agreement on the ground that the deposit was not released to him and ordered that there should be specific performance of the Agreement.

38. The damage allegedly suffered by the plaintiff was the loss of the right to forfeit the deposit on the assumption that the deposit was at some stage releasable to him and being exposed to a possible liability to Mr Chau.

39. In my view, a person of ordinary intelligence in the plaintiff's position and circumstances would have realised the following matters upon reading the judgment of Godfrey J :

(1) he had suffered damage in being required to perform the Agreement;

(2) he was obliged to perform the Agreement because the judge had rejected his case of a collateral contract and held that he was bound by the terms of the Agreement, the relevant provisions of which were set out in the judgment;

(3) the defendant did not advise him on the legal effect and his obligations under those relevant provisions of the Agreement; and

(4) when he terminated the Agreement on the ground that the deposit was not released to him (wrongfully, as held by the judge), he did so without any advice from the defendant on those relevant provisions of the Agreement.

40. With the knowledge of such matters, the plaintiff should be imputed with knowledge that his alleged damage was attributable in the sense of a real possibility, at least in part, to the omission of the defendant in advising him of the effect of the relevant provisions of the Agreement.

41. There was no suggestion that the plaintiff had been misled or deceived by anyone in barking up the wrong tree. I should also mention that in the grounds of appeal prepared by the plaintiff for an application to the Court of Final Appeal on 10 March 1999, he has stated that Mr Chau should not have sued him but should have sued the defendant, who had acted for both parties in the transaction, on the basis that if the vendor or the purchaser was dissatisfied with the transaction, that party should only seek legal redress from the solicitors firm. The grounds of appeal came after the judgment of the Court of Appeal in February 1999. Nevertheless, there was no suggestion or indication of the plaintiff that he only became aware of this new ground of appeal as a result of the judgment in February 1999.

42. For the above reasons, I am of the view that there is sufficient material for the court to find constructive knowledge on the part of the plaintiff of the matters required under section 31(5) and the defendant has established a clear case for striking out the claim which was time-barred under section 31(4)(b). I therefore dismiss the plaintiff's appeal. I make an order nisi that the plaintiff should bear the defendant's costs of this appeal, to be taxed if not agreed.

Representation:

Mr Albert Yau, appearing pro bono on the Free Legal Service of the Bar Association, for the Plaintiff

Mr Walter Lee of Messrs Gallant Y.T. Ho & Co., for the Defendant

Defendant's application by summons for security for costs of appeal granted. Please refer to CACV1114/2000 dated 26 September 2001