Liu Moon Ping v. Wong Kwok Tung and Others
Read the full judgment text of DCCJ 1912/2003 on BabelCite. This District Court judgment.
1. In this action, the Plaintiff claims against the Defendants her former solicitors for damages on the ground that the Defendants had breached their contractual and/or tortuous duties towards her to exercise reasonable skill and care when they acted for her upon her instructions to carry out all necessary conveyancing work in connection with her purchase of a property known as Flat D, 19 th Floor, No. 21 Broadway, Mei Foo Sun Chuen (“the Property”) in 1997. In this sale and purchase, the vendo
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DCCJ1912/2003 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO. 1912 OF 2003 __________ BETWEEN
__________ Coram: Deputy Judge W. K. Kwok in Court. Date of Hearing: 27th & 28th June 2005. Date of Handing Down Judgment: 20th December 2005. JUDGMENT 1.In this action, the Plaintiff claims against the Defendants her former solicitors for damages on the ground that the Defendants had breached their contractual and/or tortuous duties towards her to exercise reasonable skill and care when they acted for her upon her instructions to carry out all necessary conveyancing work in connection with her purchase of a property known as Flat D, 19th Floor, No. 21 Broadway, Mei Foo Sun Chuen (“the Property”) in 1997. In this sale and purchase, the vendors were Wong Kam Ming Simon (王鑑明) (“Wong”) and Leung Shui Hoi Sally (梁瑞開) (“Leung”). I shall refer to them collectively as “the Vendors”. The sale was completed in April 1997. 2.In July 2001, the Plaintiff wanted to sell the Property. She entered into a sale and purchase agreement with a prospective purchaser to sell the Property at $1,200,000. The purchaser raised a number of requisitions on title, and the Plaintiff failed to answer one of them satisfactorily. The sale was aborted. The Plaintiff took steps to rectify the blot on title, and managed to sell the Property in December 2001, but only at a diminished market price of $1,000,000. 3.It is the Plaintiff’s contention that her failure to answer the requisition raised by the purchaser satisfactorily in 2001, resulting in the aborted sale and the consequential losses, was caused by the Defendants who had breached their contractual and/or tortuous duties owed towards her to exercise reasonable skill and care in completing the 1997 purchase. The Defendants 4.It is admitted by the Defendants that they were at the material times partners in a firm of solicitors practising in Hong Kong. Their partnership ceased in December 1997. 5.In the title of this action, the Plaintiff says that the Defendants were formerly trading in the name of “Daniel Wong & Co.”, but the Defendants say that their former trade name was “Daniel Wong & Partners”. I am satisfied from the documents made contemporaneously with the relevant events and the statement of Mr. Wong Kwok Tung (“Mr. Wong”) that the Defendants were in fact trading under the name of “Daniel Wong & Partners” at the material times. After the partnership had dissolved in December 1997, Mr. Wong continued his practice as a solicitor under the same firm name “Daniel Wong & Partners” until September 2001 when the firm changed its name to “Fan Wong & Tso”. 6.Despite the inaccuracy in the description of the former trade name of the Defendants’ firm, the 3 partners at the material times have been individually identified and collectively named as the Defendants in this action. The description of their former trade name is otiose. I find that the Defendants’ liability, if any, will not be affected by this inaccurate description of their former trade name. In fact, no issue has been taken in this regard. 7.In this judgment, I shall refer to the Defendants’ firm at the material times as Daniel Wong & Partners (“DW&P”). The Undisputed Facts 8.The Plaintiff and Mr. Wong are the only witnesses who have testified in Court. They adopt their respective written witness statements as their evidence. They elaborate their evidence by oral testimony. Each of them is subject to cross-examination. It is apparent that there is little dispute over the facts of this case. In addition, Mrs. Dora Chan, Counsel for the Plaintiff, and Mr. Alexander Stock, Counsel for the Defendants, have not taken any issue on the authenticity or admissibility of any document disclosed in the trial bundles, and agree that the documents in the trial bundles can be used as evidence in this trial. 9.The following facts are either common ground in the evidence or are apparent from the documents admitted by the parties. 10.10. In or about February 1997, the Plaintiff through an estate agent Pricerite Realty Limited (“Pricerite”) viewed the Property. Before viewing the Property, the Plaintiff had never met the Vendors. 11.By a provisional sale and purchase agreement dated 12th February 1997, the Plaintiff agreed to buy and the Vendors agreed to sell the Property for a consideration of $2,520,000. It was stipulated in the agreement that the sale was to be completed on 16th April 1997. 12.The Plaintiff then retained DW&P to act on her behalf to carry out all necessary work to complete the purchase, and to arrange for the mortgage of the Property with HSBC. The handling solicitor was Mr. Wong. The Plaintiff left to DW&P to handle everything on her behalf relating to the purchase and the mortgage of the Property. 13.Meanwhile, another firm of solicitors, Messrs. John Ku, Tam & Ho (“JKTH”) represented the Vendors to complete the sale. 14.On or about 13th February 1997, Pricerite faxed to DW&P a copy of the said provisional agreement and a copy of the Hong Kong Identity Cards of the Vendors. The copy Identity Cards of the Vendors bore their respective names and identity card numbers. 15.On 19th February 1997, JKTH sent to DW&P a draft formal Agreement for Sale and Purchase of the Property for the Plaintiff to sign and for DW&P to attest to the execution. On or about 1st March 1997, the Plaintiff signed the Agreement after she had been explained its contents by a staff of DW&P. Under the cover of a letter dated 1st March 1997, DW&P returned the formal Agreement for Sale and Purchase to JKTH for the Vendors to sign and for JKTH to attest to its execution. 16.On 4th March 1997, JKTH returned to DW&P the formal Agreement for Sale and Purchase dated the same date after it had been signed by the Vendors and attested by JKTH (“the 1997 Agreement”). 17.In the 1997 Agreement, the names of the Vendors, both in English and Chinese, were stated. Wong was identified by production of his Hong Kong Identity Card bearing the number [xxx] and Leung by production of her Hong Kong Identity Card bearing the number [yyy]. Leung executed the Agreement by signing her name in Chinese. 18.Clause 5(a) of the 1997 Agreement stipulated inter alia that the Vendors should “prove a good title to the Property” at their expenses. 19.Under the cover of a letter dated 3rd April 1997, JKTH sent to DW&P what they described as “the title deeds and documents as per the Schedule annexed hereto” for DW&P’s approval. There were 20 items of deeds and documents listed in the Schedule, including a General Power of Attorney Memorial No. 4562927 (“the PA”), and an Assignment Memorial No. 4562928 (“the 1990 Assignment”). 20.The PA was dated 29th August 1990. It was executed by Leung in favour of Wong, appointing Wong to be her attorney “in accordance with section 7 of the Powers of Attorney Ordinance, Chapter 21, Laws of Hong Kong”. 21.Apparently, the reference to “Chapter 21, Laws of Hong Kong” in the PA was a mistake because Chapter 21 is the Defamation Ordinance, and the proper chapter number for the Powers of Attorney Ordinance is Chapter 31. However, nothing turns on this mistake. 22.In the PA, the respective English and Chinese names of Leung and Wong were stated. Leung was described as a “married woman” with an address in Australia. She described Wong as her husband whose address was a certain flat inside an industrial building in Kwai Chung, Hong Kong. Wong was described as the holder of a Hong Kong Identity Card bearing the number [xxx], whereas Leung was identified by the production of an Australian passport bearing the number [zzz]. Leung executed the PA by signing her English name. John Frederick Henry, a notary public in Melbourne, Australia, attested to the execution of the PA by Leung. 23.The 1990 Assignment was dated 7th September 1990 by which Wong and Leung purchased and acquired as joint tenants the legal estate of the Property that they eventually sold or sought to sell to the Plaintiff in 1997. Their predecessors-in-title were Lau Kam Kau and Lee Shui Chi. 24.As purchasers of the Property, Wong and Leung were identified by their respective names, in both English and Chinese, and their address was stated to be that of the Property. Wong was the only person who had executed the 1990 Assignment. He had signed twice, once for himself and the other as the lawful attorney of Leung, in the presence of Lam Alex Wai Kuen, solicitor. 25.Both the PA and the 1990 Assignment were registered in the Land Office on 3rd October 1990 under successive memorial numbers. 26.In response to the letter dated 3rd April 1997 from JKTH, DW&P by a letter dated 11th April 1997 raised certain requisitions. None of the requisitions related to the PA or the 1990 Assignment. The requisitions were answered by JKTH in a letter dated 14th April 1997. The documents requested by DW&P were also supplied. 27.On 16th April 1997, DW&P sent to JKTH a draft assignment of the Property to be executed by the Vendors. The draft assignment was approved by JKTH and was executed by the Vendors (“the 1997 Assignment”) whereby they assigned or sought to assign the legal estate of the Property to the Plaintiff. 28.In the 1997 Assignment, the respective English and Chinese names of the Vendors were stated. The Vendors were said to have the same address in a certain flat in Mei Foo Sun Chuen, whereas the address of the Property was stated to be the Plaintiff’s address. Wong was identified by production of his Hong Kong Identity Card bearing the same number [xxx] as that stated in the PA. Leung was identified by production of her Hong Kong Identity Card bearing the number [yyy]. It appeared from the 1997 Assignment that Wong signed in a way similar to that in the 1990 Assignment, while Leung signed her Chinese name. A legal executive Flora S.W. Li attested to their execution of the assignment. 29.On 16th April 1997, the Plaintiff attended the office of DW&P as she had been so requested. A female staff of DW&P explained the contents of the 1997 Assignment to her, and told her that all matters and papers were in order and that there was no problem with the purchase of the Property. The Plaintiff then signed on various documents including the 1997 Assignment and those for mortgaging the Property. 30.The DW&P had not informed the Plaintiff of, or drawn her attention to, the existence of the PA, or to any potential problem or question with the title of the Property before or after her execution of the 1997 Assignment. Purchase of the Property was completed. The Plaintiff duly paid to DW&P for their professional services. 31.After completion of the purchase, the Plaintiff did not occupy the Property herself, but let it out to successive tenants to earn rentals. The last tenant paid to her a monthly rent of $8,000 inclusive of Government rates and management fees. 32.Under the cover of a letter dated 23rd May 1998 to HSBC that provided the mortgage loan to the Plaintiff to purchase the Property, DW&P sent to HSBC “the relevant title deeds and documents” relating to the Property for the latter’s safe custody. The PA, the 1990 Assignment, the 1997 Agreement and the 1997 Assignment were included. 33.In 2001, the Plaintiff intended to sell the Property. By a provisional sale and purchase agreement dated 2nd July 2001, she agreed to sell and one Miss Chan Yuet Ying (“Chan”) agreed to buy the Property at a price of $1,200,000 (“the 2001 Sale”). 34.The Plaintiff then instructed Messrs. Tsang & Co. (“T&C”) whereas Chan instructed Messrs. Shea & Co. (“S&C”) as their respective solicitors to carry out all necessary conveyancing work to complete the sale and purchase of the Property. 35.On or about 14th July 2001, the Plaintiff entered into a formal sale and purchase agreement with Chan for sale and purchase of the Property at $1,200,000 with the completion date on or before 3rd August 2001 (“the 2001 Agreement”). Chan paid a deposit of $120,000. As the vendor, the Plaintiff was obliged by the agreement to prove good title and deliver vacant possession to Chan. In anticipation of completing the sale, the Plaintiff vacated her tenant from the Property. 36.36. By a letter dated 28th July 2001, T&C sent to S&C “the title deeds and documents” in respect of the Property, including the PA, the 1990 Assignment, the 1997 Agreement and the 1997 Assignment. 37.By a letter dated 30th July 2001, S&C raised a number of requisitions. Item 5 of the requisitions (“The Requisition”) was relevant to the present proceedings. After referring to the PA, the 1997 Agreement and the 1997 Assignment in its caption, the Requisition read as follows: -
38.S&C had therefore identified the discrepancies between (1) the identification document, and (2) the signature of the donor of the PA and those of the 2nd-named vendor (i.e. Leung) in the 1997 Agreement and in the 1997 Assignment (“the Discrepancies”). S&C alleged in effect that these were material discrepancies that might affect the title of the Plaintiff to the Property because there were doubts as to the true identity of the Leung Shui Hoi Sally who executed the 1997 Assignment. S&C demanded the Plaintiff, through T&C, to show that the two Leungs who executed the PA on the one hand and the 1997 Agreement and the 1997 Assignment on the other were in fact the one and the same person. 39.On or about 30th July 2001, Mr. Andy Au, a solicitor of T&C, informed the Plaintiff that there was a problem with the title of the Property by reason of the Requisition. Prior to this point of time, the Plaintiff had never been informed of the Discrepancies by DW&P. 40.By a letter dated 2nd August 2001, T&C asked DW&P for a reply to the Requisition. On 3rd August 2001, T&C and S&C agreed to postpone the completion to a date on or before 10th August 2001. 41.By a letter dated 6th August 2001, DW&P replied as follows:
42.T&C forwarded DW&P’s letter dated 6th August 2001 to S&C in answer to the Requisition. By a letter dated 9th August 2001, S&C refused to accept that the Requisition had been satisfactorily answered, and demanded proof from the Plaintiff that the two Leungs were the same person so as to prove good title to the Property. Under the cover of a letter dated 9th August 2001, T&C forwarded the reply from S&C to DW&P for further clarification. 43.Before DW&P replied, T&C had taken other actions in an attempt to confirm that the donor of the PA and the 2nd named vendor of the 1997 Assignment were in fact the same person. By a letter dated 15th August 2001, T&C asked Messrs. Y. L. Yeung & Co. (“YLY”) who acted for Wong and Leung when they purchased the Property in 1990, to seek clarification and assistance on the Requisition. By another letter also dated 15th August 2001, T&C wrote to the Australian Consulate General in Hong Kong seeking clarification as to whether the person identified by Australian Passport bearing the number [zzz] was the same person identified under Hong Kong Identity Card bearing the number [yyy]. 44.On or about 17th August 2001, S&C served notice on T&C that unless the Plaintiff could prove good title to the Property and answer the requisitions satisfactorily and sufficiently on or before 31st August 2001, Chan would annul the purchase of the Property. 45.By a letter dated 23rd August 2001, YLY informed T&C that they were not in a position to answer the Requisition because they had never met Leung and the 1990 Assignment was signed by Leung’s lawful attorney. YLY agreed that they had prepared the PA, but Leung had not executed the PA before any of their solicitors. 46.On or about 29th August 2001, T&C was able to locate Leung who was then living in Australia. Leung agreed to execute a statutory declaration to confirm that she was the same person who had executed the PA, the 1997 Agreement and the 1997 Assignment. 47.The Plaintiff and Chan, through their respective solicitors, then agreed to postpone the completion further, firstly to 15th September 2001, and then to 17th September 2001, upon the condition that the Plaintiff could produce the requisite statutory declaration from Leung and prove good title to the Property, failing which Chan would annul the sale. 48.However, due to Leung’s delay in making the requisite statutory declaration, Chan through S&C by a letter dated 18th September 2001 annulled the 2001 Sale and demanded for the return of deposits and payment of wasted expenses. 49.By a letter dated 21st September 2001, Mr. Wong, who was then practising under the trade name of Fan Wong & Tso, replied to the letter dated 9th August 2001 from S&C. He stated inter alia as follows: -
50.On or about 5th October 2001, the Plaintiff returned the deposit of $120,000 to Chan who duly executed a cancellation agreement dated 6th October 2001 for the sale and purchase of the Property. 51.About two months after the sale under the 2001 Agreement had been aborted, on or about 5th December 2001, T&C obtained from Leung a statutory declaration confirming that she was the same person who executed the PA and the 1997 Assignment, and that she was the holder of the Australian Passport bearing the numbers [zzz] referred to in the PA as well as the holder of the Hong Kong Identity Card bearing the numbers [yyy] referred to in the 1997 Assignment. 52.The Plaintiff paid $1,000 to Messrs. P. C. Woo & Co, solicitors for Leung, being professional charges for approving Leung’s Statutory Declaration. 53.The Plaintiff immediately put up the Property for sale. On or about 22nd December 2001, she sold the Property to Mr. Hon Kar Wor Tommy at the price of $1,000,000. The formal Sale and Purchase Agreement was made on 7th January 2002 (“the 2002 Sale”). 54.By a letter dated 2nd October 2002 from Messrs. Fan Wong & Tso to T&C, Mr. Wong stated inter alia as follows: -
55.By another letter dated 11th January 2003 from Messrs. Fan Wong & Tso to T&C, Mr. Wong reiterated his previous stance. He stated that the Requisition was not a proper, necessary and/or justified requisition on title, and that he therefore did not accept the Plaintiff had failed to answer to the requisition or she had failed to show good title to the Property. He denied breach of any duty towards the Plaintiff. The vendor's obligation 56.With the benefit of hindsight, particularly after 5th December 2001 when Leung had confirmed in her statutory declaration that she was the holder of both Australian Passport bearing the number [zzz] and Hong Kong Identity Card bearing the number [yyy] and that she was the same Leung who had executed both the PA and the 1997 Assignment, it has been proved beyond reasonable doubt the Vendors had given good title to the Property to the Plaintiff under the 1997 Assignment. It follows that the Plaintiff would have been in a position to give good title to the Property to Chan if the 2001 Sale had not been annulled. 57.However, the fact that the Plaintiff had in fact a good title to convey was neither here nor there. It is trite law that a vendor of a property must comply both with his duty to give title and to show title: Active Keen Ltd. v Fok Chi Keong [1994] 1 HKLR 396; Kok Chong Ho v Double Value Developments Ltd. [1993] 2 HKLR 423. Le Pichon J. said in Lord Energy Limited v Chen & Another, HCA A7124 of 1991, that: -
58.It is not disputed that the Plaintiff was obliged by the 2001 Agreement to show good title at her expenses pursuant to section 13 of the Conveyancing and Property Ordinance, Chapter 219. The crucial point was therefore whether the Plaintiff had shown to Chan that she had a good title to the Property that could be conveyed to Chan before the 2001 Sale was annulled on 18th September 2001. 59.A good title is one that is “without any blot, or possibility of litigation to the purchaser”: In re Stirrup’s Contract [1961] 1 WLR 449, that there is no “patent cloud which could affect the title which was sought to be passed” upon examination of the title documents: Ma Chun-man v Yung, Yu, Yuen & Co. [1978] HKLR 26, and that it is a title that can “at all times and in all circumstances be forced upon an unwilling purchaser in an action for specific performance”: Kan Wing-yau & Another v Hong Kong Housing Society [1988] 2 HKLR 187. 60.It is also trite law that the standard of proof that a vendor has to discharge when showing he has a good title to the Property is beyond reasonable doubt: MEPC Ltd v. Christian-Edwards [1981] AC 205; Chi Kit Company Limited & Another v Lucky Health International Enterprise Limited [2000] 2 HKLRD 503. 61.However, if the supposed blot on title is “a purely theoretical and not a practical plot”, or the supposed lawsuit is a “ridiculous” claim that will be “laughed out of court”, then a good title has been shown: Re Heaysman’s and Tweedy’s Contract (1893) 69 LT 89. 62.In deciding whether a vendor has succeeded in showing a good title beyond reasonable doubt, judges must exercise their common sense to see if the supposed lawsuit has any basis whatsoever: Re Heaysman’s and Tweedy’s Contract (1893) 69 LT 89; and the question must be approached from the standpoint of a willing purchaser and a willing vendor both possessed of “reasonably robust common sense”, and both intending to complete the transaction: Mexon Holdings Ltd. v Silver Bay International Ltd. [2000] 1 HKLRD 935. 63.It is not disputed, and in fact not disputable, that the Plaintiff would not have the requisite title to the Property for her to convey to Chan pursuant to the 2001 Agreement unless the Leung who executed the 1997 Assignment was in fact the same Leung who had acquired the title to the Property as a joint tenant with Wong under the 1990 Assignment. Hence, it was incumbent upon the Plaintiff to prove beyond reasonable doubt to Chan, during the requisition stage, that the two Leungs were the one and the same person. Propriety of the Requisition 64.S&C raised the Requisition and contended that the Plaintiff had failed to produce sufficient proof that the two Leungs were the same person in light of the Discrepancies. Apparently, T&C agreed with S&C. Mr. Wong and DW&P of course took a different view. 65.It is common ground in the evidence that the Defendants had never asked the Vendors to clarify or rectify the Discrepancies before or after the completion of the Plaintiff’s purchase under the 1997 Assignment. According to the evidence given by Mr. Wong, it was not because he had failed to notice the Discrepancies but because he found it wholly unnecessary and “stupid” for him to raise such requisition with the Vendors since he considered that there was no reasonable doubt on the identity of Leung. It is therefore the defence case that the Requisition raised by S&C in 2001 was not a proper, necessary or justified requisition on title that should never have been raised, and that when it was so raised, T&C should have properly answered it and should not have advised the Plaintiff to cancel the 2001 Sale. Mr. Stock submits that the wrong set of solicitors has been criticized in court. 66.It is on the basis of the following two arguments that Mr. Stock submits that there was nothing in the Discrepancies, and that they did not create even the remotest doubt as to the title that the Plaintiff had received under the 1997 Assignment: -
The primary defence argument 67.Mr. Stock submits that the Plaintiff’s case is fundamentally flawed because it is trite law that in proving title, a power of attorney under which a purchaser has executed an assignment does not need to be produced because the assignment is effective without the signature of the purchaser: Lee Kim-ha v Yip Moon-chiu & Another [1990] HKDCLR 29, Choi Hung Investment Co. Ltd. v Chinco Investment Ltd. [1995] 1 HKC 203, Lau Kwok Cheong Dinnes & Another v Tse Ming Chiu [2001] 3 HKC 200, and Sihombing and Wilkinson, Hong Kong Conveyancing Law and Practice, Issue 35, at paragraph VI [63]. Applying these authorities to the present case, Mr. Stock argues that since Wong had executed the 1990 Assignment only as assignees for himself and on behalf of Leung pursuant to the power given by the PA, the title to the Property passed to Wong and Leung jointly irrespective of their execution of the 1990 Assignment, and the PA was therefore simply not part of the chain of title. 68.On this basis, Mr. Stock submits that the PA was a document that was irrelevant to proving title, that it needed not be produced to prove title, and that it should justifiably be ignored by a solicitor examining title. It is Mr. Stock’s contention that the Plaintiffs claim is fundamentally misconceived because it is based on alleged potential defects in title arising from matters contained in the PA which was irrelevant and needed not be produced and examined, and that for this reason, the Plaintiff’s claim fails in limine. Mr. Stock regards his primary argument so strong that he terms it as his knock out point. 69.Mrs. Chan does not argue that Lee Kim-ha and its line of authorities were wrongly decided, but submits that the principle enunciated in Lee Kim-ha simply does not apply to the present case. She distinguishes the present case from Lee Kim-ha on two bases. 70.First, Mrs. Chan submits that the issue in Lee Kim-ha was whether it was required to produce the power of attorney granted by the vendors’ predecessor-in-title (Madam Lau) to her attorney to complete the purchase when Madam Lau acquired the property herself for proof of title. The issue in the present case however is on identity, i.e. whether the Leung who acquired the title of the Property jointly with Wong under the 1990 Assignment was the same Leung who purported to assign the same title to the Plaintiff under the 1997 Assignment. She stresses that in Lee Kim-ha, the power of attorney executed by Madam Lau was not available and hence no similar discrepancies were found, but in the present case, the PA had in fact been sent to DW&P and perused by Mr. Wong, and the Discrepancies cried out for clarification. 71.Mr. Stock argues that Mrs. Chan has not drawn a logical ground for distinction. He submits that since it was not necessary for the Vendors to produce the PA as a document of title and it was not necessary for the Plaintiff as the purchaser to examine the PA, it must follow as a matter of logic that any issue of identity arising from the PA did not fall within the purview of DW&P’s duties of care in relation to title. He stresses that the duty of the purchaser’s solicitor is simply to examine “the documents of title” in order to check for potential blots on title, and that the purchaser’s solicitor does not properly start looking at “extraneous materials” to try to investigate whether there might be any potential blots on title. Mr. Stock relies particularly upon Choi Hung Investment Co. Ltd. and stresses that while the issue of identity did arise in that case, the principle in Lee Kim-ha was still held to be applicable. 72.Second, Mrs. Chan points out that in Lee Kim-ha, the power of attorney had not been registered in the Land Registry, but the PA in the present case had. Mrs. Chan submits that once the PA had been registered, it prima facie formed part of the title deeds and documents. Mrs. Chan relies upon the decision of the Court of Final Appeal in Chen & Another v Lord Energy Ltd. [1999] 1 HKLRD 205. 73.Mr. Stock submits that according to Chen, the fact that a document has been registered in the Land Registry merely gives rise to a presumption that it is a document of title, but this presumption is rebuttable. He submits that the briefest glance at the 1990 Assignment will rebut the presumption because the PA was used for execution by the assignees. He stresses that registration of a document in the Land Registry simply goes to priority but does not guarantee title, and does not affect the nature of the interest. 74.In my view, in order to determine the validity or otherwise of the primary defence argument, two issues have to be considered. 75.First, was the PA required for proving title to the Property had been properly vested in the Vendors (i.e. Wong and Leung) from whom the Plaintiff derived her title under the 1997 Assignment? 76.Second, even if the PA was not so required, was it justified for Mr. Wong to ignore and take no action in respect of the Discrepancies that were apparent when the PA, the 1990 Assignment and the 1997 Assignment were compared? 77.In respect of the first issue, the primary document, or what Mr. Wong contends to be the only document, for proving that title to the Property had been transferred to and vested in Wong and Leung was the 1990 Assignment. To enable Wong and Leung to acquire the title, the 1990 Assignment had to perform two functions. First, it had to identify the parties to the Assignment, i.e. Wong and Leung as the purchasers and their predecessors-in-title as the vendors (“the identification function”). If the 1990 Assignment was the only document to be used for proving transfer of title to the Property, the descriptions of Wong and Leung as stated within the four corners of the Assignment had to be so sufficient and clear that they established beyond reasonable doubt the respective identities of Wong and Leung. Second, the 1990 Assignment had to transfer the title to the Property from the predecessors-in-title to Wong and Leung by its due and proper execution (“the transfer function”). 78.In so far as the identification of the parties was concerned, there were three parts in the 1990 Assignment that identified or sought to identify the parties. First, in the very first paragraph of the Assignment, the two predecessors-in-title of the one part, and Wong and Leung of the other part were identified by their respective names, both in English and Chinese. Leung was described as “LEUNG SHUI HOI SALLY (梁瑞開)”. Second, immediately after the parties’ names on the Assignment, they were identified by their respective addresses. The address of the Property was put down as the address of both Wong and Leung. Third, in the attestation clause at the end of the Assignment, the two predecessors-in-title and Wong were each identified by production of their respective Hong Kong Identity Cards which carried their unique identity card numbers, and their identity card numbers were duly recorded in the Assignment. However, Leung was not identified by any identification document, be it her Hong Kong Identity Card or foreign passport. What was stated in the attestation clause concerning Leung was simply that: -
79.On the face of the 1990 Assignment, the purchasers to whom the title to the Property had been transferred were Wong and Leung. Within the Assignment itself, Wong had been identified not only by his name but also by his unique Hong Kong Identity Card number [xxx]. Hence, the 1990 Assignment had established beyond reasonable doubt the identity of Wong and performed its identification function in so far as Wong was concerned. 80.In the case of Leung, the indicia of identity relating to Leung in the 1990 Assignment were that she was called “梁瑞開” in Chinese and “Leung Shui Hoi Sally” in English, that her address was that of the Property, and that her lawful attorney was Wong whose identity had been established. Having so described Leung, had the 1990 Assignment performed its identification function in so far as Leung was concerned? 81.In my view, these indicia of identity were just insufficient to establish beyond reasonable doubt the identity of Leung. It was not a rare occurrence for two or more Chinese persons to have identical names, not only in Chinese but also in English as well as in their Christian names. Her address as stated in the Assignment was not helpful because it was the address of the Property that was due to be acquired by her with Wong under the Assignment but was not her address at that time. The reference in the attestation clause that Leung executed the Assignment by her lawful Attorney Wong gave no further clues to identify Leung. In my view, the fact that the two predecessors-in-title and Wong had to be identified by their respective Hong Kong Identity Card numbers in the assignment spoke strongly that without using a unique identification document to identify Leung, the 1990 Assignment by itself was unable to perform its identification function in so far as Leung was concerned. In my view, a difficulty of identification arose under the 1990 Assignment. 82.It is trite law that where a difficulty of identification arises under a deed, extrinsic evidence is admissible to identify the person mentioned in the instrument: Sunluck International Development Ltd. v Hing King Development Ltd. [1997] 4 HKC 134. In my view, the PA provided just the kind of evidence that was needed to prove the identity of Leung beyond reasonable doubt. 83.From the fact that the PA and the 1990 Assignment were both prepared by YLY, that the PA was dated a mere 10 days earlier than the 1990 Assignment equipping Wong with the power to execute the assignment on behalf of Leung, and that the PA and the 1990 Assignment were registered in the Land Registry on the same date under successive memorial numbers with the PA being registered first, the irresistible and only inference was that Wong was relying upon the power given to him by Leung under the PA to sign the 1990 Assignment. 84.When the 1990 Assignment and the PA were read together, it was established beyond reasonable doubt that the Leung who had acquired the title to the Property jointly with Wong was the Leung whose name was “梁瑞開” in Chinese and “Leung Shui Hoi Sally” in English, who was holding an Australian passport bearing the number [zzz], and whose husband was Wong. 85.From the above analysis, I am satisfied that the PA was relevant to and required for proof of the chain of title to the Property because without the PA, the identity of Leung as one of the purchasers named in the 1990 Assignment could not be established beyond reasonable doubt. In arriving at this conclusion, I am not questioning the correctness of the decision of Lee Kim-ha and its line of authorities. 86.In Lee Kim-ha, the court was called upon to decide whether the failure to produce the power of attorney under which the purchaser (Madam Lau) used to execute the assignment amounted to a failure to show good title. His Honour Judge Patrick Chan (as he then was) held that since Madam Lau or her attorney was not required to execute the assignment for passing of title to Madam Lau, the power of attorney was irrelevant and unnecessary for proof of title. The focus was solely on the transfer function of the assignment. Insofar as the identification function of the assignment to Madam Lau was concerned, the learned judge had not been asked to rule upon it. A closer examination of the facts revealed that the identity of Madam Lau had never been called into question. Although Madam Lau did not herself execute the assignment, she signed personally on the sale and purchase agreement that led to the assignment when she purchased the property, and she also executed the assignment by which she sold the property to the defendant vendors. 87.In light of the particular facts of the case in Lee Kim-ha, it cannot be regarded as an authority for the sweeping proposition that a power of attorney under which a purchaser has executed an assignment for transfer of title to the property to him is irrelevant for any purpose, needs not be produced for proof of title, and should be completely ignored. In my view, each case depends on its own facts. If the power of attorney contains evidence necessary to complete the title to the property, for instance, providing evidence for the identification of the purchaser, it will be relevant to and required for proof of title even though it is not required for completing the transfer of title unto the purchaser. 88.Mr. Stock has also referred me to other authorities. He relies particularly upon Choi Hung Investment Co. Ltd. where he says the issue of identity had arisen, but the principle in Lee Kim-ha was still held to be applicable. In this case, three assignments of the property were involved in the chain of title. The central issue was whether the person who took the assignment under the first assignment was the same person who assigned the property under the second assignment. One of the objections was that since the original of the first assignment was missing and the copy that was registered in the Land Office did not bear the signature of the first assignee, it was not possible to compare the signature of the first assignee with the signature of the assignor in the second assignment so that it could not be verified if they were the same person. Rogers J. (as he then was) followed Lee Kim-ha and held that this objection was invalid because the absence of a valid execution by the first assignee did not affect the title to the property. The learned judge however had never ruled that since it was not necessary to produce the original of the first assignment to prove title, the issue of identity was also resolved. Instead, his lordship analyzed the evidence carefully and held that it had been proved beyond reasonable doubt that the first assignee and the assignor in the second assignment were the same person. The evidence used for determining the identity issue included a copy of the first assignment (albeit without the first assignee’s signature) and the two statutory declarations made by the second assignee under the second assignment. One matter of significance relied upon by the learned judge was that the assignee under the first assignment and the assignor under the second assignment had the same address at “98 Creffield Road London W3”. In my view, it is clear that the learned judge had considered that execution of an assignment for assigning title to the property to the assignee and the identity of the assignee were two separate and distinct issues, and held that the principle in Lee Kim-ha applied to the former but not to the latter. Hence, the fact that the principle in Lee Kim-ha was held applicable in Choi Hung Investment Co. Ltd. was not an authority to say that the PA in the present case was not relevant to or was not required for proof of the identity of Leung. On the contrary, the learned judge’s reference to the first assignee’s address in the first assignment, which was not required to prove execution of the assignment, clearly showed that the very same document was held to be relevant and admissible for proof of identity. 89.Mr. Stock also refers to Lau Kwok-cheong Dinnes. In this case, the plaintiff raised a requisition on the execution of a memorandum of agreement and condition of exchange whereby the government granted to the defendant the property in question in exchange for the defendant surrendering other lots of land. The defendant executed the conditions of exchange by his attorney. The plaintiff asked for a certified copy of the power of attorney to show due execution of the conditions of exchange. While maintaining that it was not necessary to do so, the defendant nevertheless supplied the power of attorney, and the plaintiff sought to raise further requisitions but they were not answered. Mr. Stock stresses thatLau Kwok-cheong Dinnes was similar to the present case in that the power of attorney had been produced, but Deputy Judge Jeremy Poon still held that the power of attorney was not required for proof of title. In my view, this case was different from the present case. In that case, the learned judge held that title to the property had passed to the defendant, not by due execution of the conditions of exchange, but by operation of law upon compliance of the conditions, and hence it was not necessary to produce the power of attorney, following the principle in Lee Kim-ha. The issue of identity was never before the learned judge, and it cannot be regarded as an authority to say that the power of attorney was irrelevant to proof of identity. 90.Mr. Stock has also argued that the PA in the present case was not a document of title and hence it was not required to be produced and could be ignored. This submission overlaps with the second ground of distinction drawn by Mrs. Chan between the present case and Lee Kim-ha, i.e. the PA in the present case had been registered in the Land Office while the one in Lee Kim-ha had not. I shall deal with them together. 91.In Wong Pik-ching v Yu Hon Chung & Another, unreported, HCMP No. 2969 of 1996, Mr. Recorder Edward Chan QC stated that: -
92.This statement was approved in Chen by the Court of Final Appeal. Li, C.J. agreed that this approach was sound provided it was understood that the registered instruments had to be properly registrable under the Land Registration Ordinance, Chapter 128 (“LRO”). The learned Chief Justice however stressed that on this approach, the matter was only prima facie and it might therefore be displaced on examination. Section 2 of LRO provides that only instruments that may affect interests in land may be registered in the Land Office. 93.Since the PA had been registered in the Land Office, Mrs. Chan must be right in her submission that the PA was presumed to be a document of title by virtue of these authorities. Mr. Stock does not argue otherwise but contends that the briefest glance at the 1990 Assignment would reveal that this presumption had been rebutted since the PA was used only for execution by the assignees. 94.I do not agree with this submission. The 1990 Assignment should not be glanced at briefly. Had it been read carefully, it would have revealed that the identification of Leung in the 1990 Assignment was deficient and reference had to be made to the PA for the necessary particulars to put the identity of Leung beyond reasonable doubt. 95.In Tang Wing Lam David & Another v Chung Chi Keung Frederick [1999] 3 HKC 533, Barnett J. stated as follows: -
96.In my view, while the PA in the present case did not actually transfer or was required for acknowledging receipt of the title to the Property, it did contain evidence necessary to complete the title in that it provided the information to prove beyond reasonable doubt the identity of one of the assignees Leung. I find that the PA was a title deed within the meaning of the term as defined by Barnett J. Alternatively, since the PA had been properly registered in the Land Office, it was presumed to be a document of title, and that presumption had not been rebutted. 97.Having considered the submissions made by Mrs. Chan and Mr. Stock, I accept that the present case is distinguished from Lee Kim-ha on the two grounds submitted by Mrs. Chan. I reject the defence contention and find that the PA was a document relevant to and required for proof of title, and that Mr. Wong was not entitled to ignore it once it had been supplied by JKTH to DW&P. 98.If I am wrong in this finding, there is still the second issue whether it was justified for Mr. Wong to ignore the PA. In this respect, it depends on the extent of his duties, both contractual and tortuous owed towards the Plaintiff, as a solicitor instructed by a purchaser to carry out all conveyancing work for completing the purchase of a property. 99.It is beyond doubt that, in the realm of conveyancing, a purchaser’s solicitor is under a heavy duty to protect his client against possible future hazard, and hence he is obliged to make reasonable enquires and searches into title to the property due to be acquired by his client to ensure that the vendor can show a good legal title free from adverse interests: Jackson & Powell on Professional Negligence, 5th Edition, paragraphs 10-193. He should take care with searches and enquiries and the replies received should be properly considered: paragraph 10-195. If there are suspicious circumstances that set alarm bells ringing about whether there is an underlying problem and prompt further actions, he must take the further actions: paragraph 10-195. He is under a duty to advise his client about important matter that comes to his notice, such as the existence of a right of way or a defect of title, and must warn his client about risks that the client may not appreciate since a person who goes to a lawyer with respect to a land transaction is entitled to expect that lawyer to investigate the state of any title that is germane to the matter and to explain to the client exactly what it is that is portrayed by the state of the title: paragraph 10-199. 100.Mr. Stock does not argue against the existence of such duties upon Mr. Wong and DW&P. What he stresses is that they were only under a duty to examine “the documents of title” in order to check for potential blots on title, and they were not required to look at “extraneous materials” to try to investigate whether there might be any potential blots on title. It is of course Mr. Stock’s contention that the PA was not a document of title but extraneous matters. 101.I do not agree with Mr. Stock’s submission. It is clear from the general propositions relating to the duties of a solicitor acting for a purchaser in a conveyancing transaction, as extracted from Jackson & Powell on Professional Negligence, 5th Edition and referred to above, that he has to alert himself to any suspicious circumstances that may indicate the existence of any problem relating to the title to the property, and that he has to make enquiries and searches to ensure that the title to the property that his client is going to acquire is not doubtful. To protect his client from possible future hazard, the solicitor of course has to ensure that the client will get not only a good title, but also a title that will bring no risk of litigation if his client chooses to sell the property in the future. 102.Mr. Stock has not cited any authority to me to show that a solicitor acting for a purchaser client is not required to investigate suspicious circumstances that are not apparent from an examination of documents of title but from other extraneous circumstances. On the contrary, Clough J.A. observed in Kan Wing–yau and Another v Hong Kong Housing Society [1988] 2 HKLR 187 as follows: -
103.In my view, when a court is entitled to declare that a purchaser is not bound to accept a title that is found to be doubtful because of facts appearing on the title as well as facts extrinsic to it, I can see no reason why a solicitor acting for a purchaser is only required to examine the title deeds and documents but is not required to investigate facts extrinsic to the deeds and documents, even if those extrinsic facts do set the alarm bells ringing. A doubt is a doubt, no matter how it comes to the notice of the investigating solicitor. I accept the submission by Mrs. Chan that in conveyancing, the solicitor owed a very onerous duty to make sure that he checks everything, that he advises the client of any possible hazard, and that if there is any possible hazard, he should not accept the title. Bearing in mind these onerous duties, I reject Mr. Stock’s submission that Mr. Wong or DW&P was not required to examine the PA even if the PA (contrary to my earlier ruling) was not a title deed or a part of the documents of title. 104.For reasons above, I am of the view that the PA was a title deed or document, and even if it is not, it was still relevant to and required for proof of title. Even if this finding were incorrect, Mr. Wong and DW&P were still required, in discharge of their contractual and tortuous duties towards the Plaintiff to exercise reasonable skill and care, to examine the PA, identify discrepancies if any between the PA and other documents of title as well as all other facts that came to the notice of Mr. Wong and DW&P, and raised the necessary requisitions. 105.Accordingly, I am unable to agree with the defence primary argument and I reject it. The defence secondary argument 106.106. Mr. Stock submits that there is simply nothing discrepant in the sense of a positive inconsistency that would give rise to doubts as to title as between the identification of Leung in the PA and the 1997 Assignment. It is both Mr. Wong’s evidence and Mr. Stock’s submission that the Discrepancies were not discrepancies at all for two reasons. 107.First, Mr. Stock submits that there was nothing inconsistent between Leung’s use of an English signature in the PA and a Chinese signature in the 1997 Assignment because it was perfectly normal for a Hong Kong person to have a Chinese signature as well as an English signature. He submits that since the two signatures were not signed in the same language, there was no inconsistency in the positive sense. 108.Second, Mr. Stock submits that there was nothing inconsistent between the reference to Leung’s passport in the PA and the reference to her Hong Kong Identity Card in the 1997 Assignment because it was perfectly normal for a Hong Kong person to have a foreign passport as well as a Hong Kong Identity Card. 109.Mr. Stock has referred me to a number of authorities where the court held that there was no problem with the title to the property even though there were minor in the signatures and identification documents. Such authorities include Lee Yeung-chun and another v Ng Choi-chun [1990] 1 HKLR 468; Buildon Investment Co. Ltd. v Leung Sai-yum [1989] 2 HKC 499; Many Wise Investments Ltd. v Tech Profit Development Ltd. [1993] 2 HKC 517; Leung Yam-tim v Ho Tak Man, unreported, HCMP3752/1990; Sunluck International Development Ltd. v Hing King Development Ltd. [1997] 4 HKC 134. 110.I do not find any of these authorities helpful. It is obvious to me that each of these cases was decided on the basis of its own facts. For instance, in Buildon Investment Co. Ltd., one factor of significance relied upon was that the signature of the beneficiary in the deed of renunciation compared well with that in the assent and the deed of assignment. In Many Wise Investments Ltd., Woo J. (as he then was) considered that the discrepancies between the two signatures which were affixed 34 years apart were not so significant as to cause any concern. In Leung Yam-tim, the signatures in the two assignments were affixed eleven years apart and the identity cards with the same number were produced and recorded. In Sunluck International Development Ltd., the discrepancies in the identity of the assignee in an assignment, which was a company limited, was resolved by the unique business registration number on the deed. 111.None of these cases bear close resemblance to the present case. In my view, it is important to bear in mind that in the present case, the Discrepancies had two limbs: Leung’s signatures on the PA and the 1997 Assignment were different, and Leung’s identification documents in the PA and the 1997 Assignment were different and they were issued by two different issuing authorities. 112.As far as the signature discrepancy is concerned, I do not accept Mr. Stock’s submission that since Leung merely used different languages to sign her name on the PA and in the 1997 Assignment, there was “nothing discrepant in the sense of a positive inconsistency” which would give rise to doubts as to title. In my view, if there is an inconsistency between two signatures, they are inconsistent, and there is no such thing called positive or negative inconsistency. 113.In this regard, it is important to bear in mind what McMullin J. had said in Ma Chun-man v Yung, Yu, Yuen & Co. [1978] HKLR 26 about the significance of a signature. The learned judge said: -
114.I cannot agree more with the learned judge. A personal signature must be a unique authenticating mark that can be used to verify or identify the true identity of the maker of the signature. It is through the use of signatures as identical as possible (giving due allowance for the failing hands) that the signor can identify himself and represent to the outside world that it is the same person making these signatures even though he does not sign on every occasion under the watchful eyes of others. Likewise, anyone by comparing the similarities or otherwise of the two signatures can decide whether the same person has signed them and identify the signor. In my view, two signatures cannot be more different when they are made in two different languages, because the difference between them will not be just a question of degree but there is in fact no resemblance between the two at all. 115.In addition, I am of the view that it is wrong to resolve the issue of similarities or dissimilarities of a signature by reference to the language in which it was used to make the signature. A signature is a personal identification mark that should have no bearing to the language used. A Chinese person may use an English signature as her one and only signature, and has no signature in Chinese. In fact, many people do not sign in any particular language but just make a mark or scribble in whatever way they like, and that was in fact what Wong had done when he executed the 1990 and the 1997 Assignments. 116.In Kan Wing-yau, one of the objections raised was that the identity of the donor of the 1964 power of attorney had not been shown to be that of the previous purchaser since the Chinese signatures appeared to be different. It was held that this was a ground for concern, and that good title to the property had not been shown. 117.As far as discrepancy in the identification documents is concerned, Leung was identified in the PA by production of her Australian Passport bearing the number [zzz] and in the 1997 Assignment by her Hong Kong Identity Card bearing the number [yyy]. There cannot be any argument that the identification documents were different. 118.From Mr. Wong’s evidence and Mr. Stock’s submissions, it appears that they are not really saying that there were no discrepancies between the respective signatures and identity documents in the PA and in the 1997 Assignment. What they are putting forward is in fact an explanation by Wong to justify why these discrepancies did not cause him concern about the identity of the Leung in the two documents. They say that this was just a case of two signatures being used by Leung, and it was normal for Chinese people to have one signature in Chinese and the other in English. They also say this was not a case of discrepancy in identity documents because it is normal for a Hong Kong resident to hold both a Hong Kong Identity Card and a foreign passport, and Mr. Wong describes himself to be one of this group of people. 119.With the greatest respect, whether or not it is usual for a Chinese people to sign in two different languages and for a Hong Kong a resident having a Hong Kong Identity Card to hold a foreign passport is beside the point. In discharging his duties as the Plaintiff’s solicitor to complete the purchase in 1997, Mr. Wong and DW&P had to ensure that the Vendors had shown good title, and it is important to bear in mind that the burden of proof is not just on balance of probabilities, but beyond reasonable doubt: MEPC Ltd; and Chi Kit Company Limited. 120.In my view, before Mr. Wong and DW&P advised the Plaintiff to accept title from the Vendors, what he should have asked were: while it was likely or even probable that Leung had signed the PA in English and the 1997 Assignment in Chinese, had it been proved beyond reasonable doubt that the Leung who signed her name in English in the PA was the same Leung who signed her name in Chinese in the 1997 Assignment? And while it was likely or even probable that Leung was holding both a Hong Kong Identity Card and an Australian passport, had it been proved beyond reasonable doubt that the Leung who was holding the Australian Passport bearing number [zzz] was in fact the same Leung who was holding the Hong Kong Identity Card bearing the number [yyy], and if so, had it been further proved beyond reasonable doubt that this particular Leung would sign her names in the 1997 Assignment in Chinese when she had previously signed the PA in English? 121.As apparent from the letters dated 6th August 2001 (see paragraph 41) and dated 21st September 2001(see paragraph 49), these were not the questions that ran through the mind of Mr. Wong at the material times. By saying in the letters that it was “usual” or “not unusual” for a holder of Hong Kong Identity Card to also hold and be identified by an Australian passport, and taking the view that Leung had just signed in two different languages, he had fallen into the error of asking the wrong question. What he should have asked was not what was usual or probable, but on the evidence before him, whether it had been proved beyond reasonable doubt, despite the Discrepancies, that the Leung in the PA was the same Leung in the 1997 Assignment. An examination of Mr. Wong’s witness statement, his oral testimony in court, as well as all letters he had previously written to T&C and S&C in relation to the Requisition clearly reveals that Mr. Wong had no other evidence to establish that the two Leungs were the same person other than the various aspects in the deeds and documents that he referred to. 122.It is Mr. Wong’s evidence and Mr. Stock’s submissions that there were a number of aspects of the documentation that, when taken together, made it beyond a shadow of doubt, even in 1997, that short of an elaborate fraud, the Leung referred to in the PA was the same Leung referred to in the 1997 provisional sale and purchase agreement, the 1997 Agreement and the 1997 Assignment. They relied upon four matters. 123.Firstly, it was pointed out that Leung was identified in all documents by her Chinese and English names with no discrepancies. That is correct but the issue was whether the two Leungs apparently having the same English name and Chinese name were the same person since they signed differently and had different identity documents. 124.Secondly, it was said that in the 1997 provisional sale and purchase agreement, the 1997 Agreement and the 1997 Assignment, Leung had been identified by her Hong Kong Identity Card, and she signed her names in Chinese, that her signatures in the 1997 Agreement and 1997 Assignment were attested by solicitors, and that her Hong Kong Identity Card must have been viewed in the attestation process. In my view, what are stated is correct as a matter of fact, but it does not answer the question whether the two Leungs were the same person. In particular, I noted that different persons were in charge of the different attestation processes of various documents. Leung’s execution of the PA was attested to by John Frederick Henry in Melbourne, the execution of the 1990 Assignment was attested to by Lam Wai Kuen Alex of YLY when Wong signed and Leung was not present, and the execution of the 1997 Assignment was attested by Flora S. W. Li of JKTH. It is therefore clear that none of these persons who took part in the various attestation processes could confirm the Leung before him or her was also the same Leung who executed the other documents. 125.Thirdly, it was said that Wong was the donor of the PA, the only other co-owner of the Property and had been identified by his Hong Kong Identity Card number in all relevant sale and purchase agreements and assignments with proper attestation. It was therefore submitted that since there could not be any dispute that the two Wong’s in the PA and the 1997 Assignment were the same person, there could not be any realistic suggestion that the two Leung’s were different persons because Leung had described Wong as her husband in the PA and they were described to be cohabiting in the same address at all material times, firstly in the Property when the 1990 Assignment was executed, and then in another address when the 1997 Assignment was executed. 126.Mrs. Chan has taken issue on whether it had been shown that Wong and Leung had cohabited in the same address. In my view, Mrs. Chan’s contention has substantial forces. The PA was dated 29th August 1990. Wong’s address was described to be in an industrial building in Kwai Chung while Leung was described as living in Australia. About 10 days later when the 1990 Assignment dated 7th September 1990 was executed, Wong and Leung were described in the deed to be cohabiting in the Property. That was plainly incorrect as a matter of fact. Wong and Leung could not have by 7th September 1990 taken possession of the Property, and Leung could not have resided there at that time when she was in Australia, and her absence in Hong Kong was clearly the reason why the PA had to be executed. In other words, Leung could not be identified by using the indicia that she was the Leung who resided at the Property on 7th September 1990. Furthermore, the evidence shows that solicitors preparing the assignments would just put down the addresses in accordance with client’s instructions without verification. It was clear from the letter dated 23rd August 2001 from YLY that they had never met Leung, and Leung’s address in the 1990 Assignment could only be put down according to their instructions from Wong and not from Leung. The present case was different from Choi Hung Investment Co. Ltd. where the evidence proved that the first assignee in the 1973 assignment and the assignor in the immediate subsequent assignment in 1991 were having the same address in London which provided an important indicia of identity. In my view, the address of Leung as stated in various documents might well provide some evidential proof of identity, but it was not sufficient proof, and certainly did not have the substantial force to answer queries that had been raised by the discrepancies in the signatures and identity documents. 127.Fourth, it is submitted that short of an elaborate fraud, there could be no doubt that the two Leungs were the same person in the PA and the 1997 Assignment. It is submitted that the court does not require a purchaser’s solicitor to raise requisitions in respect of some fanciful risk. 128.In my view, this point is defeated by the submission itself. A purchaser’s solicitor has of course a duty to detect and eliminate the possibility of fraud, including the possibility of an elaborate fraud. Mr. Stock submits that if the court requires a purchaser’s solicitor to check every written document against the possibility of fraud then the entire system of conveyancing would collapse. I do not agree. What a purchaser’s solicitor is required to do is simply to make all customary and reasonable searches and enquiries in light of the particular circumstances of the case handled by him. I agree with Mrs. Chan who submits that the law is not that a solicitor is required to make enquiries only when there are some sort of unusual irregularities or some evidence of positive fraud, but the law is that whenever a purchaser’s solicitor is put on notice of something irregular, he should make enquiry. In the present case, the two Leungs signed differently and with different identity documents, was it not sufficient to ring an alarm bell that there might be an issue relating to the identity of the two Leungs? 129.Mrs. Chan submits that it was significant to note that Mr. Wong had admitted in his evidence that if Leung had been identified first of all by an Australian passport and then by a USA passport, that would have created a doubt as to the identity of that person. Mrs. Chan submits that there was no material difference with the present case when Leung was identified firstly by a particular Australian passport and then by her Hong Kong Identity Card. I accept Mrs. Chan’s submission. 130.Mr. Stock places considerable reliance upon the case of Lee Yeung-chun v Ng Choi-chun [1990] 1 HKLR 468. In this case, it was held that good title to the property had been shown although the vendor’s predecessor-in-title were described with different passport numbers and had signed his middle name differently at the time of his purchase and his sale. In my view, this case differed from the present case in material respects. First, in that case, the difference in the signature was that the predecessor-in-title signed his full name in the assignment at the time of purchase but he signed only with his initials in the assignment when he sold the property. Godfrey J. (as he then was) was satisfied that there was nothing in this discrepancy, and he also found that the signatures were under the same hands. In the present case, the two signatures of Leung were in my view completely different as they were signed in different languages. Second, in that case, the difference was only in respect of the number of the passport, and this was clearly understandable since there had been a lapse of eleven years between the two assignments. On both occasion, the predecessor-in-title was holding an American passport. In the present case however, Leung was identified by two different identity documents issued by two different issuing authorities, one by the Australian Government and the other by the Hong Kong Government. Not every Hong Kong resident has an Australian passport. 131.Mr. Stock also relies upon the presumption of due execution in section 23 of the Conveyancing and Property Ordinance, which provides that an instrument appearing to be duly executed shall be presumed until the contrary is proved to have been duly executed. I do not consider the presumption assists the defence. 132.Mrs. Chan submits that the challenge here was not that the assignments or documents were not properly executed, but that the 1997 Assignment could have been validly executed by someone known as Leung Shui Hoi Sally but that someone was not the Leung Shui Hoi Sally who executed the PA. Furthermore, even if the presumption were found to have arisen, it was rebutted because of the difference in the signatures and the identity documents in the PA and the 1997 Assignment. In Kan Wing-yau, it was held that the difference in signatures in itself was sufficient to show that there was no appearance of due execution. I accept the submissions of Mrs. Chan. 133.I have considered the evidence of Mr. Wong and the submissions of Mr. Stock very carefully. I am not persuaded that the various aspects in the documentation referred to by the defence amount to sufficient proof beyond reasonable doubt that it was the same Leung who executed the PA and the 1997 Assignment. In Lam Kin-i v Tsui Ming-yee, unreported, HCMP361/1989, the vendor was under a duty to prove that the same person had signed in 1960 on the first assignment as purchaser and then in 1977 in the subsequent assignment as vendor so as to show good title. This person was described by the same name (John Tin On Wong) in the two assignments but the two signatures were materially different from one another. Godfrey J. (as he then was) held that because of the discrepancies in signature, “proper conveyancing evidence” was required to prove that the two Wongs were the same person. The vendor contended that Wong took the property jointly with another person in 1960 and sought to convey the property jointly in 1977 was strong circumstantial evidence to prove that the two signatories were of the same person, despite the discrepancies in the signatures. The learned judge held that: -
134.In my view, the observation by the learned judge is equally applicable in the present case. Even if it were right for Mr. Wong to contend that the matters he referred to in the documentation as pointers for identifying the Leung in the 1997 Assignment was the same Leung in the PA, these were no more than circumstantial evidence that was simply not enough for proving good title. I reject the defence secondary argument. 135.It is also very important to bear in mind that Godfrey J. had pointed out specifically that the vendor has to provide evidence that will satisfy not only the purchaser but also “any purchaser from him” that good title has been shown. In other words, Mr. Wong had to bear in mind not only that he had no doubt that the two Leungs referred to in the PA and the 1997 Assignment were the same person, but also that he had to satisfy that any prospective purchaser who might buy the Property from the Plaintiff should she decide to sell would share his view and take no issue with the Discrepancies, or else the Plaintiff would run into difficulties in her subsequent sale. 136.In the present case, it is beyond argument that good title could not be shown by either the Plaintiff to Chan, or by the Vendors to the Plaintiff, unless it was proved beyond reasonable doubt that the Leung who obtained title to the Property jointly with Wong under the 1990 Assignment was the same Leung who executed the 1997 Assignment in favour of the Plaintiff. The 1990 Assignment showed that the Property was vested in Wong and the Leung who signed her name in English and who was identified by an Australian Passport bearing the number [zzz]. The Leung who executed the 1997 Assignment was a person who identified herself by a signature in Chinese and by production of her Hong Kong Identity Card. Since only the person who had been vested with the title to the Property in 1990 could have the title to assign in 1997, it was imperative for Mr. Wong and DW&P to look for evidence that would establish beyond reasonable doubt that the two Leungs were the same person. The Discrepancies identified by S&C in fact stood out conspicuously and cried out for explanation. I cannot accept the defence secondary argument that there was nothing in the Discrepancy, or that there were no discrepancies. Mr. Wong had clearly fallen into the error by assuming that the PA was only relevant insofar as the transfer of title was concerned, but ignored the fact that there was deficiency in the 1990 Assignment in the identification of Leung, and the PA provided the necessary particulars of Leung to put her identity beyond reasonable doubt. I also found that Mr. Wong had failed to realize that when the Plaintiff sought to sell the Property in the future, it was likely that the prospective purchaser would point to the Discrepancies and demand for proof that the two Leungs were the same person, and by then, the Plaintiff would have to answer the requisition from the position of a vendor and not that of a purchaser. 137.I find that the Requisition had been validly and properly raised by S&C, and that it should have been raised in 1997 by Mr. Wong and DW&P when they acted for the Plaintiff in completing the purchase. Breach of duty 138.It is settled law that a solicitor owes to his client not only his contractual duty under his retainer but also a duty in tort to exercise reasonable skill and care: Feerni Development Ltd. v Daniel Wong & Partners [2001] 2 HKLRD 13. 139.A solicitors’ duty is defined by the terms and limits of his retainer and any duty of care to be imposed must be related to what he is instructed to do. The duties arising from the retainer are to be determined by reference to the relevant circumstances of the case. The test is what a reasonably competent solicitor would do having regard to the standards normally adopted in his profession : See Midland Bank v. Hett, Stubbs & Kemp [1979] 1 Ch 384; but he will not be liable for a mere error of judgment: Feerni Development Ltd. 140.In Sihombing and Wilkinson, Hong Kong Conveyancing Law and Practice, Issue 35, at paragraph VI [256], the importance of checking names, signatures and identity numbers for consistency has been states as follows: -
141.In my view, Mr. Wong and DW&P were clearly under a duty to check the names, signatures and identity numbers of the Vendors for consistency. Mr. Wong and DW&P had at least two opportunities to discover the Discrepancies. First, Mr. Wong and DW&P had been provided with photocopy of Leung’s Hong Kong Identity Card before the 1997 Agreement was signed. By that time, they must have known that Leung was identified by her Hong Kong Identity Card and when they received the title deeds and documents from JKTH including the PA, they should have noticed that Leung had never been identified previously by a Hong Kong identity card, and that she had never signed her name in Chinese. The second opportunity came of course at the time when the 1997 Assignment was sent to DW&P for the execution of the Plaintiff. However, on none of these occasions had the Plaintiff been advised of the Discrepancies and had never been told of the possible implication. At no time had Mr. Wong and DW&P raised any requisitions in this regard. I find that at the time when the 1997 Assignment was executed, the Vendors had not shown good title because of the Discrepancies, but nothing had been done by Mr. Wong and DW&P. 142.What Mr. Wong and DW&P had failed to do, in my view, was what a reasonably competent solicitor would not have failed to do. S&C had done it, and T&C accepted that the Requisition was proper. It is important to bear in mind that Mr. Wong and DW&P had a duty to protect the Plaintiff from possible future hazard, and to ensure that the title she had acquired from the Vendors was free from any patent cloud, and free from any risk or possibility of litigation. In considering whether good title had been shown, I appreciate that the court has to use reasonably robust common sense, and I might come to the conclusion that a good title had been shown if Leung had used the same identity documents but signed her name in a different language, or if she used different identity documents but signed her name in identical ways (that of course presupposed it to be in the name language). However, this was not the situation here. Using my common sense as robustly as I can, in light of the Discrepancies, I can never come to the conclusion that the Requisition raised by S&C could be classified as a fanciful risk, or a claim that could be laughed out of court. 143.I have also considered whether Mr. Wong and DW&P could be exonerated from liability on the ground that they had just fallen into an error of judgment. However, bearing in mind that it was so fundamental and obvious for a solicitor to check names, signatures and identity numbers to ensure consistency, I am of this view that this is a clear case of negligence. In saying so, I have borne in mind what was said by McMullin J. in Ma Chun-man cited in paragraph 113 above. What Mr. Wong has said in evidence was that it was not that he did not notice the Discrepancies, but he found it not necessary and even it was stupid to raise the requisition. However, with the greatest respect, he was acting on the basis that it was usual for a Hong Kong resident to have two different signatures, one in Chinese and one in English, and that it was also usual for her to hold a foreign passport, and from that basis he assumed Leung to be in this group of Hong Kong residents. However, in a conveyancing exercise, there is no place for assumption but proof beyond reasonable doubt on the basis of the title deeds and documents and proper conveyancing evidence. In fact, what needed to be done was extremely minimal. The Vendors could be asked to make a statutory declaration to confirm Leung’s identity, or Leung could have been asked to sign the Assignment again in English, or produce her Australian Passport bearing the number [zzz] to verify her identity. Bearing in mind that it was the duty of the Vendors to show good title, it was just a great failing of duty on the part of Mr. Wong and DW&P when they had failed to raise similar requisition as what S&C had done, and when they failed to ask for clarification or rectification of the Discrepancies. 144.I find that Mr. Wong and DW&P had failed to raise requisition with the Vendors despite the presence of the Discrepancies. I find that they had failed to advice the Plaintiff of the Discrepancies and failed to warn her of the risk that might flow from there. I find that they had advised the Plaintiff to accept the 1997 Assignment without the Discrepancies being clarified or rectified. In short, I find that Mr. Wong and DW&P had breached their contractual and tortuous duties towards the Plaintiff to exercise reasonable skill and care in acting for her in completing the 1997 purchase. I find them liable to the Plaintiff. Damages 145.As a result of Mr. Wong and DW&P’s breach of duties, the Plaintiff was forced to annul the 2001 Sale, and she could only sell the Property again after the Discrepancies had been rectified by a statutory declaration from Leung. The delay in sale clearly cost the Plaintiff to lose the purchase price of $200,000. There was no argument from the defence saying that the damage was too remote and not recoverable, or that the Plaintiff had failed in her duty to mitigate. There was also no challenge to the quantum on the ground that the price at which the Plaintiff had subsequently sold the Property was below the then market price. I find that the Plaintiff is entitled to recover from the Plaintiff this sum of $200,000 as damages being the diminution in the sale prices caused by delay in sale. 146.The Plaintiff has also spent $1000 legal costs so that Leung could provide the statutory declaration to clarify or rectify the Discrepancies. Without this statutory declaration, the Plaintiff would not have been able to sell the Property. I am of the view that the loss was flowing directly from the breach of duties on the part of Mr. Wong and DW&P or that it was within their reasonable contemplation and was therefore recoverable. 147.The Plaintiff is also claiming the sum of $16,825.00 being the amount of costs and expenses for the abortive 2001 Sale. The amount claimed is properly documented. I find that they had been actually spent in the abortive sale. Mr. Stock submits that this sum of money had to be spent by the Plaintiff in any event even if the 2001 Sale had gone through. What the Plaintiff had lost was the costs and expenses she had spent in the ultimate sale but she has not made any claim of that in the Statement of Claim and there is no evidence relating to those costs and expenses in this trial. I agree with the submission by Mr. Stock. I reject this claim. 148.There is originally a claim for loss of rent, but that claim has been abandoned during Mrs. Chan’s opening for the Plaintiff. 149.There is a claim for interest. It is apparent that there is no argument that the Plaintiff is entitled to interest on her loss, and the only argument relates to the rate of interest. Mrs. Chan refers to Feerni Development Ltd. and Tai Kong Enterprises v Li Hok So, unreported, HCA 2251/1995 where interest were awarded at the rate of prime plus 2%. On the other hand, Mr. Sock submits that the appropriate rate should be 1% above prime and refers to Poon Mee-kuen v Chau Hor-tong & Another, unreported, HCMP1431-3/2004; Ma Chi-wing Wendy v The Personal Representative of the Estate of Ma Vincent, Deceased, unreported, HCA 3913/2001. 150.Other than the fact that the award of interest is always within the discretion of the court, I find no substantial principle for the determination of the rate of interest. Under these circumstances, I am inclined to adopt a lower interest rate in favour of the paying party. I shall use the rate of 1% above the prime rate. Mrs. Chan asks for interest to run from 3rd August 2001, but I find the appropriate date should be 18th September 2001 when the 2001 Sale was annulled, and hence the loss and damage had occurred. Order 151.For reasons aforesaid, I make the following orders: -
Mrs. Dora Chan, instructed by Messrs. Peter Mo & Co., for the Plaintiff. Mr. Alexander Stock, instructed by Messrs. Barlow Lyde & Gilbert, for the Defendants. |
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