Chang King To v. Cheung & Choy, A Firm of Solicitors

HCA 785/2014

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 785 OF 2014

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D E C I S I O N

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1.This is the defendant’s application to strike out the Amended Statement of Claim and for the action to be dismissed.

2.The defendant is a firm of solicitors.

3.The plaintiff is the eldest son of one of their clients, a Madam Wong Shuen Yuk (Madam Wong).

4.The plaintiff and Madam Wong jointly owned a flat being Unit 1, 16^th Floor, Block 17, Heng Fa Chuen, Hong Kong as joint tenants (the flat).

5.The flat was until September 2010 occupied by the plaintiff, Madam Wong and Clarence, one of her other sons and his family.

6.The plaintiff moved out following a violent altercation between the plaintiff, Clarence and his girlfriend.

7.It is the defendant’s case that in July 2011 one Simon Cheung (Mr Cheung), a partner in the defendant firm received a telephone call from Madam Wong when she informed him that it was her wish that the joint tenancy of the flat which she owned with the plaintiff should be severed.  Mr Cheung advised her how this could be done.  They then proceeded with the matter.

8.The defendant lodged a Form of Severance with the Land Registry.

9.Due to a minor inaccuracy in the description of the flat the Form of Severance was rejected.

10.As the first Form of Severance had been served on the plaintiff he communicated by email with the defendant making numerous allegations including one that Madam Wong had not instructed them to sever the joint tenancy.

11.The plaintiff suggested that he and Madam Wong should attend upon the defendant.

12.The defendant advised the plaintiff to seek independent legal advice, and declined the request for Mr Cheung to see him as he was not a client.

13.The defendant then prepared a second Form of Severance and arranged Madam Wong to attend at their office.

14.Mr Cheung deposed in an affirmation that he had known Madam Wong for a number of years.  She had been a client of the firm.

15.When Madam Wong attended at the defendant’s offices to finalise the matter on 21 November 2011 she had been accompanied by the other son, Terry. Mr Cheung recognised her and she produced her identity card.  The number on the card was the same as the one she had used previously.  Mr Cheung caused the card to be photocopied.

16.The number on the card was the same as the number of the identity card recorded in two previous documents evidencing previous transactions where the defendant had represented Madam Wong.

17.Also Madam Wong signed a document appointing the defendant to represent her in relation to the severance of the said joint tenancy:

“                Translation

I, WONG SHUEN YUK (Wong Shuen Yuk), address: Flat 1601, Block 17, Heng Fa Chuen, Hong Kong, (Hong Kong Identity Card No.: B166950(3)) hereby appoint Cheung & Choy to be the solicitors representing me and handling legal matters for me, including the issue of notice to sever joint ownership (Notice of Severance) to Chang King To (Chang King To) in relation to Flat 1601, Block 17, Heng Fa Chuen, Hong Kong (the ‘Property’) so as to sever the Property severally and jointly owned (‘joint tenancy’) by Chang King To (Chang King To) and I and then convert it into tenancy in common (‘tenancy in common’) as the type of ownership.

Date: 21^st November 2011

	(Signature of Wong Shuen Yuk)
	WONG SHUEN YUK (Wong Shuen Yuk)
	(Hong Kong Identity Card No.: B166950(3))”

18.This is a translation of the original.

19.On 24 February 2012 the defendant lodged a second Form of Severance at the Land Registry and served a copy of it upon the plaintiff.

20.On 29 February 2012 the plaintiff wrote to the defendant enclosing a letter signed by Madam Wong in these terms:

“         To Whom It May Concern

This is to say that I, Ms Wong Shuen Yuk, have not instructed, nor paid Cheung & Choy Law Firm to write the two ‘Notice of Severance’ dated 26 July 2011 and 24 Feb. 2012 (Copies attached).

I do not know the email address of Mr. Chang King To.

And I have not received any copy of the letters as stated (cc. Client); the copies attached are provided by Mr. Chang King To.

Signed: (signed)

Wong Shuen Yuk

Date: 29-2-2012 [handwritten]”

21.In or about October 2013 Madam Wong suffered a fall in the flat.  She sustained serious head injuries which resulted in her becoming mentally incapacitated.

22.In January 2104 the plaintiff applied to be appointed as a guardian for Madam Wong.

The legal position

23.In the Amended Statement of Claim the plaintiff seeks a declaration that the registration of the Second Notice of Severance should be vacated.

24.The causes of action that are pleaded in support of this declaration are the negligence of the defendant and there is a further claim that the defendant is guilty of slander of title.

25.The duty of care upon which reliance is placed is that as the plaintiff was a co‑owner of the flat it was incumbent upon the defendant to have regard to his interests.

26.Mr Gary Lam who represented the plaintiff placed reliance upon two cases to establish his contention that the defendant owed some duty to him in the matter.

27.The first case is the Court of Appeal case of Harris v Nantes & Wylde (A Firm) [1997] ECC 570.  The Headnote in the case is as follows:

“Professional liability. Solicitors. Negligence. Conveyance of land. Tenants in common. A solicitor who is instructed, albeit by one party only, to prepare a conveyance altering the basis on which two tenants in common hold property and sends the draft conveyance to that party for execution by both parties purports to act for both parties, where there is only one legal estate in which one party cannot properly act without the concurrence of the other. Thus a solicitor cannot properly act for one party without acting also for the other.

Professional liability. Negligence. Duty of care. Land. Tenants in common.  Where a solicitor is instructed to act with respect to trust property by one of two tenants in common, it is reasonably arguable that he owes a duty of care to the other tenant, either because that tenant is his client or because he is in a situation of sufficiently close proximity to the other tenant to give rise to a duty of care.  Where, in breach of that duty, the solicitor fails to take instructions from the other tenant or to communicate with him, and the other tenant has thereby suffered loss, he ought to be able to recover that loss.  Even where the immediate cause of the plaintiff’s loss was the other tenant’s forgery, it is reasonably arguable that an effective cause, even if not the only cause, of the plaintiff’s loss is the solicitor’s failure to discharge his duty.”

28.The rationale of the Headnote is contained in a passage on p 579 of the judgment of Mummery LJ:

“Fourthly, in those circumstances it is reasonably arguable that Mr Corp owed a duty of care to Mr Harris, either (a) because Mr Harris was his client, or (b) because Mr Harris was in a situation of sufficiently close proximity o Mr Corp to give rise to a duty of care to him. That is supported by the case of WHITE V. JONES in which it is established that a solicitor may owe a duty of care to a person other than his client, when there is an assumption of responsibility for a task, giving rise to a special relationship to which a duty of care is attached. There is a reasonable case, on the facts as pleaded, that Mr Harris was a client of the firm at the time of the 1987 conveyance. ...”

29.I accept the validity of the submission advanced by Mr Victor Dawes, for the defendant, that this case can be readily distinguished from the instant case.

30.The main distinction is that all the defendants were being required to do was to sever the joint tenancy of the plaintiff and Madam Wong.  There was no legal necessity for Madam Wong to obtain the plaintiff’s consent to this and no third party interest was involved.  Certainly there was no necessity for the plaintiff to sign all documents nor for him to obtain any legal advice from the defendant.

31.The second case relied upon is Penn v Bristol & West Building Society and Others [1996] 2 FCR 729.  The Headnote encapsulates the bare facts of the case:

“Property – matrimonial home – husband and wife joint tenants – husband selling property without wife’s knowledge – husband colluding with purchaser to forge wife’s signature on conveyance and contract of sale – whether sale severed joint tenancy – whether conveyance capable of passing husband’s beneficial interest in property to purchaser.

Property – matrimonial home – husband purporting to sell property without wife’s knowledge – purported sale a sham to obtain money from building society – spouses divorced – property transfer order made in favour of wife – whether order affected by the sham transaction.

Solicitors – duty of care – instructed by husband only to act in sale of property jointly owned by husband and wife – solicitors holding themselves out to building society’s agent as acting for husband and wife – wife having no knowledge of sale and her signature being forged on conveyance – solicitors failing to follow basic procedure – liability of solicitors.”

32.And the reasoning of Judge Kolbert can be gleaned from a passage at p 742 of the judgment:

“ On behalf of Brill, Mr Lawrence submitted that it was not appropriate on the facts to impose a tortious duty on Brill (as in White v. Jones [1995] 3 F.C.R. 51) to protect Mrs Penn’s interests because as Mr Lawrence put it “by definition” if he had no authority to act for Mrs Penn the steps he took, admittedly without checking his authority, would not have had any effect on her existing interest: moreover that interest never moved as a result of Brill’s actions nor was any loss caused to Mrs Penn. He argued that the fraud would have been perpetrated anyway (according to Mr Penn’s evidence): but in my judgment that cannot be right – it would have been frustrated by any solicitor instructed by Mr Penn following the Law Society’s Guide and taking steps to ensure that he had the authority of both co‑owners. Mr Lawrence submitted that instructions to act in a conveyance are not unusual and so do not raise the need to ‘probe like a detective’ and he therefore argued that Brill would have sufficiently discharged his duty by writing to Mrs Penn on her own, setting out the instructions that he had received and asking her to confirm them. Although Mr Penn’s evidence was that he would have intercepted such a letter it was plainly Brill’s duty to write and send it or to take other steps to contact Mrs Penn to ensure that he had her authority – such as for example to ask her to call at his office. Had he done so, the fraud would have been stopped dead in its tracks. He did not. The direct consequence was not only the fraudulent transaction but loss and distress caused to Mrs Penn – it flowed directly from the fraud that she felt herself (rightly or wrongly, but naturally) to be homeless with her children. On her unchallenged evidence the dishonesty of her husband was a factor in her divorce and the uncertainty over the title to the house which has awaited this trial for its resolution has necessarily affected both her claim to D.S.S. benefits and the value if any of the property transfer order which she obtained in her divorce proceedings.

I conclude that although Mrs Penn was never a client of Brill she was reasonably within their contemplation when they received the title deeds (indeed she was necessarily within their contemplation) and her interest as co‑owner was sufficiently proximate to the transaction in which they were engaged (concerning as it did her jointly owned home) for Brill to owe her a duty to care accordingly to the principles enunciated by the House of Lords in White v. Jones (above).  Moreover he had a ready means of discharging that duty, for example by following the Law Society’s guidelines.  He did not do so.  I will return to the quantification of Mrs Penn’s loss after considering the position of Bristol & West, since the extent of their charge on Mr Penn’s half‑share must affect the value of Mrs Penn’s property transfer order.  (The extent of Mrs Penn’s loss is Issue 6).”

33.Again, the circumstances of this case were very different.  It is not easy to see what duty the defendant could possibly owe to the plaintiff.

34.Unless it can be established that the defendant owed some duty of care towards the plaintiff an action for negligence cannot succeed.

35.The claim for slander of title can be disposed of more readily.  There is a helpful definition of this tort at Chap 21.16 of Gatley on Libel and Slander, 12^th edn:

“Slander of title. At common law an action for malicious falsehood, commonly known as slander of title lies whenever a person maliciously publishes a false statement in disparagement of another person’s title to his property and thereby causes special damage. …”

36.Further, section 24(1) of the Defamation Ordinance, Cap 21 provides:

“ (1) In an action for slander of title, slander of goods or other malicious falsehood, it shall not be necessary to allege or prove special damage-

(a) if the words upon which the action is founded are calculated to cause pecuniary damage to the plaintiff and are published in writing or other permanent form; or

(b) if the said words are calculated to cause pecuniary damage to the plaintiff in respect of any office, profession, calling, trade or business held or carried on by him at the time of the publication.”

37.What is singularly lacking on the material before me is any suggestion that the defendant had any motive whatever to cause damage maliciously towards the plaintiff.

38.That would appear to dispose of this part of the action.

39.It is undoubtedly true that for any application to strike out a statement of claim it must be plain and obvious that the claim cannot succeed.

40.The only evidence that can call in question the evidence of Mr Cheung in his affidavit concerning his knowledge and relationship with Madam Wong is the written statement signed by her stating that she had not given instructions to the defendant to sever the joint tenancy.

41.Unfortunately on account of her medical condition it would not appear that she would be able to give evidence in court which would contradict what Mr Cheung deposes to.

42.After considering this application carefully I have come to the conclusion that this is a case which is completely hopeless for the plaintiff.  It is a case where it is appropriate to strike out the Amended Statement of Claim and order that the action be dismissed.  I so order.

43.I also make an order nisi that the defendant will have the costs of the action.

Mr Gary Lam, instructed by Tsangs, assigned by Director of Legal Aid, for the plaintiff

Mr Victor Dawes, instructed by Fred Kan & Co, for the defendant