WHALE VIEW INVESTMENT LTD v. KENSLAND REALTY LTD AND OTHERS

HCA 9231/1997

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 9231 OF 1997

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J U D G M E N T

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1. The plaintiff as purchaser and the 1st defendant as vendor entered into an agreement for the sale and purchase of a shop. The plaintiff instructed the 2nd defendant, a firm of solicitors, to act for it. It sought assistance in the shape of mortgage finance from the 3rd defendant, a bank. On the agreed date for completion the transaction did not proceed. The 1st defendant, alleging breach by the plaintiff, accepted its wrongful repudiation and withheld as forfeited the deposits paid. The plaintiff, denying breach, in due course came to accept the 1st defendant's wrongful repudiation, and now sues to recover the deposits and for damages for additional loss. In the alternative the plaintiff is suing the 2nd and 3rd defendants for damages in negligence. The 1st defendant counterclaims for damages for loss occasioned by the plaintiff's wrongful repudiation. The 3rd defendant claims indemnity against the 2nd defendant, joined as third party, in the event it is found liable for the plaintiff's claim.

Background

2. The plaintiff is Whale View Investment Limited (Whale View), the 1st defendant is Kensland Realty Limited (Kensland), the 2nd defendant and third party are Tam Pun & Yipp (Tam Pun) and the 3rd defendant is the Bank of East Asia (the Bank). The shop in question is in Argyle Street, Mongkok (the shop) and the registered proprietor at the material time was Delight Holdings Limited (Delight).

3. On 19 May 1997 Kensland entered into a provisional agreement with Delight to purchase the shop for $53m., the time and date for completion being by 5 p.m. on 2 September 1997. On 30 May 1997 Kensland entered into a provisional subsale agreement with Whale View to sell the shop for $55m., the time and date for completion being by 1 p.m. on 2 September 1997. The terms of the provisional agreement and provisional subsale agreement were respectively absorbed by a formal agreement (the head agreement) signed on 13 June and formal subsale agreement (the subsale agreement) signed on 20 June.

4. Pertinent clauses in the subsale agreement are the following:-

"3. The purchase of the Property shall be completed at the offices of Messrs. Tai, Tang & Chong, Solicitors between the hours of 10:00 a.m. and 1:00 p.m. on a weekday other than a Saturday and between the hours of 10:00 a.m. and 11:00 a.m. on a Saturday on or before the date as set out in part III of the Third Schedule hereto (hereinafter called "the date of completion") when the residue of the purchase money shall be fully paid and the Vendor shall execute and shall procure the Head Vendor and all other necessary parties (if any) to execute a proper assignment or assurances in favour of the Purchaser or his nominee or nominees, sub-purchaser or sub-purchasers of the Property, free from incumbrances subject only as hereinafter appears.

THE THIRD SCHEDULE

PART I

The Purchase Price : HONG KONG DOLLARS FIFTY FIVE MILLION ONLY (HK$55,000,000.00)

PART II

The purchase money shall be paid by the Purchaser to the Vendor in the following manner:-

HK$1,000,000.00 being initial deposit and in part payment of purchase price has been paid by the Purchaser to the Vendor upon the signing of the Provisional Agreement;

HK$7,250,000.00 shall be paid by the Purchaser as further deposit and in part payment of the purchase price to the Vendor upon the signing of this Agreement; and

HK$46,750,000.00 being balance of the purchase price shall be paid by the Purchaser to the Vendor on completion.

PART III

Date of Completion : On or before the 2nd day of September 1997.

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

13(a). If for any cause (other than the default of the Vendor and except as provided by Clause 6) the Purchaser shall fail to complete the purchase of the Property in accordance with the terms and conditions of this Agreement on its part to be performed and observed and/or any one of the payments payable hereunder or the balance of the purchase price shall not be paid on or before the respective due dates specified in part II of the Third Schedule hereto the deposit to the extent of not exceeding 10% of the purchase price paid by the Purchaser to the Vendor shall be absolutely forfeited to the Vendor who may (without tendering an assignment to the Purchaser) rescind the sale and resell the Property either by public auction or private contract subject to any stipulations he may think fit and any deficiency in price and all expenses attending such resale or any attempted resale shall be borne by the Purchaser and shall be recoverable by the Vendor as a debt due from the Purchaser to the Vendor. Any increase in price realised by any such resale shall belong to the Vendor.

(b). ......

(c). The part payment(s) of the purchase price and all other monies paid hereunder (excluding the deposits paid as security for the Vendor's performance and observance of the agreement contained hereunder) ("Part Payments") shall be retained by the Vendor pending determination of the actual loss and damage suffered by the Vendor as a result of the Purchaser's failure aforesaid. The compensation payable pursuant to this clause may be assessed by an order or judgment of a competent court in Hong Kong against the Purchaser for damages for the loss or damage suffered by the Vendor arising from such default.

14. If the Vendor shall for any cause (other than the default of the Purchaser) fail to complete the said sale in accordance with the terms hereof, the said deposit(s) and all moneys paid hereunder shall forthwith be returned to the Purchaser who shall also be entitled to recover from the Vendor such further damages (if any) over and above the said deposit(s) as the Purchaser may sustain by reason of such failure on the part of the Vendor and it shall not be necessary for the Purchaser to tender an Assignment to the Vendor. Nothing in this Agreement contained shall be so construed as to prevent the Purchaser from bringing an action and obtaining a decree for specific performance either in lieu of the aforesaid damages or in addition thereto as the Purchaser may have sustained by reason of the neglect or refusal of the Vendor to complete the said sale at the time and in the manner aforesaid.

34. It is hereby expressly agreed and declared that this Agreement sets out the full Agreement between the parties and that all and any warranties and/or representations whether expressed or implied and whether made verbally or in writing by either party to the other prior to the date hereof are hereby expressly waived.

37. It is hereby agreed that in respect of the payment of the balance of the purchase price required to be made by the Purchaser hereunder, the Purchaser shall deliver to the Vendor's Solicitors on the date on which such payment is required to be made hereunder cashier order(s) issued by and/or Solicitors' cheque(s) drawn on a licensed bank in Hong Kong in favour of such person(s) as the Vendor or the Vendor's Solicitors may direct for the relevant amount and the obligation of the Purchaser to make payment hereunder shall not be deemed discharged unless payment is made in the manner hereinbefore provided."

5. The date for completion, 2 September 1997, was a Tuesday, so completion was to be by 1 p.m. on that day. Tam Pun accepted instructions to act for Whale View in the transaction. Through its founder who was also a shareholder and director Lau Hok Tung (Mr Lau), Whale View applied to the Bank for mortgage finance. Whale View complied with the deadlines for payment of the deposits of $8.25m.

6. On or by 27 August 1997 the Bank approved an advance of $33m. to be secured by registered first charge against the shop's title with guarantees from Mr Lau and his wife, the other director of Whale View, and otherwise on terms and conditions accepted by the parties. By letter dated 29 August 1997 but faxed and delivered the following day (a Saturday) the Bank instructed Tam Pun to prepare the necessary mortgage documents and guarantees setting out what was needed to be done and what documents were required to be sighted to enable the advance to be released to Whale View or at its direction. One of those conditions was spelt out, under the sub-heading "remarks", as follows:-

"8. Kindly arrange to have the draw-down of mortgage money by way of split cheque. Please let us have your specific instruction as to which relevant party/parties the cheque should be issued upon completion."

7. I digress here to mention that this is a common conveyancing practice in Hong Kong, approved by the local law society and one which at clause 37 the parties incorporated into the subsale agreement. There was like provision in the head agreement. The purpose is to enable a purchaser and if applicable his mortgagee to pay in part payment of the purchase price directly to the vendor's mortgagee in settlement of the outstanding amount, thus allowing the convenience of completion on solicitors' undertakings in approved form whilst protecting the purchaser and his mortgagee from possible fraud. Thought it is not spelt out the Bank's prerequisite at no. 8 was mandatory for any advance in excess of a specified limit for the solicitors handling the transaction. In Tam Pun's case this is $5m., so for an advance of $33m. the requirement for draw down by split cheque was inflexible, and forbade the alternative method of crediting the solicitors' trust account.

8. A partner of Tam Pun called Miss Eliza Tam (Miss Tam) was the solicitor overseeing the transaction, though she delegated much of the mechanical activity, as she had in other conveyancing transactions before, to her experienced secretary Miss Venus Fung (Miss Fung).

9. The mortgage and other security documents were prepared and Whale View having passed the necessary resolutions Mr Lau and his wife were requested to attend in the late afternoon of Monday, 1 September the offices of Tam Pun. Under the direction of Miss Tam or Miss Fung they signed where told. By now it was 7 p.m. Shortly after that time Miss Fung faxed a letter of confirmation confirming compliance with the Bank's instructions sending also copies of the relevant documents required. Of course these were faxes not originals and it was well after the time one would expect the Bank's officers to be at their desks. But it was intended to alert anyone still on duty or otherwise be an early morning indication that things had been done and the originals would soon be forthcoming. The original letter with enclosures was delivered the next morning at about 9:30 a.m. This was of course 2 September, the day of completion.

10. That morning Mr Lau put Whale View's account with Tam Pun in funds to meet the remainder of the purchase price due to Kensland.

11. Meanwhile, on 29 August, as part of the usual mechanics, Miss Fung had sent a draft assignment to Kensland's solicitors Tai Tang Chong (Tai Tang) and sought instructions as to how to split the cheques under clause 37 of the subsale agreement. Their response was not to be forthcoming until 11:13 a.m. on 2 September, less than 2 hours before the deadline for completion, delayed because it was claimed Delight's solicitors had not made their like request until about 9:30 a.m. that day. Delight asked for seven split cheques. Tai Tang dealt with Tam Pun's request by forwarding Delight's list and adding two more of their own. In processing those cheques to be drawn against Whale View's credit balance Miss Fung noticed a discrepancy in the addition by a bit over $1,200.00, and told Tai Tang. A correction was faxed at 11:30 a.m.

12. Meantime there were a series of setbacks at the Bank's branch office at Wan Chai, where Tam Pun's letter of confirmation and enclosures were under scrutiny pending draw down. The officer delegated the task of checking for compliance was Miss Flora Chan (Miss Chan) who began to do so at 10 a.m. She soon found the Bank's instructions had not been complied with in five ways as follows:-

(i) Tam Pun had not enclosed an undertaking which should have been given by one of the guarantors;

(ii) original undertakings were required by the Bank; certified copies were sent;

(iii) there was no board resolution of Whale View enclosed;

(iv) the copy guarantee enclosed with the letter was wrong. The guarantee was in favour of the Kincheng Banking Corporation instead of the Bank of East Asia Limited;

(v) the confirmation letter stated that the loan money was to be paid to Tam Pun's client account instead of by cashier order as required by the letter of instruction.

13. Miss Chan telephoned Miss Fung and reported these discrepancies at 10:15 a.m. Subsequent investigation revealed that item (i) was no longer required. Miss Tam and a Mr Kenneth Tam (Mr Tam), a senior officer of the Bank, had on the Saturday discussed this requirement and Mr Tam had authorized that this was no longer needed. But neither had he noted the file of that and nor had Tam Pun's letter of confirmation made reference to it. Miss Fung made good the other shortcomings including a direction as to how the draw down cashier's orders were to be split, by letter and enclosures faxed and then delivered. By now it was midday; 60 minutes left. But still there was a problem. The covering letter referred to a different borrower and a different security; another transaction altogether. In her haste Miss Fung had pulled the wrong heading from her computer. Another call; another letter. By the time this got to Miss Chan it was 12:20 p.m. Now everything was sorted. But given the size of the advance further, more senior personnel than Miss Chan were required to scrutinize the file and countersign the cashier's orders. So it was that the two cashier's orders were not released before 12:50 p.m., a scant 10 minutes before expiry of the deadline. Miss Fung and her messenger Miss Donna Lau (Miss Lau) made a valiant effort, but Miss Fung did not present herself at the offices of Tai Tang until 1:06 p.m. Tai Tang acting on instructions refused to accept the tendered documents and cheques on the grounds they were late. Kensland claimed Whale View was in breach and had repudiated the subsale agreement, accepted the repudiation and withheld as forfeited the deposits pending final determination of its loss. That evening Kensland completed the purchase from Delight, having arranged bridging accommodation to enable it to do so.

14. The next day Whale View filed its writ.

The Issues

(a) Was it an implied term of the subsale agreement that Kensland had to give Whale View payment instructions within a reasonable time before the due date and time for completion?

(b) If so, was Kensland in breach by failing to give payment instructions in a reasonable time?

(c) If so, did Kensland's refusal to complete with Whale View amount to repudiatory breach, entitling Whale View to accept repudiation and recover its loss?

(d) If not, and Whale View was in breach entitling Kensland to accept repudiation and recover its loss, were Tam Pun negligent and in breach of the duty of care they owed their client in contract and tort by failing to complete in time? Was the Bank negligent and responsible in whole or by contribution for Whale View's default?

The Evidence

15. Those who gave evidence were Mr Lau of Whale View, a Miss Yvonne Yeung (Miss Yeung) of Kensland, Miss Tam, Miss Fung and Miss Lau of Tam Pun and Miss Chan, Mr Tam and other bank officers of the Bank.

16. It is, I believe, unnecessary to recount all that was said. There is little that is in dispute, and most I have already covered. I shall deal with what I regard is the pertinent remainder.

17. Mr Lau said that Whale View was one of a number of companies owned and controlled by him, through which over the years he had bought and sold real estate for profit. Tam Pun had acted for him and the companies in these earlier transactions, which had proceeded to conclusion uneventfully. He described the market as particularly active in mid-1997, and it was his intention to sell the shop once an offer that yielded a satisfactory gain had been made. On 2 September and than again a week later he received what he described were offers to buy at $70m. and $65.5m. respectively, though he conceded that in reality they could not be said to be as concrete as that. He explained that with the market blooming and with prices on the rise, property agents would use this means to get a vendor's commitment to a price he would take before searching for a purchaser. He said it was his intention to wait for a bit to see what the market would allow the shop's worth to rise to.

18. It was he who approached the Bank for mortgage assistance which was to lead to the bank offering Whale View $33m. on acceptable terms. He put Tam Pun in funds for the balance.

19. When it came to completion he and his wife complied with all their solicitors' requirements including the timetable, and he relied on them to complete, as he had in the past. When the transaction failed it was through no fault of Whale View or its officers. It was because Kensland was in breach or alternatively that Tam Pun and/or the Bank were negligent and were to blame. Being uncertain as to which or whom he has joined all three in his writ.

20. Miss Yeung said she is and was at the material time a director of Kensland. When Whale View did not tender in time Kensland accepted its repudiation because of market prospects of a resale at a higher price. Whale View's writ registered as a lis pendens effectively put paid to that; then in October the market collapsed. Kensland still owns the shop, worth now much less than what it cost. Kensland counterclaims to retain the deposits paid up to the level of 10% of the sale and purchase price.

21. In cross examination she denied that Whale View's breach was orchestrated to give Kensland the opportunity to make more money and that Kensland arranged bridging finance in anticipation before the 1 p.m. deadline.

22. Miss Tam of Tam Pun confirmed that whilst she had delegated the mechanics of the conveyancing to Miss Fung she was the solicitor/partner in charge, maintaining close contact, perusing and signing the outward correspondence and generally overseeing the transaction. Miss Fung had in the past carried out a similar role and was certainly familiar with what had to be done and why.

23. She conceded that having negotiated with Mr Tam of the Bank the amended requirements of the Bank set out in the letter of instructions, there was no reference to that in the confirmation letter. She also conceded responsibility for the mistakes that Miss Chan of the Bank discovered, including the blatant one that one of the guarantees was made out to a different bank altogether. She also confirmed what is apparent from the documents, that she asked that her firm's trust account be credited with the advance though the letter of instruction specified that draw down must be by split cheques. But she said these matters were quickly dealt with once apparent, albeit that the faulty guarantee was repaired by the process of replacing without signature or disclosure to the signatory the errant page.

24. It was her evidence that everything was finally made good by 11:55 a.m., though this time does not accord with that of Miss Chan and Miss Fung, who both said it was 12:20 p.m. Though time was undoubtedly tight, and made the more so because of the avoidable errors, there still should have been time for the Bank to process the cashier's orders and have them available in time to meet the deadline. She blamed the Bank's officers for failing to recognize that a few minutes late was too late; that they would have been able to make the deadline if only they, the officers, had co-operated.

25. Then it was the turn of the Bank's personnel. In broad terms I was told of the steps typically undertaken after the solicitors' confirmation letter and supporting documents have been received, which steps were taken in this particular case.

26. What is in dispute are their joint and several accounts, compared with those of Miss Tam and Miss Fung, as to how, when and to what extent they were told by Miss Fung and Miss Tam and Miss Lau of the special need for urgency, namely that delay in presentation of the cashier's orders past the deadline might be fatal to the transaction. What is not in dispute is that Miss Tam's letter of confirmation made reference to completion being today (no time given), and also that on the Bank's file was a copy of the provisional subsale agreement in which was recorded the completion date and time, but that nobody engaged in the transaction saw fit to look into the document to see what that was.

27. Mr Tam when asked about the telephone conversation he had with Miss Tam agreed he did not note on file the amended requirement as notice of the approved alteration. However other officers required to deal with the query on this point said it was quickly resolved as Mr Tam was on hand to confirm it, and little time was added to that taken to process the papers.

28. It is against that scenario that I now come to deal with the issues.

The claim against Kensland

29. Kensland exercised its right to call for split cheques, nine in all, but not until 11:13 a.m. on 2 September, 1 hour 47 minutes before the deadline for completion. The error in adding up and consequent adjustment to one of the cheques was not fixed until 11:48 a.m. Was there an implied term of the subsale agreement that the requirement for splitting the cheques had to be given in reasonable time? If so, was Kensland too late?

30. The question of "reasonable time" was considered by the Court of Appeal in Cheung Yun-ho & Anor v. Wong Kwan-cheung & Anor [1995] 2 HKLR 90. In that case, the appellants contracted to buy a property from the respondents under a provisional sale and purchase agreement. A deposit was paid upon signing the said agreement; it was also provided that the parties would sign a formal agreement for the sale and purchase and that the appellants would pay a further deposit on a specified date one week after the execution of the provisional agreement. The draft of the formal agreement was only supplied to the appellants on the day before the stipulated date for signing the formal agreement. As a result, the formal agreement was not signed on the stipulated date, although the purchasers did tender the further deposit one day later. The respondents purported to treat the failure to sign as a repudiation of the contract and purported to forfeit the deposit and treat the contract as being at an end. The appellants initiated proceedings to seek specific performance and summary judgment.

31. With reference to "reasonable time," Godfrey J (as he then was) said at page 93:

"How can it seriously have been expected that the solicitors for the purchasers, acting in their clients' best interests, should consider the form of formal Sale and Purchase Agreement submitted by the vendors' solicitors; take their clients' instructions upon it; return the formal Sale and Purchase Agreement with amendments for consideration by the vendors' solicitors; agree the final terms; and get their clients to sign an engrossment, all in the space of some 24 hours? It is nonsense."

32. I respectfully agree with this forthright approach. Indeed it is a matter of common sense that a contracting party required to perform under the contract cannot be in breach for non-performance if he has been given insufficient time and opportunity to do so.

33. What is reasonable must depend on the circumstances. Mr Chan S.C. argued on behalf of the plaintiff that what could be said to be a proper yardstick was found in the head agreement, in which the vendor Delight was required to give at least one day's prior notice in writing if it sought to exercise its entitlement to call for split cheques. Mr Chan submitted that reflected what must in the profession be recognized as a reasonable time. But in that transaction and indeed in all others where the same form has been used the contracting parties had the certainty of a specific term to rely upon. In my view what other parties contract for is no more or less than an agreed term. What must be considered as reasonable is answered by establishing the length of time it would take for a reasonably competent conveyancer to check the figures and then comply with the request and complete, without unusual pressure, before the deadline. The mechanics of compliance with a split cheques requirement are to instruct the writing and signing of cheques and/or cashier's orders as the case may be as to amount and payee as directed. No client's instructions are needed. The funds will be at hand or provided for; completion is pending. The direction is a usual and expected one; it is invariably, as in this case, contracted for and pursued.

34. When the directions came in one and three quarters of an hour before the deadline, with the adjustment half an hour later, clearly there was little time to spare. But there was no protest, and it seems to me that is because the machinery was in place, as in any firm competently run and geared to carry out, regularly, conveyancing transactions, to have the cheques and cashier's orders drawn and signed in terms of the request. Of course history reveals that the deadline was not met, but for reasons as I shall come to not related to the split cheques' direction.

35. In my view the time available was sufficient for the experienced conveyancer to comply without risk of being too late for completion. I conclude that there was an implied term of the subsale agreement that Kensland give its direction for split cheques in reasonable time, and that Kensland gave directions in reasonable time.

36. That deals with the issue of liability as between Whale View and Kensland. Kensland was entitled to accept repudiation and succeeds where Whale View fails.

37. I now turn to consider Whale View's claim to recover the resultant cost of that from Tam Pun or the Bank, or both.

The claim against Tam Pun

38. This can only succeed if Whale View can prove Tam Pun were negligent and because of that it suffered loss.

39. Mr Coleman for Tam Pun submitted, utilizing a passage from the judgment of Oliver J in Midland Bank Trust Co. Limited v. Hett, Stubbs and Kemp [1979] Ch. 384 at pages 402-3:-

"A solicitor owes a duty to his client, often both in contract and in tort, to exercise reasonable care and skill in the handling of his client's affairs. He is not to be judged by the standard of a "particularly meticulous and conscientious practitioner"; rather, the test is "what the reasonably competent practitioner would do having regard to the standards normally adopted in his profession"."

40. With that I agree.

41. He also made the point that the standard should not be applied in any given case from the stand point of hindsight which is likely to promote too high a standard. In Duchess of Argyll v. Beuselinck [1972] 2 Lloyd's Rep. 172, 185, Megarry J observed that:

"In this world there are few things that could not have been better done if done with hindsight. The advantages of hindsight include the benefit of having a sufficient indication of which of the many factors present are important and which are unimportant. But hindsight is no touchstone of negligence. The standard of care to be expected of a professional man must be based on events as they occur, in prospect and not in retrospect. If the standard of care is that of the average prudent solicitor, then I have no doubt whatever that the defendant was not negligent. Even if the standard of care is that to be attributed to the defendant himself, with something of a reputation in the world of authorship, I do not think that he was negligent. On any footing, the duty of care is not a warranty of perfection."

42. With those principles in mind, entrenched but nevertheless in practice difficult to apply, I turn to the facts of this case.

43. Tam Pun received from the Bank the document headed 'letter of instruction' dated 29 August 1997 but faxed on Saturday 30 August. It was a standard instruction to the solicitors of a successful applicant for mortgage funds, requiring the preparation and execution of the various security documents necessary to protect the Bank's advance. The prospective mortgagor being a company, standard guarantees and board resolutions were also required. The Bank's own documents were to be used; Tam Pun had a supply, and Miss Tam was familiar with them. There was nothing to suggest she or any delegated member of the staff would have difficulty in preparing the documents or otherwise fulfilling the Bank's requirements. On the Saturday Miss Tam negotiated with Mr Tam the amended instructions of which I have already made mention. Otherwise there is no chronology until late on Monday, after hours, when Mr Lau and his wife came to the office on invitation and the execution of the documents was concluded. A simple calculation reveals that this was some 56 hours after the instructions were received. Pausing here I am not suggesting that Miss Tam should be criticised for being slow to be ready. After all, 44 of those hours comprised the weekend. Even a conscientious and busy solicitor is allowed a break. But the result of that timetable was that the letter of confirmation and enclosed security documents were not physically capable of being delivered to the bank before the morning of the due date for completion, and it was at 9:36 a.m. that they were actually delivered. Miss Tam in her experience would have known that the Bank would require its designated officers to check every detail of the security documents and letter of confirmation against its instructions before proceeding to draw down the advance. And she would have also been aware, given the size of the advance, that the procedure would involve scrutiny by senior personnel. Given the timetable, then, there was little margin for error; certainly much less than had she given herself some grace and had the documents prepared and ready for signing a few hours earlier. It was thus crucial that the documents be in order and that the Bank's instructions be complied with, or else there would be suffered the delay associated with making good any defect.

44. History reveals that there were a number of mistakes. Miss Tam said they were only clerical. Of course they were; it was a transaction on documents. But she in her experience would know that a bank will require meticulous attention to detail and that includes getting the heading of any covering letter right. And one of those "clerical" errors was the wrongly recorded principal in the guarantee. If that had not been spotted the Bank could have been exposed to serious loss. There were a number of mistakes, some serious, some less so. All could and should have been avoided and would have been if ordinary care had been taken. Miss Fung put it down to the pressure of hours; that is my point. The timetable they gave themselves meant there was insufficient time to rectify the mistakes.

45. Miss Tam has said the cause of their inability to complete in time derives from Tai Tang's tardiness in directing on the split cheques. But it was not that at all. It was that the Bank did not issue the cashier's orders until 12:50 p.m.

46. Was the Bank to blame, in whole or in part, for that?

47. I shall deal with that question before ruling on Tam Pun's position.

The claim against the Bank

48. Whale View's claim against the Bank derives from the proposition that it failed to make the cashier's orders representing the advance available in time to enable its solicitors Tam Pun to complete in time. Of course that is so. There is a dispute of fact as to when and the extent to which the various officers of the Bank involved in the transaction were told or reminded of the 1 p.m. deadline. There were or could have been a number of occasions when that happened. But I do not make any express finding of fact about that because in the end I do not believe it changes the outcome. The Bank's officers were on any account doing their best to hurry things along. No one person could be accused of dragging his or her feet. But as an obvious fact the Bank has set procedures in place before a draw down of an advance can be authorized, and particularly so with one of significant size. Miss Tam from the witness box complained that once the errors were found and her firm notified the procedures came to a halt until those errors had been made good. I say no individual could be criticised, at least not fairly criticised, for not continuing to process the advance in anticipation that mistakes then discovered would be rectified. The system does not work that way; if it did there would be the risk that the draw down would proceed without full compliance and the very real risk of drastic consequences to the Bank.

49. It was not, as I find, until 12:20 p.m. that Tam Pun had repaired the mistakes that to that point had prevented Miss Chan of the Bank from declaring the file in order. Only then and not before could the final act of having the cashier's orders processed and signed begin. And, given that entailed further scrutiny by senior staff, that it took another 30 minutes for those cashier's orders to issue was entirely normal and reasonable. The officers of the Bank had an obligation to the Bank's customer to comply with a reasonable request for urgency. But their first and primary responsibility was to the Bank. They cannot be criticised for that and nor can the Bank.

50. It follows, as I find, that whilst it was because the Bank did not release the cashier's orders until 12:50 p.m. Whale View lost the opportunity to complete, the fault lay not with the Bank in whole or in part but because Tam Pun failed to exercise reasonable care and skill in the handling of their client's affairs, judged by the standard of what the reasonably competent practitioner would do having regard to the standards normally adopted in his profession.

51. I find Whale View has succeeded in claiming Tam Pun was negligent and because of that it suffered loss. I find it has failed in claiming the Bank was negligent in whole or in part and thereby caused or contributed to its loss.

52. There remains the claim pleaded that the Bank is liable vicariously, which I come to next.

The claim against the Bank in vicarious liability

53. This cannot get off the ground unless it can be established that Tam Pun were the Bank's solicitors and thus agent of the Bank, putting the Bank liable as principal for its agent's negligence.

54. I find Tam Pun were not acting for the Bank in the transaction for two reasons. The first is there was no appointment, or invitation to act. The clearest indication of that comes from the Bank's so called "letter of instruction" to Tam Pun. There were no express words of appointment or invitation to act, such as "Please represent the Bank in the preparation etc.". The letter was, as I find, a direction to a customer's solicitors of what was required to be done before their client could be entitled to the draw down. The second is that if the Bank really had instructed Tam Pun to act for it one would expect the Bank to credit its solicitors' account with the advance and then rely on it to ensure compliance with its instructions and to safeguard it from risk. The fine tooth scrutiny of the letter of confirmation and enclosures by various levels of the Bank's hierarchy was a far cry from that, with the draw down permitted only after the Bank's own exhaustive examination authorized it.

55. There was no solicitor client relationship and thus no principal agent one. The claim that the Bank was vicariously liable for Whale View's loss fails. Of course this finding renders the third party claim otiose.

56. I come now to consider the extent of damages recoverable by Kensland and Whale View.

Damages

57. Kensland has pleaded its loss under various heads but in the end limits its claim to its contractual one under clause 13(a) of the subsale agreement of claiming forfeiture by Whale View of the deposits paid to the extent of 10% of the purchase price, namely $5.5m. No argument against that entitlement has been mounted; Kensland succeeds to that extent. It shall, further, be entitled to retain the balance of the deposits pending payment of any consequential costs' order.

58. As against Tam Pun Whale View has pleaded, inter alia, the loss of the opportunity to bargain for the sale of the shop and thereby profits of up to $15m. gross.

59. Mr Lau, as I accept, did cause Whale View to buy the shop in order to sell for a profit on a buoyant market. This, after all, was his modus operandi over the previous few years. However the difficulty in establishing what his profit might have been is having to second guess what he could have sold for and when. As he conceded, the letters sent to him on 2 and 8 September were not really offers at all, though they had that appearance. And it was he who said that whilst intending to sell, he wanted to wait for a bit with the market climbing all the while. I cannot find it safe to assume that the queries from the property agents might have materialized as offers and if so at what price and when, and whether Mr Lau would have entertained them. It is as likely he would have held off and then been stuck when the crash came as it did only a month or so after the scheduled completion date.

60. What Whale View is entitled to are proven losses consequential upon liability having been established. I find this is limited to the 10% deposits forfeited to Kensland, and it will recover this and interest from Tam Pun.

Costs

61. It was my intention to make no orders pending argument. I have chosen instead to make orders but nisi at first instance, so that any party displeased or otherwise affected can come back to argue the merits.

62. Judgment now follows.

Judgment

63. The plaintiff's claim against the 1st defendant is dismissed.

64. The 1st defendant shall have judgment against the plaintiff in the counterclaim in the following terms:-

(1) a declaration that the plaintiff was in wrongful repudiation of the agreement;

(2) a declaration that by reason of the wrongful repudiation of the subsale agreement by the plaintiff, the 1st defendant is relieved of all liability for the further performance of its obligation thereunder;

(3) an order that the plaintiff do forthwith cause the registration of the sealed copy of the writ of summons in the action herein at the Land Registry against the shop be vacated;

(4) liquidated damages in the sum of $5.5m. to be paid out of the deposits totalling $8.25m. withheld;

(5) costs taxed if not agreed, to be paid when assessed out of the balance of the deposits held of $2.75m., the balance thereafter to be paid to the plaintiff.

65. The plaintiff shall have judgment against the 2nd defendant in the following terms:-

(1) liquidated damages of $5.5m.;

(2) interest thereon at 5% p.a. from 2 September 1997 to the date of this judgment;

(3) costs taxed if not agreed including reimbursement of the costs orders made against the plaintiff due to the 1st and 3rd defendants.

66. The plaintiff's claim against the 3rd defendant is dismissed. The 3rd defendant's costs including those of the third party proceedings taxed if not agreed shall be met by the plaintiff.

67. The orders for costs are nisi at first instance.