NG WAI KWAN v. LAI WAI LAM trading under the name of W L LAI & CO, SOLICITORS

DCCJ2282/2014

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 2282 OF 2014

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JUDGMENT

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1.  This is a professional negligence claim arising out of a conveyancing transaction in which the defendant acted for the plaintiff as the purchaser.

Background

2.  The property in question is known as Ground floor and the garden appurtenant thereto House D3 of Ting Fok Villa in Yuen Long, New Territories (“the Property”).

3.  Pursuant to the sale and purchase agreement, completion deadline was 5:00 pm on 5 July 2013; and time shall in every respect be of the essence.

4.  During the period from 22 May 2013 to 5 July 2013, there were exchange of correspondences between the defendant and the vendor’s solicitors Leung Kin & Co (“LKC”) on title requisition.

5.  Under his judgment that the requisition had not been satisfactorily answered, the defendant advised the plaintiff that the vendor failed to show and give a good title, and that she was not bound to complete the purchase (“the Advice”). The transaction fell through; the vendor forfeited the deposit of HK$350,000.

6.  Subsequently the plaintiff changed solicitors to take out a vendor and purchaser summons against the vendor. Judgment was passed against her; DHCJ Leung (“the Judge”) held that the requisition was satisfactorily answered and the vendor had shown a good title to pass on completion (“the VP Judgment”).

7.  Therefore, under the grievance that the Advice was wrongly given, the plaintiff commenced this action.

Issues for determination

8.  There are three main issues for determination:

Issue 1: whether the Advice was incorrect?

Issue 2: If the answer to issue 1 is in the affirmative, whether the defendant was negligent in giving the Advice? and

Issue 3: If the answer to issue 2 is in the affirmative, what are the damages for which the defendant is liable?

History of the Property

9.  Pursuant to the building licence No. 2784 dated 25 January 1989 (“the Building Licence”), one Wong Sing Yip (“Wong”) erected House D3 on Lot No. 1305B27 in D.D. No. 123 (“the Lot”). The Lot forms part of the development of an estate called Ting Fok Villa consisting of 93 village type houses erected on the respective lots.

10.  The rights and obligations of the owners of the various lots in Ting Fok Villa are governed by a Deed of Mutual Covenant (“the Head DMC”) and a management agreement.

11.  The Head DMC contains, inter alia, the followingterms:-

Definition

“Undivided Shares”

For the purpose of this Deed each of the Lots owned by the 1^st – 93^rd Owners shall be deemed to have 3 equal undivided shares with one share allocated to each Unit and …….

“Unit”

A floor of the House intended for separate residential occupation and reference to Unit in relation to the Ground Floor shall where applicable include the garden appurtenant thereto and reference to Unit in relation to the Second Floor shall include the Roof thereabove.

Section I

Clause (6)

Every Owner shall have the full right and liberty without reference to the other Owners and without the necessity of making such other Owners a party to the transaction to sell, assign, mortgage, charge, lease, let, licence or otherwise dispose of or dealing with his share or interest in his Lot SUBECT only to the terms of this Deed and, wherever applicable, the terms and conditions of the Building Licence.

Section V

Clause (1)

Each of the 1^st – 93^rd Owners shall observe and comply with the terms conditions requirements and restrictions contained in their respective Building Licences prior to any assignment, charge, lease or disposition of his Lot or any part thereof or any Undivided Shares therein.   

12.  The Building Licence contained, inter alia,the following restrictive conditions (“Condition 4(e)”):-

“4(e) The Licensee shall not assign or otherwise create an undivided share or interest in the Lot without complying with the following provisions-

(i) The undivided 1/3^rd share each shall first be allocated, by a Deed of Mutual Covenant complying with (iii) hereunder, to the Ground Floor, the First Floor and the Second Floor of the buildng on the lot;

(ii) ……….; and

(iii) such assignment or other disposal (other than an underletting not exceeding 5 years) shall be made subject to and with the benefit of a Deed of Mutual Covenant which shall provide, inter alia, for a right of access to and through all the common parts of the lot and the building thereon and for the proper maintenance and repair of the said building and the common parts thereof free from obstruction.”

13.  Ownership of the Lot as an entirety had changed hands twice before the vendor’s predecessor-in-title assigned the three units of House D3 separately to three individual owners, including the assignment of the Property to the vendor in 2007.

14.  At the time of the said assignments, there was no deed or sub-deed of mutual covenant (“sub-DMC”) as required under Condition 4(e) to show the allocation of shares, to define the common areas and to set out the respective rights of the three individual owners.

The requisition and answer, so far as material

15.  Among other requisitions, the one that eventually gave rise to  title dispute was the breach of Condition 4(e).

16.  By letter dated 22 May 2013, the defendant asked for the production of a deed or sub-DMC in compliance with Condition 4(e).

17.  By letter dated 6 June 2013, LKC made reference to the above terms of the Head DMC and asserted that since the area of each unit of House D3 was shown on the plan annexed to each respective assignment, it followed that any area not being specified in the three assignments would be common areas; hence the vendor’s title would not be affected with or without a sub-DMC. This was rejected by the defendant.

18.  By letter dated 28 June 2013, LKC provided the defendant with a copy of draft sub-DMCto be signed by the three individual owners of House D3 including the vendor.

19.  By letter dated 2 July 2013, the defendant requested LKC to procure a confirmation from the District Lands Officer (“the DLO”) of waiver of the breach of Condition 4(e) and its consent to the remedy suggested i.e. executing a sub-DMC in retrospect.

20.  By letter dated 3 July 2013, LKC denied breach of Condition 4(e) but offered by way of completion undertaking to use their best endeavors to procure the relevant waiver or consent from DLO (“the Undertaking to Procure”).

21.  On 5 July 2013 the date of completion, LKC further answered the requisition as follows, but none was to the defendant’s satisfaction.

(1) the breach was only minor and technical and that the worst scenario would be the imposition of a penalty, and sufficient sum had been secured from the vendor to pay for the same (“the Fund”); and

(2) the technical breach can effectively be remedied by the execution of the sub-DMC together with the requisite waiver to be sought from DLO.

Issue 1: whether the Advice was incorrect?

22.  There are two sub-issues under this head :

  Sub-issue(a): whether the plaintiff can rely on the VP Judgment to establish that the Advice was incorrect? and

  Sub-issue (b): if the answer to sub-issue (a) is in the negative, whether the Advice was incorrect when the question as to title is considered independently?

23.  In the determination of sub-issue (a), the following undisputed facts are matters calling for special attention.

(a) The executed sub-DMC dated 28 June 2013 was neverprovided to the defendant prior to completion deadline.

(b) LKC has never prior to completion informed the defendant whether and/or when the sub-DMC had been executed; it was not until 43 minutes after completion deadline LKC wrote to the defendant, putting on record that the sub-DMC had been duly executed, but without stating when (“the Post-completion Letter”).

Sub-issue (a): whether the plaintiff can rely on the VP Judgment to establish that the Advice was incorrect?

24.  It is the Judge’s findings that Condition 4(e) had been breached but there was no real risk of re-entry because all the owners of House D3 had entered into the sub-DMC serving the purpose of Condition 4(e) albeit in retrospect; and supposing there is still the risk of some other forms of enforcement action, the Undertaking to Procure and the offer of the Fund sufficed to remove the doubt on the title to the Property.

25.  Mr Yim for the defendant submitted that the VP Judgment was erroneous as the Judge was not informed of the critical fact that the executed sub-DMC was neverproduced prior to completion. Mr Cheung for the plaintiff argued that the Judge although not being informed, was nonetheless aware of the same.

26.  As seen from the following extracts of the transcript of hearing, the sub-DMC was a significant aspect in the Judge’s thinking process.

(1)	“COURT:	…… And it would appear that, well, as a matter of fact, the defendant has actually taken the step prior to completion, to actually solicit who could possibly be concerned to come up with the new and the very first sub-DMC.
	MR CHOI:
	(counsel for the purchaser)
		That was 6 days before the completions.
	COURT:	Yes. But still, there was this all right?
	MR CHOI:	Yes.”
(2)	“COURT:	But this is one area that I would need some confirmation from you, and that is, would you say that in relation to the requisition raised by the defendant (plaintiff/purchaser), raised by your side, the first aspect which I have illustrated, ……. but by the time of completion, the defendant has come up with steps that would serve the purpose of remedying the situation.  Because that is the first aspect of that.
	MR CHOI:	Yes.”

27.  Unfortunately, the Judge was not being assisted on the spot that what the vendor came up with 6 days before the completion was only a sub-DMC in the draft form. His attention was not drawn to the fact that LKC has never informed the defendant that the sub-DMC was executed until after completion deadline. Worse still, he was not informed of the critical fact that no executed sub-DMC was provided prior to completion.

28.  Here, Mr Cheung for the plaintiff submitted that since the Judge has indicated twice that he had read the papers, there is no reason why he would fail to realize from the correspondences and the Post-completion Letter that thevendor did not produce the executed sub-DMC before completion. I find this supposition vague and far-fetched.

29.  Mr Cheung also referred to the following extract and argued that the Judge was not misled since Mr Chu (counsel for the vendor) only told the court that LKC was “able to produce” the sub-DMC prior to completion, as opposed to having produced the same.

MR CHU:

“…….. But later on, when we move on to the – when those instructing me were able to produce the sub-DMC prior to the completion day, then there was a, slightly moved the target by the purchaser, that is whether the risk of litigation because of the subdivision before the sub-DMC was being drafted, there would be a risk of the litigations. ……”

30.  I find this argument untenable. It is apparent from the VP Judgment that the Judge has borne in mind the law regarding a vendor’s twin duty to give and to show a good title; and has also taken note that the sub-DMC is a necessary document of title. Therefore, had the Judge been aware of the said critical fact as suggested by Mr Cheung, he would definitely have discussed about it in the VP Judgment as to why he regarded good title shown notwithstanding a necessary document of title was not provided prior to completion.

31.  By reason of the aforesaid, I trust that the Judge’s findingwas reached on the basis that the executed sub-DMCwas already provided to the defendant prior to completion. Unfortunately, it in fact was not.

32.  Turning to the Advice; at the material time when it was given, the reality was that no executed sub-DMC was produced, and the defendant had no idea whether and/or when the sub-DMC had been executed. Further, there was no completion undertaking by LKC on   production of the executed sub-DMC.

33.  In the premises, the Advice and the VP Judgment were premised on factual context with distinct difference. I therefore find that the plaintiff cannot rely on the VP Judgment to establish that the Advice was incorrect.

Sub-issue (b): whether the Advice was incorrect when the question as to title is considered independently?

34.  The question as to title will be approached under the following heads:

(A) Whether there was a breach of Condition 4(e)?

(B) If the answer to (A) is in the affirmative, whether there is a real risk of enforcement action? and

(C) If the answer to (B) is in the negative such that the vendor has a good title to give, whether the vendor has satisfactorily answered the requisition to show the good title? 

(A)  Whether there was a breach of Condition 4(e)?

35.  I find the breach apparent. Mr Cheung failed to persuade me that the Head DMC could be relied on to actually indentify the common areas or areas outside exclusive possession within the Lot.It does not contain any provision which defines the right of access to and through all the common parts of the Lot. Condition 4(e) which required, among other things, the provision for the right of access and common areas within the Lot was apparently not satisfied.

(B) Whether there is a real risk of enforcement action?

36.  Whether there is a real risk is one of fact and degreeand of common sense, and each case is to be considered on its own facts: see Wong Kwok Yan & Anor v Poon Chi Lok [2009] 2 HKLRD 18.

37.  Mr Yim submitted that the breach in the present case (even if known to the DLO) was of a short duration of a few years since 2007, hence the risk of enforcement action is real. By contrast, he made reference to Jumbo Gold Investment Ltd v Yuen Cheong Leung & Anor (2000) 3 HKCFAR 52 where the risk is sunk with the lapse of time since no enforcement action was taken against a breach which has existed for over 40 years.

38.  I think the duration of a breach was just one of the factors among many others to be considered. In particular, the nature of a breach, its impact and consequences are significant matters of concern in assessing the risk of enforcement action.

39.  In the present case, Condition 4(e) essentially required the putting in place of a deed of mutual covenant governing the rights and obligations of the co-owners of each lot within the estate.  Once put in place, the deed would have been a contract amongst the owners within the lot governing the designation of undivided shares, exclusive possession, common areas and their management. So long as a deed of mutual covenant satisfied Condition 4(e), there was no further requirement for approval of the deed.  If all the co-owners of the Lot, being those who could be possibly be affected, entered into the sub-DMC serving the purpose of Condition 4(e) albeit in retrospect, I consider it improbable the DLO would take any enforcement action, not to mention the drastic step of enforcement by re-entry.

40.  The next question is that supposing there is still the risk of some other forms of enforcement action including the imposition of a fine, whether the Undertaking to Procure and the offer of the Fund sufficed to remove the doubt on the title to the Property.

41.  Mr Yim argued that the Undertaking to Procure simply could not cure the problem because the decision of the DLO is beyond the vendor’s control. Hence, unless and until there was a confirmation of waiver, the risk of enforcement action is still real. In support, he made reference to the DLO’s letter to the Law Society of Hong Kong dated 26 January 2011 on the topic of breaches of land grant terms stating that breach of restriction on alienation would be considered as serious breach and no blanket waiver of such breach would be given (“the DLO Letter”).

42.  I find that the absence of confirmation of waiver of breach does not necessarily lead to the conclusion that the risk of enforcement is real. Each case has to be considered on its own facts. The circumstances giving rise to the real risk of enforcement action in Wong Kwok Yan(above) were peculiar, hence distinguishable from the present case. Further, there was specific reservation of right in Wong Kwok Yan by the DLO who has already taken up the matter seriously by seeking legal advice regarding the breach in question. In the present case, there is only a general reservation of right under the certificate of compliance issued to Wong,

43.  On the offer of the Fund, Mr Yim submitted that since the amount was not specified, there is a risk of future litigation to recover if the Fund is insufficient to satisfy the penalty payment. Reference is made to Gigabillion Asia Pacific Ltd v Sino Dynamic International Ltd [2015] 2 HKLRD 100 where it was held that the vendor should provide an estimated figure of litigation costs incurred by the incorporated owners to which an owner is liable to contribute, so that the purchaser can assess his risk of an encumbrance.

44.  There is no force in this argument. In Gigabillion Asia Pacific Ltd, the purchaser was entitled to know the quantifiable figure because it was an encumbrance on him as owner of the property in question.In the present case, although the vendor’s offer was not worded as an indemnity,  it was on its proper construction an unequivocal promise to pay for the fine  without specifying a limit on the amount. I find the alleged risk of future litigation unrealistic.

45.  With the history of the Property, the vendor’s title is plainly not perfect. However, there can be no question as to the legal proposition that a “good” title does not mean a “perfect” title: see Mexon Holdings Ltd v Silver Bay International Ltd (2000) 3 HKCFAR 109.

46.  I find that with the sub-DMC being put into place in retrospect satisfying the purpose of Condition 4(e), there is no real risk of enforcement action. Alternatively, if the DLO will impose a fine, the offer of the Fund sufficed to remove the doubt on title. In the premises, the vendor has a good title to pass on completion.  

(C)  Whether the vendor has satisfactorily answered the requisition to show the good title?

47.  The duty to show a good title to a property includes the duty to adequately answer all requisitions properly raised by the purchaser. If the requisitions are not answered satisfactorily, the purchaser is entitled to rescind irrespective of whether the vendor may well have a good title to the property: see Active Keen Industries Ltd v Fok Chi Keong [1994] 1 HKLRD 396.

48.  A deed of mutual covenant is a necessary document of title;so is a sub-deed of mutual covenant if this is what sets out the rights and obligations of the vendor while providing for his right to exclusive possession: see Polyson Jewellery Co Ltd v Liu Song Carlos [2002] 2 HKC 18; Silver Pioneer International Ltd v Good Onwards Co. Ltd, HCMP 4907/2003 (27 September 2004)

49.  Therefore, a copy of the executed sub-DMC should have been produced by the vendor by the completion deadline to discharge of its duty. Strictly speaking,the executed sub-DMC should have been produced much earlier and within a reasonable time prior to completion in order to give the defendant time to peruse and raise requisition such as on the accuracy of the memorial number of the assignment being referred to: see Ng Chek Kok v Kiu Wai Ming [1992] 1 HKLR 5 at 14, lines 15-23, CA. 

50.  Base on the following, Mr Cheung submitted that the vendor was not required to produce a copy of the executed sub-DMC because the sub-DMC whether executed or not had never been the defendant’s concern.

(1) the defendant did not indicate whether he would accept a sub-DMC to be executed in retrospect as a remedy to the breach;

(2) ever since the draft sub-DMC was provided, the defendant had not followed up or enquired about the status of  execution of the same; and

(3) since his letter dated 2 July 2013to LKC, the defendant’s position was “switched” from the initial request for a sub-DMC to the DLO’s confirmation of waiver of the breach.

51.  On careful analysis of the exchange of correspondences, I do not think the defendant has changed his position or abandoned his right with regard to the sub-DMC. By the defendant’s letter dated 2 July 2015, along with or alternative to his request for a waiver, he has also asked for the DLO’s consent to the remedy suggested i.e. executing a sub-DMC.

52.  The seeking of a waiver does not replace the need to remedy the breach. It is noteworthy that even the vendor (by LKC’s letter dated 5 July 2013) stated that “the technical breach can effectively be remedied by the execution of the sub-DMC together with the requisite waiver to be sought from DLO.” Hence, execution of the sub-DMC has always remained a live issue which was core to the possible solution of title dispute.

53.  Although the defendant has not requested or followed up forthe production of the executed sub-DMC, it does not mean that the vendor’s duty to produce the same was discharged. Unless and until the same was produced, the suggested remedy remained the vendor’s verbal statement without proof. When it was the vendor’s primary obligationto produce a necessary document of title, it is unfair to blame the defendant for not following up with it: see Lo Hung Biu v Lo Shea Chung & Anor [1997] HKLRD 721.

54.  Based on the aforesaid, I find that the vendor has failed to answer the requisition satisfactorily to show the good title.

Conclusion on Issue 1

55.  Had the executed sub-DMC been provided by completion deadline, the defendant ought to have advised the plaintiff to complete the purchase. His insistencefor a confirmation of waiver anddecline of the offer of the Fund were of no merits.

56.  Although it turned out that the defendant’s reasoning behind the Advice wasnot all sound, the Advice nevertheless cannot be regarded as incorrect. The Advice is correct at least to the extent that the plaintiff was not bound to complete the purchase, as the vendor has failed to show a good title.

57.  In the absence of a wrong advice, it follows that there is no basis for the plaintiff’s claim for professional negligence.

58.  For completeness sake, I shall consider issue 2 on the assumption that the Advice was incorrect.

Issue 2: whether the defendant was negligent in giving the Advice?

59.  Regarding the standard of care owed by a solicitor to his client both under contract and the law of tort, the test is “what the reasonably competent practitioner would do having regard to the standard normally adopted in his profession”: see Foshan Hua Da Industrial Co v Johnson Stokes & Master (a firm) [1999] 1 HKLRD 418; So Yuk Kam v Liu, Chan & Lam (a firm) & Another [2015] 5 HKLRD 640.

60.  In particular, in a situation which involves an exercise of judgment of what advice to be given to a client (as in the present case), it is pertinent to refer to the test settled by the House of Lords in Saif Ali v Sydney Mtchell & Co [1980] AC 198 at 220H-221A:-

“…… to make allowance for the circumstances in which the impugned decision fell to be made and to differentiate between an error that was to amount to negligence and an exercise of judgment which, though in the event it turned out to have been mistaken, was not outside the range of possible courses of action that in the circumstances reasonably competent members of the profession might have chosen to take.”

61.  In the present case, the plea of negligence particularized as (a) – (e), (e1) & (f) in the Amended Statement of Claim can be summarized and categorized as follows:

Category (A) negligence:

particulars (a), (b), (e) and (f) concerning the defendant’s erroneous judgment and advice on title

Category (B) negligence:

particulars (c), (d) and (e1) concerning wrongful omission of the defendant

Category (A) negligence

62.  In considering whether an erroneous or mistaken judgment amount to negligence, the court has to take into account the level of complexity and difficulty of the matter in question. In forming a view on title, onecannot simply count on objectively verifiable indicators. Title problems are fact-sensitive and are relatively complicated and difficult.

63.  In the present case, the defendant’s judgment on the issue of title is not baseless comments or unjustified presupposition reached recklessly or blindly without reasoning.The defendant relied not only on his professional experience of handling village house transactions; he also considered the government’s stance in respect of the breach with reference to the DLO Letter.Further, the defendant has sought counsel’s opinion, albeit given on an informal basis.

64.  In the premises, even if the Advice turned out to have been mistaken,I find that it was not outside the range of possible courses of action that in the circumstances reasonably competent members of the profession might have chosen to take.The defendant’s error in judgment did not amount to negligence.

Category (B) negligence

65.  The alleged omissions include:

(c) failing to advise the plaintiff of the offer of the Fund;

(d) failing to negotiate with LKC on the amount of the   Fund if it is insufficient,; and

(e1) failing to advise the plaintiff that a vendor and purchaser summons (“VP summons”) could be taken out before completion.

Particular (c):

Failing to advise the plaintiff of the existence of the offer of the Fund

66.  At all material times, the defendant’s conveyancing clerk Chan Man Sum (“Chan”)was the person who liaised with the plaintiff. Attendance note as a contemporaneous record is produced to prove that he has told the plaintiff about the offer of the Fund. His evidencewas  unshaken under cross-examination.

67.  On the part of the plaintiff, despite her effort to make recollection and to clarify mistakes, it is apparent that her memory of   communication with Chan was vague and confused. Her evidence is not reliable.

68.  I find that Chan has informed the plaintiff that the vendor has offered the Fund. In any event, even if Chan has failed to do so, the plaintiff fell short of proving causation of how this omission would have affected her decision not to complete. Since the defendant was firmly of the view that the offer of the Fund could not remedy the defect in title, it is more probable than not, the plaintiff in reliance of the defendant’s advice would still have elected not to complete.

69.  In the premises, negligence under particular (c) cannot be established.

Particulars (d):

Failing to negotiate with LKC on the amount of the Fund if it is insufficient

70.  It is never established that the amount of the Fund was insufficient. As a matter of fact, except the DLO no one including the defendant is able to assess what amount would be sufficient.

71.  In any event, the plaintiff fell short of proving causation in failing to show the outcome of the negotiation, and how the alleged omission to negotiate would have affected the plaintiff’s decision not to complete. 

72.  Therefore, negligence under particular (d) cannot be established.

Particulars (e1):

Failing to advise the plaintiff that a vendor and purchaser summons could be taken out before the date of completion.

73.  There is no dispute that the plaintiff was not advised of the option of taking out a VP summons before completion.

74.  I was referred to the cases of Goldenfix Properties Ltd v Cheer Hope Investments Ltd (19/3/1993, HCMP 2940/1992, unreported) and Wong Yiu Ting v Kwok Wing Chiu [2009] 1 HKLRD 399 where the court urged the practitioners to bring their clients’ notice about the use of the VP summons for resolving the title issue between the parties.

75.  Mr Cheung submitted that the defendant should have fully advised the plaintiff of the various courses of action open to her, and that he was negligent in failing to give a complete advice when it was his duty to proffer. See: Benefit Charter Limited v Kevin LH Kwong & Co, Solicitors & Anor unreported HCA 4775/2000, 6 October 2004 at para 89.

76.  Mr Yim referred me to Castle City Ltd v Choi Yue Development Ltd [1995] 2 HKC 593 whereKeith J expressed his concern about the illegitimate use of VP summons where solicitors have taken the easy route of advising their clients to obtain a definitive ruling from the court. In Castle City Ltd, the judge was dealing with a case where the supposed blot on the vendor’s title was so theoretical as not to amount to a defect in the title at all.  The present case is distinguishable.

77.  I find that the present case is anappropriate onefor the purchaser and the vendor to consider postponing completion and issuing a VP summons for determination by the court on title.

78.  However, to prove as a matter of causation,it has to be shown on a balance of probabilities that there was a real and not a merely speculative chance that the plaintiff, had she been properly advised of the option,would have elected to do so; and the vendor, had he been asked to consider the option, would have agreed to the same. See: Allied Maples Group Ltd v Simmons & Simmons [1995] 4 All ER 907.

79.  The plaintiff said in her witness statement thathad she been  duly advised of the option, she would have opted for it to avoid the risk of  her deposit being forfeited.This was said with the benefit of hindsight, I shall not give much weight to it. What has to be ascertained is the plaintiff’s intention and probable reaction at the material time.  

80.  Whether the plaintiff at the material time being advised of the option of a VP summons would have opted for it would still depend on how she was being advised. Under the defendant’s firm view of title defect, it was unlikely he would advise the plaintiff that title problem was so uncertain and arguable that it was necessary to seek a final determination of the court.Further, when it comes to postponement of completion for a substantial period of time, there is insufficient evidence to infer or support a real chance that the plaintiff would have agreed to the same.

81.  On whether there would be a real and substantial chance of the vendor to have agreed to the option, Mr Cheung submitted that inference can be drawn from, inter alia, the fact that LKC all along was prepared to make concession in order to facilitate completion of the transaction.

82.  It is noted that LKC’s concession was only made to facilitate completion as scheduled. When it comes to postponement of completion for a substantial period of time, there is insufficient evidence to infer or support a real chance that the vendor would have agreed to the same.

83.  I find that the plaintiff failed to establish a real and substantial chance that both the plaintiff and the vendor would have agreed to postpone completion for issuing a VP summons.

84.  Therefore, negligence under particular (e1) cannot be established.

Conclusion on issue 2

85.  In the premises, the plaintiff failed in proving that the defendant was negligent.

Damages

86.  Should liability be established, the defendant is liable for damages in the sum of HK$462,800 as follows.

(a) HK$350,000.00 being deposits forfeited by the vendor;

(b) HK$105,000.00 being commission paid to the estate agent; and

(c) HK$7,800.00 being costs and disbursement paid to the defendant for the conveyancing work.

87.  I do not think the plaintiff is entitled to the sum of HK$ HK$225,000 being compensation for costs of the VP action.

88.  The VP action was not under the care of the defendant but the plaintiff’s new legal team. Whether a third party’s conduct operates as a novus actus interveniens depends on the circumstances and in particular, the quality of that later act or event. See: Hogan v Bentinck West Hartley Collieries (Owners) Ltd [1949] 1 All E R 588 at 592A-593A, per Lord Simonds.

89.  As discussed above, the outcome of the VP action was contributed, if not solely caused by the fact that it was being conducted on a wrong factual basis. As such, the defendant shall not be held liable for the costs of the VP action.

Conclusion

90.  I order that the plaintiff’s claim be dismissed.

Costs

91.  Although this case involves a number of complicated legal issues, I do not think for this reason alone an order for costs at a higher scale is warranted, as Mr Yim hasinvited me to make.

92.  I make an order nisi that the plaintiff do pay the defendant’s cost of the action, with certificate for Counsel, to be taxed if not agreed.

93.  The order nisi shall become absolute unless an application to vary is made within 14 days from today.