HARDY KOWARA v. HEADWELL INVESTMENTS LTD.

1994, M.P. No. 2701

H E A D N O T E

This was a Vendor and Purchaser summons. The Vendor had made a statutory declaration in 1987 before the solicitor who had prepared the declaration. The question arose as to whether this could be relied upon as constituting acceptable conveyancing evidence.

Held:-

(1) In Hong Kong there is no statutory provision or Rule of Court preventing the use of any such declaration whether it had been made before:

a. a solicitor of the party seeking to rely on it;

b. a solicitor who had been a solicitor involved in one of the transactions referred to in the declaration or;

c. a solicitor who was a solicitor of the declarant to the extent that he may have prepared the declaration.

(2) The question of whether any such declaration constituted acceptable conveyancing evidence must depend on the facts of each case.

(3) The Court would be justified in requiring the remaking of a declaration made for use in connection with a current conveyancing contract if it were made before one of the solicitors to the parties before the Court.

(4) There is no justification in preventing the use of a declaration solely on the ground that it was made before the declarant's own solicitor and the position is no different if the declaration refers to a conveyancing transaction in which the solicitor acted.

(5) In so far as there is a policy to exclude the use of any such declaration there must be a discretion in the matter.

(6) If the matter had fallen to be decided on discretion, the discretion would have been exercised to enable the statutory declaration to be relied upon having taken into account the following factors:-

a. Whether there is scope for considering that the declarant did not understand the full meaning of the declaration.

b. Whether the declaration accords with the other facts known in the case.

c. Where the declaration was made before the decision in Lee Yeung Chun v. Ng Choi Chun any rule of exclusion should not render a title doubtful that prior to that decision would have been considered good.

1994, M.P. No. 2701

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

MISCELLANEOUS PROCEEDINGS

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__________________________

REASONS FOR DECISION

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1. This is a vendor and purchaser summons.

2. At the conclusion of the hearing, I made an order in terms of the summons and said I would give my reasons in writing later, which I now do.

3. By 2 provisional agreements dated the 21st July the Plaintiff agreed to sell and the Defendant agreed to purchase 2 properties namely what might be briefly described as 2nd and 3rd floor 73C Caine Road for the sum of $3,500,000.00 each.

4. There are 2 points for consideration. The first is whether the signatures which appear on the assignment dated the 15th Jan 1957 is that of Kwa Tjiong Tjun (or Tjuen) and of the same person who signed deed of gift dated the 15th July 1985.

5. Mr. Kwa was described in these documents as a merchant and a gentleman respectively. It was noteworthy that he did not describe himself nor was he, as far as I am aware, an artist.

6. In my view given due allowance for the passage of more than a quarter of a century and the inevitable ageing I am not left in any reasonable doubt that they are the signatures of the same person.

7. The other question which falls to be decided raises in an acute way a problem which arises from the execution of a statutory declaration. There is a statutory declaration made by Kwa Kok Min. the Plaintiff in this application, on the 11th December 1987. It was registered under Memorial No. 3588645. The declaration was very short. There can be no doubt about what it says. The declarant declared that he was the holder of Indonesian Passport No. A230032 and that by Deed of Gift dated 15th July 1985 the subject premises were assigned to him by Kwa Tjiong Tjun (or Tjuen). The declarant declares that he signed that assignment and he exhibits a copy of the relevant page of the assignment showing his signature. That is all that is said. There is no question of shades of meaning or nuances. Either the declarant did so sign the document exhibited or if he did not, the declaration was a straightforward lie. There is no possibility of any misunderstanding.

8. The declaration was made before Mr. Chung Wai Ming. Mr. Chung is and was at all material times the principal of Messrs. Larry W.M. Chung & Co., the firm of solicitors which acted for the declarant in preparing the relevant statutory declaration. It is to be noted it is not the firm of solicitors currently acting for the Plaintiff, nor is it the firm of solicitors whose name appears on the Deed of Gift.

9. Objection was made that this declaration was inadmissible following the decision of Lee Yeung Chun & another v Ng Choi Chun [1990] 1 HKLR 468. If that objection be right then the vendor would not be able to rely on it to show title. The vendor does seek to rely on the declaration. It is necessary therefore to examine whether it is admissible.

The Lee Yeung Chun case

10. In Lee Yeung Chun Mr. Justice Godfrey held that the vendor had made out a good title but went on to consider whether a statutory declaration was admissible which had been made for conveyancing purposes before the solicitor acting for the party in and about the transaction to which the declaration referred. The statutory declaration was made before the solicitor who had acted in the conveyancing transaction by which the property had been conveyed to one of the predecessors in title of the vendor. In coming to his decision the Judge expressly held that, unlike the present case, there was no need to rely on the statutory declaration. He said, expressly, that the question of admissibility did not arise for decision in his case. What the Judge said was therefore obiter and was expressed as such.

11. It is pertinent to point out that the Judge himself said "..it seems the practice of a declarant's making his declaration before his own solicitor may in the past have been a common one." It is also in point that although the Judge said that the matter had been fully and ably argued, he cited no direct authority for the proposition that such a declaration was inadmissible. I take it therefore, that none was cited to him and that he knew of no direct authority. That, as I shall come to, accords with my own and Counsel's researches. Before leaving this aspect, I should mention that I note that in the course of the judgment the expression "before his own solicitor" was apparently used as the equivalent of "before a party's solicitor".

12. Mr. Justice Godfrey's reasoning is based on an analogy with the rule as to inadmissibility of affidavits and affirmations made in front of a party's solicitor. He said that such evidence was regarded as "..open to suspicion of partiality." He also drew an analogy with what was said in the argument of one of the Counsel in Vinall v De Pass [1892] AC 90 wherein the practice of solicitors' clerks making affidavits on information and belief was mentioned. The conclusion which he arrived at was that the policy considerations which applied in the case of affidavits and affirmations applied just as much to statutory declarations.

13. Two things are important to note here. In the first place the Learned Judge was expressing a rule as a matter of policy. The conclusion which he expressed in the judgment was not founded on the interpretation of any primary or subsidiary legislation. In the second place the Learned Judge ascribes the policy to considerations of partiality. I will come to that later. Suffice it to say at the moment that partiality is not "perjury", nor is it "collusion".

14. As I shall come to, the policy has not been applied in other fields in relation to statutory declarations and it is therefore necessary first of all to examine the rule in relation to affidavits and then to determine whether and to what extent that rule must be applied to statutory declarations.

The Rule preventing the taking of oaths by a party's Solicitors

The Position at Common Law

15. The rule which prevents the reception into evidence in legal proceedings of affidavits made before a solicitor of the party on whose behalf it is to be used is clearly of ancient origin. Most of the early cases (See e.g. In the Matter of Thomas Hogan a Lunatick 1754 3 ATK 813) simply record the fact that such an affidavit was not permitted to be used. The note of the case of Ross v Shearman which is to be found at 2 COOP. T. COTT 172 is however instructive. It seems that by the 1810's in most Courts such affidavits were not permitted to be used. However the report of the case makes reference to a case which was decided in the following year, 1818. In that latter case, Smith v Woodroffe 6 Price 230, Lord Chief Baron Richards refused a motion to order the removal of an affidavit which had been filed. The ground on which the removal was sought was that it had been sworn before the solicitor of the Plaintiff. The Chief Baron was apparently not convinced that the affidavit was irregular since according to the practice on the Equity side of the Court such affidavits had previously been admissible. He therefore refused the motion, but without costs. Hence in that case the affidavit was allowed to stand because that had been the previous practice in that Court. Afterwards, however, the Judge made a statement in open Court that in future affidavits were not to be made before attorneys in the cause.

16. Perhaps it may be argued that the reason that an affidavit is not admissible if it is sworn before an attorney to the party on whose behalf it is to be used is so obvious that the reason need not be stated. This may account for the absence of reasoning in all but one of the cases. In Bourke v Davis (1889) 44 Ch.D. 110, pg.126 Kay J. explained the reason when he was talking about the duty of a commissioner of oaths in administering an oath. He said this:

"The commissioner's duty before he administers the oath is to satisfy himself that the witness does thoroughly understand what he is going to swear to; and he should not be satisfied on this point by any one but the witness himself. For this reason it has been the rule since Lord Hardwicke that the Court does not accept an affidavit sworn before the solicitor in the cause, nor his clerk, although he may be a commissioner."

17. The cases (Wood v Harpur 3 BEAV 290; Hopkin v Hopkin 10 Hare, App ii and Duke of Northumberland v Todd 7 Ch.D. 777, 780.) which he cites in addition to Re Hogan are not explicit in their reasoning and certainly do not take the matter any further.

18. The passage quoted illustrates the importance of the meaning to be ascribed to the word partiality to which I have already referred. Clearly what the Judge was saying is that the importance lies in the person who swears an affidavit understanding fully what he swears. It is the duty of the commissioner, or other person before whom the affidavit is sworn, to make sure that the person swearing the affidavit does understand it. He has to go through it with him. It is not the job of the commissioner to make sure that the swearer of an affidavit is not telling lies. If someone is going to tell lies he is going to do so just as much before a stranger as he would before the solicitor of the person on whose behalf he is providing the evidence or for that matter his own solicitor.

19. The question of partiality comes in this way. The solicitor of the party on whose behalf the affidavit is being prepared has, no doubt, taken instructions. He therefore has a clear idea of the sort of evidence that is wanted to establish a case. Where a witness is not the client, the solicitor will often have been told the sort of evidence that it is thought that this witness can provide. It is all too easy therefore for a lawyer to prepare an affidavit thinking that it contains what the witness is able to say. It is then that misunderstandings can occur. He may not understand what exactly the witness can say or he may be too keen to have the affidavit sworn and thus not explain it properly to the witness. In other words it is to safeguard against what might be described as overzealous advocacy being contained in affidavits that this rule arose.

Rules of Court

20. The rule of practice which had been applied in all Courts since at least the first quarter of the 19th Century was embodied into Rules of Court by the end of the century. The rule, which is in the same form as the present Hong Kong Order 41 rule 8, read as follows:-

"No affidavit shall be sufficient if sworn before the solicitor of the party on whose behalf the affidavit is to be used or before any agent, partner or clerk of that solicitor"

21. It appears from the case of Baker v Ambrose [1896] QB 372 that previously the rules had applied only to affidavits used in litigious business. However, in that case, Wright J. applied the Rule as it stood then to affidavits required under the Bills of Sale Act, 1882 to be filed in Court.

Statute

22. Finally I should mention the Commissioners for Oaths Act, 1889. By Section 1(3) it is provided that "..a commissioner for oaths shall not exercise any of the powers given by this section in any proceeding in which he is solicitor to any of the parties to the proceeding, or clerk to any such solicitor, or in which he is interested."

23. In Re Bagley [1911] 1 K.B. 317 Cozens-Hardy M.R. was dealing with a case involving an affidavit which had to be sworn in order to register a deed of arrangement in the King's Bench Division of the court. This was provided for by the Deeds of Arrangement Act 1887. The case therefore concerned affidavits and did not concern statutory declarations. It also involved a similar point to that which had come before Wright J in Baker v Ambrose. The objection in that case was that the verifying affidavit required on registration of a deed had been sworn before the solicitor of the trustee of the deed.

24. In the course of his judgment Cozens-Hardy M.R. said that Section 1(3) of the Commissioners for Oaths Act applied to statutory declarations in the same way as to affidavits. The Judge held that an affidavit sworn before a man who had no authority was a nullity. The same reasoning applied to a declaration would lead to the result that the commissioner in question would not be competent to have the declaration made in front of him. Thus the declaration would not be one made in accordance with statutory provisions. His observation, which was clearly not part of the ratio of the case, nevertheless is something which I take to be good law but it is, of course, statute law. Furthermore, the wide meaning given to the word "proceeding" as used in the Act is also something which should be noted.

25. This section 1(3) is specifically mentioned in Order 41 rule 8 in England. Interestingly it does not seem to have any counterpart in Hong Kong, neither does Section 81(2) of the Solicitors Act 1974, nor does Section 113(5) of the Courts and Legal Services Act 1990 both of which are referred to in the notes to the White Book. Both these sections are in similar terms to Section 1(3) of the Commissioners for Oaths Act 1889. Indeed it is instructive that when Section 7A of the Legal Practitioners Ordinance was added in 1977 (3 years after the provision in the Solicitors Act was enacted) the equivalent of Section 81(2) of the Solicitors Act was not included. The Hong Kong legislation is clearly modelled on the United Kingdom Act. No doubt the equivalent of Section 81(2) was not included because it was thought that the position was adequately covered by the Rules of Court.

26. Statutory Declarations

Statutory Declarations were introduced in the United Kingdom by the Statutory Declarations Act 1835. Halsbury's Statutes explains that "Before 1835 the number of oaths taken by persons in the ordinary course of business was so great that, not only was an oath lightly regarded, but serious and unnecessary inconvenience was caused through having to undergo the various formalities. To check the abuse of the oath, this Act provided for substitution of a statutory declaration except in the case of an oath of allegiance, or an oath, affirmation or affidavit in a court of justice." Indeed the long title of the Act when it was passed was: "An Act to repeal an Act of Parliament of the present Session of Parliament...and to make other Provisions for the Abolition of unnecessary Oaths".

27. Many of the provisions of that Act are still in force to-day. There was a clear distinction drawn by the Act between a declaration and an oath. The clear intent of the Act was that oaths would not merely not be taken, but would not be allowed, in circumstances where declarations had been provided for. Looking at the provisions of the Act it is by no means clear to me that it was not indeed the intention that the solicitor of the person making the declaration, who was prima facie the person interested in whatever the subject of the declaration was, would not be competent to have the declaration made before himself.

Statutory Declarations in particular instances.

28. Statutory Declarations are used in a number of situations. One common use is in proceedings before the Registrar of Trade Marks in Hong Kong and the United Kingdom and indeed, in the United Kingdom, in proceedings before the Comptroller of Patents. Although these may in one aspect be considered as non-litigious, appeals can be launched from decisions all the way up to the Privy Council as far as the Registrar of Trade Marks is concerned and the House of Lords in relation to decisions of his United Kingdom counterpart. Furthermore the value of the rights at stake can be no mean amount. The proceedings are often as much hard fought litigation as any other. To my certain knowledge it has been so common that it might be said to have been almost the invariable practice in Hong Kong at the very least for over a quarter of a century that a statutory declaration would be made before the solicitor acting for the party on whose behalf the declaration was to be filed. In the United Kingdom, proceedings in the Patent Office and Trade Mark Registry are most usually conducted by Patent and Trade Marks Agents. Hence, the circumstances giving rise to an acting solicitor having a declaration made in front of him are not the same in England. The encyclopedic manual of practice maintained by the Registrar in the United Kingdom contains no reference to the exclusion of declarations made before the solicitor of the party on whose behalf whom it is filed. If there had been any instance of any such declaration being excluded, taking into consideration the nature of that work, it would doubtless have been mentioned. Furthermore, that manual has been compiled over the years with a view to instructing non-legally trained hearing officers, inter alia, in matters of procedure and if the filing of a statutory declaration made before a party's solicitor were not permitted, I would expect that to be mentioned.

Section 5 (8) and (9) of the Powers of Attorney Ordinance Cap 31

29. This Ordinance in general follows closely the Powers of Attorney Act 1971. Section 5(4) provides that if a donee of a power makes a statutory declaration in certain circumstances certain facts may be conclusively presumed. In 1987 an amendment was made to the Ordinance to include subsections 5(8) and (9). The first subsection provided that after the coming into force of the amendment a declaration would not be sufficient if it made before:-

(a) a solicitor who acted for the declarant or the donee of the power of attorney in the transaction referred to in subsection (2);

(b) a solicitor acting, or who has acted, for a party in any transaction affected by the statutory declaration;

(c) a partner, clerk or employee of a solicitor mentioned in paragraph (a) or (b); or

(d) a partner, clerk or employee of a partner of a solicitor mentioned in paragraph (a) or (b).

30. It can be seen that subsections (8)(b) and (d) go, or at least potentially go, very much further than the equivalent of any Common Law rule and any Rule of Court and further than any statutory provision relating to affidavits. No equivalent amendment has been made to the United Kingdom legislation. Subsection 5(9) provided that for the avoidance of doubt a statutory declaration made before the commencement of the amending Ordinance should not be invalid by reason only of the fact that it was made in those circumstances.

31. It is interesting to note that in introducing the Bill to the Legislative Council, the Attorney-General said "..a practice has grown up in Hong Kong for the statutory declarations to be sworn (my emphasis) before the very solicitor acting in the sale where the power of attorney has been relied on." I take it from that statement that this was the existing state of affairs that was intended to be dealt with by the legislation. Here, therefore, it can be said that there was a practice which existed of a statutory declaration being made before the solicitor of a party to the relevant transaction.

32. It is also noteworthy that when the legislature enacted a provision to deal with a situation where the Attorney-General said there was "doubt about the validity of this widespread practice" it was considered right and proper to ensure that there should be no retrospective invalidity cast upon a transaction.

33. I would summarise my perusal of the authorities and the law:

1. Until the decision of Godfrey J. in Lee Yeung Chun v Ng Choi Chun there had been no decision which excluded the use of a statutory declaration made before the solicitor either of one of the parties or of the declarant. Certainly none was referred to in that case and the researches of Counsel and my researches have not found any. I would contrast that with the more than 50 reported decisions which I have found in respect of affidavits.

2. The objection raised by Godfrey J was one of policy.

3. In Hong Kong there is no statutory objection to a declaration being made before a solicitor acting for the party on whose behalf it is to be used. It can be noted here that if there had been, it would probably have been unnecessary for the Powers of Attorney Ordinance to have been amended in 1987. Contrast the situation in England where it can be argued on the basis of the Commissioners for Oaths Act coupled with the obiter of Cozens- Hardy M.R. that such a declaration did not in law constitute a valid statutory declaration.

4. It seems the practice of a declarant's making a declaration before a party's own or the declarant's own solicitor may in the past have been a common one. Specifically:-

a. In 1990 it was referred to as "common" in conveyancing matters by Godfrey J.

b. In 1987 the practice was described as "widespread" by the Attorney-General in relation to declarations relating to use of a power of attorney

c. There is and for a very long time has been an almost invariable practice of declarants making their declarations before the party's solicitor in Trade Mark matters

5. The reason why an affidavit sworn before the solicitor of the party on whose behalf it is to be used is not admissible relates to the importance of the affiant understanding the contents of the affidavit. It is in that sense that the term "partiality" is to be understood.

6. When the Powers of Attorney Ordinance was amended in 1987 it was thought right that rather than invalidating past transactions retrospectively, it was declared that for the avoidance of doubt a statutory declaration made before a solicitor acting for the declarant should not be invalid for that reason.

34. Although Godfrey J's statement of the law is not binding in this case, I should say that I consider it is important where possible for Judges of commensurate jurisdiction to follow statements of the law made by their brethren. I regret however that having given this matter long consideration I cannot agree with the breadth of and absolute nature of the exclusion which he held to exist. In many instances it is no doubt preferable for declarations to be made before independent solicitors. If a declaration is made for use in connection with a current conveyancing contract and is tendered as part of the evidence in Court in proceedings determining issues arising in respect of that contract, then it seems to me that there may be little or no justification why that should be made before a solicitor acting in the Court proceedings on behalf of one of the parties. The Court would be justified in saying that the declaration should be made again. That is in keeping with the Common Law rule that a witness may not swear an affidavit before a solicitor for one of the parties.

35. I see no justification in preventing use of a declaration simply because the declarant has made it in front of his own solicitor. Neither the Common Law rule, nor the Rules of Court nor Statute prevents an affidavit in similar instances being used either in England or in Hong Kong. In many respects, the solicitor of that person may be a suitable person when it comes to considering the interests of justice. If the declaration is to prove the identity of the maker of the declaration then that solicitor is likely to be in a better position than others to know the truth relating to the identity. What I have said in this paragraph is not altered by the fact that the solicitor may have also acted for the party making the declaration in a conveyancing transaction which is referred to in the declaration.

36. Neither is the position, as I see it, any different if a declarant makes a declaration to record the existing state of affairs knowing and perhaps intending that some later owner of the property may wish to use the declaration in proceedings at a later date in connection with the property in question.

37. The question of whether any such declaration as I have referred to in the preceding paragraphs constitutes acceptable conveyancing evidence must depend on the facts of each case.

38. I consider that given the state of the law in relation to declarations in Hong Kong if there is to be a change for example in relation to declarations used for example in Trade Marks proceedings that will have to come by change in the rules or in the statute. I would add here that I consider it may well be desirable that there should be such a change. I would also add that it may be prudent for practitioners to anticipate such a change, but that does not mean it is the law.

39. Furthermore, even if I were wrong, because Godfrey J expressed what he himself described was a matter of policy and that, as I have indicated, appears to be the first pronouncement of this matter of policy there must be a discretion to alleviate the rigours of the application of that policy. At least until the new practice has become established the exercise of that discretion must be more apparent in cases where the operation of the policy would create retrospective doubt as to the quality of title to a property. I would refer here to what Lord Chief Baron Richards said and did in Smith v Woodroffe. When he laid down new policy he was careful not to back date its effect.

40. In this instance I consider it is clearly right to accept the declaration in question. In the first place as I have indicated the declaration was not made before one of the solicitors acting in these proceedings. Any analogy with the Rules of Court in Hong Kong as to affidavits, therefore breaks down. Furthermore, the solicitor before whom the declaration was made did not act in any of the conveyancing transactions. I would not disregard the declaration solely on the basis that the person before whom it was made happened to have been the solicitor of the Plaintiff in preparing the declaration. As I have indicated, even if he had acted in the conveyancing transactions I would still not have excluded the declaration. There is no equivalent of the Commissioners for Oaths Act in Hong Kong. That Act, in so far as it gives an extended meaning to the word proceeding goes further than the common law rule did.

41. Even if I were wrong and the matter were a question of discretion, I would exercise my discretion to rely on the declaration. In doing so I would take into account the following matters:-

42. Firstly, the declaration in question is very clear. It is short. There is no scope for ambiguity in what it says. In those circumstances I find it difficult to conceive that the declarant made any mistake about its contents. I cannot conceive that the declaration would, have been any different if it had been made before an independent solicitor, even had the procedure of going through an affidavit (or declaration) word by word with the person swearing (or making) it, in the manner which Kay J. thought proper in Bourke v Davis, been carried out to the letter.

43. I cannot conceive this declaration being false in circumstances which would not amount to fraud involving impersonation and forgery. I would add that one must bear in mind that one is dealing with a statutory declaration, the purpose of which is to prove the identity of the maker. In many ways one would feel far safer if the declaration were made in front of somebody who, prima facie, is likely to know the declarant rather than in front of a total stranger. One bears in mind here that the rule of policy is not there to prevent deliberate fraud and collusion by those administering the oath. If the declarant is telling lies about his identity he is far more likely to achieve his purpose in front of a solicitor who does not know him than he is in front of his own solicitor.

44. Secondly, there is no apparent reason to doubt the accuracy of the declaration and it accords with the facts otherwise known in the case.

45. Finally, the declaration was made some 3 years before the case of Lee Yeung Chun v Ng Choi Chun. A strict application of the policy would render doubtful a title that would prior to that decision have been considered unquestionably good.

46. In all these circumstances I would consider it right to exercise my discretion not to apply the policy as expressed in that case.