INTERNATIONAL TRADING CO. LTD v. LAI KAM MAN AND OTHERS

HCA461/2002

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 461 OF 2002

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J U D G M E N T

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THE CLAIM

1. In 1994, units in the Shanghai Lucky Target Square ("the Property"), a commercial development then being built in Shanghai, were offered for sale in Hong Kong. The developer of the building was Shanghai Lucky Target Development Co. Ltd ("the Vendor"). Their Hong Kong sales agent was Lucky Target Property Agency Ltd ("the Hong Kong Agent"). The units were also available for sale in Shanghai through the Vendor.

2. The plaintiff was the purchaser of Unit 908 in the Property under a sale and purchase agreement dated 13 May 1996 ("the Sale and Purchase Agreement"). The Sale and Purchase Agreement was executed on behalf of the plaintiff at the offices of Messrs K.M. Lai & Li ("Lai & Li"), solicitors, whose three partners are the defendants. Mr Ma Siu Lam ("Ma"), the 3rd defendant, a China Appointed Attesting Officer ("CAAO"), attested the plaintiff's signatures. Following the execution of the Sale and Purchase Agreement, a Real Property Ownership Certificate (title deed) should be issued and registration of the plaintiff's interests in Unit 908 made on application to the relevant authority in Shanghai. The plaintiff signed a letter of authorisation, also dated 13 March 1996 ("Letter of Authorisation"), authorising the Vendor and Mr Tsui Foo Wing ("Tsui"), a lawyer in Shanghai, to undertake the registration and to obtain the title deed. The Letter of Authorisation was also attested by Ma. No title deed in favour of the plaintiff was ever issued. Nor registration undertaken. In February 2001, Unit 908 was sold by auction in Shanghai for the benefit of a creditor of the Vendor. The plaintiff sues the defendants for loss. The defendants' case is that they never acted for the plaintiff. They acted as the Vendor's solicitors only, and they acted as CAAO in attesting the plaintiff's signature. Further, that any legal costs paid to Lai & Li by the plaintiff were paid to them "as the Vendor's solicitors". In other words, even when acting as CAAO, Lai & Li were acting for and on behalf of the Vendor only.

THE BACKGROUND

3. Mr Baldwin Wong Kwok Learn ("Baldwin Wong"), who apparently controlled the plaintiff, signed a Memorandum of Sale dated 28 March 1994 ("the Memorandum of Sale") to buy Unit 908 for HK$3,991,000 in his personal name. A deposit of 15% was paid. Incidentally, he also signed a Provisional Memorandum of Sale, also dated 28 March 1994, in relation to which an initial deposit of HK$100,000 was paid. The significance of the Provisional Memorandum of Sale was not explored at the hearing. It does not matter whether the Memorandum of Sale was actually signed on 28 March 1994.

4. It is however relevant to note that in the Memorandum of Sale the Vendor's solicitors was stated to be Lai & Li and the person to contact was Mr Lai Chak Sum ("C.S. Lai"), a conveyancing clerk.

5. Clause 2 of the Memorandum of Sale required the purchaser to "attend the appointed solicitors' office with the original of this Memorandum of Sale and his/her/its identity card or corporate documents on the appointed date to sign the pre-sale and purchase agreement. The terms of the pre-sale and purchase agreement shall be determined by the Vendor".

6. Clause 5 of the Memorandum of Sale also provided that "all solicitors' fees, government taxes/fees and all the expenses in connection with the purchase of the unit shall be borne by the purchasers". I believe this required the purchaser to pay solicitors' fees even if they were incurred by the Vendor.

7. It is quite clear that the appointed solicitors were Lai & Li. According to C.S. Lai, Lai & Li were employed to perform the duties of CAAO in connection with the sale of units in the Property. The terms of the employment were agreed at a meeting between a Mr Stephen Chung, a director of the Vendor, and the 1st defendant, Mr K.M. Lai ("K.M. Lai"). C.S. Lai was assigned by K.M. Lai to handle this project. In the letter of appointment dated 4 March 1994 the appointee was stated to be Lai & Li, although in the body of the document it was K.M. Lai (also a CAAO) who was named as the appointee. It is also relevant to note :

「... 現委托香港黎錦文律師依照香港法律辦理該商品房見證銷售和公正手續。」

It seems that K.M. Lai was appointed in respect of the 見證 (attestation), 銷售 (sale) and 公正 (notarization) "in accordance with Hong Kong law". Although K.M. Lai or Lai & Li were appointed to attest or notarise, there is no evidence what exactly it was that K.M. Lai or Lai & Li were required to attest or notarise. The appointment of K.M. Lai personally is consistent with the evidence that a CAAO is appointed as a CAAO in his individual capacity and that in attesting documents he does so in his personal capacity. I should also note that Lai & Li were not described as CAAO in the Memorandum of Sale. In the sales brochures which were supplied to potential purchasers, under Schedule of Information, Lai & Li were simply described as solicitors and notaries. There is no direct evidence whether Lai & Lai were aware of the content of the sales brochures but undoubtedly Lai & Li were aware of the wording of the Memorandum of Sale. Since Lai & Li were appointed by the Vendor prior to the sale in Hong Kong, I would expect Lai & Li to be aware of the contents of the sales brochures.

8. It is C.S. Lai's evidence that he attended one meeting between a representative of the Vendor and K.M. Lai. C.S. Lai's evidence did not mention any fees. K.M. Lai did not give evidence. I do not know if there was any agreement between the Vendor and Lai & Li or K.M. Lai on fees. I note that the Letter of Appointment dated 4 March 1994 is silent on any fees payable by the Vendor to Lai & Li. According to C.S. Lai, Lai & Li were also employed as the collecting agent of monies payable under the sale of units in the Property. However, it seems, but it is not entirely clear why, Lai & Li were not required to collect payment in respect of every transaction attested by them.

9. According to the evidence, since the units were being sold prior to completion of the Property, a pre-sale and purchase agreement was required to be signed by the parties. When the Property was built, a formal sale and purchase agreement would have to be signed. The formal sale and purchase agreement would be on a printed form, which must be purchased from the relevant authority in Shanghai.

10. It is common ground that as the transaction involved a sale of the Mainland property in Hong Kong, all documents signed in Hong Kong by Hong Kong residents have to be attested by CAAOs. Otherwise they would have no legal effect in the Mainland. Documents attested by CAAOs in Hong Kong are covered by Article 67 of the Law of Civil Procedure of the People's Republic of China, an unofficial translation of which provides :

"The People's court shall acknowledge the validity of legal acts, legal facts and documents that have been notarised through legal procedure, except those that can be overturned by counter evidence."

11. Since 22 February 1995, CAAOs have been regulated by 中國委托公証人(香港)管理辦法, issued by the Ministry of Justice.

12. According to Mr T.C. Foo, a senior solicitor and a CAAO, and who gave expert evidence on the duties of and functions of CAAOs, CAAOs were first appointed in 1981. There were at that time only eight, there are now a total of 283 CAAOs. It is also his evidence that CAAOs are appointed in their individual capacity and they attest documents as individuals.

13. In China, similar legal documents would have to be attested by Chinese notaries who are state officials. A Hong Kong resident who chooses to execute the sale and purchase agreement in the Mainland would have his signature attested by a Chinese notary.

14. According to C.S. Lai, Lai & Li were involved in the sale and purchase of a total of 128 units. Out of the 128 units, the purchasers of 127 of them signed the pre-sale and purchase agreements. However, some of these purchasers later signed the sale and purchase agreements in the Mainland. Thus, whether a CAAO is used in Hong Kong would seem to be a matter of choice by the purchaser. It also seems to follow (although this was not touched upon in the evidence) that if the sale and purchase agreement was signed in the Mainland, no attestation fee would be payable to Lai & Li. The pre-sale and purchase agreements signed by the purchasers were sent to the Vendor who signed them (presumably in Shanghai). They were then registered and returned by the Vendor to Lai & Li. According to C.S. Lai, Lai & Li would keep them until the signing of the formal sale and purchase agreement. There was no evidence how the pre-sale and purchase agreements were returned to the purchasers if the sale and purchase agreements were signed in the Mainland instead of in Hong Kong.

15. Unit 908 was the only unit where no pre-sale and purchase agreement was signed. C.S. Lai said he was told that Baldwin Wong was a good friend of one of the owners of the Vendor. Whether what he was told was true or not does not matter. I believe C.S. Lai must have been given some reason by the Vendor, otherwise he would have followed up on the matter, not least because of the debit note sent by Lai & Li to Baldwin Wong dated 25 June 1994 under which fees would have been payable to Lai & Li. C.S. Lai also suggested that the reason why Baldwin Wong did not sign the pre-sale and purchase agreement was because he wished to re-sell the unit without incurring the transaction tax of 5%. My attention was drawn to Clause 7 of the Memorandum of Sale under which the purchaser might, with the consent of the Vendor, transfer his unit on payment of a handling fee of 0.1%.

16. Although Baldwin Wong did not sign any pre-sale and purchase agreement, further instalments, each of 10% of the purchase price, which were required to be paid under the Memorandum of Sale, were paid at six monthly intervals from 1 August 1994 to the Vendor via Lai & Li.

17. Baldwin Wong's explanation that no pre-sale and purchase agreement was signed because he was not asked to sign is unconvincing. I make no finding why the pre-sale and purchase agreement was not signed, but I do not believe it was because Baldwin Wong did not receive any notice to sign the pre-sale and purchase agreement. It is quite clear from documents produced by the plaintiff, including Lai & Li's bill dated 25 June 1994, that Baldwin Wong must have been received some notification. Moreover, as I have said, Clause 2 of the Memorandum of Sale required the signing of a pre-sale and purchase agreement on a date to be appointed. I do not believe it is at all likely that the Hong Kong Agent or Lai & Li would have informed the purchasers of the other units but omitted to inform Baldwin Wong. In this context, I note that in relation to Unit 1208, also handled by Lai & Li and where the Memorandum of Sale was dated 14 March 1994, the pre-sale and purchase agreement was signed on 14 July 1994. The relevance of Unit 1208 will appear later (see para. 35 below).

18. The Property was completed in 1996. By a Chinese letter dated 25 April 1996, the Hong Kong Agent informed Baldwin Wong of the completion of the Property and that he should attend Lai & Li to deal with the completion of the transaction. The letter went on to say that if Baldwin Wong wished to make inquiry about legal matters, he should contact C.S. Lai of Lai & Li. This letter did not say that Lai & Li were acting as CAAO only nor that they were the Vendor's solicitors only. C.S. Lai said he had no prior knowledge of the content of the letter. But I cannot infer from that that K.M. Lai or Lai & Li did not know. In all probability I believe Lai & Li were aware of the content of this letter. I do not believe the Vendor would have written in these terms, if the Vendor had not been assured that Lai & Li would entertain enquiries about legal matters from the purchasers.

19. That letter was sent together with a letter from Lai & Li also dated 25 April 1996. It is also in Chinese. By this letter the purchaser was notified to pay the balance of the purchase price as well as other expenses between 29 April 1996 and 13 May 1996, and to sign the Sale and Purchase Agreement, Deed of Mutual Covenant and mortgages if applicable. Also, if the purchaser is a corporation, it should bring along :

(1) the company seal;

(2) its business registration and certificate of incorporation;

(3) register of directors;

(4) board resolution (three copies); and

(5) the authorised signatory's ID card/passport.

It concluded by saying that if the purchaser had any question or that further assistance was required, the purchaser should contact Lai & Li at any time. The letter did not say that Lai & Li were acting as CAAO only nor that they were the Vendor's solicitors only. It also did not say that such further assistance would be given without any responsibility and as the Vendor's solicitors only, and hence on behalf of a person with a conflicting interest. Nor did it say that the purchaser was under no direct obligation to pay any fees to Lai & Li and that any fees payable would be payable by the purchaser pursuant to its contract with the Vendor.

20. Between the notice of 25 April 1996 and 13 May 1996 when the Sale and Purchase Agreement was signed, Baldwin Wong, with the consent of the Vendor, transferred Unit 908 to the plaintiff. That was done by cancelling the Memorandum of Sale and the signing of a new memorandum of sale by the plaintiff dated 1 May 1996.

21. The plaintiff was a property holding company in Hong Kong. It had a small staff, but substantial property holdings. I have the distinct impression that the purchase of the unit was of no great significance to the plaintiff. At the trial, a Miss Tammy Chan Shui Kwan ("Miss Chan"), who left the plaintiff's employment in December 1996 but signed the Sale and Purchase Agreement on 13 May 1996, came back from the U.K. to give evidence. A Miss Li Mei Hing ("Miss Li"), whose responsibility was on the accounts side but who accompanied Miss Chan to Lai & Li on 13 May 1996, also gave evidence. A Miss Au Pui Sze ("Miss Au"), whose evidence related to a later period, also gave evidence. In addition, Mrs Patsy Wong Ng Kai Fung ("Mrs Wong"), the wife of Baldwin Wong, also gave evidence. So did Baldwin Wong.

22. It is common ground that prior to 13 May 1996, Miss Chan spoke to C.S. Lai and sought help from him regarding the documents required for the completion, e.g. the wording of the board resolution which was required. It is relevant only to note para. 3 of the board resolution which appointed Tsui and the Vendor as the plaintiff's representative to arrange for the obtaining of the title deed and registration, etc. It was not C.S. Lai's evidence that he had made clear to Miss Chan that in rendering such assistance, Lai & Li were acting as the Vendor's solicitors only. Lai & Li, of course, are solicitors and notaries in Hong Kong. The firm as such is not a CAAO. A CAAO is appointed in his individual capacity only.

23. On or about 9 May 1996, by fax, Lai & Li sent to the plaintiff their bill no. 44278. The bill is pre-printed. Against the word "client", the name of the plaintiff appeared. According to Mr T.C. Foo, a CAAO, who is also a solicitor, would normally issue a fee note for the attestation fees in the name of the firm of solicitors, in which he was a member. That is done so that the transaction would be covered by the insurance of the firm as solicitors. Thus, it was in Lai & Li's interest to act as Hong Kong solicitors. Bill no. 44278 conveyed the message that Lai & Li were acting as a Hong Kong solicitor. Lai & Li's case is that they acted as a Hong Kong solicitor for the Vendor. They never acted for the plaintiff. Insofar as Ma witnessed the plaintiff's signatures Ma did so as CAAO for the Vendor. That the name of the plaintiff appeared on bill no. 44278 for convenience sake only. The client was in fact the Vendor, although the plaintiff was contractually liable to the Vendor to pay on its behalf. Anyway, that is the effect of C.S. Lai's evidence. But I do not see why on such an important issue, the court should be required to rely on the evidence of a conveyancing clerk only. Ma's evidence did not touch on this. K.M. Lai was not called. Nor the 2nd defendant. I am not prepared to proceed on the basis that C.S. Lai was privy to all the discussions or agreements with the Vendor on the Vendor's liability to pay any fees. There is no evidence on which I am prepared to find that the Vendor was liable to pay any of the fees. Insofar as C.S. Lai's evidence suggested that, I am not prepared to accept it. As I have said the Letter of Appointment is silent on fees.

24. Bill no. 44278 is divided into two parts. Under lawyers' fees, there were a total of six items in the printed form. However, only four of them are relevant in relation to this purchase :

(1)	Sale and Purchase Agreement	$17,900
(3)	Certificate of legal representative for corporation	$2,000
(4)	Letter of Authorisation	$2,600
(6)	"Deed of Mutual Covenant"	$1,000

The other two items only applied to mortgages. The plaintiff did not require any mortgage. The four items totalling $23,500 can be described as profits costs for Lai & Li. There is no attempt to explore by way of evidence on whose behalf (3) and (6) were incurred. As for (1) and (4), if they were incurred by the plaintiff and not the Vendor, that would be highly relevant to the question whether there was any contractual relationship between the plaintiff and Lai & Li. In the Defence, para. 10(iv), the defendants asserted that "the legal cost paid to the Firm (as the Vendor's solicitors) in connection with the sale and purchase of the Property was HK$23,500". Insofar as fees were charged by Lai & Li for attesting the Sale and Purchase Agreement, it is Lai & Lai's case that such costs were payable to them as the Vendor's solicitors. There is no evidence that had the plaintiff not used the services of Lai & Li, the Vendor would have been liable to pay any or all of the $17,900. There is nothing in the evidence to suggest that the attestation fee would have been payable to Lai & Li, if, for instance, the plaintiff were to employ another CAAO to attest its signature in Hong Kong. There is nothing in the evidence to suggest that the plaintiff was not free to employ another CAAO to attest its signature in Hong Kong. Indeed, the plaintiff could have signed the Sale and Purchase Agreement in the Mainland, and not to use any CAAO at all. It is Lai & Li's case that the fee was a "scale fee" which a CAAO was required to charge by the Association of China-Appointed Attesting Officers Ltd ("the Association") which regulated the conduct of CAAOs in Hong Kong. However, C.S. Lai also claimed that it was an all-in fee and covered the drafting of the Sales and Purchase Agreement. So it is not Lai & Li's case that the whole of the $17,900 was incurred by the Vendor for the drafting of the Sale and Purchase Agreement which was in a printed form and had to be purchased from the relevant authority in Shanghai. The assistance given by Lai & Li consisted in filling in the blanks. It was unlikely that they were contractually entitled to charge the Vendor say $17,900 multiplied by the number of units they handled. Even if part of the fees was for drafting and part for attestation, the Vendor was not liable to pay to Lai & Li for attestation. Anyway there was no evidence to such effect. On this important issue, there was really no satisfactory evidence. I think it is more probable that the Vendor did not have to pay any fee because Lai & Li were quite happy to provide their services in return for the fees which they might earn from acting for the purchasers. If Lai & Li charged the plaintiff fees for services rendered to the plaintiff then there would be at least an implied retainer. I note that in para. 11 of the Amended Defence, the "Defendants further aver that the Plaintiff was aware that the 3rd Defendant (Ma) was an attesting witness to the documents and the Firm was only responsible for arranging notarization of the same for use in Shanghai thereafter." It is perhaps of greater relevance to note the particulars supplied under para. 11, namely, it was not Lai & Li's case that the plaintiff was expressly informed. The matters relied on to support the alleged awareness were at best equivocal. Some of the more important ones are dealt with later in this judgment. I do not believe the plaintiff was so aware at all. On the contrary, I believe the plaintiff was led to believe by the two letters referred to in paras. 18 and 19 above and by bill no. 44278 that Lai & Li were acting as solicitors in the transaction for the plaintiff as well as for the Vendor. There is no evidence that the plaintiff was told that the sum of $17,900 was a scale fee, or why the plaintiff had to pay.

25. Lai & Li charged $2,600 as lawyer's fees in relation to the Letter of Authorisation. The Letter of Authorisation authorizes/appoints Tsui and the Vendor, or either of them, to represent the purchaser to obtain the title deed as well as to effect registration. Also disbursement in the sum of $11,793 for Shanghai lawyer's fees were collected by Lai & Li from the plaintiff. In drafting and attesting the Letter of Authorisation were Lai & Li acting for the plaintiff or for the Vendor?

26. Mr Ng has argued the fact that lawyer's fees were charged shows that there was an implied or express retainer by the plaintiff of Lai & Li. That may depend on whether the plaintiff was obliged to pay those fees pursuant to their contract with the Vendor. If they were contractually bound to pay those fees to Lai & Li because of their contract with the Vendor, then it does not necessarily follow that by paying those fees they had retained Lai & Li to act for them or that Lai & Li had agreed to act for them. Mr Liu which appeared for the defendant referred me to Clause 14 of the Sale and Purchase Agreement which provides : "that if the purchaser were to appoint the Vendor or any third-party to handle the notarization transfer registration and the obtaining of title deed then the Vendor must at the time when this Sale and Purchase Agreement was signed also signed the relevant Letters of Appointment." No doubt, it was contemplated that in most if not all cases the Vendor and the lawyer nominated by the Vendor would be appointed by the purchaser for the purpose. But that would be as a matter of convenience for the purchaser as opposed to a contractual obligation. There is no evidence how or why the plaintiff decided or agreed to appoint the Vendor and/or Tsui for that purpose. But it has not been made clear why the Vendor would become liable to pay Lai & Li for the Letter of Authorisation if the plaintiff chose to sign a Letter of Authorisation. It seems that if the plaintiff had decided not to appoint anyone at all, no fee would have been payable for the Letter of Authorisation.

27. On the evidence, I am unable to conclude that the fees charged for the Letter of Authorisation or for the Sale and Purchase Agreement were incurred by the Vendor such that the plaintiff was contractually bound to the Vendor to pay on the Vendor's behalf.

28. Now if those fees, or part of them, were incurred by the plaintiff, and the plaintiff was contractually liable to pay Lai & Li, then there would be a contract between them.

29. The other part of the bill covered expenses, the first item of which is Shanghai lawyer's fees of $11,793. Presumably, this was Tsui's fees. Again, this was not explored in evidence, but it seems that Tsui's fees were incurred by the plaintiff to Tsui, thus, there should be a direct relationship with Tsui.

13 May 1996

30. It is common ground that on 13 May 1996 the Sale and Purchase Agreement was signed. The events of 13 May 1996 are important because of the conflicting evidence about what was said on this occasion.

31. The witnesses were required to recall events which happened almost eight years ago. One would expect some discrepancies. Many of the discrepancies are unimportant. For example, whether Miss Chan and Miss Li were asked to read the documents in the reception area or in the conference room where the documents were eventually signed.

32. The important conflicting evidence came after the documents were signed. After the documents were signed and the balance of the payment made, Miss Chan said she was given two receipts by C.S. Lai, the first for $2,184,046 being balance of the purchase price, and the other for $332,766 being costs and disbursement. She was also given a receipt signed on behalf of the Hong Kong Agent evidencing payment of management fees and deposits and, lastly, a document dated 13 May 1996 signed by Lai & Li and addressed to the Vendor certifying that the balance of the purchase price had been paid. This last document would enable the plaintiff to obtain possession of Unit 908 in Shanghai.

33. According to Miss Chan, she asked for photocopies of all the documents that she had signed, but that was turned down by C.S. Lai because C.S. Lai said that those documents needed to be signed by the Vendor and there was no point in giving her copies. She also said that in the presence of C.S. Lai and Ma, she asked about the title deed registration. She said C.S. Lai confirmed that the Lai & Li would follow up on the matter and let the plaintiff had the title deed in due course. That there was nothing else for the plaintiff to do except to take possession of the unit and wait for the title deed from Lai & Li. She also claimed that C.S. Lai told her that there was no need for the plaintiff to engage its own lawyers, when Miss Chan told C.S. Lai that the plaintiff would engage its own lawyers unless Lai & Li were acting for the plaintiff.

34. According to C.S. Lai, he did not remember Miss Chan asking for copies of the documents that she had signed but that if he had been asked for those documents he would have made copies for her. I prefer C.S. Lai's evidence. I do not believe that if Miss Chan had asked for copies, she would have been satisfied with the excuse that they had not been signed by the Vendor yet. Miss Chan did not give me the impression that she could have been so easily fobbed off. According to C.S. Lai, Miss Chan did ask about the procedure or what was to happen thereafter. He also said he would have told her even if she had not asked. He told her that Lai & Li would send all the documents to the China Legal Services Office in Hong Kong for certification and then all the documents would be sent to the Vendor for them to sign and to have notarised. Then the Vendor would pay the taxes and effect registration. Since the plaintiff had appointed the Vendor and Tsui, that was what they would do for the plaintiff and the title deed would be given to the plaintiff by the Vendor and not by Lai & Li, so that later they would have to chase the Vendor for the title deed. He said that was something that he would tell every buyer unless there was a mortgage in which event the purchaser would be told that the title deed would be given to the mortgagee bank.

35. I have said that according to C.S. Lai, he would tell every purchaser that the title deed would be delivered to the purchaser by the Vendor except where the property was under mortgage. There is support for his evidence from a Mr Lai Kam Wah, who is a solicitor but not a relative of any of the defendants or C.S. Lai. He was one of the directors of a company called Co-Land Property Limited, the purchaser of Unit 1208. As mentioned above (para. 17), a memorandum of sale was entered on 14 March 1994 in relation to Unit 1208. A pre-sale and purchase agreement was signed on 14 July 1994. In this case there was a mortgage and the mortgage was in favour of The Kwangtung Provincial Bank Shenzhan Branch. On 17 October 1996, he and his fellow directors attended the offices of Lai & Li to sign various documents including the Sale and Purchase Agreement, the Mortgage Contract and the Deed of Guarantee. According to him, after the documents were signed, he was told by C.S. Lai that all the documents would be sent to the Vendor by Lai & Li for the Vendor signature, notarization and registration in the Mainland and that thereafter the Vendor would deliver to the purchaser direct the relevant title deed, if the unit was not mortgaged to any bank, but as the unit was mortgaged, these documents would be delivered to the bank, and that the relevant title deed would be released by the bank to Co-Land upon full payment of the mortgage.

36. Mr Lai Kam Wah is a practicing solicitor and admits that he knows the defendants as fellow practitioners. I think he is a reliable witness. I believe he was indeed told by C.S. Lai that title deed would be returned to the purchaser by the Vendor if there was no mortgage.

Events after 13 May 1996

37. According to Baldwin Wong, shortly after 13 May, he noticed from a document although it was not the bill no. 44278 that the plaintiff was described as the client. In his witness statement, he said the document was the bill no. 44278. He said he asked Miss Chan whether Lai & Li represented the plaintiff. According to him, Miss Chan said "should be". That was not good enough for Baldwin Wong. He told Miss Chan that it was better to make clear whether Lai & Li represented the plaintiff, if not, the plaintiff would instruct Messrs Ng & Yung, their regular solicitors, so that the plaintiff would not be unrepresented. He said at that time Mrs Wong was in the office and she heard the conversation. He said Miss Chan seemed reluctant to call. Sensing reluctance on Miss Chan's part, Mrs Wong decided to call Lai & Li and ask whether they represented the plaintiff. He said Mrs Wong subsequently told him that that was confirmed by Lai & Li. He said Mrs Wong asked the person who was responsible for the project at Lai & Li, whether Lai & Li were helping the plaintiff to do everything which was required to be done including getting the title deed as lawyers and that, if not, the plaintiff would get another lawyer. According to her, she was told "Yes, Lai & Li would do everything for you". He said that was why that he did not instruct Ng & Yung to help.

38. I have to say I find his evidence unconvincing. If the plaintiff would have instructed another firm of solicitors to represent their interests if Lai & Li were not acting for them, I would have thought the plaintiff would want to find out before the documents were signed on 13 May, whether Lai & Li were also acting for them, and not afterwards.

39. But there is more. The evidence from the plaintiff is that thereafter at least twice yearly, arising out of the preparation of accounts and the audit of the plaintiff's account, someone from the plaintiff would call Lai & Li and asked to speak to the person responsible for the project to inquire about the title deed. That would be about March and July of each year. Miss Chan called before she left in December. Thereafter, Miss Li, Miss Au and a Mr Tsui did. Miss Li and Miss Au duly gave evidence confirming that. The last time, according to Baldwin Wong, that Lai & Li were called was in July of 2001.

40. Each time, it is said, that the person answering the call on behalf of Lai & Li would say that the title deed were not yet available and that they should wait. C.S. Lai's evidence, which I accept, is that if anyone had called and asked to speak to the person in charge of the project, the call would have been put through to him. He said that was only one call from the plaintiff and that was unrelated to title deed. The call was made to obtain a contact number.

41. I find it difficult to believe that if the calls had been made. C.S. Lai would have said what he was supposed to have said. Surely, as is clear from the documents produced in relation to Unit 1208, the Certificate of Title (地產權証) was issued as early as 18 December 1996. Nor was Unit 1208 an isolated event. According to C.S. Lai, there were other units which were under mortgage. If C.S. Lai had been asked after December 1996, I believe he would have told the plaintiff that Lai & Li had not been given the title deed and that the plaintiff should ask the Vendor for the title deed. Since the title deed were already available in relation to the mortgaged units, I do not believe C.S. Lai would have said repeatedly that title deed would take a long time and was not yet available. I am also of the view that if the question of title deed and registration were mentioned on 13 May 1996 by Miss Chan, there is no reason why C.S. Lai should not have told Miss Chan that the title deed would be returned to the plaintiff by the Vendor. It is C.S. Lai's evidence which I accept that of the units handled by Lai & Li, apart from those where there were mortgages, no title document was ever delivered by the Vendor to Lai & Li.

42. The evidence of Miss Chan is that in August 1996, she and Miss Li went to Shanghai to take possession of the property, but all attempts to let the property was unsuccessful.

43. According to Mrs Wong, it was in 2001, after she had enlisted the help of a Mr Shing to let the unit that she was told by Mr Shing that in order to do so she would need to have the title deeds. She explained she was told the tenant might wish to be satisfied that the plaintiff was indeed the owner of the property.

44. Although the plaintiff had instructed well-known companies such as First Pacific Davies to let the unit previously, apparently none of the other property agents ever told the plaintiff that the title deeds were necessary for the purpose of letting.

45. I have to say that I find the evidence of Mrs Wong unreliable. I do not believe that she had called Lai & Li shortly after 13 May 1996. I am not willing to rely on her evidence relating to her dealings with Mr Shing.

46. I turn to consider the evidence of Ma, who attested the documents on 31 May. According to him, he left the conference room after the documents were witnessed and before the receipts were given to Miss Chan. Thus, he was not there when the important conversation took place between Miss Chan and C.S. Lai. He was criticized by Mr Peter Ng, SC, counsel for the plaintiff, and I think rightly so, for the fact that in his witness statement in para. 5, he said :

"...I adopt and repeat herein those matters stated by C.S. Lai at paragraphs 2 to 36 of his Witness Statement and I confirm the same to be true and correct." (See B-134)

47. In cross-examination, it transpired that the only paragraph in C.S. Lai's statement that he had personal knowledge of was para. 24. And that in relation to the all important para. 26, namely :

" Before Miss Chan left the Firm's office on 13th May 1996, I told her that since the Vendor had undertaken to handle notarisation of contract and registration matters, the Sale & Purchase Agreement and all relevant documents would be forwarded by the Firm to Shanghai for the Vendor's signature and handling, and as the Unit was not mortgaged to any bank, the Vendor would deliver the relevant title documents and certificate(s) to the Plaintiff direct instead of through the Firm.",

Ma has no personal knowledge. Be that as it may, Ma's evidence is relevant in two respects, namely, that he contradicted Miss Chan's allegation that it was in his presence that C.S. Lai confirmed that Lai & Li would be dealing the title deed and returning them to the plaintiff in due course. Secondly, according to him, he said to Miss Chan, that he was attesting her signature as a "公証人". This is relied on in the Particulars to show that the plaintiff was aware that "the firm was only responsible for arranging notarization of the (documents) for use in Shanghai thereafter". But this statement was at best equivocal. It did not say that Lai & Li acted in no other capacity. It is obvious that Lai & Li did not merely act as CAAOs in the sale of the Property, they acted as the Vendor's solicitors. Indeed, they also acted for the mortgagee bank where mortgages were required. Just as importantly, the plaintiff was never told that Lai & Li acted as CAAO and as nothing else so far as the plaintiff was concerned. Thus, the fact that Ma acted as "公証人", even if that is taken to be a reference to CAAO and is factually correct, does not take Lai & Li's case very far. However, insofar as Ma contradicted Miss Chan's evidence I prefer Ma's evidence.

48. C.S. Lai was cross-examined on the letter dated 4 June 1994 from the Hong Kong Agent to Lai & Li dated 4 June 1996, where it said "after notarisation and completion of title deed they would be returned to Lai & Li to facilitate completion of procedure relating to the Sale and Purchase contract (待公証及小房証手續完成後，交回貴司，以便完成出售合同手續)." This contradicted the evidence of C.S. Lai in a very important respect. This letter which acknowledged receipt of Sale and Purchase Agreement in relation to 43 units including Unit 908 stated that the title deeds would be returned to Lai & Li. C.S. Lai said that after the receipt of this letter, he told Mr Roman Chung of the Hong Kong Agent who signed this letter that the last sentence was incorrect and Mr Chung agreed. In answer to me, he said insofar as the title document relating to units under mortgage would be sent back to Lai & Li, who would then forward them to the mortgagee bank, this sentence is correct. But it was not correct in relation to the units not under mortgage.

49. I have considered this very carefully and have to say that this letter made me pause in accepting C.S. Lai as a reliable witness. Nor am I persuaded that there was indeed this conversation with Mr Roman Chung. I had the distinct impression that C.S. Lai was uncomfortable giving such evidence. However, after careful consideration, I have come to the conclusion that on the critical question about what was said on 13 May 1996 and on whether there was the alleged conversations regarding the title deed between 13 May 1996 and July 2001, the evidence of the plaintiff is unconvincing and unreliable. Of course, that does not mean I must accept the evidence of C.S. Lai in full or even in part. But there is other support for C.S. Lai's evidence.

50. In this context, I should mention letters which were written by the plaintiff to Lai & Li in 2001. The first letter is dated 7 August 2001, it was drafted and signed by Baldwin Wong, and it reads :

"We are the registered owner of the above property, which was brought through your firm, and have just noticed that so far we have not received the title deeds of the above property.

Enclosed please find your debit note no.44278 for your easy reference.

Please let us have the title deeds as soon as possible."

51. The reply from Lai & Li is dated 15 August 2001 says :

" We have passed your letter dated 7th August 2001 to the Developer for their attention.

In the meantime, please contact the Developer whose address and telephone numbers are ..."

C.S. Lai was questioned on this reply, for example, why there was no response to the statement that ".... the above property, which was brought through your firm ...." if Ma or Lai & Li only acted as CAAO. C.S. Lai was unable to explain, although he drafted the letter.

52. On the same day, presumably after the receipt of this letter, the plaintiff wrote to the Hong Kong Agent :

"We are the registered owner of the above property, for which you acted as the sale agent for the Vendor, and have just noticed that so far we have not received the title deeds of the above property.

Enclosed please find a copy of the Memorandum of Sales No. 0149.

Please let us have the title deeds or advise how it can be obtained at your earliest convenience."

53. The next letter from the plaintiff to Lai & Li is dated 16 August 2001 and, after saying that they had contacted the Vendor in Hong Kong but were told that no one in Hong Kong could handle the matter, the letter went on to say :

"As we bought the property through your firm we assume you would let us have the Title Deed. If this is not the case please let us know the reason and how we can obtain the document."

54. When Baldwin Wong was questioned about the wording of the letter dated 16 August 2001, he said the wording is not correct. That is because it had been toned down. He said the original also drafted by him was very strong. He showed it to Miss Li and his wife and they wanted him to tone it down, because they wanted to obtain information from Lai & Li and wanted Lai & Li's co-operation. He said in the original draft he had written words to the effect that : "as your have promised to act as our lawyer, why should we have to contact the Developer". And in relation to the letter dated 7 August 2001, he said it was not quite appropriate either because they had been chasing Lai & Li for the title deed, indeed, the last time, as recently as the end of July 2001.

55. Baldwin Wong is a highly qualified person. He is a Chartered Accountant of great seniority. He had lectured at the Hong Kong University on Accountancy for a number of years. At one time, he was the Chief Accountant of K.M.B. He struck me as a highly intelligent and articulate person. I do not believe that if the plaintiff had been chasing Lai & Li for the title deed on a semi-annual basis since 1997 and it seems on several occasions in 1996, the plaintiff would have written the letters dated 7 August and 16 August in this way. Indeed, if the evidence of Miss Chan, Miss Li and Mrs Wong about the events of 13 May 1996 and shortly thereafter were true these letters would have been worded very differently. Moreover, if as recently as July 2001, C.S. Lai had said in response to enquiry from Miss Au that the title deed was not yet ready and the plaintiff should wait, I do not believe Lai & Li would have replied as they did in their letter of 15 August 2001.

56. On 27 August 2001, the plaintiff wrote again asking Lai & Li for various original documents : "to enable us to obtain the title deed (房地產權証) of the property". I do not wish to refer to other correspondence between the plaintiff and the defendants suffice it for me to say that in none of the letters written by the plaintiff to Lai & Li, was it ever suggested that Lai & Li had ever agreed or said that the title deeds would be delivered by Lai & Li to the plaintiff.

57. Moreover, prior to the plaintiff writing to Lai & Li in August, the plaintiff had written to the management company in Shanghai. The letter is letter dated 22 June 2001, where it was written :

"敝司為上述單位之業主，並已於一九九六年八月親到上海接收鎖匙，及委託前任管理公司代為辦理房地產証手續。

唯現今翻查檔案，發覺上述單位之房地產証尚未到手。現煩請貴 司代查該房地產証之下落。若然未辦或有什麼手續需要完成，煩請告知。謝謝。"

It was followed by a chaser on 23 July 2001. Miss Li who drafted and signed the letter dated 22 June was cross-examined about this letter. She was asked why it was written that the plaintiff had appointed the former management company to handle the procedures relating to the title deeds. She said that is not true, there was never any such authorization but that it was written in this way in the letter in order to find out whether in fact the title deeds were with the management company. I have to say I find her answer unsatisfactory. I believe the fact that the plaintiff should have written to the management company, which is obviously part of the Lucky Target Group, prior to their writing to Lai & Li in August 2001 supports the view that the plaintiff believed that the title deed was supposed to be delivered to them by the Vendor.

58. After carefully considering all the evidence and the submissions made, I am persuaded that C.S. Lai had told Miss Chan that the title deed would come from the Vendor notwithstanding my concern over the letter of 4 June 1996 referred to in para. 48 above. However, I am not prepared to go further and find that C.S. Lai actually said to Miss Chan that she should chase the Vendor for the title deeds. This was not in his witness statement. The significance of the evidence was obvious and I would have expected it to be included in his witness statement, if it was really part of the conversation on 13 May 1996.

59. I turn to consider whether, notwithstanding that I have rejected the evidence of the plaintiff and accepted the evidence of the defendant regarding what was said on 13 May 1996 and therefore can proceed on the basis that the plaintiff was told and understood that they would obtain the title deed from the Vendor, Lai & Li might nevertheless be liable to the plaintiff.

60. Mr Ng made the point that what Lai & Li told the plaintiff was that they "would" get their title deed from the Vendor not that they might or might not get the title deed from the Vendor and by saying so they had assumed the responsibility of advising the plaintiff which the plaintiff had relied on to their detriment. He said it does not matter that the plaintiff might have been untruthful in their evidence, the important thing is that the plaintiff relying on the defendants did nothing or there is no evidence that they did anything in relation to the title deed until they wrote the letters in June 2001 to the management company in Shanghai.

61. Mr Ng also complained that Lai & Li failed to inform the plaintiff that Lai & Li were acting as CAAO only in the transaction and they were not acting as solicitors for the purchaser, namely the plaintiff.

62. There is force in these submissions.

63. According to the evidence of Mr T.C. Foo, it was the common and good practice in 1996 for CAAO so to inform purchasers in the position of the plaintiff because of the confusion which might otherwise arise. The Association, by their Notice No. 259 of 9 December 1999, expressly stated that a CAAO should inform a purchaser what services the CAAO would provide and that the CAAO did not act as a legal adviser or lawyer, would not assess the risk nor interpret any Chinese law or give any legal opinion, and that apart from the services rendered no other services would be provided by the CAAO. According to Mr T.C. Foo, that was good and common practice in 1996 as well and applied to completed property as well as property sold in the course of construction. This common and good practice was not followed.

64. I have already found that there was a contract between the plaintiff and Lai & Li arising out of the payment of fees to Lai & Li for work performed by Lai & Li for the plaintiff.

UNDER SUCH CONTRACT, WHAT DUTIES DID LAI & LI OWE TO THE PLAINTIFF?

65. I believe such duties included at least the duty to advise the plaintiff on the terms of the Letter of Authorisation as well as the risk involved in authorising the Vendor as well as Tsui to obtain the title deed or effect the registration. It is common sense that there was a potential conflict regarding the Vendor. It may be that in the case of purchasers whose pre-sale and purchase agreements had been registered, it did not matter because they were protected by such registration already, but as Lai & Li knew, the plaintiff had not entered into a pre-sale and purchase agreement. Why could not the Sale and Purchase Agreement after registration be returned to Lai & Li (as in the case of mortgages) as an added protection to the plaintiff, such that in case of delay Lai & Li could follow up? Mr Liu made the point that Lai & Li did not have the competence to advise the plaintiff because the Letter of Authorisation was meant to be used in the Mainland. If that is so I think Lai & Li should have made that clear to the plaintiff so that the plaintiff could seek advice elsewhere.

66. I also believe it is common sense that the Letter of Authorisation together with the requisite lawyer's fee should be sent directly to Tsui. These documents did not need the signature of the Vendor. It is not clear whether Lai & Li or the Vendor were authorised by Tsui to collect the lawyer's fee from the plaintiff. If not, then in the event of the bankruptcy of the Vendor then vis-à-vis Tsui payment by the plaintiff to the Vendor was not payment to Tsui. These are elementary matters which anybody acting on behalf of the plaintiff should have warned the plaintiff. On the other hand, if it is thought that this also involved the Mainland law or procedure and Lai & Li did not have the competence to advise, Lai & Li should also have informed the plaintiff accordingly.

67. Mr T.C. Foo has given evidence on the role and function of CAAO. I have no reason not to accept his evidence. Indeed, I find his evidence on the role and function of CAAO persuasive. But the fact that a CAAO has a limited role to play as a CAAO does not mean that in a particular transaction his duty was confined to that of a CAAO. Here, it is accepted that Lai & Li acted as the Hong Kong solicitors for the Vendor. Lai & Li also acted for the mortgagee where mortgages were required. The critical question in this case is whether Lai & Li's role vis-à-vis the plaintiff was confined to that of a CAAO, and if so, what would that entail?

68. It is of interest to note that according to Directive No. 259, so far as properties under construction were concerned, a CAAO is required to inform the purchaser what services he would provide. Such services include the delivery of the pre-sale agreement to the notarial office for notarization and relevant department for registration. Also it included the retrieval of the pre-sale agreement and the delivery of such pre-sale agreement to the buyer or its nominee. Whether the same services were meant to be provided by a CAAO in Hong Kong in relation to completed property was not explored at the hearing. So I mention this in passing only. But I also make the point that it is common sense that the pre-sale agreement should be sent by the CAAO to the relevant government department in the Mainland for notarization as well as for registration, and then for the CAAO to retrieve such documents and then to give them to the buyer or its nominee. That provides obvious and necessary protection to the purchaser. Indeed taxes payable should be sent directly to the relevant government department. Nor is it an answer to say that signature by the Vendor would be required. I can see no reason why the Vendor could not have signed first or in Hong Kong if that is the only way to protect the purchaser. In the case of a sale and purchase agreement which has been preceded by a pre-sale and purchase agreement, it may be that such protection is not required because of the earlier registration. I make no finding. There is no evidence one way or the other. But in this case, or in the sale of a completed unit, where there would be no pre-sale and purchase agreement, I believe the same procedure should be adopted, and that the purchaser should be advised accordingly. If for any reason, a different procedure had to be adopted, the purchaser should be advised of the implication, as well as the alternatives open to him, e.g. signing the sale and purchase agreement in the Mainland which would require attestation by a Chinese notary and which would ensure registration. Of course, in so advising the CAAO would probably deprive himself of the opportunity of earning the attestation fees from the purchaser. But I see no reason why a purchaser should be totally unprotected without the most explicit warning.

69. As I have said I can see no reason why in the case of the sale of a completed unit, why at least the Letter of Authorisation as well as the fees payable to the Mainland lawyer should not be sent directly to the Mainland lawyer.

70. If Lai & Li were authorised by Tsui to collect fees payable to him for registration and the obtaining of title deed, I can see no reason why such fees should not be sent to Tsui direct. It was argued that because under the Letter of Authorisation, the Vendor was also appointed, that might explain why it was sent to the Vendor. But there was no explanation why Tsui's fee was nevertheless charged and paid. Does that mean there would be a refund in case Tsui was not instructed? Should not the plaintiff be advised about that too?

71. Indeed, putting it at the very lowest, Lai & Li owed a duty to inform Tsui of his appointment and payment of his fees to the Vendor. In that event, if Tsui did not receive his fees or the Letter of Authorisation one would expect Tsui to inform Lai & Li who would be under a duty to inform the plaintiff of the same.

72. I do not believe what C.S. Lai told Miss Chan was a sufficient discharge of Lai & Li's duty. What he said was equivocal. He did not say that Lai & Li did not act for the plaintiff as solicitors in Hong Kong. Nor that Lai & Li acted as CAAO and nothing else. Nor what that involved. To say the documents would be sent to the Vendor for signature and notarization was also equivocal or incomplete because the Letter of Authorisation need not be signed by the Vendor nor further notarised. Furthermore, it was never said that Tsui's fees would not be sent to Tsui direct. Nor that Lai & Li would not follow up. I think it was to cover the last point that the evidence that Miss Chan was told that the plaintiff would have to chase the Vendor for the title deeds was led. I have not accepted this part of C.S. Fai's evidence. In any event, even this is equivocal. It is not said that Lai & Li would do nothing at all and that their job ended on 13 May. If that was the case, it should have been clearly stated.

73. Lastly, I find that the fact that everything was left to C.S. Lai, experienced conveyancing clerk though he might be, is unsatisfactory. Important information, especially warnings that the purchaser was completely unprotected (for according to Lai & Li, the plaintiff was totally unprotected) should not have been left to C.S. Lai. Nor conveyed in such a causal manner.

NEGLIGENCE

74. If, however, I should be wrong about any contractual duty of care owed by Lai & Li to the plaintiff, I believe in all the circumstances Lai & Li also owed a tortious duty of care to the plaintiff.

75. I refer to the letters referred to in paras. 18 and 19 above and the fact that before 13 May 1995 Lai & Li did give assistance to the plaintiff in connection with its board resolution and other documents. I also take into account the admitted fact that Lai & Li never told the plaintiff that they were acting as solicitors for the Vendor only. I have also found that what Ma told Miss Chan when the documents were signed in his presence on 13 May 1995 was equivocal. Although I have rejected the plaintiff's evidence, I think in all the circumstances it is possible for me to find that they had relied on Lai & Li to give them assistance regarding the purchase. More importantly, Lai & Li had assumed the responsibility to do so. Such assistance would include at least advising the plaintiff that they were unprotected. I also believe Lai & Li assumed the responsibility to communicate to Tsui of the Letter of Authorisation as well as remit the lawyer's fees to him. If that had been done, I have no reason to believe that registration would not be effected or title deed obtained. Indeed, I believe Lai & Li's duties to the plaintiff in tort is not less extensive than their duties in contract.

CONTRIBUTORY NEGLIGENCE

76. One defence relied on by Lai & Li is contributory negligence although little time was spent on it. Insofar as the plaintiff's claim against Lai & Li is based on contract and insofar as I have found that there was a contract between the plaintiff and Lai & Li to exercise reasonable care, whether the defence of contributory negligence is available to Lai & Li would depend on the view I take of the law. In England, it has been held that the defence of contributory negligence is available where the defendant's liability in contract is the same as his liability in the tort of negligence independently of the existence of the contract, see Vesta v. Butcher [1989] AC 852 (CA). However, in Michael Astley and Ors v. Austrust Ltd [1999] Lloyd's LR 758, a case involving a solicitor and client, the High Court of Australia (by a majority) has held otherwise. I refer to the headnotes :

"(4) ... contributory negligence is not a defence to an action in contract at common law and does not give rise to apportionment of liability under the apportionment legislation even where, as here, the contractual duty is concurrent with a duty in the tort of negligence.

(5) ... there was no reason of justice or sound legal policy to prevent the respondent in a case such as the present from recovering for all the damages casually connected to the appellants' breach of contract even if the respondent's own conduct has contributed to the damage that he or she has suffered; by its own voluntary act, the appellant has accepted an obligation to take reasonable care and, subject to remoteness rules, to pay damages for any loss or damage flowing from a breach of that obligation; if the appellant wishes to reduce its liability in a situation where respondent's own conduct contributes to the damage suffered, it is open to the appellants to make a bargain with the respondent to achieve that end; ...."

77. The High Court of Australia was concerned with section 27A of the Wrongs Act 1936 of South Australia which is not materially different from the Law Reform (Contributory Negligence) Act 1945 or our section 21 of the Law Amendment and Reform Consolidation Ordinance, Cap.23.

78. With respect, I found the majority decision in Astley v. Austrust so compelling that I feel bound to conclude that insofar as the plaintiff's claim succeeds on contract, the defence of contributory negligence is not available as a matter of law. Gleeson CJ delivering the majority decision said at page 775 at the first column :

" At common law, contributory negligence, which was invented in 1808 is an answer to an action in nuisance, was a complete defence to an action in tort for negligence. No case can be found in the books where contributory negligence, as such, was ever held to be a defence to an action for breach of contract. Moreover, if it had been a defence to breach of contract, it is impossible to understand why the great works on pleading written in the nineteenth century make no mention of it. No trace of the defence can be found in any of those works notwithstanding that, at least after the Hilary Term Rules of 1834, such a defence would have to have been specially pleaded."

79. At page 776 in the first column :

" The fact that contributory negligence was not a defence to an action in contract points irresistibly to the conclusion that the apportionment legislation is concerned only with actions in tort and does not affect awards of damages based on breach of contract. To what, other than a common law action in tort, can section 27A(3) be referring when it says that a claim in respect of damage 'shall not be defeated by reason of the fault of the person suffering the damage'? It makes no sense now, and it made even less sense when the legislation was passed, to speak of an action in contract being defeated by 'negligence, breach of statutory duty or other act or omission which give rises to a liability in tort or would, apart from this Act, give rise to the defence of contributory negligence.'

The purpose of the enactment of the apportionment legislation was to allow recovery of damages in cases where contributory negligence would defeat an action in tort..."

80. I turn to consider whether if the tortious duty of care stood alone contributory negligence has been made out. Lai & Li relied on the fact that nothing was done by the plaintiff about the registration or the title deed until 2001. This is not an easy question. The matter is complicated by the fact that I do not accept the plaintiff's version of the facts. I am left with no evidence why the plaintiff did nothing between 1995 and 2001. I also take into consideration that I am of the view that C.S. Lai did tell Miss Chan that the title deed would be handled by the Vendor and that they would be returned by the Vendor to the plaintiff.

81. In this context I must look at the evidence of C.S. Lai again. According to para. 26 of his statement, he said :

"Before Miss Chan left the firm's office on 13 May 1996, I told her that since the Vendor had undertaken to handle notarisation of contract and registration matters, the Sale and Purchase Agreement and all relevant documents would be forwarded by the firm to Shanghai for the Vendor's signature and handling, and as the unit was not mortgaged to any bank, the Vendor would deliver the relevant title documents and certificates to the plaintiff direct instead of through the firm."

82. In his evidence, he added that the plaintiff would have to chase the Vendor for the title deed. I have said I am unwilling to accept this part of C.S. Lai's evidence. So on the facts I conclude that Miss Chan was merely told that the title deed would come from the Vendor in due course but that she had not been told that she would have to chase the Vendor for them. Bearing in mind that legal procedure in China might take time and that the title deed might not be available for a substantial length of time, the fact that the plaintiff had obtained possession of the property and had no reason to believe that anything was amiss, I am not satisfied that there was any contributory negligence on the part of the plaintiff.

DAMAGES

83. The property has fallen in value. Mr Ng contends that Lai & Li as the wrongdoer should not be allowed to take advantages of the downward movement in the market. So he contends that damages should be assessed as at May 1996. I was referred to County Personnel (Employment Agency) Ltd v. Alan R. Pulver & Co. [1987] 1 WLR 916, there, Bingham LJ (as he then was) said at 925H :

"(4) While the general rule undoubtedly is that damages for tort or breach of contract are assessed as at the date of the breach (see, for example, Miliangos v. George Frank (Textiles) Ltd [1976] A.C. 443, 468 per Lord Wilberforce), this rule also should not be mechanistically applied in circumstances where assessment at another date may more accurately reflect the overriding compensatory rule. The Dodd Properties case [1980] 1 W.L.R. 433, both affirms this principle and illustrates its application."

84. In May 1996, the loss to the plaintiff was probably nominal. Indeed, I believe the plaintiff had not lost Unit 908 until the auction in 2001. Prior to the auction, there is no reason to believe that the situation could not have been rectified by the registration of the Sale and Purchase Agreement. Although if the Vendor had become insolvent, the plaintiff would have to pay the disbursements in bill no. 44278 again.

85. The plaintiff had had the enjoyment of the Property probably until at least February of 2001. The loss of the property was not discovered until November 2001. This action was commenced on 5 February 2002.

86. On the evidence, it seems that the value of Unit 908 has fallen since 1994 reaching a bottom in 2001, followed by a slight recovery into 2002.

87. I think it would not be fair to take a possibly lower figure and assessed damages either for February or March 2001 when Unit 908 was auctioned. After all, the loss was not discovered until November 2001.

88. In all the circumstances, I believe the figure of HK$1,800,000 given as the market value as of February 2002 is the figure I should adopt. It is close enough to November 2001 although judging from evidence about the rental value the figure for November 2001 was likely to be lower.

89. The plaintiff also claims the sum of HK$332,766 which is the legal fees and taxes shown on bill no. 44278. I do not think the plaintiff is entitled to that sum. The figure of HK$1,800,000 compensates the plaintiff for the loss of Unit 908. The plaintiff had to acquire Unit 908 before it could lose it. To acquire Unit 908 HK$332,766 would have to be paid. The same applies to the claims for management fee deposit, telephone charges, etc totally HK$173,451.52. In any event, the plaintiff had the use of Unit 908 (though it was left unoccupied) until at least February 2001.

90. Travelling expenses to Shanghai in November and December 2001. So far as the November trip was concerned, it seems that Miss Wong visited the Property whilst on a pleasure trip to Shanghai with friends. She spent a total of HK$5,942. I think it would be fair to allow part of this sum. After all, on visiting the Property and discovering that it was under renovation by the new owner, she consulted Tsui. I will allow one third of this sum namely HK$1,981. As for the December 2001 trip, the expenses totalled HK$44,933. That included a watch for Mr Shing. I believe I should only award, one return air ticket, HK$3,284; four nights hotel accommodation at HK$1,940 and general expenses at HK$500 per day for four days.

91. Legal costs and court fees incurred by the plaintiff in proceedings against the Vendor in the Shanghai City No. 2 Intermediate People's Court of RMB84,783. The action was taken to mitigate its loss after Lai & Li asserted that the plaintiff had to mitigate its loss. There was no recovery because the Vendor was insolvent. I think the plaintiff is entitled to recover this sum from the defendants.

92. I order accordingly. Interests to run :

(1) HK$1,800,000 from 5 February 2002

(2) RMB84,783 from 24 November 2003

(3) HK$1,951 from 6 November 2001

(4) HK$6,724 from 15 December 2001

COSTS

93. I make an order nisi that the plaintiff is to have the costs of the action, to be taxed if not agreed.