TSE CHI SHING v. TANG WING HONG ANDREW AND ANOTHER

HCA 1846/2015

[2018] HKCFI 1403

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1846 OF 2015

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JUDGMENT

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PRELIMINARIES

1.  This is the Plaintiff’s action against the Defendant for professional negligence in the handling of a transaction for the purchase of a temporary house (the “Temporary House”) along with the right to use the government land on which it was erected, situated at and known as DD 104 No 172 of Yau Tam Mei (攸潭尾) Central (also known as Ngau Tam Mei 牛潭尾) in San Tin, Yuen Long, New Territories (the “Site”).

2.  There is no dispute that the Plaintiff is the purchaser of the Temporary House although the payment for the purchase price was made by China Asia Construction Engineering Limited, a wholly-owned company of the Plaintiff.

3.  Further, notwithstanding that the transaction was solely handled by Mr Andrew Tang (“Mr Tang”) of the Defendant, there is no dispute that if Mr Tang is held liable to the Plaintiff, the Defendant, as a partnership, will be liable.

4.  Without being exhaustive, the Plaintiff’s complaint is that the Defendant wrongfully failed to:

(a)   properly carry out title investigation as in a conveyancing transaction;

(b)   advise him that there was:

(i)   in fact no title or lawful right in respect of the Temporary House and the Site, which was capable of being effectively sold, assigned or transferred to him; and

(ii)   a real risk of enforcement action being taken by government.

5.  The Plaintiff alleges that he would not have paid the purchase price of HK$700,000 if he had been competently advised by Mr Tang.  He also claims damages by way of wasted legal fees and agency fee.

6.  Further, the Plaintiffs claims that as a result of the enforcement action taken by the Yuen Long District Land Office (“YLDLO”) on 18 March 2015, resulting in resumption of the government land, he has suffered loss and damage in the sum of HK$2,632,794 as pleaded in the Re-Amended Statement of Claim dated 2 February 2018 (“RAMSOC”) by way of:

(a)   wasted expenses incurred on construction and improvement work done at and around the Site; and

(b)   value of the chattels (including goods and tools) stored at the Site which were forfeited by YLDLO. 

THE SCHEME OF CONTROL OF TEMPORARY HOUSES

7.  In the dim and distant past, the New Territories was a rural area with substantial farming activities of various kinds such as pig husbandry, keeping of poultry and growing of crops.

8.  It was not uncommon for temporary squatter structures, typically made of stone, wood or metal to be erected on encroached government land for use as quarters for workers or storage for implements in connection with these farming activities.  For one reason or another, the government tolerated the existence of these temporary structures and enforcement action was rare.

9.  The urbanization of the New Territories and the rationalization of the use of land have given rise to the need to regulate these temporary structures and tighten up control over encroachment upon government land. A scheme was devised whereby the Lands Department (in collaboration with the Housing Department) would conduct periodical surveys on existing temporary structures. 

10.  Henceforth, the occupation of these temporary structures has been regulated by the issuing of a personal licence (known as GovernmentLand Licence) to the owner/occupant of an identified temporary structure, whose identity has been ascertained in a survey. Pertinent licensing conditions are imposed specifying the location, the area covered, the number of structures and the use allowed. 

11.  An annual licence fee is charged, which is nominal.  The licensing scheme would allow the relevant authorities to (a) differentiate between licensed occupation and trespasses on government land; and (b) detect newly erected illegal structures.

12.  As a matter of law, there is no landed property right whatsoever in or created by a government land licence.  It only confers a personal right to the named licensee and is not transferrable.

13.  The demise of farming activities in the New Territories amidst the transformation of the socio-economic landscape in Hong Kong have seen many of these temporary structures and associated government land held under licences being converted for use as scrap yards, workshops, parking facilities for cross-border vehicles and the like. 

14.  As time goes by, many of these temporary structures along with the government land associated therewith held under licences are, rightly or wrongly, sold or rented out to operators of businesses, who are not related to the relevant licensees or their descendants. 

15.  Such change of the use or occupancy of the temporary houses, which constitutes a breach of the relevant licensing condition, is unlikely to be known to the Lands Department (or the relevant District Land Office) as long as the licence fee is paid.

16.  There is every incentive for a non-licensee occupying or using a temporary structure and the government land associated therewith to keep the authority in the dark for as long as possible, lest he be visited upon by enforcement action that may include demolition of the temporary structure and/or eviction from the government land, without any compensation.

17.  In the circumstances, the personal right accruing to the holder of a government land licence has somehow become an amorphous form of land “ownership”, capable of being sold and bought, in the eyes of the average lay person.

18.  Probably, this misconception is compounded by the laxity of enforcement action by the government.  In some instances, ex gratia compensation was made by government to non-licensee occupants of some temporary structures upon resumption of government land for infrastructural development. A more recent example is the clearance of Choi Yuen Tsuen in Shek Kong to make way for the Express Rail Link to the Mainland. 

THE TEMPORARY HOUSE AND THE CHAIN OF TRANSACTIONS

19.  The transaction concerned the “sale” of the Temporary House erected on a parcel of government land at the Site previously held by one Fung Jun (馮贊) (also known as “Fung Chan”) under Government Land Licence No Y03686 (the “Licence”).

20.  Neither the original of the Licence nor a copy thereof could befound (see paragraph 29 below).  However, the location of the TemporaryHouse and the area of the Site are discernable from a Lot Index Plan (dated 4July 2013) issued by the Lands Department. 

21.  According to a letter dated 5 March 2015 from YLDLO to the Plaintiff:

(a)   in 1961, the Licence pertinent to the use and occupation of the Site was granted to Fung Jun (馮贊);

(b)   the Licence provided for 4 temporary structures for use as living quarters and keeping of poultry and pigeons; and

(c)   the Licence was not transferrable.   

22.  Prior to the transaction herein, Mr Tang was retained in about May 2014 by one Lam Tung Man林東文 (“Lam”) to prepare an instrument to effect the sale of the Temporary House along with the use of the Site to one Cheung Ka張嘉(“Cheung”) at the consideration of HK$300,000 (the “Previous Transaction”).  One Fung Cheuk Sang馮卓生(“Fung”), the son of Fung Jun, acted as confirmor in the Previous Transaction.

23.  Mr Tang explained in oral evidence that he had known both Lam and Cheung for a few years as at May 2014.  To his knowledge, Lam was involved in sales of landed properties and Lam had retained him to handle land transactions on a few occasions.

24.  For the purpose of the Previous Transaction, Mr Tang prepareda Deed of Sales “出讓契約” on or about 13 June 2014 (the “June Deed”), which was signed by Lam (as vendor), Fung (as confirmor) and Cheung (as purchaser).  The June Deed gives the history of the Temporary House, which is relevant to the action herein.

25.  The recital of the June Deed was translated and pleaded in paragraph 3 of RAMSOC.  It is however important to refer back to and cross-reference with the original wordings of the June Deed (in Chinese).

“ 3. The June Deed, inter alia, recited that:

(i)   the Purchaser (sic) is the holder/beneficial owner of a temporaryhouse of licence number DD104GLLY0386(172)) Yau Tam Mei C San Tin Yuen Long; [Recital 1]”

「 1. 買[sic] 方原為臨時屋宇牌照號碼為DD104GLLY03686‌(172)‌YAU TAM MEI C SAN TIN YUEN LONG (後簡稱"該牌照["]) 的持有人/實益擁有人。」

“ (ii) the said temporary house is registered in the [YLDLO] as RAYLY03686, the original licence holder was Fung Jun (馮贊), situated in D.D. 104 at No. 172 Ngau Tam Mei of Government Licence No. Y03686 (hereinafter called ‘the Temporary House’); [Recital 2]”

「 2. 有關該臨時屋宇註冊於元朗土地政署為RAYLY03686，原牌照持有人為FUNG JUN (馮贊) 座落地點位於元朗新田牛潭尾中區(172號) 丈量約份第104約政府牌照第Y03686號(“後簡稱為該臨時屋”) 。」

“ (iii) the Temporary House belonged to Fung Jun (馮贊), deceased who devised the Temporary House to his son Fung (馮卓生), i.e. the Confirmor herein; [Recital 3]”

「 3. 該石屋的擁有人為FUNG JUN (馮贊) ，該FUNG JUN (馮贊) 己 [已] 故該臨時屋現傳給他的兒子馮卓生 (即現"確認人") 。」

“ (iv) In 2013, the Confirmor had assigned the Temporary House to the Vendor [Lam], the Vendor desires to sell the Temporary House to the Purchaser [Cheung] absolutely; [Recital 4]”

「 4. 確認人於2013年曾頂讓給賣方，而賣方有意將該臨時屋轉賣給買方，為他所有。」

“ (v) The two parties now reached agreement in consideration of threehundred thousand Hong Kong Dollars (‘the Sale Price’), sell andpurchase the Temporary House together with all such temporary house licence rights benefits and appurtenant thereto. The Vendor agreed to sell ALL THAT the Temporary House together with all related right benefits to the Purchaser at the Sale Price; [Recital 5]”

「 5. 現雙方達成協議以叁拾萬元(後簡稱“出讓價”) 購買該臨時屋連同該臨時屋牌照及享有的一切權益及裝置等，賣方同意以該價出售該臨時屋連同一切有關權益予買方。」

“ (vi) the Vendor declared that the Vendor hold and is in possession ofthe Temporary House, the Confirmor confirmed that the original owner of the Temporary House was Fung Jun (馮贊) who was his late father and confirmed that the Confirmor was the sole beneficiary of the Estate of Fung Jun (馮贊). The Confirmor agreed to sell and assign the Temporary House to the Purchaser. The Confirmor warrants that after signing of the June Deed, the Confirmor will not enter the Temporary House and its vicinity. The Confirmor warrants that after completion of the transaction, the rights and interests of the Purchaser will not be claimed or bothered by the beneficiary of the original holder, Fung Jun (馮贊). If the Purchaser shall suffer any loss as such, the Conformor shall indemnify the Purchaser of all such loss and damages, the Confirmor shall compensate the Purchaser’s loss if breach of this term and condition; [Recital 6]”

「 6. 賣方聲明他擁有該臨時屋的擁有權，而確認人確認原持有該臨時屋為FUNG JUN (馮贊) ，該FUNG JUN (馮贊) 是他己 [已] 故父親及確認他為惟一授益人。確認人同意將該臨時屋轉售與 [予] 買方。確認人保證簽署此出讓契約後不能進入臨時屋及該臨時屋範圍，保證在交易完成後買方人的權益不會受原持有人FUNG JUN (馮贊) 的授益人索償民事訴訟及其他騷擾，如因上述情況買方受到捐 [損] 失，確認人須要保償買方一切捐 [損] 失。如違反此出讓契約條款須賠償買方損失。」

“ (vii) the Vendor warrants that the Vendor was the beneficial owner of the Temporary House and shall compensate the Purchaser if there is breach of this Deed. [Recital 7]”

「 7. 賣方保證他為該臨時屋之實益擁有人，如違反此出讓契約條款須賠償買方損失。」

26.  Further, the uncontroverted evidence of Mr Tang is that in preparation of the Previous Transaction, he was provided with the following documents:

(a)   Copy of a birth certificate of Fung showing that he was the son of Fung Chan (馮贊);

(b)   Copies of two demand notes for annual fee of the Licence (issued to Fung Jun (馮贊) c/o Fung’s address at a public housing unit Shan King Estate, Tuen Mun) dated 15 December 2010 and 15 December 2011;

(c)   Copies of the demand notes for rates in respect of the Site for various periods (i.e. 1 October 2008 to 31 December 2008; 1 April 2010 to 30 June 2010; 1 July 2010 to 30 September 2010; 1 July 2012 to 30 September 2012; and 1 January 2013 to 31 March 2013);

(d)   a 1-page Chinese “Sales and Transfer Agreement” (頂讓協議書) dated 3 October 2013 signed between Fung (as vendor) and Lam (as purchaser) in respect of the “suprastructure” of the Temporary House only (頂讓上蓋); and

(e)   a copy of the China Re-Entry Permit of Fung.

27.  There is also a copy of the Lot Index Plan (annexed to the June Deed). Mr Tang explained that it was provided by Lam for the purpose of the Previous Transaction and that the yellow marking and annotation thereon showing the area of the Site were done by Lam.

28.  After the Recital, the June Deed contains certain operative clauses, which were translated and pleaded in Paragraph 4 of RAMSOC.  Again, it is necessary to refer back to the wordings in Chinese.

“ 4. After the said recital as pleaded in paragraph 3 hereinbefore, the June Deed as prepared by the Defendant were drafted to give the following purported operative effect:-

(i)   the Vendor in consideration of the HK$300,000 (Vendor herebyacknowledged) sell the aforesaid Temporary House together with ALL THAT rights benefits appurtenant free of all claims debts encumbrances [Clause 1];”

「 1. 買方以港幣叁拾萬元(HK$300,000.00) (賣方確認收妥) 出讓上述臨時屋連同臨時屋一切權益裝置及其他亨 [享] 有權益但除一切債務債權扣抻 [押] 及責任之影響。」

“ (ii) the Confirmor confirmed the aforesaid terms and conditions [Clause 2];”

「 2. 確認人確認上述條款，如有違反上述條款須賠償買方一切捐 [損] 失。」

“ (iii) the Vendor warrants that the Vendor holds the Temporary House and is entitled to sell the Temporary House, the Vendor shall compensate the Purchaser for all loss suffered arising from breach of the June Deed [Clause 3];”

「 3. 賣方保證擁有臨時屋全部業權及擁有出售該臨時屋權利，如有違反上述條款須賠償買方一切捐 [損] 失。」

(emphasis added)

“ (iv) the Vendor, the Purchaser and the Conformer confirmed the aforesaid recital [Clause 4];”

「 4. 賣買雙方及確認人確認上述敘文。」

“ (v) It is hereby certified that the transaction hereby effect does not form part of a larger transaction or of a series of transactions in respect of which the amount or value, or the aggregate amount orvalue of the consideration exceeds HK$2,000,000.00 [Clause 5]; and”

「 5. 現證明以本協議完成的交易，並不構成一宗更大交易或一系列交易的一部份，而就該宗更大交易或一系列交易而言，其代價款額，價值，總款額或總價值超逾港幣二百萬元正。」

“ (vi) This agreement has two counterparts, the Vendor and the Purchaser each shall keep one counterpart [Clause 6].”

「 6. 本合約壹式兩份，由買賣雙方各執壹份為據」

29.  Mr Tang was given to understand in the Previous Transactionthat Fung Jun had died, but he did not (as he was not instructed to) take any steps to verify it.  The Licence had been lost and no copy could be found so that the licensing conditions therein could not be ascertained. 

30.  Mr Tang said he was not instructed to and he did not see any useful purpose in writing to YLDLO to obtain a copy of the Licence since his experience was that such a request would not be entertained.

31.  The transaction herein in the chain involving the Plaintiff (as Purchaser) and Cheung (as Vendor) was done by way of and evidenced in a similar Deed of Sales dated 9 July 2014 (the “July Deed”), which was also prepared by Mr Tang and signed in the circumstances referred to hereinbelow.  

32.  Save and except certain consequential changes, the July Deed was couched in almost identical terms as the June Deed.  Strangely, although Fung was not a party or signatory to the July Deed, he was repeatedly referred to therein as the confirmor.

33.  With reference to the English translation rendered in paragraphs 7 and 8 of the RAMSOC, the more significant provisions in the July Deed are as follows:

IN THE RECITAL (EMPHASIS ADDED)

…

2.   The said temporary house built on Government land and is registered in the Yuen Long District Lands Office as RAYLY03686, and situated in Yuen Long San Tin D.D. 104 at No. 172 Ngau Tam Mei of Government Licence No. Y03686 (hereinafter called ‘the Temporary House’).

有關該臨時屋宇建於政府土地而註冊於元朗土地政署為RAYLY03686, 座落地點位於元朗新田牛潭尾中區(172號) 丈量約份第104約政府牌照第Y03686號(“後簡稱為該臨時屋”) 。

3.   The original owner of the Temporary House was Fung Jun (馮贊), deceased who devised the Temporary House to his son Fung Cheung Sang (馮卓生).

該臨時屋的原擁有人為FUNG JUN (馮贊) ，該FUNG JUN (馮贊) 己 [已] 故該臨時屋現傳給他的兒子馮卓生。

4.   On 13^th June 2014, Fung Cheuk Sang (馮卓生) confirmed to sell the Temporary House to the Seller [Cheung] absolutely. 

馮卓生於2014年6月13日確認該臨時屋出讓給予賣方，為賣方所有。

IN THE OPERATIVE TERMS (EMPHASIS ADDED)

1.   The Seller in consideration of the HK$300,000.00 (Seller herebyacknowledged) sell the aforesaid Temporary House together with ALL THAT rights benefits appurtenant free of all claims debts encumbrances.

買方以港幣叁拾萬元(HK$300,000.00) (賣方確認收妥)  出讓上述臨時屋連同臨時屋一切權益裝置及其他亨 [享] 有權益但除一切債務債權扣抻 [押] 及責任之影響。

2.   The Seller warrants that he had the title of Temporary House and is entitled to sell the Temporary House, the Seller shall compensate all such loss suffered arising from breach thereof;

賣方保證擁有臨時屋全部業權及擁有出售該臨時屋權利，如有違反上述條款須賠償買方一切捐 [損] 失。

3.   The Seller, the Purchaser and the Confirmor confirm the aforesaid recital.

賣買雙方及確認人確認上述敘文。

34.  Apart from the numerous typographical errors, the amateurish way in which the June Deed and July Deed was prepared is self-evident. That said, the July Deed does purport to give the Plaintiff the “title” of the Temporary House “together with ALL THAT rights benefits appurtenant [thereto]”.

THE DUTIES OF THE DEFENDANT

35.  Since the decision of the House of Lords in Henderson v Merrett Syndicates Ltd [1995] 2 AC 145, it has been settled law that a clientmay pursue against solicitor in both contract and tort on the same set of facts (see Jackson & Powell on Professional Liability (8^th Ed)at paragraphs 11-013 and 11-014).

36.  At the commencement of trial, Mr Yip confirmed the Plaintiff’s position that the duties owed by the Defendant to the Plaintiff under the law of contract are co-extensive with that under the law of tort.  In this connection, the Defendant’s duties and the breaches thereof have been pleaded in paragraphs 13 and 23 of RAMSOC.

37.  In general, the duty of a solicitor owed to a client arises in contract as evidenced in the retainer.  Even in a situation where there is no express agreement, the court will readily hold that there is an implied retainer to be inferred from the parties’ conduct (Jackson & Powell (supra),para 11-005).

38.  Where the retainer is oral, the solicitor ought, for the benefit of both parties, to record the term in a letter to his client at the outset.  At the very least, the nature of the retainer should be recorded in an attendance note (Jackson & Powell (supra), at para 11-006).

39.  Breach of fiduciary duty has also been pleaded against the Defendant for failing to protect the interest of the Plaintiff by advising himnot to proceed with the transaction (see paragraphs 15 and 25 of RAMSOC). This plea, as acknowledged by Mr Yip at closing submission, is superfluous since no other remedies, apart from damages sounding in contract or tort, are available.

40.  Mr Lau referred me to Snell’s Equity (33^rd Ed), wherein it is explained that:

“ 7-009 … The ‘essence of a fiduciary relationship is that it creates obligations of a different character from those deriving from thecontract’ or tort law, or from non-fiduciary equitable doctrine (e.g.such as those relating to trusts) … And a solicitor’s negligence isnot, without more, a breach of fiduciary duty. Not every breach of duty by a fiduciary is a breach of fiduciary duty.” (emphasis added)

41.  In this connection, the learned editor of Jackson & Powell (supra) explained:

“ 11-014 … The relationship between a solicitor and his client has been described as ‘one of the most important fiduciary relations known to our law’. However, the limits of those duties must be recognized. In Clark Boyce v. Mouat, the Privy Council concluded:

‘ A fiduciary duty concerns disclosure of material facts in a situation where the fiduciary either has a personal interest inthe matter to which the facts are material, or acts for another party who has such an interest. It cannot be prayed in aid to enlarge the scope of contractual duties.’” (emphasis added)

42.  Along the same vein, Millett LJ (as he then was) in Bristol and West Building Society v Mothew [1998] Ch 1 (at 16) said that:

“ … Unless the expression [‘fiduciary duty’] is so limited it is lacking in practical utility … I would endorse the observations of Southin J. in Girardet v. Crease & Co. (1987) 11 B.C.L.R. (2d) 361, 362:

‘ The word ‘fiduciary’ is flung around now as if it applied to all breaches of duty by solicitors, directors of companies andso forth. … That a lawyer can commit a breach of the special duty [of a fiduciary] … by entering into a contract with the client without full disclosure … and so forth is clear.  But to say that simple carelessness in giving advice is such a breach is a perversion of words.’”

43.  On the foregoing authorities, I agree with Mr Lau that the plea of breach of fiduciary is a red-herring. This is purely a case of failing to exercise reasonable skill and care on the part of the Defendant, which is to be analyzed under the laws of contract and tort.

44.  A helpful summary of the duties of a solicitor retained to handle a sales and purchase transaction can be found in the judgment of Stock J (as he then was) in Foshan Hua Da Industrial Co v Johnson, Stokes & Master (a firm) [1999] 1 HKLRD 418 (at 425), viz:

“ (1) A retained solicitor owes a duty to his client, both in contract and tort. There arises, when a solicitor is engaged for reward, a contractual duty to exercise skill and care on behalf of his client. A solicitor is not expected or bound to know all the law,nor is he to be judged according to the standard which might be demonstrated by ‘a particularly meticulous and conscientious practitioner’. (See Midland Bank Trust Co Ltd v Hett, Stubbs & Kemp (a firm) [1979] Ch 384, at p.403.)

(2) The duty of a solicitor is ‘to exercise that reasonable degree of skill and care to be expected of a competent and reasonably experienced solicitor’ (Clerk and Lindsell on Torts (17th ed.) para 8‑81). ‘The test is what a reasonably competent practitioner would do having regard to the standard normally adopted in his profession.’ (See Midbank Bank, supra, at p.403.)

(3) ‘If in the course of taking instructions a professional man like a solicitor learns of facts which reveal to him as a professional man the existence of obvious risks then he should do more than merely advise within the strict limits of his retainer. He should call attention to and advise upon the risks.’ (Per Lawton LJ in Boyce v Rendells [1983] EG 268 at p.272.)

(4) Where a solicitor is asked to advise upon one matter then, as a general rule, he is not obliged to advise on different points though related, unless the connection is so close and reliance placed in the solicitor to advise generally so obvious, that advice on related points may be required. (Clerk & Lindsell, supra, para.8‑89.)

(5) The duty of a solicitor might be affected by the experience or inexperience of the client, in the sense that a client inexperienced in the field in which he seeks advice is ‘entitled to expect the solicitor to take a much broader view of the scope of his retainer and his duties than will be the case with an experienced client.’ (See Carradine Properties Ltd v DJ Freeman & Co (1985) 1 PN 41.)

(6) ‘The standard of care to be expected of a professional man must be based on events as they occur in prospect and not in retrospect.’ Per Simon Brown LJ in Boston & Co v Roberts (unrep., The Times,17 March 1995), who then cited Duchess of Argyll v Beuselinck [1972] 2 Lloyd’s Rep 172 at p.185:

In this world there are few things that could not have been better done if done with hindsight. The advantages of hindsight include the benefit of having a sufficient indicationof which of the many factors present are important and whichare unimportant. But hindsight is no touchstone of negligence.

(7)   A solicitor is not, in the absence of unequivocal instructions and acceptance by him to do so, expected to advise upon the commercial good sense of a business proposition, whether he should or should not, as a matter of commercial advantage, proceed with a transaction, whether a transaction is or is not goodbusiness or prudent, although where it is evident that a client relies on the solicitor for more than legal advice, the solicitor may be under a duty to refer the client to an appropriate source or sources of information.  (See Yager v Fishman & Co and Teff & Teff[1994] 1 All ER 552; Reeves v Thrings & Long [1996] PNLR 265;Clark Boyce v Mouat [1994] 1 AC 428).  Indeed, ‘it is in general the client’s privilege if he so wishes to mismanage his affairs.  He is entitled … to lend on insufficient security, or to enter an unwise bargain if he so chooses.  The solicitor has a duty to advise on the legal hazards of the transaction, but no more:

It was the duty of the solicitor to inform and advise, ensuringthat the information and advice was understood by the client. It was not part of his duty of care to force his advice on the client.

If that advice is disregarded he must carry out the client’s instructions or else determine the retainer’.  (Jackson & Powell on Professional Negligence (4^th ed.) para.4‑92, citing Dutfield v Gilbert H Stephens & Sons [1988] Fam Law 474.)

(8)   ‘The onus of proving professional negligence over and above errors of judgement is a heavy one.’  (See Rondel v Worsley [1969] 1 AC 191.)” (emphasis added)

45.  As to the standard expected and required of solicitors, it is trite that the Bolam principle, derived from medical negligence cases, equally applies. Hence, asolicitor who complies with an accepted practice ought to escape a finding of negligence (Jackson & Powell (supra) at paragraphs 11-097 to 11-098 referring to Bolam v Friern Hospital Management Committee [1957] 1 WLR 582).

46.  However, the principle in Bolam has since been refined in Bolitho v City & Hackney HA [1998] AC 232 in that the accepted practice itself has to be able to withstand logical scrutiny of the court before it would be adopted and relied upon to exonerate the defendant.

47.  Prior to that, in O’Donovan v Cork CC [1967] IR 173 (cited in Jackson & Powell (supra) at paragraph 11-078), it was held (at 193):

“ If there is a common practice which has inherent defects, which ought to be obvious to any person giving the matter due consideration, the fact that it is shown to have been widely and generally adopted over a period of time does not make the practice any less negligent. Neglect of duty does not cease by repetition to be neglect of duty.” (emphasis added)

48.  In Edward Wong Finance Co Ltd v Johnston Stokes & Master[1984] AC 296, the trial judge took into account evidence of general practice prevailing in Hong Kong in the handling of money in a mortgage transaction.  However, on appeal to the Privy Council, it was held that evidence of what a fellow solicitor would have done in a particular situation is of little assistance to the court.  No expert evidence is adduced in this case and it would be quite unnecessary in the circumstances.

49.  On the face of the June Deed and July Deed, the scheme of the series of transactions is that the parties simply assumed a state of affairs as recited and confirmed therein without any independent verification.  This sort of approach is not uncommon in business transactions.

50.  However, depending on the circumstances (including the terms of the retainer and background of the client), a solicitor acting for the purchaser in such a transaction is not exempted from providing proper advice on the implications of such an approach, in particular, the enforceability or otherwise of the terms governing the transaction between the vendor and purchaser.

51.  In paragraph 8 of the Re-Amended Defence, it is alleged that prior to execution of the July Deed, Mr Tang had advised the Plaintiff that“the Defendant was not the conveyancing solicitors acting for the Plaintiff,as well as for Cheung Ka” (emphasis added).

52.  Further, in paragraph 16 of the Re-Amended Defence, it is pleaded that “the Defendant was not and is not retained by the Plaintiff as the solicitors in respect of the purchase of the Government land whereupon the Temporary Squatter was erected and constructed and/or the Government licence no. Y03686, whether as alleged or at all.”

53.  These pleas are tantamount to a limitation on the scope of legal services to be rendered or a disclaimer of liability.  However, evidence expected from Mr Tang in support of these pleas is glaringly lacking.

54.  It is instructive to note that although there is no written retainer,the bill issued by the Defendant to the Plaintiff on 9 July 2014 stated that a sum of HK$7,000 was charged for the work recited therein, viz:

“ Re : AGREEMENT

To our professional charges for services rendered in attending you in conferences for instructions and consultation, attending perusing all documents and papers; attending attesting a Chinese agreement, attending interpreting the said agreement to you and miscellaneous attendance incidental thereto.” (emphasis added)

55.  In cross-examination, Mr Tang readily accepted that the fee also covered preparation of the July Deed.

56.  The duties owed by the Defendant to the Plaintiff in handling the transaction cannot depend on the label the Defendant chose to put on it.  Just because the transaction of the Temporary House is not capable of creating or transferring any title or interest in land (i.e. not a transaction for conveyance of land) does not mean that the Defendant was exempted from properly advising the Plaintiff on the nature and effect of the transaction.

57.  Likewise, the fact that it was not a conveyancing transaction did not give the Defendant a right to assume that the Plaintiff had agreed orwould agree to proceed with the transaction on the basis of whatever was purportedly “confirmed” by the relevant parties without any verification.

58.  If the Defendant had intended to limit its duty owed to the Plaintiff, a written retainer ought to have been prepared with suitable warnings drawing attention to the limited scope of the professional duty undertaken by the Defendant. 

59.  In the absence of any steps taken by Mr Tang to limit the scope of professional duty undertaken by the Defendant in handling the transaction, the Defendant’s duties are those as summarized by Stock J (ashe then was) in Foshan Hua Da Industrial Co v Johnson, Stokes & Master (a firm), supra.

TRANSACTION UNDER THE JULY DEED

60.  Since this case turns on the credibility of the Plaintiff and Mr Tang, I directed that paragraphs 2 to 22 of the Plaintiff’s witness statement and paragraphs 7 to 14 of Mr Tang’s witness statement not to be admitted as evidence-in-chief and that oral evidence be led on the crucial events surrounding the transaction.

The Plaintiff’s evidence

61.  The Plaintiff was born in the Mainland and he was educated up to primary level.  He could only understand Chinese but not English.  He came to settle in Hong Kong in about 1979 and started to work on construction sites as a steel binder. He was married in 1991 and has three grown-up children.  They lived in a public rental housing unit in Ma On Shan.

62.  Since mid-1990s, the Plaintiff started to work as a contractor for construction and renovation work.  Starting from about 2003, he operated his business through China Asia Construction Engineering Limited.  For the couple of years prior to 2014, the turnover of his company ranged from a few million to 10 million Hong Kong dollars.  Although he was unclear as to the profitability of his business, his evidence gives the impression that he was making ends meet and more.  

63.  During examination-in-chief, the Plaintiff said that prior to commencement of the litigation herein, he had no knowledge or  cognizance of “Temporary House (臨時屋), Squatter Hut (寮屋) or Temporary House Licence (臨時屋牌照)”. 

64.  He said that he had no experience of purchasing landed properties in Hong Kong.  However, he did pay attention to information about the property market on the Internet.  He also said in cross-examination that he had hoped to purchase a residential property for his family but it was beyond his reach.

65.  The Plaintiff said he had previous experience of using land in the New Territories for storage of his tools and building materials, which was allocated or sub-let to him by others at a monthly fee of about HK$10,000.  At times, when he was working on a construction project, there might be storage facilities on site.  

66.  By 2013, his construction business had developed to a stage that he needed more storage space for building materials and a place for use as a workshop.  He started looking around and he had a budget in mind of about HK$1.0 million either by way of renting or purchasing.

67.  The Plaintiff said in about May 2014, he looked up the Internet and found an advertisement for a “Brand New Villa” at a price of HK$800,000.  The Plaintiff produced a printout of the advertisement (dated 9 June 2014) and an identical one (dated 29 June 2014).

68.  These printouts suggested the so-called “Brand New Villa” was located at Pok Wai Tsuen壆圍村 (also described as Wai Tsai Tsuen 圍仔村) at Castle Peak Road (San Tam Section) consisting of 5,000 square feet with a temporary house sufficient for parking a number of vehicles and fit for multiple purposes. This is at variance with the actual location of the Site situated at Yau Tam Mei攸潭尾 (also known as Ngau Tam Mei牛潭尾).

69.  On the face of the advertisement, the original asking price was HK$1.98 million as of 5 October 2013 and that listing had expired on 29 December 2013.  The printouts showed that the last log-on date of the party placing the advertisement was 14 April 2014.  Since the listing had already expired, the contact details of the party placing the advertisement was hidden.

70.  That said, the Plaintiff was adamant that when he was readingthe advertisement on the Internet in about May 2014, the telephone number of the contact person could still be seen.  He explained that the phone number hand-written by him on the printout (dated 9 June 2014) was that of Lam, whom he contacted for viewing of the Site.

71.  On 9 June 2014, he met up with Lam at the Site and was givena name card showing that Lam was an estate agent.  Lam used a key to openthe gate to the Site and let him in for viewing. The Temporary House made of corrugated metal sheets (the “Original Structure”) as shown in the photos [C/115 to 117] was found at the Site but there was no sign of any villa.

72.  He enquired of Lam if the Temporary House could be “freely sold”.  Lam answered “yes” and offered to introduce a solicitor to him to handle the transaction to transfer to him the “right to use” the house including the land (i.e. a reference to the Temporary House and the Site).

73.  In cross-examination, the Plaintiff said he raised with Lam during the viewing that the Temporary House at the Site was not the same asa “villa” as advertised and the Original Structure was leaking, judging from the water stains.  He managed to bargain the price down to HK$700,000 and Lam agreed on the condition that a deposit of HK$100,000 would be paid.

74.  For some inexplicable reason, in his oral evidence (as he did inhis witness statement), the Plaintiff referred to Lam as the vendor whereas the Temporary House had been already been sold by Lam to Cheung in about May 2014.  The Plaintiff said he did not care too much about the identity of the vendor as he trusted things would be fine since the transaction would be handled by a solicitor.

75.  In due course, the Plaintiff attended the firm of the Defendant on 18 June 2014.  He asked Mr Tang whether the “house” (without specifying temporary or otherwise) as described in the advertisement could be “freely sold”.  Mr Tang said “yes” and that “after buying the house, the title and the decoration would belong to him (買左臨屋業權，內部裝修都係你嘅)”.  He said Mr Tang also claimed that he was very experienced in handling land transactions in the New Territories.

76.  Accordingly, he drew a cheque from his company’s bank account in the sum of HK$100,000 and Mr Tang affixed the chop of his firm (as payee).  He was given a receipt for the deposit.

77.  Upon being informed by Lam, he attended the Defendant’s firm again on 9 July 2014 when he saw Lam with another man.  He did not know this other man before, who was then identified to him as Cheung, the actual vendor.

78.  In examination-in-chief, the Plaintiff said he was given a copy of the (unsigned) July Deed and Mr Tang explained the recitals to him but not any of the operative clauses.

79.  In cross-examination, the Plaintiff changed his evidence and said Mr Tang only gave him a copy of the (unsigned) July Deed to read by himself without any explanation at all, not even the recital. 

80.  In examination-in-chief, the Plaintiff said before he signed the July Deed, Mr Tang repeated that “after buying the house, the title and the decoration would belong to him(買左臨屋業權, 內部裝修都係你嘅)” and Mr Tang also volunteered that “There should be three houses on this plot of land and you can build 2 more as luxurious as you like (其實塊地有三間屋，你可以起多兩間，起到幾靚都得)”.

81.  Mr Yip attempted to lead evidence from the Plaintiff to the effect that Mr Tang made reference to the Index Lot Plan and circled on it the location of each of the 3 houses on the plot.  As it turned out, all that was marked on the Index Lot Plan was only one circle around a printed number “Y3686”, which is the number of the Licence (within the yellow area previously marked by Lam) [Trial Bundle C/19].

82.  In cross-examination, the Plaintiff said it was in fact during his reading of the (unsigned) July Deed when Mr Tang uttered to himself the words “There should be three houses on this plot of land and you can build 2 more as luxurious as you like(其實塊地有三間屋，你可以起多兩間，起到幾靚都得)” and he only overheard it. 

83.  The Plaintiff said he did raise with Mr Tang the question as to why the purchase price was said to be HK$300,000 in the July Deed whereas the agreed price was HK$700,000.  He said Mr Tang explained that since HK$300,000 was named in the two previous transactions, he should put the same figure in the July Deed.

84.  Mr Tang then asked him to draw two cheques respectively in the sum of HK$200,000 and HK$400,000 (totalling HK$600,000 representing balance of the purchase price).  He did so and handed them over to Mr Tang and eventually it was Cheung who wrote his name on the two cheques as the payee.

85.  The Plaintiff said he took possession of the Site on 9 July 2014 and incurred huge expenses (over HK$2,600,000) on doing up the boundary wall, rebuild the Original Structure (adding to it toilets and kitchens) and erecting another corrugated metal structure at the Site.  However, up to the time of the enforcement action taken by YLDLO on 18 March 2015, the construction or renovation work at the Site had not yet been completed.

86.  Meanwhile, in early November 2014 one Fung Man Tai (馮文泰) appeared and purported to exercise his rights over the Site.  A chain and a padlock were put on the main gate thereby denying the Plaintiff access to the Site.  A report was made to the police.

87.  The Plaintiff sought assistance from Mr Tang and paid a fee of HK$10,000 to the Defendant’s firm.  Mr Tang issued one letter to the Police (dated 18 November 2014) in the following terms:

“ Re : Criminal Damage/Trespass to Land

Case No. 14015723

Person involved : TSE CHI SHING (謝志成) AND 馮文泰

Property : Temporary structure registered as Government Land

Licence No. Y03686

Venue : 元朗新田牛潭尾中區 (172號) 丈量約份第104約 (the ‘Land’)

We have instructions to act for Mr. TSE CHI SHING (謝志成) the owner of the temporary structure registered as Y03686.

Under agreement between Cheung Ka (張加[嘉]) our client Tse Chi Shing (謝志成) dated 9^th July 2014, the said structure erected on the captioned land has been sold to our client. By virtue of the said agreement, therefore our client who is in possession of the said structure should only be the owner of the said structure. Unless any person can show that he had a superior title to the said property, the said structure remains the property of our client and claiming [to be] the descendent of the temporary licence holder is not a proof of ownership…” (emphasis added)

88.  On the same date, a letter (in Chinese) was sent to Fung Man Tai (apparently sent to the address of the Site) demanding removal of the chain and lock within 7 days.

89.  One way or another, the change of occupant of the Site became known to YLDLO. On 11 February 2015, YLDLO put up a notice at the Site informing that the occupation of the government land thereat was illegal and enforcement action by way of clearance would be taken.  The Plaintiff was ordered to cease the illegal occupation of government land at the Site and criminal prosecution was also intimated.  In cross-examination, it was confirmed that the Plaintiff also received a copy of the same notice at his address in Ma On Shan.

90.  On 18 February 2015, the Plaintiff sent a letter (in Chinese) to YLDLO stating that he was the lawful beneficial owner (合法實權人) of the Licence, the Temporary House, all the installation and the rights pertinent thereto.  He also enquired about the procedure for an application to have the Licence transferred to him.

91.  The Plaintiff had a meeting with YLDLO on 2 March 2015.  This was followed-up with another letter (in Chinese) sent by the Plaintiff to YLDLO on 3 March 2015 to which he attached copies of the June Deed and July Deed to protest against the threatened enforcement action.

92.  In this letter dated 3 March 2015, it is stated that “only essential repair and reinforcement work was done to the Original Structure out of safety concern” without mentioning that the Original Structure was in fact totally demolished and rebuilt.  Nor was it mentioned that an additional corrugated metal structure was added on the Site.

93.  The Plaintiff said that he tried to contact Mr Tang between January and March 2015 but received no response from him.  Since he only trusted Mr Tang and expected him to resolve the problems for him, he did not seek any second opinion from another solicitor.

94.  The Plaintiff said the enforcement action was taken by YLDLO on 18 March 2015 unexpectedly and he had no time to retrieve the machinery, building materials and other belongings stored at the Site and has therefore suffered loss.

The Defendant’s evidence

95.  Mr Tang was qualified as a solicitor in Hong Kong in about 1992.  He has since practised from a firm in Yuen Long established by him. He has experience in dealing with property transactions involving land in the New Territories.  At the material time, the firm of the Defendant was under a partnership with Mr Tang Wing Hong.  

96.  Mr Tang said he had known Lam for a few years prior to the transaction herein.  In about June 2014, Lam brought along Cheung to himto effect the sales of the Temporary House in the Previous Transaction.  For preparation of the June Deed, he was given the various documents referred to in paragraph 26 above.

97.  In due course, the June Deed was prepared by Mr Tang and eventually signed on 13 June 2014 between Lam and Cheung.  Mr Tang explained that at the time of signing of the June Deed, wherein Fung signed as confirmor, he had no knowledge of the onward sales from Cheung to the Plaintiff. 

98.  Prior to 18 June 2014, Lam (as opposed to Cheung) called him to inform that he wanted to sell the Temporary House to a new buyer.

99.  On 18 June 2014, Lam took the Plaintiff to his office for the purpose of preparing documentation for the onward sales of the Temporary House from Cheung to the Plaintiff.  Lam introduced the Plaintiff and told him that the purchase price would be HK$300,000 and requested sales documentation to be done.

100.  Since he handled the Previous Transaction, he thought he could handle the further sales of the Temporary House to the Plaintiff.  The Plaintiff asked him whether the Temporary House could be transferred and sold (轉賣).

101.  He explained that the Temporary House was erected on government land; he could purchase the house but not the land.Since it was on government land, the government might repossess the land without compensation.  Upon hearing that, the Plaintiff did not respond or have any reaction.

102.  In cross-examination, Mr Tang clarified that when he referred to the “house” he meant only the “suprastructure” although he did not use such description or the Chinese term “上蓋” (meaning the “shell”), when he explained to the Plaintiff.

103.  The Plaintiff then drew a cheque in the sum of HK$100,000 for payment of the deposit and he affixed the firm’s chop as the payee on the cheque.  Accordingly, he issued a receipt to the Plaintiff.  He then told the Plaintiff that he would be notified when the sales document was ready.

104.  Sometime thereafter, Mr Tang told Lam that the document was ready and Lam called back to make an appointment for 9 July 2014.  On that day, Lam went up to his firm with Cheung (i.e. the vendor in the transaction involving the Plaintiff).  They and the Plaintiff gathered at a conference room of the Defendant’s firm.

105.  Mr Tang said he gave each of Cheung and the Plaintiff a copy of the (unsigned) July Deed to read to see if they have any suggestedamendment. They did read it and did not think there was any need to make any change.  He then produced the various documents including a copy of birth certificate of Fung, copies of the demand notes for annual fee of the Licence and demand notes for rates in respect of the Site.

106.  Mr Tang said, with reference to these documents, he explainedto the Plaintiff that on the information available to him, the original holderof the Licence was Fung Jun (馮贊), who had passed away, and the housewas therefore passed down to Fung.  The birth certificate was to show that Fung was the son of Fung Jun.

107.  Mr Tang said he then read the July Deed to the Plaintiff and he did so by explaining each and every paragraph (in both the recital and the operative clauses) in the document.  In the course of explaining and before signing, he repeated that the original holder of the Licence was Fung Jun (馮贊), who passed “it” (meaning the Temporary House) to Fung.  He also mentioned that Fung had transferred the Temporary House to Lam.  Recently, Lam had transferred the Temporary House to Cheung.  Hence, Cheung was the vendor under the July Deed.

108.  Mr Tang said he also repeated that the Temporary House was erected on government land, which was subject to the condition that the government might repossess the land at any time in which case the Temporary House might be demolished without any compensation.

109.  After the explanation, there was nothing untoward and both Cheung and the Plaintiff signified that they had no issue with the July Deed. They then signed on it.

110.  He then asked the Plaintiff to draw a cheque for HK$200,000 to pay for the balance of purchase price.  Thereafter, he passed the cheque to Cheung who wrote his name on it as the payee. 

111.  Mr Tang said it was not him who requested the Plaintiff to draw another cheque for HK$400,000.  That, he said, was a matter between the Plaintiff and Cheung of which he did not have much knowledge as this cheque was not drawn in front of him.  

112.  He then issued a cheque of his firm to Cheung in the sum of HK$93,000 (i.e. HK$100,000 deposit paid by the Plaintiff less HK$7,000 payable by Cheung in respect of the Previous Transaction as opposed to the transactionherein involving the Plaintiff).

113.  In November 2014, the Plaintiff requested his assistance to deal with Fung Man Tai who appeared at the Site and affixed a padlock to the entrance thereby denying the Plaintiff’s access to the Site. A report was made to the police.  He was instructed by the Plaintiff to issue a letter to the Police to explain the situation and another letter to Fung Man Tai confirming that he was the rightful owner of the Temporary House.  He did so accordingly.

114.  In about January 2015, the Plaintiff told him that he had received notice from YLDLO demanding him to cease his use and occupation of the Site.  He told the Plaintiff to resolve the matter directly with YLDLO and, if necessary, he might seek assistance from his own surveyor.  He also told the Plaintiff to resolve his dispute with Fung Man Tai directly (see paragraph 18 of Mr Tang’s Witness Statement).

115.  Mr Tang denied that he had received any calls or notification of any calls from the Plaintiff after January 2015.

116.  When being cross-examined as to why he did not set out the advice, which he had allegedly given to the Plaintiff in the course of the transaction, in the Defendant’s replies to the Plaintiff’s letters before action herein (dated on 20 March 2015 and 30 April 2015 respectively), he explainedthat he considered it sufficient to refer back to the June Deed and July Deedand generally deny the Plaintiff’s allegations in the Defendant’s reply letters (dated 27 March 2015 and 6 May 2015 respectively).    

117.  Upon being asked by the Court, Mr Tang confirmed that he knew about the scheme of government land licence.  He was aware that some government land in the New Territories, which was held under land licences for farming activities, was rented out or sold to others and was converted for use as scrap yard, workshop and storage etc.

118.  Mr Tang admitted he was also aware of the fact that because of the tolerance exhibited by the government, some people might think that they could convert these government land for use as scrap yard, workshop and storage, etc. as long as no enforcement action was taken by government.

119.  Mr Tang also knew that although there was no legal entitlement,the government might, depending on the circumstances, give ex gratia payment upon clearance.  He read in the news about the recent example of Choi Yuen Tsuen, wherein even “tenants” of land held under licences were offered some compensation by government in order to repossess the land necessary for building the ExpressRailway Link.

120.  Mr Tang accepted that the average person, who was not well educated, might have the impression that there was some form of protection in purchasing a temporary house erected on government land (held under a licence), even when there was no landed property right.

121.  Mr Tang said he had rather assumed that normally purchasers of temporary houses would know about the nature and the restrictions applicable to the temporary houses.

122.  However, he accepted that as a solicitor acting for a purchaser he ought to clearly advise the purchaser that there was no landed property right. That said, by reference to his evidence (as summarized in paragraphs 101 to 108 above), he maintained that he had done enough in advising the Plaintiff in this transaction.

123.  In particular, Mr Tang was referred by the Court to his evidence (as summarized in paragraph 106 above). Mr Tang accepted that it might have given rise to an impression that the right under the Licence was transferable, whereas in fact it was not as a matter of law.

DISCUSSION

124.  The advertisement referred to a “villa” or “temporary house” in Pok Wai Tsuen 壆圍村(or Wai Tsai Chuen 圍仔村).  Contrary to the Plaintiff’s assertion, it is unlikely that the property in the advertisement was the Temporary House at the Site, which was located in Yau Tam Mei攸潭尾 (also known as Ngan Tam Mei 牛潭尾). This has since been confirmed by reference to a local map brought to the attention of both counsel at the time of closing submission.

125.  In any case, Mr Lau has explored the content of the advertisement with the Plaintiff in cross-examination.  Despite that the discrepancies were pointed out, the Plaintiff insisted that the advertisement showed the Temporary House at the Site.

126.  Not much turns on this except that it undermines the Plaintiff’spurported reliance on the advertisement as to what he thought he was buying. In particular, the Plaintiff alleged that at the meeting with Mr Tang on 18 June 2014 he had made reference to the “house in the advertisement” and asked “whether it could be freely sold” without even mentioning any address.

127.  However, there is no evidence that Mr Tang knew about the advertisement or was given a copy at any stage.  Mr Tang’s evidence, whichI accept, is that he knew about the Temporary House and the Site from the Previous Transaction.

128.  Further, it does appear that the Plaintiff in fact had more dealings with Lam than he would admit.  At first, the Plaintiff portrayed Lam as the vendor, which permeated through the Plaintiff’s witness statement.  It is only in oral evidence that he said he had in fact been given a name card at the viewing on 9 June 2014, which showed that Lam was an estate agent. 

129.  As a construction sub-contractor, the Plaintiff was used to back-to-back contracts in a chain stating different contractual sums for the same job. It is extraordinary that the Plaintiff agreed to have the figure of HK$300,000 put in the July Deed whereas the purchase price was in fact HK$700,000 inclusive of the decoration and installation.  The Plaintiff attributed this to Mr Tang, who advised him that HK$300,000 was the price stated in the two previous transactions and therefore the same figure should be put in the July Deed.

130.  From the documentary evidence, this is a reference to the Previous Transaction (between Lam and Cheung) and the prior transaction evidenced in the said home-made agreement 頂讓協議書 (between Lam and Fung), both stating HK$300,000 as the sales price.

131.  In this regard, Mr Tang’s evidence is not credible either.  In his oral evidence, he said all along he only knew that the agreed purchase pricewas HK$300,000 and he did not know much about the HK$400,000, which was a side deal reached between the Plaintiff and Cheung.  He did not request the Plaintiff for the other cheque in the sum of HK$400,000. 

132.  However, in sub-paragraphs 4(h) and (i) of the Re-Amended Defence, it was pleaded that, prior to 9 July 2014, Mr Tang had been informed by Cheung that the Plaintiff agreed to purchase “the decoration and furniture inside the Temporary Squatter at an additional price of HK$400,000” and it was Cheung who requested him “not to mention or include the same sum of $400,000 in the proposed contract”.  

133.  More importantly, the Plaintiff’s evidence is that the Temporary House (i.e. the Original Structure) at the Site was not connected to the electricity and water mains, full of water stains, leaking and uninhabitable.  In that case, why would he pay a separate sum of HK$400,000 for the so-called “decoration and furniture”?

134.  The real reason behind the splitting of the purchase price into two sums of HK$300,000 (stated in the July Deed) and HK$400,000 (evidenced in the separate cheque) remains a mystery.  It smacks of a clandestine practice that may be prevailing at some quarters but it is not an issue that the Court has to decide. 

135.  After having heard the evidence, I have the distinct impression that the Plaintiff is more knowledgeable in the scheme of government land licence than he would admit.

136.  The tenor of his evidence is that he thought he was obtaining certain land title “業權” in the Temporary House (along with the 5,000 square feet of land at the Site) by paying the relatively meagre sum of HK$700,000.  This is unreal. 

137.  Further, in cross-examination, the Plaintiff suggested that Lamsaid the solicitor could arrange the relevant document of “Temporary House”for transferring the title “業權” to him.  He also said he did think about engaging his own solicitor but he was dissuaded by Lam who said that it would not be worth it since the sum involved was so small.  However, all these are nowhere to be found in the pleadings or the Plaintiff’s witness statement.

138.  I am of the view that the Plaintiff knew about the concept of title “業權” in the context of landed property. One could not fail to notice the long pause when he was cross-examined on whether he had thought about purchasing a domestic property for use by his family.  He was looking as his solicitor as if he was searching for hints. He then answered that he did think about it but his financial condition did not allow him. The Plaintiff gave the impression that he had more knowledge or experience in dealing with landed property than he was prepared to reveal.

139.  In his answers to questions from the Court, it became clear that he well knew about the prohibitive prices of real property even in more remote districts like Ma On Shan.  Therefore, he could not have beenunder any misconception that he was getting some landed interest or estate in the government land at the Site.

140.  Notably, in paragraph 13 of RAMSOC, it is pleaded thatthe Defendant failed to “(e) prepare valid and effective legal conveyancing documents such as deed or assignment in properly conveying the title of the Temporary House and the Licence to the Plaintiff” as if there were certain interest in land to be transferred to the Plaintiff in the transaction. At closing submission, Mr Yip clarified that this is not the Plaintiff’s case. 

141.  Further, in his evidence-in-chief, the Plaintiff categorically denied having any knowledge or cognizance of “Temporary House (臨時屋), Squatter Hut (寮屋) or Temporary House Licence (臨時屋牌照)” prior to instructing his solicitors in this case.  This is not believable.

142.  Firstly, a temporary house was referred to in the advertisement. Secondly, when being asked in cross-examination whether Lam mentioned the “Temporary House Licence” at the viewing of the Site on 9 June 2014 or at the Defendant’s firm on 18 June 2014, he admitted that Lam did mention about the “Temporary House Licence” on 18 June 2014.

143.  Thirdly, the Plaintiff was, at the very least, alive to the question as to whether the Temporary House could be “freely sold” so that he specifically raised it with Lam on 9 June 2014 and with Mr Tang on 18 June 2014. 

144.  Fourthly, upon enquiry by the Court, the Plaintiff revealed that he had various licences or registration documents (including driving licence, business registration, steel binder’s trade certificate), which needed to be renewed from time to time.  When asked, he accepted that he knew that likewise the Licence would need to be renewed at some stage although he did not know the details.

145.  Fifthly and more importantly, it was only revealed in cross-examination that a copy of the June Deed, which set out the history of the Temporary House and the Licence, was in fact given to him on 18 June 2014, although he claimed he did not read it in any detail.  

146.  The Plaintiff was quick to blame it on Mr Tang for failing to advise him as to the restricted use of the land held under the Licence.  However, as a contractor in the construction industry, he generally knew that houses could not be erected without approval from the relevant government authority.  He has lived in Hong Kong since 1980s and admittedly he had heard about “Unauthorized Building Work” being demolished in the course of enforcement action taken by government.

147.  The Plaintiff also blamed Mr Tang for wrongly advising him that “There should be three houses on this plot of land and you can build 2 more as luxurious as you like” (其實塊地有三間屋，你可以起多兩間，起到幾靚都得). For the reasons set out herein below, I find this allegation unbelievable and I reject it.

148.  To start with, this allegation was not in the original Statement of Claim.  Inoral evidence, the Plaintiff suggested that it happened on 9 July 2014 at the Defendant’s firm.  After giving him a copy of the (unsigned) July Deed to read, Mr Tang uttered such words to himself and, by so doing, Mr Tang volunteered this advice to him. 

149.  The Plaintiff would want the Court to accept that he trusted Mr Tang so much so that he acted upon this piece of gratuitous advice in incurring a large amount money on demolishing the Original Structure to rebuild a new one at the same location (with toilet and kitchen facilities) and erect an additional metal structure at another location within the Site.

150.  If true, it would be an important piece of advice acted upon by the Plaintiff.  In the premises, one would expect the Plaintiff to have put it in his letters before action (dated 20 March 2015 and 30 April 2015)wherein detailed allegations were made.  However, this was not done.

151.  When asked, Mr Yip was quite unable to suggest what might be the motive of Mr Tang in uttering such gratuitous advice to the Plaintiff,there being no evidence of any collusion between Mr Tang and any of the vendors up the chain, namely, Fung, Lam and Cheung to push through the transaction.

152.  Importantly, the Plaintiff said for the first time in the witness box that he was flexible in the intended use of the Site.  It was only after seeing Mr Tang on 18 June 2014 that he decided to renovate the Site to a habitable standard for live-in purpose.  To this end, he alleged for the first time that he told Mr Tang on 18 June 2014 that he intended to use the Site as a storage, a workshop as well as a place to live in.  However, this was not put to Mr Tang. 

153.  I find that the Plaintiff has embellished his evidence in order torun a case that Mr Tang (a) knew exactly his intention to use the Site partlyfor live-in purpose; (b) encouraged him to incur expenses for construction and improvement work at the Site, so as to saddle Mr Tang with liability forthe full amount allegedly spent on theSite. I do not accept that the Plaintiff informed Mr Tang on 18 June 2014 as to his intended use of the Temporary House and the Site.

154.  Quite apart from the change in his evidence between examination-in-chief and cross-examination as to whether Mr Tang explained to him the July Deed (see paragraphs 78 and 79 above), the allegation that Mr Tang did not explain the operative clauses in the July Deed is directly contradictory to the Plaintiff’s pleaded case (at paragraph 13(j) and paragraph 23(xi) of RAMSOC).

155.  It is the Plaintiff’s pleaded case that Mr Tang advised him, albeit wrongly, that operative Clause 4 in the July Deed was the amount of compensation (HK$2.0 million) payable by the vendor in case the vendor was in breach of the warranty of ownership of the Temporary House whereas in fact Clause 4 (which is identical to Clause 5 of the June Deed recited in paragraph 28 hereinabove) concerned a declaration of value normally for stamp duty purpose in conveyancing transactions. 

156.  The Plaintiff portrayed that he was helpless when he could not contact Mr Tang after January 2015.  Mr Tang’s uncontroverted evidence is that as early as January 2015 he advised the Plaintiff to deal with YLDLO direct and suggested that he sought assistance from a surveyor.

157.  It was not until cross-examination when it was revealed that the Chinese letter (dated 3 March 2015) sent by the Plaintiff to YLDLO wasdrafted with the assistance of the Plaintiff’s surveyor friend.  It would appear that the Plaintiff was playing down his surveyor friend’s involvement and its influence on his course of conduct. 

158.  Even if Mr Tang could not be contacted, there is nothing to prevent him from seeking advice from another solicitor.  At closing submission, Mr Yip accepted that if the Plaintiff had sought advice from another solicitor, he would have been advised that the government could properly take enforcement action to evict him from the Site in the circumstances.

159.  It does appear that the Plaintiff deliberately did not seek advice from another solicitor in order to lay the blame at the door of the Defendant and to explain why he did not take steps to retrieve and salvage his machinery and building materials kept at the Site.

160.  Accordingly, I find that it was on the strength of the advice of his surveyor friend that the Plaintiff consciously decided not to vacate the Site despite the repeated enforcement notices served on him by YLDLO.  The Plaintiff might well have been lured into a false sense of security by the advice from his surveyor friend as to the laxity of government enforcement action in general, but the consequence thereof cannot be fairly laid at the door of the Defendant.

161.  I am of the view that the Plaintiff knew that he would not be acquiring any landed title by paying the relatively meagre sum of HK$700,000.  He was also generally aware of some restrictions attendant upon the occupation of government land held under a licence (including restrictions on the permitted number and use of temporary structures erected thereon).

162.  That is probably the reason why the Plaintiff claimed that he did not read the letter (dated 3 March 2015) drafted by his surveyor friend,which was designed to misinform YLDLO that “only essential repair and reinforcement work was done to the Original Structure out of safety concern” (see paragraph 92 above).  Such drafting is clearly intended to address concerns arising from the restrictions generally imposed by government as conditions for the use of the government land held under a licence.

163.  If, as submitted by Mr Yip, it is the case that the Plaintiff was ignorant of such restrictions prior to receiving advice from his surveyor friend and that the letter to YLDLO (dated 3 March 2015) was a desperate effort to hold off the YLDLO by giving a less than truthful account as to the nature and extent of construction work undertaken at the Site, it is incumbent upon the Plaintiff to come clean in his evidence and to call his surveyor friend to explain. 

164.  In the absence of such explanation, I reject the Plaintiff’s implied assertion as to his ignorance of the restrictions concerning the number and use of temporary structures erected on government land held under a licence so much so that he relied on the gratuitous advice allegedly given by Mr Tang on 9 July 2014 (see paragraph 147 above).

165.  It is more likely than not, and I so find, that the Plaintiffwas labouring under the misconception that due to the laxity of government enforcement action and the proliferation of the practice of “sales” of temporary houses in the New Territories, it was still worth paying the sum of $700,000 so that he could use the Temporary House and the Site for an indefinite period of time. 

166.  Having said all that, it does not mean that the Defendant cannot be held liable for failing to disabuse the Plaintiff so that he knew exactly what he was walking into under the transaction.

167.  It is more likely than not, and I so find, that the Plaintiff believed that by engaging a solicitor in handling the transaction for sale andtransfer of the Temporary House and the Licence, it would afford him some form of protection so that short of any enforcement action that might be taken by government,he would be able to enjoy certain right to use the Temporary House and the Site.

168.  Importantly, in paragraph 6 of the Re-Amended Defence, it is pleaded that Mr Tang had advised the Plaintiff the following specific facts and matters (emphasis added):

(a)   In the usual course of event, the sale and purchase of a house erected on land is effected by a sale and purchase agreement, to be followed by an assignment.

(b)   Cheung was not the legal or beneficial owner of the land.  It is therefore impossible, as a matter of law, for Cheung, to sell the government land to the Plaintiff despite his claim as the owner of the Temporary House.

(c)   The Licence only conferred a personal right to Fung Chan for use and occupation of the Temporary House, which was not transferrable or salable by Fung Chan (the original licensee) to a third party.

(d)   The Licence most likely has already lapsed in effect upon the death of Fung Chan.

(e)   The transaction would not confer or assign to the Plaintiff any legal estate or interest in the Government land and/or the Temporary House and/or the Licence.

(f)   The Plaintiff, by acquiring the Temporary House, will not receive or obtain any legal title as owner of the Government land or any title in respect of the Licence.

(g)   A third party, even as a purchaser, would not have any right whatsoever to use and occupy the Temporary House lawfully unless he applies to the Government and was granted a new licence to use and occupy the Temporary House.

(h)   The granting of new licence is entirely within the discretion of the Government.

(i)   In the event that a new licence was not granted, the Governmenthad the power to take enforcement action including demolitionof the Temporary House without giving any notice or payment any compensation to the third party.

169.  All these facts and matters, in particular, that the Licence only conferred a personal right to the licensee, which was not transferrable, are closely connected with (a) the advice sought by the Plaintiff from Mr Tang as to whether the Temporary House could be “freely sold”; and (b) the Plaintiff’s purpose of engaging the Defendant in handling the transaction, which Mr Tang knew or ought to have known (see Stock J (as he then was) in Foshan Hua Da Industrial Co v Johnson, Stokes & Master (a firm) discussed in paragraph 44 above).

170.  Mr Tang well knew that the change of occupation and/or use of the Site by a person such as the Plaintiff, not being the licensee, would give rise to a real and substantial risk of enforcement action being taken by government.  It is therefore incumbent upon Mr Tang to specifically and clearly advise the Plaintiff of such real and substantial risk. 

171.  Further, Mr Tang well knew that the purported “sales” or “transfer” to the Plaintiff of the Temporary House and the Site by virtue of the July Deed will have no prohibitive effect whatsoever on the rights of the government to take enforcement action. 

172.  In this respect, Mr Tang ought to have specifically warned the Plaintiff but he patently failed to do so. There is no basis for Mr Tang to assume that the Plaintiff was knowledgeable about the personal nature and non-transferability of the Licence even if the Plaintiff had told him that he had previous experience of using government land.

173.  Evidence of Mr Tang having advised the Plaintiff in the definitive and comprehensive terms (as pleaded in paragraph 6 of the Re-Amended Defence) is sorely missing.

174.  That notwithstanding, Mr Lau made a valiant attempt to argue that (a) that the matters pleaded therein are over and above what might reasonably be expected of a competent solicitor handling the transaction; (b) what Mr Tang described in oral evidence as to what he hadactually told the Plaintiff was sufficient in the proper discharge of his duty (see paragraphs 101 and 108 above).

175.  I have no hesitation in rejecting Mr Lau’s argument and in holding that what is pleaded in paragraph 6 of the Re-Amended Defence represents the standard that might reasonably be expected and required of a competent solicitor handling the transaction.  Further, I am of the view that in his oral evidence Mr Tang was skirting around as to what exactly transpired since he was aware that his handling of the transaction fell far short of the avowed standard.

176.  I have no doubt that Mr Tang wrongfully approached the preparation and attestation of the July Deed on the basis that his duty was limited to reciting therein a state of affairs pertinent to the history of the Temporary House and the Licence as “common assumptions” of the parties,without assuming any duty to verify them or to advise the Plaintiff as to the lackof legal effect of the July Deed in ensuring his enjoyment of the land at the Site, in particular, vis-à-vis the right of government to take enforcement action. 

177.  That also explains why Mr Tang kept saying that he had “no instructions” when being cross-examined as to why certain investigative steps were not taken.

178.  One of the major faults on the part of Mr Tang is his failure to clearly advise and warn the Plaintiff such intended limitation of his retainer.  If Mr Tang had done so and the Plaintiff, with full knowledge of such limitation, still insisted on proceeding with the transaction, it would be a matter of commercial decision for the Plaintiff, who had the privilege to take whatever risk as he might wish.

179.  Further, Mr Tang said he had assumed that the Plaintiff was an experienced user of land held under government land licence and hencehe was not obliged to give full advice to the Plaintiff.  There is no basis for such assumption.

180.  On his own evidence, Mr Tang only told the Plaintiff whether on 18 June 2014 or 9 July 2014 that (a) the Temporary House was erected on government land; (b) government land could not be sold; (c) he could buy the Temporary House but not the land; (d) the government might repossess the Site without any compensation (see paragraph 101 above).

181.  Mr Tang also gave evidence that on 9 July 2014, with reference to demand notes for annual fee for the Licence and demand notes for rates in respect of the Site, he told the Plaintiff that (a) the original licensee was Fung Jun (馮贊) who had since died; and (b) the Temporary House was passed down to Fung (see paragraph 106 above). 

182.  This is along the line of the history set out in Recitals 2 and 3 in the July Deed (see paragraph 33 hereinabove).  As Mr Tang readily accepted, this might create a misunderstanding that the Licence was transferable and had in fact been transferred from Fung along the chain, and ultimately to the Plaintiff.

183.  In the premises, even on his own evidence, Mr Tang singularly failed to explain to the Plaintiff that:

(a)   the state of affairs pertinent to the history of the Temporary House and the Licence as set out in the Recital of the July Deed have not been independently verified and were only assumed to be true between the contracting parties;

(b)   the Plaintiff would not be acquiring any interest or estate in land at all;

(c)   the Licence was granted to Fung Jun (馮贊) personally and was not transferable, whether to Fung, Lam or Cheung or the Plaintiff himself;

(d)   even assuming Fung was in fact the legal owner of the Temporary House, all that the Plaintiff would be getting was the “superstructure” (or shell 上蓋) of the Temporary House along with a permission (derived from Fung who claimed to be the sole beneficiary of the estate of Fung Jun, deceased) to occupy and use the Temporary House and the Site;  

(e)   since the Plaintiff was not the registered licensee under the Licence, if the government learned about the change of occupancy and/or use of the Site, there would be a “substantial risk” that enforcement action by way of clearance might be taken (as Mr Tang had allegedly so advised Cheung in the Previous Transaction, see paragraph 5 of his Witness Statement).

184.  Further, contrary to the Plaintiff’s evidence, Mr Tang claimed that he had avoided using the term  “業權” (meaning “title”) in his oral explanation given to the Plaintiff.  It is likely that Mr Tang did use the term although he might subjectively intend to refer to the “suprastructure” or “上蓋” but failed to make it clear to the Plaintiff.

185.  More importantly, even if Mr Tang had in fact refrained from using the term “業權” in his oral explanation, it is clearly insufficient since the term was used in operative Clause 2 of the July Deed (see paragraph 33 above).

186.  Any layman, like the Plaintiff, reading the July Deed as a whole, in particular, operative Clause 2 could be forgiven to have entertained the thought that the July Deed would confer some form of legal right to use and occupy the Temporary House and the government land at the Site.

187.  In passing, the declaration of value in Clause 4 of the July Deed was clearly designed for stamp duty purpose (see Paragraph 155 above). If Mr Tang all along took the view that the transaction was not a form of conveyancing and there was no question of any payment of stamp duty, it is inexplicable why such a clause was deemed necessary (see paragraph 16 of the Witness Statement of Mr Tang). 

188.  In all circumstances, I find that due to the incompetent and insufficient advice given by Mr Tang, the Plaintiff was labouring under the misconception that by engaging the Defendant’s firm to handle the transaction, he would obtain some kind of legally transferable right to use and occupy the Temporary House (together with the government land at the Site) and such right would be transferred to him by virtue of the July Deed.  

189.  If Mr Tang had, as he ought to have, properly advised the Plaintiff of the various matters set out in paragraph 183 hereinabove, the Plaintiff would not have proceeded with the transaction and paid the sum of HK$700,000.

190.  Accordingly, I find the Defendant liable to the Plaintiff for failing to exercise reasonable skill and care in handling the transaction and in advising the Plaintiff, which constitutes breach of contract under the retainer and professional negligence under the law of tort.

191.  For the sake of completeness, I do not see the need to deal with the wide range of other allegations pleaded by the Plaintiff relating to breaches of duty on the part of the Defendant in (a) carrying out proper “title” investigation; or (b) ensuring that the July Deed were “effective in conveying the title of the Temporary House and the Licence to the Plaintiff”(see paragraphs 13 and 23 of RAMSOC).

192.  These are non-material issues since no amount of “title” investigation and no deed or assignment, howsoever drafted, would change the fact that (a) there could be no transferrable right or interest in the land comprising the Site; and (b) there was no way to enjoin the government from exercising its power to take enforcement action.

QUANTUM OF DAMAGES

193.  The Plaintiff has pleaded his losses in paragraphs 25, 25a and 25b of RAMSOC). In essence, they consisted of:

(a)	Purchase price of the Temporary House	HK$	700,000
(b)	Legal costs for purchasing	HK$	7,000
(c)	Agency fee	HK$	5,000
(d)	Legal costs for dealing with Fung Man Tai	HK$	10,000
(e)	Costs of (i) rebuilding the Original Structure; (ii) erecting an additional corrugated metal structure; (iii) materials and tools purchased for use at the Site, which were seized by YLDLO on 18 March 2015	HK$	2,423,902.00
(f)	Personal belongings, construction machinery and materials kept at the Site, which were seized by YLDLO on 18 Mach 2015	HK$	208,892.00
		HK$	3,354,794.00

The law

194.  Mr Lau referred to the decision of the English Court of Appealin Wellesley Partners LLP v Withers LLP [2016] Ch 529 on the propositionthat where the duty of care is both contractual and tortious, the measure ofdamages is governed by contractual principle.  Lord Justice Floyd explained (at 553H to 554C):

“ 80. Nevertheless, I am persuaded that where, as in the present case, contractual and tortious duties to take care in carrying out instructions exist side by side, the test for recoverability of damage for economic loss should be the same, and should be thecontractual one. The basis for the formulation of the remotenesstest adopted in contract is that the parties have the opportunity to draw special circumstances to each other’s attention at the time of formation of the contract. … The parties are assumed to be contracting on the basis that liability will be confined to damageof the kind which is in their reasonable contemplation. It makes no sense at all for the existence of the concurrent duty in tort to upset this consensus, particularly given that the tortious duty arises out of the same assumption of responsibility as exists under the contract.” (emphasis added)

195.  The same sentiment was expressed by Roth J (at 573B) and Longmore LJ (at 583B).  At closing submission, Mr Yip confirmed that he agreed with the foregoing proposition of law as expounded in Wellesley Partners LLP (supra).  

196.  In terms of the contractual approach towards assessment of damages, the rule in Hadley v Baxendale (1854) 9 Ex 341 was revisited and re-affirmed by the Court of Final Appeal in the case of Richly Bright International Ltd v De Monsa Investments Ltd (2015) 18 HKCFAR 232.  That case concerned a firm of solicitors whose breach of duty resulted in non-completion of the sales of a property in a chain (involving a sale and three sub-sales). 

197.  The Court of Final Appeal reversed the decisions of the courtsbelow holding the defendant liable for all losses up the chain and restricted the damages referable only to the sub-sales, which was last in the chain, handled by the defendant on behalf of the plaintiff.

198.  In short, in the context of professional negligence on the part of a solicitor, the measure of damages is contractual, which is restricted to what is within the “contemplation” of the solicitor and his client, subject toconsideration of “remoteness”. The notion of “foreseeability”in tort has no place in the assessment of contractual damage and should not be conflated with “remoteness”. 

199.  In other words, just because some form of loss may be foreseeable as a matter of fact does not widen the scope of the defendant’s duty and hence his liability for such other loss, if it is not within his “contemplation” in the contractual sense when the relationship is entered into.  Ribeiro and Fok PJJ explained (at 245):

“ D.2 Remoteness in contract and in tort

24. … the rules of remoteness in contract differ from those governing remoteness in tort. The latter rules impose a much wider liability for ‘any type of damage which is reasonably foreseeable as liable to happen even in the most unusual case, unless the risk is so small that a reasonable man would in the whole circumstances feel justified in neglecting it’ or ‘any damage which [the tortfeasor] can reasonably foresee may happen as a result of the breach however unlikely it may be, unless it can be brushed aside as far fetched’.

25. The reason for this difference is explained by Lord Reid in The Heron II as follows:

In contract, if one party wishes to protect himself against a risk which to the other party would appear unusual, he can direct the other party’s attention to it before the contract is made, and I need not stop to consider in what circumstances the other party will then be held to have accepted responsibility in that event.  But in tort there is no opportunity for the injured party to protect himself in that way, and the tortfeasor cannot reasonably complain if he has to pay for some very unusual but nevertheless foreseeable damage which results from his wrongdoing.”

200.  The difference between the contractual and tortious approaches in assessing damages can also be demonstrated by the ratio in case of “The Achilleas” [2008] UKHL 48, albeit a pure case of contract, which was discussed by Roth J in Wellesley (supra).

201.  Importantly, the principle enunciated in “The Achilleas” was recently adopted and applied by the Court of Final Appeal in Richly Bright International Ltd (supra).  Ribeiro and Fok PJJ said (at 247 – 251):

“ D.3 The Achilleas

28. In The Achilleas, a vessel under time charter was delayed during a legitimate final voyage and, in breach of the charterers’contract, was redelivered to the owners nine days late. As a result, the owners were unable to deliver the vessel in time for a follow-on charter lasting four to six months which had been fixed at a particularly lucrative charter rate they had managed to negotiate in an unusually volatile market. Because of the late redelivery, the owners had to renegotiate the follow-on charter and to agree to a substantially reduced rate of hire. The owners claimed the difference between the original and renegotiated rates of hire for the entire period of the follow-on charter. That claim was allowed by a majority of arbitrators and was upheld at first instance and on appeal to the Court of Appeal. However,the charterers’ appeal to the House of Lords was unanimously allowed and the owners’ award was restricted to the difference in the charter hire for the nine-day overrun.

29. In allowing the appeal, Baroness Hale of Richmond confined herself to the orthodox Hadley v Baxendale approach. Lord Hoffmann and Lord Hope of Craighead, however, took theview that, as Lord Hoffmann put it, the orthodox approach is only:

… a prima facie assumption about what the parties may be taken to have intended, no doubt applicable in the great majority of cases but capable of rebuttal in cases in which the context, surrounding circumstances or general understanding in the relevant market shows that a party would not reasonably have been regarded as assuming responsibility for such losses.

…

38. Whether a contract-breaker has assumed responsibility for a particular type of loss is decided by viewing the nature and object of the contract against its commercial background. Adopting an approach similar to that for deciding whether a contractual term should be implied, one ascertains by reference to objective indicia, whether the parties should be taken to have intended that the relevant type of loss flowing from breach of the contract falls within the scope of the contract-breaker’s assumption of responsibility. As Lord Walker put it:

… what is most important is the common expectation, objectively assessed, on the basis of which the parties are entering into their contract.

39. In The Achilleas, objective indicia leading to the conclusionof non-assumption of responsibility by the charterers included the general expectations in the relevant market; the fact that at the time of entering into the contract, the risk was unquantifiable by the charterers; that the terms of the follow-on charter agreed between the owners and the subsequent charterers was something over which the defendant charterers had no control and could not predict; and thus, that the terms of the next charter were, in relation to the charterers, res inter alios acta.

…

41. With respect, the analysis in The Achilleas regarding the concept of assumption of responsibility is compelling. It represents a logical extension of the rule in Hadley v Baxendale,building upon Lord Reid’s formulation mentioned above. Being firmly grounded in the contractual principles governing the relationship between the parties, the assumption of responsibility concept provides a principled basis for distinguishing between losses which are or are not too remote. We unhesitatingly adopt it as representing the law in Hong Kong.” (emphasis added)

The evidence

202.  In the course of the trial, it became apparent that the particulars of damages pleaded in paragraphs 25, 25a and 25b of RAMSOC (totalling HK$3,354,794) were either inaccurate or so devoid of details as to be incomprehensible.  

203.  A stack of receipts [C/36 to 100] were included in the trial bundle but most of them are either illegible or unintelligible in the absence of explanation.  Naturally, the Defendant challenged the admissibility of those receipts on the ground that they are hearsay evidence.

204.  No effort was made by the Plaintiff either in the pleadings or his witnessstatement to explain with sufficient particulars the relevance of each receipt and how the expense purportedly evidenced therein came to be incurred by the Plaintiff.

205.  At the beginning of the trial, Mr Yip was invited to produce a table to collate the information contained in the receipts.  He did so on the second day of the trial and presented a table (in landscape format).

206.  Mechanically, the table only repeated verbatim what was pleaded in paragraphs 25, 25a and 25b of RAMSOC with an added column giving the paginations of the stack of illegible, unintelligible and haphazardly arranged receipts.  It proved to be a futile exercise.

207.  With much reluctance, I granted leave to the Plaintiff in the course of the trial to file the Re-Re-Amended Statement of Claim (“RRAMSOC”).  Mr Lau, for the Defendant, rightly did not object to the amendment but reserved the right to cross-examine the Plaintiff on the discrepancies arising from the various heads of claim.

208.  Even with the opportunity to amend, the Plaintifffailed to give any further particulars as expected and required.  In the main,all it did was to shift some of items of claims (Nos. 9, 10, 11 and 27 under paragraph 25a of RRAMSOC), which were originally purported to be expenses of construction work carried at the Site, to paragraph 25b (new Nos. 12 to 15) to become loss arising from items kept at the Site and forfeited by YLDLO.  

209.  In order to do justice to the case, I allowed the Plaintiff to giveoral evidence to explain the receipts.  As it turned out, some of the receiptsare misleading and/or irrelevant to the Plaintiff’s various claims.  Even the Plaintiff himself had difficulties in deciphering some of them (e.g. item 13 in paragraph 25a of RRAMSOC corresponding to a receipt at [C/72]).

210.  Just to get rid of a short point, I have already found that the Plaintiff consciously chose to act on the advice of his surveyor friend and decided not to remove his goods and tools before the 6 March 2015 as demanded by YLDLO.

211.  It does appear that at that stage the Plaintiff had already set his sight on saddling the Defendant with this claim.  In respect of the items of machinery, tools or construction materials allegedly kept at the Site and forfeited by YLDLO (i.e. items 3 (in part), 7, 12, 13, 15, 16, 19 to 25 in paragraph 25a and all of items 1 to 15 under paragraph 25b of RRAMSOC),the losses arising therefrom were not caused by the breach of duty or negligence on the part of Mr Tang but attributable to the Plaintiff’s failure to mitigate loss by removing them in good time.  None of the claims for these items is allowed.

212.  On the whole, the Plaintiff’s evidence on quantum is far from satisfactory, which taxes on his credibility.  Some of claims are factually incorrect and unsustainable.  It tends to show that the Plaintiff is prepared to say whatever is convenient.

213.  Notwithstanding the belated concessions made by Mr Yip in a schedule (the “Schedule”), which was submitted upon direction of the court after lodging of his written closing submission, it is necessary to identify the instances where the Plaintiff failed to adduce cogent evidence to prove various items of claim.

(a)   Items 1, 4 and 5 (para 25a)

214.  Under item 1, a sum of HK$150,000 [C/36] is claimed for building the front wall near the gate by “Po Wing Cement Engineering” as shown in photo [C/115].  

215.  The Plaintiff’s evidence is equivocal whether it was inclusive of materials.  At one stage he sought to relate this job to the materials referred to in item 5 (para 25a). 

216.  Mr Lau took issue with item 1 on the basis that it is not receipted and it appears to overlap with part of the work under item 4, which is evidenced by a quotation of “Yau Shun (Ming) Engineering Co.” [C/43] in respect of which payment for HK$150,000 was receipted [C/44].  

217.  The photos [Exhibit P3] tend to support the Plaintiff’s case that these are separate jobs involving different parts of the Site under item 1 and item 4 respectively.  I allow item 4 in the sum of HK$150,000.

218.  In respect of item 1, only the claim for HK$150,000 is allowed on the basis that it was inclusive of materials but not the extra costs of materials in the sum of HK$22,315 (claimed under item 5).

(b)   Item 2 (para 25a)

219.  One of the receipts was for HK$800 [C/83] concerning transportation of five Steel Bending Machines from the Site to Caféteria Bay in Castle Peak area.  This clearly is not related to the loss allegedly suffered at the Site.  In any event, the whole of item 2 (totalling HK$4,800) has been abandoned in the Schedule.

(c)   Item 3 (para 25a)

220.  Various sums were claimed under three receipts issued by “Intelligent (Service) Engineering Company” for, inter alia, (i) 80,000 pieces of 3″×3″ tiles designated for flooring work outside the two corrugated metal structures at the Site in the sum of HK$256,000 [C/40]; (ii) labour for the flooring work in the sum of HK$325,000 [C/41].

221.  On the Plaintiff’s evidence, the 80,000 pieces of tiles (3″×3″)costing HK$256,000 were not yet installed. They were kept at the Site andseized by YLDLO.  Likewise, the flooring work for the sum of HK$325,000was not yet done, although the Plaintiff claimed that the contractor insisted on full payment.

222.  The Plaintiff said he did try to negotiate with the contractor for an abatement of price but to no avail.  I find this unbelievable since no receipt was obtained and produced by the Plaintiff in circumstances where he well knew that he would be claiming against the Defendant.  These 2 claims are disallowed.

(d)   Item 4 (para 25a)

223.  A sum of HK$840,000 is claimed on the strength of a quotation from “Yau Shun (Ming) Engineering Co.” [C/42] for demolishing and rebuilding the Original Structure, which the Plaintiff said was leaking and uninhabitable (see photos at [C/115 to 117] showing the Original Structure).

224.  Contrary to the Plaintiff’s evidence, the quotation clearly stated that it was for building two squatter houses (at HK$420,000 each), which I believe would have included re-building of the Original Structure and erecting the additional metal structure.

225.  The Plaintiff said he intended to add toilet and kitchen facilities,which however were not yet done as of 18 March 2015, when he was evicted from the Site. 

226.  However, the Plaintiff claimed that he had paid the full amount in three installments all in cash, i.e. HK$300,000 (in July 2014); HK$300,000 (in September 2014) and HK$240,000 (in February 2015) despite the fact that the kitchens and toilets were not yet installed.

227.  Again, the Plaintiff said the contractor insisted on full payment. No valid explanation was given why he did not obtain a receipt when he knew full well that he would be claiming against the Defendant.

228.  Quite apart from the unsatisfactory evidence of payment, I have already held that Mr Tang did not utter the words “There should be three houses on this plot of land and you could build 2 more as luxurious as you like” (其實塊地有三間屋，你可以起多兩間，起到幾靚都得) which was an embellishment on the part of the Plaintiff and was untrue.

229.  Further and in any event, I am of the view that this item of claim is too remote and not within the contemplation of the parties at the time of the transaction. 

230.  Whilst Mr Tang might be taken to know that the Plaintiff would incur expenses in repairing the Temporary House (i.e. Original Structure) and the boundary walls of the Site, it is not reasonably contemplated that the Plaintiff would incur a disproportionate amount of money (i.e. a few times of the purchase price of HK$700,000) to totally rebuild the Site.

231.  This is something beyond the control of the Defendant (see Richly Bright International Limited (supra), at paragraph 39).  Therefore, the whole sum of HK$840,000 is disallowed.

(e)   Item 8 (para 25a)

232.  A sum of HK$159,200 was claimed on the strength of a quotation from “Sun Yik Corrugated Metal House” or “Ho Chi Hung” [C/56].  This is said to be the sum for the labour and tools (excluding materials) involved in adding the new corrugated metal structure at the Site.

233.  Likewise, quite apart from the lack of receipt to prove the expenses, I am of the view that the erection of a new additional metal structure, while foreseeable in the tortious sense, was not within the reasonable contemplation of Mr Tang.  Accordingly, the claim is disallowed. 

 (f)   Items 9, 10, 11 and 27 (para 25a)

234.  These have been removed to become Items 12 to 15 (under para 25b) in the RRAMSOC as stored items seized by YLDLO.  These have already been disallowed (see paragraph 211 above).

(g)   Item 17 (para 25a)

235.  There are three invoices in the total sum of HK$7,300 for transportation of materials to the Site (including a container office which was said to be used by workers at the Site).  This claim is too remote and therefore disallowed.

(h)   Item 19 (para 25a)

236.  This is a claim for HK$79 for welding rods purchased from Tung Tai Hardware Materials for use in the construction of the metal structures.  This claim is disallowed along with items 4 and 8 above.

 (i)   Item 24 (para 25a)

237.  This is a claim for the loss of some metal hooks stored at the Site, which has nothing to do with the construction work carried out thereat.  This item has since been abandoned by the Plaintiff in the Schedule.

 (j)   Item 26 (para 25a)

238.  A sum of HK$600 is claimed for transportation of material from Sheung Chuk Yuen (上竹園), a place near but not the same as the Site, to Caféteria Bay in Castle Peak area, which is clearly irrelevant.  This claim has since been abandoned in the Schedule.

(k)   Item 29 (para 29)

239.  A sum of HK$68,000 was claimed for the wages paid to a caretaker deployed at the Site between July and November 2014 [C/96 to 100].  This claim is too remote and is disallowed.

 (l)   Item 9 (para 25b) and formerly item 28 (para 25a)

240.  Purportedly, this claim relates to the loss of four steel bending machines, which has since been omitted from the RRAMSOC in the following circumstances.

241.  The receipt issued by Hop Shing Machinery Factory (dated 17 December 2014) [C/95] was in the sum of HK$199,000 for the purchase of three Steel Bending Machines (Model HS-40) (i.e. HK$55,000 × 3 = HK$165,000) and one Steel Bending Machine (Model HS-25) in the sum of HK$34,000. This is formerly a separate claim under item 28 of paragraph 25a.

242.  As the evidence unfolded, it became apparent that those four machines referred to in the receipt, had been removed from the Site prior to 18 March 2015, and were not lost at all.

243.  The Plaintiff only sought to include the receipt for illustrative purpose to give an estimated second-hand value of two similar steel bending machines, which were allegedly seized by YLDLO from the Site (i.e. HK$40,000 × 2 = HK$80,000 under item 9 of para 25b).

244.  In the Schedule, this claim has been revised to (1) HK$55,000× 72.7% = HK$40,000 (Model HS-04) and (2) HK$34,000 (Model HS‑25)× 72.7% = HK$24,718, i.e. a total of HK$64,718 to match the shift in the Plaintiff’s evidence as to the models of the machines seized by YLDLO.

245.  In any event, this claim has already been disallowed for reasons set out in paragraph 211 hereinabove.

  (m)   Item 12 (para 25b)

246.  This is a claim formerly pleaded under item 9 (para 25a) for pallets of bricks delivered to the Site by “Ying Kee” in the total sum of HK$92,900.  As a stored item, this claim has already been disallowed (see paragraph 211 above).

247.  However, it is noteworthy that initially, the Plaintiff asserted that all the bricks and materials under these receipts (dated 26 August 2014 to 31 March 2015) were used for construction work at the Site.  It then transpired that his claim was that these bricks were stored at the Site and seized by YLDLO.

248.  On further examination, the Plaintiff said only about 70% (by value) of the bricks remained at Site when they were seized by YLDLO on 18 March 2015. 

249.  Remarkably, no record was produced.  One wonders how the Plaintiff was able to remember the quantity remaining and why it was not explained in the pleadings and witness statement in the first place resulting in the full sum of HK$92,900 being claimed. The Plaintiff’s evidence is not credible.

250.  In light of my findings hereinabove, the items of claims, which are allowed, are as follows:

(a)	The Transaction
	(i) Purchase Price	HK$	700,000
	(ii) Solicitors’ Fee	HK$	7,000
(b)	Legal Costs in dealing with the Police	HK$	10,000
(c)	Costs of Renovation Work at the Site pleaded in paragraph 25a of RRAMSOC
	(i) Item 1 — Po Wing Cement Engineering for building wall at the gate [C/36]	HK$	150,000
	(ii) Item 3 — Intelligent (Service) Engineering Company [C/40] for connection to the water and electricity mains	HK$	96,000
	(iii) Item 3 — Intelligent (Service) Engineering Company [C/41] for building a septic tank	HK$	160,000
	(iv) Item 4 — Yau Shun (Ming) Engineering Co for building the boundary wall marked in the photo [Exhibit P3]	HK$	150,000
	(v) Item 6 — Yuen Fat Computer Technology Company, two receipts for the CCTVs installed at the Site and demolished as shown in the photos [Exhibit P3]	HK$	12,350
	(vi) Item 14 — Hung Cheong Metal Ware Co [C/73] for the costs of a 40A electric box	HK$	1,580
	(vii) Item 18 — Sun May Plastic Advertising Co [C/84] for the signboard installed at the Site	HK$	120
		HK$	1,287,050

251.  For the sake of completeness, the Plaintiff’s evidence as to therole of Lam is not clear.  The claim for Agency Fee in the sum of HK$5,000 allegedly paid to Lam is not receipted.  It is disallowed.

CONCLUSION

252.  There will be judgment for the Plaintiff in the sum of HK$1,287,050 together interest thereon from 13 August 2015 (i.e. date of the Writ of Summons) at 1% above the prime rate of the Hong Kong Bank until the date of the judgment herein and thereafter at judgment rate until payment (see Happy Dragon Restaurant Ltd. v Director of Lands [2014] CPR 143 (at 159H).

253.  I also make an order nisi that the Defendant do pay the Plaintiff’s cost of the action herein.  The costs order nisi will be made absolute upon the expiry of 14 days from the date hereof.

254.  Any party seeking to vary the costs order nisi shall do so by way of written submission served on the opposing party and the Court within the prescribed time in which event the opposing party shall file submission in reply within 7 days.