CHU WAI HA v. TSE KI PO AND OTHERS

DCCJ11039/01

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 11039 OF 2001

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J U D G M E N T

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Introduction

1. The Plaintiff ("P") was the registered owner of Flat A on the 8th Floor, No.494, 494A and 496, Shanghai Street, Kowloon (the "Property"). The 1st and 2nd Defendants ("D1 and D2") as husband and wife together carried on an interior decoration and estate agency business known as Kwan On Property Company ("Kwan On").

2. P alleged that by a provisional agreement for sale and purchase dated 3rd July 1999 (the "1st PASP") she sold the Property to a Mr Chung Chi Kun ("Chung") as a result of D1's misrepresentations and breach of duties as estate agent. P further alleged that D1 altered the 1st PASP to insert D2 as purchaser without her knowledge and consent and by further misrepresentations induced her to enter into a formal agreement for sale and purchase dated 9th July 1999 (the "FASP") to sell the Property to D2.

3. The 4th Defendant ("D4") was the solicitor firm acting for both P and D2 in the relevant conveyance and the 3rd Defendant ("D3") was their clerk. P alleged that D3 and D4 were negligent in, inter alia, failing to properly explain the terms of the FASP to her and to inform her that D2 was the purchaser. P subsequently discovered the alleged deception through her present solicitors and did not complete the purchase of the Property. P claimed for damages for negligence and under the Misrepresentation Ordinance against D3 and D4 and for breach of duties against D4.

4. D1 and D2 denied the aforesaid claims, asserting that Chung was a genuine purchaser who was subsequently, with P's knowledge and consent, substituted by D2. D2 counterclaimed for a refund of the initial deposit of HK$20,000.00 and HK$60,000.00 being decoration costs of the Property she incurred before aborting the purchase of the Property. D3 and D4 denied the allegations of negligence, misrepresentation and breach of duties.

Preliminary matters

5. Counsel for the parties confirmed that all documents in Part D of the trial bundle and the documents exhibited to the witness statements in Part B of the trial bundle were agreed as to admissibility. Save for a few documents where the originals or original copies were produced, counsel also indicated that they were content that I only refer to photocopies of the documents, which the witnesses also referred to at the trial. In this judgment, the documents are referred to "B#" or "D#" with # representing the page number(s).

6. The parties agreed and I also granted leave for the statements of the witnesses as to fact to stand as part of their evidence-in-chief. However, the witness statement of Mr Ip Tai Lui, Leonard was not adduced in evidence as he was not called to give evidence. The witnesses as to fact at the trial were P, D1, D2, Chung and D3.

7. P was slightly confused with the dates of various events which happened quite close in time although the difference was usually not more than one or two days. However, nothing turns on the difference in dates and I have ignored such immaterial discrepancies in the summary of the evidence below.

P's background

8. P is now aged 67 years. She received education up to Primary Three and could read a little Chinese. She could not read well as she had presbyopia and cataract of the eyes. P is the registered owner of her present residence, the Property and another property known as Front Portion, 5th Floor, No.422 Portland Street, Kowloon (the "Other Property"). She had retained Hang Seng Real Estate to look after the tenancies of the Property and the Other Property.

D1 and D2's and Kwan On's background

9. Since 1997 Kwan On operated from Shop No.3, 180 Lai Chi Kok Road, Kowloon (the "Shop"). D1 did interior decoration work and the estate agency business was mostly handled by D2. D1 did not have an estate agent licence and only had limited experience (since 1997) in such work. D2 had been an estate agent (sometimes part-time) for over 20 years. In or about July/August 1999, she only had a temporary estate agent licence and she had not yet taken the requisite courses for obtaining a full licence. She eventually obtained and now holds a full licence.

Relationship between P and D1 and D2

10. P said in 1998 a friend introduced D1 (who lived on a lower floor in the same building as P) to help her decorate the Other Property (more below). D1 and D2 said they already knew P for 10 years or so before the subject transactions when they all lived in the same building. D1 did maintenance work for the building and gratuitously helped P with handyman work in her flat. They occasionally saw one another at a nearby restaurant. D1 and D2 knew P as Mrs Hon but subsequently P asked D1 to call her "Miss Chu". D1 and his family ceased living in the same building in 1997.

Other Property

11. P said in 1998 she retained D1 to decorate the Other Property which was later rented out through Kwan On. She knew Kwan On ran an estate agency business but she did not know who was responsible. D1 and D2 said P visited the Shop and D1's home to discuss the decoration works and she would go to tea together with them. When P indicated she would like to rent out the Other Property after decoration, D1 suggested D2 could help her and D2 assisted in letting out the Other Property. P and D1 had no further contact thereafter until the subject transactions.

Chung's background

12. Chung, born in Panama, returned to Hong Kong in 1997. He wanted to purchase a property within the price range of HK$200,000.00 to HK$300,000.00, which he said he could afford without a mortgage (but he did think of obtaining one). His then monthly income was HK$12,000.00 as a full-time security guard. In 1999 he live in rented premises with his family. In the course of looking for a property, he passed by the Shop in early 1999 and asked Kwan On to keep an eye out for a suitable property. That was how he came to know D1 and D2. D2 said she had brought Chung to view other properties, but Chung said he had not viewed any property other than the Property. He now works as a purchaser for a restaurant.

Decoration of the Property

13. P said in 1970 she purchased the Property which was let to a tenant until he left in June 1999. During the tenancy, she seldom went to the Property. In mid-June 1999, P decided to renovate the Property before renting it out again, so she sought D1's help. D1 gave her a written quotation dated 23rd June 1999 for HK$83,760.00. P read the quotation, insisted on adding "including scaffolding" to item 8 of the works and marked with a cross in the margin against each of the items to be deleted. D1 then gave P a fresh quotation of the same date in the sum for HK$62,000.00 which she agreed. She required D1 to specify (which he did) on the second quotation that the works were to be completed within 40 days. D1 said he then purchased the necessary materials.

June 1999

14. P said she took D1 to inspect the Property. After such a long time, she accepted that the locality was run down. D1 said P was afraid to go up to the Property. Although P eventually did so with her son-in-law and D1, her daughter refused as there was a brothel in the building. P denied knowledge of the renovation works on the external wall of the building, saying she only knew after this action was commenced. P gave D1 the keys of the Property. D1 said P was anxious to change the lock, and he did so and gave her a key to the new lock. P denied ever receiving such key, saying there was no reason to give her such key as decoration works were yet to be carried out. P paid the decoration deposit of HK$20,000.00 in cash to D1 at the Shop on 29th June 1999 and D1 gave her a receipt of the same date (D9).

Intention to sell the Property

15. P said D1 told her that "陀地" (gang people) and debt collection companies had gone to the Property to look for the former tenant and he dared not work there. But he refused to report to the police and told her not to do so herself because of the gang people and she is a woman. P said she wanted to let Hang Seng Bank sell the Property as she was troubled by what he said. D1 said he could sell the Property for her at HK$480,000.00 and she agreed. P said originally she wanted to rent out the Property and denied she wanted a quick sale. The suggestion of HK$480,000.00 only appeared reasonable to her then because D1 said so many troubling things. P consulted her relatives over D1's suggestion and they all trusted D1's recommendation.

16. On the other hand, D1 said people did come to the Property to collect money allegedly owed by the former tenant. He asked P whether it was necessary to report to the police but she declined saying it was too bothersome to give a statement. P was not confident of the property market and would like to sell the Property, which she said was old and could not be sold for very much. She said the Property could be sold even during decoration works and the asking price would be lower. It was evident that she was bothered by the brothel in the building and dissatisfied with the Property. P knew of the repairs to the building as a notice was posted up at the lift lobby. When P asked D1 to sell the Property for her, he did not suggest any value but said that with the brothel in the building, repairs to be made to the building's external wall and no interior decoration, the price would likely to be lower than usual. P suggested HK$480,000.00 as the asking price but indicated that she would sell at HK$400,000.00 and the price was negotiable.

Sale of the Property to Chung

17. D2 handled the marketing of the Property. D2 confirmed with P and recorded her instructions in her book. She placed an advertisement of the Property at the display window of the Shop and telephoned potential purchasers. D2 brought a few potential purchasers to view the Property. D1 had removed the internal partitions and furnishings, so the Property was unattractive and the rubbish was left inside the Property. There was a pipe located at the ceiling and D1 and D2 recalled that potential purchaser(s) gave bad comments on the condition of the Property, including the obstruction and appearance of the pipe and the brothel in the building. None showed an interest in purchasing the Property except Chung.

18. In or about June 1999 D1 telephoned Chung to tell him about the Property and invite him to a viewing. Chung went to the Shop and D2 brought him to view the Property. D1 was there. Chung said he did not view the Property clearly and with the partitions and decorations gone, it was difficult to visualise the original state. He saw a long pipe down the length of the Property. He counter-offered HK$300,000.00 because repairs to the external wall were required and any purchaser had to renovate the Property.

19. P said D1 reported to her about Chung's counter-offer. In paragraph 8 of her witness statement dated 23rd February 2002 ("P's statement"), P said D1 told her his wife commented that the Property was not worth HK$200,000.00. P requested an increased offer and subsequently D1 told her that the potential purchaser increased the offer to HK$320,000.00 (or HK$310,000.00 as referred to in paragraph 8 of P's statement) to which she agreed. Later D1 told her the potential purchaser changed his mind and would only pay HK$300,000.00 to which she also agreed as she thought HK$300,000.00 was reasonable in light of D1's disturbing information about gang people.

20. On the other hand, D1 and D2's case was that D2 rang P on or about 1st July 1999 to ask whether she would reduce the asking price to which P said she would let D2 have instructions later. D1 and D2 stated that in order to have a quick sale, P instructed D1 or D2 (there being some conflict in evidence who did this) on or about 3rd July 1999 to reduce the price to HK$310,000.00 provided that the purchaser agreed to bear the repair costs of the external wall and common parts of the building. On the same day, D1 or D2 (there being again some conflict in evidence on who did this) reverted to Chung who insisted on HK$300,000.00. D1 asked Chung to attend the Shop that evening for further discussions and he reminded Chung to be prepared to pay the initial deposit if a deal could be struck.

3rd July 1999

21. Chung came to the Shop in the evening of 3rd July 1999 and had a direct telephone discussion (which took 10 to 20 minutes) with P. Chung insisted on HK$300,000.00 as he was responsible for the repair costs of the external wall and the removal of the unauthorised pipe. P finally decided to sell the Property at HK$300,000.00. As they already had an oral understanding and it was late, P declined to attend the Shop that evening to sign the provisional agreement and to collect the deposit, which she would do so the following day. There is some discrepancy in evidence as to whether it was D1 who wrote out the 1st PASP (D10) or whether D2 prepared this. D2 clarified that D1 wrote the 1st PASP and she had earlier conducted a land search. Chung signed the 1st PASP and paid a deposit in the sum of HK$20,000.00 to D1. P also confirmed she spoke with Chung by telephone on 3rd July 1999 although she said there were no negotiations over the price. P said D1 asked her to go to the Shop to sign the 1st PASP and to collect the initial deposit but she declined as it was late.

4th July 1999 - P signed 1st PASP

22. P went to the Shop with her friend in the afternoon of 4th July 1999 and was told that Chung was the purchaser. P said she glanced at the 1st PASP cursorily and read the first page for about 8 to 10 minutes but could not read or understand some of it. When she tried to read the second page, D1 stopped her and proceeded to explain some of the terms to her. It was D1 who suggested the contents of clause 13 of the 1st PASP and asked her to let Chung have the keys to the Property to carry out decoration works pending completion. At D1's request, P signed at two places on the 1st PASP. Then D1 gave her a page of the 1st PASP (exhibit P1). She did not notice that the Chinese character "惠" of her name was wrongly written as "慧". D1 gave P the initial deposit of HK$20,000.00 in cash and said that she would receive a further deposit of HK$80,000.00 on 12th July 1999 and the balance of the purchase price of HK$200,000.00 on completion of the sale and purchase on 6th August 1999.

23. Although both D1 and D2 confirmed that the 1st PASP had been explained to P and the initial deposit of HK$20,000.00 received from Chung was given to P, there is some discrepancy in evidence as to whether it was D1 or D2 who attended to the same. D2 said she asked P about lawyers and P told her she had her own lawyers.

4th July 1999 - Chung's commission

24. D1 notified Chung P had signed the 1st PASP and he should pay his share of the commission of HK$6,000.00, which he did in the afternoon of 4th July 1999. He was given a receipt dated 4th July 1999 (D460) and a carbon copy of the 1st PASP (exhibit D2) signed by P. Chung stated that he discovered the 1st PASP only contained his Chinese name and not his formal English name. He did not inform D1 of this because the 1st PASP clearly stated his Hong Kong identity card number.

4th July 1999 - evening

25. D1 and D2's case was that in the evening of 4th July 1999, P rang D1 to ask him to request Chung to bear the decoration costs of HK$20,000.00 already paid by P to D1. D1 rang Chung who rejected P's request, saying it was unreasonable and the 1st PASP had been signed. He asked D1 for P's telephone number and called P to object. P said the decoration materials would be useful to him. Chung ended the call when he did not get any satisfactory result. After a short while, Chung called D1 saying that he wanted to call off the deal. D1 used the Shop's three-way telephone conference device to call P. P continued to insist that the decoration materials would be useful to Chung. Chung said he purchased the Property as is and refused to pay any extra sum. He threatened not to purchase the Property. P said she would forfeit the deposit if he did so. Chung said it was P who was in repudiation. P complained that taking into account the decoration deposit paid by her, the net sale proceeds would be HK$280,000.00. D1 tried to mediate between the two. Chung said he no longer wanted to purchase the Property because P was too troublesome and he was worried there might be other problems with the Property.

26. P suddenly asked D1 to buy the Property and refund to her the decoration deposit as he did not yet have his own property and the decoration materials would be useful to him. D1 did not immediately agree but asked D2 who was standing nearby. D2 let him decide. D1 then agreed to purchase of the Property in D2's name in place of Chung on the same terms and at the same price. It was agreed that the 1st PASP would be cancelled and the initial deposit of HK$20,000.00 paid under the 1st PASP would be refunded to Chung by D1. Chung wanted a refund of the commission paid by him too but D1 insisted otherwise. D1 said a lot of effort had gone into bringing about the deal between Chung and P. Eventually P agreed to reimburse D1 for Chung's share of the commission.

27. After Chung was off the telephone, D1 continued to speak with P to ask her to come to the Shop to sign a new provisional agreement for sale and purchase with D2 as purchaser. To simplify matters, P suggested D1 could cross out the name of Chung and insert D2's name in the 1st PASP and she would acknowledge such amendments. After all, the price and terms of the sale were the same as the 1st PASP. D1 said he did not think much about this as he had known P for a long time and trusted her.

28. P denied the aforesaid telephone conversations or verbal agreement. She only had one telephone conversation with Chung on 3rd July 1999. All along, she believed Chung was the purchaser of the Property.

5th July 1999 - 2nd PASP and refund to Chung

29. On 5th July 1999, D1 wiped out the name of Chung and his particulars and signature in the 1st PASP and inserted D2's name and identity card number. D2 signed on the amended 1st PASP (the "2nd PASP") as purchaser (exhibit D3 and D459). Neither D1 nor D2 realised the character "惠" of P's name in the 2nd PASP was wrongly written as "慧". On 5th July 1999, D1 refunded the initial deposit of HK$20,000.00 to Chung who gave a receipt (D461) and returned the carbon copy of the 1st PASP to him. Chung's evidence was that he could not remember whether he threw away the copy 1st PASP and he did not know where it is now. On or about 10th July 1999, D1 refunded Chung's share of the commission of HK$6,000.00 to him and Chung signed a receipt (B172). After this, Chung did not know anything more about the Property.

D3's background

30. D3 had 13 years' experience as a conveyancing clerk and had joined D4's Property Department in 1990. He handled conveyancing transactions assigned to him subject to the overall supervision by the solicitor in charge of the transaction. Prior to 5th July 1999, he did not know D1 or D2.

5th July 1999 - approach to D3 and D4

31. D2 telephoned D3 on 5th July 1999, introducing herself as "Miss Hung" and saying she had just purchased the Property. She said a friend whom she did not name recommended him and she asked him to handle the conveyance. D3 asked her to fax the provisional agreement to him. D2 said she informed D3 that since she was the purchaser, she did not mind that the signing of the FASP be put forward. D3 made no mention of this in his evidence. D2 also gave evidence that she told D3 her friend was an estate agent colleague and her company's name was Kwan On but D3 denied this, saying D2 did not say or do anything to make him think that she was an estate agent. There is some conflict in D2's evidence as to whether she informed P that D4 had been instructed to act for them or whether P contacted D1 on the same.

32. D3 said D2 told him the vendor was "Chu Wai Ha" and the purchase price of the Property was HK$300,000.00, and she enquired about legal costs. D2 also told him the dates for signing the FASP and completion. D2 did not give him her address. The 2nd PASP was not faxed to him on that day. D3 informed his supervising partner Mr Ip of D2's instructions and then conducted a land search of the Property (D133-135).

7th July 1999

33. P said (and as pleaded in paragraph 18(k) of the Amended Defence and Counterclaim of D1 and D2) that on 7th July 1999 D1 rang to inform her that the date for signing the FASP was brought forward. He arranged for P to attend the Shop at about noon on the following day and asked her to bring the title deeds. D2 disagreed with this in her evidence saying it was P who wished to put forward the signing of the FASP and that P's son-in-law would accompany her to do so. D2 had no problem with putting forward the signing of the FASP if D3 could prepare it in time.

8th July 1999 - D2's first visit to D4

34. On 8th July 1999 D2 passed by and attended D4's offices and gave the cashier order for the further deposit of HK$80,000.00 to D3, saying that the parties would like to sign the FASP the following day. Neither realised the character "慧" in P's name on the cashier order was wrong. D3 reminded her to fax the provisional agreement to him. D3 took a copy of D2's identity card and noted her contact telephone number (D208). D3 added that D2 said the vendor would like to instruct D4 to act for her as well. He had no problem as it was acceptable for the same firm to act for both parties in a conveyance for less than HK$1,000,000.00.

8th July 1999 - P's visit to the Shop

35. P said that she went to the Shop on 8th July 1999. Chung was not there and D1 said Chung had already given the further deposit to the solicitor's firm. As she did not know how to go to the solicitor's firm, D1 asked D2 to accompany her there. They asked her to bring the title deeds to D4's offices herself. They reviewed P's title deeds and realised that the Chinese character in P's name should be "惠", so P's name in the cashier order was wrong. D1 and his wife made several telephone calls to the solicitor's firm and the bank. P took no heed and later left.

36. On the other hand, D1 and D2 said P came to the Shop on or about 8th July 1999 and paid HK$6,000.00 in cash being her share of the commission. D1 issued a receipt to her (D11). P denied this. D1 and D2 confirmed that although P requested D2 to arrange for delivery of the title deeds to D4, D2 told P to bring the title deeds to D4 herself when she signed the FASP. D2 said P did not come to the Shop by appointment on 8th July 1999 but she brought the title deeds to the Shop because she just took them out from the Bank. D2 said D1 informed P that the FASP would be signed on 9th July 1999.

37. D3 received the faxed 2nd PASP in the afternoon twice at 3:13 p.m. (exhibits D4a and D4b) and at 3:15 p.m. (exhibit D5) from Kwan On. He said some clients do ask estate agents to fax the provisional agreements to him without production of the originals. P's name has been amended (unknown to D3) and was correct in the faxed 2nd PASP. But when D3 proceeded to prepare the FASP, he used the wrong character "慧" as appearing on the cashier order and did not pick up the mistake until after both parties signed the FASP. D2 said that it was discovered from the title deeds that the correct character in P's Chinese name should be "惠" and not "慧", so she collected the cashier order from D3/D4 in the afternoon of 8th July 1999 and obtained a replacement cashier order from the bank in P's correct name. D2 also gave D3 a photocopy of the 2nd PASP when she went to collect the cashier order. D3 suggested that the FASP be signed in the afternoon on the following day as he would be less busy.

8th July 1999 - evening

38. P said that in the evening of 8th July 1999 she telephoned D1 to tell him that her son-in-law could take her to D4's offices the following morning to sign the FASP. D1 said he had already made an appointment for her to attend D4's offices in the afternoon and D2 would accompany her there. D1 said there was no need for Chung to come. D2 also recalled that D1 requested her to accompany P to D4's offices to sign the FASP on 9th July 1999 because P's son-in-law was busy.

9th July 1999 - morning

39. D2 took the replacement cashier order to D4's offices in the morning of 9th July 1999 and signed the FASP after D3 explained to her generally of each term contained in the main body and the schedules of the FASP, including the names of the parties, the purchase price of the Property and the payment of the deposits, etc. D2 also said D3 referred to the address of the Property, the completion date and the balance of the purchase price to be paid then. D3 said he asked D2 whether she understood and she said she did. She then signed two copies of the FASP (D12-27). D2 said she saw her Chinese name on the FASP. The whole process took 10 odd minutes. D2 told D3 that P would attend their offices later in the day to sign the FASP. Then she returned to the Shop. D3 said he could not remember whether he asked D2 her address.

9th July 1999 - afternoon

40. P said she went to the Shop after lunch but Chung was not there. D1 said Chung had already signed the FASP and given a replacement cashier order to D4 earlier that morning. D1 introduced D2 as his wife "Miss Hung" and not as "Hung Kwan". P did not know her name. D2 accompanied P to D4's offices in Central. At D4's offices, D3 gave P his name card (B39) and she gave him the title deeds of the Property. He took a photocopy of her Hong Kong identity card. In the room, D2 was seated to P's right but did not say anything. With the FASP (D12-27) facing him, D3 proceeded to explain the FASP, which explanation was similar to the contents of the 1st PASP. The terms explained included the purchaser being responsible for the shared costs of the repairs of the building, the purchaser being granted a licence to carry out decorations, the name of vendor being herself, the purchase price, the initial deposit and further deposit received or to be received, the vendor not being responsible for the pipe at the Property, the date when the balance of the purchase price was payable, and what events constituted repudiation and the effect of black rainstorms and typhoons on the completion date. However, D3 did not tell P the name of the purchaser whom she still thought was Chung. Under cross-examination, P said D3 asked P whether she understood the terms and she said she understood. However, under further cross-examination, P said she could not remember and still later denied the same. She did not read the FASP. Afterwards, at D3's instructions, she signed on the FASP (D25). She did not see D2's signature on the FASP. D3 did not ask for her telephone number. She was given a cashier order in the sum of HK$80,000.00 for the further deposit. P left the room and was given a receipt for the title deeds (D28).

41. On the other hand, D2 said she accompanied P to D4's offices in the afternoon of 9th July 1999 and introduced her to D3. D3 said he asked D2 why she came again and she said P did not know the way. It seemed to D3 that D2 and P knew each other as they chatted in a familiar manner. He brought P and D2 to a room. He left the room briefly to make a photocopy of P's Hong Kong identity card. He was not sure whether he asked P for her copy of the provisional agreement but ordinarily he would have done so. However, P did not show it to him.

42. D3 said he sat on one side of the desk and D2 and P sat next to each other opposite him. One original copy of the FASP was placed on the desk facing P and the other original copy faced D3. Both copies contained D2's name. D3 said he told P that D4 represented both P and D2. P did not expressly confirm such instructions but she did not say she did not understand or make any express objection. P asked about legal fees and D3 responded to her query. She had no comments on the fees. D3 was cross-examined on various provisions on solicitors' conduct in respect of joint representation and the taking of instructions in the "Hong Kong Solicitors' Guide to Professional Conduct" on which principles he took no issue.

43. D2 and D3 said that D3 then proceeded to explain to P in general terms each of the terms contained in the body of the FASP page by page. D3 said that some explanations were more detailed (eg, the completion date) and other terms were mentioned briefly. However, he would not exclude any term from the explanation. Following this, D3 explained to P the contents of the Schedules to the FASP (except the Third Schedule which was quite technical), including reading out the names of the parties, the payment details and special terms as set out in the First Schedule. He also referred to clause 23 whereby the purchaser was granted a licence to occupy the Property for decoration purposes. D3 asked whether the keys to the Property had been handed over and both D2 and P answered him that they had been handed over. D3 said he did not or he had forgotten whether he had read out the addresses of the parties. D2 said P asked when she would receive the balance of the price and D3 explained that on date of completion she could go to D4's offices to collect the same. D2 recalled D3 explained the address of the Property, the names of the parties, the date of completion, the purchase price and the effect of black rainstorms and typhoons on completion as well. He also turned over many pages of the FASP in the course of explanation. D2 confirmed that she heard D3 say the name of the purchaser was "Hung Kwan". P gave no reaction when he mentioned this.

44. D3 said that at the end of his explanations, he told P that the FASP would become binding once it was signed and exchanged. D3 asked her whether she had any questions and whether she understood. P indicated she had no questions and she understood. D3 then turned to the page where D2 signed the FASP to show P that the purchaser had signed. P then signed the two copies of the FASP. D2 and D3 said the explanation took 10 to 20 minutes. D3 said he also asked for P's contact telephone number. But P said he should contact D2 as she was rarely at home. P did not ask for a copy of the FASP. Had she requested, she would be provided with a copy subject to payment of copying charges. D3 said that in Hong Kong, copies of such documents would normally be provided only on request.

9th July 1999 - refund of the decoration deposit

45. D1 said on 9th July 1999 he refunded to P a cash sum of HK$14,000.00 being the decoration deposit of HK$20,000.00 less HK$6,000.00 being Chung's share of the commission. D1 said P signed a receipt (exhibit D1 and D462) for the same. P denied this and said D1 told her on 9th July 1999 that Chung would like D1 to continue with the decoration works at the Property, and that D1 would refund to her the decoration deposit of HK$20,000.00. P said this was right because the decoration works were for the benefit of Chung. But D1 would deduct a sum of HK$6,000.00 as her share of the commission for the sale of the Property. So D1 paid her the sum of HK$14,000.00 and gave her a receipt for HK$6,000.00 (which was dated 8th July 1999) (D11) for P's share of the commission. When P was shown a carbon copy receipt dated 9th July 1999 (D462 and exhibit D1) for the sum of HK$14,000.00, P confirmed that the signature thereon was hers and she received this receipt. But on the second day of her cross-examination, she denied have received this receipt. She said that she did not pay attention to what was written on the receipt. Upon further cross-examination, she said she only received one receipt, ie the receipt dated 8th July 1999 for the sum of HK$6,000.00 (D11) and she had never agreed to pay Chung's share of the commission.

Post 9th July 1999

46. P said after discussion with her niece who questioned her over the low price and the joint representation for the vendor and the purchaser, her niece suggested P to engage her own solicitors, so Messrs Bobby Tse & Co ("BTC") were instructed. Under cross-examination, P said she did not know her niece's job and denied that her niece worked at a solicitor's firm.

47. On 29th July 1999 (D29-30), BTC requested D4 to return the title deeds which D4 did on the next day (D166-167). D3 prepared the assignment and telephoned D2 to inform her of P's change of solicitors. The FASP was delivered to the Lands Registry for registration on 4th August 1999 (D171-173). D2 deposited the balance of the purchase price into D4's client account on 5th August 1999 and signed the assignment. D4 forwarded the draft assignment to BTC (D34-40).

48. By a letter dated 5th August 1999 (D32-33) to D4, BTC alleged that P only sold the Property to Chung and not D2, and that she was not advised of the contents and legal effect of the FASP before being asked to sign the same. It was further suggested that the Property was undervalued and the transaction proceeded with great haste. It was claimed that D4 was in breach of their duties to P and that P was entitled to avoid the FASP. D3 said that he had never heard of Chung prior to the receipt of this letter. D3 did not consider the 2nd PASP improper or forged as both D2 and P signed the FASP and he did not know the 2nd PASP had been amended. The FASP (which was delivered for registration on 4th August 1999) could not be affected by the 1st PASP which was unregistered.

49. D2 and Mr Ip instructed D3 to proceed with completion, so the assignment duly signed by D2 (D46-51) together with the cheque for the balance of the purchase price (D52) were sent to BTC on 6th August 1999 (D43-45). D4 also reverted to BTC by letter of the same day (D41) denying the allegations against them, enclosing a copy of the 2nd PASP and confirming that the FASP had been explained to P who had no objection or query.

50. BTC enclosed in their reply letter dated 6th August 1999 (D53-54) a copy of the 1st PASP showing Chung as the purchaser and alleged that D3 did not inform P of the purchaser stated in the FASP nor fully explain the terms of the FASP. P was therefore not bound by the FASP and the cheque and assignment were returned to D4. D3 then telephoned and informed D2 of this. She told D3 that P had in fact agreed to her replacing Chung as purchaser and that she knew Chung. D3 assumed from this that Chung was her friend. D2 told him she might instruct another firm of solicitors. D2 also said that when D3 rang her to say P did not complete the transaction, he probably said something about the name but she was in the street with a customer and did not hear clearly. Later she called D1 and he tried to telephone P many times to find out why she did not complete but no one answered.

D1's visits to P

51. P said in the evening of 7th August 1999, D1 went to her home. He was apologetic and said that the purchaser Hung Kwan was in fact his wife. He said that if he had disclosed the fact earlier on, he might not be able to get the commission from P. It was up to her to decide whether to proceed with the sale. She said that she would discuss with her relatives. On the other hand, D1 said P told him that upon discussion with her niece who worked at a solicitor's firm she found the price of HK$300,000.00 too low and she would not complete the sale unless D1 and D2 paid an additional sum of HK$200,000.00. D1 said it was unreasonable and against the terms of the agreement. She asked him to consider and let her have his reply. D2 said when D1 told her, she also rejected the proposal and she let D1 handle this.

52. P admitted in cross-examination that D1 suggested an increase in price of HK$200,000.00 and she had to consult her relatives on this. She did not mention this to her solicitors or the police because she forgot. But before she came to a decision, he visited her again in the evening of 9th August 1999 to tell her off. She said D1 looked fierce and said she had to complete the conveyance and bear all legal costs. If not, both D2 and Chung would sue her. She was angry because D1 tried to blame her and shouted at her. She said her solicitors would look after this matter. D1's case was that after discussing with D2, they considered it was unreasonable for P to repudiate the agreement and impose additional terms. So he went to P's home again on 9th August 1999 to reiterate his position and give her another chance. Legal proceedings would be unavoidable if she persisted in her position. P threatened to report to the police and closed the door. Thereafter D2 asked her solicitors to handle this matter.

Post 9th August 1999 events

53. P said thereafter D1 constantly telephoned her home to threaten her. She reported to the police and gave a statement to them on 10th August 1999 (B45-50). D3 gave a statement to the police on 21st August 1999 (B159-162) and Chung also did so in November 1999 (B174-176). The police contacted D1 and D2 for investigations but they declined to give statements. No prosecution followed the police investigations.

54. D3 then realised that the character "惠" of P's name in the FASP was wrongly written as "慧". As it was common practice for the firm who initially submitted the document for registration at the Lands Registry to submit the amendment for re-registration, D3 amended the FASP (D149-165) and submitted the same for re-registration. D4 returned the balance of the purchase price of HK$200,000.00 to D2 (D177-178 and D463). D2's present solicitors, Messrs Kenneth C C Man & Co ("KMC") took over the matter from D4 and BTC was so informed on 12th August 1999 (D59).

55. Paragraph 23 of P's statement stated that D1 rang P on 14th August 1999 to say that the police were investigating the theft of air-conditioners at the Property, that he had changed the lock of the Property and that she had to pay for a lot of renovation works done by him. D1 denied such telephone conversation. P said that she could not gain entry to the Property because the lock had been changed. There was no further direct contact between the parties.

56. KMC wrote to BTC by letter dated 17th August 1999 (D60-61) stating, inter alia, that P was well aware that Chung has nominated D2 to enter into the FASP and the alteration of the 1st PASP was made with P's consent. Further, the FASP has been interpreted to P. To expedite completion of the sale and purchase of the Property, if P so requested, D2 would procure Chung to confirm the nomination if so requested by P and a draft Confirmatory Deed (purporting to confirm that the initial deposit was provided by D2 and that the Property was purchased by Chung as agent for D2) was enclosed (D62-66). In her evidence D2 denied that Chung was her agent in the purchase of the Property.

57. By three letters all dated 18th August 1999 to D1 (D67-70), D4 (D71-72) and KMC (D73-74) respectively, BTC stated the background of this matter which was largely similar to P's evidence. It was alleged, inter alia, that P intended to return the further deposit of HK$80,000.00 to the rightful owner. BTC also demanded that possession of the Property be surrendered to P. BTC further alleged that D4 was aware of the correct identities of the relevant parties and P reserved the right to apply to court to declare the FASP null and void.

58. BTC by a letter dated 21st August 1999 (D79-80) to KMC requested details of the FASP and asked whether D2 would vacate the registration of the FASP and deliver up vacant possession of the Property. BTC said that the initial deposit of HK$20,000.00 was paid by Chung and D2 had no right to it.

59. By a letter dated 27th August 1999 (D83-88), KMC wrote to BTC setting out D1 and D2's position in relation to this matter, which is largely similar to their evidence. KMC again tendered the assignment and their cheque for HK$200,000.00 for completion. KMC confirmed that D2 was then occupying the Property but apart from D1 and D2, the Plaintiff also had the keys to the Property. In their reply of the same day (D97-105), BTC said the FASP had been avoided. Further, the locks to the Property had been changed and P did not have the keys. KMC wrote to BTC on 31st August 1999 (D106) threatening to commence legal proceedings to seek specific performance of the FASP and to claim for damages and/or other relief. Under cover of a letter dated 16th December 1999 (D444), BTC refunded to D2 through KMC the further deposit in the sum of HK$80,000.00. After a series of correspondence between BTC and KMC in February and March 2000, in which BTC insisted P did not have the key to the Property and KMC insisted that she did, keys to the Property were given to BTC on 8th March 2000 (D449).

60. BTC in their letter to KMC dated 24th August 2000 (D450) noted that D2 treated the FASP as terminated and did not claim for specific performance in her pleadings. BTC threatened to apply to vacate the registration of the FASP. No further correspondence between solicitors on this subject matter was produced in these proceedings. Further, the registration has not been vacated to date.

Decoration works at the Property

61. D1 said he continued with the decoration works at the Property at his own convenience when he had no other jobs. The decoration was of better quality and in accordance with his own designs as the Property would be his home. He said he spent about HK$60,000.00 in the decoration works. He had made partitioning for the rooms including the kitchen, repaired the ceiling, dismantled old electricity and water equipment, etc. The decoration works lasted until 9th August 1999. He did not keep the receipts. D2 said that she had not given notice to quit to their then landlord yet because it depended on the progress of D1's decoration works. D2 said there was no need for her to go to the Property (and she seldom did) as D1 was in the decoration trade.

Valuation of the Property

62. For reasons set out below, it is unnecessary to set out the expert valuation evidence in any detail. Mr Brian Law of Prudential Surveyors Int'l Ltd was P's expert and his valuation of the Property as at 9th July 1999 and 6th September 2002 were HK$899,070.00 and HK$644,985.00. A main feature of his comparables was the presence of lifts but the fact of a brothel in the subject building was not reflected in his report. He suggested that such factor would only merit a 10% impact. He made no internal inspection of the Property. On being shown the photographs of the Property at C270-272, he said the downward adjustment to value for the below average condition would be the costs of the renovation and repairs, which he assessed to be about HK$30,000.00 to HK$50,000.00 and a further HK$10,000.00 for fixing the pipe. He would also give 1-2% adjustment for the nuisance of the repairs and renovation.

63. D1 and D2's expert, Mr Mr Lee Chun Fat of Lee Mark & Associates, relied on comparables which have brothel(s) in the building, which he submitted was a key feature. Taking into account the repair costs, he arrived at a valuation of HK$326,311.00 for 3rd July 1999. Mr Lee only allowed 5% adjustment for non-availability of lift service of the comparables as lift service was not significant in this case where residents had to walk up from the ground floor through the cockloft to the 1st floor to take the lift. He had not been asked to assess the value of the Property for 2002 but thought the depreciation in value would only be 10-20% as ultimately there would be the scrap value of the land.

Claim against of D3 and D4

64. Ms Ip, counsel for P, in her closing submissions confirmed that P no longer relied on misrepresentation as an independent cause of action against D3 and D4 but only as a particular of the alleged negligence and breach of duties. P's case on negligence against D3/D4 can be summarised as follows : (a) D3 did not inform her D2 was the purchaser and did not explain all the terms of the FASP, and (b) D3 lacked reasonable care and skill which is suggestive of his negligence in handling the subject conveyance. Mr Liu, counsel for D3 and D4, very properly raised the point that (b) had not been pleaded when Ms Ip embarked on this line of cross-examination. Ms Ip attempted to circumvent this by submitting that such evidence was collateral evidence of D3's "slapdash" approach to handling transactions which was probative of the matters complained in (a) above.

(1) Explanation of the FASP

65. It has never been P's case that D3 in any way colluded with D1, D2 and/or Chung or that he was a party to any deceit or fraud on P. I find D3 to be honest and reliable. He is cogent in his evidence and forthright in his response under cross-examination. He is a credible witness and I accept his evidence wherever it contradicts P's evidence. I do not propose to set out all the reasons for such finding but the main reasons were :

(a) D3 did not know D1 or D2 prior to the subject conveyance. Indeed, he had never met or spoken with D1 throughout the transaction. There is also no evidence that D3 received or would receive a benefit out of the subject conveyance. There is no reason for him to treat the subject conveyance differently from other transactions handled by him.

(b) D3 had 13 years' experience as a conveyancing clerk. The FASP was in D4's standard form, a document D3 was well familiar. He should be well aware that the main entries were in the First Schedule. It is unlikely that he would have would have missed a key entry there such as the name of the purchaser.

(c) Even P accepted that quite a number of matters in the FASP were explained to her by D3. Although she referred to them as information from the 1st PASP, some matters explained (even on her case) were clearly from the FASP, eg the effect of typhoons and black rainstorm warnings on completion. There is no reason why D3, who had explained all these matters, should omit or suppress the name of the purchaser in the FASP. Two matters are of note.

First, I agree with Mr Liu's submission that even on P's case, the explanations given by D3 appeared to be largely drawn from the First Schedule of the FASP. The FASP was itself a standard document and the material particulars of the subject conveyance were contained in the First Schedule. As explained in (b) above, it is implausible that D3 would omit reference to the name of the purchaser.

Secondly, D3 had never seen the 1st PASP and would have no idea at the time of the signing of the FASP that the identity of the purchaser would assume a pivotal role in this case. I find the coincidence of D3 failing to mention this one crucial item in the FASP whilst explaining other material terms implausible.

(d) D3's evidence is largely corroborated by D2's evidence. I find that the minor discrepancies in their evidence as submitted by Ms Ip do not affect the credibility of D3's evidence. I will deal with the credibility of D2 as a witness below.

(e) I therefore find on the balance of probabilities that D3 had informed P that D4 acted for both the vendor and the purchaser in the subject conveyance (to which P had no objection), that he had informed P the name of the purchaser was "Hung Kwan" (whom P knew was D2) and that he had materially explained the contents of the FASP to P as stated in his evidence.

66. I reject P's pleaded contention that her "implicit" instructions to D3/D4 were to sell the Property to Chung in accordance with the 1st PASP. I find that such were not P's intentions (which I will deal with below) and if I am wrong, I find that there is no or no sufficient evidence to suggest that D3/D4 knew or ought not have known of the same. I will also deal with the credibility of P as a witness below.

67. Ms Ip further submitted that the FASP contained two important errors, namely, the error in P's name (which error could have been avoided had D3 checked the 2nd PASP or P's identity card or with P) and the error in D2's address. D3 frankly admitted the former error and gave evidence that it was the result of his omission in checking the 2nd PASP or replacement cashier order or P's identity card. However, as evident from subsequent events, it was a rectifiable error and was indeed rectified. I am of the view that this itself does not constitute negligence on the part of D3. Further, since it was not disputed that it was D3 who gave a verbal explanation, the error would not necessarily have been avoided as the pronunciation of the characters "惠" and "慧" is the same. P did not notice the same error in the 1st PASP.

68. As regards the latter error, D3 said he had no recollection whether he mentioned the addresses of the parties and their Hong Kong identity card numbers but usually he would not explain these matters. Documents need only be materially explained (and I find D3 did so explain the FASP to P) and there is no need for word for word interpretation. P was (and earlier in the day D2 also was) present and willing and it should be remembered that D3 had not seen the 1st PASP and would not have the hindsight awareness that Chung also stated such address as his in the 1st PASP. In any event, as set out below, I have found P agreed to sell the Property to D2. I cannot see how these errors caused P any loss.

(2) Reasonable care and skill

69. Ms Ip submitted that D3/D4 ignored their fiduciary duties owed to P and in breach of various principles and commentaries in the "Hong Kong Solicitors' Guide to Professional Conduct" by failing to confirm instructions from P and obtain her consent for joint representation. Although these complaints have not been pleaded, Ms Ip argued they are probative collateral evidence in showing D3's general conduct.

70. As aforesaid, Mr Liu objected to Mr Ip's cross-examination on this aspect. Further, in his closing submissions, Mr Liu elaborated that the complaints were not part of P's pleaded case and as P chose to stand on her existing pleadings, P ought not make these allegations now "by the backdoor". Ms Ip urged the court to consider the evidence and not be bound by the "straightjacket" of the pleadings.

71. I refer to Hong Kong Civil Procedure 2002 Vol.1 para.18/12/1 at pp.284-285 and para.18/12/27 at p.290 as follows :

"In Aktieselskabet Dansk Skibsfinansiering v. Wheelock Marden [1994] 2 H.K.C. 264 Bokhary J.A. said at 269E-270E that the functions of properly particularised pleadings are as follows :

(1) to inform the other side of the nature of the case that they have to meet as distinguished from the mode in which that case is to be proved;

(2) to prevent the other side from being taken by surprise at the trial;

(3) to enable the other side to know with what evidence they ought to be prepared and to prepare for trial;

(4) to limit the generality of the pleadings, the claim and the evidence;

(5) to limit and define the issues to be tried, and as to which discovery is required;

(6) to tie the hands of the party so that he cannot without leave go into any matters not included (although if the opponent omits to ask for particulars, evidence may be given which supports any material allegations in the pleadings).

It is not the function of particulars to take the place of necessary averments in the pleading ......

Whenever either party is imputing fraud, negligence, or misconduct to his opponent, the facts must be stated with especial particularity and care ......"

"Particulars must always be given in the pleading, showing in what respects the defendant was negligent. The statement of claim "ought to state the facts, upon which the supposed duty is founded, and the duty to the plaintiff with the breach of which the defendant is charged" ...... Then should follow an allegation of the precise breach of that duty, of which the plaintiff complains. And lastly, particulars of the injury and damage sustained."

The above is trite law. P has made strong allegations of fraud, deceit and negligence in her pleadings. It is incumbent on her to plead with particularity the necessary averments of her case. I agree that P should not be allowed to rely on the present arguments raised without pleading the same. Nevertheless, I will consider Ms Ip's arguments for the sake of completeness.

72. Rule 5C of the Solicitors' Practice Rules permits joint representation for conveyancing transactions for value under HK$1,000,000.00. Ms Ip accepted P implicitly consented to D3/D4 to act for P in the subject conveyance. I have found on the balance of probabilities that D3 had informed P that D4 represented both the vendor and purchaser and P had raised no objection. Indeed, she even queried D3 on her legal costs. For D3, this was an ordinary conveyancing transaction. I do not find that the complaints on the taking of instructions by P or on joint representation have any merit unless P can show that the factual matrix known or ought to be known by D3 suggests that the steps taken by D3 were not enough.

73. Ms Ip submitted that D3 (and hence D4) knew or ought to suspect D2 was an estate agent so there should be greater alertness for potential conflict of interest between D2 and P. This assertion has not been pleaded as a particular of negligence or otherwise. The pleaded complaint was the failure by D3/D4 to ascertain the identity of the purchaser and not in respect of the capacity of D2. P is bound by her own pleadings. Even if P can overcome the constraints of her own pleadings, I accept, on the balance of probabilities, D3's evidence that he was not aware that D2 was an estate agent. Ms Ip submitted that the 2nd PASP was faxed to D3 from Kwan On and he never received the original 2nd PASP. D3 explained and I accept that it was not unusual for clients to arrange for their estate agents to fax the provisional agreements to him and some of them might not provide him with the original or carbon copy of the agreements. In any event, I have found that D3 had explained the contents of the FASP (including the name of the purchaser D2) to P and she had indicated she understood and signed the same. There is no or no sufficient basis for suspicion.

74. Ms Ip further submitted that D3/D4 failed to cease to act for D2 or to seek P's consent to continue to act for D2 as a result of conflict of interest arising once they became aware of the 1st PASP. Again, this has not been pleaded. The pleaded complaint was in respect of D3/D4's preparation of the FASP and their handling of P's signing of the same but not subsequent conduct. Even if P could overcome the limits of her own pleadings, such subsequent conduct is not probative in establishing the pleaded negligence. Further, I agree with Mr Liu that P suffered no loss from such conduct for there was no material misconduct after 9th July 1999 until 5th August 1999 (when BTC notified D4 of the 1st PASP) or when KMC became D2's solicitors. By 30th July 1999 P had independent legal advice from BTC and the conveyance was not completed on 6th August 1999 or any time thereafter.

75. As regards the registration of the FASP with the Lands Registry, Ms Ip in her written submissions did not (vis-à-vis P's claim against D3 and D4) challenge the original registration but rather objected to the re-registration of the FASP after amendment of P's name without consulting or informing P. There is in fact only one registration of the FASP. According to the land search records (D171-173), the date of delivery was 4th August 1999 and the registration was only temporarily withdrawn for the correction of P's name. I agree that the amendment of the FASP without consultation of P/BTC when D3/D4 was no longer acting for her is undesirable. However, as will be seen below, I find that P agreed to sell the Property to D2 and P entered into the FASP with knowledge and consent. D3/D4's amendment of the FASP, though undesirable, did not cause P any loss for the FASP was clearly registrable. This is particularly so where initially D2 claimed specific performance (and I find below she was so entitled).

(3) The applicable law

76. The legal principles on which negligence against solicitors is to be founded are not disputed. The test is what a reasonably competent solicitor would do having regard to the standards normally adopted in the profession. Such duty will depend on the circumstances of each case and the nature and scope of the retainer (see Jackson & Powell on Professional Negligence 5th ed (2002) paras.10-077 - 10-079 at pp.581-582). Mr Liu conceded that there might not be much difference in the present case between a solicitor and an unqualified clerk given that the subject conveyance was an ordinary transaction properly within the scope of duties of D3. It was also agreed that the burden is on P to prove negligence.

(4) Conclusion

77. On the aforesaid findings of fact as applied to the above legal principles, I came to the conclusion that D3 was not negligent. In light of this conclusion, a large part of P's claim against D4 based on negligence and vicarious liability falls away. However, P also claimed that D4 owed to P contractual and common law duties as pleaded in paragraph 24 of the Amended Statement of Claim. In light of the aforesaid findings, P's claims on these grounds also fail.

Claim against D1 and D2

78. As Ms Ip pointed out, P's case rests on the issue of the credibility of witnesses and the findings of fact by the court. P's case was that a scam had been perpetrated on her by D1 (as mastermind) conspiring with D2 together with Chung (as puppet) to secure a sale of the Property to D2 at an undervalue.

79. By the Amended Statement of Claim, P's causes of action against D1 were : (a) misrepresentation that the value of the Property was HK$260,000.00; (b) misrepresentation as to the identity of the purchaser and as to the genuineness of the sale of the Property to Chung, (c) misrepresentation that Chung actually paid the initial deposit and later the further deposit, (d) forgery of the 2nd PASP and deceit arising from the above matters, and (e) breach of duties as P's estate agent by inducing P to enter into the 1st PASP and in selling to a connected party, namely, D2. P claimed damages against D1 and D2 for deceit, breach of agent's duties or misrepresentation. In respect of D2, P further sought a declaration that the FASP was void or, alternatively, the FASP was avoided or rescinded or, further alternatively, damages in the sum of HK$650,000.00 (which is in excess of the jurisdiction of the District Court) in lieu. P also claimed damages for trespass to the Property.

(1) Misrepresentation and deceit

80. Although the claim against D2 for damages for deceit or breach of agent's duties or misrepresentation was included in the prayer of reliefs by amendment to the Statement of Claim in November 2002, the material facts of such cause of action against D2 had not been pleaded. It is trite that any allegation of fraud or deceit must be pleaded "distinctly and with the utmost particularity ......, and it is not allowable to leave fraud to be inferred from the facts" and that the particulars of misrepresentation must be contained in the pleading (see Hong Kong Civil Procedure 2002 Vol.1 para.18/12/16 at p.287 and para.18/12/25 at p.289). Ms Ip tried to overcome this difficulty by submitting that "P's pleaded case is that D1 was the agent and primarily liable, although it is clear from the evidence that D1 and D2 acted jointly. The court has a discretion whether liability should be joint and several as between D1 and D2". However, where serious allegations of fraud, deceit and fraudulent misrepresentation were raised, it is bad law and practice to shrug off failure to plead the material facts as a mere pleading point. This itself is sufficient to dismiss this head of claim against D2. However, for the sake of completeness, I will proceed to consider the evidence on this matter in respect of both D1 and D2.

81. Ms Ip accepted that P has the burden of proof. In fraud and deceit, it is for the claimant to prove the fact affirmatively and the burden is no light one. The standard is the same as that in other civil proceedings, namely, proof on the balance of probabilities, but the standard must take into account the consideration that the more serious the allegation is, the greater the proof is needed to persuade the court that it can be satisfied that the allegation is established. In short, P requires compelling evidence to prove the fraud (see Bullen & Leake & Jacob's Precedents of Pleadings 14th ed (2001) Vol.1 para.48-02 at pp.809-810 and Aktiesselskabet Dansk Skibsfinansiering v Brothers [2000] 3 HKCFAR 70 at 77J-79D (which case was not referred to by counsel)).

82. I find that in this case, none of the witnesses as to fact (except D3 and Chung) has told me the entire truth. I find that P has not been honest or reliable over material parts of her evidence. In assessing credibility, I have given all due allowance for the fact that the events happened in 1999 and P was aged 67 years and had limited education. I base my conclusion not only on her demeanour in the witness box but also on the inherent improbabilities of her story. I do not propose to set out all the reasons for such finding but the main reasons were :

(a) P is not a frail and helpless old lady. She had for many years managed her rented properties. Although she retained Hang Seng Real Estate to handle tenancy matters, it is clear she personally made the major decisions. P herself arranged for the renovation of the Other Property and the letting of the same and she arranged for the decoration of the Property. She carefully scrutinised D1's quotation for the decoration of the Property and was not shy to impose her will on the terms. She read the 1st PASP for some time. It is unlikely that she would unquestioningly trust D1 over the Property to the degree she portrayed in her evidence. Indeed, P gave evidence that she had consulted her relatives on D1's suggestion that he could offer the Property for sale at HK$480,000.00. P struck me as a lady with determined views and good bargaining skills.

(b) I do not accept that P only came to know D1 and D2 merely as D1's wife surnamed Hung in 1998. D1 and D2's evidence in this respect (which I accept) that they had lived in the same building as P and used the same lift, that D1 did handyman jobs for P, that P retained D1 to renovate the Other Property and she visited the Shop during such renovation, that the Other Property was let in 1998 through D2, and that P knew Kwan On also carried on estate agency business (most of which matters were admitted by P) suggest that P knew D2 and her capacity all along. I further find that P tried to play down her knowledge of the capacity of D2 with a view to overcome the hurdle of her knowledge at the time of the signing of the FASP.

(c) I do not accept that D1 represented to P that the Property was worth HK$260,000.00 or less than HK$200,000.00. P only stated in her witness statement that D1 told her his wife commented that the Property was not worth HK$200,000.00; there was no reference to the value of HK$260,000.00. More telling, there was no reference at all to the value of HK$200,000.00 or HK$260,000.00 in P's statement to the police made on 10th August 1999, that is, just shortly after the events, or in her viva voce evidence. Rather, P alleged that D1 told her the Property could be offered for sale at HK$480,000.00. However, this has not been pleaded and Ms Ip disclaimed reliance on this representation as the subject matter of the alleged fraudulent misrepresentation. In light of the above, P has not established there was any representation by D1 as to the value of the Property.

(d) P could not have been unaware of the requisite renovations to the external wall of the building until after legal proceedings were issued as she alleged. Clause 13 of the 1st PASP and Part VIII of the First Schedule of the FASP specifically referred to such renovations and P admitted that these terms had been explained to her by D1 and D3 respectively.

(e) It is clear from P's evidence that when she visited the Property in June 1989 she found the locality of the Property quite run down. The long-term tenant of the Property had recently left. P was disappointed with the condition of the Property and deemed decoration essential before renting it out. From her visit to the Property, she could not have been unaware of the brothel on the first floor near to the main lift lobby. In the circumstances, I find that she was prepared to sell the Property and accept the price of HK$300,000.00.

(f) I find it implausible that Chung or D1 would, without any request from P, voluntarily offer to refund the decoration deposit of HK$20,000.00 to her. It was not a small sum compared with the sale price. Chung had never agreed to pay beyond his initial offer and P was already bound by the provisional agreement. It is more likely that having secured Chung as the purchaser upon the signing the 1st PASP, P tried to enlarge her benefit by requesting and negotiating for the reimbursement of the decoration costs incurred as the decorations would no longer be of use to her.

(g) P denied she had agreed to sell the Property to D1/D2. Taken out of the present context, it may appear odd that a vendor would ask the estate agent to take up the purchase of his property. But I find it plausible in the present context. There is a history of relationship between P and D1/D2. It is apparent (and I so find) P was prepared to sell the Property at HK$300,000.00 to Chung and she wanted to recoup the decoration costs paid. Chung was the only person who offered for the Property and even he refused to pay for such decoration costs. D1 was the one who purchased the materials and did the decoration works at the Property and was therefore likely to be more receptive to P's proposition. I find that P therefore persuaded D1 to take up the purchase.

(h) I do not accept P's claim that she paid her share of the commission of HK$6,000.00 by deducting such sum from D1's refund of the decoration deposit of HK$20,000.00. The receipt which P relied on was dated 8th July 1999 but P agreed that the refund of the sum of HK$14,000.00 to her was made on 9th July 1999. There is no reason why D1 would state an earlier date on the receipt. Rather this receipt is consistent with D1's assertion that P paid her share of the commission on 8th July 1999. D1 said the sum of HK$14,000.00 was the balance of the decoration deposit less Chung's share of the commission agreed by P to be borne by her, which is supported by a receipt dated 9th July 1999 signed by P. Under cross-examination, P recognised her own signature on and agreed that she received this receipt. It was on the second day of her evidence that she said she never received this receipt. But she did not deny that the signature was hers. I find her explanation unbelievable.

(i) In relation to the explanation of the FASP, I have already found that I accept D3's evidence and I reject P's evidence wherever it contradicts D3's evidence.

(j) It is clear that P only repented after she had a discussion with her niece. I find that P backed out of the sale because she perceived that it was not a good bargain and not by concern as to whether the sale of the Property was to Chung or D2. She realised that there was an advantage to be had out of the fact that the 1st PASP had been amended by D1 and no doubt used that in order to suggest impropriety on the part of D1, D2 and Chung. Indeed, it is interesting to note that P had never mentioned D1 suggested an increase of the price by HK$200,000.00 during the visit on 7th August 1999 until she gave evidence in court. However, it had been D1's case that such a suggestion had been made although he said P made it. I do not believe P's version that it was D1 who suggested it. Even if there were a scam, it had been exposed by BTC's letter of 5th August 1999. Besides, P said that D1 was apologetic on 7th August 1999. It is unlikely that he would impose a requirement of an additional HK$200,000.00 on 7th August 1999. It is more plausible that P wanted to improve her bargain by demanding an increase in price.

83. I find that although there are some discrepancies in the evidence of D1, D2 and Chung, they are not shaken over the material aspects, namely, that the Property was initially sold by P to Chung who was later substituted by D2 as purchaser and that these were genuine transactions. The matters over which I have reservations, namely, the purpose for which D1 and D2 acquired the Property in place of Chung, did not adversely affect my findings on the genuine nature of the aforesaid transactions.

84. I have considered Ms Ip's submissions that Chung was not a genuine purchaser. However, despite her criticisms of the defence evidence, the witnesses were adamant as to Chung's purchase of the Property. There is no effective challenge to the evidence that D1, D2 and Chung first knew one another in 1999 when he came to look for a property. No suggestion was put to Chung (and there is no evidence) that he had any benefit or interest in acting as "puppet" in the alleged scam. Chung gave a statement to the police in 1999 largely consistent with his evidence. He was not a fiction. He signed the 1st PASP, and attended the Shop and spoke with P by telephone in the evening of 3rd July 1999. P agreed she would have met Chung had she gone to the Shop that evening as requested by D1. There is no evidence to suggest that Chung did not pay the initial deposit and his share of the commission. Rather, BTC's letter of 21st August 1999 (D79-80) stated that the initial deposit was paid by Chung. He was not cross-examined on his savings or financial resources and he said he had a steady job earning HK$12,000.00 per month. Chung's payments and receipts of monies were supported by contemporaneous documents.

85. More telling is P's conduct in respect of the transaction with Chung. After P had independent legal advice and BTC exposed the alleged scam in their letter of 5th August 1999, there was still no allegation that Chung's purchase was not genuine. Rather, P through BTC alleged that P was under a risk of being liable to sell to Chung as well as to D2 and she only entered into agreement with Chung. This was reiterated in P's evidence and in the Amended Statement of Claim.

86. Secondly, paragraph 25 of the Amended Reply and Defence to Counterclaim of D1 and D2 (the original pleading was filed on 3rd December 1999) pleaded inter alia that "the initial deposit of HK$20,000.00 having been forfeited under the Provisional Agreement". The "Provisional Agreement" necessarily referred to the 1st PASP as P rejected the 2nd PASP and the FASP. Clearly, P still recognised the 1st PASP and relied on its provision to forfeit the initial deposit. Ms Ip valiantly tried to overcome this by suggesting an alternative plea that the initial deposit was not forfeited but D2 or Chung could not claim for its refund as the 1st PASP was tainted with illegality. This has not been pleaded and is inconsistent with P's position as set out in BTC's letter of 21st August 1999 (D79-80) and the present pleadings. Further, if this argument were drawn to its logical conclusion, the 2nd PASP and the FASP (as part of the alleged scam) would also be so tainted (to which Ms Ip agreed). But P through BTC voluntarily and indeed insisted on the refund of the further deposit of HK$80,000.00 under the FASP and it was repaid to D2 after the commencement of the present proceedings.

87. Thirdly, despite the allegation that the 1st PASP was a sham, there was no claim for a return of the commission paid by P to D1. No explanation was forthcoming from P for this stance. It is clear from P's aforesaid conduct that even after receiving independent legal advice she regarded the 1st PASP as a genuine transaction.

88. I accept Chung's evidence on the material aspects of the transactions, and I also accept D1 and D2's evidence on the same. Ms Ip pointed to various discrepancies in D1 and D2's evidence and in D2's and D3's evidence. I do not propose to deal with them in detail save to say that I have carefully considered her written and oral submissions but I do not find that the discrepancies justify any adverse finding on the credibility of D1 and D2's evidence on the key aspects of their evidence. I have indicated that I have reservations over their purpose in acquiring the Property. I do not accept that D1 and D2 intended to purchase the Property for their home. Had it been the case, I find D1's lackadaisical progress with the decorations (as evident from the photographs taken of the Property in February 2000 - C270-272) and D2's lack of interest in the decoration works inexplicable. It may well be that they considered they can resell the Property on a turnaround as D1, experienced in interior decoration, could easily touch up the Property. In any event, they had pocketed HK$12,000.00 commission from the 1st PASP and could look forward to further commission if they resell the Property. However, this does not have any adverse effect on the other material aspects of their evidence. This may also explain why D1/D2 were able to make a quick decision to take up the purchase.

89. Based on the testimony which I accepted and the documents referred to in the trial, I came to the view that the material facts vis-à-vis P's claim against D1 and D2 were :

(a) Prior to the subject transactions, P already knew D1 and D2 and knew that D2 was D1's wife and she handled the estate agency business of Kwan On.

(b) In June 1999, P retained D1 to decorate the Property (having paid a decoration deposit of HK$20,000.00) and also instructed him to sell the Property on her behalf. P suggested an asking price of HK$480,000.00 but indicated that the price was negotiable and that she would accept HK$400,000.00. D1 made no representation as to the value of the Property.

(c) In late June 1999, Chung viewed the Property and made a counter-offer to purchase the Property at HK$300,000.00. After negotiations, during which P spoke with Chung by telephone on 3rd July 1999, P agreed to sell the Property to Chung for HK$300,000.00. Chung and P signed the 1st PASP on 3rd and 4th July 1999 respectively. Chung paid and P received the initial deposit of HK$20,000.00. Chung paid his share of the commission of HK$6,000.00 on 4th July 1999 to D1.

(d) In the evening of 4th July 1999, P by telephone requested Chung to take up the decoration materials and reimburse the decoration deposit of HK$20,000.00 paid by her to D1. Eventually, P, D1 and Chung agreed that (i) the sale of the Property to Chung be cancelled and D1 would refund the initial deposit of HK$20,000.00 to Chung, (ii) D1 (who nominated D2 to be the purchaser) was to purchase the Property for the same price of HK$300,000.00, (iii) P would pay her share of the commission of HK$6,000.00 and reimburse Chung's share of the commission of HK$6,000.00, and (iv) D1 would refund to P the decoration deposit of HK$20,000.00.

(e) The amendment of the 1st PASP by D1 to reflect the change of purchaser (and signed by D2) was with P's consent. The 2nd PASP was not forged.

(f) The initial deposit of HK$20,000.00 and Chung's share of the commission of HK$6,000.00 were refunded by D1 to him on 5th and 10th July 1999 respectively. Hence, the payee of the initial deposit now retained by P was in fact D2 who was substituted in place of Chung as the purchaser.

(g) D2 approached D3/D4 to act for both D2 and P in the conveyance of the Property. P knew that D2 was the purchaser of the Property in place of Chung. P knew and consented to D3 and D4 acting for both D2 and herself. D3 materially explained to her the contents of the FASP and informed her the purchaser's name was "Hung Kwan" (being D2). P signed the FASP on 9th July 1999 with knowledge and consent that D2 was the purchaser of the Property.

(h) The further deposit of HK$80,000.00 was to the knowledge of P paid by D2 to P.

(i) P paid her share of the commission of HK$6,000.00 to D1 on 8th July 1999. D1 refunded the balance of the decoration deposit in the sum of HK$14,000.00 to P on 9th July 1999 having deducted her reimbursement of Chung's share of the commission.

(j) Chung was a genuine purchaser of the Property. P all along regarded the sale of the Property to Chung as genuine and was willing to sell the Property to Chung and later D2. P backed out of the sale to D2 because she repented after discussion with her niece.

(k) In failing to complete the conveyance of the Property on 6th August 1999 or at all, P was in repudiation of the FASP and D2 was entitled to seek specific performance (which she did initially) or elect to accept such repudiation (which she did eventually by treating the FASP as terminated and demanding for the repayment of the initial deposit in her counterclaim).

(2) Breach of estate agent's duties

90. P alleged breach of estate agent's duties against D1. I reject P's claim against D2 on this head because, as explained above, the material facts of such cause of action against her were not pleaded. Ms Ip submitted that although D1 as agent was primarily liable, D1 and D2 could on the evidence be jointly and severally liable. This also had not been pleaded and P's evidence was that she had never retained D2 as her estate agent. However, for the sake of completeness, I will also proceed to consider this claim against D1 and D2.

91. P's case was that in breach of his duties, D1 (a) induced P to enter into the 1st PASP and (b) sold the Property to a connected party, namely, D2.

92. In respect of (a), Ms Ip submitted that D1 failed to advise P that the sale price was at an undervalue and that he recommended an overly low price. I have found that D1 did not make any positive recommendation on price. In relation to the first limb, I agree with Mr Wong, counsel for D1 and D2, that the primary consideration is whether D1 as an estate agent owed any duty to P to advise on the market value of the Property and not to sell at an undervalue. Such duties have not been pleaded and that is sufficient to deal with the matter. In case I am wrong, I further agree with Mr Wong that D1 did not have such duties in the context of the subject conveyance. In her closing submissions, Ms Ip indicated that P relied on the common law duties of estate agents and not on the provisions of the Estate Agents Ordinance Cap.511 or on the Practice Directions (which only came into effect on 11th November 1999) issued by the Estate Agents Authority.

93. Ms Ip relied on Kenny v Hall 239 EG 355. In that case, the plaintiff specifically asked for a valuation of the subject property and a written opinion, he having made clear to the estate agent (a substantial and reputable firm of chartered surveyors and estate agents) that the valuation was crucial to enable him to effect a sale of the property and to utilise the proceeds to acquire another. The duty of care was not contested and was conceded in that case. Goff J at p.7 of the photocopy of the judgment provided said that :

"So where an estate agent is asked to place a value on property with a view to sale he will, on the absence of a contrary intention, be entitled to charge for such valuation; though if he is instructed thereafter to act as agent for the vendor on the sale of the property, the valuation will ordinarily be treated as part of the services rendered towards the earning of the commission in the event of a successful sale, in which event a separate fee for the valuation will be waived. Such was the position in the present case."

In that case, the valuation was a chargeable item and part of the services of the estate agent. Mr Wong submitted that the role of an estate agent in Hong Kong is clearly different and Ms Ip agreed with this as a general observation. However, she submitted that the duties for English and Hong Kong estate agents are the same.

94. Although each case must depend on its own facts, it is useful to refer to the dictum of Godfrey J in Cheng Kwok Fai v Mok Yiu Wah, Peter and anor [1990] 2 HKLR 440 as cited in Happyface Limited v Lau Shui King trading as Fu King Property Agency HCA4110/96, Deputy Judge Muttrie (unreported, 4th August 1999) (neither case having been cited by counsel) :

"An agent in the property market in Hong Kong is not, as it seems to me, in quite the same position as an estate agent in England and Wales ...... An agent in Hong Kong acts as broker, usually, though not always, taking 'commission' from both the vendor and purchaser."

I find that this comment is applicable to the present case. Given D1's role as a broker, the small scale of Kwan On's estate agency business (which was known to P) and the estate agents profession was not yet comprehensively regulated in mid-1999, I find that D1 did not have a duty to P to give any valuation of the Property or to give any advice as to whether the sale price was at market value or not.

95. As regards (b), it is clear that D1 whether as estate agent or broker was an agent. Double agency did not diminish D1's fiduciary duties as agent and hence he had a duty of disclosure. Paragraph 6-055 of Bowstead and Reynolds on Agency 17th ed (2001) at p.187 (current version) was cited with approval in the Happyface Limited case :

"An agent may not enter into a transaction in which his personal interest, or his duty to another principal, may conflict with his duty to his principal, unless his principal with full knowledge of all the material circumstances and of the nature and event of the agent's interest, consents."

However, I have found that D1 did make disclosure to P who was aware that D2 was the purchaser of the Property. P had consented to this with full knowledge.

(3) Conclusion

96. In the circumstances, I find P has failed to establish her case on deceit, misrepresentation and/or breach of duties against D1 and/or D2.

Loss and damages

97. In case I am wrong on the above, I will now proceed to consider P's claim for loss and damages. Ms Ip submitted that P's claim against D1 and D2 was for damages of HK$250,000.00 (ie P's primary case) or HK$600,000.00 being the difference between the market price of the Property in 1999 or 2002 (according to Mr Brian Law) and the contract price of HK$300,000.00. Mr Wong submitted that the acts complained of were not causative of loss and no loss was actually suffered.

(1) Measure of damages on P's case against D1 and D2

98. Vis-à-vis D1 and D2, the measure of damages for deceit and fraudulent misrepresentation is the tortious measure, ie to put P in the position he would have been in if the representation or deceit had not been made (see Doyle v Olby (Ironmongers) Ltd [1969] 2 QB 158 as approved and expanded in Smith New Court Securities Ltd v Citibank NA [1997] AC 254 and also Chitty on Contracts 28th ed (1999) Vol.1 para.6-052 - 6-053 at pp 363-4). The presumption seems to be that if the misrepresentation had not been made, P would not have entered into the FASP. So P ought to be awarded such damages as will put her back in the financial position she was in before the FASP was made.

99. In the present case, Mr Wong submitted that the conveyance was never completed and hence there is no loss. The deceit or misrepresentation or breach of duties was unravelled prior to completion and the Property had not been sold. It is P's position that the FASP has been rescinded. The purpose of rescission is to restore the status quo ante in order to do justice between the parties (see Chitty on Contracts (supra) para.6-112 - 6-113 pp.391-392). So even on P's case, not having completed the conveyance, was P entitled to retain the Property and in addition claim the difference in market value between the contractual sale price of HK$300,000.00 and the market value in 1990 or 2002/now?

100. P did not put forward any convincing justification for adopting such measure of loss. Assuming P succeeded in her claim for deceit, fraudulent misrepresentation and/or breach of estate agent's duties, the tortious measure of damages means that if the misrepresentation or deceit or breach of duties had not taken place, P would contend that she would not have entered into the FASP. To be able to claim for the damages she contended for, P would need to adduce evidence that she would have otherwise sold the Property in excess of HK$300,000.00 and D1 and D2's then insistence on specific performance and/or continued refusal to vacate the registration could then perhaps be argued as having prevented a putative sale of the Property at market value. There is no such evidence here. It was admitted in paragraph 5 of the Amended Reply and Defence to Counterclaim of D1 and D2 that when P sought D1's services to decorate the Property, she did not have any intention to sell the Property. P's evidence also supported this. There is no evidence from P as to her intentions or actual dealings in respect of the Property after 6th August 1999 (ie the completion date) or 8th March 2000 (ie the date when BTC received the keys to the Property from KMC).

101. Ms Ip referred to Smith Kline & French Laboraories Ltd v Long [1989] 1 WLR 1 as applied in Polaroid Far East v Bel Trade Co Ltd [1990] 2 HKLR 447. In the Smith Kline case, the relevant goods were permanently deprived by conversion as a result of deceit and by the fraudster in taking or using the goods. The fraudster could not complain that the victim could not have used the goods and he was ordered to pay the market value of the goods. It was not a case where the victim having retained the goods, claimed for the difference in the market value and the purported sale price. In the present proceedings, the parties only entered into the FASP and the sale and purchase has not been completed.

102. Ms Ip also referred to Solloway and anor v McLaughlin [1938] AC 247 as applied in Hong Kong in BBMB Finance (Hong Kong) Ltd. v Eda Holdings Ltd. & ors [1990] 1 WLR 409. In both cases, the agent wrongfully sold shares of the principal but when the principal demanded their return, the agent purchased in market and so there was no loss to the principal. It was held that the principal was entitled to the value of the shares as at the date they were sold. These are conversion cases where the measure of damages is the market value of the goods as at the date of conversion. The judgment of the Privy Council delivered by Lord Atkin in Solloway's case at pp.257-259 stated :

"As to the deposited shares, in the circumstances of the case, the company [ie the agent] never had any right to deal with them ...... Their disposal of the deposited shares amounted to nothing short of conversion, and the client on each occasion on which the shares were sold had vested in him a right to damages for conversion which would be measured by the value of the shares at the date of the conversion ...... " (my emphasis)

It is clear that these two cases were premised on the deprivation of goods and conversion. In the present case it is artificial to say that P was deprived of the Property.

(3) Registration of the FASP

103. However, Ms Ip argued that once P entered into the FASP, it was expected that it would be registered at the Lands Registry and unless vacated, the Property could not be sold at market value and therefore there would be loss and damage. As Ms Ip succinctly summarised in paragraph 52 of her written closing submissions : "But for the registration, P would have been able to deal with her flat freely." However, the acts complained, ie the deceit, misrepresentation and breach of duties, had been exposed and were spent. Following from this, Ms Ip's arguments on "deprivation" of the Property as a result of these acts necessarily fall away.

104. Apart from pleading that the registration was made on 4th August 1999 and D2 refused to vacate the same in paragraphs 34 and 50 of Amended Statement of Claim, the causation of loss argued by Ms Ip had not been pleaded. There is even no express prayer of relief in the Amended Statement of Claim to vacate the registration and Ms Ip was constrained to rely on the prayer for "further or other relief". Ms Ip submitted that a more lenient approach to pleading damages should be taken so long as the existence of the claim is clear from the pleadings. Whilst I have some reservations over this submission, I consider it more useful to proceed directly to consider (a) whether D2 was entitled to register the FASP against the Property, and (b) what loss and damage (if any) flowed from the continued registration of the FASP.

105. Is D2 entitled to register the FASP against the Property? The FASP is clearly registrable as an instrument in writing by which the Property was affected and was so registered on 4th August 1999. At that time, D2 (as she was entitled) claimed for specific performance. The initial registration was clearly appropriate in order to maintain priority. Even when D2 no longer claimed for specific performance, in my view, D2 was entitled to a purchaser's lien in respect of the initial deposit of HK$20,000.00. A purchaser acquires a lien on property at the time he pays the purchase price (or any part of it) or, in the present case, when D2 or D1 on her behalf refunded the initial deposit to Chung. The lien is a security on the property which is enforced when the vendor fails to complete the assignment but the lien had arisen at an earlier stage when the purchase price (or part thereof) was paid. The vendor's receipt of part of the purchase price (which gives rise to the lien) is acknowledged in the agreement for sale and purchase. Here, the 2nd PASP has been superseded by the FASP which acknowledged that the initial deposit had been paid. I do not see how the continued registration was objectionable when P refused to repay the initial deposit.

106. What loss and damage (if any) flowed from the continued registration of the FASP? Ms Ip submitted that the registration prevented the sale or even a letting of the Property. I have found there is no evidence of any prevention of sale. Ms Ip submitted that even letting was prevented too due to the continued registration of the FASP, the present proceedings and the non-habitable condition of the Property. First, there is no evidence that P attempted to let the Property after 8th March 2000. Secondly, I do not understand P's concern over the title of the Property particularly after D2's counterclaim made clear in December 1999 that she did not claim specific performance of the FASP. Even if there were any concern (which I cannot see as the tenant only has a possessory interest), there is no evidence that P/BTC approached KMC after 8th March 2000 to seek D2's agreement to let the Property without prejudice to the present proceedings. Thirdly, the non-habitable condition of the Property could not be laid at D1 or D2's door. Since P claimed for rescission and there is no dispute that the FASP has been terminated and since the decoration deposit had been refunded to her (although P did not claim for a refund of the commission paid), the burden of decoration of the Property fell on P. On the above analysis, I cannot accept Ms Ip's further submission that even without the registration, P cannot now sell or let the Property as there will be no willing buyer or tenant in light of the present proceedings. I will deal with the issue of the separate act of trespass below.

(3) Measure of damages against D3 and D4

107. As against D3 and D4, Ms Ip submitted P's loss and damages were (a) damages of HK$250,000.00 and (b) the costs of setting aside and vacating the registration of the FASP with the Lands Registry (which should be assessed). Mr Liu submitted that the nature of such loss had not been pleaded vis-à-vis D3 and D4 and that the burden was on P to establish that loss was caused by D3/D4. He further submitted that the risk pleaded in paragraph 32 of the Amended Statement of Claim that P was obliged to sell to both Chung and D2 was not causative of loss because the sale price under either transaction is the same and the risk was remote as Chung had not taken any steps to complete the sale. In any event, I have found that the claimed loss in (a) has not been proved. As regards (b), I have found the registration appropriate, particularly as initially D2 claimed for specific performance.

108. Ms Ip referred to the Canadian case of McMorran's Cordova Bay Ltd v Harman & Co 106 DLR (3d) 495. There the solicitor was negligent in handling a transaction for the vendor in selling land. It was held that the measure of damages was not the full expectation of the vendor but the loss of chance of selling the land at a higher price than that agreed. At that time property values were rising. If the vendor had been properly advised, he would have rejected this sale and waited for other buyers. The trial judge framed the question which the appellate court approved as follows at p.498 of the judgment of Seaton J.A. :

"Where there had been a breach of contract by a solicitor through negligence, an injured client is entitled to be placed in the same position as he would have been had the solicitor performed his contract of service in a careful manner. For these reasons the measure of damages should be calculated on the plaintiff's loss of a chance or an opportunity to sell the land for more than $305,000.00. ......" (my emphasis)

The trial judge then proceeded to estimate the value of such chance. Here P's claims were for misrepresentation, deceit, breach of duty and negligence and a tortious and not contractual measure of damages is appropriate. Further, it is clear from the expert evidence that property values were falling rather than rising. I draw no assistance from this case.

(4) Conclusion

109. In light of my conclusions above, there is no need to consider the expert valuation evidence. Even on P's case, I find that no loss and damages have been proved as a result of the acts complained of. Further, on the balance of probabilities, I find that the registration of the FASP with the Lands Registry and its continued registration justified.

Trespass

110. P also claimed for damages for trespass against the Property (a) being mesne profits for the period from 9th July 1999 to 7th March 2000 at HK$6,400.00 per month, or (b) alternatively, the value of the Property less the sum of HK$300,000.00 for the whole period when D1 and D2 interfered with P's right to sell the Property. The alternative claim (b) is rejected as I have found there is no such interference by D2. In respect of (a), there is conflicting evidence as to whether D1 had given to P the key of the new lock of the Property. D1 said he did and P denied this in her evidence. But she admitted D1 had given new keys to the Property to her (although they did not fit and were useless) in paragraph 26 of the Amended Reply and Defence to Counterclaim of D1 and D2. However, even if P had the keys to the Property, that does not necessarily rule out the possibility of D2 having committed trespass of the Property. If D2 remained in possession of the Property and if such possession was unlawful, there was trespass even though P had the keys as well.

111. Under Clause 23 of the FASP, D2 had a licence to occupy the Property for decoration pending completion. I find that D2 had continued in possession of the Property after 9th July 1999. D2 still claimed for specific performance of the FASP as at 31st August 1999 (D106). On the evidence before me D2 only ceased claiming for specific performance on 29th October 1999 when the counterclaim was filed. Clause 23(3) of the FASP provided inter alia that if the FASP shall be determined D2 would forthwith deliver vacant possession of the Property to P without being entitled to any claim against P. There is no evidence before me that she has ceased occupation of the Property then. KMC's letter dated 27th August 1999 to BTC admitted that D2 was in occupation (although they attempted to explain this as being in possession of keys in subsequent correspondence). In the circumstances, I find that D2 remained in occupation and by this act prevented letting of the Property until the keys were delivered by KMC to BTC on 8th March 2000 and that she committed trespass of the Property from 29th October 1999 to 7th March 2000. In this respect there is no requirement that, as submitted by Mr Wong, the premises be habitable to justify a finding of unlawful occupation. Further, I find that the monthly rent commanded by the Property as at May 1999 at HK$6,399.30 (rounded to HK$6,4000.00) (D442) is reflective of the mesne profits of the Property at the material time and the mesne profits or damages for trespass payable by D2 to P are HK$6,400.00 x 4 7/31 months = HK$27,045.16.

Counterclaim for refund of the initial deposit

112. D2 claimed for the refund of the initial deposit. There is no dispute between the parties that the FASP had been terminated. In light of my aforesaid findings that P by failing to complete was in repudiation and such repudiation had been accepted, P is clearly liable to repay the initial deposit of HK$20,000.00 to D2. Even on P's case that the FASP had been rescinded, the initial deposit ought to be repaid. The Property was also subject to a purchaser's lien pending the repayment of the same by P to D2.

Counterclaim for decoration expenses

113. D2 claimed for decoration expenses of HK$60,000.00. P suggested that such loss is too remote. Under the 2nd PASP and the FASP, P gave D2 a licence of the Property to carry out decoration works. I cannot see how it can be argued that such loss is too remote. P alleged in paragraph 32 of the Amended Reply and Defence to Counterclaim of D1 and D2 that (alternatively) a fair and reasonable amount would not exceed HK$15,000.00. Other than D1's assertion of the quantum of HK$60,000.00, there is no breakdown of decoration works carried out or the costs. It is evident from the photographs in C270-272 that the original partitions and decorations had been removed and some repairs (eg at the ceiling) had been done. D1 also gave evidence that some decoration materials had been purchased. Taking into account all the evidence in this respect, I assess the quantum of the decoration expenses at HK$15,000.00 and I award such sum in favour of D2.

Declaratory relief

114. P sought a declaration that the FASP is void or has been avoided or rescinded. In view of the monetary award made above, I do not consider it necessary to consider those orders. In any event, the process of rescission is essentially the act of the party rescinding and not of the court (see Chitty on Contracts (supra) para.6-109 at p.390).

Conclusion

115. In conclusion, there will be judgment as follows :

(a) P's claims against D1, D3 and D4 are dismissed;

(b) There be judgment in favour of P against D2 in the sum of HK$27,045.16;

(c) There be judgment in favour of D2 against P in the sums of HK$20,000.00 and HK$15,000.00 and interest thereon from the date of the writ of summons to the date of judgment at 8% p.a. and thereafter at judgment rate until payment;

(d) D2 is entitled to a purchaser's lien on the Property for the return of the deposit of HK$20,000.00 and interest thereon as aforesaid in (c) above and to enforce the lien in the case of default in payment of such sums by P;

(e) Upon payment of the sums referred to in (d) above by P to D2, the registration of the FASP against the Property at the Lands Registry be vacated.

116. As the nature of the claim for mesne profits is for the wrongful occupant's use and enjoyment of the land, no interest is awarded (see Purton Investment Limited v Pui Ping Kam HCA No.A4174/89, Master Chan (unreported, 5th January 1990)).

117. P succeeded in the claim for damages for trespass, a minor part of her claim, but has failed to sustain her case over a substantial part of her claims against D2 and she failed in her claims against D1, D3 and D4. D2 had succeeded in her counterclaim. There is no reason why costs should not follow event. I therefore make an order nisi that the costs of the action be awarded to D1, D2, D3 and D4 against P and D2 shall have the costs of the counterclaim against P, to be taxed if not agreed, with certificate for counsel.

118. It remains for me to thank Counsel for their industry and assistance.