YU MAN v. T.L. IP & CO

HEAD NOTE

                1. Despite the dicta in Robertson v. Fleming, 4 Macq. 167, and what was said in Groom v. Crocker [1939] 1 K.B. 194 and other cases in that line, there is no longer any rule that a solicitor who is negligent in his professional work can be liable only to his client in contracts; he may be liable both to his client and to others for the tort of negligence. Ross v. Caunters [1980] Chancery 297 at 322 followed.

                2. The basis of the solicitor's liability to others is either an extension of the Hedley Byrne principle [1964] A.C. 465 or, more probably, a direct application of the principle of Donoghue v. Stevenson [1932] A.C. 562.

                3. Neglect to obtain the relevant Occupation Permit which was not the sole operative cause for the adjournment does not render the solicitor liable either in contract or in tort.

                4. Solicitors, who was at great pain to decide on whether to discontinue Action commenced by the plaintiff for possession of his flat for own use and serve notice to quit and start proceedings afresh or to go ahead with the Action risking dismissal of that Action for want of Notice to Quit (as the law between the end of 1981 and early 1982 prior to NGAI Sau-ying's judgment by the Court of Appeal in May 1982 was doubtful with two schools of thought) was held not liable for negligence for obtaining an adjournment to take the cautious course despite the adjournment set in motion a chain of unfortunate events for which the defendant solicitor was not to be blamed leading to a "delay" of some 17 months.

                5. Extent of solicitor's liability for professional negligence considered (at 2-3 & 9-10 of this Judgment).

                (The Plaintiff claimed, inter alia, damages for "mentality suffered" in that his marriage has been irreparably strained for deprivation of sexual pleasure with his wife due to the congested conditions of the room that he had to put up with during the delay and the presence of the children resulting in extra-marital relationship on his own part as well as on the part of his wife. Now whenever his wife goes out, he worries!)

IN THE DISTRICT COURT OF HONG KONG

HOLDEN AT VICTORIA

CIVIL JURISDICTION

ACTION NO.459 of 1984

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EX TEMPORE

JUDGMENT

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1. This is an action by the plaintiff who I understand throughout has prepared his case and conducted his case in court as a layman, for damages arising from allegedly negligence on the part of the defendant firm, solicitors, in not skilfully, diligently and knowledgeably conducting proceedings for him to recover possession of his own flat for his own use and that of his family. He claims damages firstly the differentials between the rents he had to pay for the period of alleged delay some 19 months on the pleadings and the rents he actually received from the then suit premises to the amount of $22,800 and secondly general damages for resulting distress and misery allegedly suffered. (He originally claimed for "mentality suffered etc" but that was struck out by me in Chambers earlier on substituting therefor general damages. )

2. It is important from the legal point of view to be clear in my mind at the outset the foundation of the claim whether it is based on breach of contract between solicitors and client or on tort as negligence simpliciter. I cannot expect any assistance as to the law from Mr. Yu who is a layman. Until recent years in modern times, it was thought that a solicitor could never be liable in tort and whenever he was liable his liability was ccntractual. However, I venture to the opinion that it is the current judicial tendency that a solicitor can be liable either or both in tort as well as contractually. In Ross v. Caunters [1980] Chancery 297 at 322, Sir Robert Megarry V.-C., having referred at length to nearly all the previous relevant authorities and the brief history of the matter, decided that

"        (1) Despite the dicta in Robertson v. Fleming, 4 Macq. 167, and what was said in Groom v. Crocker [1939] 1 K.B. 194 and other cases in that line, there is no longer any rule that a solicitor who is negligent in his professional work can be liable only to his client in contract; he may be liable both to his client and to others for the tort of negligence.

 

          (2) The basis of the solicitor's liability to others is either an extension of the Hedley Byrne principle [1964] A.C. 465 or, more probably, a direct application of the principle of Donoghue v. Stevenson [1932] A.C. 562.

............

 

          (5) In such circumstances there are no considerations which suffice to negative or limit the scope of the solicitor's duty to the beneficiary. "

 

At 306 Megarry V.-C. said as part of the ratio (D to F):

"...Hedley Byrne. The only effect of this decision was that as between solicitors and their clients, like everybody else, there could be a liability for financial loss resulting from reliance on a negligent misrepresentation of fact, whether written or spoken, if the person making the representation has some special skill and he knows, or ought to know, that the other "party, is relying on that skill. If a case fell within these narrow limits, then the solicitor could be liable to his client in tort. But the limits did not include statements or opinions on law, or advice, whether on law or fact, or acts, or omissions: only statements or opinions on fact were within them. Apart from that, Hedley Byrne had made no difference to the law as regards solicitors' negligence. "

3. Hedley Byrne was a case concerning banker's liability on careless misrepresentation. What Megarry V.-C. did was to apply to solicitors. The above is not intended to the academic but I think as I said it is important to be clear in one's mind the basis or foundation of the plaintiff's claim.

4. Without reproducing all the evidence, the plaintiff in substance alleged in his evidence before me that the defendant firm was negligent in failing to obtain the relevant Occupation Permit and that negligence was directly responsible for the adjournment on 8th January 1982 which was granted on the application of Counsel PW1 Mr. Chow then appearing on the instructions of the defendant for the plaintiff. It is alleged that that had set the chain of events in motion causing a delay for some 17-18 months and the damages as claimed to follow.

5. It was not in dispute that some time in September 1981 the plaintiff started an action in the District Court to recover the said flat on the said ground. He then acted in person.

6. On the 2nd September 1981 Notice of Hearing was sent to the parties and the plaintiff received it. The date of hearing was set down for 8th January 1982. In mid-November, the exact date of which has no great significance, the plaintiff instructed the defendant firm to conduct the forthcoming hearing for him. Fees were agreed at ??4,000 as "agreed costs". The above are not in dispute at all.

7. Before the hearing the sole owner of the defendant firm DW1 was apprehensive of the imminent change of the law to result the uncertainty as to whether or not Notice to Quit would be required as e pre-requisite for an order for possession. On l9th December 1981, the Landlord and Tenant (Consolidation) Ordinance, Cap. 7 was amended in such a way, particularly with regard to sections 52 and 53 that the legal-judicial-academic circles in Hong Kong were divided into two schools of thought: One, Notice was a pre-requisite; the other no notice was required at all. Mr. Ip, the solicitor, was left in a state of dilemma as to whether to abandon ship by discontinuing the action and starting afresh or alternatively to take the chance in the hope of a successful result on 8th of January. He decided in favour of taking a calculated risk. As a measure of precaution, he instructed PWl Counsel who, by the 8th of January, had the experience of some 50/60 possession cases to appear for the plaintiff. He instructed his clerk Cano Ip to arrange a conference with Counsel for the plaintiff. He cannot say definitely whether Cano had carried out his instructions. PW1 Mr. Chow categorically testified that one or two days before the hearing he held a conference in his Chambers with the plaintiff and Cano whereas the plaintiff definitely denied it and challenged Mr. Chow to the effect that Mr. Chow lied about conference. Mr. Chow gave his reasons why he could categorically recalled so well that the conference was held mainly that the plaintiff had conveyed to him in conference a number of matters, the most striking of which so retaining in his memory was that the plaintiff's one-room accommodation was so congested and appalling that his young son had to be sometimes in physical contact with his young daughter on the lower bunk which the children shared. I accept the evidence of Mr. Chow. I see no reason at all why should he lie. In fact Mr. Chow convinced me as a witness not only of truth but of great caution, telling only those matters which he could really remember that he was convinced himself that he remembered. He gave me the impression that he would rather leave it as matters not recalled than risking not telling the truth whenever he was in some doubt. I found all that I mentioned in this paragraph are true.

8. Now on the date of hearing. Firstly, it was not in dispute that the defendant firm was careless in failing to obtain the Occupation Permit before 8th of January. Secondly, Mr. Chow applied for the adjournment which was granted without objection from the defendants. The important issue is the cause for the application for the adjournment. The plaintiff contended that the lack of Occupation Permit was the sole cause in effect. I do not accept that as being contrary to the evidence as a whole. True Mr. Chow in chief had only the Occupation Permit in mind when dealing with the application and the lack of the Occupation Permit was stated and recorded as the ground for the adjournment on the 8th before Judge Wane. However, under cross-examination when reminded of the necessity to eventually discontinue the then action and the main reason behind it, PW1 came to recollect that in effect there was the other reason that there was no valid notice served on all the defendants, the tenants and sub-tenants. It was abundantly clear also on his evidence that Judge Wane then took up the case at as late as sometime after 12 p.m. (which the plaintiff said it was about 12.30 p.m.) when it's turn of the floater was called upon. With 12 defendants around, surely the case even started would not have been concluded at the end of the day, say at 5 p.m. or even a bit beyond. Eventually it took 2 days as we shall see. It would have to be made part-heard in any event. On the evidence I find that there were 3 reasons as above stated which prompted Mr. Chow to advise and obtain consent from the plaintiff to seek the adjournment. I further find that even if the Occupation Permit was in hand, an application for adjournment would have been made on the ground of no notice to quit. In fairness to the plaintiff, the lack of Occupation Permit was just as important as the other two, if not more. It is certainly true that that was the deepest impression on the mind of PWl when he was giving evidence in chief this morning. Incidentally PW1, I think, did make a mistake when he said the case was first heard in the Fire Brigade Building for it is apparent from Notice of Hearing Exh. P6 that the case was then heard exclusively in this building Pokfulam. I find that mistake on the part of Mr. Chow was an honest mistake due to lack of memory with passage of time complicated by the sizeable number of cases he had attended to in court all these years. There was, about this time, at least one judge sitting at Fire Brigade doing tenancy matters. That I can take judicial notice of it. I am sure that this mistake in no way put the truthfulness and the accuracy of PW1's evidence in question.

9. After the adjournment, Mr. Ip PW1 was even at greater pain as to what to do with the case. He consulted his solicitor brethren as well as various Counsels who appeared to hold different views. He decided to wait until the outcome of the appeal in NGAI Sau-ying, the decision of which was not delivered by the Court of Appeal until May 1982 which judgment incidentally had become a milestone in the interpretation of sections 52 and 53 the final legal judicial opinions of that, as far as I am aware, are still not unanimous although it has been a uniform practice now for solicitors to take it, and if I may say so, quite sensibly that notice to quit is a must. However, by March 11, 1982, Mr. Ip must have decided that it would be wiser to discontinue the old action and start afresh. That he did on that date by filing Notice of Discontinuance. On 15th of March, four days later, he saw to it that the Notice to Quit on the tenant was served and on the same day a letter to all sub-tenants informing them that the Notice to Quit had been served was sent by registered post to all sub-tenants with another copy of the Notice posted up at a conspicuous place of the suit premises for three consecutive days. The Notice expired on 30th April. 6 days later, on 6th May the defendant firm issued a writ for the 2nd action, Action No. VCJ 3418 of 1982. No Defence was filed within 14 days as required by statute and application for default judgment was applied for, which judgment was obtained on 27th of July, 1982. Suffice it to mention here that three or four weeks' time was needed to comply with the various procedures of drawing up the default judgment, approval of it by the Court and further disposal of it. On llth of August, 1982, a Notice of Judgment was sent to all the defendants. 6 days later, on the 17th, the defendant firm received from Arthur Au & Co., Solicitors, notice to act for all the defendants and notice that application was being made to set aside the default judgment. The application was heard on the 9th of September 1982 in which the default judgment was in fact set aside with leave to file defence. Defence of all the defendants was filed on the 17th September. On the 25th September the defendant firm made an application to set the case down for trial and it was set down for the 4th of November, 1982. On 4th November, the date of the hearing, Judge Tony Wane (the reference of Judge H, Wong in the Defence in this action was obviously a mistake) adjourned the hearing on the application of solicitor for the defendants that the 11th Defendant had gone to Mainland China for further medical treatment after prior treatments at Queen Mary Hospital. I was at one stage of the trial puzzled by the delay of some four months for it was not until 7th of March, 1983 that the defendant wrote to Arthur Au pressing for arrangement to refix the date of hearing. The cloud was cleared by Exh. D2, a letter from Arthur Au to defendant dated 13th of March 1983 in which the defendant was informed that the 11th Defendant had returned from Mainland China some days ago, obviously referring to several days from 13th of March. Mr. Ip, PW1, did not give detail evidence on it. That was understandable because he really did not personally handle the case in so far as most of the direct contact between solicitor and client was concerned. It was clear from D2 that the defendant could not have pressed Arthur Au for an early date of hearing, much earlier than 7th of March if at all. On 16th of March 1983, the defendant wrote to Deputy Registrar, Victoria District Court for the restoration of the hearing and the action was reset down for the 6th and 7th of June 1983. Hearings were had before Judge Henry Wong on those two days with judgment reserved. On 17th of June, 1983, Judge Wong entered judgment for the plaintiff with possession of the suit premises to him amongst other relief but staying execution for possession for 3 months until end of September. Eventually in September 1983, at long, last the plaintiff moved into the flat which he owns. I accept Mr. Ip, DW1's, evidence on the history and the sequences leading not only to the adjournment and discontinuance but to the final conclusion of the case. Mr. Ip strikes me as a solicitor of great caution in the conduct of the proceedings for the defendant I agree with Miss Sze that had Mr. Ip personally chosen to be irresponsible, all he needed to do was to go ahead after the adjournment on the 8th of January by asking for a new hearing date on the 8th without giving a thought to whether to discontinue the action. Mr. Ip must, as I have said, bewildered, as many solicitors and barristers and others concerned or interested with the tenancy law must have been, with what was the law relating to requirement of notice to quit Afterall he had agreed costs for only $4,000 without taking into consideration the necessity of engaging a Counsel at the time the fees were agreed Certainly when Counsel's service was included for the hearing of the 8th, the fees were very much on the low side even in 1982. And I am also impressed by Mr. Ip's evidence that he never exaggerated a single bit in his evidence on details or matters of importance, for example he made no attempt to close the gap between November and March before he wrote to Arthur Au for restoration of the case.

10. The picture would not be complete without reference to the fact that some of the defendants did ask for leave to appeal against Judge Wong's decision but was turned down by Judge Wong himself.

11. I have verified from the two court files which have been exhibited for this action the various dates and legal steps taken and found them to be accurate as above stated.

12. All the evidence contrary to my above findings had been given due consideration but rejected, i.e. on all my above findings. So much so for the facts, what will be the legal consequences? I have at all the times very much in mind that impolite-as it may be, the defendant firm was careless when neglected to obtain the Occupation Permit to be produced in court on the 8th of January, 1982. For avoidance of any misunderstanding, that was the only piece of neglect I found on the conduct of the defendant firm, none others. I am sure, let alone on a balance of probabilities, that otherwise the defendant firm and Mr, Ip in particular had acted diligently, cautiously, knowledgeably, carefully and skilfully in the exercise of his judgment as to what course of action he ought to take before and after the adjournment. Be that as they may, neglect for no Occupation Permit remained. However, the adjournment, I am quite confident, was not caused just by the lack of Occupation Permit but was caused by the other two reasons stated as well. I am not diluting the importance of the Occupation Permit. But the other two reasons were each as much the operative reasons as the Occupation Permit. Moreover, from the legal consequence point of view, even with a good and valid Occupation Permit produced, the trial on the 8th of January could not have been concluded. As I have said it would have been made part heard due to the large number of defendants. The adjournment was a foregone conclusion at the time round about 12.30 p.m. when the Court took up the case from the floater for half a day only. In other words, the neglect for no Occupation Permit did not cause the adjournment. In terms of consequences, it had only side-line significance. It really matters not whether or not there was an Occupation Permlt-result rise. As I understand the law, a plaintiff could only succeed on negligence if the damages suffered resulted from the negligence save and except in certain peculiar actions such as that based on perhaps malice of which this is not one. The law on the matter is so clear that the established law has not been retested again in modern times. Suffice it to remind myself of the law by reading and perhaps for completion of record quoting Chitty on Contracts - General Principles, 25th Edition, 1982, paragraph 726 at page 397:

".... A solicitor may be liable to his client both in contract and in tort for negligence in failing to exercise a reasonable amount of skill, diligence and "knowledge, but not for the consequences of a mistake on a doubtful point of law or a nice point of practice." (The case of Godefroy [1830] 6 Bing. 460 and others were referred to in the foot note. )

13. Even if I were wrong in finding that there was a complete lack of negligence (in fact much diligence was shown) in the judgment of Mr. Ip DW1 and in the conduct of the firm for the due prosecution of the defendant's action (save and except of course no notice) any mistake on the part of Mr. Ip or the firm or his assistant solicitors that might have been made must have been honest mistakes on a point of law very much in doubt at the time. As a matter of fact, I think Mr. Ip had made the correct decision. If he was to be criticised at all, I would criticise him for not making the decision earlier on, i.e. before the case cane on the 8th of January. He was a cautious man. For a very bold man, one would have strongly advised to abandon ship before the end of 1981. Afterall lawyers are not expected to be brave men. Caution may be a better virtue than bravery in the battle of law.

14. Before I leave the matter, I should add that I suspect that there was certain amount of misunderstanding between the plaintiff and Mr. Cano Ip, the defendant's clerk, due to a gap in communication. Perhaps the plaintiff was a person who needed to be explained painstakingly on matters of law especially law of sublety arising from a change and perhaps Mr. Cano Ip did not possess the quality of such patience for that job.

15. For the above reasons, I find that the defendant is not negligent in the sense that either the firm or any of the solicitors involved was so negligent as to be responsible for whatever damages that the plaintiff might claim to have suffered as a result of the delay for obtaining physical possession of his flat, which delay was fully accounted for as above found and stated. In the result, it is unnecessary for me to go into damages as liability has not been established. Judgment is entered for the defendant (this action is dismissed). I shall hear Counsel and party on the matter of costs.

16. Having heard party and Counsel on the matter of costs, I order that nominal cost of $1 to solicitor for the defendants, namely Ford, Kwan who, if I may say so, true to its professional spirit, admirably acted on a complimentary basis. I said true to its professional spirit not in the narrow brotherhood sense of the profession but in the broader sense of justice. And I also award a Certificate for Counsel in this case and Counsel's costs to the defendant to be taxed.

17. I have given serious thought to making no order as to costs but in all the circumstances of the case I don't think this is a case fit to be an exception to the rule that costs follow the event There was no good reasons to make it an exception particularly when an offer of $10,000 which I believe is true had been made to the plaintiff for settlement out of court on a without prejudice basis and it was refused. The plaintiff might have a sense of grievance with regard to the occupation permit issue and started this action but surely he should have balanced this factor against all the other factors. A prudent man would have asked for some legal advice before the action was started and certainly before he would turn down the offer of $10,000. Just to avoid any further misunderstanding on the law by the plaintiff, when an offer was made without prejudice it means that the defendant was not admitting any liability but was making the offer for reasons such as practicality, feasibility or "call it a day" or other reasons. I say this to dispel any illusion on the part of the plaintiff as to why should he lose the case when afterall an offer had been made to him I have also taken into due consideration the failure to obtain the Occupation Permit and my high suspicion that there was a communication gap between Cano Ip and the plaintiff for which Cano Ip as a staff of the firm for the plaintiff must be blamed and not the defendant. It was for these reasons that I have given serious consideration to make an order as to costs and it was for the same reasons that I had boldly found out from Counsel that most probably Messrs. Ford, Kwan would be on a complimentary basis in the consequence that I award only a nominal cost of $1 as solicitor's costs.