LEE SAU LING v. CHAN MAN SANG AND ANOTHER and KNIGHT & HO (A firm of Solicitors) (Third Party)

HCMP 1731/98

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1731 OF 1998

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D E C I S I O N

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1. In this matter, the Originating Summons was filed on 23rd April 1998. The Originating Summons has since been amended twice, the Re-amended Originating Summons having been filed on 12th March 1999. It is the usual vendor and purchaser summons type of Originating Summons, with the Plaintiff (the purchaser) claiming that the Defendants had failed to answer her requisitions sufficiently or satisfactorily, and claiming the return of deposit and an order for payment of stamp duty, reimbursement of estate agent's commission and costs. The Originating Summons has been registered against the Defendant/vendor's property by way of a lis pendens.

2. On 1st April 1999, apparently the Defendants alleged that their solicitors might have been professionally negligent in their conduct of that conveyancing transaction. On 7th April 1999, a letter was written by the Defendants' solicitors to the Defendants advising the Defendants to seek separate legal advice & representation.

3. On 26th April, there was a notice of change of solicitors and on 21st May 1999, about one month before the hearing of the Originating Summons, a summons was issued by the Defendants for leave to issue Third Party proceedings against those solicitors (who would now be referred to as "the Third Party"). One sees, therefore, that as between the 7th April and 21st May, the Defendants had taken some time to get legal advice from new legal advisers.

4. Unfortunately, the summons issued on 21st May for leave to issue Third Party proceedings against the solicitors was fixed for hearing as late as 14th June 1999. The Defendants to their credit did attempt to expedite that hearing but for reasons which I am not able to fully comprehend, that was not acceded to and it was not until 14th June 1999 that the Defendants got leave to issue the Third Party Notice against their solicitors. The Third Party Notice was effectively served on their solicitors on 15th June 1999 and the acknowledgment of service was filed on 23rd June 1999.

5. It is clear to me that there are a number of common issues in the main action and in the Third Party action. The most fundamental issue is whether the Third Party as the solicitors for the Defendants had answered the Plaintiff's requisitions satisfactorily or sufficiently. If the Third Party can persuade the court that the requisitions were answered satisfactorily, there is no question of any negligence by those solicitors.

6. It is in the nature of Third Party proceedings and indeed it is the commendable rationale of Third Party proceedings that the Third Party should be able to participate and be bound by the outcome of the trial in the main action. However, today is the scheduled hearing of the main action and as can be seen from the dates which I have previously referred to, the Third Party proceedings are far from ready.

7. I appreciate the point made by Mr. Horace Wong, counsel for the Plaintiff, that whatever may be the rights and wrongs of the Defendant and the Third Party, that has nothing to do with the Plaintiff. I appreciate that there may be some prejudice to the Plaintiff, but the Plaintiff's claim is only a monetary one and therefore, if there is, as a result of any delay, any prejudice, that can be compensated by interest. Similarly, as far as the hearing of the main action together with Third Party action is concerned, the Plaintiff's counsel would only need to take part in the main action and not in the Third Party action. Further, I note that the Plaintiff would not really be prejudiced because security has been provided by its registration of a lis pendens.

8. In my view, it would be unfair for the Third Party to be bound by the decision in the main action (if it were to proceed today) when it cannot really take part in the proceedings. I accept that as early as at 21st May, the Third Party would have realised that a claim was being made against it and that the main action was to be heard today. But, as I have said, it was not until 15th June that it was served with the Third Party Notice, and the Third Party is entitled to the benefit of legal advice and representation in the preparation of its case in the same way as the Defendants are entitled to such separate legal advice and preparation in the main action.

9. It is clear from the case quoted to me by the counsel for the Defendant Myers v. Sherick [1974] 1 WLR 31 that the issue of solicitors' negligence in a conveyancing transaction should be tried together with the main action. Clearly, it would have been ideal if the Third Party proceedings had started much earlier and therefore could have proceeded in tandem with the main action. However, I am not in a position today to say who is in the right and who is in the wrong in those proceedings taking some time to commence, but clearly, in my view, it would be wrong if this court were to allow the main action to proceed today with the Third Party as it were not really taking part.

10. Miss Cheng, counsel for the Third Party, has submitted that what the Defendants ought to do is simply to issue separate proceedings against the Third Party. In that way, the main action could proceed today. However, in my view, the court has this Third Party procedure for a very good reason, and the reason is to avoid the injustice and the embarrassment that would occur if the court were to arrive at a different conclusion at the hearing of the subsequent proceedings, and as I have emphasised, it is fundamental to the present case whether the requisitions had been satisfactorily answered by the Third Party as solicitors for the Defendant.

11. Taking all the above matters into consideration, in the exercise of my discretion, I think the only thing that I can do today is to adjourn the hearing of the main action and to give directions for as expeditious as possible Third Party proceedings so that the Third Party action can catch up with the main action, and for the matter to be heard as soon as possible. I will now hear the Defendant and the Third Party as to the timing of the various steps set out in the summons for Third Party directions.