[English Translation-英譯本]
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
ACTION NO. 1153 OF 2003
-------------------
BETWEEN
BANK OF CHINA (HONG KONG) LIMITED (中國銀行(香港)有限公司)Plaintiff
and
THE PERSONAL REPRESENTATIVE OF FU KIT KEUNG, DECEASED (FORMERLY TRADING AS JAN SPEED AUTO SERVICE)
1st Defendant
LAI MEI LIN( 賴美蓮)
2nd Defendant
-------------------
Before: Hon Chu J in Court
Dates of Hearing: 28 & 29 July 2009
Date of Judgment: 13 August 2009
_______________
J U D G M E N T
_______________
1. Two matters come to be dealt with in this hearing:
(1) The claim and counterclaim between the plaintiff and the 2nd defendant; and
(2) The summons issued on 3 December 2008 by the plaintiff pursuant to O.50, r.1 of the Rules of the High Court, which seeks a charging order on the 1st defendant’s interest in the On Kay Court property to be referred to below, for the purpose of enforcing a judgment previously entered in the plaintiff’s favour.
Background facts
2. Mr. Fu Kit-keung (“Mr. Fu”) and the 2nd defendant were husband and wife; they were married in 1976. Their only son was born in 1977.
3. Mr. Fu died in a traffic accident on the Mainland on 6 September 1999. Prior to his death, he was the sole proprietor of Jan Speed Auto Service (“Jan Speed”).
4. On 27 May 1982 Mr. Fu and the 2nd defendant purchased from the Hong Kong Housing Authority the property situated at Flat 6, 12th Floor, Block B, On Kay Court, 20 Chun Wah Road, Ngau Tau Kok, Kowloon (“the On Kay Court property”) and held the property as joint tenants. The property was under the “Home Ownership Scheme” of the Hong Kong Housing Authority.
5. In a letter to Kincheng Banking Corporation (“Kincheng”) dated 24 November 1992, Messrs. Leong, Lam & Co. (“Leong, Lam & Co.”) stated that they were instructed by Mr. Fu and the 2nd defendant to apply to the bank for general banking facilities to the extent of $600,000. Kincheng later agreed to grant an overdraft facility up to $600,000 to Jan Speed.
6. On 5 January 1993, Mr. Fu and the 2nd defendant executed a mortgage (“the 1993 mortgage”), by which the On Kay Court property was mortgaged to Kincheng as security for the overdraft facility granted to Jan Speed. The mortgage was executed at Leong, Lam & Co. in the presence of Mr. Sze Kin-wing, a clerk in the employ of Leong, Lam & Co. at that time. Under the Housing Ordinance (Cap. 283 of the Laws of Hong Kong) applicable in 1993, Mr. Fu and the 2nd defendant had to pay a premium to the government before they could alienate or convey the property: see sections 17AA and 17B of and paragraph 1(a) of the Schedule to the Ordinance. The undisputed fact is that Mr. Fu and the 2nd defendant had not paid a premium to the government before they executed the mortgage.
7. Mr. Fu (in his own name and on behalf of Jan Speed) and the 2nd defendant also signed a confirmation letter dated 7 January 1993 to confirm that the credit facility as secured by the mortgage over the On Kay Court property was subject to a limit of $600,000.
8. On the same day, Leong, Lam & Co. also confirmed to Kincheng by letter that the relevant mortgage had been duly executed.
9. The 1993 mortgage was in fact an “all monies” mortgage. The mortgage provided that the extent of the credit facility granted to Jan Speed by the bank was to be governed by a credit facility letter separately signed by both parties, and hence any subsequent adjustment to the extent of facility could be made simply by way of another credit facility letter signed by the parties without the need to execute a fresh deed.
10. The overdraft facility granted to Jan Speed by Kincheng was extended to $1 million on 18 October 1993. Under a credit facility letter dated 1 April 1997, the overdraft facility in favour of Jan Speed was further extended to $1.6 million and was secured by the mortgage over the On Kay Court property. Both Mr. Fu and the 2nd defendant signed on the credit facility letter to confirm acceptance of and agreement to the conditions set out in the letter.
11. On the other hand, the 2nd defendant signed a guarantee (“the 1st guarantee”) on 18 October 1993 to stand surety for Jan Speed’s indebtedness to Kincheng to the extent of a principal sum of $1 million together with interest and other costs. Subsequently, the 2nd defendant signed a second guarantee dated 11 July 1995 (“the 2nd guarantee”), by which payment was guaranteed to the extent of a principal sum of $800,000 together with interest and other costs.
12. As mentioned above, Mr. Fu passed away on 6 September 1999. As at 30 September 1999, Jan Speed had overdrawn a total sum of $1,590,968.95. The 2nd defendant wrote to Kincheng on 12 April 2000, expressing her wish to re-mortgage the On Kay Court property in order to obtain a loan of $1.25 million and requesting the bank to agree to exempt her from payment of the interest in arrears on the overdrawn sum on account of her hardship and good faith.
13. Thereafter, Kincheng agreed to the re-mortgage of the On Kay Court property and instructed Messrs. Ford, Kwan & Co. to prepare the relevant legal documents. The 2nd defendant also applied to the Director of Housing on 10 September 2000 for approval of the re-mortgage. However, the transaction in the end did not come through. From the documents and the testimony of the plaintiff’s witness Mr. Ho Wing-kin (paragraph 14 of his statement), the reasons seemed to be that the form adopted by the 1993 mortgage was irregular and that approval of the Director of Housing had not been obtained or no payment of a premium had been arranged prior to the execution of the 1993 mortgage.
14. In January 2001, Kincheng decided to seek recovery of the debts owed by Jan Speed.
15. On 18 September 2001, the 2nd defendant had a meeting with the staff of Kincheng to discuss how to deal with the indebtedness of Jan Speed. Thereafter, the 2nd defendant wrote to the bank on 5 October 2001, putting forward a repayment and settlement proposal. It is undisputed that no agreement was reached between the parties in that connection.
16. Pursuant to the Bank of China (Hong Kong) Limited (Merger) Ordinance (Cap. 1167 of the Laws of Hong Kong), Kincheng became a part of the plaintiff as from 1 October 2001. For this reason, the plaintiff succeeded to Kincheng’s interests and became the secured creditor of the 1993 mortgage, Jan Speed’s and Mr. Fu’s creditor as well as the beneficiary of the 1st and 2nd guarantees.
17. The plaintiff issued letters through its solicitors to the 2nd defendant on 6 May 2002 and 21 March 2003, demanding repayment of the debts owed by Jan Speed under the 1993 mortgage and the 1st and 2nd guarantees.
18. On 28 March 2003, the plaintiff issued the writ of summons in the present action, claiming against Mr. Fu’s estate and the 2nd defendant for the debts owed by Jan Speed. The 2nd defendant filed a defence and counterclaim on 30 April 2003. After the plaintiff had filed a reply and defence to the counterclaim, the 2nd defendant filed a reply to the plaintiff’s defence.
19. On the other hand, pursuant to the order of the Master on 21 December 2004, the Official Solicitor was appointed to represent Mr. Fu’s estate for the limited purpose of accepting service of the writ of summons in the present action. On 2 February 2007, the plaintiff was allowed to proceed with the action notwithstanding that Mr. Fu’s estate was unrepresented. Subsequently, the plaintiff obtained a default judgment against the 1st defendant (i.e. Mr. Fu’s estate) on 8 August 2007.
20. As regards the claim and counterclaim between the plaintiff and the 2nd defendant, on 16 June 2008 the plaintiff applied to set the case down for trial.
21. Since 27 November 2008, the 2nd defendant has not been legally represented and has instead acted in person. As a result, at the pre-trial review on 15 December 2008, Burrell J adjourned the trial of the case to a date to be fixed so that it could be heard before a bilingual judge. Since then, the plaintiff has provided the 2nd defendant with Chinese translations of the witness statements (including the 2nd defendant’s own statement).
The plaintiff’s claim
22. The plaintiff’s claim against the 2nd defendant rests upon the following bases:
(1) the 2nd defendant’s personal covenant for repayment in the 1993 mortgage; and
(2) the 2nd defendant’s liability for repayment under the 1st and 2nd guarantees.
The 2nd defendant’s defence and counterclaim
23. The 2nd defendant denied any liability to the plaintiff for repayment of Jan Speed’s debts under the 1993 mortgage or the 1st and 2nd guarantees.
24. Regarding the 1993 mortgage, the 2nd defendant has put forward the following defence in her pleadings:
(1) The mortgage, which was executed without the consent of the Director of Housing, is void under section 17B(1) of the Housing Ordinance; and
(2) The 2nd defendant executed the mortgage as a result of misrepresentation by Mr. Sze Kin-wing and undue influence of Mr. Fu, and Kincheng had actual and/or constructive knowledge thereof, and hence the mortgage should be declared void.
25. As regards the 1st and 2nd guarantees, the 2nd defendant has put forward the following defence in her pleadings:
(1) Her signatures on the two guarantees were in fact not her deeds (non est factum );
(2) She executed the two guarantees as a result of misrepresentation by Mr. Fu and/or Mr. Li Tai-pang, an employee of Kincheng’s, as well as undue influence of Mr. Fu, and Kincheng had knowledge thereof. The two guarantees should therefore be declared void; and
(3) The plaintiff’s claim exceeds the $1.8 million limit of guarantee under the two guarantees. This defence is obviously misconceived. The extent of guarantee mentioned in each of the two guarantees refers to the principal sum and does not include accrued interest and other costs.
26. At the same time, the 2nd defendant counterclaims against the plaintiff for the following relief:
(1) Rescission of the 1993 mortgage and delivery up of the mortgage deed for cancellation;
(2) Return of the title deeds of the On Kay Court property; and
(3) A declaration that the 1st and 2nd guarantees are void, and delivery up of the two guarantees for cancellation.
Issues at trial
27. The issues between the plaintiff and the 2nd defendant at trial can be grouped under the following two major heads:
(1) Is the 1993 mortgage legally valid? This involves three issues:
(a) Is the mortgage completely void by reason of section 17B of the Housing Ordinance?
(b) Is the mortgage void under the principle of misrepresentation? and
(c) Is the mortgage void under the principle of undue influence?
(2) Are the 1st and 2nd guarantees legally valid? Again this involves three issues:
(a) Are the two guarantees not binding on the 2nd defendant under the principle of non est factum ?
(b) Are the two guarantees void under the principle of misrepresentation? and
(c) Are the two guarantees void under the principle of undue influence?
28. In the present case, the plaintiff’s claim against the 2nd defendant would be established if the 1993 mortgage or the two guarantees were found to be legally valid.
Witnesses at trial
29. At trial, the plaintiff called three witnesses, namely Mr. Sze Kin-wing, Mr. Mak Sui-fung and Mr. Ho Wing-kin. Mr. Sze was a clerk of a solicitors’ firm who witnessed the execution of the 1993 mortgage by the 2nd defendant. Mr. Mak was in charge of the debts involved in the present case during the period between June 2001 and the merger of Kincheng and the plaintiff. He attended the meeting between the 2nd defendant and the bank staff on 18 September 2001. Mr. Ho is a collection manager of the plaintiff and is currently responsible for handling the debts involved in the present case. The plaintiff did not call Mr. Li Tai-pang, who had allegedly made misrepresentation to the 2nd defendant, because Mr. Li had left the plaintiff’s employ without leaving any means of contact.
30. The 2nd defendant was the only witness for the defence.
Is the 1993 mortgage legally valid?
(1) The Housing Ordinance
31. According to paragraph 6 of the recital of the deed of assignment executed by Mr. Fu and the 2nd defendant upon acquiring the On Kay Court property, the assignment was subject to the provisions in the Schedule to the Housing Ordinance and relevant amendments thereto.
32. Paragraph 1 of the Schedule to the Housing Ordinance which was applicable at the time of execution of the 1993 mortgage required a purchaser of a property under the Home Ownership Scheme to pay a premium before alienating or conveying the property. The plaintiff does not dispute that this requirement applied to a mortgage over the property and that Mr. Fu and the 2nd defendant had not paid a premium before executing the 1993 mortgage.
33. Section 17B of the Housing Ordinance which was applicable at the time of execution of the 1993 mortgage provided as follows:
17B. Where –
(a) any land in any estate is sold under section 17A to any person; or
(b) any land in respect of which the Authority is authorized to nominate purchasers is sold to a person nominated by the Authority,
any alienation or conveyance or purported alienation or conveyance or any agreement to alienate or convey such land –
(i) by that person in breach of any term or condition of the agreement for sale and purchase or any covenant in the deed of assignment relating to such land; and
(ii) by a mortgagee of such land in breach of any of the terms on which the mortgage was authorized by the Secretary for Housing,
shall be void.
34. The plaintiff does not dispute that the On Kay Court property was governed by section 17B(a), and that the failure to pay a premium before executing the 1993 mortgage constituted a breach of a term of the deed of assignment within the meaning of section 17B(i). However, the plaintiff submits that the provision in section 17B that “any alienation or conveyance or purported alienation or conveyance or any agreement to alienate or convey such land … shall be void” would not render all the terms of the 1993 mortgage void. The plaintiff’s argument is: section 17B only affected the provisions in the mortgage on the charging of the On Kay Court property to the bank and did not affect the validity of the personal covenant for repayment under clause 2.01 of the mortgage.
35. In Konew Finance Ltd v. Wong Kai Ming (No.2) [2001] 4 HKC 218, District Judge Lok considered whether an agreement for an equitable mortgage would be rendered void by section 17B of the Housing Ordinance and pointed out that the legislative intent of section 17B concerned only agreements to charge properties and not other agreements or arrangements. The Judge therefore held that the agreement for repayment in that case was not void by reason of section 17B.
36. The version of section 17B of the Housing Ordinance which was applicable in the Konew Finance Ltd case is a post-1993 amended version which expressly provides that any agreement to mortgage is governed by that section. Although that version is somewhat different from the one involved in the present case, Judge Lok’s observation on the legislative intent of section 17B equally applies. The terms in the Schedule to the Housing Ordinance and the provision of section 17B are obviously aimed at ensuring that alienations or conveyances of properties under the Home Ownership Scheme are in line with the object of the Scheme and that the Scheme will not be enjoyed by ineligible people or otherwise be abused. What the Ordinance intends to govern are properties under the Scheme and interests in those properties. The Ordinance is not intended to disrupt or affect normal lending or commercial activities and relationships. As Judge Lok pointed out, to interpret section 17B in such a way as to nullify agreements for the advancement and repayment of loans would go beyond the legislative intent and lead to injustice: see page 222.
37. In fact, the version of section 17B which applies in the present case merely provided that “alienation”, “conveyance” and “agreement to alienate or convey” were void. On its express wording, the provision had nothing to do whatsoever with the advancement and repayment of loans or agreements therefor. In my view, whether judging from its express terms or from its legislative intent, section 17B merely served to nullify a relevant arrangement or agreement to charge the property and did not affect an arrangement or agreement for the advancement and repayment of a loan.
38. In the 1993 mortgage, clause 2.01 was an undertaking for repayment given jointly and severally by Mr. Fu and the 2nd defendant to the bank, whereas clause 3.01 related to the charging of the On Kay Court property by Mr. Fu and the 2nd defendant to the bank. In my judgment, on the above analysis of section 17B of the Housing Ordinance, that section merely nullified the clause in the 1993 mortgage relating to the charging of the property and did not affect the validity of clause 2.01. It follows that, under clause 2.01, both Mr. Fu and the 2nd defendant were contractually obliged to fully repay the debts owed by Jan Speed upon demand of the bank. Even though no premium had been paid prior to the execution of the 1993 mortgage, clause 2.01 was still legally valid.
(2) Misrepresentation
39. The second ground of defence raised by the 2nd defendant on the 1993 mortgage is: before she signed the mortgage, Mr. Sze Kin-wing, who was then employed by Leong, Lam & Co., had made misrepresentation to her and the plaintiff had knowledge thereof.
40. In paragraph 14 of her defence and counterclaim, the 2nd defendant provides the following particulars of her allegation of misrepresentation:
(1) Mr. Sze did not explain the contents of the mortgage deed. He merely told the 2nd defendant to sign on the document, thereby impliedly representing to her that the mortgage was proper and lawful.
(2) In reliance of Mr. Sze’s representation, the 2nd defendant signed the 1993 mortgage.
(3) Mr. Sze made the said representation with knowledge that it was false.
(4) As a manager of the bank, Mr. Li Tai-pang should have known that a property under the Home Ownership Scheme could be mortgaged only with prior approval of the Housing Authority.
(5) The bank knew that no prior approval had been obtained from the Housing Authority prior to the execution of the 1993 mortgage.
(6) In 2001, the 2nd defendant complained of this problem to Mr. Mak Sui-fung and Mr. Tsang Yat-ming, a manager of the plaintiff. Therefore, the plaintiff had knowledge of the misrepresentation.
41. The 2nd defendant’s testimony, which is by and large the same as the contents of her defence, is that Mr. Sze simply told her to sign the mortgage documents without explaining to her the nature and effect thereof. Mr. Sze has taken issue with what the 2nd defendant pleaded and said. Such discrepancies in their evidence will be dealt with below, under the section on undue influence.
42. In respect of the allegation that the 1993 mortgage was tainted with misrepresentation and should therefore be set aside, even if what the 2nd defendant said in her pleadings and testimony were accepted in their entirety, the alleged misrepresentation was not based on certain conduct on the part of Mr. Sze in relation to the mortgage but was rather based on the silence that Mr. Sze had kept on the mortgage. In other words, the 2nd defendant’s case is that Mr. Sze’s silence constituted a representation that the 1993 mortgage was proper and lawful, and that the representation was a misrepresentation because the mortgage was void under section 17B of the Housing Ordinance.
43. As a matter of law, mere silence or inaction does not constitute a representation unless the person concerned has a duty to disclose in law or he knowingly withholds a material part of a representation: see Halsbury’s Laws of England (4th edition 2003 Re-Issue) Vol. 31 paras. 748-751.
44. As far as the legal effect of the 1993 mortgage is concerned, Kincheng had no duty in law to make full disclosure to the 2nd defendant: Kincheng Banking Corp. v Kao Yu Kuei [1986] HKC 212, 214F, 215F. Nor did Leong, Lam & Co. or Mr. Sze bear such duty.
45. Furthermore, on the above analysis, not all the clauses of the 1993 mortgage were void. And the undisputed evidence is that in 1993 Kincheng did not know that the mortgage contravened the deed of assignment and the provisions in the Housing Ordinance regarding payment of a premium, or that the mortgage would be partially void by reason of section 17B. Mr. Sze testified that when he received the file from other colleagues of the solicitors’ firm, he did not know that a premium had to be paid in respect of the property, much less know that no premium had been paid or that the relevant requirements had not been complied with. This being the case, there is nothing in the facts which indicates that Mr. Sze knowingly withheld from the 2nd defendant the non-payment of a premium and non-compliance with the statutory requirements.
46. Put simply, even if, as the 2nd defendant alleges, Mr. Sze had simply asked her to sign the documents without explaining the nature and contents thereof, it did not in law constitute a representation of fact that the 1993 mortgage was proper and lawful.
47. Furthermore, the evidence in the present case does not indicate that the 2nd defendant had been induced by the alleged misrepresentation to sign the 1993 mortgage. As a matter of general principle, it is for the party who puts forward the defence of misrepresentation to prove that the alleged misrepresentation had affected her mind: Chitty on Contracts (30th edition, 2008) para. 6-032. The 2nd defendant testified that she had no knowledge at all that what she signed was a mortgage document, and that Mr. Sze had never mentioned that the document was a mortgage instrument. She insisted that she did not know what she signed was a legal document, still less know that it would involve legal consequences and legal obligations or might even affect her personal interest. On the 2nd defendant’s own assertion, the legality of the 1993 mortgage could not possibly have been a matter of concern to her at the material time and would not have affected her mind or decision.
48. In light of the above analysis and reasons, I hold that the 2nd defendant has failed to prove that the 1993 mortgage was procured by misrepresentation. Her defence based on misrepresentation must fail, and her counterclaim for setting aside the 1993 mortgage falls to be dismissed.
(3) Undue influence
49. The third ground of defence raised by the 2nd defendant on the effect of the 1993 mortgage is that the mortgage was procured by undue influence exercised on her by Mr. Fu and the bank had knowledge thereof.
50. Undue influence is a principle under the law of contract. It can constitute a ground for nullifying a contract and can serve to discharge the contractual liabilities of the parties to a contract. The legal principles on undue influence have been set out in decided cases such as Royal Bank of Scotland plc v Etridge (No. 2) [2002] AC 773; Li Sau Ying v Bank of China (Hong Kong) Ltd (2004) 7 HKCFAR 579; and Bank of China v Leung Ngai Hang & Choi Yin Yee (CACV 250/2005, judgment delivered on 12 January 2006).
51. Where someone seeks to set aside a transaction between her and a third party (e.g. a bank) on the ground that her husband had exercised undue influence over her, the court has to consider three issues:
(1) Has the wife proved to the satisfaction of the court that she was indeed unduly influenced by her husband?
(2) If yes, did the other party to the transaction know of the presence of undue influence and was put on enquiry accordingly? and
(3) If the other party to the transaction was put on enquiry, did he take reasonable steps to establish that the transaction was not procured by undue influence?
See Royal Bank of Scotland v Etridge (No. 2) ,para. 101.
52. The facts relied on in support of the 2nd defendant’s claim that the 1993 mortgage was procured by her husband’s undue influence are (see paragraph 16 of her defence and counterclaim): The two of them got married in 1976 and had lived together since then. The 2nd defendant entrusted the financial matters of the family to her husband and had all along reposed trust and confidence in him in relation to those matters. She did not take part in managing the business of Jan Speed. She signed the mortgage at the request of her husband to enable him to obtain an overdraft facility of $600,000 for his business. The mortgage was (the 2nd defendant says) a transaction most disadvantageous to her as it was for an unlimited amount of money and involved the liability to pay interest and other costs.
53. The 2nd defendant claims that the bank had constructive knowledge of the undue influence. Her case is that, following a few social gatherings with her and Mr. Fu, Mr. Li Tai-pang came to know that they were husband and wife and in a relationship of mutual trust and resided together at the On Kay Court property.
54. As regards the circumstances under which she signed the 1993 mortgage, the 2nd defendant has this to say in paragraphs 5 to 7 of her witness statement (of which the original is in English):
5. In about January 1993, my late husband told me that he needed to borrow a sum of HK$600,000 for his business. He said that he could apply for an “OD” from [Kincheng] Bank which was a personal debt to him. The interests charged depended on the “OD” used. However, he requested me to sign some documents because I was his wife. Mr. Li Tai-pang told him that both the husband and wife had to sign the documents for approval. Then, I thought those documents were formally requested by [Kincheng] Bank for granting a personal debt for my husband. It is only until this case then I know “OD” means “an overdraft facility”.
6. Thereafter, my late husband told me to sign a document in a solicitor firm, namely Leong, Lam & Co. (“the said Firm”). He told me that the said Firm was provided by [Kincheng] Bank. I remember that when I arrived at the said Firm, my late husband and a male later known as Mr. Peter SZE were already there. Mr. Peter SZE was a representative of the said Firm.
7. Once I sat down, Mr. Peter SZE told me to sign a document. He did not explain to me the nature and effect of the document. Nor any copy given to me. In the premises, I relied upon my late husband and just believed it was an official document required by [Kincheng] Bank for granting an “OD” to my husband. I had no idea that it was a Deed of Mortgage.
55. In her testimony, the 2nd defendant also mentioned that she came to know Mr. Li Tai-pang through her colleagues at work. He was then the manager of Kincheng’s Quarry Bay branch office. As he took his car to Jan Speed for repair, he and the 2nd defendant and her husband became friends. They often had meals and played mahjong together.
56. On the other hand, Mr. Sze Kin-wing, who was then responsible for arranging execution of the mortgage by the 2nd defendant and Mr. Fu, described the circumstances at the material time as follows (paragraphs 5 to 9 of his witness statement (of which the original is in English)):
5. From the letter of the Firm to the Plaintiff’s predecessor namely Kincheng Banking Corporation (“KBC”) dated 24 November 1992, the Firm had informed KBC that it acted for Fu and the 2nd Defendant with instructions to apply to KBC for banking facilities to the extent of HK$600,000.00. If KBC had any further queries, it could contact me [see item 2 of the Plaintiff’s List of Documents].
6. Upon review of the Mortgage and the letter of the Firm to KBC dated 7 January 1993 [see item 32 of the Plaintiff’s 2nd Supplemental List of Documents], I note that on 5 January 1993, Fu and the 2nd Defendant went to the office of the Firm at 2nd Floor, Chiu Lung Building, 15-25 Chiu Lung Street, Central, Hong Kong. In view of the lapse of time, I cannot recall exactly what happened on that date. However, it is my usual practice at that time that when I met the clients, I usually arranged them to the conference room first. I then made photocopy of their identity cards. Thereafter I would confirm with them the instructions given to the Firm. I would also explain to them that under the Mortgage, the mortgaged property had to be charged to the mortgage bank as security for the banking facilities to the borrower. I would explain to them the extent of amount covered by and their liabilities for repayment of loan under the Mortgage. Before I requested the clients to sign on a mortgage, I asked them whether they understood and satisfied with the terms of the mortgage. I would only ask them to sign on the mortgage after they indicated to me that they understood and satisfied with its terms. After their execution of the mortgage document, the solicitor would sign his/her name and attest my signature.
7. As the incident took place on 5 January 1993, I cannot remember the detailed circumstances under which the Mortgage was executed. But, I am sure that I explained the terms of the Mortgage, to Fu and the 2nd Defendant as stated above because it is my invariable practice to explain the terms of the Mortgage to the borrower and the mortgagor in such manner.
8. I would like to refer to paragraph 14 of the Defence and Counterclaim wherein the 2nd Defendant alleged, inter alia , that she was induced to sign the Mortgage by my misrepresentation. Further, she alleged that I at the Firm did not explain the contents of the Mortgage to her and I just told her to sign, impliedly representing to her that the Mortgage was proper and lawful. In reliance of my said alleged representation, she signed the Mortgage. The said representation is false and fraudulently made by me.
9. I do not agree with that all such allegations. I would never induce anybody including the 2nd Defendant to sign a mortgage document without first explaining to him/her the contents thereof and his/her extent of liability and confirmed with him/her their understanding before execution of the mortgage documents. I therefore strongly denied the 2nd Defendant’s said allegations and I confirmed that I had never made any false and fraudulent representations during the whole transaction as alleged or at all.
57. Mr. Sze had worked as a clerk at Messrs. Johnson Stokes & Master since 1978 and, as such, was involved in conveyancing transactions. In 1986 he left that firm and joined Leong, Lam & Co. When he testified at trial, he gave a “live” demonstration of how he would normally explain to clients a document similar to the 1993 mortgage. During cross-examination, the 2nd defendant pointed out to Mr. Sze that she was very busy on the day of execution of the mortgage and only stayed at the solicitors’ firm for a short time, and hence Mr. Sze could not have explained the mortgage document to her in detail. Mr. Sze’s reply was that, given that a mortgage was a document with important consequences, and with his many years of training and work experience in solicitors’ firms, he would never perform his duties perfunctorily by allowing clients to execute documents without first giving clients an explanation.
58. Mr. Sze is in my view a forthright witness. He admitted that as he was merely responsible for meeting Mr. Fu and the 2nd defendant and arranging for them to sign the mortgage, he did not check whether a premium had to be paid before the On Kay Court property could be mortgaged and he did not know at that time that no payment of premium had been made. The “live” demonstration shows that he was very experienced in explaining documents similar to the 1993 mortgage and had a firm grasp of the relevant salient points. I believe his testimony that, in line with his usual practice, he did explain to Mr. Fu and the 2nd defendant that the mortgage was an “all monies” mortgage, with the amount of the loan being subject to a separate facility letter to be signed by the borrowers; that the bank could demand repayment of the loan from the owners of the property, who had provided cross-guarantees for the loan; and that upon the borrowers’ default in repaying the loan, the bank was entitled to sell the property and seek recovery from the owners of the remaining outstanding sum.
59. I have reservations over the 2nd defendant’s claim that she had no knowledge whatsoever of the nature and contents of the document that she signed and that she did not even know that it was a mortgage document. As a matter of common sense, however hurried the 2nd defendant might be, Mr. Sze could not possibly have proceeded with the execution of the mortgage without even mentioning that it was a mortgage. Furthermore, on her own testimony, the 2nd defendant did know that she was going to the solicitors’ firm for the purpose of signing a document relating to Mr. Fu’s application to the bank for a loan, and she understood that it was an important document which the bank required her to sign. That being the case, if she did not have the faintest idea of the nature of the document, she would have certainly asked Mr. Sze or Mr. Fu. Nothing in her testimony indicates that she was on bad terms with Mr. Fu or that she had other reasons to refrain from asking Mr. Fu what was happening. Nor does her testimony reveal any reason on the day in question which made her refrain from asking Mr. Sze what it was that she was signing or which made her reluctant to do so. What is more, in 1993, the 2nd defendant was not a person who had no social or work experience whatsoever. She began driving a school bus when her son was studying in Primary 3 or 4 (in about 1986 or 1987), had her own vehicle, and had the experience of entering into a hire purchase for the vehicle. As a matter of fact, when she and Mr. Fu acquired the On Kay Court property in 1982, they mortgaged it to a bank. In my view, judging from all the objective evidence and facts, the 2nd defendant could not have failed to know that what she signed was a mortgage, an instrument having legal consequences and binding on her.
60. Even if the 2nd defendant’s testimony on the circumstances surrounding the execution of the 1993 mortgage were accepted in its entirety, it still could not, in my view, have established the element of undue influence.
61. In Royal Bank of Scotland v Etridge (No. 2) , the House of Lords pointed out that it naturally followed from a normal and healthy marriage that there was mutual trust between husband and wife and that the wife fully supported the husband’s business ventures. Therefore, undue influence could not be presumed from the mere fact that the wife had all along reposed trust and confidence in the husband and had agreed to act as surety for the husband’s business and debts: see paragraphs 159, 160, 162 and 244 of the judgment.
62. The situation in the present case is the same. Taken at its highest, the 2nd defendant’s testimony merely shows that there was a relationship of mutual trust between her and Mr. Fu. The fact that she entrusted her and the family’s financial affairs to Mr. Fu only showed that Mr. Fu had influence over her. As to her claim that she signed the document solely because she heeded Mr. Fu’s request, this only shows that she signed the document because she was under Mr. Fu’s influence. However, apart from proving that she was under Mr. Fu’s influence, she has to adduce evidence to prove that Mr. Fu had exercised undue influence on her.
63. However, there is no evidence in the present case to show that Mr. Fu had abused the trust and confidence which the 2nd defendant had reposed in him or had misleadingly induced or improperly pressurized the 2nd defendant into signing the 1993 mortgage. On the contrary, what Mr. Fu had allegedly told the 2nd defendant was in fact all correct, including that the bank had requested her to go to the solicitors’ firm to sign documents and that this was a condition for the grant of an O.D. of $600,000 to Mr. Fu’s business.
64. As to the 2nd defendant’s allegation that the mortgage was a transaction most disadvantageous to her, generally speaking, husband and wife are, as pointed out in Royal Bank of Scotland v Etridge (No. 2) , bound up in weal or woe. If the husband’s business is the main source of family income, the wife’s and the family’s well-being will naturally run hand-in-hand with that of the husband and with the performance of his business. Therefore, it is normal and natural for a wife to do all she can to assist the husband by, for instance, charging the matrimonial home as security for the husband’s business borrowings or acting as a guarantor. It cannot be said that such an arrangement is necessarily most disadvantageous to the wife or that such a transaction is necessarily prejudicial to her: see paragraphs 28 and 30 of the judgment.
65. In short, the 2nd defendant has in my judgment failed to prove that the 1993 mortgage was procured by the exercise of undue influence on her by Mr. Fu. This being the case, it is not necessary for the court to determine whether the bank had knowledge of the undue influence and was under a duty to make inquiries, and whether the bank had taken reasonable steps to satisfy itself that the mortgage was not procured by undue influence. I shall just briefly deal with two related matters.
66. First, even if the 2nd defendant’s testimony were accepted in its entirety, this could not lead to the conclusion that Mr. Li Tai-pang was aware that Mr. Fu had exercised the so-called undue influence over the 2nd defendant or that the 2nd defendant did not sign the 1993 mortgage of her own volition. Therefore, there is no evidential basis to support the allegation that the bank had actual or constructive knowledge of the alleged undue influence; hence the bank had no duty to make inquiries: paragraph 41 of the judgment in Li Sau Ying v Bank of China (Hong Kong) Ltd ; and paragraphs 15 to 16 of the judgment in Bank of China (Hong Kong) Ltd v Leung Ngai Hing & Choi Yin Yee .
67. Secondly, as there was no obvious risk of undue influence, the bank at that time was merely required to satisfy itself that the 2nd defendant clearly understood the nature and effect of the 1993 mortgage and that she signed the document of her own volition: paragraphs 36 to 37 of the judgment in Li Sau Ying v. Bank of China (Hong Kong) Ltd . On his evidence, Mr. Sze Kin-wing should have clearly told the 2nd defendant that the document was a mortgage and also the salient terms thereof. I agree with the submission of Mr. Man of Counsel that the bank had taken reasonable steps to satisfy itself that the 2nd defendant signed the mortgage of her own volition and with a clear understanding of the relevant matters.
(4) Conclusion on the 1993 mortgage
68. On the above analysis and grounds, I find that the personal covenant for repayment in the 1993 mortgage was legally valid and binding on the 2nd defendant. The 2nd defendant’s counterclaim on the 1993 mortgage must fail.
Are the 1st and 2nd guarantees legally valid?
(1) Non est factum
69. The first ground of defence raised by the 2nd defendant on the 1st and 2nd guarantees is that her signatures on the documents were not her deeds (non est factum ). In paragraph 20 of her defence, the 2nd defendant pleads that she had been induced to sign the documents by misrepresentations from Mr. Li Tai-pang and Mr. Fu (i.e. the documents were overdraft facility documents) and that she genuinely believed that the documents concerned overdraft facilities.
70. Specifically, the 2nd defendant has this to say in her pleadings:
(1) She signed two documents at the request of Mr. Li Tai-pang and Mr. Fu.
(2) Before she did so, no one explained the nature or contents of the documents to her, and at the time of signing the documents she was only shown the execution page thereof.
(3) Upon inquiry, she was merely told that it was a document granting overdraft facilities to Mr. Fu.
(4) With her limited education, the 2nd defendant understood overdraft facilities to mean that they enabled Mr. Fu to borrow money for his business.
(5) The 2nd defendant did not know that, as a consequence of signing the guarantees, she would be liable for the money borrowed by Mr. Fu. Furthermore, the total guaranteed amount of $1.8 million far exceeded her earning capacity. Had she known the truth at that time, she would definitely not have agreed to the terms of the guarantees.
71. Regarding the circumstances under which she signed the two guarantees, the 2nd defendant has this to say in paragraphs 9 to 11 of her witness statement (of which the original is in English):
9. Several months later, my late husband told me that [Kincheng] Bank could increase the amount of “OD” but required me to sign some more documents. I thought those were standard documents as before. Further, I relied upon my late husband and I trusted him.
10. In relation to the 1st Guarantee dated 18 October 1993, I had no idea when it was signed. I only remember that by that time Mr. LI Tai-pang always joined us for meals and played mahjong. Sometimes, he would bring documents for my signature. Every time, he just turned to the relevant page and directed me to sign. Although I had asked for the nature, my husband said it was just a document of OD provided by [Kincheng] Bank. Mr. LI did not explain and just urged me to sign. Also, no copy was given to me.
11. Similarly, I could not recall how the 2nd Guarantee dated 11 July 1995 and the ‘Facility Letter’ dated 1 April 1997 were signed. I believe those documents were signed under the same circumstances as the 1st Guarantee.
72. Under cross-examination, the 2nd defendant conceded that when she signed the document she knew that it was about Mr. Fu’s intention to increase the amount of overdraft, that it was an important document, and that she would have to bear certain consequences once she put her signature on it. She also agreed that she signed the document of her own volition in order to help Mr. Fu borrow money from the bank. However, she stressed that she did not know it was a guarantee that she signed. Nor had she ever envisaged that she would become personally liable for repayment or incur other liabilities, much less questioned why she was required to sign bank documents when the loan involved was Mr. Fu’s personal loan.
73. I find it difficult to accept the 2nd defendant’s allegation that she did not know that the documents which she signed would have legal effect or render her personally liable for the legal consequences. Although she was only educated up to Form 2, by 1993 and 1995 she had gained considerable social and working experience, had been exposed to credit and loan arrangements, and had had the experience of signing documents relating to such transactions. She was clearly aware at the material time that what she signed were documents required by the bank for the purpose of increasing the amount of overdraft facility in Mr. Fu’s favour. A reasonable person in these circumstances could not possibly have thought or believed that the 2nd defendant would after signing the documents not be personally liable at all for Mr. Fu’s overdraft debts. If it had not indeed crossed her mind that those documents would lead to liabilities and consequences, then she had obviously adopted an attitude of burying her head in the sand and avoiding the reality without trying to understand the actual situation.
74. Regarding the doctrine of non est factum ,the party who seeks to rely on it as a defence must prove that the transaction with which the document he signed was concerned is fundamentally different in substance from the transaction which he understood it to be, and that he had acted with reasonable care when he signed the document: Saunders v. Anglia Building Society [1971] AC 1004, 1015-1016. In other words, a person who signed a document negligently and carelessly could not plead non est factum in order to deny the legal validity of the document which he signed and its binding effect on him: see Kincheng Banking Corporation v. Kao Yu Kuei [1986] HKC 212, 215D.
75. In the present case, on the 2nd defendant’s own testimony, she had apparently not acted with reasonable care when she signed the two guarantees. Although she alleged in her defence and counterclaim that Mr. Li Tai-pang and Mr. Fu had made misrepresentations to her concerning the documents, there was in fact no misstatement in what the two persons had allegedly told her. This is because the two guarantees were indeed documents required to be signed for the purpose of extending the overdraft facility to Mr. Fu. Nothing in the 2nd defendant’s evidence indicates that anyone had told her that upon signing the two documents she would not incur any personal liability or become liable for the overdraft loans to Mr. Fu. Furthermore, as discussed above, the 2nd defendant had no reasonable ground to believe or think that by signing the documents she would not have to bear legal consequences or be personally liable for the overdraft loans to Mr. Fu. Any misunderstanding or lack of understanding on her part of the effect of the two guarantees was the result of her failure to gain a clear idea of the documents before she signed them. As she had signed the two guarantees negligently and carelessly, she is precluded from relying on non est factum as a defence.
(2) Misrepresentation
76. The 2nd defendant’s second ground of defence is that the two guarantees were procured by misrepresentation from Mr. Li Tai-pang and Mr. Fu. Her case in this respect is similar to that in respect of non est factum : see paragraph 22 of her defence and counterclaim. Although the 2nd defendant pleads that Mr. Li and Mr. Fu had made misrepresentation intentionally and fraudulently, she has not given particulars of the allegation of fraud. Nor does her testimony support a case of intentional fraud. In her final submission, the 2nd defendant claimed that as Mr. Li was involved in a case of conspiracy to defraud, there was reason to believe that at the material time he intended to mislead and conceal the nature of the documents in order to have the transaction completed and derive benefit therefrom. There is, however, neither solid evidence that Mr. Li had indeed been criminally prosecuted nor any evidence of the relevant details. Even if his integrity were indeed in doubt, it still could not be concluded that he had intentionally defrauded or dishonestly misled the 2nd defendant in 1993 and 1995. As pointed out above, there was no misstatement in what Mr. Li and Mr. Fu told the 2nd defendant (as she mentioned in her testimony) because the two guarantees were indeed documents pertaining to the extension of the overdraft facility to Mr. Fu and the bank loan to him. The 2nd defendant did not mention in her testimony that Mr. Li had said any other thing about the two guarantees or the underlying transactions. Nor did she say that either Mr. Li or Mr. Fu had ever represented to her that she would not be personally liable for Mr. Fu’s loans after signing the two documents.
77. On the other hand, generally speaking, the bank had no legal duty to explain the terms of the documents and their legal effect to the 2nd defendant: see Kincheng Banking Corporation v. Kao Yu Kuei , at page 215. It follows that Mr. Li, as an employee of the bank, had no legal duty to explain the terms of the guarantees and their legal effect to the 2nd defendant.
78. On the evidence before me and the relevant legal principles, the 2nd defendant has in my judgment failed to establish that the 1st and 2nd guarantees were procured by misrepresentation and should therefore be void and not be binding on her.
(3) Undue influence
79. The third ground of defence raised by the 2nd defendant in relation to the two guarantees is that they were procured by Mr. Fu’s undue influence and the bank had constructive knowledge thereof. The case that she put forward in her defence is similar to that in respect of the 1993 mortgage (which was allegedly tainted with undue influence) and that in respect of the two guarantees (the signatures on which were allegedly non est factum ).The 2nd defendant’s evidence in this connection has been referred to above.
80. Regarding the 1st and 2nd guarantees, the 2nd defendant’s testimony merely shows that she signed the two documents at Mr. Fu’s request. And that she agreed to sign the two guarantees because she had reposed trust and confidence in Mr. Fu and was under his influence. However, the evidence in the present case does not at all indicate that Mr. Fu had abused the 2nd defendant’s trust and confidence in him, or had pressurized her or by other means induced or brought pressure to bear on her. Nor, as stated above, had Mr. Fu misrepresented to the 2nd defendant in relation to the documents, the loan transactions involved or his business or financial condition. In these circumstances, there is simply no evidence to support the claim that Mr. Fu had exercised undue influence. The fundamental element of this ground of defence does not exist. For these reasons, the defence that the two guarantees were procured by undue influence is not made out.
(4) Conclusion on the 1st and 2nd guarantees
81. On the above analysis and grounds, I find that the 1st and 2nd guarantees are both legally valid and binding on the 2nd defendant. The 2nd defendant’s counterclaim on the two guarantees must fail.
Other grounds of defence
82. Apart from the above grounds of defence, the 2nd defendant also alleged in her defence and counterclaim (paragraphs 5 and 6) that during a meeting on 18 September 2001, Mr. Mak Sui-fung on behalf of Kincheng verbally promised and agreed not to calculate further interest on the outstanding principal owed by Mr. Fu to the bank and to stay legal proceedings for the time being. However, according to the 2nd defendant’s witness statement (paragraphs 21 and 22), although at the meeting she did request that the interest be frozen, Mr. Mak only agreed to relay her request to his supervisor. Subsequently, the 2nd defendant reiterated the request in her letter of 5 October 2001 but the bank never replied. The 2nd defendant also confirmed in her evidence at trial that she had not reached any agreement with the bank on the freezing of interest or the non-commencement of legal proceedings. On the other hand, the documents disclosed by the plaintiff indicate that the Deputy General Manager of Kincheng had as early as on 4 January 2001 directed that steps be taken to collect the debt. According to the testimony of Mr. Ho Wing-kin, a witness for the plaintiff, although the bank’s staff subsequently discussed with the 2nd defendant about repayment arrangement, there was no record that the bank had agreed to any repayment proposal or responded to the 2nd defendant’s proposals.
83. This being the case, there is no evidence to support the promise or agreement as pleaded by the 2nd defendant.
84. The 2nd defendant pointed out in her final submission that the non-payment of a premium prior to execution of the 1993 mortgage was the result of the fault on the part of the bank and the solicitors’ firm, but she has become the victim for no reason and this is unfair to her. As stated above, as no premium had been paid in respect of the mortgaged property, the arrangement and terms under the 1993 mortgage relating to the charging of the property are void by reason of the Housing Ordinance. The consequence is that the bank is precluded from exercising the relevant power under the 1993 mortgage, namely to take possession of the On Kay Court property on the ground that the borrower’s loans has not been repaid, and to sell the property to set off the indebtedness. This has not caused any actual damage to the 2nd defendant. Therefore, the failure to pay a premium for the property prior to execution of the 1993 mortgage has not caused any injustice to the 2nd defendant.
85. The 2nd defendant also complains that as the present case has been delayed for years, a substantial amount of interest has been accrued, and to date the principal and interest total over $3 million. I note that as at 6 May 2002, when the plaintiff through its solicitors first made a demand to the 2nd defendant for repayment, the accrued interest was $164,508.91. However, the plaintiff did not institute the present action until almost one year later, on 28 March 2003, which was more than 3 years after Mr. Fu passed away and more than 2 years after the bank decided to demand repayment of the debts. By that time the accrued interest had already exceeded $467,000. Following the commencement of the present action, the exchange of pleadings between the plaintiff and the 2nd defendant was completed back in October 2003. When the plaintiff obtained judgment against the 1st defendant on 8 August 2007, the total outstanding principal and interest thereon had exceeded $3.8 million.
86. Mr. Man of Counsel has explained that, as a result of issues concerning the representation of Mr. Fu’s estate and the procedural problems arising therefrom, other procedures of the case had been affected and the case was not set down for trial until June 2008. Mr. Man has also submitted that the huge sum of interest is primarily caused by the 2nd defendant’s refusal to perform her obligation to repay the debts under the 1993 mortgage and the two guarantees, as a result of which the bank had to resort to legal action and trial of the case.
87. The borrower passed away back in September 1999, but the bank’s action for debt recovery protracted all the way to 2009. This, I agree, is hardly satisfactory. Apart from the cessation of the 2nd defendant’s legal representation, which resulted in an adjournment of the trial to another date to be fixed, there is no indication that the 2nd defendant has done anything which caused a delay in the proceedings. On the other hand, the plaintiff has not proceeded expeditiously with the debt recovery action. For example, it did not issue a demand letter to the 2nd defendant until May 2002, and its applications to the court for directions on the issue of representation of the 1st defendant in the present proceedings were not made once and for all but were made sporadically, often with a long interval of time in between.
88. It is true that had the 2nd defendant not taken issue with the repayment of debts, the recovery action could have been concluded earlier and the interest would not have been accumulated to such a huge sum as it now stands. However, the plaintiff as creditor ought to have acted reasonably promptly in recovering the debts. Furthermore, the undisputed fact that the 2nd defendant wrote to the bank in April 2000 and in October 2001 with proposals on repayment shows that she did not refuse to deal with the loans right from the beginning. In fact, in the letter dated 5 October 2001, she requested the bank to suggest alternative proposals if the bank did not accept her proposals, but the bank did not respond and instead issued a formal demand letter more than half a year later.
89. Mr. Man agrees that whether a judgment debt is to carry interest and the calculation of such interest are matters of discretion for the court. In my judgment, in the circumstances of the present case, the interest to be awarded to the plaintiff as against the 2nd defendant should be calculated up to the date of this judgment.
Costs
90. Turning to the question of costs between the plaintiff and the 2nd defendant, in line with the usual rule of practice that costs should follow the event, I make a costs order nisi that costs of the plaintiff be paid by the 2nd defendant, to be taxed if not agreed. Although the relevant loan documents provide that the legal costs of the plaintiff are to be assessed on a solicitor and client basis, the costs awarded to the plaintiff as against the 1st defendant were assessed not on this basis but on a lower party and party basis, and in my view the costs of the plaintiff’s claim against the 2nd defendant should also be assessed on a party and party basis.
Application for a charging order
91. As to the plaintiff’s application for a charging order pursuant to the judgment entered in its favour against the 1st defendant, the plaintiff’s case is that if the court concludes that the 1993 mortgage is void by reason of undue influence from Mr. Fu or on any other ground which only concerns the 2nd defendant, then Mr. Fu’s act of mortgaging the On Kay Court property to the bank without seeking the consent of or notifying the other joint tenant constituted a unilateral alienation of his interest in the property. Under the rules of equity, this situation was tantamount to a severance of the joint tenancy between Mr. Fu and the 2nd defendant in the On Kay Court property during Mr. Fu’s lifetime: see Megarry & Wade: The Law of Real Property (17th edition, 2008) para. 13-008; First National Securities v. Hegerty [1985] 1 QB 850; Campbell v. Buchanan Smith (British Columbia Supreme Court, 5.12.1991); and Bank of Montreal v. Kozsil (British Columbia Court of Appeal, 27.2.1985).
92. The plaintiff’s application for a charging order is made on the premise that the 1993 mortgage is declared void vis-a-vis the 2nd defendant. As I have held that the mortgage is not void vis-a-vis the 2nd defendant by reason of undue influence, it is not necessary for me to deal with this summons and I will not make any order in respect of the summons.
Conclusion
93. I make the following orders:
(A) The claim and counterclaim between the plaintiff and the 2nd defendant
(1) The 2nd defendant do pay the plaintiff:
(a) the sum of HK$3,814,693.11; and
(b) interest on the sum of HK$1,956,280.36 at the rate of 17.75% per annum (or HK$951.34 per day) from 28 July 2007 to 8 August 2007 and at judgment rate from 9 August 2007 until the date of this judgment.
(2) The 2nd defendant’s counterclaim be dismissed.
(3) The 2nd defendant do pay the plaintiff costs of this action in respect of the claim and counterclaim between the plaintiff and the 2nd defendant, to be taxed on a party and party basis if not agreed. This order nisi shall become absolute 14 days after the date of this judgment unless either party applies to vary the order.
(B) Application by way of summons for a charging order
No order be made in respect of the summons or costs of the application.
(Carlye Chu)
Mr. Bernard Man, instructed by Gallant Y. T. Ho & Co., for the Plaintiff.
The 2nd Defendant in person, present.
Translated by the Judgment Translation Unit of the Judiciary and approved by Mr. Edmund Cham, Solicitor.