CHOW SIU PO v. CHEERBOND DEVELOPMENT LTD

HCMP 1043/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1043 OF 2008

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J U D G M E N T

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1.  This is a vendor-purchaser summons.  The issue is discrepant signatures.  The plaintiff and the defendant entered into a sale and purchase agreement on 3 April 2008.  The plaintiff was the purchaser and the defendant the vendor.  The purchase price was $3,980,000.  Pursuant to the agreement, the plaintiff paid the defendant $400,000 deposit.  Completion was scheduled on 5 May 2008.

The respective claims and counterclaims

2.  The defendant’s previous solicitors duly delivered the title deeds to the plaintiff’s solicitors for perusal.  The plaintiff’s solicitors duly raised requisitions.  There was, however, one requisition on discrepant signatures that the parties could not resolve.

3.  The plaintiff’s solicitors on 8 May purportedly terminated the agreement on the ground of the defendant’s breach.  They sought the return of the $400,000 deposit.  They also reserved the right to claim damages from the defendant.  They returned the title deeds and documents to the defendant’s former solicitors as well.  The plaintiff now claims the return of the deposit and damages.  He says that the defendant could not have forfeited the deposit because it has failed to provide satisfactory answers to the requisition.  Alternatively, he says that the deposit exceeded the conventional 10% by $2,000.  The deposit therefore cannot be forfeited.  He relies on Workers Trust and Merchant Bank Limited v Dojap Investment Limited [1993] 2 All ER 370.  He also claims a lien on the property for the deposit and damages.  He has registered the originating summons against the defendant’s property at the Land Registry.

4.  The defendant’s former solicitors on 10 May 2008 also purported to terminate the agreement on the ground of the plaintiff’s breach.  They also purported to forfeit the $400,000 deposit and rescind the agreement.  The defendant now counterclaims for a declaration that it has answered the requisition satisfactorily and that the deposit has been forfeited.  The defendant further claims damages from the plaintiff for breach of the agreement and for slander of title because of the plaintiff’s registration of the originating summons at the Land Registry.

The discrepant signatures

5.  I now come to the issue of discrepant signatures.  One of the title deeds is a deed of gift dated 16 September 1982 (“the Deed”).  It was made by a Madam Ng in favour of her two sons, Messrs. William Y (or Yee) Lee and Tom Lee, Jr. (or Junior), both of the USA.

6.  Mr William Yee Lee executed the Deed as donee in the USA before a British Vice Consul.  The execution clause reads:

“SIGNED, SEALED and DELIVERED by the said William Y (or Yee) Lee, one of the Donee (he having been previously identified by the production of his Texas Drivers Licence in the presence of: -”

To the right of this clause is the signature of Mr William Yee Lee.  The attestation clause underneath reads:

“The above signature, William Y Lee was made this sixteenth day of September nineteen hundred and eighty two at the British Consulate General, Houston, by a person unknown to me who stated he was William Lee and produced by way of identification Texas Drivers Licence issued in the name of William Lee, before me Christine Hayes, British Vice Consul at Houston.”

7.  The next title deed is a power of attorney (“the Power”) purportedly made by Mr William Yee Lee on 16 January 2008 before a notary public in Texas.  It states that it was given on 16 January 2008 by:

“WILLIAM Y (or YEE) LEE (holder of Texas Drivers Licence issued in the name of William Lee and holder of U.S.A. Social Security Card Number 463389672).” 

The address stated in the Power is the same as that in the Deed. 

8.  The execution clause in the Power contained the same description of William Yee Lee as in its beginning which was by reference to the Texas Drivers Licence and the same social security card number.  To the right of the execution clause and above the attestation by the notary public is a signature of this William Yee Lee.  

9.  Unfortunately, this signature does not appear similar to that of Mr William Yee Lee made in the Deed.  This signature appears to have been made by a very unsteady hand.  The strokes appear to have been written bit by bit by a sick or even disabled person.  The strokes appear to have been written slowly and with some degree of difficulty.  There also appears to have been two attempts in writing the capital letter “W” with one at a higher position and the other at a lower and more to the left position.

10.  It is because of the discrepancy between this signature in the Power and the signature of William Yee Lee in the Deed that the plaintiff’s solicitors raised the requisition.  They wanted proof that the William Yee Lee who signed the Deed was the same William Yee Lee who signed the Power.  The reason being that Tom Lee, Jr. had, pursuant to the Power, sold William Yee Lee’s interests together with his own interests in the property to the defendant.

11.  In the course of answering the requisitions, the former solicitors of the defendant further produced a “statutory durable power of attorney” (“the Statutory Power”), which was also purportedly executed by William Yee Lee.  The execution of the Statutory Power was acknowledged by the same notary public who attested the execution of the Power.

12.  The Statutory Power was dated 14 October 2005.  It starts by saying:

“I, WILLIAM YEE LEE, address (the same address as in the Deed and the Power), my social security number being 463-38-9672, appoint TOM LEE, JR. … as my agent (attorney-in-fact) to act for me ...”

There is a signature by this William Yee Lee at the end and above the acknowledgement by the notary public.  However, this signature does not appear similar to the one in the Deed or the one in the Power except that it also appears to have come from an unsteady hand with some strokes written bit by bit.

13.  There is no dispute that the William Yee Lee who executed the Statutory Power on 14 October 2005 is the same William Yee Lee who executed the Power on 16 January 2008.  Both Powers were executed before the same notary public.  On both occasions, the signor was identified by a social security card issued by the US Government and bearing the same number.

14.  Both the William Yee Lee who executed the Deed in September 1982 and the William Yee Lee who executed the Power in January 2008 were identified by a Texas Drivers Licence issued in the name of “William Lee” though without mentioning the number of the licence.

15.  I accept that this person who appeared before the notary public in October 2005 and January 2008 was indeed known as William Yee Lee as evidenced by his social security card.  In the circumstances, I do not think he could be someone other than the William Yee Lee who executed the Deed as one of the donees.  I do not think it likely for the brother, Tom Lee, Jr., to have located another William Yee Lee who was prepared to take part in a fraud by impersonating another William Yee Lee and to defraud the latter’s interests in a real property.  The discrepant signatures can be explained by a long lapse of time and/or illness.

16.  The defendant also relies on the cases of Chan Fu Wa & Another v Chu Bon Mok HCMP 280 of 1993, Ulsan Limited v Lau Kam Shing & Another [1997] 3 HKC 740, and New Jade Enterprises Limited v Jing Ying She Limited HCA 13764/1997.  However, each case of discrepant signatures depends on its own facts and I do not think it necessary to rely on these cases in coming to my conclusion.

17.  I therefore find that the signatures by William Yee Lee in the Deed made on 16 September 1982 and in the two Powers made on 14 October 2005 and 16 January 2008 respectively were all made by the same William Yee Lee.  On this finding, Mr Lau, counsel for the plaintiff, accepts that the defendant has answered this requisition satisfactorily.  That disposes of the issue of discrepant signatures in favour of the defendant.

Forfeiture of deposit exceeding 10%

18.  On the question of forfeiture of the deposit which was in excess of the conventional 10%, I think the reason for fixing the deposit at $400,000 instead of $398,000 was merely for rounding up to a round figure.  Though there is no evidence on why the deposit was so fixed, I do not think there was any attempt on the part of the defendant to extract from the plaintiff a deposit which was significantly more than the conventional 10%.  In any case, I think this 0.5% excess can be regarded as de minimus and shall not affect the defendant’s right of forfeiture.

Decision on liability

19.  I therefore declare that the defendant has satisfactorily answered the plaintiff’s requisition.  I dismiss the plaintiff’s originating summons.  I further declare that the defendant was entitled to forfeit the $400,000 deposit and terminate the agreement.  I also order that the registration of the originating summons at the Land Registry be vacated. 

Damages

20.  On the question of liability for damages for slander of title by registration of the originating summons at the Land Registry, the plaintiff disputes it during the hearing.  He would like to argue it out as a matter of law.  I therefore adjourn the issue of the plaintiff’s liability to pay damages for the wrongful registration of the originating summons at the Land Registry for argument. 

21.  I also adjourn the issue of the plaintiff’s liability to pay damages for breach of contract or the assessment of such damages to be dealt with at the conclusion of the argument on the plaintiff’s liability for the wrongful registration.  The parties shall arrange an appearance before the listing officer for a date to be fixed for this purpose.  I reserve one day for this purpose.

(Discussion re costs)

22.  This is a tough case and I do not envy the position of the plaintiff’s solicitor who had the duty of advising on the acceptability of the title or the adequacy of the answer to the requisition.  However, if the defendant should have taken the further task of seeking assurance from its own vendors or the vendors’ solicitors or seek assistance from the legal professionals or other professionals in Houston, Texas for further verification of Mr William Yee Lee, it might be that this case would not have been necessary.  The defendant did not do what it could have done and, hence, the need for this case.  I think it is not entirely unreasonable for the plaintiff to have pursued this matter despite it having failed.  In the circumstances, I think no order as to costs is a fair order and I so order.