YEUNG SHU v. ALFRED LAU & CO (A FIRM) AND ANOTHER

---------------------------------------------------

REASONS FOR JUDGMENT

---------------------------------------------------

Nazareth V-P:

Introduction

1. Having heard Mr Wilson Chan for the appellant, we dismissed the appeal without calling upon the respondent who appeared in person. We now give our reasons.

2. The original plaintiffs in these proceedings were a Mr Yeung and his wife. In 1979 they decided to buy a flat in a building which a Mr Chang was then intending to build on a plot he owned at No. 55 Main Street, Aplichau ("No.55). They entered into a Sale and Purchase Agreement with Mr Chang on 13th November 1979 retaining Solicitors for that purpose. Unfortunately the Solicitors failed to register the Sale and Purchase Agreement and Mr Chang not only failed to erect the building, but disposed of the share in No. 55 in association with the proposed flat. By then he had left Hong Kong for Taiwan. The plaintiffs instituted proceedings against the Solicitors, who brought in Mr Chang by means of a Third Party Notice seeking contribution in respect of damages they might be ordered to pay. Keith J found both defendants liable and apportioned the plaintiffs' loss equally between them ordering the Solicitros to pay $175,000 to Mr Yeung and Mr Chang to contribute $87,500 to the Solicitors. The Solicitors now appeal to this Court against that apportionment of damages, claiming that Mr Chang ought to contribute a much greater share. That then is the nature of the appeal before us, but of course aspects of the matter have to be addressed in much greater detail.

The facts

3. Since the commencement of the proceedings Mr Yeung's wife has died and my references to Mr Yeung include him born in his personal capacity and as personal representative of his wife's estate.

4. The purchase price they agreed with Mr Chang was $84,000 and the Sale and Purchase Agreement acknowledged the payment by Mr Yeung and the receipt by Mr Chang of $33,600.

5. Mr and Mrs Yeung were not the first purchasers of the intended flat. Mr Chang had first agreed to sell it to Mr Lee Shui-wai. That agreement was accordingly cancelled and Mr Yeung paid $56,000 to Mr Lee for cancellation of his agreement and the right to buy the flat himself. By a supplementary agreement on the same day, 13th November 1979, the date of the completion of the building was extended and Mr Yeung agreed to pay $4,000 as compensation, apparently for Mr Chang to pursue the completion of the building despite practical difficulties.

6. The Solicitors submitted a bill for their services, including registration of the Sale and Purchase Agreement and disbursement of $30 for the registration fee, although, as I have said, it was never registered.

7. Mr Chang subsequently left Hong Kong for Taiwan. The building was never completed. In 1988 one Mr Siu Chun-wing, to whom Mr Chang had given a power of attorney, executed two documents relating to No. 55 on behalf of Mr Chang. The first, on 1st June 1988, was a Sale and Purchase Agreement under which Mr Chang agreed to sell No. 55 to Harvest Step Development Ltd ("Harvest Step"), along with adjoining land, for a total of $16.8 million. The second document, executed on 9th September 1988, was an assignment of No.55 to Harvest Step together with the adjoining land. The value attributed to No. 55 was $4.2 million. It was clear from the Sale and Purchase Agreement with Harvest Step that both Mr Chang and Harvest Step were well aware that there were a number of sale and purchase agreements registered against the plot of land or parts of it which had not been completed, that negotiations to cancel these agreements were continuing and that if the vendors failed to complete the sale, Harvest Step would be entitled to the return of its deposit together with interest.

8. Although the Sale and Purchase Agreement with Mr Yeung had not been registered, Mr Chang to his credit tried to procure its cancellation. He instructed his Solicitors to offer Mr Yeung $35,000 for his agreement to cancellation. That, however, was far less than the total of $93,000 he had paid out. Understandably he refused. Similar offers were made to others with whom Mr Chang had made similar agreements in respect of other flats in the planned building. The purchase price agreed for one such flat was $92,000 of which the purchaser had paid a deposit of $10,000. She was paid $80,000 for cancellation of her agreement which had been registered.

Mr Yeung's claim

9. Mr Yeung's claim against the Solicitors was that they had negligently and in breach of their duty failed to register the Agreement as a result of which he suffered damage in the following way. Had the Agreement been registered the vendor would have been unable to assign the premises without Mr Yeung's consent to the cancellation of their Agreement; also by reason of s.3 of the Land Registration Ordinance Cap 128 the Agreement had been rendered null and void to all intents and purposes against Harvest Step. In the premises Mr Yeung averred, he lost his interest in the premises and the value thereof and/or the opportunity to be compensated by the vendor for cancellation of the Agreement. Mr Yeung also gave notice that he would contend that the value of the premises was at least $600,000 being one-twelfth of the purchase price paid by Harvest Step to the vendor or alternatively the value of the premises which if complete in August 1979 would have been at least $370,000.

The judgment

10. Keith J found that the Solicitors' failure to register the Sale and Purchase Agreement amounted to a breach of their duty of care. He rejected Mr Chan's submission on behalf of Mr Yeung that because Mr Yeung had no right to specific performance of the Sale and Purchase Agreement, he was not entitled to damages. He held that it could not be said that Mr Yeung and his wife had already lost their right to obtain specific performance of the Sale and Purchase Agreement. Whatever thoughts we may have about them, there is no appeal against these findings, and they accordingly must be accepted.

11. As to the measure of Mr Yeung's loss, the judge rejected the contention that the market value of the flat on the date of assignment to Harvest Step was an accurate reflection of the loss caused to Mr Yeung. He concluded that the correct measure of the plaintiffs' loss against the defendant "is the loss of the opportunity to negotiate a cancellation charge from Mr Chang". As to the quantum of the damages, he concluded that Mr Yeung and his wife would have agreed a cancellation charge with Mr Chang in the region of $175,000.

The issue in this appeal

12. It seems to me that as neither the finding that the Solicitors were liable to Mr Yeung in damages, nor the finding or assumption that the damages for which both they and Mr Chang were held liable were the same was challenged, only one issue has to be determined to resolve this appeal: whether the Court should intervene to alter the apportionment made by the judge between the Solicitors and Mr Chang.

13. In the context of that issue I have to say that this is an unusual case. Given that his Sale and Purchase Agreement would have given him a share of one-twelfth in the building and in No. 55, which was sold for $4.2 million, it would seem that Mr Yeung's share should have been of the order of double the $175,000 he was awarded. Yet he is the only party to the original proceedings who had neither appealed nor appeared. Breach of the Sale and Purchase Agreement first occurred in November 1980 when the building was not completed, but it was not until 10 years later that Mr Yeung instituted proceedings. Although on the face of the matter it seems very doubtful that they were liable in damages for it appears unlikely that specific performance could have been ordered, the Solicitors did not appeal the finding that they were liable for damages. Nor was the point taken on Mr Chang's behalf below, although he was there represented by counsel, that the damages for which he might be liable, were possibly not the same as those for which the Solicitors were liable (see s.3(1) of the Civil Liability (Contribution) Ordinance (Cap 377). Nor more importantly was any explanation provided as to how the Solicitors' failure to register the Sale and Purchase Agreement came about, although fees for their services in that respect and for a disbursement of the registration fee were recovered by the Solicitors, Had evidence been led on this and related matters it seems to me that a case may have been made out before the judge that the responsibility of Mr Chang for the loss substantially exceeded that of the Solicitors, whose failure to register may have been shown not to have been deliberate but simply an oversight. However that was not done.

14. Mr Chan's original contention on behalf of the Solicitors was that the totality of what they were ordered to pay should be reimbursed by Mr Chang. However that would plainly be inconsistent with the judge's finding that the Solicitors were also liable, a finding that I say again has not been appealed. Nor, does the evidence clearly support such a conclusion although I feel bound to repeat, that had the evidence in point been fully and clearly adduced, it might have called for a larger contribution by Mr Chang. As it is, it seems to me that interference by this Court with the judge's exercise of discretion would not be justified even upon the well-established principles ordinarily applicable (see e.g. Hadmor Productions Ltd v Hamilton and anors [1983] 1 AC 191; G v G [1985] 2 All ER 225).

15. But it seems to me that it is not those principles that apply to the apportionment of contribution to damages in this case, but the higher threshold identified by the House of Lords in The Macgregor [1943] AC 197. Viscount Simon LC, with whose speech Lord Atkin, Lord Thankerton and Lord Wright agreed, there said this:

"It seems to me, my Lords, that the cases must be very exceptional indeed in which an appellate court, while accepting the findings of fact of the court below as to the fixing of blame, none the less has sufficient reason to alter the allocation of blame made by the trial judge."

Lord Wright added this at p.201:

"... it would require a very strong case to justify any such review of or interference with this matter of apportionment where the same view is taken of the law and the facts. It is a question of the degree of fault, depending on a trained and expert judgment considering all the circumstances, and it is different in essence from a mere finding of fact in the ordinary sense. It is a question, not of principle or of positive findings of fact or law, but of proportion, of balance and relative emphasis, and of weighting different considerations. It involves an individual choice or discretion, as to which there may well be differences of opinion by different minds. It is for that reason, I think, that an appellate court has been warned against interfering, save in very exceptional circumstances, with the judge's apportionment."

Lord Porter agreed with both speeches.

16. In the result I had no hesitation in concluding that this Court should not intervene and that the appeal should be dismissed with no order as to costs.

Godfrey, J.A. :

17. For my part, I doubt whether the defendant here had any claim at all to contribution from the third party. The damage done to the plaintiffs by the defendant was (as the judge described it) "the loss of the opportunity to negotiate a cancellation charge from [the third party]". The damage done to the plaintiffs by the third party was the loss of the plaintiffs' bargain with the third party. It does not seem to me that this was "the same damage"; and it is only where the damage suffered by the plaintiffs by the wrongdoing of the defendant is "the same damage" as the damage suffered by the plaintiffs by the wrongdoing of the third party that the defendant's right of contribution against the third party arises: see section 3(1) of the Civil Liability (Contribution) Ordinance, Cap. 337, and cp. Brise Construction Ltd v. Haiste Ltd. Watson and others (Third Parties) [1996] 1 WLR 675.

18. But the third party has not taken this point and we must, I believe, therefore proceed on the footing that the defendant was entitled to contribution from the third party, as the judge held.

19. The judge assessed the proper amount of the contribution at 50 per cent. The defendant says that he should have assessed it at 100 per cent, because in substance the entire cause of the plaintiffs' loss was the failure of the third party, in breach of contract, to complete his contract with the plaintiffs; and because it is the third party, not the defendant, who has reaped the entire benefit of this breach of contract.

20. If accepted, this argument (most attractively presented to us by Mr. Wilson Chan, on behalf of the defendant) would result in the defendant suffering nothing from its admitted negligence in failing to effect the registration at the Land Registry of the plaintiffs' contract. That does not accord with my notion of the justice of the matter, particularly when I see that the defendant not only failed to register the plaintiffs contract, but had the gall to charge the plaintiffs a fee for doing so. I think the judge was right to reject the argument that the entire responsibility for the plaintiffs' damage should be held to be the third party's responsibility. But how, then, is the responsibility (and therefore the contribution) to be apportioned? There seems to me to be no sensible yardstick for measuring the respective responsibility of the defendant, on the one hand, and the third party, on the other hand. That being so, an equal division of responsibility (and therefore contribution) seems to me to be fair and reasonable. So the judge thought. In any case, I cannot see how we can, or should, question his conclusion. A question of apportionment like this is a question "of proportion, of balance, and relative emphasis, and of weighing different considerations. It involves an individual choice or discretion, as to which there may well be differences of opinion by different minds......an appellate court [will not interfere] save in very exceptional circumstances, with the judge's apportionment" : see The Macgregor [1943] AC 197, per Lord Wright at p. 201. And there are no such "very exceptional circumstances" here.

          it is for these reasons that I concurred in our decision to dismiss this appeal.

Liu JA:

21. I also agree. For my part, I would add only this: the plaintiff and his late wife entered into an Agreement for Sale and Purchase dated 13 November 1979 for the acquisition of a front 3rd floor flat in a building to be erected by the third party at No. 55 Main Street, Aplichau. On the same day, a Supplementary Agreement of even date was also signed between the same parties for, inter alia, extending the building completion date to a further period of one year from 13 November 1979. In reality, when the third party failed to complete the building by 13 November 1980, the plaintiff would not have merely sought from the third party as vendor a conveyance to him and his late wife as purchasers some undivided shares in No. 55 Main Street, Aplichau. In practical terms, the plaintiff for himself and his late wife must have treated the Agreement for Sale and Purchase as wrongfully repudiated when the third party failed to erect and complete the proposed building. On 1 June 1988, the third party caused his interest in No. 55 Main Street, Aplichau to be sold to Harvest Step Development Ltd. That was some 71/2 years after the extended completion date for the construction of the proposed building. The third party had negotiated with the plaintiff for the cancellation of the said Agreement for Sale and Purchase. When the third party sold his No. 55 Main Street, Aplichau, the Agreement for Sale and Purchase for the purchase of a front 3rd floor flat must have been regarded by all as being detached from the land. The negotiation by the third party was an exercise to clear his liability, not his title to the property because that Agreement for Sale and Purchase had not been duly registered. In no way could the third party be fairly accused of harbouring any intention, at this time, to defraud the plaintiff and his late wife whose remedy lay in damages for the third party's breach. This is not a case in which the third party. could properly be said to have been enabled to retain proceeds of fraud.

22. The ordered contribution on the basis of the "same damage" in terms of these words in section 3(1) of Civil Liability (Contribution) Ordinance, Cap. 377 would seem to be arguably insupportable. The trial judge was not invited to assess damages as against the third party under the said Agreement for Sale and Purchase and no assessment was ever attempted on a proper or any basis. With no known assessed quantum, the question of unjust enrichment could not arise. It was a very unusual situation for contribution to be apportioned, and applying s. 3(1) as he did the judge was well aware of it. The judge's apportionment was focused on the degree of blame of the personalities involved rather than the plaintiffs potential liability. The judge had to and did take a stand on what he regarded as a proper contribution, having viewed the situation realistically, particularly when loss of an opportunity to negotiate on the said Agreement of Sale and Purchase was wholly brought about by the firm of solicitors, the defendant. It has been said that cases of apportionment in which exceptional circumstances exist to warrant a revision are rare. See Ingram v. United Automobile Service, Limited and Others [1943] KB 612. There are no exceptional circumstances in the judgment below, which would allow us to intervene. I agree that the appeal be dismissed with no order to costs.