Your World of Legal Intelligence
 Hong Kong | 1-800-335-6202

Au Yeung, Cheng, Ho & Tin (A Firm) And Others v Au Yeung Chi Sang

Judgment Cited authorities 5 Cited in Precedent Map Related
Vincent
Judgment Date22 January 2020
Neutral Citation[2020] HKCFI 224
Year2020
Judgement NumberHCA288/2014
Subject MatterCivil Action
CourtCourt of First Instance (Hong Kong)
HCA288/2014 AU YEUNG, CHENG, HO & TIN (A FIRM) AND OTHERS v. AU YEUNG CHI SANG

HCA 288/2014

[2020] HKCFI 224

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

HIGH COURT ACTION NO 288 OF 2014

________________________

BETWEEN

AU-YEUNG, CHENG, HO & TIN (A FIRM) 1st Plaintiff
CHENG WING FU 2nd Plaintiff
HO KWOK WAI 3rd Plaintiff
and
AU YEUNG CHI SANG Defendant

________________________

Before: Hon Marlene Ng J in Chambers
Date of Hearing: 27 February 2019
Date of Handing Down Judgment: 22 January 2020

________________________

J U D G M E N T

________________________

I. INTRODUCTION

1. The 1st plaintiff (“P1” or “AYCHT”) was a partnership that carried on the business of a solicitor firm in Hong Kong since 1997, and the 2nd and 3rd plaintiffs (“P2” and “P3”) were/are P1’s only partners. The defendant (“D”), an experienced legal practitioner, was admitted as a solicitor in Hong Kong in 1994 and was one of P1’s founding partners. P1, P2 and P3 (collectively, “Ps”) claimed D was experienced in inter alia conveyancing legal practice, familiar with conveyancing practice and procedure, and was active (and had direct involvement) in property market speculation in Hong Kong, but D denied he specialised in conveyancing matters and claimed that at all material times he focused primarily on personal injury and employees’ compensation cases. Ps claimed D retired from P1 since about 1 January 2008,[1] and became a consultant until he resigned from P1 on/about 7 June 2013, but D claimed he retired as partner of P1 on 28 March 2003, and then became a consultant and later senior consultant of P1 until June 2013.

II. PARTIES’ RESPECTIVE CASE

2. Ps’ case Ps’ claim against D was based on the following incident (“Incident”):

(a) in/about July 2010 D (then a consultant at P1) instructed his colleagues to assist him to inter alia prepare a deed of exchange (“Deed”) in respect of (i) a property in Tsuen Wan, New Territories, Hong Kong (“TW Property”), and (ii) a property in Tai Po, New Territories, Hong Kong (“TP Property”) (collectively, “Properties”) and matters relating thereto;
(b) D was the registered owner of the Properties which were mortgaged to the Bank of China (Hong Kong) Limited (“BOC”);
(c) D well knew the Deed should not have been executed without first obtaining BOC’s written consent or first discharging the mortgage with BOC in respect of the Properties;
(d) but D instructed his colleagues at P1 to inter alia prepare the Deed to transfer ownership of the Properties to D’s close friend Lee Che Guy without first obtaining BOC’s consent or first discharging the mortgage with BOC in respect of the Properties;
(e) on/about 15 July 2010, D executed the Deed in the presence of his colleague Wu Ka Wang Nelson (clerk under P1’s employ, “Wu”).

3. Ps went on to claim as follows:

(a) Ps had not been informed and had no knowledge of the preparation/ execution of the Deed, matters relating thereto and matters relating to the Incident;
(b) Ps had not given any informal consent/approval for the preparation/ execution of the Deed, matters relating thereto and matters relating to the Incident;
(c) in/about April 2013, BOC discovered the Incident, and as a result BOC suspended P1’s legal services for inter alia preparation of mortgages and discharges, and “other relating legal works for the BOC since April 2013”.

4. Ps claimed it was an express/implied term of the contract for service between Ps and D that D inter alia had to act in good faith and in Ps’ best interest, and D owed fiduciary duties to Ps to act in good faith, not to place himself in position of conflict of interest, not to benefit himself or third party without Ps’ informed consent/approval, to perform his work honestly believing that it was for the joint benefit of Ps and D, to ensure Ps were fully informed and/or to recommend Ps to take independent legal or other appropriate advice in case of potential conflict of interest.

5. Ps claimed D was in breach of the aforesaid obligations in (a) executing the Deed without first obtaining approval from BOC or first discharging the mortgage with BOC in respect of the Properties despite having relevant knowledge/expertise as a legal practitioner, (b) not informing Ps of the Incident or other matters relating thereto, and (c) placing himself in a position whereby his duty to Ps and his own interest might conflict, ie executing the Deed in favour of Lee Che Guy despite the obligations in the above paragraph. Ps claimed they suffered and continued to suffer loss and damage: “[loss] of profits caused by the suspension of legal works from BOC to be accounted for and assessed”, “[prospective] loss of profits to be assessed”, and “[other] loss and damage to be assessed”.

6. Ds’ case and Ps’ reply D claimed that at all material times P2 was a partner of P1 in charge of all conveyancing and related administration matters, and was assisted by 3 conveyancing solicitors specifically employed for handling P1’s conveyancing work[2] under P2’s supervision. But Ps disagreed, and denied P2 was the partner of P1 in charge of all conveyancing matters.

7. D averred that in/about July 2010 he / Lee Che Guy retained P1 to prepare a deed of exchange in respect of the TP Property (of which D was the registered owner and BOC was the mortgagee) for the TW Property (of which Lee Che Guy, whom D admitted was/is his close friend and a staff of P1, was the registered owner). D claimed he relied on P1’s conveyancing solicitors to handle all legal work in relation to such exchange of the Properties, and if there was no consent from BOC (which D did not admit), it was due to negligence/omission of P1, its partners (ie P2 and/or P3) and/or P1’s conveyancing solicitors who handled the exchange of the Properties. D averred he was a client of P1 in respect for the exchange of the Properties, and P1, its partners (ie P2 and/or P3) and/or P1’s conveyancing solicitors who handled the exchange of the Properties had actual/imputed knowledge about such exchange and/or “legal works relating thereto”. D agreed he executed the Deed in Wu’s presence, and claimed that by January 2013 he had fully repaid the mortgage loan to BOC so the mortgage of the TP Property was discharged.

8. But Ps denied (i) D / Lee Che Guy retained P1 to prepare the Deed in respect of the Properties, (ii) absence of consent from BOC was due to negligence/omission by P1 and/or so-called “conveyancing solicitors of P1” and/or (iii) D was P1’s client in the matter of the exchange of the Properties, and Ps averred as follows:

(a) P2, P3 and D (before he resigned from P1) were all responsible for supervising P1’s conveyancing work;
(b) P1 did not have designated “conveyancing solicitor” or “litigation solicitor”, but some solicitors had more experience/exposure in litigation matters and other solicitors had more experience/exposure in conveyancing matters;
(c) at the time of preparation/execution of the Deed, D as P1’s consultant and/or senior associate was involved in handling conveyancing matters for clients whom he introduced to P1, and he guided/directed other employees of P1 on these conveyancing cases;
(d) P1 and D had not entered into any retainer over the preparation of the Deed in respect of the Properties; D just instructed his colleagues at P1 to assist him to prepare the Deed; and D mainly and personally handled the exchange of the Properties with the assistance by P1’s assistant solicitors.

9. D averred that if P1 was no longer retained by BOC for legal services since about April 2013 (which D denied), it was noted that:

(a) whenever P1 acted for BOC as mortgagee, BOC would instruct P1 to deliver to them all relevant title deeds as soon as they had been properly registered;[3]
(b) since some time in 2011/2012 P1 consistently failed to deliver title deeds to BOC as instructed, and in /about early September 2012 BOC complained that P1 failed to deliver title deeds to BOC despite completion of the mortgages for a long while;
(c) so P2 issued a circular to all staff requiring them to deliver title deeds and/or related documents to BOC for the transactions listed in the circular.

On the other hand, Ps agreed that ever since BOC engaged P1 for legal services, Ps occasionally failed to deliver title deeds to BOC on time, but (i) BOC did not suspend P1 from provision of legal services on such ground, (ii) BOC did not complain and in/about September 2012 merely reminded P1 to deliver the concerned title deeds to them, (iii) it was BOC’s practice all along to remind P1 to deliver title deeds to them on time, and (iv) P2, P3 and D (before he resigned from P1) from time to time issued circulars to remind P1’s staff to deliver title deeds and related documents to BOC and other banks on time.

10. D claimed that even if BOC suspended P1’s legal services in preparing mortgages/discharges and other related work and P suffered loss/damage as a result (which D denied), P1 could still have acted for clients in relation to the conveyance of properties, and P1 failed to take reasonable steps to mitigate loss by referring conveyancing clients to other banks that were prepared to provide mortgage loans on comparable terms and/or to other law firms who could act for BOC to prepare mortgages/ discharges at no extra cost to the clients (ie Ps would settle the fees of these other law firms).

11. D went on to aver (but P denied) that (a) whenever a staff (including non-professional staff) of P1 introduced a conveyancing case to P1, P1 would pay up to 57% of...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT