Tang Chi Kin v Tang Fong Chuen

APPELLATE JURISDICTION

APPEAL No. 10 of 1947.

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(O.J. Action No. 1 of 1946)

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JUDGMENT

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1. This is an Appeal from a judgment of the learned Chief Justice declaring the respondent to be solely entitled to the property known as No.8, St. Stephen's Lane, and granting to the respondent possession and mesne profits.

2. The essential facts of the case were that the respondent was a general in the Chinese Army and the Crown lessee of the house property with which the case is concerned. Amended and substituted by Order of the Full Court lated 20.9.47.

3. At first the appellant acting upon advice paid only half of the purchase price as the purported agent was unable to produce any title deeds and proposed to retain the other half until the return of the respondent from China. However, upon production by the purported agent of a letter purporting to have been written by the respondent approving of the sale and upon guarantees being signed by certain persons, he paid over the remainder of the purchase money. The letter was also a forgery. The appellant entered into possession and during the remainder of the Japanese occupation and thereafter he expended substantial sums in repairs.

4. In December 1945, the respondent first heard of the forgery and in January, 1946, he returned to Hong Kong for the first time since his departure about October, 1941. He remained in Hong Kong only for a few days before returning to China and during those few days he consulted a solicitor and was advised that, as the civil courts had not yet been reinstituted in Hong Kong, there was no effective legal step he could take at that time to regain possession of his property. He left instructions that steps were to be taken as soon as possible, and in fact this action was commenced as No.1 of 1946, as soon as the civil administration was restored in Hong Kong.

5. On the 25th April, 1946, the appellant caused to be sent to the solicitors in the Colony a circular letter of enquiry in the following terms:

" Dear Sirs,

6. Upon receipt of this letter the solicitor for the respondent notified the defendant (on the 26th April, 1946) of the forgeries and of the respondent's intention to bring proceedings to recover the property.

7. It is agreed that this was the first notice given by the respondent to the appellant that the title of the latter was bad; the respondent in evidence said that as he could not take any legal step to enforce his rights and as he had no expectation that the appellant would relingnish the property upon a mere request it never occurred to him to notify the appellant who was a stranger to him.

8. Between January and April, 1946, the appellant claims to have spent a substantial but indeterminate sum on the property and this was conceded by counsel for the respondent for the purpose of the argument. It was held as a fact, however, by the learned Chief Justice upon the evidence that the respondent did not at any time have knowledge that money was being so expended by the appellant.

9. During the period January to April, 1946, by virtue of the provisions of the British Military Administration Proclamation No. 6 as modified by an Order dated the 20th day of December, 1945, the property could not be assigned without a special Order by the Chief Civil Affairs Officer, but it could have been let for a term not exceeding one year or been made the subject of a lien or equitable mortgage with the approval of the Finance Controller. The existence of this Proclamation was mentioned to the respondent by his solicitor in January, 1946.

10. A further fact of some importance was that the appellant had no knowledge that the respondent became aware of the forgery in December, 1945, or returned to the Colony for a few days in January, 1946.

11. Only one ground of appeal was relied upon - namely, that the trial judge was wrong in deciding that the respondent was not estopped from setting up his title to the property by reason of his failure to notify the appellant of the forgery as soon as he became aware of the defect in appellant's title. This allegation though set out in the Pleadings as finally amended was not in fact relied upon by counsel for the appellant at the hearing as he took the view that the learned Chief Justice was bound by the decision in the case of Chan Fui Hing and others v. Fung Kai Sun, O.J. Action No.92 of 1939, decided in the Supreme Court of Hong Kong in December, 1940. This is clearly a mistaken view as every case of alleged estoppel must be decided upon the particular facts. However, the point has been fully argued before this Court and it is expedient that a decision be given upon the merits.

12. The submission for the appellant reduced to simple terms is that if B. has a document bearing the purported signature of A. and if A. knows that fact and further that B. is relying on that document, then it is A.'s duty to inform B. forthwith of his mistake. If the delays and B. is prejudiced an estoppel arises and B. receives the full benefit of the estoppel irrespective of whether the whole or only a part of the loss is due to A.'s failure to disclose. As to the existence of a duty to speak in such circumstances counsel relied on the following passage in volume 13 of Hailsham on page 496: "A duty to speak arises whenever a person knows that another is acting on an erroneous assumption of some authority given or liability undertaken by the former, or is dealing with or acquiring an interest in property in ignorance of his title to it. It is the duty of a man whe knows that another is relying on a document bearing a counterfeit of his signature to give notice of the forgery without delay."

13. The authorities quoted for the second part of this proposition include M'Kenzie v. The British Linen Co. 1881, 6 A.C. 82. Greenwood v. Martin's Bank Ltd. 1933, A.C. 51 and Ogilvie v. West Australian Mortgage and Agency Corporation, 1896, A.C. 257. Ewing (William) & Co. v. Dominion Bank (1904) A.C. 806. These cases are bank cases.

14. Before proceeding to analyze...