In the case of Gain Global Corp Ltd v Fongs [2024] HKCFI 894, Justice Mr. Wilson Chan ruled against a claim of professional negligence brought by a mortgage lender against a solicitor firm regarding a mortgage fraud incident.
The Plaintiff had provided a mortgage loan to an individual who claimed to own the property but had allegedly lost the original title deeds. The solicitors (instructed by the Plaintiff) were tasked with investigating the property title, preparing the mortgage, a rental assignment, and a statutory declaration for the borrower. Despite advice for the borrower to obtain a certificate of registered particulars from the Immigration Department (at [14]), the transaction proceeded without it. Later, it was revealed that the registered owner of the property had not signed the documents (at [16]).
The key question revolved around whether the solicitors were obligated to prevent identity fraud by ensuring the borrower had valid title, verifying their identity, thoroughly checking related documents, and ensuring the lender could obtain a clear title (at [30]).
Justice Mr. Wilson Chan emphasized that a solicitor's duties are dictated by the terms of the engagement and implied duties must align with the instructions given (at [68]).
In his ruling, Justice Mr. Wilson Chan determined that the solicitors were not unconditionally responsible for guaranteeing the lender's acquisition of a clear title. Their duty to "investigate title" was interpreted as a requirement to exercise reasonable care and skill rather than to prevent all forms of fraud (at [75]). Additionally, they were not mandated to verify the borrower's identity conclusively or confirm their ownership of the property(at [77]). Their scope of work did not include examining documents beyond those directly provided by the lender (at [79]). As the Plaintiff failed to demonstrate any breach of duty by the solicitors, the claims were dismissed.
November 2024
Dr. Anthony Lai and Mr. Ali Abdul Rafay
Comments