Gross negligence of estate agent resulted in client's heavy loss

An estate agency company was appointed as the sole agent for the sale of all the units, including shop spaces, in a commercial and residential block in Kowloon. At the time a Chinese herbalist was contemplating expansion of his practice for which more space was required. The herbalist sought assistance from this estate agency company, and inspected two adjoining shop units on the ground floor of the building in question accompanied by a salesperson representing the company. After some negotiation with the vendor the herbalist decided to purchase the two adjoining shop units. A provisional agreement for sale and purchase was signed and a deposit was paid.

The salesperson had provided the herbalist with no property information or land search results prior to the signing of the provisional agreement, nor had he indicated the capacity in which the vendor was selling the units. It was only when the formal agreement for sale and purchase was due to be signed that the herbalist's solicitor found out that the vendor was only a confirmor and there was no documentary evidence to confirm the transaction between this confirmor and the actual owner of the property. Eventually the confirmor could not complete the deal. The entire building, including the two shop units, was sold by the mortgagee bank to a third party. The herbalist was successful in a civil action that would entitle him to the refund of his deposit money, but the confirmor was a limited company without assets and the result was that he could not get the hundreds of thousands of dollars back at all.