Chan Tin Chung v. Wong Ka Chun t/a Pro Auto Co and Another
Read the full judgment text of DCCJ 4422/2017 on BabelCite. This District Court judgment was delivered on 17 December 2019.
1. The 1 st defendant traded in second-hand vehicles, and the 2 nd defendant was his sales representative and agent. The 1 st defendant had a second-hand Ferrari F599 F1 (“ the F599 ”) to sell.
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DCCJ 4422/2017 [2019] HKDC 1677 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO 4422 OF 2017 -------------------------------------- BETWEEN
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---------------------- JUDGMENT ---------------------- 1.The 1st defendant traded in second-hand vehicles, and the 2nd defendant was his sales representative and agent. The 1st defendant had a second-hand Ferrari F599 F1 (“the F599”) to sell. 2.The plaintiff paid a sum of HK$82,800 as deposit for the purchase of the F599, which the defendants said they had forfeited because of a breach of contract by the plaintiff. The plaintiff disputes that and now claims for its return. Circumstances leading to the dispute and the Sales Agreement 3.The below circumstances, unless otherwise stated, are common ground or not disputed. 4.In late 2016 or early 2017, the plaintiff learned about the sale of the F599 from the internet. He contacted the 2nd defendant, with whom he never had any dealing before. They had some discussions. The plaintiff was shown the F599 twice. 5.On 10 February 2017, the wife of the plaintiff Madam Jim signed in her name a provisional sales agreement (“the Provisional Agreement”) for the purchase of the F599 at the price of HK$828,000. 6.The 2nd defendant and the plaintiff then met at about noon on 20 February 2017 in a garage in Kwun Tong where the F599 was parked (“the 20 February Meeting”). They had some discussions (“the 20 February Discussion”). Some of the contents and effect of what was said or agreed are disputed, which will be alluded to later. After that, they signed the Sales Agreement (“the Sales Agreement”); and contemporaneously the plaintiff paid the said deposit of HK$ 82,800 by issuing a cheque to the 1st defendant. The amount was received by the 1st defendant. 7.The Sales Agreement was a one-page document in English bearing the logo of the 1st defendant. It was prepared by the 2nd defendant. The provision under “Remarks” is the one now disputed by the parties. I will set out the entire Sales Agreement:-
8.In the afternoon of 20 February 2017, the plaintiff set up a whatsapp group consisting of himself, Madam Jim and the 2nd defendant to discuss matters relating to the sale of the F599. There were ensuing queries from the plaintiff about the amount of monthly payment being too high, discussions and communications about obtaining a loan of the same amount at interest rate of 2.5% per annum, which was agreed to by the 2nd defendant, and a loan in the larger amount of HK$1,200,000 at other interest rates. Various documents and income proofs were also provided by the plaintiff and Madam Jim to the 2nd defendant for the purpose of applying for the bank loan. 9.The loan was actually applied for in the name of Madam Jim and to be guaranteed by the plaintiff. While the F599 was to be purchased by the plaintiff, all along parties knew that the F599 was to be registered in the name of Madam Jim and the plaintiff was to act as her guarantor. Nothing turns on this arrangement. 10.The long and short was that by mid April 2017 Madam Jim and the plaintiff could not obtain the car loan from all the banks introduced by the defendants. 11.The plaintiff then on 25 April 2017 again offered to pay the balance of the purchase price by cash[1], which the defendants refused. The plaintiff demanded the return of the deposit which again was refused. I say that the plaintiff offered to pay cash again because earlier on 12 March 2017, the plaintiff already mentioned to the 2nd defendant that he could pay cash, but his suggestion was met with a strong response by the 2nd defendant. I will say more about this exchange later on. 12.It is not disputed that the plaintiff was all along ready and willing to complete the purchase by paying the balance price by cash. It is also not disputed that the plaintiff, as he said, was in fact desirous of buying the F599. 13.The plaintiff therefore commenced this action on 6 October 2017. Parties’ respective case 14.The defendants’ case is that:-
15.The defendants further said that under the above loan arrangement, the 1st defendant would be entitled to a commission from the lending bank equaled to 31% of the total interest, while the 2nd defendant would be paid by the 1st defendant a fair portion of that. The defendants accepted that they had never told the plaintiff about this, but said that the plaintiff knew that they would receive commission from the lending bank. 16.The defendants confirmed in closing submission that it is their case that since they were not at fault regarding the plaintiff’s and Madam Jim’s failure in obtaining the loan from banks introduced by them, the plaintiff must be treated as being at fault and therefore breached the Sales Agreement, thereby entitling them to forfeit the deposit. 17.The plaintiff’s case and evidence, essentially, is that financing had been suggested by the 2nd defendant towards the end of the 20 February Discussion. The plaintiff then asked the 2nd defendant to indicate what the term of loan and monthly payment amount would be, for his consideration. There upon the 2nd defendant used HK$1,000,000 as the loan amount, 3% as interest rate and 36 monthly instalments to calculate out a monthly instalment payment of HK$30,278. These figures were therefore provided by the 2nd defendant as a reference for him. The plaintiff also said that he had queried why such information need to be written in the Sales Agreement. The 2nd defendant answered that it did not matter, might as well wrote it down (“寫埋啦，吾緊要”)[2]. The plaintiff said he had never agreed to the term as now alleged by the defendants The “Remarks” clause in the Sales Agreement does not have the meaning and effect now contended for by the defendants 18.In paragraphs 2, 5, 6, 10 and 13 of their respective Defence, both defendants contend that the “Remarks” clause in the Sales Agreement has the meaning and effect as set out in paragraph 14(a) above and that the plaintiff had breached it. 19.For ease of reference, I set out that very short provision again:-
20.The principles to be applied to the interpretation of commercial agreements are trite:-
21.It is also trite that the courts are not concerned to identify the subjective understandings of the parties to the contract or the meaning which they subjectively ascribe to the term in dispute, and such evidence is therefore inadmissible (para 13-048 Chitty on Contracts Vol 1 33rd ed). 22.Applying the above principles, I must reject the 2nd defendant’s evidence and repeated submission emphasized to this court, and adopted by the 1st defendant, that the “Remarks” clause by the 2nd defendant’s own reading carried the meaning and effect the defendants now contend. 23.To ascertain the meaning, I turn to look at the language, if there is much language to speak of. The “Remarks” clause consists only of one word and 4 sets of numbers with minimal description – Financing, HK$1,000,000, 3%/Year, 36 months and Monthly Payment HK$30,278. While one can surmise that they refer to the core terms of some form of loan, it is beyond clear that however one reads it, it would be impossible to ascertain, as its objective meaning, the meaning and effect - “essential term”, “must obtain financing from bank(s) introduced by the defendants” or “the 1st defendant is entitled to forfeit the deposit if such financing is not so obtained”. The defendants’ contention that the “Remarks” clause has such meaning need only to be stated to be rejected. Any oral agreement to that effect? 24.In evidence, the 2nd defendant said that the alleged term was orally agreed between him and the plaintiff in a telephone conversation that took place a day before the 20 February Meeting as well as in that meeting. He said quite emphatically that the words “必须” and “重要” were spoken by him in relation to the plaintiff’s obligation to obtain financing from bank(s) introduced by the defendants. 25.The plaintiff denied having so agreed, and the gist of his evidence has already been set out in paragraph 17 above. 26.Mr Kwan for the plaintiff pointed out, rightly, that in their Defence, the defendants alleged that the plaintiff had promised to such a term, but it was always by reference to the “Remark” clause and never to any oral agreement. 27.I mentioned earlier that the 2nd defendant responded quite strongly when the plaintiff first mentioned on 12 March 2017 about paying the balance price in cash. The whatsapp messages exchanged between the plaintiff and the 2nd defendant were thus[3] :-
Likewise, in this message exchange when the 2nd defendant was complaining against the plaintiff for changing the contract terms, the 2nd defendant never mentioned any oral agreement or orally agreed term. 28.The existence of any oral agreement or orally agreed term also was not mentioned in any other whatsapp messages exchanged between the parties. 29.When questioned as to why, if it had been agreed, such a term was not written out in language, the 2nd defendant’s explanation, essentially, was that the “Remarks” clause, as it was, already carried that meaning. This explanation, as I said above, I have no difficulty at all to reject. 30.When also questioned, if such was agreed a day ago, why he did not type it out in the Sales Agreement, his explanation was that the Sales Agreement was the form the company has always used. However, the following was typed out, in advance and prior to meeting Madam Jim, under “Remarks” in the Provisional Agreement[4], which was also prepared by him :
31.This clearly shows that his explanation is not true, and further that the 2nd defendant, on a prior occasion in relation to the same deal, has set out in quite clear and elaborate language what the parties’ arrangement and agreement were. In my view, if he and the plaintiff had reached such an oral agreement prior to the 20 February Meeting as the defendants now contend and if as they say it was an “essential” term of such importance, there was no reason why, for the benefit of the defendants, that the 2nd defendant did not write or type out the same in the Sales Agreement, as he did in the Provisional Agreement. 32.Regarding credibility of witnesses, I am of the view that the 2nd defendant was very bend on advocating his own cause and his own subjective interpretation of events or words spoken. I do not find him a reliable witness. On the contrary, I find the plaintiff calm and straight forward while giving evidence and find him credible and reliable. The 1st defendant did not give evidence and rely on the evidence of the 2nd defendant. 33.Based on the matters set out above in paragraphs 26 to 31 and my assessment of the credibility between the plaintiff and the 2nd defendant, I prefer the plaintiff’s evidence and reject the 2nd defendant’s where they differ, and find for the plaintiff’s version and hold that the parties have not reached such oral agreement as alleged by the defendants. Other matters 34.The 2nd defendant gave evidence that in a telephone conversation occurred around the time the plaintiff and him were discussing a “leasing” loan at 1.75% interest (presumably around 12 March 2017, see whatsapp message[5]), the plaintiff offered to pay the defendants an extra HK$10,000, which arrangement, as events showed, was not taken up. The 2nd defendant said that such offer supported the defendants’ case. To that, the plaintiff said in evidence that he did not remember having said so. Mr Kwan submitted that even if the plaintiff was minded, almost a month after the Sales Agreement was signed, to pay something extra to sweeten the deal, such move did not reflect, one way or another, whether such an alleged term was agreed to; and that rather, it was consistent with the fact that the plaintiff was eager to successfully purchase the F599. I agree with the said submission without finding whether such was in fact said by the plaintiff. 35.Mr Kwan also raised (but did not find it necessary to seriously pursue) the alternative arguments (a) that even if the plaintiff were contractual obligated to obtain financing from a bank introduced by the defendants and even if such were breached, the 1st defendant was still bound to complete and would be entitled to damages equivalent to the lost commission only, and not refusal to complete and forfeiture of the deposit, and (b) that the failure to obtain such a loan from banks introduced by the defendants was without fault on the part of the plaintiff such that the deposit should have been refunded by way of restitution. In view of my finding and holding above, I do not find it necessary to adjudicate on these 2 alternative arguments. 36.As the defendants appear quite conversant in English and having obtained their understanding, I deliver this judgment in English. However, if they think the need arises, they may contact the court to arrange for this judgment to be interpreted to them. Conclusion and disposition 37.In the premises, I hold that there was no such contractual term as contended for by the defendants, and the 1st defendant therefore has no right to forfeit the deposit. 38.The plaintiff claims no other relief but the return of the deposit. I therefore enter judgment against the 1st defendant for the sum of HK$82,800. 39.The plaintiff seeks interest from the date of the issuance of the writ to the date of this judgment at the rate of 5% per annum, which was the earlier lesser prime rate. The 1st defendant does not contend otherwise. I so order. Interest on the sum then after until full payment will be at judgment rate. 40.As to costs, Mr Kwan mentioned that it is reasonable to commence this action also against the 2nd defendant as it was not confirmed then that he was a mere agent and the 1st defendant was the principal, that the 2nd defendant was the protagonist, and that the 1st defendant was mirroring and adopting the Defence and all matters proffered by the 2nd defendant. 41.Considering these matters provisionally without deciding, I make a costs order nisi, which presently seems fair to me in the circumstance, that the 1st defendant do pay the plaintiff’s costs of this action to be taxed if not agreed and there is no order as to costs of this action between the plaintiff and the 2nd defendant. This costs order nisi will become absolute unless there is an application to vary the same within the next 14 days.
Mr Kwan Man Wai, of Or & Lau Solicitors, for the plaintiff The 1st defendant appeared in person The 2nd defendant appeared in person | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||