Read the full judgment text of CACV 66/2019 on BabelCite. This Court of Appeal judgment was delivered on 19 June 2020 before Lam VP, Chu JA, Au JA.
Civil law – property sale and purchase – misrepresentation – oral and implied – agency – estate agent as broker – rescission – rectification – appellate review of factual findings – palpable error. This appeal concerned disputes arising from the sale and purchase in August 2011 of Duplex Flat B on 32 & 33/F of Block 1 and car parking spaces at Hill Paramount, Shatin, for HK$69.8 million. Bright Gold Limited was the developer and vendor; Mega Well Development Limited was the purchaser (through its sole director Katherine Cheng); Centaline Property Agency Limited was the introducing estate agent; and Woo Kwan Lee & Lo acted as Mega Well's solicitors. The duplex came with only a narrow Strip of roof (about 25 sq ft) just outside the stairwell and the B Upper Roof accessed by a cat ladder, with a stated 'Extra Roof Area' of 199 sq ft; the larger 'Yellow Area' on the roof was common area. Mega Well alleged that Centaline's agent Stella Wong made oral misrepresentations during three viewings that the Yellow Area formed part of Duplex B, and that the developer had impliedly represented the same through the artificial lawn, plants and garden furniture on the Yellow Area. Bright Gold's formal SPA mistakenly included the neighbouring Duplex C's roof (C Roof) as part of Duplex B, and Bright Gold sued for rectification, while Mega Well counterclaimed for rescission of the SPA and damages, or alternatively damages in lieu. The trial judge found in favour of Mega Well on the Oral Misrepresentation, rejected Implied Misrepresentation, held Centaline to be Bright Gold's agent, ordered rescission with Bright Gold to refund HK$69.8 million and Centaline to pay Mega Well damages of HK$100, and dismissed Mega Well's claim against WKLL. On the Oral Misrepresentation and Reliance Issue, the Court of Appeal held that the trial judge's findings were tainted by palpable error because he failed to grapple with the true significance of the recorded conversation in which Cheng spontaneously referred to the 199 sq ft figure from the Sales Brochure (contradicting her evidence of first seeing the Brochure in 2012 litigation) and failed to properly assess the independent evidence of WKLL's Ms Lau, which corroborated Centaline's account of the WKLL Meeting and undermined Mega Well's case. The Court set aside the findings on oral misrepresentation and reliance, dismissed Mega Well's claims against Bright Gold, and remitted the claim between Mega Well and Centaline for re-trial. On the Implied Representation Issue, the Court dismissed Mega Well's cross-appeal, holding that the decorated state of the Yellow Area, the absence of demarcation on the roof, the existence of a 'Refuge Floor' sign, and the ambivalent evidence of Bright Gold's sales manager, all supported the trial judge's finding that no implied representation was made. On the Agency Issue, the Court held that the trial judge's inference of agency was plainly wrong and unsupported by the evidence: the three characteristics of agency identified in Haringey LBC v Ahmed (authority to affect the principal's relations with third parties, fiduciary duty, and control by the principal) were not made out, and mere payment of commission, alignment of interest, lack of direct vendor-purchaser contact, and conduct of negotiations through Centaline were all consistent with Centaline being a broker/canvassing agent. The Declaration signed by Mega Well was a clear intimation that Centaline was an introducer without authority to bind Bright Gold. Rectification of the SPA was granted to Bright Gold on the basis of common mistake over the C Roof (a finding unchallenged on appeal), Mega Well was ordered to pay Bright Gold's costs of the appeal and below (without prejudice to seeking indemnity from Centaline in the re-trial), Mega Well was ordered to pay Centaline's costs of the appeal, and the damages issue between Mega Well and Centaline was left to be considered afresh in the re-trial.
Legal issues: Oral Misrepresentation and Reliance Finding · Implied Representation from State of Yellow Area · Whether Centaline Acted as Bright Gold's Agent in Making the Oral Misrepresentation
Outcome: Cross-appeals of Centaline and Bright Gold allowed; appeal by Mega Well dismissed; judgment of the trial judge set aside; rectification of the SPA granted to Bright Gold; counterclaim by Mega Well against Bright Gold for Misrepresentation dismissed; claim by Mega Well against Centaline remitted to another judge of the Court of First Instance for re-trial.
Cites 7 cases