Ho Yuen Kwong v. Ma Shiu Fan and Another

HCA001524/1974

IN THE SUPREME COURT OF HONG KONG

ORIGINAL JURISDICTION

ACTION NO.1524 OF 1974

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Coram: Briggs, C.J.

Date of Judgment: 4th February, 1976.

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JUDGMENT

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1. I agree with counsel that this is a question of fact. In January 1973 the plaintiff became aware that one Doctor Lai Chung Lim wished to sell his land at Shatin. The plaintiff introduced the defendants to Doctor Lai as purchasers.

2. It is the plaintiff's case that he and the defendants agreed that if Doctor Lai were to sell the land to the defendants, the defendants would pay the plaintiff a commission, worked out on the sum which would be paid for the land per square foot. The plaintiff said that Doctor Lai and the defendants reached an agreement for the sale of the land and that therefore he was entitled to his commission. Part of that commission has already been paid and this action is brought to recover the balance.

3. The defendants have given a different version of the facts to the Court. They deny that there was any agreement for commission. They say that what was agreed was that the defendants were to purchase Dr. Lai's land with the intention of a re-sale at a profit. And it was agreed that after the introduction of the defendants to Doctor Lai by the plaintiff, the plaintiff would be entitled to a share in any profit which was make by such a re-sale. The defendants' case is that an agreement was reached between them and Doctor Lai for the purchase of the land but that this was cancelled later for good reason and that they had therefore made no profit since there has been no re-sale. Meanwhile, the land had been sold by Doctor Lai to a third party. The plaintiff therefore is entitled to nothing and the defendants have counterclaimed for a sum representing part payment of a sum of money which has been paid to the plaintiff in respect of part of the anticipated profit of a re-sale. The only evidence of an agreement that commission was to be paid to the plaintiff therefore comes from the plaintiff himself.

4. The plaintiff is and has for many years been an interpreter and clerk in the office of a solicitor's firm. In his evidence he gave an account of a meeting at which the defendants and Doctor Lai attended. It was on February 1st, 1973 and he was himself present. The place was the International Restaurant in Nathan Road. The defendants were already eager to purchase the land and there was a discussion as to the price. Doctor Lai was asking for $20 per square foot: the defendants hoped for a reduction of the price to $18 per square foot.

5. After some discussion, and a considerable period of time, the plaintiff said that the defendants and Doctor Lai produced a written agreement in Chinese and asked him to look it over. He said that the first defendant gave a cheque for $290,000 to Doctor Lai as a deposit. And that Doctor Lai agreed to pay the plaintiff a commission of 50 cents per square foot of the land, if the deal went through at a satisfactory price. He said that the defendants went further and said that he, the plaintiff, would get a commission from them, the defendants as purchasers whether the transaction went through or not and that the commission would be at the rate of $2 per square foot. The area of the land was 44,431 square feet and the asking price was $20 per square foot. This means that the defendants were then willing to pay the plaintiff a commission of 10%, namely a sum of over $88,000 for the mere introduction of the parties.

6. Be that as it may this meeting was abortive. On March 11th, 1973 the defendants and Doctor Lai signed another agreement in Chinese at the New Metropole Restaurant. This agreement was exhibited. The plaintiff was not a party to it. It was signed by the two defendants and Doctor Lai. Their signatures are witnessed by two names. The plaintiff in evidence said that they were two employees in the same firm as that in which he worked, one of whom was his brother-in-law. Neither of these two persons was called as a witness.

7. The cheque which had previously been given to Doctor Lai by way of deposit was restored to the defendants and another and similar cheque was given to Doctor Lai made out in his favour, but this was not accepted. This agreement was stamped on the following day.

8. The agreement provides for the purchase by the defendants of the land at $20 per square foot. A term of the agreement read, in effect, but not in so many words, that Doctor Lai could give vacant possession of the land. There were also certain provisions concerning the deposit.

9. On the day following the making of the agreement the plaintiff said the defendants informed him that they were going to re-sell the land to one Chong Pao Ching, who was the representative of the Kam Shek Investment Company. An agreement purporting to be to that effect was exhibited by the defendants. The plaintiff was not a party to this agreement. And he told the defendants that he was not interested in it. His only concern, he said, was his commission under the agreement of March 11th.

10. The plaintiff received a cheque from the defendants according to his evidence for some $21,000 odd. He said that this was part payment of his commission.

11. The plaintiff was adamant that the agreement that the defendants would pay him commission at the rate of $2 per square foot was made at the abortive meeting on February 1st, 1973 in the presence of Dr. Lai. And he emphatically denied that this was to be his share of any profit made upon a re-sale by the defendants.

12. Doctor Lai was called as a witness by the plaintiff. He said the meeting at the International Restaurant was on January 11th or 12th, 1973, not on February 1st. A copy of the agreement of March 11th, 1973 was shown to him and he said he remembered seeing this on that date i.e. in January. He did not, however, remember the clause concerning the giving of vacant possession being included in it. Indeed, he said, had that clause been there he would not have signed the agreement. He also said that there were no witnesses' signatures when he signed and that he signed in January and not on March 11th as the agreement states.

13. This witness went on to say that the sale to the defendants fell through and he sold the land to Kam Shek Investment Company. The price was $20 per square foot and as he had promised he paid the plaintiff commission at the rate of 50 cents per square foot, namely $22,215.50.

14. In August a second agreement with Kam Shek was made under which the price was reduced. This was a result of an alleged breach of contract on Dr. Lai's part, a threatened action and an out of court settlement. These matters did not concern the plaintiff. In spite of the lower price per square foot Doctor Lai finally received, he did not ask for a return of part of the commission he had paid to the plaintiff.

15. This witness did not assist the case for the plaintiff. He said that he only signed one agreement and that was on the earlier date. The allegation is that that agreement was altered - part of a new clause being added, the date changed and two witnesses' signatures added. Dr. Lai said he did not hear any mention of payment by the defendants to the plaintiff of commission. He gave me the impression that he, Doctor Lai, considered that the presence of the plaintiff was due to his being the introducer to the defendants, and as a solicitor's clerk who had obtained for him a certified true copy of the title deeds to the land.

16. The plaintiff also called Chong Pao Ching of Kam Shek Investment Company who was the intended purchaser of the land from the defendants and who eventually purchased the land from Dr. Lai. This witness did not advance the case for the plaintiff.

17. In support of his case, the plaintiff placed considerable reliance on two documents which were exhibited as A6 and E. The former is a statement signed by the two defendants. The latter is a statement signed by the plaintiff himself. I find both these documents to be equivocal and I will deal with them later in the judgment.

18. I now come to the defendants' case. Both the defendants gave evidence. Their case put quite simply is that there was never an agreement with the plaintiff for commission. What was agreed was that the defendants would purchase the property at $20 per square foot, and re-sell it, it was hoped, at $26 per square foot. The profits made on a re-sale would be shared, the plaintiff receiving $1.50 per square foot.

19. The first defendant agreed with Dr. Lai that the agreement to sell the land to the defendants was not signed on March 11th but earlier. However, he disagreed with Dr. Lai when the latter said that the clause concerning vacant possession was inserted at a date different from the date on which the agreement was signed.

20. He said that he, his wife and the plaintiff agreed that upon the re-sale of the land the plaintiff would receive one third of the profit made, which it was hoped would be $6 per square foot. One-third would be paid to the defendants and the final third would be paid to a friend, a doctor, who I understand had or would put up a portion of the purchase price.

21. He said that originally it was agreed that the plaintiff would get $1.50 per square foot as his share of the profit, but later the plaintiff asked for a further 50 cents per square foot for one Mr. Ng. One of the plaintiff's witnesses gave evidence that the plaintiff asked for a further 50 cents for such a purpose but the plaintiff denied this. Mr. Ng was not called. This agreement was made orally.

22. The first defendant said that the plaintiff said that the agreement between Dr. Lai and the defendants for the sale of the land must be witnessed. The plaintiff himself said that the two witnesses, whose signatures appear on the agreement were in the restaurant by chance at the time the agreement was made. Both Dr. Lai and the two defendants denied this. The first defendant said that the plaintiff arranged for this to be done at the cost of $2,000 per witness. The plaintiff denied that any such sum was paid or charged.

23. The first defendant said that they agreed to re-sell the land to Mr. Chong at a profit of $6 per square foot, but that this agreement was cancelled later and there was in fact no re-sale. However, Mr. Chong had given the defendants three post-dated cheques including one for $44,431 in purported payment of the land. Because the transaction did not go through payment on these cheques was stopped to the plaintiff by the defendants.

24. The defendants also paid the plaintiff a cheque for $19,315.50. This they said was part of the plaintiff's share of the profits. The payment was made by a cheque dated March 13th, 1973 which has been exhibited and it actually was a sort of balance of account between the plaintiff and the defendants. The share of profits was $22,215.50, but some deductions were made from that sum of certain sums which had already been given to the plaintiff during the negotiations.

25. The first defendant said that Mr. Chong's cheque for $44,431 was given to the plaintiff for custody and because the plaintiff would stand to receive a large sum of the profits which the parties thought they had made. On April 14th, 1973 two documents were signed by the parties. They are in equivocal language. One document is a receipt signed by the plaintiff. The other seems to suggest that it was to have been signed by Chong Pao Ching. They are memoranda and do not form part of a contract.

26. It is part of the case for the plaintiff that these documents show that the true transaction between the parties was the payment of a commission to the plaintiff for the introduction of the defendants to Dr. Lai and not an agreement to share in any profits made from a re-sale. I do not think that the plaintiff is right here. The documents refer in translation to the "recommendation in connexion with the purchase" - to" expenses" and to "profits and commission".

27. At best the documents are equivocal. It is the case for the defendants that the plaintiff's introduction of them to Dr. Lai was the quid pro quo for a share in the profits upon re-sale of the land. These two documents support that version of the facts but in addition they would support the plaintiff's view, that commission was intended, at least, in part. They do not decide the basic question at issue in this case.

28. Mr. Chong's cheque for $44,431 was endorsed to the plaintiff in mid-April in the Metropole Restaurant before witnesses who gave evidence to this effect. It was endorsed after it had been dishonoured. The sum represents a profit of $1.50 per square foot. And according to the defendants it was the plaintiff who suggested the endorsement.

29. The first defendant said that the agreements with Dr. Lai and with Mr. Chong were cancelled by mutual agreement because vacant possession of the land could not be given. The defendants withdrew from the transaction leaving the matter as between Dr. Lai and Mr. Cheng, who eventually came to an agreement. The plaintiff played no part in that agreement or in the negotiations which preceded it.

30. The second defendant also gave evidence along the same lines as that given by the first defendant. She was emphatic that any payment to the plaintiff was not on account of commission but was on account of a share in any profits made from a re-sale. She said that the cheque for $44,431 was given to the plaintiff at his request because he thought that when the whole purchase price was paid the defendant might not pay him.

31. The second defendant said that though the agreement for re-sale had been cancelled, she was advised that as she still had Mr. Chong's post-dated cheques she could still cash them, and if she was successful the money so obtained would be shared in the manner agreed with by the parties, the plaintiff receiving his share.

32. I accepted the version of the facts given by the defendants. The defendants are not experienced in land deals. Indeed, I was told that this was their first. The plaintiff is a most experienced person. If the agreement had been for commission only one would have expected something in writing clearly stating that fact especially as the rate of commission suggested was so very high. I believed the two defendants, their evidence agrees with the documentary evidence. The agreement was that if a profit were made it would be shared. I disbelieved the plaintiff's version of the facts. I do not think there was any agreement for the payment of a commission to the plaintiff by the defendants.

33. It was suggested in argument that the plaintiff was entitled to a share of the price for the land on the agreement of sale of the land to Kam Shek. It is true that that agreement shows on its face that a large profit would be made by the defendants. But that sale never went through, no sale was effected, no profits were made so there was nothing to share.

34. There must be judgment for the defendants on the claim with costs.

35. The defendants have counterclaimed for the sum which they paid the plaintiff. This was $23,215, in effect a profit of 50 cents per square foot. The second defendant said in her evidence-in-chief that Mr. Chong had compensated the first defendant for the sum that the defendants had paid the plaintiff and that Mr. Chong supplied $3,000 towards the stamp duty which was given by her to the plaintiff.

36. Counsel for the defendants says that this should be dealt with as profit from the deal. And taking into consideration the fact that the plaintiff was entitled to one-third of any profit made his share would be $8,405.

37. This means that the plaintiff must repay the sum of $13,310 on the counterclaim.

38. There will be judgment for this amount on the counterclaim. The defendants are to have their costs of the counterclaim.

Representation:

C.Y. Wong (H.H. Lau & Co.) for Plaintiff.

K.H. Woo (Peter Mo & Co.) for Defendants.