Li Pik Chun v. Hopewell Housing Ltd

HCA002706/1972

IN THE SUPREME COURT OF HONG KONG

ORIGINAL JURISDICTION

ACTION NO. 2706 OF 1972

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Coram: LI, J. in Court

Date of Judgment: 29th September, 1973 at 10.00 a.m.

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JUDGMENT

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1. In this action the plaintiff asks for Specific Performance of an oral agreement for the purchase of property known as "Flat A6 and carpark No. L.67 of Hipway Towers in Kun Tong", at the net price of $88,162.00.

2. It is the plaintiff's case that, on the 28th May, last year, she had an agreement with the defendant for the purchase of the said property at the said price, and such agreement was evidenced in writing in a document which is exhibited in the agreed bundle in Exhibit 1. I shall refer to the document as Exhibit 1(3) because it is page 3 of the agreed bundle. On the 14th June last year the plaintiff's solicitor wrote to the defendant's solicitor, a letter asking for the transaction to be completed - Exhibit 3. On the 17th July, last year, the defendant's solicitor replied to the plaintiff's solicitor in a letter, Exhibit 5, saying in so many words that the defendant was no longer interested in selling the property to the plaintiff and was prepared to refund the deposit which had been paid by the plaintiff.

3. The defence case is that there has been no agreement at all. Exhibit 1(3) is signed on the basis that it is only an application on the part of the plaintiff to the defendant to purchase the said property at the price of $88,162.00. In that document, Exhibit 1(3)

4. According to the plaintiff everything was agreed and she paid the full deposit before she signed the Exhibit 1(3). She was asked to sign by Miss WONG. However, there was, on another part of her evidence- in-chief in which she said that she was shown a form similar to Exhibit 1(3) by a man.

5. The defendant's evidence on this aspect is given by Mr. LAU Wai-shiu, a gentleman in charge of Sales at the site office. According to him the plaintiff was brought by Miss WONG and the plaintiff signed Exhibit 1(3) before him. It was after Exhibit 1(3) was signed that he accepted the plaintiff's cheque for $2,000.00 in the form of a deposit.

6. On this fact and this evidence Mr. LEE, learned counsel for the plaintiff contends that the plaintiff's evidence is to be accepted and that there was an oral agreement on payment of the deposit of $2,000.00 and that it is not necessary for the plaintiff to rely on Exhibit 1(3). There had been an oral contract completed on payment of the deposit of $2,000.00 since the defence has not expressly pleaded fraud in this matter or lack of a memorandum in writing, it is not necessary for the plaintiff to rely on Exhibit 1(3) at all. However, I am unable to accede to this argument. Perhaps the simplest fact in issue is that this document is very much pleaded by the plaintiff in the statement of claim. A party can not go back on his pleadings. On the plaintiff's evidence alone again, there is doubt as to who caused her to sign Exhibit 1(3) and when she signed Exhibit 1(3). On the other hand, Mr. LAU was quite adamant that she signed it before he accepted her cheque for the deposit. As to the calculations of payment, the plaintiff had to refer to Exhibit 1(3) to refresh her memory as to what were the various payments demanded in that document. For this reason whether I determined that there had been an agreement on the 28th May, 1972, I have to answer the second question first or, rather, the second part of the first question first that, Exhibit 1(3) must be part and parcel of an agreement, if at all.

7. Let us then look at Exhibit 1(3). There has been some dispute as to the proper translation of this document. But for the purposes of this case I think I can adopt the translation that is provided by the plaintiff. It is entitled: "ADVANCE APPLICATION FOR THE PURCHASE OF FLATS", dated 28th day of May, 1972, addressed to Hopewell Housing Limited. Then it goes on to provide: "I wish to apply to your company for the advance purchase of premises on the following terms and shall be pleased if you will kindly accept and register for sale. Description of premises: HIPWAY TOWERS, Flat A6 on the 6th floor. List price $109,200.00. Agreed net price $88,162.00. Security furnished. I am willing to make a down payment of $2,000.00 as security for reserving the said premises." Then it goes on to "Method of Payment, paragraph 1. At the time of signing the agreement pay portion of the purchase price at $32,750.00. Reckoned on 75 per cent, net amount payable $24,562. At the same time pay the purchase price for lower car port L.67, no discount, net amount $7,500. TOTAL: $32,062.00. Paragraph 2. On completion of the concrete laying, pay further part payment, purchase price $7,626.00. Reckoned at 80 per cent, net amount payable $6,100.00. Paragraph 3. After grant of Occupation Permit, pay balance of purchase price at $58,824.00. Reckoned at 85 per cent, net amount payable $50,000.00."

8. Pausing here, it would appear that, whatever was the cause of the mistake or calculation, either the defendant had forgotten about the value or the fees for the carpark to be included in the item of that price, or that, in calculating the second payment, they have missed out one digit, the list price of $10,000.00. That is the cause of the whole trouble in this action.

9. However, the document does not stop there. There are two supplemental rules:

And after evidence is heard the translators who certified another version of the translation agreed that probably the better translation would be that the last few words in Supplemental Rule 2. should be translated as "I agree to have no objection" But that is neither here nor there. Under all these the plaintiff appended her signature, address and telephone number. On the other side the defendant company's chop was applied with the words: "Agreed and signed LAU Wai-shiu. Approved by Hopewell Housing Limited."

10. Having decided that this document is part and parcel of an agreement, if any; and, in any event, a material document in this action, I have to consider the interpretation. Mr. LEE, for the plaintiff, argued that Supplemental Rule 2. first of all, is unenforcible because it is merely an agreement not to disagree and, secondly, the plaintiff was never told of this rule, and, thirdly, that since the defendant company had signed and put the word 'agreed' on this document, therefore the word 'agreement' in Supplemental Rule 2. is satisfied. Thus, this document Exhibit 1(3) alone is an agreement, and therefore, once this has been signed the defendant has passed the line of no return and cannot cancel the application.

11. I will deal with the third point first. Indeed, on the face of it, if there has been any agreement the defendant will not be allowed to cancel an application. However, it is a cardinal principle of interpretation of a document that two words in the same document must be given the same meaning. In paragraph 1. of the Method of Payment, we have the same word and the same term "agreement" because it provides: "At the time of signing the agreement pay portion of the purchase price $32,750.00." That word "agreement" if it has the same meaning as the word "agreement" in Supplemental Rule 2. then it will appear that the plaintiff would be required there and then to pay the sum of the first payment, total sum of $32,062.00. On the other hand, if the word "agreement" means agreement for sale and purchase, which is more normal in the interpretation of a document concerning a sale of property, then the word "agreement" can only be a short version of an agreement of sale and purchase. Similarly, in Supplemental Rule 2. the word "agreement" would seemingly bear the same meaning, that it is an agreement of sale and purchase of the property. Thus, there is a doubt in the meaning of the word "agreement" in these two places in the document. I cannot say that these terms, using it, translating it literally and simply is not ambiguous. As such one must accept extrinsic evidence for the interpretation of this document. The evidence is that all the plaintiff paid at the signing of this document Exhibit 1(3) was $2,000.00 as deposit. For this reason I find as a fact that the word "agreement" in Supplemental Rule 2. means agreement for sale and purchase. The term "signing an agreement" in Supplemental Rule 2. is not satisfied by the defendant company putting the word "agreed" and a chop on this document. My interpretation of this document and the defendant's action including the word "agreed" and a signature on it is that the defendant agreed to put this application through. This is far from agreeing there and then to treat this document as an agreement of sale and purchase of the property as we understand it in a conveyancing transaction.

12. The other point that has been raised by Mr. LEE is that it was merely an agreement not to disagree and as such is unenforcible. Again, I am not able to accept this argument. It is true that an agreement to agree is unenforcible because it is something in a vacuum. It is an agreement to agree in the future. On the other hand, an agreement to have no objection or not to raise any objection means that the plaintiff agreed not to object to something that has already been agreed upon, namely, a unilateral right on the part of the defendant to rescind or to cancel any application. Harsh as the term may be, it is, nonetheless, a term in that document. It is an undertaking on the part of the plaintiff. There is no escape from it. Until such day as the freedom of contract can be restricted this feature will always appear in transactions between individuals and big corporations. It depends on the law of demand and supply. As to the fact that the plaintiff had no notice of this rule, I think I only need observe that it is not like some railway tickets, with small print on the reverse side of it, printing lots of restrictive conditions. It is in bold print, right above the place where the plaintiff put her signature. I cannot accede to the argument that the plaintiff had no notice of it.

13. Having come to the conclusion it is a material term to be considered and that it is enforceable by the defendant, I will probably have disposed of this action. However, the issue must be determined. I find as a fact that on 28th May there had been no agreement. The discussions and details of calculation of price was merely a matter of working out the details to be put on document 1(3) admittedly filled up by the staff of the defendant company but adopted and signed by the plaintiff as part of her application. It remains an application despite the payment of a deposit and despite the putting down of the word "agreed" by staff of the defendant company, Mr. Lau. I accept Mr. Lau's evidence that Exhibit 1(3) was signed before the payment of the cheque of $2,000. But that is not really a material factor. On that day there was no agreement but merely the application on the part of the plaintiff containing the term which includes Supplemental Rule 2 which, I repeat, provides that before the signing of an agreement, if the defendant company wishes to cancel the application and return without interest the deposit, the plaintiff agreed not to raise any objection.

14. I also find as a fact that there was definitely a miscalculation but the responsibility for the miscalculation was on the part of the defendant and not the plaintiff. However, the document signed by the plaintiff is in the form of an application in the name of the plaintiff and therefore whatever miscalculation was done by the defendant, there is no evidence that there was any fraud or deliberate cheating on the part of the defendant or the plaintiff. Unfortunately, the plaintiff has adopted this miscalculation as part of her application. But that is not fatal. What is fatal for the plaintiff's action is the terms in Supplemental Rule 2. Having discovered the mistake, the plaintiff refused to rectify the price at a certain time and at all material times, In that case the defendant was at liberty to cancel the application and offer to return the $2,000 before the signing of any agreement for the sale and purchase of this flat. I find that this Supplemental Rule 2, as a material part of the application and an undertaking on the part of the plaintiff, is sufficient to enable the defendant to take advantage of it, to correct their own mistake - or to salvage their own mistake by cancelling the transaction.

15. I further find the facts that after the 28th May last year the mistake was soon found out by the defendant. I accept the evidence of Mr. Lau and Mr. Chu, which is partly admitted by the plaintiffs, on their evidence, that they telephoned her and telephoned her husband. The plaintiff's evidence is that they never explained the mistake to them on the telephone. They merely told them (the plaintiff and her husband) to go to the office, head office or the site office, to rectify the mistake. I mention this because there is a moral issue as well as the legal side of it when one considers the matter of specific performance. The defence evidence was that they had already explained everything to them on the telephone and told them that if they wanted further details and to go to the head office or the site office to rectify the mistake

16. I find that the defendant did in fact contact the plaintiff or her husband and told them of the miscalculation. I have some doubt that they might not be able to explain as plainly and clearly to the plaintiff on the telephone but they did request the plaintiff and/or her husband to go to their office to listen to their further explanations.

17. I find that the plaintiff and her husband deliberately refused to go to the office. Instead, on her own evidence which is not challenged, the plaintiff went to the defendant's solicitors to make quite sure that the price could not be changed.

18. I find that the defendants' solicitors gave them a noncommittal answer and that they were told to go back in two days time for the papers. On the second visit to the defendants' solicitors the plaintiff found out that the defendant company was not willing to go through with the transaction because there was the mistake in the calculation. The plaintiff was accordingly advised by the defendants' solicitors to go to the defendants' office to clear up the matter. These are undisputed facts or unchallenged facts. It came from the plaintiff herself. Instead of going to find out the truth and get to the root of the matter, the plaintiff saw fit at once, in her own words, to go to C.P. Lin & Co. to see a Mr. Chan, There and then instructions were given and a letter, Exhibit 3, was written to the defendants' solicitors. It is the plaintiff's own evidence that she realised the miscalculation and why she was asked to go to the defendant company on return from her visit to Mr. Chan of C.P. Lin & Co. I asked her that she must have been to that office many times which was the visit, the return from which she realised the miscalculation. She told me that it was after the first visit to Mr. Chan. Thus she must have known of the miscalculation by early June and certainly before the middle of June last year. Yet there was no approach, no negotiation and no visit to any of the defendant's offices until early in July. There she said she saw Mr. Cheung and asked for an explanation to be given to her solicitors. This, I find, is not the conduct of a reasonable person who is willing, ready and able to rectify any honest mistake whether made by herself or made by others. I find that this is the conduct of a person who is quite prepared - indeed, if the law enables her to do so, or the contract enables her to do so, she is quite entitled to do so - to take advantage (and I mince no words) of a mistake made by the opposite party. Unfortunately she under-rated the force of Supplementary Rule 2 of Exhibit Pl(3) and therefore at the beginning of July last year she offered to meet the defendant half way by offering payment of an extra $4,000. She herself has not come into the open about it. She said that the few thousand dollars offered was to be offered as tea money to the staff of the defendant who, she thought were demanding. This coming from a lady who, by appearance, can hardly be said to be uneducated, is surprising. Her husband gave evidence that he felt that it was dishonest of the defendant to raise the price by $8,000 and therefore he offered to meet half this.

19. I find as a fact that at all times the plaintiff knew of the miscalculation right from the beginning, which is not a difficult point to explain. All one need do is to take the list price and subtract the list price of the first and the third payments and one can tell straight away by the difference the second payment, and that in the second payment there was an undercharge of some $10,000 in the list price. This, having regard to the whole circumstances, is not difficult for anyone of the stations in life of the plaintiff and her husband to understand.

20. I also find that at the beginning of July the plaintiff had been warned by Mr. Chu of the intended cancellation. In so many words Mr. Cheung told them that if they were not willing to rectify the mistake the defendant would exercise the right to cancel the transaction and return the deposit. I do not accept the plaintiff's evidence that Mr. Chu barged in to scold them and said that the deposit was forfeited. Looking at Mr. Chu, as a witness, he might be the type of person who might be crude. However crude he might be, I find it difficult to accept that he would dare go into his superior or senior officer's room to point at the clients who went to see his superior officer and there and then scold them in that room. I accept Mr. Cheung's evidence that Mr. Chu did say that if that was the case it would seem, in a way, that if they were not willing to rectify the mistake they were in effect taking advantage and getting a cheap flat, and that was all that was said. All I want to say is that I find as a fact that they had been warned at the beginning of July last year and I find as a fact that the final cancellation comes in a letter, Exhibit 5, the defendant company's solicitors' letter, to the plaintiff's solicitors. They have written in these terms:

21. I find that there is no formal language necessary to effect a cancellation. This, as far as I am concerned, may be interpreted as a cancellation of the application and an offer to return the deposit of $2,000. This repudiation is subsequently substantiated by the writ issued and the defence of this action. That was done before the signing of any agreement for the sale of the property. In the circumstances, unfortunate as it may be, the plaintiff has been caught by Supplemental Rule 2 in that the application form, which was an undertaking. The defendant was entitled to exercise that right before the signing of the agreement and therefore the plaintiff has no claim in her action for a specific performance.

22. As to a specific performance on terms, I may only observe that those who come to equity must come with clean hands - I am by no means saying by this remark that there was anything dishonest on the part of the plaintiff. Far from it what I am saying is that she was trying very hard to rely on law and, not on equity, to pursue her legal rights, which she misconceived, and she has to abide by it. But there is more to it. As I understand it, the principle of granting specific performance is that the parties may be able to be put in their status quo. There is no status quo in this matter because the price of the flat must have changed, circumstances have changed. A year has gone by.

23. For these two reasons I am not inclined to order a specific performance on terms, even if the plaintiff were to pay what was originally demanded after rectification of the application form.

24. Accordingly, the plaintiff's action must be dismissed with costs.

(Application by Mr. Lee to deprive the defendants of 50% of the costs).

Representation: