Yim Lan Fung v. Thomas Young

HCA000829/1982

BETWEEN

Coram:  Hon. Penlington J. in Court

Date: 22 November 1982

___________

JUDGMENT

___________

1. This is a claim in which the Plaintiff seeks to rescind a tenancy agreement entered into in May 1979 under which she let her flat at Baguio Villas to the defendant. There are three grounds on which the claim is based. The first of these is that the defendant, who was the sole proprietor of a firm called Taipan Agencies Corporation, was acting as the plaintiff's agent at the time and that he failed to disclose to the plaintiff that the tenant of the flat was in fact to be himself. He therefore failed in a fiduciary duty which is owed to the plaintiff, as his principal, to disclose that he was in fact acting as a principal and not as an agent. The second ground is that the defendant, through an employee Mr. Jimmy KONG, fraudulently mis - represented to the plaintiff that the tenancy agreement contained a clause prohibiting subletting. The third ground is that if there was not such fraudulent mis - representation the said Mr. Jimmy KONG acted negligently in his capacity as the plaintiff's agent in not inserting such a clause in the tenancy agreement.

2. The plaintiff said that having purchased the flat she considered whether or not she and her family would move into it themselves but decided to let it because the family did not wish to move from their present accommodation. She saw an advertisement in a local Chinese newspaper stating that Taipan Agencies Corporation could arrange for the letting of flats. She spoke to Mr. KONG on the telephone who said that they would be able to let the flat but she would have to pay them a fee of one-half of a month's rental. She agreed and told Mr. KONG she thought a rental of $4,000 a month would be about right. She was later told over the telephone that a tenant had been found who was a Mr. YOUNG who was a Chinese living in Mew Zealand and who had at Australian wife. They would be out of Hong Kong for a considerable part of their time and were prepare to pay a rent of $3,200 per month. She said that because Mr. YOUNG sounded an attractive tenant she agreed to the rental suggested. On same evening a Mr. KONG came to see her. He had a document in English already signed by the tenant. She also signed and Mr. KONG signed as witness to both signatures. Mrs. YIM said that she wanted a prohibition on subletting and that she asked him to explain what was in the tenancy agreement as she did not read English. Mr. KONG told her that that condition was already in the document. She said that she had only agreed to a low rental because Mr. YOUNG was the sort of tenant she wanted, particularly because he did not have a family. She also said that she did not want any trouble with sub-tenants. She said that Mr. KONG assured her that "everything was included which was required by the Government". Mrs. YIM said that she also signed the document at page 19 of the agreed bundle of documents which is a letter from Taipan Agencies Corporation addressed to herself setting out the terms of the proposed tenancy. One of the terms of the tenancy is that there should be an option for the tenant to have a further three years tenancy at an increased rental of 15%. It also says that the tenant should pay a "Agency Introduction Commission" of $1,600. This is the half month's rental which Mr. KONG had told the plaintiff she would have to pay. The actual amount is in fact $4,703 and is as set out in a payment advice which is page 14 of the agreed bundle. This is the defendant's own document and sets out the payment received on behalf of Mrs. YIM and the deduction made there from. These deductions also include an "agency introduction commission" of $1,600.

3. Mrs. YIM said that she had never met Mr. Thomas YOUNG and .she always believed that he was the actual tenant.

4. Some time after the tenancy agreement had been signed she received a phone call from a Mrs. LAW. Mrs. LAW said that she was her tenant and that the bath tub was leaking. The Plaintiff then made enquiries from Taipan Agencies Corporation as to who in fact was the tenant and following that she instructed her solicitors. She said that she did not know and had never been informed that Mr. YOUNG was in any way connected with Taipan Agencies Corporation and certainly did not note that he was in fact the owner of that firm.

5. Mrs. YIM said that while her native language was Mandarin she does speak some Cantonese although she has difficulty carrying out a conversation in that dialect. Her discussions with Mr. KONG were all in Cantonese. She said that so far as she could remember the advertisement in the newspaper said that Taipan Agencies Corporation was in a position to find tenants for landlords. She denied that she had signed the letter dated the 24th May and she also denied that she had been paid a deposit of $3,200. She said that all the transactions took place on the same day and she signed all the documents on the same day notwithstanding that they are dated different dates.

6. She said her husband was a seaman and he knew English. He was, however, away at sea in May 1979 when she let the flat and on his return she did not show him the documents. She trusted Mr. KONG. She said she did not show the documents to anybody until she went to her solicitors.

7. The defendant said that he was the owner of a group of companies which were dealing in and managing property. Part of that activity was to act as estate agent. He said that part of their business was to take tenancies of flats and then to sublet. On some occasions this meant putting in furniture and doing other work on the flat before they were sublet. He said he did put an advertisement in the Sing Tao Newspaper which stated that they had clients wishing to rent Baguio Villa flats. He was not however able to produce a copy of the advertisement. He said that the charge of $1,600 was not an agent's fee and that he never gave Mr. KONG authority to act as Mrs. YIM's agent. He said that he was never dealing with Mrs. YIM on an agent/principal basis. He said that the tenancy agreement was drawn up following agreement with Mrs. YIM to let her flat at $3,200 per month but Mr. KONG did not come back with the document signed. The provisional agreement in the form of a letter was then drawn up and was signed. He said he made out his own cheque for $3,200 and gave it to Mr. KONG who later came back with the provisional agreement signed. The cheque was presented for payment and he produced the relevant cheque but I am satisfied that in fact this cheque was paid to Mrs. YIM and that it is the cheque referred to in the payment advice.

8. He said that on receipt of a letter from Mrs. YIM's solicitors he wrote to them and a letter dated the 9th October advising that in fact the flat had been sublet to a company called Rassil Co. Ltd. at a rental of $200 per month. He agreed that he was a director of Rassil Co. Ltd. and that the rental of $200 per month was in fact a nominal figure. Rassil Co. Ltd. then sublet the premises to a Mrs. Alice Kay. He said that he thought she was paying a rental of $3,960 per month.

9. The defendant submitted that the letter of 24th May from Taipan Agencies Corporation to Mrs. YIM quite clearly states that the premises have been let to their client and that therefore is quite clear that they were acting for the tenant and not for Mrs. YIM. He says that the agency introduction commission is simply a lump sum payable to the agency by the landlord as a fee and it is not an indication that there was an agent/ principal relationship between them.

10. I am quite satisfied from the evidence that there was indeed an agency relationship between Mrs. YIM and the defendant. While there are aspects of Mrs, YIM's evidence that I am not satisfied with I am quite satisfied that Mr. KONG did hold himself out as acting as her agent in letting of the flat. She says that the advertisement dated that the agency could find tenants for landlords and I am satisfied that by asking for a commission of one-half a month's rent the defendant must have held himself out as acting as agent for the landlord. I do not accept the defendant's evidence as to the meaning of the phrase "agency introduction commission". I am satisfied this was a commission payable by the principal to his agent. I am also satisfied that the defendant did have a duty as agent for the plaintiff to disclose to her that he was going to be the tenant of the flat himself and that he failed in such duty. (See Bomstead on Agency, 4th Edi. Articles 47. P.132 and the cases cited therein.)

11. I am not satisfied on the evidence that there was fraudulent mis - representation by Mr. KONG to the plaintiff regarding question of there being a clause in the tenancy agreement prohibiting subletting nor do I find that there was negligence on his part in not inserting such a clause. The plaintiff is therefore entitled to rescind the tenancy agreement and I so order.

12. The plaintiff also claims damages being the difference in rental between that received by the defendant and that paid by the defendant to the plaintiff. This is a more difficult question as the authorities seem to suggest that the principle where there has been a failure by the agent to disclose must either rescind the contract or Claim for damages although the remedy in each case must depend very much on the circumstances. I am satisfied that here the plaintiff is only entitled to rescind the contract. The pray for relief does claim damages but only as an alternative to rescision.

13. The plaintiff is entitled to her costs. Initially I considered that because this was a failure of the defendant in his Fiduciary duty there costs should be on a solicitor and own client basis, However I am now satisfied that the proper order should be that the costs should be on a common fund basis. This will ensure that the plaintiff receives all costs reasonably incurred.

Representation:

A. Ismail (D.W. Ling & Co.) for Plaintiff.

Thomas Young (Defendant in person).