Embassy Freight Hong Kong Ltd v. Centaline Property Agency Ltd and Another
Read the full judgment text of DCCJ 6700/2002 on BabelCite. This District Court judgment was delivered on 30 September 2003.
1. In this case, the Plaintiff ("P") claimed against the 1st and 2nd Defendants ("D1 and D2"), who were respectively an estate agent and its employee, for damages for misrepresentation and/or negligence. There was no dispute that D1 carried on the business as an estate agent for sale, purchase and leasing of properties in Hong Kong and at the material time, D2 was the holder of Estate Agent Licence No. E-160158 and employed by D1 as a senior estate agent.
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DCCJ006700/2002 DCCJ6700/2002 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO. 6700 OF 2002 ____________
____________ Coram: Her Honour District Judge Marlene Ng in Court Dates of Hearing: 3 and 4 September 2003 Date of Judgment: 30 September 2003 _______________ J U D G M E N T _______________ Introduction 1.In this case, the Plaintiff ("P") claimed against the 1st and 2nd Defendants ("D1 and D2"), who were respectively an estate agent and its employee, for damages for misrepresentation and/or negligence. There was no dispute that D1 carried on the business as an estate agent for sale, purchase and leasing of properties in Hong Kong and at the material time, D2 was the holder of Estate Agent Licence No. E-160158 and employed by D1 as a senior estate agent. 2.It was further agreed that :
3.P claimed that on or about 24th August 2002 and in the course of negotiations, D2 orally represented to P that the management fees of the Premises were about HK$1.60 per square foot. In reliance thereof, P entered into the Provisional Agreement with the owner of the Premises and D1. P averred that on or about 18th September 2002 when P was settling the management fees with the management office of Great Smart Building, P discovered that the management fees payable were in fact HK$2.50 per square foot and not HK$1.60 as represented by D2. 4.P claimed it suffered loss and damages by reason of the misrepresentation and/or negligence of D1 and D2, namely, the difference between the actual management fees and the management fees as stated by D2 (ie, 2,906 square feet x (HK$2.50 - HK$1.60) x 36 months = HK$94,154.40) together with interest thereon. 5.D1 and D2 denied that they made the alleged representation and averred that on or about 24th August 2002, D1 told P that the management fees of the Premises were about HK$2.60 per square foot. D1 and D2 counterclaimed against P for outstanding commission of HK$8,718.00. Mr Wu, counsel for P, confirmed that P did not dispute its liability for commission in the sum of HK$8,718.00 but claimed that it was entitled to set-off the same against the alleged damages as aforesaid. 6.Mr Wu and Mr Maurellet, counsel for D1 and D2, were agreed as to the admissibility and authenticity of the documents contained in Section C of the trial bundle ("TB"). P has lodged a plaintiff's bundle of documents but Mr Wu informed me that P would not rely on those documents for the trial. 7.The present trial was conducted in English. However, with the agreement of both counsel, I granted leave for the witnesses to give evidence in Chinese. Rule 5B of the Official Languages (Translation) Rules Cap.5B provides that if a court indicates that it intends to conduct a trial or part of a trial in the Chinese or English language, any document that is written in the other language that is to be admitted in evidence must be accompanied by a certified translation in the language of the trial. On agreement of counsel, I granted leave to dispense with the need for the translation of the documents used in the trial from one official language to the other official language. 8.There were 3 witnesses in the present trial : Mr Ho Po Wing also known as Mr Danny Ho ("Ho") and Ms Lam Chi Kiu Regina ("Lam") gave evidence for P, and D2 gave evidence for D1 and herself. With the agreement of both counsel, I granted leave for the witness statements to stand as evidence-in-chief. P's case 9.Both Ho and Lam were and are P's directors. P was engaged in the business of international freight-forwarding of goods. By 15th August 2003, Lam had been with P for 15 years. She had been P's shareholder since about 4 years ago. Ho has been P's managing director since the company was established. There were 2 other directors. P had 18 employees in Hong Kong. 10.Lam said that in August 2002, P's place of business was at Room 1802-1803, 18th Floor, Causeway Bay Plaza II, No.463 Lockhart Road, Causeway Bay, Hong Kong ("Causeway Bay Premises"). There were 2 rooms and a small conference/meeting room. It was about 2,000-2,200 square feet. The rest of the office area was an open area for the general staff. The Causeway Bay Premises were for office/administrative work and not for storage purpose. Lam said they seldom met clients at their offices. Rather, they would visit their clients. On the other hand, Ho said that many of their clients used to visit them at the Causeway Bay Premises to do business. He said that their clients would come quite frequently to their offices for documentation. 11.The rent of the Causeway Bay Premises was HK$13.00 per square foot. Although Lam could not remember the precise amount of the management fees of the Causeway Bay Premises, she thought it was HK$4.00 or HK$4.10 per square foot, which amount included air-conditioning charges. The management fees remained the same through P's tenancy. Ho also thought that the management fees were HK$4.00 odd per square foot. 12.Lam said Causeway Bay Plaza II was an average building. She said offices would be acceptable to employees so long as the transportation was good. She said that there was no special advantage to be had in the Wanchai and Causeway Bay areas. In fact P only required that its office be on Hong Kong Island, so even Sheung Wan was acceptable. Hence, when they contemplated moving office, they also inspected the Sheung Wan Premises (see below). On the other hand, Ho said that if they moved their office only 1-2 streets away, it would have less effect on their clients. Further, he preferred their office to be in Wanchai/Causeway Bay area rather than in Sheung Wan. Ho said he quite liked working at Causeway Bay Plaza II. 13.P considered moving office and engaged D1 for that purpose. Ho said that was about 1 and a half months before P rented the Premises (see below). Lam said they initially contacted Mr Patrick T Y Wong ("Wong") as he was the agent who found the Causeway Bay Premises for them. However, Wong had since been promoted to sales director and he assigned Mr Stanley P K Lee ("Lee") of D1 to handle P's instructions. Lam said it was Lee and not D2 who looked after their account. Lam said her requirements for the new office as given to D1 were premises of the size of 2,000-2,400 square feet, rent of about HK$7.00 per square foot and the premises should be situate in the area from Sheung Wan to Causeway Bay. Nothing else was mentioned in particular but it was understood that there would be 3 months' rent-free period. 14.Lam said that they wished to save at least HK$200,000.00 over the new 3-year tenancy. Ho and Lam came to the target of HK$200,000.00 after discussion. Lam said that the intended savings would be made over rent, management fees, rates and air-conditioning charges in respect of the new premises to be rented as compared with the Causeway Bay Premises. She acknowledged that there were some fixed costs that would be incurred in any tenancy and she would not take those into account. Her main considerations would be rent, management fees and rates. In working out the intended savings, she had taken into account the removal fees and decoration cost. Lam said that she had made a list of the properties she had inspected for comparison purpose. 15.Ho said P only moved offices reluctantly in order to save money. He said that the target was to save as much money as possible. He said at first they had no figure in mind until Ho looked at the market. Then they worked out the difference between the expenses for the Causeway Bay Premises and the estimated expenses of the potential new premises and came up with the figure of HK$200,000.00 odd. 16.Ho said Lam was principally in charge of looking for new premises. They had viewed about 3-4 properties before they inspected Units 01 and 02, 1st Floor, Alliance Building, No.133 Connaught Road Central, Sheung Wan ("Sheung Wan Premises"). Lam said that on 21st August 2002, Lee recommended the Sheung Wan Premises which were about 2,400 square feet to her. Lee accompanied her to inspect the Sheung Wan Premises. Except for the fact that the windows faced the flyover near Shun Tak Building, Lam was quite satisfied with the interior of the Sheung Wan Premises. She found the hall and the particular floor of the Sheung Wan Premises acceptable. Lam accepted that Causeway Bay Plaza II was a higher class building but pointed out that was not important. 17.Ho said that the rent for the Sheung Wan Premises was HK$6.00 per square foot. Lam said it was exclusive of management fees. Lam said that the management fees for the Sheung Wan Premises were HK$1.10 per square foot. She remembered it well as she was in the accounting field. Lam said she was trained as an accountant and was sensitive to numbers. Lee gave Lam such information in writing when she first visited the Sheung Wan Premises upon his introduction. Lam believed such information was part of the information D1 should give to its client. Lam said that apart from the Premises, D1 had given Lam information of other premises in writing. Lam had in fact retained the services of another estate agent and she was also given similar information about other premises in writing. Ho thought the management fees were HK$1.90 per square foot but he could not remember clearly. He confirmed that the management fees of the Sheung Wan Premises did not include air-conditioning charges. There was no central air-conditioning, so the tenant would have to pay for the electricity charges only. 18.Lam told Ho of the particulars of the Sheung Wan Premises on 22nd August 2002. Ho confirmed this and said that Lam found the size and rent of the Sheung Wan Premises satisfactory. Lam wanted him to view the Sheung Wan Premises but told him the building was shabbier than or not as nice as Causeway Bay Plaza II. Ho asked Lam to arrange with the estate agent for an inspection of the Sheung Wan Premises on 24th August 2002. 19.Lam said that she informed Lee and requested him to arrange for an inspection of the Sheung Wan Premises together with Ho on the morning of 24th August 2002. Lee replied that there would be no problem but he would arrange for a colleague to attend as he had another appointment on 24th August 2002. 20.At the appointed time on the morning on 24th August 2002, Lee's colleague, D2, and the landlord's representative together with Ho and Lam inspected the Sheung Wan Premises. The landlord's representative said that there would generally be no problem in respect of the requests Lam had made at the last inspection. During the inspection Lam heard D2 telephone another customer saying that there was a property unit of about 2,400 square feet in Sheung Wan District, that the price was within his/her range and asked whether he/she would like to inspect the same. Lam was unhappy with D2's conduct in recommending the Sheung Wan Premises to another customer whilst they were inspecting the same. She informed Ho of this at once. In the afternoon on 26th August 2002, Lam told Wong about this incident. 21.Lam said that basically they were satisfied with the Sheung Wan Premises which were not expensive. Ho said Alliance Building and its lobby were ordinary or commonplace. The Alliance Building was lower in quality than Causeway Bay Plaza II. Ho regarded Causeway Bay Plaza II as mid-market and Alliance Building as below mid-market. Ho found the Sheung Wan Premises suitable for use as their office in terms of the place and other features; it was "okay, so-so" but it could not be said that he was very satisfied with it. The Sheung Wan Premises overlooked a flyover and it was on the 1st floor. Ho said the interior furnishings were very old and substantial refurbishment was required. It would take time and cost to fit out the Sheung Wan Premises. But he did not tell D2 or indicate by conduct that he was not interested in the Sheung Wan Premises or find it unsatisfactory. 22.Lam said she had brought only 1 piece of paper (which was torn from a notepad at the office) with her. She drew a rough plan of the Sheung Wan Premises (TB p.48 and exhibit P1). According to Lam, there were 6 small rooms and 2 larger rooms beyond the reception area (although Ho said there were 4 rooms). The numerals Lam wrote on the piece of paper represented measurements she took at the Sheung Wan Premises during the inspection. 23.Lam said their reason for moving office was to make savings. Lam would consider price (which comprised management fees as well) as a whole and, further, decoration cost. It might be said that the only consideration was money because she wanted to cut cost. She did not think P would have to move to a shabby building as their selected range were buildings from Sheung Wan to Causeway Bay. Up to the time when Lam went with Ho to view the Sheung Wan Premises on 24th August 2002, the Sheung Wan Premises were the least expensive amongst the properties introduced by D1. Lam said D1 informed her that it would be difficult to find other properties within their budget. But despite the price factor, Lam said she would still inspect the properties to see if they were acceptable. 24.After the inspection of the Sheung Wan Premises on 24th August 2002, at about 11:00 am, D2 recommended to Lam and Ho another property in Wanchai said to meet their requirements. Lam understood that to mean that D2 felt Ho was the sort of person who wanted a place with better surroundings (ie better location and better building) and therefore D2 introduced the Premises to them. Ho denied he said he was not interested in the Sheung Wan Premises or asked for fully fitted premises. 25.Lam said D2 told them that the Premises at about 2,906 square feet were larger than their requirements. However, the asking rent was modest at HK$5.50 per square foot and it suited their budget. Further, the surroundings were pleasant and the Premises had a terrace. D2 said they would definitely like the Premises. Lam said D2 told them that as D1 was the sole agent, they could inspect the Premises immediately. Lam said she and Ho went to view the Premises because D2 said the surroundings were better and that they would prefer the Premises. Lam said that by her calculations based on information provided by D2, although they had to pay more for the Premises than for the Sheung Wan Premises, P could still save HK$200,000.00. But the savings would be less than what P would make over the Sheung Wan Premises. 26.Ho said D2 told them that the environment of the Premises was better because it was on a higher floor and in Wanchai. But Ho said that rent was not mentioned before going to the Premises in the taxi. Ho said he had previously inspected premises at Caltex Building. It was a mid-market property of lower quality than Causeway Bay Plaza II but better than Alliance Building. He said he would consider moving into such unit and it was similar to the Premises. 27.On the way to the Premises by taxi, D2 sat in front and Lam and Ho sat at the back. Lam was sure that conversations in the taxi could be heard by all. D2 told them that the rent of the Premises could possibly be negotiated down to HK$5.20 per square foot. Lam then asked D2 the amount of the management fees of the Premises and D2 replied it was HK$1.60 odd (一個六毫幾) per square foot. Lam asked for the precise amount but D2 did not remember clearly, which Lam understood to mean that D2 did not remember the amount of cents over HK$1.60. Lam said she was a person who was careful and precise over calculation matters and she would prefer to have such information. She had in mind the need to prepare a comparison of the properties inspected on return to the office. She needed the precise figure as she could not immediately work out the savings if the management fees were HK$1.61 or HK$1.69 per square foot. 28.Ho was not concerned with the monetary details and left that to Lam because she was an accountant. He viewed the Premises from a different perspective, eg the interior and the location, and left figures and details to Lam. Ho said he could not remember all the questions raised but recalled that Lam asked D2 the rent and management fees as he was paying attention to the same. Ho said D2 replied that the management fees were HK$1.60 odd (一個六毫幾) per square foot. He considered this a fair amount and was not surprised that it was so much cheaper than that of the Causeway Bay Premises. He said that the management fees at the Causeway Bay Premises included air-conditioning charges. Further, different buildings had different management fees and the management fees of the Sheung Wan Premises were also HK$1.00 odd per square foot. The quality of Alliance Building was slightly lower than that of Great Smart Building. 29.Lam said she did not ask for the amount of rates of the Premises because she thought that there would not be too much difference when compared with the rates payable for the Causeway Bay Premises. She acknowledged that this might be an omission. But when Lam made her comparison of the properties inspected, she did not take rates into account. She did not regard that rates would create any difference because the Causeway Bay Premises were smaller at 2,000-2,200 square feet but at the same time its quality was higher than that of the Premises. Hence, even though the Premises were 2,906 square feet, Lam believed that the difference in rates in relation to the 2 premises would not be great. 30.Lam, Ho and D2 arrived at Great Smart Building at about 11:15 am. Lam and Ho were satisfied with the Premises after inspection. Lam said she could not deny that Ho preferred the Premises to the Sheung Wan Premises. The Sheung Wan Premises was on the 1st floor and the Premises were on the 27th floor, so naturally the latter's view was more open. There was a bit of sea view through a gap. Lam said that P still had to spend time in decorating the Premises but the Premises required less time and money than the Sheung Wan Premises. P actually spent about HK$100,000.00 for the decoration of the Premises. The previous tenant was also in freight-forwarding business. But as P had to move their furniture into the Premises, they could only retain 10%-15% of the original interior decoration. Lam said P did not remove the original fixtures. 31.At the time of inspection, there were 5 rooms in the Premises and in the middle there was a large central space for the general staff. As D2 did not provide them with a floor plan of the Premises, Lam drew a rough plan (TB p.48 and exhibit P1) on the reverse page of the paper on which she drew the rough plan of the Sheung Wan Premises. The Premises were shown as a rectangle with one side marked as the entrance of the building with the characters "大厦門口 灣仔道". She then put wiggly lines on the 2 shorter sides of the rectangle to represent windows and wrote down the words and characters "27/F Great Smart 佳誠商業大厦 233 Wanchai Rd". Ho used a compass to check the bearings of the Premises and marked the same on the rough plan (ie the 2 arrows and the alphabets "N" and "E"). 32.Lam also confirmed with D2 again that the rent asked by the landlord of the Premises and the management fees were HK$5.50 and HK$1.60 odd (一個六毫幾) per square foot respectively. Lam then said that as the management fees were HK$1.60 odd per square foot, she would treat it as HK$1.69. Lam said as far as she could remember, D2 did not reply. Lam at the same time noted down "1.69" on her rough plan in D2's presence. She believed that D2 saw her do so. That was after she had put down the words and characters on the paper and Ho had written down the bearings of the Premises. Ho also confirmed that when he drew the arrows and wrote the alphabets "N" and "E", "1.69" was not yet written on the paper and it was only written down after Lam asked D2 something. At that time, Ho was near to them. He said he was certain when Lam asked D2, D2 said it was HK$1.60 odd. Ho said Lam did most of the talking. They left the Premises at about 11:40 am. 33.In Lam's cross-examination, Mr Maurellet suggested that the figure "1.69" written on the paper was in fact a combination of "1.6" and 1.9" being a comparison of the management fees of the Causeway Bay Premises and the Premises, so that by adding HK$2.50 (ie, the actual management fees of the Premises) to HK$1.60 and HK$1.90 respectively, they would come up with HK$4.10 and HK$4.40 (reflecting the range of management fees for the Causeway Bay Premises). Lam denied this suggestion. 34.Ho accepted that the location, lobby/lift and management of Great Smart Building were acceptable. The Premises had a better view. He said that the interior of the Premises was "okay"; P could use part of the fittings and decorations. Ho accepted that the general presentation and ambience of the Premises were better than the Sheung Wan Premises and he preferred working at the Premises. He also confirmed that there was less renovation work for the Premises and that would lead to savings. The Premises were larger than the Sheung Wan Premises. As regards his recollection of the information provided by the estate agent on the rent and management fees of the Premises (HK$5.50 and HK$1.60 odd respectively) and the Sheung Wan Premises (HK$6.00 and about HK$1.90 respectively), he did not find it odd that the Premises were cheaper than the Sheung Wan Premises. 35.On the same day at about 1:35 pm, Lam telephoned Ho to discuss about the Premises. Ho wanted to reduce the rent to HK$5.00 per square foot. He told Lam to call D2 to ask her to request the landlord to reduce the rent to HK$5.00 per square foot. On the same day at about 1:45 pm (or after 2:00 pm according to Lam's viva voce evidence), Lam used her mobile telephone to call D2's mobile telephone and told her that P wished to rent the Premises. As D2 previously mentioned that the rent could be negotiated down to HK$5.20 per square foot, Lam requested D2 to make a counter-offer of HK$5.00 per square foot to the landlord. Lam raised again the matter of management fees of HK$1.60 odd per square foot and D2 confirmed it was correct. In her viva voce evidence, Lam also said she told D2 to try to extend the rent-free period to 4 months. 36.Lam explained that she raised the topic of the management fees again with D2 during the telephone conversation because by that time she had done her calculations and found out that if the management fees exceeded HK$1.70 per square foot or above HK$1.69 per square foot, P could not meet their cost-cutting target of HK$200,000.00. Management fees at the rate of HK$1.70 per square foot were the maximum they could afford. In cross-examination, Lam said she did not have special reason for raising the topic of the management fees 3 times. She simply wanted to re-confirm the position. 37.At about 10:00 am on 26th August 2002, Lee contacted Lam to discuss the leasing details of the Premises. Lam repeated their requirement of reducing the rent to HK$5.00 per square foot. As D2 said the rent could be negotiated down to HK$5.20, Lam counter-offered at HK$5.00. Lam also requested 4 months' rent-free period. Shortly thereafter, Lee replied it was impossible to obtain rent at HK$5.00 per square foot. He said the landlord blamed him as the landlord had never asked for rent at HK$5.50 per square foot, not to say negotiating down to HK$5.20. The landlord's lowest asking rent was HK$6.00 per square foot all along. Despite this, Lam did not ask Lee to confirm the rent-free period and the management fees because she trusted D2 to provide her with proper particulars. After all, D1 found the Causeway Bay Premises for them. 38.Ho said on or before 26th August 2002, P decided to rent the Premises at HK$6.00 per square foot. Lam said that as the rent was exclusive of management fees, P was liable to pay the management fees. The exact amount of the management fees was not stated on the Provisional Agreement or in the formal tenancy agreement. The landlord agreed to 4 months' rent-free period. The air-conditioning system was provided by the landlord so all P had to do was to pay for the electricity. Lam said this factor had been considered when they decided to rent the Premises. 39.At about 4:30 pm on 26th August 2002, Lam signed the Provisional Agreement on P's behalf at D1's offices where Wong attended her. Clause 11 provided that "in consideration of the service rendered by [D1], [D1] shall after this agreement be entitled to receive HK$17,436.00 from the Landlord and HK$8,718.00 from [P] as commission such commission shall be paid not later than [16th September 2002]". 40.The formal tenancy agreement dated 9th September 2002 was signed by Lam on P's behalf on or about 6th September 2002 ("Formal Agreement") at the solicitors' offices of James P Y Lau & Co. Ho said that by the time of the signing of the Formal Tenancy Agreement, P had paid the rental deposit of HK$52,308.00. Lam did not meet the landlord's representative at the signing of the Provisional and Formal Agreements. Hence, P relied on D2's representation of the amount of the management fees. 41.Both the Provisional and Formal Agreements provided that P shall be entitled to 4 months' rent-free period. However, during such period, P shall be responsible for paying the management fees of the Premises. 42.On the morning of 18th September 2002 at about 10:00-11:00 am (although Lam could not remember the exact time), Lee accompanied Lam and Ho to wait for the landlord at the lobby of Great Smart Building to take delivery of possession of the Premises. Lam said that whilst they were waiting, she had a casual chat with the staff of the management office at their counter. She mentioned that management fees were due. She did not know why but the staff mentioned that the management fees for the Premises were HK$7,272.00. Lam was not immediately aware of it but shortly afterwards it occurred to her that the management fees could not be HK$7,272.00 because for the 2,906 square feet Premises, the management fees would not be HK$7,272.00 even at HK$2.00 per square foot. Lam said she immediately telephoned Wong to reflect this and informed him that the Plaintiff would take legal action. Although there were 28 floors in Great Smart Building, Lam was not surprised that the staff remembered the management fees. There was only 1 unit on 27th Floor, ie the 2,906 square foot Premises which included the washroom, air-conditioning room and rear corridor. Lam said that the staff had to collect management fees every month and the 27th Floor was not the only floor with only 1 unit. 43.In Lam's witness statement, it was said that she had a conversation with the staff and then became aware that the management fees were actually HK$2.50 odd per square foot and therefore different from D2's previous representations. Ho in his evidence also said that during the casual chat, the caretaker said the management fees were HK$2.50. He found it strange because he was told that it was HK$1.60 odd. 44.Even so, Ho and Lam took possession of the Premises on 18th September 2002 because the Formal Agreement had been signed with the landlord. Lam said that had P rescinded the same, the landlord would have sued them. P had also sought legal advice. Further, the tenancy of the Causeway Bay Premises would expire by the end of November 2002 and Lam considered there was insufficient time to deal with the unravelling of the Formal Agreement. Lam explained that she was not permanently stationed in Hong Kong and she had to go on business trips. Lam denied that P took up the Premises simply because the surroundings were better. P did so because there was in law a binding agreement between the landlord and P. 45.Ho also confirmed in his evidence that the tenancy of the Causeway Bay Premises would not expire until November 2002. He said that P had already entered into the Formal Agreement for the Premises and made plans to move office. There was insufficient time to move elsewhere. Ho said it was very difficult to look for a new office. He still had to look after P's business and viewing potential properties took a lot of time. It was suggested to him that Lam was principally involved and he only need to view the selected properties at the last stage. However, Ho said that Lam also had her own business to look after at the office. Ho agreed that on 18th September 2002 they had not checked whether the Sheung Wan Premises were still available, but by that time they were already bound by the Formal Agreement. He did not want to be embroiled in litigation whereby the landlord would sue P and P would have to sue the estate agent. Even though P had initiated this litigation, it was less troublesome as it did not involve the landlord. When asked by the court as to the urgency in signing up the Provisional Agreement for the Premises only 2 days after the inspection when they have looked for premises for 1 and a half months, Ho said that they were exhausted by the process and they had business to attend to. They had also consulted fung shui and were informed that the Premises were acceptable. 46.Ho and Lam said neither D2 nor anyone else at D1 had ever mentioned that the management fees of the Premises were HK$2.60 per square foot. The current management fees of the Premises were HK$7,272.00 per month or HK$2.50 odd per square foot, which had not been changed since the commencement of the tenancy. 47.Lam said the purpose for moving out of the Causeway Bay Premises was to save at least the targeted sum of HK$200,000.00, so that was the main consideration when considering various options. Lam compared every option with the Causeway Bay Premises to work out what savings could be made. 48.Mr Maurellet pointed out to Lam in cross-examination that when she formed the view that HK$1.70 per square foot was the maximum she would allow for management fees, she was working on the basis that the rent was HK$5.50 per square foot, hence the final agreed rent of HK$6.00 per square foot would have exceeded her budget. Lam explained that when she made her calculations, she assumed that there would be the usual 3 months' rent-free period. She remembered calling D2 to request for 4 months' rent-free period but she was not sure whether she would get it. But they eventually had 4 months' rent-free period. Further, Lam had previously discussed with Ho to change the telephone system when they moved office. When Lee informed her that the landlord insisted on HK$6.00 per square foot, P considered not replacing the telephone system in order to meet the savings target of HK$200,000.00. Lam explained that the difference in the eventual rent as agreed (HK$6.00 per square foot) and what they were told (HK$5.50) was 50 cents. For the 2,906 square foot Premises, it would equate to HK$1,450.00 per month over a 3-year period, totalling about HK$50,000.00. For a rent-free period of 1 month, it would be in the region of HK$16,000.00. As P did not change the telephone system, there would be savings too because each handset would cost more than HK$2,000.00. Lam said she was trained as an accountant and she was sensitive to numbers. 49.Lam accepted that there were other reasons which led them to choose the Premises over the Sheung Wan Premises but if the management fees exceeded HK$1.70 per square foot, they would have rejected the Premises. Lam explained that it was not that the Premises were better than the Sheung Wan Premises. They could save HK$80,000.00 more over the 3-year tenancy if they had rented the Sheung Wan Premises but it would take longer to renovate the same. Lam accepted that there was less demolition work to be done at the Premises than if they had taken up the Sheung Wan Premises. It was cheaper from the point of view of decoration cost to move into the Premises than into the Sheung Wan Premises. After P took possession of the Premises, P renovated the Premises and it now has 3 rooms and a small conference room made from partitions. The remaining open space was used by the general staff. 50.By a letter dated 20th September 2002 from P's solicitors to D1, P claimed for loss and damages in the sum of HK$94,154.40 as set out in the present claim (subject to adjustment due to accelerated payment). By a further letter dated 30th September 2002, P's solicitors chased for a response. By a letter dated 4th October 2002, D1 wrote to P's solicitors denying all allegations and the said claim, saying that they would "arrange with [P] about further investigation". By another letter of the same date to P, D1 demanded payment of commission in the sum of HK$8,718.00 due to it. D1 had not chased for its commission prior to this letter. By a letter dated 9th October 2000 to D1 from P's solicitors, P claimed to set-off the commission against the damages due to it and again demanded for payment of the balance of HK$85,436.40 (subject to adjustment because of accelerated payment) or an undertaking from D1 to make monthly payment of HK$2,615.40 being the difference in management fees to P. 51.Ho denied that the present claim was made because he wanted to move into a nicer building and to get D1 to pay for such benefit. He said that he thought the information provided by the estate agent should have been professional. 52.Lam said she only met D2 on 24th August 2002. Lam did not have any favourable or adverse comments on D2's performance in relation to the Premises (other than the alleged misrepresentations) but Lam had reservations about her attitude during the inspection at the Sheung Wan Premises as aforesaid. D1 and D2's case 53.D2 and Lee were D1's senior property negotiators and they worked as a team. D2's responsibilities included sale and purchase and leasing of commercial premises. Her estate agent's licence was E160158. D2 had worked as an estate agent since 1987 continuously. Her specialty was commercial buildings on Hong Kong Island. D2 said that she had never received any complaint in her 16 years as an estate agent. 54.D2 explained that there are 4 categories of commercial buildings. Rent and facilities in a building are indicators of the category a building belongs to. Class A buildings included The Landmark and Wheelock House in Central, Shun Tak Building, Kam Loong Building and Li Po Chun Building in Sheung Wan, Lippo Centre Phases I and II, Far East Financial Centre and United Centre in Admiralty and Convention Plaza and Central Plaza in Wanchai/Causeway Bay. Causeway Bay Plaza is a bit lower than Class B. D2 said that she had dealt with all classes of commercial buildings in her 16 years as an estate agent. 55.D2 said she would look for premises for clients in accordance with their requirements. To ascertain their requirements, she would ask each client the size and rent of the property he has in mind, the district where the property is to be located and his estimated budget. Rent and management fees were always the most important considerations. Usually the client would want to know the rent, location and the size of the potential premises. Clients would rely on information provided by D1 or the individual employee. Every time D2 took a client to view a property, she would get ready all necessary information in writing, including rent/price, management fees, air-conditioning charges (if any), size and facilities (eg carpark) of the property, so long as such information could be found in D1's computer database. Usually, D1/D2 would discuss with the client by telephone first and send the information to the client by fax or e-mail, followed by further telephone conversation. If the client was interested, D2 would arrange for inspection of the potential properties. 56.D2 said that at or about 6:00 pm on 23rd August 2002, Lee told her that Lam had inspected the Sheung Wan Premises and found it suitable, but he was not free the following day. So he requested D2 to help him take Lam and Ho (Lam's boss) to inspect the Sheung Wan Premises the following day. D2 agreed to do so. She did not know whether Ho regarded the Sheung Wan Premises suitable. D2 was not told of Lam and Ho's requirements as she was merely assisting her colleague to accompany them for the inspection. 57.D2 said that Alliance Building was a Class C building in Sheung Wan. The building was relatively old amongst other buildings in Sheung Wan. The lobby was commonplace with only an aged security guard. Nicer buildings had several security guards and a counter at the lobby. According to D2, Alliance Building was not particularly well maintained. 58.At about 10:30 am on 24th August 2002, D2 took Ho and Lam to inspect the Sheung Wan Premises. D2 did not bring along information in respect of the Sheung Wan Premises with her. She recalled that the rent and management fees of the Sheung Wan Premises were HK$6.00 and HK$1.10 respectively per square foot. There was no separate item for air-conditioning charges as recorded in D1's computer database. Had the client wished to know the air-conditioning charges, D2 would have telephoned the landlord to ask for the same. Generally D1 did not have information on air-conditioning charges but would seek such information upon request from clients. 59.D2 said that most of the ceiling had fallen down in the Sheung Wan Premises. The carpet was quite shabby and mouldy and was partly damaged. Ho was not interested in the Sheung Wan Premises as they would have to spend much money to decorate it. Further, the Sheung Wan Premises were on the 1st floor facing Shun Tak Building and there was heavy traffic. 60.D2 could not remember how many incoming calls she had to her mobile telephone whilst at the Sheung Wan Premises nor could she remember whether there was any call from a customer asking about the Sheung Wan Premises. Lam and Ho stayed at the Sheung Wan Premises for about 45 minutes. Ho inspected the premises carefully and looked at every corner including the corridors. Lam followed him and they talked. D2 did not pay any attention whether Lam wrote anything down or made any measurements or made notes on exhibit P1 (TB p.48). She accepted that she was following them around but sometimes she was with them and sometimes she chatted with the landlord's representative. D2 forgot whether she made any outgoing calls or any outgoing call about the Sheung Wan Premises. 61.D2 did not find Ho to have any genuine interest in the Sheung Wan Premises. Ho told D2 to look for a fully fitted, cheap and convenient property. Having inspected the Premises a few days earlier, D2 thought of the Premises and recommended it to Ho, giving information on the rent, management fees and size to Lam and Ho. D2 understood "fully fitted" to mean that partitions, ceiling and carpet had been installed and one could just move into the premises without further decoration. Though similar in size to the Sheung Wan Premises, the Premises were fully-fitted as requested by Lam and Ho. Their chief requirements for the new premises were that the premises be nice, cheap and suitable (平靚正). 62.D2 said that D1's computer information showed that the Premises occupying the whole of the 27th floor at 2,906 square feet was vacant for leasing. The rent was HK$6.00 per square foot and the management fees were around HK$2.60 per square foot. In August 2002, there was more than 1 unit available in Great Smart Building and the computer record showed that the management fees were HK$2.50 for some units and HK$2.60 for other units, so D2 used the phrase "around HK$2.60" (大約兩個六). D2 was not the one who received instructions from the landlord and every colleague had the right to deal with the Premises. D1 was not the sole agent for letting the Premises and other estate agents could let out the Premises on behalf of the landlord. On 24th August 2002, D2 did not have written information on the Premises with her and the information as provided by her to Lam and Ho were based on her memory. 63.On the way to the Premises in the taxi, D2 told them the details of the Premises, including its size of 2,906 square feet, its rent of HK$6.00 per square foot, its management fees of about HK$2.60 per square foot, its street location and floor level, the terrace attached to the Premises, the furniture, rooms and decoration at the Premises, to them. Generally speaking, P could simply have moved into the Premises as its office. D2 said she also mentioned that they could bargain with the landlord to reduce the rent down to HK$5.50-HK$5.20 per square foot. D2 said she did not find the management fees too expensive compared with similar buildings since Great Smart Building situated at Wanchai Road could not be regarded as a bad/poor building. The building had a carpark so it was reasonable for the management fees to be HK$2.60 per square foot. D2 said that she did not know whether the fact Great Smart Building had a carpark was information stored in D1's computer database but she herself had seen the carpark and the Premises. 64.D2 denied that she had ever said the management fees were about HK$1.60 per square foot. She was sure because about 2-3 days before 24th August 2002, she had taken her clients, Fennie Wong and Mr Ma, to inspect the Premises. They had similar requirements, ie the premises they looked for should be nice, cheap and suitable, and the rent must be particularly cheap. Therefore the price, including rent and management fees, were key elements of their consideration. D2 had prepared a written proposal for the Premises. The written proposal contained details of the Premises, ie the size, suggested rental and management fees. In fact D2's clients wanted the Premises very much but they only required the Premises half a year later. 65.At or about 11:15 am on 24th August 2002, D2, Lam and Ho arrived at the Premises. In her witness statement, D2 said Ho told her he was interested in the Premises and asked her about the details of the Premises. D2 told him it was 2,906 square feet. D2 suggested that Ho make a counter-offer of rent at HK$5.20 to HK$5.00 per square foot. She also told Ho that the management fees were about HK$2.60 per square foot. D2 had no recollection of Lam asking questions on the management fees and then writing something down. 66.D2 accepted that it was not stated in her witness statement that she told Lam and Ho that the rent was HK$6.00 per square foot. She disagreed that she mentioned from recollection that the landlord's asking price was HK$5.50. D2 said that there was no problem in making a counter-offer of HK$5.20 even if the asking rent was HK$6.00. In fact, D2 learned at a company meeting that one of her colleagues had contacted the landlord of the Premises who was anxious to let out the Premises rather than to let it stand vacant. She also became aware that the rent could probably be negotiated down to HK$5.50 or HK$5.20. Thus, when D2 knew Ho was interested, she recommended to Ho to make a counter-offer of HK$5.20 to HK$5.00 per square foot. D2 said it was the mentality of every client to start negotiating from the bottom. 67.D2 said that both Lam and Ho talked with her and she accepted (but did not know why) she made no reference to Lam doing any talking in her witness statement. 68.When they left the Premises at or about 12:00 noon on 24th August 2002, Lam and Ho asked D2 to contact the landlord of the Premises and make an offer of rent at HK$5.00 per square foot on his behalf. 69.At about 1:00 pm on 24th August 2002, Lam called D2 and made enquiries about the response of the landlord. D2 told her that as that day was a Saturday, she could not contact the landlord and she would leave the matter to Lee who would follow up the matter. D2 forgot whether Lam asked whether the management fees were HK$1.60 odd per square foot. But D2 said she never told Ho and Lam that the management fees of the Premises were HK$1.60 per square foot. 70.P eventually rented the Premises at HK$6.00 per square foot. D2 was not engaged in the negotiations in respect of the rent. However, both Ho and Lam told D2 that they found the Premises suitable for them and that they need not spend a lot of money in decoration. D2 could not recognise the signature on behalf of D1 on the Provisional Agreement and she did not know which the estate agent/salesperson had licence no.036682 as stated on the Provisional Agreement. 71.D2 said that she earned a monthly basic salary and commission at about 20-25% of the commission earned by D1 in respect of completed transactions via her efforts. In respect of the sale of properties, D1 charged 1% of the price from the vendor and the purchaser respectively. For the leasing of properties, the tenant had to pay half a month's rent as commission and the landlord sometimes had to offer 2 months' rent as commission as a result of the present economic situation. Each team member had to satisfy his/her own individual quota. D2 said that every one would do their best to meet the target. If D1 received the commission from the client before 4:00 pm on the last day of the month, then D2 would receive her share of the commission on the 17th day of the following month. 72.By completion of the leasing of the Premises by P, D1 stood to earn HK$20,000.00 odd as commission. A claim for HK$2,000.00 (ie 10%) was put forward and out of that HK$2,000.00 she would actually pocket HK$200.00. The balance of HK$1,800.00 would be shared by other colleagues as D2 only played a minor role to assist Lee in accompanying Lam and Ho to view the Sheung Wan Premises. According to D1's policy, in such circumstances, staff could only receive 10% of the commission entitled. 73.D2 said that she had not checked whether she had received her share of the commission. She had known that this case had developed into a court case or there was some problem which had not been settled, so P surely would not have paid the commission. Although she knew there was some trouble, she did not know whether court attendance was required. She could not remember on which date it became a court case but she became aware that this transaction had turned into a court case when Wong told her of the same and questioned her last year. She believed it was on the day P took delivery of vacant possession of the Premises. 74.Wong said there was some problem arising from the management fees but they did not have any serious discussion. Wong asked her whether she had referred to management fees because Wong told her that Lam said that the management fees were incorrect. Wong asked D2 how she related the matter of management fees to Lam. D2 could not remember the precise words she told Wong but the gist was that she said that the management fees were about HK$2.60 per square foot. D2 said this was said on the occasion when Lam called in to complain about the management fees. D2 was not sure whether it was before or after the date of taking delivery of vacant possession. D2 merely took Lam and Ho to inspect the 2 premises and did not take part in the negotiations. As Wong was following up on the matter, D2 did not ask what was wrong with the management fees. But earlier under cross-examination, D2 said after P rented the Premises and before she made her statement in the present proceedings, D1 had not made any enquiries of her in respect of her dealings with Lam and Ho. Issues 75.The issues in this case are as follows :
76.Mr Maurellet raised a further issue as to whether D2 as an employee of D1 could be made personally liable to P for the alleged misrepresentation and/or negligence. D2's personal liability 77.Mr Maurellet submitted that D2 could not be personally liable at all since there were no grounds for P to so claim when it was clear that D2 was acting in the course of her employment. There was no evidence to support the contention that she made an assumption of personal responsibility. Mr Maurellet invited the court to dismiss P's claim against D2 with costs to be awarded on a higher basis. He said that as P's case against D2 was obviously unsustainable, P in issuing the claim against D2 had been acting in terrorem. Mr Maurellet cited Williams and anor v Natural Health Foods Ltd and Mistlin [1998] 1 WLR 831 in support of his contention. 78.In that case, the plaintiffs approached the defendant company with a view to obtaining a franchise for a health food shop. The brochure described the system in glowing terms and the company sent detailed financial projections which demonstrated the likely future profitability of the shop to the plaintiffs. The company's managing director and principal shareholder played a prominent part in the production of the projections. However, all pre-contract documents were on the company's notepaper and the plaintiffs dealt with an employee of the company. The plaintiffs did not know the director and had no material pre-contract dealings with him. The plaintiffs subsequently sued the company and later the director for damages for financial loss suffered as a result of negligent advice. The cause of action against the director was based on his assumption of personal responsibility. 79.Lord Steyn at p.835 of the judgment said that in order for a director or employee to incur personal liability in tort as well as imposing vicarious or attributed liability upon the company, the assumption of personal responsibility such as to create a special relationship between the plaintiff and the tortfeasor was required. What amounted to an assumption of risk was to be considered objectively, so that "the primary focus must be on things said or done by the defendant or on his behalf in dealings with the plaintiff. Obviously, the impact of what a defendant says or does must be judged in the light of the relevant contextual scene ...... The inquiry must be whether the director ...... conveyed directly or indirectly to the prospective franchisees that the director assumed personal responsibility towards the prospective franchisees." The authorities cited by Lord Steyn emphasised in the context of the issue of personal liability of a company's employee the distinction between "mere reliance in fact and reasonable reliance on the employee's pocket book", ie, an assumption of personal responsibility by the individual who performed the services on behalf of the company. As there were no dealings between the director and the plaintiffs in the Williams' case (supra), there was no evidence that the plaintiffs believed that the director was undertaking personal responsibility to them. 80.Mr Wu submitted that he had no quarrel with the broad legal principles. However, he said that it was clear from the evidence that D2 was acting within the scope of her employment. If she committed any wrong, D1 would be vicariously liable. D1 was retained by P and owed a duty of care to P. This special relationship gave rise to 2 courses of action : misrepresentation and negligence. Mr Wu further submitted that it was D2 who took it upon herself to introduce the Premises to Lam and Ho and took the trouble to bring them to inspect the Premises. She gave information about the Premises to Lam and Ho and agreed to liaise with the landlord on their behalf, which task was later passed on to Lee. Mr Wu submitted that these were clear indications that D2 had assumed personal care of the matter. Further, she was entitled to a slice of the commission. D2 knew that information passed by her to Lam and Ho would be relied on by them. Hence D2 was sued as joint tortfeasor. Mr Wu distinguished Williams' case (supra) by saying that the managing director there had no direct dealings with the plaintiffs. But here, D2 had direct dealings and contact with P's Lam and Ho. 81.I find that, viewed objectively, there was an assumption of personal responsibility by D2. Mr Wu was right in pointing out that D2 had direct dealings with Lam and Ho. Even on D2's case, she said she introduced the Premises to Lam and Ho because of Ho's request that he wanted better premises. In making such introduction and giving information about the Premises, she was directly answering the request and requirements of Ho. Whether D2 assumed personal responsibility is a different consideration from the issue of whether P relied on any alleged representation by D2. The latter requires a consideration of P's intention/conduct assessed on the balance of probabilities. The alleged representation and reliance 82.The issue of whether D2 represented to P's Lam and Ho that the management fees of the Premises were about HK$1.60 per square foot turned on the assessment of the credibility of the witnesses in light of their evidence, the documents and other evidence before the court. 83.I agree with Mr Maurellet's submission that Lam was an unsatisfactory witness. I find that Lam was not reliable over material parts of her evidence. I base my conclusion not only on her demeanour in the witness box but also on the inherent improbabilities of her story. Ho was a more reliable witness. He was more realistic and sensible in his description of the requirements for P's future office and his perceptions of the various premises inspected by him. It was clear that the task of looking for P's future office was delegated to Lam and he was involved mainly with last stage viewing of potentially suitable premises. He was not intimately involved with the dollars and cents of the proposal to move office. There is no doubt that Lam, for whatever reason, repented the decision to rent the Premises at the price they did. She said that they remained there because they were locked in by the time they allegedly discovered the misrepresentation. I find that it was merely with hindsight or comity between directors and colleagues that Ho was persuaded to adopt Lam's version of events. I do not propose to set out all the reasons for such findings but the main reasons were :
84.Mr Wu submitted that exhibit P1 was a contemporaneous document supporting P's case. He said that the following numerals were written on exhibit P1 : "2906" (ie the size of the Premises), "5.50" (ie the rent per square foot as informed by D2) and "1.69" (ie the management fees as informed by D2), and they would assist in assessing credibility. However, it must be remembered that this document was in Lam's possession all along. D2 had no recollection that Lam wrote these numerals on exhibit P1 and Ho said that when he put in the arrows and the alphabets "N" and "E" on exhibit P1, these numerals had not been written in yet. There is of course little doubt that "2906" represented the size of the Premises. However, in light of my aforesaid assessment of Lam's evidence, I find on the balance of probabilities that I cannot rely on Lam's assertions that "5.50" and "1.69" represented the asking rent and management fees of the Premises as advised by D2. I need not speculate as to why Lam wrote these figures but it was clear that Lam was attached to calculations, comparisons and figures. They may well relate to other considerations she had in mind. 85.Mr Wu submitted that as there was no mention of the amount of management fees in the Provisional or Formal Agreement and there was no meeting with the landlord, the first opportunity for P to discover the alleged misrepresentation was on 18th September 2002 and immediate complaint was made to Wong. The complaint made to Wong was in fact corroborated by D2's evidence. Further, 2 days thereafter on 20th September 2002, P had already instructed solicitors to issue a demand letter to D1 setting out the gist of the complaint. It was prompt action and the complaint was not recent fabrication. I accept that Lam complained to Wong and without doubt, the demand letter was issued on 20th September 2002. 86.However, it is not unknown for a person to repent after a rushed decision. It should be remembered that even on Lam's evidence, it was she who initiated the discussion on management fees with the caretaker on 18th September 2002. She said she did not know why he mentioned that the management fees were HK$7,272.00 per month (but not HK$2.50 odd per square foot). That was why it took her a moment to work out that the management fees were in excess of HK$1.69 per square foot. Ho, on the other hand, said that the caretaker said that the management fees were HK$2.50 which he found strange as he was told it was HK$1.60 odd. This disparity, which goes to the central issue of the alleged discovery of the falsity of the representation, led one to doubt Lam's and Ho's veracity on this issue. Interestingly, no evidence was forthcoming that Lam and Ho complained to Lee who was present right next to them. Lam's evidence only referred to her complaint to Wong. 87.I find that although there are some minor discrepancies in D2's evidence, she was not shaken over the material aspects, namely, that she had not represented to Lam and Ho that the rent and management fees of the Premises were HK$5.50 and HK$1.60 odd per square foot. D2 frankly admitted that clients invariably ask about rent and management fees of premises and would generally rely on information provided by the estate agent. 88.D2 had no particular interest to serve in misrepresenting the rent and management fees of the Premises. P was not her client; Lee was responsible for the account. Given D1's policy which she explained in her evidence, she would realise even before she set off for inspection of the Sheung Wan Premises that a done deal would only generate HK$200.00 as commission for her. Mr Wu raised the spectre of the telephone call by D2 to her customer about the premises whilst at the Sheung Wan Premises, which he submitted she conveniently forgot. I find that it is not surprising, given the nature of their work, for an estate agent to receive a number of incoming calls and to send a number of outgoing calls each day and for such agent not to recollect any such call made over a year ago. On the other hand, there is no basis for insinuating that D2 intended to retain the Sheung Wan Premises for her own client. It was clear from the evidence, which I accept, that the Premises were much more to Ho's liking than the Sheung Wan Premises and the former enjoyed many advantages over the latter. Further, there was no evidence at all as to what became of the Sheung Wan Premises, whether it was let and if so, to whom and by whom. The aforesaid suggestion would be speculative and, indeed, Mr Wu did not go so far to suggest the same. 89.I have found that Ho expressly or by conduct indicated that he was not particularly happy with the Sheung Wan Premises. The condition, location, floor level and view of the Sheung Wan Premises all supported such conclusion. I further find that it was on such basis that D2 recommended the Premises to Lam and Ho. D2's explanation of her choice of the Premises was also plausible in light of her visit to the Premises 2-3 days earlier. Mr Wu submitted that it was clear that Lam took measurements of the Sheung Wan Premises. He argued that if Ho were not interested, measurements would not have been taken by Lam. I see no contradiction between Lam being meticulous and taking down measurements and Ho being lukewarm over the Sheung Wan Premises. They considered the premises from different perspectives. I also do not find it unreasonable for a potential tenant to start negotiating from HK$5.00 or HK$5.20 per square foot even if the landlord's asking price was HK$6.00. As stated by D2, there was no commercial objection to testing the waters with a low amount to determine negotiation strategy based on the response. 90.Mr Wu submitted that D2's evidence on whether enquiry had been made of her in respect of P's complaint is evasive. At first, D2 denied any such questioning by D1 but later admitted that Wong did ask her about the same. Mr Wu submitted it was strange for D1 not to follow up on the same and give a substantive reply to P's solicitors. He therefore argued that D2 gave a poor answer and was unreliable. There is some discrepancy in D2's evidence in this regard but I do not find the discrepancy material. She was not the agent in respect of P's account. She merely rendered friendly assistance to Lee and took no part in the negotiations. It was not something that would excite particular attention or memory on her part. She told Wong the gist of her description of the management fees to Lam and Ho. D1 had denied P's allegations by correspondence and I do not see how it was necessarily incumbent on them to give a substantive reply. Mr Wu also asked the court to bear in mind that D1 did not chase for the management fees until 4th October 2002, but I do not read anything sinister into the same. 91.Based on the testimony which I have accepted and the documents referred to in the trial, I find on the balance of probabilities that the material facts are as follows :
92.In the circumstances, the above findings are sufficient to dispose of this case. However, for the sake of completeness, I will deal with the question of loss and damages. Damages 93.Mr Maurellet submitted that even if P established liability against D1 and D2, P in fact suffered no loss. In an action for misrepresentation and/or negligence, the measure of damages is the tortious one, ie, as if the misrepresentation or the negligent act had not been made or done. Parties are to revert to the status quo ante. However, when P allegedly discovered the falsity of the representations on 18th September 2002, they had a further 72 days before the expiry of the tenancy of the Causeway Bay Premises to look for new premises. No efforts were made to look for new premises or check whether the Sheung Wan Premises were still available. Mr Maurellet submitted that P by remaining at the Premises had the benefit of being in a better building with better management for slightly higher management fees, and P was in fact trying to pass on the cost of the "upgrade" to D1 and D2. There was no evidence that the management fees of HK$2.50 odd per square feet were above the market price. 94.Mr Maurellet cited Ford and anor v White & Co (a firm) [1964] 1 WLR 885, Perry v Sidney Phillips & Son [1982] 1 WLR 1297 and Carreras Ltd v DE & J Levy 215 EG 707, [1970] EGD 618 to support his contention. I need only refer to the first and third cases. 95.In Ford's case (supra), the plaintiffs negotiated for the purchase of land which was offered at a price reflecting the existence of a restriction against building on part of it. Their solicitors negligently stated that the land was not restricted and acting thereon the plaintiffs purchased the land at the original price. It was held that had the property been purchased in excess of the market value as a result of wrong advice, the relevant measure of damages would have been the difference between the market value and the price paid. However, as the plaintiffs acquired the property equal in value to the price they paid for, there were no damages. Pennycuick J rejected the measure of damages suggested by the plaintiffs, being the difference between the market value of the property with the restriction as at the date of purchase and the market value of the property without such restrictions. He said this would have put the plaintiffs in a better position than if their solicitors had properly fulfilled their duty, ie, not only would the plaintiffs have a property equivalent in value to the price they paid but they would receive the aforesaid differential as recompense for their disappointment that the property was not free from restrictions. That would make the defendant liable on the footing that they warranted that their view was right. 96.In the Carreras Ltd's case (supra), the plaintiff retained the defendant agents to find office accommodation in London. The defendant suggested certain premises and represented that the net area available was 26,996 square feet. In reliance thereof, the plaintiff entered into a sublease at a rent of ￡54,000 pa. The net area was in fact 26,048 square feet, some 948 square feet less than as represented. It was held in that case that the plaintiffs would probably not have taken up the office had they been aware of the misrepresentation. They were in no hurry and space was clearly of importance to them. But the evidence was that the plaintiff's landlord could have obtained anywhere between ￡50,000-￡60,000 for the premises; hence the plaintiffs could not show that they had paid more than the market value and were therefore not entitled to damages. 97.Mr Wu referred me to Clerk & Lindsell on Torts 18th ed (2000), para.15-42, pp.814-815 where, in discussing the tort of deceit, the learned authors said "the damages are at large and are to compensate the claimant for all that he has lost. If the claimant is not fully compensated by the difference between what he had paid and the true market value, he is entitled to consequential losses". In citing this passage, it is clear that Mr Wu accepted that the true measure of damages was the tortious one, ie the difference between "what he had paid and the true market value". Despite this, Mr Wu argued that the Ford and Carreras Ltd's cases (supra) were distinguishable because by renting the Premises, P was compelled to take on something they would not have wanted had they been told. By the time of the alleged discovery of the misrepresentation, the Formal Agreement had been signed and the rental deposit had been paid. However, this was exactly the situation in the Carreras Ltd's case (supra) where the court accepted that the plaintiff there would have rejected the premises had they been aware of the misrepresentation. I do not find the cases cited by Mr Maurellet distinguishable nor do I find that P suffered any loss under the tortious measure of damages. There is no evidence that the management fees of HK$2.50 odd or even HK$2.60 per square foot for the Premises were above market value. Rather, D2, an estate agent with 16 years' experience specialising in commercial properties in Hong Kong, was of the view that such management fees were reasonable as Great Smart Building at Wanchai Road could not be regarded as a bad or poor building and it had a carpark. 98.Mr Wu further submitted that the difference between the management fees as represented by D2 and the actual management fees was consequential loss. In the passage in Clerk and Lindsell cited by Mr Wu, the learned authors referred to consequential losses as further loss flowing from the tortious act beyond the usual measure of loss, such as loss of profits or interest on money borrowed as a result of the tort. In the present case, P's claim was not for consequential losses but rather for a wholly different measure of loss, which is not permissible. I therefore find that P had failed to establish any recoverable loss. 99.Had it been necessary to deal with the matter, Mr Wu accepted that P would not be entitled to interest on future loss in respect of the claimed amount as a result of accelerated payment. He argued that it was unnecessary to discount the claim for future loss to take into account imponderables. Mr Maurellet submitted that there should be a downward adjustment given the possibility that management fees would go down over the balance of the tenancy term in light of the present economic climate. I find that it is unnecessary to deal with this matter in light of my aforesaid findings. Conclusion 100.In the circumstances, I dismiss P's claims against D1 and D2. In respect of the Counterclaim, I grant judgment in favour of D1 against P in the sum of HK$8,718.00 together with interest at the rate of 8% pa from the date of the writ of summons to the date of judgment and thereafter at judgment rate until the date of payment. 101.I also make an order nisi that P do pay D1 and D2's costs of the action and D1's costs of the Counterclaim to be taxed if not agreed with certificate for counsel.
Representation: Mr Paul Wu instructed by Messrs Angus Tse, Yuen & To for the Plaintiff. Mr José-Antonio Maurellet instructed by Messrs Cheung & Choy for the 1st and 2nd Defendants. |