Wu Tai Liang v. Wong Wai Chung and Others

IN THE SUPREME COURT OF HONG KONG

ORIGINAL JURISDICTION

ACTION No.110 of 1948

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Coram: Mr. Justice J. Reynolds.

Date of Judgment: 4 October 1948

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JUDGMENT

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1. This is an action for the specific performance of an alleged agreement for the purchase and sale of premises known as Nos.34 and 36 Des Voeux Road, Central. The alleged agreement was contained in the correspondence exchanged between the solicitors for the plaintiff Messrs. Russ & Co., and the solicitors then acting for the three defendants, Messrs. Wilkinson& Grist.

2. In a letter of 29th October, 1947, Messrs. Wilkinson & Grist enclosed a draft agreement, for the sale of the premises in question, for the approval of the purchaser. The purchaser took objection to one clause of this agreement but later waived his objection; and by a letter of 5th November, 1947 Messrs. Russ & Co., his solicitors, asked for the engrossment of the agreement to be sent them in order to have it executed by his client. This was done by a letter of 6th November and in a letter of 7th November, Messrs. Russ & Co. returned the agreement, in duplicate, duly signed. On 18th November, Messrs. Russ wrote to defendants' solicitors requesting a copy of the agreement executed by the defendants. And on 24th November came the reply from Messrs. Wilkinson & Grist stating that Kwok Kai Shiu, the 3rd defendant, had refused to sign the agreement.

3. Mr. Prior appeared in Court for the 1st and 2nd defendants and intimated that his clients did not object to a decree for specific performance of the agreement being given against them and accordingly I make a decree for specific performance against 1st and 2nd defendants. Mr. Prior, a partner in Messrs. Wilkinson & Grist, was also called as a witness for the plaintiff. He stated that Messrs. Wilkinson & Grist had acted in this matter for the 3 defendants, who were owners of these 2 properties as trustees for the Wo Fat firm. He further stated that he had a general retainer from 3rd defendant at least up to 11th November and that the 3rd defendant knew that he was attempting to agree terms with Messrs. Russ & Co; That 3rd defendant knew the price and terms with respect to stamp duty; but that he (Mr. Prior) had not taken specific instructions from him with regard to the payment of the purchase money or the deposit. He stated in cross-examination that his instructions were to agree on the form of agreement with Messrs. Russ & Co. He was given the name of purchaser, the price and amount of stamp duty and was instructed to negotiate the form of contract; and later he stated "I consider that I had to negotiate and agree on a form of contract. I had no authority to sign a contract. My instructions were to agree on a form of contract to be signed by the parties. That is the normal procedure. This authority was given me by the managing partner of the Wo Fat firm. He also said that when the three defendants came to Messrs. Wilkinson & Grist's office to sign the agreement, and after it had already been signed by the 2nd defendant, either he drew 3rd defendant's attention to the clause referring to the payment of the deposit (or vice versa) and that 3rd defendant then asked Mr. Prior to explain it to him. When it was explained that the 3rd defendant was not to be one of those to receive the deposit, he said, "I am one of the trustees and ought to receive the deposit". When it was pointed out to him that this would not be so, he said, "I will not sign" and walked out of the office. At this time 3rd defendant raised no objection as to the price. Mr. Prior admitted that probably the first time that 3rd defendant saw the agreement was on 11th November, when he came to sign it. He also admitted that he had no authority to sign an agreement for sale on behalf of the defendants.

4. Mr. Li Pak Hung, an interpreter employed by Messrs. Wilkinson & Grist, and who was the interpreter dealing with this matter, said in his evidence that he had discussed the matter with 3rd defendant before 11th November and that the 3rd defendant raised no objections. He stated that 3rd defendant knew that negotiations between his firm and Messrs. Russ & Co., were going on and that he knew the actual purchase price. Before the case was opened, counsel for 3rd defendant admitted that, during the months from May to October, 1947, 3rd defendant had known that Messrs. Wilkinson & Grist were seeking to obtain a purchaser for the property in question.

5. Mr. Sheldon submitted, that on evidence, Messrs. Wilkinson & Grist were the agents of the 3rd defendant with authority to conclude on his behalf a binding contract for the sale of these premises to the plaintiff that on the correspondence there was a binding contract. He then argued that the letter of 6th November from Messrs. Wilkinson & Grist enclosing the agreement in duplicate for engrossment and that of 7th November acknowledging the deposit and returning the agreement duly executed by plaintiff was a sufficient memorandum in writing to satisfy section 4 of the Statute of Frauds and he relied on the case of Daniels v. Trefusis (1914) 1 Ch. 788. In that case it was held that the Statute of Frauds may be satisfied as completely by a note or memorandum signed by an agent, of the terms contained in a verbal contract, as by a note or memorandum signed by the principal himself, provided the agent had authority to sign the particular note or memorandum; and the fact that the agent was not authorised or intended to bind his principal by a contract is immaterial.

6. It was argued on behalf of the 3rd defendant that a solicitor normally acting in the course of negotiation between vendor and purchaser was not got the authority to enter into a final contract on behalf of his client. That in the absence of specific authority from 3rd defendant there could be no final contract until the formal agreement was duly signed by him. And consequently that the letter of his solicitor could not constitute a sufficient note or memorandum under section 4 of the Statute of Frauds.

7. He relied on Forster v. Roland 158 E.R. 410; Hamer v. Sharp 19 Eq. 108; Smith v. Webster 3 C.D. 49; Prior v. Moore 3 T.L.R. 624; Lockett v. Norman - Wright (1925) C.D. 56 and a number of other cases.

8. I find on the evidence that Messrs. Wilkinson & Grist had only authority to negotiate and agree to the terms of the formal contract and had no authority to conclude a final contract on the 3rd defendant's behalf, and that therefore apart from the Statute of Frauds there was no complete agreement.

9. It would, also, appear to me, on the authority of Smith v. Webster, that Messrs. Wilkinson & Grist had no authority to sign on behalf of the 3rd defendant the letters (alleged to form part of a final agreement) if such letters were intended to constitute part of a final agreement and therefore such letters are not a sufficient note or memorandum under section 4 of the Statute of Frauds.

10. The present case is clearly distinguishable from Daniels v. Trefusis where the question was whether there was a sufficient note or memorandum of Statute of Frauds of a previous verbal contract.

11. I hold therefore that the plaintiff's claim against the 3rd defendant must be dismissed with costs.

12. The question of whether the execution of a conveyance of the property to the plaintiff by the 1st and 2nd defendants would be sufficient is not one which I consider I should be called upon to decide in this suit and I make no finding on this aspect of the case.