Centaline Property Agency Ltd v. Suen Wai Kwan Samantha and Another
Read the full judgment text of DCCJ 9117/2001 on BabelCite. This District Court judgment.
1. In this claim, the Plaintiff, an estate agent claims against the 1 st and 2 nd Defendant commission in the sum of $161,600.00 pursuant to a Provisional Sale & Purchase Agreement dated 7 th February 2001 entered into by the 2 nd Defendant for and on behalf of the 1 st Defendant to purchase a property known as Flat B, 20 th Floor and Car Park No. 80 on Ground Floor, Skyscraper, 132-142 Tin Hau Temple Road, Hong Kong (“the Premises”). The Plaintiff introduced the Premises to the 2 nd Defendan
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DCCJ9117/2001 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO. 9117 OF 2001 -------------------- BETWEEN
-------------------- Coram: Her Honour Judge C.B. Chan in Court Dates of Trial: 17th & 18th June 2004 and 30th & 31st July 2004 Date of Handing down of Judgment: 20th October 2004 JUDGMENT 1.In this claim, the Plaintiff, an estate agent claims against the 1st and 2nd Defendant commission in the sum of $161,600.00 pursuant to a Provisional Sale & Purchase Agreement dated 7th February 2001 entered into by the 2nd Defendant for and on behalf of the 1st Defendant to purchase a property known as Flat B, 20th Floor and Car Park No. 80 on Ground Floor, Skyscraper, 132-142 Tin Hau Temple Road, Hong Kong (“the Premises”). The Plaintiff introduced the Premises to the 2nd Defendant. The Agreement is a tripartite agreement between the 2nd Defendant who represented himself to be and acting as agent for the 1st Defendant as Purchaser of the first part, the registered owner of the Premises as the Vendor of the second part and the Plaintiff as the Agent of the third part (“the Agreement”). The Agreement provided the following:-
2.The Plaintiff’s pleaded case is that the 1st Defendant breached the Agreement by failing to complete the sale and purchase of the Premises as provided by the Agreement and also failed to pay the initial deposit provided thereunder. By virtue whereof, the Plaintiff is entitled to claim under clause 10 of the Agreement for the sum of $161,600 being the liquidated damages provided and agreed in the Agreement. This is made up of:-
3.The Defendants’ pleaded case is that the 2nd Defendant was induced into signing the Agreement when the Mr. Yu Sui Sang, Alan, (hereinafter referred to as “Yu”) the staff of the Plaintiff who introduced the Premises to the 2nd Defendant, orally represented to the 2nd Defendant that:-
4.Yu tendered the Agreement and the Cheque to the Vendor without the prior consent and instructions from the 2nd Defendant. The Agreement was executed by the Vendor and the Cheque was tendered to the Vendor. 5.The 2nd Defendant had relied on the representations of Yu and was induced by him to sign the Agreement. The Plaintiff being the principal of Yu was guilty of making the misleading representations. The Defendants plead in their Defence & Counterclaim that the Agreement was void virtue of the aforesaid and the Defendants are not bound by it. 6.The Defendants also pleaded in their Defence & Counterclaim that the Plaintiff through Yu unilaterally and materially altered the Agreement without the consent of the Defendants by altering the completion date from the 9th April 2001 to 3rd April 2001. 7.The Defendants counterclaim for loss and damage and seek indemnity against the Defendants’ liabilities towards the Vendor. The Plaintiff’s Witnesses 8.Yu who was a property negotiator of Happy Valley Branch of Centaline Property Agency Ltd., was the staff of the Plaintiff. He introduced the 2nd Defendant (hereinafter referred to as “Mr. Sun”) to the Premises. He stated that he first got to know Mr. Sun when Mr. Sun looked at the advertisement of properties outside the show window of the Plaintiff’s office in Happy Valley. Mr. Sun told him that he was looking for a flat of around 2,000 sq. ft. at a price of between $6m - $8m. Thereafter, he took Mr. Sun to view two properties in Happy Valley. Mr. Sun did not like those flats in Happy Valley. 9.On the 7th February 2001, at about 5:00 p.m., he took Mr. Sun to look at the Premises. On that occasion, apart from himself, two of his colleagues, one Rex Tam Hin Ming (hereinafter referred to as “Rex”) and another, named Frankie were also there. After viewing the property, Mr. Sun asked whether he could acquire the Premises at a price of $7.8 million. Yu had previously told Mr. Sun that the asking price of $8.7 million. 10.Mr. Sun invited Yu to his home to discuss further and to wait for a reply from the Vendor. They arrived at Mr. Sung’s home between 5:30 p.m. to 6 p.m. Yu was in Mr. Sun’s home for between 1 hour 15 minutes to 1.5 hours. 11.In Mr. Sun’s home, he signed the Property Inspection Form (Form 4) to verify that Yu took him to view the Premises. After Mr. Sun had signed that, Yu telephoned Rex, his colleague to enquire whether the Vendor would consider $7.8 million. Rex said the Vendor had set a bottom price of $8.15 million. He would not consider a lower price. Mr. Sun stated that price was too expensive. Later Rex telephoned him and informed him that the Vendor had received another offer at $8.05 million. Yu and Mr. Sun had further discussions. Yu asked whether Mr. Sun would consider purchasing the property at a price of between $8.05 million to $8.15 million. 12.Eventually Mr. Sun stated that he wished to purchase the Premises at $8.08 million. Yu then prepared the Agreement as showed in page 1 to 2 of the Bundle of Documents – Documents (BD-D) in triplicate. Prior to the signing of the Agreement by Mr. Sun, Yu had explained the contents to him. Yu also explained to Mr. Sun that if he wished to purchase the Premises he should pay a deposit. Yu explained to Mr. Sun that a copy of this Agreement would be handed to the Vendor and if the Vendor signed on it the deposit would be paid to the Vendor. 13.In relation to completion date at Clause 2(d), Mr. Sun asked him what is the usual time span to completion date. Yu stated that it was 2 months. Mr. Sun stated he had no problem to that. Yu therefore put the date as 9th April 2001. 14.In relation to Clause 9, there is a clause related to commission. Mr. Sun wanted to reduce the purchaser’s commission to $40,000. Eventually it was agreed at $50,000.00. At page 1, the name of the purchaser was originally Mr. Sun. Subsequently, Mr. Sun wished to amend it to his daughter’s name, Suen Wai Kwan Samantha. Mr. Sun showed the ID card of his daughter for the ID card number therein to be copied onto the Agreement. Mr. Sun then added the words “For and on Behalf of Sun Wai Kwan Samantha” above the signature of Mr. Sun. 15.In relation to Clause 12 where the name of the Purchasers’ Solicitor is stated, Mr. Sun at first showed him the business card of the Solicitors firm of Lee Chan & Cheng. Subsequently on the next morning on the 8th February, at about 10:30 a.m., over the telephone, Mr. Sun asked him to change the name of the solicitors to Chow Griffiths & Chan. Yu stated that the name of Messrs. Chow Griffiths & Chan was communicated to him in Chinese. He was at a meeting when one of his colleagues told him that she knew the English name of the firm. She was able to give him a business card of that firm of Solicitors. Subsequently, he telephoned Rex, his colleague to tell him that the customer requested to change the name of the solicitors to Chow Griffiths & Chan. So, the name of the solicitors Lee Chan & Cheng was crossed out and substituted by Chow Griffiths & Chan. 16.Mr. Sun issued a cheque number 016428 of Shanghai Commercial Bank in the sum of $300,000.00 for the initial deposit. Mr. Sun asked him to write down the name of Messrs Chow & Ho Solicitors as the payee. Yu stated that he read out each and every clause of the Agreement in Chinese to Mr. Sun. He did that as his usual practice. He asked Mr. Sun if there were things he did not understand. It was then that Mr. Sun asked to add the words “including water and electricity”. Clause 15 was added at the instruction of Mr. Sun by his colleague Rex. 17.Yu stated that prior to the signing of the Agreement, he did not tell Mr. Sun that the Agreement and the deposit was for testing the bottom price. The Vendor had already expressly stated that he was willing to sell at $8.15 million and he had an offer at $8.05 million. He understood that Mr. Sun liked the Premises very much. So he tried his best to help Mr. Sun in this transaction. He stated that although this was a top floor apartment, however the saleable area did not include the roof. He stated that Mr. Sun did not request him not to present the Agreement to the Vendor until he obtained Mr. Sun’s consent. 18.Yu left Mr. Sun’s flat and went downstairs. He made a telephone call to Rex. Rex came in a car and drove Yu to the Braemar Hill Branch of the Plaintiff which was the branch where Rex worked and where the Premises was listed for sale. There, they had discussions with the Vendor. The Vendor needed time to consider the offer of $8.08 million. Yu left the Agreement and the cheque for the deposit to Rex and his colleague. 19.Yu then telephoned Mr. Sun and told him that the Vendor has received the offer. As soon as he hears the reply from the Vendor, he will let him know. 20.At around 10:30 p.m., Rex telephoned him to inform him that the Vendor has agreed to accept the offer of $8.08 million, however he wished to advance the completion date from the 9th April 2001 to 3rd April 2001. He telephoned Mr. Sun who agreed that the completion date could be advanced to the 3rd April 2001. However, he added that he would like the wardrobes in the three bedrooms to be left behind. Yu then confirmed with Mr. Sun the price of $8.08, the date of completion on 3rd April 2001 and the Vendor had to leave behind the wardrobes in the three bedrooms. Yu asked Mr. Sun whether he could let the Vendor sign the Agreement subject to these terms. Mr. Sun stated, “no problem”. He stated that he was going to bed at that time and told Yu not to call him anymore that evening. 21.Yu then telephoned Rex and conveyed the terms to him. Yu told Rex that if the Vendor agreed to these terms, he could let the Vendor sign the Agreement. 22.After an hour or so, Rex telephoned him to say that the Vendor had signed the Agreement. That was around 12:15 a.m. At around 9:30 a.m. on the 8th February 2001, he telephoned Mr. Sun and told him that the transaction had been completed. He congratulated Mr. Sun. Mr. Sun did not make any particular response. He asked Mr. Sun to make further signatures on the Agreement. Mr. Sun stated that he will call him later. At about 10:10 a.m., Mr. Sun called him and asked to change the name of the solicitors to Chow Griffiths & Chan. Yu notified Rex. At about 12 noon, Mr. Sun telephoned him again and stated that his daughter would like to have a look at the Premises. Yu stated that he would bring the Agreement for Mr. Sun to sign at certain parts. He called Rex and asked him to arrange with the Vendor. 23.At about 4 p.m. he met with Mr. Sun at Skyscraper. There was a female, in her 60’s came with Mr. Sun. Nothing particular happened during the inspection. He went there with his manager. The inspection started from the sitting room. They went to the master bedroom and other bedrooms and the kitchen. During the inspection the female seemed worried about some water stains on the wall. After inspection Yu handed a form for Mr. Sun’s signature. Mr. Sun refused to take the form. Instead, he said that there should be a cooling period. Then he left. Yu asked Mr. Sun if he found any problem with the inspection. His manager also came with him. Mr. Sun ignored him. They then followed Mr. Sun to take the lift down. Mr. Sun remained silent. Eventually Yu and his manager said goodbye to him downstairs. 24.If the transaction went ahead, Yu would have gained $9,000 commission. Evidence of Mr. Tam Hin Ming Rex 25.He was a property negotiator of Braemar Hill Branch Branch of Centaline Property Agency Ltd., the Plaintiff, Yu was his colleague. 26.He was present at the first viewing of the property by the 2nd Defendant on the 7th February at about 5 p.m. He stated that after the viewing of the property, the 2nd Defendant showed interest in the flat and when they were at the car park of the property, the 2nd Defendant told Yu that he would offer HK$7.8 million to purchase the property with the car park. 27.Yu and the 2nd Defendant went to the 2nd Defendant’s home in Summit Court, North Point for the purpose of preparing the necessary documents for the purchase of the Property. He waited for the sister-in-law of the Vendor at the lobby of Skyscraper. 28.When he met the sister-in-law of the Vendor at the lobby, he told her about the offer of the 2nd Defendant. She replied that the Vendor would not consider to sell the Property if the offer was less than HK$8.15 million. 29.Later, he received a call from Yu. He told Yu that the Vendor’s sister-in-law had just rejected the 2nd Defendant’s offer and insisted that the Vendor would not consider the offer if the offer was less than HK$8.15 million. 30.Yu then told the 2nd Defendant about the matter. Yu told him that the 2nd Defendant said the counter-offer of HK$8.15 million was too expensive to him. 31.Then, Rex told the Vendor’s sister-in-law that the 2nd Defendant found that the asking price was too expensive to him. She told him that there was an offer of HK$8.05 million made by another purchaser. He called Yu and informed him of the same. 32.At or about 7.00 p.m. on 7th February 2001, Yu left the 2nd Defendant’s flat and Rex drove Yu to the Plaintiff’s branch in Braemar Hill. Yu gave him the preliminary agreement of sale and purchase at the price of HK$8.08 million signed by the 2nd Defendant and the cheque for HK$300,000.00 being the initial deposit. 33.At or about 7.30 p.m. on 7th February 2001, he called Vendor’s sister-in-law and told her about the 1st Defendant’s offer. She told him that she would contact the Vendor and informed him about the offer. However, there might be a problem concerning the completion date. She would check with the Vendor about the completion date and call him later. He told Yu the aforesaid. 34.At or about 10.30 p.m., the Vendor’s sister-in-law informed him the price was acceptable to the Vendor but the completion date had to be changed to 3rd April, 2001. He therefore informed Yu the same. 35.Later, Yu called him and said that the 2nd Defendant agreed to change of the completion date to 3rd April 2001 and the 2nd Defendant requested that the wardrobes in the Property should not be removed. Yu requested him to contact the Vendor and inform the Vendor the same and see whether he could take the provisional agreement to the Vendor for his signature. 36.Then, he called the Vendor’s sister-in-law and told her about the consent of the 2nd Defendant to the change of completion date and the 2nd Defendant’s request for the wardrobes in the Property. The Vendor’s sister-in-law told him that the request was acceptable to the Vendor and confirmed that he could take the provisional agreement and cheque to TVB for Vendor’s signature. He therefore informed the same to Yu and amended the completion date to 3rd April 2001 and added the additional clause ‘雙方承諾三間房的衣櫃不必遷出’to the provisional agreement (“amended provisional agreement”). 37.Then he took the amended provisional agreement and the cheque to Vendor at TVB for his signature. The Vendor did sign and initial on the amended provisional agreement. After that, he called Yu and informed him the same. 38.At or about 10.30 a.m. to 11.00 a.m. on 8th February 2001, Yu told him that the 2nd Defendant requested that his solicitors should be changed to Messrs. Chow Griffiths & Chan and asked him to amend the amended provisional agreement accordingly. He therefore crossed out Messrs. Lee, Chan, Cheng and inserted Messrs. Chow Griffiths & Chan on the amended provisional agreement. 39.At or about 12.00 noon, Yu told him that the 2nd Defendant requested to inspect the Property with the 1st Defendant again that day. 40.At or about 4.00 p.m., he, Yu, Mr. Toson Chui, the 2nd Defendant and a woman inspected the Property. However, after the inspection, the woman said that there was water leakage near the window of a room in the Property. The 2nd Defendant looked emotional after the woman pointed out the water stain to him and spoke with him in the living room and the balcony. The Defendants’ Evidence 41.The 2nd Defendant gave evidence to say that the 1st Defendant is his daughter. He stated that he signed the Agreement. When he signed the Agreement, he did not have authorization from the 1st Defendant to sign it on her behalf. 42.He stated that on the 7th February 2001, Yu made a telephone call to him to tell him that there was a flat available at the Skyscraper. Yu stated that he would take the 2nd Defendant to view it at 5 p.m. The 2nd Defendant stated that he informed Yu that he would prefer an earlier time. Yu said that the earlier time was not possible. It is not in dispute that Yu told him that the asking price stated by the landlord was $8.7m. The 2nd Defendant said the price was too high. Yu told him that it was a good property. If he was interested in the property he could help him get the property at a good price. 43.He stated that he inspected the property with Yu. After that Yu and himself went to his home. He signed a flat inspection form. Yu repeatedly suggested to him that he signed the Provisional Agreement to test the price. Initially he did not agree to that. Later on, Yu stated that he must sign this Provisional Agreement so that the landlord realized that he is in good faith to purchase the property and the landlord would disclose the price he would sell the property at. He stated that whilst Yu was writing the Provisional Agreement he was tired and did not see clearly what he wrote. After Yu completed preparing the Agreement, he wrote a cheque in the sum of $300,000.00. He handed the cheque to Yu and told him that the purpose was to test the price. It was not an agreement. As soon as Yu have found the actual price, Yu had to tell him. Yu could not give the Agreement to the other party. Yu therefore took the Agreement with him. At around 11 p.m. Yu telephoned him and told him that the Vendor wished to advance the completion date. He had already slept by 11 p.m. Yu’s telephone call woke him up. Yu told him that the other party wished to advance the completion date. He said no. He disagreed and he did not wish to discuss this any further. He informed Yu that if he had something to say he should call him the next day. 44.The next day shortly after 9.00 a.m., Yu telephoned him and said, “Congratulations, Mr. Sun, you have got it!” He said, “What? I made it very clear yesterday that you were not to hand over the agreement to the other party. Why did you do it?” 45.He stated that he was very angry. Yu suggested to have another inspection of the property at noon. So at 1 – 2 p.m. on 8th February, he went there again. His purpose to go there was to get back the cheque and the Agreement. However, Yu said that the Agreement and the cheque had been given to the Vendor. He became more angry. 46.He stated that he had not instructed Yu to change his solicitors name to Chow Griffiths & Chan. He did not instruct Yu that the wardrobes in the property should not be removed. He made a complaint to the Estate Agents Commission. He prepared a witness statement for them on the 21st March 2001. 1st Defendant’s Evidence 47.She stated that she is the daughter of the 2nd Defendant. Before the 8th February 2001, she had no knowledge of the transaction in the Agreement. She had not either expressly or impliedly given authority to her father to buy a property on her behalf. The Issues 48.1. Did Yu represent to the 2nd Defendant that the Provisional Agreement was signed only for the purpose of testing the lowest price the Vendor would agree to?
Credibility of Witnesses 49.Having considered all the evidence and observed their demeanour I find Yu and Rex to be credible witnesses despite having considered all the submissions of the Defendants’ Counsel related to the issue of their credibility. 50.I find the evidence of the 2nd Defendant not credible for the following reasons:-
51.I do not accept the 2nd Defendant’s evidence related to the representations made to him by Yu related to the purpose for the Agreement and the cheque was to test the lowest price that the landlord would accept. I do not accept any part of the evidence of the 2nd Defendant which conflicts with that of Yu. The 1st Issue 52.Since I do not accept the evidence of the 2nd Defendant as true or reliable, I find that Yu did not represent to the 2nd Defendant that the Agreement would not have legal force but would only be shown to the Vendor in order to test the lowest price that the landlord would accept. The 2nd Issue 53.The Defendants’ Counsel submitted that since the Plaintiff’s case is exclusively founded on the Agreement and oral instructions for amendments, its case cannot be made out at law and is bound to fail, because:-
To put it simply, in gist, the counter-offer of the Vendor had never been accepted, or formally accepted by the 2nd Defendant. 54.The Defendants’ Counsel referred to Section 3 (1) “Land contracts to be in writing” of the Conveyancing and Property Ordinance (“CPO”), Cap. 219 states that:- “Subject to section 6 (2), no action shall be brought upon any contract for the sale or other disposition of land unless the agreement upon which such action is brought, or some memorandum or note thereof, is in writing and signed by the party to be charged or by some other person lawfully authorized by him for that purpose.” 55.The Defendants’ Counsel submitted that accordingly any variations must be made in writing and signed by the party being sued. In other words, parole evidence from Yu and Rex is not admissible to demonstrate any variations or amendments to contracts, where the contracts are required to be in writing. 56.He referred to Kwan Siu Man v. Yaacov Ozer [1999] 1 HKLRD 216, where Litton PJ stated:-
57.He further referred to Wellfit Investment Ltd. Poly Commence Ltd. & Anor [1996] 4 HKC 174, where Godfrey JA said:-
58.Again he relied on Happy Dynasty Ltd. v. Wai Kee (Zens) Construction & Transportation Co. Ltd. & Others v. Dyno Westfarmers [1998] 1 HKLRD 309, where Yam J held that:- “Parole evidence was inadmissible in this case. Once the transactions had been reduced to or recorded in writing by agreement of the parties, extrinsic evidence was inadmissible to contradict, vary, add to or subtract from the terms of the documents.” p. 213 E to F 59.He submitted that in the English case of New Hart Builders Ltd. v. Brindley [1975] 1 All ER 1007, Goulding J held that where the alteration of a document was not merely for the purpose of correcting a mistake in a written statement of an agreement but effected or evidenced an alteration of the terms of a contract already concluded and binding on the parties, s. 40 (1) of the 1925 Act was not satisfied unless the party to be charged signed the document afresh or expressly revived the existing signature by appropriate words or gestures directed to the signature. Accordingly there was no sufficient writing to satisfy s. 40 (1). 60.Again in Advanced Chemicals Ltd. v. Centaline Property Agency Ltd. DCCJ 16630 of 2000 (unreported), HH Judge Lok rightly held in paragraph 5 that:- “As the Plaintiff had not initialled the amendment relating to the date for the execution of the formal agreement, it is common ground that there was no binding agreement between the Plaintiff and the Vendor relating to the sale of the Property.” 61.The Defendants’ Counsel concluded that in the premises, putting the Plaintiff’s case at its highest, there was never a valid and enforceable Agreement against the Defendants, because the amendments were not signed by the party to be charged namely the Defendants, as required by s. 3 (1) of the CPO. 62.The Plaintiff’s Counsel submits that the counter proposal related to the date of completion was made by the Vendor and accepted by the 2nd Defendant and the other terms related to the wardrobes in the bedrooms and the change of the 2nd Defendasnt’s solicitors were agreed before the Vendor signed his copy of the Agreement. It is not a situation as stated in New Hart v. Brindly cited by the Defendant’s Counsel at page 1008 “where the alteration of a document was not merely for the purpose of correcting a mistake in a written statement of an agreement but effected or evidenced an alteration of the terms of a contract already concluded and binding on the parties…” In which event the statutory requirement “was not satisfied unless the party to be charged signed the documents afresh or expressly revived the existing signature by appropriate words or gestures.” In this case the contract had not been concluded before the alterations. 63.He referred to the words of Goulding J at page 1012 b-d of the Judgment who stated “that in certain cases an alteration made to a document after a signature and approved by a party to be charged is sufficiently authenticated for the purpose by the original signature. That is so he says where the signed document is altered in order to correct a mistake in the written statement of an existing contract as apparently in Bluck and Gumpertz. The law is similar where the signed document is altered before the parties are contractually bound at all, as in Stewart v. Eddowes and Koenigsblatt v. Sweet. But counsel submits, the result is different where the alteration of the document effects or evidences an alteration of a contract already concluded at some earlier time and binding on the parties”. 64.The new terms related to the changed completion date and the inclusion of the wardrobes in the bedrooms were added by Mr. Yu as the agent of Mr. Sun on his instructions after his signature, and only then did the Vendor agree and sign his copy of the Agreement which only then became a binding contract. It would seem that the change in the solicitors firm was made after the Vendor signed his Agreement. 65.The Plaintiff’s Counsel referred to Chitty on Contracts at para. 4-035 which states that “where a memorandum is altered after it has been signed in order to correct a mistake in the written statement of an existing contract or before the parties are contractually bound at all, parole evidence is admissible to show that the signature was intended to apply to the memorandum as altered. But such signature cannot authenticate subsequent alternations which effect a variation of a contract concluded and binding on the parties at some time previous to the alternations”. 66.The English Court of Appeal case (which is referred to in New Hart) which is relied on by Chitty to the above mentioned proposition is Koenisgblatt v. Sweet [1923] 1 Ch. 314. 67.In that case Lord Sterndale M.R. held that “I think it is settled law now, that when once you get a ratification it relates back, it is equivalent to antecedent authority: mandato priori aequiparatur; and where there has been ratification that the act is done is put in the same position as it if it had been antecedently authorised… [D] on the evidence does not prove that his signature is attached to something, which he did not agree. He only proves it attached to something which he did agree, but says the signature was attached before he agreed, and therefore as he did not sign it over again, there is no memorandum of the agreement signed by him or by his agent” and at p. 327 “but I am satisfied … that Mr. Sweet was told, not only that an alternation had been made in the part signed by [the other contracting party] but that the alteration had been made, as Mr. Roe says ‘in the contract’, that is in both parts. Therefore when he said to his agent, Mr. Roe, that he approved of the alterations, as they appeared not only in the part signed by [the other contracting party] which he had before him, but in the one that was signed by him, which he knew to be in [the other side’s] possession, he recognised his signature as attached to the document containing those alterations.” 68.The Plaintiff’s Counsel submits that should the Court find that Mr. Sun did instruct the changes that the agent wrote on the document, then as these will have been done before the contract was entered the contract would not have been void for the reasons stated in the aforesaid authorities. 69.In reply the Defendant’s Counsel further submitted that the cases of Stewart v. Eddowes (1874) LR 9 CP 311 and Koenigsblatt v. Sweet [1923] 2 Ch 314 are cases over a century and three quarters of century old. They have not been considered or referred to by the Hong Kong Courts according to his research. He submitted that their application is limited to their own special circumstances and merits in the then cultural and economic position in England or were wrongly decided. 70.He referred to Lambton Holdings Ltd. v. Mai [1976] 2 NZLR 757, where Wild CJ. distinguished this case from the case of Stewart v. Eddowes in that,
71.It could be seen that in this New Zealand case, the principles in Stewart v. Eddowes had not been overturned but the Judge merely distinguished the facts in that case as different from that in Stewart v. Eddowes. The Defendant’s Counsel submitted that in the present case, it was clear that all amendments, in the ordinary course of the Plaintiff’s business necessitated the initials of all parties. In fact Yu stated in evidence that after he informed Mr. Sun that the Vendor had signed the Agreement, he “asked Mr. Sun to make further signatures on the Agreement.” In fact Yu did attempt to ask Mr. Sun to initial the amendments on the Agreement on the 8th February after the 2nd viewing of the property but by then Mr. Sun had decided not to proceed with his purchase. 72.The second case referred to by the Defendant’s Counsel is Austie v. Aksnowiez [1999] 10 W.W.R. 713. He cited the following paragraphs from the judgment: Côté JA stated in para. 40:-
Further in para. 52,
73.The Defendant’s Counsel submitted the above Canadian case has rightly pointed out the unfairness in admitting parole evidence and the inherent weakness of those outdated English cases cited by the Plaintiff. It is submitted that the strict requirements and the utmost intention of s. 3 (1) of the CPO must be adhered to and that the final product of the Agreement shall be signed by the party to be charged. Any parole evidence seeking to contradict or vary the writings in the Agreements ought to be excluded. 74.The Defendants’ Counsel submitted a pleading point in that the Plaintiff had failed to plead the material fact that the Agreement was altered orally by instruction by the 2nd Defendant prior to the exchange of the Agreements between the 2nd Defendant and the Vendor. He submitted that as it is a material fact relied on by the Plaintiff, it is required to be pleaded. 75.Further the Defendants’ Counsel referred to Clause 13 of the Agreement which states, “This Agreement supersedes all prior negotiations, representations, understanding and agreement of the parties hereto.” He submitted that this clause clearly showed the intention that parole evidence is valueless. He submitted that due to Clause 13 the oral confirmation of the 2nd Defendant must be endorsed in writing by the 2nd Defendant or his agent. 76.The final point of the Defendants’ Counsel was that the evidence of the Plaintiff, if admitted, would create a dangerous floodgate to the volatile Hong Kong property market. Purchasers and Vendors would then no longer be protected by written contracts. Assuming for one moment that the Plaintiff’s evidence was to be admitted, potential vendors and purchasers’ interest would be harmed by real estate agents by alleging “oral confirmations” adverse to their interests. Those real estate agents would merely need one party’s signature and aver that the other unsigned party had confirmed it orally prior to that signature. By using the admission of parole evidence as an engine of fraud would be totally unacceptable to the intention and the aim of the CPO and the originating Statutes of Frauds Act 1677 requiring contracts for the sale of landed properties to be in writing. Is the Agreement Enforceable at law? 77.Having considered the submissions of respective Counsel and considered the authorities, it is clear that the completion date is an essential term of the Agreement as stated by Litton PJ in Kwan Siu Man v. Yaacov Ozer aforesaid. I have accepted the evidence of Yu and Rex and therefore I find that the counter-offer related to the completion date was accepted by the 2nd Defendant before the Agreement was signed by the Vendor. 78.The facts of this case are not exactly the same as that in Koenisgblatt v. Sweet where Sweet the Vendor had orally ratified alterations to the contract made before exchange of contract. Roe, the managing clerk of Sweet’s Solicitors, after exchange of contracts had shown Sweet the alterations in the contract made by him. Sweet saw the alterations, applied his mind to them and adopted the acts of Roe his agent and orally ratified the alterations. It was under such circumstances that the Court of Appeal confirmed the decision of Russell J of the lower court that at the time the contract was ratified and approved by Sweet, he “not only approved of the alterations, but in effect, agreed that the document signed by him, on the previous occasion, should be a memorandum of that contract;” 79.In this case, the 2nd Defendant orally agreed that the completion date should be advanced to the 3rd April. He had not been shown the alterations to the Agreement. Nor had he been told that there were alterations to the Agreement previously signed by him. He had not applied his mind to the alterations. He did not orally ratify the alterations. As stated in Austie v. Aksnowicz, “Koenigzblatt v. Sweet…is not on point; it is about authority of an agent to sign, and ratification of his authority.” 80.This case can be distinguished on its facts from those in Stewart v. Eddowes. As referred to above, this case is somewhat like Lambton Holdings Ltd. v. Mai where the defendant had been told that he would have to initial the oral acceptance of the alteration. In this case, it was clearly the intention of Yu that the 2nd Defendant would initial the alterations to the Agreement. It was never the intention that the 2nd Defendant’s signature on the Agreement would be related back to the alterations made thereon by Yu even though he had authorized Yu orally to change the terms of the Agreement. 81.Yu himself stated in paragraph 29 of his witness statement that “on the 8th February 2001 when he called the 2nd Defendant and told him that the Vendor had accepted his request not to remove the wardrobes in the Property and signed the amended provisional agreement. He requested to take the provisional agreement to the 1st Defendant for her to initial on the amendment on the provisional agreement.” Again in his oral evidence he said “Since at 9:30 a.m. I requested Mr. Sun to meet me to ask him to add his signatures to the Provisional Sale & Purchase Agreement, so I planned to take this opportunity to bring him the Provisional Sale & Purchase Agreement for his signature.” There had never been any intention that the original signature of the 2nd Defendant in the Agreement would have the effect of covering the amendments to the said Agreement. 82.I agree with the Defendants’ Counsel that the facts related to the oral instructions by the 2nd Defendant to Yu agreeing to the changed completion date before the contract was entered into between the parties is a material fact that should have been pleaded either in the Statement of Claim or in the Reply. It is a fact that is necessary in formulating the complete cause of action of the Plaintiff’s case. Failure to plead this would render oral evidence thereof inadmissible. It is stated in paragraph 18/7/7 of the Hong Kong Civil Procedure 2004 that “if the Plaintiff succeeds on findings of fact not pleaded by him, the judgment will not be allowed to stand, and on appeal the court will either dismiss the action…or in a proper case will if necessary order a new trial…” Hence reference to the oral agreement of the 2nd Defendant related to the alterations thereof could not be relied on. 83.Further, as submitted by the Defendants’ Counsel, Clause 13 of the Agreement renders “inadmissible extrinsic evidence to prove terms other than those in the written contract, since the parties have by the clause expressed their intention that the document is to contain all the terms of their agreement” (Chitty on Contracts para 12-102 Vol. 1 28th Edition). This would render it difficult for the Plaintiff to call or rely on oral evidence related to authorization by the 2nd Defendant to vary the completion date. 84.Having distinguished this case from Koenigsblatt v. Sweet and Stewart v. Eddowes, having considered the pleading point and Clause 13 of the Agreement, and s. 3(1) of the Conveyancing & Property Ordinance, it is my view that oral evidence of the authority given by the 2nd Defendant to vary the terms of the Agreement could not be admitted or relied on. This case should be subject to the strict requirements and intention of s.3(1) of the Conveyancing & Property Ordinance. Parole evidence seeking to contradict or vary the writings in the Agreement is to be excluded. 85.Having so found, the principles in Kwan Siu Man v. Yaacov Ozer, Wellfit Investment Ltd. Poly Commence Ltd & Anor referred to aforesaid would apply to this case. The Agreement is not enforceable as the completion date being an essential term thereof contains an alteration which had not been countersigned by the 2nd Defendant. The 3rd Issue 86.The Plaintiff’s Counsel submitted that the Plaintiff claims by virtue of the alternative pleaded case of breach of collateral agreement of implied warranty by the 2nd Defendant that he was authorized by the 1st Defendant to offer to purchase the Property in terms of the Agreement and/or to enter into the Agreement for her as her agent. The pleaded case of the Plaintiff is that the 2nd Defendant orally or by the Agreement made the representations that he is the agent of the 1st Defendant. 87.The Defendants’ Counsel submitted that there was no pleading by the Plaintiff of breach of implied warranty of authority. The Plaintiff’s Counsel submitted that it is not necessary to plead collateral warranty. He submitted that breach of warranty of authority is by necessity a collateral warranty. 88.Be that as it may, it is clearly the case in Article 108 “Measure of Damages for Breach of Warranty of Authority” of Bowstead and Reynolds on Agency 17th Ed., wherein para. 9-077 states,
In para. 9-078 further states:-
89.McGregor on Damages 17th Ed. at para 31-004 states,
90.In view of the aforesaid, it is clear that the Plaintiff is not entitled to the sum claimed. 91.I dismiss the Plaintiff’s claim with an order nisi for costs of the claim to the Defendants to be taxed if not agreed with Certificate for Counsel. The Defendants’ Counterclaim be dismissed with an order nisi for costs of the Counterclaim to the Plaintiff to be taxed if not agreed with Certificate for Counsel.
Representation: Mr. Jośe Antonio Maurellet instructed by Messrs. Cheung & Choy for the Plaintiff. Mr. Lawrence Hui instructed by Messrs. Cheng Wong Lam & Partners for the 1st and 2nd Defendants. |
Cases cited in this judgment