Jungle Holdings Ltd v. Fenton Associates Ltd and Another
Read the full judgment text of DCCJ 1099/2004 on BabelCite. This District Court judgment.
1. This case is concernedwith a failed leasing transaction in respect of the property known as Flat B on 1 st Floor, 11 Ching Sau Lane, Chung Hom Kok, Hong Kong and car park nos. 2 and 5 (“the Property”).
Cited by 2 cases · Cites 1 case
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DCCJ 1099/2004 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO. 1099 OF 2004 -------------------- BETWEEN
-------------------- DCCJ 1100/2004 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CIVIL ACTION NO. 1100 OF 2004 -------------------- BETWEEN
-------------------- Coram: Deputy District Judge J. Ko in Court Dates of Hearing: 12th – 15th September 2005, 20th – 21st September 2005 & 9th December 2005 Date of further written submissions: 23rd December 2005 Date of Handing Down Judgment: 22nd March 2006
______________________ J U D G M E N T ______________________ 1.This case is concernedwith a failed leasing transaction in respect of the property known as Flat B on 1st Floor, 11 Ching Sau Lane, Chung Hom Kok, Hong Kong and car park nos. 2 and 5 (“the Property”). 2.In July and August 2003, Fenton Associates Limited (“Fenton”) was then the registered owner of the Property. Fenton as landlord entered into a provisional tenancy agreement in respect of the Property (“PTA”) with Jungle Holdings Limited (“Jungle”) as tenant. Centaline Property Agency Limited (“Centaline”) was the estate agent acting for both Fenton and Jungle in the transaction. 3.PTA provides that Fenton shall let and Jungle shall take through Centaline the Property for a term of 3 years commencing from 1st September 2003 at the monthly rent of $27,000 inclusive of management fees and rates. A deposit of $27,000 was paid by Jungle to Fenton under PTA. 4.Clause 2 of PTA provides that Fenton and Jungle have agreed to enter into a formal tenancy agreement on 6th August 2003 subject to the terms and conditions contained in PTA. 5.Clause 9 of PTA further provides that should Jungle (as tenant) fail to complete the deal in the manner contained in PTA, the deposit paid under PTA shall be forfeited, and Fenton shall be entitled at its absolute discretion to let the Property to others and Fenton shall not sue Jungle for any liabilities and/or damages caused by Jungle’s default. Similarly, clause 10 of PTA provides that should Fenton (as landlord) fail to let the Property to Jungle in the manner contained in PTA, Fenton shall compensate Jungle with a sum equivalent to the amount of the deposit together with a refund of the deposit paid and Jungle shall not take any further action for specific performance or damages. 6.The protagonists in this case are:
7.I should also mention by way of introduction the estate agency agreement dated 31st July 2003 signed by Cabirol on the one part and Centaline on the other part in respect of the intended leasing of the Property (“EAA”). 8.Clause 1 of EAA provides that Cabirol as “Tenant” appoints Centaline to act as “Agent” in the transaction subject to and in accordance with the terms therein. 9.6th August 2003 came and went but Fenton and Jungle did not enter into any formal tenancy agreement in respect of the Property in accordance with PTA. 10.Jungle and Fenton blame each other for the failure to enter into the formal tenancy agreement. Fenton has forfeited the deposit paid by Jungle pursuant to clause 9 of PTA. 11.In DCCJ 1099/2004, Jungle is now claiming against Fenton for the return of the deposit, and against both Fenton and Centaline for damages. The cause of action relies on by Jungle in its claim against both Fenton and Centaline is breach of PTA. In addition, Jungle alleges that Centaline has failed in its duties as its estate agent. 12.In DCCJ 1100/2004, Centaline is claiming against Cabirol for commission under the express terms of EAA, or damages for breach of PTA or an implied term of EAA. 13.The main issues in this case can crudely be outlined as follows:
14.The two actions have been tried together since they relate to the same factual matrix and the issues are intertwined. Who is responsible for the failure to complete the leasing transaction on 6th August 2003? 15.Clause 2 of PTA provides that:
For the present purpose, it is imperative to note that PTA is silent on the venue for signing of the formal tenancy agreement on 6th August 2003. 16.The most crucial issue in DCCJ 1099/2004 is who is responsible for the failure to complete the leasing transaction on 6th August 2003 in accordance with PTA. 17.Jungle's case is based on the testimony of the Cabirolsand the documentary evidence adduced. Centaline’s case is inextricably tied with that of Fenton and relies mainly on the testimony of Ward, Cheung, R-Kusters and A-Kusters,aw well as the documentary evidence adduced. 18.Much of the events leading up to 6th August 2003 are not disputed. They may be briefly stated as follows:
19.It is common ground that no formal tenancy agreement in respect of the Property was executed on 6th August 2003. (a) Jungle's case on what happened on 6th August 2003 20.According to Fu, she instructed Cheung as early as on 31st July 2003 when Cabirol executed PTA that the formal tenancy agreement would be signed at the Property. She says that Cheung later confirmed with her on 4th August 2003 by phone that the formal tenancy agreement would indeed be signed at the Property on 6th August 2003. 21.Essentially, Jungle’s case is that the Cabirols had attended the Property on 6th August 2003 for the signing of the formal tenancy agreement in accordance with PTA but no one from either Fenton or Centaline turned up. Hence, Jungle says, Fenton and Centaline were in breach of PTA, and Centaline failed in its duties as Jungle’s agent. 22.According to the Cabirols, they began waiting outside the Property on 6th August 2003 from about 5 pm. There was no sign of anyone from Fenton or Centaline. 23.Fu was unable to call Cheung with her own mobile phone because the battery was low and the couple did not use Cabirol’s mobile phone to call Cheung. 24.After waiting for a while, the couple went to a nearby Wellcome Supermarket forits air-conditioned environment and refreshment as well as to use the public phone there. The couple went back and forth the Property and the supermarket several times on that day. 25.Cabirol does not speak Chinese and it was Fu who called Cheung at the supermarket. According to Fu, she called Cheung 2 to 3 times with the public phone at the supermarket but the calls were all diverted to the voicemail. She left a message in Cheung’s voicemail to the effect that the Cabirols had been waiting outside the Property and asked Cheung to call her back. Fu also called Centaline’s branch office in which Cheung worked but was informed that Cheung was out. 26.The couple waited outside the Property until about 7:30 pm. No one from Fenton or Centaline turned up and they left the Property for home. (b) Fenton/Centaline's case on what happened on 6th August 2003 27.According to Cheung, after Jungle and Fenton had agreed on the improvements to the Property, Ward called her on 1st August 2003 to indicate that Fenton was willing to accept the lease and asked Cheung to bring PTA to Fenton’s office on the following day for her to sign. Ward further instructed her that the venue for the execution of the formal tenancy agreement would also be Fenton's office. Cheung informed Fu of the result as well as the arrangement to sign the formal tenancy agreement at Fenton’s office. This, according to Cheung, was accepted by Fu. 28.On 2nd August 2003, Cheung took PTA to Fenton’s office for Ward to sign. Later, Cheung arranged her colleague Ms. Leona Wong to take the Cabirols to the Property again for them to take some measurements. 29.In the evening of 4th August 2003, Cheung received a telephone call from Fu who demanded a deferment of the commencement of the tenancy for 5-6 months for fung shui reasons. 30.On 5th August 2003, Cheung called Ward and A-Kusters to discuss Jungle’s request for deferring the commencement of the tenancy. This was rejected. Fu later requested a shorter deferment, which was also rejected by Fenton. 31.At about 1 pm on 6th August 2003, Fu called Cheung and said that Jungle would not execute any formal tenancy agreement in respect of the Property. Cheung communicated Jungle’s stance to Fenton. Cheung later called Fu again to try to persuade her to change her mind but without success. 32.Meanwhile, Ward and A-Kusters made themselves available at Fenton’s office for the execution of the formal tenancy agreement notwithstanding Jungle’s stance. R-Kusters also stood by in his office in Ningbo. No one from Jungle turned up at Fenton’s office on 6th August 2003. (c) Discussion 33.Having considered all the evidence, I find Fenton/Centaline's case more believable. I consider the Cabirols' testimony to be highly artificial. Indeed, I agree with the observation of Fenton's counsel that the Cabirols have tailored their evidence and the case now put forward by them is the best possible case given the undisputable evidence. 34.Let me analyze the respective case of Jungle and Fenton/Centaline from the following perspectives:
(c1) The agreed venue for execution of the formal tenancy agreement 35.Fu is adamant in court that she had instructed Cheung as early as 31st July 2003 that the formal tenancy agreement would be signed at the Property. Curiously, however, she has failed to mention this important fact in any of her witness statements. 36.On the other hand, it is not correct for Jungle/Cabirol's counsel to observe in his closing submission that Cheung has similarly omitted to mention the fact that the venue for execution of the formal tenancy agreement had been agreed on 1st August 2003 in her witness statements. 37.Cheung was cross-examined by Fenton's counsel on this very issue and she referred to paragraphs 12-15 of her witness statement [Bundle 2, pp.96-97] to refute any suggestion of recent fabrication. 38.Jungle/Cabirol’s counsel has also gone into considerable lengths in his closing submission to challenge the underlying reason(s) for Fenton to elect Fenton’s office as the venue for signing the formal tenancy agreement. 39.There may be many reasons for Ward and R-Kusters respectively to want to sign the formal tenancy agreement at Fenton's office. Some of these reasons may be common to them. I do not find a microscopic scrutiny of each of these reasons helpful. The fact that no one from Fenton attended the two inspections of the Property by the Cabirols and the fact that Ward executed PTA as well as the amendments thereto at Fenton's office go some way, in my view, to confirm Fenton's election (for whatever reason(s)) to execute the formal tenancy agreement at Fenton's office. 40.What's more, Ward was about 84 years old at the time of the transaction. As R-Kusters was away in Ningbo at the time, Ward was apparently the only director of Fenton in Hong Kong to execute the formal tenancy agreement for and on behalf of Fenton [Bundle 3, p.279]. It would be quite reasonable for her to want to sign at her own residence. This is all the more so as Fenton was served by its agent Centaline and all the necessities of completion could be attended to by Centaline. 41.It has also been submitted on behalf of Jungle that Fenton’s office would be an unusual venue for completion when no arrangement was made for the Cabirols to check the Property, to test the keys and to verify the utilities meter readings before signing the formal tenancy agreement. 42.In my view, the absence of any arrangement for the Cabirols to finally inspect the Property must be viewed in its proper context. It is Fenton/Centaline’s case that Jungle had refused to sign the formal tenancy agreement. Had Jungle elected to proceed with the transaction and requested for a final inspection, it could easily have been arranged and done through Centaline. (c2) The events between 4th and 6th August 2003 43.According to the Cabirols, nothing eventful happened after the second inspection of the Property on 2nd August 2003. The parties had agreed on the improvements to be done on the Property. The Cabirols were happily shopping for lightings and furniture for their new home. On 4th August 2003, Cheung further reminded Fu by telephone of the appointment to sign the formal tenancy agreement. 44.According to Cheung, Ward, A-Kusters and R-Kusters, however, there had been frantic exchange of telephone calls between the parties between 4th and 6th August 2003 prompted by Fu's requests for deferment of the commencement of the tenancy and subsequent refusal to sign the formal tenancy agreement. 45.The record of calls logged by Cheung’s mobile phone, which is summarized below with part of the telephone number obliterated to preserve privacy, is more consistent with Fenton/Centaline’s case:
46.These frantic telephone calls between 4th and 6th August 2003 cannot be explained by the simple case put forward by Jungle, even if one takes into account Cheung’s call to Fu (and possibly to Fenton) to confirm the appointment to sign the formal tenancy agreement. 47.Jungle/Cabirol's counsel has submitted that Cheung’s detailed recollection of the calls is implausible and self-serving. He criticizes Cheung for being able to give minute details of the content of certain critical calls but unable to recall other basic information such as where she was or what she was doing when she made those calls. 48.I find the above criticism unduly harsh. Jungle/Cabirol’s counsel has apparently accepted, no doubt with the Cabirols in mind, that given the length of time which has elapsed since the relevant events it is entirely understandable for any witness to have difficulty recollecting with precision the details of the calls. 49.It must also be noted that Cheung has in fact made a statement to the Small Claims Tribunal sometime in January 2004 detailing the calls [Bundle 3, pp.220-223]. This was apparently done when the conversations were still fresh in her mind. Given this earlier statement, it is not surprising that Cheung is able to recall the calls at trial but not other details. (c3) The events on 6th August 2003 50.First, it is the Cabirols' testimony in court that they had waited outside the Property from about 5 pm to 6:30 pm on 6th August 2003 (i.e. some 1½ hours). This is to be contrasted with the contents of his earlier written statements. 51.In his statement to the police dated 13th August 2003 (i.e. just 1 week after the incident) [Bundle 3, p.353], Cabirol stated that the couple had waited from 1700 to 1930 hours (i.e. some 2½ hours). In another statement prepared for the Small Claims Tribunal, Cabirol stated that they had waited from 5 pm for more than 2 hours [Bundle 3, p.231]. 52.Cabirol recognizes the discrepancies under cross-examination.He attributes such discrepancies to typographical errors. He explains that his wife (i.e. Fu) has a better memory and she has since pointed out the errors to him. 53.At first glance, one may not have considered the difference between an estimate of 1½ hours and 2 or 2½ hours as significant. However, when one looks at such discrepancies in the light of the detail call list of Fu's mobile phone, one will begin to entertain some suspicion. 54.The detail call list of Fu’s mobile phone registered 5 calls between 5 pm and sometime after 7:30 pm [Bundle 3, p.323]:
55.Bearing in mind that it is the Cabirols’ testimony that the battery of Fu's mobile phone at that time was low so much so that Fu was unable to call Cheung with it, it is quite suspicious that there could have been those 5 calls made through Fu's mobile phone totalling some 4 minutes! 56.The explanation offered by the Cabirols at trial is that Fu could not really converse with the callers for the first 3 calls but only repeatedly said “wei” and asked who it was calling. As to the other 2 calls at 1904 and 1933 hours, the Cabirols say they had already reached home by then. Fu was then recharging her mobile phone and, hence, was able to make those calls with her mobile phone. 57.Had the Cabirols maintained their original time estimates of 2 or even 2½ hours from 5 pm, they would have to explain not just 3 calls but 5 calls. This may turn out to be problematic as the last 2 calls lastedalmost half of the total airtime of 4 minutes. Moreover, the Cabirols say it took them about 20 minutes to reach home from the Property on 6th August 2003. Hence, it is not open to them to claim that they had left earlier in view of the time of calls logged. 58.The Cabirols only “corrected” their initial time estimate in their respective witness statements dated 7th October 2004 [Bundle 3, pp.108 and 119]. That was more than 1 year after the incident. By then, the detail call list of Fu’s mobile phone was available to them. 59.Secondly, it is Jungle's case that Cabirol was also waiting outside the Property with Fu. Cabirol has admitted in court that he had his own mobile phone with him at all times when the couple was waiting outside the Property. Why did the couple not use Cabirol’s mobile phone to call Cheung? 60.The explanations offered by the Cabirols for not using Cabirol’s mobile phone are not entirely consistent. On the one hand, Cabirol claims he was then waiting for important overseas business calls and so he did not allow his wife to use his phone. On the other hand, Fu claims that her husband was wearing a long face during the wait and she dared not ask for the use of his phone. 61.Thirdly, it is common ground that there was in fact a telephone available at the security guard post at the entrance of the Property. Why did the Cabirols not use that phone but instead walked up to Wellcome Supermarket to use the public telephone there? 62.Cabirol explains that the security guard was asleep at the time and he did not want to disturb him. Given the couple's testimony that they had at least waited 1½ hours, I find it rather unlikely that the security guard on duty there would have slept through the whole period of time. 63.I have carefully observed the demeanor of Fu when she testifies in court. She has impressed me to be a lady with strong character. She does not appear to me to be someone who would allow herself and her husband to wait for 1½ hours in the August heat and walk up and down the slope to use a public phone when there was one right under their nose at the security guard post. 64.Fourthly, the Cabirols have not been consistent regarding the frequency of their visits to Wellcome Supermarket on 6th August 2003. Cabirol says the couple had gone there 2 to 3 times, while it is 6 to 8 times by Fu’s count! 65.Fifthly, the fact that the couple went repeatedly to Wellcome Supermarket to use the public phone is, in my view, a material fact. It is rather unlikely that the Cabirols would have omitted to mention it when they recount the frustrating events that happened on 6th August 2003. Be that as it may, this was never mentioned in any of their statements made prior to their respective witness statement dated 7th October 2004. 66.Cabirol did not mention this material fact in his police statement [Bundle 3, p.353] and his three statements to the Small Claims Tribunal [Bundle 3, pp.231-235; pp.251-259; and 274]. Fu has similarly omitted to mention it in her three statements to the tribunal [Bundle 3, pp.236-238; 263-268; and 275]. This is so notwithstanding the fact that Cheung has put the telephone conversations in issue during the proceedings in the tribunal [Bundle 3, pp.220-228]. 67.Their witness statements dated 7th October 2004 were apparently prepared after the detail call lists of Fu’s mobile phone have become available. The significance of the use of a public phone to Jungle’s case is that there is simply no evidence available to disprove Fu’s alleged calls to Cheung and Centaline at the material time. 68.Sixthly, it is the Cabirols’ testimony that they could not contact Cheung when they were waiting outside the Property. This is contradicted by the detail call list of both Cheung’s mobile phone and Fu’s mobile phone. 69.The following call is registered in the detail call list of both their mobile phones:
70.Jungle/Cabirol's counsel has submitted that the data contained in the detail call list is just an array of indeterminate numerical data whose accuracy is unverified. In my view, the fact that the same call time (i.e. 1812 hours) and the same duration of call (i.e. 1.7 minutes) is logged in the records of both phones is very persuasive evidence that there was in fact such a call and of such a duration. Indeed, both Cabirol and Fu dare not deny such a call under cross-examination. They merely put up the excuse that the call was not received properly (due to low battery) and Fu had to repeatedly say “wei” and asked who it was calling. In my view, it is rather unlikely that anyone would have done that for 1.7 minutes in those circumstances! 71.Seventhly, it is Fu's testimony that she had left messages at Cheung’s voicemail asking Cheung to call back. What was the purpose of asking Cheung to call her back when she knew her mobile phone was low in battery to the extent that she could not receive any call properly? 72.Eighthly, Fenton's office was merely 10 minutes away from the Property by car. The Cabirols have gone there before on 2nd August 2003 when Ms. Leona Wong took PTA there to be amended. It is only reasonable to assume that the Cabirols had PTA with them when they attended the Property to sign the formal tenancy agreement. After all, the terms of formal tenancy agreement would have to be subject to the terms of PTA (see clause 2 of PTA) and no draft formal tenancy agreement had been supplied to the Cabirols beforehand. Fenton’s address is clearly stated on PTA [Bundle 3, p.294]. The fact that the Cabirols had chosen to wait in the heat for at least 1½ hourswithoutattempting to contact Fenton is unconvincing. 73.On the other hand, I find it reasonable for Ward (and A-Kusters) to wait at Fenton's office on 6th August 2003 notwithstanding Jungle’s stance not to sign the formal tenancy agreement. After all, it had been agreed under PTA that a formal tenancy agreement would be signed on that day. It was open to Fenton as a matter of law to refuse to accept Jungle’s anticipatory breach and continued to press for performance (see Chitty on Contracts, 29th edition (2004), para.24-021). Moreover, given the fact that Jungle had been willing to compromise in terms of the improvements to the Property, there was always the possibility that the Cabirols would change their mind. It was also reasonable for R-Kusters to standby at his office in Ningbo just in case anything concerning the transaction came up. (c4) The events after 6th August 2003 74.I also find Jungle's case concerning what happened after 6th August 2003 to be suspicious. According to Fu, she tried to contact Cheung by calling Centaline's number on 7th August 2003. A male staff of Centaline answered the call and muttered slander to her and accused the Cabirols of failing to execute the formal tenancy agreement in respect of the Property. 75.Thereafter, the Cabirols located another property on the same street as the Property through another estate agent. Cabirol entered into a provisional tenancy agreement in respect of this other property on 11th August 2003 and a tenancy agreement [Bundle 3, pp.363-368] was executed by Jungle as tenant on 11th September 2003. This tenancy commenced on 28th September 2003. 76.Fu conducted searches against Fenton at the business registration office of the Inland Revenue Department, the Companies Registry and the Land Registry. On 11th August 2003, Jungle filed its claim in the Small Claims Tribunal under SCTC 77352/2003 initially against Fenton only. The Cabirols also reported the matter to the police on 13th August 2003. On 23rd September 2003, Jungle joined Centaline into SCTC 77352/2003 as a defendant. Eventually, SCTC 77352/2003 was transferred to the District Court and became DCCJ 1099/2004. 77.The Cabirols say there was no communication between them and Fenton or Cheung between 7th August 2003 (after Fu’s alleged call to Centaline) and 13th August 2003 (when they reported the matter to the police). 78.The allegation of the Cabirols that there was no communication between them and Cheung is contradicted by the following call records in Cheung's mobile phone detail call list [Bundle 3, pp.348-349]:
79.According to Cheung, Fu arranged with her over the phone in the morning of 9th August 2003 to view other premises and an appointment was made for flat viewing at 3 pm on that day. The Cabirols were late for the appointment and so Cheung called Fu again at 1516 hours. Cheung brought up the issue of Centaline’s commission in respect of the failed leasing transaction regarding the Property with Fu after flat viewing. Fu became agitated and accused Fenton of failing to turn up at the Property on 6th August 2003. 80.Cheung's testimony is consistent with the call records. The fact of an appointment for flat viewing is also evidenced by an entry in the logbook kept by Centaline [Bundle 3, p.248 or Exhibit B] and Cheung’s own handwritten record [Bundle 3, p.285]. 81.Indeed, if Cheung had deliberately failed to turn up at the Property for completion, why did she call Fu on 6th August 2003 and 9th August 2003? 82.In any event, I consider the Cabirols' testimony that they had not contacted Cheung or Fenton unconvincing. The Cabirols say they had been eager to find a new home closer to where their daughters would be attending school and the Property suited their requirements. They had already signed PTA and paid $27,000 deposit for the leasing of the Property. They, according to Jungle's case, attended the Property on 6th August 2003 with a view to complete the transaction but no one from Fenton or Centaline turned up. Given the fact that they should still be eager to complete the transaction, it would have been reasonable for them to contact Cheung to find out why Cheung and Fenton did not turn up. There was nothing for them to rule out the possibility of some misunderstanding between Jungle and Fenton and/or Centaline. 83.However, the Cabirols did not bother to call Cheung after the couple had reached home on 6th August 2003 and had access to functioning telephones to ascertain why she (and Fenton) did not turn up at the Property earlier. They allegedly waited until the next day and only to call Centaline. The alleged conversation with someone from Centaline on 7th August 2003 must have further underlined the need to clarify with Cheung. After all, Cheung had beena trusted agent according to Cabirol. Yet, there is simply no attempt to contact Cheung to find out what hasgone wrong. This is, in my view, not consistent with their case that they were very eager to complete the deal for the sake of their daughters’ schooling. 84.Fu has emphasized in her testimony how she found out through searches at the Inland Revenue Department, the Companies Registry, the Land Registry that Fenton is not a company registered in Hong Kong. This, according to her, has confirmed the existence of a plot to defraud Jungle. 85.The Cabirols appeared to harbour no doubt that Fenton and Centaline were in the wrong and there was a conspiracy between them against Jungle. They simply assumed the deal was off and did not clarify further with Cheung or Fenton. 86.Yet, when Jungle filed its claim in the Small Claims Tribunal on 11th August 2003, only Fenton was sued [Bundle 3, pp.180-182]. This was so notwithstanding the fact that the Cabirols were apparently being chased by Centaline for commission [Bundle 3, p.353]. The Cabirols only applied to join Centaline as a defendant on 23rd September 2003. This was apparently after Centaline’s ultimatum to Jungle dated 28th August 2003 demanding for payment of commission under clause 12 of PTA within 7 days failing which legal proceedings would be instituted [Bundle 3, p.356]. (d) Conclusion 87.Jungle's case is essentially premised upon a conspiracy between Fenton and Centaline to defraud Jungle (although Jungle/Cabirol’s counsel has tried to play down this aspect in his closing submission). However, there is simply no evidence of any other offer available to Fenton (let alone a better offer) on or before 6th August 2003, so as to provide an incentive to Fenton not to complete the leasing transaction with Jungle. The testimony of Ward and Mr. Paul P.C. Fok (an estate agent from Hong Kong Property Services (Agency) Limited) that Fenton had withdrawn the Property from the market after executing PTA shows quite the opposite. 88.The fact that Fenton had offered the Property for sale for quite some long time prior to August 2003 but without success suggests that Fenton should also be eager to complete the leasing transaction with Jungle. This is confirmed by the fact that Ward and A-Kusters chose to wait at Fenton’s office on 6th August 2003 (and R-Kusters at his office in Ningbo) for completion. 89.The evidence concerning the subsequent sale of the Property by Fenton shows that the transaction only came about after the leasing transaction between Jungle and Fenton had fallen through. According to Mr. Leon Chu (an estate agent from Ricacorp Properties Limited), he only introduced the Property to the subsequent buyer in the morning of 30th August 2003. The provisional agreement for sale and purchase of the Property was signed on 17th September 2003 [Bundle 3, pp.371-371], which was followed by the formal agreement dated 8th October 2003 [Bundle 3, pp.373-393]. There is nothing to suggest that this subsequent sale was already in the horizon on or before 6th August 2003. 90.Fenton has been criticized for not disclosing the fact of the subsequent sale earlier during the proceedings in the Small Claims Tribunal. I agree with Fenton’s counsel that it was not strictly necessary for Fenton to disclose what has actually become of the Property, at least not until it has become an issue. First, Jungle was not claiming for specific performance in the Small Claims Tribunal. Secondly, Fenton was entitled to dispose of the Property under clause 9 of PTA after the leasing transaction with Jungle had fallen through. In the premises, Fenton cannot be criticized for not volunteering such information in the first place. 91.Centaline would have earned a commission in the total sum of $27,000 under clause 11 of PTA if the leasing transaction between Jungle and Fenton had completed. According to Cheung, she would have personally received $13,500. This was the incentive for Cheung and Centaline to want to complete the transaction. Cheung and Mr. Leon Chu (the estate agent acting for Fenton in the subsequent sale of the Property) have been thoroughly cross-examined as to whether Cheung and Centaline have received “back commission” in the subsequent sale. There is simply no evidence of Centaline and/or Cheung benefiting from that subsequent sale. 92.Parties have also spent a lot of effort arguing whether the circumstantial evidence in this case is consistent with fung shui being the underlying reason for the Cabirols to back out from the transaction. In my view, this is a complete red herring. The absence of any prior reference to fung shuiby the Cabirols in the transaction does not exclude the possibility of it being the underlying reason for them not to complete. 93.For the above reasons, I find Fenton/Centaline’s case on the failure to complete the leasing transaction more believable. I accept the testimony of Ward, A-Kusters, R-Kusters and Cheung and find that the agreed venue for execution of the formal tenancy agreement was Fenton’s office. Jungle did propose deferments of the commencement of the tenancy and, after such proposals had been rejected by Fenton, indicated that Jungle would not be signing the formal tenancy agreement after all. The Cabirols did not turn up at Fenton’s office on 6th August 2003 to sign the formal tenancy agreement and Jungle was therefore was in breach of PTA. Whether Centaline failed in its duties as Jungle's estate agent in the transaction? 94.Jungle’s claim against Centaline for breach of estate agent’s duties is pleaded in paragraph 16 of the Re-Amended Statement of Claim as follows [Bundle 1, p.17]:
95.Jungle's pleaded case is not supported by the evidence at trial. There was no evidence from the Cabirols that they had tried to contact Cheung after the failure to execute the formal tenancy agreement on 6th August 2003. Quite to the contrary, the detail call list of Cheung' mobile phone evidences telephone conversations on 9th August 2003. 96.In any event, given my above finding that it isthe Cabirols who failed to turn up at Fenton’s office on 6th August 2003 to sign the formal tenancy agreement, there is no question of Centaline failing to take all reasonable or proper steps to ensure the transaction was successfully completed or to exercise all due diligence in that regard. 97.I am not satisfied that Centaline has failed in its duties as estate agent of Jungle in the transaction. Whether Cabirol is liable to Centaline under EAA or PTA in the circumstances of this case? 98.I shall now turn to the main issue in DCCJ 1100/2004, namely, whether Cabirol is liable to Centaline under EAA or PTA in the circumstances of this case. (a) Admissibility of extrinsic evidence 99.In his opening, Jungle/Cabirol’s counsel identifies one of the primary issues to be whether Cabirol signed EAA in his own capacity and therefore should be held personally liable thereon. He opens his case to the effect that there was an understanding between the parties to EAA (i.e. Cabirol and Centaline) that Cabirol was signing as the appointed agent of Jungle. He submits that to the extent necessary the Court is entitled in its discretion to admit extrinsic evidence which demonstrates that Cabirol did enter into EAA as the disclosed agent of Jungle. 100.The extrinsic evidence sought to be adduced is pleaded in paragraph 2(ii) of Cabirol’s Amended Defence in DCCJ 1100/2004 [Bundle 4, p.8] as follows:
101.This has prompted Centaline’s counsel to raise the preliminary issue of admissibility of such extrinsic evidence. She relies on the following passage from Shogun Finance v. Hudson [2004] 1 Lloyds Rep 532 at 542 and argues that since EAA expressly provided Cabirol signing for himself, Cabirol is not permitted to adduce extrinsic evidence to show otherwise.
102.It appears from the pleadings filed by both Cabirol and Centaline in DCCJ 1100/2004 that they both accept that Jungle was in fact the principal of Cabirol for the leasing transaction (see paragraph 2 of Centaline’s Amended Statement of Claim [Bundle 4, p.1]; and paragraph 2(ii) of Cabirol’s Amended Defence [Bundle 4, p.7]). What divides them is whether the fact of agency was disclosed at the time of EAA and ultimately whether Cabirol incurred personal liability on EAA. 103.In my view, the starting point of the discussion is the following statement of Lord Scarman in Yeung Kai Yung v Hong Kong and Shanghai Banking Corporation [1981] AC 787 at 795:
104.“The question whether the agent is to be deemed to have contracted personally, in the case of a contract in writing other than a deed, bill of exchange, promissory note or cheque, depends upon the intention of the parties, as appearing from the terms of the written agreement as a whole, the construction of which is a matter of law.” (at Article 101 in Bowstead and Reynolds on Agency, 17th edition (2001)) 105.“Where it is clear from the terms of a written contract made by an agent that he contracted personally, extrinsic evidence is not admissible to show that, notwithstanding the terms of the contract, it was the intention of the parties that he should not be personally liable on it, because such evidence would be contradictory to the written contract.” (at Article 102(1) in Bowstead and Reynolds on Agency, 17th edition (2001)) 106.In the present case, is it clear from the terms of EAA that Cabirol contracted personally? 107.Clause 1 of EAA [Bundle 3, p.296] is in these terms:
108.EAA concludes with a section for signatures [Bundle 3, p.299]. Cabirol signed under “Signature of the Tenant” and provided his own identity card number. 109.In my view, it is clear from the above that Cabirol himself is the contracting party. Jungle’s name is not mentioned anywhere in the agreement. There is no indication from the face of EAA that Cabirol was signing as an agent for anyone. The space for “Business Registration Certificate number of the Tenant” and “Position of the Signatory” in the signature section have been left blank. 110.Under clause 1, it was Cabirol who appointed Centaline as his agent in respect of the intended leasing transaction. And Centaline owed the duties set out in clause 2 and Schedule 2 of PTA to Cabirol. 111.What is more important is the fact that under clause 3 the “Tenant” is to pay Centaline as the “Agent” the commission set out in the accompanying schedules. Having personally constituted the definition of “Tenant” under clause 1, Cabirol has assumed personal liability to pay the commission under EAA. There is nothing in the agreement to exclude his personal liability on the commission. 112.Not only is there nothing to exclude his personal liability for the commission under clause 3, Cabirol further agrees under clause 5 in Schedule 3 of EAA to pay commission to Centaline should, inter alia, his undisclosed principal enter into a binding lease with the landlord. 113.Jungle/Cabirol’s counsel seeks to justify the admission of extrinsic evidence by arguing that the identity of the contracting parties must be settled as an issue of fact with reference to all the available evidence before the question on the construction of the terms of the contract can properly arise. He prays in aid Chitty on Contracts, 29th edition (2004), Vol.1, para.12-114, Young v. Schuler (1883) 11 QBD 651, Finzel, Berry & Co v. Eastcheap Dried Fruit Co [1962] 1 Lloyd’s Rep 370 and Homburg Houtimport BV v. Agrosin Private Ltd (“The Starsin”) [2003] 1 Lloyd’s Rep 571. 114.The passage relied upon in Chitty on Contracts is entitled “Evidence of agency” and the issue under discussion there is whether extrinsic evidence may be adduced to show that one or both of the contracting parties to an agreement were agent for other persons and acted as such in making the contract so as to give the benefit or burden of the contract to their undisclosed principals. See a similar statement of law at Article 78(3) of Bowstead and Reynolds on Agency, 17th edition (2001). This is not the issue under discussion here. Neither Jungle nor Centaline is claiming against each other on the basis of EAA. 115.The cases of Young v. Schuler, Finzel, Berry & Co v. Eastcheap Dried Fruit Co and Homburg Houtimport BV v. Agrosin Private Ltd (“The Starsin”) are examples of application of the legal proposition discussed above (see the short judgments of Brett MR and Cotton LJ in Young v. Schuler; the judgment of McNair J at p.375 in Finzel, Berry & Co v. Eastcheap Dried Fruit Co; and the judgment of Lord Millett at para.175-176 in Homburg Houtimport BV v. Agrosin Private Ltd (“The Starsin”). They do not, in my view, advance Cabirol’s cause any further. 116.Jungle/Cabirol’s counsel further submits, on the authority of Danziger v. Thompson [1944] KB 654, that the description of Cabirol as “tenant” in EAA is ambiguous and extrinsic evidence is admissible to show that Cabirol in fact entered into EAA as an agent. 117.In my view, Danziger v. Thompson is another example of application of the aforementioned legal proposition. The plaintiff in that case resorted to extrinsic evidence in order to charge the principal (i.e. RJ Thompson) on the tenancy agreement which was entered into in the name of the agent (i.e. Dulcie Thompson). The issue before Lawrence J was whether such evidence would contradict the description of Dulcie Thompson in the tenancy agreement as the “tenant” of the premises. 118.I have already set out above why I consider it clear from the terms of EAA that Cabirol has contracted personally. The fact that Cabirol (who has personally constituted the definition of “Tenant” in EAA) may be acting as agent for Jungle does not mean that he is not liable for his own engagements. We have gone full circle and back at where we started, namely, the observation of Lord Scarman in Yeung Kai Yung v Hong Kong and Shanghai Banking Corporation quoted above. 119.For the above reasons, I find it clear from the terms of EAA made by Cabirol that he contracted personally. Extrinsic evidence is therefore not admissible to show that, notwithstanding the terms of the EAA, it was the intention of Cabirol and Centaline that Cabirol should not be personally liable on it. (b) In any event, Cabirol's case is not preferred 120.Even if I am wrong and should have allowed such extrinsic evidence to be adduced, I would not have believed it. (b1) Cabirol's case 121.It is the Cabirols' testimony that the first inspection of the Property was in mid-July 2003. EAA and PTA were both signed at Jungle’s office in the evening of 31st July 2003. When Cabirol was cross-examined by Centaline’s counsel, he says that he had told Cheung he would be signing in the name of Jungle. He did not realize that Cheung had prepared EAA in his own name and he simply signed it as he trusted Cheung. (b2) Centaline's case 122.It is Centaline's case that EAA and PTA were signed on different occasions. According to Cheung, EAA was signed after the Cabirols inspected the Property on 31st July 2003 and PTA was signed later in the evening at Jungle's office. 123.After the inspection on 31st July 2003, Fu told Cheung that Cabirol would be the one to sign EAA. Cheung then requested for Cabirol's identity card to fill in EAA. Cheung then explained the contents of EAA to the couple before Cabirol executed the same. She denies that she had been told at the time of EAA that Cabirol was a director of Jungle and that Jungle would be the intended tenant. (b3) Discussion 124.To start with, Cabirol's testimony in court is not consistent with his witness statement. He stated in his witness statement that he told Cheung before signing EAA that he was a director of Jungle and had been authorized to appoint Centaline as the estate agent of Jungle to rent a property in Hong Kong and it was Cheung who told him to sign EAA in his own name. He simply signed it in the belief that he was signing for and on behalf of Jungle [Bundle 2, p.104]. 125.Cabirol is an experienced businessman and he admits under cross-examination that he appreciates the difference between signing for and on behalf of a principal (thus binding the principal on the contract) and signing in his own capacity (thus incurring personal liability thereon). His testimony that he failed to notice when he signed EAA that he was not in fact signing for and on behalf of Jungle is simply incredible. That should have been quite obvious to him given the fact that Cheung expressly executed EAA for and on behalf of Centaline [Bundle 3, p.299] and he himself executed PTA as Jungle's agent with Jungle's chop on the same occasion [Bundle 3, p.295]! 126.When he was cross-examined on this, he said he simply trusted Cheung. Jungle is unable to put forward any advantage to be gained by Cheung, Centaline or Jungle for Cheung to want Cabirol to sign EAA in his personal capacity when he was executing PTA for and on behalf of Jungle. 127.Fu was also present when Cabirol executed EAA and PTA. Fu has apparently betrayed the truth when she was first asked by Jungle/Cabirol's counsel during examination-in-chief about this matter. Fu initially confirmed that Cabirol was signing for himself. She even went on to explain that Cabirol must have signed for himself because his own identity card number was put in EAA but not Jungle’s chop. On realizing that her answer was inconsistent with Cabirol’s case in DCCJ 1100/2004, she retracts and maintains that Cabirol should be signing for Jungle as he is a director and shareholder of the company. 128.Turning to Centaline's case, Cheung says EAA was signed after the Cabirols inspected the Property on 31st July 2003. The fact that the inspection was carried out on 31st July 2003 (as opposed to mid-July 2003 as alleged by the Cabirols) is confirmed by:
129.Cheung has apparently mistaken the approximate time of inspection on 31st July 2003 in her statement to the police [Bundle 5, pp.102] and her statement to the Small Claims Tribunal [Bundle 3, p.217]. She then stated that the inspection was in the morning or at about 11:15 am. This has prompted Cabirol to produce the email messages he sent out in the morning of 31st July 2003 [Bundle 5, pp.147-173] to confirm that he was at his desk in the office for the whole morning. 130.Cheung has since realized that the time references in her previous statements are incorrect. She has recounted in court how she has come to discover that the actual time of inspection should be sometime after noon by referring to the logbook kept by Centaline [Bundle 3, p.248a or Exhibit B] which was only available to her recently. I accept her explanation. 131.Cheung has also clarified in court that what she really meant in her police statement [Bundle 5, p.102] was that the Cabirols had not signed any provisional tenancy agreement (as opposed to any document) after the inspection. This explanation is consistent with what she later states in paragraph 2 of her statement for the Small Claims Tribunal [Bundle 3, p.217]. This ambiguity in the way Cheung expressed herself has not caused me to doubt Cheung's testimony. 132.Jungle/Cabirol's counsel has submitted that it is unbelievable that Cheung was unaware at the time of EAA that Cabirol was the agent for Jungle. However, it is not Cabirol's testimony that he handed over his name card to Cheung upon their first meeting as is contended. Moreover, Ward has clarified in court that she is not certain whether she had been informed by Cheung before PTA that the intended tenant is Jungle (as opposed to a family). (b4) Conclusion 133.For the above reasons, I consider Cheung's testimony more believable. I find that EAA was signed by Cabirol sometime after noon on 31st July 2003 after the inspection of the Property and PTA was signed by Cabirol later in the evening at Jungle's office. No one told Cheung prior to Cabirol executing EAA that Cabirol was a director of Jungle and that Jungle was the intended tenant of the Property. (c) Cabirol's liability 134.Cabirol signed PTA “for and on behalf of” Jungle. The legal position of Cabirol vis-à-vis PTA is clear. “In the absence of other indications, when an agent makes a contract, purporting to act solely on behalf of a disclosed principal, whether named or unnamed, he is not liable to the third party on it. Nor can he sue the third party on it.” (at Article 99 of Bowstead and Reynolds on Agency, 17th edition (2001)) 135.There is nothing in the terms of PTA to indicate that Cabirol intended to bind himself. Cabirol is therefore not personally liable on PTA. 136.It is common ground that Jungle was in fact the principal of Cabirol in the leasing transaction. I have already found that it had not been made known to Cheung at the time of EAA that Cabirol was acting as an agent for Jungle. As such, Jungle may be regarded as Cabirol’s undisclosed principal at the time of EAA. 137.Under clause 5 in Schedule 3 to EAA, Cabirol is to pay commission to Centaline if, inter alia, his undisclosed principal enters into a binding lease with the landlord. 138.I do not accept Jungle/Cabirol's counsel's submission that PTA is in the nature of an agreement to enter into a lease but not a binding lease. To start with, the submission is not consistent with paragraph 8 of Cabirol's Amended Defence in DCCJ 1100/2004 [Bundle 4, p.9]. In any event, clause 1 of PTA specifically provides that Fenton shall let and Jungle shall take the tenancy of the Property commencing from 1st September 2003. The formal tenancy agreement to be executed is subject to the terms of PTA (see clause 2 of PTA) and all essential terms of a valid lease hadalready been agreed upon in PTA. The then obligation on Jungle and Fenton was to sign a formal tenancy agreement to implement the lease for which agreement had already been reached in terms of EAA. This is further confirmed by clauses 9 and 10 of PTA, which provide for the situation when one if them fail to complete the transaction in accordance with their agreement. 139.I therefore hold that PTA is a binding lease and Cabirol is liable to Centaline in the sum of $13,500 (being half a month's rent) under clause 5 in Schedule 3 of EAA. 140.I agree with Jungle/Cabirol's counsel that the obligation to remunerate Centaline provided in the express terms of EAA should not be further widened by imposing an implied duty to not deprive Centaline of the opportunity to earn commission under a wider set of circumstances. I do not see why the implied term suggested by Centaline needs to be read into EAA. Conclusion 141.There are other minor points taken by Jungle/Cabirol's counsel. Suffice it for me to say that I have considered them all in reaching my conclusion. 142.For the above reasons:
143.On the question of costs, I see no reason why costs should not follow the event. I make the following costs order nisi:
DCCJ 1099/2004 Mr. Abraham Chan instructed by Messrs. Simmons & Simmons for Plaintiff. Mr. Samson Hung instructed by Messrs. Cheung, Chan & Chung for 1st Defendant. Miss Shannon Leung instructed by Messrs. Cheung & Choy for 2nd Defendant. DCCJ 1100/2004 Miss Shannon Leung instructed by Messrs. Cheung & Choy for Plaintiff. Mr. Abraham Chan instructed by Messrs. Simmons & Simmons for Defendant. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cases cited in this judgment
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