Centaline Property Agency Ltd v. Erawan Waterproofing Co Ltd

DCCJ 757/2005

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 757 OF 2005

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BETWEEN

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Coram : Deputy District Judge W. C. Li in Court

Date of Trial : 22^nd December 2006

Date of Handing Down Judgment : 5^th January 2007

J U D G M E N T

1.The Plaintiff was an estate agency which acted for the Defendant as vendor in the sale of a commercial property known as 10^th Floor, Grand Building, 15-18 Connaught Road Central, Hong Kong,  (“the property”) for HK$11,711.500.00 to a purchaser, RCB International Limited (“the purchaser”), introduced by the Plaintiff to the Defendant.

2.A provisional agreement for sale and purchase of the property was signed on 14 April 2004 (“the provisional ASP”) between the Defendant, the purchaser and the Plaintiff as the estate agent for both the Defendant and the purchaser, and by virtue of Clause 9 of the provisional ASP, the Defendant agreed to pay the Plaintiff HK$105,000.00 as estate agent commission on the transaction. The sale and purchase of the property was successfully concluded and the Defendant failed to pay the Plaintiff the agreed commission of HK$105,000.00. The Plaintiff therefore brought this action against the Defendant for the payment of the commission money of $105,000.00 which was long overdue and outstanding.

3.The Defendant in its Defence stated that  (1) they suspected the Plaintiff to be negligent in that the Plaintiff provided false and misleading information on the prices of properties sold in the month of April 2004 and based on the false and misleading information provided by the Plaintiff, the Defendant made a wrong decision to sell the property at HK$11,711,500.00;  (2) the Plaintiff had provided insufficient and unsatisfactory services to the Defendant in that the Plaintiff had not provided relevant valuation report for the property and did not give the Defendant professional opinion of the reasonable market value of the property at the time; (3) the Plaintiff employed “forceful and pushy convincing attitude” and pressed the Defendant to sell the property; and (4) the Plaintiff failed to keep their promise to provide free agency service to the Defendant in renting an office premises after the sale of the property.

4.The Defendant did not provide particulars as to how the information on the recent transaction prices of properties sold in the area provided by the Plaintiff was false and misleading. Yeung Fai Shing Kelvin (“Mr. Yeung”), an estate agent employed by the Plaintiff who handled this transaction, testified that a Ms. Chow of the Defendant asked him to provide information on the transaction prices of recent properties sold in the area. He provided Ms. Chow with a list of properties that were sold around the period in April 2004. Mr. Yeung testified that he obtained the information from the computer record of the Plaintiff, some were transactions handled by the Plaintiff itself, and this information from the Plaintiff’s computer record were derived from records obtained or verified from the government Lands Office. Mr. Yeung had also orally obtained a valuation of the property of the Defendant from the Bank of China (“BOC”) and BOC then valued the property of the Defendant at $9.5 million. Mr. Yeung had informed Ms. Chow of the BOC valuation of the property.

5.A Ms. Flora Wai of the Defendant (“Ms. Wai”) telephoned the Plaintiff in about February 2004 and instructed the Plaintiff to sell the property for $17 million. In about March 2004, Ms. Wai lowered the asking price to $15 million and in early April 2004, Ms. Wai further reduced the asking price to $13 million. The Plaintiff arranged the purchaser to view the property and a series of negotiation over the price between the purchaser and the Defendant then occurred. The Plaintiff acted for both the purchaser and the Defendant. The price negotiated was in the range between $2,900 to $3,000 per square feet of the property. It was at this stage that Ms. Wai asked the Plaintiff to provide information of recent transactions of commercial properties in the Central and Sheung Wan districts. The Plaintiff provided information based on Lands Office record of recent transactions of properties sold at Granding Building, Euro Trade Centre, Far East Consortium Building, China Insurance Group Building and Wing On House as requested by the Defendant.

6.On 14 April 2004, the purchaser signed the provisional ASP and offered to buy the property from the Defendant at $2,950 per square feet, i.e. at the purchase price of $11,711,500.00, and provided a deposit cheque for $450,000. 00. Mr. Patrick Wong and Mr. Yeung of the Plaintiff personally delivered the signed provisional ASP and the cheque to Ms. Chow of the Defendant. Ms. Chow of the Defendant did not show disagreement to the price offered by the purchaser but told the Plaintiff that the Defendant for that price would only pay the Plaintiff a commission of $20,000.00. Mr. Patrick Wong disagreed to reduce the Plaintiff ‘s commission of 1% of the purchase price.  Ms. Chow then asked Mr. Patrick Wong to leave the signed provisional ASP and the purchaser’s deposit cheque with her. Mr. Patrick Wong again refused and had wanted to leave the Defendant’s office. Ms. Chow then suggested that instead of 1% commission, the Defendant would pay the Plaintiff a commission of $105,000.00. The Defendant’s offer of $105,000.00 commission was accepted by Mr. Patrick Wong. Ms. Chow then signed the provisional ASP for and on behalf of the Defendant and accepted the purchaser’s deposit cheque.  It was clearly shown on the provisional ASP document that the commission of 1% of the purchase price was amended to $105,000.00.

7.Between mid-April to July 2004, the Plaintiff had successfully introduced the Defendant to rent an office premises at 25^th Floor, Tung Wai Commercial Building, No. 109-111 Gloucester Road, Wanchai, Hong Kong, and Ms. Chow of the Defendant had signed a commission agreement with the Plaintiff to pay the Plaintiff $30,000.00 as commission for this rental agreement. The Defendant had failed to pay the commission to the Plaintiff and the Plaintiff sued the Defendant at the Small Claims Tribunal. The Defendant eventually settled the Plaintiff’s claim at the Small Claims Tribunal by paying the outstanding sum of $30,000.00 by 2 instalments.

8.The Plaintiff had been appointed by the Defendant to act as its agent to sell the property. The Defendant made the decision to sell the property at a price after negotiation with the purchaser. It was purely a matter of offer and acceptance between the purchaser and the Defendant. As for the Plaintiff, they acted as the estate agent who introduced a purchaser to the Defendant and when the contract was made between the Defendant and the purchaser, the Plaintiff would be entitled to the commission the Defendant had agreed to pay on the transaction.  There was no evidence that the Plaintiff had provided false and misleading information. To the contrary, the Plaintiff, as with most estate agents, provided information of recent transactions based on Lands Office record. The Defendant’s allegation of false and misleading information appeared to be no more than an excuse not to pay the commission to the Plaintiff. The compliant that the Plaintiff had not provided sufficient and satisfactory services to the Defendant was also unfounded. The Plaintiff was not in a position to offer “professional opinion of the reasonable market value” of the property at the time. The Defendant had at first put the property up for sale for $17 million and eventually reduced the asking price to $13 million. The purchaser further bargained and offered the amount of  $11,711,500.00. It was entirely up to the Defendant’s own freewill to accept or refuse the offer. It was upon the Defendant’s request that the Plaintiff had provided information of recent transactions.  This showed that the Defendant had made comparisons and had given due consideration whether or not to accept the purchaser’s offer. As to professional valuation of the property, that was a matter entirely for the Defendant whether or not to engage a professional valuer and to satisfy itself of the price they would want to sell the property. The Defendant’s allegation that the Plaintiff had pressed them to sell at a lower price did not appear true either. From the evidence, the Plaintiff was pressed by the Defendant to lower their estate agent commission. The Defendant could have refused the purchaser’s offer and refused to sell. Instead the Defendant had wanted to pay less commission and did manage to lower the commission payable to $105,000.00.  As for the 4^th ground in the Defendant’s Defence, there was not a grain of truth in its allegation that the Plaintiff had offered to provide free services to the Defendant to rent an office. The evidence appeared quite to the contrary. The Plaintiff had obtained a written commission agreement from the Defendant and the Plaintiff had enforced the commission agreement through the Small Claims Tribunal. In the present claim, the Defendant had also admitted liability when they asked the Plaintiff to allow them to pay the outstanding commission to the Plaintiff by instalments. The Plaintiff had refused the Defendant’s request. I see no reason why the Plaintiff should not have judgment in their favour to have the outstanding commission paid forthwith.

9.The Plaintiff was entitled to the commission they had earned and the Defendant did not have a defence to the action. I therefore enter judgment for the Plaintiff in the sum of HK$105,000.00 against the Defendant together with interest at judgment rate from the date of the writ, i.e. 21 February 2005, to the date of handing down of this judgment, and also interest at judgment rate from date of handing down to the date of full satisfaction of the judgment sums to the Plaintiff. I also order the Defendant to pay the Plaintiff’s costs of this action, to be taxed if not agreed, with certificate for counsel.

Representation:

Miss Shannon Leung was instructed by Messrs. Cheung & Choy for the Plaintiff.

The Defendant was not legally represented and was absent from the trial.