Lau Lung Po v. So Lan Fong
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IN THE SUPREME COURT OF HONG KONG (ORIGINAL JURISDICTION) ACTION NO. 901 OF 1971 ----------------- BETWEEN
--------------------------- Coram : Li, J. Date : 11th April, 1972. ------------------------ J U D G M E N T ------------------------ 1. This is an action for a dishonoured cheque for the sum of $30,000.00 dated 20th April, 1971. There is no dispute that the defendant is the drawer of the cheque drawn in favour of the plaintiff, and that the cheque was dishonoured on presentment for payment. The defence is one of fraud, mainly a fraudulent misrepresentation in that it is alleged that the plaintiff, on the 26th and the 31st of March, 1971, fraudulently misrepresented to the defendant that he was a co-owner of the property known as 79/81 Austin Road, Kowloon, ground floor, which property the defendant intended to purchase for herself or her nominee, and that to effect such a transaction the plaintiff’s signature was required for the assignment. 2. The defence evidence is that the defendant one day (on the 26th March) was walking along Austin Road when she observed a sign-board at the site of the property at 79/81 Austin Road. She was interested in the property and she made an enquiry from the watchman at the site. She was given a telephone number and she went away and telephoned. She was told that the price was $460,000 and she was referred to see the plaintiff at the Fuji Hotel. At that meeting the plaintiff told her that he, the plaintiff, was a co-owner of the property, had an interest in the property and that his signature was required to effect the sale. The plaintiff demanded $30,000 in addition to the purchase price as a signing fee. 3. The defendant believed and acted upon this representation and subsequently gave the plaintiff a cheque for $30,000, post-dated to the 20th April, 1971. That afternoon the defendant went back to the solicitor’s office where she was told that after a search at the Land Registry it was revealed that the plaintiff was indeed not one of the co-owners of the property in question. However, she had a doubt in her mind and she did not completely disbelieve that the plaintiff was not the co-owner. 4. She went to another solicitor’s office givinginstructions to that solicitor to prepare and make arrangementsforthe transaction to go through. She did not tell the solicitor that there was such a doubt in her mind. Then, on the 6th of April the defendant’s solicitors prepared the Deed of Assignment. The defendant executed it without raising any further questions as to ownership of the property. The papers were then sent to the plaintiff’s solicitors. The attorney of the owner, Mr.CHEUNG Kam-shing, executed the document and returned the assignment to the defendant’s solicitors. In the meanwhile the full purchase price of $460,000 had been paid. 5. Then there was some dispute about one small room which was supposed to be delineated on the plan of the Deed of Assignment. The defendant was so engrossed in this discrepancy that she did not raise the matter of the ownership of the plaintiff until the 13th or 14th of April, 1971. She arranged to see the plaintiff and she told the plaintiff that if she should find out that he, the plaintiff, was a co-owner, then she would pay the $30,000. and redeem the cheque by cash. She found out later that the plaintiff was not. Therefore, she stopped the payment of her cheque for $30,000. 6. It is also part of the defence evidence that some time later she paid the watchman at the site a total of $3,000, $2,300 of which represents the commission of 0.5 per cent.of the purchase price and $700 for the watchman’s trouble in looking after the flat for a few days. 7. The plaintiff’s version is, that when the defendant met him some time in March, 1971, he told the defendant that he was the sole agent for the selling of the property, and he gave the whole history of his relationship to the property to the defendant to the extent of showing hera document, exhibit 15. This document revealed that at some time the plaintiff was a co-owner of the property of one half share which he subsequently assigned to a Mr. Cheung Kam Shing for certain consideration. The purchaser, Mr.Cheung Kam Shing,was not then in a position to pay him the full purchase price. Therefore, Mr. Cheung signed a document inthe form of exhibit 15 to the effect that he appointed the plaintiff as the sole agent for the sale of the property, and that when the property was sold the plaintiff would recoup from the proceeds of sale to the extentof $170,000. In addition Mr. Cheung also specified that the price he wanted for the ground floor was to be $460,000 and that if there was any surplus to this price the plaintiff could obtain it would go to the plaintiff in the form of either commission or brokerage. 8. The defendant was illiterate and she did not look at the paper.However, the plaintiff denied having told the defendant that he was a co-owner and that his signature was required at all.All the defendant asked at the meeting was for the purchase price. She was told that the purchase price was $520,000 and there was some bargaining. Eventually the price was settled for $500,000. The defendant told the plaintiff that it was as good as sold. She told the plaintiff to take down the sign-board and to allow her a couple of days for her to consult her other partners or other directors of the company which evidently was the purchaser of the property. 9. A few days later the defendant arranged to meet the plaintiff at the Hoi Suen or Hoi Sze Restaurant at Granville Road, Kowloon. On that day the plaintifftold the defendant that the price should be segregated in two portions. One, the sum of $460,000 was to be paid to the solicitors of Mr. Cheung Kam Shing in consideration of the assignment of the property in question, the other $40,000 was to be paid to the plaintiff. 10. The defendant then told the plaintiff that she herself was also acting for the nominee company, the eventual purchaser, and, therefore, she also would like to share that profit of 40,000 to the extent of $10,000. Therefore, on the spot the defendant gave the plaintiff a personal cheque for the sum of $30,000. But that was not all. The defendant required the plaintiff on that occasion to sign a receipt which reads as follows:- 11. “Received from Madam So Lan Fong cheque No. KB/S1 022124 dated the 20th day of April, 1971 for the sum of HK$30,000.00 only drawn on the Malayan Banking Limited being commission, that I guarantee to complete the sale and purchase transaction of No.79 and 81, Austin Read, Groundfloor, before the said date. However if the transaction fails, Madam So has the right to stoppayment of the said cheque. This is evidence.” 12. This is dated the 1st of April, 1971. Presumably the cheque of $30,000 was post-dated to the 20th April and was handed to the plaintiff on that day. 13. Stopping here, it is pertinent to mention that this receipt was prepared by the defendant’s solicitor’s clerk, prior to her meeting the plaintiff on the 1st of April. On this receipt there is no mention of any representation on the part of the plaintiff that he is one of the co-owners and that his signature is required. All that is required of the plaintiff is that he guaranteed the transaction must go through before the 20th April, 1971 that, if the transaction does not go through within the material time, the defendant will be at liberty to stop payment of the cheque for $30,000. The plaintiff then reported the matter to the owner of the property, Mr. Cheung Kam Shing and eventually the transaction went through. 14. When the due date arrived the plaintiff presented the cheque for payment and the cheque was dishonoured. Hence this action. In addition the plaintiff calls two witnesses, namely the owner of the property Mr. Cheung Kam Shing and the watchman Mr. Cheung Dat Chee. Mr. Cheung Kam Shing gave evidence and he confirmed the contents of exhibit 15 to the effect that he, the Plaintiff, was appointed as sole agent for the sale of the property in question. He said that normally he never interfered in any prospective purchases. He always referred the matter to the plaintiff and he also confirmed that all he required for the property was $460,000, although the list price of the property was marked at $520,000, and that whatever surplus of the proceeds of sale that the plaintiff could obtain would go to the plaintiff in the form of remuneration, brokerage or commission. There is the evidence of Mr. CheungDat Chee that all he told the defendant on the material day was the telephone number of the plaintiff and asked her to get in touch with the plaintiff. He had not told her the purchase price, even though he knew it was round the vicinity of $500,000. He certainly did not tell the defendant that the purchase price or the sales price was $460,000. 15. Such are the evidence of the two parties. Perhaps I should add that having regard to the nature of the defence and having regard to the allegation of fraud, it is agreed and indeed properly agreed, that the defendant must prove her case of fraud. 16. Looking at the evidence I find that the defendant has failed to prove her case or her allegation of fraud. I come to this finding on the following grounds. 17. The most predominant factor which influences my decision is that exhibit 16 was drafted by the defendant’s solicitor’s clerk on her instructions. Had there been mention that the plaintiff was the co-owner and that his signature was essential to effect the conveyance, that document would never have been drafted on such terms. It would have put the plaintiff in the position that he must join in the conveyance or that he must convey and not merely to guarantee the transaction would be completed. 18. Secondly the defendant told me in her evidence that she is experienced in property dealings. She had that experience of 20 years and it would be difficult to imagine that such an experienced property dealer, whether she be literate or illiterate, to accept the word of a person whom she met for the first time that he was the co-owner without having a search of title before she took any step whatever, either in the form of payment of money or signing any paper. However, she said that she was so eager to clinch the deal, that she was prepared to pay a post-dated cheque to the plaintiff well before she made any search of title. Be that as it may, she was a careful woman enough to require the plaintiff to sign a document to the effect that the plaintiff would guarantee that the transaction would be completed before the 20th April and if not so, she would be entitled to stop the payment of the cheque in exhibit 16. On that very afternoon she had been informed that the plaintiff was not a co-owner. She should have beenwise enough there and then to make further enquiries before the 6th of April, 1971 when she finally signed the Deed of Agreement. 19. That is not all because on the 2nd of April, 1971 Messrs. Philip Wong & Co. sent all the papers which represented the title deeds to Lau, Chan & Ko, the defendant’s solicitors, in which was enclosed a number of documents, the very day thatshe went to Lau, Chan & Ko. Amongst the papers sent were certified copy of the Assignment Memorial number 791395, a certified copy of a document, Assignment Memorial Number 748585, Deed of Mutual Covenant, Occupation Permit and form of assignment for the execution of the defendant. All these papers should have shown clearly, and abundantly clearly, that the plaintiff was never a co-owner of the property. That should have put the defendant wise. Despite this she saw fit to allow the papers to go through and executed the assignment herself on the 6th of April. 20. Perhaps I should mention that that letter dated the 2nd of April was in exhibit 19 and that on the 6th of April her own solicitor, Mr. Peter Chan of Lau, Chan & Ko sent the executed assignment to Messrs. Philip Wong & Company for the signature of the owner, the vendor, Mr. Cheung Kam Shing, without raising any query as to whether he was the sole owner or he was merely one of the co-owners. 21. Pausing at this stage, had there been any misrepresentation, the defendant would have no difficulty in finding out whether, in fact, the plaintiff was a co-owner and whether his signature was never required for the proper assignment. Had the defendant there and then acted upon her right, she would be able to stop payment of the cheque or even refuse to complete the transaction then and delay the matter until after the 20th April. At this moment I am not concerned whether there would be a right of action on the part of the plaintiff to say that the vendor was a willing vendor, but at least it would be more consistent conduct on the part of the defendant to say that because of this misrepresentation she is not paying the $30,000, therefore, is stopping payment because of the plaintiff’s misrepresentation. That was not the conduct of the defendant. She went on with the property transaction and then subsequently stopped payment of her cheque. 22. Apart from that, I also find that the defendant’s evidence raised certain serious doubts in the following point. First of all, there was no mention whatever of the purchase price on the first meeting with the plaintiff. Now all she said was that she rang one person who told her that the purchase price was $460,000 and there was no need for her to mention the purchase price. Her conversation with the plaintiff was engrossed on the signing fee of $30,000 and all she required, in the first meeting, was a couple of days, for the plaintiff to consult his partners as to whether there should be a sale. Even on the sign-board, the property was offered for sale and the purchase price was fixed at $460,000, I do not see what the plaintiff had to consult his partners about. Why delay it a couple of days to consult his partners? The price is right, the property is up for sale, whyshould there be any further consultation? 23. The third point, as I have already mentioned, is that the defendant on her own account, said that she did not see fit to inform her solicitor, Mr. Peter Chan, eventually her solicitor for the transaction, that the plaintiff maintained himself as one of the co-owners. In her evidence the defendant admitted in so many words that at that time shewas prepared to pay $490,000 for the property, provided of course that the plaintiff was a co-owner.As an experienced person inproperty dealings, I do not see what relevance had the number of owners to any property to do with the transaction. Either she wanted to buy the property or she did not. If she did want to buy the property and the price was good enough for her, I do not see why there should be any difference in her attitude or approach towards the property because it had one owner ....or two owners. Besides, the defendant in her evidence-in-chief said that at the first meeting the plaintiff tried to show her a document, she said that she was illiterate. She did not read it and she said she trusted the plaintiff. Later in cross-examination she denied any document being shown to her. This may or may not be of assistance, because she might have meant that she did not read any document. But it comes back to this point. If the plaintiff were determined to defraud her and make fraudulent misrepresentations, I do not see why he should show her the document which gave her a whole history of his relationship to the property which would make it abundantly clear that he was not one of the co-owners. I believe what the plaintiff told the defendant was that he held the power whether the sale should be effected or not and that he had an interest in the property in the sense that he still had $170,000 outstanding from the proceeds of sale of the property, but being a layman he might have made reference to interests on property which the defendant at that time took into consideration. The Defendant was so anxious to acquire the property that she was prepared to pay any agreeable price, including the $30,000. 24. That would have been the end of the matter but there is that extra bit of evidence. The defendant said that she eventually paid $3,000 to Cheung Dat Chee, Cheung Dat Chee said that it was only tea money. That seems to be a great sum, or really rather a big sum of money for tea money for a watchman who did not do anything except to give a telephone number to the defendant. This might have the colour of commission being paid already. That is neither here nor there. One must observe that on the day of the payment of the $3,000 to Cheung Dat Chee, he was required to sign a receipt. I find that the date of the receipt is rather significant in the sense that it was dated 22nd April, two days after that cheque for $30,000 was due for payment, and one week after the defendant stopped payment of the cheque for $30,000. 25. I may have a very suspicious mind, but I would have imagined that an unsolicited payment of $3,000 two days after the date of the cheque might have given a colour that commission had been paid to a third person. The transaction was completed on the 8th or 9th of April 1971. The defendant did not see fit to pay the watchman or show her gratitude until nearly a fortnight afterwards. I do not see why, in any event, one set of commission should offset the sum of money that was demanded by the plaintiff and agreed as payable. I find as a fact, that there was no such misrepresentation, fraudulent or otherwise, on the part of the plaintiff. But on the pleadings of which the plaintiff must be boundthat it was admitted in hisreply to and the defence to the counterclaim for the return of the cheque on the part of the defendant that: 26. “the Plaintiff did inform the Defendant that he ad a share or interest in the said property and that he was in a position to procure the salethereof to the Defendant or her nominee.” 27. As I have said, I find that what I interpreted the plaintiff’s representation was that he had an interest in the property in the sense that he had an interest in a portion of the proceeds of sale. If I am wrong in this and if one takes the pleadings literally, I find that despite this he had not represented himself a co-owner or that his signature was required. I find that the defendant had not acted on such misrepresentation as alleged in the amended statement of defence and counterclaim in the sense that she was led to believe, and did believe the representation because subsequent to this representation there were so many opportunities where the defendant could and should have found out. I find that the defendant must have found out that the plaintiff was never a co-owner and that his signature was never required. What brings it to my mind is that the defendant, knowing full well at a later stage before the transaction was effected that the plaintiff was never a co-owner and his signature was never required and yet having agreed to the purchase price she was so eager to clinch the deal, she might have felt it was a fair deal. She subsequently relented and took the easy way out and stopped the payment of thecheque. 28. Under the circumstances I find for the plaintiff, and give judgment to the plaintiff for the sum of $30,000 plus interest at 8 per cent. per annum from the date of the cheque, that is the 20th of April, 1971 to the date of payment and the counterclaim is dismissed, both with costs.
R. Mills-Owens (L.S. Shum & Co.) for Plaintiff P. Fung (F. Zimmern & Co.) for Defendant. |