CENTALINE PROPERTY AGENCY LTD v. TONEGAWA YOSHINOBU AND ANOTHER

DCCJ 4201/2005

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 4201 OF 2005

------------------------------

------------------------------

------------------------------

J U D G M E N T

------------------------------

1.  For reasons stated here, I dismiss both the Plaintiff’s claim and the Defendants’ counterclaim. Each party should bear its own costs. Subject to any existing cost order, I make an order nisi to that effect.

2.  I start by adumbrating the case of each party.

3.  Plaintiff’s case

The Plaintiff claims against the Defendants for commission / liquidated damages in the sum of $140,000. The Plaintiff’s case is that it acted as (estate) agent for the Defendants in the sale of their property viz. House No. 105, Casa Marina II, 1 Lo Ping Road, Tai Po, New Territories (“House 105”). On 1^st October 2004, the Defendants entered into a Provisional Agreement for Sale and Purchase of House 105 (“the Provisional Agreement”, Hearing Bundle pages 72 and 73). The Defendants, however, backed out of the deal and sold House 105 to another Purchaser, Mr. CHOW Hung (“Mr. CHOW”) by entering into agreement with Mr. CHOW on 18^th of the same month.

The claim for commission is pursuant to Clause 4 and Schedule 2 of the Agency Agreement the Defendants entered into with the Plaintiff (“the Defendants’ Agency Agreement”, Hearing Bundle page 68 to 71) as well as Clause 9 of the Provisional Agreement. The alternative claim for liquidated damages is pursuant to Clause 10 of the Provisional Agreement.

(Clause 9 of the Provisional Agreement did not specify the amount of commission to be paid by the Defendants to the Plaintiff. There is merely reference to “as stipulated in Form 3 KFR3000463(1)” (“the Reference”). There was no evidence from the Plaintiff to link the Reference to the Defendants’ Agency Agreement. Paragraph 7A of the Amended Statement of Claim pleaded that Clause 9 provided “inter alia, that the Plaintiff shall be entitled to receive from the Defendants HK$140,000.00 being the commission on or before 28 October 2004.” This was not traversed by the Defendants in their pleadings. The Defendants must be taken to have admitted that that is the effect of Clause 9 (see Order 18 rule 13 of the Rules of District Court, Cap.336). In any event, Defence at trial did not take any point regarding the Reference. I note that paragraph 11 of the 2^nd Defendant’s witness statement, Hearing Bundle page 59, referred to the Defendants’ Agency Agreement as bearing the Reference. I do not think Defence can dispute that Clause 9 stipulated as the Plaintiff maintained).

4.  At all material times, Miss Anita YANG (“ANITA”) and Mr. Nelson LUI (“NELSON”) were estate agents working for the Plaintiff at different branch offices.

5.  ANITA came to know Ms. KWONG Yim Wah (“Ms. KWONG”) through handling real estate transactions as her agent. Ms. KWONG was married to a Mr. CHUI.

(During trial, Ms. KWONG had been referred to as Mrs. Chui. In the Defence, Ms. KWONG was referred to as Mr. Kwong Yim Wah/ Mr. Kwong. This mistake was repeated in the witness statement of the 2^nd Defendant (“D2”) (see paragraph 6, Hearing Bundle page 59).

6.  From the Plaintiff’s computer records, NELSON learned that the Defendants were offering to sell House 105 for $7.8 Million. On 1 September 2004, NELSON telephoned D2 and discussed with her House 105, in particular the price. NELSON mentioned, inter alia, that House 106 was sold for $7.93 Million to which D2 replied that she was aware of it. NELSON also mentioned that House 63 and 74 had been sold for $5.9 Million and $5.6 Million respectively.

7.  NELSON contacted ANITA and asked if she had any potential purchaser. ANITA contacted Ms. KWONG who showed interest.

8.  NELSON arranged with D2 for viewing House 105. Only ANITA, NELSON and Mr. CHUI attended the 1^st viewing. The 3 of them together with Ms. KWONG attended the 2^nd one.huiHHHh During the 2^nd viewing, Ms. KWONG indicated that Mr. CHUI liked the house. Mr. CHUI mentioned that he wanted House 105 for his own occupation.

9.  On 28 September Ms. KWONG offered to purchase House 105 for $6.7 Million with completion in 6 months. When NELSON relayed this offer to D2, D2 rejected it and suggested either a) $6.8 Million with completion in 2.5 months or b) $7 Million with completion in 4.5 months. NELSON asked whether the Defendants would pay 2% commission (instead of the usual 1%) if the price of $7 Million were secured. D2 agreed to this.

10.  Over the telephone, NELSON had told D2 that $7 Million was the highest price House 105 could fetch in the market.

11.  On 30 September Mr. CHUI indicated $7 Million was acceptable but requested a 6-month completion period. When NELSON communicated this to D2, D2 rejected it immediately and insisted on $7 Million with a 4.5- month completion period. NELSON conveyed this to Mr. CHUI.

12.  On 1 October at around noon, ANITA and NELSON met Mr. CHUI and Ms. KWONG at the Club House of Parc Versailles. NELSON produced a clean copy of the Provisional Agreement and filled it in in front of Mr. CHUI and Ms. KWONG. “Some of the clauses in the…Agreement were left blank, in particular the name of the 1^st Defendant (“D1”), the identity card numbers of the Defendants and the completion date of the transaction…” (witness statement of NELSON, paragraph 20, Hearing Bundle page 55). NELSON did not know the correct name of D1and the Defendants’ identity card numbers. He left out the completion date because although Mr. CHUI and Ms. KWONG were agreeable to the 4.5-month completion period, they requested NELSON to try negotiating for 6 months.

13.  Ms. KWONG was named purchaser in the Provisional Agreement. She gave a cheque for $150,000 (“the Cheque”) to NELSON for the initial deposit.

14.  At 3 p.m. that same afternoon, ANITA and NELSON met the 2 Defendants at the Club House of Phase I, Casa Marina. The 2 Defendants were living in House 37 (“House 37”) of this Phase I. They had purchased House 37 in December 2003 using the services of the Plaintiff.

15.   NELSON asked the Defendants to consider extending the completion period. D1 became angry and scolded NELSON. The 2 Defendants stormed off towards their car in the car park. ANITA and NELSON followed them. D2 issued the ultimatum of $7 Million with a 4.5 month completion period. ANITA immediately telephoned Mr. CHUI who confirmed his acceptance of those terms.

16.  NELSON took out the Defendants’ Agency Agreement with the intention of completing it and explaining it to the Defendants as he went along. D2, however, took it from NELSON saying that no explanation was necessary as she would look at it on her own. “She further endorsed her named (sic) on it and passed it to the 1^st Defendant where he did the same”  (witness statement of NELSON, paragraph 23, Hearing Bundle page 61).

17.  NELSON then produced the Provisional Agreement, filled in the commencement date, and started to explain its contents. D2 stopped NELSON from what he was doing and said she would read the Provisional Agreement herself. She took the Provisional Agreement from NELSON. She filled in the name of D1 and the Defendants’ identity card/ passport numbers. The 2 Defendants then executed the Provisional Agreement. 

18.  NELSON gave a copy of the (executed) Provisional Agreement as well as the Cheque to D2. The Defendants drove off in their car.

19.  Defence Case

D1 and D2 were husband and wife. D2 had once rented a domestic unit through NELSON who was then working for an Estate Agency other than the Plaintiff.

20.  One day outside a supermarket, D2 met NELSON and learned that NELSON had switched to working for the Plaintiff. D2 appointed NELSON agent to sell House 105. D2 trusted NELSON and told him so. D2 asked NELSON the price for House 105. NELSON replied that the highest was $7 Million.

21.  In late September 2004, there was 1 viewing of House 105 arranged by NELSON.

22.  There were a number of telephone exchanges between NELSON and D2 on the morning of 1 October 2004. NELSON said that Ms. KWONG offered to purchase at $6.7 Million. NELSON said that that was a very good price and should be accepted. D2 replied that it was too low. NELSON said he would try to get the price to $7 Million but asked for 2% commission (instead of the usual 1%) because of the extra effort he had to put in. D2 was not willing to pay 2%. However, NELSON said that originally the price was $6.7Million, now it would be $7 Million, the 2% commission would be shouldered by the purchaser. D2 said that that would not be so good. NELSON asked D2 to help out (as I understand it, to help NELSON get the extra 1% commission). NELSON indicated that the purchaser needed and wanted the house to live in with his friends and that 3% commission would not be surprising. D2 thought the purchaser liked the house very much (hence, as I understand it, she believed the $7 Million price could be secured), she therefore agreed (see also paragraph 34 below).

During the 2^nd of such telephone conversations, the price of $7 Million was agreed. The completion period was agreed during the 3^rd or 4^th telephone calls.

23.  In the afternoon of the same day, the Defendants met NELSON (and ANITA). D1 was Japanese and relied on the interpretation of her wife D2 to understand NELSON. NELSON enquired whether the Defendants would reduce the price to $6.95 Million. This made D1 angry. The Defendants walked away to return to their car in the car park. NELSON followed and ultimately said $7 Million was fine. NELSON went through the Provisional Agreement with D2. The Defendants then signed the Provisional Agreement.

24.  Sometime after 5 p.m. that same afternoon, NELSON went to House 37 and produced the Defendants’ Agency Agreement. D2 saw NELSON filling in the Defendants’ Agency Agreement. NELSON told D2 that preparing the Defendants’ Agency Agreement was just routine and that it was not important. NELSON did not explain its contents. He told D2 that dates mentioned in the Defendants’ Agency Agreement  were randomly selected. Since the Provisional Agreement had already been executed and D2 trusted NELSON, she signed the Defendants’ Agency Agreement. D2 then took the Defendants’ Agency Agreement to D1 (who was then in another part of the house) for him to sign.

25.   An agent of Midland Realty International Limited (“Midland Agent”) telephoned D2 the next day asking to view House 105. D2 mentioned that it had been sold for $7 Million. The Midland Agent said the price was too low and that her client would have gladly paid $7.5 Million.

26.  On 18 October, the Midland Agent successfully effected sale of House 105 by the Defendants to Mr. CHOW at the price of $7.68 Million (see Hearing Bundle pages 74 and 75).

27.  The Defendants refunded to Ms. KWONG the amount of the Cheque and paid her a further sum of $150,000 as liquidated damages.

28.  The sale to Ms. KWONG was for $7 Million and the sale to Mr. CHOW was for $7.68 Million. The Defendants deny liability to the Plaintiff mainly on the ground of breach of fiduciary duty, negligence and misrepresentation of NELSON in stating the highest price of House 105 as $7 Million. There was a further allegation that NELSON told D2 that the purchaser would occupy House 105 as residence. The truth, according to Defence, was that Ms. KWONG was buying for speculation purposes. This latter ground was not pursued during trial to any extent worthy of note. I cannot find any sufficient evidence to prove that Ms. KWONG was buying for speculation. On the contrary, evidence from the Plaintiff (which I accept) indicated that Ms. KWONG and her family would live in House 105. There was no evidence to suggest that sale by the Defendants would be influenced by whether the purchaser was a speculator. On the evidence that I accept, my conclusion is that the Defendants’ only concern was the amount of money they were getting for House 105. This further allegation can be consigned to the oubliette.

29.  Matters considered

Subject to matters herein stated, I accept the evidence called by the Plaintiff. It is clear that NELSON is the key witness. I was impressed when he, without hesitation, admitted that he told D2 $7 Million was the highest price for House 105. This was the gravamen of the Defendants against him and I have no doubt that NELSON understood so much. I was all the more impressed when he went on to concede that he could have been wrong in this his view on the price. ANITA’s evidence to a large extent corroborated that of NELSON. I note that ANITA has already left the employ of the Plaintiff. I had the opportunity to observe ANITA when she gave evidence. I am sure that she was trying her best to recount truthfully and impartially what happened.

30.  Mr. Simon LI (“SIMON”) was the supervisor of NELSON. Both the Plaintiff and Defence agree that there was some unpleasantry between the Plaintiff and D2 in the past. A Mr. Peter Chan of the Plaintiff had handled D2’s purchase of her residence i.e. House 37. D2 alleged that this Mr. Chan falsely assured her the house was new and had not been lived in. The Plaintiff’s stance was that D2 bought the house “as is”. In any event, D2 had at least lodged formal complaint to the Plaintiff against Mr. Chan (and, I tend to think, expressed her utter dissatisfaction with the Plaintiff as well). SIMON supervised NELSON’s dealing with the Defendants. He was the one who signed on behalf of the Plaintiff in the Defendants’ Agency Agreement. I accept that SIMON recalled the previous unhappy experience with D2 over House 37. In all probabilities, the Plaintiff must have proceeded with particular caution when dealing with D2 (and D1) on this occasion. The Plaintiff must also have realised that the Defendants’ Agency Agreement was its ticket to commission. I have no doubt that the Plaintiff (SIMON and NELSON) would have insisted on the Defendants signing the Defendants’ Agency Agreement before their signing the Provisional Agreement. D2’s evidence was that after execution of the Provisional Agreement and only later on in the early evening did NELSON rather nonchalantly present the Defendants’ Agency Agreement for the Defendants’ execution. I find this incredible and reject it without hesitation. This is particularly when D2 said to the effect that she trusted and believed NELSON when NELSON said the Defendants’ Agency Agreement was just a matter of routine and was of no consequence. Common sense as well as her previous experience in renting/ purchasing real property through the Plaintiff would have told her otherwise.

31.  Mr. Ian CULLEN (“Mr. CULLEN”) and Mr. Kenneth CHEUNG (“Mr. CHEUNG”), both surveyors, were the expert witnesses respectively called by the Plaintiff and the Defendants on the valuation of House 105 as at 1 and 18 October 2004. Their reports are found in the Hearing Bundle: Mr. CULLEN’s is at page 152 to 212 and 212-19 to 212-22; Mr. CHEUNG’s is at page 105 to 150. As I understand it, the purport of calling Mr. CULLEN was to establish (for the Plaintiff) that the price of $7 Million on 1 October was about right and the price of $7.68 Million that Mr. CHOW contracted for on 18 October was excessive; the purport of calling Mr. CHEUNG was to show that the price of $7 Million was way off the mark and the price of $7.68 Million was close to bull’s eye. What I thought would be a battle of the experts just fizzled out. Anyone expecting fireworks was bound to be disappointed.

32.  The main difference between the approach of Mr. CULLEN and Mr. CHEUNG was their treatment of the elements of lack of privacy and view for House 105. Mr. CHEUNG did not consider these worthy of the weight ascribed them by Mr. CULLEN. There is really no need to go into the niceties of how and why the 2 experts arrived at their conclusions on valuation. Mr. CHEUNG said in evidence that valuation was “both a science and an art” and that each surveyor was entitled to his own views. Mr. CHEUNG stated that he could not say Mr. CULLEN was wrong and hoped that Mr. CULLEN would not say that he (Mr. CHEUNG) was wrong. There is thus no evidence to prove that the price of $7 Million was excessively low and that, assuming there was some duty to indicate/ advise the Defendants on the value of House 105, NELSON failed in this duty or had made some misrepresentation. As mentioned earlier, Mr. CULLEN maintained that $7 Million for House 105 on 1 October was about right. I can see no reason to reject this opinion (or his opinion that Mr. CHOW had paid too much). 

33.  I do not consider the mere fact that House 105 was sold on 18 October at $7.68 Million a litmus test that it was undervalued on 1 October. I also do not consider the fact that Mr. CHOW had been unsuccessful in selling House 105 for some 2 years any indicating that he had paid through his nose for it. Such are the vicissitudes of life!

34.  I refer to paragraph 22 above. I think what D2 meant, inter alia, was this: NELSON said that the Defendants would be getting an extra $300,000 for House 105 ($6.7 Million increased to $7 Million), the additional 1% commission in the sum of $70,000 that the Defendants needed to pay would come out of this extra $300,000 and thus in effect be shouldered by the purchaser. This may hold true and D2 may be so persuaded if the Defendants were prepared to sell at $6.7 Million – the $300,00 will thus be a windfall, thanks to the extra effort of NELSON. The Defendants’ case, however, is that they were not willing to sell at $6.7 Million. Furthermore, NELSON had indicated that the highest price of House 105 was $7 Million. D2 must have at least understood that any amount in excess of $6.7 Million and up to $7 Million would not be any windfall for the Defendants. Hence, any commission to be paid in addition to the usual 1% would come out of the Defendants’ pockets and not in effect be shouldered by the purchaser. There was no evidence that the Defendants were looking for a quick sale so that they were prepared to receive less than what they thought they should get. In any event, since NELSON indicated that House 105 could fetch $7 Million (its highest price), did D2 really not consider that NELSON (as agent for the Defendants) was already bound to try to secure this highest price for the Defendants? D2 is no simpleton. I think if NELSON did speak as alleged, D2 would have immediately identified the sophistry – and given NELSON a piece of her mind!  

35.  D2 tried to give the impression that she trusted and relied on NELSON. She trusted and relied on him in relation to the worth of House 105 and the nature/contents of the Defendants’ Agency Agreement. What was the basis for such trust and reliance? It was just that NELSON had satisfactorily helped her rent domestic premises some years ago. This is a tenuous basis by any standard. On this occasion, the Defendants were disposing of a substantial asset. D2 did not appeal as naïve or gullible. I do not accept that D2 had so trusted and relied on NELSON. 

36.  D2 said that shortly before the Defendants were supposed to execute the Provisional Agreement, NELSON asked them to reduce the price to $6.95 Million. NELSON/ the Plaintiff would only get the extra 1% commission of $70,000 if and when the price reached the $7 Million figure. Why would NELSON ask for this reduction? Was NELSON willing to forgo the extra $70,000? Was Ms. KWONG going to compensate NELSON for this $70,000 because NELSON helped her save $50,000? On Defence case, the Defendants’ Agency Agreement had not been signed. Did NELSON expect the Defendants to still pay him the extra commission when the price was below $7 Million and the Defendants would be getting $50,000 less?

37.   I prefer and accept the evidence of the Plaintiff over that of the Defence. It is clear that the Defendant’s counterclaim must fail. However, it does not follow that the Plaintiff must succeed.

38.  It is beyond dispute that the Plaintiff acted as agent for both Ms. KWONG and the Defendants in the sale and purchase of House 105.

39.  Certain principles of law pertinent to such dual or double agency were summarised and reiterated by Hunter JA delivering the leading judgment for the local Court of Appeal in Richard Ellis Ltd. v Van Hong-tuon (1988) 1 HKLR 169. I can do no better than reproduce here an extract from that judgment:

‘	…It is convenient to take as one’s starting point on the law, article 46 in the 15th edition of Bowstead on Agency, which reads:
	“	No agent may enter into any transaction in which his personal interest might conflict with his duty to his principal, unless the principal, with full knowledge of all the material circumstances and of the exact nature and extent of the agent’s interest, consents.”
	That is the basic premise, which has been very clearly and firmly established for many years. One has only to look at the decision in Parker v McKenna (1874) LR 10 Ch App 96 where there are two oft-quoted passages in the judgments. First Lord Cairns, L. C. at p. 118:
	“	Now the rule in this Court, as I understand it, as to agents, is not a technical or arbitrary rule. It is a rule founded upon the highest and truest principles of morality. No man can in this Court, acting as an agent, be allowed to put himself into a position in which his interest and his duty will be in conflict.”
	Even blunter was Sir William James, L. J.:
	“	It appears to me very important that we should concur in laying down again and again the general principle that in this Court no agent in the course of his agency, in the matter of his agency, can be allowed to make any profit without the knowledge and consent of his principal; that that rule is an inflexible rule, and must be applied inexorably by this Court, which is not entitled, in my judgment, to receive evidence, or suggestion, or argument as to whether the principal did or did not suffer any injury in fact by reason of the dealing of the agent; for the safety of mankind requires that no agent shall be able to put his principal to the danger of such an inquiry as that.”
	The application of this general rule to estate agency in particular was considered on three occasions…by the Court of Appeal in England…the second  Fullwood v Hurley (1928) 1 KB 498…
	…Lord Hanworth, M. R. summarised his judgment in this way at p.502:
	“	It cannot be stated too plainly that an agent must not accept commissions from both sides, that if there are two commissions that are to be received it must be on the basis of the actual work being done for both parties with the assent of both parties after full knowledge. If such knowledge is afforded and it is made plain what position the agent occupies, then it is possible for the agent to act between the parties, but if and so long as the agent is the agent of one party, he cannot engage to become the agent of another principal without the leave of the first principal with whom he has originally established his agency.”
	He pointed out that such leave would need “strong and cogent” evidence from the first principal…
	Scrutton, L. J. on the same page in a much-quoted observation said this:
	“	No agent who has accepted an employment from one principal can in law accept an engagement inconsistent with his duty to the first principal from a second principal, unless he makes the fullest disclosure to each principal of his interest, and obtains the consent of each principal to the double employment.”
	… Megaw, J. in Anglo-African Merchants Ltd. v Bayley (1970) 1 QB 311…(I)n respect of the alleged defence of custom and practice...said this:
	“	A custom will not be upheld by the courts of this country if it contradicts the vital principle that an agent may not at the same time serve two masters – two principals – in actual or potential opposition to one another: unless, indeed, he has the explicit, informed, consent of both principals.”
	…An agent who is contractually bound to one principal has to show performance of his Fullwood duty before he “engages” or enters into the second contract. Such proof is essential to the legal validity of the contract…The Plaintiff has to show that he has performed his fiduciary duty. There is no onus on a defendant, who knows nothing whatever of the true facts, to plead or prove breach of fiduciary duty...’

(Note:	a)	The words of Lord Hanworth  M. R. and Scrutton L. J. are from the case of  Fullwood (supra);
	b)	The quote from Megaw J. is not presented here in the way they were referred to by Hunter J.A. However, this does not detract from the points made; and
	c)	On the point of pleadings, Silke V.P. in Richard Ellis Ltd., supra, at pages 174 and 175 said: “In my view it is not required to aver in the pleading that the double agent had done everything that is necessary to allow him to succeed in claiming a commission or reward from his clients. It is necessary to his success that he shows himself to have acted within the terms of his duty, leading evidence to that effect, whether or not the other side takes the point.”)

40.  In order to emerge victors, the Plaintiff has to satisfy me on “strong and cogent evidence” that it had the “explicit and informed consent” of a) Ms. KWONG and b) the Defendants to act as agent for both of them in the sale and purchase of House 105. “Informed consent” means consent with “full knowledge of all the material circumstances and of the exact nature and extent of the agent’s interest”.

41.   Ms. KWONG did not give evidence. There was no evidence from any witness called for the Plaintiff that anyone had explained to Ms. KWONG that the Plaintiff also acted as agent for the Defendants or that the Plaintiff would get double commission from the Defendants if it could get Ms. KWONG to pay $7 Million for House 105 (“the Double Commission point”).

42.  The Plaintiff had acted for Ms. KWONG in her purchase in September 2004 of House 59 Casa Marina Phase II. The Agency Agreement then signed by Ms. KWONG (“KWONG’s 1^st Agency Agreement”) can be found in Hearing Bundle page 71-1 to 71-4. The Agency Agreement between Ms. KWONG and the Plaintiff in relation to House 105 (“KWONG’s 2^nd Agency Agreement”), if there ever was one, was not produced during trial. Even if produced and assuming it is contained “all the material circumstances and of the exact nature and extent of the agent’s interest”, there will need to be evidence to explain the circumstances Ms. KWONG came to sign it to prove her “explicit and informed consent”.

43.  Schedule 1 of KWONG’s 1^st Agency Agreement stated that vendor and purchaser had each to pay 1% commission to the Plaintiff. There was indication that the Plaintiff was “double agent / may act as double agent” (see Hearing Bundle page 71-2). Even assuming that disclosure of double agency had thus been sufficiently made, I do not think the Plaintiff can point to KWONG’s 1^st Agency Agreement and ask the Court to infer that in the present instance Ms. KWONG must have given her “explicit and informed consent”.

44.  I have already referred to Clause 9 of the Provisional Agreement (see last sub-paragraph in paragraph 3 above). Under what circumstances did Ms. KWONG sign the Provisional Agreement? Was the Reference explained to her, the vital aspect being the Double Commission point?

45.  KWONG’s 1^st Agency Agreement was dated 27 September 2004. In all probabilities, it is a standard form used by the Plaintiff and the same sort of form was used for KWONG’s 2^nd Agency Agreement (assuming there was one).

Clause 2 in Schedule 3 of KWONG’s 1^st Agency Agreement (Hearing Bundle page 71-2) provided to the effect that if the sale/purchase transaction failed to complete without the fault of the purchaser, the purchaser would not have to pay any commission.

Clause 10 of the Provisional Agreement provided to the effect that if the sale/purchase failed to complete due to the fault of either Vendor or Purchaser, the party at fault would need to pay liquidated damages to the Plaintiff in the sum of $140,000. Under Clause 9 of the Provisional Agreement, Ms. KWONG was bound to pay commission of $70,000.

Ms. KWONG can be forgiven for thinking that the sum of liquidated damages represented the total commission the Plaintiff would have received had there been completion - $70,000 represented the commission the defaulting party had promised to pay and the other $70,000 represented the commission the innocent party was released from paying but which the Plaintiff demanded compensation from the party at fault. In other words, purchaser and vendor were each paying the same 1% commission of $70,000. Such considerations cause me to be intransigent and even ruthless in my insistence on being satisfied that Ms. KWONG understood clearly the Double Commission point and consented to the Plaintiff acting as agent for both herself and the Defendants. Suffice to say that I am nowhere near being so satisfied.

One is entitled to be suspicious of why Clause 9 merely stated the Reference and the sum of liquidated damages was set at $140,000 (not fully catering for the situation of the Defendants being the defaulting party i.e. liquidated damages in the sum of $210,000 – the commission of $140,000 the Defendants had contracted to pay and the commission of $70,000 Ms. KWONG had contracted to pay). These aspects were, however, not explored at trial. I do not think it fair to deal with them beyond the manner expressed here.

46. The Plaintiff has failed miserably to prove “explicit and informed consent” from Ms. KWONG. This is already reason enough to dismiss the Plaintiff’s claim. I will, however, continue to look into proving such consent from the Defendants.

47. NELSON said in evidence that the Defendants knew he was acting as agent for the purchaser. Such bare assertion can never do. It was argued that D2 knew because she was aware of NELSON arranging and taking people to view House 105. NELSON’s action in this regard is at best equivocal as to whether he also acted as agent for the (potential) purchaser. The Plaintiff’s evidence was that NELSON was going to complete and explain the Defendants’ Agency Agreement including his agency for Ms. KWONG. D2, however, snatched away the Defendants’ Agency Agreement and said she would read it herself. I do not accept that the legal requirement is satisfied by NELSON standing aside and allowing D2 to find out for herself the double agency. The “explicit and informed consent” of the Defendants is paramount. There was nothing to prevent NELSON from orally telling D2 at any time the fact and particulars of his also being agent for Ms. KWONG. The same point can be made in response to the argument that D2 snatched away and said she would read by herself the Provisional Agreement (Clause 9 of which indicated Ms. KWONG was bound to pay $70,000 commission to the Plaintiff).

48. Paragraph 4 (b) (iii) of the Defence (Hearing Bundle page 20) pleaded to the effect that D2 asked NELSON “why the Defendants (as vendors) should pay the Plaintiff 2% as commission when Mr. Kwong (as purchaser) should pay the Plaintiff only 1% commission…” However, the Plaintiff denied this in paragraph 10 of the Amended Reply (Hearing Bundle page 40). I do not think the Plaintiff can take advantage of what it denied and is not supported by any evidence.

49. The Plaintiff has also failed to prove the necessary consent by the Defendants.

50. Various other points were advanced by Defence Counsel in his final submission. For example, it was argued that D1 was not named in the Defendants’ Agency Agreement. It is beyond dispute, however, that D1 signed on it (together with D2 as vendors of House 105. Hearing Bundle page 70). I see nothing in this point. Defence Counsel also submitted that the Provisional Agreement did not contain information prescribed by provisions of the Estate Agents Ordinance, Cap.511 (see Sections 45 and 46). The Plaintiff thus could not maintain the present action for commission or damages. The short answer to this is that D2’s action prevented NELSON from properly completing the Provisional Agreement. I cannot see how the Defendants can be allowed to benefit from the fault of D2. There is already sufficient and good reason to dismiss the Plaintiff’s claim. I will not deal with the many other arguments advanced by Counsels.