REGENT LAND ASIA LTD v. LEE CHAU HUNG, EVA AND OTHERS

DCCJ 4460/2007

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 4460 OF 2007

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BETWEEN

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REASONS FOR JUDGMENT

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1.  This was an appeal by the plaintiff against the Order of Master B. Mak made on 5 February 2010 whereby the plaintiff’s two applications under its two summonses relating to interrogatories to be answered by the 1^st and 2^nd defendants were dismissed with costs summarily assessed to the 1^st and 2^nd defendants.

2.  At the conclusion of the hearing of the appeal, the appeal was dismissed with written reasons to be handed down. This court also made an immediate summary assessment of costs of the appeal of HK$26,726 to be paid by the plaintiff to the 1^st and 2^nd defendants.

Background Facts

3.  For the present purpose, the undisputed background facts can be outlined briefly. Both the plaintiff and the 3^rd defendant are licenced estate agents in Hong Kong. The 1^st Defendant is an 86-year-old lady and the registered owner of a property situated at G/F, No. 18 Pak Sha Road, Causeway Bay, Hong Kong (“the Shop”). The 2^nd Defendant is the son of the 1^st Defendant.

4.  By letter dated 11 May 2007, the plaintiff promoted its agency services to the 1^st defendant knowing that the tenancy relating to the Shop would expire on 30 September 2007. The 2^nd defendant replied to the plaintiff on behalf of the 1^st defendant over the phone on the following day and agreed to appoint the plaintiff as his agent to look for a new tenant. On 15 May 2007, the plaintiff sent the 1^st defendant by fax a written offer of one Magic Spa Hong Kong Limited (“Magic Spa”) to rent the Shop for 3 years at a monthly rent of HK$290,000 (“the Written Offer”). The Written Offer was dated 14 May 2007 and was endorsed by Magic Spa.

5.  The 1^st defendant did not accept the Written Offer of Magic Spa and instead without the knowledge of the plaintiff subsequently executed a tenancy agreement with Magic Spa dated 18 June 2007 whereby Magic Spa agreed to rent the Shop at a monthly rent of HK$300,000. Messrs. T.L. Ip & Co., a firm of solicitors, acted for the 1^st defendant and the 3^rd defendant was the estate agent of both the 1^st defendant and Magic Spa in this transaction.

The Plaintiff’s case

6.  The plaintiff claims that the 1^st defendant and/or the 2^nd defendant after the receipt of the Written Offer contacted Magic Spa directly behind its back and then sent the 3^rd defendant to make a counter-offer of a monthly rent of HK$300,000 – HK$10,000 more than the Written Offer.

7.  In doing so, the 1^st defendant was said to have breached an oral agreement whereby the 2^nd defendant agreed (on the 1^st defendant’s behalf) to pay the plaintiff half share of the agency fee equivalent to half month of the final rental being HK$150,000 (and not HK$145,000). The plaintiff further alleges that the 1^st defendant has wrongfully deprived the plaintiff the opportunity to earn the other half of agency fee in the sum of HK$150,000 payable by Magic Spa. Hence, the plaintiff claims against the 1^st defendant a total sum of HK$300,000.

8.  The plaintiff further alleges that all the 3 defendants or any 2 of them conspired to injure the plaintiff by causing breaches of the said agreement. An additional complaint against the 3 defendant is that it induced the 1^st defendant and Magic Spa to breach their respective agency agreements with the plaintiff.

The Defendants’ case

9.  Each of the 1^st defendant and the 2^nd defendant filed her/his defence separately, despite the two documents are very much similar in their contents. The 2^nd defendant has filed a witness statement for himself and on the behalf of the 1^st defendant. The 1^st defendant has not filed any witness statement in spite of the unless order of Master C. Lee dated 18August 2009 (“the Unless Order”)[1].

10.  The case of the 1^st and 2^nd defendants is that the 1^st defendant through the 2^nd defendant did on or about 12^th May 2007 orally appointed the plaintiff as her agent in respect of the Shop and agreed to pay the plaintiff half share of the final monthly rental as agency fee if the plaintiff successfully introduce a tenant to enter into a tenancy agreement in the terms and conditions accepted by the 1^st defendant. The appointment was made expressly on a non-exclusive basis.

11.  The 2^nd defendant as a representative of the 1^st defendant did not accept the Written offer of Magic Spa given through the plaintiff. He was subsequently approached by Mr. Allan Liu of the 3^rd defendant and was told that there was a prospective tenant who offered a monthly rent of HK$300,000 for the Shop. The 3^rd defendant also brought the representative of Magic Spa to pay a visit to the Shop. Only then did the 2^nd defendant know that the prospective tenant referred to by the 3^rd defendant was Magic Spa.

12.  In a nutshell, the 1^st and 2^nd defendants deny any exclusivity in the appointment of the plaintiff. They further deny that they ever contacted Magic Spa directly after the Written Offer and asked the 3^rd defendant to make a counter-offer on behalf of the 1^st defendant.

13.  The case of the 1^st and 2^nd defendants is substantially consistent with that of the 3^rd defendant. The 3^rd defendant makes it clear that it was the 3^rd defendant who approached the 2^nd defendant and gave him an offer on behalf of Magic Spa. It is remarkable that the 3^rd defendant has filed a witness statement of Chin Po Lin Pauline, who was the representative of Magic Spa dealing with the 3^rd defendant in relation to the tenancy of the Shop. There, Chin Po Lin Pauline gives an account supportive of the 3^rd defendant’s case.

14.  It is common ground that the 1^st defendant through the 2^nd defendant made an oral agreement with the plaintiff on or about 14^th May 2007 to appoint the plaintiff to be her agent for a new lease of the Shop. In my view, the central issue in these proceedings is what the terms of the oral agreement were and, to be exact, whether there was any term(s)which forbid the 1^st defendant from appointing other agents for her intended new lease of the Shop.

15.  The crux of the plaintiff’s complaint is thus the 1^st defendant should have continued the negotiation with Magic Spa through the plaintiff after the Written Offer and the plaintiff was entitled to a total commission equivalent of a month rental subsequently agreed by the 1^st defendant and Magic Spa. I note in passing that it is not the plaintiff’s pleaded case that the plaintiff was ever the exclusive agent of the 1^st defendant. Nor does the witness statement filed on its behalf contain such an allegation.

The Plaintiff’s Dismissed Applications

16.  The plaintiff first took out a summons dated 1 September 2009 to apply for 9 interrogatories to be answered by the 1^st defendant. The 1^st defendant did not contest the application and an order dated 15 September 2009 was made by a master to compel the 1^st defendant to answer on oath/by affirmation the 9 interrogatories (“September Order”).

17.  The 1^st defendant filed her 2^nd affirmation on 22 September 2009 (D1’s 2^nd Affirmation”) and set out her answers to the 9 interrogatories. By letter dated 16 October 2009, the plaintiff’s solicitors expressed their dissatisfaction with the 1^st defendant’s answers to Interrogatories 5, 6 and 7 and demanded proper answers to such interrogatories on oath within 5 days.

18.  By letter dated 21 October 2009, the 1^st defendant’s solicitors advised that the 1^st defendant could make a supplemental affirmation to give such answers to the relevant interrogatories as set out therein.

19.  The plaintiff’s solicitors were still unhappy with the proposed answers. Thus, the plaintiff took out a summons on 2November 2009 (“the November Summons”) to apply for an order that the 1^st defendant do answer Interrogatories 5, 6, 7, 8 and 9. The grounds specified in the 1^st Summons are that “the purported answers are unsatisfactory or improper or inadmissible heresay (sic) or not answering the questions”.

20.  I should add that the marginal note of the November Summons stated the application was made under Order 26 r.1 of the Rules of the District Court. As accepted by Mr. Chung appearing for the plaintiff, this is a wrong reference. This court’s jurisdiction to order a person to make a further answer originates in Order 26 r.5(2) and not Order 26 r.1.

21.  By another summons dated 29^th October 2009 (“the October Summons”), the plaintiff applied for an order that the 2^nd defendant should answer 3 interrogatories.

22.  The October Summons too contains a deficiency in form. As pointed out by Mr. Billy Ma, Counsel for the 1^st and 2^nd defendants, the Rules of the District Court are different from the Rules of the High Court in that all interrogatories must be served only with leave. The plaintiff by the October Summons should first ask for leave to serve the interrogatories on the 2^nd defendant instead of asking the 2^nd defendant to answer the interrogatories straight away.

23.  Despite the deficiencies of the October Summons and the November Summons, Mr. Ma did not take objection and insist on amendments of the two Summonses by the plaintiff. I therefore proceeded to assess the merit of the applications. I shall first deal with the November Summons for reasons that would be apparent from the discussion below.

Relevant Legal Principles

24.  The parties are in agreement as to the broad principles to be applied. They are well-established and were summarized by Cheung J (as he then was) in Lee Nui Foon v. Ocean Park Corp (No 2) [1995] 2 HKC 395. I do not intend to set them out here. Suffice it to say that the overriding concern of this court in exercising the discretion to grant or refuse leave to serve interrogatories is that they have to be necessary either for disposing fairly of the cause or matter or for saving costs.

25.  For the plaintiff’s application for further answers to interrogatories already served on the 1^st defendant, Mr. Chung agreed that the question to be decided is whether the answers are sufficient and not whether they are true: Hong Kong Civil Procedure 2010 Vol.1 §26/5/3.

The Present Appeal

November Summons

Interrogatories 5 to 7

26.  This summons concerns the 1^st defendant’s answers given in D1’s 2^nd Affirmation to Interrogatories 5 to 9 served pursuant to the September Order. Interrogatories 5 to 7 and the 1^st defendant’s answers are reproduced as follows:

Interrogatory 5

Did the 3^rd defendant and/or Mr. Liu Allan His On ever make an offer of leasing of a Shop known as Ground Floor, No. 18 Pak Sha Road, Causeway Bay, Hong Kong on behalf of Magic Spa Limited to the 1^st defendant?

Answer 5

The 3^rd defendant and Mr. Liu Allan Hsi On had not contacted me personally or directly. The 2^nd defendant conducted the negotiations in relation to tenancy matters of the Shop on my behalf.

Interrogatory 6

When?

Answer 6

Not applicable

Interrogatory 7

If the answer to Question 5 is affirmative. (sic) Was the offer oral and what were the terms of the offer? If in writing, please furnish with Chung Fong & Co the documents thereof.

Answer 7

Not applicable

27.  Though the 1^st defendant consented to answer these three interrogatories without demurring at their propriety, I do not think they are necessary at all.

28.  Firstly, Mr. Chung accepted that the answer to Interrogatory 5 must be in the affirmative. He indicated that he was merely interested to know what the 1^st defendant would say as to when the offer was made by Magic Spa through the 3^rd defendant. He contended that the exact timing of the offer was of critical importance to the case of the plaintiff. Be that as it may, the plaintiff could have dispensed with this interrogatory and asked the 1^st defendant directly when the offer was made. He nevertheless found Interrogatory 5 necessary to avoid asking two questions in one question. I fail to see why this would be the case. Interrogatory 5 is clearly unmeritorious given the obviousness of the answer thereto.

29.  More importantly, in paragraph 11 of the witness statement of the 2^nd defendant, it is clearly stated that on or about 19May 2007 Allan Liu phoned the 2^nd defendant to inform him that there was a potential tenant offering a month rental of HK$300,000. The potential tenant was later known to the 2^nd defendant to be Magic Spa.

30.  Mr. Chung argued that the witness statement of the 2^nd defendant did not assist the 1^st defendant. He wanted the 1^st defendant to give her own version of events so as to tie her down. This is however not the function of interrogatories at all and the plaintiff is wrong to invoke this procedure for that purpose. As explained by the learned editors in Hong Kong Civil Procedure 2010 Vol.1 at §26/0/2, administration of interrogatories is a procedure for the purpose of discovery of facts relevant to a dispute.

31.  In her answers, the 1^st defendant sufficiently disclosed the relevant fact – the 2^nd defendant was her agent conducting all the negotiations with the 3^rd defendant on her behalf.

32.  There is no dispute about the authority of the 2^nd defendant to deal with the 3^rd defendant on the behalf of the 1^st defendant. The 1^st and 2^nd defendants have all along been jointly represented by the same firm of solicitors. The 1^st defendant has authorized the 2^nd defendant to make a witness statement on her behalf albeit she is disallowed by the Unless Order to rely on it. She is not going, and in fact unable, to testify at trial without filing her own witness statement. Against this background, her answers are adequate in all respects. For all the details of the offer of Magic Spa including the manner in which it was given, the plaintiff should turn to the 2^nd defendant.

33.  Perhaps out of abundance of caution, the 1^st defendant’s solicitors wrote to the plaintiff by letter dated 21 October 2009 to volunteer the following further answers to be given in a supplemental affirmation in reply to Interrogatories 5 to 7:

Answer 5

Yes but at all material times the 1^st defendant did not have any contact either verbally or in writing with the Plaintiff, the 3^rd defendant or Mr. Allan Liu in respect of the letting of the Shop and the 2^nd defendant was at all material times the authorized representative of the 1^st defendant to deal with all matters in respect of the tenancy and letting of the Shop on behalf of the 1^st defendant.

Answer 6

As informed by the 2^nd defendant, the offer of leasing of the Shop was made on or about 19 May 2007 to the 2^nd defendant for and on behalf of the 1^st defendant.

Answer 7

As informed by the 2^nd defendant, it was an oral offer that a potential tenant would pay HK$300,000.00 monthly rent for the Shop.

34.  Mr. Chung explained to me why he still found these proposed answers improper. He indicated that he would apply to strike out those proposed answers if they were to be given in a supplemental affirmation. He argued that Answer 5 should be a simple answer of yes or no and nothing further. By the remainder of the proposed Answer 5, the 1^st defendant, Mr. Chung claimed, was trying to adduce evidence including hearsay evidence to support the case of the 2^nd defendant despite her ineligibility to testify without filing her own witness statement.

35.  This complaint was ill-founded. If the contention of Mr. Chung were right, the 1^st defendant would effectively be in a Catch-22 situation. Whilst she was compelled by the September Order to answer the interrogatories, her answers, even being a simple answer of yes or no, would inevitably be an illegitimate attempt to adduce evidence according to Mr. Chung.

36.  I further do not find any merit in Mr. Chung’s objection to the proposed answers on the ground that they contain hearsay evidence. The 2^nd defendant was throughout the agent of the 1^st defendant conducting lease negotiations on her behalf. If the plaintiff insists that 1^st defendant should herself give the details of such negotiations, she can only do the best she can and is of course entitled to refer to what the 2^nd defendant has reported to her in respect thereof.

Interrogatories 8 to 9

37.  Interrogatories 8 to 9 and the 1^st defendant’s answers in D1’s 2^nd Affirmation are reproduced as follows:

Interrogatory 8

Did the 1^st defendant ever instruct her Solicitors, T.L.Ip & Co. to prepare a new tenancy agreement of the Shop in 2007?

Answer 8

I did not personally instructed (sic) Messrs. T.L.Ip & Co., Solicitors to prepare a new tenancy agreement of the Shop in 2007 but the 2^nd defendant instructed Messrs. T.L.Ip & Co. on my behalf.

Interrogatory 9

If answer to Question 8 is yes. (sic). When were the instructions of the first time given by the 1^st defendant to T.L.Ip & Co? The name of the Solicitors of T.L. Ip & Co the 1^st defendant instructed?

Answer 9

The 2^nd defendant told me that on or about 1June 2007, the 2^nd defendant instructed Mr. Leung Pik Chi, clerk to Messrs. T.L.Ip & Co. to prepare a new tenancy agreement of the Shop on my behalf.

38.  I do not find any inadequacy of the answers at all. Mr. Chung maintained the same objection to these answers and submitted that the 1^st defendant should simply give a simple answer of “No” to Interrogatory 8, with which he would be perfectly happy, and should not adduce hearsay evidence. For the same reason, I reject his submission.

39.  To conclude, the 1^st defendant’s answers to Interrogatories 5 to 9 in the D1’s 2^nd Affirmation are sufficient. The plaintiff is not entitled to further answers. In any event, the further answers given by the 1^st defendant should negative any necessity of further answers. The November Summons was rightly dismissed.

October Summons

40.  The October Summons concerns the 2^nd defendant and the plaintiff sought the following three interrogatories to be answered:

Interrogatory 1

Did the 2^nd defendant ever instruct T.L.Ip & Co. to prepare a new tenancy of the shop in 2007?

Interrogatory 2

If the answer to Question 1 is affirmation: (a) when? (b) by what means of communication? (c) if communications are writing or digital, please furnish us a copy thereof.

Interrogatory 3

If the answer to Question 1 is affirmative:-

(a)  the name and title of person of T.L.Ip & Co whom the 2^nd defendant instructed; and

(b)  the name of the solicitor of T.L.Ip & Co who had conduct of drafting the new tenancy of the shop.

41.  I fail to see how these interrogatories intended to be served are relevant to any issues of this action at all. In Mr. Chung’s skeleton submission, it was submitted that “it was undisputed that T.L. Ip & Co were the Solicitors for the 1^st defendant preparing and settling the Tenancy Agreement dated 18 June 2007.” Given the undoubted status of the 2^nd defendant as an agent of the 1^st defendant, it is clear that the answer to Interrogatory 1 must be in the affirmative.

42.  The answers of the 1^st defendant, as set out above, should in any event negative the necessity of these interrogatories.

43.  Mr. Chung explained that he actually wished to see if there was any written instruction given to T.L.Ip & Co which might contain the Written Offer. If so, Mr. Chung argued, it would help to establish the plaintiff’s conspiracy claim.

44.  In the first place, this is wrong in principle. As submitted by Mr. Ma, interrogatories must not be effectively asking for documents of discovery: Lee Nui Foon v. Ocean Park Corp (No 2) supraat§2(4)(8).

45.  Furthermore, there is no reason whatsoever to believe that the written instruction(s) given by the 2^nd defendant to the solicitors of the 1^st defendant did contain the Written Offer. This allegation is never made by the plaintiff in its pleadings and witness statement and it can only be purely speculative. The plaintiff is not entitled to such fishing interrogatories.

46.  In my view, the October Summons, wholly devoid of merit, was rightly dismissed by the Master too.

Conclusion

47.  For the foregoing reasons, the plaintiff’s appeal must be dismissed.

[1]Paragraph 1 of the Unless Order reads: “Unless the 1^st defendant do file and serve her witness statement by 4 pm on 25 August 2009, the 1^st defendant be debarred from relying on the joint witness statement dated 27 May 2009 filed herein (the 2^nd defendant’s witness statement) and be debarred from adducing any witness statement at trial.”