LEUNG WAI CHEUNG v. OCTEL NETWORKS LTD AND ANOTHER

CAMP 145/2020

[2021] HKCA 656

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 145 OF 2020

(ON AN INTENDED APPEAL FROM DCCJ NO 4454 OF 2017)

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J U D G M E N T

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Hon Au JA (giving the Judgment of the Court):

A.   INTRODUCTION

1.  This is the plaintiff’s renewed application[1] for leave to appeal against the judgment (“the Judgment”) of Deputy District Judge Barbara Wong (“the Judge”) of 15 May 2020.  By way of the Judgment, the Judge dismissed the plaintiff’s claim against the defendants arising out of a tenancy agreement dispute.

2.  The plaintiff first sought leave from the Judge who refused the application by way of her decision dated 14 August 2020.  He now renews his leave application before this Court.

3.  After reviewing the summons and the parties’ respective written submissions, we find it appropriate to deal with this leave application on the basis of the written submissions only pursuant to Order 59, rule 2A(5) of the Rules of the High Court (Cap 4A) (“RHC”).

B.   BACKGROUND

4.  The Judge has comprehensively summarized the background leading to the dispute in the Judgment at [3] ‑ [37].  For the present purpose, we will only highlight the following.

5.  The plaintiff is the owner of the premises situated at workshop units 6 & 7 on 6^th floor of Block B, Hang Wai Industrial Center, No 6 Kin Tai Street, Tuen Mun, New Territories (“the premises”).  In July 2017, the 2^nd defendant was looking for a place for the business operation of his company, the 1^st defendant.  It engaged the service of the Third Party as its estate agent (“the estate agent”).

6.  On 20 July 2017, Shirley Wong (“Wong”) of the estate agent took the 2^nd defendant to look at the premises, which was at that time occupied by an existing tenant.  Wong informed the 2^nd defendant that the existing tenant would move out on 15 August 2017.  The plaintiff and the 2^nd defendant then negotiated through Wong for the renting of the premises.  On or about 25 July 2017, the parties, again through Wong, reached an oral understanding that the 1^st defendant would rent the premises for a year from 15 August 2017 at a monthly rental of HK$20,000, which was to be paid by 12 post‑dated cheques in advance.  The 1^st defendant as tenant shall be responsible to pay the stamp duty for the tenancy agreement.

7.  On 7 August 2017, Wong provided a written tenancy agreement for renting the premises to the 2^nd defendant for his confirmation and signing.  The written tenancy agreement was in the estate agent’s standard form.  It provided that the monthly rental was $20,000 and its term was from 15 August 2017 to 14 August 2018 with an option for renewal.  It also provided that the tenant shall pay the landlord the Rental Deposit (representing two months’ rental)[2] and the first month’s rental[3]. The 2^nd defendant signed the written tenancy agreement on behalf of the 1^st defendant and himself (acting as the guarantor), and handed a cheque which was post‑dated to 13 August 2017 to Wong in the sum of $60,000 for the said Rental Deposit and first month’s rental.  It was the 2^nd defendant’s case and evidence, which was accepted by the Judge, that he explained to Wong that he issued the post‑dated cheque as he wanted to make sure that the existing tenant would vacate the premises by 12 August 2017 as said by the landlord so that the 1^st defendant could move into it on 15 August 2017.  He asked Wong to relate this to the plaintiff.

8.  Later, on the evening of 7 August 2017, the plaintiff also signed the written tenancy agreement on behalf of his company, Metak Investment Management Company Ltd (“Metak”), which managed the premises.  He also signed on the tenancy agreement that under the printed acknowledgement acknowledging the receipt of Rental Deposit and first month rental at $60,000.  Nevertheless, the plaintiff only realized on the next day, 8 August 2017, that the cheque was post‑dated.

9.  What followed was a series of communications between the parties, through Wong as the intermediate.  These communications were mostly contained in the respective WhatsApp messages between the plaintiff and Wong on the one hand, and the 2^nd defendant and Wong on the other.  The Judge found that the gist of these messages showed that Wong accepted and apologized that she had not drawn the plaintiff’s attention to the post‑dated nature of the cheque, and the plaintiff complained about the post‑dated cheque and he demanded for the immediate payment of the Rental Deposit and the first month rent.  At the same time, the other messages also showed that the 2^nd defendant also insisted on the post‑dated cheque payment of the Rental Deposit as he was not happy with the plaintiff’s attitude and reiterated his concern about whether the plaintiff would be able to deliver vacant possession of the premises to him on 15 August 2017.

10.  On 13 August 2017, the 2^nd defendant indicated to Wong by WhatsApp message that he decided to cancel the deal and would not rent the premises.

11.  Thereafter, the plaintiff commenced the present action, claiming damages for the defendants’ breach of the tenancy agreement.  The defendants raised various defences.  Relevant for the present purpose is the main defence that there was never a concluded binding agreement between for renting the premises.

12.  By way of the Third Party action, the defendant also in turn claimed against the estate agency for loss, on the basis that the estate agent had breached its duty owed to the defendants in cashing the two cheques issued by the defendants for the respective payment of commission and the stamp duty when the plaintiff had not accepted the defendants’ offer made on 7 August 2017[4].

C.   THE JUDGMENT

13.  The trial went before the Judge who heard the evidence of the plaintiff, the 2^nd defendant and Wong.

14.  As mentioned above, the Judge dismissed the plaintiff’s claim after finding that there was no binding agreement concluded between the parties.

15.  In coming to that finding, the Judge evaluated all the available evidence as to whether the parties had reached a binding agreement for renting the premises.  She adopted an objective assessment of the evidence against what reasonable persons in the positions of the parties would behave in the factual circumstances faced by them: [42] of the Judgment.

16.  In evaluating the evidence, the Judge placed more weight on the WhatsApp messages as they were written contemporaneous record of the communications between the parties, conducted through Wong as the go‑between.  The messages between Wong and the plaintiff was referred to in the Judgment as the “Leung Series of WhatsApp Messages” and those with the 2^nd defendant as the “Abrar Series of WhatsApp Messages” in the Judgment. For convenience, we will adopt the same abbreviations in this Decision.

17.  The Judge first found that the defendants in issuing a post‑dated cheque with the signed tenancy agreement was making a counter offer to the plaintiff for renting the premises.  This was so as the written tenancy agreement stipulated for the immediate payment of the Rental Deposit and one‑month rental, which was an important material term of the standard format agreement. The post‑dated cheque therefore amounted to a counter offer with a change of a material term.  In this respect, the Judge also accepted the 2^nd defendant’s evidence and held that the counter offer was conditional upon the plaintiff accepting the post‑dated cheque payment: [46] ‑ [49] of the Judgment.

18.  The Judge then found that the condition was not conveyed by Wong to the plaintiff.  She also found that the plaintiff did not accept the post‑dated cheques.  Hence, he had not accepted the counter offer: [50] ‑ [53] of the Judgment.

19.  Since by 13 August 2017, the plaintiff still had not accepted the counter offer, the 1^st defendant was entitled to withdraw it as it did through the 2^nd defendant.  There was therefore no concluded contract between the plaintiff and the defendants for renting the premises.  She therefore dismissed the claim: [54] ‑ [61] of the Judgment.

D.  THE INTENDED APPEAL

D.1    Grounds of appeal

20.  In a lengthy draft Grounds of Appeal dated 26 August 2020 (which will be treated as the draft Notice of Appeal), the plaintiff advanced in substance three grounds of appeal[5]:

(1)  The Judge erred in law in holding that the post‑dated cheque was an essential condition for the defendants’ offer and in any event in failing to find that the plaintiff had confirmed his acceptance of the cheque via phone through Wong in the morning of 8 August 2017: paragraphs 1.1 ‑ 1.15 (“Ground 1”).

(2)  The Judge failed to clarify the conflicting evidence in court which resulted in an improper trial: paragraphs 2.1 ‑ 2.2 (“Ground 2”).

(3)  The Judge failed to attach weight to Wong’s evidence and showed unreasonable favour to the defendants’ defence which lacked support and contradicted with Wong’s evidence.  She also disregarded the plaintiff’s evidence which was corroborated by Wong’s evidence: paragraphs 3.1 ‑ 3.6 (“Ground 3”).

21.  In support of these grounds, the plaintiff has also filed a lengthy written submission and a supporting affirmation to elaborate his contentions.

D2.    Legal principles

22.  Section 63A(2) of District Court Ordinance (Cap 336) provides that leave to appeal shall not be granted unless the court is satisfied that the appeal has reasonable prospect of success or there is some other reason in the interests of justice why the appeal should be heard.  Reasonable prospects of success involves the notion that the prospects of succeeding must be reasonable and therefore more than fanciful, without having to be probable: see SMSE v KL [2009] 4 HKLRD 125, per Le Pichon JA at [17].

23.  Further, in respect of a challenge against the factual findings made by the trial judge, the appellant has to overcome a very high threshold in order to succeed.  The Court of Appeal would not interfere with the judge’s factual findings unless the findings are plainly wrong, or that the judge had failed to take into account relevant considerations, or took into account irrelevant considerations: see China Gold Finance Ltd v CIL Holdings Ltd & Others [2016] HKCA 4, per Lam VP at [14] ‑ [15]; BMC v BGC [2020] HKCA 317, per Kwan VP, at [82] ‑ [85].

24.  Bearing these principles in mind, we now proceed to consider the merits of the grounds of appeal.  In so doing, we have considered the plaintiff’s contentions raised in the written submissions and affirmation insofar as they are related to the grounds set out in the draft Grounds of Appeal.

D3.    Ground 1

25.  Under this ground, the plaintiff effectively seeks to challenge all the findings made by the Judge leading to the conclusion that there was no concluded binding agreement between the plaintiff and the defendants.

26.  First, the plaintiff argues that the issue of the post‑dated cheque was not evidence that the defendants had imposed a condition of the offer.  He submits that instead it was only a request of deferred payment because the defendants told Wong if the plaintiff had any issue with the post‑dated cheque they could make outright payment.  Further, the defendants already knew that the existing tenant would move out as shown in their WhatsApp messages with Wong at 1:12 pm on 25 July 2017, coupling with the fact that they could always sue the plaintiff if vacant possession was not delivered[6].  This showed that there was no counter offer made by the defendants.

27.  There is nothing in these complaints.

28.  The term relating to payment is clearly an important and material term of an agreement.  In this respect, as noted by the Judge at [12] of the Judgment, the standard written terms of the tenancy agreement signed by defendants properly looked at required the immediate payment of the Rental Deposit and first month rental.  See: clause 7 of the tenancy agreement, and the written acknowledgement of the receipt of the Rental Deposit and the first month rental stated at the landlord’s signature part in the agreement.

29.  Hence, it is plainly open to the Judge to conclude that by only issuing post‑dated cheque for the payment of the Rental Deposit and the first month rental (instead of making immediate payment), the defendants were varying an important and material payment term of the agreement and thus in effect making a counter offer to the plaintiff with a varied payment term for the Rental Deposit and first month rental.

30.  This contention therefore has no merits.

31.  Second, the plaintiff also says it was in any event wrong for the Judge to find that he had not accepted the conditional offer.  The gist of the plaintiff’s argument is that he had accepted the conditional offer by the following conducts[7]:

(1)  After being informed of the post-dated cheque on 8 August 2017, he still requested through Wong for the issue of the 11 post‑dated cheques for the rest of the monthly rental;

(2)  He instructed Wong to issue a termination notice to the existing tenant;

(3)  He stopped other agents from viewing the premises;

(4)  He never returned the post‑dated cheque to the defendants;

(5)  His WhatsApp messages to Wong on 13 August 2017 showed that he already accepted the post‑dated cheque;

(6)  Wong already banked in the defendants’ cheque for her commission on 10 August 2017 which showed that the deal was completed.

32.  This is a challenge against the Judge’s finding of fact.

33.  The Judge explained why she found that the plaintiff had not accepted the post‑dated cheque payment of the Rental Deposit and the first month rental before the defendants sought to cancel the deal on 13 August 2017 at [18] ‑ [26], [51] and [52] of the Judgment.  She came to that conclusion by considering (a) the 2^nd defendant’s own evidence that Wong complained to him that the plaintiff wanted immediate payment of those sums and, if that was not done, the plaintiff would be at liberty to rent the premises to another tenant, against (b) all the relevant Abbrar Series of WhatsApp Messages around that time.  She accepted the 2^nd defendant’s evidence (see [49] of the Judgment).

34.  In our view, the Judge was entitled to prefer the 2^nd defendant’s evidence after assessing the contesting evidence against the contemporaneous WhatsApp Messages.  All these documented messages, read objectively, could reasonably be regarded to be in support of the 2^nd defendant’s evidence.  In other words, it cannot be said that the Judge was plainly wrong in making the finding.

35.  In the premises, it is reasonably open to the Judge to make the finding based on the evidence.

36.  The plaintiff next seeks to contend that Wong did not have his authority to convey those messages to the 2^nd defendant.  He argues that the Judge ought to differentiate Wong’s role at some critical stage.  He submits that Wong’s advice to the 2^nd defendant as to the immediate payment of the Rental Deposit was simply her own professional advice but not his position.  Moreover, the plaintiff also says Wong did not have the authority to reject the post‑dated cheque as it was without his instruction or consent[8].

37.  We are equally not persuaded by these submissions.

38.  First, it is not open to the plaintiff to raise this point on appeal as the issue of the estate agent’s authority was not advanced before the Judge.  It is not open to the plaintiff, having read the Judgment which dismissed the plaintiff’s case premised on the evidence of the 2^nd defendant and Wong’s WhatsApp messages, to argue for the first time that Wong never had his actual authority to reject the post‑dated cheque and demanded immediate payment of the Rental Deposit and first month rental.  In particular, whether an estate agent is authorized by and therefore acting for a particular party in providing information relating to a property to another party is a question of fact: Yili Concepts (HKG) Ltd v Lee Wai Chuen HCA 12911/97 (unreported, 29 September 2000), per DHCJ S Kwan (as Kwan VP then was), at [21] ‑ [22]; see also Bright Gold Limited v Mega Well Development Limited [2020] HKCA 575 at [89].  The Court of Appeal on appeal does not generally entertain new point involving fact‑sensitive issues that had not been canvassed before the Judge: Flywin Co Ltd v Strong & Associates Ltd [2002] 5 HKCFAR 356 at [38] and [39].  This cannot be a viable ground against the Judgment.

39.  Second, and in any event, this contention is not supported by any evidence.  The plaintiff has not in this leave application pointed to any evidence (whether in his witness statement or oral evidence) advanced at trial to show that, after being notified by Wong about the post‑dated nature of the cheque on 8 August 2018[9], he informed Wong that he accepted it.  The lack of any such evidence adduced in the trial is even more telling when the Abrar Series of WhatsApp Messages discovered in the proceedings and adduced in the trial showed clearly that Wong had since been asking the 2^nd defendant to make immediate payment of $60,000, failing which the plaintiff was at liberty to lease the premises to another.  If the plaintiff’s case below was that he had in fact accepted the post‑dated cheque at the latest on 8 August 2017, one would have expected that the first thing the plaintiff would have done was to advance this case by way of evidence and submission before this Judge.  This is particularly so as it is the defendants’ pleaded defence that there was no tenancy agreement reached between the parties and that the defendant’s “offer” to rent the property on the terms of post‑dated cheque payment for the Rental Deposit and first month rental was not accepted by the plaintiff[10].

40.  The plaintiff has also referred to Empire Trend Enterprises Ltd v Double Mind Co Ltd [2001] 1 HKC 302 and Ip Ming Kin v Wong Siu Lan (unreported, DCCJ 1236/2010, 30 March 2012) in support of his contention that Wong did not have the relevant authority to reject the post‑dated cheque on his behalf.  These authorities do not assist the plaintiff as they were decided on the particular and different factual matrix therein, which further endorsed the aforesaid principle that cases involving the authority of estate agent ought to be considered on a case‑by‑case basis.

41.  For all the above reasons, Ground 1 has no merits at all, and leave to appeal should not be granted on this ground.

D4.    Ground 2

42.  Under this ground, the plaintiff essentially complains that the Judge failed to raise questions in cross examination with the plaintiff and Wong as to whether the plaintiff had withheld his acceptance of the post‑dated cheque and instructed Wong to ask the defendants to pay immediately.  He therefore says the trial was conducted unfairly as he did not have the opportunity to clarify this important matter in evidence at trial.

43.  This is plainly unarguable.  As mentioned above, it is the defendants’ pleaded case that the plaintiff had refused to accept the post‑dated cheque and there was never a binding agreement between the parties[11].  Similarly, from Wong’s witness statement[12] and more importantly the evidence of the WhatsApp messages, it is plain that it is the estate agent’s position that the plaintiff was not happy with the post‑dated cheque and demanded instead immediate payment of the Rental Deposit and the first month rental after signing the tenancy agreement.  If it is the plaintiff’s case that he had all along accepted the post‑dated cheque when he signed the tenancy agreement, it is for him to raise that at trial and in cross‑examining the 2^nd defendant and Wong.  See also [38] - [39] above.

44.  There are also no merits in this ground.

D5.    Ground 3

45.  Under this ground, the plaintiff again complains about the Judge’s conclusion that the plaintiff had not accepted the defendant’s counter offer in relation to the post‑dated cheque.  In this respect, he says the Judge was biased and unreasonable in accepting only the 2^nd defendant’s evidence when he himself in giving his evidence had confirmed that the offer had been accepted by the plaintiff with reasons.  The plaintiff also submits that his evidence and argument were confirmed and corroborated by Wong’s evidence.  He also says the Judge did not explain why she did not accept his evidence nor had she clarified with Wong in evidence whether the plaintiff had indeed confirmed his acceptance of the offer.

46.  In support of this ground, the plaintiff seeks to rely on Chung Yuk Man David v Ng Chin Ho (unreported, DCCJ 820/2006, 19 September 2007) to say that the Judge ought to have attached great weight to Wong’s evidence as she, as an estate agent, was an independent witness.

47.  It is well‑established that in the absence of any express ranking of factors, the relative weight to be given to each factor depends on the facts of the case, and the advantage of the trial judge in seeing the witnesses applies not only to credibility and findings of primary fact, but also to the judge’s evaluation of the facts: G v BVR [2020] HKCA 307, per Yuen JA, at [25.5] citing Piglowska v Piglowski [1999] WLR 1360.

48.  In the present case, the Judge had undertaken a comprehensive review of all the relevant matters, including the witnesses’ oral evidence, witness statements evidence, and in particular the contemporaneous WhatsApp messages[13]. As observed above, in concluding that the plaintiff had not accepted the post‑dated cheque and thus refused to accept the counter offer made by the defendants, it is clear from the Judgment that in assessing the evidence as a whole, she had given more weight to the WhatsApp messages considered objectively against the common ground that the plaintiff was not even informed of the post‑dated nature of the cheque when signing the tenancy agreement[14].  Moreover, as pointed out at [43] above, it is Wong’s evidence at paragraph 34 of her witness statement, supported by the relevant WhatsApp message, that the plaintiff was unhappy about the post‑dated cheque payment.  This is something that is plainly open to the Judge to do as the trial judge, and we cannot say the conclusion she had arrived at is plainly wrong or without any evidential basis.

49.  In the premises, Ground 3 is similarly without merits.

D6.    Challenge against the costs order

50.  It is noted that in the written submission[15], the plaintiff seeks to challenge the costs order made by the Judge at [71] of the Judgment that the plaintiff and the Third Party shall equally bear the costs of the defendants (who acted in person in the trial).  The plaintiff submits that since the Judge had found that the estate agent was in breach of its duty, the Third Party should bear all the costs.

51.  There is nothing in this.  First, this ground challenging the costs order is not raised in the Draft Notice of Appeal, and should not be entertained by this court.  Second and in any event, there is similarly no merit in the contention.  The Judge’s finding of the Third Party’s negligence is in relation to the payment of the stamp duty using the defendants’ cheque not in accordance with the defendants’ instruction. This has nothing to do with the plaintiff’s claim against the defendants in which the plaintiff has lost.

E.   DISPOSITION

52.  For all the above reasons, none of the grounds of appeal have any merits.  We therefore dismiss the plaintiff’s application for leave to appeal with costs to the defendants.

53.  In the defendants’ statement of costs filed on 5 October 2020 by their then solicitors, they are seeking the sum of $90,620.  Given that the defendants’ solicitors had previously appeared for the defendants in the leave application before the Judge, we are of the view that some of the items of attendance set out in the statement of costs are unnecessary and should not be included[16].  We will therefore summarily reduce the costs to be $80,000.  We therefore order that the plaintiff do pay the defendants costs, summarily assessed at the sum of $80,000.

54.  Further, we are of the view that the application is totally without merit and we make an order pursuant to Order 59, rule 2A(8) of the RHC that no party may request the determination to be reconsidered at an oral hearing inter partes.