NEW CENTURY PROPERTY CONSULTANTS LIMITED v. GINWO INDUSTRIES LIMITED

1992 No. A6227

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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J U D G M E N T

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1. The Plaintiff is a property consultant. It claims $217,750.00 being a sum of 1% of the purchase price of office premises found for the Defendant by the Plaintiff. In its amended statement of claim, the Plaintiff pleads thus:

"3. On or about the 18th day August 1992 the Plaintiff entered into a contract with the Defendant (the agreement) under which the Plaintiff agreed to introduce the Defendant to the vendor of commercial premises situated at Rooms 1501 and 1502 Convention Plaza, 1 Harbour Road, Wanchai, (the premises), with a view to the Defendant purchasing the premises.

4. It was an express term of the agreement that in the event of the Defendant signing a Sale and Purchase Agreement in respect of the premises a sum of 1% of the purchase price would become payable to the Plaintiff."

2. The Plaintiff goes on to plead that it introduced the Defendant to the vendor on or between 18th and 26th August and that on 27th August, pursuant to the agreement and the Plaintiff's introduction, the Defendant signed a sale and purchase agreement at a price of $21,775,000.00, the premises being assigned to the Defendant on 15th September.

3. The Defendant sought particulars of when and where the alleged agreement was made, whether it was in writing or oral, and the names of the parties to it. The particulars were eventually provided on 14th December 1992, as follows:

"1. By a telephone conversation on the 17th of August 1992 between the Michelle Ng, the representative of the Defendant and Bruce Chan, representative of the Plaintiff.

By a letter dated the 18th of August 1992 addressed to the Defendant. At the inspection at Room 1501 and 1502 Convention Plaza at approximately 3 pm on the 19th of August 1992, and by a letter dated the 19th of August 1992 addressed to the Defendant.

2. The agreement was in writing and oral and by conduct.

By a telephone conversation between Michelle Ng and Bruce Chan, on 17th of August 1992. Also by a letter dated the 18th of August 1992 addressed to Michelle Ng and subsequently confirmed orally by the authorised representatives of the Defendant, Michelle Ng and Lo Chun Wing at the premises, Rooms 1501 and 1502 Convention Plaza at approximately 3 pm on the 19th of August 1992 and further evidenced by a letter dated 19th of August 1992 addressed to the Defendant.

3. See 2. above."

4. On 5th August 1993, the Defendant sought further particulars of the Plaintiff's case and enquired, inter alia, whether it was the Plaintiff's case that the Defendant agreed to pay 1% of the purchase price to the Plaintiff upon signing a sale and purchase agreement irrespective of the price at which the Defendant purchased; irrespective of the date when the Defendant purchased the premises; and irrespective of whether it was the Plaintiff who "bought" about the sale. The Plaintiff's answer on 11th August was "yes".

5. In August 1992, the Defendant which is a trading company had office premises in the Shun Tak Centre. It was seeking new, larger office premises. Bruce Chan (Mr. Chan), a director of the Plaintiff, became aware of this through a friend and on 17th August contacted Michelle Ng (Miss Ng) to offer help. Miss Ng told Mr. Chan that the Defendant was looking for 3,000 to 3,500 square feet in Central to purchase, preferably in Shun Tak Centre. Mr. Chan said he would look at his listings and, if he identified premises which the Defendant wanted to buy, the Plaintiff's commission would be 1% of the sale price. It was Mr. Chan's evidence, although disputed by Miss Ng, that Miss Ng agreed to such terms.

6. Mr. Chan thought that Central Plaza would be suitable for the Defendant and telephoned Peter Man (Mr. Man) of Kiu Lok Service Management Limited (Kiu Lok), with whom he had previously done business. Kiu Lok was the management agent of Central Plaza and also acted as agent of vendors or landlords of premises within Central Plaza Building from time to time. Mr. Man told Mr. Chan that his own unit was for sale and provided details. That unit is the premises in issue.

7. According to Mr. Chan, he telephoned Miss Ng on 18th August about the premises. Miss Ng agreed to look at them. Mr. Chan immediately sent the details by fax. With the covering fax message was a letter addressed to the Defendant for the attention of Miss Ng:

"SUBJECT TO CONTRACT

Dear Ms Ng,

Re: Part of 15/F Convention Plaza

Further to our telephone conversation regarding the captioned premise, I have pleasure in submitting details of the above for your due consideration.

PREMISES	:	Part of 15/F Convention Plaza 1 Harbour Road, Hong Kong
AREA	:	Approx 3,484 sq.ft.
PRICE	:	HK$22,297,600.00 i.e. HK$6,400 per sq.ft.
CONDITION	:	The premises is currently leased to a company until 8/93 with a monthly rental income of HK$92,370.00
AGENCY FEE	:	1% of the purchase price will be payable upon signing of Sale & Purchase Agreement

I hope the above will be informative and look forward to meeting you at 3:00p.m. tomorrow, in the meantime, should you require further information, please give me a call."

8. Mr.Chan said that he followed his fax message with a phone call to Miss Ng to confirm that she had received the details. He said Miss Ng confirmed she had received them and confirmed the meeting for 3:00 p.m. on 19th August, the following day.

9. Miss Ng denied speaking to Mr. Chan at all on 18th August. She said that she knew nothing of the premises until the following morning when she arrived at her office and, as was her custom, checked the fax-machine for incoming faxes. On this point and on others where Miss Ng disagrees with Mr. Chan, I accept the evidence of Mr. Chan. First, I found Mr. Chan to be a more satisfactory witness. Second, Miss Ng admitted that later on in her dealings with Mr. Chan she had lied to him. Third, I am unable to accept that Mr. Chan was so devious as to concoct a telephone conversation and an arrangement to meet at a specific time.

10. On 19th August at 3:00 p.m., Mr. Chan met Miss Ng and Lo Chun-ying (Mr. Lo), a director and general manager of the Defendant at Central Plaza. On the way up to the 15th floor where the premises were situated, Mr. Chan gave them a floor plan of the property and on an information sheet under the Plaintiff's letterhead, the following details:

PREMISES	:	Unit 1501 & 2 Convention Plaza 1 Harbour Road, HK.
AREA	:	Approx 3,484 Sq. ft.
PRICE	:	HK$22,297,600.00 i.e. HK$6,400 per sq.ft.
CONDITION	:	The premises is currently leased to a management company until 8/93 with a monthly rental income of HK$92,370.00
REMARKS	:	Harbour view
AGENCY FEE	:	1% of the purchase price payable upon signing of Sale & Purchase Agreement
VIEWING	:	Please contact appointed agents NEW CENTURY PROPERTY CONSULTANTS LTD. at 892 0023

SUBJECT TO CONTRACT

11. Mr.Chan said that he explained this information sheet, including the Plaintiff's commission of 1%, to Miss Ng and Mr. Lo who said they understood. They then went into the premises and met Mr. Man, who was introduced by Mr. Chan. Mr. Chan explained that Mr. Man's company was tenant of the premises and that Mr. Man was also acting on behalf of the vendor.

12. After inspecting the premises, Miss Ng said that it was quite interesting and that she would like details of matters such as the rent of the parking space and the date of completion. Mr. Chan obtained these details and faxed them to miss Ng on the same day. He also called Miss Ng and arranged for a further inspection on 26th August at 3:00 p.m. when Mr. Li Gang-ming (Mr. Li) would be available. Mr. Li was another director and the major shareholder of the Defendant. From the evidence, it is plain that he was the man who controlled the company and made important decisions, and whose instructions both Miss Ng and Mr. Lo obeyed.

13. On 26th August, Mr. Chan met Miss Ng, Mr. Lo and Mr. Li at Central Plaza. He supplied an information sheet similar to the one which he had provided on 19th August. He went through the particulars again and again said that his commission would be 1% of the purchase price. Mr. Li had a quick look at the details and made no comment. With Mr. Man, an inspection of the premises followed. After the inspection, Mr. Chan was told that the Defendant was interested and that he would be contacted again.

14. It was at this point that the mischief started. Mr. Li decided that the premises should be bought and was prepared to offer $6,000.00 per square foot. He said, however, that more agents should be contacted so as to get the best price. The Defendant had already been in touch with another firm of estate agents, Colvin and Horne Limited, which had shown Miss Ng and Mr. Lo property at the Bond Centre. So, while Miss Ng was calling Mr. Chan to tell him that the Defendant would like to buy at $6,000.00 per square foot, Mr. Lo was doing the same to Colvin and Home. After making enquiries of Mr. Man, Mr. Chan telephoned Miss Ng and told her that $6,000.00 had been rejected the vendor was looking for a sum of about $6,300.00. In the meantime, Mr. Lo had discovered that the boss of Colvin and Home, Mr. Ko, was acquainted with the owner of the premises and could negotiate the price down to $6,250.00. After speaking to Mr. Li, Mr. Lo arranged through Colvin and Horne to meet the vendor the following morning at 11:00 a.m.

15. Miss Ng was informed of this price. Accordingly, when Mr. Chan called her to say that the vendor was looking for $6,300.00 (that was according to Mr. Chan's evidence. Miss Ng said that Mr. Chan told her $6,350.00), she informed him that another agency had said the transaction could be effected at $6,250.00. Mr. Chan suggested meeting the vendor to negotiate. Miss Ng agreed to this and said the time should be confirmed the following morning. Next day, Mr. Chan through Mr. Man arranged a meeting with the vendor at 11:00 a.m. He telephoned Miss Ng who, on the instructions of Mr. Lo, put Mr. Chan off with an explanation that she had visitors from China and was not available till later in the day. In evidence, Miss Ng admitted she lied to Mr. Chan.

16. Miss Ng, Mr. Lo and representatives of Colvin and Horne went to the vendor's office in Hunghom at 11:00 a.m. There, agreement was reached for the premises to be purchased at $6,250.00. Mr. Lo then fetched Mr. Li who signed a provisional sale and purchase agreement in his own name. That agreement provided for Colvin and Horne to be paid commission of $217,750.00.

17. Through Mr. Man, Mr. Chan got wind of what was taking place. He eventually managed to contact Miss Ng who confirmed that she was with the vendor. Mr. Chan said that he would still have to charge her 1% commission. Miss Ng made no response.

18. Miss Ng plainly had some sympathy for Mr. Chan. She told Mr. Lo and Mr. Li that Mr. Chan had done a lot of work for the Defendant and expressed the hope that something could be paid to him. After discussion, it was agreed that $50,000.00 should be paid to Mr. Chan and the Plaintiff. This would be deducted from the commission payable to Colvin and Home, who told Miss Chan that, if Mr. Chan asked, he should be told that only 0.5% commission had been paid to that firm. In evidence, Mr. Lo acknowledged that it was dishonest to lie to Mr. Chan. In any event, Mr. Chan would not accept $50,000.00 and no sum has ever been paid to the Plaintiff.

19. Subsequently, Mr. Chan had a number of conversations on the telephone with Miss Ng and Mr. Lo. He recorded these conversations and agreed transcripts were in evidence. The thrust of these conversations was that Mr. Chan had trusted the Defendant, had done the work and should get commission. Miss Ng was sympathetic but said she had no authority to deal with the matter. Mr. Lo said that the Defendant was only paying commission once, to Colvin and Home, and it was up to the Plaintiff and Colvin and Horne to sort it out between themselves. It is to be noted that during the course of these at times lengthy conversations, Mr. Chan did not once assert that there had been an agreement between him and the Defendant.

20. The issue, therefore, is whether there was an agreement between the parties and if so, the terms thereof. The first question that arises is whether Miss Ng had authority to make such an agreement on behalf of the Defendant. The answer to that is plainly, yes. Whilst it is clear that ultimate responsibility for deciding whether or not to purchase property lay with Mr. Li, both Mr. Li and Mr. Lo were accustomed to leaving subsidiary matters to Miss Ng. It was the evidence of Mr. Lo that both he and Mr. Li would not read documents, such as those handed to them by Mr. Chan, but would only glance at them and pass them to Miss Ng for proper perusal. Further, by the manner in which she addressed herself to dealing with Mr. Chan and making the various arrangements and enquiries of him, she was clothed with ostensible authority.

21. Miss Ng knew about the Plaintiff's terms, or perhaps to be more accurate term, that is to say, that it would charge a commission of 1% on the purchase price contained in a sale and purchase agreement. Although she denied it, I find as a fact that Mr. Chan drew her attention to this term and that the term was agreeable to her. Further, Miss Ng acknowledged that she was aware that estate agents generally charge a commission of 1%. That Miss Chan was told about the commission and found it to be agreeable does not, however, mean that she concluded an agreement with the Plaintiff.

22. The two important documents from the Plaintiff, which I have set out earlier, are both marked "subject to contract". Mr. Chan's explanation was that those words applied to the purchase of the premises and not to the collateral agreement between him and the Defendant. I find it difficult to accept that it is possible to sever one part of each of these documents in such a manner. The second document adds to my perplexity because it is, on its face, a document coming from an agent for a vendor and not a purchaser. It would be curious for a purchaser's agent to talk about viewing arrangements in a document of this nature. But assuming that both documents came from the Plaintiff, which through Mr. Chan considered that it was or was to be appointed agent for the Defendant, these documents must be the basis of any agency contract between them. Being, as they are, expressed 'subject to contract', I find it impossible to accept that the term relating to commission can somehow be extracted and stand alone.

23. In any event, it is far from clear to me precisely what was agreed between the parties. The Plaintiff's pleaded case is that the Plaintiff would introduce the Defendant to the vendor of the premises and if the Defendant signed a sale and purchase agreement, a sum of 1% of the purchase price would become payable. Mr. Chan's evidence, in contrast, was that the obligation on the Plaintiff was to identify property which the Defendant wanted to buy, Whilst I have no difficulty in determining that the price would be the price in any sale and purchase agreement rather than the initial bargaining price contained in the Plaintiff's documents, I am not clear why it is asserted that the commission would be payable regardless of the circumstances in which the Defendant signed the sale and purchase agreement. It is, I accept, important that premises should be found. Equally important, in my view, and certainly I would think to a purchaser, is the price at which the premises can be obtained. Whilst the Plaintiff was undoubtedly treated in a very shabby fashion indeed, the fact remains that when given the opportunity Colvin and Horne were swiftly and successfully able to negotiate a price satisfactory to the Defendant. In my judgment, the terms which appear in the Plaintiff's documents fall far short of encompassing payment of commission to the Plaintiff in the circumstances which obtained in this case.

24. I find that there was no concluded agreement between the Plaintiff and the Defendant. As I have indicated, I am unable to avoid applying the words "subject to contract", which are words employed by the Plaintiff, from affecting all the terms set out in the Plaintiff's two documents. Even if I could avoid that conclusion and find that there was an agreement, on the evidence that agreement would be one by which the Plaintiff would become entitled to a commission of 1% of the price agreed between the vendor and purchaser upon the Plaintiff and not some other party being immediately instrumental in the vendor and purchaser coming to terms and signing an agreement. If an agent such as the Plaintiff wishes to ensure that once he has identified premises which his client ultimately purchases, his commission will become payable irrespective of the circumstances in which an agreement is signed, he must make appropriate and unambiguous provision for that. There was no such provision here. It follows that the claim must fail.

25. In the circumstances, I do not have to deal with the issues of whether or not there was any or sufficient evidence of the identity of the vendor, whether Mr. Man was representative or agent of the vendor, whether the Defendant was introduced to the vendor, and whether the Defendant signed a sale and purchase agreement.

26. In dismissing the Plaintiff's claim, I repeat what I have said earlier, namely that the Plaintiff was very shabbily treated. Had he been given the opportunity, it is perfectly possible that Mr. Chan could have negotiated a price of $6,250.00, or in some manner have consummated the deal. Not only was he not given that opportunity, he was deceived about what the Defendant was doing behind his back. In the circumstances, I make an order nisi that, rather than follow the event, there should be no order as to costs.