WONG LAI FONG v. BUT CHEUNG YIN

1991, No.A3194

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. Yesterday I gave judgment for the plaintiff against the defendant for specific performance of a provisional sale and purchase agreement. I now give my reasons for this decision.

2. By a provisional sale and purchase agreement dated the 22nd March 1991 made between the plaintiff as purchaser and the defendant as vendor, the defendant agreed to sell to the plaintiff Flat D, 9th Floor, 115 Broadway, Mei Foo Sun Chuen, free from incumbrances for the sum of $1,120,000. Under the terms of the agreement, the plaintiff agreed to pay an initial deposit of $50,000 on the signing of the agreement, and a sum of $62,000 on or before the 2nd April 1991 as a further deposit when a formal sale and purchase agreement would be signed by the parties. It was also agreed that completion was to take place on or before the 22nd May 1991.

3. It was also a term of the agreement that if either party should fail to comply with the agreement without the prior consent of the other party, the defaulting party shall be deemed to have been in breach of the agreement.

4. The plaintiff paid the initial deposit of $50, 000 on the signing of the provisional sale and purchase agreement. A draft sale and purchase agreement was then drawn up by the defendant's solicitors and sent to the plaintiff's solicitors on the 2nd April 1991. On the same date, the plaintiff's solicitors returned the agreement executed by the plaintiff and the plaintiff's husband as purchasers, together with a cheque for $62,000 in respect of the further deposit.

5. On the 11th April 1991, the defendant wrote to the plaintiff cancelling the agreement and returned the cheque for $50,000. No reason was given by the defendant for the cancellation. However, the plaintiff did not accept the cancellation and her solicitors replied on the 25th April 1991 stating that the agreement was still valid and subsisting and demanded completion in accordance with the terms of the agreement. The sum of $50,000 was also returned to the defendant which sum has since been forfeited by him. However the sum of $62,000 was not forfeited.

6. The defendant has admitted the terms of the provisional sale and purchase agreement in these proceedings but he contends that he was not liable to sign the formal agreement because it had been executed by the plaintiff and her husband whereas, he claims, that it should have only been signed by the plaintiff.

7. The plaintiff's case is that she was under no obligation to disclose that she was also entering into the contract on behalf of her husband. Mr Ho, counsel for the plaintiff drew my attention to a number of authorities including Yiu Yau-ping v. Fong Yee-lan [1992] 2 HKLR 167 where it was held that the fact that a provisional agreement called for a formal agreement to supersede it was not inconsistent with the provisional agreement being binding. This case cited with approval Branca v Cobarro [1947] 1 KB 854 and Chan Yock-kwong v Wong Hee-mao [1962] HKLR 480.

8. The provisional sale and purchase agreement in this case is clearly binding for all the material terms such as the purchase price, the amounts to be paid by way of deposit and the date for completion were all agreed. The Yiu Yau-ping case was followed recently in Chu Wing-ning v Ngan Hing-cheung and Siu Pik-ying No.A9409 of 1991, unreported, a decision of Mr Robert Ribeiro, Q.C., sitting as a deputy High Court judge.

9. Mr Ho submitted that a contract of sale of land is not generally a contract of which the personal quality of a contracting party forms a material ingredient of the contract. Accordingly he asserted that a contract of sale of land entered into by an agent can be enforced by his undisclosed principal by way of specific performance. He referred me to Barnsley's Conveyancing Law and Practice, 3rd edition, p.561, to Chitty on Contracts, 26th edition, vol.1, para.374, and to two cases : Smith v Wheatcroft (1878) 9 Ch D 223 and Dyster v Randall & Sons [1926] 1 Ch 932. In the last case, the plaintiff wished to purchase two plots of land but knew that the vendors, the defendants, would not entertain any offer from him if he approached them directly. Accordingly, he procured a friend to buy the plots for him without disclosing the fact that he was acting as his agent. In his judgment at p.938, Lawrence J. said :-

“ ...it is essential to bear in mind that the agreement which the plaintiff seeks to enforce is not one in which any personal qualifications possessed by Crossley (the purchaser) formed a material ingredient, but is a simple agreement for sale of land in consideration of a lump sum to be paid on completion. It is an agreement which the defendants would have entered into with any other person. It is well settled that the benefit of such an agreement is assignable and that the assignee can enforce specific performance of it. If Crossley had entered into the agreement on his own behalf (as the defendants believed he had) he could immediately have assigned it to the plaintiff and the defendants would have been bound to convey the plots to the plaintiff. Moreover, as Crossley had not, before signing the agreement, disclosed the fact that he was acting as agent, he was liable under it as principal and the defendants could have compelled him to complete the purchase.

Further, it is to be noted that in this case there was no direct misrepresentation such as there was in Archer v Stone 78 LT 34. Crossley was not asked by the defendants whether he was buying for the plaintiff and he made no statement to the defendants on the subject. The real question therefore is whether Crossley's silence, in the circumstances, amounted to a misrepresentation which renders the agreement unenforceable in this Court. In my judgment mere non-disclosure as to the person actually entitled to the benefit of a contract for the sale of real estate does not amount to misrepresentation, even though the contracting party knows that, if the disclosure were made, the other party would not enter into the contract; secus, if the contract were one in which some personal consideration formed a material ingredient: see Nash v Dix 78 LT 445 and Said v Butt [1920] 3 KB 497."

10. The defendant stated in his evidence that he only objected to the inclusion of the plaintiff's husband's name as joint purchaser on the grounds that he had not been told by his solicitor. Quite clearly, the identity of the purchasers was of no consequence to the defendant and it is established by authority that it is not a material ingredient of a contract for the sale of land. In fact, it was perfectly obvious that the defendant reneged upon his agreement because he had agreed to sell in a rising market.

11. As the defendant had shown no justification for cancelling the agreement. I gave judgment for the plaintiff for specific performance.