XCHRX HOUSE LIVING PROPERTY & INTERIOR DESIGN CO. LTD. v. VICTORY POWER INTERNATION LTD. AND ANOTHER

DCCJ14010/2001

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 14010 OF 2001

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Judgment

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1. For reasons that will become apparent, the Plaintiff's Statement of Claim is set out below :-

"1. At all material times, the Plaintiff was and is still carrying on the business of an estate agency.

2. Solely through the introduction and services of the Plaintiff, the 1st Defendant as vendor agreed to sell and the 2nd Defendant as purchaser agreed to purchase the property known as All That Flat A, 12/F of Three Carmen's Garden, and Car Parking Space No. 181 of Carmen's Garden, No. 9 Cox Road, Kowloon, Hong Kong ("the Property") at the price of HK$11,880,000.00 ("the Price").

3. On about 20th June 2001, the 1st Defendant, the 2nd Defendant and the Plaintiff entered into a Provisional Agreement for Sale and Purchase dated 20th June 2001 for the sale and purchase of the Property at the Price ("the Agreement").

4. Clause 6 of the Agreement provides that the parties shall execute the formal agreement for sale and purchase on or before 18th July 2001.

5. Clause 7 provides that the 2nd Defendant as purchaser shall upon signing of the formal agreement for sale and purchase pay the Plaintiff the sum of HK$118,800.00 as its service fees and that the 1st Defendant as vendor shall upon signing of the formal agreement for sale and purchase pay the Plaintiff the sum of HK$118,800.00 as its service fees. The Plaintiff will refer to the Agreement at the proceedings of this action to the full term and effect thereof.

6. On about 18th July 2001, the formal agreement for sale and purchase was duly signed by the 1st and 2nd Defendants.

7. In wrongful breach of the Agreement, and despite repeated demands and requests of the Plaintiff, the 1st and 2nd Defendants had failed and still refuse to pay the said agreed service fees to the Plaintiff.

8. The Plaintiff further claims interest on the amounts of the said agreed service fees awarded pursuant to the District Court Ordinance for such period and at such rate as this Honourable Court may deem just.

AND the Plaintiff claims the 1st and 2nd Defendant respectively and each of them for :-

1. HK$118,800.00;

2. Interest as aforesaid;

3. Costs; and/or

4. Further or other relief."

2. As can be seen, the Statement of Claim contains the essential facts which are not really in dispute. The Plaintiff and the 1st Defendant have indeed reached full and final settlement and the only matter outstanding before me is the Plaintiff's application for summary judgment against the 2nd Defendant.

3. The 2nd Defendant has not yet filed or served her Defence. She does, however, allege in her affirmation in opposition that the Plaintiff had agreed to accept $10,000 from her and abandoned the claim for $118,800 as commission. This allegation is denied by the Plaintiff in affirmation in reply.

4. Mr. Chain for the Plaintiff says that it is well established law that where the Defendant's case in opposition to the Plaintiff's application for summary judgment, on facts, is plainly incredible, the court must not shrink from giving judgment for the Plaintiff without further ado. Presently, stripped of all irrelevant allegations, the 2nd Defendant's only defence is that there was a settlement agreement under which the Plaintiff agreed to accept $10,000 in full and final settlement : paragraph 8 of her affirmation. The alleged settlement sum being less than 10% of the Plaintiff's entitlement must surely raise an eyebrow. In support of that allegation, the 2nd Defendant produced a photocopy impression of the cheque for $10,000 with her hand-written 'receipt clause" on that copy where Mr. Chan of the Plaintiff was said to have signed to acknowledge receipt. That story is however contradicted by Mr. Chan of the Plaintiff producing the receipt clause on the photocopy impression of 2 other cheques for the total sum of $118,800 which the 2nd Defendant handed over to the Plaintiff in purported payment of the commission. This receipt clause was also written by the 2nd Defendant and dated the same day as the other receipt clause. Mr. Chain pointed out that since the 2nd Defendant drew and delivered to the Plaintiff two cheques for the full amount of commission, there is no reason for the Plaintiff to accept on the very same day $10,000 (less than 10% of the full commission) as satisfaction. The 2nd Defendant's story is, therefore, plainly incredible and the 2nd Defendant has not offered any further explanation. Accordingly, the court is urged to give summary judgment for the Plaintiff.

5. Mr. Finley for the 2nd Defendant informed the court that he had been instructed at the eleventh hour but he believed the 2nd Defendant might well have some explanation about the two receipt clauses being dated the same day. For instance, the date(s) might not have been put by the 2nd Defendant. I see that the significance of the two receipt clauses being dated the same day was brought up in an affirmation filed on behalf of the Plaintiff on 19th November 2001. So the 2nd Defendant should have had plenty of opportunity to deal with this point. Perhaps the 2nd Defendant did not quite see the significance of this point for she had no lawyer acting for her until the weekend before the hearing before me. I suppose some judges justifiably may say too bad the 2nd Defendant has had her opportunity to explain and now there should be summary judgment for the Plaintiff, whilst other judges may decide, without attracting criticism for being less than robust, to give the 2nd Defendant an opportunity to file and serve further affirmation evidence to deal with the point. I am inclined to err on the safe side, i.e. giving the 2nd Defendant a short period of time to file further evidence. After all, at the end of the day, the Plaintiff can still succeed after trial if the truth is on the Plaintiff's side.

6. Quite apart from there being possibly triable factual issues, I have grave doubts about the Plaintiff's cause of action. The problem arises from the indisputable fact that the Plaintiff is an estate agent suing for estate agency commission. Now, sections 45 and 46 of the Estate Agents Ordinance, Cap. 511 provides that :-

"45. Estate agency agreement required as regards certain proposals and undertakings

(1) Where a person (in this section referred to as "the agent") proposes or undertakes (whether for a commission or other fee or not) to perform estate agency work for a client, whether as regards a particular property or not, a right or other cause of action whereby damages or any other relief or remedy may be recovered or obtained in legal proceedings as regards the proposal or undertaking shall lie at the suit of the agent if, and only if -

(a) an agency agreement (in this Ordinance referred to as an "estate agency agreement") embodying the terms of the proposal or undertaking, being an agreement between the agent and the client which is in the prescribed form and which contains such particulars (if any) in respect of the proposal or undertaking as are prescribed for the purposes of this section has been entered into and, in the case of a written document, properly executed; and

(b) the agent was a licensed estate agent at the time when the estate agency agreement was so entered into and executed.

(2) Where a person ("the agent") makes a proposal or gives an undertaking to perform estate agency work for a client as described in subsection (1), the agent shall be entitled to recover from, or to require the payment by any other person of, any amount in respect of any outgoing paid or payable by the agent as regards any acquisition or disposition of any property to which the proposal or undertaking relates if, and only if

(a) an estate agency agreement between the agent and the client which is both in the prescribed form and contains in respect of the proposal or undertaking such particulars (if any) as are prescribed for the purposes of this section has been entered into and, in the case of a written document, properly executed; and

(b) the agent was a licensed estate agent at the time when the estate agency agreement was so entered into and executed.

(3) A right or other cause of action described in subsection (1) shall not lie at the suit of any person other than the agent within the meaning of this section by reason only of anything contained in this section.

46. Form and content of estate agency agreement

(1) An estate agency agreement shall comprise 1 or more written documents, and any agreement made in accordance with regulations made under subsection (4) to vary or supplement any such documents."

As already seen, the Plaintiff is relying on a provisional sale and purchase agreement to sue for commission. There is no doubt that that provisional agreement does not comply with the form and substance of an estate agency agreement stipulated in section 46 of the Estate Agents Ordinance, Cap. 511.

7. Mr. Chain contends that if there is challenge based on sections 45 and 46 of the Estate Agents Ordinance, Cap. 511, it is a matter to be pleaded in the Defence but the 2nd Defendant has not raised this point in pleadings. I think the short answer is that the 2nd Defendant has not yet pleaded. She has so far only filed and served affirmation to oppose the Plaintiff's application for summary judgment. Of course the 2nd Defendant cannot make statements about the law or argue legal principles in affidavits; but this does not prevent points of law being raised before pleading has been filed and served.

8. The long answer to Mr. Chain's argument is that section 45 states quite clearly that "a right or other cause ...... shall lie at the suit of the agent if, and only if, .....". So the matter of estate agency agreement is about the right or cause of action. The Plaintiff has to disclose in its Statement of Claim that it has right or cause of action. It is not a matter of defence that has to be raised. The Plaintiff's Statement of Claim pleads a provisional sale and purchase agreement which plainly is not an estate agency agreement. If there is an application by the 2nd Defendant to strike out the Plaintiff's claim as disclosing no reasonable cause of action, I think the court should have little difficulty in making an order in terms and there be no need to look into the Defence before granting the strike out application.

9. The matter is a little more complicated. In fact, the Plaintiff and the 2nd Defendant had signed an estate agency agreement in February 2001. But, on the face of that estate agency agreement, the agreement is valid for 3 months only and so it "expired" by the end of May 2001 well before the provisional sale and purchase agreement pleaded in the Statement of Claim was signed. Mr. Chain, true to form, was quick to cover this point. He contended that the fact the estate agency agreement "expired" does not mean that the Plaintiff is not entitled to recover commission for work done that originated from that estate agency agreement. In other words, an "expired" estate agency agreement may extend or have a kind of after life.

10. I do not think it is appropriate at this stage to conduct analysis of the effect of an estate agency agreement that is expressed to have a shelf life of 3 months only. For one thing, the Plaintiff has not in its pleading cited the estate agency agreement as the basis of its cause of action. For another, even if the Plaintiff pleads the "expired" estate agency agreement as the basis of cause of action, obviously it is a question of mixed law and fact as to effect of that "expired" estate agency agreement and the Plaintiff is not entitled to have summary judgment when an issue involving mixed law and fact requires trial.

11. In the premises, no matter how one looks at this matter, the Plaintiff is not entitled to summary judgment. The Plaintiff's summons against the 2nd Defendant is therefore dismissed. I make an order nisi that the costs of the dismissed summons be costs in cause. There is liberty to apply.