Talent-Sign Properties Ltd v. Tang Chi Ming

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMININSTRATIVE REGION

DCCJ No. 16303 of 1998

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Judgment

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Background

1. The plaintiff is an estate agent suing for agency fees due under an agency agreement with the defendant. In response to an advertisement in a newspaper, the defendant rang the plaintiff for an appointment to view a particular flat, 14A, in Serene Court, Tin Hau Temple Road. He turned up at the office of the plaintiff at the appointed time and was received by Ms Chow. He signed an agency agreement before he was taken to view two flats 14A and 12A in Serene Court, both of which were specified in the agreement. Flat 12A was occupied at the time and Ms Chow and the defendant spent only a few minutes viewing the premises. The defendant showed more interest in the other flat and spent much longer time inspecting it and made subsequent visits to it for further inspection. Shortly after his last inspection, the defendant offered to purchase flat 14A for 7 million, signed a provisional agreement and made out a cheque of $300,000 for the deposit to show his sincerity. His offer was subsequently increased to 7.5 million. However the plaintiff was unable to conclude the deal at that price with the vendor. The cheque intended for the deposit and the provisional agreement were returned to the defendant. About a month later, the defendant purchased for 7.78 million the other flat, flat 12A, through another agent.

Pleadings

2. It is pleaded in paragraph 3 of the amended particulars of claim that:

"Clause 3 of the agency agreement provided inter alia, that the defendant agreed to pay...1 per cent of the purchase price in the event that the defendant...purchase any of the said properties----within a period of three months from the date of the agency agreement..."

and, in paragraph 4 it is pleaded:

" In pursuance of the agency agreement, the plaintiff faithfully introduced the said properties to the defendant and arrange the defendant to view the conditions thereof. The plaintiff further introduced to the defendant the landowner of flat 12A ...namely Wong Yung Yung..."

The only breach of the agency agreement that is alleged is set out in paragraph 8:

" In breach of the term of the agency agreement--- the defendant failed and/or refused ----to pay the sum of $77,800..."

3. The plaintiff bases his claim solely on the provisions of clause 3 of the agency agreement. The claim for service rendered on quantum meruit basis or other breaches by the defendant have not been pleaded in the alternative.

4. There are 3 pleaded defences (1) that no contract was entered into in relation to flat 12A: Paragraph2(i), (2) if there was such contract, the defendant was induced to sign the contract by misrepresentation: paragraph2(ii), and (3) the plaintiff failed to discharge its duties expressly provided in the contract. In addition these defences, the defendant raised the defence of double agency. The plaintiff acted both for the defendant and the vendor. It is contended by the defendant that the plaintiff has failed to prove that it has made full disclosure of its exact interest to each of its principals. It is settled law on the authority of the Court of Appeal case, Richard Ellis Ltd. V Van Hong-tuon [1988] 1 HKLR 169 that this defence of double agency needs not be pleaded.

No Contract/Misrepresentation

5. The defendant complains that when he first contacted the plaintiff over the phone he was told only about flat 14A. It was this flat he was intended to view. He therefore raised the query and in fact showed his unhappiness when he saw flat 12A included in the list for inspection. Ms Chow told him that it was for price comparison and that the signing the agreement was a formality. Only then he signed the agreement which had not been explained the him. On the other hand Ms Chow said she had explained the content of the statement to the defendant who had not complained about the inclusion of another flat in the inspection list.

6. I find both of them not totally honest. I do not believe the defendant that he complained about including 12A in the inspection list. He was interested in purchasing a flat in Serene Court. The two flats are of similar size and he should have been happy if he was to be offered more flats to choose from. When confronted with this, he could not explain why he should have complained. I believe the defendant made this up to boost his defence.

7. The agency agreement is in a printed form provided by the plaintiff. In the agency agreement there are certain phrases which as admitted by Ms Chow are not applicable and should have been deleted. If Ms Chow has in fact explained in details its content as claimed, it would be easy for her to delete those inapplicable phrases. This she has not done and fails to give a reasonable explanation. I do not accept her evidence that she has explained the content of the agreement in details to the defendant.

8. The defendant admitted that he would have signed the agreement just the same had he known the true effect of the agreement. Even if he might have not read the agreement, he had an opportunity to do so. The agreement is in simple language and is easy to understand. I have no doubt that when he signed the contract, the defendant knew perfectly well that the plaintiff intended to earn its commission from a successful deal of either flat 12A or flat 14A. In these circumstances I hold that the defendant has not been induced into entering into agreement and that flat 12A is also the subject-matter of the agreement. These two defences must fail.

Double Agency/Double Commission

9. Ms Chow admitted that the plaintiff would charge the vendor commission as well. She also said that both the vendor and the defendant knew this fact. Mr. Chan, counsel for the defendant submits that the plaintiff has to discharge the burden of proof that it has fulfilled the Fullwood duty. This I accept. He further submits as the plaintiff fails to produce any documentary proof about agency agreement with the vendor, the plaintiff has failed to discharge the burden of proof. This I do not accept. It is a question of evidence. The defendant has not specifically pleaded this defence, and no specific discovery has been made in respect of this document at any time. In these circumstances, I do not think the court should simply reject the oral evidence adduced by the plaintiff and find for the defendant on this point. Unfortunately for the plaintiff, the oral evidence adduced on the point is nothing more than a bare assertion that its two principals knew that it charged double commission. No evidence has adduced that either of them knew exactly what commission it was going to charge the other or the exact terms. Scrutton L. J. held in Fullwood v Hurley [1928] 1 KB 498 at Page 502:

" No agent who has accepted an engagement inconsistent with his duty to the first principal from a second principal, unless he makes the fullest disclosure to each principal of his interest......."

and at page 503:

" It is not enough merely to give notice that there is commission, leaving the purchaser to inquire what it is and how much. It is the agent's duty to make the fullest disclosure on his second contract of all the benefit he is getting out of it,....."

10. The plaintiff therefore fails to make full disclose and is not entitled to claim commission from the defendant. This defence succeeds.

Plaintiff's Failure to Perform its Part

11. The duties of the plaintiff are spelt out in some details in clause 1 of the agreement:

"On signing this agreement, your company as agent, will act bona fide, to identify premises and to arrange for them to be shown to me, to provide information available and known to you about those premises, to conduct negotiations on my behalf, and to assist in entering into an enforceable sale and purchase ...agreement..."

12. Apart from taking the defendant to view the flat, the plaintiff did nothing else. Contrary to what is pleaded the plaintiff did not introduce the vendor to the defendant. No negotiation was conducted on his behalf. No information as the identity of the owner/vendor was provided. It is clear not all duties stipulated have been performed. Mr. Chan thus submits that on the true construction of the contract, all these tasks must be performed before the commission is due. He must be right. One cannot say this will be unfair to the estate agent plaintiff. Firstly, the question of fairness or unfairness is irrelevant in the instant case. Secondly, estate agents have a lot of other devices to secure their submission. If they want to do it, they should do it properly. Very often they stipulate in the contract that a commission is payable upon the happening of a simple event. There is nothing wrong to bind the principal to a commission on the mere introduction of the property. This has not been done by the plaintiff. Clause 3 begins with the pretext " In consideration of the above, I agree to pay an agency fee...". The words "the above" must referred to duties of the plaintiff referred in Clause 1. On the true construction of the contract, Clause 3 cannot be invoked to require the defendant to pay a commission when very little was done in pursuance of Clause 1.

13. Ms Chow alleged that it was the defendant who show no interest in purchasing flat 12A when he learned that a commission would be charged. Assuming she is right, the fact remains it has not been pleaded that by withholding or withdrawing his instructions the defendant has been in breach of any term, express or implied. This has been clearly raised in the final submission of the defence. The plaintiff was given a chance to make any necessary application. My invitation to make an application to amend was not taken up. That being the case, his claim on this ground does not become available to the plaintiff. However, even if it is otherwise, it will also fail.

14. The defendant claims that it is Ms Chow who refused to conduct the negotiation on his behalf. He said she thought the offer of 7.5 million was low and that was doomed to fail. The asking price for 12A was 9 million much higher than 14A. It was going to be a bigger gap to close than in the case of 14A. The sales price included a car parking space. No discussion about what its sales price would be without the car park. Ms Chow made no attempt to persuade the defendant to consider flat 12A at her office when she returned the cheque. She did not initiate negotiation with the vendor of 12A. This clearly tends to show Ms Chow was not interested. This was because the offer by the defendant was too low in her view. On the other hand, if the defendant did not show any interest as contended by her, I doubt very much that she did not persuade the defendant to purchase the flat. She would probably gave her opinion what the price would be without the car parking space etc. All these support the contention of the defendant that she thought the offer was too low and refused to conduct negotiation on his behalf. I accept the defendant's version and the claim would have failed even if it were available to the plaintiff.

15. The plaintiff has not based his claim on quantum meruit basis and did not seek any amendment of its claim to include this ground. The claim on this ground is therefore not in issue. In any event such claim would have failed miserably. Firstly, no evidence was led to show the worth of the effort of the plaintiff. Secondly, I accept the submission of Mr. Chan that there is no scope for such claim. This is a special contract and the plaintiff failed to do what entitled them to a commission. ( Bentall & other V Vicary (1931( K B 253)

Conclusion

16. The claim is dismissed. I make an order nisi for costs in favour of the defendant with certificate for counsel to be taxed if not agree. The order nisi for costs be made absolute within 6 weeks after handing down judgment. There be liberty to apply.