FIELDID INVESTMENT LTD t/a LINDEN REALTY v. LEE LAI FUN

Small Claims Tribunal Appeal No. 25 of 1991

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HEADNOTE

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An undertaking given by a prospective purchaser to an estate agent not to approach the owner either directly or through another agent does not apply to a situation in which the buyer is, by coincidence, subsequently shown the same flat by another estate agent, and eventually purchases it through that other agent. The first agent is not entitled to any commission in such circumstances. Such undertakings may be necessary and apt to protect estate agents against unscrupulous purchasers and owners getting together to cut them out after they had done their work of introduction. But that was not the situation in the present case, which was one of coincidence and not of collusion.

IN THE SUPREME COURT OF HONG KONG

SMALL CLAIMS TRIBUNAL APPEAL NO. 25 OF 1991

(From CLAIM NO. H-17154/91)

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JUDGMENT

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1. This is an application for leave to appeal against a decision of the Small Claims Tribunal.

2. The applicant company, who was the claimant before the tribunal, was and is an estate agent. In April this year, it showed a flat to the defendant. But the defendant did not purchase the flat through it. Subsequently, the defendant, who was still in the market for a flat, went to another agent. That other agent took the defendant to see - by coincidence - the very flat that the claimant had taken her to see earlier. Until she arrived at the flat, she did not even know that she was being taken to see a flat which she had already seen. In the result, she purchased the flat through the second agent. Nevertheless, the claimant insisted on a commission. The defendant refused to pay; and the claimant brought a claim for such commission.

3. The adjudicator, Mr Z.E. Li, accepted the defendant's evidence, rejected the evidence of the claimant's witness, and found the facts which I have just outlined. By his decision of September 12 this year, he dismissed the claim. It is against that decision that the claimant now seeks leave to appeal.

4. Reliance was and is placed by the claimant on an undertaking by the defendant - contained in a standard form agreement which it had got her to sign on the day on which it showed her the flat - not to approach the owner of the flat either directly or through another agent.

5. On the facts which he found - and there can be no appeal against a decision of the Small Claims Tribunal on the facts - the adjudicator concluded quite simply and quite rightly that the defendant had not approached the owner of the flat either directly or through another agent, the whole matter being one of coincidence.

6. Looking at the Application for Leave to Appeal on Point of Law in Form 9, one sees a complaint that the adjudicator erred in law in holding that the undertaking was "... unreasonable and therefore not binding upon the Defendant". The adjudicator's view on the question of enforceability is set out in the penultimate page of the written reasons which he gave on October 29 this year. He said:

"In all the circumstances, in so far as it purports to prohibit the Defendant from purchasing the property in question except through the Claimant, it is unreasonable and therefore unenforceable."

7. That statement was unnecessary to the decision. The adjudicator had found the facts. And he had applied the undertaking in its plain and obvious meaning to the facts which he found. In doing so, he came to a correct decision.

8. But the ambit of the undertaking urged upon him caused him some anxiety. He spoke about concepts such as restraint of trade; he drew an analogy with agreements such as solus agreements; and he went into the matter at some length.

9. Now I can understand the claimant's anxiety over the possible implications of some of the things which the adjudicator said. After all, it may be that undertakings of this sort are necessary and apt to protect estate agents against unscrupulous purchasers and owners getting together to cut them out after they had done their work of introduction. That would be collusion rather than coincidence. But, properly understood in their context, the observations of the adjudicator are not of the wide purport feared by the claimant; and his observation which I have quoted is - as I have said - unnecessary to his decision which, on the facts, is clearly a correct one.

10. The adjudicator might have been dealing with what the position would be if - as a matter of construction - the undertaking could apply to a coincidence such as the one here in question. But he need not have concerned himself with that since it is clear that such undertakings cannot apply to such situations. It is plain and obvious that they cannot. And even if there were some ambiguity about it, any such ambiguity, arising out of the agent's standard form, would have to be resolved against the agent. What the adjudicator also seems to have had in mind is this. If such undertakings could be applied to a coincidence such as this one, then an estate agent without even a sole agency would be put in a position as favourable in effect as that of an agent with a sole right to sell.

11. Those considerations seem to have exercised the adjudicator, and to have led him to make observations unnecessary to his decision. If his observation as to enforceability were crucial to his decision, I would not shut out the challenge to it; and I would give leave to appeal so that both sides of the question could be fully argued. But the fact of the matter is that the decision is - on its own facts - clearly unassailable; and there is no reasonable ground for taking this matter further. The application for leave to appeal is refused.