AMY SO v. TONY CHIU YUN KAN AND OTHERS

1991, No.A8771

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 3rd defendant is an estate agent. In March 1991 through her company, Excel Land Properties Consultant Company, she acted for the 1st defendant and one Mr Wan in the sale of a property in Village Terrace as well as the 2nd defendant and the said Mr Wan in the sale of another property in Stanley Main Street. On verbal instructions from the 1st and the 2nd defendants respectively to Excel Land, she signed agreements for sale and purchase on their behalf. It is the case of the plaintiff and the 3rd defendant agent that similarly the 1st and the 2nd defendants, this time as co-owners, orally instructed the 3rd defendant to sell Flat B on the 3rd Floor of 5 Village Terrace including the roof. The formality and legality of these oral instructions to sell are not a matter in controversy. The only issue is whether or not the 3rd defendant agent was so instructed to sell.

2. The 1st defendant and the 2nd defendant have apparently been in the habit of playing the property market. At lease the 1st defendant belongs to a group of friends who share the same pastime. The 1st defendant consulted the 3rd defendant and other property agents as to opportunities for and the price range in property acquisition. The 3rd defendant agent had, from time to time, been consulted also by the 2nd defendant on property prices. The 1st and the 2nd defendants are old friends of over 20 years. They had decided to be independent from their families and to share accommodation in the suit premises which were purchased in February 1991. Principally due to lack of available labour in the Chinese New Year period, the decoration of the suit premises had taken some five months to complete and the 1st and the 2nd defendants set up residence in the suit premises only by July 1991. There is no sufficient evidence of any other reasons as to why the 1st and 2nd defendants moved into the suit premises in as long as five months after purchase.

3. The 1st defendant had constantly sought quotations for the suit premises. I am not at all persuaded that the 1st defendant would have been so keenly interested in regular quotations if the 2nd defendant as co-owner had been firm that he would never sell except to an offer he could not possibly resist. Almost immediately after they moved into the suit premises in August 1991, the 1st defendant personally instructed the 3rd defendant agent to sell them. By about 13 August, some two weeks before the signing of the Provisional Agreement for Sale and Purchase by the 3rd defendant agent allegedly on behalf of the 1st and the 2nd defendants on 28 August 1991, the keys to the suit premises had been given by the 1st defendant to the 3rd defendant agent with the view to allowing inspection by prospective buyers. The 3rd defendant agent was promised by the 1st defendant to be additionally rewarded 1% commission if the sale price was to exceed $1.9 million.

4. I propose to begin with the versions of the 1st and the 2nd defendants. When the 1st defendant was still being legally represented, he stated in paragraph 7 of his witness statement that in or about August 1991, "I together with the 2nd defendant specifically authorised (the 3rd defendant agent) to sell the premises on our behalf at a price of $1.97 million". The 1st defendant now says that that was a blatant error. His excuse is not too convincing. The 1st defendant claims that the 2nd defendant had in fact no knowledge of his instructions to the 3rd defendant agent to sell. Bearing in mind their closeness in relationship, their occupation of the neighboring bedrooms in the suit premises and their admitted common preoccupation in property acquisition, it is difficult to accept that the 1st and the 2nd defendants had not discussed and agreed to allow the 3rd defendant agent to handle what could have been an early disposition for a handsome profit. After all, the 1st defendant was "over-joyed" with the price. The 3rd defendant agent was to receive an extra reward for an over $1.9 million offer. The 1st defendant also claims that the 2nd defendant had no knowledge of that additional reward offered to the 3rd defendant agent in terms of 1% commission, half of which would be the 2nd defendant's responsibility. The 1st defendant is now also adamant that his instructions to sell covered only his own half interest. Would anyone want to buy half a flat? Is that not incredible? It is equally hard to believe that the 1st defendant would put a price of $1.9 million on the jointly owned property without any consultation with the 2nd defendant. I also cannot accept that keys to the suit premises were given to the 3rd defendant agent for property inspection in the ignorance of the 2nd defendant who could have been exposed to disturbing irritation

5. But more inexplicable episodes are yet to come in the evidence of the 1st and the 2nd defendants. When the 3rd defendant agent contacted the 1st defendant on 28 August 1991 with the news of an offer of $1.938 million, the 1st defendant found the price agreeable but instructed the 3rd defendant agent to consult the 2nd defendant. The 3rd defendant agent had been under the impression that the legal interest vested only in the 1st defendant although she sensed that the 2nd defendant and the 1st defendant, sharing accommodation and an interest in the property market, were probably the beneficial co-owners. The 1st defendant himself thereupon also contacted the 2nd defendant. According to the 1st defendant, he got through to the 2nd defendant but the line quickly went dead so that he could not put in more than three words :"Hello, Goldie has got" The 1st defendant said that he tried again to get through to the 2nd defendant but in vain. However, the 2nd defendant never returned his call! What is impossible to accept is the 2nd defendant's claim that he had heard more than these three uttered words. In fact, according to the 2nd defendant, there was a substantial conversation as follows :"Very quickly (the 1st defendant) said that the 3rd defendant had got a buyer who was interested to buy our flat. I asked the 1st defendant 'why sell it?' The 1st defendant replied :'In that case I would ask the 3rd defendant to phone you'. The 1st defendant did not tell me the price. I was not interested in the price." The 2nd defendant maintains that only then the battery was running low and that neither the 1st defendant nor he contacted each other again to resume the telephone conversation. One of them must have lied about the words spoken and heard, and their individual attempts to steer the 3rd defendant clear from the sale instructions lack credence.

6. To divert for a moment, the 3rd defendant's case is that she duly acted as told and contacted the 2nd defendant. Finally, when she got through to the 2nd defendant, in her version she said :"Leslie, I have got a client giving a reply of a price of $1.938 million. Tony has asked me to ask you about your opinion." The 2nd defendant replied : "No problem, but I have to need two more months to find a place to move to. Today I am very busy. The battery of my mobile phone is getting flat. If you have anything, you fix things up with Tony." This version of the 3rd defendant agent is, of course, denied by the 2nd defendant. When the 3rd defendant agent later on the same day reported back to the 1st defendant of the 2nd defendant's consent and the 2nd defendant's request for two additional months to complete, the 1st defendant allegedly accepted the suggestion. The 1st defendant had never brought up the two months period to complete himself and he raised no objection to such a delayed completion date in the Provisional Agreement for Sale and Purchase signed. Still later in the course of preparing the Provisional Agreement for Sale and Purchase, when the plaintiff, as prospective buyer, requested to have a list of furniture to be left behind, the 3rd defendant agent sought the consent of the 1st defendant alone. The 3rd defendant agent had been asked by the 2nd defendant to leave matters in the hands of the 1st defendant and furniture was only a trivial side request from the prospective buyer. The 3rd defendant agent would not likely have invented more instructions if she had not in fact been given them by the 2nd defendant.

7. At about 5 p.m. on the same day, 28 August, the 3rd defendant agent, together with her partner, took the 1st defendant to view Comfort Terrace. The 1st defendant had intended to go with the 3rd defendant agent and her partner to the office of the prospective buyer's agent, Mr Simon Ng. For an urgent message which required the immediate attention of the 1st defendant, he declined to go to the office of Mr Simon Ng and instructed the 3rd defendant agent to sign the sale documents. The 3rd defendant and her partner proceeded to the office of Mr Simon Ng and having been joined by the plaintiff there, the party proceeded to the suit premises.

8. When the 1st defendant returned home the same evening on 28 August, he found the cheque and the Provisional Agreement for Sale and Purchase. The 3rd defendant agent has explained that the Provisional Agreement for Sale and Purchase was only subsequently placed in the new car of the 2nd defendant in the afternoon of the 29 August when she took the 2nd defendant to view Comfort Terrace. The matter was not put to the 1st and 2nd defendants. It arose for the first time in the 3rd defendant's evidence, but that does not really matter because even on the cheque alone there was no doubt that both the 1st and the 2nd defendants would be aware of the sale. According to the 3rd defendant agent, both the 1st defendant and the 2nd defendants called her late about 11:45 p.m. on 28 August. According to the 3rd defendant agent, neither the 1st defendant nor the 2nd defendant raised any objection to the sale of the property. They were rather eager to seek information as to the mechanics in acquiring Comfort Terrace. In fact, according to the 3rd defendant agent, the 2nd defendant made an appointment with her to view Comfort Terrace the next day in the afternoon. The contents of the conversation are denied. It is also disputed that the 1st defendant spoke to the 3rd defendant agent.

9. However, according to the 1st and the 2nd defendants, only the 1st defendant contacted the 3rd defendant agent and told her that the 2nd defendant had never agreed to the sale. It is said to be early on 29 August. What is important to note is that in this telephone conversation and on all subsequent occasions, the 3rd defendant agent was never remonstrated on what must have been her deception and dishonesty. It is not to be forgotten that the 2nd defendant was allegedly very upset so much so that he went to bed leaving the matter to be sorted out by the 1st defendant with the 3rd defendant agent on 28 August evening or early 29 August.

10. I turn next to the 3rd defendant agent's version. She claims that the first time she was told that the 2nd defendant refused to sell was when the 1st defendant rang her up in the afternoon on 30 August. As for the 2nd defendant himself, he telephoned the 3rd defendant agent in the morning of 31 August 1991 that he had decided not to sell the property. According to the 3rd defendant agent, she was distressed and felt obliged to and did, at the suggestion of the prospective buyer, arrange for the parties to meet face to face. On 3 September, only the 1st defendant attended the pre-arranged meeting. On 15 September 1991, the 1st and the 2nd defendants met the prospective buyer, the plaintiff, in the presence of their respective agents and others. The 2nd defendant told the prospective buyer, the plaintiff, direct that the property was not to be sold. Thereupon, the 2nd defendant placed the cheque on the table. It is disputed whether the plaintiff took the cheque or whether the plaintiff refused to take it but her agent, Mr Simon Ng, took custody of it in the circumstances. In any case, Mr Simon Ng still retains the cheque today, but I prefer the plaintiff's evidence.

11. The 3rd defendant agent claims to have taken the 2nd defendant to view Comfort Terrace the next day in the afternoon, when she placed the Provisional Agreement for Sale and Purchase in the new car of the 2nd defendant. The 1st and the 2nd defendants had no opportunity to challenge the assertion of the 3rd defendant agent as to this. The relevance is that the 2nd defendant allegedly raised no objection to the sale nor accused the 3rd defendant agent of impropriety. The 2nd defendant called his colleague to corroborate his evidence that in the afternoon of 29 August, a Thursday, he was engaged in a usual meeting of his company. Both the 1st defendant and the 2nd defendant maintain that the 2nd defendant in fact viewed Comfort Terrace before 28 August. It is also said by the 3rd defendant agent that she even enquired from the 2nd defendant whether the cheque, by way of deposit, had been cashed. Counsel for the 1st and the 2nd defendants seek to make much capital of the evidence that the plaintiff had insisted on the cheque to be presented after a search made in the Land Registry. Mr Simon Ng completed the search only around 4:00 in the afternoon of 29 August and accordingly informed the plaintiff around 4:10. It is submitted on behalf of the 1st and the 2nd defendants that the 3rd defendant agent could not have consistently made such an enquiry as to the cashing of the deposit cheque. However, there is no evidence that the 1st and the 2nd defendants had been told of the plaintiff's insistence. Further, at the time when the prospective buyer enquired as to the names on the Rates Demand Notes and Utility Bills before the signing of the Provisional Agreement for Sale and Purchase, the 3rd defendant agent, on contracting the 1st defendant, managed to locate these documents in a drawer in the suit premises. To the 3rd defendant agent, ownership must have been so verified.

12. This disputed incident of the 2nd defendant's visit to Comfort Terrace on 29 August and the conversation during it can have but little significance. Also, there are other aspects in which the evidence of the 1st and the 2nd defendants and that of the 3rd defendant agent have not entirely come out in perfect harmony. But taking a bird's-eye view of the 1st and the 2nd defendants' versions alone, for the analysis I have endeavoured to make, it is highly improbable that the 2nd defendant could have no knowledge of the sale or could have given no consent to it.

13. It does not follow that I must accept the version of the 3rd defendant agent or that of the plaintiff. The 3rd defendant is an impressive witness. On the whole I prefer her evidence. She seems genuinely aggrieved. Whether or not there was a viewing of the Comfort Terrace premises on 29 August, I accept her evidence that the 2nd defendant did view these premises with the 3rd defendant after the signing of the Provisional Agreement for Sale and Purchase although I am not sure that the date as given by the 3rd defendant agent for such a visit is wholly accurate. She also recalls the request of the 1st defendant at about 1 p.m. on 30 August that she should consult Ms Yu Kar Po as to whether after sale the respective resources and incomes of himself and the 2nd defendant would be financially viable to secure the acquisition of Comfort Terrace. It was only at about 5 p.m. on the same day that the 3rd defendant agent, so she says, was told for the first time that the 2nd defendant refused to sell. It is improbable that the 1st defendant's earlier enquiry was made without consultation with or knowledge of the 2nd defendant.

14. The 2nd defendant, I find, duly authorised the 3rd defendant agent to act on his behalf in the sale of the suit premises.

15. In the Provisional Agreement for Sale and Purchase, Mr Simon Ng, agent for the prospective buyer, put in $1.94 million, an additional $2,000 over and above the price which had been agreed by the 1st and the 2nd defendants. The 3rd defendant agent welcomed the extra without hesitation.

16. The plaintiff was and is clearly able, ready and willing to complete.

She broke into tears on 15 September when she confronted the 1st and the 2nd defendants and was given the bad news direct. She was keen to acquire the premises particularly with a roof in that part of the town. She had been and brought her family to the suit premises altogether three times. She has explained her resources with reference to her additional acquisition of the Discover Bay property. It cannot be said that acquisition of the suit premises was beyond her capability. Moreover, she had the support of her family. She took pains., communicate. with the prospective sellers with a view to resolving the difficulty. Through her solicitors on 12 September 1991, she tendered $154,000 by way of further deposit. Earlier on 5 September 1991, she caused to be registered in the Land Office against the suit premises the Provisional Sale and Purchase Agreement. Negotiation was conducted with the 1st defendant on 3 September and she had the final meeting with the 1st and the 2nd defendants on 15 September in Cheung Hing Cafe. The writ in this case was issued on 5 November 1991. I find her a reliable witness and prefer her evidence also as to the return of the cheque although the 3rd defendant's evidence on the cheque is not wholly satisfactory.

17. It has taken this action quite some time to come to trial. The 1st and the 2nd defendants had not sought to have this action struck out for want of prosecution. There is no evidence sufficient to pin fault on the plaintiff in terms of dilatoriness. The 1st and the 2nd defendants have been in the habit of toying with property acquisitions. The 2nd defendant does claim that he is fond of the suit premises but there is no evidence of real hardship. It would be unproductive for me to embark on an analysis of the circumstances and the relevant law with reference to specific performance and judicial discretion. I am left in no doubt in this case that discretion ought to be exercised in favour of the plaintiff and specific performance should be decreed. Counsel of the plaintiff assures this court that the plaintiff seeks only specific performance.

18. In view of my findings, there was no breach of warranty on the part of the 3rd defendant agent.

19. I decree specific performance and dispose of the action and the Third Party proceedings accordingly. Counsel for the plaintiff would have carriage of the order in these matters which have been jointly heard. Costs are to be reserved.