L & D ASSOCIATES (a firm) v. CHAN MAN CHON MADALENA

IN THE COURT OF APPEAL

1987, No. 80
(Civil)

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JUDGMENT

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Kempster J.A.:

1. This is the judgment of the Court.

2. On 26th May last in the District Court Judge Leong dismissed a claim by L & D Associates for commission from Miss CHAN Man-chon Madelena the purchaser of a flat in Happy Valley. By leave the plaintiffs appeal against that Judgment.

3. It is apparent from the evidence of Mrs Poon, also known as Mrs. Lam, the plaintiff's negotiator and representative, that they and other estate agents were acting as the vendor's sub-agents for the sale of these premises.

4. On or about 25th June 1986, having seen a newspaper advertisement for the flat which the plaintiffs had inserted and which must have identified them, the defendant telephoned for an appointment. Mrs. Poon arranged to meet her at the flat at 4.30 p.m. the same afternoon. The defendant arrived in company with her mother.

5. According to the defendant, whose evidence the trial judge preferred as and when it conflicted with that of Mrs. Poon, she signed a document called “inspection Record” presented to her following the view. We are in no position to question such preference. It is upon this document that, by their Amended Particulars of Claim, the plaintiffs rely as constituting an enforceable promise by the defendant to pay them commission in the event of purchase. That such a document may have contractual effect if consideration be proved and that the agents can then recover commission from a purchaser whether or not they concluded the bargain on his behalf is established. L & D Associates v. WU Siu-Keung(1).

6. The consideration expressed was the introduction of the defendant to the premises and the material words read:

“I hereby agree to engage your services for introducing premises listed above to be purchased by me and in consideration thereof I agree to pay you agency fee in the sum of 1% of the purchase price -. I further agree that this agreement shall be binding on my family members, nominees or agents who subsequent to the said introduction purchase the said premises.”

The judge found that by the time of signature the introduction had already been effected and that, accordingly, the consideration was “past”. This is a conclusion of law which the plaintiffs challenge.

7. Where what is in substance one transaction falls for consideration it is not sufficient merely to examine in detail the chronological sequence of events in order to answer the question whether or not a consideration expressed is "past". The law is accurately stated in para.320 of Vol. 9 of Halsbury’s Laws of England:

“A so-called ‘past consideration’, that is, something done by the promisee before the promise was made may constitute a motive for the promise but is not valuable consideration - the question whether consideration is past or merely executed is essentially one of fact. An apparent exception to the rule is, that where services have been rendered by one person to another at his request a subsequent promise to pay for these services can be enforced. This is, perhaps, not a real exception to the rules stated above, for in such a case there may be an implied promise to pay for the service, and the subsequent express promise may be treated either as an admission which evidences or as a positive bargain which fixes the amount of that reasonable remuneration on the faith of which the service was originally rendered.”

This succinct exposition was recently amplified by Lord Scarman in PAO On v. LAU Yiu-leong(2) :

“An act done before the giving of a promise to make a payment or to confer some other benefit can sometimes be consideration for the promise. The act must have been done at the promisors' request: the parties must have understood that the act was to be remunerated either by a payment or the conferment of some other benefit: and payment, or the conferment of a benefit, must have been legally enforceable had it been promised in advance.”

8. In the instant case the defendant had certainly requested the plaintiffs' services to assist her in purchasing the premises in question but it would not follow that the parties must have understood that the plaintiffs were to be remunerated therefor by the defendant since to her knowledge the plaintiffs were acting for and on behalf of the vendors and would look to them for reward. However p the defendant expected to pay commission none the less. What, in our view, is critical and fatal to the plaintiffs' claim is that any express or implied agreement for payment of commission by the purchaser, far from being legally enforceable had it been promised in advance, would have been unenforceable as repugnant to cardinal concepts of the Law of Agency:

“The plaintiff’s position is quite clear that is to say that he was at that time acting for the vendor, he was the agent for the vendor owing a duty to his principal and intending to receive and being entitled to receive a commission from the vendor. That being his position he was in accordance with his duty disentitled so to engage in a second agency with the purchaser, an agency which would conflict with his duty towards his original principal, the vendor, a position which, unless it was assented to with full knowledge by his original principal, could not be maintained by him as an agent at all.” per Lord Hanworth. M.R. in Fullwood v. Hurley(3).

Put in a slightly different way by Scrutton L.J. at p.502:

“No agent who has accepted an appointment from one principal can in law accept 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 obtains the consent of each principal to tile double employment.”

9. No evidence of the vendor's consent to a second agency which, necessarily, would give rise to a conflict of interest was led on behalf of the plaintiffs. In our opinion, therefore, the situation outlined by Lord Scarman did not obtain as between the parties to this litigation and, as the judge found, the expressed consideration for the defendant’s promise was "past". Such bare promise cannot be enforced at the suit of the plaintiffs.

10. Although the question of "double agency" was not raised by counsel for the defendant below or before us we cannot overlook the recent conclusion of another division of this Court in similar circumstances that:

"It is necessary to [an estate agent’s] success that he shows himself to have acted within the terms of his duty leading evidence to that effect whether or not the other side would take the point." Richard Ellis v. Van Hong Tuon(4) per Silker V.-P.

11. In any event it is incumbent upon a party suing upon a promise contained in a written document to demonstrate that consideration has been given: Savage v. Uwechia(5).

12. Insofar as, in the absence of a finding by the judge, we are invited to conclude on the basis of his notes of evidence that a material misrepresentation was made by Mrs. Poon to the defendant as to the nature and effect of the document we decline so to do.

13. It is unnecessary for us to rule on the applications to amend the Particulars of Claim and the Respondent’s Notice.

14. The appeal is dismissed.