TAI TUNG REALTY (AGENCY) CO. v. MOONBA LTD.

IN THE SUPREME COURT OF HONG KONG

SMALL CLAIMS TRIBUNAL APPEAL NO. 3 OF 94

(Claim No. 32817 of 1993)

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J U D G M E N T

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1. This is an appeal against the Judgment of the learned Adjudicator in the Small Claims Tribunal dismissing the Claimant's claim for the sum of $14,000.00 being service charge arising out of a provisional rental agreement between the Defendant and one Alos Components Ltd.

2. The Defendant was at the material time the registered owner of the premises at Unit 8, 4/F, Nan Fung Commercial Centre, Kowloon Bay. (The said premises) and the Claimant was an estate agent.

3. It is not in dispute that in or around July 1993, the Defendant through it director, one Ma Pui Tung who is a solicitor instructed the Claimant to find a tenant or a purchaser for the said premises. After receiving the instruction, Miss Chan of the Claimant saw an advertisement in a newspaper relating to the said premises and when she rang the telephone number in the advertisement, she got in touch with a Miss Cheung Suk Ming. Miss Chan thought Miss Cheung was either the owner or the owner's representative and during their contact, Miss Cheung made reference to her boss. The Claimant eventually found a tenant, Alos Components Ltd to rent the said premises and a provisional rental agreement dated 30.7.93 was executed between Alos Components Ltd. and Miss Cheung who described herself in the agreement as the landlord or it agent. The claimant acted as the witness to the said agreement. A sum of $28,000.00 being one month's rent was paid by the tenant as deposit. The parties agreed to execute a formal tenancy agreement on or before 6th of August 1993 at the office of Messrs. K.C. Man and Company. The tenant agreed to pay a service charge of $14,000.00 to the Claimant. The agreement further provided that should the tenant be in default, the deposit would be forfeited by the landlord and should the landlord be in default, a sum equal to double the amount of the deposit had to be paid to the tenant as compensation and the defaulting party also had to pay to the Claimant the sum of $14,000.00. At the suggestion of Miss Cheung, the deposit of $28,000.00 was in fact paid to Messrs. K.C. Man and Company where Mr. Ma was then working as an assistant solicitor.

4. Subsequently, the Defendant decided to sell the premises instead and on or about 28.8.1993 a provisional Sale and purchase agreement was executed between the Defendant and the buyer Countrywide Industrial Ltd. in respect of the said premises. Before the sale and purchase agreement was executed, Mr. Ma made a telephone call to Mr. Wong Kuen Kong of Alos Components Ltd. and concluded a settlement deal in respect of the cancellation of the provisional rental agreement whereby the defendant repaid the rental deposit of $28,000.00 to Alos and paid a further sum of $28,000.00 as compensation. The settlement was said to be made on a without prejudice basis.

5. On 2.9.93, Messrs. K.C. Man & Company, on behalf of the Defendant sent 2 cheques each for $28,000.00 to Alos and the letter accompanying the cheques contained the following:

" we are instructed that in the evening of 28th August 1993, Mr. Josip Ma of our client has during a telephone conversation exchange with your Mr. Wong Kuen Kong, your managing director as we are given to understand, concluded with him a settlement deal in respect of the cancellation of a purported provisional rental agreement dated 30th July 1993 alleged to be made between you and our client. Pursuant to the said settlement deal and strictly without admission of liabilities whatsoever on the part of our client we are instructed to send to you two cheques each in the sum of $28,000.00. The first cheque is for the return of the initial deposit and the second is the agreed sum for the cancellation of the said purported rental agreement and the full and final settlement of the entire case in respect thereof."

6. Subsequently Mr. Ma offered to pay $14,000.00 on an ex-gratia basis to be shared between the Claimant and Miss Cheung. No agreement was reached and the offer was withdrawn.

7. The Defendant raised 2 matters at the hearing in the Small Claims Tribunal namely that the Claimant was only a witness and not a party to the provisional rental agreement and that Miss Cheung had not been authorised to act on behalf of the Defendant.

8. The learned Adjudicator did not make any finding on the first matter but it is clear that the contention of the Defendant could not be sustained.

9. The Claimant was the agent who concluded the deal between the Defendant and Alos and signed the provisional rental agreement which provided for payment to the Claimant for its service rendered to the parties who also signed the agreement in question. Clearly the Claimant was a party to this tripartite agreement and the Defendant's contention on this must fail.

10. The learned Adjudicator in her reasons for decision made the following findings:

"There was no evidence that the Defendant authorised Miss Cheung to enter into the provisional rental agreement for and on behalf of the Defendant. Miss Chan herself established contact with Miss Cheung. I found that the Defendant had not represented to the Claimant, either by word or conduct, that Miss Cheung was authorised to enter into the provisional rental agreement for and on behalf of the Defendant. The settlement deal with Alos Components Ltd was made on a without prejudice basis in the Claimant's shop in the presence of Miss Chan of the Claimant. The making of the settlement deal did not amount to a ratification of the provisional rental agreement by the Defendant. Mr. Ma offered to make an ex-gratia payment of $14,000.00 to be shared between the Claimant and Miss Cheung. There was no agreement on the sharing. The offer of ex-gratia payment was withdrawn."

11. With respect to the learned Adjudicator, her finding that Miss Cheung had not been authorised by the Defendant to enter into the provisional rental agreement on its behalf was against the weight of the evidence. There was no dispute that through Mr. Ma, the Defendant had first approached the Claimant to find a tenant or purchaser for the said premises. A deposit of $28,000.00 was made payable to Messrs. K.C. Man & Company of which Mr. Ma was working as an assistant solicitor. Mr. Ma agreed that the cheque was given to him by Miss Cheung together with a pile of paper and the cheque was paid into the account of his firm. When the Defendant subsequently decided to sell the said premises, it was Mr. Ma who negotiated with Mr. Wong of Alos to cancel the provisional rental agreement. Pursuant to the cancellation agreement, the rental deposit was returned together with a equal amount as compensation which was what was stipulated in the provisional rental agreement in question. As between the Defendant and Alos, the settlement was made on a without prejudice basis, but the Claimant is certainly entitled to rely on such matter to show that the Defendant considered itself to be bound by the provisional rental agreement. There

was of course the offer of $14,000.00 to be shared by the Claimant and Miss Cheung.

12. The Court is mindful of its powers on appeal under the Small Claims Tribunal Ordinance. But on the undisputed evidence presented to the Tribunal, the only reasonable inference that should have been drawn was that Miss Cheung had been authorised by the Defendant in signing the provisional rental agreement in question. In so far as the learned Adjudicator failed to draw such an inference, she had committed an error of law and the Court should correct such error.

13. The appeal is therefor allowed. The decision of the learned Adjudicator is set aside and that the Claimant be granted judgment against the Defendant in the sum of $14,000.00 and interest thereon at the rate of 9.5% p.a. from the date of filing of the claim, namely 18th of October 1992.