LEUNG SHUK KAM v. CHEUNG SUET FUN MARIA AUSILIA AND ANOTHER

1991, No. A6182

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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JUDGMENT

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The persons and the property involved

1. The 1st Defendant is the registered owner of a property known as Flat H on the 43rd Floor of Block 5 of Belvedere Garden, Phase 2, in Tsuen Wan ("the property") The Plaintiff brings this Action inter alia for specific performance of a "Provisional Agreement for Sale and Purchase" dated 10th July 1991 ("the provisional agreement") whereby, the Plaintiff contends, the 1 st Defendant agreed to sell the property to her.

2. The provisional agreement, which was on a form provided by the Luen Pong Property Agency ("the estate agency) was signed by the Plaintiff and the 2nd Defendant, but not by the 1st Defendant. The Plaintiff alleges that the 2nd Defendant did so as the 1st Defendant's agent or alternatively, that the 1st Defendant subsequently ratified such signature on her behalf. This is denied by the 1st Defendant

3. The 2nd Defendant has not appeared and was not represented at the trial. Substituted service had been ordered. Exactly what, if any, relationship there was between the 1st and 2nd Defendants is in issue According to the Plaintiff, the 2nd Defendant was the boyfriend of or otherwise closely related to the 1st Defendant's elder sister, Miss Cheung Yuen Kwan ("the elder sister"), who beneficially owned or had a beneficial interest in the property. The 1st Defendant denies any knowledge of the 2nd Defendant and alleges that he was merely an employee of the agency, its proprietor being one Miss Candy Wong Hui-wan ("Candy Wong"). It is accepted by the 1st Defendant that the elder sister was a friend of Candy Wong.

4. The 1st Defendant testified that she lived in the property together with her mother and her younger sister called Cheung Suet-man ("the younger sister").

5. The Plaintiff, the 1st Defendant and the younger sister testified as witnesses. Candy Wong was also called on the 1st Defendant's behalf and started her evidence near the end of the Court's sitting on Friday, 2nd October. However, she failed to re-appear in Court when it resumed sitting on Tuesday, 6th October (after a public holiday Monday). I was informed by Counsel for the 1st Defendant that on the Friday, Candy Wong had allegedly been subjected to intimidation in respect of her testifying as a witness and that this had led her to refuse further attendance at court. A report to this effect had been made to the police. As she was not under subpoena and as no application was made to issue a subpoena to compel her attendance, the trial proceeded without further evidence from Candy Wong. Although she did not herself appear, she sent a friend who delivered to the Court a cashier order in the sum of HK$50,000 made out in favour of the Plaintiff, explaining that it represented the return of the deposit which Candy Wong had received. That cashier order is held by the Plaintiff's solicitors pending the outcome of this Action and further directions from the Court.

6. This is a case where the parties gave sharply conflicting versions of the relevant events. I shall set out each such version in turn.

The Plaintiff's version of events

7. On 10th July 1991 answering a newspaper advertisement for sale of the property, the Plaintiff and her husband went to inspect the flat, having made an appointment by telephone with Candy Wong for this purpose. They met Candy Wong on the ground floor of the building in question and were shown upstairs to the flat by a girl who appeared to be one of its occupants.

8. In the flat, the Plaintiff and her husband first met the 2nd Defendant. He emerged from an inner room, apparently putting on or adjusting his clothing and was introduced by Candy Wong as the owner of the property. Also present were an elderly woman who was introduced by the 2nd Defendant as his mother in law and a second small girl that he said was his daughter. In addition, a woman of about 30 years of age was present but the Plaintiff was unclear as to who she was.

9. The 2nd Defendant showed the Plaintiff and her husband the flat. Favourably impressed by the property, the Plaintiff and her husband started discussing the price with the 2nd Defendant. They persuaded him to reduce the asking price of $1,600,000 by $6,000 to $1,594,000. During these discussions, the 2nd Defendant received several telephone calls from someone who wanted to know about the progress of the sale. He addressed that person as his wife.

10. Having agreed the price, the Plaintiff, her husband, Candy Wong and the 2nd Defendant decided to go to the estate agency to sign an agreement. However, they first went to the Plaintiff's home to collect her cheque book. At the agency, Candy Wong introduced the Plaintiff and her husband to a woman said to be the 2nd Defendant's wife. At the trial, the Plaintiff indicated that the person so introduced was a particular woman who was sitting in the public gallery of the Court and who was subsequently identified as the elder sister.

11. The Plaintiff was then shown the provisional agreement and asked to sign it. It was only then that the 2nd Defendant said that he was not the registered owner. He asserted that nevertheless he was the "real owner" of the flat and fully able to dispose of it. The Plaintiff read the provisional agreement for herself and saw that the Vendor named in it was the 1st Defendant and not the 2nd Defendant. This caused her to question whether they should proceed without the registered owner signing the agreement. They were however persuaded by the staff of the estate agency and by 2nd Defendant to sign.

12. The Plaintiff however erroneously signed the provisional agreement in the space provided for the vendor and also erroneously signed the receipt clause. Similarly, the 2nd Defendant erroneously signed in the space intended for the purchaser. Nothing turns of this as a matter of law as both parties are agreed that these were merely mistakes. The Plaintiff explains that this occurred as she had simply signed in the places pointed to by staff of the estate agency.

13. After signing, the Plaintiff handed her deposit cheque for $50,000 to the 2nd Defendant. The estate agency offered to arrange for a solicitor to act for the Plaintiff but she declined, saying that she had solicitors of her own although she had not yet decided which firm to use. The Plaintiff and her husband then left the estate agency.

14. She discussed the question of which solicitors to use with her husband on the next day (11th July) and possibly also on 12th July. In any case, by 12th July 1991, they had instructed Messrs. Rowdget Young & Co. ("Rowdget Young") to act on their behalf and by that time the estate agency had been informed of the Plaintiff's choice of solicitors.

15. On 12th July 1991, Rowdget Young wrote to Messrs. Norman Yung & Co ("Norman Yung")enclosing a copy of the provisional agreement "signed by our respective clients", asking Norman Yung to "take your client's instructions to confirm the terms and conditions" of that agreement and asking for a draft Agreement for Sale and Purchase.

16. Norman Yung replied on the next day, 13th July 1991, enclosing a draft Sale and Purchase Agreement.

17. Thereafter, as appears from a letter dated 18th July 1991, the Plaintiff, through Rowdget Young, approached the Hang Seng Bank for a mortgage in the sum of $1,100,000 to help finance purchase of the property.

18. Under the provisional agreement, the parties were to "attend their solicitors' firms to handle the procedures" and the Plaintiff was to pay a further deposit of $109,400 on or before 23rd July 1991. Two or three days before that date, the Plaintiff started to receive a number of telephone calls from the 2nd Defendant who claimed that he had been offered $1.68 million for the property and that the Plaintiff therefore had to raise her offer if she wanted to complete the purchase. He suggested that the Plaintiff should otherwise take back her deposit and not proceed saying that even if she managed to acquire the flat, he would destroy everything in it, adding that he had many contacts among policemen and triad members.

19. The Plaintiff ignored these threats and, on 23rd July 1991 went to see Rowdget Young who had, by then, had amended the Norman Yung draft Sale and Purchase Agreement. She placed her solicitors in funds for the further deposit and, under cover of a letter dated 23rd July 1991, these solicitors sent the amended draft Sale and Purchase Agreement together with a cheque for $109,400 by way of further deposit to Norman Yung on the Plaintiff's behalf.

20. Two days later, on 25th July 1991, Norman Yung wrote to Rowdget Young returning the cheque for $109,400 stating: "..... we write to inform that we no longer have any instruction to act for the Vendor (of the property)."

21. The earlier deposit of $50,000 had been paid into the 1st Defendant's current account with the Hongkong & Shanghai Banking Corporation and, apart from the suggestion made by the 2nd Defendant in his threatening telephone calls that the Plaintiff take back her money, no one offered to return that deposit. It had still not been paid back to the Plaintiff.

22. On 16th August 1991, the Writ was issued, initially only against the 1st Defendant. On 30th October 1991, Candy Wong wrote to the Plaintiff offering to refund the deposit and alleging that she had repeatedly, attempted to do so. On 14th February 1992, after the Plaintiff had moved from her previous address, the 2nd Defendant again telephoned to threaten her, demanding that she accept a return of the deposit and proceed no further with the proceedings. On 19th March 1992, the Writ was amended to join the 2nd Defendant as a party alleging breach of warranty of authority in the alternative against him.

The 1st Defendant's version of events

23. On 13th October 1988, the elder sister had entered into an agreement with the developer for the purchase of the property for $790,500 but on 24th May 1989, before completion, she had on-sold the property to the 1st Defendant for the same price. The 1st Defendant had paid 10% of the price to the elder sister and thereafter, she had made the mortgage payments on the property using her own money, assisted by contributions from her mother. Such mortgage payments are evidenced by entries in a savings account passbook produced as Exhibit D1. The 1st Defendant is and was therefore the beneficial as well as the registered owner of the property.

24. As Phase III of Belvedere Garden was approaching completion, the 1st Defendant decided that she wanted to trade up to a larger flat in that new phase of the development. She therefore approached several estate agencies and placed the property on their books. The price she demanded was $1.6 million and a period of some 2 to 3 months before completion and delivery of vacant possession was to be required as she needed time to purchase the new flat and to have it decorated.

25. While the elder sister was a friend of Candy Wong, the proprietor of .the estate agency, the 1st Defendant did not know the 2nd Defendant at all. He is not her brother-in-law and she does not know whether he is the elder sister's boyfriend or is otherwise known to her. He has no interest in the property.

26. On 10th July 1991, Candy Wong telephoned to say that she had prospective purchasers who wished to view the property. The 1st Defendant informed Candy Wong that she would be out that evening but agreed to the flat being viewed provided that Candy Wong brought along a male colleague. She made this a requirement since only her elderly mother and the younger sister would then be at home and she considered the presence of a male employee of the estate agency a safeguard against possible wrongdoing by persons let in to view the flat. The 2nd Defendant was apparently the male colleague brought along by Candy Wong.

27. The next morning, the 1st Defendant heard from Candy Wong by telephone that the persons who had viewed the flat the night before had wanted to purchase the flat and that consequently, a provisional agreement had been signed at the estate agency and their cheque for a deposit of $50,000 had been paid by Candy Wong into the 1st Defendant's account. The account number and the 1st Defendant's Identity Card number (which had been written on the provisional agreement) had been obtained by the estate agency from the list Defendant's mother on her being told by Candy Wong that the flat had been sold.

28. The 1st Defendant was annoyed that this had been done without her consent, in particular because the estate agency had purported to agree a sale price of $1,594,000 (instead of $1,600,000) and a completion date only one month (instead of two months) away. She therefore told Candy Wong that the arrangement was unacceptable, whereupon the latter assured her that it had been made plain to the Plaintiff and her husband that the 1st Defendant could simply return the deposit and cancel the agreement if she were unwilling to accept the terms negotiated.

29. The 1st Defendant ascertained on the following day, 12th July 1991, that the $50,000 had indeed been credited to her account. Because she was anxious to ensure that the money was returned to the would-be purchasers as soon as possible, she had, the night before, arranged to obtain $50,000 in cash from the elder sister in order to return the deposit to the estate agency. The 1st Defendant thought that this would be a convenient course to take and that returning the money in cash would preclude the would-be purchasers from refusing to accept return of the deposit by the simple expedient of not presenting a cheque for that sum. She had approached the elder sister since she generally had large sums of cash in hand, in keeping with her being in the "fashion business". The 1st Defendant also adopted this approach since she knew that she would not have time on 12th July, to get to the bank while it was open to withdraw the cash herself. Accordingly, when she saw that $50,000 had indeed been credited to her account, the 1st Defendant transferred that sum into her sister's account, effecting such transaction at an electronic teller machine. That evening, in accordance with their previous day's arrangement, the 1st Defendant went from her office in Kwai Fong to Cheung Sha Wan where the elder sister lived la journey taking some 45 minutes) and together, the two sisters went to Castle Peak Road where the estate agency was, "a few streets away".

30. At the estate agency, the sum of $50,000 in cash, all in $1,000 notes, was handed to Candy Wong who issued a receipt for the same. She also confirmed that return of the deposit meant that the transaction was void.

31. However, in the days following 12th July, Candy Wong telephoned the 1st Defendant "every two days or so" saying that the purchasers had refused to take the deposit back and still wanted to proceed with the sale. The 1st Defendant declined to sell, saying that the price and the short completion period were unacceptable. Apart from this, the 1st Defendant had lost all confidence in the estate agency since it had acted without her consent in signing the provisional agreement and in paying the deposit into her account so that she was unwilling to effect the sale through that agency.

32. The 1st Defendant never instructed Norman Yung to act on her behalf and does not know that firm of solicitors. She did not herself take any steps to contact the would be purchasers directly.

The main issues

The main issues arising on this evidence are as follows:-

(1)    Whether in signing the provisional agreement, the 2nd Defendant was acting within the scope of his actual or ostensible authority as the 1st Defendant's agent.

(2)     If not, whether the 1st Defendant subsequently ratified the 2nd Defendant's signing of the provisional agreement on her behalf.

(3)     Whether the validity of the provisional agreement was conditional on the 1st Defendant herself signing the document.

(4)     If the provisional agreement is in law binding on the 1st Defendant, whether the remedy of specific performance is available to enforce it in the light of its provisions regarding pecuniary compensation for non-performance.

The 2nd Defendant's authority to sign the provisional agreement

33. Mr. Miu, for the Plaintiff frankly conceded that there is little evidence to support a finding of either actual or ostensible authority. This was, with respect, a realistic and proper concession.

34. In my view, the Plaintiff's evidence simply does not establish that the 2nd Defendant was acting pursuant to any authority conferred by the 1 st Defendant. It is elementary and not disputed that in law a person does not constitute himself an agent simply by asserting, however convincingly, that he has been appointed as such by the alleged principal. Prior to the signing of the provisional agreement at the estate agency, this was exactly the position in this case. The Plaintiff and her husband were persuaded by the 2nd Defendant's own claims (aided and abetted by the estate agency) that he had authority to sell the flat and not by anything said or done by the 1st Defendant. Indeed, according to the Plaintiff's own evidence, it was the 2nd Defendant and the staff of the estate agency who overcame her initial reluctance to sign without prior confirmation of the sale by the 1st Defendant.

35. In such a case, the purported agent may find himself liable for breach of his warranty of authority but, unless the principal has subsequently ratified the purported agent's conduct, that conduct does not result in a contract binding on the principal. I therefore find that the Plaintiff has failed to prove that the 2nd Defendant was the 1st Defendant's duly authorized agent for the purposes of negotiating and agreeing the provisional agreement on 10th July 1991.

Ratification by the 1st Defendant

36. The Plaintiff is however on much stronger ground when she contends that the 1st Defendant ratified the 2nd Defendant's signing of the provisional agreement by accepting the $50,000 deposit.

37. It is not in dispute that the Plaintiff issued a cheque for $50,000 in the 1st Defendant's favour and that on 11th July 1991, that cheque was paid into the Plaintiff's current account with the Hong Kong Bank. It is also accepted that in the morning of 11th July 1991, the 1st Defendant was told of such payment by Candy Wong and told that it was intended to be the deposit payable under the provisional agreement. It is clear from the bank statement produced by the 1st Defendant (as Exhibit D2) that on the following day, 12th July 1991, the 1st Defendant transferred that sum out of her account. In evidence she told the Court that this was a transfer into the account of the elder sister.

38. If the position rested there, I have no doubt that such conduct would constitute an implied ratification by the 1st Defendant of the 2nd Defendant's purported signature of the provisional agreement on her behalf.

39. In Bowstead on Agency. 15th Ed., the basis of implied ratification is summarised as follows: "Ratification will be implied whenever the conduct of the person in whose name or on whose behalf the act or transaction is done or entered into is such as to show that he adopts or recognises such act or transaction in whole or in part: and may be implied from the mere acquiescence or inactivity of the principal." (p. 66) In particular, it is pointed out that "receipt or retention of money with knowledge of the circumstances of a contract under which it is paid will normally constitute ratification of that contract ....." (p. 67).

40. Plainly, the 1st Defendant had knowledge of the material circumstances of the 2nd Defendant's purported signing of the provisional agreement on her behalf. Acceptance of the deposit in her bank account and transferring it to her sister's account were acts which, without more, would be sufficient to establish implied ratification.

41. The 1st Defendant's case however is that far from ratifying the provisional agreement, on 12th July 1992, she promptly returned the money in cash to Candy Wong who in turn sought to return it to the Plaintiff in the circumstances I have described above. If this was indeed the case, then plainly, no ratification can have occurred.

42. I regret to say however, that for a number of reasons I find myself unable to accept the 1st Defendant's evidence that she in fact returned the money in cash on 12th July. Her evidence in this regard was, in my judgment, lacking in credibility and unreliable.

43. First, I find the entire suggestion that the 1st Defendant and the elder sister considered it necessary or desirable to return the deposit in cash during the evening of 12th July 1991 lacking in credibility.

44. When asked why she considered it appropriate to pay in cash, the 1st Defendant at first merely explained that this seemed a convenient course since the elder sister had cash which she would otherwise have to pay into a bank anyway. That does not strike me as at all convincing. Payment by cash would require the 1st Defendant to make a 45 minute journey after work to the elder sister's premises, after which the two young women would have to carry $50,000 in cash to the estate agency which was "a few streets away", putting the money at risk as they did so.

45. When she was pressed on this matter, the 1st Defendant gave a further reason why she decided to pay in cash:-

"A:    If I issued a cheque, he could refuse to cash it at the, bank If I paid cash and got a receipt in return, that could prove I had already returned the money.

Q:     Is that the reason for cash?

A:     One of the reasons. Another was that my elder sister had cash in hand."

46. This might have been a more convincing answer but for the 1st Defendant's evidence as to her complete lack of concern and lack of action when, according to her, she was later told by Candy Wong that the Plaintiff was refusing to accept return of the cash. If the 1st Defendant had gone to the trouble and risk of paying the estate agency in cash to ensure that the Plaintiff could not refuse its return, I find it impossible to believe that, when told that the Plaintiff was refusing to accept the money, the 1st Defendant would not have taken some steps to contact the Plaintiff or otherwise to make it plain to her that she was not bound by the provisional agreement and that she was not going to sell the property to the Plaintiff.

47. On the 1 st Defendant's version of the events, it should have been obvious to her that the Plaintiff would see that her cheque for the $50,000 had been cleared and paid and, without some direct action on her own part, that there was a risk that the Plaintiff would claim that payment had been accepted - the very consequence which the 1st Defendant said she was seeking to avoid by returning the deposit in cash.

48. A second, and in my view, important reason for rejecting this version of the events rests on the 1st Defendant's relationship with the estate agency at the time of the alleged cash payment.

49. She was asked in cross-examination why when, according to her Candy Wong was reporting that the Plaintiff and her husband were still pressing to buy the property, she had not simply demanded terms that were acceptable to her. Her evidence was as follows:-

"Q:     Did you make a counter-offer?

A:     Because I had lost confidence in the estate agency, I would not go on with the transaction.

Q:     You had not suffered anything, so why lost confidence?

A:     Without my consent they had signed the agreement and accepted the deposit on my behalf. I would not have any dealings with the estate agency any more.

Q:     Why not sell?

A:     No purchaser to meet my terms. Sale was not a must.

Q:     Why didn't you say 2 months to completion and the price you wanted?

A:     I did say that to all the agencies. These were my prerequisites.

Q:     After 12/7 did you repeat these to Candy Wong when she called you each and every day? .....

A:     No. Because I was not going to have any further transaction. I had stopped asking the agency to sell the flat and would have no more dealings with it."

50. I find it impossible to accept that, given her avowed lack of confidence in the estate agency, the 1st Defendant was nevertheless prepared to hand over to Candy Wong the sum of $50,000 in cash. Furthermore, even if the 1st Defendant had been prepared to do this (according to her, on the strength of the estate agency's receipt), I cannot accept that given her unfavourable view of the estate agency, she would have shown such a lack of concern about the money remaining in the estate agency's hands when she discovered that the Plaintiff had not accepted its return.

51. Thirdly, I think it very telling that when amending the Defence and Counterclaim in March or April 1992, the 1st Defendant alleged that she withdrew the deposit sum from her current account. The pleading reads as follows:-

"On the 12th July 1991, the 1st Defendant withdrew the said HK$50,000.00 from her current bank account and returned the same to the Agency to confirm her refusal to accept the said Agent." (para 4 (n))

52. No explanation has been tendered as to why the 1st Defendant's evidence on this important issue deviated at the trial from the pleaded allegation. It is plain from the 1st Defendant's evidence as to her income and from her bank statement that she does not commonly deal with sums as large as $50,000, particularly in cash. The decision to return the deposit to the estate agency using cash which her sister had to hand, if such a decision was ever made, must have been a very special event which I would expect her vividly to recall. I therefore consider it revealing that her instructions to her legal advisers as at April 1992 were evidently that the deposit had been returned by withdrawing money from her own current account and not by using cash obtained from the elder sister to whom a bank transfer had been made.

53. This takes me to the receipt which purports to have been issued by the estate agency for $50,000 cash on 12th July 1991. It states that it is payment "to return Leung Shuk Kam the deposit for the purchase of (the property)".

54. The only evidence as to the circumstances of the issue of this document comes from the 1st Defendant who testified that it was written out in her presence and issued to her on 12th July 1991. This was said to have happened at the estate agency. Unfortunately, for the reasons given above, Candy Wong's evidence was not available on this matter. The 2nd Defendant, who is the only other person who might have thrown light on this document from the point of view of the estate agency has not appeared.

55. In the light of the unfavourable view I have taken of the reliability of the 1st Defendant's evidence, and in the absence of any evidence from Candy Wong or the 2nd Defendant, I cannot give any weight to this document and in particular find it hard to accept that it was issued contemporaneously.

56. It will be recalled that on 13th July 1991, Norman Yung, then believing themselves to have instructions, via the estate agency, to act for the 1st Defendant, wrote responding to Rowdget Young's letter of 12th July and enclosing a draft Sale and Purchase Agreement. That letter was delivered by hand to Rowdget Young who acknowledged receipt at noon on 13th July. Only on 25th July 1991, did Norman Yung inform Rowdget Young or anyone else that their instructions had been withdrawn. When they did write, they put it in terms of informing Rowdget Young "..... that we no longer have any instruction to act for the Vendor (of the property)."

57. The 1st Defendant denies that Norman Yung were ever acting on her behalf. However, she accepts that they came onto the scene because Candy Wong had purported to instruct them to act on her behalf. This is pleaded in her Amended Defence and Counterclaim, paras. 6(a) and 6(b), in the following terms:-

"(a)      In the evening of the 10th July 1991, upon the Plaintiff and the 2nd Defendant signing the said Agreement, Miss Wong has sent the said Agreement to Messrs. Norman Yung & Co by fax for the preparation of the formal agreement on the assumption that the 1st Defendant would agree to the said Agreement.

(b)    Upon learning the 1st Defendant's refusal to accept the said Agreement, Miss Wong notified Messrs. Norman Yung & Co. that the deal about the said Agreement was called off and abandoned."

58. The pleading does not say when Norman Yung were disinstructed. If the 1st Defendant had indeed returned the deposit in cash on 11th July 1991, and if Candy Wong had thereupon issued the receipt, I would have expected Candy Wong instantly to have informed Norman Yung by fax or telephone that they should stop acting despite her.earlier instructions. Otherwise, she would be running the risk of uselessly incurring their legal charges on a deal that had gone off.

59. The contemporaneous documents, however, show that Norman Yung, proceeded to correspond with Rowdget Young on 13th July, suggesting that on the day after the date on the receipt, their instructions had not yet been withdrawn by Candy Wong. Even if Candy Wong had just missed informing Norman Yung before they had sent off the letter and draft agreement on 13th July, Norman Yung could certainly be expected to inform Rowdget Young of their instructions being withdrawn promptly after they sent the draft agreement on 13th July. Yet no such intimation was given by Norman Yung until 25th July. Silence from Norman Yung was therefore maintained to beyond 23rd July which was the date in the provisional agreement for payment of the second tranche of the deposit. It was only two days after the Plaintiff had actually paid that tranche that the message came back from Norman Yung saying that they no longer had instructions to act, returning the Plaintiff's cheque.

60. At the end of her evidence, I asked the 1 st Defendant why, when she had learned from Candy Wong that the would-be purchasers were refusing to accept return of the deposit, she had not tried to contact them directly. Her answer was that she did not know who they were. Mr. Miu, took this up, and pointed out that if she had the receipt, she would have known the Plaintiff's identity since it stated the buyer's name. The 1st Defendant replied:-

"A: Yes. But I did not pay much attention to it. I thought it was sufficient proof."

61. In my view, this was an unconvincing answer and _I am-in all the circumstances unable to accept the 1st Defendant's evidence that Candy Wong's receipt was actually issued on 12th July by virtue of a contemporaneous cancellation of the provisional agreement. I find that it was probably issued some significant time later, quite possibly not until the 25th July, 1991 or some time thereafter, reflecting a change of mind on the 1st Defendant's part regarding her desire to proceed with the sale.

62. I found the Plaintiff's evidence on this matter (summarised above) convincing. She was searchingly cross-examined by Mr. Wong but, in my view, was not shaken on any material issue.

63. I therefore hold that on the facts, the 1st Defendant ratified the provisional agreement by accepting payment of the deposit into her account and/or by transferring that money to her sister's account.

Whether the provisional agreement is conditional

64. Mr. Wong next submitted that, whatever acts might have been done or purportedly done on the 1st Defendant's behalf by the 2nd Defendant (or by anyone else), the wording of the provisional agreement was such that it was in any event only a conditional agreement. Its validity depended on its being signed by the Vendor, that is, by the 1st Defendant herself. As she never signed, it was not a legally valid or enforceable agreement. The clauses relied on by Mr. Wong in support were as follows:

Clause (5) 5: "This Agreement shall become valid if signed by the Vendor. If not, our firm will return the deposit paid (without interest) and accept no liability."

Clause (6): "This Provisional Agreement shall become effective right after signing by both parties. After signing the formal Agreement in the solicitors' firms, the said formal Agreement will supersede this Provisional Agreement. This Provisional Agreement is in triplicate, both parties and the witness shall each have one copy as proof."

At the beginning, the 1st Defendant is named as the Vendor.

65. In my judgment, this argument fails. The general rule is that a person may make a contract or do any other act as an agent on behalf of a principal, which that principal could himself do. Leaving aside cases where an Ordinance may require personal performance of specified acts (which do not apply here), the exception to the general rule arises only where the nature of the act to be done "requires discretion or special personal skill" so as to exclude performance by anyone other that the principal himself: see Bowstead on Agency, 15th Ed., p. 36-38.

66. The act of signing this provisional agreement was not inherently an act that required personal performance by the Vendor and I hold that signature by a duly authorised agent or signature subsequently ratified by the principal operate to bind the principal in the ordinary way.

67. The language of Clause (5) 5. is in my view, aimed at making it clear to a would-be purchaser that unless and until the Vendor (or, one might add, someone signing on his behalf) actually signs the provisional agreement, it is not a binding contract. It is intended to cater for the situation where the intending purchaser (and probably also the estate agency) sign first, with a view to securing the Vendor's signature later. It is not intended to exclude signature by an agent.

68. Similarly, Clause 6 does not help the 1st Defendant. This is a provision which takes up the position where both Vendor and Purchaser sign (whether by themselves or through agents). It records that the agreement takes effect immediately at that point but goes on to provide that it is superseded when the parties sign the, anticipated sale and purchase agreement to be drawn up by solicitors. Nothing in its language displaces the general rule enabling. principals to sign documents by agents.

Whether specific performance is available

69. Finally, I turn to the question of the remedy. In the course of submissions, counsel helpfully canvassed the possible relevance of the increasingly substantial line of decisions on provisional agreements which (as in the present case) provide for pecuniary sanctions for failure of performance and the remedy of specific performance.

70. The decisions cited to me included the Court of Appeal decisions in Wong Lai-fan v Lee Ha [1992] 1 HKLR 125 and in Fong Yee Lan v Yiu Yau Ping (Unreported) Civ App No 128 of 1991 as well as decisions at first instance including Lee Tat Kwong v Stephen Choi Pui Kei & Anr. (Unreported) HCA 1991, No. A2338 (Godfrey J) and Tung Kiu Ying v Chan Mei Yuet (Unreported) HCA 1991, No. A2682 (Barnett J).

71. However, in the light of the conclusion which I have reached, a detailed analysis of those authorities is not required. In my view, on the facts of the present case, those authorities cannot serve the 1st Defendant's purpose of barring the Plaintiff from claiming specific performance. For present purposes, it suffices to note that the cases, including those mentioned above, establish the following propositions:-

(1)     A liquidated damages or similar pecuniary compensation clause in a contract for the sale of land does not necessarily mean that the remedy of specific performance is excluded (e.g., on the basis that the parties must be taken to have agreed that damages are an adequate remedy).

(2)     Whether specific performance remains available depends of the construction of the contract, in particular, as to its primary purpose. That purpose may be the sale of land but with the contract also giving the parties the option to buy their way out of conveying land by the purchaser forfeiting the deposit or by the vendor making pecuniary compensation to the purchaser:

(3)     Where this option has not been duly exercised (e.g., where compensation has not been immediately offered as required by the contract's terms), the contract, being a contract primarily for the sale of land, remains capable of enforcement by specific performance.

72. In the present case, the primary obligation undertaken by the parties under the provisional agreement is for the sale and purchase of the property While the agreement contains provision for pecuniary alternatives, the 1st Defendant has never in fact sought to avail herself of any such alternative. She has never sought to exercise any option to tender pecuniary compensation to the Plaintiff pursuant to the terms of the provisional agreement. Her stance has throughout been that she is not bound by that agreement at all. In such circumstances, there is no basis for holding that the remedy of specific performance has been barred or is otherwise rendered unavailable to the Plaintiff by the terms of the provisional agreement.

Conclusion

73. I have therefore concluded that the Plaintiff is entitled to Judgment and in particular, to a decree of specific performance of the provisional agreement for the sale of the property to her by the 1st Defendant. I also make an Order Nisi that the 1st Defendant do pay to the Plaintiff the costs of this Action.

Alternative Findings

74. In case this matter should go further, I ought to indicate that if, contrary to my conclusion, the Plaintiff was not entitled to specific performance of the provisional agreement, I would have had no hesitation in finding the 2nd Defendant liable in damages for breach of his warranty of authority on the evidence which I have referred to above.

75. In the course of the trial, Mr. Wong (in my view entirely properly) abandoned the claim for damages pleaded in the Amended Counterclaim. In the light of my decision on the Plaintiff's claim, it follows that the balance of the Counterclaim must also stand dismissed.

76. At the request of the parties, with a view to saving costs, I have agreed that this Judgment should be handed down and that subsequently, I should adjourn into Chambers to hear solicitors for the parties on the Order to be made and any further directions required. This is the course which I propose to follow after the parties have had the opportunity of reading this Judgment.