CHAN WONG KWAI PETER v. SUN JIAMIN

DCCJ 778/2016

[2018] HKDC 551

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO 778 OF 2016

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JUDGMENT

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Background

1.  This is a dispute over the sale and purchase of a car park known as Residential Parking Space No. 238, Basement, Phase I of Mont Vert, No. 9 Fung Yuen Road, Tai Po, New Territories (“the Carpark”).  Both the plaintiff and the defendant were and are owners of residential units of the estate within which the Carpark is situated (“Estate”).

2.  When Fantastic State Limited, the developer of the Estate (“Developer”), commenced to sell carparks in the Estate to owners of residential units, owners of some units were assured that they would have a carpark allotted to them for purchase while owners of some other units did not have such assurance.  The defendant belonged to the former group while the plaintiff was in the latter group.  The first round of drawing of lots relating to the carparks in the Estate took place on 10 October 2015, and the defendant entered into an agreement with the Developer in respect of the Carpark (“Head Agreement”) on that day.

3.  The Developer then decided to allow owners of the other units in the Estate to participate in a second round of drawing of lots held on 11 October 2015.  The plaintiff participated in this second round of drawing of lots but was unsuccessful.  The plaintiff decided to purchase from the open market.  This was how the plaintiff came about to engage the service of Ricacorp Properties Limited (“RPL”).

4.  By a provisional agreement for sale and purchase dated 12 October 2015 (“Agreement”), the defendant agreed to sell and the plaintiff agreed to buy the Carpark for HK$1,300,000.  Under the Agreement, the defendant was selling the Carpark as confirmor.  RPL was the agent acting for both the plaintiff and the defendant and Ms Xu Hong (“Xu”) of RPL handled the matter throughout.  This transaction was not completed. 

5.  Before signing the Agreement, the defendant had on 10 October 2015 entered into another provisional agreement for the sale and purchase of the Carpark with one Ko Ka Lun Edwin (“Ko”) as the purchaser for the price of HK$950,000 (“Ko Agreement”).  Centaline Property Agency Limited (“Centaline”) was the estate agent involved in this transaction.  Eventually the sale of the Carpark by the defendant to Ko was completed.  The date of both the assignment of the Carpark from the Developer to the defendant and the assignment from the defendant to Ko is 4 December 2015.

6.  The Ko Agreement is in the form of a pro forma agreement with most of the terms in print and blanks for specific particulars, such as names of the parties, to be filled in.  It is stipulated in the Ko Agreement that the defendant was selling as confirmor.  In the blank space provided in Clause 20 of the Ko Agreement, additional terms have been set forth, including the provision “此合約為必買必賣”.  The terms in print include provisions on payment of stipulated amount upon rescission by the vendor and the purchaser, but these were completely crossed out.     

7.  It is the plaintiff’s case that the defendant was in breach of the Agreement by accepting payment of the initial deposit but thereafter reneged from the Agreement by selling the Carpark to Ko.  The defendant’s case is that he did not receive the initial deposit and it was the plaintiff who was in breach of the Agreement. 

8.  In the statement of claim, apart from interest and costs, the plaintiff is claiming a return of the deposit in the sum of HK$130,000 and damages to be assessed.  It is pleaded in the statement of claim that the plaintiff has suffered loss and damages as a result of the defendant’s breach including but not limited to the initial deposit of HK$130,000. No evaluation report or other information on the market value of the Carpark has been submitted. 

Issues in dispute

9.  Parties agree that the issues in disputes are:

(1)  whether the plaintiff repudiated the Agreement by failing to pay the initial deposit;

(2)  whether the defendant breached the Agreement by failing or refusing to assign good title of the Carpark;

(3)  if the defendant is found to be in breach of the Agreement, the loss and damage suffered by the plaintiff as a result of the defendant’s breach of the Agreement.

Issues (1) and (2) can actually be dealt with together because both hinge upon whether the defendant had received payment of the initial deposit under the Agreement.

Evidence

10.  The plaintiff himself and Xu were called as witness to testify on behalf of the plaintiff while the defendant himself gave evidence for his own case.

11.  I find Xu to be an unreliable witness.  She answered questions in a guarded manner and many of her answers are inherently implausible.  Xu was also evasive, claiming to have forgotten many things, including details of the routine practice of RPL, even though she had worked as an agent there for about three years.  Xu would sometimes use a specific term in her response but then said she could not explain what that specific term meant.  In addition, there are marked differences between the evidence of Xu in her witness statement and her oral testimony.  There were occasions where Xu directly contradicted herself and gave different versions when responding to the same question.

12.  In respect of the plaintiff’s own evidence, Mr Chong, counsel for the defendant, drew my attention to the discrepancy between the testimony of the plaintiff and that of the affirmation filed in support of the plaintiff’s application for leave to file the witness statement of Xu which was only made in January 2018, less than 3 months before the trial.  The plaintiff testified that it took him a short while to locate Xu after the action was commenced, while the solicitor making the supporting affirmation said it took a significant time before their firm was able to locate Xu.  As the plaintiff was not asked to clarify or explain, I do not find it appropriate for me to speculate the reason behind.  I find the plaintiff straightforward when answering questions.  Although sometimes the plaintiff was not consistent, I am satisfied that it was due to unreliable memory rather than lying.      

13.  The defendant also answered questions without hesitation, but some parts of his testimony are inherently improbable. Where there is any discrepancy between his version and that of Xu’s, I prefer the testimony of the defendant.

Terms of the Agreement

14.  The Agreement was drawn up by Xu and executed by the plaintiff, the defendant and Xu on behalf of RPL.  The pro forma printed form provisional agreement for sale and purchase of RPL was used.  It is printed on carbonless copy paper and a user only has to write on the top page and the writings will appear on the pages below.  The copy kept by the plaintiff is blue in colour, while the copy kept by the defendant is yellow in colour, respectively admitted as Exhibits P1 and D1 at trial.  Neither of the copies kept by the plaintiff and the defendant is the top page.       

15.  The printed terms are set out in both Chinese and English, with blank spaces to be filled in, as required. One such blank space is Clause 22, where two additional terms were written out by hand in Chinese only.  With the rest of the blank spaces that had been filled up, some were in English and some in Chinese.  The terms specifically referred to in the Statement of Claim are Clauses 2(a), 2 (d), 3 and one of the two provisions added in Clause 22, although there is the general statement that the plaintiff will rely on the full terms and conditions of the Agreement at trial.

16.  The following terms of the Agreement are relevant to the issues in question.  Only the English version, or where there is no English version, the Chinese version, is set out. 

“2. The purchase price of the said Premises shall be HK$1,300,000 which shall be paid by the Purchaser to the Vendor in the manner as follows:

(a) Initial deposit shall be paid upon signing of this agreement in the sum of HK$130,000;

…

(d) Balance of the purchase price shall be paid upon completion on or before 24-11-2015 in the sum of HK$1,170,000.

3. Formal Agreement for Sale and Purchase of the said Premises shall be signed on or before 23-10-2015 if the terms thereof shall have been agreed to by both the Vendor and the Purchaser.

4. All deposits payable by the Purchaser shall be paid to the Vendor’s Solicitors as stakeholder who shall not release the said deposit(s) to the Vendor unless it is proved that the balance of the purchase price is sufficient to discharge the existing charge in respect of the said premises.

7. The Vendor is selling as confirmor and this Agreement is subject to the terms and conditions of the principal agreement made between the Vendor and the Head Vendor.

9. Should the Vendor fail, refuse or not intend to complete the sale of the said Premises in the manner herein contained, the Vendor shall immediately refund the deposit(s) paid hereunder to the Purchaser and compensate the Purchaser with a sum equivalent to either the deposit(s) paid hereunder or 10% of the purchase price whichever is the lower as liquidated damages, the Purchaser shall not thereafter to take any further action to claim for damages and/or to enforce specific performance against the Vendor.

20. In case of conflict between the English & Chinese version of this agreement, the English version shall prevail.

22. 本合約必須於成交當日中午十二時前完成交易。

此合約履行必買必賣。”

17.  Three clauses in the Agreement had been crossed out, Clauses 6, 9 and 10.  In respect of Clause 6, both the English and Chinese versions were crossed out.  Only the signature of the plaintiff appears against this crossed out provision.  As regards Clauses 9 and 10, only the Chinese version was crossed out, and the signatures of both the plaintiff and the defendant appear next to these crossed out provisions.

18.  One other important provision is the clause acknowledging receipt of the initial deposit (“Receipt Clause”). There is no dispute that the defendant signed the Receipt Clause.  The cheque number and the bank against which the cheque was drawn by the plaintiff for payment of the initial deposit (“Cheque”) were set out in the blanks in this Receipt Clause.  The plaintiff’s copy of the Agreement and the defendant’s copy of the Agreement differ in only one respect – the amount of the Cheque is written out in the plaintiff’s copy but not in the defendant’s copy.  Apart from this, there is no discernible difference between the two documents.

Plaintiff’s evidence

19.  Before the commencement of the present action, the plaintiff and the defendant had never met each other. The brokering and execution of the Agreement were handled by Xu on behalf of RPL, as agent for both of them.  Xu met the plaintiff and the defendant separately for the execution of the Agreement.  The circumstances under which the plaintiff came to sign the Agreement are largely uncontroversial.

20.  The plaintiff was not among the group of owners of units in the Estate who could participate in the first round of the drawing of lots for carparks in the Estate on 10 October 2015.  He did participate in the second round on 11 October 2015, but he was not successful.   

21.  The plaintiff left his contact with various estate agents, having indicated to them his interest in purchasing a carpark in the Estate.  He received a telephone call from Xu on 12 October 2015 who told him about the defendant wishing to sell the Carpark.  During this call, the plaintiff accepted the price asked for, i.e. HK$1.3 million. 

22.  The plaintiff went to the office of RPL at Uptown Plaza of Tai Po to meet Xu for execution of the Agreement in the afternoon on 12 October 2015.  The place was crowded and they went to the McDonald’s restaurant in that shopping centre to transact their business.  Xu explained the terms of the Agreement to the plaintiff in Cantonese and the plaintiff worked on the Chinese version of the Agreement. The deadline for the signing of the formal sale and purchase agreement (“Formal Agreement”) and the date of completion were set by Xu.     

23.  The plaintiff testified to his having seen the Head Agreement before signing the Agreement.  With the information from the Head Agreement, Xu filled in the name of the defendant in the Agreement and the plaintiff put down the name of the defendant as the payee of the Cheque.  The plaintiff said he had not sought legal advice on the Head Agreement.  When asked if he knew the defendant had the right to sub-sell as confirmor, the plaintiff said he knew the defendant had such right because at the time of the drawing of lots for the carparks in the Estate, there were a lot of estate agents present and there were people selling as confirmor already.  Although accepting the deal with the defendant would be subject to the Head Agreement, it was the plaintiff’s understanding that there were two transactions with the plaintiff dealing with the defendant only.

24.  It is the plaintiff’s case that the hand-written terms in Clause 22 of the Agreement were inserted at his request.  Not knowing at what point of time the sale and purchase between himself and the defendant would be considered as completed, the plaintiff asked Xu to write out the time of completion in those added clauses.  The plaintiff also testified to his intention to have Clauses 9 and 10 crossed out.  After signing, the plaintiff handed over the Cheque to Xu.

25.  Xu was to meet the defendant for execution of the Agreement by him on her own, after she parted with the plaintiff.  She did call the plaintiff again around 9 pm on 12 October 2015, to arrange to meet up with him so as to hand over a copy of the executed Agreement to him.  The plaintiff admitted to being told by Xu, when they so met in the late evening, that the defendant had asked Xu to keep the Cheque for him for the time being and that she would be going to the office of the defendant the next day to give him the Cheque. 

26.  The plaintiff did not seek any explanation from Xu as to why the defendant had asked her to keep the Cheque.  He said he was not worried because Xu told him the defendant had signed the Agreement and the Cheque was kept by her for the defendant. 

27.  When they met at the late evening on 12 October 2015, Xu did not tell the plaintiff about the note referred to in paragraph 43 below, the one that she wrote and gave the defendant regarding the Cheque.  The plaintiff did not agree to the proposition that Xu had called him during her meeting with the defendant for signing the Agreement, or that Xu had told him that night about the Ko Agreement, i.e. the other agreement that had already been signed by the defendant with Ko for the sale and purchase of the Carpark.

28.  On 13 October 2015, the plaintiff received a call from Xu, telling him that the deal with the defendant was unsuccessful, because the defendant had already signed an agreement with Ko through Centaline.  He was also told that Xu still had the Cheque with her, that the defendant had refused to accept it.  The plaintiff had not asked Xu the reason for such refusal, believing that the purchase of the Carpark by him would eventually succeed because of the 必買必賣 provision in the Agreement. 

29.  Later on the plaintiff instructed Messrs Tam, Pun & Yipp (“TPY”) to handle the sale and purchase of the Carpark on his behalf.  There had been some exchange of correspondence between TPY on behalf of the plaintiff and Messrs Y.C. Lee, Pang, Kwok & Ip (“LPKI”) on behalf of the defendant from 22-29 October 2015, around the time when the Formal Agreement was supposed to be signed in accordance with the terms of the Agreement.  The first letter dated 22 October 2015 was sent by TPY to the defendant directly, urging the defendant to nominate lawyers to represent him in respect of the Agreement.  In these letters, LPKI claimed termination of the Agreement on ground of failure of the plaintiff to pay the initial deposit pursuant to Clause 2(a) of the Agreement, while TPY asserted payment of the initial deposit had been effected by the plaintiff.

30.  On the quantum of damages, the plaintiff said he knew the price at which the Carpark was sold to Ko was HK$770,000.  He did not agree to Mr Chong’s proposition that he was paying too high a price for the Carpark.  The plaintiff said it was the market price for the Carpark at that time.

Evidence of Xu

(i) Xu’s witness statement

31.  The witness statement of Xu gave only very brief details of what happened in her meeting with the defendant on 12 October 2015.  Xu said the defendant went to the office of RPL in Uptown Plaza to sign the Agreement.  When she handed the Cheque to the defendant, he told her to keep the Cheque for the time being as it was very late and he had to head back to Mainland China that night.  The defendant asked her to give him the Cheque later at his office at Shun Tak Centre in Sheung Wan.

32.  Xu therefore went to Shun Tak Centre on 13 October 2015 and upon arrival, the defendant proposed to cash the Cheque immediately.  They went to queue at one of the banks in Shun Tak Centre and there were a lot of people at the bank.  After queuing for 5-10 minutes, the defendant decided not to cash the Cheque but asked Xu to keep it for him and not to cash it yet.  They then went to the office of the defendant, where the defendant told her of the sale of the Carpark to Ko under the Ko Agreement.  The defendant showed Xu the Ko Agreement and asked her what he should do and whether the Agreement was still valid.  Xu was very surprised and said she did not know what the defendant should do.  The defendant told Xu to keep the Cheque for the time being and not to cash it.

33.  The Cheque was then passed by Xu to the relevant department in RPL and Xu had not received any further instructions from the defendant to cash the Cheque.  Xu mentioned in her witness statement that on the two occasions on 12 and 13 October 2015 when she was instructed by the defendant to keep the Cheque for the time being and not to cash it, she was keeping the Cheque for the defendant, as his agent.

(ii) Xu’s oral testimony

34.  On the witness stand, a lot more details, and more importantly twists and turns, were added by Xu to her account in the witness statement, in particular as to what had happened during her encounters with the defendant.    

35.  Xu said the defendant called to say that he had a carpark of the Estate to sell on 12 October 2015, having been successful in the drawing of lots.  Xu told the defendant the market price would be HK$1.2 million – HK$1.3 million and the defendant decided to sell it at that price range.  Xu could not remember whether the defendant told her about the price he had to pay the Developer, but she knew that the defendant would be making a profit if he was to sell it at HK$1.3 million. 

36.  In relation to the filling in of the blanks in the Agreement, Xu said she was the one who put in the details in the blanks, and save for the names of the vendor and of the seller and their identity card numbers, all the blank spaces had already been filled in when she met the plaintiff for the signing of the Agreement.  Xu stated that she worked on the Chinese version of the Agreement.

37.  At first Xu said the name of the defendant was only inserted into the Agreement when she met with the defendant later that night and the plaintiff only knew that he was buying from a Mr Sun, without knowing the full name of the defendant, when he signed the Agreement.  Later on, when asked how the plaintiff could have written out the name of the defendant on the Cheque, Xu said the defendant had earlier on given her the information regarding the name of the payee for the cheque for payment of the initial deposit, when Xu called him for that purpose.  Subsequently Xu said it was the defendant who called her, and that she could not remember whether the name of the payee had been written out on the Cheque when it was handed over to her by the plaintiff.  

38.  Xu averred that she had explained the terms of the Agreement to the plaintiff in Cantonese before he signed.  Xu could not recollect the basis for her to put down 23 October 2015 as the deadline for signing the Formal Agreement or 24 November 2015 as the date of completion, nor whether the plaintiff had asked for sight of the Head Agreement or whether Xu had given the plaintiff a copy of the Head Agreement. How Xu explained to the plaintiff the effect of Clause 7 of the Agreement and the inherent risk of the defendant selling as confirmor is also a matter that had slipped from the memory of Xu.

39.  As for the place of meeting between Xu and the defendant, it is Xu’s oral testimony that they met at a coffee shop in Uptown Plaza instead of the office of RPL.  Although initially saying that she had explained all the terms of the Agreement to the defendant, including the crossing out of Clauses 9 and 10 of the Agreement, Xu subsequently said she could not remember whether she did indeed explain the two additional terms under Clause 22 to him.  She also could not remember the reasons for inserting those two additional terms.   

40.  Xu could offer no explanation as to why the copy of the Agreement kept by the defendant does not have the amount of the Cheque written out in the Receipt Clause.  She did at one point say that the three copies of the pro forma agreement were attached on top of one another when she wrote the amount of the Cheque onto the document, but later said she could not remember whether they were so attached.

41.  After Xu had stated that the defendant did not raise any matters other than those relating to the Agreement, the defendant’s case on what happened on 12 October 2015 was put to her.  Xu could not remember whether the defendant talked to her about the Head Agreement, but disagreed with the proposition that the defendant told her about the Ko Agreement.  Xu had also forgotten the details about the sequence in which the defendant put his signature to the various places of the Agreement, but did not agree to the averment that Xu had not given the Cheque to the defendant or that the defendant refused to sign the Receipt Clause when Xu refused to hand over the Cheque.

42.  As to the defendant’s allegation in his witness statement that Xu left the coffee shop for about 30 minutes during her meeting with the defendant, Xu firstly said that she had not left at all, but later said she could not remember whether she had left.  Xu denied contacting the plaintiff to tell him about the Head Agreement and the Ko Agreement during the 30 minutes she was away.

43.  A note is mentioned in the supplemental witness statement of the defendant as being written out by Xu and given to the defendant dated 12 October 2015 (“Note”).  The Note says –

“ 原件支票暫時由徐宏保管2015-10-13交返賣家”

44.  Upon being shown the Note which is admitted as Exhibit D-2, Xu confirmed that she wrote out the Note on the backside of a photocopy of the Cheque at the request of the defendant. Xu said the Note was given to the defendant after he had signed the Agreement, including the Receipt Clause.  Xu said she could not be sure whether the defendant signed the Receipt Clause because of the Note.

45.  After the signing of the Agreement by the defendant, Xu met the plaintiff again on the ground floor of Uptown Plaza on 12 October 2015, to hand over a copy of the executed Agreement to him.  Xu told the plaintiff then and there that, as instructed by the defendant, the Cheque was kept by her.  She could not remember whether she told the plaintiff that she had written the Note and given it to the defendant.

46.  Xu said she went to the office of the defendant on 13 October 2015 for signing of the Formal Agreement and she considered the deal to have fallen through because the defendant did not sign the Formal Agreement on that day.  That the defendant failed to sign the Formal Agreement was also what she, at one point, said she had reported to her superiors in RPL, although later on she switched to saying that she could not remember whether she did so report and whether her superiors had asked her about the outcome and details of the deal between the plaintiff and the defendant, and then back again to saying that she had so reported.

47.  When it was pointed out to Xu that under Clause 3 of the Agreement, the parties did not have to sign the Formal Agreement until 23 October 2015, Xu did not consider her understanding of the obligations of the parties to sign the Formal Agreement to be incorrect, stressing that the Formal Agreement could be signed on any day before 23 October 2015.  According to Xu, since the defendant had said that he did not know any lawyers, she went with someone from a law firm, a 邵先生(“Mr Shiu”), to the defendant’s office on 13 October 2015 to sign the Formal Agreement.  Xu was asked why the presence of Mr Shiu was never mentioned in her witness statement.  Her answer was she was not aware of the importance. 

48.  It is Xu’s testimony that Mr Shiu had on 13 October 2015 brought along a formal agreement with him for the defendant to sign.  As to how the parties could sign the Formal Agreement on 13 October 2015 when the plaintiff had not nominated the law firm that was to represent him in the purchase, Xu said that after signing by the defendant, the Formal Agreement would be sent to the plaintiff for him to find his lawyers. In response to the question of how could the Formal Agreement be signed by one side when the parties had not agreed on the terms yet, Xu said the terms should be the same as the provisional agreement for sale and purchase.

49.  On the evidence from Xu that she and the defendant had queued at a bank, intending to cash the Cheque on 13 October 2015, Xu gave a different version at the stand.  She said that they went to the bank first to take a look before heading to the office of the defendant.  She did not confirm which was the actual state of affairs, but said she might not have expressed herself too well.  She said she could not remember whether Mr Shiu went with them to the bank.

50.  At the office of the defendant, the defendant let Xu have a look at the Ko Agreement.  Xu then realized that the deal between the plaintiff and the defendant could no longer proceed, that the Formal Agreement could not be signed.  As for Mr Shiu, Xu said she could not be sure whether Mr Shiu had taken a look at the Ko Agreement as well, but after learning from Xu and the defendant that the deal between the plaintiff and the defendant could not proceed further, Mr Shiu said it would not be appropriate for him to be involved any more.

51.  Another matter Xu was not sure was whether the defendant had ever had the Cheque in his possession on 13 October 2015.  Although in her witness statement, Xu did not mention the defendant being passed the Cheque at any point of time on 13 October 2015, Xu said on the witness stand that she could not remember whether the defendant had the Cheque with him when they left the bank to go to his office. 

52.  After leaving the office of the defendant on 13 October 2015, Xu said she got in touch with the plaintiff upon returning to her office.  Xu told him that the Formal Agreement was not signed, that the defendant had signed the Ko Agreement before signing the Agreement with the plaintiff but Xu did not know about it beforehand. 

53.  Xu left the employment of RPL in February or March 2016.  She was asked a number of questions about the letters exchanged between RPL and the defendant, in which there are material differences between the events described by RPL, whether indicated as being based on the reports of the handling agent or not, and those testified by Xu. To these, Xu’s answers were either she had no knowledge of what RPL said in those letters or she could not remember whether she had told RPL those matters or not.

Defendant’s evidence

54.  The defendant accepted that on the date of the signing of the Agreement, he had already sold the Carpark to Ko, but he denied not having told Xu about the Ko Agreement when he signed the Agreement.  It is the defendant’s case that he told Xu about it on 12 October 2015, at the time the Agreement was executed by him.  When asked whether he would agree that given that the Carpark had been sold to Ko, he would not be in a position to sell the Carpark to the plaintiff, the defendant at first said he was not sure, but upon further questioning, he agreed that for the same carpark, there cannot be two buyers.

55.  In relation to the execution of the Ko Agreement, the defendant said the initial deposit paid by Ko was HK$77,000 and this sum was not paid to the defendant, but was paid to the solicitors and used as payment of the initial deposit under the Head Agreement.  Although the defendant did not himself pocket the HK$77,000 paid by Ko, he agreed that the initial deposit under the Ko Agreement had been paid by the purchaser to the vendor under that agreement.

56.  According to the defendant, when he met Xu at the coffee shop on 12 October 2015, Xu presented the Agreement and asked him to sign.  When he reached the Receipt Clause, he paused and asked Xu for the Cheque.  Xu told him that she could not pass him the cheque then.  It is the defendant’s testimony that he believed that Xu’s refusal to give him the Cheque might be due to the fact that the sale between the plaintiff and the defendant was a sub-sale which was subject to the Head Agreement. 

57.  Whilst admitting that Xu never said the reason for not handing over the Cheque to him was because of the nature of the Agreement being a sub-sale, the defendant confirmed that he had not asked Xu why.  The defendant explained that he was eager to conclude the deal with the plaintiff because Ko had expressed an intention to back out from the Ko Agreement, having learnt that the Head Agreement did not allow sub-sale by the defendant.  The defendant was therefore worried that he might not be able to find another purchaser.  The defendant mentioned that he was told by Xu that the plaintiff was prepared to pay a high price for the Carpark, but the plaintiff insisted that the agreement be signed within that day.

58.  Although the defendant had not brought along the Head Agreement and the Ko Agreement when he met Xu on 12 October 2015, he had raised the matter about Ko’s threatened rescission with Xu. The defendant mentioned that the two of them discussed what would happen in such a scenario, that Ko had paid HK$77,000 as deposit and the possibility of Ko having to pay compensation in an amount representing twice the deposit.  Xu specifically asked the defendant whether the Ko Agreement was a 必買必賣 agreement, and the defendant told her that he could not be sure.   

59.  Xu then left the coffee shop for about half an hour.  The defendant said after waiting for quite a while at the coffee shop, he went upstairs to find the office of RPL.  That was how he came to see Xu talking to a middle-aged man outside the office of RPL.  The defendant assumed Xu was consulting people on how to deal with the situation. 

60.  When Xu came back to the coffee shop, she passed the Note to the defendant.  The defendant confirmed that he agreed to sign the Receipt Clause upon seeing the Note, and at that point of time he was agreeable to the handing over of the Cheque to him on 13 October 2015. 

61.  When asked why he claimed in his defence that the plaintiff was in breach in not giving him the Cheque on 12 October 2015, but he had not made such allegation on 13, 14, 15 of October 2015 or within a reasonable time, the defendant said it was because all along he had not been in contact with the plaintiff and Xu was his only contact.  Further, when Xu and Mr Shiu said on 13 October 2015 that the deal between the plaintiff and the defendant could not proceed further after reading the Head Agreement and the Ko Agreement, the defendant did not ask for the Cheque any more.  However, the defendant did not agree that he considered the Agreement to be no longer effective because of the opinion of Xu and/or Mr Shiu, and not because the plaintiff had not paid the initial deposit to him.

62.  One other matter specifically put to the defendant is the effect of Clause 20 of the Agreement.  The defendant expressed his understanding that both he and Xu were not conversant with English and so they went by the Chinese version.  He therefore did not agree that the English version should prevail.  The defendant confirmed that Xu had explained the crossing out of Clause 9 of the Agreement to him.  According to the defendant, under the usual practice in Mainland China, a vendor is only liable to pay double the deposit amount for recission.

63.  In respect of the evidence of Xu, the defendant did not agree that Xu had passed him the Cheque on 12 October 2015, that he asked Xu to keep the Cheque because it was late and the defendant had to go to Mainland China, that Xu gave the defendant the Note because she was to keep the Cheque for the defendant and to give it back to him on 13 October 2015, that Xu gave the Cheque to him again on 13 October 2015, that the defendant told Xu for the first time on 13 October 2015 about the sale of the Carpark to Ko, or that Xu and Mr Shiu came to the office of the defendant on 13 October 2015 together with the Formal Agreement for him to sign.  Notwithstanding the above, the defendant confirmed his stand that he was willing to sign the Receipt Clause because of the Note and that he was willing to continue with the sale of the Carpark to the plaintiff even if he was to receive the Cheque on 13 October 2015 and not on 12 October 2015.

12 October 2015

64.  The allotment of carparks in the Estate by drawing of lots only began on 10 October 2015, which was a Saturday, two days before the signing of the Agreement.  It would be highly unlikely that the Head Agreement could be revealed by a land search of the Carpark by 12 October 2015[1], even if one were to be conducted.  It is even more unlikely that the plaintiff would be willing to pay HK$130,000 as initial deposit for the purchase of the Carpark without any assurance that he was buying from someone who indeed had the right to sell. 

65.  The parties have not referred me to the code of conduct or professional guide relating to the provision of services by estate agents. Whether or not it is a specific requirement or a recommended practice of the Estate Agents Authority or of RPL, I would expect an estate agent to have ascertained that a person claiming to have authority to sell a property does in fact have such authority before presenting an agreement to an intended purchaser to sign.  It is thus more likely than not that the plaintiff knew whom he was purchasing the Carpark from when he signed the Agreement, after having had the chance to peruse the Head Agreement. 

66.  The setting of the date of completion in the Agreement would also have to tally with the completion of the Head Agreement.  For a sub-sale, completion usually takes place on the same day as the completion of the head agreement.  Although Xu no longer has any memory as to why she put down 24 November 2015 as the date of completion of the sale and purchase of the Carpark under the Agreement, it is more likely than not that she had checked the Head Agreement for the purpose, before committing the signing parties to a date that would give rise to serious legal rights and liabilities on their parts. I therefore accept the plaintiff’s own evidence that he had had a look at the Head Agreement before he signed the Agreement.  The name of the defendant should thus have been filled in when the Agreement was signed by the plaintiff.

67.  There is the mystery of the defendant’s copy of the Agreement not having written on it the amount of the Cheque.  Given the nature of carbonless copy paper, and having examined the exhibits P-1 and D-1, I am satisfied that all the other writings shown on the two different copies of the Agreement, including the number of the Cheque and the name of the bank in the Receipt Clause, were made at the same time in one go and not separately.  The only way the amount of the Cheque was omitted from the defendant’s copy would be the detachment of that copy when that piece of information was inserted. 

68.  It is the submission of the defendant that the omission of the amount of the Cheque in the Receipt Clause is another indication that the plaintiff and/or Xu had no intention to pass the Cheque to the defendant.  I do not agree that such conclusion can be drawn.  It is not a case of the Receipt Clause having no details inserted.  The number of the Cheque and the name of the bank against which it was drawn had been put down in both the plaintiff’s and the defendant’s copies of the Agreement. There would be no uncertainty as to the amount of the Cheque, the amount of the initial deposit having been stipulated in Clause 2(a) of the Agreement.  I therefore do not accept this submission of the defendant.  Since I do not find the issue on whether the plaintiff had paid the initial deposit to the defendant on 12 October 2015 to be affected by the reason why that copy was detached, it is not necessary for me to make a finding on the reason for the omission of the amount of the Cheque in the Receipt Clause.

69.  I find Xu’s explanation in her witness statement that the defendant had asked her to keep the Cheque for him on 12 October 2015 to be a lame one.  As pointed out by the defendant, a cheque is just a small piece of paper and there was no good reason why the defendant could not bring it along with him even if he was to head back to Mainland China that night. 

70.  I prefer the testimony of the defendant that he had told Xu about the Ko Agreement, that he had not had the Ko Agreement with him that day, but he had had the discussions which he testified to with Xu on the matter.  Having so discussed with Xu, it would be apparent that the right of the defendant to sell the Carpark to the plaintiff was far from certain and the Ko Agreement was a potential block to the deal between the plaintiff and the defendant.    

71.  I also accept what the defendant said about Xu leaving the coffee shop to go back to her office to consult other people.   If, as Xu claimed, she did not know about the Ko Agreement beforehand and she intended to hand over the Cheque to the defendant upon his execution of the Agreement, she would not have the Note in place when she went to the coffee shop.  Even if the defendant did indeed ask Xu to keep the Cheque because he had to go to Mainland China, the need for Xu to hold on to the Cheque could only arise after meeting with the defendant.  Xu would therefore have to go back to the office to make a photocopy of the Cheque.

72.  Although I find Xu to have left the coffee shop during her meeting with the defendant, the evidence before me does not support a case of Xu having contacted the plaintiff while she was away.  According to the plaintiff, after he had signed the Agreement and right until Xu called him for handing over to him a copy of the Agreement that had been signed by the defendant, Xu and the defendant had not been in contact with each other.  The defendant only saw Xu talking to a middle-aged man outside the office of RPL at Uptown Plaza, without identifying that man as the plaintiff.  That being the case, it is my finding that there was no change to the instruction of the plaintiff to Xu regarding the Cheque, i.e. to pass it to the defendant upon his signing of the Agreement.    

73.  I do not find the defendant’s testimony of his not asking Xu for the reason for her refusal to give him the Cheque on 12 October 2015 to be credible.  As vendor, the defendant had the right to be paid the initial deposit and if such right was denied him, he would be entitled to an explanation.  The defendant referred to his belief that the Cheque was withheld because he was sub-selling to the plaintiff.  That however was not the position provided for under the Agreement. Clause 4, the only provision on such matter, requires the stakeholding by the vendor’s solicitors of all deposits payable by the purchaser only where it is proved that the balance of the purchase price is sufficient to discharge the existing charge in respect of the property.  The Agreement does not require stakeholding of the initial deposit in the case of a sub-sale.   

74.  The failure of the defendant to ask for an explanation for the withholding of the Cheque also does not sit well with his testimony about Xu leaving midway during the meeting on 12 October 2015.  The defendant said he believed Xu went away to consult others on how to deal with the situation because of what he saw when he went to find the office of RPL within Uptown Plaza.  This means that Xu did not tell him why she went off for 30 minutes and he had to find out on his own.  Not only was Xu’s action contrary to basic etiquette, it would also be a move rather out of the ordinary as a person in the defendant’s position would have asked Xu why.  It is a case of the defendant not telling the whole truth, and more likely than not, Xu had told the defendant the reason for not passing the Cheque to him and also that her leaving the meeting had to do with the reason for not handing over the Cheque to him.

75.  The defendant put forward two reasons as to why the plaintiff would want to withhold the passing of the Cheque to the defendant.  Firstly, the plaintiff was aware of the transaction was a sub-sale subject to the Head Agreement and he particularly asked for the addition of Clause 22 of the Agreement.  The plaintiff however had not sought legal opinion on the Head Agreement and he was concerned that the defendant might not have the right to sub-sell the Carpark.  Hence, he wanted to avoid the risk in passing the Cheque to the defendant before he had the chance to seek legal opinion to ascertain the position.  Secondly, Xu was informed of the intended repudiation of the Ko Agreement by Ko and this added uncertainty to the sale and purchase of the Carpark between the plaintiff and the defendant.

76.  Whilst the above concerns would be natural to a person in the position of the plaintiff, I do not accept that it was the plaintiff who instructed Xu not to hand over the Cheque.  There is no evidence which shows that the plaintiff was aware of the Ko Agreement when he signed the Agreement.  Even the evidence of the defendant does not support a case of Xu being told about the Ko Agreement before the defendant met her at the coffee shop for the signing of the Agreement.  The evidence of the plaintiff that he only knew about the Head Agreement then but not the Ko Agreement was unwavered and I accept it. 

77.  As for the plaintiff’s concern over the ability of the defendant to sub-sell the Carpark, the 必買必賣 provision in Clause 22 of the Agreement was indeed added at the insistence of the plaintiff, but there is no evidence to justify a finding that the plaintiff was concerned about the risk of handing over the Cheque to the defendant because the defendant was selling as a confirmor.  The plaintiff was specifically asked about this, and I accept his evidence that he was in no doubt about the ability of those who were allotted carparks in the Estate to sub-sell them.  The plaintiff himself was present at the second round of drawing of lots and he saw for himself how sub-sales were entered into right there.      

78.  The defendant testified that he had raised the issue about the Ko Agreement with Xu on 12 October 2015 when they met at the coffee shop, and their discussions had touched on the question of whether the Ko Agreement was a 必買必賣 agreement, which could not be verified then because the defendant did not have the Ko Agreement with him.  I accept his evidence on this and reject that of Xu when she said the defendant did not mention the Ko Agreement to her on 12 October 2015.  After the defendant and Xu had had those discussions, both of them would realize that the defendant could only sell the Carpark to the plaintiff if the defendant would be able to wriggle out of the deal he made with Ko because the Ko Agreement was not a 必買必賣 agreement.

79.  I thus find the Cheque was kept by Xu because of the risk that the defendant might no longer have the right to sell the Carpark to the plaintiff because of the Ko Agreement.  I also accept the defendant’s evidence that Xu left the coffee shop during her meeting with him on 12 October 2015 to consult others at the office of RPL on how to address such risk.  The solution they came up with was the retention of the Cheque by Xu in the meantime and the issue of the Note to the defendant.

80.  Mr Chong, counsel for the defendant, submitted that the Note was not written out upon the instructions of the defendant.  He pointed to the absence of any signature of the defendant on the Note which shows that the Note was more a unilateral offer from Xu to keep the Cheque for the defendant.  Mr Chong also asked me to note that the wording of the Note does not suggest the temporary safe-keeping of the Cheque by Xu was under the instruction of the defendant, and that the full name of Xu was written out in the Note while the defendant was only referred to by the generic term “vendor” also suggests that it was not the defendant who told Xu what to write.  Lastly, the Note was not worded as a receipt of the Cheque by the defendant and so more likely than not, it was Xu who pro-actively decided upon her safe-keeping of the Cheque.

81.  Mr Chong also tried to convince me that there is doubt on whether the plaintiff intended to pass the Cheque to the defendant.  He referred me to the admission of the plaintiff to three matters – (1) that when Xu passed the executed Agreement to him, Xu told him about the Note and that she was keeping the Cheque; (2) that he was told by Xu of her keeping the Cheque on 13 October 2015 after the meeting among Xu, Mr Shiu and the defendant; and (3) that he knew of the allegation of the defendant’s lawyers in their letter of 23 October 2015 that the plaintiff had failed to pay the initial deposit pursuant to clause 2(a) of the Agreement.  Despite such knowledge, the plaintiff was very passive in following up with the delivery of the Cheque or the payment of the initial deposit.

82.  I should first point out the plaintiff only admitted to being told by Xu about her keeping the Cheque on 12 October 2015 but not about the Note.  In any event, I do not agree that the plaintiff failed to act on the knowledge of the other matters at all.  From the correspondence shown in the bundle, it was the plaintiff’s lawyers who first wrote to the defendant himself, questioning the failure of the defendant to nominate lawyers to represent him in respect of the Agreement notwithstanding the impending deadline for the signing of the Formal Agreement.  It had been the plaintiff’s belief that completion of the Agreement would take place because of the必買必賣 provision.  The matter had by then been entrusted in the hands of his lawyers.  That is anything but passive. 

83.  Rather, I find the inaction on the part of the defendant after the event on 13 October 2015 to be inconsistent with his stand that the plaintiff was in breach in not paying the initial deposit.  There is nothing to show that the defendant took any action until he received a letter from the plaintiff’s solicitors dated 22 October 2015 urging for his nomination of the lawyers to represent him.  The excuse proffered by the defendant that he had not been in contact with the plaintiff before and Xu was his only contact is not a plausible one.  Any complaint for non-payment of the initial deposit could be made through Xu or RPL, it being the agent for both parties.  It is more likely the case that having realized that he actually had no authority to sell the Carpark to the plaintiff, the defendant could not insist on its performance.

84.  As regards the Note, given that it was the solution decided upon after Xu returned from discussions with her colleagues at the office of RPL and there is also no evidence from Xu or the defendant that he was party to the discussions between Xu and her colleagues, I agree that it is more likely than not that the Note was not prepared upon the instructions of the defendant.  I find the Note to have been written out by Xu either by herself or upon the advice of her colleagues, but not at the instructions of the defendant. 

85.  That may be the case, but it is my finding that the Note was not issued by Xu at the instructions of the plaintiff either.  There is not a shred of evidence to base such a finding.  Having learnt about the Ko Agreement upon meeting the defendant, a responsible estate agent would have put a hold to the transaction and only proceeded further upon clearance of the potential obstacle.  The plaintiff should have been informed and if he agreed to a deferment, the deal with the defendant could continue after it was found out that the Ko Agreement would pose no hurdle to their sale and purchase of the Carpark. 

86.  That however was not what had happened.  As per the testimony of the defendant, Xu told him the price offered by the plaintiff was very high but the plaintiff required the agreement to be signed on that day, 12 October 2015.  It is also the evidence of the defendant that he was eager to find another purchaser, in light of the threatened repudiation of the Ko Agreement.  As for Xu, naturally she would not want to have the opportunity to earn commission from the deal gone in the thin air because of the failure to meet the specific condition of the plaintiff in having the agreement signed on 12 October 2015.  The signing of the Agreement by the defendant on 12 October 2015 would mean to the defendant, the securing of a replacement purchaser who was willing to pay a much higher purchase price than Ko; and to Xu, the potential of earning a share in the commissions.   

87.  If the Ko Agreement was not a必買必賣agreement, under the terms of the usual provisional agreement for sale and purchase, the defendant would only have to pay double the amount of the initial deposit paid by Ko under the Ko Agreement for recission.  In such a case, not counting the expenses that would have to be incurred, the defendant would still be making a profit of about HK$376,000[2], almost half of what he agreed to pay for the purchase of the Carpark from the Developer.  Unfortunately for the parties, the temptation proved too great for the defendant to resist, and the defendant agreed to sign the Agreement so as to meet the specific condition set by the plaintiff and the defendant and Xu were to find out if the defendant did in fact have the right to sell to the plaintiff afterwards.  I find that it was on such understanding that the defendant agreed to take the Note in place of the Cheque and to sign on the Receipt Clause. 

88.  Mr Chong referred to the following passage in the judgment of the case of Yili Concepts (HKG) Ltd v Lee Wai Chuen HCA 12911/97, 29 September 2000 –

“It is a question of fact in each case whether an estate agent is authorized by and therefore acting for a particular party in providing information relating to a property to another party. Although an estate agent in Hong Kong usually acts as a broker taking commission from both sides, he may assume different roles at different stages of the negotiation leading to the transaction.”

89.  The Yili case is concerned with misrepresentations made by an estate agent and whether such estate agent was acting for the vendor in providing the information in question.  I accept the general principle that it is a question of fact in each case as to whether an estate agent is acting for a particular party in carrying out the action under consideration.

90.  Mr Chong submitted that there would be no payment of the initial deposit even if the Cheque was held by Xu on behalf of the defendant.  I do not agree.  The contractual obligation of payment of the initial deposit is in Clause 2(a) of the Agreement.  There is no requirement that the cheque in payment of such deposit has to be physically passed to the vendor.  What happened with the execution of the Ko Agreement also shows that payment of the initial deposit can be effected without the defendant being given possession of the cheque at all.  The defendant himself accepted that there was payment of the initial deposit under the Ko Agreement even though it was paid over to the solicitors and not to him, and he had also signed on the clause acknowledging the receipt of the initial deposit in the Ko Agreement.

91.  The question for this court is therefore which party Xu was acting for when she kept the Cheque upon signing of the Agreement by the defendant.  I have pointed out earlier that I accept the evidence of the plaintiff himself that he did not know about the Ko Agreement.  He would not therefore be aware of the risk of the Agreement being blocked by the prior sale of the Carpark under the Ko Agreement.  There would thus be no reason for him to want the Cheque to be withheld at all. 

92.  What the defendant and Xu did on 12 October 2015 was to take a chance on being able to find the Ko Agreement to be not a 必買必賣 agreement when they were to next meet on 13 October 2015.  What Xu did with the Cheque and the Note was contrary to the instructions of the plaintiff and as such, I do not find Xu to be acting as the agent of the plaintiff in so doing. 

93.  As for the defendant, it may be disputable whether Xu was acting as his agent when she kept the Cheque with her if he had not signed on the Receipt Clause.  However, in putting his signature to the Receipt Clause, the defendant agreed to the holding of the Cheque by Xu for the time being, knowing full well that Xu would be reverting to the plaintiff on the basis of the Agreement was to be regarded as duly signed on 12 October 2015.  In so doing, and from that point of time, the holding of the Cheque was to the order of the defendant.

94.  The Cheque was not only held by Xu to the order of the defendant, she was also acting for the defendant in keeping the Cheque until they were to meet on 13 October 2015.  Even though the defendant never had possession of the Cheque, by signing the Receipt Clause, he accepted payment of the initial deposit to be made in such manner.  There was thus payment of the initial deposit by the plaintiff to the defendant on 12 October 2015.

95.  In light of such finding, there is no further need for me to deal with the events on 13 October 2015. Nevertheless, since I have assessed the credibility of the witnesses based on their evidence as a whole, I shall proceed to address their account of what happened on 13 October 2015.

13 October 2015

96.  The testimony of Xu that she went to the office of the defendant on 13 October 2015 for the signing of the Formal Agreement cannot be further from the truth.  The Agreement itself did not mandate the signing of the Formal Agreement.  Under Clause 3 of the Agreement, parties were to sign the Formal Agreement only if they could agree on the terms thereof.

97.  More importantly, a formal agreement is usually the result of negotiations, which can sometimes be extensive, between the solicitors of the vendor and of the purchaser on behalf of their clients.  The deadline for the signing of such a formal agreement is therefore usually set to allow for time for such negotiations to be conducted.  Given that the parties had not even nominated solicitors to represent them in this conveyancing matter yet, the Formal Agreement could not have been ready for execution then, whether by the parties or by the defendant alone.  Even if Xu was not familiar with such practice, this state of affairs would not have escaped Mr Shiu, with him being a legal personnel drawn in for the purpose of assisting in the conveyancing matter.

98.  The story about queuing at a bank trying to cash the Cheque is also not one I would believe, especially when Xu herself gave conflicting evidence at the witness stand that they only took a look and did not actually queue at a bank.  Xu also could not say whether Mr Shiu went together to the bank with her and the defendant.  I find the whole thing to be made up by Xu.

99.  Instead of bringing the Formal Agreement to the defendant’s office for him to sign, I find the purpose for Xu’s visit on 13 October 2015 was to find out if the defendant was still free to sell the Carpark to the plaintiff despite the Ko Agreement.  That would also be why Xu brought along someone from a law firm, as Mr Shiu might be able to provide some assistance, should that be required, in the interpretation of the document. 

100.  Xu would not require any assistance in the interpretation of the 必買必賣clause in the Ko Agreement, in view of its clear wording and the crossing out of the provisions on rescission by either party.  It would be apparent to Xu that the sale and purchase of the Carpark under the Agreement could not proceed any further.  I accept the plaintiff’s own evidence that he was only informed about the Ko Agreement by Xu on 13 October 2015.  I do not accept Xu’s evidence that she knew about the Ko Agreement only on 13 October 2015, although I accept that she only had the chance to peruse the Ko Agreement and so she was only certain about the effect of it on 13 October 2015. 

101.  Having learnt of the binding effect of the Ko Agreement on the Carpark, whether through himself looking at the Ko Agreement or being told of it by Xu and/or Mr Shiu, the defendant would have come to realize that there was no basis for him to ask for the Cheque any more.  That the Cheque should not be handed over to the defendant would be the consensus of Xu and the defendant.  Hence, I reject the evidence of Xu that she was instructed by the defendant to hang on to the Cheque by the defendant on 13 October 2015.  I also reject the evidence of the defendant that he considered the Agreement no longer effective because the plaintiff had not paid the initial deposit.  

Conclusion on liability

102.  Although the Cheque was not passed to the defendant on 12 or 13 October 2015, I find it to be held by Xu to the order of the defendant on 12 October 2015 and Xu was acting for the defendant in doing so.  The Cheque was in the possession of Xu as agent of the defendant when the defendant signed on the Agreement, including the Receipt Clause, to comply with the specific condition of the plaintiff that the agreement between him and the defendant for the sale and purchase of the Carpark had to be signed on 12 October 2015.  There was thus payment of the initial deposit by the plaintiff to the defendant.

Damages

103.  Mr Chan, counsel for the plaintiff, based the claim for damages on Clause 9 of the Agreement.  He pointed me to the cases of Lee Ming Ching v Man Sun Finance (International) Corp Ltd [1993] 1 HKC 113 and Polyset Ltd v Panhandat Ltd (2002) 5HKCFAR 234 where the effect of a similar clause requiring payment of twice the amount of the initial deposit was considered.  The Lee Ming Ching case was concerned with the issue of whether the vendor could still rely on the clause to back out from the deal if he paid the double deposit amount after the date stipulated for payment of the further deposit and signing of the formal agreement.  In the case of Polyset Ltd v Panhandat Ltd, the questions before the court were whether the purchaser was entitled to rescind the agreement and whether the unusually large deposit (35% of the purchase price) was a reasonable quid pro qua for keeping the property off the market.  I do not find these cases to be of assistance here. 

104.  Despite the actual crossing out of the Chinese version of Clause 9 of the Agreement and the clear evidence of both the plaintiff and the defendant of their intention to cross out that clause, Mr Chan asked me to give effect to Clause 20 of the Agreement, and award damages to the plaintiff in accordance with the English version of Clause 9 which they had not crossed out as well.  As Mr Chan put it, whatever the intention of the parties might be, as a matter of construction, the court should give effect to the English version of Clause 9 because the parties could, but did not, cross out Clause 20 or both the English and Chinese version of Clause 9. 

105.  Given that the plaintiff has himself confirmed his insistence to enter into a 必買必賣agreement and both parties testified to their working on the basis of the Chinese version of the Agreement, I have grave reservations in accepting this argument of Mr Chan.  More importantly, as pointed out by Mr Chong, reliance on Clause 9 of the Agreement is not the pleaded case of the plaintiff.  The following passage from the case of In Citibank N.A (Nominees) Ltd v Deacon Te-ken Chiu [1983] HKLR 121 was drawn to my attention –   

“The statement of claim alleges the execution of several documents and twice states that the plaintiff will refer to them at the trial for their full terms, true meaning and effect. I must say quite clearly that I agree with Mr. Yorke that this formula has no place in our modern system of pleading. In the days when pleading were highly technical and prolix and were required to follow set patterns it may have been necessary and permissible to use such a long-stop to avoid the necessity of setting out in full a document the interpretation of which might not be in issue. Today the formula is inconsistent with O.18 r.7. If the precise words of the document are material, they must be stated. Otherwise the effect of the document must be briefly stated. It is not necessary, as has been submitted, to use this formula in order to reserve a right to the party pleading to refer to the entire document for the purpose of interpretation. Not only is the formula unnecessary but it tends to be misleading…”

106.  In the Statement of Claim, the plaintiff has referred neither to Clauses 9 and 20 of the Agreement nor their effect.  The defendant cannot be expected to meet any additional claim that the plaintiff chooses to bring up at trial.  Not being raised in the pleadings, this point is not open for the plaintiff to take and I reject it. 

107.  The return of the deposit in the sum of HK$130,000 is one of the reliefs asked for in the Statement of Claim.  There is no dispute that the Cheque has not been cashed, so the plaintiff does not have HK$130,000 out of pocket and no return can be ordered.

108.  Assessment for damages is another relief sought.  Mr Chong rightly referred me to the discussions in McGregor on Damages 20^th edition which state that where the breach of contract consists of a failure to transfer property, the basic loss is the market value of the property.  As already mentioned, the plaintiff has not adduced any evidence to show that he has suffered loss as a result of the breach of the Agreement by the defendant.   

109.  When making his closing submissions orally, Mr Chan put forward an alternative claim on damages.  He asked for an award of nominal damages if the court is not with the plaintiff on the effect of Clause 9 of the Agreement.  Not only is an award of nominal damages not appropriate in the present case when it has not been pleaded, but also because the plaintiff knew full well that the burden is on him to establish loss but elects not to do so, for reasons only known to himself.  If the plaintiff is not minded to prove his loss, he should not be dragging the defendant to court at all.  Such an award will only encourage unnecessary litigation. 

110.  I therefore make no award of damages and dismiss the plaintiff’s claim.

Costs

111.  On a nisi basis, I order the plaintiff to pay costs of this action, with certificate for counsel and including all costs reserved, to the defendant, to be taxed if not agreed.