CHUNG YUK MAN DAVID AND ANOTHER v. NG CHIN HO

DCCJ 820 / 2006

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 820 OF 2006

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JUDGMENT

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1.  The Defendant and his mother, Madam Chan Mei Kwei (“Chan Mei Kwei”), are and were at the material times the registered owners of the property (“the Property”) known as Flat 1, 7th Floor, Block A, Sun Kwai Hing Gardens, No. 161, Tai Wo Hau Road, Kwai Chung, New Territories, Hong Kong. 

2.  The 1^st and 2^nd Plaintiffs are respectively father and son. They as purchasers entered into a provisional sale and purchase agreement (“the Provisional Agreement”) dated 5 November 2005 to purchase the Property at the purchase price of HK$1,350,000.

3.  However, the Provisional Agreement was only signed by the Defendant but not Chan Mei Kwei. 

4.  It is common ground that on 6 or 7 November 2005, the Defendant informed the estate agent, Ms Alice Chan (“the Estate Agent”), who acted for both parties, that he would not proceed with the sale under the Provisional Agreement.  It is also common ground that on 6 November 2005, that is the next day after the Provisional Agreement was signed, the Defendant and Chan Mei Kwei signed another preliminary sale and purchase agreement to sell the Property to another purchaser for the price of HK$1,400,000 (‘the Subsequent Sale”).

5.  Given that the Defendant did not proceed to complete the sale of the Property to the Plaintiffs, the 2^nd Plaintiff later purchased another flat (“the Substitute Property”) located in the same residential estate at the price of HK$1,440,000.

The Plaintiff’s claim

6.  The Plaintiff brought the present claim against the Defendant for breach of the Provisional Agreement or breach of warranty of authority, seeking specific performance of the Provisional Agreement or alternatively damages.   The Plaintiff also registered the writ of the action against the Property.  The Subsequent Sale was eventually cancelled apparently by reason of this registration.

7.  At the first day of the trial, the Plaintiff through Counsel indicated to the Court that they were no longer pursuing the remedy of specific performance. In the premises, the Court is only asked to deal with the questions of liability and damages.

8.  The head of damages claimed by the Plaintiff are as follows:

(1)	HK$50,000 being the difference in the value of the Property under the Provisional Agreement (HK$1,350,000) and the Subsequent Sale (HK$1,400,000).
(2)	HK$1,500 as professional costs and travelling expenses incurred by the Plaintiff for arranging the adjudication or deferment of payment of stamp duty (“the Stamp Duty Related Expenses”).
(3)	HK$210 being the registration fee for registering the Provisional Agreement at the Land Registry (“Registration Fee”).
(4)	HK$5,000 being professional costs for engaging conveyancing solicitors for the sale and purchase under the Provisional Agreement (“Conveyancing Legal Fees”).

9.  During closing submissions, Plaintiff’s Counsel further seeks an additional item of damages in the sum of HK$675, being the additional stamp duty paid by the Plaintiffs for purchasing the Substitute Property at the price of HK$1,440,000. 

The Defence

10.  Before I set out the Defendant’s pleaded case, it is important to note it is not his present case that he did not have the necessary authority from Chan Mei Kwei to sign the Provisional Agreement for and on her behalf. 

11.  The defence now raised by the Defendant is this:  Just when he was about to sign the Provisional Agreement both for himself and for and on behalf of his mother, the Estate Agent asked him to sign only for himself and that he should ask Chan Mei Kwei to go to her office the other day to sign the Provisional Agreement. 

12.  It is therefore the Defendant’s case that, at the suggestion and request of the Estate Agent, which was not objected to by the Plaintiffs, he only signed the Provisional Agreement in his personal capacity but not also for and on behalf of his mother.  In the premises, the Provisional Agreement had not been properly and formally executed by all the registered owners, and there is thus never any binding agreement for the sale of the Property. 

13.  It is also the Defendant’s case that the Provisional Agreement is in any event not binding as he had never formally received the Plaintiff’s cheque (“the Cheque”) of HK$50,000 as payment of the initial deposit, which is a condition precedent under the Provisional Agreement. 

14.  The Defendant further counterclaims for damages suffered as a result of the aborted Subsequent Sale caused by Plaintiff’s registration of the Provisional Agreement at the Land Registry. 

15.  However, at the beginning of the trial, the Defendant through his Counsel also abandoned his counterclaim.  I am therefore no longer concerned with that.

The common ground

16.  The following facts are uncontroversial in the evidence of the witnesses of both parties.

17.  The Defendant lived at the Property alone.  His mother, Chan Mei Kwei, lived with his father somewhere near. 

18.  At that material time, the Defendant was out of work for quite some time, and Chan Mei Kwei agreed with him that he should sell the Property to have some money.

19.  On 1 November 2005, the Defendant went to the Estate Agent’s office and engaged her to seek a buyer for the Property.   The Defendant signed the engagement form alone.

20.  On 5 November 2005, at around 8 pm, the Estate Agent brought the Plaintiffs to inspect the Property.  They were greeted and met by the Defendant alone.

21.  The Plaintiffs were interested in the Property. They and the Defendant then engaged in a negotiation for the sale price of the Property. 

22.  During the negotiation, the Defendant had a number of telephone conversations with Chan Mei Kwei to obtain her agreement and approval to accept the offer coming from the Plaintiffs.  The Defendant finally, with the approval and consent of Chan Mei Kwei, accepted the Plaintiff’s offer of HK$1,350,000 as the purchase price.

23.  All these telephone conversations between the Defendant and his mother were conducted in front of the parties.  The Defendant also says, which is not challenged by the Plaintiffs, that during one of these conversations, he expressly asked his mother whether he could represent her, and she replied in the affirmative.

24.  Upon the Defendant’s acceptance of the offered purchase price, the Estate Agent’s asked her husband to bring to the Property a blank provisional sales and purchase agreement for the parties’ signatures.  After the blank agreement was brought there, the Estate Agent filled in all the relevant information, including Chan Mei Kwei’s identity card number.  The Defendant confirms in evidence that he obtained Chan Mei Kwei’s identity card number during one of the telephone conversations he had with her.

25.  After she had filled in all the information, the Estate Agent then asked the Plaintiffs to sign it, which has two pages.  She also asked the Plaintiffs to initial the various amendments made to the various clauses therein.  The Plaintiffs duly signed and initialled the Provisional Agreement.

26.  Upon signing the Provisional Agreement, the 1^st Plaintiff also drew the Cheque.  It was made out to the Defendant alone, because the Defendant did not have a joint name account with Chan Mei Kwei.

27.  The Estate Agent then asked the Defendant to initial and sign the Provisional Agreement.   She also asked the Defendant to initial at its 2^nd page the space which provided for the acknowledgement for the receipt of the Cheque.

28.  The Defendant accepts in evidence that he initialized twice for the acknowledgment for the receipt of the Cheque, as he was doing that for himself and also on behalf of his mother.

29.  At the bottom right of the 1^st page of the Provisional Agreement, there is a space provided for the signature of the vendor.  Similarly at the lower part of the 2^nd page of the Provisional Agreement, there is also a space provided for the signature of the vendor.   The Defendant again confirms that he signed at both places once.

The core disputed facts

30.  Above the signature space for the vendor on both pages of the Provisional Agreement, the Estate Agent respectively wrote the following handwritten sentence (“the Handwritten Sentence”):

“	For and on behalf of 陳玫瑰 [i.e., Chan Mei Kwei]

31.  Below the Handwritten Sentence (on both pages), there are also the handwritten characters of the Defendant’s name (“the Handwritten Name”).

32.  What is in contention (and perhaps the only material and crucial contention) between the parties at trial is whether the Handwritten Name is, as said by the Plaintiffs, in fact the Defendant’s signature for the purpose of signing the Provisional Agreement for and on behalf of Chan Mei Kwei, or as alleged by the Defendant, the Defendant’s hand printed name.  

33.  It is the Defendant’s evidence that after he had read the Handwritten Sentence as it was phrased, he said to the Estate Agent that the sentence seemed to have suggested that he was only signing it for Chan Mei Kwei but not for himself.  He therefore suggested to add to the Handwritten Sentence his own name so that the whole sentence would read as “For and on behalf of [陳玫瑰] [伍展豪]” to make it clear that when he signed he was signing it for both his mother and for himself.  According to the Defendant, the Estate Agent agreed to his suggestion, and he therefore printed the Handwritten Name on it under the Handwritten Sentence. He then intended to act for Chan Mei Kwei to sign again under the Handwritten Sentence with the alleged printed Handwritten Name.

34.  The Defendant says it was only at this stage that the Estate Agent indicated to him that it would be “safer” to ask his mother to go to her office to sign the Provisional Agreement.  The Plaintiffs did not object to this.  He therefore did not sign it again under the Handwritten Sentence (with allegedly the printed Handwritten Name), as he originally intended to, for the purpose of representing Chan Mei Kwei. 

35.  What in effect the Defendant says is that at this point of time, the Plaintiffs through the Estate Agent effectively asked him not to sign for and on behalf of Chan Mei Kwei, but required Chan Mei Kwei to sign it personally the next day.

36.  It was under these circumstances that the Defendant says the Estate Agent said she would keep the Cheque until Chan Mei Kwei signed the Provisional Agreement.  It is also the Defendant’s evidence that when he initialized at the Provisional Agreement, he was asked by the Estate Agent only to check whether the information on the Cheque was correct and he was never in fact physically given (in the sense that being handed with) the Cheque. 

37.  The Defendant also says in evidence that he was asked by the Estate Agent to sign at the vendor’s place and under the Handwritten Sentence after he had already initialized the acknowledgment of the Cheque.  This is different from the Estate Agent’s account of the events. She recalls that the Defendant initialized for the receipt of the Cheque last after he had signed everything else in the Provisional Agreement.

38.  According to the Defendant’s case as submitted at trial, given that he was not asked to, and did not, sign the Provisional Agreement also for and on behalf of Chan Mei Kwei, there was no binding agreement formed between the Plaintiffs and the Defendant for the sale of the Property when the Plaintiffs left the Property at around 11pm on 5 November 2005.  That is also why all three copies of the Provisional Agreement and the Cheque were taken away and kept by the Estate Agent when she left.

The issues

39.  In light of the above, the principal issues thus arising that call for determination are as follows:

(1)	Whether or not the Defendant in fact signed the Provisional Agreement both for himself and for and on behalf of Chan Mei Kwei, or he signed only in his own capacity.  In other words, whether the Handwritten Name is a signature of the Defendant or whether it is only a printed name made by him, and whether or not at the signing of the Provisional Agreement, the Estate Agent asked the Defendant not to sign for his mother but only in his own capacity.
(2)	Whether or not the Defendant had been given and thus paid the initial deposit of HK$50,000 by way of the Cheque.
(3)	Whether by reason of the above findings, the Defendant is in breach of the Provisional Agreement or in breach of warranty of authority.
(4)	Whether the Defendant is liable to pay any damages, and if so, the quantum.

The evidence and findings

The witnesses

40.  At trial, both Plaintiffs gave evidence in support of their case. 

41.  The Estate Agent also gave evidence under a subpoena issued by the Plaintiffs. 

42.  The Defendant himself gave evidence at trial, and he has no other witnesses.

43.  I have the following general observations of the respective witnesses.

44.  Both the 1^st and 2^nd Plaintiffs gave evidence in a straightforward manner.  In giving evidence, they appeared to me to be frank and un-avoiding. They would not hesitate to accept that they could not recall matters which, if confirmed, might have been beneficial to their case.  Their evidence was not shaken under cross examination.  I find them respectively to be an honest and reliable witness.

45.  The Estate Agent has more than 10 years’ experience as an estate agent.   She confirms that both sides have approached her seeking her assistance in this case, but she is only prepared to give evidence independently as the middle person between the parties in relation to the disputed transaction.  She further confirms to the Court that her witness statement filed in this action was drafted in English by her husband (as her husband writes better English than her) upon her instructions.  She gave it to the Plaintiffs because the Plaintiffs’ solicitors asked for it, while the Defendant’s solicitors did not. 

46.  I regard Estate Agent as an independent witness, and she gives evidence firmly and straightforwardly.   She also impresses me as an honest and reliable witness.  Given that she is an independent witness, I also attach particular weight to her evidence in areas where the Plaintiffs’ evidence conflicts that with the Defendant’s.

47.  On the other hand, I do not find the Defendant a reliable witness.  In answering questions under cross examination and from the Court, the Defendant was not always straightforward and at times evasive.   In particular when he was asked about matters which on the face are contradictory to the Defendant’s case, he would give an answer which does not make any common sense or which is contradictory to what he has previously said in evidence. I will explain this later when I deal with specific parts of the Defendant’s evidence below.

48.  In the premises, generally insofar as there is any material conflict between their evidence, I would prefer the Plaintiffs’ and the Estate Agent’s evidence to that of the Defendant.

Assessment of the evidence and findings

49.  The Estate Agent says it is not uncommon in her experience that one joint owner would sign in a provisional sale and purchase agreement for and on behalf of the other joint owner for the sale of a property.  She also says that she still has a clear recollection of the disputed events, since this is the first time in her experience that someone has reneged on having signed for and on behalf of the other joint owner of a property.

50.  The Estate Agent gives firm evidence that she had not asked the Defendant at the last minute not to sign for and on behalf of Chan Mei Kwei as alleged.  She also recalls clearly that the Handwritten Name under the Handwritten Sentence is the Defendant’s signature when she asked him to sign both for himself and for his mother.  

51.  I have no reason to doubt the Estate Agent’s evidence.

52.  The Plaintiffs’ evidence is consistent with that of the Estate Agent.

53.  As I mentioned above, I also regard the Estate Agent and the Plaintiffs as credible witnesses. 

54.  On the other hand, for the following reasons, I reject as inherently incredible the Defendant’s evidence that effectively at the last minute, the Plaintiffs at the suggestion of, and through, the Estate Agent asked the Defendant not to sign for and on behalf of Chan Mei Kwei.

55.  It is common ground that the Defendant had the necessary authority from Chan Mei Kwei to sign for her. It is also common ground that the parties had been negotiating for the sale in a happy and harmonious mood up till the time when the Plaintiffs left the Property.  There is also nothing in the evidence to show that the Plaintiffs and the Estate Agent were suddenly concerned or worried about having the Defendant to sign for Chan Mei Kwei. 

56.  In the circumstances and in light of the common facts as set out in the early part of this judgment, it is inherently incredible that the Plaintiffs and the Estate Agent would have suddenly at the very last minute asked the Defendant not to sign the agreement for and on behalf of Chan Mei Kwei, when everything beforehand was proceeded on the basis that he was signing it for Chan Mei Kwei, such as he initialized for the receipt for the Cheque twice, once for himself and once for Chan Mei Kwei.

57.  Further, in answer to the Court’s question, the Defendant said that even if the Handwritten Sentence were supplemented with his printed name by way of the Handwritten Name, in addition to the signature he had already appended to at the space for the vendor, he was still going to sign again for his mother.  As such, I find his evidence that he asked to insert his name at the Handwritten Sentence to make sure that he was also signing for himself incredible:  He had already signed for himself at the space provided for the vendor; I could not see why it would have become reasonable or necessary for him to ask to add his printed name (by way of the Handwritten Name) to the Handwritten Sentence.  The Handwritten Sentence was provided for his signing for and on behalf of Chan Mei Kwei.  If the addition of the Handwritten Name to the Handwritten Sentence were, as alleged, intended to render the signing thereunder for the Defendant himself and also for his mother, he would only have been required to sign once, but not twice.

58.  I also find it inherently incredible and contrary to common sense that the Estate Agent would have asked the Defendant to initial for the receipt of the Cheque first before asking him to sign for the Provisional Agreement.  It is more consistent with common sense that the acknowledgment for the receipt of the Cheque, being payment for the initial deposit, was made as the last step in completing the Provisional Agreement.  This is also consistent with the fact that the space provided for such an acknowledgment is set out at the very bottom of the last page of the Provisional Agreement.

59.  The Defendant’s evidence that when he was provided with the Cheque, he was only asked to check the information thereon, but not to be given it, is inconsistent with common sense.  Other than the name and amount, there was practically nothing for the Defendant to check on the Cheque.  It is clearly more likely than not that he was given the Cheque as payment for the initial deposit and  he then initialized at the Provisional Agreement to acknowledge receipt.  It is important to note that the Defendant accepts in evidence that he knew he was initialling for the receipt of the Cheque.

60.  Moreover, the Defendant’s case is also unreliable and incredible for the following reasons.

61.  After the Defendant had defaulted in completing the sale and purchase of the Property with the Plaintiffs, the Plaintiffs through their solicitors wrote to the Defendant demanding him to complete the transaction.

62.  By a letter dated 15 November 2005, the Defendant through his then solicitors, Messrs Joyce Chan & Co, replied and said that before signing the Provisional Agreement, he had already told the Estate Agent that he had no authority to sign it for and on behalf of Chan Mei Kwei. The Estate Agent then asked him to sign first, and said that the Provisional Agreement would not be binding on him if his mother refused to sell.

63.  This is a story completely different from the Defendant’s case and evidence as adduced at trial.

64.  Although accepting that he had been shown a copy of the draft reply letter by his solicitors, when asked under cross examination as to why there was such a change of allegations, the Defendant first evaded the question and then, when pressed, answered that he did not know why the solicitors would have written the reply in such a manner.

65.  I have no hesitation in rejecting the Defendant’s explanation for his changing allegations.  The Defendant’s solicitors could not have written the rely letter without the Defendant’s instructions as to what allegedly happened when he signed the Provisional Agreement. It is therefore simply incredible that he did not now why the solicitors wrote the reply in such a way. 

66.  The irresistible inference from the Defendant’s changing allegation is that he is prepared to change his case whenever it suits him.

67.  I am of the clear view that he is not a reliable witness.

68.  For the reasons set out above, I accept the Estate Agent’s and the Plaintiffs’ evidence insofar as it is in conflict with the Defendant’s.  I also reject the Defendant’s evidence which is materially different from that of the Plaintiffs and the Estate Agent.

69.  The Estate Agent’s own evidence that she said to the Defendant that it would be “safer” to also ask Chan Mei Kwei to go to her office the next day to sign the Provisional Agreement is not inconsistent with the Plaintiffs’ case that the Defendant did sign the Provisional Agreement for and on behalf of Chan Mei Kwei.  As explained by her, she said that because she wanted to be doubly sure that there would not be any problem for the transaction.  In other words, although the Defendant did sign for himself and for and on behalf of Chan Mei Kwei, the Estate Agent would like to put on both brace and belt to avoid any arguments later on.  This alone does not mean that the Defendant did not sign for his mother, and that there was no binding contract between him and the Plaintiffs when they left the Property.

70.  For the above reasons, I find the following facts as established on balance of probabilities:

(1)	The Estate Agent did not ask the Defendant not to sign for and on behalf of the Chan Mei Kwei.
(2)	The Handwritten Name is the Defendant’s signature acting for and on behalf of Chan Mei Kwei, but not his printed name.
(3)	The Defendant was only asked to initial for the receipt of the Cheque last after he had signed the Provisional Agreement for him and for and on behalf of Chan Mei Kwei as vendors.
(4)	The Defendant was given the Cheque as payment for the initial deposit.  He then asked the Estate Agent to keep the Cheque for him for banking purposes later on Monday.

71.  By reason of the above findings, I further hold that the Defendant is in breach of the Provisional Agreement by refusing to complete thereunder, and in trying to sell the Property to another person subsequently. He is liable to the Plaintiff for damages as a result of his breach.

72.  I will now move on to deal with the quantum of damages.

Quantum

The claim for HK$50,000

73.  It is common ground that, upon the default of the Provisional Agreement, the Defendant and Chan Kwai Mui immediately entered into another provisional sale and purchase agreement to sell the Property at HK$1,400,000, HK$50,000 more than the price they had contracted to sell to the Plaintiffs.

74.  The Plaintiffs now claim this sum of HK$50,000 as part of their loss as a result of the Defendant’s breach of the Provisional Agreement.  Mr Wilson Lau, counsel for the Defendant does not seriously challenge that this represents a proper measure of damages for the Plaintiffs for their loss of the bargain, if the Defendant is found to be liable.

75.  Given I have concluded that the Defendant is in breach of the Provisional Agreement, I therefore hold that he is liable to pay the Plaintiffs this sum of HK$50,000 as part of the loss suffered by them.

The Stamp Duty Related Expenses and the Conveyancing Legal Costs

76.  In relation to the Stamp Duty Related Expenses and the Conveyancing Legal Costs, the Plaintiffs have simply failed to provide any evidence in support of them.  There is no receipts or record of payments provided to show that the Plaintiffs have in fact incurred and paid for such expenses.  In the circumstances, I am not satisfied as proved the claimed quantum under these heads of loss.  I would therefore disallow the claims under these heads.

The Registration Fee

77.  In relation to the Registration Fee, the Plaintiffs again have not provided any documentary evidence to show that it has in fact paid such fees.  However, given that the Registration Fee is a standard fee charged by the Land Registry and it is not disputed that the Provisional Agreement was registered at the Land Registry, I would accept that this quantum as proved representing a loss suffered by the Plaintiffs.

78.  The Defendant is thus also liable to the Plaintiffs the sum of HK$210.

Additional stamp duty

79.  This is a claim only advanced by the Plaintiffs’ counsel for the first time at her closing submissions.  This claim is a form of special damages which is not pleaded.  The Plaintiffs have also not adduced any evidence in support thereto. 

80.  I would disallow this part of the claim.    

Conclusion

81.  For the reason set out above, I give judgment in favour of the Plaintiffs as against the Defendant for the total sum of HK$50,210.  The Defendant should also pay interest to the Plaintiffs at 1% above the prime rate as from time to time quoted by the Hong Kong and Shanghai Bank, and thereafter at judgment rate from the date of this judgment until full payment of the judgment sum.

82.  For completeness, I would also dismiss the Defendant’s counterclaim.

83.  Given that the Plaintiffs succeed substantially in their claim, I see no reason why costs should not follow the event.  I make an order nisi that costs of the action be to the Plaintiffs to be taxed if not agreed, with certificate for counsel.