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HCA 701/2015

IN THE HIGH COURT OF THE

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HONG KONG SPECIAL ADMINISTRATIVE REGION

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COURT OF FIRST INSTANCE

ACTION NO 701 OF 2015

_________________________
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BETWEEN

()
(HONG KONG PROPERTY SERVICES
(AGENCY) LIMITED)

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and

(ZOU JIFENG)

________________________

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Plaintiff

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Defendant

Before : Deputy High Court Judge Marlene Ng in Chambers

Date of Hearing : 17 January 2017

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Date of Handing Down Judgment : 26 January 2017

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________________

JUDGMENT
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I. INTRODUCTION
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1.

The plaintiff (P) was/is a licensed estate agent pursuant to

the Estate Agents Ordinance Cap 511 (EAO).

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2.

P claimed that pursuant to sections 45-46 of the EAO, P and

the defendant (D) signed an estate agency agreement (Form 4) dated

20 October 2012 (Form 4). By the Form 4, D engaged P as his estate
agent for the period from 20 October 2012 to 19 January 2013. The

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C
D

following were express terms and conditions of the Form 4:

E

Clause

Description

/, ZOU JIFENG ()
1()[P]()
/20121020, 2013119(
)()

,135

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20121020

(
)

(
)

1%

1%

20121020

1%

1%

[]

,
, : ,

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(a)
(b)

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23

3.

[]

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21

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,
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It was Ps case that on 20 October 2012, P introduced to D a

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property known as Nos 21 and 23 Cumberland Road, Kowloon

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(Property) and arranged for D to inspect the Property on the same day.
D agreed to pay P 1% of the purchase price of the Property as

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commission. P further claimed that as a result of Ps services as estate

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agent and according to the terms/ conditions of a provisional agreement

the Purchaser is not liable to pay any commission to other estate agents with
whom the Agent co-operates for the purpose of purchasing any one or more of the
Properties

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for sale and purchase dated 20 October 2012 made by Foo Tak
Development Company Limited (Foo Tak) as vendor, D as purchaser
and P as estate agent (PASP), Foo Tak agreed to sell and D agreed to
purchase the Property (Transaction).

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F

4.

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D

The copy PASP as disclosed by P was in Ps standard pre-

printed form with (a) Ps logo and estate agent (company) licence

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st

number at top left of the 1 page, (b) date and names of Foo Tak and D
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completed in manuscript, (c) Ps pre-printed name, business registration

number, estate agent (company) licence number at the top of the 1st page,

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and (d) the following express terms and conditions:

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Clause

Description

The purchase price of the Property shall be HK$348,888,000.00 which shall

be paid by [D] to [Foo Tak] in the manner as follows: (a) initial deposit shall
be paid upon signing [the PASP] in the sum of HK$17,500,000.00, (b) upon
signing of the Formal Agreement for Sale and Purchase on or before 2 nd Nov,
2012 further deposit shall be paid in the sum of HK$17,388,800.00, (c)
balance of the purchase price shall be paid upon completion on or before
15 January 2013 at [Foo Taks] solicitors in the sum of HK$313,999,200.00.

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9a

9b
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10a

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16

In consideration of the services rendered by [P], [P] shall be entitled to

receive HK$3,488,800.00 from [Foo Tak] and HK$3,488,800.00 from [D] as
commission (respectively the Vendor Commission and the Purchaser
Commission).
The Vendor Commission and the Purchaser Commission shall be paid not
later than 15 Jan, 2013.
If in any case either [Foo Tak] or [D] fails to complete the sale or purchase in
the manner herein contained, the defaulting party shall compensate at once
[P] HK$6,977,600.00 as agreed damages.
This Agreement supersedes all prior negotiations,
understanding and agreements of the parties hereto.

representation,

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It is hereby declared that [P] is the Agent for both [Foo Tak] and [D].

Notice to the

Save And Except those mentioned in [the PASP], any staff of [P]

Purchaser
and Vendor

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ranking below branch manager has no authority to give or make any

promise, warranty or representation for and on behalf of [P].

The PASP was signed by Yu Pang Lin for and on behalf of Foo Tak, D,

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and Calvin Lam (estate agent (individual) with licence no E067013)

(Lam)2 for and on behalf of P. The PASP was registered in the Land
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Registry by memorial no 12111902210010.

5.

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Pursuant to the PASP, Foo Tak and D entered into a formal

agreement for sale and purchase dated 15 January 2013 (FASP). Part

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II of Schedule 4 of the FASP specified the completion date for the

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Transaction to be on/before 15 March 2013 (ie the completion date had

been extended). The following were express terms/conditions of the

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FASP:
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Provision

Description

Schedule 7
Clause (f)
Information included for the
purposes of s.29B(1) of the
Stamp
Duty
Ordinance
(Cap117)

Date of any preceding unwritten sale agreement or

agreement for sale made between the same parties on
the same terms:
The 20th day of October 20123

Schedule 1
Clause 1
Special Conditions

Notwithstanding anything herein contained to the

contrary, the parties hereto agree that if the sale and
purchase of the Property shall not be completed by
reason of the default of either party after signing
thereof, the defaulting party shall be responsible to
pay or (as the case may be) reimburse to the other
party all estate agents commission paid or payable in
connection with this transaction and all stamp duty
paid or payable under [the FASP] and/or the Precedent
Agreement.

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2

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Lam was an estate agent who held (a) an estate agent licence (individual) from
1 January 1999 to 31 December 2001, 6 October 2005 to 5 October 2012 and
since 15 October 2012 valid up to 14 October 2017, and (b) a salespersons
licence from 6 October 2004 to 5 October 2005
the date of the PASP

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A
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P signed the FASP in the presence of solicitor Cheung Wai Man

(Cheung) of his former solicitors Deacons (Deacons). Cheung also
signed on the FASP to confirm he had interpreted it to D.

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D

6.
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F

According to the Recitals (Recitals) of a Cancellation

Agreement made on 31 December 2014 between Foo Tak as vendor and

D as purchaser more particularly described in paragraph 8 below

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(Cancellation Agreement),
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(a) the completion date for the Transaction was further

extended to 22 March 2013 (Recital (B));

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(b) D paid to Foo Tak a total sum of $66,888,800.00 as deposit

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and part payment (Recital (C));

(c) D did not complete the purchase of the Property on

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22 March 2013 consequent upon which Foo Tak purported

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to terminate the FASP and forfeit the deposit (Recital (D));

(d) by a writ of summons in HCA1009/2013, D sued Foo Tak

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for inter alia specific performance and/or damages in lieu

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on the basis that the termination was invalid (Recital (E));

(e) by a deed of settlement dated 3 June 2014 (Settlement

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Deed), Foo Tak and D settled HCA1009/2013 and such

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claims/ disputes arising from the FASP (Recital (E));

(f)

pursuant to the Settlement Deed, Foo Tak and D agreed to

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proceed with the FASP whereupon D would complete the

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purchase of the Property on 3 December 2014 by paying the

balance of the purchase price, failing which it was

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irrevocably agreed that Foo Tak would be entitled to forfeit

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10% of the purchase price in the sum of $34,888,800.00

from the deposit, and the balance of the deposit in the sum

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of $32,000,000.00 would be returned to D free of interest

(Recital (F));
(g) the completion date for the Transaction was further

extended to 31 December 2014 but the other terms of the

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D

FASP and Settlement Deed remained unchanged (Recital

E

(G));
(h) by letter dated 30 December 2014, Ds present solicitors

Liau, Ho & Chan (LHC) confirmed to Foo Taks

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solicitors (i) D was unable to complete the purchase of the

Property on 31 December 2014 due to his financial inability

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and (ii) pursuant to the Settlement Deed Foo Tak shall be

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absolutely entitled to forfeit $34,888,800.00 from the

deposit and shall return the balance of $32,000,000.00 to D

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(Recitals (H)).
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7.

Recital (D) stated that clause 10a of the PASP was

encapsulated in clause 1 of Schedule 1 of the FASP, which meant the

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Precedent Agreement in the latter clause and the preceding

agreement

for

sale

made

between

the

same

parties

dated

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20 October 2012 referred to the PASP.

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8.

By the Cancellation Agreement, D admitted he was in

default for the purpose of clause 10a of the PASP. Choi Lai Shan (clerk
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to LHC) signed the Cancellation Agreement to confirm its contents had

been interpreted to D in putonghua, and D signed such agreement in the

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presence of LHCs solicitor Kelvin KY Li. The Cancellation Agreement

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expressly stated as follows:

Provision
Recital (A)

Description
By a [PASP] dated 20 October 2012 entered into between [Foo Tak],

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[D] and [P] (the Agent) (registered in the Land Registry by

Memorial No 12111902210010), [Foo Tak] agreed to sell and [D]
agreed to purchase [the Property] for HK$348,888,000 whereas
the date for the completion of the sale and purchase was
scheduled on 15 January 2013 (the Provisional ASP).

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Recital (D)
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Clause 1

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Clause 2

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9.

Clause 10a of the Provisional ASP [ie the PASP] provides that if
in any case either [Foo Tak] or [D] fails to complete the sale and
purchase, the defaulting party shall compensate the Agent [ie P] for a
sum equivalent to the total of the commission payable by [Foo Tak]
and [D]. Clause 10a of the Provisional ASP [ie PASP] was further
encapsulated in Clause 1 of Schedule of the [FASP] which provides
that shall any party default in the completion, the defaulting party
shall be responsible to pay or reimburse to the other party all estate
agents commission paid or payable in connection with the
transaction.
[Ds] failure to complete on 31 December 2014 amounts to default for
the purpose of Clause 10a of the Provisional ASP [ie the PASP] and
repudiation of the [FASP] and the [Settlement Deed] which [Foo Tak]
accepts so that the [FASP] (as modified by the Mutual Agreement, the
[Settlement Deed] and the Time Extension Proposal) is forthwith
terminated and cancelled with no further force or effect whatsoever as
between the parties hereto for the purpose of completion of the
[Property] but without prejudice to such rights reserved under Clause
1 to Schedule 1 of the [FASP].
[Foo Tak] is entitled to and hereby do forfeit HK$34,888,800 from the
Deposit. The balance of the Deposit in the sum of HK$32,000,000 is
hereby returned by [Foo Tak] to [D] (the receipt of which is hereby
acknowledged by [D]).

On the express terms of the PASP, FASP and Cancellation

Agreement,4 it was plain that:

(a) P (defined as the Agent in both the PASP and Cancellation
Agreement) was the estate agent for both Foo Tak and D in

respect of the Transaction;5

(b) each of Foo Tak and D agreed to pay 1% of the

sale/purchase price of the Property to P for its services in

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B
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D
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all of which were signed by D and the latter 2 were signed in the presence of Ds
solicitor under interpretation
see clause 16 of the PASP

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respect of the Transaction (Vendor Commission and

Purchaser Commission);

(c) if D failed to complete the Transaction, he shall at once

compensate the Agent by a sum equivalent to (i) 2% of

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D

the sale/purchase price or (ii) the combined Vendor and

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Purchaser Commission as agreed damages;7

(d) the Agent in (c) above was expressly identified to be P;8

(e) D failed to complete the purchase of the Property;

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(f)

Ds failure in (e) above amounted to (i) default for the

purpose of clause 10(a) of the PASP and (ii) repudiation of

the FASP and the Settlement Deed;

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(g) the Cancellation Agreement was without prejudice to rights

reserved under clause 1 of Schedule 1 of the FASP that

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encapsulated clause 10a of the PASP, ie D as defaulting

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party was responsible to pay all estate agents commission

payable in connection with the Transaction under the

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Precedent Agreement being the PASP.

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10.

Thus, on 30 March 2015, P commenced the present action

against D to claim agreed damages under clause 10a of the PASP in the
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sum of $6,977,600.00 with interest and costs.

11.
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Mr Chu, counsel for D, submitted it was all along Ds case

that (a) D did sign the PASP dated 20 October 2012 (and he would not
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see clause 9a of the PASP

see clause 10a of the PASP, clause 1 of Schedule 1 of the FASP and clause 1 of the
Cancellation Agreement
see clause 10a of the PASP, clause 1 of Schedule 1 of the FASP that expressly
referred to the Precedent Agreement (ie the PASP), and Recitals (A) and (D) and
clause 1 of the Cancellation Agreement
see Recital (H) and clause 1 of the Cancellation Agreement
see Recital (H) and clause 1 of the Cancellation Agreement

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disown his signature thereon), and (b) Ds estate agent in respect of the
Transaction was Yancy Personal Affairs HK Limited (
, Yancy) and not P. But D did not specifically plead (a)-(b)
above in his Defence (see paragraph 13 below).

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12.

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On 22 February 2016, LHC wrote to Ps solicitors Tony Kan

& Co (TKC) for production of the PASP referred to in the Statement of

Claim (SoC) for inspection/copies (22/2/16 1

st

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Letter). On

24 February 2016, TKC replied that P was unable to produce the original
PASP as it had been submitted to Deacons for registration (24/2/16

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1 Letter). On 22 February 2016, LHC also wrote to TKC to enquire

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whether P claimed (a) it was the agent for both Foo Tak and D in respect
of the Transaction, (b) it was entitled to receive the Vendor and

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Purchaser Commission, (c) Yancy had no interest in Ps claim (22/2/16

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2nd Letter). On 24 February 2016, TKC declined to reply to such

questions pending sight of Ds Defence (if any). There was no mention

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in the 22/2/16 1st and 2nd Letters of the matters in paragraph 11(a)-(b)
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above.

13.
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On 28 February 2016, D filed his Defence. D admitted he

signed a provisional agreement with Foo Tak, but denied he ever

agreed to pay commission to P for the Transaction. There was no clear

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admission that D had entered into and executed the PASP as pleaded in
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the SoC, and no averment at all that Yancy was Ds estate agent in
respect of the Transaction.
14.

On 11 May 2016, P filed its Amended SoC (ASoC). On

22 March 2016, P filed a summons pursuant to Order 14 rule 1 of the

Rules of the High Court (RHC) for summary judgment of the amount

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claimed with interest and costs (including costs of the application)

(Summons). On 22 March and 5 August 2016, P filed the affirmation
of its senior associate director Lam (ie Lam Yee Hang also known as
Calvin Lam11) (Lams 1st Aff) and that of its solicitor Chan Kit Yin

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(Chans Aff) in support of the Summons and to verify the claim in the
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SoC. On 8 April 2016, D filed his own affirmation to oppose the

Summons (Ds 1st Aff).
15.

It was only on 20 May 2016 that LHC wrote to TKC

(20/5/16 Letter) to assert he had appointed Yancys Regan Shum (also

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known as Shum Chun Wai, Shum) as his agent to deal with his
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personal affairs in Hong Kong and that he did not engage P for any
service, so P did not provide any service for him and was not entitled to

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any damages. By the 20/5/16 Letter, LHC invited P to produce the

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original PASP for inspection and also to reply to the questions raised in
the 22/2/16 2nd Letter.
16.

Yancys company search records showed it changed its

name to Prince Foster Property Agency Limited (Prince Foster) on

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12 October 2015. Before such change of name, Yancys directors were

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Ng Chan Man and Yancy International Limited, and the latter was its
sole shareholder. After such change of name, its directors were

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Chan Pui Shuen, Shum and Li Hoi Wing, and they also became its
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shareholders. The Estate Agents Authority records showed Yancy (later

known as Prince Foster) held a license as estate agent (company) since

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25 July 2011 valid up until to 24 July 2017.

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as evidenced by Lams name card exhibited to his 2nd affirmation filed on

5 August 2016

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17.

On 22 July 2016, D filed a summons to seek leave to

file/serve further affirmation to oppose the Summons (Aff Summons).

On 25 July 2016, D filed his 2nd affirmation (Ds 2nd Aff). On
5 August 2016, P filed Lams 2nd affirmation (Lams 2nd Aff) and

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D

Shums affirmation (Shums Aff). At the hearing of the Aff Summons

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and the Summons on 10 August 2016 (Master Hearing), Master Ho

granted leave for the parties to file/serve these new affirmations with

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costs to P, and also granted judgment in favour of P against D in the sum

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of $6,977,600 with interest at prime rate plus 1% (ie 6%pa) from

31 December 2014 to the date thereof and thereafter at judgment rate

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until full payment and with costs of the action (including the Order 14
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application) summarily assessed at $140,000 with certificate for counsel

(Master Order).
18.

On 12 August 2016, P filed Lams 3rd affirmation to verify

the ASoC pursuant to Ps undertaking to Master Ho at the Master

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Hearing.
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19.

On 23 August 2016, D filed Notice of Appeal to set aside

the Master Order and to seek an order that costs of the Summons and
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appeal be to D to be taxed if not agreed (Appeal). The hearing of the

Appeal came before me on 17 January 2017 (Appeal Hearing).
II. AFFIDAVIT EVDIENCE

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(a) 1st round of affidavit evidence

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20.

D claimed (a) he did not engage P to be his agent or

otherwise separately agreed with P to pay any commission, and (b)

although he understood the PASP was a preliminary agreement for his

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A
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intended purchase of the Property from Foo Tak, no one explained to

him the terms or effect of the clauses when he signed it.

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21.

D further claimed P and D had not entered into or executed

any estate agency agreement as required under section 46 of the EAO

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and/or section 6 of the Estate Agents Practice (General Duties and Hong
Kong Residential Properties) Regulation Cap 511 (Regulations) and/or

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Form 3 of the Regulations (and the PASP did not meet such requirement
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in form and substance), so by virtue of section 45 of the EAO P was not

entitled to make the present claim which was essentially for commission

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payable to an estate agent. On the other hand, P claimed P and D did

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enter into or execute the Form 4 dated 20 October 2012, and Form 3 of
the Regulations was irrelevant as it only applied to the vendor of

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property transaction.
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(b) 2nd round of affidavit evidence

22.

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D suggested the 24/2/16 1st Letter was illogical in the sense

that the burden of proof was unreasonably shifted to [D] , and P

should have a stamped original copy of the PASP.12 D expressed surprise

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that P could not produce the original PASP, and complained of its nonO
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reply to the 20/5/16 Letter. But the Lam 2nd Aff queried why such
complaint was not raised in Ds Defence and/or Ds 1st Aff (when the

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22/2/16 1st Letter was sent before the Defence was filed), but raised less
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than 3 weeks before the Master Hearing by way of Ds 2 nd Aff. Anyway,

Lam explained Ps standard-form provisional agreement (adopted for the

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PASP) consisted of 3 layers, ie top layer in white paper and 2 layers

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below in carbon paper, and the practice of P (and other estate agents in
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D claimed that estate agents in Hong Kong used tri-coloured pre-printed

provisional agreement forms in triplicate so the vendor, purchaser and agent
would each have a copy

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Hong Kong) was to retain the top paper copy of the completed/signed
provisional agreement and to give a carbon copy to each of the vendor
and purchaser. P retained the PASPs top paper copy, but upon Ds
subsequent request P gave it to Deacons for registration purpose.13 This

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D

was the original because a carbon copy would be described as such in the
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land registration records,14 which explained why the 24/2/16 1st Letter
stated the original PASP (ie top paper layer) was delivered to Deacons
for registration. D did not refer to or deny such explanation in Ds 2

Aff.

23.

nd

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D next claimed there were not quite legible Chinese

characters in manuscript alongside clause 9a

in the copy PASP exhibited to Lams 1st Aff. D claimed that all along he

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understood Shum and/or his company (now known to be Yancy) to be

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the middleman for the Transaction, and P was not his agent, and that he
did not (a) have business relationship/dealings with P or (b) know any of

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Ps agents including Lam (whom D thought was an unlicensed Alvin

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Lam) mentioned in the PASP or Hui King Yee (Hui) mentioned in the
Form 4. D said his impression of the strangers he met in the purported

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day (presumably 20 October 2012) was that they were Shums fellow
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colleagues as he only agreed to instruct Shum in relation to his personal

investment in Hong Kong (and Shum did a lot of things for his business

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in Hong Kong), but P did not provide any service to him so Ps claim
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must fail for want of consideration.

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13

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see the land search records of the Property that showed the PASP was duly
stamped on 16 November 2012 and registered on 19 November 2012 under
memorial no 12111902210010 signed by a solicitor of Deacons
as illustration Lam produced land search records made on 15 January 2015 in
respect of another property in Kwai Chung that described carbon copy of
provisional agreement for sale and purchase was registered in the Land Registry
under memorial

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24.

Lams 2nd Aff suggested that on Ds case D must have

known Yancy was his agent for the Transaction and could have so
averred (but he did not so aver) in the Defence and/or Ds 1 st Aff, and D
did not offer any explanation for such omission until he filed Ds 2 nd Aff

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C
D

less than 3 weeks before the Master Hearing. Anyway, Lam said (1) his
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name was Calvin Lam and not Alvin Lam, (2) he was the estate
agent who signed the PASP on Ps behalf, and (3) D knew/agreed to

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engage P as his estate agent in the Transaction. Lam further explained

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that:
(a) Yancys Shum approached/told Lam (i) Yancy acted for D in

his application under the Capital Investment Entrant

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Scheme (Scheme), and (ii) D was looking for a luxury

property in Hong Kong for such application;

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(b) Shum told Lam Yancy was a licensed estate agent but its
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primary business was to service clients applications under

the

Scheme,

and

proposed

commission-sharing

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arrangement with P whereby (i) Yancy would refer D to P,

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(ii) P would introduce suitable properties to D, (iii) P would

receive and collect commission from D upon completion of

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purchase of any property so introduced to D by P, and (iv) P

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would pay to Yancy the commission paid by D in

consideration of (i) above15 (collectively, Commission

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Arrangement);
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(c) Hui (who was Lams subordinate) informed Lam that before
the PASP was signed she had arranged for and accompanied

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D to view a number of 1st/2nd-hand properties and D

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15

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this meant that if the Transaction was completed, P would keep the Vendor
Commission payable by Foo Tak and P would pay over to Yancy the Purchaser
Commission payable by D (ie Yancy would receive half of the total commission
payable to P under the PASP)

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eventually chose the Property, and indeed Lam himself

accompanied D to view the Property before D signed the

PASP;

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(d) when D signed the PASP, Shum, Hui and Lam were present,

and Lam explained the PASPs terms/conditions to D;

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(e) the Commission Arrangement was common in estate agency

business, and was duly disclosed to and agreed by D, which

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explained why (i) the PASP was signed by P (and not

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Yancy) and (ii) (when Lam came to his explanation of

clause 9a of the PASP) he wrote

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alongside the amount of the Purchaser Commission to

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indicate that such commission payable by D to P would

eventually be shared with Yancy.

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25.

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Lam added D could not say he did not know P acted as his

agent because (a) clause 16 of the PASP clearly provided P was the agent

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for both the vendor and purchaser, (b) D confirmed under clause (f) of
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Schedule

of

the FASP that the Precedent Agreement was dated 20 October 2012 (ie

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the PASP), (c) Recital (A) of the Cancellation Agreement confirmed P

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was the Agent under the PASP, and (d) by clause 1 of the Cancellation
Agreement D agreed his failure to complete the purchase of the Property

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amounted to default for the purpose of clause 10a of the PASP upon
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which Ps claim was premised.

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26.

By Shums Aff, Shum as director of Prince Foster (formerly

known as Yancy) confirmed (a) the matters in paragraph 24 above

insofar as they concerned Yancy/Shum, (b) prior to making the PASP it
was P who provided estate agency services to D, including sorting out

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A
B
C

properties that met Ds requirements, providing D with information on

properties, accompanying D to view properties (including the Property),
and negotiating with Foo Tak over the terms of sale/purchase of the
Property without which Foo Tak and D would not have entered into the

B
C
D

PASP.
E
F

27.

Ds 2nd Aff further suggested P had displayed a hostile/

unhelpful stance and had not been full and frank despite LHCs 22/2/16
G
H

1st and 2nd Letters and 20/5/16 Letter, which showed P failed to discharge
its evidentiary burden even for an Order 14 application. D complained P

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essentially relied on one piece of disputable and inadmissible document

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[ie the PASP] asking for a judgment sum of over $6 million. D further
claimed he was entitled to discovery and inspection.
III. LEGAL PRINCIPLES: APPEAL FROM MASTERs DECISION

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28.
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It is trite that an appeal from the master to judge in

chambers is dealt with by an actual rehearing of the application which

led to the order under appeal, and the judge treats the matter as though it

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came before him for the first time. The judge will give the weight it
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deserves to the previous decision of the master; but he is in no way

bound by it.16
IV. LEGAL PRINCIPLES: SUMMARY JUDGMENT

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29.
S

Both Mr Lam, counsel for P, and Mr Chu had no essential

quarrel over the applicable legal principles. A plaintiff may invoke the
procedure under Order 14 of the RHC where there is no valid defence to
16

see Hong Kong Civil Procedure 2017 Vol 1 para 58/1/2 at p 1084

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A
B

his claim or otherwise a triable issue. The rationale is set out in Hong
Kong Civil Procedure 2017:

The underlying policy of the summary procedure is to

prevent a defendant from delaying the plaintiff from obtaining
judgment in case in which the defendant clearly has no defence to
the plaintiff's claim: Man Earn Ltd v Wing Ting Fong [1996] 1 HKC
225.

Order 14 proceedings for summary judgment when there is no

defence to a claim are an important feature of the legal process. It
enables plaintiffs in cases where there is no defence to obtain
expeditious summary judgment to avoid unnecessary delay. When
applied for, it is for the defendant to show that there is a triable issue
or an arguable defence if he is to be allowed his day in court. To
deny him his day in court, if he shows a triable issue or an arguable
defence, is indeed a fearful injustice. On the other hand, if he has no
defence and he obtains leave to defence, equally, there is injustice to
the plaintiff (Manciple Ltd v Chan On Man [1995] 3 H.K.C. 459 at
466, per Mortimer JA).

F
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The machinery of O.14 works on the basis that if the plaintiff's

application is properly constituted, he is prima facie entitled to
judgment unless the defendant shows cause to the contrary or the
application is dismissed.

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17

30.

In Ng Shou Chun v Hung Chun San,18 Godfrey J noted it

was not appropriate to embark on a mini-trial of the action on affidavit

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D
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evidence. The court should ask itself the question whether what the
N
O

defendant says is credible or believable. If so, he must have leave to

defend; if not, the plaintiff is entitled to summary judgment. Hong Kong

N
O

Civil Procedure 2017 goes on to say that:19

P

In considering whether there are triable issues the Court will,

of course, not take the alleged defence on its face value but test it
against the evidence disclosed in the affidavit including matters such
as contemporaneous documents, whether the alleged defence is
inconsistent with the defence previously put forward or whether the
defence is only recently raised despite opportunity being given to the
defendant to respond earlier. The Court will also consider the
inherent probability of the defence. But what the Court should not do
is to conduct a mini-trial on complicated factual issues. in Paul Y

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17
18

19

Vol 1, para 14/4/1 at p 273

[1994] 1 HKC 155
Vol 1, para 14/4/9 at pp 276-277

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Management Ltd v. Eternal Unity Development Ltd (unrep.,

CACV16/2008, [2008] H.K.E.C. 1359 at [19] per Cheung J.A.

The defence set up need only show that there is a triable issue
or question or that for other reason there ought to be a trial; and
leave to defend ought to be given unless there is clearly no defence
in law such as could have been raised on the former demurrer to the
plea and no possibility of a real defence on the question of fact
(Jacobs v. Booths Distillery Co (1901) 85 L T 262; Runnacles v.
Mesquita (1876) 1 Q.B.D. 416). Where there are unexplained
features of both the claim and the defence which are disturbing
because they bear the appearance of falsity and disreputable business
dealings and questionable conduct, the court should not make
tentative assessments of the respective chances of success of the
parties or the relative strengths of their good and bad faith, and
should not on such an examination grant the defendant conditional
leave to defend, but should give unconditional leave to defend:
(Billion Silver Development Ltd v. All Wide Investments Ltd [2000] 2
H.K.C. 262 applying Extraktionstechnik Gesellschaft fr
Anlagenbau Gmbh v Oskar (1984) 128 S J 417

B
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31.

But to raise a triable issue or arguable defence, the

defendant cannot be sparing of the particulars of his defence, and then

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D
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claim that as a result of his own parsimony in details there is an

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obscurity which must await trial for illumination. 20 Further, [a] desire
to investigate alleged obscurities and a hope that something will turn up

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on the investigation cannot, separately or together, amount to a sufficient

N
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reason for refusing to enter judgment for the plaintiff. You do not get
leave to defend by putting forward a case that is all surmise and

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Micawberism (per Megarry V.-C. in Lady Anne Tennant v. Associated

P

Newspapers Group Ltd [1979] F.S.R. 298).21

P
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V. DISCUSSION
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20

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21

see Sumikin Bussan International (HK) Ltd v The Precast Piling & Engineering
Co Ltd & anor HCA3814/2001, DHCJ Reyes SC (as he then was) (unreported,
10 April 2002) para 39
see Hong Kong Civil Procedure 2017 Vol 1 para 14/4/3 at pp 273-274

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32.

Mr Chus

written

submissions

raised

wide-ranging

contentions. But in the course of his oral submissions it transpired (a) D

would not pursue some matters for the Appeal and (b) some matters were
just different ways of making the same point. I deal first with a number

B
C
D

of matters which had turned into non-issues.

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33.

First, notwithstanding the complaints raised in the 22/2/16

st

1 Letter and 20/5/16 Letter, which complaints were reiterated even in

G
H

Ds 2nd Aff filed shortly before the Master Hearing, Mr Chu confirmed at
the Appeal Hearing (a) D as purchaser signed the PASP and (b) D would

G
H

not disown his signature thereon. I further note D did not suggest the
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copy PASP exhibited to Lams 1st Aff was in any way different from the
PASP he actually signed. Indeed, such copy PASP was identical to the

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original PASP registered in the Land Registry. Further, although Ds 2 nd

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Aff suggested each party to an executed standard-form provisional

agreement in triplicate should have retained one copy, D as

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purchaser never explained (i) where his copy of the PASP was, and (ii)
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whether and if so how his copy was different from the copy PASP
exhibited to Lams 1st Aff. That being the case (and given Ps

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explanations in the 24/2/16 1st Letter and in Lams 2nd Aff in

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paragraphs 12 and 22 above), Mr Chu confirmed D no longer maintained

the complaint that P failed/refused to produce the original PASP for

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inspection/copying.
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34.

Secondly, Mr Chu also did not dispute D signed the Form 4.

In the circumstances, D no longer maintained the complaint that P was in

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breach of sections 45-46 of the EAO and/or it was not entitled to sue D
for commission and/or agreed damages under the PASP by reason of
such breach (see paragraph 21 above).

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35.

Thirdly, there was clear and cogent evidence that D entered

into and executed the FASP and Cancellation Agreement, and Mr Chu
did not suggest otherwise. Still further, as Mr Lam reminded, the

C
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Form 4, PASP, FASP and Cancellation Agreement contained a number of

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signatures that appeared to be Ds signatures, and in Ds 1st and 2nd Affs

D did not deny those signatures were his.
36.

Fourthly, Mr Chus written submissions suggested the

Form 4 and PASP were inadmissible for being unstamped. I cannot see

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why Form 4 would require stamping since it was not a document

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chargeable with stamp duty as specified in the First Schedule of the

Stamp Duty Ordinance Cap 117.22 As regards the PASP, it was properly

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stamped as arranged by Deacons (see paragraph 22 above). There is no

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merit to such contention, and at the Appeal Hearing Mr Chu confirmed D

would abandon such argument.
37.

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Fifthly, Ds suggestion that the estate agent who signed the

PASP on Ps behalf was not licensed was probably a misunderstanding.

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Since (a) Lam explained he was the Calvin Lam (not Alvin Lam)
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who signed the PASP (see paragraphs 4 and 24 above), and (b) D
accepted Lam was a licensed estate agent (see footnote 2 above), Mr Chu
confirmed

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22

see section 4(1) of the Stamp Duty Ordinance Cap 117

- 21 A

would no longer maintain the above argument.

B
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38.

In light of the above, the starting point must be the undisputed

and/or indisputable fact that D entered into and executed the Form 4, PASP,
FASP and Cancellation Agreement. What was the legal effect of D having
E

signed all these agreements? For the PASP, all D said was he understood it
was a preliminary agreement for his intended purchase of the Property from

F
G

Even though a copy of the Form 4 was exhibited to Chans Aff, in the

FASP and Cancellation Agreement, D must have understood their contents

O
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In my view, Ds allegation that no one explained the terms or

effect of the PASPs clauses to him was not a triable issue or arguable
defence. As a matter of law, a person who signed a document, even if he

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were specific vitiating factors recognised by law such as non est factum,
undue influence or misrepresentation. In Bank of China (Hong Kong) Ltd v
Fung Chin Kan & anor, Litton PJ said:23
the fundamental principle that, generally speaking, when a
person signs a legal document, he or she is bound by the act of
signature: As a matter of general law, it is no defence to say that he
or she did not understand the contents of a legal document; that
person takes the chance of being bound by its terms, as he or she can
take the simple precaution of not signing until its contents have been
fully explained and understood.

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23

did not care to read its contents, would still be bound by it unless there
N

present solicitors.
39.

contents. Actually, Ds 2 Aff did not mention the Form 4 at all. For the

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nd

since they had been interpreted to him respectively by his former and
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Foo Tak, but no one explained the terms or effect of its clauses to him.
subsequent Ds 2nd Aff D did not say he did not read/know/understand its

(2002) 5 HKCFAR 515, 533

- 22 A

A few years later, Ribeiro PJ in Ming Shiu Chung & ors v Ming Shiu Sum
B

& ors explained as follows:

84. It is in law highly immaterial to ask how or why the father

nevertheless signed the documents. Reliance is universally placed on
signatures appended to documents by persons of full age and
understanding as signifying the signatorys assent or adherence to
what that document states. Where such a person has signed a
document which purports to have legal effect, the law has never
regarded it as enough to show that he signed without knowing its
contents for the document to be disavowed. It is an everyday
occurrence that people sign documents without reading the small (or
even the large) print and therefore sign without actually knowing the
terms (or all the terms) of the document signed. But they are held to
the documents which they have chosen to sign unless there is shown
to be a recognized legal basis for concluding that their apparent
consent has been in some way vitiated or that reliance on that
document by some other person falls into some category of
unconscionable conduct justifying relief in equity.

87. The vitiating factors at common law include fraud, mistake,

misrepresentation, non est factum, duress, undue influence and lack
of mental capacity:

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24

40.

vitiating factor. He made a half-hearted suggestion that when D signed the

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at the Appeal Hearing, there was no such averment in the Defence and no

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do, draw such inference as the PASP clearly described P as the Agent for
Foo Tak and D, and displayed Ps name/logo prominently on the 1 st page.

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condescend upon the particulars of any arguable defence or triable issue.

Thirdly, unilateral mistake as to the terms of the contract may affect the
contract if known to the other party.25 There was simply no evidence P was

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aware D labored under any mistake.

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24
25

not P as his estate agent. I reject such argument. First, as Mr Chu conceded

Secondly, it was for D to raise any defence of mistake, and it behoved D to

Q

Mr Chu in his oral submissions was unable to identify any

such evidence in Ds 1st/2nd Affs. I am unable to, as Mr Chu would have me

O

PASP he was under the mistaken belief that the PASP referred to Yancy and
M

(2006) 9 HKCFAR 334, 361-361

see Chitty on Contracts 32nd ed Vol 1 para 3-022 at pp 350-351

- 23 A
B
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41.

Thus, the only matter Mr Chu could rely on was Ds allegation

that he had not been explained the terms/effect of the clauses in the PASP,
but the authorities in paragraph 39 above clearly showed this would not
detract from the binding effect of the Form 4, PASP, FASP and

Cancellation Agreement. That being the case, the meaning/effect of the

express terms of such legal documents would be as set out in paragraph 9

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claim that P was Ds estate agent for the purpose of the Transaction, and

Further, as a matter of fact, it lied ill in Ds mouth to say he did

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to P:

Ps name in full as the Agent both at the top of the 1st page
where the parties were described and at the bottom of the 2nd
page where the parties appended their signatures. The PASP

not engage P as his estate agent and/or he did not agree to pay commission
(a) The PASP was in both English/Chinese languages, and recited

42.

pursuant to clause 10a of the PASP.

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above. On such basis, P had plainly established a prima facie case for its
that D was liable to pay the Agent (ie P) agreed damages of $6,977,600.00

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also bore Ps logo, and in clause 16 clearly described P as the

Agent for both Foo Tak and D. There was no suggestion D
had not read the PASP when he signed it.

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(b) P signed at various places in the body of the PASP including

alongside clauses 8, 9a, 14 and 16, and clause 16 expressly
provided that [it] is hereby declared that the Agent is the

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Agent for both the Vendor and the Purchaser / for the Vendor
only / for the Purchaser only.

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- 24 A

43.
B
C

The suggestion that D did not engage P as his estate agent

and/or he did not agree to pay commission to P was even more incredible
given Ds own confirmations in the FASP and Cancellation Agreement,
both of which were interpreted to him by and signed in the presence of his
former and present solicitors. Hence, P must have known from the terms of

the FASP set out in paragraph 5 above that if he failed to complete the
purchase of the Property, he would be responsible to pay or reimburse all

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Agreement (interpreted to him by Ds present solicitors LHC), it expressly

Schedule 1 of the FASP to compensate the Agent [ie P] for a sum

complete the Transaction (see paragraph 8 above). Since the FASP and

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understood the effect of the PASP, FASP and Cancellation Agreement

explained in paragraph 9 above. In my view, any suggestion otherwise
would be incredible and/or unbelievable, especially when D never even

default for the purpose of clause 10a of the PASP by reason of his failure to
Cancellation Agreement had been interpreted to D, he must have

obligation under clause 10a of the PASP as encapsulated in clause 1 of

equivalent to the total commission payable by [Foo Tak] and [D], and Ds

estate agents commission payable under the PASP. For the Cancellation
recited the PASP, the full name of P as the Agent named in the PASP, Ds

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hinted he did not understand the contents of the FASP and Cancellation
Agreement. It was even more telling that D shied away from giving any
explanation at all as to why he signed the Cancellation Agreement when it

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was interpreted to him that (a) it was P and not Yancy that was the named
Agent who entered into and executed the PASP with Foo Tak and D
(Recital (A)), (b) clause 10a of the PASP provided for the defaulting

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vendor/purchaser to compensate the named Agent (ie P and not Yancy) for
a sum equivalent to the total Vendor and Purchaser Commission payable by
the defaulting party which provision was encapsulated in the clause 1 of

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Schedule 1 of the FASP (Recital (D)), and (c) D was such defaulting party.
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- 25 -

In my view, the silence was loud and strongly militated against Ds

B

contention that Yancy was Ds estate agent for the Transaction.

44.

I now turn to the heart of Mr Chus submissions. Mr Chu

argued that the Commission Arrangement revealed in Lams 2

E

nd

Aff and

Shums Aff (see paragraphs 24 and 26 above) cast doubt on Ps case, and
raised triable issues and arguable defence as to (a) who (ie P and/or Yancy)

F
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services were provided by such agent to D,26 (c) who (ie P and/or Yancy)

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the total commission and/or agreed damages of $6,977,600.00 to be

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leave to defend should be given.

45.

H
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Mr Chu next submitted that Ps case on the Commission

Arrangement disclosed in Lams 2nd Aff and Shums Aff was materially

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departure Ps Order 14 application must fail.27 Such contention rested on

Mr Chus reading of Lams/Shums explanation of the Commission
Arrangement as follows: (a) the sharing of commission between P and

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Yancy/Shum under the Commission Arrangement was a unilateral

variation of contract [presumably the PASP] done behind Ds back,
(b) Yancy itself was a licensed estate agent and could have entered into and

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executed an estate agency agreement (statutory Form 4 of the Regulations)

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26

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about the PASP could only be resolved at trial, and hence unconditional

different from Ps case as pleaded in the ASoC, and by reason of such

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10a of the PASP and for how much (or, to put it in another way, how was
apportioned by P and/or Yancy). Mr Chu submitted such uncertainties

actually was Ds estate agent in respect of the Transaction, (b) what

was entitled to commission and/or agreed damages under clauses 9a and

27

Mr Chu submitted Ps case must fail for want of consideration (reflected under
clause 9a and 10b) if P did not provide any service to D
see Li Chuen Kwai v Po Lam Construction Development Limited HCA2376/2013,
DHCJ Wilson Chan (unreported, 24 September 2014) para 11

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- 26 A

and/or a contract to pay commission to D (eg standard-form provisional

B
C

agreement for sale and purchase), (c) there was no evidence Yancy and D
entered into and executed any statutory Form 4 of the Regulations or any
provisional agreement for sale and purchase or other contract for payment
of commission to Yancy, (d) Yancy was not a party to the Form 4 and PASP

so they were incomplete, (e) by reason of (b)-(d) above and sections 4546 of the EAO28 Yancy could not rely on the incomplete Form 4 and

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Transaction,29 (f) although P could sue for commission and/or agreed

and/or agreed damages for and on behalf of Yancy who was not a party to

could sue for. Mr Chu submitted the above contentions raised arguable

46.

For the present purpose, I am prepared to assume that (a)

Yancy did not enter into or execute any statutory Form 4 of the
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commission or agreed damages under the PASP. Nevertheless, I am not

persuaded by Mr Chus contentions.
28

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29

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Regulations, and (b) Yancy could not sue or claim against D for

apportionment of the agreed damages to which P itself was entitled and/or

questions of mixed fact and law that could only be resolved at trial.

could not rely on the incomplete Form 4 and PASP to sue for commission
such agreements, especially when there was uncertainty as to the

PASP to sue D for commission or agreed damages in respect of the

damages since P and D did enter into and execute the Form 4 and PASP, P

section 45 of the EAO provides inter alia that (a) where the agent
proposes/undertakes to perform estate agency work for a client, the agent can only
sue for damages or other relief/remedy as regards the proposal/undertaking if and
only if he and the client enter into and execute an estate agency agreement being
Form 3 or Form 4 of the Regulations and he was a licensed agent at that time, and (b)
such right or cause of action shall not lie at the suit of any other person other than
the agent by reason only of anything contained in [section 45 of the EAO]
see Housing Living Property & Interior Design Company Limited v Victory Power
International Limited & anor DCCJ14010/2001, HHJ Z E Li (unreported, 20
December 2001) and Easy Property Co Ltd v Hau King Kuen [2004] 1 HKLRD 154,
155-156

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- 27 A
B
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47.

In light of paragraphs 38-45 above, Ds suggestion that he only

engaged Yancy/Shum to be his agent for the Transaction and did not engage
P who did not provide any service for him was incredible as being contrary
to the contemporaneous legal documents (ie the Form 4, PASP, FASP and

Cancellation Agreement). It was especially telling that D did not offer any
explanation (when it was for him to show triable issues and arguable

F
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and the Cancellation Agreement expressly referred to P as the Agent but did

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confirmed Ds default in completing the Transaction that triggered his

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D
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and Purchaser Commission under clause 10a of the PASP, and/or (b) why
he did not read/understand those documents.

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48.

As Mr Lam submitted, even on the face of the PASP, the

procurement of P and D to sign the PASP itself was already sufficient

consideration to support Ds promise to pay commission and/or agreed

recited Ps full name as the Agent named in the PASP and expressly
obligation to pay agreed damages equivalent to the total amount of Vendor

defences) as to (a) why he signed those documents when the Form 4, PASP
not mention Yancy at all and when the Cancellation Agreement expressly

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damages to P under clauses 9a and 10a of the PASP. But here Lams 2 nd Aff
and Shums Aff went further to make clear that although it was Yancy who
referred D to P it was P who carried out estate agency work for D (see

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paragraph 26 above), which in my view explained why (a) P was named as

the Agent and signed as such in the PASP, (b) Foo Tak and D contracted to
pay and P contracted to receive from them the Vendor Commission and

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Purchaser Commission under clause 9a, (c) Foo Tak and D contracted for
the defaulting party to pay agreed damages to P in a sum equivalent to the
Vendor and Purchaser Commission under clause 10a, and (d) the

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contracting parties for the PASP were Foo Tak, D and P. This represented
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- 28 A

the 1st contractual relationship in respect of which Yancy was not a party
B
C

st

st

(1 Contract). For this 1 Contract, Yancys referral of D to P was merely

a background matter that led to the Form 4 (between P and D) and PASP
(among Foo Tak, D and P) and not a contractual feature as between P and
D.
49.

However, Yancys referral of D to P was a contractual feature

Commission Arrangement between Yancy and P of which D was not a

it would receive from D upon completion of the Transaction (under the 1 st

In practical terms, if the Transaction had been completed, P

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would ultimately have retained half of the total commission paid in respect
of the Transaction. But it was essential to understand the true nature of the
contractual rights/entitlements for such result. Foo Tak and D were

50.

did not concern D.

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referral of D to P, P agreed to pay over to Yancy the Purchaser Commission

Contract). This was a matter of referral fee as between P and Yancy which

in respect of a separate and distinct contractual relationship being the

party (2nd Contract). For this 2nd Contract, in consideration of Yancys

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contractually obliged under the 1st Contract (ie the PASP) to respectively
pay P the Vendor and Purchaser Commission, and if D failed to pay P the
Purchaser Commission, P could sue D for recovery of the same since P and

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D entered into and executed the Form 4 and PASP. This meant that vis-vis Foo Tak and D under the 1 st Contract (ie the PASP), P was contractually
entitled to recover/keep the Vendor and Purchaser Commission. But by the

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2nd Contract between P and Yancy (ie the Commission Arrangement), P was
contractually obliged vis--vis Yancy to pay over the Purchaser
Commission so received to Yancy. On such basis, Mr Chus submission as

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to uncertainties as to the apportionment on commission in respect of the

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- 29 A

Transaction between P and Yancy was not understood. Indeed, Mr Chus

B
C

own written submissions recognised that in the event of no breach, Yancy

is entitled to $3.48 million [ie the entire Purchaser Commission] and
nothing goes to P. In the course of his oral submissions, Mr Chu accepted
this was the effect of the Commission Arrangement as explained by Lam

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and Shum.

51.

Yancy who entered into and signed the Form 4 and PASP with D, but (b)

of the PASP. It is interesting to note that although D claimed Yancy to be

P
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services Shum/Yancy performed in respect of the Transaction except for a

vague assertion that Shum had done a lot of things for my business in

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luxurious residential property in Ds personal name.

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52.

alongside the amount of the Purchaser Commission spelled out at clause 9a

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The above was consistent with the fact that (a) it was P and not

Hong Kong. However, the Transaction involved a private purchase of a

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his estate agent for the Transaction, he failed to condescend upon what
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the name of Yancy (who did not directly contract with D) was written
H

But Ps present claim was not for commission payable under

clause 9a of the PASP but for agreed damages payable under clause 10a
upon Ds default in completing the Transaction. Nothing in Lams/Shums
description of the Commission Arrangement showed that the agreed

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damages payable by D under clause 10a of the PASP were to be shared or

given to Yancy. Paragraph 22 of Lams 2 nd Aff only stated Yancy would be
entitled to receive the commission payable by [D] if [D] completed the

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purchase of any property introduced by [P] to [D]. I also note Lam did not
put down Yancys name next to clause 10a. Indeed, Mr Chu recognised as
much in his written submissions which stated [one] way of interpretation

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[of the Commission Arrangement] could be that in the event of breach, P is

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entitled to $6.9 million Mr Chu suggested that given the present

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state of the evidence, the Court could draw other inference of facts, but he
did not elaborate on what other possible inference could be drawn from
Lams description of the Commission Arrangement (as agreed by Shum
and explained in paragraphs 24 and 26 above.) In my view, since (a) Yancy

did not come into the picture in relation to agreed damages under
clause 10a of the PASP, and (b) P and D did enter into and execute the

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principal was entitled to sue D for the whole sum of $6,977,600.00 as

of relevance or assistance.

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53.

But in any event, even if the agreed damages were to be shared

between P and Yancy, I still do not see any merit in Ds contentions in

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sharing between P and Yancy/Shum (ie the Commission Arrangement) was

a unilateral variation of contract [ie the PASP] by [P] and Yancy, done
behind Ds back amply demonstrated the fallacious conflation of the 1 st

45 above premised on commission-sharing between P and Yancy would be

paragraphs 44-45 above. Mr Chus submissions that the commissionL

Form 4 and PASP in compliance with sections 45-46 of the EAO, P as

agreed damages. I am unable to see how the contentions in paragraphs 44-

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and 2nd Contracts explained in paragraphs 48-51 above. The PASP was the
only agreement that provided for commission payable by D (but Yancy was
not a contracting party thereto), and there was no positive evidence D had

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any legal relationship/obligation to pay commission to Yancy upon

successful completion of the Transaction or to pay the agreed damages
upon default in completion. It is difficult to see how the Commission

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Arrangement being a contract between P and Yancy (that had nothing to do

with D) could vary the PASP being a contract among Foo Tak, D and P
(that had nothing to do with Yancy). In my view, it was plain and obvious

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that any claim by P for commission or agreed damages pursuant to the

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provisions in the PASP rested on the 1st Contract which had nothing to do
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nd

with the 2 Contract, so P made the present claim as principal in its own
right and not as any nominal plaintiff or quasi-nominal plaintiff for and
on behalf of Yancy. In the circumstances, it mattered not that Yancy did not
enter into or execute the Form 4 and PASP, and there were no arguable

uncertainties as to who was contractually entitled to commission and/or

agreed damages under clauses 9a and 10a of the PASP and for how much.

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no way dependent on or affected by its Commission Arrangement with

54.

Mr Chu in his oral submissions conceded it was permissible

for P to have separate agreement with its staff/employee to share the

personally but not for and on behalf of P receive apportioned share of such

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right to sue D for the entire Purchaser Commission payable under clause 9a
of the PASP. Mr Chu argued that Ps Commission Arrangement with Yancy
was different, but he was unable to articulate the legal basis for such

Purchaser Commission payable by D (ie such staff/employee would

commission) (Staff Arrangement), which would not have affected Ps

Ps claim against D was governed by the terms of the PASP, which was in
Yancy.

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distinction given that both the staff/employee and Yancy were outside
parties to the PASP and commission-sharing between P and such outside
parties underlied both the Staff and Commission Arrangements. I am

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unable to accept Mr Chus vague reference to some common perception

that staff/employees might share commission earned by the employer.
Rather, I accept Mr Lams submission that how P wished to share the

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commission it received from D under the PASP (which then became Ps

own income/monies) was its prerogative.

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55.
B
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On the aforesaid analysis, Mr Chus following arguments

(which he accepted were different ways of putting the same points as set
out in paragraphs 44-45 above) would also fall away:

(a) Mr Chu submitted the ASoC should be struck out since on Ps

own case it is not the only beneficial party despite purportedly
it has legal standing to sue thus placed P in a position of

conflicts. Such submissions were less than illuminating, but

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and P were both entitled to the commission and/or agreed

damages payable under the PASP, this again reflected

st

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conflation of the 1 and 2 Contracts which was not Ps case at

all. On such basis, the alleged conflict was not understood.

(b) Mr Chu submitted Yancy and P were in breach of their

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fiduciary duties in not telling D what was going on. Since

I have concluded the 1st and 2nd Contracts were separate and

distinct, and D was contractually obliged to pay commission

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and/or agreed damages to P and not Yancy, it did not matter

whether or not D knew of the Commission Arrangement. As

Mr Lam submitted, it was not a defence that D did not know

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about it. But in any event, there was evidence that disclosure
had been made to D not only from Lams 2nd Aff but also from

the contemporaneous PASP itself in which P signed as the

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named Agent but the name of Yancy (not a contracting party to

the PASP) was placed alongside the amount of the Purchaser

Commission in clause 9a.

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if Mr Chu meant the Commission Arrangement showed Yancy

Mr Chu submitted that an agent (eg Yancy and P) owes fiduciary duties to its
principal (eg D) (see Snells Equity 32nd ed para 7-004 at pp173-15)
Mr Chu submitted that under common law the alleged transfer/sharing of
commission was not permitted without Ds prior consent, and under rule 14 of the
Regulations, the purchasers consent was required for an agent and sub-agent to share
commission (but see discussion in paragraph 58 below)

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(c) Mr Chu contended the inhibited move of commissionB

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sharing to get around the statutory bar was unenforceable

due

to

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illegality, and it was against public/court policy for P (a

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mere nominal/quasi-nominal plaintiff) to employ the Court

machinery as a means to achieve a profit-sharing commercial
objective. I have explained why P sued D as principal for the
agreed damages under clause 10a of the PASP and not as any

nominal or quasi-nominal plaintiff (see paragraph 53 above).

I am unable to see how the Commission Arrangement was

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Mr Chu made some feeble allusion to prohibited secret

PASP that the Purchaser Commission was 1% of the purchase

Purchaser Commission payable by D and the terms of payment

unchanged

notwithstanding

the

Commission

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Arrangement between P and Yancy. Quite simply, D was

contractually obliged to pay the agreed commission (or the
agreed damages) to P, but it had no contractual duty to pay

into and executing those agreements, and the amount of the

remained

Commission. D was expressly informed by the Form 4 and

price of the Property and he agreed to the same by entering

illegal or contrary to public policy.

commission, but I see nothing secret about the Purchaser

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Yancy at all.
This was clearly reflected by clause 4 of Schedule 3 of the
statutory Form 4 of the Regulations that provides as follows:

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The Purchaser is not liable to pay any commission to other

estate agents with whom the Agent co-operates for the purpose
of purchasing any one or more of the Properties. This

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provision in Schedule 3 titled Commission to be paid by

Purchaser in the statutory form demonstrates 2 things: (i) the
Regulations envisage the relevant estate agent (ie the agent

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who entered into and executed the statutory Form 4 with the
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purchaser client) may have to cooperate with other estate

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agents to effect the purchase of property(ies) for the purchaser

client, but (ii) the purchaser client only has to pay commission
for the relevant estate agent and did not have to pay any
commission to other estate agents with whom such agent

cooperates. This is precisely the present position in which D

was contractually obliged to pay the Purchaser Commission to

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and Yancy that did not concern D who did not have to pay

(d) Mr Chu submitted the Commission Arrangement represented a

damages under the PASP to commission-sharing with

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pleaded in the ASoC and affronted by D. This was again a

conflation of the 1st and 2nd Contracts that misunderstood the
true nature of Ps case against D that consistently relied on

entitlement to the Purchaser Commission and/or agreed

Yancy/Shum under the Commission Arrangement that was not

which the EAO sought to cure.

departure from Ps case in the ASoC premised on Ps sole

P, but the Commission Arrangement was a matter between P

Yancy. The Commission Arrangement was not the mischief

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clause 10a of the PASP, and not the Commission Arrangement

which Lam referred to merely to explain the notation of
Yancys name alongside clause 9a of the PASP.

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(e) Mr Chu suggested both the uncompleted Form 4 and the

PASP do not bear weight as a legal document vis--vis legal
charge and share transfer documents they are both

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uncertain contract which require extrinsic evidence [ie Lams

2nd Aff and Shums Aff] to be adduced to supplement Ps case
but P should not be allowed to adduce parol evidence

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intentionally to depart from the documentary record. 32 But

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since D was contractually obliged to pay commission and/or

agreed damages to P (who was Ds agent for the Transaction)

and not to Yancy under the PASP, I am unable to see why the
Form 4 and PASP were incomplete or uncertain. Further, as P
relied on the terms of the PASP and not the Commission

Arrangement or any parole agreement, the need for parole

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evidence was not understood. If it was suggested parole

evidence was required to incorporate the Commission

Arrangement
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into

the

PASP,

this

again

reflected
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misunderstanding of Ps case and conflation of the 1 and 2

(f)

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nd

Contracts which I disagree.

Mr Chu submitted (i) P and Yancy could not sue D as the

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PASP was not a properly executed contract due to defects

under its clauses 9a and 10 in breach of section 45 of the EAO

which provides that the agent is not entitled to sue if the

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relevant estate agency agreement and/or provisional agreement

for sale and purchase are not properly executed, and (ii) the

Summons was essentially a request for judgment in favour of

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Yancy who as a sub-agent without any valid statutory Form 4

required under section 45 of the EAO could not maintain the

present claim. Such arguments assumed P was claiming agreed

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damages on behalf of Yancy, but in fact P sued D as principal

under the PASP which was the true contract between P and D.

Once it was understood that Ps claim was based on the PASP

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and not the Commission Arrangement, there would be no

inconsistent claims and no breach of section 45 of EAO.

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see Chitty on Contracts 32nd ed Vol 1 para 13-099 at pp 1069-1070

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56.
B
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Mr Chu next submitted that sharing of commission between P

and Yancy under the Commission Agreement was not permitted under
regulations 14(1)-(2) of the Regulations which provide as follows:
(1) A licensee who act as a sub-listing agent shall not demand
payment of any commission from the client concerned of the
principal agent.
(2) A licensee shall not recommend to a client the use of services of
any other person where a pecuniary or other beneficial interest may
accrue to the licensee in consequences of the recommendation, or the
use of the services by the client, without first disclosing that interest
to the client at the time of the recommendation.
(my emphasis)

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57.
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In my view, there are no merits to such arguments. In respect

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said that P acted as sub-listing agent to demand payment of commission

from D as the client concerned of Yancy as principal agent. Regulation 2 of

instruction from a principal agent in respect of the listing of a residential

property. As Mr Lam rightly pointed out, D did not list any property for

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58.

Mr Chu in his oral submissions suggested Foo Tak must have

listed the Property for sale so this court should infer that P was a sub-listing
agent who demanded commission from Foo Tak. Whilst Foo Tak did agree
to pay the Vendor Commission to P under clause 9a of the PASP, there was
Mr Chu submitted such inference could be drawn from the Commission
Arrangement whereby inter alia [P] would refer suitable properties to
this court should infer P was Foo Taks sub-listing agent and not Foo Taks
principal agent, and who was the principal agent if P was the sub-listing
agent. The short answer was that there was simply no evidence at all. In

sale or letting so neither P nor Yancy could have been a sub-listing agent.

[D], but he did not explain why, if any inference was to be drawn at all,
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the Regulations defined sub-listing agent as a licensee who obtains an

not even a shred of evidence that P was a sub-listing agent for Foo Tak.
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of regulation 14(1) of the Regulations, I am unable to see how it could be

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any event, since P is now demanding agreed damages from D and not Foo
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Tak, I am unable to see the relevance of regulation 14(1) of the

Regulations.
59.

In my view, regulation 14(2) of the Regulations is irrelevant

here since P did not recommend D the use of services of Yancy. But more

Regulations might result in fines or other regulatory consequences, they did

106. Section 56(3) of the EAO provides that any regulation made under
this section or any other provision of this Ordinance may create offences
in respect of contravention of any of the regulations and may provide for
the imposition of a fine and imprisonment as well as specify defences that
may be raised for such an offence.
107. There is no provision in the EAO or [the Regulations] to deprive the
licensed estate agent of commission payable under contract on the ground
of non-compliance.

G Lam J in Liu Chung Man v Midland Realty International Ltd 34 cited such
decision with approval. Mr Chu had no answer to these legal principles
which I respectfully agree.
60.

Mr Chu submitted the PASP was a sham document in light

nd

of Ps case advanced in Lams 2 Aff and Shums Aff as it did not state
what it meant, ie it did not reflect the full terms of the Commission
Arrangement between P and Yancy. In his oral submissions, Shum

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suggested that by the above submissions he made the same point as set out

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confirmed he would not argue the PASP was a sham document, but
in paragraphs 44-45 above. That being the case, such submissions again

Property Agency Limited v Yip Yuk Fai, HHJ Leung said that:

33

Regulations, it was no defence to Ps claim because whilst breach of the

not affect the licensees or agents entitlement to commission. In Centaline

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importantly, even if there was breach of regulations 14(1)-(2) of the

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DCCJ5321/2009, HHJ Leung (unreported, 18 August 2011)

HCSA42/2015, G Lam J (unreported, 9 September 2015) paras 21-22

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reflected misunderstanding of Ps case by conflating the 1 st and 2nd

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Contracts. Actually, it was Ps consistent case that the PASP specified P

(not Yancy) was the estate agent entitled to be paid commission and/or
agreed damages under clauses 9a and 10a. P simply relied on the express
terms of the PASP which, as Mr Lam submitted, did not give the

appearance of legal rights or obligations that the contracting parties (ie Foo
Tak, D and P) did not intend to create.

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61.

In any event, I cannot see how as a matter of law the PASP

could have been a sham document. In Hui Cheung Fai & anor v Daiwa
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Development Limited & ors which Mr Chu cited, DHCJ Eugene Fung SC
explained as follows:
71. The classic definition of sham is Diplock LJs formulation in
Snook v London and West Riding Investments Ltd [1967] 2 QB 786.
A sham exists where (1) the parties intended that the documents or
acts they have done would not create the legal rights or obligations
they appear to create and (2) it was intended that the documents or
acts would mislead a third party into believing the parties had
created those rights and obligations. At p 802C-F, Diplock LJ said:

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a sham means acts done or documents executed by

the parties to the sham which are intended by them to give to
third parties or to the court the appearance of creating between
the parties legal rights and obligations different from the actual
legal rights and obligations (if any) which the parties intend to
create. But one thing, I think, is clear in legal principle, morality
and the authorities ... that for acts or documents to be a sham,
with whatever legal consequences follow from this, all the
parties thereto must have a common intention that the acts or
documents are not to create the legal rights and obligations
which they give the appearance of creating. No unexpressed
intentions of a shammer affect the rights of a party whom he
decided.

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72. In Hitch v Stone [2001] STC 214, Arden LJ at 230a-e gave the
following guidance as to whether an act or document is a sham:

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Second, as the passage from Snook makes clear, the test of

intention is subjective. The parties must have intended to create

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HCA1734/2009, DHCJ Eugene Fung SC (unreported, 8 April 2014)

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different rights and obligations from those appearing from (say)

the relevant document, and in addition they must have intended
to give a false impression of those rights and obligations to third
parties.

Fifth, the intention must be a common intention ... (my

emphasis)

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As Mr Chu eventually conceded at the Appeal Hearing, there was simply

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the PASP to give an appearance of legal rights and obligations which the

62.

Mr Chu next argued that in the Order 14 context the court

should not come to any firm view on applying statutory provision(s)

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against contractual terms and rather should let the matter proceed to trial
as explained by Lord Hoffman in System Control plc v Munro Corporate
plc & ors.36 In that case, the plaintiffs claim for summary judgment was

no evidence that P and D (let alone Foo Tak) had any common intention for
parties did not intend to create.

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based on breach of contract and a statutory cause of action. The issue in

dispute was that, having previously contended it had accepted the
defendants repudiation and the contract was at an end, whether the plaintiff

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could amend its claim and affirm the contract and claim damages. Lord
Hoffman at pp 666-667 held there was a triable issue of law as to whether
the plaintiffs purported termination of the contract precluded it from

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asserting the contracts continued validity where the foundation for the
right to rescind remained in dispute, and there was also question as to
whether the statutory claim could be maintained if the contract claim could

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not, so an Order 14 application was unsuitable in that case.

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63.

I agree with Mr Lam that the decision in System Control plc

was nothing more than an application of trite Order 14 principles, albeit in

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[1990] BCLC 659

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the context of statutory and contractual causes of action. The factual

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context in that case was far removed from the present case where there was
simply an action on contract with no statutory cause of action. The real
question must be whether there was any triable issue or arguable defence,
and on the aforesaid analysis there was none in the present action.
VI. CONCLUSION

64.

The Appeal is dismissed. There is no reason why costs should

not follow event. I grant a costs order nisi that D shall forthwith pay P costs
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summary assessment of costs as follows:

(c)

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if no application is made to vary the costs order nisi within

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14 days from the date hereof, the summary assessment of costs

will be by paper disposal (unless otherwise directed);

D do within 7 days thereafter lodge and serve succinct

Ps statement of costs (Objection Summary);

summary of objections of not more than 1 page in respect of

P do within 14 days from the date hereof lodge and serve

Direction 14.3;

(b)

statement of costs not exceeding 1 page pursuant to Practice

of the Appeal to be summarily assessed. I also give directions for the

(a)

(d)

if application is made to vary the costs order nisi within

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14 days from the date hereof, the party seeking variation of the
costs order nisi do within 14 days from the date hereof fix a
date with the Listing Clerk for the hearing of the application

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for variation of the costs order nisi and summary assessment

of costs before me in chambers (open to the public) on a date
not before 28 days from the date hereof with half hour

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reserved.
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VII. POSTSCRIPT

65.

At the Appeal Hearing, I raised with Mr Chu the issue of

actual/ potential conflict of interest between D and his present solicitors

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LHC, and urged him to consider the matter with D and LHC. Ds stance
was set out in paragraph 11 above, ie Yancy and not P was Ds estate agent

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relation to the Cancellation Agreement which reiterated and confirmed the

well with Ds case put forward to this court at the Appeal Hearing. As a

(Marlene Ng)
Deputy High Court Judge
Mr Keith Lam, instructed by Tony Kan & Co, for the plaintiff

Mr George Chu, instructed by Liau, Ho & Chan, for the defendant

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address such apparent conflict.

including clause 10a without any mention of Yancy at all. This did not sit
matter of professional conduct, it is essential that LHC should properly

for the Transaction. However, LHC were the solicitors who acted for D in
PASP, and which recited P as Ds agent and also the terms of the PASP

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