Appeals – findings of fact – trial judge misdirected himself as to effect of certain evidence to support his conclusion – Court of Appeal justified in interfering with judge’s findings of primary fact on basis satisfied that such findings plainly wrong – point on imputed knowledge identified and left open
In these consolidated actions tried in the District Court, the claim brought by P (the “Agent”) against each of two defendants (the “Vendors”) was for agreed damages of HK$60,000 pursuant to a provisional sale and purchase agreement between the Agent as estate agent procuring the sale of a property and the Vendor concerned as vendor of the property. Each Vendor (a) defended the claim against it on the ground of fraudulent misrepresentation by the Agent as to the identity of the purchaser; and (b) counterclaimed for damages for misrepresentation, breach of agreement and breach of statutory duty under the Code of Ethics promulgated by the Estate Agents Authority. L was the sole shareholder and director of each Vendor. L’s daughter, C, was responsible for supplying information to the Agent’s employee. Both properties were in the same building. Together they amounted to 40 percent of the building. The purchaser already owned 40 percent of the building. If the sales were completed, the purchaser would own 80 percent of the building and be in a position to apply for the compulsory sale of the building for the purpose of redevelopment. Each Vendor rescinded the agreement to which it was party and paid the purchaser HK$150,000 by way of liquidated damages. The Trial Judge held that (a) the Agent had falsely represented to each Vendor the identity of the purchaser, but that (b) each Vendor had known the purchaser’s identity before entering into its provisional sale and purchase agreement (signed by L on its behalf) so that neither Vendor had acted in reliance on such misrepresentation in entering into such agreement. He therefore entered judgment for the Agent against each Vendor and dismissed each Vendor’s counterclaim. Each Vendor appealed.
Held, allowing the appeals, setting aside the judgment, dismissing the Agent’s claims and entering judgment for each Vendor for HK$150,000 on its claim against the Agent, that:
- One of the situations in which the Court of Appeal would be justified in feeling satisfied that a trial judge’s findings of primary fact were plainly wrong and would therefore be justified in interfering with such findings was where the trial judge had misdirected himself as to the effect of certain evidence which he understood to support his conclusions. That was the situation here with regard to the Trial Judge’s finding that each Vendor had known the purchaser’s identity before entering into the provisional sale and purchase agreement to which it was a party so that neither Vendor had acted in reliance on the Agent’s misrepresentation as to the purchaser’s identity in entering into such agreement.
- Since the Trial Judge’s finding that C knew the purchaser’s identity before L signed each provisional sale and purchase agreement was unsustainable, it was unnecessary to determine whether the Vendors were right in their argument that even if C had such knowledge, the same could not be imputed to either Vendor because L was the sole director and shareholder of each Vendor. (The Vendors based this argument of theirs on Wells v Smith  3 KB 722 at p. 725 which the Agent sought to distinguish by reference to Strover v Harrington  Ch 390 at pp. 407–409 on the basis that the Vendors had authorised C to receive all the relevant information).