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Colonial Cases

Preston v. Chan Lai Sun, 1864

[breach of contract]

Preston v. Chan Lai Sun

Consular Court, Shanghai
Source: The North-China Herald, 10 December 1864




Before - Sir HARRY S. PARKES, K.C.B., H.B.M. Consul,

F. B. JOHNSON, Esq., J. THORNE, Esq., Assessors.


THE claim in this case was for Tls. 1,400 for breach of contract.  The following is a copy of the plaint.

That, on the 2nd April 1863, at Shanghai, defendant, in consideration of the purchase by plaintiff of a plot of land in Hongque, and next thereafter in the occupation of J. W. Wood, promised to complete the buildings on this land, fit for habitation, within thirty days from date.  That defendant further agreed that if J. W. Wood should fail to fulfil the terms of his lease, he would find other responsible tenants at the same rent; and the plaintiff says that defendant has neglected to put said buildings into a state fit for habitation, in consequence of which Mr. Wood refused to sign a former lease and vacated the premises and was exempted from the payment of the rent.  That the defendant, though requested to find another tenant, refuses to do so.  The plaintiff, therefore, claims Tls. 14,0000 damages

The defendant alleged in reply.

  1. That defendant did not promise the plaintiff as in plaint.
  2. That he did not neglect to make the buildings fit for occupation.
  3. That Mr. Wood did fulfil the terms agreed between plaintiff and defendant, and that if Mr. Wood quitted the premises, it was occasioned by the negligence of plaintiff himself.

Mr. EAMES, in opening the case for the plaintiff, said that he supposed the question in this case was as to the sum of damages.  (The agreement made with Chan Lai-sun was here read and admitted by the counsel for the defence.)  One of the buildings on this land was rented by the Municipal Council and the other by Mr. Wood.  Chan Lai-sun promised to provide responsible tenants.  Mr. Preston, when about to leave Shanghai wished to invest some money which he then had, and accordingly bought this property from Chan Lai-sun.  Mr. Preston but for the disagreement which has arisen, would not now be at Shanghai, he having come out for the sole purpose of attending to this affair.  The grounds on which Mr. Wood declined to pay rent were that the plaintiffs in the case which was then tried had not put the place into a proper state of repair.  When he went into the house it was unfinished.  By agreement it was to have been finished in thirty days.  The terms of the agreement had been discussed in Mr. Laisun's presence and he must have understood them perfectly.  Until the terms of the agreement between Mr. Wood and mr. Lai-sun should be carried out, the former was not bound to take the lease.  Mr. Lai-sun had specially agreed that the premises should be completed for occupation, and it was on the ground of this not having been done, that Mr. Wood refused to pay the rent.

The house was at one time unapproachable but by a plank, on account of the water which surrounded it, and it was only through the kindness of a neighboring proprietor who afforded means of transit through his land, that the house was rendered approachable. (The judgment in the former case was read, in which it was decided that the agreement was not to be looked upon as a lease.)  This judgment was in favor of the plaintiff in the present instance.  He (Mr. Eames) wished to call Mr. Wood as witness in order that he might explain and amplify the manner in which the work had been done, and shew that the term in the agreement "complete for occupation" had not been carried out.  A good deal certainly depended upon what was considered the meaning of the expression fit for occupation, as what would make fit a grog-shop in Hong-que would hardly do for one of the large hongs. 

The learned Counsel wished to shew, 1st, wheat was necessary to carry out this term in the agreement; 2nd, what was done towards this end; 3rd, the expense of doing it.  He wished to draw the attention of the Court to the fact that the purpose for which mr. Preston bought the land had been defeated, for his reason in purchasing the premises was that he might be enabled to return home, and not as a land speculation.  Now, however, he is obliged to be out here to look after his interests; at the same time, it is not an unproductive investment.  One of the lots is at present rented by the Municipal Council, but the other is untenanted.  It had also been agreed to open a road from the house, but this was not done.  He wished to call as witness Mr. Cowie, a gentleman of known experience on such subjects, who, having already looked at the premises, would be able to prove to the Court the unfinished state in which he found them.

Mr. COWIE said: - I was called on, about two months ago, to examine certain premises in Hong-que formerly occupied by Mr. Wood.  This report of their condition (handed in) is a correct one. (The opinion expressed in it was that 1,200 or 1,500 Taels per annum would be a fair rent for the place if put in repair.  Its inferiority was at once perceptible, and the whole property presented a very uninviting appearance being in a very unfinished state.)  I have never been there in wet weather.  The ground is exceedingly low, and should have been raised.  It is the almost invariable practice to raise ground situated so low as this.  The rooms were badly arranged, and the house very unfinished in appearance.  The plaster was badly put on and falling away.  It did not actually lay the wall bare.  I don't recollect as to the mantels.  It is impossible for me to go into minute particulars as I have seen many houses since.  I don't know what would be the expense of opening the road mentioned in the report.

To Mr. ROBINSON: - I first saw the house in the spring of 1863.  I made the report about two months ago.  The first time I saw it, it might have been February, March or Aperil.  Mr. Laisun then shewed me over the property.  Mr. Wood put the place in my hands to let for him.  It was probably in June or July he did so.  He was, I think, in the house at the time.

TO THE COURT: - I advertised the place for three months for immediuate possession.  I did not then consider it in good condition.  At that time there was a great demand for houses.  I cannot recollect the state of the house when Mr. Wood took it, but I heard Mr. Wood frequently speak of its being surrounded by water.  I tried hard to find a tenant but could not do so.

W. B. PRESTON said: - At the time I purchased the land I wass about to leave Shanghai.  I left for San Francisco on the 15th or 16th of April.  Mr. Laisun offered to let me have two lots, one of which was taken by the Municipal Council and the other by Mr. Wood.  The rent of one was Tls. 1,500, the other Tls. 2,500, making in all 4,000 Tls.  He agreed to sell it for Tls. 20,000.  I also agreed for a corner piece, suitable for building, for Tls. 2,000.  Mr. Laisun afterwards came to me, wishing to get out of the bargain, saying that he had found another purchaser willing to pay Tls. 25,000.  I held him to his agreement.

I came back to Shanghai, solely on account of this business.  It was understood that the place should be completed according to the agreement between Mr. Wood and Mr. Laisun.  When I came back, I found the plaster falling off the walls and ceilings.  The roof was falling in so that I had to put stanchions for support, and the ground was in a complete swamp.  Mr. Laisun agreed with both Mr. Wood and myself as to the road.  As far as the repainting of the hoses was concerned, it was entirely between Mr. Wood and Mr. Laisun, but in the case of the road, the arrangement was made with me and Mr. Wood also.  (Mr. Preston here explained the position of and necessity for the road, by means of a plan shewing the position of the lots) Mr. Laisun was to have made two roads.

TO THE COURT: - The road leading to the bund was to be opened then and the other shortly after.  This Mr. Laisun agreed to do before signing the agreement.  I do not know how many mow were in the small piece of land. I would not have bought the property were not the roads to be opened.

To Mr. EAMES: - The house altogether appeared unfinished.

To Mr. ROBINSON: - Mr. Laisun and I discussed this agreement, and I put it into writing.  I did not think it necessary to mention the roads in it.  When I bought the houses they were nearly finished, and Mr. Laisun told me there was no lease in existence, but that a verbal agreement had been entered into which he considered equal to a lease.  If the houses had not been leased I should not have bought them.  Mr. Wood asked Laisun frequently for a written agreement, but he would not give it.  If the Municipal Council were to give up the lease, I consider Laisun bound to find another tenant.  The lease of the Municipal Council was between the Municipal Council and Mr. Laisun.  The transfer of the land to me was made at the Consulate.  Mr. Laisun was not bound to pay rent; only to find another tenant.

TO THE COURT: - I don't exactly know what the agreement between Laisun and Wood was, but he was to complete it, as specified therein.

W. WOOD: - I made an agreement with Laisun with regard to this land.  I was to have rented the place from the 1st May, but did not until afterwards.  When I went in, it was incomplete.  The rooms were unfinished and damp, and the ceiling falling.  The marble mantel-pieces had not been put in.  Mr. Laisun was to have built a six-foot weal round the premises, and to have made a proper carriage road leading from the bund to my house.  The ground round the house was a regular swamp during the time I was in the house.  In the wet weather it was most difficult to get to it, as there was no proper road leading to it.  The doors and windows were not properly finished.  The lease was presented to me after I entered the house.  I then refused to sign it on account of these deficiencies, otherwise I should have signed it.  I considered the place quite unfit for occupation.

To Mr. ROBINSON: - At the time I took possession, I put no protest on record as to the condition of the house.  I did not begin to pay rent until the 8th of June.  I instructed Mr. Cowie to let the house for me.  This was in August or September.  I sub-let it to Mr. Birt for a short time.  I am quite clear about the agreement for the six-foot wall round the premises.  I have made complaints to Mr. Laisun, saying that I washed my hands of it.  Mr. Laisun informed me that the ground through which the road was to be made, belonged then to him.  I was very anxious that the road should be ready.  It could not have been completed for several months.  There was also a promise that a second road should be made.

TO THE COURT: - Some things requiring repair, which I pointed our before taking possession, were put to rights.  I went into the house on the 8th June, while it was yet unfinished, because I was obliged to leave the one I then occupied.

The deposition formerly made by H. Leighton, acting under power-of-attorney for Mr. Preston, was put in and read.  It confirmed part of the evidence of the witnesses for the plaint, but stated that after repairs the house was habitable.

W. BIRT: - In 1863 I took a house from Mr. Wood in Hong-que.  I occupied it for about three months.  I took it monthly.  The house was in a very bad condition when I went into it.  The ceiling had fallen in various places, and in one room the rain came in.  I think these houses are bad enough, but it was worse.  There were marble mantel-pieces down below which were ready to be put up but were not.  There was a pathway when I took the place first, but it was afterwards blocked up, so that I had to pass through the grounds of a person living next me.  The whole compound was a sheet of water.  On one occasion I had to go across a plank, when I fell in and was submerged nearly to my middle.  There were high tides then.

To Mr. ROBINSON: - The bungalow next me was raised by artificial means and was quite dry.  My chief objection was not having any road or wall, and also the bad state of repair of the house.  I think the roof should have been taken off altogether to make it all right.

TO THE COURT: - There was a bamboo fencing round the place.  There were no bells in the house.  The doors and windows were tolerable.

C. BLETHEN: - I remember having been employed, about three months ago, to examine an unoccupied house in Hong-que.  The paper handed in is a copy of an estimate I have made of the cost of things which are required to be done to put the house in proper repair.  I think the estimate is fair.

THOMAS D.  KINGSMILL was examined next in regard to the report sent in by his firm, regarding the house in question, which was handed into court.  It appeared from this and from a subsequent letter on the same subject, that Tls. 600 would approximately cover the repairs necessary.

This closed the case for the plaintiff.

CHAN LAISUN: - About two years ago I built a house and a bungalow.  When I had nearly completed then, they were both applied for.  Mr. Preston looked over the property and said he would take it for Tls. 20,000 and Tls. 2,000 extra for the additional piece of land.  I had been offered Tls. 2,500 for the house and Tls. 1,500 for trhe bungalow at that date.

The conditions of payment were drawn out by Mr. Preston, and also an agreement concerning the parties who were to take these houses, which I signed.  The money was paid.  When the time for the tenants to enter on occupation; but they entered, and Mr. Wood's house was ready.  I went to Canton and was away about two months. On my return I was told that Mr. Kingsmill had surveyed the premises and that other repairs were necessary, which I made.  I never promised Mr. Preston to raise the ground, nor did I ever engage to put up a wall.  When Mr. Wood took the house, he said, there is no wall.  I said, I cannot put one now, but perhaps I may when I have built over all my ground.  There was no road to the bund; but I said I would make one as soon as the neighboring property, which I intended to build, came into my possession.  In the meantime, there was a path leading past my house, by which he could approach his own.  Subsequently I bought out the Chinese tenants from the neighboring property, and re-sold to Mr. Hanbury and Mr. Seward.  Since then there has been much dispute.  When Mr. Wood and the Municipal Council guaranteed to take these premises, I knew that the former was not likely to throw up the agreement, although there was no written document, and the same with the Council.  If these parties had not taken the houses, I should have considered myself bound, at that time, to provide some other tenant. 

I had the lease to the Council prepared by Mr. Cooper; and at the same time asked Mr. Preston whether he would like to have a lease drawn out for Mr. Wood.  But he said he would get that done himself.  I said I would make a road as soon as I could secure land for it.  I told Mr. Wood that I wanted all my money to build on my land; but I would do so afterwards.  Having sold the land, I do not now consider myself obliged to make any additions to it.  Mr. Preston bought the property just as he saw it.  Nothing was said about filling in the land, or making other alterations.

To Mr. EAMES: - When I sold the land to Mr. Hanbury, there was an understanding that he should open a road.  I cannot say how many mow I bought.  I transferred the property as I bought it.  I know nothing about what may have been taken from Mr. Preston's lot.  Mr. Wood asked me to put up two mantel pieces, and I told Mr. Preston that he, having bought the houses, ought to supply them.  He agreed.  My promise to Mr. Wood was to build a wall at some future time, intending to do so when my land was all built on, and I was receiving interest for my money.  By the provision in my agreement with Mr. Preston, I meant that if Mr. Wood did not take the house, I would provide another tenant - not that I would provide a succession of tenants, it Mr. Wood left.  I have stated that I sold the property to Mr. Preston, subject to any agreement with Mr. Wood.  I should say that I am not now liable to build a wall, having sold the property.

To Mr. ROBINSON: - When I sold the land to Mr. Hanbury, I stipulated that there should be a road, having agreed that I would have one made.  There was no stipulation in my agreement with my contractor, that he should tilt up the ground.  At the time the agreement was made between myself and Mr. Preston, Mr. Wood could have refused to take the house; and therefore I promised to find another tenant if he did not take it.  Mr. Wood could have refused top take the house if he had pleased, when we had our conversation about the wall, and I declined to put it up at the time.

TO COURT:- I consider myself absolved from responsibility for Mr. Wood not having fulfilled his obligations, because Mr. Preston took the drawing-up of the lease out of my hands.  The Municipal Council would be glad to throw up their lease, but cannot, because I had it drawn out legally.

YUN-KING said, he was left to finish Mr. Wood's house after Mr. Laisun went away.  He was requested to put up mantel pieces, to whitewash the walls, and to make a paving.  He did not see the mantel pieces put up, but wass told they had been put up.  Saw the rest of the work done, and the fencing put up.

To Mr. EAMES: - Part of the plaster on the ceiling fell down, and I had it set to rights.  Mr. Preston's houses are low; the ground is under water when it rains.

LAURENCE WALSH, a witness produced by the plaintiff, was here examined.  I remember being present at a conversation held between Mr. Laisun and Mr. Preston regarding the land (in question).  I heard the former asked whether the land was to be filled in, and he replied in the affirmative.

To Mr. ROBINSON: - The conversation took place between the 1st and 15th April.  (Mr. Robinson here remarked that Mr. Laisun denied all recollection of the incident or of the wiriness's face, and suggested that the latter might be mistaken in the identity of the individual who had made the remark).  I understood that Mr. Preston had bought the land at the time.

Mr. ROBINSON thought the case lay in a nutshell; and that a great deal of unnecessary evidence had been brought forward.  What Mr. Wood had said and done had nothing to do with it; if he had not liked the premises he had nothing to do but leave them alone.  The question was merely as to the meaning of the agreement between Preston and Laisun.  The latter had offered to get a proper lease of the property to Mr. Wood drawn up; but Preston had taken the matter into his own hands, and by so doing had absolved Laisun from all responsibility.  But, even as it was, he thought the lease had been binding and that the plaintiff ought to have insisted on it and not allowed Wood to leave.  Mr. Leighton, who to all intents was the same as Mr. Preston, had agreed with Mr. Wood that a lease was unnecessary, and this having been the case, the neglect of the plaintiff could not be visited on Laisun.  The agreement even stipulated that if Wood sub-let the premises, he was to be responsible.  It was evident that, so soon as the latter took the houses, Chan Laisun's connection with the property was at an end.  The bargain had been for the purchase of the ground, on the simple condition that the vendor was to find a tenant for the house.  Had he done so or had he not?  If the Court held not, Laisun would of course have to pay; but the claim for Tls. 14,000 was absurd.

How small the cause of complaint against the house was, had been shown by the evidence of the gentlemen who had been employed to make it all right.  The report of Messrs. Whitefield and Kingsmill, who were chosen by the plaintiff, and which was made shortly after Mr. Wood's occupation, shewed beyond dispute that Tls. 600 would cover the cost of the additions which they considered necessary.

Mr. EAMES, in the course of his reply, said the point argued, when the validity of Mr. Wood's lease had been tried before the Court on a previous occasion, was whether it was binding as a lease.  If it was not a lease it was still an agreement of some kind; and might be binding in some other sense.  Mr. Wood's obligation was to take the house, subject to its completion.  The lease was binding, but on condition that the house was put in proper condition.  If the document then called in question had been the actual lease, Mr. Wood must have kept the house.  But it was only a conditional agreement for a lease.  Instead of refusing to take the house, as he might have done, he entered it and gave time to the proprietors to complete it.  There was a great lack of houses, and Mr. Wood was compelled to leave the one he had previously occupied.  It appeared that the house was not in proper condition, and Mr. Wood had got out of it.  Laisun had not furnished a responsible tenant, and was liable, therefore, for all the damages that could be shown.  Mr. Preston had invested for a permanent investment, and his purpose had been defeated.  His money might as well be at the bottom of the sea.  It was impossible to estimate damages with mathematical precision in a case like the present.

Much had been said about Leighton's negligence in not presenting a lease to Wood; but the house had not been completed, and under these circumstances it would not have been right to have insisted on the latter signing one.  With regard to Messrs. Whitfield and Kingsmill's estimate, that referred only to things absolutely necessary to be done; for example, it made no mention of the wall, and it was evident that the erection of one had been agreed on.  It appeared to be a clear case of endeavour to avoid fulfilling the terms of an agreement - the latter perhaps not being so clear as it might have been.

The Court delivered the following judgment:-

Two points are raised in the contract in this case.  Firstly, whether the defendant did complete the premises so as to render them fit for occupation, and secondly, whether he supplied the plaintiff with leases on the term as set forth in the contract.

On the first point the Court hold that a surrounding six-foot wall, the raising of the ground to the extent of eighteen inches, and certain drains are necessary to render the said premises fit for occupation.  That these do not appear to have been supplied, and are assessed by the Court on the evidence at present before it, at Tls. 1,640, which the Court accordingly hold the defendant bound to pay to the plaintiff.

On the second point the Court hold that the defendant did provide the plaintiff with lessees in the terms of the contract, and had fulfilled his obligations in this respect.

Published by Centre for Comparative Law, History and Governance at Macquarie Law School