Tan & Au LLP v Seo Puay Guan and others

• Jurisdiction: Singapore
• Judge: Dedar Singh Gill JC
• Judgment Date: 07 March 2019
• Neutral Citation: [2019] SGHC 59
• Court: High Court (Singapore)
• Hearing Date: 12 September 2018,12 October 2018,13 September 2018
• Docket Number: Originating Summons No 1100 of 2017
• Plaintiff Counsel: Carolyn Tan Beng Hui, Au Thye Chuen and Kelvin Leong (Tan & Au LLP)
• Defendant Counsel: Twang Kern Zern and Lam Jianhao Mark (Central Chambers Law Corporation),Chooi Yue Wai Kenny, Fong Kai Tong Kelvin and Kong Tai Wai David (Yeo-Leong & Peh LLC),and the seventh respondent in person.
• Subject Matter: Contract,Duress,Contractual terms,Express terms,Legal Profession,Remuneration,Stakeholding fees
• Published date: 13 March 2019

Dedar Singh Gill JC: Introduction

This is an application by Tan & Au LLP (“the Applicant”), for the determination of how the net sales proceeds of 63 West Coast Park (“the Property”) which it held as stakeholder for several months are to be distributed amongst the Respondents. The Applicant also seeks to be paid stakeholding fees and disbursements out of these proceeds.

Background facts

The Respondents are seven siblings (whom I shall refer to as “R1”, “R2” etc, respectively). Their parents are the late Mr Seo Tian Hock and Mdm Tan Poh Geok, who passed away on 3 June 1995 and 19 November 2009 respectively. Both passed away intestate. At present, there has been no application for the grant of letters of administration for either of their estates.

In 1982, R1 and his then-wife purchased the Property. It is R2, R3 and R6’s position in this application that prior to completion, R1 and his then-wife had sold the Property to the Respondents’ parents (see [18] below).¹ Nonetheless, it is undisputed that the Property was registered in the names of R1 and his then-wife as joint tenants. Sometime in 2004, the manner of holding was changed to a tenancy-in-common. In 2008, R1’s then-wife filed for divorce. In the divorce proceedings, R1 took the same position that R2, R3 and R6 take in this application – that the Property had been sold to their parents before completion in 1982, and that although the Property was registered in his and his former wife’s names, it did not actually belong to either of them.² (I should mention that R1’s position in the present proceedings is quite different and I will elaborate on that at a later point in this judgment.) Eventually, the parties reached a settlement as to how to deal with the Property for the purposes of the divorce proceedings. By way of a court order dated 23 July 2010, by consent, R1 was ordered to pay his former wife $1.5m for her 50% share and rights in the Property.³ Thereafter, the Property remained registered solely in R1’s name.

On 13 January 2017, R1 sold the Property to a third party for a sale price of $4.1m, with completion scheduled for 7 April 2017. However, about a month prior to completion, R7 lodged a caveat against the Property.⁴ After some negotiations, R1 and R7 entered into a settlement agreement dated 6 April 2017 (“the R1–R7 SA”) by which R1 promised to pay R7 a sum of $430,000 out of the sales proceeds if R7 withdraws his caveat.⁵ R7 then withdrew his caveat against the Property.

Meanwhile, on 4 April 2017, R2 to R6 instructed the Applicant to lodge a caveat against the Property on the basis that the Property belonged to their late mother, and that R1 was holding the Property as trustee for all the beneficiaries of her estate. The caveat was duly lodged on 5 April 2017, as confirmed by a letter from the Applicant dated 12 April 2017 (“the Letter”). I will set out the relevant details of the Letter in due course.

On 13 April 2017, R1 to R6 met at the Applicant’s office in an attempt to resolve their disputes arising from the lodgement of the caveat. This meeting was initiated by R1.⁶ After the meeting, the Applicant prepared several drafts of a settlement agreement which were circulated to R1 through his then-lawyer, who responded with proposed amendments on 18 and 20 April 2017.⁷ However, the version of the settlement agreement which the parties eventually signed dated 21 April 2017 (“the SA”) did not incorporate any of the amendments proposed by R1 (ie, the SA was in the form proposed by R2 to R6 on 19 April 2017).⁸ Subsequently, R1 to R6 also signed a variation deed dated 3 May 2017 (“the VD”). I will set out the key portions of the SA and VD in a later section of this judgment. For present purposes, it need only be noted that pursuant to cll 6.1 and 6.2 of the SA (as varied by cl 2 of the VD), the parties agreed that R2 to R6 would withdraw their caveat if certain sums were paid to the Applicant to hold as stakeholder upon completion. These clauses read as follows:⁹ 6.1 For completion of the sale of the Property, [R1] shall procure the following sums to be paid to [the Applicant] by way of cashier’s order(s): 6.1.1 a sum of S$205,000.00 being 5% of the sale price of the Property which was paid by the Purchaser to [R1]; and 6.1.2 a sum of S$2,732,067.69 being the balance of the sale price of the Property … 6.2 In exchange for the said cashier’s orders mentioned in clauses 6.1.1 and 6.1.2, [the Applicant] shall release the Withdrawal of Caveat (in respect of Caveat IE/795234J) to the Vendor’s solicitors and provide to the said solicitors an undertaking that the said Withdrawal of Caveat will be lodged at the Singapore Land Authority within 3 working days of actual completion of sale of the Property.

On 28 April 2017, the sale of the Property was completed.

On 2 May 2017, R1 duly deposited $2,937,067.69 with the Applicant.¹⁰

In August 2017, the Applicant was discharged by R4 and R5. This was followed by R2, R3 and R6 doing the same in September 2017. However, as the Applicant was still the stakeholder of the sum deposited with it by R1, it commenced the present application to determine how that sum ought to be dealt with. In its originating summons filed on 29 September 2017 (“the OS”), the Applicant sought the following prayers: 1. Leave be granted to the Applicant to pay the sum of S$2,937,067.69 into Court being the net sales proceeds (“Net Sales Proceeds”) arising out of the sale of [the Property]. 2. [R1 to R7] appear and state the nature of their respective claims to the Net Sales Proceeds and maintain or relinquish the same and abide by such Court order as may be made herein. 3. Leave for the Applicant to apply to Court for a preliminary order of S$20,000.00 for disbursements to be deducted from the S$2,937,067.69 paid into Court to account of Applicant for out of pocket expenses at the outset of the Application which is to be taken into consideration upon the conclusion of the said matter against such of the Respondents as this Court deems fit. 4. That [R1] and [R7] refund the sums of S$690,000.00 and S$430,000.00 respectively which they had illegally obtained from the “Net Sales Proceeds”. 5. The costs of this Application is to be agreed or taxed and paid by such parties as this Court deems fit to the Applicants. For convenience, I refer to the above prayers as “prayer 1”, “prayer 2” etc, respectively.

On 12 January 2018, Senior Assistant Registrar Christopher Tan (“the SAR”) ordered as follows (“the 12 January Order”):

By Consent …

(a) Leave be granted to the Applicant to pay the balance stakeholding sum of $2,937,067.69 being the net sale proceeds arising out of the sale of [the Property], less the alleged stakeholding fees of $33,600, into Court; [and] (b) That the Respondents’ rights at any time to dispute, claim and/or bring an action against the Applicant and/or claw back the alleged stakeholding fees (and/or any other sums which have been charged or deducted as stakeholding fees), whether in whole or in part, and/or for the Respondents’ rights to bring this issue of the alleged stakeholding fees before the Court for determination at the hearing of this action (HC/OS 1100/2017) herein are reserved.

On 29 March 2018, the Applicant paid the sum of $2,903,467.69 (being $2,937,067.69 less $33,600) into court.

Parties’ cases The Applicant’s case

The Applicant makes no argument as to how the net sales proceeds should be divided amongst the seven Respondents, and claims to have no interest in the substantive proceedings.¹¹ However, the Applicant claims to be entitled to stakeholding fees and disbursements, which are to be paid out of the net sales proceeds prior to any distribution of the same amongst the Respondents. In this regard, the Applicant relies on four key documents. The first document is the Letter, mentioned at [5] above. In particular, paras 4, 5 and 6 of the Letter state:¹² 4. We now write to you on our costs for acting for you in the matters (without any court action). Our costs would range between S$8,000.00 to S$12,000.00. We estimate that the work would take about 20 hours to complete by way of settlement. We will write to you further if matters exceed 20 hours and/or if court action is required to be taken to resolve the matters, we will notify you of the same and inform you of our further costs in the matters. 5. In addition, costs will be payable if our firm were to act as stakeholder of the sales proceeds arising from the sale of the Property. Our costs for acting as stakeholder will be S$4,000.00 (without any court action) and if interpleader action is required to be taken for payment of the monies into court, we will write to you on the amount of further costs payable. 6. Our costs mentioned in paragraphs 4 and 5 above are exclusive of disbursements. You will pay all disbursements incurred or to be incurred by us in discharging the work entrusted to us. We will also be entitled to render interim invoices to you periodically for settlement.

[emphasis added]

The second document is the SA, drafted by the Applicant and signed by R1 to R6 (see [6] above). Clauses 7 and 8 of the SA state:¹³ 7. The Stakeholder Sum shall be held by [the Applicant] until probate or letters of administration has been obtained in respect of Seo Tian Hock, deceased and/or Tan Poh Geok, deceased or earlier if it is ascertained by [the Applicant] that probate or letters of administration is not required to be obtained for distribution of the Stakeholder Sum. Any fee payable to [the Applicant] to act as stakeholder shall be deducted from the sale proceeds of the Property. 8. The Stakeholder Sum shall be held by the Stakeholder on the following terms: -

…

8.2 professional fees shall be payable to the stakeholder for acting as stakeholder in the matter and both parties (i.e. the Vendor [ie¸ R1] and 5 siblings) agree that ...