Alrich Development Pte Ltd v Rafiq Jumabhoy (No 2)

• Jurisdiction: Singapore
• Judge: Chao Hick Tin J
• Judgment Date: 19 July 1994
• Neutral Citation: [1994] SGHC 186
• Date: 04 July 1994
• Docket Number: Suit No 1542 of 1990
• Year: 1994
• Published date: 19 September 2003
• Plaintiff Counsel: Patrick Wee and Cheong Yuen Hee (Chua Hay & Wee)
• Citation: [1994] SGHC 186
• Defendant Counsel: Michael Hwang, S Shanmugam and Francis Xavier (Allen & Gledhill)
• Court: High Court (Singapore)
• Subject Matter: Civil Procedure,Land,Whether plaintiff company foreign person,Contract,Conflict of interest,Amendments,s 4 Companies Act (Cap 50, 1990 Ed),Whether reasonable apprehension or likelihood of mischief if defendant's solicitors allowed to continue to represent the defendant,Identity of purchaser,Whether general manager was director of company,Amendment of defence after close of plaintiffs' case,ss 2(1), 3, 25, 36 Residential Property Act (Cap 274),No prejudice to plaintiffs which could not be compensated in costs,Whether vendor entitled to rescind contract,Action for rescission,Whether amendment can be allowed despite lateness,Legal Profession,Vendor relying on representation as to identity of purchaser,Contract for the sale of land,Sale of land,Vendor would not have entered into contract if he had known the identity of the real purchaser,Conditions of sale,Member of plaintiffs' former solicitors joining defendant's solicitors,Misrepresentation

Cur Adv Vult

The plaintiffs, Alrich Development Pte Ltd (Alrich), are real estate developers and the defendant is the owner of the property at lot 41-44, TS 26, known as No 36, Ewe Boon Road (36 EBR). This is an action for specific performance of a sale and purchase agreement constituted by an option dated 8 June 1990 given by the defendant to one Madam Ho Poh Lin (HPL) and exercised by the plaintiffs as the nominee of HPL. The option relates to 36 EBR. The principal defence raised is one of misrepresentation.

Background

I think I should at the outset identify the major personalities involved and recount the events from the very beginning so that the issues raised in this action may be more readily understood.

The plaintiffs, Alrich, were incorporated in 1980. Alrich`s original shareholders were Lim Chong Siong (LCS) and Eddie Chong Keng Wee, with each holding 100,000 $1 shares. They were also the directors. Pursuant to Alrich`s application, on 16 October 1987 Alrich received clearance from the Controller of Residential Property to enable the company to acquire and retain residential property and was required by the Controller to amend its memorandum and articles of association so that only Singaporeans could be shareholders and directors of the company.

Before the clearance was obtained, LCS and Eddie Chong transferred 195,000 shares in the company to one Seetoh Oi Ling (STOL) and 5,000 shares to one Peter Wan Siew Teck (Wan). At that time LCS was only a permanent resident in Singapore. He became a citizen in March 1993. Both STOL and Wan became directors of Alrich on 1 September 1987. Thereafter, LCS assumed the office of the general manager of Alrich. Wan has been associated with the company from the beginning. Wan did not have to pay for the 5,000 shares transferred to him. Neither did STOL pay for her shares. At the time, on record, Alrich had an accumulated loss of over $2m. LCS stood as a guarantor for all facilities from the bank. He continued to do so even after he ceased to be a shareholder and director.

STOL has been living with LCS as man and wife since 1984. She has given him a child. Earlier between 1973 and 1981, LCS was living with HPL as man and wife. HPL has also given LCS two boys, a pair of twins.

One Simon Cornelius (SC) is an estate agent. SC knew Wan since 1978 and renewed their acquaintance in 1988. SC knew the defendant even before 1978. In this judgment I shall refer to the defendant as `RJ` and the wife of `RJ` as `Mrs RJ`. Four other property brokers were also involved in this matter: Donald Han, KC Ting, SL Tan and Madam YL Tan. The extent of their involvement will be described as I go along.

Ewe Boon Road and Keng Chin Road were at all material times a residential area. Sometime in 1988 and early 1989 SC was trying to interest Wan, and consequently Alrich, to purchase properties in the Ewe Boon Road area. He identified in particular 38 EBR and the neighbouring properties. In fact, the owners of 38 EBR had asked SC to find a buyer for their property. SC brought Wan to see the area. Through SC`s efforts Alrich decided to buy 38 and 40 EBR. The options to those two properties were obtained in July 1989.

Also around that time SC approached RJ to make an offer on behalf of Alrich to purchase the adjacent 36 EBR at a price of $1.4m. RJ was living there with his family. The offer was later increased to $1.6m. SC also told RJ that Alrich was about to or had purchased the two neighbouring properties at 38 and 40 EBR. Both Mr and Mrs RJ did not accept those two offers.

In September/October 1989 SC met Mrs RJ by chance. He again raised the question of the sale of her husband`s property. On his own initiative, and without checking with Wan, he increased the offer to $1.8m as he was confident that Wan would agree with what he was doing. That was also refused by the RJs. SC kept Wan informed of all that.

In the meantime in August 1989 Mrs RJ had her first encounter with Wan. She said it occurred on a day in August 1989 when she was leaving her residence at 36 EBR in a girlfriend`s car. As she was about to enter the car she was interrupted rather abruptly by Wan who introduced himself as being from Alrich. At that point she was familiar with both the names as SC had mentioned those names to her before when SC was trying to persuade her husband to sell their home to Alrich. Mrs RJ alleged that Wan behaved rather aggressively as he said he could not understand why the RJs did not want to sell their property. He also remarked that it would not be comfortable living next to a construction site, and that anything could happen.

Wan did not deny that he first met Mrs RJ around that time. He was then in the vicinity and he saw Mrs RJ leaving her house. He introduced himself and left a calling card with her. However, he denied that there were any unpleasant exchanges with Mrs RJ on that occasion. It was asked: would a person behave aggressively or make a threat and yet leave his calling card. I do not think I need make a determination on this point as it could be a matter of perception. I do not think anything in this action really turns on that incident, though rightly or wrongly it did leave a mark in the mind of Mrs RJ.

In November 1989 Alrich`s application to the competent authorities to develop No 38 and 40 EBR into a block of walk-up flats was refused. There is some evidence to suggest that the competent authorities did informally indicate to Alrich that if 38 and 40 EBR were to be developed jointly with the neighbouring property, No 6 Keng Chin Road (6 KCR), the application might have a better chance of success, even to the extent of being permitted to build beyond low rise to medium rise (up to ten storeys).

Following that Alrich began to look at 6 KCR which was a bigger piece of land than 38 and 40 EBR combined. Alrich claimed that they could not afford such a big development. Thus they approached one Lam Chung Ho (Lam) from Hong Kong for the purpose of entering into a partnership - to share the risk. According to Wan an understanding was reached with Lam just before Christmas 1989. Lam secured the option to 6 KCR on 12 January 1990 and exercised it in Hong Kong on 30 January 1990. The acceptance was conveyed to the vendors` solicitors on 8 February 1990. However, notwithstanding the earlier informal indication, an application to the competent authorities for a medium rise development, from two to 12 storeys, on Nos 38 and 40 EBR and No 6 KCR (hereinafter collectively referred to as `the three plots`) was rejected on 12 February 1990.

As a result it was decided to dispose of the three plots together. Lam allegedly assigned his rights to 6 KCR to Alrich without so much as a scrap of paper to record what was their understanding. Wan said it was a gentleman`s agreement. Alrich sold the three plots to Toa Corporation on 16 March 1990 at an overall price of $260 psf.

However, Wan claimed that Lam insisted on being paid at $308 psf in respect of 6 KCR. His solicitor corrected him and said it was $288, giving credit to the 10% deposit already paid by Lam. The reason would appear to be this: as 38 and 40 EBR would not themselves be able to fetch $260 psf, Lam wanted a bigger share of the profits. Wan said Alrich acceded to Lam`s demand. On 18 July 1990 Alrich issued a cheque for $3,605,106.71 in favour of Lam, the bulk of which represented profits due to him from the sale.

Sometime in February/March 1990 the RJs approached one David Lawrence, the Managing Director of Richard Ellis, an international firm of estate agents and valuers, to sell their house. By then, the RJs had decided to get a new place for their residence. They appreciated that the whole Keng Chin/Ewe Boon area would be the subject of redevelopment. Lawrence assigned one Donald Han (Han), a marketing executive with Richard Ellis, to attend to it. At the time Han knew that Alrich was trying to sell the three plots. He spoke to Wan suggesting that perhaps Wan should consider incorporating 36 EBR with the three plots and sell them off as one bigger parcel. Eventually Wan showed interest but said that the price must be right.

Han negotiated with Wan and Mrs RJ on the price. This carried on for about a week. Han could not remember what was the initial and other offers that Wan made. Wan said RJ initially asked for $2.5m; his offer then was $2.3m. Later RJ asked for more, at $2.7m. Han said finally Wan agreed to the price of $2.7m, but asked for a six-month completion date. Wan also told Han that the solicitors for Alrich would be M/s Chong Yeo and Partners.

On 16 March 1990, Lawrence wrote a letter to RJ (DB1) advising him to accept the $2.7m offer, even though the offer was coupled with a six-month completion date. RJ was a little concerned about the long completion date. RJ seemed to entertain some doubts whether the buyer was really able to pay. But RJ finally agreed to all that and named M/s Adrienne Chew to be his solicitors. Everything seemed to be agreed, subject to contract. M/s Adrienne Chew faxed a draft contract to Han who in turn faxed it to Wan on 19 March 1990. Because of RJ`s concern whether the buyer was really able to pay there was inserted in the draft a clause requiring the buyer to furnish a guarantee; this was only a proposal. There was no response or comment at all from Wan as to the contents of the draft contract.

It would appear that sometime in the second half of March 1990, Wan wanted to see the road interpretation plan and some other plans relating to 36 EBR. Those were eventually furnished to Wan. Han`s recollection on this aspect was somewhat unclear. But Han said that it was finally understood that Alrich would hand over their cheque on 31 March 1990 to close the deal. At the very last minute Alrich withdrew. Han said Wan told him that Alrich was not proceeding with the deal because their Hong Kong joint-venture partner was pulling out. He said he remembered this reason given by Wan `vividly`.

When Mrs RJ...