Alrich Development Pte Ltd v Rafiq Jumabhoy (No 2)

• Jurisdiction: Singapore
• Judge: Goh Joon Seng J
• Judgment Date: 25 May 1995
• Neutral Citation: [1995] SGCA 53
• Date: 25 May 1995
• Subject Matter: Materiality,s 2(1) Residential Property Act (Cap 274),Whether company a Singapore company,Option given for valuable consideration,Sale of land,Whether having the same meaning as term in Companies Act,Whether exercise of option valid,Definition of terms,Whether misrepresentation originated from purchaser,Effect of certificate of clearance from the Controller of Residential Property,Words and Phrases,'Director' in Residential Property Act,ss 2, 3, 10(3) & 14(2) Residential Property Act (Cap 274),Option for the purchase of land,Contract,Misrepresentation,'Director',Misrepresentation by estate agents or brokers,Conditions of sale,Land,Whether reference may be made to other statutes,Whether nominee bound by purported revocation,Effect of revocation of option before exercise of option,Whether representation material,Attempted exercise of option by company with de facto director who was not Singapore citizen,Statutory Interpretation,s 4(1) Companies Act (Cap 50, 1994 Ed),Definitions,Nature of option
• Docket Number: Civil Appeal No 119 of 1994
• Published date: 19 September 2003
• Defendant Counsel: Michael Hwang, K Shanmugam, Francis Xavier and Tan Chuan Thye (Allen & Gledhill)
• Court: Court of Appeal (Singapore)
• Plaintiff Counsel: Arthur Leolin Price QC, Cheong Yuen Hee and Patrick Wee (Chua, Hay & Wee)

Cur Adv Vult

The facts

The appellants, Alrich Development Pte Ltd (Alrich), are a property development company incorporated in 1980. The original shareholders were Lim Chong Siong (Lim) and Eddie Chong Keng Wee, each holding 100,000 shares of $1 each. They were also then the directors of the company. At that time, Lim was a permanent resident in Singapore; he became a citizen only in March 1993. On 16 October 1987, Alrich, pursuant to their application, received clearance from the Controller of Residential Property permitting them to acquire and retain residential property, and they were required by the Controller to amend their memorandum and articles of association so that only Singaporeans could be shareholders and directors of the company. Prior to that date, however, in anticipation of the clearance, Lim and Eddie Chong transferred 195,000 shares in the company to one Seetoh Oi Ling (Seetoh) and 5,000 shares to one Peter Wan Siew Teck (Wan). Both Seetoh and Wan did not pay anything for the shares. Seetoh has been very close to Lim; they have been living as man and wife since 1984 and arising from their cohabitation they have a child. Wan has been associated with Alrich from the beginning. Both Seetoh and Wan became directors of Alrich on 1 September 1987. As from that date or thereabouts Lim ceased to be a director and assumed the office of the general manager of Alrich. He had previously stood as guarantor to the bank for Alrich`s debts and liabilities and continued to do so after he had ceased to be a shareholder and director of the company.

The respondent, Rafiq Jumabhoy (RJ), was the owner of 36 Ewe Boon Road, Singapore (36 EBR), the subject matter of the present dispute. 36 EBR was at all material times a residential property where RJ and his family lived. Sometime in February or March 1990, RJ approached one David Lawrence, the managing director of Richard Ellis, an international firm of estate agents and valuers, to sell the property. By then, RJ and his wife had decided to move elsewhere as they realized that the area surrounding their house would be subject to redevelopment. Lawrence assigned one Donald Han (Han), a marketing executive, to attend to it. At that time, Han knew that Alrich owned three plots of land around the neighbourhood and were trying to sell them. He suggested to Wan that Alrich should consider incorporating 36 EBR with the three plots and sell them as one big parcel. Wan showed some interest and Han thereupon negotiated with Wan and Mrs Jumabhoy on the price. Finally, Wan agreed (on behalf of Alrich) to purchase the property for the sum of $2.7m and requested for a six-month period for completion. A draft contract was prepared and forwarded to Alrich for approval; Alrich, however, subsequently withdrew from the purchase. When told of this by Han, Mrs Jumabhoy intimated to Han that they would not sell the property to Alrich and that Han should look for other buyers. RJ also was very disappointed and he told David Lawrence that he would not sell the property to Alrich except for the sum of $2.7m.

In May 1990, other real estate agents or brokers came onto the scene, namely, SL Tan (SL) and Mdm YL Tan (YL). SL and YL are not brokers working together in the same firm; they work separately and independently, and are merely broker-friends. On 19 May 1990, SL and his wife viewed the property 11 Keng Chin Road, which YL told him was available for sale. He took the opportunity of looking round the vicinity, and 36 EBR attracted his attention. Through his wife, who got in touch with Mrs Jumabhoy on the telephone, an appointment was made for SL to see the property on 23 May 1990 at about 3pm. SL alone went to 36 EBR at the appointed date and time. He met Mrs Jumabhoy and the latter quoted him a minimum price of $2.5m. No other conditions were mentioned by her. According to Mrs Jumabhoy, she asked SL whether the buyer was a `private buyer` to which SL replied in the affirmative, and she even asked him if the buyer was Alrich and SL replied in the negative. He informed her that he would bring his client to see the property later.

After viewing the property, SL informed his broker-friend YL that 36 EBR was available for sale. YL in turn got in touch with Wan who said that the price of $2.5m was too high. However, upon receipt of the information, Wan passed it on to Lim who instructed Wan to negotiate for the purchase of the property at the price of $2m. YL had not known Wan for long. She first met Wan in February 1990 when she placed an advertisement in the newspaper for the sale of some properties, including those at Yarwood and Holland Road areas. Lim came with Wan and saw her, but no transaction was entered into.

On 28 May 1990 YL told SL that she had a potential buyer and asked SL to fix an appointment for the buyer to view the property. Accordingly, SL got in touch with Mrs Jumabhoy and an appointment was arranged. SL and YL both went and saw the property on 29 May or 1 June 1990 - 29 May, according to YL but 1 June, according to Mrs Jumabhoy. YL told Mrs Jumabhoy that she represented the buyer who wanted to remain anonymous. According to YL, she and SL were shown round the house, and Mrs Jumabhoy enquired if the buyer was buying it for own occupation to which YL replied that she did not know but it might be so. However, Mrs Jumabhoy said that YL told her that the buyer was an elderly lady who was buying it for her own occupation. YL made some enquiries and did some calculations and there and then offered a price of $2m for the property but no agreement was reached with Mrs Jumabhoy at that stage.

Sometime towards the end of May 1990, Mrs Jumabhoy contacted another property agent, KC Ting (Ting), and asked him to sell 36 EBR at a price of $2.2m or thereabouts. Accordingly, on the 2, 3 and 5 June 1990 Ting inserted an advertisement in The Straits Times for the sale of 36 EBR. He got only two responses, one of which was from Wan, who first mentioned $1.9m and then increased the price to $2m.

On 4 June 1990, Ting called Mrs Jumabhoy saying that the buyer would offer $2m, and Mrs Jumabhoy said that she would revert. She then called SL and asked him to obtain a better price from YL`s client. SL later reverted with the offer of $2.025m with an option for eight weeks and a payment of 2% of the purchase price as option fee. Mrs Jumabhoy was not too happy with the increased offer and asked SL to obtain a better price: she even offered him an incentive of $1,000 for every $25,000 above $2.025m. On 4 or 5 June 1990, SL responded saying that YL`s client was not prepared to increase the offer. Shortly thereafter, Ting called Mrs Jumabhoy saying that his buyer would like to see the house; however, later he telephoned again and this time he said that his buyer would not be coming and that the price of $2m was firm.

Throughout this period, RJ was in the United States of America and was not involved in any of these discussions or negotiations with any of the brokers. But Mrs Jumabhoy had kept him informed of the development.

On the morning of 5 June 1990, Mrs Jumabhoy told SL that RJ would like to speak to him and she obtained SL`s telephone number for her husband. On the evening of 5 June, Mrs Jumabhoy spoke to her husband and confirmed that the buyer was an elderly lady not connected with Alrich and gave the reason for the eight-week option. A little later, RJ telephoned SL from the United States and spoke to SL briefly. According to RJ, SL confirmed to him what Mrs Jumabhoy had earlier told him. On that basis, he asked Mrs Jumabhoy to proceed with the sale. On the morning of 6 June 1990, Mrs Jumabhoy called SL and gave him the name of her solicitor, Ms Lyn Wee of M/s Allen & Gledhill.

Ms Wee also gave evidence on behalf of RJ. She said that SL spoke to her on 5 June 1990 and she got instructions from her client later that day. Subsequently, there were requests from SL to expedite the preparation of the option which was prepared and faxed to YL on 6 June 1990. Later on the same day, she faxed another draft of the option to YL incorporating a clause relating to payment of the commission on the sale. On 7 June, she received an amended version of the draft from the solicitor acting for the purchaser, Ho Poh Lin (Ho), and the amendments contained, inter alia, a nominee clause. She cleared the amendments with RJ`s brother, Iqbal Jumabhoy. The option was subsequently signed by another brother of RJ, Asad Jumabhoy, on 8 June 1990 acting under a power of attorney given by RJ.

Between 5 and 30 July 1990, RJ made three offers through his solicitors, M/s Allen & Gledhill, to Ho offering compensation for the cancellation of the option. The initial offer was $25,000 which was subsequently increased to $100,000 but the offer was not accepted. On 6 August 1990, RJ revoked the option granted to Ho. The revocation was rejected. A nomination form in favour of Alrich was executed on the same day by Lim on behalf of Ho acting under a power of attorney. Alrich, as a nominee, then exercised the option by executing the acceptance form pursuant to the terms of the option. This acceptance was rejected by RJ.

Alrich then commenced this action against RJ claiming specific performance of the contract, damages in lieu of or in addition to specific performance and other consequential reliefs. They also lodged a caveat on the property. The claim was resisted by RJ and he raised four defences, namely:

(a) that the option was rescinded or revoked by RJ in view of the misrepresentations by SL on behalf of Ho and/or Alrich that the purchaser was an elderly lady purchasing 36 EBR for her own occupation and that Alrich was not involved in the purchase of the property;

(b) that the option had been rescinded or revoked prior to acceptance and therefore it was incapable of acceptance, and that Alrich, not being a party to the option, had no right to sue on that option;

(c) that there was no sufficient note or...