By Products Traders Pte Ltd and Another v JAK Alhadad & Co Pte Ltd

• Jurisdiction: Singapore
• Judge: Tan Lee Meng J
• Judgment Date: 26 November 2004
• Neutral Citation: [2004] SGHC 265
• Plaintiff Counsel: Tan Kah Hin (Choo Hin and Partners)
• Published date: 12 September 2008
• Court: High Court (Singapore)
• Defendant Counsel: Nor'ain bte Abu Bakar and Ruby Tan (Abu Bakar Tan Ibrahim and Partners)
• Subject Matter: Contract,Breach,Subject matter under contracts for sale and purchase of property no longer existed,Vendor could not fulfil contractual obligations to transfer property,Whether deposits paid under contracts refundable,Discharge,Anticipatory breach,Whether purchaser repudiated contract,Misrepresentation,Whether any misrepresentation by seller to induce purchaser to enter into contractual relations

26 November 2004 Judgment reserved.

Tan Lee Meng J:

1 The first plaintiff, By Products Traders Pte Ltd (“BP”), and the second plaintiff, Mr David Reginald Ellis Broadley (“Broadley”), who both paid the defendant, JAK Alhadad & Co Pte Ltd (“JAK”), deposits under contracts for the sale and purchase of a number of properties in Singapore, sued to recover the said deposits after JAK was no longer in a position to perform its obligations under the said contracts. JAK refused to refund the said deposits on the ground that the plaintiffs repudiated the contracts in question and filed a counterclaim with respect to losses suffered as a result of the plaintiffs’ alleged breach of contract.

Background

2 The dispute in the present case concerns the sale of 25 properties in Singapore that belonged to the late Shaik Ahmad bin Abdullah Wahdain Basharahil (“Shaik Ahmad”), who died in Madura, Indonesia, on 15 July 1953. In his will (“the Will”), Shaik Ahmad required the said properties to be placed on trust after his death for the benefit of the persons who would, in accordance with Mohamedan law, have been entitled to his estate if he had died intestate.

3 The trustee appointed by Shaik Ahmad in the Will did not reside in Singapore. As such, the Public Trustee was appointed trustee by virtue of an order of court on 11 October 1976. With this order, Shaik Ahmad’s 61 immovable properties in Singapore became vested in the Public Trustee. Of these, 32 were compulsorily acquired by the State. This left the estate of Shaik Ahmad (“the estate”) with only 29 properties in Singapore.

4 Under the terms of the Will, Shaik Ahmad’s assets were to be distributed 21 years after his death. However, the distribution, which was scheduled for 1979, was delayed and as late as the 1990s, the beneficiaries had not received any part of the assets. Soon, far too many persons claiming to represent all the beneficiaries under the Will started to sell the estate’s properties even though the legal title to the properties was vested in the Public Trustee.

5 On 5 November 1994, one Abdurrachman Abdullah Wachdin Basyarahil (“Abdurrachman”), who claimed to be “the attorney of the heirs and heiresses” of Shaik Ahmad and the sole representative of all the beneficiaries under the Will, entered into an agreement to sell the estate’s 29 properties to JAK for $14m. The parties were aware that the properties were subject to caveats and claims by other parties and Abdurrachman undertook to “use his best endeavours to render the property free from all encumbrances at the date of completion”. JAK claimed to have paid Abdurrachman $500,000.00 immediately and an additional sum of $490,000.00 subsequently.

6 JAK planned to make a hefty profit by reselling the estate’s 29 properties. On 17 November 1994, it granted Broadley an option to purchase the 29 properties for $24m. Broadley paid JAK $750,000 for the option and lodged a caveat against the properties on 18 January 1995.

7 Abdurrachman’s application to become the trustee of the estate was dismissed by the High Court in August 1995. JAK soon realised that it had been deceived by Abdurrachman and on 16 September 1995, its then director, Mr Syed Jafaralsadeg bin Abdul Kadir Alhadad (“Jafar”), reported to the Singapore police that Abdurrachman had cheated his company because he did not represent all the beneficiaries of the estate. He added that he would not have paid Abdurrachman any money had he known the truth.

8 JAK did not give up its plans to acquire and resell the estate’s 29 properties. On 12 February 1996, it entered into a series of agreements with a number of persons, who claimed to be the sole beneficiaries under the Will, for the sale and purchase of the estate’s 29 properties at $12m. Two Indonesians, Musa Said Wachdin (“Musa”) and Salim Hasan Wachdin (“Salim”), claimed to have the authority to act on behalf of all the members of this group (collectively referred to as the “M & S group”).

9 Confident that it had the 29 properties in its bag, JAK started to market the said properties once again. On 10 January 1996, it entered into an agreement to sell four of these properties to BP for $4m. These four properties were Nos 515, 517, 519 and 521 Serangoon Road. BP lodged a caveat with respect to these properties on 12 August 1998.

10 On 19 March 1996, JAK concluded seven agreements to sell 21 of the properties it was purchasing from the M & S group to Broadley for $14.8m (“the 1996 agreements”). These properties were Nos 32, 34, 36, 38 and 40 Kinta Road, No 25 Koon Seng Road, Nos 144, 146, 148, 150, 273 and 275 Joo Chiat Road, Nos 18, 19, 20, 21, 22, 23 and 24 Pahang Street, No 46 Clive Street and No 61 Dickson Road. As has been mentioned, Broadley entered into an earlier agreement in November 1994 to purchase from JAK the estate’s 29 properties (“the 1994 agreement”). This earlier agreement was rescinded and a large sum of money that was paid as a deposit under the 1994 agreement was treated as Broadley’s initial deposit under the 1996 agreements.

11 JAK then entered into an agreement to sell the remaining four properties for $3.5m to one Mr Mohamed Ayoob s/o Meera Hussian (“Ayoob”), who is not a party to the present proceedings.

12 While JAK may have been pleased to have entered into agreements to sell the 29 properties it was purchasing from the M & S group to BP, Broadley and Ayoob for $22.3m, its attempt to acquire the estate’s 29 properties from the M & S group for $12m did not proceed smoothly as the members of this group were not the only persons who claimed to be beneficiaries under the Will. In fact, on 12 August 1993, long before the M & S group dealt with JAK, another rival group, whose members also claimed to be beneficiaries under the Will, had sold the same 29 properties to another Singapore company, Beng Tiong Trading Import and Export (1988) Pte Ltd (“BTT”) for $8.26m. BTT duly placed a caveat on the properties it purchased. On 11 July 1996, BTT instituted Suit No 1255 of 1996 against the vendors and the Public Trustee. On 19 July 1996, it obtained a declaration that it was entitled to the rights, interests, benefits and entitlements of the persons from whom it purchased the 29 properties. BTT also obtained an order that the Public Trustee take “such steps as are necessary in cognisance of the [said] declaration”.

13 In the meantime, JAK tried to safeguard its interest in the estate’s 29 properties by pacifying the rival groups of claimants of the estate’s properties. On 18 October 1999, JAK undertook to pay the M & S group and the rival group of claimants a total of 38.5bn rupiahs on completion of the sale of the estate’s 29 properties to it. The completion date was to be not later than the end of March 2000. That date passed by without a resolution of JAK’s problems being in sight.

14 On 11 July 2000, the picture altered dramatically when the Public Trustee and one Mr Quraisj Wahidin (“Quraisj”), the attorney of a number of persons claiming to be beneficiaries under the Will, instituted Originating Summons No 1030 of 2000 to obtain an order to sell the estate’s 29 properties. Musa and Salim, who sold the 29 properties to JAK, objected to the proposed sale by the Public Trustee and filed Originating Summons No 600626 of 2001, in which the Public Trustee and Quraisj were named as defendants. Musa and Salim alleged that the persons whom they represented were the only beneficiaries under the Will and that the persons whom Quraisj represented were not beneficiaries under the Will. In their suit, they sought a determination of “the true and lawful beneficiaries of the Estate of [Shaik Ahmad] and their respective shares and proportions”.

15 BTT, the plaintiffs and JAK took steps to protect their own interests by applying to be added as respondents in the proceedings initiated by the Public Trustee and Quraisj. BTT, the plaintiffs and JAK also entered into negotiations to present a common front to thwart the proposed sale. What transpired during these negotiations was disputed and serious allegations of misconduct were levelled by the plaintiffs and JAK against each other. More will be said about this and the positions taken by BTT and the plaintiffs in Originating Summons No 1030 of 2000 later on.

16 Lee Seiu Kin JC heard Originating Summonses Nos 1030 of 2000 and 600626 of 2001 at the same time. Quraisj accepted that the persons represented by Musa and Salim were beneficiaries under the Will but denied that they were the only beneficiaries. He filed an affidavit which set out the testator’s family history and the names of 14 principal beneficiaries as well as a list of secondary beneficiaries. Neither Musa nor Salim filed an affidavit to challenge Quraisj’s evidence regarding the family tree. On 30 July 2002, Lee JC ruled that there were 14 principal beneficiaries of the estate and made an order empowering the Public Trustee to sell the estate’s 29 properties at a price not less than $17,970,000.00. The order further provided that the properties were freed from all encumbrances, including the equitable interests of the beneficiaries under the Will and the interest claimed by the caveators against the properties, and that all the claims of the beneficiaries and the caveators who had lodged caveats against the properties in question should be deemed to be cancelled or withdrawn.

17 With these developments, the members of the M & S group were in no position to transfer the 29 properties that they had agreed to sell to JAK. It followed that JAK was in no position to transfer 25 of the said 29 properties that it had agreed to sell to the plaintiffs. All 29 of the estate’s properties were subsequently sold by the Public Trustee to parties unconnected with the present proceedings.

18 JAK instituted Suit No 1497 of 2002 against Musa and Salim, the representatives of the M & S group and on 14 January 2003, it obtained judgment in default of appearance for $4,270,096.00 against...