Cheong Lay Yong v Muthukumaran s/o Varthan and another (K Krishna & Partners and another, third parties)

• Jurisdiction: Singapore
• Judge: Quentin Loh JC
• Judgment Date: 01 March 2010
• Neutral Citation: [2010] SGHC 59
• Plaintiff Counsel: Christopher Anand Daniel, Lim Cheng Hock Lawrence (Matthew Chiong Partnership)
• Docket Number: Suit No 783 of 2007
• Date: 01 March 2010
• Hearing Date: 30 November 2009,04 January 2010,04 December 2009
• Subject Matter: LAND,sale of land
• Year: 2010
• Citation: [2010] SGHC 59
• Defendant Counsel: Vinodh S Coomaraswamy SC, Terence Seah, Ivan Koh (ShookLin & Bok LLP),Ignatius Joseph (Ignatius J & Associates),Cheah Kok Lim (Sng & Company)
• Court: High Court (Singapore)
• Published date: 03 March 2010

Quentin Loh JC:

The Plaintiff, as purchaser, claims specific performance of a contract for the sale of an apartment at 54 West Coast Crescent, #01-01, West Bay Condominium, Singapore (“the Apartment”). The 1st and 2nd Defendants, a husband and wife, as vendors, resist the claim on various grounds and in the event they fail as against the Plaintiff, they have brought in their solicitors as the 1st Third Party (“Solicitors” or “Krishna”, as the context requires, Mr Krishnamoorthi being the partner handling the Defendants’ matters in K Krishna & Partners) and the property agent as the 2nd Third Party (“the Agent”), claiming an indemnity from either or both of them. The Plaintiff also claims damages and interest under the contract and such further or other order as the court deems fit.

After oral submissions on 4 January 2010, I gave judgement, with brief grounds, in favour of the Plaintiff against the Defendants, dismissed the Defendants’ claims against the 1st and 2nd Third Parties and awarded costs against the Defendants for all parties on an indemnity basis, and said that if any party wished to take this further, I would give my full reasons in a written judgement. As the parties needed time to work out the orders required, I gave leave for the parties to return the next day with an agreed draft judgement. The Defendants appealed against my decision on 3 February 2010.

There are some key facts, which are not really in dispute: On the evening of 29 May 2007, the Plaintiff viewed the Apartment together with the Agent and the Defendants; the Plaintiff and Defendants agreed on the price, the Plaintiff issued a cheque for $6,350 to the 2nd Defendant and the Plaintiff was given an option to purchase the Apartment (“the Option”), the wording of which was on fairly standard terms and supplied by the Agent. The next day, the Plaintiff went to view the Apartment from the outside and was disturbed by a substation or transformer near the Apartment and was afraid it would pose a health hazard to the occupants; she changed her mind and stopped payment of the cheque on 30 May 2007. The Defendants left Singapore on the morning of 31 May 2007 for a holiday to Canada and did not return until 11 June 2007, and they were uncontactable during that period. Sometime on or before 8 June 2007, the Plaintiff changed her mind and contacted the Agent; the Plaintiff went to see the Defendants’ Solicitors on 8 June 2007 and handed them a second cheque for $6,350 and the original Option. The Plaintiff exercised the Option on or about 11 June 2007 by paying the remaining 4% of the purchase price, ($25,400). The last date for the exercise of the Option was 13 June 2007. The details surrounding these five central facts, their legal effect and the state of mind of the parties are in contention.

The Defendants’ Case

The 2nd Defendant did not give evidence. The 1st Defendant confirmed that he made all the decisions; the 2nd Defendant gave him full authority to do so and to speak on her behalf as well.

The Defendants wanted to sell the Apartment and had a price of $680,000 in mind. The Agent brought the Plaintiff to view the Apartment on the evening of 29 May 2007. The Defendants were also present at the viewing. As the Apartment was tenanted, the parties then went to the car park to negotiate the price. Eventually the price agreed upon was $635,000. The Agent produced the Option, the Defendants signed the Option, and in return, the Plaintiff gave them her cheque for $6,350 (“the 1st Cheque”). The blanks in the printed Option were filled in by the Agent upon being given the details by the 1st Defendant. One of the blanks filled in was the name of the Defendants’ Solicitors. The Defendants told the Plaintiff and the Agent that they were leaving for a family holiday on 31 May 2007. The Defendants banked in the 1st Cheque on 30 May 2007 and left for their holiday on an early morning flight on 31 May 2007 to Vancouver.

The Defendants were unaware of the fact that the Plaintiff had stopped payment on the 1st Cheque on 30 May 2007. The Agent called the 1st Defendant on 11 June 2007 when they returned and the 1st Defendant informed her that they had just landed from a long flight and were suffering from jet lag. The next day, 12 June 2007, the Agent called the 1st Defendant and told him that the Plaintiff had exercised the Option by depositing the balance 4% with his Solicitors. The 1st Defendant called Krishna on the same day to inquire about the sale of another of his properties, 145 Dunlop Street, which Krishna was also handling for him. In this telephone conversation, the 1st Defendant also asked Krishna about the Plaintiff’s exercise of the Option in relation to the Apartment. Krishna said he was not aware of the same and would have to check and confirm the same. Krishna called back the same day or the next day to confirm the exercise of the Option by the Plaintiff.

However, when the 1st Defendant went down to open his letter box on 13 June 2007, he was shocked to find a letter from the Plaintiff’s bank to the Defendants, containing a “Return Cheque Advice” dated 1 June 2007 with the reason: “Payment Stopped”. No one had told him about the cancellation of the 1st Cheque and he wondered how the Option could have been exercised. The 1st Defendant called the Agent who said that under the Option the Solicitors had the right to “accept” and since Krishna had already accepted the 2nd Cheque, the 1st Defendant had to proceed and if he was not satisfied, he could sue his Solicitors. The 1st Defendant called Krishna who only then told him that the cheque issued to his firm was dated 8 June 2007 and that it had been banked into his firm’s Client’s Account; Krishna did not know that there was a 1st Cheque which had been dishonoured. The receipt and acceptance by Krishna of the 1% option fee and the subsequent 4% upon exercise of the Option was therefore without the Defendants’ knowledge or mandate and outside the scope of his Solicitors’ authority. The Defendants considered that the Option had been terminated by the Plaintiff stopping payment on the 1st Cheque and there was no valid option to be exercised thereafter.

The 1st Defendant then verbally informed Krishna on 13 and 15 June 2007 about his position and requested Krishna to stop the sale and withhold from proceeding any further. However Krishna not only made no attempts to stop the sale, but to the 1st Defendant’s horror, Krishna proceeded to write two letters, both dated 13 June 2007, to the Plaintiff’s solicitors requesting first a postponement of the completion date to 15 October 2007 and secondly, the release of the 4% deposit of the purchase price from the Solicitors’ stakeholding obligation. The 1st Defendant never asked his Solicitor to make such requests. The Defendants protested against the contents of the 13 June 2007 letters in a letter to their Solicitors dated 16 June 2007.

The 1st Defendant was also upset by the actions of the Plaintiff. He had brought down his selling price below the market value “…to help her and she acted with such bad motive.” The 1st Defendant tried to contact her but she refused to deal with him. He had to go down to her workplace at Suntec City and ask her to come down to meet him. He asked her why she had dishonoured her 1st Cheque and then made payment to his Solicitor with a 2nd Cheque. He did not discuss anything else. He subsequently sent a letter to the Plaintiff dated 1 July 2007 on the invalidity of the Option and another to the Plaintiff’s solicitors, dated 10 July 2007. The 1st Defendant stated in his AEIC that: “There is no other reason for us wanting to stop the sale apart from the misrepresentations and misleading information received from the parties.”

The 1st Defendant’s AEIC then goes on to say that by a letter dated 10 August 2007, his Solicitors tried to blame him and allege that he was aware of the dishonour of the cheque even before going abroad. The 1st Defendant denies this and states that he banked in the 1st Cheque on 30 May 2007 and left for Canada on 31 May 2007 on an early morning flight and “…by which time…[he had]…no chance to know about the dishonour of the cheque.” The Defendants say that they were “…tricked by all the parties intentionally and negligently to proceed with an invalid sale.” The Defendants argued that they never gave their Solicitors the mandate to act in respect of the Option fee of $6,350 and that their Solicitors should have returned all the monies to the Plaintiff’s solicitors and taken the 1st Defendant’s instructions. The Agent knowingly assisted the Plaintiff and had acted without the mandate, consent or approval of the Defendants in helping the Plaintiff tender the 2nd Cheque, concealing the fact of the dishonour of the 1st Cheque from the Defendants and in getting the Defendants’ Solicitors to accept the 2nd Cheque.

On their pleadings the Defendants claim: as against the Solicitors, damages, and in effect an indemnity for the Defendants’ liability to the Plaintiff, as a result of their negligence, breach of duty, lack of skill or diligence and/or acting without any mandate from the Defendants, accepting the 1% Option fee in their firm’s name when the Option provided that 1% Option was to be paid to the Defendants personally, failing to inform the Defendants when they received a 2nd Cheque dated 8 June 2007, failing to put the Plaintiff on notice that the exercise of the Option was not available or that the exercise of the Option was invalid, failing to stop the sale although the Option was null and void and stating that “it cannot be done”, resulting in the Plaintiff asking for specific performance (I pause to note that the Defendants’ Claim against the Solicitors (Amendment No.1) is badly pleaded; it also includes allegations against the Agent. Most noteworthy is the absence of any allegation that Krishna wrote two 2 letters dated 13 June 2007...