Deans Property Pte Ltd v Land Estates Apartments Pte Ltd and Another

• Jurisdiction: Singapore
• Judge: Goh Joon Seng J
• Judgment Date: 08 November 1994
• Neutral Citation: [1994] SGCA 124
• Docket Number: Civil Appeal No 14 of 1994
• Date: 08 November 1994
• Year: 1994
• Published date: 19 September 2003
• Plaintiff Counsel: Manjit Singh, Chow Kin Wah and Samuel Chacko (Manjit & Pnrs)
• Citation: [1994] SGCA 124
• Defendant Counsel: Lee Mun Hooi and Tan Lee Cheng (Lee Bon Leong & Co)
• Court: Court of Appeal (Singapore)
• Subject Matter: Purchaser initially disinterested,Whether trial judge entitled to find that such a defence was established,Whether agents effective cause of sale,Failure to plead,Right to commission,Estate agents,Civil Procedure,Introduction of purchaser by agents to seller,Defence of settlement or compromise,Whether break in chain of causation,Agreement to purchase effected through subsequent direct negotiations between parties,Pleadings,Agency

Cur Adv Vult

Background

The appellants are licensed real estate agents. The first respondents are a company which owned a factory cum warehouse at 170-178 Paya Lebar Road, Singapore 1440 (the property). The second respondent was a director of the first respondents and also a director and shareholder of Heshe Holdings Pte Ltd (Heshe) whose managing director was Chia Shi Teck (Chia). Heshe are garment manufacturers with their manufacturing processes located within the property.

Around March/April 1989, the second respondent requested Dean Ong (Ong), the appellants` managing director, to find a purchaser for the property as well as for his shares in Heshe (the shares). On the basis of prior dealings, it was understood that if the appellants managed to effect a sale, they would be entitled to a commission amounting to 1% of the sale price. Ong and his colleague Tay Tien Guan (Tay) then set about marketing the property and the shares. Investment proposals were prepared and sent to various companies, including First Capital Corp (FCC) which expressed some interest. Two viewings of the property were arranged by Ong and Tay for FCC in June 1989. Ultimately, FCC purchased the shares for $10m in August 1989 and the property for $19m in September 1989 with completion in December 1989. The appellants were paid $120,000 by the second respondent as commission for the sale of the shares. The appellants received nothing from the first respondents for the sale of the property, but FCC did pay the appellants $75,000, apparently in respect of the same.

About two years later, on 31 May 1991, Ong wrote to the first respondents requesting payment of a 1% commission ($190,000) in respect of the sale of the property. Two reminders were subsequently sent by Ong. On 29 July 1991, the second respondent replied on behalf of the first respondents stating that the sale of the property was effected directly between FCC and the first respondents and therefore the appellants were not entitled to any commission for the sale. Subsequently on 14 August 1991 the appellants commenced this action in the High Court claiming $190,000 as commission payable for arranging the sale and purchase of the property.

The evidence in the High Court

In the High Court, Ong and Tay testified for the appellants. It was their evidence that they arranged two viewings of the property for FCC. One of the viewings was attended by Tay, Chia and Wong Kwai Choy (Wong), FCC`s general manager, when Chia showed and explained Heshe`s operations to them. At this viewing, FCC only expressed interest in the shares. Ong said that another viewing was attended by Lay Kok Weng (Lay) who was in charge of FCC`s property division. Tay admitted that Lay subsequently told him of FCC`s disinterest in the property but said that Wong later informed him that FCC would in fact be interested in the property if the price was right. This led to negotiations in which both Ong and Tay claimed they were actively involved. In the event, the property was sold for $19m but the appellants did not receive any commission from the respondents. They did, however, receive $75,000 from FCC which Ong said was a commission and partly in payment for their efforts in bringing about a reduction in the purchase price from $19.5m to $19m.

The respondents called Wong and Lay to give evidence on their behalf. Both Wong and Lay admitted receiving the investment proposal prepared by the appellants and reading it. Lay said that he went with Ong to view the property in June 1989. However, he informed Tay a few days later that FCC was not interested in purchasing the property. Wong said that subsequently, when he met Chia at the factory premises on the property, he had already been told by Lay that the property was not a good investment and he made it clear that FCC was only interested in the shares and not in the property. Both Ong and Tay were present at this meeting. He said that the discussions took place in a meeting room within the property but he was not shown the rest of the property. FCC agreed to purchase the shares and became the majority shareholder in Heshe. According to Wong, it was only after this that Chia approached him concerning the purchase of the property, pointing out the long term advantages of FCC owning the property on which Heshe`s operations were being carried out. Wong said that the sale of the shares was structured such that he was only allowed to do a detailed inspection of Heshe`s balance sheets and business plans after the purchase and it was only on doing so that he concluded that for long term purposes it would be good to purchase the property as Chia had suggested. He said that, having obtained his backing, Chia subsequently raised the issue at a meeting at which members of the FCC board of directors were present. The board was persuaded by Wong and Chia, and Lay was instructed to negotiate a price between $18m and $20m. Lay confirmed that he negotiated the price on behalf of FCC with the second respondent. However, he made it a point to say that neither Ong nor Tay were present or involved in the negotiations. Some time after the sale was agreed at a price of $19m, the second respondent expressed the hope that there would be no misunderstanding with Ong. Wong said that on being told this by Chia, he contacted Ong to inform him that the sale had been a result of direct dealings between the first respondents and FCC and that the appellants were not entitled to any commission. In the face of Ong`s expressed dissatisfaction, and after some bargaining, Wong said that he eventually agreed that FCC would pay him $75,000.

Chia and the second respondent also gave evidence and their version of events was substantially the same as Wong`s and Lay`s. Chia said that he had instructed the appellants to market the property confidentially so as not to damage market confidence in Heshe. He admitted that he did not know Wong or Tay prior to the meeting arranged by the appellants. He confirmed FCC`s initial disinterest in the property and said that its subsequent purchase was largely due to his efforts in convincing FCC`s board of directors as to the long term advantages of owning the property.

The second respondent confirmed that he had originally contacted the appellants to instruct them to market the property. He said that he subsequently negotiated the price at which the property was sold and noted that neither Ong nor Tay was present at these negotiations. He also confirmed approaching Chia to help prevent any misunderstanding by requesting Wong to inform Ong that the sale was a direct deal and that no commission was payable. He also said that he had subsequent dealings with the appellants after the completion of the sale of the property but the question of commission for that sale was not brought up at all until May 1991. Finally, the second respondent also said that when he contacted Ong following his letter of 31 May 1991, Ong told him that Tay thought Ong had taken the commission for the sale of the property and that the letter was merely meant to show Tay that Ong had not. The second respondent said that some negotiations to settle this dispute followed but the parties could not agree on a compromise and the matter was then left in the hands of their respective solicitors.

The decision of the High Court

In her judgment, the learned judicial commissioner (as she then was) found the evidence of Ong and Tay...