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

• Jurisdiction: Singapore
• Judge: Lai Siu Chiu JC
• Judgment Date: 29 January 1994
• Neutral Citation: [1994] SGHC 21
• Date: 29 January 1994
• Subject Matter: Direct negotiations between parties resulting in sale,Whether chain of causation broken,Agency,Introduction of purchaser and vendor by agents,Right to commission,Singapore practice in payment of agent's commission,Civil Procedure,Purchaser initially disinterested,Effective cause of transaction,Court precluded from hearing merits of claim in new action
• Docket Number: Suit No 1697 of 1991
• Published date: 19 September 2003
• Defendant Counsel: Lee Mun Hooi (Lee Bon Leong & Co)
• Court: High Court (Singapore)
• Plaintiff Counsel: Manjit Singh and Anil Sachdev (Manjit & Pnrs)

The facts

Cur Adv Vult

The plaintiffs are licensed real estate agents. At the material time, the first defendants were the registered owners of a factory cum warehouse situated at No 170-178 Paya Lebar Road, Singapore 1440 (`the property`). The second defendant was a director of the first defendants and concurrently a director and shareholder of a company known as Heshe Holdings Pte Ltd (`Heshe`), whose managing director was/is Chia Shi Teck (`Chia`).

In or about March/April 1989, the second defendant requested the plaintiffs` managing director, Dean Ong (`Ong`), to find a purchaser for the property as well as for his shares in Heshe (`the shares`). Towards that intent, Ong (PW1) received from Chia (DW4) a valuation report (done in 1983) which valued the property at $22,055,000. Ong also received from the second defendant (DW3) certain confidential documents (`AB7-39`) pertaining to Heshe. According to Ong, the second defendant instructed him to secure a purchaser for the property and to secure another buyer for the shares alternatively to secure one purchaser for both the property and the shares. The second defendant wanted $20m for the property but in the event it was one purchaser for both the shares and the property, he was willing to sell the property at $18m. It was orally agreed that he would pay the plaintiffs a commission amounting to 1% of the sale price. The plaintiffs did not receive an appointment letter for the property or the shares from either defendant. In the past (since 1984) the plaintiffs had sold other properties for the second defendant and had been paid commission for their services without any agreement in writing.

Ong and his associate Tay Tien Guan (`TTG`), who was then the plaintiffs` project director, set about marketing the property and the shares respectively. On his part, Ong prepared an investment proposal dated 13 May 1989 (`exh P1`) offering the property at a price of $22m which he sent, inter alia, to companies like First Capital Corporation (`FCC`), Far East Organisation, the Wing Tai group and Inchcape.

According to Ong, FCC expressed an interest in both the property and the shares. As regards the property, Ong said he arranged two viewings for FCC sometime in June 1989, he attended both viewings. Ultimately, FCC purchased both the property and the shares, the shares at $10m and the property at $19m, which sales were completed in August and September 1989 respectively. The plaintiffs, however, were only paid their commission for selling the shares ($120,000) but not for the property.

On 29 September 1989, TTG had written on the plaintiffs` behalf to First Capital Management Pte Ltd (`FCM`) attentioned to Wong Kwai Choy (`WKC`) who was then FCC`s general manager as follows (`the letter`):

We refer to the purchase of five units of factory/warehouse at Nos 170-178 Paya Lebar Road, Singapore by First Capital Properties Pte Ltd a wholly owned subsidiary of the First Capital Corporation Ltd (FCC) Group on 25 September 1989.

We confirmed the commission payable of $75,000 by the FCC Group to us as agreed between your Mr Wong Kwai Choy and our Mr Tay Tien Guan in respect of the above purchase. Such commission shall be payable to us upon the completion of the sale and purchase of the above properties.

Kindly acknowledge your agreement to the above terms by signing and returning to us the duplicate copy of this letter.

There was no acknowledgment by FCC to the letter (see AB61) but they paid the plaintiffs the commission of $75,000.

On 31 May 1991, Ong wrote on the plaintiffs` behalf to the first defendants, marked for the attention of Chia as follows (`AB62`):

We refer to the sale of the above property to First Capital Properties Pte Ltd through our introduction.

As agreed, prior to the said sale, our fees of 1% of the sales price amounting to $190,000 will be payable to us upon completion of the sale.

Inspite of various telephone conversations/meetings with your Mr Chia, we have yet to receive payment.

We would appreciate if you could send us your cheque for the sum of $190,000 being payment of our brokerage fees for the above sale, as soon as possible.

There was no response from the defendants to the above and another letter from the plaintiffs. Upon a further reminder from the plaintiffs to the first defendants dated 25 July 1991 (`AB65`), the second defendant replied on the first defendant`s behalf. His letter dated 29 July 1991 (`AB66`) is as follows:

We are amazed that you sent us a bill for an event that took place way back in 1989. The matter was explained and accepted by you. The sale was concluded by the undersigned directly with two general managers of the purchasing company. For records, you were not party to the deal. Neither were you given exclusive marketing rights. You had in fact made several offers to us which were not acceptable. The subsequent sale was done by us directly. For goodwill sake, the undersigned had requested that the purchasers pay you some token commission, which they agreed to. We were informed that they had paid you.

We therefore reject all claims whatsoever. The undersigned had spoken to you on several occasions and you had in fact agreed to drop the matter.

Your invoice is now returned.

The defendants` letter drew a sharp reply from the plaintiffs` solicitors (see AB69) who gave notice that unless they received a positive response by a certain deadline, proceedings would be commenced. The first defendants had, by 14 August 1991, also appointed solicitors who wrote (see AB76) to the plaintiffs` solicitors reiterating their clients` stand. In the event, the plaintiffs commenced this suit in August 1991.

The claim

In the statement of claim, the plaintiffs alleged:

(i) they introduced FCC to both the property and the shares and this was known to, and acknowledged by, the defendants;

(ii) under the terms of the plaintiffs` appointment, a commission of 1% was payable; alternatively, the market commission then payable was 1% of the sale price;

(iii) the property was sold for $19m with the transfer effected sometime in December 1989, notwithstanding which the first defendants failed to effect payment of the commission due or any part thereof; and

(iv) the first defendants purported to renege on the payment due on or about 29 July 1991 by suggesting it was the second defendant who secured the purchaser.

The plaintiffs prayed for a declaration that they were the effective cause of the sale and that they are entitled to the said commission and if the same had been paid to the second defendant the moneys are properly due to the plaintiffs and accountable by the second defendant to the plaintiffs.

In the common defence they filed:

(i) both defendants denied that the plaintiffs are entitled to the alleged or any commission;

(ii) the first defendants contended that:

(a) ) the sale of the property was brought about by direct negotiations between the first defendants` director, Chia, and FCC`s management after FCC had purchased the shares;

(b) ) after the plaintiffs had introduced the property to FCC, the management of FCC, in particular Lay Kok Weng, had expressed no interest and FCC was never a ready or willing buyer;

(c) ) thereafter the plaintiffs were never involved or participated in the sale of the property to FCC;

(iii) the first defendants denied that there were any terms of appointment of the plaintiffs for payment of the alleged or any commission.

The evidence

As proceedings were commenced after 1 August 1991, the suit came under the provision of the new O 38 r 2 of the Rules of the Supreme Court 1990 (`RSC`) and witnesses were required to file affidavits of their evidence-in-chief (hereinafter referred to as the affidavit[s]).

In his affidavit and in his testimony, Ong said:

(1) When he met with the second defendant in March/April 1989 it was understood (after negotiations started off with his request for 2%) that commission of 1% of the purchase price of the property would be payable to the plaintiffs upon the successful completion of the sale vide the plaintiffs` introduction of a purchaser. This was the practice of past dealings between them where the second defendant paid the plaintiffs commission in excess of $300,000 for selling, inter alia, properties at Branksome Road and Pasir Ris Avenue and two units at Peninsula Plaza without the need for any appointment letters/documentation on the agreed commission rate; the plaintiffs trusted the defendants. He understood from the second defendant that Heshe was applying for a listing on SESDAQ, the secondary board of the Stock Exchange of Singapore.

(2) After he had sent exh P1 to prospective purchasers, including FCC, he wrote to Chia on 24 June 1989 (AB69) to confirm Chia`s instructions to market the property confidentially and to confirm FCC had been introduced by the plaintiffs.

(3) When FCC expressed an interest in the property, he and TTG dealt with WKC on both the property and the shares and with LKW on the property.

(4) At the first viewing of the property, WKC, TTG and Chia were present. At the second viewing, LKW was present together with Chia. FCC never indicated to him that they were not interested in the property, neither did Chia call him to say he was not to market the property after his letter to Chia dated 24 June 1989.

(5) The first defendants had bought the property for $8.61m and, in selling it to FCC at $19m, they made a profit of about $10.39m. Further, they obtained a better price then their asking price of $18m.

(6) Between January 1990 and April 1991, he tried to call Chia no less than five to ten times but Chia did not take his calls. During the same period, neither the defendants nor Chia indicated to him that they would not be paying the commission.

(7) By May 1991, the plaintiffs were worried why the commission was not...