EC Investment Holding Pte Ltd v Ridout Residence Pte Ltd

JurisdictionSingapore
CourtCourt of Three Judges (Singapore)
Judgment Date28 September 2011
Date28 September 2011
Docket NumberCivil Appeals Nos 177 and 184 of 2010

Court of Appeal

Chao Hick Tin JA

,

Andrew Phang Boon Leong JA

and

VKRajah JA

Civil Appeals Nos 177 and 184 of 2010

ECInvestment Holding Pte Ltd
Plaintiff
and
Ridout Residence Pte Ltd and others and another appeal
Defendant

Lee Eng Beng SC, Disa Sim and Jonathan Lee (Rajah & Tann LLP) for the appellant in Civil Appeal No 177 of 2010 and the first respondent in Civil Appeal No 184 of 2010

Tan Cheng Han SC, PBalachandran and Kenneth See (Robert Wang & Woo LLC) for the first respondent in Civil Appeal No 177 of 2010 and the appellant in Civil Appeal No 184 of 2010

Phua Siow Choon (Michael BBOng & Co) for the second respondent in Civil Appeals Nos 177 and 184 of 2010

Kelvin Tan Teck San and Denise Ng (Drew & Napier LLC) for the third respondent in Civil Appeals Nos 177 and 184 of 2010

Alvin Yeo SC, Melvin Lum, Daniel Tan and Chan Xiao Wei (Wong Partnership LLP) for the fourth respondent in Civil Appeals Nos 177 and 184 of 2010.

Beckkett Pte Ltd v Deutsche Bank AG [2009] 3 SLR (R) 452; [2009] 3 SLR 452 (refd)

Chaulk v Fairview Construction Ltd (1977) 33 APR 13 (refd)

City Hardware Pte Ltd v Kenrich Electronics Pte Ltd [2005] 1 SLR (R) 733; [2005] 1 SLR 733 (refd)

Clark v Lucas Solicitors LLP [ 2010] 2 All ER 955 (refd)

Coastland Properties Pte Ltd v Lin Geok Choo [1999] 3 SLR (R) 890; [2001] 1 SLR 72 (refd)

Domowicz et al v Orsa Investments Ltd (1993) 15 OR (3d) 661 (refd)

Dowsett v Reid (1912) 15 CLR 695 (refd)

Excelsior Hotel Pte Ltd v Hiap Bee (Singapore) Pte Ltd [1989] 2 SLR (R) 322; [1989] SLR 902 (refd)

Federal Computer Services Sdn Bhd v Ang Jee Hai Eric [1991] 2 SLR (R) 427; [1991] SLR 259 (folld)

George Inglefield, Ltd, Re [1933] Ch 1 (refd)

Good Property Land Development Pte Ltd v Société Générale [1989] 1 SLR (R) 97; [1989] SLR229 (refd)

Guan Chong Cocoa Manufacturer Sdn Bhd v Pratiwi Shipping SA [2003] 1 SLR (R) 157; [2003] 1 SLR 157 (refd)

Gurfinkel v Bentley Pty Ltd (1966) 116 CLR 98 (refd)

Heron Bay Investments Ltd v Peel-Elder Developments Ltd (1976) 2 CPC 338 (refd)

Lam Chi Kin David v Deutsche Bank AG [2010] 2 SLR 896 (refd)

Landco Albany Ltd v Fu Hao Construction Ltd [2006] 2 NZLR 174 (refd)

Lim Hwee Meng v Citadel Investment Pte Ltd [1998] 3 SLR (R) 101; [1998] 3 SLR 601 (refd)

Mitz v Wiseman et al; Strathalian Beach Association, Third Party (1971) 22 DLR (3 d) 513 (refd)

Loan Investment Corp of Australasia v Bonner [1970] NZLR 724 (refd)

Neretlis v Meade [2005] OJ 638 (refd)

Ng Chee Chuan v Ng Ai Tee [2009] 2 SLR (R) 918; [2009] 2 SLR 918 (folld)

Ong Hien Yeow v Central Chambers LLC [2011] 1 SLR 1186 (refd)

Peh Eng Leng v Pek Eng Leong [1996] 1 SLR (R) 939; [1996] 2 SLR 305 (refd)

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Snook v London and West Riding Investments Ltd [1967] 2 QB 786 (refd)

Thai Chee Ken v Banque Paribas [1993] 1 SLR (R) 871; [1993] 2 SLR 609 (refd)

TKM (Singapore) Pte Ltd v Export Credit Insurance Corp of Singapore Ltd [1992] 2 SLR (R) 858; [1993] 1 SLR 1041 (refd)

Vishva Apurva, The [1992] 1 SLR (R) 912; [1992] 2 SLR 175 (folld)

Wong Chee Siong v Tan Boon Hw a [2010] SGHC 222 (refd)

Wroth v Tyler [1974] Ch 30 (refd)

Bankruptcy Act (Cap 20, 2009 Rev Ed) s 45

Moneylenders Act 2008 (Act 31 of 2008)

Rules of Court (Cap 322,R5, 2006 Rev Ed) O 57 r 3 (2) , O 57 r 15 (1) (a)

Supreme Court of Judicature Act (Cap 322, 2007 Rev Ed) s 41

Credit and Security—Money and moneylenders

Equity—Remedies—Specific performance—Damages in lieu of specific performance

Land—Sale of land—Contract

In 2006, 39 A Ridout Road, Singapore 248438 (‘the Property’) was purchased by Ridout Residence Pte Ltd (‘Ridout’), the first respondent in Civil Appeal No 177 of 2010 and the appellant in Civil Appeal No 184 of 2010 (‘the two appeals’), for $28 m. The Property was held on trust by Ridout for it sole shareholder and director, one Mr Agus Anwar (‘Anwar’). To effect the purchase, Anwar used $17 m out of a total loan of $30 m obtained from Hong Leong Finance Limited (‘HLF’), the second respondent in the two appeals, which was secured by way of a mortgage over the Property. In 2008, Anwar obtained a further loan of $10 m from Orion Oil Limited (‘Orion’), the third respondent in the two appeals, which was secured by a charge registered against Ridout in respect of the balance of the proceeds of sale of the Property.

The main issues raised in CA177/2010 were (a)whether the judge (‘the Judge’) below was right in regarding the transaction between ECI and Ridout as purely a loan coupled with security; and (b)if the transaction between ECI and Ridout was a sale of the Property, whether ECI should be denied specific performance and only be awarded damages. CA184/2010 was an appeal by Ridout against, essentially, the Judge's refusal to award damages for consequential losses suffered by Ridout following his dismissal of ECI's claim.

Originating Summons No 1357 of 2010 was filed by EC Investment Holding Pte Ltd (‘ECI’), the appellant in CA177/2010 and the first respondent in CA184/2010, praying for, inter alia, specific performance of the sale and purchase agreement between Ridout and itself as evinced by an option over the Property granted by Ridout in its favour dated 5 June 2009 which was exercised by ECI on 27 August 2009 (‘the First Option’). HLF was cited as the second defendant in the action below whereas Orion and one Thomas Chan (the fourth respondent in the two appeals) intervened in the proceedings. Thomas Chan expressly asked for specific performance of an option over the Property granted by Ridout in his favour on 7 October 2009 (‘the Second Option’).

Held, dismissing the appeals:

(1) The proper approach in determining the true nature of a transaction was to look at the substance, as opposed to the form, thereof. From the facts of this case, it was clear that the First Option dated 5 June 2009 contained a ‘normal’ option in favour of ECI, albeit with some unusual features. The Deed of Settlement post-dated 8 June 2009 accorded to Ridout the right, within a 60-day period, to cancel the First Option by paying ECI $1.68 m. There could be no doubt as to what the First Option and the Deed of Settlement (collectively ‘the Two Instruments’) mean on their face: at [30], [31] and [61].

(2) There were clearly different objectives on the part of Ridout and ECI in entering into the transaction, viz, Anwar wanting to borrow money and ECI wanting to buy the Property at the best possible price. The arrangement eventually worked out by the parties' solicitors as reflected in the Two Instruments satisfied, to an extent albeit not completely, the needs of both parties. Anwar was unquestionably a seasoned businessman and entrepreneur. Similarly, KC Tan and Poh who were directors of ECI were also men of business. Neither could claim to be at a disadvantage when they entered into the transaction: at [63] and [64].

(3) In a case of this nature, as between the oral evidence of the parties and the objective contemporaneous documentary evidence, greater emphasis should be placed on the latter. At the material time, both parties were legally represented and the Two Instruments were considered and approved by the respective solicitors as representing what their clients were prepared to accept, as opposed to what they would have preferred. It would be fair to assume that the legal effect of the Two Instruments would have been explained to the parties by their respective solicitors: at [65].

(4) The arrangement set out in the Two Instruments gave Anwar some hope of keeping the Property, but it did not lie in his mouth to now claim that he did not fully appreciate the consequential effects of his failure to raise the $1.68 m which Ridout had to pay to have the First Option cancelled. As it turned out, Anwar's confidence was ill-founded. However, that was hardly a proper basis or ground to hold that the Two Instruments did not mean what they say. There was nothing in the Two Instruments which was unclear or ambiguous. While ECI did drive a hard bargain in the hope of achieving a gain regardless of whether or not Ridout cancelled the First Option, the Two Instruments were nevertheless an agreement freely entered into by Anwar on behalf of Ridout: at [65] and [71].

(5) The weight of the evidence inextricably pointed towards the finding that the true nature of the transaction between Ridout and ECI (as embodied in the Two Instruments) was that of a genuine agreement for the sale of the Property by Ridout to ECI. As Ridout did not fulfil the condition to have the First Option cancelled within the 60-day period, ECI validly exercised that option on 27 August 2009 and there came into being a valid contract under which Ridout was required to sell the Property to ECI at the price of $20 m (‘the Sale Agreement’). It was not for the court to review, ex post facto, the reasonableness of a transaction freely concluded between (what were essentially) two commercial entities. The court should not substitute its views on commercial wisdom for those of the contracting parties: at [74] and [96].

(6) The issue then turned on whether ECI should be granted specific performance of the Sale Agreement. The remedy of specific performance was founded in equity and was discretionary in nature. It was settled principle that an appellate court would only interfere with a first instance judge's exercise of discretion on limited grounds: at [75] and [76].

(7) As regards the question of whether ECI should be granted specific performance of the Sale Agreement, this court was of the view that the transaction was not ‘unclean’ just because of the extremely low purchase price of the Property. Neither had ECI suppressed material information nor approached the court with ‘unclean hands’ when it was late in making discovery. However, this court was of the view that damages would be...

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3 books & journal articles
  • Contract Law
    • Singapore
    • Singapore Academy of Law Annual Review Nbr. 2011, December 2011
    • 1 December 2011
    ...was handed down on 28 September 2011. That decision has now been reported: see E C Investment Holding Pte Ltd v Ridout Residence Pte Ltd[2012] 1 SLR 32 (E C Investment). 11.107 Responding to the five grounds relied upon by the learned judge at first instance to support his conclusion that t......
  • Contract Law
    • Singapore
    • Singapore Academy of Law Annual Review Nbr. 2012, December 2012
    • 1 December 2012
    ...which may not have been entirely resolved by the Court of Appeal in E C Investment Holding Pte Ltd v Ridout Residence Pte Ltd[2012] 1 SLR 32 (discussed in (2011) 12 SAL Ann Rev 182 at 221, paras 11.105–11.115), it is generally accepted that the paradigm case where damages would not be an ad......
  • Equity and Trusts
    • Singapore
    • Singapore Academy of Law Annual Review Nbr. 2011, December 2011
    • 1 December 2011
    ...not find any evidence to depart from the general rule. Equitable defences 14.17 E C Investment Holding Pte Ltd v Ridout Residence Pte Ltd[2012] 1 SLR 32 is a very important case on specific performance and contracts of sale of land. As in the previous year, this review will not focus on the......

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