Emporium Holdings (Singapore) Pte Ltd v Knight Frank Cheong Hock Chye & Baillieu (Property Consultants) Pte Ltd

• Jurisdiction: Singapore
• Judge: Warren Khoo L H J
• Judgment Date: 28 June 1994
• Neutral Citation: [1994] SGCA 147
• Plaintiff Counsel: Mr Chelva R Rajah with Mdm Sugidha Nithiananthan (Tan Rajah & Cheah)
• Published date: 30 April 2004
• Court: Court of Appeal (Singapore)
• Defendant Counsel: Mr Tan Kok Quan with Miss Audrey Thng Tze Ern (Lee & Lee)
• Subject Matter: Agency,Estate agents,Whether firm of real estate agents appointed agent for sale of property,Right to commission,Effective cause of sale,Introduction of purchaser and vendor by agent,Sale concluded through services of third party,Whether chain of causation broken

[Delivered by Rajendran J] Cur adv vult JUDGMENT:

1. The appellants ("Emporium Holdings") were at the material time owners of certain units at Lucky Plaza, Singapore, ("the Klasse property"), where they were carrying on a business under the style of Klasse Departmental Store. The respondents ("Knight Frank") were a firm of real estate agents and property brokers.

2. On 2 December 1988 two brothers, Raj Kumar and Asok Kumar (also known as the Royal Brothers), secured an option to purchase the Klasse property for the sum of $25m. The brothers exercised the option on 31 December 1988. The option had been secured through the services of Laurence John Wee ("Wee"), a partner in Wee Ramayah & Partners, a firm of advocates and solicitors. The sale and purchase was completed on 1 March 1989 when the property was conveyed to a company called Royal Brothers Pte Ltd. A sum of «% of the purchase price was paid to Wee by Emporium Holdings for having procured the sale.

3. A news item that the Royal Brothers had secured an option on the Klasse property was published in the Straits Times on 14 December 1988. Knight Frank in a letter dated 15 December 1988 to Emporium Holdings asked for a commission of 1% for having acted as agents in the sale. Receiving no response to this letter, Knight Frank on 4 January 1989 sent to Emporium Holdings their bill for $250,000 being 1% of the sale price. Upon Emporium Holdings' refusal to seitle the bill, Knight Frank in July 1990 instituted the present action against Emporium Holdings.

THE HISTORY OF THE SALE

$18m and suggested an asking price of $20m to allow for slight negotiation. In that letter, Knight Frank requested that, in the event Emporium Holdings decidted to sell the property. Knight Frank be given a 3-months sole agency to work on the sale and a commission of 1% should any sale materialise. Emporium Holdings declined to grant a sole agency but by telex dated 16 September 1987 informed Knight Frank that they would give Knight Frank up 30 September 1987 "to bring forth any serious buyer that can meet our indicated price for'negotiation". The indicated price was $23m.

5. Knight Frank then prepared an information sheet on the Klasse property and distributed it to potential buyers. On 22 September 1987 Kong Yoon Leng (Kong") a director of Knight Frank wrote to Teh Ban Lian ("Teh") the group managing director.of Emporium Holdings that they had found only one serious investor and he, after lengthy negotiations, was prepared to offer $19m for the property. Knight Frank recommended that Emporium Holdings seriously consider this offer. The offer did not interest Teh as the price was not right. Kong testified that the serious investor referred to was the Royal Brothers. This evidence was not challenged.

6. About 9 months later, in early June 1988 Kong telephoned Teh and told Teh that he would like to introduce a buyer for the Klasse property. Teh agreed to meet the buyer and lunch was arranged for 7 June 1988. At that lunch Kong introduced Raj Kumar to Teh. The sale of the Klasse property was discussed. Teh said that at the lunch on 7 June 1988 Raj Kumar offered a price of $19m and gave reasons to justify the price. Teh told him that his price was S25m. At the lunch Raj Kumar raised his offer to $21m. Teh responded that the price was too low and that the desired price was S25m.

7. Following the lunch Knight Frank, on 9 June 1988, sent a letter to Emporium Holdings confirming me offer by the Royal Brothers at $21m. In the letter Knight Frank also expressed their belief that there was a strong possibility of increasing the offer to $23 m and stated that if a sale materialised their commission would be 1%. Kong telephoned Teh a few days later and was told that Emporium Holdings were not interested in selling the property. Kong said that he called Teh a few times subsequently but the answer always was that they were not interested in selling the property or that the price was not right.

WEE RAMAY AH & PARTNERS

8. On the 15 November 1988, Wee called Teh on the phone asnd told Teh that he had a buyer for the property at $24m. Teh said that he told Wee that he did not want to waste time and that the buyer had to be serious He was assured by Wee that the buyer was serious. Teh then contacted his Board members and was given a mandate to discuss the sale as the 6ffer was close to the price of $25m they wanted. On 16 November 1988, Teh received a letter from Wee Ramayah & Pnrs in which they said that they had a purchaser interested in purchasing the Klasse property for $24m and asked for a commission of «% if the sale was concluded. On receipt of the letter, Teh spoke to Wee and told him that the sale price was $25m. He also agreed to give Wee a commission of «% if the sale materialised. Thereafter there was active negotiations between him and Wee on the terms of the sale. Teh testified that he negotiated only through Wee and that up to the time he signed the option he did not know who the buyer of the property was.

9. Teh told the court that the difference of $lm between the price asked and the price offered was resolved when Wee suggested that after completing the purchase at $25m Emporium Holdings lease back the property for 6 months for $500,000. This suited Emiporium Holdings' needs to have possession for a longer period to get rid of stock and look for alternative sites. It also suited the purchaser as the purchase price would effectively be $24.5m. The amount for the option fee and the period of the option were also negotiated and agreed. Wee Ramayah & Pnrs forwarded a draft option incorporating these terms to Emporium Holdings on 22 November 1988. The draft was further discussed and modified and thereafter Teh signed the optionidaied 2 December 1988 on behalf of Emporium Holdings

10. Teh's evidence relating to the negotiations with Wee was supported by Wee. Wee testified that on 15 November 1988 Raj Kumar and Asok Kumar requested him to negotiate with Emporium Holdings for the purchase of the Klasse property. Both Emporium Holdings and the Royal Brothers were clients of Wee Ramayah & Pnrs. Wee said that when the brothers asked him to negotiate the purchase they asked him to keep their identity confidential as they did not wish the price to escalate as they were known in the market as purchasers of prime retail space in Lucky Plaza and Far East Plaza. At the time he negotiated and concluded the deal Wee was not aware that 5 months previously Knight Frank had introduced Raj Kumar to Teh as a potential purchaser of the property.

11. Asok Kumar gave evidence on behalf of Emporium Holdings. He said that in 1987 there were rumours on the market that the Emporium group was in financial difficulties and that their assets, which included the Klasse property, could be up for sale. He and his brother were interested in the Klasse properly and they made^:their interest known to a number of agents who approached them. He could specifically recall the involvement of Knight Frank only in June 1988 when Kong arranged for a lunch with Teh to discuss the purchase. He did not attend the lunch but his brother Raj Kumar did. He said that he and his brother were prepared to pay $22m but nothing materialised. After about 3 months the matter went cold and there was no further news from Kong. As Knight Frank was making no progress in the purchase of the Klasse property, Asok Kumar approached Wee in November 1988 and asked Wee to try and secuce the purchase. Through the services of Wee he and his brother were within a short period able to conclude the purchase at $25m.

12. Knight Frank's case was that on or about 7 June 1988 Emporium Holdings had engaged them to find a purchaser for the Klassc .property and that Emporium Holdings had expressly or impliedly agreed to pay them a commission of 1% of the sale price should the sale materialise. Knight Frank maintained that since they had introduced Raj Kumar to Telk as a potential buyer and since the sale had materialised, they were the effective cause of the sale and were entitled to 1% remuneration for their services.

WAS KNIGHT FRANK APPOINTED AGENT BY EMPORIUM HOLDINGS?

13. On the question whether Knight Frank had been appointed as an agent to find a buyer for the Klasse property, the learned trial judge held:

Kong's evidence was that he telephoned Teh and invited him ko the lunch on 7 June 1988, and told him that he would introduce a buyer for the property. The introduction was made at the lunch. Teh attended the lunch knowing that the purpose was to introduce a buyer for the property. The lunch meeting was followed by Kong's letter of 9 June 1988 (AB12) to which the defendants did not reply. Counsel for the defendants contended that AB12 was merelyla letter from the plaintiffs seeking an appointment as the defendants' agents for the sale of the property and that Teh's acceptance of the invitation to lunch should not be tantamount to appointing thb plaintiffs as agent for the sale of the property, especially when the question of agency or commission was not discussed at any time. It was submitted mat when the invitation for lunch was accepted, Teh was under the impression that it was just to meet someone who was interested in buying the property.

I did not accept Teh's evidence that the plaintiffs were not his agent for the sale of the property at the lunch and his comment that 'if the price is acceptable, then the terms and conditions plus the commission can then thereafter be discussed". Under cross- examination, Teh admitted that if the Royal Brothers had bought the property following the lunch meeting, a commission would be paid to the plaintiffs. To my mind the defendants did appoint the plaintiffs as their agent, although not as their sole agent to sell the Klasse property on or about 7 June 1988.

property; and even in the letter of 9 June 1988 Knight Frank were only soliciting appointment as agent. It was submitted that on the facts...