Foo Song Mee v Ho Kiau Seng

• Judge: Chao Hick Tin JA
• Judgment Date: 06 September 2011
• Neutral Citation: [2011] SGCA 45
• Citation: [2011] SGCA 45
• Court: Court of Appeal (Singapore)
• Published date: 13 September 2011
• Docket Number: Civil Appeal No 16 of 2011
• Plaintiff Counsel: Foo Soon Yien (Bernard & Rada Law Corporation)
• Defendant Counsel: Hee Theng Fong, Lin Ying Clare and Leong Kai Yuan (RHT Law LLP)
• Subject Matter: Contract
• Hearing Date: 06 July 2011

Chao Hick Tin JA (delivering the grounds of decision of the court): Introduction

This appeal arose out of a suit brought by Foo Song Mee (“the Appellant”) against Ho Kiau Seng (“the Respondent”) to recover outstanding commission monies amounting to $271,913.40, before interest. Her claim was dismissed by the trial judge (“the Judge”) in Foo Song Mee v Ho Kiau Seng [2011] SGHC 4, where it was held that the Appellant had not proved that there was a contract between the parties under which any payment of commission monies was due to her. At the conclusion of the hearing of the appeal on 6 July 2011, we allowed the appeal. We now give our reasons.

The facts

At all material times, the Appellant was a real estate agent with REA Realty Network and the Respondent, a businessman. Sometime in May 2007, the Appellant was informed by one Ray Lau (“Ray”), an assistant vice-president of United Overseas Bank Limited (“UOB”), that a development undertaken by Gazelle Land Pte Ltd (“Gazelle”), consisting of 11 units of apartment at 3 Buckley Road (“the Development”), was available for sale. UOB was financing the Development and Ray was the officer handling this account. The Appellant agreed to assist in the sale of the Development on the understanding with Ray that if the sale was successful, Ray would receive the seller’s agent’s commission from Gazelle and share a portion of it with the Appellant.

The Appellant approached her father for help and he arranged for her to meet one Hoo Long Sin (“HLS”), who was the Respondent’s brother. HLS informed her that the Respondent might be interested in purchasing some units and arranged for them to meet. The Appellant agreed with HLS that if the Respondent was to purchase some units in the Development, the Appellant would pay HLS a referral fee.

The first meeting between the parties took place sometime in July 2007. The Respondent was interested. She negotiated for a discount on the purchase price for the Development, having it lowered from $1,650 per square foot (“psf”) to between $1,601 and $1,636 psf. On 29 July 2007, the Appellant wrote the Respondent a letter stating that she proposed to be the Respondent’s agent for the purchase and sale of the Development. The Respondent then informed her that he wished to purchase all eleven units in the Development if the price could be further lowered and that he would pay her a commission on the discount which she could obtain for him. On 18 September 2007, the Appellant finally managed to have it reduced to $1,550 psf. It then dawned on the Respondent that at this price he would still have to pay over a million dollars in stamp duty fees on the purchase. Because of this consideration, he instructed the Appellant to negotiate for a further discount. Eventually she obtained a further reduction of $70,000 for each unit. We should clarify that the Appellant never negotiated directly with Gazelle on the price. All the negotiations with Gazelle in relation to having the purchase price reduced were done through Ray who acted as an intermediary.

On 25 September 2007, Gazelle granted the Respondents the options to purchase all the eleven units in the Development (“the Options”) at the agreed reduced price. Also around this date, the parties met and determined that $1,459,567 was the total discount which the Appellant had negotiated and obtained. The Respondent agreed to give the Appellant as commission 30% of the savings which amounted to $437,870.10. The sale and purchase agreements for the eleven units were executed on 24 October 2007. In late November 2007, the Appellant requested the Respondent for her commission, claiming that HLS was demanding his referral fee from her. She asked for payment of one-third of the agreed commission.

According to the Appellant, on 3 December 2007, she went to the Respondent’s office to hand over a draft letter (to be signed by him) bearing the same date in these terms:¹

In consideration of the services rendered by you in helping me to secure my purchase of the [Development], I agree to pay you a sum of $437,870.10.

..............................

Ho Kiau Seng

(NRIC No [xxx])

On 5 December 2007, the Appellant received a telephone call from HLS asking her to attend at the Respondent’s office to pick up a cheque. She attended the Respondent’s office bringing with her a similar draft letter but re-dated to 5 December 2007 (“the 5 December letter”). However, it is pertinent to note that the Respondent had left a cheque dated 3 December 2007 for the sum of $145,956,70 which his Secretary, one Ms Ng Poh Keng (“Ms Ng”), handed over to the Appellant.

As requested by the Appellant, Ms Ng signed the 5 December letter for the Respondent by inserting the alphabet “f” beside the Respondent’s name. Obviously, for the record, Ms Ng also typed the following at the bottom of that letter which the Appellant signed:²

I, Ms Foo Song Mee, received a cheque UOB 028792 amounting to S$145,956.70 dated 3 Dec 2007 from [the Respondent]

[The Appellant’s signature]

---------------------------------

Received by: Ms Foo Song Mee

Date: 5 Dec 07

On 28 December 2007, the Appellant paid HLS a referral fee of $31,607.50. The Appellant continued to demand payment of the balance of her commission monies from the Respondent. On 3 September 2008, he issued another cheque to her for the sum of $20,000. Thereafter, the Respondent refused to make any more payment to the Appellant. On 13 January 2009, the Appellant, through her solicitors, sent the Respondent a letter of demand for the balance of the commission.

On 13 July 2009, the Appellant issued a writ against the Respondent claiming for the balance of $291,913.40. In the Respondent’s defence, besides denying that the Appellant was entitled to any commission, he also counterclaimed for the total sum of $165,956.70 ($145,956.70 and $20,000) which the Respondent claimed were personal loans he made to the Appellant.

Grounds of the Judge’s decision

The Judge dismissed the Appellant’s claim and held that there was no contract between the parties for the payment of the alleged commission. He found that even on the Appellant’s own case, although the Respondent agreed to pay the Appellant a commission for the discount she had managed to obtain from Gazelle, there was no agreement as to what was the amount of the commission or the formulae on which the commission was to be calculated. What was concluded was only an agreement to pay an unascertainable sum. That being the position, and absent the crucial factor as to the quantum of the commission, a contract could not have come into being on 25 September 2007. All that was left was an unenforceable promise from the Respondent to the Appellant to pay her an unspecified sum.

The Judge also gave two further reasons as to why there could not be an agreement of the kind claimed by the appellant. First, it was unusual for an estate agent to collect commission from the buyer. Normally it would be the seller who would pay the estate agent’s commission. Second, the alleged commission of $437,870.10 amounted to 1.14% of the purchase price which was higher than the normal 1% payable to an estate agent for such services. He found the Appellant’s evidence not credible and instead found that the Respondent’s assertion that there was no such agreement was more believable. Accordingly, the Judge found that the Respondent’s claim that he would only pay the alleged commission when the resale of the apartments was completed, made more commercial sense.

As the Respondent had in his defence made a counterclaim for the return of the two sums paid to the Appellant as friendly loans, judgment was given to the Respondent for his counterclaim of $165,956.70.

Was there an agreement to pay the Appellant for her services to negotiate for a reduction in purchase price (“Price Reduction Services”)?

The main ground given by the Judge in dismissing the Appellant’s claim was that as there was no agreement between the parties as to the precise sum, or an objective formula to determine the quantum, of the commission before the Options were granted by Gazelle to the Respondent, there was thus no concluded contract between them. We noted that the Respondent’s evidence on this was:³

6. The [Appellant] also informed me during subsequent meetings that she could obtain a price reduction on the initial purchase price of the [Development]. In the course of our discussions, the [Appellant] drew up a table in which she calculated for me the amount of savings [the Respondent] would enjoy if she successfully obtains a reduction in the purchase price of [the Development], and calculated the amount of commission that she was seeking, being 30% of the difference between the original purchase price ... and the final discounted price...

...

8 Thereafter on 25 September 2007 [the Respondent] signed the Option to Purchase ...

[emphasis added]

From this account of the Respondent, it seemed that before the Option was given by Gazelle, the parties had discussed and even agreed that for the Price Reduction Services rendered, the Appellant would be paid a commission based on the quantum of the amount of reduction she managed to obtain from Gazelle. A table was presented to him showing the computation based on the 30% formula. He stated that the Appellant wanted 30% of the actual reduction she obtained. However, we also noted that the evidence of the Appellant was less than clear with regard to the precise date on which the parties had agreed on the exact amount of the commission or the formula to determine the same. The Appellant agreed that it could be after the Option had been granted by Gazelle. Nevertheless, it was clear that on the evidence, the Respondent had agreed, before the grant of the Option, that he would pay the Appellant a commission for the Price Reduction Services even though the exact quantum or the formula to determine...