Fook Gee Finance Company Limited v Liu Cho Chit

• Jurisdiction: Singapore
• Judge: Lai Siu Chiu J
• Judgment Date: 30 April 1997
• Neutral Citation: [1997] SGHC 112
• Court: High Court (Singapore)
• Published date: 28 March 2013
• Year: 1997
• Plaintiff Counsel: Michael Khoo (as counsel) with Josephine Low and Jimmy Yap (Donaldson & Burkinshaw),Woo Tchi Chu (as counsel) and Harpal Singh (Harpal, Wong & M Seow)
• Defendant Counsel: Ajaib Haridass and Thomas Tan (Haridass Ho & Partners)
• Citation: [1997] SGHC 112

JUDGMENT:

Cur Adv Vult

The undisputed facts

The plaintiff (Madam Lim) in Suit 4149 of 1984 is the wife of Liu Cho Chit (Liu), who is the defendant in Suit 4141 of 1983. Liu was, at the material time one of the contractors of the Housing and Development Board (HDB) and conducted his business through his company, Hoe Huat Construction Pte Ltd.

Liu was also the managing director of Peng Ann Realty Pte Ltd (PAR). Together with Koh Chee Chong and Yip Ho Meng, they were the only directors and shareholders of PAR, each holding one share with a par value of $1. Yip Ho Meng was the nominee of one Lok Bok Sim, who was then the managing director of Singapore Finance Limited.

Sometime in July 1972, PAR bought a parcel of land situated at Kampong Chai Chee comprising lots 21-26, 4-4, 4-7, 120, 121, 122, 123 and 221 of Mukim 28, having an area of 186.7 acres (the property). The purchase price of $1.09m was financed entirely by a loan of $1.5m from Singapore Finance Limited secured by a legal mortgage on the property and personal guarantees of the three directors.

On 20 July 1972, shortly after the purchase of the property, two of the lots, namely Lots 221 and 4-4 with a total area of about 5.8 acres were gazetted by the Government for acquisition. In due course, these two lots were compulsorily acquired. Soon after the gazette notification, Liu and his co-directors of PAR decided to sell the remaining six lots, as they were worried that there would be further acquisition of the remaining lots.

In December 1972, Liu was introduced to Tan Geok Tee (Tan), the second defendant in Suit 4149 of 1984, and following negotiations between the two of them, a sale and purchase agreement was made on 23 January 1973 (the Main Agreement) between PAR and Collin Investment Pte Ltd (CIP) whereby PAR agreed to sell to CIP three of the lots, namely Lots 21-26, 4-7 and 123 (the three lots), with a total area of about 178 acres at the price of $2.05m. CIP is one of Tan's family companies and is now known as Lee Kai Investment Pte Ltd (LKI) which is the third defendant in Suit 4149 of 1984.

The three lots were within five zones under the master plan, that is, rural, permanent residential, temporary residential, water catchment and open space. The area zoned permanent residential was situated in Lots 21-26 and 4-7. However, it only occupied about 4.6 acres in Lot 21-26. The Main Agreement was signed by Liu on behalf of PAR and by Tan on behalf of CIP.

During the negotiations leading to the Main Agreement, Liu and Tan orally agreed to develop jointly the 4.6 acres in Lot 21-26, zoned permanent residential. The terms of the joint venture were subsequently reduced in writing, and made in the names of Liu's wife (Madam Lim) and Tan's daughter (Collin Tan). These terms were embodied in four documents, (the Joint Venture Agreements), all of which were backdated to 23 January 1973. Briefly, the Joint Venture Agreements were as follows:

First, there was an agreement (the Sub-sale Agreement) whereby CIP agreed to sell to Madam Lim and Collin Tan part of Lot 21-26 zoned residential and described as "approximately 5 acres" (the joint venture site) for $50,000. This agreement was signed by Tan on behalf of CIP and also on behalf of Collin Tan, and by Liu on behalf of Madam Lim. Clause 7 of the Sub-sale Agreement provided that the purchase "shall be completed on the day when a separate title has been delivered for the property". The agreement also provided, inter alia under cl 9:

Special Condition 1

The Purchasers on behalf of the Vendor shall immediately after the signing of this Agreement apply to the Chief Planner or other relevant authority for the purpose of obtaining separate title for the property. The costs and expenses in respect of the subdivision and the survey for the purpose of enabling the Vendor to validly convey the title of the property to the Purchasers shall be borne by the Purchasers.

Special Condition 4

Should the Purchasers fail to obtain approval for the subdivision aforesaid, the property described in the First Schedule hereto shall be developed by the Purchasers in the name of the Vendor and in such event, the Purchasers shall be entitled to all the benefits of the development and responsible for the liabilities incurred thereby.

Next, there was an agreement (the Second Agreement) in which Madam Lim and Collin Tan were to procure the incorporation of a company, Collden Realty Pte Ltd (Collden), with an authorised capital of $2m. Clause 5 provided that immediately upon the incorporation of Collden, the parties were required to take steps to procure the sale by Madam Lim and Collin Tan of the joint venture site to Collden.

By Clause 8 of the Second Agreement, it was provided (notwithstanding their respective proportions of shareholding in Collden) that Collin Tan would bear 80% and Madam Lim 20% of the development costs of the joint venture site. It was further provided that should Madam Lim fail to contribute her share of 20%, Collin Tan would advance the amount with interest at a rate of 10.8% per annum, provided that she should not be required to contribute such development costs in excess of $1.5m. Again, Tan signed this agreement on behalf of his daughter Collin, and Liu signed on Madam Lim's behalf.

A further agreement (the Collden Agreement) provided that Madam Lim and Collin Tan were to convey the joint venture site to Collden in return for 50,000 shares of $1 each, credited as fully paid, with Madam Lim receiving 22,500 shares (representing 45% of the interest in Collden) and Collin Tan receiving 27,500 shares (representing 55% of the interest in Collden). By Clause 2, it was agreed that Collden would accept the conveyance of the joint venture site "from CIP direct". Liu signed the Collden agreement on behalf of Madam Lim whilst Tan signed it on behalf of Collin Tan.

Lastly, there was the Fall-back Agreement, which was supplemental to the Sub-sale Agreement; this provided that in the event CIP failed to purchase the three lots under the Main Agreement from PAR, the Sub-sale Agreement would absolutely determine and become null and void and the sum of $50,000 paid thereunder would be forfeited and each party would have no claim against the other. Again, the Fall-back Agreement was signed by Tan on behalf of Collin Tan and by Liu on behalf of Madam Lim.

The sale under the Main Agreement was completed on 14 March 1973 and all three lots were conveyed on the written direction of CIP to Collin Development Pte Ltd (CDP), another company of Tan, which is now known as Lee Tat Development Pte Ltd (Lee Tat). The conveyance from PAR to CDP/Lee Tat was executed by Liu on PAR's behalf.

On 20 December 1973, Lee Tat, through their architects, Lim Chew Kuan & Associates, applied to the competent authority for planning permission for a proposed condominium development and a golf course on Lots 21-26 and 123. The joint venture site was excluded from the proposed development. The application was refused and a notice of refusal of written permission dated 21 September 1974 was issued. The reasons given for the refusal was that there was no proper access to the site and that the site would be affected by a 'Public Scheme'. An appeal was made to the Minister for National Development but the appeal was unsuccessful, and on 31 March 1975, Lee Tat were informed that the appeal had been disallowed.

About a year later, the three lots, except a portion of about 4.2 acres, were acquired by the Government. The unacquired land comprised of about 3.7 acres of the joint venture site and a portion of about 21,808 sq ft of land zoned rural, also part of Lot 21-26, which was immediately outside and adjoining the contemplated boundary of the joint venture site. The unacquired land was subsequently resurveyed and renumbered as Lot 1606. The Pan Island Expressway (PIE) now runs along the northern boundary of Lot 1606.

However, the Joint Venture did not materialise and neither Liu nor Tan (nor their respective nominees) took any steps to implement the terms of any of the Joint Venture Agreements. It appears that there were subsequent negotiations between Liu and Tan for the latter to acquire Liu's interest in the joint venture site and this culminated in the dispute before me. Thus, in June 1984, Madam Lim commenced this action in Suit 4149 of 1984. In essence, Madam Lim claimed specific performance of an agreement alleged to have been made whereby Lee Tat and/or Tan agreed to purchase her share in Lot 1606 for $3.8m in which Liu, for and on behalf of Madam Lim, had been paid part of the monies. Tan denied that any monies had been paid for that purpose and in turn claimed that the monies so paid were advanced as a loan to Liu. This latter dispute formed a separate issue which was brought by way of Suit 4141 of 1983. At trial, I decided to hear both suits together as the evidence and events which transpired were inextricably linked.

The plaintiff's claim in Suit 4149 of 1984

(i) Madam Lim's testimony

Madam Lim's testimony was as follows. She explained that she never involved herself in her husband's business affairs. However, she knew that in 1973, Liu had entered into a number of contracts in her name but she could not recall whether Liu had told her before or after the contracts were signed. Madam Lim said that she knew that the contract concerned the purchase of a piece of land and that Liu had informed her that he was buying the land jointly with a Hong Kong national. She did not, however, know of their contents, the price of the property or the outcome of these agreements. Nevertheless she had given her husband full authority to handle the matters pertaining to the purchase of the land. She did not pay for the property and the correspondence between her and any other parties involved had been prepared by Liu and all she did was to sign them without reading the contents. Madam Lim also claimed that she was unaware of Collin Tan's...