Gay Choon Ing v Loh Sze Ti Terence Peter

CourtCourt of Three Judges (Singapore)
Judgment Date08 January 2009
Docket NumberCivil Appeals Nos 33 and 34 of 2008
Date08 January 2009

[2009] SGCA 3

Court of Appeal

Chao Hick Tin JA


Andrew Phang Boon Leong JA


V K Rajah JA

Civil Appeals Nos 33 and 34 of 2008

Gay Choon Ing
Loh Sze Ti Terence Peter and another appeal

Tan Teng Muan, Loh Li Qin (Mallal & Namazie) and Sarbjit Singh Chopra (Lim & Lim) for the appellant in Civil Appeal No 33 of 2008 and the respondent in Civil Appeal No 34 of 2008

Manjit Singh s/o Kirpal Singh and Sree Govind Menon (Manjit Govind & Partners) for the respondent in Civil Appeal No 33 of 2008 and the appellant in Civil Appeal No 34 of 2008.

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Application of English Law Act (Cap 7A, 1994Rev Ed)s 3 (2)

Contract–Compromise agreement–Requirements for valid compromise–Consideration–Definition–Adequacy benefit–Detriment or loss suffered–Intention to create legal relations–Contextual approach to contractual interpretation–Course of correspondence demonstrated parties' intention to reach amicable solution–Whether there was valid compromise agreement between parties by virtue of contemporaneous execution of Points of Agreement and Waiver Letter

From the early 1970s, Loh Sze Ti Terence Peter (“the plaintiff”) and Gay Choon Ing (“the defendant”) shared a close friendship. The plaintiff was the managing director and shareholder of ASP Company Limited (“ASP”) based in Nairobi, Kenya and invited the defendant to join his Company. From 1981 to 2004, the defendant commenced work with ASP and was eventually made a director of ASP. The defendant was also a shareholder of the Company, a family business started by the defendant's father, which owned and operated a hotel in Little India. In 1993, the Company had plans to redevelop the Hotel. Having undertaken to raise $2.5m for the redevelopment project, the defendant turned to the plaintiff, in view of their long-standing friendship. The plaintiff alleged that this sum of money extended was an investment but the defendant contended that it was a loan. Pursuant to this, the defendant issued shares to the plaintiff and entered into a Trust Deed on 3 January 1994.

From 1995 to 2003, after the signing of the Trust Deed, the plaintiff continued to render assistance in the form of guidance to the defendant in relation to the development of the Hotel and the structure of the Company. In 2003, the plaintiff inquired for details of dividends paid by the Company and learnt that these had not been paid. Relations began to sour in 2003 when the defendant indicated he wished to retire from ASP and requested that he be paid his severance package. A terse correspondence ensued between both parties. On 15 October 2004, the plaintiff sent an email to the defendant indicating that he hoped to reach an amicable solution to the ongoing dispute. The following day, the defendant replied and was agreeable to resolving the matter amicably instead of resorting to litigation. Against this background, the defendant's Kenyan lawyers wrote to the plaintiff on 25 October 2004, seeking payment of the defendant's terminal dues. Two days later, on 27 October 2004, the parties entered into a Points of Agreement (“the POA”). On the exact same day, a waiver letter was sent by the plaintiff in his capacity as managing director of ASP to the defendant (“the Waiver Letter”). This letter was signed by the defendant as well as by the plaintiff on behalf of ASP. After the POA was executed, full payment of $1.5m was made to the plaintiff. However, on 10 February 2005, tempers flared up again and this culminated in an eventual impasse between the plaintiff and the defendant. The trial judge considered each issue in great detail and, based on the arguments canvassed before her, arrived at a conclusion as to the legal status of the Trust Deed. The issue as to whether there was a valid compromise agreement between the parties by virtue of the contemporaneous execution of the POA and the Waiver Letter, however, became a subsidiary issue as parties dealt with it only tangentially in their submissions.

Held, allowing the appeal in Civil Appeal No 33 of 2008 and dismissing the appeal in Civil Appeal No 34 of 2008:

(1) The key issue was whether or not the POA and the Waiver Letter constituted a valid compromise agreement between the parties. From a close analysis of the documents as well as the context furnished by the course of correspondence between the parties from October 2004 to February 2005, it was clear that both the plaintiff and the defendant, for all intents and purposes, acted and proceeded on the basis that there was a concluded compromise. The plaintiff promised to release the defendant from all his obligations under the Trust Deed in accordance with the terms of the POA while the defendant in turn, agreed to relinquish all claims against ASP: at [39].

(2) Compromise could be defined as the settlement of dispute by mutual concession, its essential foundation being the ordinary law of contract. Where parties had demonstrated that they intended to dispose of their actual or potential dispute by reaching an amicable resolution agreeable to both parties, this compromise would be recognised and given effect to by the courts: at [41] to [45].

(3) A compromise would not arise unless certain requirements were fulfilled: first, there had...

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