Grandhome Pte Ltd v Ng Kok Eng and Another

• Jurisdiction: Singapore
• Judge: C R Rajah JC
• Judgment Date: 18 January 1996
• Neutral Citation: [1996] SGHC 6
• Docket Number: District Court Appeal No 101 of 1994
• Date: 18 January 1996
• Year: 1996
• Published date: 19 September 2003
• Plaintiff Counsel: P Kumar Ratty (Mitra & Pnrs)
• Citation: [1996] SGHC 6
• Defendant Counsel: Liaw Jin Poh (Lee & Lee)
• Court: High Court (Singapore)
• Subject Matter: Agency,Whether chain of causation broken by intervention of second agent,Principal refusing to pay commission after agreeing to same offer renewed by a different agent for lower commission,Whether agent effective cause of transaction,Estate agents

The appellants, who are the plaintiffs in this action, carry on the business of estate agents. The first and second respondents, who are husband and wife and own the property No 4, Highland Walk, Singapore (the subject property), were building a new terrace house at Marlene Avenue (the Marlene Avenue house). They wished to sell the subject property to help pay for the Marlene Avenue house. They appointed the appellants on a non-exclusive basis as their agents to effect the sale and agreed to pay a commission of 1% of the sale price upon the completion of a sale to a buyer obtained by the appellants.

Following their appointment, the appellants advertised the subject property for sale in the 18, 20, 25 and 27 May 1993 issues of The Straits Times . Mr Teo Hui Meng (the purchaser) who eventually purchased the subject property saw one of these advertisements and telephoned the plaintiffs at the telephone number given in the advertisement. An appointment was made for him to meet one of the plaintiffs` sales agents, Mr Bryan Han (Bryan), outside the subject property sometime in May 1993. They met as arranged and Bryan took the purchaser into the subject property where they spent some 20 minutes viewing it. The first respondent in his affidavit of evidence-in-chief said that he had no recollection of the occasion when Bryan brought the purchaser to view the subject property. During cross-examination, however, he testified that he was sure that Bryan had brought the purchaser to view the subject property sometime in May 1993.

After the viewing, Bryan and the purchaser had a discussion outside the subject property for about 30 minutes. A colleague of Bryan`s, Ms Evelyn Chung (Evelyn), was present during these discussions. The purchaser was keen on purchasing the subject property and during this discussion offered $1m for it. Bryan says he thereupon conveyed this $1m offer to the respondents but they turned it down. The respondents say Bryan never communicated this $1m offer to them.

Either the next day or a few days later, the purchaser spoke to one Mr Lim Yan Hin (the second agent) who was also an estate agent. The second agent already knew that the subject property was for sale. The purchaser told the second agent that he was prepared to offer $1m for the subject property. The second agent asked him to make out a cheque for $10,000 in favour of the first respondent if he was seriously interested. The purchaser did so. That same day the second agent collected the cheque and went to see the first respondent. He showed the first respondent the $10,000 cheque and conveyed to him the purchaser`s offer of $1m.

The first respondent testified that he was aware at the time this offer was made that the second agent was making it on behalf of the purchaser. The first respondent also testified that he did not tell the second agent that he already knew the purchaser (ie that he had already met the purchaser as a prospective purchaser of the subject property) because he did not consider it relevant.

The first respondent further testified that he offered the second agent a commission of 0.5% of the sale price amounting to $5,000 if the sale went through and the second agent agreed to this. The appellants then gave the purchaser, through the second agent, an option to purchase the subject property for $1m. The option money of $10,000 was paid by way of the aforesaid cheque for $10,000. This option was later exercised by the purchaser and the sale subsequently completed.

In these circumstances, the appellants say they are entitled to their 1% commission of $10,000 from the respondents. To be so entitled the appellants must show that they were the effective (or efficient) cause of the purchaser purchasing the subject property. It is not enough for the appellants to show that they were one of the causes for the sale (a causa sine qua non). To be the effective cause they must show they were the critical cause (the causa causans). The appellants say they were the causa causans because it was they who brought the subject property to the attention of the purchaser and sparked his interest in it so much so that he offered $1m for it.

The appellants say the respondents cannot avoid liability to pay the appellants` commission simply by accepting the purchaser`s offer of $1m when communicated to them through someone else (ie the second agent). Especially not as it was the appellants who engendered the purchaser`s interest in the subject property which led to the offer and as the respondents had refused the purchaser`s $1m offer when conveyed to them a day or so earlier through the appellants.

The respondents say they are not liable because the appellants not only failed to convey the purchaser`s offer of $1m to them but refused to do so. Only the second defendant informed them of this offer, which they then accepted. As they could not have sold to the purchaser unless the purchaser`s offer was conveyed to them and as it was the second agent and not the appellants who did so, the appellants were not the effective cause of the sale. It was the second agent to whom they had paid the agreed 0.5% commission of $5,000 who was the effective cause.

The respondents also submitted that even if Bryan did convey the $1m offer to the respondents, once it was rejected that rejection ended one set of negotiations. The second agent`s involvement started a new chain of events and the eventual sale to the purchaser was the culmination of a second set of negotiations arising from this new chain of events.

The learned trial judge found that the second agent was the effective cause of the sale by his speedy action in approaching the respondents with the purchaser`s $10,000 cheque. Against this decision the appellants appeal. The respondents filed a respondents` notice saying that the decision of the learned trial judge could be affirmed on the additional ground that Bryan failed and refused to convey the purchaser`s $1m offer to the respondents.

In deciding whether or not the appellants were the effective cause or causa causans of the sale it would be necessary for the learned trial judge to first determine whether Bryan in fact failed and refused to communicate the $1m offer to the respondents.

The communication issue

Bryan testifies that he did communicate the $1m offer to the respondents. He said that after the purchaser made the offer he left the purchaser outside the subject property and went back into the subject property. He informed the respondents of the purchaser`s offer of $1m but they turned it down and asked instead for $1.1m. He then went back and conveyed this to the purchaser who was still waiting outside. The purchaser said that he was not prepared to offer more than $1m and thereafter left after giving his business card to Bryan. Bryan`s evidence on this point is supported by Evelyn. She confirmed she was present when the purchaser arrived at the subject property and she saw him go in to view it with Bryan. She also confirmed that Bryan and the purchaser had a discussion outside the subject property afterwards and that the purchaser asked Bryan to offer the respondents $1m. She said Bryan agreed and went back into the house whilst she and the purchaser waited outside. She further testified that Bryan came out a little later and said that $1m was not acceptable to the respondents and tried to persuade the purchaser to increase his offer but the purchaser was not prepared to and soon thereafter drove away.

The first respondent...