Ho Kon Kim v Besty Lim Gek Kim and Others

• Jurisdiction: Singapore
• Judge: Chao Hick Tin JA
• Judgment Date: 26 September 2001
• Neutral Citation: [2001] SGCA 64
• Court: Court of Appeal (Singapore)
• Year: 2001
• Published date: 08 April 2013
• Plaintiff Counsel: Michael Khoo SC and Josephine Low (Michael Khoo & Partners)
• Defendant Counsel: M Amaladass, Sivakolunthu and Gn Chiang Soon (M Dass & Co),Leslie Chew SC, Lioney Tay and Esther Ling (Khattar Wong & Partners),C R Rajah SC and Chew Kei-Jin (Tan Rajah & Cheah),Tan Kok Quan SC and Chia Boon Teck (Tan Kok Quan Partnership)
• Citation: [2001] SGCA 64

Judgment:

Introduction

1. There are two appeals before us. The first is Civil Appeal No. 164 of 2000, which is an appeal by Madam Ho Kon Kim (Madam Ho) against the decision of the High Court dismissing her claim against the three defendants, Ms Betsy Lim Gek Kim (Ms Lim), the law firm of William Lai & Alan Wong (WLAW) and RHB Bank Berhad (RHB). In this appeal, Madam Ho appeals against the High Courts decision insofar as it relates to the dismissal of her claim against Ms Lim and RHB only. Although WLAW were named as the second respondents, Madam Ho in fact did not appeal against the dismissal of her claim against them. The second appeal is Civil Appeal No. 167 of 2000, which is an appeal by the two advocates and solicitors, Mr James Leslie Ponniah (Mr Ponniah) and Mr Wong Ann Pang (Mr Wong), against the decision of the High Court in which they were ordered to bear the costs payable by Madam Ho to WLAW and RHB on the ground that in acting for Madam Ho, they had acted improperly and unreasonably in joining these parties in the action instituted by Madam Ho. Mr Wong acted for Madam Ho in the transaction that gave rise to the present litigation and Mr Ponniah was her counsel in the proceedings below.

Facts

2. The relevant facts giving rise to these two appeals are as follows. Madam Ho is a widow and was the registered proprietor of a property with a house thereon known as 124 Branksome Road (the property). The property comprises a relatively large piece of land measuring some 15,173 square feet in area. She had lived there for some fifty years since her late husband, Dr Foo Chee Guan, purchased it in 1947.

3. Prior to 1996, Madam Ho had mortgaged the property to Keppel Finance Limited (Keppel) as security for the credit facilities extended to one of her sons, Robert. Sometime in 1996, Robert informed Madam Ho that he had defaulted on interest payments to Keppel and the latter had issued a notice recalling the loan granted to him and secured by the mortgage. Madam Ho then sought the advice of her solicitor, Mr Wong, a conveyancing partner of the law firm of Wong & Lim. She was advised of the consequences of default in payment to Keppel and on his advice decided to sell the property in the open market in the hope of obtaining a better price for it.

4. In or around April or May 1996, Madam Ho was introduced by her daughter, Jeanette, to Ms Lim and her husband, Mr Joseph Wee Woon Chuan (Mr Wee). Ms Lim was both a shareholder and director of a property development company known as Derby Development Pte Ltd (Derby), while Mr Wee who was also a director was its project manager. At that time, Ms Lim and Mr Wee representing Derby were interested in purchasing the property and proposed a joint development with Madam Ho for the construction of three detached houses on the land, one of which was to be retained by Madam Ho while the other two were to be sold to Derby. During the negotiations, Madam Ho asked for a sum of $6m together with one of the houses to be built on the property as the price for the property. Derby, on the other hand, counter-offered the sum of $4.2m together with one completed house for the property, and required Madam Ho to mortgage the property to a bank or financial institution to raise the necessary finance for the proposed development. On Mr Wongs advice, Madam Ho decided not to participate in the joint development.

5. Subsequently, on 15 July 1996, Derby offered to buy two-thirds of the property for the sum of $4.2m together with a fully-constructed house costing at least $700,000 to be built by Derby on the remaining one-third of the land of Madam Ho. Madam Ho agreed to this offer. On 17 July 1996, she accepted a sum of $88,000 from Derby as Ernest Money for the Re-development of 124 Branksome Road. Following the payment of this amount, on 25 July 1996, Madam Ho gave written permission to Derby to apply to the relevant authority for planning permission for the redevelopment of the property, and Mr Wong, as her solicitor, was instructed to proceed with the preparation of the agreement for the sale of two-thirds of the property as contemplated by the parties.

6. What Mr Wong came up with was an option to be given by Madam Ho to Derby, which upon exercise thereof would become a contract. On 16 August 1996, he sent a copy of the draft option to WLAW, the solicitors for Derby, for their consideration.

7. There arose subsequently a change of parties to the proposed purchase. Ms Lim informed Madam Ho that Derby had failed to secure a construction loan for the development of the property but that Ms Lim herself was able to obtain an overdraft facility in the amount of $6.1m from the bank, Oversea-Chinese Banking Corporation Ltd (OCBC). Under the terms offered by OCBC, $3.7m of the facility was to be used to pay for part of the cost for the land, $2.2m was to be used to pay for the costs of construction of the three houses, and the balance of $200,000 was to be used to service the interest accruing on the amounts borrowed. The overdraft facility was to be secured by a first legal mortgage on the entire property. A copy of the offer document from OCBC was furnished to Madam Ho, who on Mr Wongs advice, agreed to substitute Ms Lim as the purchaser of the property in place of Derby.

8. On 12 September 1996, Ms Jennifer Leong (Ms Leong), the solicitor in charge of this matter at WLAW, returned the draft option to Mr Wong with various amendments. There ensued some lengthy correspondence in exchange between the two firms of solicitors on the terms of the draft option. Whatever difficulties there were confronting the parties in arriving at a mutually satisfactory draft were probably compounded by the fact that, as the property on completion of the purchase was to be mortgaged to OCBC, the interests of the bank would have to be taken into account and incorporated therein. At that time, Ms Leong was also acting for OCBC in the mortgage of the property. In one of her letters to Mr Wong, she wrote that her clients financiers ( i.e. OCBC) required the land area of Madam Hos plot to be capped at 5,030 sq. feet, and the relevant clause in the option should be amended to reflect this requirement. This was agreed to by Madam Ho.

9. Eventually all the terms of the option were settled and agreed. The salient terms were as follows:

3 The Cash Sale Price of the property is SINGAPORE DOLLARS FOUR MILLION AND TWO HUNDRED THOUSAND ONLY (S$4,200,000), subject to special conditions enumerated below.

..

17. The Purchaser is entitled to create a paramount mortgage over the property.

The Law Societys Conditions of Sale 1994 were incorporated in the terms of the sale, in so far as they were not inconsistent with those terms and were not varied thereby. The general terms and conditions of sale are not contentious. In addition, there are special conditions to the sale and the material terms thereof are the following:

SPECIAL CONDITIONS

18(a). In addition to the payment of S$4.2 million by the Purchaser, the Purchaser shall deliver a completed detached bungalow unit to the Vendor free from encumbrances. The Vendor shall be at liberty to choose any one of the three units approved by the relevant authority ("the Vendors Unit") within 1 month from the date full details of the approved drawings by the Architect appointed by the Purchaser ("the said Architect") have been presented to the Vendor

18(b) Pursuant to clause 18(a) the Purchaser shall ensure that the approved plan shall not comprise any individual unit with a land area exceeding 5,030 square feet or 5% more than each of the other units. Should any unit exceed the land area stated above which compels the Vendor to choose a unit of less than 5,030 square feet the Vendor shall be entitled to a monetary compensation calculated at $503.00 per square foot for every square foot of the Vendors Unit less than 5,050 square feet.

19. The Purchaser shall obtain consent from the paramount mortgagee to allow the Vendor to lodge a caveat over the Vendors Unit as soon as the private lot is allotted.

..

22 In addition to the cash payment of S$4.2 million and the delivery of one completed unit to the Vendor the Purchaser shall account to the Vendor as one-half of the consideration in excess of S$3.8 million for each of the remaining 2 units after deduction of the costs incurred in the sale thereof. ..

..

25. Notwithstanding completion of sale and purchase herein the terms and conditions of this Agreement shall remain in full force and effect between the Vendor and the Purchaser in so far as the same are not fulfilled and shall not merge in the assurance of the said property on completion of the sale and purchaser herein or upon registration of such assurance. ..

10. The option was signed by Madam Ho on 26 September 1996 and was issued soon thereafter to Ms Lim. On 14 October 1996, Ms Lim paid Madam Ho the sum of $332,000 and exercised the option and thereupon a binding sale and purchase agreement was made between the parties. For convenience, we shall hereafter refer to this document as the sale agreement. Before that date, in early October 1996, the layout plan for the development of the proposed three units of detached houses had been drawn up and settled by Ms Lims architects, Atelier Group Architect, and Madam Ho had selected the plot she wanted, namely the plot marked as Plot 3 on the plan. This was evident from the letter dated 2 October 1996 written by Derby to WLAW as the solicitors for OCBC, indicating the particular plot selected by Madam Ho. The letter said:

RE: 124 BRANKSOME ROAD

We refer to the above subject matter and as requested by Mrs Ong Lee Foong from OCBC on the Plot as selected by Madam Ho Kon Kim, we enclose herewith a Plan from M/s Atelier group Architect as "Marked Plot 3" as selected for your kind attention and transmission.

Kindly also be informed that Notice of Provisional Permission has been granted 20.9.96 and it was...