Hu Lee Impex Pte Ltd v Lim Aik Seng (trading as Tong Seng Vegetable Trading)

• Jurisdiction: Singapore
• Judge: Andrew Ang J
• Judgment Date: 26 July 2013
• Neutral Citation: [2013] SGHC 142
• Court: High Court (Singapore)
• Hearing Date: 24 April 2013,22 April 2013,23 April 2013
• Docket Number: Suit No 190 of 2012
• Plaintiff Counsel: Wong Tze Roy (Goh JP & Wong)
• Defendant Counsel: Chow Weng Weng (Chow Ng Partnership)
• Subject Matter: LAND
• Published date: 10 September 2013

Andrew Ang J: Introduction

The plaintiff, Hu Lee Impex Pte Ltd, seeks an order that the defendant Lim Aik Seng assigns the tenancy of a shop unit located at Block 11, Wholesale Centre #01-572, Singapore (the “Shop Unit”) pursuant to certain oral agreements. The Shop Unit is currently being rented by the defendant from the Housing and Development Board (“HDB”).

Facts Undisputed background

Both the plaintiff and defendant are wholesalers dealing with fruits and vegetables. Tan Soon Huat (“PW1”) is the plaintiff’s managing director. The defendant, with one Tan Cheng Tong (“the deceased”), had registered Tong Seng Vegetable Trading (“TSVT”) as a business name for their partnership in March 1998. The plaintiff had carried on part of its wholesale business at the Shop Unit since about 1992, and had been renewing tenancy agreements in respect of the same with the HDB since then. A few months after May 2006, the plaintiff assigned the tenancy of the Shop Unit to TSVT, with TSVT subsequently entering into a tenancy agreement dated 7 November 2006 directly with HDB for the Shop Unit.

Purported oral agreements

The parties materially disagree on the circumstances surrounding the assignment of the Shop Unit to TSVT. The plaintiff alleges that the Shop Unit was assigned pursuant to a specific oral agreement (elaborated upon at [5] below) (“the 2006 Agreement”). The defendant denies that there was ever such an agreement.

Early in 2011, the deceased learnt that he was terminally ill from cancer. A meeting was held at the deceased’s home in May 2011, where discussions were held regarding the Shop Unit (“the May 2011 Meeting”). The plaintiff alleges that another oral agreement was concluded (elaborated upon at [7] below) (“the 2011 Agreement”). The defendant denies that there was such an oral agreement. The deceased subsequently passed away on 1 June 2011.

Pleadings

The plaintiff avers that the 2006 Agreement was made on the following express terms: The plaintiff would assign to the deceased or TSVT all its rights and interest in the Shop Unit under the tenancy agreement with the HDB dated 21 December 2004; The sole purpose of the assignment was to enable the deceased to carry on a vegetable wholesale business at the Shop Unit; The plaintiff would not charge the deceased and/or TSVT any fee for the assignment; and The Shop Unit would have to be reassigned to the plaintiff upon the plaintiff’s request or the deceased ceasing to operate a vegetable wholesale business at the Shop Unit.

In contrast, the defendant avers that the plaintiff had relocated its business to new premises at Chin Bee Avenue and had no further need for its then three shop units (of which the Shop Unit was one) at the Pasir Panjang Wholesale Centre, all of which had cold rooms installed by the plaintiff. The plaintiff had approached the defendant and the deceased sometime in May 2006 for TSVT to take over two of the units without any payment required. In return, the plaintiff would take over the tenancies of two stalls in the same wholesale centre from the defendant and the deceased. The defendant and the deceased understood that it was cheaper and easier for the plaintiff to assign the units (inclusive of the cold rooms) without requiring any payment, as surrendering the units back to the HDB would entail reinstatement of the same involving the removal of the cold rooms. The defendant and the deceased subsequently agreed that they would only take the Shop Unit. Notably, the plaintiff assigned the second unit to a third party which to-date is still occupying the same. The third unit was reinstated and surrendered to the HDB.

As regards the 2011 Agreement, the plaintiff avers that PW1 had at the May 2011 Meeting informed the deceased, the deceased’s wife (one Seow Sai Gek), and the defendant that the plaintiff would require the Shop Unit to be reassigned to it immediately. Although the plaintiff was not bound to do so, it offered to help the deceased (or the deceased’s wife) and the defendant by operating a vegetable wholesale business at the Shop Unit after the assignment, and share the profits therefrom with them. The defendant instead requested for the plaintiff to allow the defendant’s son to operate the vegetable wholesale business. The plaintiff agreed to this on the following conditions: The plaintiff would defer requiring the assignment of the Shop Unit back to it, and would allow specifically the defendant’s son to join the defendant in operating the vegetable wholesale business at the Shop Unit; No other party apart from the defendant’s son would be allowed to operate and/or join the defendant in the vegetable wholesale business at the Shop Unit; The defendant and/or his son would have to pay over to the deceased (or the deceased’s wife) their share of the profits made from the vegetable wholesale business at the Shop Unit; and The Shop Unit would have to be assigned back to the plaintiff if the defendant’s son ceased to operate the vegetable wholesale business at the Shop Unit, or if the defendant breached any of the other terms of the 2011 Agreement.

The plaintiff alleges that the 2011 Agreement was breached on two counts. First, the defendant’s son did not operate the wholesale business at the Shop Unit. Instead the defendant allowed one Choi Chin Foong (“Choi”) and one Wong Yew Choong (“Wong”) to operate and/or join in the defendant’s business. Second, the defendant had not paid to the deceased (or the deceased’s wife) their share of the profits.

As stated earlier, the defendant denies that there was any such agreement. The defendant denies that the plaintiff had asked for the Shop Unit to be reassigned, and also avers that it would not have made any commercial sense for the plaintiff to offer to operate the business at the Shop Unit sharing the profits therefrom with the defendant and the deceased (or the deceased’s wife). There was also no commercial sense in the plaintiff’s insistence upon the defendant’s son being the only person allowed to operate the business, as TSVT was the lawful tenant and was fully entitled to decide how it should operate its business.

The defendant further submits, in the alternative, that both the 2006 Agreement and the 2011 Agreement (hereinafter “the Agreements”) are unenforceable as they do not meet the requirements of s 6(d) of the Civil Law Act (Cap 43, 1999 Rev Ed) (“s 6(d)”). The plaintiff has several rebuttals to this. First, s 6(d) only applies to contracts which create an interest in immovable property, which the Agreements do not. Second (and this appears to be in similar vein), the Agreements are not assignments but agreements to assign. Agreements to assign do not transfer or dispose of any interest in immovable property at the time of agreement, but at a future time or subject to the fulfilment of conditions. The Agreements confer rights in personam, which are not caught by s 6(d). Third, even if s 6(d) were applicable, the doctrine of part performance would apply.

Issues

Accordingly, the issues raised are: first, whether there were oral agreements concluded in 2006 and 2011 and; second, assuming arguendo that there were such oral agreements, whether they meet the requirements of s 6(d). I shall deal with the second issue first.

Are the requirements of s 6(d) met?

Section 6(d) provides as follows: Contracts which must be evidenced in writing 6. No action shall be brought against —

…

(d) any person upon any contract for the sale or other disposition of immovable property, or any interest in such property; or

…

unless the promise or agreement upon which such action is brought, or some memorandum or note thereof, is in writing and signed by the party to be charged therewith or some other person lawfully authorised by him.

The UK Law Commission, in its report Transfer of Land Formalities for Contracts for Sale etc. of Land (Law Com No 164, 1987) (Chairman: Mr Justice Beldham) (“UK Law Commission Report”), set out succinctly the justification for requiring contracts dealing with land to comply with certain requirements. They can be summarised as follows: There is a need for certainty. The existence and terms of oral contracts are always difficult to establish and the resulting confusion would lead to increased litigation. The availability of reliable and incontrovertible evidence of the existence and terms of a transaction would minimise disputes (at para 2.7). The evidential function of writing also assists the prevention of fraud and goes some way to ensuring that parties are not bound in the absence of actual agreement (at para 2.8). The requirement of writing would warn the consumer about the gravity of the transaction into which he is about to enter and give him time to reflect and (if need be) seek legal advice. At least, it prevents a person from being bound without realising it since most people are aware that signing a written document imports some binding effect (at para 2.9). Without formalities, it may be difficult to ascertain the exact time when a contract is created, and this would lead to confusion. Pre-contract negotiations would be unnecessarily uncertain and hazardous (at para 2.10). Formalities perform a “channelling” function by marking off transactions from one another and creating standardised transactions. The identification and classification of certain types of transaction are facilitated, enabling them to be dealt with routinely (at para 2.11). Each piece of land is unique; interests in or rights over it should not be created or disposed of casually. The remedy of specific performance for contracts relating to land recognises this (at para 2.12).

In my view, the plaintiff’s first two contentions are unsustainable for reasons set out below.

The plaintiff first argues that s 6(d) of the Act only applies to contracts which create an interest in immovable...