Kok Lee Kuen and Another v Choon Fook Realty Pte Ltd and Others

• Jurisdiction: Singapore
• Judgment Date: 01 October 1996
• Date: 01 October 1996
• Docket Number: Civil Appeal No 45 of 1996
• Court: Court of Appeal (Singapore)

Kok Lee Kuen and another

Plaintiff

and

Choon Fook Realty Pte Ltd and others

Defendant

[1996] SGCA 57

Yong Pung How CJ

,

Lai Kew Chai J

and

Chao Hick Tin J

Civil Appeal No 45 of 1996

Court of Appeal

Agency–Classes of agents–Company–Whether company capable of acting as agent for directors–Whether legal propositions that company having to act through human agents meaning that company might not act as agent for individual–Existence of authority as test for existence of agency–Equity–Remedies–Rectification–Contract for sale of land–Contract not naming separate lot of land–Negotiations between parties conducted on basis that separate lot to be included–Separate lot having no commercial value in isolation–Purchase for eventual redevelopment for which separate lot necessary–Whether vendor aware of purpose and intending to sell separate lot as part of contract–Standard of proof “convincing proof”–Whether burden of proof discharged–Vendor alleging changing of mind prior to signing of option–Change of mind not communicated to purchaser–Whether rectification to be allowed–Applicable principles–Land–Sale of land–Completion–Interest for late completion–Late completion due to dispute over whether rectification possible–Purchaser having possibility of completing under protest and without prejudice to right for rectification–Rectification ordered in favour of purchaser–Whether late completion due to default of purchaser

After negotiations through an independent agent, the first defendant granted the first plaintiff an option for the purchase of a property, described in terms of the addresses of all the townhouses in Weng Gardens (“the development”). The second to sixth plaintiffs were family members and shareholders and directors in the first defendant company. The second plaintiff company exercised the option as nominee of the first plaintiff. During the negotiations conducted between the second defendant and the independent agent, which were on the basis that the plaintiffs wanted both the land and the houses in the development for rental collection in the first instance but intended to redevelop the land eventually, the plaintiffs were given a site plan showing that the property had an area of 23,090 sq ft, but they did not know that this land area included, as a separate parcel, a thin strip of land fronting the road, Lot 641 (“the additional lot”) that was owned by the remaining defendants, without which the development would be landlocked. The additional lot had only a public drain, which on its own was of no commercial value to the owner. The development sat on Lot 640. The plaintiffs did not know of the separate numbering; what they intended to buy was the entire site, indeed they assumed that the development sat on the entire 23,090 sq ft. The parties disputed whether the additional lot was part of the subject property. The defendants refused to convey the additional lot without further consideration. The second and fifth defendants further claimed that immediately before the option were granted, they had came to an intention to retain the additional lot. The defendants alleged that the conduct of the plaintiffs was not reasonable when they refused to complete the purchase of only Lot 640 (with the six townhouses) under protest and without prejudice to their right for rectification, and were thus liable for interest for late completion.

The plaintiffs sought rectification of the option to include the additional lot but the trial judge held that the parties did not have the intention to sell and buy the additional lot and the proper remedy for the plaintiffs would lie in an abatement of price. The trial judge held that the plaintiffs could not have the intention to acquire the additional lot as they did not know of its existence at the time of contract. She further held that there would be difficulties in ordering specific performance of the additional lot, as that lot did not belong to the first defendant company, which could not act as the agent of the second to sixth defendants as a company itself could not act in its own person but only through directors. The plaintiffs appealed.

Held, allowing the appeal:

(1) The court must be satisfied that in granting rectification it was not making a new contract for the parties, but affirming a contract which the parties made. Knowledge of the designation of the additional lot was not material. It was what both parties intended to sell and buy that mattered. The degree of probability required was that of “convincing proof”. Applying the test of “convincing proof” it had been proven by the purchasers that what the vendors intended to sell was a development site consisting of 23,090 sq ft. The purchasers wanted to buy the whole development site for re-development. The purchasers did not intend to buy a landlocked site which did not even have an access to the main road. They were told by the vendor, through the independent agent, that the site consisted of an area of 23,090 sq ft, which was the total area including the additional lot. The vendors thus clearly intended to sell the additional lot, which on its own had no commercial value: at [43], [47] to [49], [53].

(2) Even if it were true that the vendors had, immediately before the option was granted, discussed and wanted to retain the additional lot, they knew or must have known that in the purchasers' mind they thought they were buying the whole development plot including the additional lot. The change of intention on the vendors' part was never communicated to the purchasers. In such a case, rectification could also be ordered: at [54].

(3) There was no principle of law which precluded a company from acting for and on behalf of an individual or individuals, even though those individuals were the directors of the company. That a company had to act through human agents was different from saying that a company might not act as an agent for an individual, even though that individual might be a director of the company. The question was really whether the first defendant had the authority to act on behalf of the second to sixth defendants to sell the additional lot. The second through sixth defendants were happy to let the second and fifth defendants decide for them on the price. Everything among the second to sixth defendants was carried out in an informal manner even in respect of matters of the first defendant. On the evidence the first defendant had the authority to sell the whole site on its own behalf as well as on behalf of the other defendants. The fact that, at the time the option was granted, the different ownership of the additional lot was overlooked, could not affect the authority given to the first defendant: at [60] and [61].

(4) For purposes of determining liability for interest of late completion, the late completion was not attributable to default by the purchasers despite the possibility of completing under protest and without prejudice to their right for rectification, as they need not accept what they had not agreed to buy: at [64].

[Observation: For the purpose of determining whether there was a common mistake in the description of the property for sale it was not necessary to rely on events subsequent to the option, which must be viewed with caution as they might not provide evidence of intention prior to or at the time of contract but might be evidence of a later intention: at [58].]

A Roberts & Co Ltd v Leicestershire County Council [1961] Ch 555 (refd)

Anfrank Nom Pty Ltd v Connell (1989-90) 1 ACSR 365 (refd)

Crane v Hegeman-Harris Co Inc [1939] 1 All ER 662 (refd)

Ferguson v Wilson (1866) LR 2 Ch App 77 (refd)

Frederick E Rose (London) Ld v William H Pim Jnr & Co Ld [1953] 2 QB 450 (refd)

Joscelyne v Nissen [1970] 2 QB 86 (refd)

NSW Medical Defence Union Ltd v Transport Industries Insurance Co Ltd (1986) 6 NSWLR 740 (refd)

Pukallus v Cameron (1982) 43 ALR 243 (distd)

Riverlate Properties Ltd v Paul [1975] Ch 133 (refd)

Syed Yacob Alkaff v Syed Alwee Alkaff [1992] 3 SLR (R) 283; [1993] 1 SLR 34 (folld)

Thomas Bates and Son Ltd v Wyndham's (Lingerie) Ltd [1981] 1 WLR 505 (refd)

Michael Khoo, Josephine Low (Michael Khoo & Partners) and C P Lee (C P Lee & Co) for the appellants

Tan Hin Tat, Sean Lim and Lim Kwang Min (Sim Hill & Tan) for the respondents.

Judgment reserved.

Chao Hick Tin J

(delivering the judgment of the court):

1 This appeal arises from a decision of the High Court in two related originating summonses [reported at Kok Lee Kuen v Choon Fok Realty Pte Ltd [1996] 1 SLR (R) 688]. Both summonses concerned the sale of a property which was described in the option as “Nos 3, 3A, 3B, 3C, 3D and 3E Balmoral Crescent”, which option was duly exercised.

2 In the first originating summons (“OS 129/1995”), the first plaintiff Kok Lee Kuen (“Kok”) was the person in whose favour the option was granted. The second plaintiff, TG Development Pte Ltd, was the company which exercised the option, pursuant to the “and/or nominee” clause therein. The first defendant was Choon Fook Realty Pte Ltd, which company granted the option to Kok. The second to sixth defendants were and are the shareholders and directors of Choon Fook Realty and they are all members of the same family, the second and third defendants being husband and wife and the other three defendants being their children. In the second originating summons (“OS 242/1995”), TG Development sought, inter alia, a declaration that the 21-day notice to complete given by the solicitors for Choon Fook Realty was bad in law and was ineffectual to annul the agreement for sale. Both originating summonses were consolidated to be heard together.

Title of the property

3 At the outset it is necessary for us to give a brief account of the development affecting the title of the property in question, as well as the dealings concerning it.

4 In 1979, the land known as Lot 14-35 TS 26 had...