Lee Seng Cheong and Others v Seah Bak Seng

• Jurisdiction: Singapore
• Judge: Chan Seng Onn J
• Judgment Date: 07 January 2008
• Neutral Citation: [2008] SGHC 1
• Docket Number: Suit No 19 of 2007
• Date: 07 January 2008
• Published date: 29 January 2008
• Year: 2008
• Plaintiff Counsel: Cheong Yuen Hee and Sherain Tan (J S Yeh & Co)
• Citation: [2008] SGHC 1
• Defendant Counsel: Anthony Lee and Tan Yin Tze (Bih Li & Lee)
• Court: High Court (Singapore)
• Subject Matter: Whether implied term was condition,Whether there was implied term that time was of essence in contract for sale and purchase of shares,Remedies,Contract,Appropriate measure of damages for failure to deliver shares on time,Contractual terms

7 January 2008

Chan Seng Onn J:

1 Lee Seng Cheong (“Lee”), the first plaintiff, was close friends with the defendant, Seah Bak Seng, for more than 40 years. The second to eighth plaintiffs were the relatives, friends and colleagues of Lee. The defendant was the executive director of Fotronics Corporation Sdn Bhd (“Fotronics”), a company incorporated in Malaysia.

2 In 2004, Fotronics was seeking to list its shares in the Malaysian MESDAQ market. The requisite approvals from the Malaysian authorities to list the shares were obtained in July 2004. The defendant informed Lee that, being an executive director, the defendant would be allotted a substantial number of shares. The defendant asked Lee if he was interested in purchasing these shares. Lee allegedly indicated to the defendant that he and his relatives and friends would like to buy the shares with a view to selling them for a quick profit at the date of listing or soon thereafter.

3 Subsequently, some of the plaintiffs entered into written agreements with the defendant for the purchase of Fotronics shares. The particulars of these agreements were set out at paragraph 5 of the Amended Statement of Claim dated 31 January 2007 as follows:

No.	Name	Date	No. of Shares	Price per Share
1.	Lee Seng Cheong	11.08.2004	270,000	RM 1.00
2.	Lee Seng Cheong	11.08.2004	400,000	RM 1.00
3.	See Chak Wah	11.08.2004	50,000	RM 1.00
4.	Tan Kian Heng	11.08.2004	50,000	RM 1.00
5.	Ramasamy Somasundaram	11.08.2004	50,000	RM 1.00
6.	Lee Sea Kian	11.08.2004	100,000	RM 1.00
7.	Chia Wang Nor	11.08.2004	20,000	RM 1.00
8.	Sim Eng Chee	11.08.2004	10,000	RM 1.00

It should be noted that See Chak Wah (No. 3) was not a plaintiff in this action.

4 Apart from the above written agreements, the plaintiffs also alleged that the defendant orally agreed to sell additional Fotronics shares to some of them. The particulars of these oral agreements were set out at paragraph 7 of the Amended Statement of Claim as follows:

	Name	Date	No. of Shares	Price per Share
1.	Cheong Yin Yuen	10/8/2004	80,000	RM 1.00
		11/9/2004
2.	Puan Chew Motor Works	Sept 2004	300,000	RM 1.00
3.	Loo Yuh Huey	Aug 2004	50,000	RM 1.00
4.	Loo Yuh Huey	25 Jan 2005	50,000	RM 1.20
5.	Lee Seng Cheong	25 Jan 2005	300,000	RM 1.20

It should be noted that Puan Chew Motor Works (“PCMW”) (No. 2) was not a plaintiff in this action. Also, there was in fact a written agreement dated 11 August 2004 (AB19) evidencing the sale of 50,000 shares to Loo Yuh Huey (No.3) in August 2004. During the course of the trial, the plaintiffs admitted that the figures presented in the Amended Statement of Claim were not entirely accurate. They sought to amend the Amended Statement of Claim after the close of the defendant’s case. I will deal with that later.

5 The plaintiffs made payments for the share purchases listed above (in [3] and [4]) by way of cheques for the equivalent amounts in Singapore dollars except for the share purchase by Lee Sea Kian, which was paid for in Malaysian Ringgit (“RM”).

6 The written agreements were signed as early as August 2004 because the original intended listing date was to be in September 2004. However, due to several delays, the shares were only listed on 31 January 2005. At the time of listing, the market price of the shares was RM 1.40 per share and rose to a high of RM 1.48.

7 It was the plaintiffs’ case that the shares were to be delivered before listing date, viz, 31 January 2005. Such delivery was not effected. When the plaintiffs asked for their shares on 31 January 2005, the defendant told them that the shares were not ready for delivery. It should be noted that the contracts were silent as to the date the shares were to be delivered to the plaintiffs.

8 By February 2005, the share price had fallen below RM 1.40 per share. The defendant still had not delivered the shares. Lee testified that he had demanded the plaintiffs’ shares from the defendant on several occasions but the defendant failed to deliver the same. Despite the defendant’s failure to deliver, Lee entered into another oral agreement with the defendant in February 2005 to purchase 400,000 shares at RM 1.00 per share. At that time, the share price was RM 1.08. The purpose of the transaction was for Lee to sell these shares for a profit of RM 0.08 per share. Lee issued two cheques dated 14 and 21 February 2005 to pay for these share purchases. According to Lee, the defendant was to deliver the shares immediately but he failed to do so.

9 On 13 April 2005, the defendant transferred 2,050,000 Fotronics shares into Lee’s share account. Lee only found out about this when he received a contract note (AB32) from Avenue Securities Sdn Bhd (“Avenue”), a firm of sharebrokers. The price of the shares had fallen below RM 1.00 by this time. Upon the defendant’s advice, these shares were subsequently transferred to Commerce International Merchant Bankers Berhad (CIMB). It should be noted that not all of the 2,050,000 shares belonged to the plaintiffs. The defendant had deposited additional shares in Lee’s account. Apparently, the defendant told Lee that “Somebody’s share is in your account” (NE p 70).

10 It will be recalled that PCMW ([4] supra) had purchased 300,000 shares. Lim Puan Chew, the owner of PCMW, was unhappy with the defendant’s late delivery and demanded that Lee resolve the matter quickly. In July 2005, Lim Puan Chew and Lee met the defendant and his brother, one Seah Bak Kheow, in the defendant’s office in Singapore. There were differing accounts as to what transpired at that meeting. The plaintiffs’ version was that the defendant agreed to refund PCMW the full purchase price of its shares. However, in order to prevent other plaintiffs from making similar demands for refunds from the defendant, the defendant issued a cash cheque and instructed Lee to deposit it first into Lee’s own bank account, and thereafter Lee was to issue his own cheque to refund the money to PCMW. The amount of the cash cheque made out by the defendant for the refund, which was in Singapore dollars, matched the amount of the cheque in Singapore dollars issued by PCMW to pay for its purchase of the shares. Lee signed an acknowledgement that the monies were on loan to him and the money would be repaid in 12 monthly instalments with interest at the rate of 7.5% per annum. Lee asserted that the acknowledgement was signed under duress. Lee only made the first interest payment of S$852 and stopped making subsequent interest payments. Lee claimed inter alia the return of S$852 in this action.

11 The defendant presented another version of the facts. At the meeting, the defendant had allegedly told Lim Puan Chew to seek redress from Lee as there was no contract between PCMW and the defendant. Following the meeting, the defendant agreed to help Lee obtain a loan from Bumiputra Commerce Bank to repay Lim Puan Chew. When that loan application was rejected, the defendant claimed that he extended to Lee a loan for the sum of S$136,364 to be repaid in 12 monthly instalments with the interest rate of 7.5% per annum.

12 In paragraph 11 of the Amended Statement of Claim, the plaintiffs claimed inter alia the return of the purchase price (as set out in [3] and [4] above) and damages as set out below:

No.	Name	Purchase Price (RM)	per share
1	Lee Seng Cheong	400,000	160,000
2	Lee Seng Cheong	270,000	108,000
3	Lee Seng Cheong	300,000	60,000
4	Cheong Yin Yuen	80,000	32,000
5	Tan Kian Heng	50,000	20,000
6	Ramasamy Somsasundaram	50,000	20,000
7	Loo Yuh Huey	50,000	20,000
8	Loo Yuh Huey	50,000	10,000 at RM 0.20
9	Lee Sea Kian	100,000	40,000
10	Chia Wang Nor	20,000	8,000
11	Sim Eng Chee	10,000	4,000

and

No.	Name	Purchase Price (RM)	Loss of Profit at RM 0.08 per share
1	Lee Seng Cheong	400,000	RM 32,000

13 The defendant’s sole defence was that the parties had orally agreed that the shares would only be transferred or delivered to Lee when Lee, who was representing all the other plaintiffs, called upon the defendant to do so. The defendant alleged that at no time before 13 April 2005 (when the shares were finally transferred) were any such instructions given to the defendant. In his affidavit, the defendant averred that since no instructions had been forthcoming from Lee for some months, he decided on his own accord sometime on or about 13 April 2005 that he should not hold on any longer to the shares and should instead transfer the shares purchased by Lee and the other plaintiffs to Lee’s share account, which eventually he did. Therefore, the defendant argued that he had not breached the contracts by transferring the 2,050,000 shares to Lee on 13 April 2005. The defendant instituted a counterclaim for the repayment of the loan to Lee and for RM 104,409.63, being the purchase price of 400,000 Fotronics shares that the defendant had allegedly purchased on Lee’s behalf between November 2005 and December 2005. Lee denied having knowledge of any such purchase.

14 On 10 October 2007, I allowed the plaintiffs’ claim in part and dismissed the defendant’s counterclaim. I ordered as follows:

a. The defendant is to return to the plaintiffs the purchase price in Malaysian Ringgit for the shares purchased by the first plaintiff on behalf of himself and the others as set out in exhibit P2 less the RM 300,000 paid for the shares of Puan Chew Motor Works Pte Ltd. The total amount to be restituted by the defendant to the plaintiffs is RM 1,520,000. Interest is to be awarded at 6% per annum from the respective dates of payment (as evidenced by the respective dates of the cheques for payment of the shares) to 1 April 2007, and thereafter at 5.33% per annum to the date of judgment;

b. The first plaintiff is to transfer...