Lim Geok Hian v Lim Guan Chin

• Judgment Date: 01 October 1993
• Date: 01 October 1993
• Docket Number: Originating Summons No 1278 of
• Court: High Court (Singapore)

Lim Geok Hian

Plaintiff

and

Lim Guan Chin

Defendant

[1993] SGHC 233

L P Thean JA

Originating Summons No 1278 of 1990

High Court

Contract–Misrepresentation–Fraudulent misrepresentation–Brother and sister agreed to share father's inheritance equally–Whether brother aware of father's testamentary arrangements–Whether brother induced sister to execute agreement by fraudulent misrepresentation–Contract–Unconscionability–Brother and sister agreed to share father's inheritance equally–Whether “inequality of bargaining power” sufficient in itself to set aside contract–Contract–Undue influence–Brother and sister agreed to share father's inheritance equally–Brother much more highly educated than sister–Sister not astute but strong-willed and determined–No presumption of undue influence between brother and sister–Actual influence to be proved–Whether brother had capacity to influence sister

The plaintiff was the son of a traditional Chinese man who favoured boys over girls, and the defendant was the plaintiff's elder sister. There was a wide disparity in their educational standards, with the plaintiff being the more highly educated. The plaintiff was the father's favourite child, and was expected by the rest of the family to inherit his house. Their father had unexpectedly devised the property which is the subject of the dispute absolutely to the defendant by a will dated 6 September 1986. Prior to their father's death, the plaintiff and the defendant entered into an agreement dated 19 August 1987 (“the agreement”) which provided, inter alia, that in the event of the will of their father specifying that either of them would inherit the entire property, then the property would belong to them in equal shares. The plaintiff brought this action to enforce the agreement. In her defence, the defendant admitted the execution of the agreement but argued that: (a) the plaintiff had exerted undue influence in inducing her to execute the agreement; (b) the bargain had been unconscionable; and (c) she had been induced to execute the agreement by fraudulent misrepresentation on the part of the plaintiff, to the effect that he was most likely to inherit the property and the agreement was thus to her benefit. The defendant further counterclaimed to rescind the agreement on the basis that the plaintiff had found out about the contents of their father's will before entering into the agreement, while the defendant had been unaware of the same at the relevant time.

Held, dismissing the claim and allowing the counterclaim:

(1) The relationship of brother and sister was not one where the presumption of undue influence arose, and actual influence must be proven. A complainant who was relying on a plea of undue influence as against another party must show that (a) that other party had the capacity to influence the complainant; (b) the influence was exercised; (c) its exercise was undue; and (d) its exercise brought about the transaction: at [37].

(2) It was not established that the plaintiff could or did in fact exercise any dominance or influence on the defendant in the sense of pressurising or prevailing upon her to sign the agreement if she did not really want to. The defendant was a strong-willed and determined person who was capable of exercising her own judgment and did exercise her own judgment in signing the agreement. No undue influence was exercised by the plaintiff over her in relation to her signing the agreement: at [39] and [40].

(3) The present case was not one which involved an unconscionable bargain in the absence of any fraudulent conduct by the plaintiff. Even though it was true that the defendant was not highly educated and did not receive independent advice, it was clear that she understood the agreement and intended the legal effect of the agreement. Her ignorance and poverty did not place her at any disadvantage: at [48].

(4) The plaintiff had represented to the defendant that he was most likely to inherit the property, that he would give her half of it and that the agreement was for her benefit. The plaintiff at that time knew the contents of the will and he therefore knew that the representations he made were not true. In reliance on these representations, the defendant signed the agreement. The agreement was therefore induced by the plaintiff's fraudulent misrepresentations and must be set aside on that ground: at [61].

[Observation: Inequality of bargaining power was insufficient, in itself and in the absence of any unconscionable or fraudulent conduct, to justify the setting aside of a contract: at [44].]

Alec Lobb (Garages) Ltd v Total Oil (Great Britain) Ltd [1985] 1 WLR 173 (folld)

Allcard v Skinner (1887) 36 Ch D 145 (refd)

Bank of Credit and Commerce International SA v Aboody [1990] 1 QB 923 (folld)

Beckley v Newland (1723) 2 P Wms 182; 24 ER 691 (folld)

Cresswell v Potter [1978] 1 WLR 255 (refd)

Fry v Lane (1889) 40 Ch D 312 (refd)

Harvey v Mount (1845) 8 Beav 439; 50 ER 172 (distd)

Lai Kwee Lan v Ng Yew Lay [1989] 2 SLR (R) 252; [1989] SLR 863 (folld)

Lloyds Bank Ltd v Bundy [1975] QB 326 (not folld)

National Westminster Bank Plc v Morgan [1985] AC 686 (folld)

Sharp v Leach (1862) 31 Beav 491; 54 ER 1229 (distd)

Wethered v Wethered (1828) 2 Sim 183; 57 ER 757 (folld)

Cheong Yuen Hee and V Thinagaran (William Oh & Pnrs) for the plaintiff

Harry Elias and Regina Quek (Harry Elias & Pnrs) for the defendant.

Judgment reserved.

L P Thean JA

1 In this action, the plaintiff claims against the defendant, his elder sister, a share of the property known as 28 Olive Road, Singapore. The property was devised to the defendant absolutely by the will dated 6 September 1986 of their late father, Lim Say Chong, who passed away on 29 May 1990. The plaintiff's claim is founded on an agreement dated 19 August 1987 made between him and the defendant which provided, among other things, that in the event of the will of their father “specifying” that either of them was to inherit the entire property, the property would belong to them in equal shares. The defendant does not deny that she had entered into such an agreement, but says that she was induced to enter into it by: (a) undue influence exercised by the plaintiff; or (b) fraudulent misrepresentation on the part of the plaintiff. Alternatively, she says that the entire agreement is in the circumstances an unconscionable bargain. Accordingly, she counterclaims that the agreement should be set aside.

The background

2 It is necessary in this case to set out the historical background to this dispute. The late Lim Say Chong (“the father”) had four children by his wife, Loh Gim Hong (“Madam Loh”), and they are as follows (in the order of seniority):

(a) Lim Yuan Fong (“Yuan Fong”), the daughter;

(b) Lim Guan Chin, the defendant;

(c) Lim Giok Luen (“Giok Luen”), the son; and

(d) Lim Geok Hian, the plaintiff.

3 The father was educated in Chinese and was a traditional Chinese who favoured sons over daughters and the plaintiff was his favourite child.

4 The plaintiff is the only child in the family who studied in a Chinese language school, and he could communicate well with his father and was close to his father. In 1969, he left for England for higher education and pursued a course of studies in mechanical engineering at the University of London; he probably did that as an external student. In 1972, he obtained the degree of Bachelor of Science (in mechanical engineering) and thereafter he joined the Imperial College of Science and Technology to pursue postgraduate studies. In 1974, he obtained the Diploma of Membership of the Imperial College and the degree of Master of Science (in acoustic and vibration technology in the field of mechanical engineering). Subsequently, he also obtained his professional qualifications, namely, membership of the Institution of Mechanical Engineers in 1979 and membership of the Institution of Gas Engineers in 1982.

5 The father financed the plaintiff's studies in England, including his studies for the degree of Master of Science. While the plaintiff was in England, the father and the plaintiff remained in constant touch with each other; they wrote to each other (in Chinese) frequently. The father even gave the plaintiff 10,000 in 1983 to help him upgrade his house to a bigger house. He was married in England on 22 June 1974 and has two children. His wife, Chua Siew Chin Carol, is also highly educated; she has a degree of Master of Science. He and his family returned to Singapore on 15 June 1985. However, he had committed an offence under the Enlistment Act (Cap 93) for failure to return to Singapore to do national service. Hence, on his return, he was charged and convicted for remaining outside Singapore after expiry of his exit permit. He subsequently did his national service on a full time basis from early December 1985 and completed it in mid-June 1988. The plaintiff is now a senior lecturer in mechanical engineering at the Nanyang Technological University, Singapore, and his wife is a lecturer at the Ngee Ann Polytechnic.

6 By contrast, the highest standard of education the defendant had attained was secondary two. She studied in Methodist Girls' School, but after secondary two, she could not study and had to leave school. Thereafter she took up a vocational course at the Maris Stella Vocational Institute. Her problem in studies was probably compounded by her illness. She was unfortunately afflicted with a skin disease which has marred seriously her facial appearance. She is presently a quality controller in a factory manufacturing capacitors and works on shifts. She is earning a gross salary of about $1,100 per month inclusive of shift allowance, transport and other allowances.

7 The property was the family home. As originally owned by the father, it had an area of 36,000sq ft. Subsequently, he subdivided it into two lots and transferred the smaller...