Lim Koon Park v Yap Jin Meng Bryan

• Judgment Date: 22 July 2013
• Date: 22 July 2013
• Docket Number: Civil Appeal No 107 of 2012 (Suit No 184 of 2010)
• Court: Court of Appeal (Singapore)

Lim Koon Park and another

Plaintiff

and

Yap Jin Meng Bryan and another

Defendant

[2013] SGCA 41

Sundaresh Menon CJ

,

Andrew Phang Boon Leong JA

and

V K Rajah JA

Civil Appeal No 107 of 2012 (Suit No 184 of 2010)

Court of Appeal

Contract—Formation—Continuing negotiations—Exact circumstances surrounding conclusion of contract unclear—Documentary evidence unambiguously showing agreement pertaining to profits resulting from sale of properties—Whether there was agreement entitling first appellant to 22.5% of profits from sale of properties

Contract—Misrepresentation—Characterisation—First appellant representing that property had a plot ratio of 1.4—Three plot ratios relevant to property—Whether first appellant had represented that property had maximum permitted plot ratio of 1.4

Contract—Misrepresentation—Reliance—First respondent presumed to have relied on first appellant’s purported misrepresentation—Whether presumption of reliance was presumption of law or presumption of fact—Whether presumption of reliance ought to apply—Whether first respondent had indeed relied on first appellant’s purported misrepresentation

Evidence—Presumptions—Legal and factual—When irrebuttable or rebuttable—Presumption of reliance presumption of fact and not presumption of law—Reasons for invoking presumption of reliance had to be given

The first appellant, Lim Koon Park (“Park”), the second appellant, Wee Pek Joon (“Madam Wee”), the first respondent, Yap Jin Meng Bryan (“Bryan”) and two other persons (hereinafter referred to collectively as the “JV Parties”) were part of a joint venture which sought to acquire, redevelop and resell properties for profit. The second respondent, Riverwealth Pte Ltd (“Riverwealth”), was incorporated as a joint venture vehicle for the acquisition of two properties situated at 428 (“428 RVR”) and 434 River Valley Road (“434 RVR”) (both properties shall hereinafter be collectively referred to as “the Properties”).

In early 2007, Park informed the other JV Parties that 434 RVR was up for sale. Park knew about the sale because he was engaged by CB Richard Ellis, which was in turn acting for the ultimate sellers. Park had also assisted in the submission of an outline application to the Urban Redevelopment Authority (“the URA”) for the redevelopment of 434 RVR into a residential development, where the plot ratio of 434 RVR was stated to be 1.4. On 28 September 2007, Riverwealth was incorporated, with Bryan beneficially owning 50% of the shareholding of Riverwealth and Madam Wee holding 25% of the shareholding of Riverwealth. Bryan and Madam Wee were also directors of Riverwealth (along with another JV Party). On 18 December 2007, the option to purchase 434 RVR was exercised for a sum of $36 m. Later, on 22 February 2008, the option to purchase 428 RVR (which was adjacent to 434 RVR) was purchased for a sum of $12.5 m. The acquisition of the Properties was financed in two ways. Firstly, a loan of $30 m was extended by Hong Leong Finance to Riverwealth. This loan was jointly and severally guaranteed by Bryan, Park, and another JV Party. Secondly, Bryan in his personal capacity extended a loan of approximately $22 m to Riverwealth and injected $1 m in equity capital.

On 20 November 2008, Riverwealth’s equity shareholding was restructured. Riverwealth issued new shares to Bryan, increasing his proportional ownership in Riverwealth to 74%. Madam Wee’s proportional ownership in Riverwealth dropped to 13%. Due to increased risk exposure, Bryan wanted Madam Wee (and another JV party) to either pay for or transfer to Bryan her allotment of shares in Riverwealth. Madam Wee did neither, and was removed as a director at an extraordinary general meeting on 12 August 2009. The remaining directors, inclusive of Bryan, then passed a resolution on 4 September 2009 resolving to sell the Properties to Oxley JV Pte Ltd (“Oxley JV”). The Properties were sold to Oxley JV for a sum of $60.08 m on 8 October 2009.

Park sued for his share of the profits from the sale of the Properties, alleging that there was an oral agreement that entitled him to 22.5% of the profits. Bryan denied that Park was entitled to a share of the profits, and alleged that there was an indicative oral agreement that would only entitle Park to profits if the Properties were sold within a certain time frame for a certain price range and if the risks and costs of holding the Properties were minimised in view of the declining property market at that time. Bryan further counterclaimed that Park had misrepresented that 434 RVR had a plot ratio of 1.4. The trial judge dismissed Park’s claim for his share of the profits, and further held that Park had misrepresented that 434 RVR had a plot ratio of 1.4. Park and Madam Wee appealed against the trial judge’s decision on both counts.

Held, allowing the appeal:

(1) It was well-settled that appellate intervention was narrowly circumscribed: a trial judge’s findings of fact should not ordinarily be disturbed where they hinge on an assessment of witness credibility. However, it was always important to test witnesses’ evidence against the objective facts and independent evidence, and appellate intervention was justified where findings of fact were plainly wrong or against the weight of evidence: at [37] and [76] .

(2) An operative misrepresentation consisted in a false statement of existing or past fact made by one party before or at the time of making the contract, which was addressed to the other party and which induced the other party to enter into the contract. Section 2 (1) of the Misrepresentation Act (Cap 390, 1994 Rev Ed) reversed the burden of proof, in that the party who made the misrepresentation had to show that he had had reasonable grounds to believe that the fact represented was true: at [38] and [39] .

(3) The trial judge conflated three different types of plot ratios in making her determination. The trial judge wrongly concluded that Park had represented that 1.4 was the maximum permitted plot ratio, when he had only represented that 1.4 was the approved proposed plot ratio. This was in fact true, and there was thus no misrepresentation: at [41] to [43] and [51] .

(4) The presumption that a representee had relied on a material representation was a presumption of law, and not a presumption of fact. As such, the presumption of reliance was not mandatory: a court might choose to apply the presumption, depending on the factual matrix: at [53] and [54] .

(5) The trial judge did not explain why she invoked the presumption of reliance. A closer perusal of the documentary evidence indicated that Bryan had not relied on a representation that 434 RVR had a maximum plot ratio of 1.4, and that the trial judge had erred in choosing to utilise the presumption of reliance: at [59] and [63] .

(6) That the exact circumstances surrounding the conclusion of the contract were unclear was no impediment to discerning that one was in fact concluded in the course of the parties’ continuing negotiations. The court had to look at the whole correspondence and decide whether, on its true construction, the parties had agreed to the same terms. The courts scrutinised the objective conduct of the parties in determining if an agreement had been reached, and tried as far as practical experience allowed to ensure that the reasonable expectations of honest men were not disappointed: at [65] , [66] and [75] .

(7) There was an extant oral agreement for Park to ultimately receive 22.5% of the profits from the sale of the Properties: at [79] .

[Observation: All presumptions were merely propositions in the form of “P implies Q; P is proven to be true, so therefore Q is true”, and were special forms of modus ponendo ponens: at [55] .

Presumptions of law were mandatory and could be further subdivided into irrebuttable and rebuttable presumptions of law. An irrebuttable presumption of law was such that if P was proven on a balance of probabilities, then Q was ipso jure proven regardless of the rest of the available evidence. A rebuttable presumption of law was such that if P was proven on a balance of probabilities, then Q was established only if there was insufficient countervailing evidence indicating otherwise: at [56] and [57] .

A presumption of fact was not an obligatory rule of law; the court had a discretion on whether to apply the presumption to the particular factual matrix. As such, when a court did apply a presumption of fact, it was incumbent on the court to give reasons for the application of the presumption: at [57] .]

Aircharter World Pte Ltd v Kontena Nasional Bhd [1999] 2 SLR (R) 440; [1999] 3 SLR 1 (folld)

Lau Siew Kim v Yeo Guan Chye Terence [2008] 2 SLR (R) 108; [2008] 2 SLR 108 (folld)

Ng Buay Hock v Tan Keng Huat [1997] 1 SLR (R) 507; [1997] 2 SLR 788 (folld)

Ng Chee Chuan v Ng Ai Tee [2009] 2 SLR (R) 918; [2009] 2 SLR 918 (folld)

St Paul Fire and Marine Insurance Co (UK) Ltd v Mc Connell Dowell Constructors Ltd [1996] 1 All ER 96 (folld)

Tan Chin Seng v Raffles Town Club Pte Ltd [2003] 3 SLR (R) 307; [2003] 3 SLR 307 (folld)

Tat Seng Machine Movers Pte Ltd v Orix Leasing Singapore Ltd [2009] 4 SLR (R) 1101; [2009] 4 SLR 1101 (folld)

Tribune Investment Trust Inc v Soosan Trading Co Ltd [2000] 2 SLR (R) 407; [2000] 3 SLR 405 (folld)

Yong Kheng Leong v Panweld Trading Pte Ltd [2013] 1 SLR 173 (folld)

Misrepresentation Act (Cap 390, 1994 Rev Ed) ss 2, 2 (1)

Residential Property Act (Cap 274, 2009 Rev Ed) ss 2, 3

Rules of Court (Cap 322, R 5, 2006 Rev Ed) O 22 A r 9 (3) , O 43 r 2, O 43 r 3

Chelva Ratnam Rajah SC (instructed) (Tan Rajah & Cheah) and Srinivasan V N and Rahayu Mahzam (Heng, Leong & Srinivasan) for the appellants

Sarjit Singh Gill SC, Lum Baoling Georgina and Ho Ching Ying Victoria Anne (Shook Lin & Bok LLP) for the respondents.

Judgment reserved.

V K Rajah JA

(delivering the judgment of the court):

Introduction

1 This...