Min Hong Auto Supply Pte Ltd v Loh Chun Seng and Another

• Judge: MPH Rubin JC
• Judgment Date: 24 April 1993
• Neutral Citation: [1993] SGHC 87
• Citation: [1993] SGHC 87
• Defendant Counsel: P Suppiah and Noor Mohamed Marican (Noor Mohamed Marican & Assoc)for the defendants
• Published date: 19 September 2003
• Plaintiff Counsel: Mohan Pillay and Joseph Yeo (Drew & Napier)
• Date: 24 April 1993
• Docket Number: Suit No 1530 of 1989
• Court: High Court (Singapore)
• Subject Matter: Execution of option allegedly induced by misrepresentation,Quantum of damages is difference between market price and purchase price at the time the mortgagees' sale took place,Acceptance of cheque,Option executed,Contract,Breach,Failure to call witness,Evidence,Whether right to demand cash waived,Property had been sold by mortgagees,Land,Payment by cheque when executing option,Conveyance,Whether adverse inference can be drawn,Proof of evidence,s 116(g) Evidence Act (Cap 97, 1990 Ed),Sale of land,Whether estate agent acted as agent of vendors or purchasers,No deliberate withholding of evidence,Whether valid tender,Option to purchase,Presumptions,Damages,Whether vendors bound by option to complete purchase,Misrepresentation of estate agent

Cur Adv Vult

Background

The dispute between the plaintiffs and the defendants revolves around an option to purchase a property known as 23 Paya Lebar, 121 Ubi Avenue 4, Singapore. The plaintiffs` claim is for damages for breach of contract arising from the defendants` failure to complete the sale of the said property.

The following facts were not in dispute. On or about 16 May 1989 one William Ong, a real estate agent, delivered to the plaintiffs an option to purchase the property for a price of $900,000. The option (PB-7/8) dated 16 May 1989 was duly executed by the defendants who were the owners of the property. The material part of the option provides as follows:

16 May 1989.

Option

Re: Property at Lot No 2771/U4 Mukim No 23 Paya Lebar (121 Ubi Avenue 4) Singapore

...

To: Messrs Min Hong Auto Supply Pte Ltd, Singapore

In consideration of the sum of $20,000.00 Dollars Twenty thousand only paid to us, the receipt of which we acknowledge hereby, we Mr Loh Chun Seng NRIC 0890306-I and Mr Yang Shee Khong NRIC 1362351-A hereby make the following offer which remains open until 4pm on 16 June 1989.

We hereby offer to sell to you or your nominee the above property such offer to be accepted in the manner hereinafter provided and upon the terms set below. This offer may be accepted by you or your nominee signing at the foot of this copy of the option marked `ACCEPTANCE COPY` and delivering the same duly signed together with the 10% of the purchase price (less the option money of $20,000.00) to our solicitors Messrs Noor Mohamed Marican & Associates of 151 Chin Swee Rd, Manhattan House No:07-07, Singapore as stakeholders who are authorized to acknowledge receipt of the deposit on or before the above date.

Terms of sale

(1) The sale price shall be $900,000.00 Dollars (Nine hundred thousand) only.

(2) The sale is with vacant possession.

(3) The sale is subject to the `Singapore Law Society`s Condition of Sale 1981`.

...

(6) The sale shall be completed at the office of our solicitors on or before 22 August 1989.

...

(9) The option money paid herein shall be treated as part payment towards the 10% deposit of the purchase price which shall be paid on the exercising of this option as aforesaid.

(10) If this option is not exercised on or before the date hereby stipulated, the offer herein contained shall lapse and the option moneys paid shall be forfeited.

...

(signed) (signed)

Vendor`s signature Vendor`s signature

Loh Chun Seng ... Yang Shee Khong ...

(signed)

Witness`s signature

William Ong ...

It was also not in dispute that the plaintiffs` cheque for a sum of $20,000 given to William Ong in exchange for that option was handed over by William Ong to the defendants on 16 May 1989. However on 24 May 1989 the defendants being unwilling to proceed with the sale, returned the said cheque to the plaintiffs under their letter dated 24 May 1989. The said letter (PB-16) reads as follows:

[From] Loh Chun Seng and Yang Shee Khong

...

24 May 1989

[To] Messrs Ming Hong Auto Supply Pte Ltd

...

Property at 121 Ubi Avenue 4, Singapore

Lot No 2771/U4 Mukim No 23 Paya Lebar

We refer to the option dated 16 May 1989 in relation to the above property which you requested us to sign and thereafter to send it to our solicitors for approval.

Our solicitors have informed us that we are not able to give vacant possession of the above property at the date of completion.

We have also been informed that in the event that the terms are not suitable to us, the option will be cancelled.

We therefore return herewith your Malayan Banking Berhad Cheque No 176933 dated 16 May 1989 for the sum of $20,000.00 and wish to treat the option as cancelled.

Yours faithfully

(signed)

Enc

The plaintiffs however did not agree to the cancellation of the option. They instructed their solicitors to return the cheque for $20,000 and went ahead with the exercise of the option on 30 May 1989 by signing the same and forwarding to the defendants a cheque for $70,000 being the balance of the 10% deposit. There ensued an exchange of correspondence between the respective solicitors culminating in a writ being issued by the plaintiffs for the specific performance of the agreement for sale. However, on or about 23 October 1990, there was a sale of the property by the mortgagees and as a result the plaintiffs` claim for specific performance became otiose and the claim was one for damages for breach of contract.

Pleadings

The plaintiffs in their statement of claim averred that the option given by the defendants was legally binding and that they were at all material times ready and willing to fulfil their obligations under the contract but the defendants had refused to honour their side of the bargain.

The defendants by their defence claimed that at the time of the signing of the said option, they had no intention to bind themselves or to create any legal relationship between the parties.

The defendants further claimed that the said William Ong acted as an agent for the plaintiffs in connection with the intended transaction. They then proceeded to particularize the role played by William Ong under para 4 of the defence as follows:

Particulars

i On or about the 16th day of May 1989, one Cheah Keong Hoe brought the said William Ong to see the defendants at the premises known as No 19A Opal Crescent, Singapore.

ii The said William Ong then informed the defendants that there was a buyer for the said property and then handed an option for them to sign. The said option was prepared by William Ong himself.

iii The defendants informed the said William Ong that they wish (sic) to discuss the terms of the option with their solicitors before signing it especially with regard to vacant possession of the said property, whereupon the said William Ong assured the defendants that the option was a mere formality and that the defendants would not be bound by its terms until after they have (sic) sought their solicitors` advice and confirmed the terms and conditions thereof.

iv The defendants as a result of the said representation signed the said option in the bona fide belief that they would not be bound by its terms and conditions.

The defendants further, by an amendment made to the defence after the plaintiffs` principal witness Ang Boon Lim had concluded his evidence, raised a legal issue suggesting that even if there was a binding contract between the parties, the two cheques tendered by the plaintiffs were not valid tenders since the option did not provide for payments by cheque.

The plaintiffs in their reply raised the issues of estoppel and waiver on the part of the defendants. In the main the reply focussed on the capacity of William Ong and the mode of payment. The plaintiffs particularly averred that the defendants` waiver could be inferred from the acceptance of the cheque of $20,000 in the first instance by William Ong who, according to the plaintiffs, had actual or ostensible authority to accept payment by reason of his being given possession of the duly signed option. The plaintiffs further contended that waiver could also be inferred from the defendants` failure to rely on the ground of lack of valid tender in the defendants` letters dated 24 May 1989 and 31 May 1989 rejecting the said cheques.

Shorn of all rhetoric, the main issues for resolution are: (1) whether the option given by the defendants to the plaintiffs is a binding one; and (2) if the option was binding, did the plaintiffs exercise the option in the manner prescribed or implied under that option - in relation to the mode of payment. A subsidiary issue in this case pertains to the capacity of the real estate agent, William Ong. The issue is whether William Ong is the agent of the plaintiffs or of the defendants.

The plaintiffs` evidence

Mr Ang Boon Lim (`Ang`), a director of the plaintiffs, testified that a week prior to 16 May 1989, William Ong contacted him and told him that there was a warehouse available for sale at a price of $920,000. Ang obtained the address of the property from William Ong and after inspecting the property from outside told William Ong that he would be prepared to pay a price of $900,000 for the property. William Ong replied that he had to seek instructions from the owner and in the event the plaintiffs indicated that they were willing to purchase the property at $900,000.

Ang further testified that after he had received a draft option from William Ong he went to inspect the property on 16 May 1989 together with William Ong and his solicitor Ho. Later that day as advised by his solicitor, he issued a cheque for $20,000 drawn in favour of the defendants. He understood subsequently that the said cheque was exchanged for the option on the day itself. However, on 27 May 1989, he received a letter dated 24 May 1989 from the defendants advising the plaintiffs that the defendants would wish to treat the option as cancelled.

The plaintiffs did not accept the return of the cheque. To that end Ang instructed his solicitors to return the cheque and to demand completion of the sale. On or about 30 May 1989 as advised by his solicitors, the plaintiffs exercised the option and sent another cheque for $70,000 made payable to the defendants` solicitors being the balance of the 10% deposit of the purchase price. He asserted that he never asked or authorized William Ong to act for him in respect of the sale and that William Ong never raised with him the issue of any commission being payable to him in respect of the sale of the property. He further maintained that William Ong did not mention to him that the vendors wanted to confer with their solicitors before they agreed to the terms of the option.

Ang denied that William Ong was the plaintiffs` agent. He further testified that during his...