Mookka Pillai Rajagopal and Others v Khushvinder Singh Chopra

• Jurisdiction: Singapore
• Judgment Date: 07 October 1996
• Date: 07 October 1996
• Docket Number: Civil Appeal No 108 of 1995
• Court: Court of Appeal (Singapore)

Mookka Pillai Rajagopal and others

Plaintiff

and

Khushvinder Singh Chopra

Defendant

[1996] SGCA 58

M Karthigesu JA

,

L P Thean JA

and

Goh Joon Seng J

Civil Appeal No 108 of 1995

Court of Appeal

Contract–Undue influence–Actual–Solicitor entering into option agreement as purchaser with clients through undue influence–Solicitor purporting to perfect agreement by entering into subsequent supplemental agreement and causing vendors to make statutory declaration exonerating him–Solicitor using threat to cause financial embarrassment to one vendor to bring about supplemental agreement–Whether actual undue influence made out–Contract–Undue influence–Presumed–Solicitor entering into option agreement as purchaser with clients through undue influence–Solicitor purporting to perfect agreement by entering into subsequent supplemental agreement and causing vendors to make statutory declaration exonerating him–Supplemental agreement manifestly disadvantageous to vendors–Whether presumption of undue influence negated by supplemental agreement and statutory declaration–Legal Profession–Solicitor-client relationship–Transactions with client–Solicitor in hac re–Solicitor entering as purchaser into sale and purchase of property with clients–Solicitor acting for clients in respect of same property prior to sale–Whether purchaser solicitor in hac re in respect of vendors–Duties of solicitor in hac re–Whether duties discharged

Number 91 Jalan Seaview (“the property”) was jointly owned by the three appellants. They first engaged the respondent to act for them as solicitor in its re-mortgage, and later, in its sale. Having been told by the first appellant that everything was to be handled by the second appellant, the respondent commenced negotiations to purchase the property with the second and third appellants. On 14 October 1993, the respondent was given an option to purchase the property for $1,200,000. This option was prepared by the respondent, but did not name his firm as solicitors for the appellants. The option was signed by the second and third appellants, but neither purported to sign on the first appellant's behalf. A cheque for $12,000 was given to the second appellant in consideration of the option, and it was agreed that the second appellant would be paid $50,000 as commission on the successful completion of the sale. However, all three appellants executed a subsequent option to third parties, on receiving a higher offer for the property, and that option was exercised in November 1993.

Meanwhile, on 25 October 1993, the respondent purported to exercise the option granted to him by giving notice of exercise of the grant to his own firm, before discharging himself as solicitor for the appellants and lodging a caveat on the property. Following further discussions with all three appellants, the respondent prepared a supplemental agreement which was signed by himself and the three appellants. This agreement, made on or about 22 November 1993, referred to his option to purchase the property and stated that, in consideration of the second appellant waiving payment of his “commission” of $50,000, the purchase price was increased to $1,250,000. On 8 December 1993, the respondent also procured a statutory declaration by all three appellants purporting to uphold the validity and integrity of the supplemental agreement and his option.

Faced with the appellants' refusal to proceed with the sale of the property to him, the respondent applied for a declaration that a valid and binding sale and purchase agreement had been formed, and for an order that it be specifically performed. The appellants alleged that they had been unduly influenced and counterclaimed for loss caused by the respondent's lodgement of the caveat on the property.

At first instance, it was held that no undue influence, whether actual nor presumed, had been applied; and in any event, the appellants had affirmed the transaction, given their statutory declaration as well as certain correspondence from the first appellant's solicitors to the third party purchasers. The appellants appealed.

Held, allowing the appeal:

(1) The respondent's option was signed by only two of the three joint tenants of the property. It was incomplete and ineffective. Thus, the purported exercise of the option by the respondent did not give rise to any agreement for the sale and purchase of the property: at [21] and [22].

(2) In any event, the option did not bind the first appellant since he had never held the second appellant out as having any authority to sign the option on his behalf, nor had he conferred any such authority on the second appellant. Nor had the second appellant purported to sign the option on the first appellant's behalf: at [21].

(3) At all material times until 25 October 1993, the respondent remained the solicitor in respect of the sale of the appellants' property to himself. Trust and confidence were reposed on the respondent, and he was undoubtedly in a position to exercise influence over the second and third appellants in the negotiations with them. Given the manner and time of night when negotiations were conducted and the option executed by the second and third appellants, they were not given any opportunity to seek independent legal advice. In those circumstances, it would be presumed that the respondent had exercised undue influence over the second and third appellants in executing the option unless the respondent rebutted the presumption by showing that they had freely exercised their judgment in doing so; and given the facts of the case, the respondent had failed to do so: at [35], [36] and [38].

(4) The 22 November 1993 supplemental agreement amounted to a sale and purchase agreement of the property made between the appellants and the respondent. But although the respondent had ceased to be the solicitor for the appellants by this time, the circumstances justified inferring that the confidential relationship between the parties continued and the respondent was the solicitor in hac re. As a solicitor, the respondent had a duty to make full and proper disclosure to the appellants of the effect of the supplemental agreement on the appellants, the advantage he would gain thereby, and the manifestly disadvantageous predicament in which the appellants would be placed as a result. In these circumstances, undue influence would be presumed, and the respondent had failed to rebut the presumption: at [24], [47], [50] and [54].

(5) Alternatively, the evidence relating to the re-negotiation established the respondent's actual undue influence over the second appellant and, through him, the first and third appellants. The appellants did not have the benefit of independent legal advice before they executed the supplemental agreement, nor could it be imagined that any reasonably competent solicitor would not have advised against executing such a document. The extent of the respondent's influence could also be seen or inferred from the circumstances in which the appellants were brought to sign the statutory declaration, the wording of which was wholly one sided and for the respondent's sole benefit; and even though the commissioner for oaths who attested the signatures for the appellants explained to them the content of the statutory declaration, she could not have advised them on the legal consequences: at [55] and [63] to [66].

(6) As for the correspondence between the first appellant's solicitors to the third party purchasers, whatever effect they might have in relation to the addressees, they did not concern the respondent. Written on the basis that the appellants believed they were bound by the transaction with the respondent, they had no independent validity: at [72].

Allison v Clayhills (1907) 97 LT 709 (folld)

Demerara Bauxite Company, Limited v Louisa Hubbard [1923] AC 673 (folld)

McMaster v Byrne [1952] 1 All ER 1362 (folld)

N Sreenivasan and Palaniappan Sundararaj (Derrick Ravi & Partners) for the appellants

Michael Hwang and Francis Xavier (Allen & Gledhill) for the respondent.

Judgment reserved.

L P Thean JA

(delivering the judgment of the court):

1 This is an appeal from the decision of the High Court allowing the claim by the respondent for a declaration and specific performance of an agreement for the sale and purchase of a property and disallowing the counterclaim by the appellants for various reliefs.

The facts

2 The relevant facts that gave rise to the appeal before us are these. The appellants are the owners of the property known as 91 Jalan Seaview (“the property”) as joint tenants. The first appellant is the father, and the third appellant, the wife, of the second appellant. The respondent is an advocate and solicitor practising as a sole proprietor under the name and style of Khush Chopra.

3 On 5 August 1993, the second appellant signed a warrant to act authorising the respondent to act as solicitor in connection with all matters pertaining to an intended “purchase” of the property including conveyance, mortgage and other related work. The word “purchase” was an error as the transaction intended or contemplated was a re-mortgage of the property. The second appellant was in effect instructing the respondent for himself and on behalf of the first and third appellants. This was not in dispute. The respondent accepted the instructions from the second appellant and acted for all of them in the re-mortgage. He sent out requisitions to the various government departments and wrote to the existing mortgagee on behalf of the appellants giving notice of redemption and asking for the title deeds to the property. The re-mortgage, however, was subsequently abortive.

4 In October 1993 the appellants intended to sell the property and through a broker Rocky Selvarajoo (“Rajoo”) they were given to understand that there was an interested buyer, Srochna d/o Rajagopal. Unknown to the appellants Srochna...