Ng Soo Khim v Heng Teo Bong

• Jurisdiction: Singapore
• Judgment Date: 05 September 1992
• Date: 05 September 1992
• Docket Number: Suit No 4722 of 1985
• Court: High Court (Singapore)

Ng Soo Khim

Plaintiff

and

Heng Teo Bong

Defendant

[1992] SGHC 235

Goh Phai Cheng JC

Suit No 4722 of 1985

High Court

Contract–Formation–Oral agreement–Whether agreement was formed–Civil Procedure–Pleadings–Objections–Whether written agreement should be excluded on basis that it was not pleaded–Function of pleadings–Land–Sale of land–Contract–Option to purchase exercised–Whether there was binding contract–Land–Sale of land–Contract–Option to purchase–Whether there was binding contract–Dishonoured cheque for sale proceeds–Effect of such cheque–Whether defendant entitled to elect to treat contract as at an end

The plaintiff, Ng Soo Khim, claimed to have orally agreed to lend a sum of $130,000 to the defendant, Heng Teo Beng, and his brother, Heng Teo Meng (“HTM”). In consideration, the defendant agreed to repay the sum on demand. He also agreed jointly with HTM to sell their property to the plaintiff for $520,000. Prior to 9 July 1982, the property was mortgaged to a bank to secure HTM's overdraft facility. The plaintiff contended that on 1 March 1985, he handed the $130,000 in cash to the defendant and HTM and exercised an option to purchase the property - which was granted to him for $5,000 - by signing the acceptance portion of the same and issuing to the defendant's and HTM's solicitors a cheque for $47,000, being the balance of the 10% deposit.

The plaintiff claimed for the return of the $130,000, the $5,000 and damages on the ground that the defendant and HTM failed, neglected and/or refused to return the said $130,000 despite his repeated demands, and to take such necessary action to avert the bank's foreclosure of the property. The bank auctioned off the property on 7 March 1985 rendering the plaintiff's performance of the sale and purchase agreement of the property impossible. The defendant denied taking the said loan and argued that the $130,000 was owed by HTM instead. Further, the plaintiff had not exercised the said option to purchase within the stipulated time because the cheque issued for the payment of the balance of the 10% deposit was dishonoured. In the alternative, even if the said option was considered as exercised within the stated time, there was no concluded and binding contract between the plaintiff and the defendant on the ground that the exercise of the said option was subject to the payment of $47,000 being made and received but the said sum was not received. In reply, inter alia, the plaintiff denied that the defendant had a right to forfeit the said $5,000.

The issues before the court were whether: (a) an oral agreement between the parties existed; (b) the plaintiff handed over the sum of $130,000 to the defendant and HTM on 1 March 1985; and (c) the plaintiff was entitled to a refund of the $5,000 paid by him for the option to purchase the property.

During the hearing, the defendant produced an original document (DB2), which the plaintiff contended was not admissible as the defendant had not pleaded that there was a written agreement to the effect as set out in that document.

Held, allowing the claim:

(1) The function of pleadings was to require the parties to state the facts on which the party pleading relied on for his claim or defence, as the case may be, but not the evidence by which those facts were to be proved. DB2 was admissible in evidence: at [28].

(2) On the evidence: (a) the defendant handed the $130,000 to the plaintiff on 1 March 1985 after the plaintiff had exercised the option to purchase; (b) the plaintiff had agreed to purchase the property from the defendant and HTM for the sum of $650,000 and accepted the condition imposed by the defendant and HTM, namely, that he would give the defendant the sum of $130,000 in cash on the day the contract for the sale and purchase was signed and he would pay a deposit equivalent to 10% of the sum of $520,000 that was recorded as the purchase price in the option notwithstanding that the parties had agreed that the property would be sold to the plaintiff for $650,000; (c) the defendant and HTM knew that bankruptcy proceedings were pending against HTM; and (d) there was a binding contract of sale and nothing in the terms of the option expressly or impliedly stated that the contract would be operative only if the cheque for $47,000 was honoured: at [73] and [82].

(3) The provision in the option for the payment of the deposit was not a condition precedent to the formation of a contract. It was a fundamental term of the contract that was concluded when the plaintiff exercised the option to purchase the property. A breach of this entitled the vendor to treat the contract as at an end and to sue for damages, including the amount of the unpaid deposit: at [93].

(4) The defendant and HTM were not entitled to elect to treat the contract as at an end on 7 March 1985 even though the cheque for the 10% deposit had been dishonoured. Before the option to purchase was given to the plaintiff, HTM's solicitors had been informed that the bank would, in principle, agree to a private sale of the property if the sale price was sufficient to cover the sum due, interest thereon and the bank's legal and other costs incurred by reason of HTM's failure to repay the debt. Yet HTM's solicitors had proceeded to give the option to the plaintiff without having obtained the prior approval of the bank. If the cheque had not been dishonoured, the bank would not have given their consent to such option since the sale price stated therein was insufficient to cover the sum due to the bank and interest thereon and the bank's legal and other costs: at [94] and [95].

Blankenstein, Bartenstein, Birkenstein, The [1985] 1 WLR 435; [1985] 1 Lloyd's Rep 93; [1985] 1 All ER 475 (refd)

Chua Gek Kuon v Seow Chai Seng [1991] 1 SLR (R) 614; [1992] 1 SLR 270 (folld)

Dewar v Mintoft [1912] 2 KB 373 (refd)

Duke v Robson [1973] 1 WLR 267 (refd)

International Trust and Finance Ltd v Chui Pui Cheng [1985-1986] SLR (R) 777; [1986] SLR 301 (refd)

Lo Geok Kwee v Suriyakumari d/o Kandasamy Gopal [1991] SGHC 199 (distd)

Lowe v Hope [1970] Ch 94; [1969] 3 All ER 605 (refd)

Millichamp v Jones [1982] 1 WLR 1422; [1983] 1 All ER 267 (folld)

Myton Ltd v Schwab-Morris [1974] 1 WLR 331; [1974] 1 All ER 326 (refd)

Pollway Ltd v Abdullah [1974] 1 WLR 493; [1974] 2 All ER 381 (refd)

Powell v Marshall, Parkes & Co [1899] 1 QB 710 (refd)

Renol Holding Corp v Lankenau116 NYS 2 d 86 (refd)

Selene G, The [1981] 2 Lloyd's Rep 180 (refd)

Selvaduray v Chinniah [1939] MLJ 253 (distd)

Warlow v Harrison1 El & El 309; 120 ER 925 (refd)

Bankruptcy Act (Cap 20,1985 Rev Ed)s 54

Conveyancing and Law of Property Act (Cap 61, 1985 Rev Ed)s 25

Evidence Act (Cap 97,1990 Rev Ed)s 116illus (g)

Land Titles Act (Cap 276,1970 Rev Ed)s 65 (1)

Stamp Duties Act (Cap 312,1985 Rev Ed)ss 2, 46,52

Yeo Hock Cheong and Jimmy Yap (Hock Cheong & Co) for the plaintiff

Lim Kia Tong and Poo Siok Mei (Teo & Lim) for the defendant.

Judgment reserved.

Goh Phai Cheng JC

1 In this action, the plaintiff's claim against the defendant is, inter alia, for:

(a) the sum of $130,000 which the plaintiff alleged was lent to the defendant pursuant to an oral agreement made between the plaintiff and the defendant in or about late January 1985 or early February 1985;

(b) the sum of $5,000 which was paid by the plaintiff to the defendant and his brother, Heng Teo Meng (“HTM”), as the consideration for an option to purchase the property known as 8 Lorong H, Telok Kurau, Singapore (“the property”); and

(c) damages.

The plaintiff's case

2 The plaintiff's case as pleaded in paras 3 to 6 of the statement of claim is as follows:

1. 3 By an oral agreement made [in] or about late January 1985 [or] early February 1985, between the plaintiff and the defendant, the plaintiff agreed to lend to the defendant and [HTM] the sum of $130,000 free of interest in consideration of the defendant agreeing to pay the said sum on demand, and also to sell jointly with [HTM] their said house [the property] to the plaintiff at the price of $520,000.

2. 4 In pursuance of the said agreement, the plaintiff -

   1. (a) handed over on the first day of March 1985 to the defendant and [HTM] cash in the sum of $130,000 by way of a friendly loan as aforesaid;

   2. (b) exercised an option to purchase the said property granted at a consideration of $5,000 option money, by the defendant and [HTM] dated 8 February 1985 by signing the acceptance portion of the same and issuing to the solicitors for the defendant and [HTM] a cheque in the sum of $47,000 being the balance of the 10% deposit payable thereunder on the first day of March 1985.

1. 5 In breach of the said agreement, the defendant and [HTM] failed, neglected and/or refused:

   1. (a) to return the same sum of $130,000 in spite of repeated demands by the plaintiff to do so;

   2. (b) to take such necessary actions to avert the foreclosure of the said property by the mortgagees who auctioned off the said property on 7 March 1985 thereby rendering the sale and purchase agreement in respect of the said property impossible of performance by the plaintiff who was at material times willing, ready and able to do so.

1. 6 By reason of the matters aforesaid the plaintiff has suffered damages and has been put to loss, inconvenience and expense.

The defence

3 As regards the plaintiff's claim for the return of the loan of $130,000, the defence pleaded in paras 13 to 15 of the amended defence is as follows:

1. 13 The defendant denies taking a loan of $130,000 from the plaintiff or any part thereof as alleged in the statement of claim or at all.

2. 14 Paragraph 4 (a) of the statement of claim is denied.

3. 15 The defendant says that as the sum of $130,000 was owed by [HTM], the defendant left the disposal of the issue to [HTM]. The defendant denies owing the plaintiff the said sum of $130,000.

4 As regards the claim for the return of...