Ong Eng Kae and another v Rupesh Kumar and others

• Jurisdiction: Singapore
• Judge: Aedit Abdullah JC
• Judgment Date: 25 June 2015
• Neutral Citation: [2015] SGHC 163
• Court: High Court (Singapore)
• Hearing Date: 06 April 2015,13 January 2015
• Docket Number: Originating Summons No 979 of 2014
• Plaintiff Counsel: Vijai Parwani (Parwani Law LLC)
• Defendant Counsel: Gunaseelan S E Selvadurai (S. Gunaseelan & Partners)
• Subject Matter: Civil Procedure,Costs,Personal cost order against solicitor
• Published date: 01 July 2015

Aedit Abdullah JC: Introduction

Originating Summons No 979 of 2014 (“OS 979/2014”) was the Plaintiffs’ application for specific performance of an Option to Purchase entered into between the Plaintiffs and the 1st Defendant, Rupesh Kumar (“Rupesh”), in relation to a property owned by Rupesh at 60 Chestnut Avenue #23-02 Treehouse Singapore 679517 (“the Property”). The Plaintiffs’ application for specific performance was made on the ground that they had satisfied the conditions under the Option to Purchase, which are the payment of an option fee and the payment of a deposit to exercise the option, thereby giving rise to a binding sale and purchase agreement of the Property. Having heard the parties, I granted the Plaintiffs’ application on 13 January 2015 and ordered the property to be transferred to the Plaintiffs upon payment of the balance sum under the Option to Purchase. I also made the following orders to facilitate the transfer of the Property: Rupesh to pay interest, including late completion interest under Condition 9 of the Law Society of Singapore’s Conditions of Sale 2012, to the Plaintiffs; Rupesh to deliver vacant possession of the Property to the Plaintiffs free of all encumbrances upon completion of the sale of the Property; 4th Defendant to withdraw his caveat on 21 January 2015 or on the completion of the sale of the Property, whichever date occurs earlier; Costs, damages, late completion interest, and any other expenses incurred by the Plaintiffs to discharge any obligations of Rupesh in respect of the Property to be deducted from the balance sum of sale proceeds due to Rupesh; and There shall be liberty to apply.

Having rendered my decision on the substantive matters, it remained for me to decide on the issue of costs for OS 979/2014. On this matter, the Plaintiffs, who had succeeded in OS 979/2014, made an oral application during the 13 January 2015 hearing for a personal cost order against Rupesh’s solicitor. I reserved judgment after hearing the Plaintiffs and Rupesh’s solicitor on this issue.

Facts Background facts of OS 979/2014

The Plaintiffs were a married couple looking to purchase a condominium close to the 1st Plaintiff’s mother’s house. A friend of theirs by the name of Nagasaravanan s/o Uttamasegeran (“Saravanan”) informed them that his friend, Rupesh, wanted to sell the Property on an urgent basis. Rupesh asked for a selling price of $1.45m, but as he needed the funds urgently, he requested for half the sum to be paid on or before exercising the Option to Purchase and for the balance sum to be paid upon completion of the sale. The Plaintiffs agreed and entered into an Option to Purchase with Rupesh on 23 September 2013 (“OTP”) reflecting this arrangement:

IN CONSIDERATION of the sum of Singapore Dollars Six Hundred and Seventy Five Thousand Only (S$675,000.00) (hereinafter called “the option money”) received by (Mr. Rupesh Kumar …) (hereinafter called “the Vendor”) from the Purchaser this day by way of option money, the Vendor hereby grants the Purchaser and/or Nominee(s) this Option to Purchase the above described property … upon the terms set out below. …

Under the OTP, the Plaintiffs had to pay an additional sum of $50,000 before 4.00pm on 24 October 2013 in order to exercise the OTP. The clause bearing out this obligation read as follows:

… This Option shall be exercised by the Purchaser by signing at the portion of this Option marked “ACCEPTANCE COPY” and delivering the same duly signed together with a cheque for the sum of [$50,000] paid to the Vendor …

The parties intended for a sale and purchase agreement to arise upon the Plaintiffs’ exercise of the OTP, as is evident from the following clauses in the OTP:

This Option and the Acceptance Copy signed by the Purchaser shall constitute a binding contract of the sale and purchase of the property. The option money shall form part of the purchase price paid upon proper exercise of this Option in the manner stipulated therein.

…

The sale price shall be [$1,450,000].

The Plaintiffs’ case was that they had paid Rupesh two separate sums of $675,000 and $50,000, and that upon which, a binding sale and purchase agreement arose between the parties. They tendered the following documents to support their case: Two separate notes bearing Rupesh’s signature, acknowledging that he had received sums of $675,000 and $50,000 from the Plaintiffs for the purchase of the Property. A letter dated 22 October 2014 from Rupesh’s former solicitors, Wong, Gopal & Rai (“WGR”), who had represented him in the sale and purchase of the Property, confirming that Rupesh had received the sums of $675,000 and $50,000 from the Plaintiffs.

Unfortunately, completion was not forthcoming. The original completion date of 15 November 2013 was delayed and postponed a number of times. Rupesh was adjudged a bankrupt on 18 September 2014, following which the Plaintiffs decided to commence OS 979/2014 on 17 October 2014 against him to facilitate the completion of the sale and purchase agreement.

Facts pertaining to the issue of costs

I pause to point out the significance of Rupesh’s status as a bankrupt. Under s 131(1)(a) of the Bankruptcy Act (Cap 20, 2009 Rev Ed) (“the BA”), a bankrupt is incompetent to maintain any action without the sanction of the Official Assignee (“OA”). The prerogative in deciding whether to defend an action against the bankrupt and if so, when and how to go about doing that rests entirely with the OA unless otherwise sanctioned by the OA. What this means is that once Rupesh was declared a bankrupt on 18 September 2014, he would have had to seek the OA’s authorisation in order to defend himself against the Plaintiffs.

Rather than leaving the OA to determine the appropriate course of action to take in OS 979/2014, Rupesh wanted to defend the action by himself. He instructed Mr Gunaseelan S E Selvadurai (“Mr Gunaseelan”) to represent him. Mr Gunaseelan, who was aware of Rupesh’s status as a bankrupt, knew he had to obtain the OA’s consent before he could do so. He wrote to the OA on 3 November 2014 seeking the requisite consent:

We have been approached by [Rupesh] to act for him …

We confirm that a third party has agreed and accepted to pay all our fees and disbursements in this matter.

On the same day, the OA emailed the Plaintiffs’ solicitors, Mr Vijai Parwani (“Mr Parwani”) informing him that the OA had authorised Mr Gunaseelan to act for Rupesh:

The bankrupt’s solicitors, [Mr Gunaseelan], had written to our office today to obtain the [OA’s] consent to act for the bankrupt in OS 979/2014. As a third party is paying for the bankrupt’s legal costs incurred in this matter, the Official Assignee has granted [Mr Gunaseelan] consent to act for the bankrupt in OS 979/2014. Please note that parties are not to look to the [OA] or the [bankrupt’s] estate for costs incurred in the matter.

The first Pre-Trial Conference (“PTC”) was held the next day. Mr Parwani and Mr Gunaseelan appeared in the PTC whereas the OA was absent. Later on in the evening, the OA sent a follow-up email to Mr Gunaseelan stating as follows:

We wish to clarify that the [OA’s] sanction for you to act for your client, [Rupesh], in the matter of OS 979/2014 is on the basis that a third party is bearing all costs incurred in this matter, including any adverse costs made against the bankrupt.

Mr Gunaseelan did not issue a response to the OA’s clarification in the preceding paragraph. On 12 November 2014, the OA sent...