Orix Capital Ltd v Personal Representative(s) of the Estate of Lim Chor Pee (deceased) and Others

• Jurisdiction: Singapore
• Judge: Judith Prakash J
• Judgment Date: 07 September 2009
• Neutral Citation: [2009] SGHC 201
• Date: 07 September 2009
• Subject Matter: Whether circumstances of lease were such that it was unfair, oppressive and unconscionable,Partners and third parties,Partnership,Moneylenders Act (Cap 188, 1985 Rev Ed),Whether salaried partner held out to world as partner of firm,Test,Salaried partner,Money and moneylenders,Cessation of partnership,Whether there was duty to disclose features of transaction,Inducement,Contractual terms,Contract,Whether transaction was disguised moneylending transaction,Whether parent had undue influence over his adult child,Breach,Misrepresentation,Partners liable for acts of partner in normal course of business,Credit and Security,Whether party acted in a "morally reprehensible manner",Whether party was moneylender under s 3,Repudiation,Whether lease was sham transaction,Undue influence,Whether partners were party to contract,Whether partner who left firm could be bound by actions of remaining partners,Whether acceptance of repudiatory conduct could be withdrawn by parties' agreement,Whether contract could be revived after repudiation had already been accepted by innocent party,Sham transaction
• Docket Number: Suit No 540 of 2007
• Published date: 22 September 2009
• Defendant Counsel: Michael Khoo Kah Lip SC, Josephine Low Miew Yin and Andy Chiok Beng Tiow (Michael Khoo & Partners),Oommen Mathew (Haq & Selvam)
• Court: High Court (Singapore)
• Plaintiff Counsel: Felicia Ng Hui-Li (Piah Tan & Partners)

7 September 2009 Judgment reserved.

Judith Prakash J

Introduction

1 The plaintiff, Orix Capital Limited, is a leasing company and grants leasing facilities to customers in respect of office equipment which it purchases from suppliers like Canon Singapore Pte Ltd (“Canon”) and then leases to the end-users. In this case, the plaintiff claims amounts arising under a lease agreement involving two photocopiers on the basis that the persons liable under the lease were Lim Chor Pee (“LCP”), his son, Lim Hsi-Wei Marc (“Marc Lim”), the second defendant herein, and the third defendant, Rebecca Marie Stephanie Tai-Yeo Hsiu Erh (“Ms Yeo”). LCP died before this action was commenced and his estate (the “Estate”) was made the first defendant in the action. The Estate did not defend the action and the plaintiff has obtained judgment against it. The other defendants, however, contested the claim. Hereafter when, for convenience, I refer to “the defendants” I should be understood as referring to the second and third defendants only.

Undisputed facts

2 At all material times LCP was a lawyer in private practice practising under the name and style of Chor Pee & Partners (“the firm”). He was the principal administrator of the firm and the person who made most, if not all, of the administrative decisions required by the firm. The office manager of the firm who implemented such decisions was one Ms Susanna Soh.

3 Marc Lim joined the firm as a legal assistant on 1 January 1997 and was made a salaried partner with effect from 1 January 2001. Under the appointment letter signed by LCP dated 19 January 2001, Marc Lim’s appointment as salaried partner was “without any other participation in the profits or loss and assets and liabilities of the firm”. Marc Lim averred that he handled legal work and did not participate in the administrative or financial affairs of the firm.

4 Ms Yeo joined the firm on 1 April 2003 to practise with it on a profit sharing basis without participation in the profits of the firm as a whole or in its assets and liabilities. The basic arrangement for Ms Yeo’s remuneration was that the firm and she would share profits in various proportions on files (a) handled by her in whole or in part, (b) referred by her to the firm, and (c) referred by the firm to her. There was no signed contract between Ms Yeo and the firm but the agreed terms of her practice were set out in a document which was e-mailed to Ms Yeo by LCP. This document was entitled “Profit Sharing Agreement Between Chor Pee & Partners (CPP) and Rebecca Tai-Yeo (“Partner”)” and its first clause stated that Ms Yeo would practise with CPP on a profit sharing basis without participation in the assets and liabilities of CPP pending the corportisation of CPP.

5 The background to the plaintiff’s claim is not straightforward. The story started on 1 August 2001 when the firm entered into a lease agreement (“the Newcourt agreement”) with a company called Newcourt Financial (Singapore) Pte Ltd (“Newcourt”) for four photocopiers supplied by Canon (“the Newcourt copiers”). Under the Newcourt agreement, the firm was to pay a monthly rental of $2,955 for the Newcourt copiers for a period of 60 months ending on 31 July 2006. In February 2004, the Newcourt agreement was varied. Under the variation, the lease period was extended to 4 February 2010 and the monthly lease payments were reduced to $1,800 per month for the first 12 months of the extended period, $2,000 per month for the next year, $2,200 per month for the third year, $2,400 for the fourth year, $2,600 per month for the fifth year and $2,653.76 per month for the sixth year.

6 In July 2004, one Ms Dora Loh, who was then employed as senior sales consultant by Canon, approached Susanna Soh with a view to concluding a deal through which the firm would acquire new photocopiers. She recommended two new models (the “Copiers”) to Susanna Soh and ascertained that the firm was then paying $1,800 per month for the Newcourt copiers. At the same time Dora Loh ascertained from Newcourt that in order to procure an early termination of the Newcourt agreement, the firm would have to pay Newcourt $164,144.34 plus GST (“the termination sum”). Having done further calculations, Dora Loh worked out that Canon’s sale price for the Copiers (taking account of the termination sum which Canon would have to pay Newcourt), would be $231,500 plus GST. Dora Loh was aware from her discussions with Susanna Soh that the firm would not be interested in upgrading its copiers if this project resulted in an additional monthly expenditure for the firm since the firm was keen to reduce its cash flow. Before putting her proposal to the firm therefore, Dora Loh approached Danny Lee, an employee of the plaintiff, and asked him whether the plaintiff would be able to purchase the Copiers for $231,500 plus GST and then lease the same to the firm for $1,800 per month.

7 After doing his calculations, Danny Lee informed Dora Loh that the plaintiff would buy the Copiers at the price stated and it would then be willing to lease them to the firm for approximately six years at the following monthly rentals:

(a) for months 1 to 24, $1,800;

(b) for months 25 to 48, $3,500;

(c) for months 49 to 72, $5,450; and

(d) a final payment of $47,400.

8 Based on the figures set out above, Dora Loh prepared a proposal for the firm for the lease of the Copiers which were to replace the Newcourt copiers. The proposal showed that for the first two years, the firm would pay less under the new lease than under the Newcourt agreement as varied. As part of the proposal, Canon was to pay the termination sum to Newcourt. This proposal was accepted by Susanna Soh. On or about 17 July 2004, she signed a document called a Sales Agreement (“the Sales Agreement”) issued by Canon which set out the main terms of what was described as the “Lease Purchase”.

9 The plaintiff then prepared lease agreement number OC/LA/0804/005169 (“the Lease”) in respect of the two Copiers. The date of the Lease was 27 August 2004. The lessee was described in the schedule to the Lease as follows:

LESSEE

Name	: LIM CHOR PEE (I/C NO: S2088197F),; LIM HSI-WEI MARC (I/C NO: S1601047B) &; REBECCA MARIE STEPHANIE TAI-YEO HSIU-ERH; (I/C NO: S1660081D) PRACTISING UNDER FIRM OF; CHOR PEE & PARTNERS
Address:	3 KILLINEY ROAD; #07-01 WINSLAND HOUSE 1; SINGAPORE 239519

The Lease was signed by LCP and Marc Lim. Their signatures appeared above the stamped name of the firm and their designation was typed in as “Partners”.

10 Canon delivered the Copiers to the firm on 29 July 2004 and 2 August 2004. Canon then invoiced the plaintiff and the plaintiff paid Canon the agreed price for the Copiers.

11 The firm paid the monthly rental due under the Lease up till April 2005. Thereafter, the rentals due under the Lease went unpaid. On 7 July 2005, the plaintiff wrote a letter of demand to the firm in respect of the unpaid rental and by this letter notified the firm as follows:

Please note that this constitutes an event of default under the Lease Agreement. Pursuant to this, the Lease Agreement is therefore deemed to have been repudiated by you, which repudiation we accept. Hence this agreement is terminated as at 07 July 2005. We hereby demand full payment of the sum of S$306,632.59 detail (sic) of which are shown below:- … Please note that if the said sum of S$306,632.59 together with default interest of S$199.22 per day from 08 July 2005 is not paid within seven (7) days from the date of this Demand Notice, we will institute legal proceedings against you …

12 On 22 July 2005, the plaintiff’s solicitors, Messrs Piah Tan & Partners, sent a letter of demand to LCP, Marc Lim and Ms Yeo at the firm’s address. The letter stated inter alia that the three addressees had repudiated the Lease by default in payment of the monthly rental and that repudiation had been accepted by the plaintiff and the Lease had been terminated on 7 July 2005. As at 7 July, the amount due was $306,632.58 but on 19 July 2005, the firm had sent the plaintiff a cheque for $1,890 which the plaintiff was accepting in diminution of the debt due but without prejudice to the termination of the Lease and the plaintiff’s rights in respect of the same. The letter went on to demand payment of the balance of $307,627.98 due as at 22 July 2005.

13 After receipt of the letter of demand, LCP spoke to the plaintiff’s credit manager one Ms Vivian Lim (“Ms Lim”) regarding the matter and, as a result, on 5 August 2005, Messrs Piah Tan & Partners wrote to LCP and the defendants, at the firm’s address, in the following terms:

We refer to our letter dated 22 July 2005. We are instructed by our clients that subsequent to our letter, Mr Lim Chor Pee had requested for (sic) a reinstatement of the Lease Agreement and agreed with our clients’ Ms Vivian Lim that the outstanding rental for June and July 2005 ($1,890-00 per month) would be paid on 29 July and 5 August 2005 respectively and that the rental sum from August 2005 would be paid via GIRO. Our clients instruct that they have to date received payment of only a sum of $945-00 on 2 August 2005. On a without prejudice basis, our clients are prepared to give you a further opportunity to have the Lease Agreement reinstated on condition that:-
(1)	You make payment of a sum of $4,725-00 (being the outstanding rental from June to August 2005) to our clients.
(2)	You make payment of a sum of $200-00 being our clients’ legal costs to date on an indemnity basis via cheque in favour of “Piah Tan & Partners” to be delivered to our office by 10 August 2005.
(3)	You shall make payment for future rental via GIRO provided that if you are unable to effect the GIRO payments by 1 September 2005, you shall pay the rental due on 1 September 2005 to our clients no later than 2 September 2005.
We trust that you will make prompt payment to avoid legal proceedings being commenced.

14 By its solicitors’ letters dated...