Seah Boon Lock v Family Food Court

• Judgment Date: 25 May 2007
• Date: 25 May 2007
• Docket Number: Suit No 394 of 2005
• Court: High Court (Singapore)

Seah Boon Lock and another

Plaintiff

and

Family Food Court

Defendant

[2007] SGHC 80

Andrew Ang J

Suit No 394 of 2005

High Court

Agency–Principal–Undisclosed–Breaching of licence agreement for food stall premises by licensor–Losses suffered by family business running food stall–Plaintiff claiming losses arising from breach as signatory to licence agreement–Plaintiff not owner of food stall and did not personally suffer loss–Losses to family business foreseeable to licensor–Whether plaintiff could claim for losses suffered as agent for undisclosed principal–Whether identity of undisclosed principal needed to be disclosed at trial–Contract–Formalities–Requirement for signature–Signature contained in separate letter referring to unsigned license agreement–Whether agreement could be read together with letter–Section 6 (d)Civil Law Act (Cap 43, 1999 Rev Ed)–Contract–Remedies–Damages–Contracting party claiming for losses suffered by third party–“Broad ground” as basis for contracting party to claim such losses–Third party suffering loss of performance interest as well as loss of profits–Whether “broad ground” enabling contracting party to claim for third party's loss of profits–Land–Licences–Termination–Parties entering into licence agreement for food stall premises–Licensor later alleging certain oral conditions tied licence agreement to business operations of another stall also licensed to licensee–Whether licence agreement subject to oral conditions–Whether licensor entitled to terminate licence for first stall when licensor ceased business operations at second stall–Whether licensor wrongly repudiated licence agreement

The plaintiffs were owners and operators of a chain of duck rice stalls. The first plaintiff (“Seah”) countersigned a “Letter of Offer” prepared by the defendant (“FFC”) confirming Seah's intention to enter into a licence agreement for the use of certain stall premises (“the Yew Tee Stall”). Subsequently, he received a licence agreement (“the Agreement”) prepared for FFC and returned it duly signed together with two cheques required under the Agreement of which one was for a security deposit. Unbeknown to him, FFC did not countersign the Agreement. However, it sent Seah a letter (“the 21 October 2003 letter”) signed by one of its partners confirming that the licence took effect from a certain date.

The Agreement also stipulated that there was a monthly fee to be paid to FFC, subject to a cap. The plaintiffs duly paid the monthly fee in the months that followed. Subsequently, on or about 20 January 2004, FFC purported to unilaterally remove the fee cap.

Long after the Agreement took effect, FFC wrote to Seah, alleging that he had promised that the Yew Tee Stall was tied up with the business operations of a stall at another location also licensed from FFC to Seah (“the Sungei Kadut Stall”). Subsequently, before the expiry of the term stipulated in the Agreement, FFC purported to give Seah notice to cease all operations at the Yew Tee Stall. Thereafter the electricity supply to the Yew Tee Stall was terminated. Faced with objections from the plaintiffs, FFC alleged that FFC had validly terminated the Agreement because the Agreement was allegedly given on condition that the plaintiffs would continue to concurrently operate the Sungei Kadut Stall, which allegation the plaintiffs denied. At the time of termination, FFC retained all the plaintiffs' sales proceeds from the Yew Tee Stall in respect of the period 1 March 2005 to 15 April 2005. The security deposit was also forfeited. In addition, FFC retained all the plaintiffs' equipment, goods and effects at the Yew Tee Stall.

Seah then brought this suit. FFC belatedly filed a counterclaim for sums allegedly outstanding in respect of the Sungei Kadut Stall. At the trial, the second plaintiff (“Wee”), who was Seah's wife, joined in the action as a previously undisclosed principal after FFC alleged that Seah was not the party who suffered the losses alleged to have been caused by FFC's repudiation of the Agreement.

FFC's defence was that the Agreement had no application because FFC did not sign it. It averred that it did not do so because together with the Agreement which it had sent to Seah there was a deed (“the Deed”) containing terms tying the operation of the Yew Tee Stall with that of the Sungei Kadut Stall but that Seah had only returned the Agreement duly signed without similarly executing the Deed. Seah denied that he had received the Deed. Alternatively, FFC asserted that the Agreement was subject to oral conditions agreed between the parties (“the Oral Conditions”). Further, in the alternative, FFC pleaded that it was entitled to terminate the Agreement on account of the dishonest conduct of the plaintiffs' employee.

Held, allowing the claim and dismissing the counterclaim:

(1) FFC's contention, that because the plaintiffs failed to sign the Deed FFC did not return a copy of the duly executed Agreement, had no merit. FFC had relied on the Agreement in its defence as well as by its own conduct and contemporaneous documents. FFC also admitted that the Agreement applied, subject to the alleged Oral Conditions: at [21] to [24].

(2) With respect to s 6 (d) of the Civil Law Act (Cap 43, 1999 Rev Ed), provided the document relied on by the plaintiffs contained all the material terms, it need not have been deliberately prepared as a memorandum. The requirement for writing or signature could be satisfied via two documents, of which only one had been signed. The 21 October 2003 letter expressly referred to the Agreement and bore the signature of one of FFC's partners and confirmed the commencement date of the license. As such, there was no doubt that the writing or signature requirement was satisfied: at [26] and [27].

(3) The effect of a failure to comply with the statutory requirement was that the contract was unenforceable but not void. Where there had been part performance, equity would intervene on the ground of estoppel to prevent a defendant from sheltering behind the statute. Even if the plaintiffs had failed to satisfy s 6 (d)of the Civil Law Act, there had been more than sufficient acts of part performance which were referable to the Agreement: at [28] and [29].

(4) The overwhelming weight of the evidence was against FFC's case that the Agreement was subject to the alleged Oral Conditions. FFC's case at trial was completely at odds with the version and the chronology set out in its originally pleaded defence and the further and better particulars. FFC's original defence omitted any mention of fundamental and crucial points which, if true, would have been covered in the pleadings from the beginning: at [31] to [35].

(5) Considering that formal contracts were being drawn up and that FFC at all material times had access to lawyers and that the costs of appointing such lawyers was never an issue for FFC (since it would be borne by the plaintiffs), it was inexplicable that the most fundamental terms amongst the alleged Oral Conditions failed to be reflected in the contractual documents: at [37].

(6) Seah did not breach the restriction against assignment and subletting contained in the Agreement as alleged by FFC as Seah entered into the Agreement as agent for an undisclosed principal: at [43].

(7) FFC had wrongly repudiated the Agreement: at [44].

(8) When it was said that an agent lost his right to sue the third party on the intervention of the undisclosed principal when the latter sued, this was a reference to “suing to judgment”. It was not inconsistent for both the undisclosed principal and the agent to have sued a third party, provided that it was not claimed that the third party was thus liable to judgment with respect to both principal and agent simultaneously. The mere act of either the principal or the agent commencing suit should not be automatically taken as conclusive evidence that inconsistent rights would be exercised against the third party by both principal and agent. The plaintiff's pleadings were claims by the two parties in the alternative: at [57] and [60].

(9) Wee was not the owner of the Yew Tee Stall and could not be the undisclosed principal: at [61].

(10) In some circumstances it was appropriate for an agent to bring a suit in his capacity as an agent without disclosing the identity of his principal. Where ownership and control of a tangled family business was not easily established, it would be easier to accept that the member of the family who signed the contract was the agent of an undisclosed principal. He acted, in effect, as a representative for the greater family interest. It would have been circuitous for the undisclosed principal to be pinpointed, for that would only have led to protracted and unhelpful arguments as to whether that identified party was truly the principal or not: at [72].

(11) There was a distinction between an undisclosed principal's “objectively assessable loss” on the one hand and his “special” or “idiosyncratic loss” on the other. An agent should not be able to claim for some idiosyncratic loss of the undisclosed principal, particularly where the undisclosed principal remained unidentified at trial. Whether the principal's loss was objectively assessable or idiosyncratic was a matter of fact. In the instant case, it could not be said that the losses were not in the contemplation of FFC when it entered into the contract: at [98] and [99].

(12) Seah had a performance interest that he could continue to operate the Yew Tee Stall for the full term of the Agreement. He could have claimed for the loss of such performance interest on the basis of the broad ground, but he did not do so in his pleadings: at [108].

(13) Under the broad ground, the only loss which could be claimed by the party not receiving the bargain he contracted for was the performance loss and nothing else. The “bargain” which the contracting party did not receive comprised the...