Sim Tony v Lim Ah Ghee (trading as Phil Real Estate & Building Services)

• Jurisdiction: Singapore
• Judgment Date: 26 April 1995
• Date: 26 April 1995
• Docket Number: Civil Appeal No 128 of 1994
• Court: Court of Appeal (Singapore)

Sim Tony

Plaintiff

and

Lim Ah Ghee (trading as Phil Real Estate & Building Services)

Defendant

[1995] SGCA 42

M Karthigesu JA

,

Lai Kew Chai J

and

Chao Hick Tin J

Civil Appeal No 128 of 1994

Court of Appeal

Contract–Consideration–Past consideration–When sufficient consideration–Contract–Illegality and public policy–Statutory illegality–Whether contract made by public servant engaging in trade without approval in breach of departmental rules illegal–Whether departmental rules “legally bound” public servant for purposes of Penal Code provision–Whether transaction unenforceable as against public policy–Section 168 Penal Code (Cap 224, 1985 Rev Ed)–Words and Phrases–“Legally bound ”–Section 168 Penal Code (Cap 224, 1985 Rev Ed)

The appellant was a civil servant. An owner of some properties (“the vendor”), asked the appellant to refer any prospective buyers to him. Two estate agents found a potential buyer, but wanted to deal with the vendor through the respondent acting as front man. The appellant agreed to introduce the respondent to the vendor. The appellant was motivated by friendship and did not seek any reward for making the introduction. At their first meeting, the vendor agreed to pay the respondent a half percent commission should the sale and purchase be completed. They subsequently met again, this time with the prospective buyer. At this meeting, the vendor asked the respondent to “take care” of the appellant, to which the respondent replied in the affirmative. The appellant did not take part in the conversation, and indeed, considered his assistance at that stage as gratuitous. Shortly before completion of the transaction, the estate agents and the respondent agreed to give a quarter share in the commission to the appellant. Subsequently, the appellant faced disciplinary proceedings for engaging in trade which led to his dismissal from service. The appellant then brought this action alleging that there was a contract to share the half percent commission among the respondent, the estate agents and himself. The trial judge dismissed the claim on the ground that the agreement among the four of them was not binding because consideration was past and did not fall within the exceptions required for past consideration to be good consideration. The appellant appealed. The respondent raised a further defence of illegality, in that the appellant was a public officer and thereby prohibited by his conditions of service, set out in the Instructions Manual, from such conduct as he engaged in when arranging the transaction, and such conduct was also an offence under s 168 of the Penal Code (Cap 224, 1985 Rev Ed).

Held, dismissing the appeal:

The second of the three conditions in Pao On v Lau Yiu Long [1979] 3 All ER 65 was that it must have been understood that payment would be made to the promisee for past consideration to be good consideration. As the consideration here was provided before the promisee indicated to the alleged promisor that he would like such reward; the promisee provided consideration not with any hope for any reward or benefit but out of friendship; and the thought of paying the promisee never entered the alleged promisor's mind; this condition was not satisfied. While the alleged promisor in his capacity as estate agent for the property sale and purchase transaction did separately promise the vendor that the promisee would be rewarded, even at that point in time the promisee was not expecting any reward. The fact that the promisee changed his mind before the sale and purchase agreement was signed did not alter the position. While no commission would have been payable to anyone if the sale and purchase agreement had not been signed, the signing was a condition precedent for payment of the commission and not a consideration for the separate promise by the alleged promisor: at [21] and [22].

[Observation: Section 168 of the Penal Code was breached only when there was breach of some enactment or rule of law which imposed the legal prohibition, not when mere departmental rules, which had no force of law, were breached. There was no authority that an agreement entered into in breach of such a public employment service condition should be rendered unenforceable on the ground of public policy, and such breach would not without more render the agreement a corrupt agreement: at [26] to [29].]

Pao On v Lau Yiu Long [1980] AC 614; [1979] 3 All ER 65 (folld)

South East Asia Insurance Bhd v Nasir Ibrahim [1992] 2 MLJ 355 (distd)

Penal Code (Cap 224, 1985 Rev Ed) s 168 (consd);s 43

Joe Chellam (Palakrishnan & Partners) for the appellant

G Raman (G Raman & Partners) for the respondent.

Judgment reserved.

Chao Hick Tin J

(delivering the judgment of the court):

1 This is an appeal against a decision of Lai Siu Chiu J refusing the appellant's claim for a quarter share in the commission amounting to $465,338.26 earned by the respondent out of a property transaction on the ground that the agreement of the respondent to pay the appellant the said quarter share was based on past consideration. (See [1994] 2 SLR (R) 910.)

The facts

2 The appellant was at all material times an officer of the Corrupt Practices Investigations Bureau (“CPIB”). The respondent was then in the business of an estate agent.

3 In 1979 the appellant had in the course of his work as a CPIB officer come into contact with one William Goei (“Goei”) and they soon became good friends. Goei controlled a number of companies which owned properties in Goldhill Plaza and Goldhill Centre. Sometime in April 1989 Goei told the appellant that he wished to sell some of his properties and asked the appellant to refer to Goei any prospective buyers. It was a known fact that Goei would not deal with a stranger.

4 The appellant conveyed Goei's wishes to one Lena Wong and another Kang Lye Kim (“Kang”), who were both estate agents. Later, they told the appellant that they had found a potential buyer, one Lauw Siang Liong (“Lauw”). Though Lena Wong knew Goei, she could not approach Goei directly because of an earlier incident where Lena Wong was involved in bribing one of Goei's employees. Thus Lena Wong brought in the respondent who was to act as their “front” man. Accordingly, on 15 May 1989 the respondent was introduced by the appellant to Goei. At this meeting the question of commission was discussed. The respondent wanted 1% but Goei was only prepared to offer % as the sale price was substantial.

5 The next day, 16 May 1989, the...