Simpson Marine (SEA) Pte Ltd v Jiacipto Jiaravanon

• Court: Court of Appeal (Singapore)
• Judge: Andrew Phang Boon Leong JA,Judith Prakash JA,Tay Yong Kwang JA
• Judgment Date: 23 January 2019
• Docket Number: Civil Appeal No 233 of 2017
• Date: 23 January 2019

Simpson Marine (SEA) Pte Ltd

and

Jiacipto Jiaravanon

[2019] SGCA 7

Andrew Phang Boon Leong JA, Judith Prakash JA and Tay Yong Kwang JA

Civil Appeal No 233 of 2017

Court of Appeal

Contract — Formation — Pre-contract deposits — Buyer paying deposit to dealer to reserve yachts for buyer's choice — Deposit to become down payment on contract of purchase for selected yacht — Payment channelled by dealer to vendor — Initial agreement aborted — Whether fresh agreement concluded on similar terms

Restitution — Failure of consideration — Total failure of consideration — Pre-contract deposits — Buyer paying deposit to dealer to reserve yachts for buyer's choice — Deposit to become down payment on contract of purchase for selected yacht — Payment channelled by dealer to vendor — Whether basis of deposit was to secure yachts — Whether basis of deposit failed — Whether subsequent failure of parties to enter into contract of purchase amounted to total failure of consideration

Held, allowing the appeal:

(1) Pre-contract deposits were governed by general principles of restitution for failure of consideration or basis. The inquiry into failure of consideration or basis had two parts: first, what was the basis for the transfer in respect of which restitution was sought; and second, did that basis fail? Since the appellant did not contest that the initial basis for the payment of the Deposit had failed when the 100G #12 was sold, the burden fell on the appellant to establish that on 8 May 2013, the parties had agreed on a fresh basis for the Deposit and this fresh basis did not fail. The question of whether the Deposit was refundable was to be viewed with reference to the evidence of the basis for the payment: at [47], [48] and [60].

(2) There was sufficiently cogent evidence that the respondent had agreed on 8 May 2013 that the Deposit would be applied to hold the 100L #15 and 100G #15 until at least 31 May 2013 so that the respondent could choose between them. While there was a significant weakness in the appellant's case in that there was no documentation of the fresh terms for the appellant's receipt of the Deposit, this was not insurmountable if the factual matrix clearly pointed towards the existence of the alleged agreement. The testimony of the appellant's Azimut-brand representative, who met the respondent on 8 May 2013, was consistent with the surrounding evidence, including the relevant documentary evidence and the parties' contemporaneous conduct. Viewed in its proper context, the appellant's decision to remit the Deposit on 9 May 2013 had to have followed from the respondent's agreement the day before to apply the Deposit to reserve the 100L #15 and 100G #15. This was supported by the text of the remittance record; the similarity in the structure of the alleged holding deposit agreement and that of the earlier abortive holding agreement; and the evidence of the appellant's reliance on the respondent's authorisation to remit the Deposit to Azimut. Further, the manner in which the parties had conducted themselves, including their execution of the compromise agreement, was consistent with the alleged agreement on 8 May 2013: at [65] to [78].

(3) The basis of the Deposit did not fail because both yachts were kept off the market for the respondent until at least 31 May 2013. The respondent's decision not to purchase either yacht did not cause a total failure of basis because the payment was not made on the basis that a contract of purchase would be executed. Accordingly, the appellant was not liable to return the Remainder to the respondent: at [81] and [83].

[Observation: The admissibility and relevance of subsequent conduct in the formation and interpretation of contracts had yet to receive detailed scrutiny by this court. While there was no absolute prohibition against evidence of subsequent conduct in interpreting a contract, this court had opined that such evidence was likely to be inadmissible in construing a written contract because it did not elucidate the parties' objective intentions or relate to a clear and obvious context. However, where the court was ascertaining whether a contract had been formed, evidence of subsequent conduct had traditionally been regarded as admissible and relevant, although there is some instability in this rule. It might be argued that a distinction between the evidential rules applicable to the formation and interpretation of contracts was untenable, such that a consistently restrictive or consistently liberal approach ought to be adopted. Since the court did not hear argument on this issue, the court declined to reach any firm views on the admissibility, relevance and probative value of subsequent conduct for the purpose of either contract formation or interpretation: at [79].]

Case(s) referred to

Benzline Auto Pte Ltd v Supercars Lorinser Pte Ltd [2018] 1 SLR 239 (folld)

Jiacipto Jiaravanon v Simpson Marine (SEA) Pte Ltd [2017] SGHC 288 (refd)

Sharma v Simposh Ltd [2013] Ch 23 (refd)

Tat Seng Machine Movers Pte Ltd v Orix Leasing Singapore Ltd [2009] 4 SLR(R) 1101; [2009] 4 SLR 1101 (refd)

United Artists Singapore Theatres Pte Ltd v Parkway Properties Pte Ltd [2003] 1 SLR(R) 791; [2003] 1 SLR 791 (refd)

Y.E.S. F&B Group Pte Ltd v Soup Restaurant Singapore Pte Ltd [2015] 5 SLR 1187 (refd)

Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design & Construction Pte Ltd [2008] 3 SLR(R) 1029; [2008] 3 SLR 1029 (refd)

Facts

In early 2013, the respondent (deceased) was in negotiations with the appellant, a luxury yacht dealer, to purchase yachts from an Italian yacht maker, Azimut Benetti SpA (“Azimut”). On 26 April 2013, the respondent signed an invoice agreeing to pay a deposit of €1m (“the Deposit”) to secure two specific 100-ft yachts, identifiable by their model and hull numbers (“100L #15” and “100G #12”), until 15 May 2013, at which time the Deposit was to be transferred to either yacht to become the initial down payment. The respondent paid the Deposit to the appellant on 29 April 2013, but Azimut had just sold the 100G #12 to another buyer. The appellant informed the respondent that hull number 15 (“100G #15”) was the next available yacht for the same 100G model.

On 8 May 2013, the respondent met the appellant's and Azimut's representatives in Hong Kong and viewed a 100L yacht. According to the appellant, the respondent agreed at this meeting to use the Deposit that he had paid to the appellant to secure the 100L #15 and 100G #15 until 31 May 2013 in order to enable him to choose between them, at which point the Deposit would be applied to the purchase price of his chosen yacht. The respondent denied that such an agreement had been reached. On 9 May 2013, the appellant remitted the Deposit to Azimut.

The respondent eventually refused to purchase an Azimut yacht in the 100-ft series. On 31 July 2013, a compromise was reached whereby half the Deposit was to be applied to the purchase price of another Azimut yacht that the respondent had already purchased (“compromise agreement”). The remaining €500,000 (“the Remainder”) was the subject of dispute in this appeal.

The High Court held that the basis for the payment of the Deposit, which was to secure the 100L #15 and the 100G #12 until 15 May 2013, failed when Azimut sold the 100G #12 to another buyer, and the parties did not agree on 8 May 2013 that the Deposit would be used to secure the 100L #15 and 100G #15 until 31 May 2013. Therefore, the Judge awarded the respondent restitution of the Remainder. The appellant appealed, arguing that the respondent was not entitled to restitution because he had agreed on 8 May 2013 to pay the Deposit to Azimut to reserve the 100L #15 and 100G #15, both of which were in fact reserved for him for the stipulated period.

Prem Gurbani (Gurbani & Co LLC) (instructed), Bazul Ashhab bin Abdul Kader, Chan Cong Yen Lionel, Liao Ruiyi and Beatrice Mathilda Yeo Li Hui (Oon & Bazul LLP) for the appellant;

Oei Ai Hoea Anna and Deannie Yap (Tan, Oei & Oei LLC) for the respondent.

23 January 2019

Judgment reserved.

Andrew Phang Boon Leong JA (delivering the judgment of the court):

Introduction

1 In this appeal, the appellant, a yacht dealer, seeks to resist restitution of a deposit paid by the respondent, Jiacipto Jiaravanon (who is now deceased and whom we shall refer to as “Jiaravanon”), on the ground that the parties agreed that the deposit was paid for the purpose of holding two yachts off the market pending Jiaravanon's decision to purchase either of them and that this purpose did not fail notwithstanding Jiaravanon's decision not to proceed with a purchase.

2 The factual dispute may be briefly stated. In early 2013, Jiaravanon was in negotiations with the appellant to purchase one or two yachts from an Italian yacht maker, Azimut Benetti SpA (“Azimut”). In so far as the series of larger yachts was concerned, Jiaravanon was considering two models in Azimut's 100-ft series, the 100 Leonardo (“100L”) and the 100 Grande (“100G”). He was specifically interested in two hulls that were available for early delivery – the 100L hull number 15 (“100L #15”) and the 100G hull number 12 (“100G #12”).

3 On 26 April 2013, Jiaravanon signed an invoice agreeing to pay a deposit of €1m (“the Deposit”) to the appellant to “secure [the 100L #15 and 100G #12] until 15th May 2013 at which time the deposit will be transferred to either yacht to become the initial down payment”. Jiaravanon transferred the Deposit to the appellant on 29 April 2013. However, it transpired that one or two days before this, Azimut had sold the 100G #12 to another buyer. The appellant therefore did not remit the Deposit to Azimut, but retained it. The appellant informed Jiaravanon that hull number 15 for the same 100G model (“100G #15”) was available for the next earliest delivery. Jiaravanon continued to discuss with the...