Tan Jin Sin and Another v Lim Quee Choo

• Jurisdiction: Singapore
• Judge: Chao Hick Tin JA
• Judgment Date: 06 March 2009
• Neutral Citation: [2009] SGCA 12
• Docket Number: Civil Appeal No 90 of 2008 (Suit No 401 of 2007)
• Date: 06 March 2009
• Year: 2009
• Published date: 11 March 2009
• Plaintiff Counsel: C R Rajah SC (instructed) and Suppiah Thangaveloo (Thango & Co)
• Citation: [2009] SGCA 12
• Defendant Counsel: Johnny Cheo Chai Beng (Cheo Yeoh & Associates LLC)
• Court: Court of Appeal (Singapore)
• Subject Matter: Whether clauses were dependent or independent obligations,Construction of contracts,Breach,Contract

6 March 2009

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

1 This was an appeal against the decision of the High Court in Suit No 401 of 2007 (see Lim Quee Choo v Tan Jin Sin [2008] SGHC 133 (“the GD”)). We allowed the appeal and now give the detailed grounds for our decision.

The Agreement and the Undertaking

2 The respondent, together with Wong Peng Luan (“Wong”), are the co-administrators of the estate of the respondent’s husband.

3 On 23 March 2004, the respondent and Wong obtained judgment for the sum of $3,381,656 and $12,000 in costs against Tan Wah Leng and Thian Kim Hoe (“the judgment debtors”). At that time, the judgment debtors were directors of Dauphin Offshore Engineering & Trading Pte Ltd (“Dauphin”) and were the registered owners of 8.5 million shares out of the total issued and paid-up capital of 10 million shares in Dauphin. The remaining 1.5 million Dauphin shares were held by the appellants. The first appellant is the brother of Tan Wah Leng; the second appellant is the first appellant’s wife.

4 The respondent and Wong commenced execution proceedings to seize the 8.5 million shares in Dauphin by way of Writs of Seizure and Sale (“WSS”) Nos 58 and 61 of 2004. The sheriff seized the 8.5 million shares and the next step in the execution proceedings would have been to place an advertisement in the newspapers to elicit offers from the public for those shares. Before this was done, the judgment debtors requested for some more time to fully satisfy the judgment debt.

5 On 24 February 2005, the respondent, Wong, the judgment debtors, and the appellants entered into an agreement (“the Agreement”). As this appeal hinges on the proper construction of the Agreement, the document is set out in full, as follows:

AGREEMENT MADE THIS 24^TH DAY OF FEBRUARY 2005

Between

LIM QUEE CHOO/WONG PENG LUAN (“the Plaintiffs”) on the first part.

And

TAN WAH LENG/THIAN KIM HOE (“the Defendants”) on the second part.

And

TAN JIN SIN/LIM LEE CHIN (“the Third Parties”) on the third part.

WHEREAS

A. The Plaintiffs have obtained Judgment against the Defendants in Suit No 232 of 2004/X in the High Court of Singapore.

B. The Plaintiffs have commenced enforcement action in Writ of Seizure and Sale Nos. 58 and 61/2004/R in respect of 8,500,000 shares in Dauphin Offshore Engineering & Trading Pte Ltd held by the Defendants.

C. The Plaintiffs are prepared, at the Defendants’ request, to withhold enforcement in Writ of Seizure and Sale Nos. 58 and 61/2004/R in accordance with the terms and conditions in this Agreement.

IN CONSIDERATION OF THE MUTUAL COVENANTS HEREIN, IT IS HEREBY AGREED THAT:

1. Subject to clause 2 below, the Plaintiffs shall withhold further enforcement action in Writ of Seizure and Sale Nos. 58 and 61/2004/R and shall not take steps to advertise in any way the sale of the 8,500,000 shares in Dauphin Offshore Engineering & Trading Pte Ltd held by the Defendants.

2. The Defendants shall fully satisfy the Plaintiffs’ Judgment in Suit No 232 of 2004/X by 19 April 2005, failing which the Plaintiffs may continue with their enforcement action in Writ of Seizure and Sale Nos. 58 and 61/2004/R.

3. The Third Parties hereby irrevocably agree to transfer all their 1,500,000 shares in Dauphin Offshore Engineering & Trading Pte Ltd to Lim Quee Choo for consideration of S$1.00 in the event the Defendants shall fail to comply with Clause 2 above and fully satisfy the Plaintiffs’ said Judgment. Pursuant to this Clause 3, the Third Parties shall forthwith execute transfer forms in favour of Lim Quee Choo.

4. The Defendants shall also pay the sum of S$15,200.00 being costs awarded by the Courts so far, that remain unpaid on or before 24 March 2005. The Defendants shall also make an interim payment of S$25,000.00 by 2 March 2005.

5. This Agreement is confidential and all parties hereby undertake, in good faith, to maintain the strictest confidence.

[Signatures and witnesses omitted]

6 Also on 24 February 2005 (ie, the same day that the Agreement was made), the appellants entered into the following undertaking (“the Undertaking”):

To: LIM QUEE CHOO

UNDERTAKING

We, TAN JIN SIN and LIM LEE CHIN hereby irrevocably undertake and acknowledge that we agree to transfer all our 1,500,000 shares in Dauphin Offshore Engineering & Trading Pte Ltd to Lim Quee Choo or nominee for a total nominal consideration of S$1.00 in the event Tan Wah Leng / Thian Kim Hoe shall fail to abide by the Agreement dated 24 February 2005 between Lim Quee Choo / Wong Peng Luan on the first part and Tan Wah Leng / Thian Kim Hoe on the second part and us collectively on the third part.

This is in consideration of Lim Quee Choo / Wong Peng Luan forbearing to proceed with the execution proceedings as set out in the said Agreement.

Pursuant to this Undertaking, we enclose herewith our signed transfer forms in your favour.

We also undertake to sign all documents, pass all resolutions and do all things necessary to effect the transfers.

Dated this 24^th day of February 2005.

Signed: (Tan Jin Sin) Witness: Raymond Ong (Advocate & Solicitor)

(Lim Lee Chin)

We, Tan Jin Sin and Lim Lee Chin acknowledge receipt of S$2/-

Signed: (Tan Jin Sin)/(Lim Lee Chin)

The events after the Agreement and the Undertaking had been made

7 On 2 March 2005, the judgment debtors duly made the interim payment of $25,000 (see cl 4 of the Agreement). On 17 March 2005, the respondent’s lawyers wrote to the judgment debtors’ lawyers concerning the other interim payment of $15,200 that was due on 24 March 2005 (see also cl 4 of the Agreement). The respondent’s lawyers sent three further written reminders on 24 March, 30 March and 5 April 2005 (see the GD at [6(j)]). The last letter in this series of letters stated that if the $15,200 was not received by 2.00pm that day (viz, 5 April 2005), the sheriff would be informed to proceed with the advertisement for the sale of the shares immediately.

8 On 6 April 2005, the judgment debtors proposed a partial payment scheme, as follows: $5,000 would be paid by 7 April 2005; and a further $5,000 would be paid by 8 April 2005. The respondent agreed with the proposed scheme but stated that the judgment debtors had breached the terms of the “settlement” and that if the judgment debtors failed to pay as promised by 8 April 2005, the advertisement for the sale of the shares would be proceeded with immediately (see the GD at [6(l)]).

9 7 April 2005 came and went without any payment of the first $5,000 and a reminder was sent to the judgment debtors’ lawyers. 8 April 2005 also came and went without any payment of the second $5,000. On the same day, the respondent’s lawyers wrote to the sheriff to proceed with the advertisement. On 11 April 2005, the sheriff wrote to Singapore Press Holdings to publish the “Sheriff’s Notice of Sale” for WSS Nos 58 and 61 of 2004 on 13 April 2005.

10 However, on 11 April 2005, a creditor of Dauphin presented a winding-up petition against Dauphin. The respondent’s lawyers instructed the sheriff to proceed with the advertisement unless there was a court order to stay such an action, but the sheriff replied that the advertisement would be made only after the conclusion of the winding-up petition to avoid any complications. In the result, the sheriff did not proceed with the advertisement and no advertisement was actually published in the newspapers (see the GD at [6(s)]).

11 When the date came for payment of the judgment debt (of $3,381,656 and $12,000 costs) on 19 April 2005 (see cl 2 of the Agreement), the judgment debtors did not make any payment; the interim payment of $15,200 (pursuant to cl 4 of the Agreement) was also never paid (see the GD at [6(t)]).

The decision below

12 The trial judge (“the Judge”) first held that the case could be decided on the following point alone (see the GD at [7]−[9]):

7(b) … A reasonable person interpreting clause 1 would not have expected clause 1 to be breached if only mere preparations were made but no advertisement was actually published. In other words, to a reasonable person in the position of the addressee, the normal understanding would be that so long as the addressee did not in fact publish any advertisement, no breach of clause 1 would have occurred and it would have been irrelevant whatever preparatory steps might have been taken with a view to publication.

…

8 It was not disputed that no advertisement of the WSS was published. No enforcement action was in fact carried out under the WSS apart from the mere preparatory steps to advertise. There was no discernible loss which could be established… I could therefore see no prejudice to the judgment debtors and [the appellants]… The mischief sought to be prevented by the prohibition...