Teh Guek Ngor Engelin nee Tan and Others v Chia Ee Lin Evelyn and Another

• Jurisdiction: Singapore
• Judge: Chao Hick Tin JA
• Judgment Date: 06 April 2005
• Neutral Citation: [2005] SGCA 19
• Docket Number: Civil Appeal No 80 of 2004
• Date: 06 April 2005
• Year: 2005
• Published date: 07 April 2005
• Plaintiff Counsel: Davinder Singh SC, Harpreet Singh Nehal and Nicolas Tang (Drew and Napier LLC)
• Citation: [2005] SGCA 19
• Defendant Counsel: K Shanmugam SC, Christopher Anand Daniel and Sonita Jeyapathy (Allen and Gledhill),Jimmy Yap (Jimmy Yap and Co)
• Court: Court of Appeal (Singapore)
• Subject Matter: Assessment,Damages,Contract,Formation,Whether parties having intention to create compromise agreement,Whether parties having intention to enter into binding oral contracts,Whether perceptions of third party relevant in determining whether compromise agreement formed,Whether trial judge properly quantifying damages due to respondent,Whether benefits received by respondent independent of any act of mitigation may be considered to reduce amount of damages payable by appellant,Whether trial judge correct in finding no oral contracts or compromise agreement concluded between parties,Respondent's consultancy agreement with appellant terminated without notice

6 April 2005

Choo Han Teck J (delivering the judgment of the court):

1 The first appellant, Engelin Teh, was a partner in the law firm of M/s Colin Ng & Partners in 1994 when the first respondent, Evelyn Chia, joined the firm as a partner. The first respondent changed her position from that of a partner to that of a consultant in 1995. In September 1996, she joined Engelin Teh in a new firm, known as M/s Engelin Teh & Young, as a consultant. The terms of her consultancy were set out in a written letter dated 9 September 1996 (“the first consultancy agreement”) under the letterhead of Engelin Teh & Young. Evelyn Chia’s position under the first consultancy agreement made it clear that she worked on a profit-sharing basis. The profit sharing was based on the simple formula that she would be entitled to a 30% share of the bills rendered from files which concerned matters which were brought in, and dealt with, directly by her. In respect of those matters which were brought in directly by her but for which the work was done by other lawyers in the firm, her profit share would be 15% of the bills rendered for those matters. The profit shares would be calculated after deducting Evelyn Chia’s “costs” to the firm. These costs were calculated at $130,000 a year, and included her annual fee of $84,000, the salary of her secretary, and an annual administrative charge of $12,000.

2 Evelyn Chia re-negotiated the terms of the first consultancy agreement with Engelin Teh in February 1998. This resulted in a fresh agreement in writing dated 25 February 1998 (“the second consultancy agreement”). The second consultancy agreement adopted all the terms of the first consultancy agreement except those specifically varied. The varied terms provided that the firm would not have a right to terminate Evelyn Chia’s consultancy, a right that the firm could previously exercise after two years from 9 September 1996, by giving one month’s notice. Under the second consultancy agreement, Evelyn Chia was given an option to extend her consultancy until 23 September 2000. It was also agreed that her annual costs would be set off against her billings in chronological order.

3 In mid-1999, Young Chee Foong, one of the partners in Engelin Teh & Young, left the partnership. Engelin Teh then formed a new partnership known as M/s Engelin Teh & Partners. It included the second appellant, Kau Yong Meng, the third appellant, Tracy Chen, and the second respondent, Florence Koh. These other partners were initially not involved in this action because Evelyn Chia named Engelin Teh as the sole defendant in her Writ of Summons. Engelin Teh subsequently joined her other partners as co-defendants. Florence Koh, who had given evidence at the trial, had since left the partnership, and did not appeal against the judgment below. It was only the appellants’ appeal against the order of costs awarded by the trial judge against the appellants in Florence Koh’s favour that maintained her continued interest in this appeal. Reverting to the new partnership, Evelyn Chia’s consultancy was retained on 6 October 1999 on the same terms as the second consultancy agreement (which was a variation of the first consultancy agreement) (“the third consultancy agreement”). The third consultancy agreement was to end on 23 September 2001, after which it could be extended by mutual agreement.

4 In March or April 2000, Evelyn Chia was appointed the solicitor for a company described by the trial judge as a “subsidiary of a leading bank”, and thereafter in the judgment as “the land developer”. We will retain the latter description for convenience. Consequent upon her appointment, it was envisaged that she would be given the conveyancing work in respect of five major projects. It was about this time that Evelyn Chia once again re-negotiated with Engelin Teh the terms of her consultancy agreement. It is not important to dwell on the reasons why the third consultancy agreement needed to be re-negotiated, but to avoid any erroneous inferences being drawn, it would be sufficient for us to state the findings and views of the trial judge on this point. Firstly, the court below accepted that the retainer by the land developer had enhanced Evelyn Chia’s position in the firm. Secondly, it also found that Evelyn Chia thought that her share of the profits under the agreement ought to be increased to 45%. Thirdly, she had contemplated leaving the firm to join M/s Rodyk & Davidson, a thought partly prompted, perhaps, by her strained working relationship with Kau Yong Meng over a client. Eventually, however, Florence Koh drafted an agreement on behalf of the partners, and the terms were agreed, after some amendments, and signed on 13 April 2000 (“the fourth consultancy agreement”). The terms of the fourth consultancy agreement were essentially the same as those of the third consultancy agreement. The main variations involved the increase of her share of profit from 30% to 45% in respect of the five anticipated projects from the land developer as well as all conveyancing files, and included the provision that, in respect of the bills between January and March 2000, she would receive a lump sum of $5,500. A sum of $20,000 would also be paid towards Evelyn Chia’s membership fee in the Tower Club. This was a payment made in connection with Evelyn Chia’s unhappiness with Kau Yong Meng, which in turn was connected to a condominium development in Sunset Way. Hence, in this regard, it was agreed that Evelyn Chia would repay the $20,000 to the firm if she were not retained as solicitor for the Sunset Way project. The fourth consultancy agreement also provided in cl 2 that Evelyn Chia’s term of appointment “shall remain valid for as long as our duties as solicitors in the 5 Projects have not been completed”, but nothing turned on this at the trial and on appeal.

5 In January 2001, the land developer merged with another company. The new management withdrew the appointment of Evelyn Chia as the solicitor for the five projects. However, as the trial judge found, Evelyn Chia was still working on a number of substantial projects in spite of the loss of the five mentioned ones. On 18 April 2001, Engelin Teh spoke to Evelyn Chia and asked if there was any possibility that she might be reappointed to the five projects. Evelyn Chia told her that that would be unlikely. The trial judge found that Engelin Teh, angered by this reply, demanded that Evelyn Chia repay the firm 15% of all the fees that she had collected under the fourth consultancy agreement. Evelyn Chia telephoned Engelin Teh the next morning to talk about this matter, but Engelin Teh was adamant that she repay the firm the money demanded, and at the same time told Evelyn Chia that the partners were terminating her consultancy with the firm immediately. On the same day, 19 April 2001, Engelin Teh wrote a memorandum to Evelyn Chia (“the 19 April memorandum”). It is an important document and we set it out in full as follows:

Dear Evelyn

As you know, the agreement to pay you 45% of all invoices billed and collected by you and the $20,000 for the Tower Club membership was premised on your procuring the 5 projects. These projects have been withdrawn by [the land developer]. As the basis for such payment no longer exists, and you have indicated that you are not prepared to compromise the outstanding issues by giving the firm a refund of 15% of the 45% payments which have already been paid to you, you leave us with no choice but to take the necessary action against you to recover such sums and the $20,000. This is without prejudice to our rights to claim any sum greater than the aforesaid should we be found entitled thereto.

As agreed in our telephone conversation this morning, your position as consultant with the firm is terminated by mutual consent with immediate effect.

As spoken, you should not come into the office (save to collect your personal belongings) or communicate in any way with the clients of the firm including those files under your charge. With immediate effect, these files will be put under the charge of KYM.

As Florence is an employee of the firm, no instruction to the contrary should be given to her and should she act against the instructions of the partners, the firm will have no choice but to terminate her services.

Please note that all communications between yourself and the firm should be directed to myself or KYM.

Please note that the matter herein is without prejudice to the firm’s rights to claim against you in respect of the loss of the 5 projects.

ET

6 Evelyn Chia replied by a letter dated 23 April 2001, in which she began by describing the impact that the 19 April memorandum had had on her. She stated:

I have always had respect for you as a Senior member of the Bar and fond regard for you, but your memo and events of 19 April 2001 have left me so shocked and saddened that it has taken me a few days to regain my composure and clarity of mind to seek necessary help and advice.

Evelyn Chia then proceeded to refute the factual content of the 19 April memorandum, signing off by leaving the door open for a possible resolution of the quarrel on amicable terms, stating:

It is not my intention to take this matter further than is necessary. But even if my efforts for the firm are not acknowledged, my contractual rights to payment must be observed.

7 On 11 October 2002, Evelyn Chia filed her claim against Engelin Teh as the sole defendant in the action below in the High Court, claiming damages for wrongful termination of the fourth consultancy agreement (see [2004] SGHC 193) . Engelin Teh subsequently joined Kau Yong Meng, Tracy Chen, and Florence Koh as the second, third, and fourth defendants. The foremost defence of the defendants (Florence Koh did not appeal and was named as the second respondent in the appeal before us) was that of accord and satisfaction, or what the appellants called “a contract of compromise”. This contract of...