Wu Fu Ping and Another v Ong Beng Seng and Others

CourtCourt of Appeal (Singapore)
JudgeChao Hick Tin JA
Judgment Date29 January 2001
Neutral Citation[2001] SGCA 6
Citation[2001] SGCA 6
Defendant CounselChiah Kok Khun and Chan Pui Yee (Wee Swee Teow & Co)
Plaintiff CounselTeo Guan Teck (Guan Teck & Lim)
Published date19 September 2003
Docket NumberCivil Appeal No 74 of 2000
Date29 January 2001
Subject MatterWhether duty to indemnity just and proper,Term in contract on indemnity against tax liability,Whether tax liability under assessed,Effect of use of word "including",Contract,Interpretation of clause,Term in contract on extend of indemnity uses word "including",Consent order,Contractual terms

(delivering the judgment of the court): This appeal concerns the interpretation of certain clauses in a consent order, which was reached after negotiation between the parties, at the commencement of a trial. It was a package settlement of three earlier actions (the earlier actions).

Though this action was commenced by way of a writ, the parties agreed to treat the dispute as one of interpretation of the terms of the consent order.

The background

In 1992, the appellants, in this appeal, whom we will for convenience call Wu and Thia, and the respondents, whom we will call `the Ongs` and another, Juay Chong Lee, entered into a joint venture and incorporated a company called Koh Yee Huat Enterprises Pte Ltd (KYH). KYH was run like a quasi-partnership. The Ongs, in total, held 46% of the shares in KYH.

The business of KYH grew.
It bought shares in another company, PJ88 Enterprises Pte Ltd (`PJ88`) and incorporated two other companies, Teng Tong Corporation Pte Ltd (Teng Tong) and Wueyfu Investment (S) Pte Ltd (Wueyfu). Everyone had the same number of shares in KYH except for one of the Ongs, Ong Kok Beng (the third respondent).

KYH, PJ88 and Teng Tong are all involved in the business of operating coffee shops and renting stalls to third parties who would pay in addition to the rental, a deposit which would be refunded on termination of the licence.
These three companies shall hereinafter be referred to as `the companies`.

Trouble started in June 1997 when Wu and Thia purchased Juay`s shares in KYH and appointed three additional directors to KYH.
Under the articles of association of KYH, the same opportunity should also have been offered to the Ongs to purchase Juay`s shares. The Ongs then instituted OS 781/97 for a declaration that the transfer of shares from Juay to Wu and Thia was invalid. A second originating summons (OS 776/97) was commenced to declare the appointment of the three new directors as invalid. A third originating summons (OS 767/97) sought relief for the sale of the Ongs` shares in KYH to Wu and Thia, or for the company to be wound up, on the ground of oppression.

All the three originating summonses were consolidated for trial.
Juay was also made a party to those proceedings. However, the trial did not commence as the parties, on the prompting of the judge, decided to negotiate for a settlement. In order that a settlement could be speedily reached, the parties adopted a broad brush approach, without seeking valuation and taking only the following assets into account to determine the fair price for the shares of the Ongs, which Wu and Thia would buy over:

(i) the value of the real properties owned by the companies;

(ii) the cash in the bank accounts of the companies;

(iii) the estimated value of Teng Tong as a going concern.

All other assets, eg amounts due from debtors to KYH, profits of KYH, furniture and fittings, were to be disregarded for the valuation of the shares of KYH.

After considerable haggling over several days, it was agreed that each KYH share be valued at $8.
On the basis of this valuation, Wu and Thia were to pay $3.68m to the Ongs for their 460,000 shares in KYH and some $1.1m to Juay. However, as Wu and Thia did not have the necessary funds to pay to the Ongs, the parties agreed that the Ongs would take over a commercial property (a coffee shop) which was the principal asset of PJ88 (by transferring all shares in PJ88 to the Ongs) and it was also agreed that that property was worth $9m. On this arrangement, with the transfer of the property to the Ongs, the latter were to pay Wu and Thia, the difference between $9m and $3.68m and also less some other sums. The details of the payment arrangement were specified in cl 5 of the consent order and it is necessary that we set out that provision:

Subject to the first and second defendants complying with the conditions laid down in s 76(10) and 76(11) of the Companies Act on or before the completion date, the first, second and third plaintiffs shall pay the first and second defendants a sum of moneys on the completion date calculated in the following manner:

$9,000,000.00 less the amount due to the Bank in respect of the mortgage loan of Blk 640 [num ]01-04 Bukit Batok Central less all other debts of PJ88 which accrued before the completion date less the sum of $3,680,000.00 being the agreed valuation of the first, second and third plaintiffs shares in the Company less the first and second defendants` share of the hearing fees of the above actions. The payment herein is subject to settlement of account under Orders 6, 16, 17 hereof, if any.

It would be noted that cl 5 refers to cll 6, 16 and 17 and these clauses are central to the issues which have now arisen between the parties:

6 There shall be verification of the Bank balances, rental of food stalls deposits as at 21 October 1998 before the completion date provided that any adjustments shall not affect the share valuation but shall be by settlement of account.


16 (Wu and Thia) are to indemnify the (Ongs) of all liabilities, including all government taxes, levies, fees and/or charges incurred up the completion date owing to third parties and/or government bodies of PJ88.

17 (Ongs) are to indemnify (Wu and Thia) of 46% of all liabilities, including all government taxes, levies, fees and/or charges incurred up 21 October 1998 owing to third parties and/or government bodies by the Company and (Teng Tong).

Under the consent order, the original completion date was to be 2 February 1999.
By mutual agreement it was postponed to 12 April 1999. However, prior to this date problems began to surface. On 7 April 1999, the parties appeared before the judge, who recorded the consent order, for the purpose of resolving the completion account. Following that appearance, Wu and Thia`s solicitors wrote on the same day to Ongs` solicitors forwarding a revised completion account and stating:-

1 We refer to the attendance before the Judicial Commissioner Tay Yong Kwang this morning on the matter of the Settlement Account for completion.

2 We enclose herewith revised Completion Account and in respect of which please take note the manner of payments requested.

3 With regard to your clients` liability to indemnify our clients to the extent of 46% of the Company`s and Teng-Tong Corporation Pte Ltd`s liabilities, our clients will seek your clients` payment in discharge of their indemnity for each and every of the liabilities when discharged. In this regard, we shall forward to you as soon as possible a statement of all the liabilities subject to your clients` indemnity. Amongst others, the liabilities will include the Company`s and Teng-Tong Corporation Pte Ltd`s liability to third parties for the refund of rental deposits and tax liabilities.

The revised completion account, for reasons set out in the letter, left out the required adjustments under cll 6 and 17.
It reads:

Amount payable under Order of Court 9,000,000.00

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2 books & journal articles
  • Contract Law
    • Singapore
    • Singapore Academy of Law Annual Review No. 2001, December 2001
    • 1 December 2001
    ...turn primarily on the interpretation of the relevant terms and/or facts, as was the situation, for instance in Wu Fu Ping v Ong Beng Seng[2001] 2 SLR 40; Hyundai Engineering & Construction Co Ltd v Sembawang Kimtrans (S) Pte Ltd[2001] 1 SLR 739 (which was, in any event, primarily a decision......
    • Singapore
    • Singapore Academy of Law Journal No. 2003, December 2003
    • 1 December 2003
    ...5 See e.g., Ebrahimi v Westbourne Galleries Ltd[1973] AC 360; Re Central Realty Co (Pte) Ltd[1999] 1 SLR 559; Wu Fu Ping v Ong Beng Seng[2001] 2 SLR 40. 6 Ebrahimi v Westbourne Galleries Ltd, ibid, 379. 7 See A Berle and G Means, The Modern Corporation and Private Property (New York, Harcou......

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