Yongnam Development Pte Ltd v Springleaves Tower Ltd and Another

• Jurisdiction: Singapore
• Judge: S Rajendran J
• Judgment Date: 01 December 2003
• Neutral Citation: [2003] SGHC 301
• Docket Number: Suit No 747 of 2002
• Date: 01 December 2003
• Published date: 02 January 2004
• Year: 2003
• Plaintiff Counsel: SA Pillai and Brandon Choa (Acies Law Corporation)
• Citation: [2003] SGHC 301
• Defendant Counsel: Tan Chuan Thye and Tan Xeauwei (Allen and Gledhill),Wong Hur Yuin (Wee Swee Teow and Co) on watching brief,Yvonne Quek appears as corporate representative of second defendants,Thio Shen Yi and Karen Teo (TSMP Law Corporation) on watching brief
• Court: High Court (Singapore)
• Subject Matter: Whether defendants had been assigned debt allowing them to sue in contract,Assignment,Effect,Powers of attorney,Whether powers of attorney are to be strictly construed,Manner,Whether defendants estopped from insisting on their strict legal rights,Whether "indoor management rule" applicable,Agency,Whether both assignor and assignee must be parties to action,Ratification,Choses in Action,Equity,Whether defendants had authority to contract on behalf of donor under terms of power of attorney,Estoppel,Construction of agent’s authority,Whether there was any express or implied ratification by defendants

Judgment reserved.

S Rajendran, J:

1 This is a claim by Yongnam Development Pte Ltd (“YDP”) against Springleaves Tower Ltd (“STL”) and Somerset Development Pte Ltd, formerly known as Liang Court Development Pte Ltd (“LC”) for specific performance – alternatively a refund of the purchase price – of the sale and purchase of the 23^rd floor of a building known as “Springleaf Tower”. There were two Sale and Purchase Agreements, both dated 31 March 1999, entered into between the parties in respect of the 23^rd floor. I will refer to the first – which accorded with the prescribed Sale and Purchase Agreement under the Sale of Commercial Properties Act (“the Prescribed Form”) – as the Sale and Purchase Agreement (“S&P Agreement”) and the second, under which considerable amendments to the S&P Agreement were effected, as the Supplemental Sale and Purchase Agreement (“SS&P Agreement”). I will refer to the two agreements together as “the Sale Contracts”.

2 STL did not seek to defend the claim against it and YDP has obtained judgment against STL. That judgment, however, remains unsatisfied due to the impecunious financial position of STL. LC denied liability to YDP on three grounds:

(a) YDP had given no consideration for the purchase.

(b) The person who signed the Sale Contracts was not authorised to do so on behalf of LC.

(c) There had been no acceptance or ratification by LC of the Sale Contracts.

Joint Development Agreement.

3 STL and LC (jointly referred to as the Defendants) were joint developers of Springleaf Tower (“the Project”) and owned the land on which Springleaf Tower was to be built as tenants-in-common in the proportion 70 (STL) : 30 (LC). Their respective rights and obligations in respect of the Project were set out in a Joint Development Agreement (“JDA”) dated 13 June 1996. Under the JDA, the contribution of the Defendants towards the construction and other costs of the Project was also to be in the proportion 70:30.

4 The JDA required the Defendants to co-operate in securing separate credit facilities for each to finance their respective interest in the Project. Pursuant to that requirement, arrangements were made with Overseas Union Bank (“OUB”) to finance STL and LC. As security for the financing, the Defendants, on 15 January 1998, mortgaged the entire Project to OUB and covenanted in the mortgage documents that each would, in the event of default by the other, repay the other’s indebtedness to OUB.

5 Under the JDA, the Defendants also agreed that Tuan Kai Construction Pte Ltd (“TKC”) – which like STL was part of the Ban Hin Leong group of companies – would be the main contractor of the Project. It was not in dispute that the controlling shareholder of the Ban Hin Leong group of companies was one Richard Lim Choon Hock (“Richard Lim”). TKC was appointed as the main contractor of the Project on 1 October 1997.

Supplemental Joint Development Agreement.

6 Following the allotment, under the Strata Titles Act, of share values in the units in Springleaf Tower, the Defendants entered into a Supplemental Joint Development Agreement (“Supplemental JDA”) dated 19 January 1998 – which allocated the strata units in the Project between STL and LC. STL desired to sell some of the strata units allocated to it and provision was accordingly made – in cl 4 of the Supplemental JDA – for such sales. As these sales would be “off the plan” the units could – except with the consent of the Controller of Housing (“the Controller”) – be sold only in accordance with the Prescribed Form. Annexed to the Supplemental JDA as Appendices B and C were the forms in which any Option/Sale and Purchase Agreement relating to any unit in the Project was to conform. Appendices B and C were identical to the Prescribed Form.

7 The provisions of cl 4 of the Supplemental JDA are of particular relevance to these proceedings. I will therefore set out the provision in cl 4 in full:

4. SALE OF STRATA UNITS

STL shall be entitled to sell the STL Units and LC shall be entitled to sell the LC Units subject to the following conditions:-

(1) Each option to purchase and sale and purchase agreement (collectively the “S&P Documents”) naming both STL and LC as joint vendors shall be in the forms set out in Appendices B and C respectively, which forms are prescribed under the Sale of Commercial Properties (Amendment) Rules 1997 incorporating amendments approved by both STL and LC and approved by the Controller of Housing;

(2) Both STL and LC shall be parties to the S&P Documents as joint vendors for the sale of each STL Unit and each LC Unit;

(3) To enable LC to co-ordinate, carry out and complete the sale of the LC Units, STL shall issue a power of attorney to LC (the “STL Power of Attorney”) in respect of the LC Units, in the form set out in Appendix D;

(4) To enable STL to co-ordinate, carry and complete the sale of the STL Units, LC shall issue a power of attorney to STL (the “LC Power of Attorney”) in respect of the STL Units, in the form set out in Appendix E;

(5) STL and LC shall maintain the two project accounts which have been opened in their joint names with Overseas Union Bank Limited, namely Project Account No. 89-41506-3 which shall be operated solely by STL (“STL Project Account”) and Project Account No. 34-41907-5 which shall be operated solely by LC (“LC Project Account”);

(6) The entire sale proceeds from the sale of the STL Units shall be deposited into the STL Project Account for the sole benefit of STL;

(7) The entire sale proceeds from the sale of the LC Units shall be deposited into the LC Project Account for the sole benefit of LC;

(8) On legal completion of the sale and purchase of each sold Strata Unit, STL and LC shall jointly execute and deliver:-

(a) the transfer of the strata title of each sold STL Unit to the purchaser thereof, as directed by STL; and

(b) the transfer of the strata title of each sold LC Unit to the purchaser thereof, as directed by LC.

It will be noted that STL and LC were required by sub-cll (5) to (7) above to deposit the sale proceeds of any units sold into their respective project accounts with OUB.

8 LC and STL were also required, under sub-cll (3) and (4) above, to execute powers of attorney (PAs) in favour of each other in the forms set out. On the same day that the Supplemental JDA was signed (19 January 1998), STL and LC gave to each other their respective PAs. The PA authorised the attorney to sign Options to Purchase/Sale and Purchase Agreements on behalf of the donor in the forms annexed to the PA as Annexures B and C. Annexures B and C of the PA were identical to Appendices B and C of the Supplemental JDA which, as noted earlier, complied with the Prescribed Form.

The amended contract.

9 On 26 January 1998 – soon after the Supplemental JDA had been entered into – the contract between STL and LC and the main contractor TKC was amended. Clause 4 of this new contract with TKC (“the Amended Contract”) spelt out that the progress payments payable to TKC by STL and LC were to be in the same proportion as the strata units allocated to them under Supplemental JDA. Clause 4 further provided:

For the avoidance of doubt, the Contractor [TKC] expressly acknowledges and agrees that Springleaves Tower Ltd and Liang Court Development Pte Ltd shall each only be liable to make payment to the Contractor of any monies due or payable under the Contract Agreement or this Supplemental Agreement, in accordance with the proportion set out in and based substantially on the Joint Development Agreement.

The extent of STL’s and LC’s obligation to pay TKC was therefore restricted to their respective share in the Project, ie to the proportion 70 : 30.

YEC: the nominated sub-contractor.

10 Yongnam Engineering and Construction Pte Ltd (“YEC”) was the nominated sub-contractor for the structural framework for the Project. As work on the Project proceeded YEC began to get increasingly concerned about TKC’s failure to effect progress payments on time and requested STL to guarantee these payments. It would appear that this request was made of STL because STL was a sister company of TKC in the Ban Hin Leong group of companies. LC was not party to and did not know of this request. I would note here that LC was not, at any time, in breach of its obligation to TKC to pay its proportionate share of TKC’s invoices.

Settlement Agreement.

11 In spite of the guarantee given by STL, TKC again failed to make progress payments in time to YEC. Discussions ensued between YEC, STL and TKC with a view to resolving the problems STL and TKC faced in making such payments. Seow Soon Yong (“Seow”), the Chief Executive Officer of YEC, told the court that in trying to resolve these problems he had spoken frequently with Sam Tan, a Senior Vice President of OUB, and Sam Tan had encouraged YEC to take up from STL a floor in the Project in lieu of payments by TKC. Seow did not at any time discuss the problems faced by YEC with LC. LC played no role in the discussions between STL, TKC and YEC.

12 On 13 February 1999, YEC, STL and TKC entered into an agreement – referred to as the Settlement Agreement – whereby STL assumed TKC’s liabilities to YEC under the YEC sub-contract and agreed to transfer the 23^rd floor of Springleaf Tower to YEC (valued at $13.9 million inclusive of a compensatory credit of about $2.7 million) against the amount due from STL/TKC to YEC. On the same day, STL sent a letter to YEC that summarised the arrangement between them relating to the said transfer. The letter read as follows:

We refer to the Settlement Agreement (the “Agreement”) dated 13 February 1999 and entered into between yourselves, ourselves and Tuan Kai Construction Pte Ltd.

We hereby acknowledge that in the ordinary course of business, the consideration payable to you under the Contracts (as defined in the Agreement) would be paid to you in cash. However, we and Tuan Kai have requested you to purchase the Floor (as defined in the...