Abdul Jalil v A Formation Construction: Forbearance as Consideration in Compromise Agreement

In Abdul Jalil bin Ahmad bin Talib and Others v A Formation Construction Pte Ltd, the Court of Appeal of Singapore heard an appeal regarding the power of a sole trustee to waive arrears of rent. The appellants, the present trustees, challenged the previous trustee's waiver of rent payable by the respondent, A Formation Construction Pte Ltd. The court dismissed the appeal, holding that the waiver was within the sole trustee's power to carry on the necessary business of the trust and that the respondent had provided sufficient consideration for the waiver.

1. Case Overview

1.1 Court

Court of Appeal

1.2 Outcome

Appeal dismissed with costs.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Court of Appeal case regarding whether forbearance constitutes consideration for a compromise agreement and estoppel in trust law.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Abdul Jalil bin Ahmad bin TalibAppellantIndividualAppeal DismissedLost
Hussen Bin Ahmad Bin Salamah Bin Awad Bin TalibAppellantIndividualAppeal DismissedLost
Waleed Abdul Jalil TalibAppellantIndividualAppeal DismissedLost
A Formation Construction Pte LtdRespondentCorporationAppeal DismissedWon

3. Judges

Judge NameTitleDelivered Judgment
Chan Sek KeongChief JusticeYes
Andrew Phang Boon LeongJustice of the Court of AppealNo
Tay Yong KwangJudgeNo

4. Counsels

Counsel NameOrganization
Kelvin PoonRajah & Tann
Andre YeapRajah & Tann
Aloysius Leng Siew WeiAbraham Low LLC
Anthony NettoTeo Keng Siang & Partners

4. Facts

  1. The appellants are the present trustees of a trust established under a will.
  2. The respondent, A Formation Construction Pte Ltd, entered into lease agreements with the previous trustees for properties.
  3. The lease agreements stipulated rent payments and obligations for the trustees to obtain vacant possession.
  4. The trustees failed to obtain vacant possession by the agreed date, leading to arrears in rent.
  5. The sole trustee waived part of the arrears of rent in a compromise agreement with the respondent.
  6. The appellants, upon becoming trustees, commenced an action to recover the waived rent.

5. Formal Citations

  1. Abdul Jalil bin Ahmad bin Talib and Others v A Formation Construction Pte Ltd, CA 117/2006, [2007] SGCA 29

6. Timeline

DateEvent
Lease agreements entered into between trustees and A Formation Construction Pte Ltd.
Rent became payable by the respondent.
Awad bin Omar Harharah died.
New trustee appointed.
Solicitors for the trustees sent a notice demanding payment of arrears of rent.
Vacant possession of the Amoy Street property given to the respondent.
New trustee retired, leaving Shaik as sole trustee.
Vacant possession of the Purvis Street properties given to the respondent.
Respondent's solicitors proposed changing the commencement date of rent payments.
Solicitors for the sole trustee sent a letter demanding payment of arrears of rent.
Solicitors for the sole trustee sent a "without prejudice" letter offering to waive part of the arrears of rent.
Respondent's solicitors agreed to the offer in relation to the Amoy Street property.
Notices to quit sent to the respondent with respect to all the trust properties.
Respondent's directors confirmed acceptance of the second offer.
Sole trustee appointed another trustee to the trust.
Appellants replaced the previous trustees by court order.
Appellants commenced action to recover waived rent.
Judgment reserved.

7. Legal Issues

  1. Consideration
    • Outcome: The court held that the tenant's giving up the right to make a claim against previous trustees constituted sufficient consideration for the compromise agreement.
    • Category: Substantive
    • Sub-Issues:
      • Forbearance as consideration
  2. Estoppel
    • Outcome: The court held that it would be inequitable for the present trustees to refuse to honor the compromise agreement, as the tenant had discharged obligations under it.
    • Category: Substantive
  3. Trustee's Power
    • Outcome: The court held that the sole trustee had the power under the will to enter into the compromise agreement to waive the arrears of rent.
    • Category: Substantive

8. Remedies Sought

  1. Recovery of waived rent
  2. Interest on waived rent

9. Cause of Actions

  • Recovery of rent arrears

10. Practice Areas

  • Commercial Litigation
  • Trusts and Estates

11. Industries

  • Construction

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Huddersfield Banking Company, Limited v Henry Lister & Son, LimitedCourt of AppealYes[1895] 2 Ch 273England and WalesCited to support the argument that the power to make "arrangements" with tenants includes making compromises with tenants.
Pabari v Secretary of State for Work and PensionsUnknownYes[2005] 1 All ER 287England and WalesCited for the English court's construction of the word 'necessary'.
Freeman & Lockyer v Buckhurst Park Properties (Mangal) LtdCourt of AppealYes[1964] 2 QB 480England and WalesCited for the principle that an agent can only have apparent authority to do an act within the capacity of the principal.
Biggerstaff v Rowatt’s Wharf LtdUnknownYes[1896] 2 Ch 93England and WalesCited in relation to ostensible authority of officers and servants to enter into contracts on behalf of corporations.
British Thomson-Houston Company, Limited v Federated European Bank, LimitedUnknownYes[1932] 2 KB 176England and WalesCited in relation to ostensible authority of officers and servants to enter into contracts on behalf of corporations.
HSBC Trustee (Singapore) Ltd v Lycee Francais De SingapourCourt of AppealYes[1996] 2 SLR 24SingaporeCited for the argument that the respondent had constructive notice because a copy of the will had been registered in the land-register.
Fairtitle v GilbertCourt of King's BenchYes(1787) 2 TR 169England and WalesCited as authority for the submission that actual or constructive notice was sufficient to enable the appellants to set aside the compromise.
Dance v GoldinghamCourt of Appeal in ChanceryYes[1873] LR 8 Ch App 902England and WalesCited as authority for the submission that actual or constructive notice was sufficient to enable the appellants to set aside the compromise.
Waugh v H B Clifford & Sons LtdChancery DivisionYes[1982] Ch 374England and WalesCited for the principle that in contentious matters a solicitor has ostensible authority to bind his client to a compromise.
Harford v Birmingham City CouncilUnknownYes(1993) 66 P & CR 468England and WalesAccepted as long established that in contentious matters a solicitor has ostensible authority to bind his client to a compromise.
Abacus Realty Pte Ltd v Indian Overseas BankCourt of AppealYes[1999] 1 SLR 1SingaporeCited for the principle that the ostensible authority of solicitors extends to non-contentious matters.
Hughes v Metropolitan Railway CompanyHouse of LordsYes(1877) 2 App Cas 439England and WalesCited as a well-known decision that in equity, a promise by a contracting party not to enforce his strict legal rights has a limited effect provided that certain conditions are met.
Central London Property Trust Limited v High Trees House LimitedKing's Bench DivisionYes[1947] KB 130England and WalesCited as a well-known decision that in equity, a promise by a contracting party not to enforce his strict legal rights has a limited effect provided that certain conditions are met.
Regina (Nilsen) v Governor of Full Sutton PrisonUnknownYesRegina (Nilsen) v Governor of Full Sutton Prison The Times, 2 January 2004England and WalesCited for the English court's construction of the word 'necessary'.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Control of Rent Act (Cap 58, 1985 Rev Ed)Singapore
Companies Act (Cap 50, 2006 Rev Ed)Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Trust
  • Trustee
  • Rent
  • Lease
  • Waiver
  • Compromise
  • Consideration
  • Estoppel
  • Forbearance
  • Necessary business of the trust

15.2 Keywords

  • Trust
  • Rent
  • Lease
  • Waiver
  • Compromise
  • Consideration
  • Estoppel

17. Areas of Law

Area NameRelevance Score
Trust Law90
Contract Law80
Estoppel75
Trustees Duties65
Property Law60
Forbearance50

16. Subjects

  • Trusts
  • Contract Law
  • Property Law