Hon Chin Kong v Yip Fook Mun: Contract Formation, Variation, and Remedies for Breach of Contract

In Hon Chin Kong v Yip Fook Mun, the Singapore High Court addressed a dispute over a failed sale of shares in CDX Singapore Pte Ltd. Hon Chin Kong, the plaintiff, sought the return of $300,000 paid to Yip Fook Mun and Wimol Angsopa, the defendants, arguing no binding contract existed. The court, presided over by Kannan Ramesh J, found that a contract was formed on 24 May 2013, and subsequently varied, for the sale of shares and an office property for $828,000. The court held that the $300,000 was a forfeitable deposit due to the plaintiff's breach, dismissing the suit with costs to the defendants.

1. Case Overview

1.1 Court

High Court of the Republic of Singapore

1.2 Outcome

Suit dismissed with costs to the defendants.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Singapore High Court case involving a dispute over a failed company share sale. The court ruled there was a binding contract and the deposit was forfeitable.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Hon Chin KongPlaintiffIndividualClaim DismissedLost
Yip Fook MunDefendantIndividualJudgment for DefendantWon
Wimol AngsopaDefendantIndividualJudgment for DefendantWon

3. Judges

Judge NameTitleDelivered Judgment
Kannan RameshJudgeYes

4. Counsels

Counsel NameOrganization
Lee Chiat Jin JeffreyLee Chai & Boon LLP
Yap Ee Lin FeliciaLee Chai & Boon LLP
Tan Teng MuanMallal & Namazie
Loh Li QinMallal & Namazie

4. Facts

  1. Plaintiff sought return of $300,000 paid to defendants in September 2013.
  2. Plaintiff is a Singapore citizen residing in Brunei.
  3. First defendant worked for Gallagher Security Management System.
  4. Defendants were sole directors and shareholders of CDX Singapore Pte Ltd.
  5. Plaintiff operated two Brunei companies, one a Gallagher partner.
  6. Plaintiff expressed interest in acquiring defendants’ shareholding in CDX.
  7. Parties negotiated the sale of CDX shares and the office property.

5. Formal Citations

  1. Hon Chin Kong v Yip Fook Mun and another, Suit No 576 of 2015, [2017] SGHC 286

6. Timeline

DateEvent
CDX Singapore Pte Ltd incorporated.
First defendant got to know the plaintiff.
Plaintiff emailed the first defendant expressing interest in buying CDX again.
First defendant sent the plaintiff an email with the subject 'Your offers'.
Plaintiff replied to the first defendant's email.
First defendant replied to the plaintiff's email.
Plaintiff sent the first defendant two text messages confirming the deal.
First defendant emailed the plaintiff.
Plaintiff met the defendants in Brunei.
First defendant returned to Singapore.
First defendant told Lorraine Lee from BSP Management Pte Ltd about the share transfer.
Parties signed documents for the transfer of shares.
First defendant sent the plaintiff a WhatsApp message regarding the bank transfer.
First defendant asked for updates on the transfer.
Plaintiff replied to the first defendant's email.
Original deadline for the sale.
Plaintiff sought to defer payment to 1 October.
Plaintiff sent the first defendant WhatsApp messages proposing payment in three times.
First defendant received an email from Ms Gina Fe A Maratas attaching the Purchase Letter.
First defendant emailed Ms Maratas with a revised version of the Purchase Letter.
First defendant received the first payment of $300,000.
Deadline for the second payment of $300,000.
Deadline for the final payment of $228,000.
Plaintiff had not made the second and third payments.
WhatsApp messages were exchanged between the plaintiff and the first defendant.
First defendant sent an email to the plaintiff.
Plaintiff replied to the first defendant's email.
First draft of written agreement sent to the first defendant.
Plaintiff's solicitors demanded the return of the $300,000.
Defendants' solicitors gave the plaintiff seven days to complete the sale.
Plaintiff commenced proceedings.
Repudiation accepted by defendants.
Oral grounds for decision to dismiss the suit issued.
Full grounds of decision issued.

7. Legal Issues

  1. Contract Formation
    • Outcome: The court held that a binding contract was formed on 24 May 2013.
    • Category: Substantive
    • Sub-Issues:
      • Acceptance
    • Related Cases:
      • [2009] 2 SLR(R) 332
  2. Contract Variation
    • Outcome: The court held that the original contract had been successfully varied.
    • Category: Substantive
  3. Remedies for Breach of Contract
    • Outcome: The court held that the $300,000 was a forfeitable deposit and the penalty rule did not apply.
    • Category: Substantive
    • Sub-Issues:
      • Deposits
      • Part payments
      • Penalties
    • Related Cases:
      • [2007] 3 SLR(R) 537
      • (1884) 27 Ch D 89
      • [1954] 1 QB 476
      • [2002] HKCFA 15
      • [1993] AC 573

8. Remedies Sought

  1. Return of $300,000

9. Cause of Actions

  • Breach of Contract
  • Claim for return of deposit

10. Practice Areas

  • Commercial Litigation

11. Industries

  • Security
  • Corporate Services

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Gay Choon Ing v Loh Sze Ti Terence Peter and another appealCourt of AppealYes[2009] 2 SLR(R) 332SingaporeCited for the principle of final and unqualified expression of assent to the terms of an offer.
Lee Chee Wei v Tan Hor Peow Victor and others and another appealCourt of AppealYes[2007] 3 SLR(R) 537SingaporeCited as the seminal local case on deposits and their recoverability.
Triangle Auto Pte Ltd v Zheng Zi Construction Pte LtdHigh CourtNo[2000] 3 SLR(R) 594SingaporeCited for the principle that a deposit in a sale and purchase contract is a security for damages for breach of contract.
Howe v SmithCourt of AppealYes(1884) 27 Ch D 89England and WalesCited as the locus classicus on the law of deposits, defining the nature of a deposit as a guarantee that the contract shall be performed.
Stockloser v JohnsonCourt of AppealNo[1954] 1 QB 476England and WalesCited for the principle that money expressly paid as a deposit is equivalent to a forfeiture clause.
Polyset Ltd v Panhandat LtdCourt of Final AppealYes[2002] HKCFA 15Hong KongCited for the principle that if the parties intend the advance payment as a deposit, they are taken to have agreed that it is to be forfeited in the event that the payer fails to complete.
Indian Overseas Bank v Cheng Lai GeokCourt of AppealNo[1993] 1 SLR(R) 32SingaporeCited for the argument that the deposit amounted to a penalty and thus should not be recoverable.
Hua Khian Co (Pte) Ltd v Lee Eng KiatCourt of AppealNo[1996] 2 SLR(R) 562SingaporeCited for the argument that forfeiture of the deposit amounted to a penalty.
Zalco Marine Services Pte Ltd v Humboldt Shipping Co LtdCourt of AppealNo[1998] 2 SLR(R) 195SingaporeCited for the argument that forfeiture of the deposit as part of damages was permissible.
Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co LtdHouse of LordsYes[1915] AC 79United KingdomCited for the principles of the penalty rule.
Hadley v BaxendaleCourt of ExchequerYes(1854) 9 Exch 341England and WalesCited for the principles of common law damages.
Cavendish Square Holding BV v Makdessi and another appealSupreme CourtNo[2016] AC 1172United KingdomCited for the reformulation of the penalty rule in the UK.
Mayson v ClouetPrivy CouncilYes[1924] AC 980United KingdomCited for establishing the fundamental difference between part payments and deposits.
Linggi Plantations Ltd v JagatheesanPrivy CouncilYes[1972] 1 MLJ 89MalaysiaCited for the principle that the law relating to the forfeiture of deposits has always been treated as entirely distinct and separate from the learning introduced into English law by the distinction between liquidated damages and a penalty.
Workers Trust & Merchant Bank Ltd v Dojap Investments LtdPrivy CouncilYes[1993] AC 573United KingdomCited for the principle that the forfeiture of a deposit does not fall within the general rule and can be validly forfeited even though the amount of the deposit bears no reference to the anticipated loss to the vendor flowing from the breach of contract.
Union Eagle Ltd v Golden Achievement LtdPrivy CouncilYes[1997] UKPC 5United KingdomCited for the principle that in the normal case of a reasonable deposit, no inquiry is made as to whether it is a pre-estimate of damage or not.
Goh Liang Yong Jonah and another v Heng Kuek Hoy and anotherHigh CourtYes[2013] SGHC 203SingaporeCited as authority for the proposition that a sum has to be reasonable in order to take effect as a deposit.
Dies and another v British and International Mining and Finance Corporation, LimitedKing's Bench DivisionYes[1939] KB 724England and WalesCited for the principle that in ordinary circumstances, unless the contract otherwise provides, the seller, on rescission following the buyer’s default, becomes liable to repay the part of the price paid.
McDonald v Dennys Lascelles LtdHigh Court of AustraliaYes[1933] HCA 25AustraliaCited for the principle that the contract of resale contains no provision for the retention or forfeiture of the instalments.
Philips Hong Kong Ltd v The Attorney-General of Hong KongPrivy CouncilYes[1993] 61 BLR 49Hong KongCited for endorsing the principles articulated by Lord Dunedin in Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1915] AC 79.
Hong Leong Finance Ltd v Tan Gin Huay and anotherHigh CourtYes[1999] 1 SLR(R) 755SingaporeCited for endorsing the principles articulated by Lord Dunedin in Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1915] AC 79.
Beihai Zingong Property Development Co and another v Ng Choon MengHigh CourtYes[1999] 1 SLR(R) 527SingaporeCited for endorsing the principles articulated by Lord Dunedin in Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1915] AC 79.
Overseas Union Enterprise Ltd v Three Sixty Degree Pte Ltd and another suitHigh CourtYes[2013] 3 SLR 1SingaporeCited for endorsing the principles articulated by Lord Dunedin in Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1915] AC 79.
Xia Zhengyan v Geng ChangqingCourt of AppealYes[2015] 3 SLR 732SingaporeCited for affirming that the penalty rule is still basically embodied in Lord Dunedin’s formulation of the rule, as well as the four tests of construction that he set out, in Dunlop at 86–88.
Pacific Rim Investments Pte Ltd v Lam Seng Tiong and anotherHigh CourtYes[1995] 2 SLR(R) 643SingaporeCited for the principle of relief against forfeiture.
Comr of Public Works v HillsPrivy CouncilYes[1906] AC 368United KingdomCited for the principle that a sum paid over by one party to the other party as a deposit, in the sense of some sort of surety for the first party’s contractual performance, does not prevent the sum being a penalty, if the second party in due course forfeits the deposit in accordance with the contractual terms.
Else (1982) Ltd v Parkland Holdings LtdCourt of AppealNo[1994] 1 BCLC 130England and WalesCited for the principle that a sum paid over by one party to the other party as a deposit, in the sense of some sort of surety for the first party’s contractual performance, does not prevent the sum being a penalty, if the second party in due course forfeits the deposit in accordance with the contractual terms.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
No applicable statutes

15. Key Terms and Keywords

15.1 Key Terms

  • Deposit
  • Forfeiture
  • Penalty rule
  • Contract formation
  • Contract variation
  • Earnest money
  • Reasonable deposit
  • Part payment
  • Repudiation
  • CDX Singapore Pte Ltd

15.2 Keywords

  • contract
  • formation
  • variation
  • remedies
  • deposit
  • penalty
  • singapore
  • high court
  • share sale
  • forfeiture

17. Areas of Law

Area NameRelevance Score
Contract Law95
Formation of contract90
Deposits Law85
Penalties80
Variation of Contract75
Damages70
Contractual Interpretation60
Estoppel40

16. Subjects

  • Contract Law
  • Commercial Law
  • Sale of Shares
  • Deposits
  • Penalty Clauses