Oei Hong Leong v Chew Hua Seng: Intention to Create Legal Relations in Share Sale Agreement

Oei Hong Leong and Oei Hong Leong Art Museum Limited, the Appellants, appealed against the High Court's decision to dismiss their claim against Chew Hua Seng, the Respondent, for breach of contract. The claim arose from an agreement made on 16 October 2017, where Chew was to procure a buyer for the Appellants' shares in Raffles Education Corporation Ltd (REC). The Court of Appeal dismissed the appeal, finding that the parties did not have the intention to create legal relations, and therefore no legally binding contract existed. The court also stated that they saw no reason to disagree with the Judge’s findings with regard to the second and third issues.

1. Case Overview

1.1 Court

Court of Appeal of the Republic of Singapore

1.2 Outcome

Appeal Dismissed

1.3 Case Type

Civil

1.4 Judgment Type

Ex Tempore Judgment

1.5 Jurisdiction

Singapore

1.6 Description

Appeal regarding a share sale agreement. The court found no intention to create legal relations, dismissing the claim for breach of contract.

1.7 Decision Date

13 August 2020

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
Oei Hong Leong	Appellant	Individual	Appeal Dismissed	Lost	Jaikanth Shankar of Davinder Singh Chambers LLC Tan Ruo Yu of Davinder Singh Chambers LLC Davinder Singh SC of Davinder Singh Chambers LLC Yee Guang Yi of Davinder Singh Chambers LLC Terence De Silva of Davinder Singh Chambers LLC
Oei Hong Leong Art Museum Limited	Appellant	Corporation	Appeal Dismissed	Lost	Jaikanth Shankar of Davinder Singh Chambers LLC Tan Ruo Yu of Davinder Singh Chambers LLC Davinder Singh SC of Davinder Singh Chambers LLC Yee Guang Yi of Davinder Singh Chambers LLC Terence De Silva of Davinder Singh Chambers LLC
Chew Hua Seng	Respondent	Individual	Appeal Dismissed	Won	Lim Wei Lee of WongPartnership LLP Levin Low of WongPartnership LLP Alvin Yeo SC of WongPartnership LLP Russell Pereira of WongPartnership LLP

3. Judges

Judge Name	Title	Delivered Judgment
Andrew Phang Boon Leong	Judge of Appeal	Yes
Steven Chong	Judge of Appeal	No
Belinda Ang Saw Ean	Judge	No

4. Counsels

Counsel Name	Organization
Jaikanth Shankar	Davinder Singh Chambers LLC
Tan Ruo Yu	Davinder Singh Chambers LLC
Davinder Singh SC	Davinder Singh Chambers LLC
Yee Guang Yi	Davinder Singh Chambers LLC
Terence De Silva	Davinder Singh Chambers LLC
Lim Wei Lee	WongPartnership LLP
Levin Low	WongPartnership LLP
Alvin Yeo SC	WongPartnership LLP
Russell Pereira	WongPartnership LLP

4. Facts

Oei and Chew are personal friends and business associates.
The appellants collectively held 14.04% of the share capital in REC as of 25 September 2017.
The relationship between Oei and Chew deteriorated over a placement agreement.
Oei issued a notice of requisition to convene an extraordinary general meeting of REC’s shareholders.
Oei, Chew, Chung and Sukma met on 16 October 2017 and entered into an agreement.
Chew was to procure a buyer for the appellants’ shares in REC at $0.44 per share.
The transaction with a potential buyer, Peng, fell through.

5. Formal Citations

Oei Hong Leong and another v Chew Hua Seng, Civil Appeal No 36 of 2020, [2020] SGCA 78

6. Timeline

Date	Event
2017-09-01	Relationship between Oei and Chew deteriorated over a placement agreement.
2017-10-10	REC allotted and issued 95 million shares pursuant to the placement agreement.
2017-10-12	Oei issued a notice of requisition to convene an extraordinary general meeting of REC’s shareholders.
2017-10-16	Oei, Chew, Chung and Sukma met and entered into the Agreement.
2017-10-25	Chew informed Oei that he had found a potential buyer of the appellants’ shares.
2017-10-28	The transaction with Peng fell through.
2017-11-15	Last day of transaction as per the 16 October Note.
2020-08-14	Judgment delivered.

7. Legal Issues

Intention to Create Legal Relations
- Outcome: The court held that there was no intention to create legal relations between the parties.
- Category: Substantive
- Related Cases:
  - [2009] 2 SLR(R) 332
Breach of Contract
- Outcome: The court did not rule on this issue as it found no intention to create legal relations.
- Category: Substantive

8. Remedies Sought

Monetary Damages

9. Cause of Actions

Breach of Contract

10. Practice Areas

Commercial Litigation
Appeals

11. Industries

Education

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Oei Hong Leong and another v Chew Hua Seng	High Court	Yes	[2020] SGHC 39	Singapore	The decision of the High Court being appealed against.
Gay Choon Ing v Loh Sze Ti Terence Peter and another appeal	Court of Appeal	Yes	[2009] 2 SLR(R) 332	Singapore	Cited for the principle that intention to create legal relations is an essential element for a binding contract.
Barry v City West Water	Federal Court of Australia	Yes	[2002] FCA 1214	Australia	Cited as an illustrative case where an intention to create legal relations was found notwithstanding the informal nature of the negotiations.
Agius v Sage	Supreme Court of Victoria	Yes	[1999] VSC 100	Australia	Cited as an illustrative case where an intention to create legal relations was found notwithstanding the informal nature of the negotiations.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute Name	Jurisdiction
Companies Act (Cap 50, 2006 Rev Ed)	Singapore

15. Key Terms and Keywords

15.1 Key Terms

Raffles Education Corporation Ltd
REC shares
Extraordinary general meeting
Notice of Requisition
16 October Note
Intention to create legal relations

15.2 Keywords

contract
agreement
shares
intention to create legal relations
appeal
Singapore

17. Areas of Law

Area Name	Relevance Score
Contract Law	95
Breach of Contract	90
Intention to create legal relations	90
Company Law	30
Estoppel	20

16. Subjects

Contract Law
Commercial Law
Share Sale Agreement