Oei Hong Leong v Chew Hua Seng: Contract Formation, Intention, Breach & Damages
In Oei Hong Leong v Chew Hua Seng, the Singapore High Court addressed a dispute over an alleged oral agreement between Oei Hong Leong and Chew Hua Seng regarding the sale of shares in Raffles Education Corporation Limited (REC). Oei claimed Chew failed to procure a buyer for his shares at $0.44 per share by November 15, 2017, leading to damages. Chew argued the agreement was not legally binding and he had fulfilled his obligations. The court, presided over by Lee Seiu Kin J, dismissed Oei's claim, finding no intention to create legal relations and no breach of contract by Chew.
1. Case Overview
1.1 Court
High Court of the Republic of Singapore1.2 Outcome
Plaintiffs' claim dismissed in its entirety.
1.3 Case Type
Civil
1.4 Judgment Type
Judgment
1.5 Jurisdiction
Singapore
1.6 Description
Singapore High Court case involving Oei Hong Leong and Chew Hua Seng concerning an alleged oral agreement for the sale of shares in Raffles Education Corporation Limited. The court dismissed the plaintiff's claim.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Oei Hong Leong | Plaintiff | Individual | Claim Dismissed | Lost | |
| Chew Hua Seng | Defendant | Individual | Judgment for Defendant | Won | |
| Oei Hong Leong Art Museum Ltd | Plaintiff | Corporation | Claim Dismissed | Lost |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Lee Seiu Kin | Judge | Yes |
4. Counsels
4. Facts
- Oei and Chew had a personal and business relationship; Oei was a substantial shareholder in REC, founded by Chew.
- Oei expressed concerns about REC's Placement Agreement, leading to disputes with Chew.
- Oei issued a Notice of Requisition to convene an EGM to remove Chew as Chairman and CEO.
- Oei and Chew met at Sukma's house on October 16, 2017, resulting in the 16 October Note.
- The 16 October Note documented an agreement where Chew would procure a buyer for Oei's shares at $0.44 per share by November 15, 2017.
- Oei later refused to sign the sale and purchase agreement with a potential buyer, Peng, due to payment terms.
- The plaintiffs withdrew their Notice of Requisition on November 15, 2017.
5. Formal Citations
- Oei Hong Leong and another v Chew Hua Seng, Suit No 1059 of 2017, [2020] SGHC 39
6. Timeline
| Date | Event |
|---|---|
| Oei became a substantial shareholder in REC. | |
| Oei introduced Chew to Yang, a potential investor. | |
| Chew met with Yang on several occasions from August to October 2017. | |
| REC entered into a placement agreement with RHB Securities Singapore Pte Ltd. | |
| REC announced the Placement Agreement to the SGX. | |
| Oei met Chew to discuss unhappiness over the Placement Agreement in September and October 2017. | |
| Oei sent a letter to Chew formally communicating his unhappiness over the Placement Agreement. | |
| Chew replied to Oei's letter. | |
| Morgan Lewis Stamford LLC wrote to the SGX on Oei’s behalf. | |
| REC issued an announcement that the Placement Shares had been allotted and issued. | |
| Placement Shares would be listed on the official list of the SGX. | |
| Oei issued a Notice of Requisition to convene an EGM. | |
| REC announced the Notice of Requisition to the SGX. | |
| REC held its Annual General Meeting. | |
| Oei, Chew, Doris and Sukma met at Sukma’s house. | |
| Oei met with Tan to discuss the drafting of an announcement to be made by REC. | |
| Oei had a follow-up meeting with Tan. | |
| A draft withdrawal letter and announcement was circulated by Tan to REC’s other independent directors. | |
| The approved drafts were then shown to Oei for his approval. | |
| Oei received an update from Chew that he had found a potential buyer, Peng. | |
| Oei refused to sign the finalised sale and purchase agreement between himself and Peng. | |
| Chew updated Tan via Whatsapp message. | |
| Oei wrote a letter to Chew and Tan to defer the Notice of Requisition to a date after 15 November 2017. | |
| REC responded, informing Oei that unless the Company receives a formal notice of withdrawal, the Company will comply with its obligations. | |
| REC sent the necessary notice of the EGM and accompanying circular to its shareholders. | |
| The plaintiffs withdrew their Notice of Requisition. | |
| Deadline for Chew to procure a buyer for the plaintiffs’ shares. | |
| Plaintiffs claim damages from this date. | |
| Notes of Evidence. | |
| Notes of Evidence. | |
| Notes of Evidence. | |
| Trial began. | |
| Trial continues. | |
| Trial continues. | |
| Trial in September. | |
| Trial in October. | |
| Judgment reserved. |
7. Legal Issues
- Intention to Create Legal Relations
- Outcome: The court found that there was no intention to create legal relations.
- Category: Substantive
- Related Cases:
- [2000] 2 SLR(R) 407
- [2009] 2 SLR(R) 332
- [1919] 2 KB 571
- [1925] AC 445
- [2000] 1 SLR(R) 204
- [2019] 1 SLR 696
- Breach of Contract
- Outcome: The court found that the defendant did not breach the agreement.
- Category: Substantive
- Related Cases:
- [2002] 1 SLR(R) 672
- Mitigation of Losses
- Outcome: The court found that the plaintiffs had failed to mitigate their losses.
- Category: Substantive
- Related Cases:
- [2010] 2 SLR 1154
8. Remedies Sought
- Monetary Damages
- Interest
- Costs
9. Cause of Actions
- Breach of Contract
10. Practice Areas
- Commercial Litigation
11. Industries
- Education
- Finance
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Tribune Investment Trust Inc v Soosan Trading Co Ltd | High Court | Yes | [2000] 2 SLR(R) 407 | Singapore | Cited for the objective test of whether parties intended to create legal relations. |
| 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 presumptions regarding intention to create legal relations in commercial and social/domestic arrangements. |
| Balfour v Balfour | Court of Appeal | Yes | [1919] 2 KB 571 | England and Wales | Cited for the presumption that parties do not intend to create legal relations in social and domestic arrangements. |
| Rose and Frank Company v J R Crompton and Brothers, Limited and others | House of Lords | Yes | [1925] AC 445 | England and Wales | Cited for the presumption that parties do intend to create legal relations in business and commercial arrangements. |
| Hongkong & Shanghai Banking Corp Ltd v Jurong Engineering Ltd and others | High Court | Yes | [2000] 1 SLR(R) 204 | Singapore | Cited for ascertaining the true bargain between the parties. |
| Simpson Marine (SEA) Pte Ltd v Jiacipto Jiaravanon | Court of Appeal | Yes | [2019] 1 SLR 696 | Singapore | Cited for the relevance of subsequent conduct in ascertaining whether a contract has been formed. |
| Mr Jeffrey Ross Blue v Mr Michael James Wallace Ashley | High Court of Justice | Yes | [2017] EWHC 1928 (Comm) | England and Wales | Cited for the unlikelihood of negotiating a contractual arrangement in an unlikely setting. |
| Tan Hock Keng v L & M Group Investments Ltd | Court of Appeal | Yes | [2002] 1 SLR(R) 672 | Singapore | Cited for the meaning of the term 'procure'. |
| Y.E.S. F&B Group Pte Ltd v Soup Restaurant Singapore Pte Ltd (formerly known as Soup Restaurant (Causeway Point) Pte Ltd) | Court of Appeal | Yes | [2015] 5 SLR 1187 | Singapore | Cited for the exercise of contractual interpretation requiring courts to look at both the text and context of an agreement. |
| ABD (Metals & Waste), Ltd v Anglo Chemical & Ore Company Ltd | High Court | Yes | [1955] 2 Lloyd’s Rep 456 | England and Wales | Cited for the interpretation of 'available market' in determining damages for breach of contract. |
| Scandinavian Bunkering (Singapore) Pte Ltd v MISC Bhd | Federal Court | Yes | [2015] 3 MLJ 753 | Malaysia | Cited for calculating damages where the market cannot absorb the asset at one go. |
| City Securities Pte Ltd (in liquidation) v Associated Management Services Pte Ltd | High Court | Yes | [1996] 1 SLR(R) 410 | Singapore | Cited for the default measure of damages upon a breach of contract for the sale of shares. |
| The “Asia Star” | High Court | Yes | [2010] 2 SLR 1154 | Singapore | Cited for the principle of mitigation of losses. |
| Ageas (UK) Limited v Kwik-Fit (GB) Limited and another | High Court of Justice | Yes | [2014] EWHC 2178 (QB) | England and Wales | Cited for taking account of what is known of the outcome of a future contingency at the time that the assessment falls to be made. |
13. Applicable Rules
| Rule Name |
|---|
| Rule 812(1) of the listing manual of the Singapore Exchange Securities Trading Limited |
| Rule 810(2) of the Listing Manual |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Securities and Futures Act (Cap 289, 2006 Rev Ed) | Singapore |
| Companies Act (Cap 50, 2006 Rev Ed) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Raffles Education Corporation Limited
- Placement Agreement
- Notice of Requisition
- 16 October Note
- Procure
- Placement Shares
- Extraordinary General Meeting
- Shareholding
- SGX
- Confidential Agreement
15.2 Keywords
- contract
- intention
- breach
- damages
- shares
- agreement
- procure
- reconciliation
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Intention to create legal relations | 85 |
| Contract Law | 80 |
| Breach of Contract | 75 |
| Formation of contract | 70 |
| Damages | 60 |
| Remedies | 50 |
| Performance of Contract | 40 |
16. Subjects
- Contract Law
- Shareholder Disputes
- Commercial Litigation