Judgment

Nik Hashim, JCA

(delivering the judgment of the court)

BACKGROUND

1. This appeal is directed against the decision of Abdul Malik Ishak J reported in [1998] 7 MLJ 720 and [1998] 3 CLJ 964 in an action brought by the respondent before us as plaintiff against the appellant as defendant. At the conclusion of submissions of learned counsel from both sides on April 2, 2004, we dismissed the appeal with costs. The reasons for our decision now follow.

2. Both the plaintiff and the defendant were bodies corporate registered in the Republic of Singapore. The plaintiff purchased 26 parcels of land in the Mukim of Tebrau in the district of Johor Bahru from the defendant under an agreement dated July 28, 1967 (the SPA) (exh P1) for a consideration of S$52,000. By clause 2 of the SPA the consideration was acknowledged by the defendant in the following terms:

   2.

   The purchaser (the plaintiff) has already paid to the vendor (the defendant) the total purchase price of $52,000.00 before the signing of this agreement the receipt of which the vendor (the defendant) hereby acknowledges. The plaintiff claimed that the defendant had failed to apply to the Collector of Land Revenue for the issue documents of title to each of the 26 parcels of land and to execute the transfer documents in favour of the plaintiff or its nominees.

   The plaintiff obtained a judgment in default of appearance against the defendant which on appeal by the defendant, was set aside by the then Supreme Court. But, prior to this setting aside, the High Court of Johor Bahru had ordered the Registrar of Land Titles to issue the documents of title in favour of the plaintiff. As such, the plaintiff had possession of the new issue documents of title (the old ones having been cancelled by the Collector of Land Revenue) which showed that the plaintiff remained as the proprietor of the land. During the trial, the plaintiff amended its statement of claim seeking, inter aha, a declaration that the new issue documents of title were valid, and an order directing the Registrar of Titles to endorse the plaintiff as the registered proprietor on the register document of title. In its amended statement of defence the defendant denied entering into the SPA and receiving the purchase consideration of S$52,000. Alternatively, the defendant contended that the SPA was ultra vires the defendant's memorandum and articles of association (the M&A) and was therefore void. The learned judge allowed the plaintiffs claim and hence, this appeal.

APPEAL

3. It is the defendant's case before us that the contract is invalid and was signed without authority under the company's M&A by a director purporting to be the managing director and a company secretary who was not authorized to sign any contract. The defendant also raised the issues of non-receipt of the purchase price and that the principles of non est factum and estoppel have no application to the case.

   CONTRACT UNDER SEAL

4. The SPA was executed specifically under seal. The fact that the contract was under seal was not even disputed in the High Court. It is elementary that when a contract is made under seal by a corporation, the act of affixing the seal is equivalent to the company's signature (see Understanding Company Law, 7th edn, Phillip Lipton and Abraham Herzberg at p 332; Northside Developments Pty Ltd v Registrar-General (1990) 64 ALJR 427 at p 432). Though in this case it was not necessary for the SPA to be made under seal, the learned trial judge made a specific finding of fact that the SPA was signed and sealed. Article 80 of the defendant's M&A expressly provides that "in favour of any purchaser", an instrument that is sealed with the common seal and signed by both a director and secretary of the company (as is the case here) shall be conclusive of the fact that the seal had been properly affixed. Besides, the learned judge found for a fact that the defendant's seal was properly affixed to the SPA when in his judgment at p 59 of the appeal record, he said:

   The seal of the defendant was affixed to the sale and purchase agreement as reflected in exh P1 and in my judgment both Thong Kong Fye and Koh Kok Peng had rightly put their signatures thereto which must in law bind the defendant and be conclusive of the fact that the seal was properly affixed. This was my judgment and I so hold accordingly.

5. Further, Mr. Hsieh Shao-An (SP1), the solicitor who witnessed the signing of the SPA, testified that Thong Kong Fye, the managing director of the defendant, signed the SPA together with its secretary, Koh Kok Peng in his presence on July 28, 1967. The purchaser was Thong Guan Co and the signatory was that of Tan Poh Cher and Chew Chee Seng. Thus, the defendant's submission that "the contract was purportedly signed by Thong as director and Koh as secretary when neither was authorized by resolution or under the M&A to do so" is hollow and without merit.

   ARTICLE 71

6. The defendant sought to rely on the Form 31 at p 649 of the appeal record submitted to the Registry of Companies and Businesses of Singapore (the ROC) to say that three of the four directors of the defendant company resigned on July 27, 1967 making it a one director company (i.e. Thong) at the time of signing of the contract thereby rendering it invalid for being in breach of article 71 of the M&A which states:

   The continuing Directors may act notwithstanding any vacancy in their body; provided always that in case the Directors shall at any time be reduced in number to less than two it shall be lawful for the remaining Director to act as Directors for the purpose of filling up vacancies in the Board, but not for any other purpose.

7. It must however be noted that this Form 31 was only submitted on August 21, 1967. Hence it does not affect the position of any third party making a search at the registry on July 28, 1967. In the present case the contract was concluded before July 28, 1967 and the parties merely formalized it on July 28, 1967. On July 28, 1967 the managing director (Thong) and secretary (Koh) were merely carrying out what was already authorized.

8. In the instant case the defendant company had at least two directors as Kwek Kok Thye only resigned on August 10, 1967. It was admitted in evidence at the trial that the original signed carbon copy of a resignation letter dated August 10, 1967 was signed by the late Kwek Kok Thye (exh P24 at p 678 of the record of appeal) and based on exh P24, the learned judge made a finding of fact (at p 69 of the appeal record) that Kwek Kok Thye resigned on August 10, 1967 which date coincided with the appointment of two new directors as reflected in the Form 31. Though the Form 31 filed on behalf of the defendant with the ROC showed an earlier resignation date, it is a fact that the said Form dated August 21, 1967 was filed after August 21, 1967. In the absence of any direct evidence, and there was none in this case, to contradict the said resignation letter dated August 10, 1967, all that could be safely ascertained was that Kwek's resignation took place prior to the date of the Form 31 i.e. August 21, 1967. It would be most unfair and unconscionable to allow the defendant to use a technicality of this sort to challenge the validity of a contract for which it already acknowledged having received full purchase price of S$52,000.

   THE LAW IN JULY 1967

9. Moreover, the law as it then was i.e. July 1967, allowed private companies to have only one director. Section 142(2) of the Singapore Companies Ordinance (Cap 174) exempted private companies from having at least two directors i.e. a private company could have only one director. Hence, it was lawful for the defendant as a private company to have a single director in July 1967. Any suggestion to the contrary would surely conflict with the prevailing law then and therefore cannot prevail.

   KNOWLEDGE

10. On the issue that the plaintiff had actual knowledge if not put on inquiry by the alleged sudden resignation of three directors on the eve of the contract, it is important to note that the plaintiff's directors who executed the contract on July 28, 1967 were not the ones who allegedly resigned as directors of the defendant company. Thus, knowledge of any resignation cannot be imputed. Surely, the resigning directors would have given notice (if any) to the secretary of the defendant company and not to the plaintiff. The knowledge of an officer common to two companies is not necessarily the knowledge of both companies and will not be imputed to the other company unless he has some duty imposed on him to communicate his knowledge to the company sought to be affected by the notice (see In Re Hampshire Land Co (1896) 2 Ch D 743; Re David Payne & Co [1904-7] All ER Rep 1501).

    NON RECEIPT OF PURCHASE PRICE

11. The defendant's argument that it did not receive the purchase price on the ground that there was no receipt to support it is ludicrous and against the entire weight of evidence. The defendant had admitted in clause 2 of the contract (P1) to receiving the full purchase price or S$52,000 even before the signing of the contract, and the payment was further confirmed by the sworn testimony of the defendant's own solicitor, SP1. The defendant adduced no evidence whatsoever to even challenge the acknowledgement of the payment. We agree with the learned counsel for the plaintiff that since the contract acknowledged the payment, the contract therefore is the receipt that the defendant had already been paid.

    NON EST FACTUM

12. The defendant in its amended statement of defence pleaded:

    1.	Paragraphs 1 and 2 of the statement of claim are denied. The defendants deny entering into the agreement dated July 28, 1967 for the sale of 26 lots of land. The defendants aver that there was and still are no such sale. Accordingly the defendants deny receiving the sum of $52,000 or any sum at all for the alleged sale.
    2.	Alternatively, the defendants contend and will contend that even if the alleged agreement does exist (which is denied): 2.1 The alleged agreement and purported transaction is ultra vires the M&A of the defendant company and is therefore void. [emphasis added]

    It is worthy of note that the aforesaid plea of capacity of the signatories being ultra vires the M&A is an alternative plea to paragraph I of the defendant's defence. Obviously, the denial of the very existence of the SPA is a plea of non est factum in its essence and true form. According to Black's Law Dictionary, 5th edn, 1979, "non est factum" means "a plea denying execution of instrument sued on". Halsbury's Laws of England, 4th edn, vol 12, 1975 at p 544 paragraph 1365 states:

    Plea of non est factum 1365. When plea available. The plea of non est factum, or nient son fait, is that by which a man sought to be charged in some action or proceeding upon a writing alleged to have been sealed and delivered by him avers that it is not his deed. This plea is only available where the party sued can show either that there never has been, or that there is not existing at the time of the plea, any valid execution of the deed on his part ....

    Thus, by its own pleadings, the defendant did clearly plead non est factum. It is therefore not true to say that the plaintiff and the learned trial judge went on a frolic of their own by raising issues for the defendant which the defendant did raise in its pleadings.

    ESTOPPEL

13. On the question of estoppel, we agree with the learned trial judge that the doctrine of estoppel is applicable against the defendant (see Boustead Trading (1985) Sdn Bhd v Arab Malaysian Merchant Bank Bhd [1995] 3 AMR 2871; [1995] 3 MLJ 331). The defendant is estopped from denying the course of conduct whereby the defendant in its letter dated March 12, 1970 to the plaintiff admitted the contract i.e. the sale and purchase agreement (SPA) to purchase the 26 lots as stated in the letter:

    In fact the new management took over the company (the defendant) with the full knowledge that the 26 lots have been sold to you (the plaintiff) and the remaining lots are owned by the company (the defendant).

    Besides this letter, the plaintiff was also in possession of the defendant's other letters. One of such letters was dated April 2, 1970 which reads:

    We regret to inform you that the mortgage of your abovementioned properties to Asia Commercial Banking Corporation Ltd was made by the former director of the company, Mr. Thong Kong Fye. Since the company has been taken over by the new management, we will no doubt be liable for such act undertaken by Mr. Thong Kong Fye. Therefore, we will take steps to redeem your abovementioned properties and thereafter to comply with clause 6 of the said agreement for sale (SPA) ....

    A perusal of these letters will leave no room for any doubt that the defences such as the non-execution of the SPA and the failure of consideration are not bona fide, and in this regard, the learned trial judge was right when His Lordship aptly described the defences as "nothing but mere shams" (p 75, record of appeal).

    CONCLUSION

14. In summary therefore, having reviewed this case as a whole and having considered the submissions of both sides, we were not prepared to disagree with the learned trial judge on his findings of facts based on the evidence adduced before him, and consequently, we found no good reasons for interfering with his judgment. In our judgment, the contract was valid, lawful and binding and in furtherance of the object and prime business of the defendant. Trafficking in land was the mainstay and core business of the defendant (see paragraph 3(2) of the M&A at p 592 of the appeal record and also evidenced in the contract itself). It is an established principle that courts strive to uphold rather than destroy bargains which the parties believe to have concluded. The old maxim of English law, verba ita sunt intelligenda ut res magis valeat quam pereat (see Popular Industries Ltd v Eastern Garment Manufacturing Sdn Bhd [1989] 3 MLJ 360 at p 363) is applicable in this case. We accordingly applied this maxim to give effect to the intentions of the defendant and the plaintiff rather than holding that there was no valid contract between them.

15. Finally, we hold that there was absolutely no merit whatsoever in this appeal and dismissed it with costs and further ordered that the deposit be paid to the plaintiff towards accounts of taxed costs. The order of the learned judge was affirmed except the prayer pertaining to damages under item (vi) of the plaintiffs statement of claim which was struck out following its withdrawal by the plaintiff in the appeal. We also made a consequential order that the defendant was to deliver to the plaintiff a registrable Form 14A of the National Land Code 1965 for each parcel of land on or before April 16, 2004.

Cases

Boustead Trading (1985) Sdn Bhd v Arab Malaysian Merchant Bank Bhd [1995] 3 AMR 2871; [1995] 3 MLJ 331, FC; David Payne & Co; Re [1904-7] All ER Rep 1501, CA; Hampshire Land Company; In Re (1896) 2 Ch D 743, HC; Northside Developments Pty Ltd v Registrar-General (1990) 64 ALJR 427, HC; Popular Industries Ltd v Eastern Garment Manufacturing Sdn Bhd [1989] 3 MLJ 360, HC; Thong Guan Co (Pte) Ltd v Lam Kong Co Ltd [1998] 7 MLJ 720; [1998] 3 CLJ 964, HC

Legislations

Malaysia

National Land Code 1965: Form 14A

Singapore

Singapore Companies Ordinance (Cap 174): s.142

Authors and other references

Black's Law Dictionary, 1979, 5th edn

Halsbury's Laws of England, 1975, 4th edn, vol 12

Phillip Lipton and Abraham Herzberg, Understanding Company Law, 7th edn

Representations

Cyrus Das, Shamsul Bahrin Manaf and Sunita S Sothi (Shook Lin & Bok) for appellant

M Pathamanathan and T.C. Gan (Gan & Lim) for respondent

Notes:-

This decision is also reported at [2004] 3 AMR 517