|
www.ipsofactoJ.com/archive/index.htm
[1989] Part 3 Case 4 [HCM] |
|
www.ipsofactoJ.com/archive/index.htm
[1989] Part 3 Case 4 [HCM] |
|
|
HIGH COURT OF MALAYA |
Tunku Ismail
- vs -
Messrs Hisham & Kadir
|
Coram WAN ADNAN J |
5 APRIL 1989 |
Judgment
Wan Adnan J
This is an application by the plaintiffs that the defendants do furnish the plaintiffs a continuing and irrevocable banker’s guarantee for the sum of $435,305.20 payable upon the plaintiffs’ delivery of complete vacant possession of the land held under Surat Putus 20740 lot 2414 mukim and district of Kota Setar, Kedah (‘the said land’) to Kedah Utara Development Sdn Bhd (‘the purchasers’).
The defendants are a firm of solicitors. Their main office is in Kuala Lumpur. The facts are as follows: The plaintiffs are the administrators of the estate of Tunku Md Jewa Han Ibni Almarhum Sultan Abdul Hamid (deceased). Pursuant to an order of the High Court Alor Setar the said land was sold to the purchasers for the sum of $1,038,228. The defendants were acting for the purchasers and Bank Bumiputra Malaysia Bhd and the plaintiffs’ solicitors were M/s Tan, Yu & Company.
On 16 January 1985 the defendants wrote to the plaintiffs’ solicitors as follows:
|
We write to inform you that the abovenamed borrower has been granted a banking facility of $ 1.1m by way of a first legal charge against the abovementioned property. We would be most grateful if you could forward to us the duly adjudicated memorandum of transfer together with the title deed and other necessary documents on our undertaking to pay you the sum of $450,000 towards account of the tender amount and a continuing and irrevocable banker’s guarantee for $435, 305.20 upon the due registration of the said transfer. |
On 28 January 1985 the plaintiffs’ solicitors wrote to the defendants as follows:
|
We thank you for your letter dated 16 January 1985. We enclose herewith the following documents:
Please note that the aforesaid documents are delivered to you on your express solicitors’ undertaking to present the said transfer and tide deed for registration within seven (7) days upon receipt of the said documents and to forward us the following within seven (7) days upon the due registration of the said transfer in favour of Kedah Utara Development Sdn Bhd:
|
The said land was duly registered in the name of the purchasers on 29 January 1985. The charge over the said land in favour of Bank Bumiputra Malaysia Bhd was also duly registered. On 28 January 1985 the defendants forwarded to the plaintiffs‘ solicitors a demand draft for $450,000 being part payment of the balance of the purchase price. But despite many requests they had failed to furnish the continuing and irrevocable banker’s guarantee for $435,305.20. The plaintiffs alleged breach of undertaking on the part of the defendants and by this application seek to enforce the undertaking.
The affidavits filed on behalf of the defendants were made by Ahmad Sobri who described himself as a senior partner of the firm of M/s Hisham Sobri & Kadir at all material times. According to him, with the consent of the other partners of the firm, a branch of the firm was opened in Alor Setar. The persons entitled to the earnings from the branch were only himself and Dato Hishamuddin. At all material times the branch was managed by Yaacob Othman, a legal assistant in the employ of the branch. Yaacob resigned with effect from 28 February 1985 and with effect from 1 March 1985 the branch was sold to Wan Aziz Wan Daud with all its assets and liabilities. The defendants deny liability on the following grounds:
The undertaking was ambiguous.
The legal assistant Yaacob Othman did not have authority.
The undertaking was given by mistake and therefore not enforceable.
The undertaking has become impossible to comply.
This matter is not a fit and proper case for summary enforcement.
1. THE UNDERTAKING WAS AMBIGUOUS
Counsel for the defendants had submitted that the undertaking was ambiguous for the reason that it did not state the terms of the guarantee to be issued, the name of the issuing bank, the person in whose favour the guarantee was to be issued and the time the guarantee would crystallize. In my view there is no ambiguity at all. The defendants had wanted to register the memorandum of transfer and charge first before paying the full purchase price to the plaintiffs because the bank would not release the loan until a charge in their favour had been registered. To achieve this the defendants had to give the necessary usual undertaking for the payment of the balance of the purchase price. ‘All this is elementary conveyancing practice under the Torrens system’: per MT Chang FJ in Tan Suan Sim v Chang Fook Shen [1980] 2 MLJ 66. The undertaking was to pay $450,000 and to give a continuing and irrevocable banker’s guarantee of $435,305.20 upon due registration of the transfer. The plaintiffs’ solicitors in their letter dated 28 January 1985 in acceding to the defendants‘ request for the duly adjudicated memorandum of transfer and other necessary documents had clearly stated that the continuing and irrevocable banker’s guarantee was to be made out in favour of the plaintiffs and that it should be made payable upon delivery of vacant possession of the said land to the purchasers. It is not necessary that the banker’s guarantee must be issued by a particular bank. Any banker’s guarantee from any bank would be sufficient for the purpose.
The defendants knew the nature and effect of their undertaking and knew exactly what was required of them thereunder. On the facts I find that the defendants’ undertaking was clear, unqualified and unequivocal. The defendants had made a clear undertaking. (See T Damodaran v Choe Kuan Him [1979] 2 MLJ 267 and John Fox (a firm) v Bannister King & Rigbeys (a firm) [1987] 1 All ER 737.)
2. THE DEFENDANTS' LEGAL ASSISTANT, YAACOB OTHMAN, DID NOT HAVE AUTHORITY
Counsel for the defendants had submitted that there was no evidence that Yaacob had authority to give the undertaking. He said the plaintiffs must prove that Yaacob had the ostensible authority. In City Trust Ltd v Levy (United Bank of Kuwait Ltd v Hammond; City Trust Ltd v Levy) [1988] 1 WLR 1051 one Emmanuel was engaged as an assistant solicitor and he had the charge of the day-to-day running of a branch office under the supervision of the principal. He gave an undertaking. The issue before the court was whether the undertaking was binding upon his principal. Consequently it was in issue whether he did have ostensible authority since he did not have actual authority. It was said in that case that the onus of proving ostensible authority is on the plaintiff. The court also accepted the proposition that there can only be ostensible authority to give an undertaking of a kind which is in the ordinary course of a solicitor’s business. In that case expert evidence was brought in to show that the undertaking given by Emmanuel was within the ordinary course of a solicitor’s business. There was a need for such evidence. The undertaking was in the following form:
|
Please accept this letter as an irrevocable and unconditional undertaking to pay to you on or before two months from date hereof for the credit to the account of AE Johnson the sum of one hundred and fifty thousand pounds (£150,000). |
The bank relied on it in granting the loan to Johnson.
Here in the present case it is so crystal clear that the undertaking was within the ordinary course of a solicitor’s business that no further proof is required. The defendants were acting for the purchasers and the bank. The purchasers were getting a loan from the bank to pay the balance of the purchase price. The bank would only release the loan upon registration of the charge in their favour. The memorandum of transfer would have to be registered first. An undertaking to the plaintiffs for the payment of the balance of the purchase price was thus necessary for the completion of the documentation and registration of the charge which was being undertaken by the defendants as solicitors for the bank. What further proof is necessary? The affidavit evidence had satisfied me that the undertaking given by Yaacob to the plaintiffs’ solicitors was within the ordinary course of a solicitor’s business. He therefore had the authority to give the same.
3. THE UNDERTAKING WAS GIVEN BY MISTAKE
Counsel for the defendants submitted that as Yaacob was mistaken into believing that the bank was going to issue the guarantee, the undertaking was unenforceable. I was referred to the case of Mullins v Howell (1879) 11 Ch D 763. In that case the court refused to enforce an undertaking against the defendant because the court was satisfied that the defendant had made a mistake. The mistake was that ‘the undertaking went further than he intended or was aware of, inasmuch as he never intended to remove the projecting buttresses ....’ The mistake was as to the extent of the undertaking. But here in the present case there was no such mistake. Yaacob knew exactly the nature and effect of the undertaking he gave. There was no mistake as to the undertaking. Yaacob was just taking risks in giving the undertaking when the necessary banker’s guarantee had not yet come to his hands.
4. THE UNDERTAKING HAS BECOME IMPOSSIBLE TO COMPLY
In Re A Solicitor [1966] 3 All ER 52 the court held that the court would not order a solicitor to do something which was not possible for him to carry out. In that case Pennycuick J said:
|
.... on the evidence before me the lease is not to be found and I do not think it would be right to make an order on the respondent solicitor to hand it over to the bank. There is the further point that the lease itself has been forfeited so that the interest which is the subject mater of the lease no longer exists. (See also Udall v Capri Lighting Ltd [1987] 3 WLR 465.) |
In the present case the defendants’ undertaking was to give a banker’s guarantee for the balance of the purchase price. This was necessary because at the relevant time vacant possession could not be given to the purchasers by reason of there being squatters on the said land. That was why the guarantee was to be made payable only upon the delivery of complete vacant possession of the said land. Now vacant possession had already been given to the purchasers and according to Ahmad Sobri in his affidavit the purchasers had started to build houses on the said land. The plaintiffs are yet to receive the balance of the purchase price of $435,305.20.
The undertaking has not become impossible of performance. The defendants can obtain the banker’s guarantee from any bank. It can still be expressed to be payable upon delivery of vacant possession of the said land, but since vacant possession had already been given the guarantee can be crystallized forthwith.
5. THE MATTER IS NOT A FIT AND PROPER CASE FOR SUMMARY ENFORCEMENT
In Silver & Drake v Baines [1971] 1 QB 396 Lord Denning MR said:
|
This court has from time immemorial exercised a summary jurisdiction over solicitors. They are officers of the court and are answerable to the court for anything that goes wrong in the execution of their office. Even if the solicitor has been guilty of no fault personally but it is the fault of his clerk, is accountable for it. This jurisdiction extends so far that if a solicitor gives an undertaking in his capacity as a solicitor the court may order him straightaway to perform his undertaking. It need not be an undertaking to the court. Nor need it be given in connection with legal proceedings. It may be a simple undertaking to pay money, provided always it is given ‘in his capacity as a solicitor’. If such an undertaking is given, the court may summarily make an order on the solicitor to fulfil his undertaking .... This summary jurisdiction means, however, that the solicitor is deprived of the advantages which ordinarily avail a defendant on a trial. There are no pleadings; no discovery; and no oral evidence, save by leave. The jurisdiction should, therefore, only be exercised in a clear case. |
Counsel for the defendants had submitted that the matter ought not be dealt with summarily as there are issues which should go for trial. Apart from the issues which I have already dealt with there was the issue that the Alor Setar branch of the defendant firm was a separate entity and that the branch office had been sold to others. In my view the sale of the branch office did not affect the liability of the defendants. The liability had already incurred and the defendants would continue to be liable to the plaintiffs despite the sale. The private arrangement among the partners of the defendant firm as to their respective interests in the firm and in the branch also does not affect the liability of the defendants on the undertaking. It is for the partners themselves to determine who among them should bear the liability. It is not for the court to determine the issue on this application to enforce the undertaking.
It is my finding that this is an appropriate case for which summary jurisdiction can be exercised. I have already held that the defendants’ undertaking was clear, unqualified and unequivocal, that it was clearly within the ordinary course of a solicitor’s business and that Yaacob had the ostensible authority to give the undertaking. On the evidence before me I am satisfied that the case against the defendants had been clearly established (see John Fox v Bannister King & Rigbeys [1987] 1 All 737).
For the above reasons I allowed the plaintiffs’ application in terms of the originating summons and costs.
Cases
Tan Suan Sim v Chang Fook Shen [1980] 2 MLJ 66; T Damodaran v Choe Kuan Him [1979] 2 MLJ 267; John Fox (a firm) v Bannister King & Rigbeys (a firm) [1987] 1 All ER 737; City Trust Ltd v Levy [1988] 1 WLR 1051; Mullins v Howell (1879) 11 Ch D 763; Re A Solicitor [1966] 3 All ER 52; Silver & Drake v Baines [1971] 1 QB 396
Representations
GS Nijar and MQ Yu for the plaintiffs.
Shahul Amiruddin for the defendants.
|
|
all rights reserved taiking.thing pte ltd |
|
|
