Ong Eng Kae and another v Rupesh Kumar and others

Aedit Abdullah JC:

[1] Originating Summons No 979 of 2014 (“OS 979/2014”) was the Plaintiffs’ application for specific performance of an Option to Purchase entered into between the Plaintiffs and the 1st Defendant, Rupesh Kumar (“Rupesh”), in relation to a property owned by Rupesh at 60 Chestnut Avenue #23-02 Treehouse Singapore 679517 (“the Property”). The Plaintiffs’ application for specific performance was made on the ground that they had satisfied the conditions under the Option to Purchase, which are the payment of an option fee and the payment of a deposit to exercise the option, thereby giving rise to a binding sale and purchase agreement of the Property. Having heard the parties, I granted the Plaintiffs’ application on 13 January 2015 and ordered the property to be transferred to the Plaintiffs upon payment of the balance sum under the Option to Purchase. I also made the following orders to facilitate the transfer of the Property:

(a) Rupesh to pay interest, including late completion interest under Condition 9 of the Law Society of Singapore’s Conditions of Sale 2012, to the Plaintiffs;

(b) Rupesh to deliver vacant possession of the Property to the Plaintiffs free of all encumbrances upon completion of the sale of the Property;

(c) 4th Defendant to withdraw his caveat on 21 January 2015 or on the completion of the sale of the Property, whichever date occurs earlier;

(d) Costs, damages, late completion interest, and any other expenses incurred by the Plaintiffs to discharge any obligations of Rupesh in respect of the Property to be deducted from the balance sum of sale proceeds due to Rupesh; and

(e) There shall be liberty to apply.

[3] The Plaintiffs were a married couple looking to purchase a condominium close to the 1 Plaintiff’s mother’s house. A friend of theirs by the name of Nagasaravanan s/o Uttamasegeran (“Saravanan”) informed them that his friend, Rupesh, wanted to sell the Property on an urgent basis. Rupesh asked for a selling price of $1.45m, but as he needed the funds urgently, he requested for half the sum to be paid on or before exercising the Option to Purchase and for the balance sum to be paid upon completion of the sale. The Plaintiffs agreed and entered into an Option to Purchase with Rupesh on 23 September 2013 (“OTP”) reflecting this arrangement:

[4] Under the OTP, the Plaintiffs had to pay an additional sum of $50,000 before 4.00pm on 24 October 2013 in order to exercise the OTP. The clause bearing out this obligation read as follows:

[5] The parties intended for a sale and purchase agreement to arise upon the Plaintiffs’ exercise of the OTP, as is evident from the following clauses in the OTP:

[6] The Plaintiffs’ case was that they had paid Rupesh two separate sums of $675,000 and $50,000, and that upon which, a binding sale and purchase agreement arose between the parties. They tendered the following documents to support their case:

(a) Two separate notes bearing Rupesh’s signature, acknowledging that he had received sums of $675,000 and $50,000 from the Plaintiffs for the purchase of the Property.

(b) A letter dated 22 October 2014 from Rupesh’s former solicitors, Wong, Gopal & Rai (“WGR”), who had represented him in the sale and purchase of the Property, confirming that Rupesh had received the sums of $675,000 and $50,000 from the Plaintiffs.

[7] Unfortunately, completion was not forthcoming. The original completion date of 15 November 2013 was delayed and postponed a number of times. Rupesh was adjudged a bankrupt on 18 September 2014, following which the Plaintiffs decided to commence OS 979/2014 on 17 October 2014 against him to facilitate the completion of the sale and purchase agreement.

[8] I pause to point out the significance of Rupesh’s status as a bankrupt. Under s 131(1)(a) of the Bankruptcy Act (Cap 20, 2009 Rev Ed) (“the BA”), a bankrupt is incompetent to maintain any action without the sanction of the Official Assignee (“OA”). The prerogative in deciding whether to defend an action against the bankrupt and if so, when and how to go about doing that rests entirely with the OA unless otherwise sanctioned by the OA. What this means is that once Rupesh was declared a bankrupt on 18 September 2014, he would have had to seek the OA’s authorisation in order to defend himself against the Plaintiffs.

[9] Rather than leaving the OA to determine the appropriate course of action to take in OS 979/2014, Rupesh wanted to defend the action by himself. He instructed Mr Gunaseelan S E Selvadurai (“Mr Gunaseelan”) to represent him. Mr Gunaseelan, who was aware of Rupesh’s status as a bankrupt, knew he had to obtain the OA’s consent before he could do so. He wrote to the OA on 3 November 2014 seeking the requisite consent:

[10] On the same day, the OA emailed the Plaintiffs’ solicitors, Mr Vijai Parwani (“Mr Parwani”) informing him that the OA had authorised Mr Gunaseelan to act for Rupesh:

[11] The first Pre-Trial Conference (“PTC”) was held the next day. Mr Parwani and Mr Gunaseelan appeared in the PTC whereas the OA was absent. Later on in the evening, the OA sent a follow-up email to Mr Gunaseelan stating as follows:

[13] At the PTC held on 25 November 2014, the Assistant Registrar directed a reply affidavit and response affidavits from Rupesh and the Plaintiffs respectively to be filed and served. Accordingly, Mr Gunaseelan updated the OA of these developments on the same day.

[14] The OA continued to make no appearance in the third and final PTC held on 16 December 2014. On that same day, Mr Gunaseelan requested a template copy of the deed of indemnity from the OA. The OA obliged his request on 31 December 2014.

[16] A signed copy of the deed of indemnity finally arrived at the OA’s office on 16 January 2015 – three days after I had delivered judgment on the substantive matters in OS 979/2014. In response to this development, the OA took the position that throughout the proceedings the sanction given was a conditional one, and the absence of a third party undertaking rendered the sanction ineffective. The OA further declared that it had no power to grant “retrospective sanction” in respect of a deed of indemnity tendered after the disposal of the matter.

[20] As mandated by s 131(1)(a) of the BA, a bankrupt, or in turn his solicitor, may take further steps in proceedings after the commencement of bankruptcy only upon receipt of the OA’s sanction. The Plaintiffs, relying on the authority of Tan King Hiang, argue that consent had not been given by the OA. They argue that the condition upon which the OA’s consent rests – which was for Mr Gunaseelan to furnish a third party undertaking – was not satisfied and accordingly consent was not given. Mr Gunaseelan argues that the OA had already issued its consent, and seen in this light, the request for him to issue a third party undertaking was more of a formality rather than a precondition.

[21] What was relevant to my mind in these proceedings was whether from the surrounding circumstances, including the words and conduct of the OA in evidence, the Plaintiffs can show that Mr Gunaseelan’s conduct of the proceedings was wanting. In Tan King Hiang, the Court of Appeal looked to the issue of existence of actual consent, and nothing was raised in that case about reasonable conduct and expedition arising out of a reasonable interpretation of events.

[23] The 21 November 2014 email could reasonably be interpreted as the OA authorising Mr Gunaseelan to represent Rupesh in the proceedings on its behalf, and such authorisation was not attached with a precondition of a third party undertaking. On this interpretation, if the OA had intended otherwise, the OA would have asked for the third party undertaking to be submitted before Mr Gunaseelan attends the next PTC instead of asking for it to be submitted “as soon as possible”. It continued to be absent from the subsequent (and final) PTC held on 16 December 2014, allowing Mr Gunseelan to represent Rupesh on its behalf despite not having received the third party undertaking. In doing so, I find that the OA was essentially permitting Mr Gunaseelan to take further steps in the proceedings. It bears emphasis that such conduct on the part of the OA must be viewed in the light of the fact that Mr Gunaseelan had yet to submit a third party undertaking throughout this period of time. That being the case, it seems immaterial to me whether or not the 4 and 12 November 2014 emails had the effect of qualifying the OA’s consent. Even if they did, I am satisfied that the OA’s email dated 21 November 2014 could be interpreted as having waived such a precondition, and there is no evidence of substantial work done in the interim period. Indeed, it was only at the 25 November 2014 PTC that the AR directed reply and response affidavits from Rupesh and the Plaintiffs to be filed.

[24] In my judgment, it is useful to analyse the question of the apparent consent against the statutory background of s 131(1)(a) of the BA. The provision vests in the OA the right to control proceedings on behalf of the bankrupt, and having been so empowered, the OA was in a position to do a number of things. It could apply to stay the proceedings and request the Plaintiffs to file a proof of debt in bankruptcy; it could contest the Plaintiffs’ application; it could ask for an adjournment if it required more time to consider what position to take; or it could simply concede to the Plaintiffs’ application before the matter even comes to the courts. On what was before me, the OA did none of these. A total of three PTCs were conducted before the matter came before me of which the OA attended none. Several affidavits were filed by both sides, which the OA was kept informed of, and yet it did not say anything. It did not exercise the powers vested in it by virtue of s 131(1)(a) of the BA, allowing and even requesting Mr Gunaseelan to carry on with the proceedings. It further gave Mr Gunaseelan no directions whatsoever, giving the plausible interpretation of leaving him with the conduct of this matter.

[25] Looking at the context of this case as a whole, while the requirements stipulated by the OA were not in the end fulfilled by the time of the hearing of the substantive application, I could not find in light of the reasonable interpretation that could be given to the OA’s communications at the time with Mr Gunaseelan that there was lack of reasonable competence on his part.

[27] The Plaintiffs further argue that the disposal of the matter renders Mr Gunaseelan’s application for the OA’s sanction nugatory, and on the authority of Standard Chartered Bank v Loh Chong Yong Thomas [2010] 2 SLR 569, the OA was in no position to grant a “retrospective sanction” for the deed that came in only after the matter had already been disposed of. Given my conclusions above, the issue of whether the OA has powers to grant “retrospective sanction” is now moot.