A COURT has found that an agreement between Electronic Realty Associates (ERA) and a property owner could result in ‘unjust enrichment’ for the property agency.
District Judge Francis Tseng has thus ordered four lawyers to return to Mr Simon Suppiah Sunmugam the money they had paid out as commission to the agency.
The lawyers had earlier released $28,000 as commission to ERA from the sale of Mr Suppiah’s house.
The 62-year-old private investigator had sued Ms Amarjit Kour, Mr Gregory Tang Wee Thiang, Ms Belinda Ang Choo Poh and Mr Peter Cuthbert Low, of the now-defunct law firm Peter Low Tang & Belinda Ang, for failing in their professional duties in connection with a property sale in 2002.
A fifth lawyer, Mr Andrew John Hanam, was found not to be at fault as he was not involved in the agreement. He had been engaged only to act for Mr Suppiah’s divorce from Madam Nee Shyan Huey in May 1996.
In his judgment last Wednesday, Judge Tseng said the four lawyers’ interpretation of the provisions of the agreement, titled Exclusive Authorisation to Sell, renders the property seller ‘at the complete mercy’ of ERA and could result in a ‘most unfair situation’.
Signed in June 2001 by Madam Nee, 44, an insurance agent, the agreement granted ERA a commission of 2 per cent on the first $1 million of the purchase price and 1 per cent for any amount in excess paid for the matrimonial home in Punggol.
This was payable if the company introduced a buyer or if the property was sold within three months.
After the 90-day period, the agreement would continue from week to week unless terminated by either party.
The proposed selling price was $2.4million, but ERA found a potential buyer who offered only $1.6 million in February the following year.
Mr Suppiah rejected it as too low, and a month later, he found a buyer who was willing to pay $1.75 million.
When the sale was completed, Mr Suppiah expected his share of the sales proceeds to be $240,000, with the rest of the money going to Madam Nee and to a trust fund for the couple’s two daughters.
When he received only $212,000 in July 2002, as $28,000 had been taken out for the agency’s commission, he instructed Mr Hanam to write to the other lawyers to withhold payment, as he had found the buyer himself.
But by then it was too late, as they had already released the money to ERA.
It was argued that since the agreement was not terminated, ERA was entitled to the commission even if the agency did nothing after the three-month period.
However, Judge Tseng said that this would amount to ‘unjust enrichment’ for the agency.
The court also dismissed the defendants’ claims that they were acting only for Madam Nee and did not owe her ex-husband any professional obligation.
The judge noted that their law firm clearly stated it was acting for both parties in its correspondence with the Central Provident Fund Board and the Comptroller of Property Tax.
Mr Suppiah’s lawyer Alain A. Johns also convinced the court that there was ‘a total lack of consideration on the part of ERA’ in the agreement, which he said should be regarded as ‘void and unenforceable’.
The four lawyers, who were also ordered to pay costs, are considering an appeal against the verdict.
Source: Straits Times, 5 Apr 2010