James Foong J

This is an application by the plaintiff under O 81 of the Rules of the High Court 1980 against the defendants for specific performance of a sale and purchase agreement of a certain property entered into between the plaintiff and the defendants on 1 June 1990 (hereinafter referred to as 'the sale and purchase agreement').

The defendants' defence is based mainly on the following grounds:

(1) that the sale and purchase agreement is invalid for reason that the director who executed it has no authority to do so;

(2) that the transaction contravenes s 132C(1) of the Companies Act 1965 ('the Act') and the plaintiff had knowledge at the material time when the property was being sold that it formed a substantial asset of the defendants;

(3) that the plaintiff did not perform his part of the obligation under the sale and purchase agreement by failing to pay the balance of the purchase price.

After due consideration I came to the following findings. The sale and purchase agreement is not invalid. The director, one Koo Teng Shin @ Khoo Kim Lim, acted well within the ambit of a resolution of the board of directors of the defendants passed on 15 March 1989 relating to the sale of the said property. The relevant part of the resolution reads as follows:

Authority to sell

Following the above, it is resolved that the company do hereby sell the property inclusive of the approved plan at $220 per sq ft (ono) and that a commission of 1% be also approved for payment to the person who manages to secure a purchaser.

Authority to issue option

That the chairman be and is hereby authorized to grant options to interested parties.

This resolution was duly approved by the directors of the defendants and this fact is not disputed by the defendants. This resolution approved the sale of the said property at a certain price. It further gave the chairman of the defendants authority to grant options to interested parties who wished to purchase the property.

I do not agree with the defendants' contention that since the resolution only authorizes the chairman to grant options, he has no authority to enter into a contract for the sale and purchase of the said property. An option granted by the chairman as specified in the resolution is binding on the defendants. Consequently, if the option is exercised upon by the grantee, the sale and purchase of the said property will also bind the defendants. One cannot separate and distinguish the two acts for, when the option is acted upon by the grantee, which was so in this case, the option to purchase then automatically crystallizes into a full agreement to purchase.

The defendants also contended that the said resolution has lapsed due to effluxion of time. I find no authority from the defendants' counsel to support this point; neither was there any evidence whatsoever either expressly or by implication, that this resolution has been annulled. A resolution properly passed, which is so in this case, is binding on the defendants and until it is dissolved, cancelled or annulled, expressly or by implication, it binds the defendants on actions taken by its director who acted within the ambit of the resolution.

It is not disputed that no approval of the defendants in a general meeting for the sale of this said property was obtained. As such s 132C(1) of the Act has been contravened. However, from the evidence adduced by affidavits, I find that the plaintiff had no notice of this contravention and, since the sale and purchase of this said property is for valuable consideration, this transaction is valid under s 132C(3) of the Act.

The allegation by the defendants that the plaintiff had not fulfilled his obligation is totally unacceptable. It is clear from the letters that transpired between the plaintiff and the defendants' solicitors that it was the defenwho refused to recognize the sale and purchase agreement. In fact, they not only returned the initial sum of 10% of the purchase price but also declared th