CHIA SEONG POW v ALEXMA CORPORATION SDN BHD

Case Significance

Addresses whether an unsigned draft SPA can bind where later drafts followed, and whether the corporate veil may be lifted to impose general and exemplary damages on a sole director personally — tying together the formation, mid-trial sale and separate-legal-personality issues typical of aborted property transactions.

This Court of Appeal decision concerns whether an unsigned draft sale and purchase agreement can amount to a concluded and binding contract, and the related questions of when a company's corporate veil may be lifted and whether a director can be made personally liable in damages. The dispute was between an appellant, referred to here by his procedural role, and the corporate party Alexma Corporation Sdn Bhd.

The core contractual question, as framed in the headnote, was “whether an unsigned 3rd draft SPA was a concluded and binding contract, notwithstanding that there were 4th and 5th drafts”. That framing places the case within the familiar body of law on when negotiations — conducted through successive drafts — cross the line into a binding agreement, and on the significance of the parties continuing to exchange later versions after the draft said to be binding. The existence of a 4th and 5th draft was a pointer against the 3rd draft having been intended as the final, concluded bargain.

The case was complicated by events during the litigation: the “subject property [was] sold in the midst of trial”. That development fed into the second and third issues, namely “whether [the] corporate veil of the defendant company can be lifted” and “whether general and exemplary damages can be imposed against the sole director personally”. The claim to pierce the veil and fix personal liability on the sole director engaged the general principle that a company is a separate legal person and that its controllers are not ordinarily answerable for its obligations absent the recognised grounds for lifting the veil.

The judgment is significant for tying together three questions that often arise in aborted property transactions: whether a pre-signature draft can bind, whether the sale of the subject property mid-trial affects the parties' rights, and whether the strict separation between a company and its sole director can be displaced so as to expose that individual to general and exemplary damages.