Ground & Sharp Precision Engineering Pte Ltd v Midview Realty Pte Ltd

• Jurisdiction: Singapore
• Judge: Judith Prakash J
• Judgment Date: 22 September 2008
• Neutral Citation: [2008] SGHC 160
• Court: High Court (Singapore)
• Published date: 02 October 2008
• Year: 2008
• Plaintiff Counsel: Justin Phua (Justin Phua Tan & Partners)
• Defendant Counsel: Lawrence Tan Shien-Loon and Sandra Tan Pei May (Drew & Napier LLC)
• Subject Matter: Civil Procedure,Contract
• Citation: [2008] SGHC 160

22 September 2008

Judith Prakash J:

1 This was an appeal by the plaintiff against the decision of the Assistant Registrar to grant the defendant’s application to strike out the plaintiff’s writ of summons and statement of claim. I dismissed the appeal and now give my reasons.

The plaintiff’s claim

2 The plaintiff is in the business of mechanical engineering works and the defendant is in the business of real estate development and building construction. The defendant developed a factory building at 16 Boon Lay Way Tradehub 21 Singapore 609965 (“the Development”) and is the registered proprietor of factory units #01-40, #01-41 and #01-42 in the Development (“the Units”).

3 The plaintiff pleaded in its statement of claim that the defendant had agreed to lease the Units to it and had further granted it an option to purchase each of the three Units within 12 months of the date of commencement of the respective leases. This agreement was allegedly contained in or evidenced by three letters of intent drafted by the defendant’s marketing agent REA RealtyNetwork Pte Ltd (“REA”) dated 10 July 2006, which the plaintiff and defendant signed on 11 July 2006 and 13 July 2006 respectively (the “letters of intent”).

4 On 8 August 2007 the plaintiff and defendant entered into three separate tenancy agreements in writing for the lease by the defendant to the plaintiff of the Units for a term of two years commencing 10 August 2007 (the “Tenancy Agreements”). By a letter dated 19 September 2007 from the plaintiff’s former solicitors Messrs Tan Thian Chua & Co to the defendant, the plaintiff purported to exercise the option to purchase the Units in accordance with the terms and conditions in the options. When the defendant did not respond, the plaintiff completed and submitted to the defendant on 26 September 2007, three separate booking forms for the purchase of the Units together with three separate cheques representing the balance of the booking fee for each of the Units. Despite a reminder by the plaintiff’s solicitors by letter dated 2 October 2007, the defendant did not reply to confirm the sale of the Units, nor did it accept the booking forms or the accompanying cheques.

5 The plaintiff lodged a caveat against each of the Units on 29 November 2007, asserting the existence of binding options between itself and the defendant. Subsequently, pursuant to the defendant’s application under s 127 of the Land Titles Act, the Registrar of Titles gave notice of its intention to cancel the three caveats. The plaintiff therefore claimed, inter alia, a declaration that there was a binding and enforceable option to purchase in respect each of the Units; an order allowing the caveats to remain or deferring their cancellation until after the trial; and specific performance of the options.

6 By its defence the defendant denied that there was any agreement in writing wherein it had granted the plaintiff any option to purchase the Units within 12 months of the commencement of the respective leases. It averred that the letters of intent were made subject to contract. By the defendant’s account, around September 2006 the plaintiff requested that it be allowed an option to purchase the Units within 12 months of the commencement of the leases. The defendant was prepared to accede to the plaintiff’s request provided the purchase price was pegged to the prevailing market rate to be mutually agreed upon, and was subject to contract. The defendant conveyed these terms to the plaintiff by letter dated 22 September 2006, but the plaintiff did not respond.

7 In its reply, the plaintiff averred that none of the options to purchase referred to in the letters of intent was subject to contract; it “was never the intention of the [parties] that the options granted to purchase the [Units] would be so subject to contract.” It further asserted that one Angela Ang, a representative from REA, had assured the plaintiff’s Ng Choon Beng that “no other document would be required to be executed or exchanged for the options to purchase to be valid and enforceable.” The plaintiff also pleaded, for the first time in its reply, that on 4 August 2006, at the defendant’s request, the plaintiff signed three letters of offer in respect of the lease of the Units (the “offer letters”). The offer letters were issued by the defendant itself rather than by REA and did not contain the option to purchase found in paragraph 18 of the letters of intent. Angela Ang explained to the plaintiff that this omission was because the defendant was “unwilling to put on record discounts [it had] given by way of renovation voucher [sic] and absorption of stamp fee”. It was pleaded that Angela Ang again assured the [plaintiff] that paragraph 18 of the [letters of intent] did contain a validly issued and enforceable option to purchase, and that “no other document would be required to be executed or exchanged for the options to purchase to be valid and enforceable.” (Reply at [5.3])

8 The plaintiff further pleaded in its reply that Angela Ang had agreed that the defendant “would confirm in writing that the [plaintiff had] an option to purchase the [Units] from the date of commencement of the lease.” It was in these circumstances that the defendant wrote to the plaintiff on 22 September 2006 to confirm this. The plaintiff pleaded at [5.6] of its reply:

It was wrong for the [defendant] to have introduced terms such as “subject to contract” or pegging the price “at the prevailing market rate to be mutually agreed upon” into their letter of 22 September 2006, as such terms were not contractually agreed upon in the [options to purchase in the letters of intent]. Owing to ignorance and oversight, the [plaintiff] did not object to the inclusion of such terms.

9 The plaintiff averred that the clause “12 months from date of agreement” in paragraph 18 of the letters of intent meant 12 months from the date of commencement of the lease, and the options to purchase the Units had therefore not expired when it exercised them through their solicitors by letter of 19 September 2007. Finally, the plaintiff alleged that it had informed REA as early as June 2007 of its decision to exercise the options to purchase, pressing REA to process the exercise of the options on numerous occasions thereafter. Angela Ang having left the employ of REA, one Winston Woon was assigned to attend to the plaintiff; he completed the booking forms on the plaintiff’s behalf and represented that the plaintiff was required to sign and hand over the forms and cheques in order to exercise the options to purchase. It was in these circumstances that the plaintiff’s Ng Choon Beng signed and handed over the forms and the cheques to Winston Woon, for him to hand them over to the defendant.

10 On the appeal, the plaintiff submitted that the claim should not have been struck out as the matter should go to trial for, inter alia, the following issues to be decided:

(a) whether the options to purchase the Units were indeed subject to contract and hence not enforceable as no formal options were later granted to the defendant;

(b) whether the defendant was estopped from asserting that the options to purchase the Units were subject to contract because of certain representations made by the defendant’s marketing agent, REA, that no other document would be required to be executed for the options to be valid and enforceable.

The law on striking out

11 O 18 r 19 provides:

(1) The Court may at any stage of the proceedings order to be struck out or amended any pleading or the endorsement of any writ in the action, or anything in any pleading or in the endorsement, on the ground that –

(a) it discloses no reasonable cause of action or defence, as the case may be;

(b) it is scandalous, frivolous, or vexatious;

(c) it may prejudice, embarrass or delay the fair trial of the action; or

(d) it is otherwise an abuse of the process of the Court,

and may order the action to be stayed or dismissed or judgment to be entered accordingly, as the case may be.

(2) No evidence shall be admissible on an application under paragraph 1(a).

(3) This Rule shall, as far as applicable, apply to an originating summons as if it were a pleading.

12 The defendant’s application was made pursuant to O 18 r 19(1)(a)-(d). O 18 r 19(2) did not apply in relation to the second to fourth grounds, and I considered the parties’ affidavit evidence as well as the documents themselves.

13 An application under O 18 r 19(1)(a) requires that the cause of action be shown to have no chance of success when only the allegations in the pleading are considered (Drummond-Jackson v British Medical Association [1970] 1 All ER 1094). While O 18 r 19(2) precludes the admissibility of evidence on an application solely under O 18 r 19(1)(a), the court has the inherent jurisdiction to dismiss an action on the ground that it is obviously frivolous...