Ajit Chandrasekar Prabhu and another v Yap Beng Kooi and another

• Jurisdiction: Singapore
• Judge: Aedit Abdullah JC
• Judgment Date: 27 October 2015
• Neutral Citation: [2015] SGHC 280
• Court: High Court (Singapore)
• Docket Number: Suit No 735 of 2013
• Published date: 04 November 2015
• Year: 2015
• Hearing Date: 14 April 2015,10 July 2015,16 April 2015,15 April 2015
• Plaintiff Counsel: Lim Tong Chuan and Joel Wee (Tan Peng Chin LLC)
• Defendant Counsel: P Padman, Keith Tnee (Tan Kok Quan Partnership)
• Subject Matter: Land,Sale of land,Contract,Sale of Land,Completion
• Citation: [2015] SGHC 280

Aedit Abdullah JC: Introduction

In this case, a number of the main claims in issue concerned concepts at the heart of conveyancing: what constitutes a defective title, and what amounts to failure to give vacant possession. Despite the efforts of the Plaintiffs in this case I did not agree with their arguments which attempted to push the boundaries of these concepts.

The dispute arose from the purchase of a property by the Plaintiffs from the Defendants. It was discovered that the required regulatory approval had not been obtained for the construction of a particular room. The Plaintiffs claimed damages for breaches of warranty that all works had been authorised. In addition, the Plaintiffs claimed losses stemming from the unauthorised structure, namely defective title, lack of vacant possession and non-completion of the conveyance. These losses consisted of the cost of rectification, as well as claims for temporary accommodation, or in the alternative, the loss of opportunity to rent out the property. Rectification costs were claimed on the basis that the room had to be put into a state suitable for what it was supposedly described to be, a gym. The Defendants however denied that there was any such representation that the room was meant to be a gym.

As it was not disputed that there was a breach of the warranty that regulatory approval would be obtained for the room, damages were awarded for rectification of the breach, but not to the extent that the room could be used as a gym based on the specifications put forth by the Plaintiffs’ witnesses. I also awarded damages for alternative accommodation while the work was carried out. However, I rejected the arguments that there was defective title, failure to deliver vacant possession and non-completion. Accordingly, the other damages claimed by the Plaintiffs were rejected. The Plaintiffs have appealed.

Background

The Defendants were the owners of a property located at Camden Park, Singapore (“the Property”). In late 2012, they put the Property on sale. In early 2013, the Plaintiffs viewed the Property, which included a structure, the top portion of which was a room described as, inter alia, a rumpus room and a gym. The precise description used by the first defendant (“1st Defendant”) was in issue in the case. After paying an option fee of $250,000, the Plaintiffs were granted an Option to Purchase (“the Option”) over the Property, which incorporated the Law Society of Singapore’s Conditions of Sale 2012 (“the Law Society Conditions”). The consideration for the Property, as stated in the Option, was $25m. The Option was exercised, with completion targeted for end April 2013. The Plaintiffs paid the balance amount on 29 April 2013 and keys were given to them. Renovation works were started on the Property by mid-2013.

In July 2013, the Plaintiffs’ solicitors wrote to the Defendants contending that, among other things, the room was constructed without the relevant approvals. Rectification costs, loss of use and alternative accommodation costs were claimed on behalf of the Plaintiffs. In August 2013, the present proceedings were commenced.

The Plaintiffs’ Case

The Plaintiffs’ claims for damages were founded breach of warranty, failure to provide good title and a failure to give vacant possession. Breach of warranty arose through the fact that there was, contrary to cl 11 of the Option and cl 10.1 of the Law Society Conditions, an unauthorised structure on the Property. The Plaintiffs additionally claimed (a) a defect in title because of the unauthorised structure; (b) that there was a failure to give vacant possession because of the inability to occupy the Property in view of the rectification work to be done; and (c) that there was no actual completion of the conveyance. The Plaintiffs claimed damages representing the work required on the Property, but did not seek to rescind the contract.

The Plaintiffs contended that there was a failure to fulfil the obligation to provide good title because the Property was subject to encumbrances that were covered by the contract between the parties and the Defendants failed to disclose a latent defect of title. The defect in title arose because the room in question breached the building regulations. Citing a number of authorities, it was contended that the room could never be approved by the regulator. The Court of Appeal case of Huang Ching Hwee v Heng Kay Pah and anor [1992] 3 SLR(R) 452 (“Huang Ching Hwee”), determined that unauthorised works were only not a defect in title in limited circumstances. The Property in question here could not in fact be occupied legally because there was a regulatory prohibition against it.

The Defendants also failed to deliver vacant possession as required under cl 15 of the Option. According to the Plaintiffs, the authorities showed that there will be a failure to deliver vacant possession if there is a physical impediment substantially preventing possession. The Plaintiffs contended that the existence of the unauthorised modifications required remedial work, and such work substantially deprived the Plaintiffs of possession. From such failure to deduce good title and to give vacant possession, there was therefore no completion of sale. Further the Plaintiffs argue that, contrary to the arguments of the Defendants, no estoppel arose to the effect that there was completion.

The Plaintiffs’ witnesses were Mr Ng Kian Huan Edmund, their architect (“PW1”), Mr John Lim Kheng Hock, their structural engineer (“PW2”), and the first plaintiff (“1st Plaintiff”) himself. In particular, PW2 testified that the structure as built was in violation of regulations and would not be approved. The Plaintiffs had a fourth witness, Mr Suey Hueh King, who was not needed for cross-examination.

The Plaintiffs took issue with the evidence of the Defendants’ witnesses, especially the 1st Defendant’s denial that he had represented the room to be a gym, as well as the expert reports concerning the rectification work needed for the room, and what would be needed to allow it to be used as a gym. It was further argued that an adverse inference should be drawn under illustration (g) of s 116 of the Evidence Act (Cap 97, 1997 Rev Ed) as the Defendants failed to call the interior designers, architects and structural engineers.

The Plaintiffs claimed losses for the rectification work and accommodation costs, or alternatively the rental representing the loss of opportunity, and interest for late completion. It was argued that there was no real challenge from the Defendants on these.

The Defendants’ Case

At trial, the Defendants did not deny (a) that regulatory approval for the room was not obtained; (b) that the Defendants were in breach of the warranty in the Option and Law Society Conditions; and (c) importantly, that the room should be rectified. However, the Defendants denied the Plaintiffs’ claim that the room was unsafe, and averred that the rectification costs were not as large as the Plaintiffs claimed.

The Defendants maintained that the conveyance of the Property was completed in April 2013. While the Defendants accepted that there was breach of warranty, they denied any defect in title. Huang Ching Hwee, they say, was authority for the position that for unauthorised works to create a defect in title there must actually be an intention to impose liability by the regulator, which has been brought to the notice of the persons concerned. Given that there was no certainty or inevitability that the regulators would have issued a notice or order under the relevant Act, or enforced that Act with respect to the room, there was no defect in title. They argue that the Plaintiffs’ attempt to distinguish Huang Ching Hwee should not be accepted. Completion occurred as required by the contract. In any event, any defect in title would not prevent completion.

Vacant possession was also duly delivered. The Defendants argue that physical impediments were not sufficient to prevent delivery of vacant possession. Mere interference with occupation and enjoyment of property is insufficient to prevent vacant possession from being delivered. The interference must be to a substantial part of the property, and must prevent the purchaser from enjoying the property and the right to deal exclusively with the property. On the facts, vacant possession was given as the room only occupied a small proportion of the entire Property, and the Plaintiffs had registered themselves as proprietors and had undertaken renovations. The Plaintiffs could have also let or sold the Property onwards. Any rectification of the room could have been readily made.

The Plaintiffs were not entitled to claim the loss of use of the balance of the purchase price. Furthermore, the costs claimed for rectification were excessive – there was no contractual agreement that the room was to be used as a gym, and in any event, the entire agreement clause ousted any representation that the room was to be used as a gym. Even if the room was to be converted into a gym, the amount claimed was excessive as the requirements used by the Plaintiffs were excessive. Similarly, the Plaintiffs’ claims for alternative accommodation and market rental were contradictory and were not supported by evidence.

The Defendants relied on evidence from three witnesses. The first witness was the 1st Defendant himself. Second was Mr Kook Tiak Liong, a Director of a construction company whom the Defendants sought to rely on for an expert opinion on the costs of rectification (“DW2”). The third witness was Mr Chin Kiew Sion, the Defendant’s engineering witness (“DW3”).

The Decision

I found that there was indeed a breach of warranty as the construction of the room had not been given the required regulatory approval. This was a breach of cl 10.1 of the Law Society’s Conditions, which was incorporated into the contract. The Option itself contained in...