Alivestone Investment Pte Ltd v Splendore Investments Pte Ltd and another appeal

• Jurisdiction: Singapore
• Judge: Karthigesu JA
• Judgment Date: 26 April 1995
• Neutral Citation: [1995] SGCA 41
• Date: 26 April 1995
• Subject Matter: Conditional contract,Sale subject to obtaining consent from relevant authorities,Sale and purchase of premises,Whether necessary before application for consent to sale is made,s 4(2) & (10) Controlled Premises (Special Provisions) Act (Cap 60),Obligations under contract remaining inchoate until consent obtained,Sale of property,Whether term a condition precedent to formation of contract,Sale of land,Land,Requirement of evidence of purchasers' funds to effect development of premises,Whether discretion to accept or reject evidence possessed by Tenant's Compensation Board or vendors,Contract,Controlled premises
• Docket Number: Civil Appeals Nos 151 and
• Published date: 19 September 2003
• Defendant Counsel: Jimmy Yap (Donaldson & Burkinshaw)
• Court: Court of Appeal (Singapore)
• Plaintiff Counsel: Mohan Pillay (Wong Partnership)

Cur Adv Vult

We heard these two appeals together. They arise from two originating summonses filed under s 4 of the Conveyancing and Law of Property Act (Cap 61), namely, OS 769/93 and OS 889/93, respectively, concerning the sale and purchase of certain properties, hereinafter referred to as `the properties`. In OS 769/93, the respondents, referred to hereinafter as `the vendors`, applied for a declaration that they are discharged from further performance of the agreement dated 17 May 1993 (the option agreement) made between them and the appellants (the purchasers) for the sale and purchase of the properties and for a further declaration that they are entitled to retain for their own use and benefit the deposit paid to them by the purchasers. The vendors also claimed an order requiring the purchasers to withdraw the caveat number CV/067354C, lodged by them with the Registry of Titles against the properties. In OS 889/93 the purchasers claimed a series of declarations the net effect of which is that the vendors are not entitled to the declarations and the order they claimed for in OS 769/93 but on the contrary that they, the purchasers, were entitled to declarations and orders that the vendors are bound by the terms and obligations undertaken by the vendors by the option agreement and another agreement entered into between the vendors and purchasers regarding the sale and purchase of the properties dated 28 April 1993 (the second agreement).

The learned judge who heard these applications granted an order in terms of the vendors` application in OS 769/93 with costs and dismissed the purchasers` application in OS 889/93 and ordered the purchasers to pay the vendors` costs. His reasons are to be gleaned from his note recorded in the minutes following the orders he made. He said:

... I find for the plaintiffs in OS 769/93 in terms set out in the conclusion, namely, para 34 of the plaintiffs` further submission dated 16 August 1994.

It follows that the application in OS 889/93 has to be dismissed.

The para 34 referred to reads as follows:

In the premises, the vendor (plaintiffs) respectfully urge this court to find (a) that the contract was a conditional contract; (b) that the cl 4A condition was a condition precedent on the fulfilment of which a fully binding contract or sale was made to depend; (c) that the condition had to be performed by both the parties to the contract; (d) that the condition had to be performed at the latest by 10 August 1993, that is, the completion date; (e) that the condition was not performed by the completion date; (f) that the non-performance of the condition by that date was due to the default of the purchaser in failing to perform its obligation under the contract, that is, to provide the vendor with the requisite evidence to proceed with the application to the TCB [refers to Tenant`s Compensation Board]; (g) that the vendor was accordingly entitled to rescind the contract; (h) that the vendor is entitled to retain the deposit; and (i) that the vendor is also entitled to the consequential relief sought in this action.

The facts which are uncontroversial are these. The vendors are the owners of the properties which were formerly rent-controlled premises under the Control of Rent Act (Cap 58) but are situated within the designated development area for the purposes of the Controlled Premises (Special Provisions) Act (Cap 60) (the Act). On 3 July the vendors obtained an order for recovery of possession of the properties under s 4 of the Act from the Tenants` Compensation Board (the Board). In compliance with the order of the Board (which was not exhibited) the occupiers of the properties vacated the properties and by a date in December, presumably 10 December 1992, the vendors had fully recovered possession of the premises such that they were in a position to commence development of the properties in accordance with the plan approved for that purpose. It will be noted that by s 4(2)(c) of the Act the vendors were required to undertake to the Board in writing that work for the purpose of putting into effect the approved development of the properties will commence within six months of the date when possession of the properties has been obtained or such further period as the Board may determine in any particular case. Since there is no evidence of any other period we will assume that the period in this case was six months. Accordingly, the vendors were or would be required to commence the approved development of the properties before 10 June 1993 or else they ran the risk of the properties being acquired by the government (see s 5(1)(a) of the Act). This, however, has not happened. It would also be noted that by s 4(2)(a) of the Act the vendors were required to produce evidence to the Board that they had the necessary funds or will be able to raise the necessary funds to put into effect the approved development of the properties. In the absence of evidence of the extent of the funds required by the Board, we will assume that it was $800,000.

Section 4(10) of the Act provides that the properties having been vacated under s 4 `shall not be used by the landlord (ie the vendors) for any purpose other than effecting development in accordance with the plan approved for that purpose and until such development is commenced the premises (ie the properties) shall not be sold, leased, or otherwise disposed of without the consent in writing of the Board .` (Our emphasis.) The sanction for the contravention of this provision is contained in s 4(11) of the Act and it is a fine not exceeding $500 or imprisonment for a term not exceeding one year or both.

It is common ground that by 28 April 1993 the vendors had not commenced the approved development of the properties. On 28 April 1993 the vendors for a consideration of $46,000 paid to them granted an option (the option) to one Chua Boon Kwang alias Chua Hong Keng, and/or to his nominee, for the sale of the properties for $4.6m. The option was to be exercised before 4pm on 18 May 1993 by completing the `acceptance copy` attached to the option and by paying to the vendors a sum of $414,000 which together with the consideration for obtaining the option will be equal to 10% of the purchase price. Failure to exercise the option by the time set for its exercise would result in the forfeiture of the consideration of $46,000 without recourse. The option was duly exercised by the purchasers on 17 May 1993 and became the option agreement referred to earlier. The relevant clauses of the option agreement for present purposes are cll 4A, 4B, 5 and 9 which we set out in full below:

4A The sale herein is subject to the vendor obtaining the consent in writing of the Tenants` Compensation Board (TCB) under s 4(10) of the Controlled Premises (Special Provisions) Act (Cap 60) (the Act) to sell the property. To enable the vendor to obtain such consent from the TCB, the purchaser agrees and undertakes that:

(i) he shall commence development of the property in accordance with the plan for development approved by the Ministry of National Development for the purpose of the Act within six (6) months from 10 December 1992;

(ii) he shall, if necessary, satisfy the TCB that he has the fund of Dollars Eight Hundred Thousand ($800,000) to carry out the aforesaid development; and

(iii) he shall, if necessary, comply with any other conditions imposed by the TCB.

4B In the event the TCB does not consent to the sale herein, then the option herein shall be rendered null and void and each party is to bear their own costs and neither party shall have any claim against the other.

5 The sale shall be completed at the office of the vendor`s solicitors, M/s Donaldson & Burkinshaw on 10 August 1993.

...

9 The sale is subject to the Singapore Law Society`s Conditions of Sale 1981 in so far as...