Alivestone Investment Pte Ltd v Splendore Investments Pte Ltd

• Jurisdiction: Singapore
• Judge: Judith Prakash J
• Judgment Date: 28 March 1996
• Neutral Citation: [1996] SGHC 54
• Docket Number: Originating Summons No 1005 of
• Date: 28 March 1996
• Year: 1996
• Published date: 19 September 2003
• Plaintiff Counsel: Mohan Pillay and Tay Peng Cheng (Wong Partnership)
• Citation: [1996] SGHC 54
• Defendant Counsel: Jimmy Yap (Donaldson & Burkinshaw)
• Court: High Court (Singapore)
• Subject Matter: s 4(10) Controlled Premises (Special Provisions) Act (Cap 60),Words and Phrases,Sale of land,Land,'Default',Whether vendor solely responsible for default,Law Society's Conditions of Sale 1981 condition 8,Law Society's Conditions of Sale 1981 condition 8(b),Claim for interest on deposit,Relevant considerations,Delay in completion

Introduction

In this originating summons, the plaintiffs who were the purchasers of immovable property from the defendants (the vendors) claimed that the vendors were liable to pay them either:

(a) interest for late completion of the sale of the property at the rate of 10% pa pursuant to condition 8(b) of the Law Society`s Conditions of Sale 1981 for the period 10 August 1993 to 29 September 1995; or

(b) interest at such rate as the court deemed proper on the sum of $460,000 wrongfully forfeited by the vendors, for the period from 10 August 1993 to 29 September 1995 or such other date as the court deemed proper.

The vendors owned certain properties at Liang Seah Street, Singapore (the properties). In April 1993, the vendors granted an option to purchase these properties at a price of $4.6m to one Mr Chua Boon Kwang and/or his nominee on the terms and conditions stated in the option. The plaintiffs (the purchasers) exercised the option as purchaser on 17 May 1993 and paid the vendors a sum of $414,000 being the balance of the 10% deposit (Mr Chua having paid $46,000 at the time the option was granted). A contract for sale therefore came into existence and, in accordance with the terms of the option, completion of the sale and purchase was to take place on 10 August 1993. The Law Society`s Conditions of Sale 1981 were imported into the contract by cl 9 of the option.

Clause 4(A) of the option provided that the sale was subject to the vendors 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 properties. By sub-cl (ii) it was provided that to enable the vendors to obtain such consent, the purchasers had to satisfy the TCB that they had a fund of $800,000 to carry out the approved development of the properties.

The sale was not completed on 10 August 1993. On the next day, the vendors` solicitors wrote to the purchasers` solicitors claiming that the purchasers were in breach of cl 4(A)(ii) of the option in a manner which indicated that they wished to repudiate the contract and that therefore the vendors were entitled to forfeit the 10% deposit paid. Thereafter each party took out an originating summons. The proceedings were heard together and in August 1994, the High Court decided that the vendors had been discharged from further performance of the contract and that they were entitled to retain the deposit. The purchasers appealed. In April 1995, the Court of Appeal reversed the decision of the High Court and held that the purchasers were not in breach of the contract and that the vendors had to complete the sale. The vendors were ordered to apply forthwith to the TCB for approval of the sale of the properties and an extension of the time granted for the development of the properties.

The vendors complied with the order of the Court of Appeal and completion of the sale and purchase of the properties took place on 29 September 1995. In October 1995, the purchasers took out this summons.

Condition 8(b) of the Law Society`s Conditions of Sale 1981

The first claim which the purchasers made was based on this condition, a form of liquidated damages clause. The vendors` stand was that the condition did not apply in the circumstances of the case and that the purchasers were not entitled to claim interest at the rate of 10% pa as provided in the condition. Condition 8 in so far as it is relevant reads:

If the sale shall not have been completed on or before the date fixed for completion, then:

(a) If the delay in completion is attributable solely to the default of the purchaser, he shall pay interest on the amount of the purchase price (less the deposit and any sum paid to account) at the rate of 10% pa from and including the date fixed for completion until the date of actual completion of the sale.

(b) If the delay in completion is attributable solely to the default of the vendor, he shall pay to the purchaser by way of liquidated damages interest at the rate of 10% pa on the purchase price of the property from and including the date fixed for completion until the date of actual completion: ...

It can be seen from the above that where one party to a contract for the sale and purchase of land uses this condition as a basis for claiming interest from the other on account of a delay in completion of the sale, the claimant must satisfy two conditions. First, he must show that such delay arosefrom the default of the other party and secondly, that such default is the sole reason for the delay.

What constitutes `default` in this context? Parker J in Re Bayley-Worthington and Cohen`s Contract [1909] 1 Ch 648 considered the meaning of `default` in the course of his judgment. He said at (p 656):

... Default must, I think, involve either not doing what you ought or doing what you ought not, having regard to your relations with the other parties concerned in the transaction; in other words, it involves the breach of some duty you owe to another or others. It refers to personal conduct and is not the same thing as breach of contract.

So, in contracts for the sale of real estate providing for completion at a certain date, and containing provisions as to what is to happen if completion be delayed beyond that date by or without the default, or wilful default, of either party, the conduct of that party has to be considered; and if he has been guilty of no breach of duty he will not, I think, be in default within the meaning of the contract. Of course the duties of each party towards the other must be determined by all the circumstances, including the nature of the contract and its provisions; and in determining these duties the complexities of the English law of real property must be borne in mind.

The above definition of `default` has been accepted in Singapore as applying to the construction of that word in condition 8. See See Bee Hoon v Quah Poe Hoe [1989] 3 MLJ 65 and Toh Teck Sun v Mandarin Gardens Pte Ltd [1988] 2 MLJ 276 .

To decide whether the vendors were in default, I therefore had to determine whether there was something which they did not do which they ought to have done or whether they did something which they should not have done. This question had to be determined in relation to the obligations which the vendors owed the purchasers under the contract of sale and it involved a detailed scrutiny of what each party had actually done in relation to the TCB approval after that contract came into existence.

Events from 17 May 1993 to 10 August 1993

It would be recalled that the sale was subject to the vendors obtaining the TCB`s written consent to it. To enable the vendors to obtain such consent, the purchasers agreed, inter alia, to commence development of the property in accordance with certain approved plans within six months of 10 December 1992 and to satisfy the TCB that they had a fund of $800,000 for the purpose of this development. Bearing in mind the agreed completion date of 10 August 1993, the parties had 86 days (including Sundays and public holidays) from 17 May 1993 to do what each of them was contractually bound to do in order to obtain the TCB consent and complete the sale by that date.

On 7 June 1993, the vendors` solicitors wrote to the purchasers` solicitors requesting that, in order for their clients to apply to the TCB for the necessary consent, the purchasers furnish them with their mortgagees` letter of confirmation that the sum of $800,000 was ready and available to enable the purchasers to carry out the...