Bestland Development Pte Ltd (in liquidation) v Manit Udomkunnatum and Another

• Jurisdiction: Singapore
• Judge: Lim Teong Qwee JC
• Judgment Date: 12 June 1996
• Neutral Citation: [1996] SGHC 119
• Docket Number: Originating Summons No 969 of 1995
• Date: 12 June 1996
• Year: 1996
• Published date: 19 September 2003
• Plaintiff Counsel: Harish Kumar (Chor Pee & Co)
• Citation: [1996] SGHC 119
• Defendant Counsel: Michael Hwang and Andrew Ho (Allen & Gledhill)
• Court: High Court (Singapore)
• Subject Matter: Lien,Right based on equitable lien on property,Whether lien to purchase money an interest in land,s 104(1) Land Titles Act (Cap 157),Equitable lien,s 5 Sale of Commercial Properties Act (Cap 281),Whether right to such lien precluded when sale fell through due to purchaser's default,Purchasers' right to lodge caveat,Credit and Security,Interest in land,Conditions of sale,s 115(1) Land Titles Act (Cap 157, 1994 Ed ),Whether precluded purchaser from exercising right to equitable lien for refund of part of purchase money,Construction of rescission clause,Vendor's option to deal with land as if agreement 'had not been entered into',Caveats,Sale of land,Land

Judgment:

LIM TEONG QWEE JC

Cur Adv Vult

This is a claim for an order directing the Registrar of Titles to remove or expunge a caveat lodged by the defendants affecting the shop unit at 317 Outram Rd #01-50 Concorde Hotel Shopping Centre. The shop unit is comprised in subsidiary strata certificate of title in volume 234 folio 180 of the subsidiary land-register.

By an agreement in writing dated 3 March 1983 the plaintiff agreed to sell and the defendants agreed to purchase the residue less one day of the plaintiff`s leasehold estate in the shop unit which is in a shopping centre then being developed by the plaintiff. The agreement is substantially in the form prescribed under the Sale of Commercial Properties Act (Cap 281). It provides that the price of $777,672 is payable as to 10% immediately upon signing the agreement, 55% in nine instalments ranging from 3% to 10% each within 14 days of the receipt of notices of completion of various stages of the development works, 10% within 14 days of the production of a licence for temporary occupation issued by the relevant building authority and the balance of 25% on completion. The defendants paid a total of $482,156.64 which is 62% of the price. That is the aggregate of the first instalment of 10% and the next eight instalments totalling 52%. Further instalments have fallen due and it is not in dispute that the defendants have not made any payment towards any part of these instalments or any other payment towards the purchase price.

Clause 6(1) of the agreement provides that if any instalment remains unpaid after the period of 14 days referred to interest will commence on the day following the expiry of the 14-day period and be payable until the instalment is paid or `the expiration of the notice to repudiate this agreement given by the vendor pursuant to para (3) hereof` whichever is earlier. Paragraph (3) or cl 6(3) provides:

If any of such unpaid instalments and interest remains unpaid for any period in excess of forty (40) days after its due date, the vendor shall be entitled at his option on giving to the purchaser or his solicitors not less than thirty (30) days` notice in writing to treat this agreement as having been repudiated by the purchaser and (unless in the meanwhile such unpaid instalment and interest shall have been paid) this agreement shall at the expiration of the said notice (and in this respect time shall be of the essence) be annulled and in such an event -

(a) the vendor shall be entitled to deal with or otherwise dispose of the said unit in such manner as the vendor shall see fit as if this agreement had not been entered into;

(b) the instalments previously paid by the purchaser to the vendor excluding any interest paid shall be dealt with and disposed of as follows:

(i) firstly, all interest calculated in accordance with para (1) hereof owing and unpaid shall be paid to the vVendor;

(ii) secondly, a sum equivalent to twenty five (25) per cent of the balance thereof shall be paid and forfeited to the vendor; and

(iii) lastly, the residue thereof shall be refunded to the purchaser;

(c) neither party hereto shall have any further claims against the other for costs, damages, compensation or otherwise hereunder; and

(d) each party hereto shall pay its own costs in the matter.

On 15 August 1989 the plaintiff`s solicitors gave this notice to the defendants` solicitors:

We refer you to cl 6(3) of the agreement dated 3 March 1983.

On behalf of our clients, we hereby give your clients, Mr Keh Kee Guan and Mr Manit Udomkunnatum, notice that upon the expiry of 30 days from service of this notice on your clients, our clients will treat the said agreement as having been repudiated by your clients; so that, unless before the expiry of that period of 30 days all the unpaid instalments of purchase price and interest payable under the agreement are fully paid, the agreement will be annulled ...

Time was extended twice and finally on 10 October 1989 the plaintiff`s solicitors wrote:

Our clients are agreeable to a final extension of the completion date for another three weeks from 6 October 1989 on terms that interest for late completion will continue to accrue and the extension granted herein shall not be construed as a waiver of our clients` right to rescind the agreements or any other rights accruing thereof ( sic).

The defendants did not make any payment and the agreement for sale and purchase was not completed by 27 October 1989 or at all. What the defendants did was to lodge caveat CV/34146C dated 15 October 1992. The caveat gives these particulars of the interest claimed:

interest as lienholder over the abovementioned premises (the `premises`) comprising of a leasehold estate for the unexpired portion of a term of 99 years commencing from16 June 1980, for the refund of purchase moneys aggregating the sum of $298,483.66 or thereabouts and interest thereon by virtue of:

(i) the caveator and the registered proprietor having entered into an agreement for sale and purchase dated 3 March 1983 (the `agreement`) for the sale and purchase of the premises;

(ii) the termination/annulment of the agreement; and

(iii) the liability of the registered proprietor to refund to the caveator the said sum of $298,483.66 or thereabouts as a result of the termination/annulment of the agreement.

This is the caveat which the plaintiff is seeking an order to have removed. Although they refer to the `termination/annulment` of the agreement it appears reasonably clear that the defendants have treated the agreement as having come to an end under cl 6(3) which provides for the refund of part of the purchase money paid. The plaintiff in an affidavit refers to the notice given on 15 August 1989 as a notice to complete which it clearly is not while the letter written on 10 October 1989 extended time for completion but nevertheless its case in these proceedings is that the agreement has come to an end under cl 6(3) and it is entitled to deal with or otherwise dispose of the shop unit as if the agreement had not been entered into as provided under para (a) of cl 6(3).

The plaintiff puts its case this way. It is said that by the terms of the sale and purchase agreement of 3 March 1983 and in particular paras (a) and (c) of cl 6(3) the defendants are precluded from asserting any lien for the residue which under para (b)(iii) should be refunded to them. If the defendants are not so precluded then it is said that they are not entitled to such a lien because the agreement for sale and purchase has gone off through their default. Finally it is said that the plaintiff does not hold the residue in trust for the defendants. The plaintiff is now in liquidation and is probably insolvent. If the defendants have no lien for the money payable to them then they will rank as unsecured creditors.

Section 104(1) of the Land Titles Act (Cap 157) which was in force when the caveat was lodged provided:

Any person claiming an interest in land, or any person otherwise authorised by any Act to do so, may lodge with the Registrar a caveat in the prescribed form.

The Act was repealed by the Land Titles Act (Cap 157, 1994 Ed) which came into force on 1 March 1994 but any caveat lodged under the repealed Act has effect as a caveat lodged under the present Act. See s 172(4) of the repealing Act. In answer to a point made in the defendants` written submissions I pause here to say that this application is properly made under s 127 of the present Act and not under the equivalent provision of the repealed Act. `Interest` in relation to land means `any interest in land recognised as such by law, and includes an estate in land`. See s 4 of the repealed Act which remains unchanged in the present Act. The defendants claim interest as lienholders for the refund of part of the purchase money paid under the sale and purchase agreement as a result of its termination or annulment. If the interest claimed is not an interest in land that is recognised as such by law then the caveat cannot be supported. If it is then the question is whether they have lost their equitable lien or are otherwise precluded from asserting it by the terms of the agreement.

John Baalman, The Singapore Torrens System (1961) says at p 195:

The number of interests which will justify the lodging of a caveat is limited by the number of permissible `interests in land`.

and later at the same page:

There is nothing in the Ordinance to suggest that this is one of the occasions on which the legislature intended to create a new interest in land to be known as a caveatable interest.

That was a commentary on the 1956 Ordinance which has since been repealed but it is no less apt in reference to the repealed Act in the 1985 edition and the present Act. At p 195 part of Lord Brougham`s judgment in Keppell v Bailey (1834) 2 My & K 517; 39 ER 1042 was cited and I think it bears repeating. Lord Brougham LC said at pp 535, 536:

... it must not therefore be supposed that incidents of a novel kind can be devised and attached to property at the fancy or caprice of any owner. It is clearly inconvenient both to the science of the law and to the public weal that such a latitude should be given. There can be no harm in allowing the fullest latitude to men in binding themselves and their representatives, that is, their assets real and personal, to answer in damages for breach of their obligations. This tends to no mischief, and is a reasonable liberty to bestow; but great detriment would arise and much confusion of rights if parties were allowed to invent new modes of holding and enjoying real property, and to impress upon their lands and tenements a peculiar character, which should follow them into all hands, however remote.`

I think that is a convenient starting point for an inquiry into the question whether the interest claimed by the defendants will support the caveat lodged by them.

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