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

• Jurisdiction: Singapore
• Judgment Date: 21 January 1997
• Date: 21 January 1997
• Docket Number: Civil Appeal No 105 of 1996
• Court: Court of Appeal (Singapore)

Bestland Development Pte Ltd

Plaintiff

and

Manit Udomkunnatum and another

Defendant

[1997] SGCA 4

Yong Pung How CJ

,

M Karthigesu JA

and

L P Thean JA

Civil Appeal No 105 of 1996 (Originating Summons No 969 of 1995)

Court of Appeal

Land–Sale of land–Conditions of sale–Purchaser's default after part payment of purchase price by instalments–Annulment of agreement by vendor–Purchaser entitled to refund of residue of purchase price paid–Lodgement of caveat by purchaser as lien holder–Whether purchaser lost entitlement to lien upon annulment of agreement–Whether purchaser precluded by terms of agreement from asserting lien–Whether vendor held residue of purchase price on trust for purchaser

The appellant, Bestland, were developers of a shopping centre. By an agreement in writing, Bestland agreed to sell a shop unit in the centre to the respondent purchasers. Pursuant to the agreement, the purchasers paid a total of 62% of the purchase price by instalments. When the purchasers failed to pay further instalments, Bestland annulled or terminated the agreement pursuant to cl 6 (3) of the agreement. Clause 6 (3) (a) provided that upon such annulment Bestland were entitled to deal with or otherwise dispose of the property as if the agreement had not been entered into. Clause 6 (3) (b) further provided that Bestland were obliged, after certain deductions, to repay to the purchasers the residue of the instalments. The purchasers lodged a caveat claiming an interest as lienholder over the property for the refund of the residue. Bestland applied for an order to remove the caveat. The application was dismissed and Bestland appealed. There were three issues in the appeal, namely whether (a) the purchasers, by failing to complete the purchase, had lost their entitlement to a lien on the property, (b) on a true construction of cl 6 (3) of the agreement the purchasers were precluded from asserting any lien, and (c) in the context of a purchaser's lien, Bestland held the residue on trust for the purchasers.

Held, dismissing the appeal:

(1) A purchaser acquired an equitable lien over the land upon payment of each instalment of the purchase price in accordance with the agreement for sale and purchase of the land. If the agreement was not completed and the purchaser was entitled notwithstanding any misconduct there might have been on his part to recover from the vendor any part of the purchase money he had paid in accordance with the agreement then and in every such case the purchaser had an equitable lien over the land for such part of the purchase money. This was so whether the agreement was not completed because of default on his part or on the vendor's part or without any default on the part of either as long as the purchaser had not lost his right to recover some part of the purchase money: at [22] and [23].

(2) An equitable lien could be precluded by or qualified by the terms of the contract. Clause 6 (3) (b) expressly preserved the purchasers' entitlement to the residue and thereby secured their lien for the residue: at [36].

(3) The use of any language or expression of a trust was not appropriate in describing the nature of a purchaser's lien on the property. However, as the purchasers in this case were entitled to the proceeds of any dealing or disposal of the property to the extent of the residue, it followed that Bestland upon their dealing or disposal of the property were obliged to hold the proceeds thereof to the extent of the residue on trust for them. It was only in that respect that Bestland were a trustee for the purchasers: at [39] and [40].

Bestland Development Pte Ltd v Lai-Tan Holdings Pte Ltd [1990] SGHC 129 (not folld)

Chip Thye Enterprises Pte Ltd v Development Bank of Singapore Ltd [1994] 2 SLR (R) 68; [1994] 3 SLR 613 (refd)

Cox v Parker [1987] NSW (SC) 11, 208 (refd)

Frankcombe v Foster Investments Pty Ltd [1978] 2 NSWLR 41 (refd)

Hewett v Court (1983) 149 CLR 639 (folld)

Howe v Smith (1884) 27 Ch D 89 (refd)

Mayson v Clouet [1924] AC 980 (refd)

Ridout v Fowler [1904] 1 Ch 658 (distd)

Rose v Watson (1864) 10 HL Cas 672 (folld)

Virginia Developments Pte Ltd v Behem Investments Pte Ltd [1988] 1 SLR (R) 302; [1988] SLR 396 (folld)

Whitbread & Co, Limited v Watt [1901] 1 Ch 911 (folld)

Whitbread & Co, Limited v Watt [1902] 1 Ch 835, CA (folld)

Wythes v Lee (1855) 3 Drew 396; 61 ER 954 (refd)

Land Titles Act (Cap 157, 1985 Rev Ed) s 104 (1)

Land Titles Act (Cap 157, 1994 Rev Ed) ss 115 (1), 127

Harish Kumar (Chor Pee & Co) for the appellant

Michael Hwang and Andrew Ho (Allen & Gledhill) for the respondent.

Judgment reserved.

L P Thean JA

(delivering the judgment of the court):

1 This is an appeal against the decision of the High Court dismissing an application by the appellants for an order that the caveat lodged by the respondents claiming an equitable lien on the property, #01-50, Concorde Hotel Shopping Centre, for part of the purchase money paid under an agreement made between the appellants and the respondents be removed or expunged. The court held that the respondents have an equitable lien on the property.

The facts

2 The relevant facts that gave rise to the dispute and to the appeal now before us are as follows. The appellants were the developers of the shopping centre situate at 317 Outram Road, presently called the Concorde Hotel Shopping Centre. By an agreement in writing dated 3 March 1983 the appellants agreed to sell to the respondents the leasehold estate in a shop unit in that centre, namely, #01-50, Concorde Hotel Shopping Centre (“the property”), for a sum of $777,672. The agreement was substantially in the form prescribed by the Sale of Commercial Properties Rules 1979 and provided, among other things, that 10% of the purchase price was payable upon the signing of the agreement with the balance to be paid by progressive instalments at various stages of the development.

3 Pursuant to the agreement, the respondents paid a total of 62% of the purchase price amounting to $482,156.64 which consisted of the aggregate of the first instalment of 10% and the next eight instalments totalling 52%. Thereafter, the respondents failed to pay the further instalments which fell due. Meanwhile, on 11 March 1988, the appellants went into liquidation.

4 On 15 August 1989, the appellants' solicitors gave notice to the respondents pursuant to cl 6 (3) of the agreement that, if the respondents did not complete the transaction within 30 days, the appellants would terminate the agreement. The respondents did not comply with that notice. The appellants subsequently gave the respondents two extensions of time to complete, but the latter again failed to complete the transaction. Finally, on 10 October 1989, the appellants' solicitors wrote to the respondents as follows:

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 …

Notwithstanding the extension, the sale and purchase was not completed on 27 October 1989 or at all, and the agreement was duly annulled or terminated by the appellants acting under cl 6 (3) thereof, which we shall set out in detail in a moment.

5 Upon such annulment, the appellants under cl 6 (3) (a) are entitled to deal with or otherwise dispose of the property in such manner as they shall see fit as if the agreement had not been entered into, and under cl 6 (3) (b) the appellants are obliged, after the deductions made under sub-paras (i) and (ii) thereof, to repay to the respondents the residue of the aggregate of the instalments (“the residue”) which amounts to approximately $298,483.66. The appellants were then already in liquidation and no such amount was paid to the respondents. On 15 October 1992 the latter lodged a caveat No CV/34146C in the Register of Titles claiming interest as follows:

Claims interest as lienholder over the abovementioned premises (the Premises) [the property] comprising of a leasehold estate for the unexpired portion of a term of 99 years commencing from the 16th June 1980, for the refund of purchase monies aggregating the sum of $298,483.66 or thereabouts and interest thereon.

By virtue of

1. (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;

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

3. (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.

No further step or action was taken by either of the parties with reference to the property or the caveat until about three years later.

6 On 3 October 1995 the appellants pursuant to s 127 of the Land Titles Act (Cap 157, 1994 Ed) applied by OS 969/1995 for an order that the caveat be removed on the ground that since the agreement was repudiated by the respondents and was annulled by the appellants pursuant to cl 6 (3) of the agreement, the respondents have no caveatable interest in the property for the residue. The appellants say that the respondents have only a personal claim for money had and received which they would have to prove as unsecured creditors in the appellants' liquidation. The appellants further say that cl 6 (3) of the agreement precludes any equitable lien, and that in any event, no such lien can arise in the respondents' favour since they were in default.

7 The respondents, on the other hand, whilst they admit that the agreement was duly terminated on 27 October 1989 as a result of their default, maintain that, despite their default, cl 6 (3) of the agreement...