Cheung Yong Sam Investments Pte Ltd v Land Equity Development Pte Ltd

• Jurisdiction: Singapore
• Judgment Date: 23 November 1992
• Date: 23 November 1992
• Docket Number: Suit No 1253 of 1989
• Court: High Court (Singapore)

Cheung Yong Sam Investments Pte Ltd

Plaintiff

and

Land Equity Development Pte Ltd

Defendant

[1992] SGHC 291

Judith Prakash JC

Suit No 1253 of 1989

High Court

Land–Sale of land–Condition precedent to completion of sale and purchase–Developer to obtain planning approval by specified date–Whether agreement may be rescinded by developer on ground that planning approval not obtained by specified date–Whether developer taking advantage of own wrong

On 20 May 1987, the plaintiff, the owner of the CYS building, entered into an agreement (“the agreement”) to sell that piece of land to the defendant. It was a condition precedent to the completion of the sale and purchase that the defendant should obtain by 30 November 1987 planning approval under s 9 (1) of the Planning Act “upon terms satisfactory to the [defendants] for the development for commercial use of the said property either by itself or in conjunction with other lands”. On 29 January 1988 the defendant purported to rescind the agreement on the ground that planning approval had not been obtained by the specified date. The plaintiff was dissatisfied with the rescission and brought this action for damages for breach of contract. The defendant counterclaimed for the return of the 5% deposit they had paid the plaintiff.

Held, dismissing the claim and allowing the counterclaim:

(1) It was a well-established principle of the law of contract that a party to a contract who by his own act brings about the occurrence of a certain event cannot rely on such event to escape from his contractual obligations: at [40].

(2) While in this case the defendant would have been entitled to reject a planning approval that was not satisfactory to it, in determining its satisfactoriness it would not have been entitled to act arbitrarily, capriciously or unreasonably. If it did so it would not be able to rely on their right of rescission. In the present case, the defendant had been formed with a particular aim in mind. Since incorporation it had been working towards achieving that aim and had sold that aim to other investors and prospective tenants. As such, it would not have been arbitrary, capricious or unreasonable for the defendant to have rejected a planning approval that did not give it the impressive and prestigious development it sought: at [51].

(3) The evidence indicated that there would not have been in place on 30 November 1987 a planning approval that was satisfactory to the defendant: at [52].

(4) The agreement was a complex legal document drafted and negotiated by lawyers from well-established practices. The plaintiff, having had the benefit of competent legal advice, would have been aware from the beginning that the defendant only wanted to complete the purchase of the CYS Building provided that its acquisition fitted into the larger scheme of things. It had no use for the land on its own. The defendant was willing to compensate the plaintiff within reason for the time it took to determine whether its plans were achievable. It did this by agreeing to pay the plaintiffs $175,000 a month until the conditions precedent to completion were satisfied or the contract rescinded on the basis that the conditions were not satisfied by a specified date. The plaintiff in turn was willing to accept such payment for the time it remained committed to sell the land to the defendant, always knowing that in view of the scale of the defendant's plans there was a chance that the agreement would be brought to an end. Since the defendant, having done their best, could not persuade the authority to issue, or even to indicate that it was prepared to issue, the type of approval the defendant wanted, it was entitled to rescind the contract: at [53].

Brauer & Co (Great Britain Ltd) v James Clark (Brush Materials) Ltd [1952] 2 All ER 497; [1952] 2 Lloyd's Rep 147 (refd)

Mulvena v Kelman [1965] NZLR 656 (refd)

New Zealand Shipping Co Ltd v Société des Ateliers et Chantiers de France [1919] AC 1 (refd)

Peh Kwee Yong v Sinar Co (Pte) Ltd [1987] SLR (R) 405; [1987] SLR 114 (refd)

Planning Act (Cap 279,1970 Rev Ed)s 9 (1)

Choo Han Teck and Lek Siang Pheng (Helen Yeo & Partners) for the plaintiff

Joseph Ang, Marina Chin and Raymond Wong (Lee & Lee) for the defendant.

Judgment reserved.

Judith Prakash JC

1 On 20 May 1987, the plaintiffs, the owners of the the CYS Building which stood at the corner of Malacca Street and Market Street, entered into an agreement (“the agreement”) to sell this piece of land to the defendants. The agreement, which I will discuss in more detail later, provided that it was a condition precedent to the completion of the sale and purchase that the defendants should obtain by 30 November 1987 planning approval under s 9 (1) of the Planning Act “upon terms satisfactory to the [defendants] for the development for commercial use of the said property either by itself or in conjunction with other lands”. On 29 January 1988 the defendants purported to rescind the agreement on the ground that planning approval had not been obtained by the specified date. The plaintiffs were dissatisfied with the rescission and brought this action for damages for breach of contract. The defendants counterclaimed for the return of the 5% deposit they had paid the plaintiffs.

Events leading up to the agreement

2 The defendant company was established in 1986 by Mr Serge De Kantzow, an Australian developer, for the purpose of developing on a site in Raffles Place a building of significant proportions in terms of height and bulk and which would make a definitive statement of international architecture. The development was to be known as “Republic Plaza”. Initially the defendant company was co-owned by Mr De Kantzow himself and an Australian company. Later two Japanese shareholders were brought in. Mr De Kantzow had made endeavours to involve Singaporean companies like the Hong Leong Group in the project but had not been successful.

3 From the outset, the defendants' efforts were focused on acquiring a substantial parcel of land at the corner of Raffles Place. This rectangular parcel is shown on the site plan appendixed to this judgment. It would be seen that the parcel was bordered by Cecil Street, D'Almeida Street, Malacca Street and Market Street and was made up of several lots owned by various private owners and the State. The defendants tried hard to acquire substantially the whole of that parcel apart from Lot 456 at the corner of D'Almeida Street and Malacca Street which was being developed for the UCO Bank.

4 If one looks at the plan in the direction of Malacca Street, one sees that the parcel was then divided into a right hand portion and a left hand portion by Lots 194 and 193-2 on which Amber Building was constructed and Lot 193-5 on which the Great Eastern Life Building stood. I shall henceforth call Lots 194, 193-2 and 193-5 “the intermediate lots”. To the right of the intermediate lots were Lots 195-2, 292, 199-2 and 200 and to the left were Lots 192-4, 191, 195, the lots on which the CYS Building and Fidvi Building (which was adjacent to the CYS Building) stood, and a number of state-owned lots. A back lane ran between and separated those lots which fronted Cecil Street and those which fronted Malacca Street. The significance of the back lane was that in effect it joined the right hand lots to the left hand lots so that a person on one side could have access to the other side without having to pass over the intermediate lots. There was also a back lane which connected Malacca Street and Cecil Street.

5 By about November 1986, the defendants had successfully acquired options to all the private lots in this parcel except for the intermediate lots which were owned by the OCBC Group (“OCBC”) and Great Eastern Life Assurance Co Ltd (“GEL”) and the lots on which the CYS and Fidvi Buildings stood. Although the defendants attempted vigorously to start negotiations with OCBC and GEL for the purchase of the intermediate lots, they were met with complete disinterest.

6 At all material times the competent authority for the approval of building plans was the Development and Building Control Division of the Public Works Department (“the authority”). The defendants were aware that the intention of the authority was to have a “comprehensive development” on this parcel. From the authority's view such a comprehensive development would be one which covered the whole area bounded by Cecil Street, D'Almeida Street, Malacca Street and Market Street (excluding only Lot 456). The defendants agreed that this intention was desirable in town planning terms. Their aim was to acquire all the necessary lots and amalgamate them in order to effect the authority's intentions but the disinterest of GEL and OCBC put a major stumbling block in their path.

7 In November 1986 the defendants submitted to the authority, through their architects, RSP Architects Planners & Engineers (“RSP”), an outline planning application (“OPA”) for the proposed development on the private lots which they had acquired together with the State land in the parcel. As the defendants' intention was to continue their efforts to acquire the intermediate lots, the concept contained in this proposal was for a two-phased development. Phase 1 was for the construction on one part of the land of a 280m high tower having a wide-based podium big enough to accommodate four banking halls and covered walkways leading past the intermediate lots to the other side of the land. The height of 280m was significant as it was the same as the height of the two highest developments in Singapore, viz the OUB Centre and the UOB Plaza. If the defendants succeeded in acquiring the intermediate lots, Phase 2 would be implemented by extending the podium to cover the intermediate lots. The purpose of the OPA was to test whether the defendants could get approval for a tower of the requisite height and a net plot ratio of...