Chi Liung Holdings Sdn Bhd v Attorney General

• Judge: Warren Khoo L H J
• Judgment Date: 11 May 1994
• Neutral Citation: [1994] SGCA 68
• Citation: [1994] SGCA 68
• Defendant Counsel: Soh Tze Bian (Attorney General's Chambers)
• Published date: 19 September 2003
• Plaintiff Counsel: Cheong Yuen Hee and Lai Swee Fung (Toh Tan & Pnrs)
• Date: 11 May 1994
• Docket Number: Civil Appeal No 63 of 1993
• Court: Court of Appeal (Singapore)
• Subject Matter: 'Sell or dispose of land',Qualifying certificates,Contract,Land,s 3 Residential Property Act (Cap 274),Effect of entering sale and purchase agreement with foreigner subject to obtaining qualifying certificates,Sale and purchase of property,Conditional contract,Effect of condition precedent,Residential property,Option to purchase,Words and Phrases,Whether property can be said to have been sold on exercise of option if conditional clause not satisfied,Sale to foreigner,Sale of land,Whether beneficial interest in property can pass to purchasing party on completion of conditional contract,Conditions of sale,Formalities,Option containing conditional clause,Whether 'sale' effected on completion of contract if condition precedent is not satisfied

Cur Adv Vult

The appellants are a company incorporated in Malaysia. In 1984, they were desirous of purchasing two parcels of land, one at Balmoral Road and the other at Gallop Road, for development for a consideration of $8,250,000 and $14,235,642 respectively. As a foreign company, the appellants were required under s 31 of the Residential Property Act (Cap 274) (`the Act`) to apply for qualifying certificates to enable them to purchase the properties. Pursuant to this provision, the appellants applied to the Controller of Housing (`the Controller`) for qualifying certificates. Before approving the appellants` application, the Controller required the appellants to give a written undertaking in respect of each of the properties. Accordingly, two undertakings, dated 30 August 1984 and 22 October 1984 respectively, were given and they were each signed by the managing director of the appellants, one Tong Lee Hwa. Both the undertakings contained identical terms and conditions. By cl 2(d) of each of the undertakings, the appellants undertook as follows:

That the [appellants] will:

(d) not sell or dispose of the land without the prior written approval of the Controller.

Each of the undertakings was secured by a bank guarantee. At the material time, the bank guarantees were issued by Citibank NA. Under cl 3 thereof, the bank agreed to pay to the Government of Singapore on demand sums of money as follows:

(A) A sum of dollars ... if the company [the appellants] fails to apply to the competent authority for written permission to develop the land by 30 September 1988 or such extended period as may be allowed by the Controller in writing.

(B) A sum of dollars ... if the company fails to submit building plans to the building authority for approval within the period stipulated in the written permission of the competent authority or by 31 March 1989 or such extended period as may be allowed by the Controller in writing.

(C) A sum of dollars ... if the construction fails to reach first floor level within the period stipulated in the written permission of the competent authority or by 30 November 1989 or such extended period as may be allowed by the Controller in writing.

(D) A sum of dollars ... if the company fails to obtain temporary occupation licence for the housing development by 31 March 1991 or within such extended period as may be allowed by the Controller in writing.

(E) A sum of dollars ... equivalent to 40% of the purchase price of the land or the remaining undischarged sum of (a) to (d) above, whichever is the lesser, if the company sells or disposes of the land without the prior written approval of the Controller, provided always the said 40% of the purchase price of the land shall be the maximum amount payable under this guarantee for any default by the company of any or all of the conditions listed in part A of the `undertaking`.

On 31 December 1988, Tong Lee Hwa passed away suddenly. As a result, the appellants faced immense pressure from their bankers, who were financing the development of the properties, with the result that they had either to sell the properties or risk a forced mortgagee`s sale. On 10 April 1989, the appellants` solicitors wrote to the Controller seeking his consent to an intended sale of the properties to a company, Teng Fuh Holdings Pte Ltd (`Teng Fuh`). Although Teng Fuh is a company incorporated in Singapore, not all its shareholders or directors at the time were Singaporean, and it was, therefore, also a `foreign company` within the meaning of s 2 of the Act. Accordingly, Teng Fuh was also required to obtain qualifying certificates from the Controller for the purchase of the properties. On 12 April 1989, the appellants granted two options to Teng Fuh or its nominees to purchase the two properties respectively. The options, except for the description of the property and the sale price therefor, contained identical terms and conditions. Paragraph 2 of each of the options provides:

The vendor [ie the appellants] hereby offers to sell to you and/or your nominees (hereinafter called `the purchaser`) who accept this offer in the manner hereinafter contained the property upon the terms set out below.

One of the terms of the sale, namely, cl 8 provides as follows:

(i) The sale and purchase is conditional upon the purchaser obtaining a qualifying certificate from the relevant government authorities for the purchase and retention of the property within a period of 15 weeks from the date of exercise of this option.

(ii) In the event that approval from the relevant governmental authorities for the qualifying certificate is not obtained within the aforesaid period, the date fixed for completion of the sale and purchase as stipulated in cl 6 shall be extended for a further five (5) weeks (hereinafter called `the extended period`) within which period the purchaser shall obtain the qualifying certificate referred to in 8(i) above.

(iii) If the purchaser fails to complete on the expiry of the extended period, condition 29 of the conditions of sale will apply save as follows:

(a) Conditions 29(4)(b)(i) shall be deleted and be substituted with the following:

`forfeit from the deposit and retain for the vendor`s benefit the sum of $768,657.50 and refund the balance sum of $996,342.50 forthwith to the purchaser and each party shall pay their own costs in the matter and neither party shall have or make any claim or demand against the other for costs, damages, compensation or otherwise in respect of this option;`

(b) Condition 29(4)(c) shall not be applicable.

Provided always that condition 29 of the conditions of sale shall apply in its full terms to either party where the purchaser has already obtained the qualifying certificate and default is made in completing this sale and purchase for any other reasons whatsoever.

(iv) In the event the purchaser does not submit its application to the Controller of Housing for the qualifying certificate within three weeks from the date of exercise of option (time to be of the essence), the vendor shall be at liberty to forfeit 1% of the 10% deposit paid hereunder and to call off the sale in which event this agreement shall become null and void and neither party shall be entitled to claim any compensation or costs from the other in respect of this agreement and the vendor shall refund the balance of the 10% deposit to the purchaser. For the purpose herein, the purchaser shall furnish evidence of application of such application as aforesaid to the vendor`s satisfaction within the said period of three weeks.

On 2 May 1989, both the options were exercised by a company, Vimbosa Pte Ltd (`Vimbosa`), as Teng Fuh`s nominee. Accordingly, two contracts for the sale and purchase of the properties respectively were made between the appellants and Vimbosa. Vimbosa was also a foreign company, and, accordingly, it had to apply for qualifying certificates for the purchase of the properties. Presumably, applications were made by Vimbosa soon thereafter.

At that time, the appellants had not received any response from the Controller. Following two reminders from the appellants` solicitors, the Controller replied on 31 May 1989 asking for particulars of the purchasers and of the proposed selling price, all of which were subsequently furnished. On 10 July 1989, the Controller wrote to the appellants` solicitors refusing to grant approval. The letter stated, inter alia, the following:

(2) Please be informed that your clients` request to allow them to sell the above two projects is not approved.

(3) We understand that your clients have granted an option to sell each of the above two projects and the options have been accepted. In the circumstances, could your clients explain within one week of this letter why Citibank`s two letters of guarantee (Nos 5928088601 and 5928088602) should not be forfeited in view of their breach of condition 3(E) of both said guarantees.

On 17 July 1989, the appellants` solicitors appealed to the Controller to revoke his decision, which was followed by a second appeal on 10 August 1989. The Controller on 25 August 1989 replied, asking for certain information which was supplied by the appellants` solicitors. Finally, after several reminders, the Controller replied on 2 December 1989 saying that the appellants` explanation for the sale of the properties was not accepted, and that, since the appellants had contravened para 2(d) of the undertakings, the appellants would have to forfeit to the government the sum of $3,300,000 and $5,694,256.80 under para 3(E) of the bank guarantees respectively. The material parts of the letter were as follows:

(2) We have carefully considered your explanation on behalf of your clients but regret to inform you that your clients` explanation is not accepted. It is noted that your clients` options for the sale of the above properties to M/s Vimbosa Pte Ltd given on 12 April 1989 had been accepted on 2 May 1989.

(3) Since your clients have contravened condition (d) of both their written undertakings dated 30 May 1984 and 22 October 1984, Citibank NA will be asked to pay to the government a sum of $3,300,000 and $5,694,256.80 under para 3(E) of Citibank`s letters of guarantee Nos 5928088601 and 5928088602 respectively.

On the same day, the Controller requested Citibank NA to forward the two sums totalling $8,994,256.80 to the Public Works Department (`PWD`). Subsequently, it was found that the two component sums were not correct and they were reduced respectively to $2,887,500 and $4,982,474.70 making a total of $7,869,974.70. On 12 December 1989, the Controller wrote to Citibank NA informing the latter of the corrected amount payable and requesting payment thereof to PWD. On 19 December 1989, the bank forwarded the sum to PWD and recovered the same from the plaintiffs` deposits with the bank.

On 31 January 1990, Vimbosa, which...