Chua Chay Lee and Others v Premier Properties Pte Ltd

• Jurisdiction: Singapore
• Judge: Chao Hick Tin JA
• Judgment Date: 11 July 2000
• Neutral Citation: [2000] SGCA 34
• Docket Number: Civil Appeal No 182 of 1999
• Date: 11 July 2000
• Year: 2000
• Published date: 19 September 2003
• Plaintiff Counsel: Thio Shen Yi and Priscilla Chang (Thio Su Mien & Partners)
• Citation: [2000] SGCA 34
• Defendant Counsel: Mohan Pillay and Andre Maniam (Wong Partnership)
• Court: Court of Appeal (Singapore)
• Subject Matter: Breach,Whether apartment owners entitled to terminate agreement,Developer delaying construction of new apartments by one year,Whether developer repudiating contract,Repudiatory breach,Developer in agreement with apartment owners to exchange new apartments for old apartments in en bloc purchase of site,Contract

(delivering the grounds of judgment of the court): In this case, the appellants, the owners of apartments to be built by the respondents at St Martin`s Drive, Singapore, claimed the right to terminate their contract with the respondents on the ground of anticipatory breach because the respondents were not in a position to complete and hand over the said apartments to them by the deadline stipulated in the contract. The respondents, who admitted that there was a delay in the completion of the construction of the apartments, contended that the circumstances of the delay were such that the question of a repudiatory breach on their part did not arise. As such, they argued that the appellants should be satisfied with damages for the delay. In the court below, the learned judicial commissioner held that as the respondents had not repudiated the contract, the appellants were not entitled to terminate the contract. We dismissed the appellants` appeal against the decision of the learned judicial commissioner and now give the reasons for our decision.

A Background

The respondents, who are property developers, wanted to redevelop a site at St Martin`s Drive, on which stood 24 apartments. As such, they offered to acquire the apartments on the basis of an en-bloc transfer of all the 24 apartments to them. The agreement for the en-bloc transfer of the apartments to the respondents (hereinafter referred to as the `agreement`), which was dated 22 March 1996, gave the apartment owners two options. First, an apartment owner could sell his or her apartment to the respondents for $2.4m. Secondly, an apartment owner could, at no cost, exchange his or her old apartment for a new one to be built by the respondents on the redeveloped site.

The appellants, who owned apartments on the site in question, opted to exchange their old apartments for new ones. Unlike those who sold their apartments to the respondents, those who opted to exchange their old apartments for new ones received no money for their apartments. As they had to wait for some time before taking delivery of their new apartments, a number of terms in the agreement protected their rights. To begin with, the appellants each received a banker`s guarantee for $2,805,000 as security for the respondents` performance of the obligation to provide them with new apartments. Secondly, the respondents were required by cl 5.4 of the agreement to hand over the new apartments to the appellants not later than 33 months after all the old apartments had been handed over to them. Thirdly, cl 5.4 of the agreement further provided that in the event of a delay in the handing over of the new apartments to the appellants, the respondents were to pay the appellants liquidated damages at the rate of 10% per annum on the sum of $2,805,000, the amount stipulated in the banker`s guarantee.

After signing the agreement and taking over the appellants` apartments, the respondents took steps to acquire some land which was adjacent to the site on which the appellants` old apartments stood. This was permitted under the agreement but it was quite a time-consuming task. In fact, negotiations for a neighbouring lot, on which stood a sub-station which had to be decommissioned, took over a year. As a result of the acquisition of additional land, the respondents were able to increase the number of apartments to be built on the enlarged site.

In the meantime, the appellants were unhappy that there was no construction activity on the development site after the completion of piling work. The deadline for handing over the new apartments to the appellants was 28 August 1999 (hereinafter referred to as the `handing over date`). The appellants feared that the respondents could not complete their new apartments by the handing over date because the site was overgrown with vegetation in 1998 and appeared to have been abandoned. According to the third appellant, the respondents indicated in 1998 that they did not intend to build the promised apartments and after the preview of the working model of the project in January 1998, the respondents approached the appellants to accept in exchange for their new apartments on the St Martin`s site new apartments which the respondents were building in Anderson Road. She said that the respondents dropped the idea of a proposed swop of apartments even though the appellants showed a keen interest. Thereafter, the appellants were alarmed by newspaper reports on financial difficulties faced by the respondents. On 24 March 1998, the Business Times quoted the respondents` representative as saying that the respondents would sell their St Martins` land if the price was right.

Although the position looked bleak from the appellants` point of view in 1997, 1998 and early 1999, things finally began to move after the first quarter of 1999. By April 1999, all the approvals required for the expanded housing project were obtained. The respondents envisaged that their housing project, which had been expanded with the acquisition of adjoining land, would be completed in two phases. Phase I would include the appellants` apartments. The main contract for the housing project was awarded in early May 1999 and the contractors were contractually bound to complete Phase 1 of the project within 63 weeks failing which liquidated damages at the hefty rate of $10,000 per day would be payable by them.

On 22 April 1999, the respondents invited the appellants to select their new apartments on 8 May 1999. However, the appellants, who noted that the date for the completion of the housing project was stated as `31 December 2002` in the respondents` brochure for their housing project, were minded to end their contract with the respondents. As such, the appellants` solicitors wrote to the respondents` solicitors on 11 May 1999, to terminate the agreement. The relevant portions of the letter are as follows:

[O]ur clients have perused the brochure and wish to express their shock and utter dismay that your clients` expected TOP date for the St Martin Residence is on 31 December 2002. This is contrary to your clients` expressed intention to honour ... all the terms of the agreement.

As we have constantly reiterated in our previous letters, our clients had entered into the agreement solely on the basis that their home would be exchanged for another at the same premises by 28 August 1999. The unreasonable long delay ... constitutes a blatant breach of a fundamental condition of the agreement ...

By reason of the foregoing, your clients have repudiated the agreement. In light of your clients` repudiation of the agreement, take notice that we hereby, for and on behalf of our clients, accept your clients` repudiation of the agreement, thereby terminating the same without prejudice to any of our clients` rights and remedies in law and/or equity against your clients for their breach.

On the following day, the appellants` solicitors wrote to the bank to demand the payment of $2,762,603.84 under the performance guarantee. The sum was with respect to the price of their property as at the date of the agreement, namely, $2.4m, the sum paid to the cash vendors, as well as interest on the said sum.

On 12 May 1999, the respondents` solicitors replied that their clients considered the termination by the appellants of the agreement as wrongful and that any call on the performance bond would be invalid and unconscionable. On 18 May 1999, the respondents` solicitors wrote to the appellants` solicitors to point out that the appellants had already been verbally informed that the date for completion for their apartments was set back by only about a year. It was placed on record that the main contractor had been awarded the contract and that the main contractor was required to complete the construction work in question within 63 weeks from May 1999. Finally, the respondents` solicitors stated the respondents` position in the following unambiguous terms:

While our clients accept that there will be a delay in the completion of the project, our clients` position is that this cannot constitute repudiatory conduct ...

Our clients` position is accordingly that your clients` termination is wrongful and our clients do not accept the same. Your clients have by their conduct acted in repudiatory breach of contract. Our clients choose to affirm the contract.

On 21 May 1999, the appellants` solicitors responded to the respondents` solicitors` letter of 18 May 1999 and said as follows:

Even by your clients` admission, the earliest date of completion is August 2000, which is one year later than the original handover date. By any standard, one year is too long a waiting period for our clients. In the circumstances, your clients have committed an anticipatory breach ...

Faced with the appellants` refusal to reconsider their position, the respondents took out an originating summons on 21 May 1999 to determine whether the appellants` demands under the performance guarantees were valid. They also applied for an interim injunction to restrain the appellants from receiving any payment under the guarantees until after the validity of their demands has been determined by the court. The appellants in turn sought a declaration from the court by way of a notice of counterclaim that the respondents` breach of contract was, inter alia, repudiatory.

Decision of the judicial commissioner

The learned judicial commissioner rightly took the view that the main issue to be determined was whether or not the plaintiffs had, in the circumstances of the case, repudiated the agreement so as to entitle the appellants to terminate it on 11 May 1999. His Honour accepted that the respondents were not in a position to hand over the apartments to the appellants by 28 August 1999 and that the expected delay in the completion of the appellants` apartments was 12 months. His Honour said that while the respondents had breached the...