Chua Tian Chu and another v Chin Bay Ching and another

• Jurisdiction: Singapore
• Judge: Andrew Ang J
• Judgment Date: 20 May 2011
• Neutral Citation: [2011] SGHC 126
• Court: High Court (Singapore)
• Docket Number: Suit No 778 of 2009
• Published date: 27 May 2011
• Year: 2011
• Hearing Date: 12 November 2010,08 November 2010,19 November 2010,10 November 2010,16 November 2010,18 November 2010,12 January 2011,22 November 2010,09 November 2010,11 November 2010,15 November 2010
• Plaintiff Counsel: Adrian Ee (Ramdas & Wong)
• Defendant Counsel: Ramalingam Kasi (Raj Kumar & Rama) andCollin Choo (Derrick Wong & Lim BC LLP)
• Subject Matter: Building and Construction Law,Damages,Liquidated Damages
• Citation: [2011] SGHC 126

Andrew Ang J: Introduction

The plaintiffs, Mr Chua Tian Chu (“Mr Chua”) and Ms Cheang Poh Ling Pauline, were the purchasers of a property located at 22A Kheam Hock Road, Singapore (“the property”), pursuant to a sale and purchase agreement (“the Agreement”) entered into with the defendants, Mr Chin Bay Ching (“Mr Chin”) and Ms Tjia Mui Kui on 30 November 2006. The defendants were the vendors as well as the developers of the property. The agreed purchase price of the property was $5,680,000.

Prior to the sale of the property to the plaintiffs, Mr Chin had intended to renovate the detached bungalow standing on the land, built sometime in the late 1980s or early 1990s. Mr Chin engaged the services of an architectural firm by the name of Formwerkz Architects (“FA”) and a main contractor, Kian Hong Seng Construction Pte Ltd (“KHSC”), to carry out re-construction works on the property. Upon submission of the original building layout plans (“BP01”) drawn up with the assistance of FA, Mr Chin obtained the Building and Construction Authority’s (“BCA”) approval on 21 August 2006.

Shortly thereafter, in or around November 2006, the plaintiffs began negotiations with the defendants to purchase the property. The negotiations were principally in relation to BP01 (the original building layout plans designed by FA) and resulted in a list of amendments thereto to be incorporated into the Agreement. The finalised list of amendments was incorporated by way of the Fourth and Fifth Schedules annexed to the Agreement. While the Fourth Schedule consolidated the plaintiffs’ amendments to BP01, the Fifth Schedule predominantly related to renovation works as well as additional fixtures and fittings to be integrated into the property. Additional changes were made to the Fifth Schedule on 4 December 2006, after the Agreement was signed and an amended list replaced the Fifth Schedule originally attached to the Agreement.

By 26 January 2007, a revised building layout plan (“BP02”) had been drawn up. The defendants submitted the second application for BCA’s approval in July 2007 which was subsequently approved on 7 September 2007. It is worthwhile noting that FA also prepared three other building layout plans on 1 February 2007, 23 October 2007 and 16 July 2008.

Clause 9.1 of the Agreement imposed a contractually stipulated deadline for the delivery of the notice to take vacant possession of the property as “not later than 31st December 2007”. Clause 9.3 of the Agreement provided:

The Vendor shall deliver vacant possession of the Property to the Purchaser by delivering a notice to the Purchaser to Take Possession in respect of the Property. On delivery of vacant possession of the Property to the Purchaser, the Vendor must deliver to the Purchaser or his solicitors a copy of the Temporary Occupation Permit for the Property together with the certificate from the Vendor’s architect that the building, drainage, sewerage and electrical works serving the Property have been constructed in accordance with the plans and specifications approved by the Building Authority and that water and electricity supplies have been duly connected to the Property. [emphasis added]

On 6 January 2009, more than a year after the contractually stipulated date, the defendants gave notice to the plaintiffs to take vacant possession of the property following BCA’s issuance of the temporary occupation permit (“TOP”) on 6 January 2009. The plaintiffs took the position that the defendants’ notice to take vacant possession was only valid upon delivery of a copy of the TOP, as well as the architect’s certificate referenced under cl 9.3 of the Agreement. At the plaintiffs’ insistence, the defendants forwarded the architect’s certificate on 16 January 2009 which attested to the fact that the building, drainage, sewerage and electrical works serving the property complied with approved plans and requisite specifications. In accordance with their interpretation of cl 9.3 of the Agreement, the plaintiffs took the view that the defendants’ notice to take vacant possession was only valid upon delivery of the architect’s certificate, on 16 January 2009 onwards.

Clause 4 of the Agreement set out the payment schedule agreed by the parties for the progress instalment payments of the purchase price. As at 15 January 2009, the plaintiffs had completed the payment of 20% of the purchase price in accordance with the time line set out in cll 4.1.1, 4.1.2 and 4.1.3. Under cl 4.1.4 of the Agreement, a further 70% was payable “within 14 days after receipt by the Purchaser or his solicitors of the Vendor’s notice to take possession” with a photographic copy of the TOP issued by BCA.

On 30 January 2009, 14 days from the date that the plaintiffs received the architect’s certificate, the total sum of $3,976,000 fell due (ie, 70% of the purchase price). The plaintiffs only made payment of $3,834,077.81 having unilaterally deducted $141,922.19 from the total sum which fell due. The plaintiffs’ deduction of $141,922.19 from the purchase price due was based on their calculation of the liquidated damages accrued from 1 January 2008 until 15 January 2009. The plaintiffs computed the quantum of liquidated damages deducted based on the contractually agreed interest rate of 12% per annum on the sum of $1,136,000 (ie, 20% of the purchase price paid) for the delay period of 380 days (ie, 1 January 2008 until 15 January 2009). By 30 January 2009, having paid 90% of the purchase price less the deduction, the plaintiffs nevertheless declined to take possession of the property owing to alleged defects and incomplete works.

Clauses 12.1 and 4.1.5 of the Agreement provided as follows: Clause 12.1 The Vendor [Defendants] must give to the Purchaser [Plaintiffs] a notice requiring completion of the sale and purchase of the Property [‘Notice to Complete’] in accordance with this clause no later than fourteen days (14) days after the date of issue of Notice to Take Possession. [emphasis in original] Clause 4.1.5 The balance of the ten per cent (10%) of the Price shall be dealt with as follows:- (a) on completion of the sale and purchase of the Property in accordance with Clause 12 hereof; a sum of $418,000.00 [‘said sum’] shall be paid to the Vendor’s solicitors to be held by the Vendor’s solicitors as stakeholders and the said some or any balance thereof [after any deduction has been made in accordance with clauses 10 and 11 hereof] shall be paid over to the Vendor upon the notification of the receipt of the CSC [Certificate of Statutory Completion] issued by the Building Authority accompanied by a photographic copy duly certified as a true copy by the Vendor’s solicitors; and (b) on the completion of the sale and purchase of the Property a sum of $150,000.00 shall be paid to the Vendor at the expiry of 12 months from the date of notice to take vacant possession to the Purchaser in respect of the Property, or such balance remaining from the said $150,000.00 after any deduction has been made in accordance with clause 11 hereof.

On 2 February 2009, the defendants solicitors gave the plaintiffs the Notice to Complete the sale. Pursuant to cll 12 and 4.1.5(a) of the Agreement set out above, $418,000 fell due upon the defendants’ delivery of the Notice to Complete, to be paid to and held by the defendants’ solicitors as stakeholders. Pursuant to cl 4.1.5(b), the remaining sum of $150,000 was payable to the defendants 12 months from the date of completion of the sale and purchase of the property, subject to deductions made for defects liability under cl 11.

The plaintiffs withheld payment of the $418,000 due under cl 4.1.5(a) on the basis that the property was not fit for occupation. They demanded that rectification works be conducted immediately by the defendants. The defendants were informed by the plaintiffs’ solicitors to complete all the outstanding works identified in a list prepared by Mr Chua dated 30 January 2009. Furthermore, the plaintiffs gave the defendants one month’s notice, expiring on 6 March 2009, to put the property in a state fit for occupation.

Clause 6.1 of the Agreement provided:

In addition to the charge of interests under Clause 5, the Vendor is entitled to give the Purchaser a not less than 21 days notice to pay any sum that remains unpaid for a period of 14 days or more after the due date of payment, or to comply with any or all terms or conditions of this Agreement, failing which the Vendor may at its own election (i) deem that the Purchaser is in breach and (ii) further deem that the Purchaser has repudiated this Agreement. [emphasis in original]

On 4 March 2009, the defendants served 21 days’ notice on the plaintiffs under cl 6.1 of the Agreement demanding payment of the sum of $418,000 overdue under cl 4.1.5(a). The plaintiffs’ repeated failure to complete the sale and purchase of the property, notwithstanding multiple extensions arranged between the parties, culminated in the defendants’ rescission of the Agreement on 23 July 2009. The defendants construed the plaintiffs’ act of non-payment of the sums which fell due under the Agreement as a repudiatory act under cl 6.2 of the Agreement.

The plaintiffs commenced this action by way of writ on 11 September 2009 seeking specific performance, liquidated damages, the cost of the rectification works and, alternatively, damages. In the course of the trial, the parties managed to agree on the following issues: The defendants decided not to challenge the plaintiffs’ unilateral deduction of $141,922.19 in liquidated damages for delay occasioned from 1 January 2008 to 15 January 2009; and A global sum of $410,000 as the rectification costs attributable to the defects in the property was agreed. (Curiously, counsel for the defendants said that the issue of liability was left for the court’s determination. It is also interesting to note that by agreeing to a global figure...