Chuan Bee Realty Pte Ltd v Teo Chee Yeow Aloysius and Another

• Jurisdiction: Singapore
• Judge: Lim Teong Qwee JC
• Judgment Date: 13 May 1996
• Neutral Citation: [1996] SGHC 102
• Docket Number: District Court Appeal No 27 of 1995
• Date: 13 May 1996
• Year: 1996
• Published date: 19 September 2003
• Plaintiff Counsel: Lawrence Lee (David Chong & Co)
• Citation: [1996] SGHC 102
• Defendant Counsel: Ee Chong Nam Andrew (Andrew Ee & Co)
• Court: High Court (Singapore)
• Subject Matter: Sale and purchase of property,Materiality,Recovery of deposit,Rescission of option,Law Society Conditions of Sale 1981, cl 11,Misrepresentation of area and breach of implied condition,Misrepresentation,Contract

This is an appeal against the judgment of a district court ordering rescission of an option for the purchase of the property at 809 Upper East Coast Rd and repayment by the defendant to the plaintiffs of $35,000 paid by them for the option together with interest and costs.

On 20 March 1994 the plaintiffs signed an offer to purchase the property for $3,500,000 in the form given to them by a real estate agent. The offer was subject to four terms and conditions. The first prescribed an `option period` of 14 days and a `completion period` of 12 weeks. The second was to the effect that the property was to be sold with vacant possession. Clauses 3 and 4 provide:

3 The sale of the above real estate is subject to the attached option, a copy of which is initialled by me/us.

(4) Within three (3) working days (ie by 4 pm 23/3/94), the owner of the above property must either accept or reject this offer failing which this offer shall lapse. If rejected, the option money tendered herewith will be refunded to me/us ... . If accepted the owner shall deliver to the undersigned the option duly signed by the owner within the time stipulated above.

The option money of $35,000 was tendered by cheque drawn in favour of the defendant and it was received by the agent. The next day the agent delivered to the plaintiffs an option to purchase the property signed on behalf of the defendant by a director. The option provides that it `shall expire at 4pm on the 4th day of April 1994 (hereinafter called `the expiry date`) and will be null and void if not exercised in the manner and on or before the expiry date stipulated herein` and further that `the option money shall be forfeited by the [defendant] in the event this option is not exercised in the manner and on or before the expiry date stipulated herein`. The option was not exercised before its expiry or at any time at all and the defendant forfeited the option money of $35,000. In the action the plaintiffs claimed rescission of the option and repayment of the option money or alternatively damages and other reliefs for misrepresentation and for breach of implied terms. A claim for wrongful repudiation of the option was abandoned at the hearing and while there was an alternative claim for breach of warranties the warranties were not pleaded.

The case in misrepresentation is pleaded in this way. The agent placed an advertisement in T he Straits Times newspaper in its 20 March 1994 issue (para 1 of the statement of claim) which said `See to appreciate` and among other things `9000/5600 square feet` and `Beautiful reflective pool` (para 2). The same day the first plaintiff met Mr Liang, the defendant`s agent, who showed him round the property. The agent represented to him that `the reflective pool was in beautiful condition` and that `the property would fetch more than four (4) million dollars in two years` time` (para 4a). The first plaintiff made the offer to purchase in reliance on the agent`s representations and the particulars in the advertisement. Paragraph 13 states:

Contrary to the representations made by the [agent], through its three newspaper advertisements and through [the agent], the plaintiffs aver

(a) that the property was not in beautiful condition,

(b) the reflective pool showed a massive crack and water seepage,

(c) the total area of the property was not 9,000 sq ft but only 8,740 sq ft,

(d) the built-in area was not 5,600 sq feet but 4,020 sq ft.

No falsity is alleged in respect of the agent`s alleged representations as to the beautiful condition of the reflective pool and the value of the property in two years` time. The two other advertisements pleaded (paras 11, 12) were in the issues of 26 and 27 March 1994 of the newspaper which could only have been seen by the plaintiffs after they had made the offer to purchase and the option had been delivered to them and they could not have made the offer to purchase in reliance on anything said in either of them. Nothing in the only advertisement the plaintiffs could have relied on said that the property was in beautiful condition and it is not pleaded that the agent ever represented that the property was in beautiful condition. Clearly sub-para (a) of para 13 of the statement of claim cannot stand. In any case if there was such a representation it would not be one relating to a matter of fact. It is no more than a statement of opinion. The allegations about the reflective pool as to the massive crack and water seepage were abandoned at the trial as I was informed by Mr Lee who was counsel for the defendant. The only person who could testify to these allegations was the plaintiffs` architect and he gave no evidence. What the first plaintiff said about what the architect found or told the agent was clearly hearsay and ought not to have been admitted in evidence. However he was cross-examined on this part of his evidence and the defendant admitted in para 16 of the defence that the architect had pointed out to the agent that there were cracks in two tiles and water seeped out from these cracks when the architect stepped on them.

It is not pleaded as part of the plaintiffs` case in misrepresentation that they understood `9000/5600 square feet` in the advertisement to mean that the total area of the property was 9,000 sq ft and the built-in area was 5,600 sq ft or what they understood `built-in area` to mean. The statement in the advertisement is at best ambiguous and the plaintiffs ought to have stated in what sense they understood it. See Smith v Chadwick (1882) 20 Ch D 27. The defendant in its defence admitted the advertisement (para 1) but denied that the statements in it amounted to representations (para 23) and in the alternative alleged that the agent informed the first plaintiff that the total area of the property was about 8,800 sq ft and further alleged that `the gross saleable area or gross floor area and improvements [was] about 5,600 sq ft` (para 24). At the trial evidence was adduced as to the area of the land and on behalf of the plaintiffs the `gross floor area` and on behalf of the defendant the area of the first and second storeys of the two-storey building on the property.

`9000/5600 square feet`

(1) 9,000 sq ft

The first plaintiff said in his affidavit that the total area of the property was 8,745 sq ft. Under cross-examination he said it was from searches made by his lawyer but his lawyer gave no evidence. The evidence was that a copy of the certificate of title was delivered by the defendant`s solicitors to the plaintiffs` solicitors on 23 March 1994 and a copy of it was admitted in evidence. It states the area to be 817.3 sq m. This is also the area mentioned in the valuation report produced in evidence by the plaintiffs. The grounds of judgment give no indication as to what the learned district judge found to be the actual area but there was no evidence other than that it was 817.3 sq m and he could not have come to any other finding. There was no evidence what this translates to in square feet but using the formula 1 sq m = 10.76391 sq ft the area of the land would be 8,797 sq ft (to the nearest whole number). Assuming that `total area of the property` an expression used by both the plaintiffs and the defendant means the area of the land then the actual area was 817.3 sq m (8,797 sq ft).

Mr Liang, the defendant`s agent, said in his affidavit that on 20 March 1994 he and a colleague showed the plaintiffs and their daughters around the property and the first plaintiff inquired of him and he told the first plaintiff that the area of the property was about 8,800 sq ft. Under cross-examination he said:

Q: You described the property as 9,000/5,600?

A: Yes. Land area 9,000 and gross floor are ( sic ) 5,600.

Q: Do you agree that the land area was not correct?

A: It was rounded out.

Court: Did you state around 9,000?

A: No.

Q: You inflated the figure by 200 sq ft?

A: Yes but I highlighted that to the plaintiffs.

Q: (Put): You did not tell Dr Teo?

A: I did.

The first plaintiff did not either in his affidavit or in his oral evidence deny that Mr Liang had told him that the area was about 8,800 sq ft and the last question ought not to have been put to the witness. Mr Lee in his closing submission dealt with the evidence on this point at some length and there was no response from Mr Ee.

In his grounds of judgment the learned district judge said at p 2 (D) of the record of appeal:

I found as a fact there was misrepresentation in the size of the property - it was not `9000/5600 sq ft` as described in the advertisements and the `beautiful reflective pool` also described in the advertisements was non-existent.

The learned district judge did not say if he came to any finding as to whether Mr Liang informed the first plaintiff that the area was about 8,800 sq ft but his finding that the size of the property was not 9,000/5,600 sq ft must have been based on a finding that Mr Liang did not. The grounds of appeal do not touch on this expressly but it appears from para 4(1) of the petition of appeal that the defendant accepts for the purpose of the appeal at any rate that the area represented was 9,000 sq ft. The question then is whether a representation in the advertisement that the area is 9,000 sq ft (836.1 sq m using the same formula) is a misrepresentation when the actual area is 817.3 sq m (8,797 sq ft). The difference is 18.8 sq m (203 sq ft). From the approved building plan produced in evidence the property would have a frontage of about 18.2 m (about 59 ft 9 ins) and the difference would be equivalent to about 1.03 m (3 ft 5 ins) of the frontage of the property. In percentage terms it is about 2.3% of the actual area.

In Spencer Bower & Turner, The Law of Actionable Misrepresentation (3rd Ed) p 5 it is stated:

Article 10 What constitutes misrepresentation

A misrepresentation is a representation which, when made,

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