Eng Bee Properties Pte Ltd v Lee Foong Fatt

• Jurisdiction: Singapore
• Judge: Judith Prakash JC
• Judgment Date: 30 August 1993
• Neutral Citation: [1993] SGHC 202
• Docket Number: Originating Summons No 1033 of
• Date: 30 August 1993
• Published date: 19 September 2003
• Year: 1993
• Plaintiff Counsel: Harry Lee Wee (Braddell Brothers)
• Citation: [1993] SGHC 202
• Defendant Counsel: Peter Yap and Sim Eu Jin (Peter Yap & Co)
• Court: High Court (Singapore)
• Subject Matter: Option to purchase,s 94 proviso (d)Evidence Act (Cap 97),Proof of evidence,Oral evidence of subsequent modification not allowed,ss 111 & 112 Land Titles Act (Cap 157),Whether tainted with illegality,Land,Parole evidence rule,'Wrongfully',Contract required by law to be in writing,Evidence,Effect of illegality on right to damages,Contract,s 112 Land Titles Act (Cap 157),Proprietors' right to damages for wrongful lodgment of caveat,Whether purchaser had right to lodge caveat,Words and Phrases,Whether terms varied,Caveats

Cur Adv Vult

This action arises out of an option for the purchase of the land and premises known as Nos 9 to 13 Spottiswoode Park (`the Park property`) which was granted by the plaintiffs to the defendant on 3 August 1989. The plaintiffs say that the option lapsed, unexercised, on 4 August 1989 but that the defendant wrongfully placed a caveat against the Park property and refused to remove it, thus causing them damage.

When the plaintiffs sued in October 1989, they wanted the removal of the caveat and damages for its wrongful entry. They also asked for a declaration that they had validly forfeited the option money paid by the defendant. The plaintiffs later sold the property with the burden of the caveat and, in January 1992, the defendant, after negotiations with the purchaser, removed the caveat on payment by the purchaser of $145,000. Accordingly, the plaintiffs are now asking only for the declaration and damages.

From November 1989, when he filed his first affidavit in reply to the claim, up to 1 September 1992 when the action first came on for hearing, the defendant`s position was that the option period had been extended by agreement and that his caveat had been entered rightfully. He alleged that he had tendered payment of the balance of 10% of the purchase price, as required by the option, within the extended period but the plaintiffs had refused to accept it and had wrongfully failed to complete the purchase of the property. The defendant also put forward a counterclaim.

On 1 September 1992, counsel for the defendant applied for leave to amend the defence and withdraw the counterclaim on the basis that he had just been given instructions by the defendant which indicated that the contract of sale between the plaintiffs and the defendant was tainted by illegality. Leave to amend was granted, the counterclaim was withdrawn, and amended pleadings were filed. Thus the defendant fought the trial itself on the basis that the purported transaction between the plaintiffs and himself was illegal. Consequently the plaintiffs were not entitled to make any claim against him for damages as this would result in their profiting from their own illegal conduct. The plaintiffs totally denied the defendant`s allegations.

The plaintiffs` story

The plaintiff company is a property developer. Their main witness was one of their directors, Mr Kwok Wai Hoi. He negotiated to sell two properties to the defendant: the Park property and No 23 Everton Road (`the Everton property`) which was adjacent to it and an essential component of any planned development of the Park property. As far as development was concerned, neither property was of much value without the other.

As developers, the plaintiffs had had designs on the Park property for some time. They had been advised by their architect that the Park property could not be redeveloped by itself because of the road reserve running through it and that if they wanted to buy and redevelop it they should also look for adjacent lots. Thus, when in March 1989 they were offered the Everton property, they were quick to enter a contract to buy it for $130,000. Completion of the purchase was delayed, however, as the land on which No 23 Everton Road stood had to be subdivided to give the plaintiffs a proper title.

In the meantime the plaintiffs had entered into a contract to purchase the Park property for $200,000. Completion of this purchase was due around 30 August 1989. The plaintiffs were unsuccessful in obtaining financing for the purchase and, as they were facing cash flow problems, decided to try and sell both properties.

In late July 1989, Mr Kwok was introduced to the defendant by one Mr Kwan Cheng Kee, a manager of the MUI Bank. The defendant was interested in buying the properties and negotiations started. It was finally agreed that both properties would be sold together and that the defendant would pay $200,000 for the Park property and $180,000 for the Everton property.

On 3 August 1989, Mr Kwok prepared and signed, on behalf of the plaintiffs, an option for the sale of the Park property to the defendant. The first two paragraphs of the option read:

In consideration of the sum of dollars ten thousand ($10,000) paid by you to me this day by way of option-money, I, the undersigned, Eng Bee Properties Pte Ltd, 190 Middle Rd #12-01 Singapore 0718 hereby grant to you this option, which shall be valid until 4pm on 4 August 1989, to purchase the abovementioned property at the price of dollars two hundred thousand ($200,000).

This option shall be exercised by a notice in writing signed by you accompanied with a cashier`s order for $10,000 equivalent to balance of 10% of the purchase price and forwarded to my solicitors, Edwin Chan, 101 Upper Cross Street #04-24 People`s Park Centre Singapore 0105 before its expiry date. [Emphasis added.]

As arranged with the defendant, the signed option was sent to Mr Kwan`s office at the MUI Bank on the same day. The defendant was supposed to hand Mr Kwan the option money of $10,000 in return for the option. He took the option but did not pay the option money. Mr Kwok telephoned Mr Kwan about this and was assured by Mr Kwan that the option money would be delivered to the plaintiffs` then solicitors, Edwin Chan . No money was paid that day. Instead, the option money was delivered the next day (on 4 August 1989) to Edwin Chan and, after receiving legal advice that it was in order to accept the option money, the plaintiffs took the defendant`s cheque.

The defendant did not send Edwin Chan or the plaintiffs themselves the signed acceptance copy of the option and the balance of the deposit money by 4pm on 4 August 1989. According to Mr Kwok, since the option was not exercised in accordance with its terms, it lapsed automatically.

On 5 August 1989, the plaintiffs` solicitors received a letter from Peter Yap & Co , the defendant`s solicitors, in relation to the Park property. The letter stated: `We are instructed that there is an obvious typographical error in the said option stating the exercise of the option date as 4 August 1989 at 4pm` and went on to ask Edwin Chan to ascertain from the plaintiffs the actual date of exercise of option which it said the defendant understood as being `the usual seven or ten days from the date of grant of option`. Edwin Chan sent a brief reply two days later stating that there was no typographical error in the option. Under cross-examination Mr Kwok denied that he had agreed, as alleged by the defendant, to extend the time for exercise of the option to a period of seven to ten days after the date of the option.

Meanwhile, on 3 August 1989, Mr Kwok had given instructions to Edwin Chan to prepare a sale and purchase agreement in respect of the Everton property. He took this course as the legal title to this property was complicated. The draft agreement was sent by Edwin Chan to the defendant`s solicitors on 7 August 1989. From the plaintiffs` point of view the most important terms of this sale, as had been agreed with the defendant prior to 3 August 1989, were that 10% of the price was to be paid on signing, a further $45,000 was payable two weeks later and the balance was payable on completion.

On 22 August the defendant`s solicitors sent an amended sale and purchase agreement for the Everton property to the plaintiffs` solicitors. The payment terms had been amended to provide that 10% of the price would be paid on signing and the entire balance on completion. According to Mr Kwok, the plaintiffs had been hoping to use the $45,000 to assist them in completing the purchase of the Park property and when the defendant reneged on his agreement on the payment schedule, they decided not to proceed with the sale of the Everton property to him.

On the same day the defendant`s solicitors wrote to Edwin Chan stating that they had been instructed that, pursuant to discussions between the plaintiffs and the defendant, the remaining 10% of the deposit for the Park property would be paid by the defendant directly to the plaintiffs. Mr Kwok said he was amazed by the lies the letter contained. He did not, however, instruct his solicitors to deny the lies as he felt it was pointless to reply.

Throughout his testimony Mr Kwok maintained strongly that the sale terms of the properties were as disclosed in the option and the draft sale and purchase agreement. He denied the allegations of the defendant that the prices shown in the written documents were incorrect and that the defendant was to pay him in cash as `under the table money` an extra $130,000 for the Park property and an extra $20,000 for the Everton property. He denied that the formal documents had disclosed different prices from the actual prices because the plaintiffs wanted to evade paying income tax on the profit from the sales.

Mr Kwok said that the plaintiffs only discovered the existence of the defendant`s caveat against the Park property shortly before 12 September 1989 when their solicitors wrote to the defendant`s solicitors requesting him to remove the caveat. The defendant refused to do so.

These proceedings were commenced on 25 October 1989. Two weeks later the plaintiffs entered into an agreement with one Tan Guan Kee to sell the Park property to him, free from encumbrances, at a price of $800,000. The defendant again refused to remove his caveat, however, and the sale fell through. The plaintiffs were only able to sell the Park property two years later in November 1991 when they agreed to sell it at a price of $600,000, subject to the defendant`s caveat, to one Chua Koon Hor. The remarkable increase in the value of the Park property was because it had been declared a conservation property thus making redevelopment unnecessary.

The defendant`s story

According to the defendant, it was clear during all his negotiations with Mr Kwok that he had to buy both properties together. It was also agreed that the sale prices for the properties would...