Fu Loong Lithographer Pte Ltd v Mun Hean Realty Pte Ltd

• Jurisdiction: Singapore
• Judgment Date: 27 February 1989
• Date: 27 February 1989
• Docket Number: Originating Summons No 219 of 1986
• Court: High Court (Singapore)

Fu Loong Lithographer Pte Ltd

Plaintiff

and

Mun Hean Realty Pte Ltd

Defendant

[1989] SGHC 18

Joseph Grimberg JC

Originating Summons No 219 of 1986

High Court

Equity–Estoppel–Whether plea of estoppel contrary to public policy–Equity–Estoppel–Agreement for sale of property stipulating date of completion–Buyer representing that date for completion inconsequential–Seller late in giving notice to complete–Buyer claiming liquidated damages for delay in completion–Seller raising plea of estoppel–Whether plea of estoppel established–Whether plea of estoppel defeated by Sale of Commercial Properties Act (Cap 281, 1985 Rev Ed) and Sale of Commercial Properties Rules 1985 (GN No S 4/1985)–Land–Conveyance–Agreement for sale of property stipulating date of completion–Buyer representing that date for completion inconsequential–Seller late in giving notice to complete–Buyer claiming liquidated damages for delay in completion–Seller raising pleas of estoppel and waiver–Whether pleas established–Whether pleas defeated by Sale of Commercial Properties Act (Cap 281, 1985 Rev Ed) and Sale of Commercial Properties Rules 1985 (GN No S 4/1985)–Whether new agreement between parties to be implied–Whether parties could agree that there should be no stipulated completion date–Section 5 Sale of Commercial Properties Act (Cap 281, 1985 Rev Ed)–Rules 5, 6, 7 and 14 Sale of Commercial Properties Rules 1985 (GN No S 4/1985)

The plaintiff concluded an agreement (“Agreement I”) with the defendant to purchase part of a factory. The agreement provided that the area of the property purchased was only an estimate and in the event of a difference between the estimated and the actual area, the purchase price was to be adjusted. The defendant was to deliver vacant possession within 14 days of the issue of the temporary occupation licence (“TOL”). However, if TOL was not issued by 28 February 1981, the defendant was to pay the plaintiff interest on the moneys the buyer had paid the seller. Completion was to take place 14 days after the buyer received notice to complete from the seller. There was no provision for liquidated damages in case of delay.

A second agreement (“Agreement II”) was drawn up to replace Agreement I when the plaintiff tried to obtain a mortgage loan from the bank to finance the purchase of the property and it was discovered that Agreement I did not comply with the Sale of Commercial Properties Act (Cap 281, 1985 Rev Ed) (“the Act”), which required a completion date to be stipulated. Agreement II differed from Agreement I in three respects. Firstly, it stipulated the date of completion to be on or before 31 December 1983; secondly, the defendant was no longer required to obtain the temporary occupation licence (“TOL”) by a specified date; and thirdly, the clause relating to the adjustment for price based on the difference between the approximate and actual area was omitted. The agreement was executed by the plaintiff and defendant and backdated to the date of Agreement I.

In October 1983, one Tan acquired the whole of the issued share capital of the plaintiff. However, the defendant did not issue the notice to complete the sale until December 1985. In the notice, the defendant claimed the balance of the purchase price and the sum payable for the difference between the estimated and actual area of the property. The plaintiff refused to pay either of the two sums. Instead, the plaintiff claimed liquidated damages for the defendant's breach of its obligations to issue a notice to complete on or before 31 December 1983.

The plaintiff subsequently commenced this action, claiming: (a) a declaration that it was entitled to liquidated damages; (b) an order that the purchase price be abated by the amount of its liquidated damages; (c) interest on the liquidated damages; and (d) an order that the sale and purchase of the property be completed after the liquidated damages and interest had been paid.

The defendant denied liability for liquidated damages arguing that the plaintiff: (a) was estopped by its representations and/or conduct from saying that the completion date for the sale and purchase was 31 December 1983 and that the defendant was in breach; or (b) had waived its completion date clause in Agreement II; or (c) a new agreement between the parties had to be implied whereby the date for completion was extended to a date to be notified by the buyer to the seller.

Held, granting the plaintiff's application:

(1) The plaintiff represented to the defendant by its words, acts or conduct, that the date for legal completion was inconsequential. So long as the plaintiff was let into possession as soon as possible, the plaintiff could not hold the defendant to the completion date of 31 December 1983 stipulated in cl 14 (2) of Agreement II and the arrangement between the parties provided for compensation to the plaintiff if the defendant defaulted in securing TOL by the agreed date: at [25] and [33].

(2) Whereas the pleas of estoppel and waiver were prima facie supportable on the evidence and would otherwise have succeeded, they were defeated by virtue of the Act and the Sale of Commercial Properties Rules 1985 (GN No S 4/1985), and by wider considerations of public policy. While it was open to the parties to agree on a completion date, what the parties could not do was to agree that there should be no stipulated completion date at all. The argument that there was an implied new agreement whereby the date for completion was extended to a date when the plaintiff notified the defendant to complete the said agreement within a reasonable time was not supported by the evidence: at [51], [52], [53], [56] and [57].

(3) Declaratory judgment was granted, ordering the defendant to complete the sale and purchase of the property and to pay the plaintiff liquidated damages: at [59].

Bradshaw v McMullan [1920] 2 IR 412 (folld)

Foo Kee Boo v Ho Lee Investments (Pte) Ltd [1988] 1 SLR (R) 598; [1988] SLR 620 (distd)

Orchard Twelve Investments Pte Ltd v Golden Bay Realty Pte Ltd [1985-1986] SLR (R) 723; [1986] SLR 272 (distd)

Phoenix Heights Estate (Pte) Ltd v Lee Kay Guan [1981-1982] SLR (R) 484; [1982-1983] SLR 20 (distd)

W J Alan & Co Ltd v El Nasr Export & Import Co [1972] 2 All ER 127 (folld)

Sale of Commercial Properties Act (Cap 281, 1985Rev Ed)s 5 (consd)

Sale of Commercial Properties Rules1985 (GN No S 4/1985)rr 5, 6, 7, 14 (consd)

Cheong Yuen Hee and Andrew Chua (Y H Cheong) for the plaintiff

Tan Tee Jim (Allen & Gledhill) for the defendant.

Judgment reserved.

Joseph Grimberg JC

1 On 8 October 1980, the plaintiffs concluded an agreement (“Agreement I”) for the purchase by them from the defendants of premises on the mezzanine floor of a flatted factory in Toa Payoh (“the property”) for a sum of $1,252,800. The agreed consideration represented a price of $160 per square foot.

2 Agreement I contained the following provisions, inter alia:

1. (i) clause 3 provided that the area of the property, described in the schedule as being approximately 7,830sq ft, was only estimated. In the event of a difference between the estimated and the actual area, there was to be an adjustment of the purchase price on the date of legal completion;

2. (ii) clause 16 (1) provided that the defendants were to deliver vacant possession of the property within 14 days of the issue of the temporary occupation licence (TOL). If TOL was not issued by 28 February 1981, the defendants were to liable to pay the plaintiffs interest on all moneys by then paid by the plaintiffs at the rate of 9% p.a; and

3. (iii) clause 19 provided that completion was to take place 14 days after the receipt by the plaintiffs or their solicitors. The clause contained no provision for the payment by the defendants to the plaintiffs of liquidated damages for delay.

3 Miss Jeannie Ng, an advocate and solicitor, acted for both the plaintiffs and the defendants in the transaction. It was the plaintiffs' intention to take a loan from DBS Finance Ltd in order to finance the purchase, the loan to be secured by a mortgage over the property. The mortgagees' solicitors drew Miss Ng's attention to the fact that Agreement I did not comply with the requirements of the Sale of Commercial Properties Act (Cap 281) in that, inter alia, no completion date was stipulated. In the event, Miss Ng prepared a second agreement (“Agreement II”), which was executed by the parties on 25 February 1981 although it was backdated to 8 October 1980 (the date of Agreement I). It is common ground that the parties intended Agreement II to replace Agreement I.

4 Agreement II differed from Agreement I in material respects. Firstly, it provided, by cl 14 (2), for notice to complete to be given by or on behalf of the defendants to the plaintiffs or their solicitors on or before 31 December 1983, and for liquidated damages for delay; secondly, it omitted all reference to the defendants having to procure the issue of a...