Kassim Syed Ali and Others v Grace Development Pte Ltd and Another

• Jurisdiction: Singapore
• Judge: Karthigesu JA
• Judgment Date: 03 June 1998
• Neutral Citation: [1998] SGCA 38
• Docket Number: Civil Appeal No 237 of 1997
• Date: 03 June 1998
• Year: 1998
• Published date: 19 September 2003
• Plaintiff Counsel: VK Rajah SC and R Chandra Mohan (Rajah & Tann)
• Citation: [1998] SGCA 38
• Defendant Counsel: K Shanmugam SC and Edwin Tong (Allen & Gledhill),Davinder Singh SC and Rosalind Lazar (Drew & Napier)
• Court: Court of Appeal (Singapore)
• Subject Matter: Purchasers petaining possession of units in office and shopping complex,Purchasers fail to show what they get less valuable than what they have contracted for,Contractual terms,Remedies,Sale and purchase agreement,No evidence of purchasers suffering loss because of vendor's breach,Specific performance,Whether liquidated damages clause applies to assessing damages for loss arising from vendor's breach of contract,Contract,Purchasers seeking abatement in price,Whether specific performance vendor entitled to,Purchasers not rescinding contracts,Compensation for loss,A proper and rational basis for abatement in price,Agreement for purchase of units in hotel and shopping complex,Whether court will order abatement of purchase price when there has been a breach of contract by vendor,Whether vendor entitled to issue notice to complete,Damages,Whether vendor in breach of contract

Judgment:

LP THEAN JA

Cur Adv Vult

(delivering the judgment of the court): The three appellants were the defendants respectively in the three separate actions, Suits Nos 1423, 1426 and 1443 of 1991, instituted in the High Court by the first respondents for specific performance of the agreements relating to their purchase of the premises. These three actions were subsequently consolidated (the consolidated actions). The first respondents also instituted, at the same time, 19 other actions against 19 other parties (the 19 purchasers) making similar claims in respect of their purchases of the premises respectively. All the defendants counterclaimed against the first respondents damages for breach of contract. They were represented by the same firm of solicitors. As the claims and counterclaims in all the actions were based substantially on the same facts, it was agreed that the 19 actions would abide by the results of the consolidated actions. The consolidated actions were tried before S Rajendran J, and in a reserved judgment (reported in [1998] 1 SLR 730) the learned judge allowed the claims of the first respondents for specific performance and dismissed the counterclaims of the appellants. Against this decision the appellants have now appealed.

2. The facts

The relevant facts that gave rise to the proceedings below are not in dispute and have been fully set out in the judgment of the learned judge, which we respectfully adopt. For our purpose, we need only to refer to the following material facts. The appellants each entered into agreements with the company called Adelphi Development Pte Ltd (ADPL) in 1982/1983 for the purchase of shop units in a building now called `The Adelphi`, which is situate at the junction of Coleman Street and North Bridge Road. The Adelphi, as originally designed, was to consist of a podium block and a tower block, and the podium block was to comprise units of shop premises and basement carparks, while the tower block was to house a hotel with 309 rooms. Work on the podium block commenced first as phase 1 of the project. The contract for the construction of The Adelphi was awarded to OCK Construction Pte Ltd (OCK).

3.Prior to the execution of the sale and purchase agreements with the appellants and the 19 purchasers, ADPL had contemplated the conversion of the premises in the tower block from hotel to office and shop units. This is apparent from a letter written by ADPL`s solicitors to the Controller of Housing seeking approval for the inclusion in the sale and purchase agreement of clauses (namely, cll 32 and 33) which were to the effect that the purchasers were deemed to have knowledge of the vendor`s intention to apply to convert the hotel component of the project into office and shop units. However, cll 32 and 33 were, for some inexplicable reasons, not included in 50 out of the 148 sale and purchase agreements that were entered into by ADPL. The appellants and the 19 purchasers were amongst those whose sale and purchase agreements did not have the amended clauses.

4.On 19 January 1983, ADPL`s solicitors wrote to the appellants` solicitors explaining that cll 32 and 33 had been `inadvertently omitted` from some of the sale and purchase agreements entered into and sought a confirmation to the effect that the two clauses would be deemed to have been included in the sale and purchase agreements made with the appellants. The appellants` solicitors replied saying that their clients could not agree to the inclusion of such clauses.

5.On 10 December 1987, ADPL obtained in principle approval for the conversion of the tower block from hotel to office, subject to the consent of those persons who had already contracted to buy the premises in the proposed building. By a letter dated 2 August 1988, ADPL`s solicitors requested consent from the appellants to the hotel component being converted to premises for office. The appellant`s solicitors replied stating that their clients would consent on condition that ADPL agreed to compensate them by an abatement of the purchase price amounting to a discount of 35% of the purchase price. No agreement, however, was reached between the parties.

6.In the course of construction, ADPL encountered financial difficulties which severely hindered the progress. In order to ameliorate further losses, which amounted to about $18.5m, the shareholders of OCK decided to purchase The Adelphi site together with the benefit of the project (then partially completed) for $77.5m, and the first respondents were incorporated for the purpose. On 15 September 1988, the first respondents entered into an agreement with ADPL for the purchase of The Adelphi. In the meantime, the first respondents were also negotiating with DBSL Building Pte Ltd (DBSL), the second respondents, for the sale to the latter of the tower block and the unsold shop units in the podium block.

7.The sale and purchase agreement between the first respondents and DBSL was entered into on 19 October 1988, and by this agreement the first respondents sold the building, The Adelphi (less the shop units already sold), to DBSL for $78m. By cl 30 of the agreement, DBSL reserved the right to require the first respondents to take steps to convert the hotel component of the building to office premises and shop units. It was also provided that, upon DBSL exercising this right, the first respondents would use their best endeavours to obtain the consent of all the purchasers of the sold units to the conversion as well as the approval of the building authority for the conversion. If the approval of the building authority was obtained, cl 30(5)(b) of the agreement provided for the upward revision of the purchase price from $350 per square foot to $520 per square foot for the shop and the office units purchased by DBSL. DBSL exercised the right under cl 30 on the same day as the sale and purchase agreement was signed. The approval previously obtained by ADPL had lapsed on 1 July 1988, but DBSL was prepared to give the first respondents time to obtain approval for the conversion.

8.Under the terms of the sale and purchase agreements between ADPL and the purchasers, the purchase price was payable progressively in accordance with a schedule set out in cll 4(1) and (2) thereof. Progress payments would fall due and payable within 14 days after the receipt by the purchasers of the vendor`s notice in writing that a particular stage of the construction had been completed or that a particular event had occurred. Up to the time when the dispute between the appellants and the first respondents arose, all notices issued to the appellants under cl 4 of the sale and purchase agreements were duly complied with.

9.On 16 December 1988, the first respondents` solicitors wrote to the appellant`s solicitors offering a discount of 20% of the purchase price in exchange for the purchasers` consent to the conversion. The appellants replied on 22 December 1988 stating that their clients wanted a discount of 30% in return for their consent. The first respondents found the offer unacceptable. Consequently, by a letter dated 5 January 1989, the first respondents appealed to the Permanent Secretary of the Ministry of National Development for a waiver of the condition that they obtain consent from the purchasers for the conversion. This appeal was rejected on the grounds that Rule 2 of the Planning (Development) Rules required the developer to obtain the purchasers` consents. Upon the first respondents making a further appeal, consent was eventually granted, and formal approval for the conversion was obtained on 31 January 1990.

10.In the meanwhile, the podium and the basement floors were completed. On 15 December 1989, temporary occupation permit (TOP) was issued by the building authority for the podium and basement floors. The first respondents` solicitors on or about 27 December 1989 gave notice to the appellants` solicitors of the issue of the TOP and asked for payment of the instalment due under cl 4(1)(k) of the sale and purchase agreements and further requested the appellants to take possession of the respective premises subject to payment of all sums then outstanding and due to the first respondents. The appellants made the payments as requested and took possession of the respective premises in early 1990.

11.On 14 March 1990, soon after the appellants had taken possession of their respective units, the appellants` solicitors wrote to the first respondents` solicitors saying that their clients had been informed that the first respondents were arranging for the conversion of the Adelphi complex to an office cum shopping complex and asked for a response to their letter of 22 December 1988, in which the appellants` solicitors had asked for the 30% discount for their clients in exchange for their clients` consent to the proposed conversion. The first respondents` solicitors replied stating that the first respondents were not agreeable to the appellants` proposal. No agreement between the first respondents and the appellants materialised in relation to the conversion.

12.About one year later, on 4 February 1991, the building control division notified the architects that the first respondents` application for certificate of statutory completion (CSC) was approved, and the CSC dated 2 February 1991 was enclosed. On 5 February 1991, the first respondents` solicitors forwarded a certified true copy of the CSC to the appellants` solicitors and requested for payment of the instalment of 5% of the purchase price falling due under cl 4(2)(a) of the sale and purchase agreement.

13.The appellants each refused to pay the instalment, and their solicitors maintained that the first respondents` notice was `bad and ineffectual`. Two reasons were given. First, the first respondents had already assigned their rights title and interests under the sale and purchase agreements to DBSL and accordingly, in the absence of any indication that the...