Harris Hakim v Allgreen Properties Ltd

• Jurisdiction: Singapore
• Judge: Chao Hick Tin JA
• Judgment Date: 13 September 2001
• Neutral Citation: [2001] SGCA 61
• Date: 13 September 2001
• Subject Matter: Default by purchaser in payment,Clause allowing developer to forfeit 20% of purchase price,'Without prejudice to any other rights available to the vendor at law or in equity',Standard form sale and purchase agreement of condominium unit,Purpose of Housing Developers Rules,Whether developer can claim sums falling outside the clause,Housing Developers Rules (Cap 130, R 1, 1990 Ed) Form E cl 5(3),Land,Conveyance,Housing Developers Rules (Cap 130, R 1, 1990 Ed) Form E cll 5(3)(b), 5(3)(c) & 5(4),Words and Phrases,'other rights',Sale and purchase of property,Damages,Breach of sale and purchase agreement,Payment of purchase price in instalments,Measure of damages,Housing Developers Rules (Cap 130, R 1, 1990 Ed) Form E,Right of forfeiture without prejudice to other rights available at law or in equity
• Docket Number: Civil Appeal No 600013 of
• Published date: 19 September 2003
• Defendant Counsel: BV Peter and R Doraisamy (Ramdas & Wong)
• Court: Court of Appeal (Singapore)
• Plaintiff Counsel: George Pereira (instructed) and Serene Chan Poh Choo (Tan Lee & Choo)

Judgment:

Cur Adv Vult

The facts

1. The relevant facts giving rise to the appeal now before us are as follows. The appellant, Mr Harris Hakim ('Mr Hakim') entered into a sale and purchase agreement dated 14 May 1996 ('the Agreement') with the respondents, Allgreen Properties Ltd ('Allgreen'), whereby Mr Hakim agreed to purchase from Allgreen an apartment in a private housing development called 'Springdale Condominium' which was then being developed by Allgreen. The Agreement was in the form prescribed as Form E by the Housing Developers Rules (1990 ed) and incorporated within it the Singapore Law Society's Conditions of Sale 1994, in so far as those conditions were applicable to the sale and were not varied by or were not inconsistent with the terms of the Agreement.

2. The purchase price for the apartment was $1,165,000, which was to be paid by instalments at different stages of the construction as provided in cl 3 of the Agreement. It was provided by cl 5(1) of the Agreement that, in the event that Mr Hakim defaulted in payment of any instalment for more than 14 days, Allgreen would be entitled to charge interest at the specified rate as provided in cl 5(2). By cl 5(3), the Agreement further provided that if Mr Hakim should default in payment of any instalment for more than 14 days, Allgreen would be entitled, at their option on giving not less than 21 days' notice to Mr Hakim, to treat the Agreement as having been repudiated and, unless in the meanwhile the unpaid instalments and interest were paid up, upon the expiration of the 21 days, the Agreement would be annulled, and in such event, without prejudice to any other rights available to Allgreen at law or in equity, Allgreen would be entitled to certain rights as provided in paragraphs (a), (b) and (c) of cl 5(3). We shall refer to the terms of this clause in detail in a moment.

3. About two years later, Mr Hakim ran into financial difficulties, and found it difficult to keep up with the instalment payments. By that time, the total amount of instalments Mr Hakim had paid to Allgreen under the Agreement amounted to $669,000. By a letter dated 28 July 1998, written by his solicitors to Allgreen, he requested the latter to serve him a notice under clause 5 of the Agreement and thereafter to exercise their rights under cl 5(3): forfeit the sum of $233,000, which is 20% of the purchase price of $1,165,000, deduct it from the sum of $699,000, being the total of the instalments previously paid, and refund the balance thereof to him. Allgreen, however, refused to accede to this request.

4. Mr Hakim continued to default in the payment of further instalments. Finally, on 19 August 1999, Allgreen decided to invoke cl 5(3) of the Agreement. Allgreen's solicitors sent a notice to Mr Hakim pursuant to cl 5(3) which, so far as relevant, read as follows:

We refer to the above matter and note that the progress payments under clauses 3(1)(h) and 3(3)(a) of the Sale and Purchase Agreement were due on 5 November 1998 and 30 April 1999 respectively.

In view of the above, we are instructed by our clients to and do hereby give to your client(s) notice pursuant to clause 5(3) of the Sale and Purchase Agreement that unless your client(s) pay the unpaid instalment(s) and interest within twenty-one (21) days from the date hereof, the said Sale and Purchase Agreement shall at the expiration of the said twenty-one (21) days be annulled and our clients shall, without prejudice to any other rights available to them at law or in equity proceed in accordance with clause 5(3) of the said Sale and Purchase Agreement.

5. As might have been expected, Mr Hakim was unable to comply with the notice. On 6 December 1999, Allgreen's solicitors sent Mr Hakim a further letter referring to the previous notice and stating, among other things, the following:

3 In accordance with Condition 29 of the Singapore Law Society's Conditions of Sale 1994, without prejudice to any other rights or remedies available to our clients at law or equity, the deposit paid by your client has been forfeited and retained for our client's own benefit.

It is common ground that the reference in the letter to 'Condition 29 of the Singapore Law Society's Conditions of Sale 1994' was an error and that the correct reference intended was 'clause 5(3)(c) of the Agreement'. Nothing however turns on this error.

6. Mr Hakim's apartment was subsequently resold by Allgreen. By a letter dated 23 March 2000, Allgreen's solicitors informed Mr Hakim that out of the total amount of the instalments paid up by him, Allgreen would be refunding him the sum of $399,259.87, and provided the following computation showing how the sum of $399,259.87 was arrived at:

1.	Original Sale Price	$1,165,000.00
2.	New Sale Price	$ 900,000.00
3.	Shortfall	$ 265,000.00
Add	Outstanding Interest	$ 20,896.30
	Legal Fees	$ 350.20
	Outstanding Maintenance Charges	$ 2,532.54
	Agent's Commission	$ 9,000.00
	Outstanding Property Tax	$ 1,652.09
	Auction/Valuation Charges	$ 309.00	$299,740.13
4.	Off-set amount paid by original purchaser to date (60%)		$699,000.00
	Refund Amount		$399,259.87

7. Mr Hakim disputed this computation. While he accepted that Allgreen were entitled to claim for the outstanding interest, maintenance charges and property tax, these being accrued debts due to Allgreen, and to claim the sum of $223,000 being the 20% of the purchase price that was forfeited under cl 5(3) of the Agreement, he disputed that Allgreen were entitled to claim for legal fees, the agent's commission incurred during the sale, the auction/valuation charges, as well as the shortfall arising from the resale. His computation of the refundable amount was as follows:

Total payment by Mr Hakim	$699,000.00
Less 20% pursuant to clause 5(3)(c)	$233,000.00
Outstanding interest	$20,896.30
Outstanding maintenance charges	$2,532.54
Outstanding property tax	$1,652.09
Amount to be refunded:	$440,919.07

8. Allgreen were unwilling to refund $440,919.07 as requested by Mr Hakim. They refunded only $399,259.87, which was accepted Mr Hakim without prejudice to his right to claim the balance. Mr Hakim therefore commenced proceedings in Originating Summons No 896 of 2000 ('the present action'), seeking a determination by the Court as to the amount to be refunded by Allgreen to him, and claimed the balance sum of $41,659.20.

Decision below

9. At the hearing below, Mr Pereira, counsel for Mr Hakim submitted that by virtue of the words: 'without prejudice to any other rights available to [Allgreen] at law or in equity', upon the termination of the contract under cl 5(3), Allgreen were entitled to elect either of the two courses:

(i) to re-sell the property and pursue a claim against Mr Hakim for unliquidated damages at common law, or

(ii) to proceed under cl 5(3) by, inter alia, forfeiting 20% of the purchase price.

In support of this construction of cl 5(3), counsel relied on three cases decided in England: Tally and Anor v Wolsey-Neech (1979) 38 P&CR 164; Wallace-Turner v Cole (1983) 46 P&CR 164 and Sakkas and Anor v Donford Ltd (1983) 46 P&CR 290. We shall turn to these cases shortly. Reverting to the instant case, Mr Pereira submitted that, as Allgreen had elected to exercise their rights under cl 5(3), they would be entitled only to such compensation as cl 5(3)(b) and (c) allowed, and were not entitled to recover, in addition, any damages at common law. Any loss arising from the re-sale above and beyond the forfeited sum and the interest under cl 5(3)(b) and (c) was irrecoverable.

10. On the other hand, Mr Peter, counsel for Allgreen submitted that the right to invoke cl 5(3) and forfeit 20% of the purchase price was exercisable, in the words of cl 5(3), 'without prejudice to any other rights available to [Allgreen] at law or in equity'. It was thus submitted that in the instant case the 20% forfeited was insufficient to cover Allgreen's losses arising from the resale, and therefore on the basis of those words in cl 5(3) they were entitled to recover from Mr Hakim the amount of loss they had sustained over and above the 20%.

11. Allgreen's contention was accepted by the judge. He held at 9 as follows:

9 On the face of it, cl 5(3) gave Allgreen Properties the right to forfeit the 20% as well as pursue other rights they may have against HH [Mr Hakim] for the breach of contract. And, in the absence of any restrictive words in cl 5(3), these other rights must include Allgreen Properties' right to damages (by way of expenses in the re-sale and any drop in the sale price) should those damages exceed the 20% forfeited by Allgreen Properties under cl 5(3).

The judge rejected the three cases relied upon by Mr Pereira on the ground that 'the context and content of the conditions' in those cases were materially different from the provisions of cl 5(3), and the courts in those cases held that those conditions provided for liquidated damages, and that the parties, having pre-agreed on the quantum of damages, were precluded from claiming additional amounts as damages. Turning to cl 5(3) the judge said:

11 Clause 5(3) in our present Agreement does not appear to be a clause setting out the liquidated damages payable on breach. Whilst cl 5(3) entitled Allgreen Properties to forfeit 20% of the purchase price, it does not say, nor can it readily be inferred from the context, that this 20% is to be treated as liquidated damages. Indeed, cl 5(3) leaves the question of damages for breach open because the right to forfeit the 20% is prefaced by the words "without prejudice to any other rights available to him at law or in equity". These words appear to have the effect of preserving the right of Allgreen Properties to recover damages or seek other remedies at common law or in equity should Allgreen Properties suffer damages in excess of...