Ho Kian Siang and Another v Ong Cheng Hoo and Others

• Jurisdiction: Singapore
• Judge: Lee Seiu Kin JC
• Judgment Date: 11 July 2000
• Neutral Citation: [2000] SGHC 136
• Docket Number: Suit No 600017 of 2000
• Date: 11 July 2000
• Year: 2000
• Published date: 19 September 2003
• Plaintiff Counsel: Molly Lim SC and Belinda Ang (Peter Low Tang & Belinda Ang)
• Citation: [2000] SGHC 136
• Defendant Counsel: Anthony Lee and Lynette Chew (Bih Li & Lee),Sreenivasan and Derrick Wong (Derrick Ravi Partnership)
• Court: High Court (Singapore)
• Subject Matter: Assessment of damages,Date of assessment -Plaintiff claiming for specific performance only and electing for damages only at trial,Remedies,Whether damages to be assessed at time of election, time of breach, or other time,Contract,Damages

: In this action the first and second plaintiffs (`the plaintiffs`) seek an order for specific performance in respect of a contract for sale and purchase of 39 Walmer Drive (`the property`) entered into between the plaintiffs and the first and second defendants (`the defendants`) on 22 March 1999. The third defendants (`the bank`) were the mortgagees of the property at the material time. The defendants failed to complete on the contractual date for completion, viz 29 June 1999 and that situation remained up to the first day of trial. The primary reason for this was the inability of the defendants to secure a discharge of their mortgage. This was because the outstanding sum owed to the bank was in excess of the sale price and the defendants did not have funds to pay the difference. In addition, one of the conditions of completion was that the temporary occupation permit (`TOP`) for the property must have been issued and this had not been done on 29 June 1999. The TOP was finally obtained sometime in November 1999 and after that date it was no longer an impediment to completion.

The defendants had been in default under their mortgage to the bank since mid-1998. On 21 December 1999 the bank took out OS 1963/99 (`the OS`) in which one of the prayers was for an order for the defendants to deliver up to the bank the property and an adjoining property known as 39A Walmer Drive. The plaintiffs, having an interest in the matter, applied for and obtained an order joining them as defendants in the OS.

On the first day of trial, 29 May 2000, the plaintiffs entered into a settlement agreement with the bank in this action and the OS. In respect of the OS the plaintiffs withdrew their opposition and with the defendants` consent, I gave an order in terms of the prayers therein. As mortgagees in possession, the bank agreed to sell the property to the plaintiffs for $1.7m. The defendants agreed with the bank that they would not object to the sale of the property for this sum. With that, the plaintiffs discontinued their claim against the bank in this suit. By this settlement, the plaintiffs have effectively abandoned their claim for an order for specific performance and they asked the court to grant them damages in lieu thereof.

The issue

The defendants do not dispute that they are liable to the plaintiffs in damages. As a result of the settlement between the plaintiffs and the bank on the first day of trial, the issues before me have been reduced to just the question of the quantum of damages that the defendants are liable for. The plaintiffs contend that damages should be assessed as at the date on which they elected for damages, ie 29 May 2000. The defendants submit that damages should be assessed as at the following dates:

(i) 29 June 1999, which is the contractual date for completion and the date the contract was breached; alternatively,

(ii) August or September 1999 when the defendants orally informed the plaintiffs that they would not be able to complete due to their inability to discharge the mortgage to the bank, ie the date when the contract was `lost`; alternatively,

(iii) December 1999 or January 2000 when the defendants informed the plaintiffs of this in writing.

Under the sale and purchase agreement of 22 March 1999, the price of the property was $1.318m. Before me the parties agreed that the market value of the property on three key dates were as follows:

(a) $1.45m on 29 June 1999;

(b) $1.50m in December 1999/January 2000;

(c) $1.65m on 29 May 2000.

If the plaintiffs` contention is upheld, then damages would be the difference between $1.65m and the purchase price of $1.318m, viz $332,000. If any of the defendants` contentions are correct, damages would range from $132,000 to $182,000.

Interim orders

Judgment was reserved at the end of the trial. However, as the defendants had admitted that they were liable to the plaintiffs in damages for at least $132,000, I made the following interim orders:

(i) that there be judgment against the defendants for $132,000;

(ii) that the defendants refund to the plaintiffs` solicitors the deposit of $13,180;

(iii) that the defendants` previous solicitors refund to the plaintiffs` solicitors the deposit of $118,620.

The facts

In 1990 the defendants purchased a plot of land with a detached house then known as 39 Walmer Drive. They subsequently decided to re-develop it by constructing a pair of semi-detached houses on the land and sub-dividing the title. They obtained various loans from the bank and mortgaged the land as security. Unfortunately for them their business suffered in 1998. They encountered cash flow problems and in June 1998 defaulted on the payment of the loan instalments. This was rectified after the bank issued a letter of demand. However the defendants` problems did not stop there. They had some difficulty in paying their building contractor and the bank had to step in and issue a guarantee in order to ensure that the work proceeded. The defendants say that they explained their problems to the representatives of the bank and were told to sell the houses which were still under construction. In any event at some point, the defendants decided to sell one of the houses to reduce their financial burden.

In early 1999 the plaintiffs were looking for a property. They chanced upon the property under construction and made inquiries to the foreman on the site. They were referred to the defendants and after some negotiation, principally as to price, the defendants granted the plaintiffs an option to purchase on 9 March 1999. The plaintiffs exercised this option on 22 March by payment of the usual deposit. Under the contract, completion was fixed on 29 June 1999 and one of the conditions was that the TOP would have been obtained by then.

The defendants` solicitors at the time, M/s Sim Mong Soo & Co (`SMSC`) wrote to the bank on 22 March 1999 to inform them of the sale and to request, among other things, for a redemption statement for the mortgage. On 5 April M/s Foo & Quek (`FQ`) replied on behalf of the bank and included a redemption statement that required the payment of the full amount outstanding under the mortgage, viz about $3m. As this sum was secured by the mortgage over the entire land and the two buildings, of which the defendants were selling only one half to the plaintiffs, SMSC wrote to FQ to remind them of this and to seek a reduced redemption sum in order to be able to complete the sale. In their letter to FQ dated 7 May, which was forwarded to SMSC on 10 May, the bank stated that they would agree to the sale subject to two conditions:

(i) payment of a sum of at least $1.7m, or a sum sufficient to reduce the security ratio to 80% of their valuation of the remaining unit; and

(ii) placement of a fixed deposit of about $90,000 as security for the guarantee issued in favour of the building contractor.

In her affidavit, the second defendant said that she and the first defendant subsequently instructed SMSC to inform the plaintiffs `at the earliest opportunity` that they were unable to complete. During cross-examination the second defendant elaborated that she told her solicitor, Sim Mong Soo (`Sim`), that they were facing financial problems and were unable to pay the difference between the balance payable under the sale contract and the redemption sum required by the bank. She said that she instructed Sim to tell the plaintiffs` solicitors that they could not complete the transaction. However there is no record of any document emanating at that time from SMSC, or from the defendants for that matter, in which the plaintiffs or their solicitors were advised that the defendants were unable to complete or would not complete. The first document that hinted of this only surfaced some seven months later, on 6 January 2000. I will deal with that later. Returning to May 1999, the evidence from the contemporary documents points to quite the opposite, ie that the defendants were preparing for completion. On 2 June, SMSC wrote to the plaintiffs` solicitors handling the purchase, M/s RCH Lim & Co (`RCHL`), forwarding the documents of title with a request to return one copy of the Schedule of Deeds duly signed. This letter was copied to the defendants. SMSC on 3 June wrote to the CPF Board giving notice of redemption of the CPF charge on the property and requesting the title deeds and a redemption statement as at 29 June. Again this letter was copied to the defendants. However there is no correspondence from SMSC after this until after the contractual completion date of 29 June. They failed to reply to inquiries from RCHL, FQ and the solicitors for the CPF Board, and the letters grew increasingly anxious as the completion date neared.

On 29 June, RCHL wrote to SMSC to state that the plaintiffs were ready and willing to complete the purchase on that day and pointed out the provision in the contract on interest for late completion. SMSC did not reply to this letter. RCHL wrote another letter to SMSC dated 16 July, which reads as follows:

We refer to our letter dated 29 June 1999 which we have not as yet heard from you thereon.

Could you please let us know when your clients expect to get the temporary occupation permit for the above building and also the separate certificate of title for the property so that completion can take place. Your early reply would be appreciated.

This letter suggests that the plaintiffs had instructed RCHL that the defendants would complete upon obtaining the TOP and a sub-division of the land.

On 30 July 1999, after a long silence, SMSC wrote a rather puzzling letter to RCHL. It states as follows:

We have sent all letters to our clients for their instructions.

We have also reminded them of the completion date. However, we have yet to hear from them. We will let you know their reply on your letters as soon as we have heard from them.

From the documents up to this stage,...