Ho Kon Kim v Betsy Lim Gek Kim and Others

• Jurisdiction: Singapore
• Judge: Lai Siu Chiu J
• Judgment Date: 16 April 2001
• Neutral Citation: [2001] SGHC 75
• Court: High Court (Singapore)
• Published date: 15 March 2013
• Year: 2001
• Plaintiff Counsel: James Ponniah with Leong Sue Lynn (Wong & Lim)
• Defendant Counsel: M Dass (M Dass & Co),Tan Kok Quan SC with Chia Boon Teck (Tan Kok Quan Partnership),Leslie Chew SC with Lionel Tay & Esther Ling (Khattar Wong & Partners),Chelva Rajah SC with Chew Kei-Jin (Tan, Rajah & Cheah)
• Citation: [2001] SGHC 75

JUDGMENT:

Grounds of Judgment

1. At the conclusion of the trial, I dismissed the plaintiff's claim against all three (3) defendants. Subsequently, at a hearing pursuant to 0 59 r 8(2) of the Rules of Court, I ordered that the costs payable by the plaintiff to the second and third defendants were to be borne by the plaintiff's solicitors James Ponniah and Wong Ann Pang personally but, the costs of the first defendant would be borne by the plaintiff herself. The plaintiff as well as the aforesaid solicitors have now appealed against my decision (in Civil Appeals Nos. 164 and 167 of 2000 respectively).

The facts

2. The plaintiff was at the material time, the owner of a piece of land with a house standing thereon, situated at No. 124, Branksome Road (the property) with an area of 15,173 sq ft. She was widowed in June 1989 and has amongst her six (6) children, sons Robert and Leslie and a daughter, Jeanette. She had been residing at the property since it was purchased by her late husband Foo Chee Guan in 1947.

3. In 1992, at Robert's request, the plaintiff mortgaged the property to Keppel Finance Limited (Keppel) to obtain credit facilities for him/his businesses. In 1996, Robert informed her that he had defaulted in servicing the interest on the facilities; as such Keppel intended to recall the loan they had extended to him. The plaintiff consulted her lawyer Victor Wong Ann Pang (WAP) who informed her that if Keppel foreclosed on the property as mortgagees, the price that could be realised may be less than if the property was sold in the open market. Consequently, the plaintiff was advised to sell the property before Keppel took any action.

4. In April/May 1996, Jeanette brought Betsy Lim (the first defendant) to see the plaintiff, together with Wee Woon Chuan Joseph (Wee) the first defendant's husband. At that time, both the first defendant and Wee were directors of a property company known as Derby Development Pte Ltd (Derby). The plaintiff was informed that Derby was interested in developing the property jointly with the plaintiff.

5. At a preliminary meeting held on 25 May 1996, the plaintiff asked for $6m for the property in addition to one (1) of the three (3) bungalows that Derby proposed to erect thereon after the existing house had been demolished. The plaintiff was told it would cost about $2m to erect three (3) bungalows of reasonably good finish. Subsequently, the first defendant counter-offered $4.2m for the property and added that the plaintiff had to mortgage the property for the parties' joint development. The plaintiff decided she did not want to participate in redeveloping the property. In July 1996, Derby offered to buy of the property from the plaintiff for $4.2m in addition to which, the company would construct a bungalow on the remaining for her costing at least $700,000; the plaintiff accepted the offer.

6. On or about 15 July 1996, the plaintiff instructed WAP to prepare the option for her in favour of Derby. She further instructed him to ascertain from Keppel the redemption sum as she intended to redeem the property on 1 November 1996. On 17 July 1996, the first defendant paid to the plaintiff who duly receipted, the sum of $88,000 as deposit. On 25 July 1996, the plaintiff gave written authorisation to Derby to apply for redevelopment of the property.

7. On 4 September 1996, the plaintiff was informed by the first defendant/Wee that Derby could not obtain financing for purchase and redevelopment of of the property. However, she was also told that the first defendant had been offered a loan by Overseas Chinese Banking Corporation (OCBC) to finance the purchase as well as to complete the redevelopment. The plaintiff was informed that the terms of OCBC's construction loan of $2,200,000 (the construction loan) ensured that the monies were utilised solely for the erection of three bungalows on the property. Consequently, the first defendant proposed that she replace Derby as the purchaser. The plaintiff, after consulting WAP, accepted the first defendant's proposal. WAP made the necessary amendments to substitute the first defendant for Derby in the draft option. OCBC as well as the first defendant, were represented by William Lai & Alan Wong (the second defendants) and in particular by Jennifer Leong (JL).

8. Later, when she discussed the draft option with WAP, the plaintiff was told that JL/the second defendants would not agree to the inclusion of a clause in the draft option allowing the plaintiff to lodge a caveat which would take precedence over the mortgage of OCBC. WAP informed the plaintiff that he would suggest a revised clause to the second defendants to replace the unacceptable clause but warned her that if she insisted on the inclusion of a caveat clause, the financing from OCBC may not go through. As the plaintiff did not want to jeopardise the sale or delay the completion beyond November 1996, she agreed to compromise. Hence, the option dated 24 September 1996 (the Option) contained as a Special Condition the following clause which was what was ultimately acceptable to OCBC/the second defendants:

19. The purchaser shall obtain consent from the paramount mortgagee to allow the Vendor to lodge a caveat over the Vendor's Unit as soon as the private lot is allotted.

Clause 18 of the Option had defined 'the Vendor's Unit' as any one (1) of the three (3) units of bungalows which the first defendant would erect on the property (approved by the relevant authority) chosen by the plaintiff, which land area should not exceed 5,030 sq ft and in any event not exceeding 5% of the land area of the other two (2) units.

9. Contrary to the agreement reached between the plaintiff and the first defendant/Wee and contrary to the plaintiff's instructions to him (see N/E 25), WAP did not draft the terms of the Option to reflect a sale by the plaintiff of only of the property. Instead, the heading of the Option (see 1AB101) referred to No. 124 Branksome Road, Singapore 439640 and in the body of the Option, the plaintiff offered to sell to the first defendant the above mentioned property upon the terms set out below. Neither was there any clause in the Special Conditions to restrict the sale by the plaintiff to of the property. Similarly, in the statutory declaration (see 1AB112) made by the plaintiff on 16 October 1996 (required of transferors for every sale or disposal of immovable property after 15 May 1996), there was no mention that she was only transferring of the property to the first defendant.

10. The first defendant exercised the Option on 14 October 1996 (well before the expiry date of 31 October 1996) by paying to the plaintiff's solicitors the sum of $332,000 (being the balance 10% of the purchase price [$4.2m] less the deposit paid of $88,000). On 15 November 1996, the first defendant completed her purchase by paying the balance of $3,773,050.16 of the purchase price in exchange for an executed Transfer from the plaintiff together with a discharge of the mortgage of Keppel. The property was mortgaged to OCBC by the first defendant in turn. In the Transfer, under the column Property Address it was stated:

(a) the whole.

(b) No. 124, Branksome Road, Singapore 439640.

In item (F) of the Transfer headed CONSIDERATION (see 1AB140) it was stated:-

Transferor ACKNOWLEDGES RECEIPT of Singapore dollars four million and two hundred thousand only ($4,200,000) cash consideration and one (1) detached house to be constructed by the Transferee for the Transferor (emphasis added).

while in the column (D) headed PRIOR ENCUMBRANCES, the word NIL appeared. In cross-examination (N/E47), the plaintiff said she understood the word Nil to mean no obstructions/no other interests on the property.

11. On or about 1 July 1997, the plaintiff received a copy of the grant of written permission dated 19 June 1997 issued by the Urban Redevelopment Authority (URA) to Derby for the proposed erection of 3 units of 2-storey detached dwelling houses each with a basement. Noting that Derby and not the first defendant was named by URA as the developer, the plaintiff through WAP raised her objections to the first defendant as which result the latter agreed to apply to the relevant authorities to be named as the developer in place of Derby.

12. On 17 July 1997, the plaintiff vacated the property as requested by the first defendant; WAP duly informed the second defendants of the fact and requested the latter for OCBC's permission to lodge a caveat on the plot (plot no. 3) the plaintiff had previously selected.

13. Pursuant to a demolition permit dated 20 August 1997, the existing house on the property was demolished in October 1997 and piling/construction works started in the following month, after the issuance of the permit to carry out building works by the Public Works Department on 13 October 1997. Under cl 20 of the Option, the first defendant had to deliver to the plaintiff plot no. 3 with a bungalow within 16 months from obtaining written permission to commence works. Notice of grant of written permission was given on 1 October 1997 (see 1AB223) by the Chief Planner of the URA. Hence, the deadline to the first defendant to deliver the plaintiffs bungalow would be 31 January 1999 and not December 1998 as pleaded in the statement of claim.

14. In July and August 1997, at the plaintiff's request, her solicitors wrote to the second defendants for OCBC's consent (and for a site plan) to lodge her caveat; however no consent was forthcoming from OCBC. Hence, on 11 June 1998, on the plaintiff's instructions, WAP lodged a caveat CV/42087G (the caveat) on the property without any site plan. It was then the plaintiff discovered, from a title search conducted by her solicitors, that on 9 May 1997, the mortgage of OCBC had been discharged and, the property had been re-mortgaged to Sime Bank Berhad (which subsequently changed its name to RHB Bank Berhad [the third defendants]). The plaintiff...