Hongkong & Shanghai Banking Corp v San's Rent A-Car Pte Ltd trading as San's Tours & Car Rentals

• Jurisdiction: Singapore
• Judge: Goh Joon Seng J
• Judgment Date: 18 July 1994
• Neutral Citation: [1994] SGCA 100
• Date: 29 September 1994
• Subject Matter: Relevant principles,Whether binding contract concluded,Agency,Whether purported acceptance on terms of equitable title constituted counter-offer,Land,Undisclosed principal,Third party and principal’s relations,Whether offer was to purchase legal and equitable title,Sellers equitable mortgagees of property,Sale of land,Contract,Whether receivers appointed under debenture acted as appellant's agents or agents of property owners
• Docket Number: Civil Appeal No 1 of 1993
• Published date: 19 September 2003
• Defendant Counsel: Michael Khoo and Cheah Kok Lim (Michael Khoo & BB Ong)
• Court: Court of Appeal (Singapore)
• Plaintiff Counsel: Davinder Singh and Hari Kumar (Drew & Napier)

Cur Adv Vult

This is an appeal from the judgment of Michael Hwang JC dismissing the claim by the appellants, The Hongkong & Shanghai Banking Corp (the bank) against the respondents, San`s Tours & Car Rentals (San`s), for wrongfully rescinding a contract for the sale and purchase of a piece of land being private lot A6379 part of government survey lot 235 and 51-3, mukim 11, Kranji, with buildings thereon known as No 12, Sungei Kadut Avenue, Singapore (the said property).

The brief facts

On 4 December 1978, Motor & Leasing Pte Ltd (the company) executed a debenture in favour of the bank (the said debenture) charging its then assets to secure the advances made and other facilities granted by the bank to the company.

On 26 February 1981, the Jurong Town Corporation (JTC) under the building agreement granted to the company a licence to enter upon the said piece of land for the purpose of, inter alia, constructing thereon the said factory buildings and other structures within a period of 24 months from 16 September 1980 or within such extended period as JTC might agree.

On 7 May 1981, by a supplemental deed of assignment the company assigned to the bank all its right title and interest in and to the said property under the building agreement. The bank thereby became the first equitable mortgagee of the said property.

The company subsequently defaulted in its obligations to the bank. So on 14 October 1986, the appellants appointed Mick Aw Cheok Huat (Aw) and Kaka Singh of the accounting firm of Touche Ross & Co as receivers and managers over the assets and undertakings of the company pursuant to their powers under the said debenture and three supplemental debentures.

Aw and an assistant, Ansari, met with San`s managing director, Mr James Ang Hock Hai (Ang), who was accompanied by his solicitor, Mr Michael Ong (Ong). At this meeting, Aw produced a blank letter of offer which was in the receivers` standard form and addressed to `The receivers and managers, Motor & Leasing Pte Ltd.` Following successful negotiations, the terms were typed on the standard form by the receivers and managers as an offer from San`s. After some amendments the letter of offer was signed by Ang and dated 1 September 1988. The material parts read:

12, Sungei Kadut Avenue, Singapore

We, San`s Tours & Car Rentals ... hereby offer to purchase the above JTC leasehold property for Singapore Dollars One Million and Fifty Thousand only ($1,050,000).

We understand that the following terms will apply.

...

(2) Vendor is selling as first equitable mortgagees.

...

(10) Law Society`s Conditions of Sale.

By letter of 2 September 1988, M/s Drew & Napier by facsimile accepted the offer in the following terms:

12, Sungei Kadut Avenue, Singapore

... As solicitors for and on behalf of the receivers and managers of Motor & Leasing Pte Ltd and Hongkong & Shanghai Banking Corp, we have been instructed to accept the offer contained in the said letter.

Please note that on completion our client will execute an assignment of their rights in the building agreement made between Jurong Town Corporation of the one part and Motor & Leasing Pte Ltd of the other part.

On 6 September 1988, M/s Michael Khoo & BB Ong replied on behalf of San`s:

Re: 12 Sungei Kadut Avenue, Singapore

We refer to your telefax dated 2 September 1988.

Our clients instruct us that they do not wish to proceed with the proposed purchase of the abovementioned property as they were informed by your clients, the receivers and managers, that the annual rental payable to Jurong Town is about $214,000 but they have since ascertained from Jurong Town that the annual rental is in the region of $327,000 which will be increased to about $393,000 after our clients have taken over the captioned property.

It is to be noted that the reason given by M/s Michael Khoo & BB Ong for the rescission was the alleged misrepresentation on the annual rental payable to JTC.

On 13 September 1988 M/s Michael Khoo & BB Ong raised an additional ground contending that the purported acceptance amounted to a counter-offer. Their letter to M/s Drew & Napier stated:

Additionally, your communication of the acceptance by your clients of our clients` offer which was faxed to us on 2 September 1988 at 1716 hours amounted to a counter-offer in that in our clients` original offer, nothing was mentioned about the assignment of your clients` rights in the building agreement made between Jurong Town Corporation of the one part and Motor Leasing Pte Ltd (sic) of the other part ... .

On 5 January 1989, the bank commenced proceedings claiming damages for wrongful rescission. In answer, San`s raised six defences:

(1) that there had been no contractual consensus ad idem in the offer and its purported acceptance, since they as purchasers had assumed that the vendors had legal title to the leasehold property, and their written offer of 1 September 1988 clearly was an offer to purchase the said property with legal title while the purported acceptance was for the sale of the said property on an equitable title only;

(2) that the appellants were not the party with whom the alleged contract was made, as the true vendors were the receivers and managers acting as agents of the company and not of the appellants;

(3) that the appellants had no power to sell the said property in any case since by virtue of cll 16, 17 and 18 of the said debenture only the appointed receivers and managers were entitled to sell the said property;

(4) that there had been material non-disclosure of the rent-revision clauses in the agreement with JTC;

(5) that the appellants had not accepted the respondents` repudiation; and

(6) that the receivers and managers had misrepresented the existing rent for the said property.

San`s also counterclaimed for rescission.

In the meantime pending the hearing, the bank tried unsuccessfully to sell the said property. Consequently, on 20 April 1989 the said property was surrendered to JTC.

The learned judicial commissioner found for San`s on their defence (1) above and dismissed the bank`s claim with costs. He rejected San`s defences (2) and (3) and made no finding on defences (4) and (5). On defence (6) he found that there was no misrepresentation by the receivers and managers.

The bank then appealed against the learned judicial commissioner`s dismissal of their claim on defence (1) and against the order for costs. In turn, San`s filed a respondents` notice against the rejection by the learned judicial commissioner of their defences (2) and (3).

In upholding defence (1), the learned judicial commissioner said:

As mentioned earlier, the terms of the offer letter were to purchase `the above JTC leasehold property`. The law is that, where a vendor offers to sell a property, he is offering to sell the whole legal and equitable title to the property unless the terms of the offer provide otherwise, either expressly or by necessary implication. This is trite law, and has been reaffirmed by the Court of Appeal in Chua Sock Chen v Lau Wai Ming [1992] 2 SLR 465 at pp 470-471. (See also Tate & Anor v Sihan Sadikan [1992] 1 SLR 594 .) It is, or should be, standard conveyancing practice in Singapore that, where sale agreements are entered into in respect of properties where legal title has not yet been issued, express reference is made in the sale agreement to the fact that the sale is of the equitable interest only, and that on completion there will not be a conveyance or transfer, but an assignment of right, title and interest.

In Chua Sock Chen v Lau Wai Ming & Anor , the respondents were the purchasers of an apartment under an agreement with the developers. Before the issue of the subsidiary strata certificate of title the...