Lau Soon v UOL Development (Dakota) Pte Ltd

• Jurisdiction: Singapore
• Judge: Lee Seiu Kin J
• Judgment Date: 19 August 2021
• Court: High Court (Singapore)
• Docket Number: Registrar's Appeals from the State Courts Nos 21 and 22 of 2020

Lau Soon and another

and

UOL Development (Dakota) Pte Ltd and another appeal

[2021] SGHC 195

Lee Seiu Kin J

Registrar's Appeals from the State Courts Nos 21 and 22 of 2020

General Division of the High Court

Building and Construction Law — Terms — Authorised deductions from stakeholding sum — Singapore Academy of Law holding disputed sum as stakeholder — Whether court could order final apportionment or division of disputed sum

Limitation of Actions — Particular causes of action — Action for court to order final apportionment or division of disputed sum held by Singapore Academy of Law as stakeholder — Whether cause of action founded on contract — Whether cause of action time-barred

Limitation of Actions — When time begins to run — Action for court to order final apportionment or division of disputed sum held by Singapore Academy of Law as stakeholder — Whether time ran from date of vendor's service of notice of dispute

Held, dismissing the appeal:

(1) There was nothing in the SPA that imposed a duty on the Purchasers to allow the Stakeholding Sum to be released to the Vendor without court intervention. Hence, the Purchasers could not be said to have breached the SPA in this regard: at [22].

(2) The Vendor's cause of action was “founded on a contract” within the meaning of s 6(1)(a) of the Limitation Act. The relationship between a stakeholder, a purchaser, and a vendor was contractual in nature, even where the SAL was the stakeholder. Also, a stakeholder could only undertake the role of a trustee concurrently where the parties had agreed for the stakeholder to do so. Here, there was nothing in the Singapore Academy of Law (Stakeholding) Rules (1998 Rev Ed) (“the Stakeholding Rules”) that suggested that the SAL would hold stakeholding moneys in such a capacity: at [24] to [26].

(3) Generally, where a stakeholder was involved, there were two separate contracts to be considered. The first was the contract between the vendor and the purchaser for the sale of the property (“the bilateral contract”). The second was the contract between the vendor, the purchaser, and the stakeholder, for the stakeholder to keep the stakeholding moneys pending a triggering event (“the tripartite contract”). In the present case, the SPA was the bilateral contract between the Purchasers and the Vendor. Since cl 5.4 of the SPA provided that the SAL was to hold sums as stakeholder, there was a tripartite contract between the Purchasers, the Vendor, and the SAL for the SAL to retain the Stakeholding Sum pending a triggering event: at [28] and [29].

(4) The SAL's role as stakeholder was prescribed by law. The purchasers and the vendors did not have a choice of stakeholder and the SAL could not refuse to be their stakeholder. Thus, to respect the SAL's part in the three-party stakeholder relationship, the terms of the tripartite contract had to be consistent with the Stakeholding Rules in force at the time which the bilateral contract (ie, the SPA) was entered into: at [30] and [31].

(5) To reconcile the contractual nature of the purchaser-vendor-stakeholder relationship with the superimposition of the Stakeholding Rules, where the Stakeholding Rules addressed matters falling within the purpose and scope of the tripartite contract, any terms asserted to form part of the tripartite contract had to be within the bounds set by these rules. However, not all of the Stakeholding Rules fell within the scope of the tripartite contract. Where a party sought recourse to the tripartite contract, it would need to identify an applicable rule in the Stakeholding Rules that could be read as a term governing the tripartite relationship. If there were no relevant rules, it would need to formulate an applicable term and demonstrate that such term: (a) formed part of the contract; and (b) was not inconsistent with the Stakeholding Rules: at [32].

(6) The Vendor's cause of action was founded on the tripartite contract. It arose upon notification to the SAL that it disputed the Purchasers' Notice of Deduction, and six years had elapsed before the Vendor filed the originating summons. The parties' present dispute pertained to whether there was a basis for the Vendor to seek an order compelling the SAL to release the Stakeholding Sum after more than six years. Since the mechanisms for managing and resolving the present dispute were specifically and exactly provided for by r 7 of the Stakeholding Rules, there was no need for the terms of the tripartite contract to be separately formulated. Rule 7 could be interpreted and applied as a term governing the parties' contractual relationship: at [33], [36] and [38].

(7) Rule 7 of the Stakeholding Rules provided that after the purchaser had filed a Notice of Deduction and the vendor had filed a Notice of Dispute, the SAL would continue to hold the stakeholding moneys beyond the stakeholding period. Rule 7 also provided for payment out only upon the occurrence of two triggering events: (a) where the parties notified the SAL that they had reached an agreement; or (b) a court order was received by the SAL. Hence, r 7 did not contemplate a limit to the period of extension of the stakeholding period. It followed that the two triggering events would always be available to the parties and, in turn, that it was intended that no limitation period was to apply where a party sought the triggering event of a court order. Since the terms of the tripartite contract had to be consistent with r 7, the Purchasers and the Vendor had adopted the same intention when contracting. They thus contracted out of any limitation period that would apply to either party commencing an action under the tripartite contract for a court order on the final apportionment of the Stakeholding Sum: at [34] to [36] and [40].

(8) Moreover, there was no reason of policy to impose a time bar. There could be any number of reasons for a long delay in commencing the action to obtain the court order. If there were a time bar, the Stakeholding Sum would remain in the possession of a stakeholder that had no beneficial interest in the money: at [41].

(9) Hence, although the Vendor's claim was founded on a contract, there was no applicable limitation period, including that under s 6(1)(a) of the Limitation Act. As for the Purchasers, their claim was premised on their rights under the SPA, ie, the bilateral contract, and was time-barred at the time the originating summons was filed. The Vendor was entitled to the Stakeholding Sum and the issue of whether the proceedings should be continued as if begun by writ was thus a non-starter: at [42] to [44].

Case(s) referred to

Cytec Industries Pte Ltd v Asia Pulp & Paper Co Ltd [2009] 2 SLR(R) 806; [2009] 2 SLR 806 (folld)

Gribbon v Lutton [2002] QB 902 (folld)

Republic of the Philippines, The v Maler Foundation [2014] 1 SLR 1389 (folld)

Thomson Hill Pte Ltd v Chang Erh [1992] 2 SLR(R) 366; [1992] 2 SLR 769 (folld)

Facts

The appellants (“the Purchasers”) purchased a condominium unit (“the Unit”) from the respondent developer (“the Vendor”) by a sale and purchase agreement (“the SPA”). Pursuant to the SPA, the Purchasers paid a sum of $64,450 (ie, 5% of the purchase price) to the Singapore Academy of Law (“the SAL”) to hold as stakeholder (“the Stakeholding Sum”).

The Purchasers claimed that, on taking possession of the Unit, they detected a litany of defects and unsatisfactory work. They further claimed that the Vendor did not rectify all the defects. Three months before the final payment date, the Purchasers instructed the SAL to deduct the full amount of the Stakeholding Sum by serving on the SAL a “Deduction by Purchaser (Form 3)” (“Notice of Deduction”). Subsequently, the Vendor disputed the attempted deduction and served an “Objection by Vendor to Deduction (Form 3A)” on the SAL (“Notice of Dispute”).

Thereafter, the Vendor commenced an action by way of an originating summons, seeking, inter alia, an order for the Purchasers to authorise the SAL to release the Stakeholding Sum to the Vendor. The Purchasers resisted the application on two grounds. Firstly, they claimed that the Vendor was not entitled to the Stakeholding Sum because it had failed to meet its obligations under the SPA to rectify defects in the Unit and throughout the development. Secondly, they argued that...