Lim Chin San Contractors Pte Ltd v Shiok Kim Seng (trading as IKO Precision Toolings)

• Jurisdiction: Singapore
• Judge: Philip Pillai J
• Judgment Date: 15 May 2012
• Neutral Citation: [2012] SGHC 105
• Plaintiff Counsel: Kelvin Chia (Samuel Seow Law Corporation)
• Docket Number: Suit No 1019 of 2009(Registrar’s Appeal Nos 362 and 372 of 2011)
• Date: 15 May 2012
• Hearing Date: 04 May 2012,09 March 2012,16 April 2012
• Subject Matter: Remedying the equity,proprietary estoppel,Equity
• Published date: 09 April 2013
• Citation: [2012] SGHC 105
• Defendant Counsel: Eugene Tan and Soh Chun York (Drew & Napier LLC)
• Court: High Court (Singapore)
• Year: 2012

Philip Pillai J: Introduction

This present appeal and cross appeal arose out of the Assistant Registrar’s assessment of damages pursuant to my decision in Lim Chin San Contractors Pte Ltd v Shiok Skim Seng [2010] SGHC 243 (“the Judgment”). In the Judgment, I found that the Defendant had made out a claim for proprietary estoppel and directed that the quantum of compensation is to be assessed by a Registrar. Also, in the Judgment, I specifically directed that the parties are to be at liberty to clarify the terms of the orders I made, and to apply for any ancillary orders so as to give effect to my judgment. I note that neither party had done so. They proceeded to argue the quantum of compensation before the Assistant Registrar on their respective assumptions and both now appeal against the assessment below.

All the necessary findings of fact are set out in the Judgment and need not be repeated here for the purposes of this appeal against the assessment below.

Remedial discretion for proprietary estoppel

Once the court determines that a proprietary estoppel claim has been established, the court is faced with the unusual task of fashioning an appropriate remedy to satisfy the equity. Compared to the principles governing the assessment of damages pursuant to breach of contract, the principles governing the fashioning of an appropriate proprietary estoppel remedy are still not clear cut. This is necessarily so as the appropriate remedy would always turn on the particular facts of each case out of which the proprietary estoppels arose.

The authors of Kevin Gray & Susan Francis Gray, Elements of Land Law (Oxford University Press, 5th Ed, 2009) noted at para 9.2.95 that:

… [I]n deciding how to reinforce or concretise the estoppel claimant’s inchoate equity, the court can go much further. The upholding of a claim of proprietary estoppel opens up the court’s jurisdiction to fashion new rights for relevant parties. The general principle of relief was stated over a century ago in Plimmer v Mayor etc of Wellington (1884) 9 App Cas 699 at 714. Here the Judicial Committee of the Privy Council held that when an equity of estoppel has been raised, ‘the Court must look at the circumstances in each case to decide in what way the equity can be satisfied’. The court has an extremely wide discretion to formulate an appropriate remedy. Sometimes the remedial outcome is tantamount to specific enforcement of the original promise of rights; at the other end of the remedial spectrum the circumstances may call for nothing more than an order for money compensation or a simple injunction restraining the landowner’s exercise of his adverse rights.

[emphasis added; footnotes omitted]

While the court in each case has an extremely wide discretion to fashion a remedy, such discretion cannot be exercised arbitrarily and without reference to established principles. Lord Walker cautioned in Cobbe v Yeoman’s Row Management Ltd [2008] 1 WLR 1752 at [46] that:

[E]quitable estoppel is a flexible doctrine which the court can use, in appropriate circumstances, to prevent injustice caused by the vagaries and inconstancy of human nature. But it is not a sort of joker or wild card to be used whenever the court disapproves of the conduct of a litigant who seems to have the law on his side. Flexible though it is, the doctrine must be formulated and applied in a disciplined and principled way. Certainty is important in property transactions.

The court’s duty is to do equity and no more than equity: Cameron v Murdoch [1983] WAR 321 at 360. This means that the court, as a court of conscience, goes no further than what is necessary to prevent unconscionable conduct: Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 419. The court seeks, amongst other aims, to preserve some kind of proportionality between the detriment which has been incurred by the estoppel claimant and the remedy eventually awarded: Jennings v Rice [2003] 1 P & CR 100 at 111 (“Jennings”). In more recent cases, this approach has been referred to as the ‘minimalist approach’. Robert Walker LJ (as he then was) in Gillett v Holt [2001] 1 Ch 210 at 237 neatly explains the minimalist approach as follows:

The court’s aim is, having identified the maximum [extent of the equity], to form a view as to what is the minimum required to satisfy it and do justice between the parties. The court must look at all the circumstances, including the need to achieve a “clean break” so far as possible and avoid or minimise future friction: see Pascoe v Turner [1979] 1 WLR 431, 438-439.

In the present case, I have already found at [33] of the Judgment that an outright order to sell the unit to the Defendant is out of the question, the more appropriate remedy being an award of monetary compensation. I shall now turn to the principles that govern the quantification of such an award.

Expectation - or reliance-based approach

When awarding monetary compensation as a remedy for a proprietary estoppel claim, the court could adopt either an expectation-based approach or a reliance-based approach in quantifying the compensation, depending on the facts of each case. The difference is that the expectation-based approach looks to the plaintiff’s position had the representations been carried through, whereas the reliance-based approach looks to the plaintiff’s position had the defendant not made the representations. It is clear that while the court may take into account any of the above bases of quantifying the compensation, no single approach is determinative. The court could even arrive at an intermediate figure taking into account the different bases: Clayton v Green (1979) NZRL 139 at 140.

The issue of whether the court should address the claimant’s expectations or the losses or detriment the claimant sustained as a result of his reliance upon the representation was addressed by Sundaresh Menon JC in Hong Leong Singapore Finance Ltd v United Overseas Bank Ltd [2007] 1 SLR(R) 292 (“Hong Leong”). After undertaking a comprehensive survey of the existing authorities, Menon JC concluded (at [247]-[249]): 247 The approach taken in Jennings v Rice towards fashioning an adequate but proportionate remedy is consistent with that taken in particular by Mason CJ in the Australian High Court decision in Commonwealth of Australia v Verwayen (1990) 170 CLR 394. Mason CJ noted as follows at 413:

[T]here must be a proportionality between the remedy and the detriment which is its purpose to avoid. It would be wholly inequitable and unjust to insist upon a disproportionate making good of the relevant assumption.

248 This was followed by our Court of Appeal in LS Investment. However, it is important to note that proportionality is but one element, albeit a critical one, to be considered in fashioning the appropriate remedy. The court may consider all the relevant circumstances including the expectations the detriment, avoiding injustice to others (see, eg, Giumelli v Giumelli (1999) 196 CLR 101) and the conduct of the parties. Prof Tan Sook Yee in Singapore Land Law puts it thus at p 104:

The courts respond to the equity when it is raised, by taking into account all the surrounding circumstances, the conduct and the expectation of the parties.

249 The key to this response is flexibility so as to ensure that the remedy is appropriate to the equity in each case. It may involve giving effect to the common expectation as was the case in Lim Teng Huan v Ang Swee Chuan [1992] 1 WLR 113; or limiting the relief so as to preserve a degree of proportionality between the detriment and the relief as was the case in Gillett v Holt ([178] supra); or to award monetary relief as was the case locally in Khew Ah Bah v Hong Ah Mye [1971-1973] SLR(R) 107 and in Australia in Giumelli v Giumelli ([248] supra). It may even be found that the equity had been satisfied by enjoyment and was therefore exhausted as was the case in Sledmore v Dalby ((1996) 72 P & CR 196.

[emphasis added in bold italics]

The approach in Jennings, which adopts the fulfilment of the claimant’s expectation as a starting point, has been repeatedly endorsed in subsequent cases. However, I note that the approach has not received universal support. Professor John Mee concluded critically in his chapter “The Role of Expectation in the Determination of Proprietary Estoppel Remedies” published in Modern Studies in Property Law, Volume 5 (Hart Publishing, 2009) (Martin Dixon ed) 389 at p 415 that:

[T]he only appropriate role for expectation is as a cap on a remedy determined on the...