Lim Hoe Heng v Poh Choon Kia

• Jurisdiction: Singapore
• Judgment Date: 18 October 2012
• Date: 18 October 2012
• Docket Number: Civil Appeal No 18 of 2012
• Court: Court of Appeal (Singapore)

Lim Hoe Heng

Plaintiff

and

Poh Choon Kia and another

Defendant

[2012] SGCA 58

Chao Hick Tin JA

,

Andrew Phang Boon Leong JA

and

Sundaresh Menon JA

Civil Appeal No 18 of 2012

Court of Appeal

Contract—Breach—Vendor causing delay to completion—Whether delay constituted default pursuant to condition 8.2 Law Society's Conditions of Sale 1999—Condition 8.2 Law Society's Conditions of Sale 1999

Contract—Sale of land—Vendor failing to complete sale by estimated date of completion—Whether there was date fixed for completion in light of Housing and Development Board's resale processes

Damages—Measure of damages—Purchasers claiming late completion interest payable as liquidated damages under condition 8.2 Law Society's Conditions of Sale 1999—Whether liquidated damages were applicable in light of construction of contract—Condition 8.2 Law Society's Conditions of Sale 1999

Land—Conveyance—Obligation to complete in absence of fixed date of completion—Whether there was obligation to complete within ‘reasonable time’

The appellant, an undischarged bankrupt, granted to the respondents an option (‘the Option’) to purchase his Housing and Development Board flat (‘the Flat’). The respondents exercised the Option on 21 January 2011. Clause 12 of the Option provided that unless extended by the Housing and Development Board (‘HDB’), the date of completion of the sale would be within eight weeks from the date of the HDB's first appointment (‘the First Appointment’) with the buyer and seller of the Flat.

The sale was subject to the approval of the HDB, and cl 15.2 of the Option provided that specific performance, damages and/or other remedy would be open to the non-defaulting party if the HDB's approval was not obtained before the date of completion due to one party's default. The Option also incorporated the Law Society's Conditions of Sale 1999 (‘the LSCS’). In particular, condition 8.2 of the LSCS provided that where a delay in completion was due solely to the vendor's fault, the vendor was liable to pay late completion interest as liquidated damages.

At the First Appointment with the HDB on 25 February 2012, the parties were informed of the HDB's two-stage resale process consisting of the prior ‘Resale Approval Stage’ and the subsequent ‘Completion of Resale Stage’. The HDB's letter to the parties on the same day stated the estimated dates of approval and completion of the resale to be 1 March 2011 and 8 April 2011 respectively. In particular, the letter stated that one week before the scheduled date of completion, the HDB would inform the parties by letter of the appointment date to complete the sale.

HDB's approval of the sale was not obtained by 8 April 2011 because the appellant failed to obtain the signed consent of his wife (‘Kang’) to the sale. This was one of the HDB's resale requirements. This requirement was only waived on 31 May 2011. The appellant's wife had also lodged a caveat on the Flat which the appellant was unable to remove due to his legal incapacities as a bankrupt. On 19 April 2011, upon the HDB's enquiry, the respondents opted to defer the sale rather than cancel it.

On 6 September 2011 the respondents commenced proceedings against the appellant and Kang seeking, inter alia, specific performance of the sale, late completion interest payable as liquidated damages pursuant to condition 8.2 of the LSCS, and unliquidated damages to be assessed by the court. It was argued that the HDB's approval had not been obtained by reason of the appellant's default in not obtaining Kang's consent to the sale, resulting in a breach of the contractual obligation to complete by 8 April 2011.

The appellant argued that 8 April 2011 was only an ‘estimated’ completion date, and absent the HDB's confirmation of a fixed date, there was no fixed date of completion. As such, there was no obligation to complete the sale by a specific date. It was also argued that condition 8.2 of the LSCS did not apply in the circumstances.

The judge in the High Court (‘the Judge’) found the appellant liable for late completion interest payable as liquidated damages pursuant to condition 8.2 of the LSCS, and ordered completion of the sale, which eventually took place on 29 February 2012.

The appellant appealed against the part of the Judge's orders relating to the payment of late completion interest and costs.

Held, allowing the appeal:

(1) There was no fixed date for completion of the sale of the Flat. Clause 12 of the Option fixed no such date as it simply provided for a period of eight weeks after the First Appointment within which completion could take place. The last day of such a stipulated period could not be taken to be the day fixed for completion. Neither had the HDB fixed a completion date. The 8 April 2011 date was presented by the HDB as an estimate, and was clearly tentative especially considering the HDB's two-stage resale process wherein the Completion of Resale Stage was contingent on the HDB's approval being granted at the Resale Approval Stage: at [25], [26] and [40].

(2) In the absence of a fixed date for completion, the law imposed on the parties the obligation to complete the sale within a reasonable time. The contractual period of eight weeks after the First Appointment and the HDB's estimated completion date of 8 April 2011, while not contractually binding, were relevant factors in determining what such reasonable time would be. In the circumstances, there had been an unreasonable delay in the eventual completion of the sale on 29 February 2012: at [30].

(3) The appellant had a duty to meet the HDB's requirement of obtaining spousal consent to the sale. His failure to obtain Kang's consent amounted both to a breach of contract as well as a ‘default’ for the purpose of cl 15.2 of the Option. The principles in In re Bayley-Worthington and Cohen's Contract[1909] 1 Ch 648 relating to the concept of ‘default’ were not relevant to the present case: at [34].

(4) The remedies provided under cl 15.2 of the Option included damages for delay in completion of the sale, and even late completion interest payable as liquidated damages under condition 8.2 of the LSCS. The application of the clause was not restricted to situations where a sale was cancelled: at [38].

(5) Liquidated damages were a contractual creation, the entitlement to which depends on the terms of the contract. As a matter of construction, the application of condition 8.2 of the LSCS required that there be a ‘date fixed for completion’ of the sale. Absent such a date fixed for completion, condition 8.2 of the LSCS did not apply. Accordingly, the respondents were not entitled to claim late completion interest under condition 8.2 of the LSCS: at [39] and [40].

(6) In the absence of a fixed date of completion, it was still open to the respondents to claim unliquidated damages under general law, subject to proof of loss and their duty to mitigate. However, the respondents had failed to prove the expenses they purportedly incurred as a result of the appellant's breach of his duty to complete within a reasonable time: at [51], [52] and [55].

(7) The respondents' agreement to defer the sale and the HDB's approval of the same operated to indefinitely extend the period for completion of the sale. As the respondents had not been entitled to claim late completion interest under condition 8.2 of the LSCS at the point at which they agreed to defer the sale, they could not be said to have gained an additional right to do so simply by their agreement to defer the sale: at [44] and [45].

Alivestone Investment Pte Ltd v Splendore Investments Pte Ltd [1996] 1 SLR (R) 678; [1996] 2 SLR 597 (refd)

Bayley-Worthington and Cohen's Contract, Re [1909] 1 Ch 648 (refd)

Chan Ah Beng v Liang and Sons Holdings (S) Pte Ltd [2012] 3 SLR 1088 (distd)

Chinnock v Hocaoglu [2009] 1 WLR 765 (folld)

Ken Glass Design Associate Pte Ltd v Wind-Power Construction Pte Ltd [2003] 1 SLR (R) 34; [2003] 1 SLR 34 (distd)

Lee Christina v Lee Eunice [1993] 2 SLR (R) 644; [1993] 3 SLR 8 (refd)

Lian Soon Construction Pte Ltd v Guan Qian Realty Pte Ltd [1999] 3 SLR (R) 518; [2000] 1 SLR 495 (refd)

Lie Kie Siang v Han Ngum Juan Marcus [1991] 2 SLR (R) 511; [1992] 1 SLR 476 (refd)

Peak Construction (Liverpool) Ltd v Mc Kinney Foundations Ltd (1970) 1 BLR 111 (refd)

Raineri v Miles [1981] AC 1050 (folld)

See Bee Hoon v Quah Poe Hoe [1989] 1 SLR (R) 623; [1989] SLR 639 (refd)

Toh Teck Sun v Mandarin Gardens Pte Ltd [1988] 1 SLR (R) 294; [1988] SLR 390 (refd)

Travista Development Pte Ltd v Tan Kim Swee Augustine [2008] 2 SLR (R) 474; [2008] 2 SLR 474 (refd)

Land Titles Act (Cap 157, 2004 Rev Ed) s 127 (2)

Jimmy Yap (Jimmy Yap & Co) for the appellant

A Thamilselvan (Subra TT Law LLC ) for the respondents.

Judgment reserved.

Sundaresh Menon JA

(delivering the judgment of the court):

1 This appeal arises out of an agreement for the sale and purchase of a Housing and Development Board (‘HDB’) flat by the appellant, Lim Hoe Heng (‘the appellant’) to the respondents, Poh Choon Kia and Goh Siu Mui (‘the respondents’).

Parties

2 The appellant was the registered sole owner of a HDB flat at Block 121 Potong Pasir Avenue 1 #11-273, Singapore 350121 (‘the Flat’). The appellant's wife, one Kang Weina (‘Kang’), was the second defendant in the proceedings below, but she is not party to this appeal.

3 The respondents were, at the material time, in search of a matrimonial home in anticipation of their wedding on 13 November 2011.

Background

4 The appellant had been an undischarged bankrupt since 12 June 2008, when his construction business failed. As his mortgage payments on the Flat had fallen into arrears, he was given the option of either selling the Flat on the open market, or surrendering the Flat to the HDB. The appellant opted for the former course and as it transpired, he granted the respondents an option to purchase the...