Lim Hwee Meng v Citadel Investment Pte Ltd

• Jurisdiction: Singapore
• Judge: Karthigesu JA
• Judgment Date: 06 August 1998
• Neutral Citation: [1998] SGCA 46
• Date: 06 August 1998
• Subject Matter: Contract,Civil Procedure,Effect of such communication,Whether respondents aware of terms of option and time for completion,Formation,Whether communication of acceptance by other means precluded,Whether appellant wrongly repudiated contract by giving respondents insufficient time to complete,Appeals,Whether appellant intended to enter into firm contract with respondents,O 57 r 9A(2), O 57 r 9A(17) Rules of Court 1996,Whether requirement in option stipulating communication of acceptance via returning signed copy of option,Construction of contract,Whether notice to complete served on respondents valid,Land,Principles applicable in deciding whether to allow application,Whether binding contract in existence,Assessment of evidence by appellate court,Appellate court slow to overturn trial judge's findings of fact,Intention to create legal relations,Whether appellant's acceptance of offer communicated to respondents,Whether clause condition precedent to existence of contract or condition precedent to performance of obligations under contract,Whether appellant entitled to serve 21-day notice of completion on respondents on passing of completion date,Failure to complete,Contractual terms,Acceptance,Whether signing of option to purchase property would have given rise to binding contract,Whether appellant entitled to forfeit deposit paid by respondents at end of 21-day period,Sale of land,Option to purchase property,Communication of acceptance,Whether appellant's evidence indicated his acceptance of respondents' offer,Whether granting application would cause prejudice to appellant,Application for leave to be heard
• Docket Number: Civil Appeals Nos 161, 238 and 253 of 1997
• Published date: 19 September 2003
• Defendant Counsel: Koh Tien Hua (Shook Lin & Bok)
• Court: Court of Appeal (Singapore)
• Plaintiff Counsel: Tan Soo Kiang and Wan Kwong Weng (Wee Swee Teow & Co)

Judgment:

LAI KEW CHAI J

(delivering the grounds of judgment of the court): Introduction

1.CA 161/97 is an appeal against the decision of Warren LH Khoo J allowing the respondents` claim that the appellant had wrongfully repudiated a contract of sale and purchase of property to the respondents, and his decision to award damages in lieu of specific performance of the contract. CA 238/97 and 253/97 deal solely with the trial judge`s assessment of damages. The respondents failed to file their case within the time specified by the Rules of Court 1996 and made an application before us under O 57 r 9A(17) for leave to be heard. The application and the appeals were heard on the same day. We allowed the application and at the end of the hearing, we allowed CA 161/97. In light of our decision to allow the appeal and set aside the judgment of the court below, we did not find it necessary to deal with CA 238/97 and 253/97. We now give our reasons for allowing the application and the appeal.

2. Background

Mr Tien and his wife obtained an option from Mr Lim Hwee Meng (the appellant) to purchase a house in Jalan Tanah Puteh (the property) for $848,000. The option was dated 21 September 1992 and expired on 8 October 1992. Mr Tien paid the option fee of 1% ($8,480) by cheque. The cheque was dishonoured on three occasions, the last of which was on 29 September 1992. There was much conflict of evidence as to what happened after this.

Mr Tien`s version of events

3.Before the option expired, Mr Tien began to explore the possibility of his company, Citadel Investment Pte Ltd (the respondents), buying the property in place of himself and his wife. The defendant agreed to extend the expiry date of the option. Mr Tien paid the appellant a sum of $8,480 (the 1% option fee) in cash on or about 13 October 1992, on the basis that the respondents would be the purchaser of the property. On or about 31 October 1992, he paid the appellant another 9% of the purchase price ($76,320) by cheque. Mr Tien expected the appellant to issue him an option naming the respondents as the purchaser, but the appellant failed to do so. Mr Tien then took it upon himself to prepare one. He closely followed the form of the option which had been issued to him naming him and his wife as purchasers. The only differences were that the respondents was now named as the purchaser of the property and the addition of a clause subjecting the purchase to the approval of the Land Dealings Unit (cl 5). The particulars of the purchaser and the vendor, the property, and the purchase price had all been typed in. However, the date of the option, the expiry date of the option and the date for completion of the purchase had all been left blank.

4.Mr Tien met the appellant on 4 December 1992. By this time, the 10% deposit required by the option had been paid (the first 1% in cash on 13 October 1992 and the remaining 9% by cheque on 31 October 1992). Mr Tien signed two copies of the option he had prepared and gave them to the appellant. The appellant did not however sign either copy of the option, saying that he wished to consult his lawyers first. The appellant assured Mr Tien that he would sign the options and return a copy to Mr Tien.

5.Mr Tien expected the appellant to return him a signed copy of the option and fix the date for completion of the purchase. The appellant failed to do so. As such, Mr Tien did not take any steps towards completion.

6.On 8 February 1993, the appellant, through his solicitors, wrote to the respondents, giving the respondents 21 days to complete the purchase. There was not enough time for the respondents to complete the purchase. The respondents, through their solicitors, asked the appellant for an extension of eight weeks to complete, but their request was refused. In the result, the respondents failed to complete and the 10% deposit was forfeited.

The appellant`s version of events

7.After Mr Tien`s cheque for the 1% option fee had been dishonoured for a third time on 29 September 1992, Mr Tien paid the appellant the amount in cash on 1 October 1992. On 8 October 1992, Mr Tien asked the appellant for an extension of the expiry date of the option. The appellant agreed. Towards the end of October, Mr Tien proposed that the respondents take the place of Mr Tien and his wife as purchasers of the property. The appellant again agreed. However, he insisted that the date of the option naming the respondents as purchaser, its expiry date, the date for its exercise and the completion date for the purchase be the same as the respective dates stated in the original option naming Mr Tien and his wife as purchasers.

8.Contrary to Mr Tien`s evidence, Mr Tien and the appellant met on 1 November 1992 and not on 4 December 1992. Again, contrary to Mr Tien`s evidence, the dates in the option naming the respondents as purchaser had all been filled in and not left blank. Indeed, it was Mr Tien himself, using his fountain pen, who had filled in all the dates, namely the date of the option (21 September 1992), the expiry date of the option (8 October 1992), the date on which the option should be exercised (8 October 1992), and the date of completion of the purchase (14 December 1992). And again contrary to Mr Tien`s evidence, the appellant had signed one copy of the option. He had not signed the other copy because he had merely intended to keep it for record purposes. The option required a deposit of 10% of the purchase price, less the option fee which had already been paid. Mr Tien paid the remaining 9% by cheque. In view of the fact that Mr Tien`s cheques had been repeatedly dishonoured in the past, the appellant decided to keep both copies of the option until this cheque was cleared. The appellant had made up an excuse for keeping both options, saying that he wished to consult his lawyers first.

9.The cheque was cleared on 2 November 1992. The appellant then went to see his lawyer, Mr William Oh. He left both copies of the option with Mr Oh.

10.Mr William Oh informed the appellant that he could not act for him in the matter. The appellant then went to another lawyer, Mrs Hwee. He told Mr Tien that Mrs Hwee was acting for him. He did not instruct Mrs Hwee to act until the middle of January. In the meantime, Mr Tien did not contact either Mr Oh or Mrs Hwee. The appellant retrieved the copies of the option from Mr Oh and gave them to Mrs Hwee in the middle of January. Mr Oh however gave evidence that although the appellant had come to see him about the option, he had not left the copies of the option with Mr Oh.

11. Findings of fact below

The trial judge accepted the appellant`s evidence that the payment of the 1% option fee had been made on 1 October 1992 and rejected Mr Tien`s evidence that it had only been made on 14 October 1992. The trial judge also accepted the appellant`s evidence that the meeting between the parties had taken place on 1 November 1992 and not on 4 December 1992 as Mr Tien had claimed. The trial judge further found that the dates in the option had been filled in by Mr Tien, using his fountain pen, and not left blank as Mr Tien had claimed. Finally, contrary to the appellant`s evidence, the trial judge found that the appellant had not signed either copy of the option at the meeting. Even if the appellant had signed one of the copies of the option, he had not done so with the intention of entering into a firm contract with the respondents. He had only intended to enter into a contract with the respondents when Mr Tien`s cheque had cleared. The cheque was presented and cleared on or about 2 November 1992.

12.After that, both parties took no further action. The completion date was allowed to pass. The appellant, through Mrs Hwee, then issued a notice to complete dated 18 February 1993 under the Law Society`s Conditions of Sale giving the respondents 21 days to complete the purchase. The respondents, through their solicitors, sought an extension of eight weeks to complete the purchase in a letter dated 5 March 1993. This request was rejected. The respondents failed to complete and the appellant forfeited the 10% deposit. The respondents then brought an action for specific performance of the contract to purchase the property, with an alternative claim for damages.

13. The trial judge`s analysis

The trial judge found that at the end of the meeting on 1 November 1992, the options prepared by Mr Tien, together with the cheque for the remaining requisite deposit of 9% of the purchase price, constituted an offer by Mr Tien, on behalf of the respondents, to purchase the property from the appellant. To accept the offer, the appellant not only had to sign the option; he had to communicate the acceptance to Mr Tien. The conventional way of doing so would be for the appellant to send a signed copy of the option to Mr Tien. This was however not done. What the appellant did do was to present and clear Mr Tien`s cheque for 9% of the purchase price.

14.The position therefore was that there was no clear indication of an acceptance of the offer by the appellant until the letter dated 18 February containing the notice to complete. By that date, the date for completion stated in the option had passed. The trial judge nonetheless proceeded on the basis that there was a contract, observing at [para ] 24:

I cannot overlook the fact that Mr Tien had paid, on behalf of the company, a substantial sum in expectation of a contract being concluded, and [the appellant] had accepted it. In these circumstances, if [the appellant] had wanted to accept the offer, or, for that matter, to reject it, he should have acted much more resolutely than he in fact did.

15.The trial judge held that as there was no clear indication of an acceptance of the offer by the appellant until the letter dated 18 February containing the notice to complete, the respondents should have been given a reasonable time from that date to complete the purchase. The 21 days given by the...