Allgreen Properties Ltd v Lim Lay Bee And Another (administrators of the estate of Loh Siok Hong)

• Jurisdiction: Singapore
• Judge: Choo Han Teck JC
• Judgment Date: 11 March 1998
• Neutral Citation: [1998] SGHC 73
• Docket Number: Suit No 2102 of 1996 (Registrar's Appeal Nos 474 and 475 of 1997)
• Date: 11 March 1998
• Year: 1998
• Published date: 19 September 2003
• Plaintiff Counsel: B Vijayan Peter and Julia Eng (Ramdas & Wong)
• Citation: [1998] SGHC 73
• Defendant Counsel: Lauw Yann Ching (Rodyk & Davidson)
• Court: High Court (Singapore)
• Subject Matter: Sale of land,Contract gives vendors right to forfeit sum equal to 20% of purchase price from instalments previously paid by purchaser,Contract,Land,Breach,Whether normal rules in determining a penalty clause apply,Conditions of sale,Vendor' s right to forfeit sum equal to 20% of purchase price from instalments previously paid,Purchaser to prove oppression,Forfeiture clause based on subsidiary legislation,Purchaser failed to pay,Damages,Assumption that terms not intended by authority to be oppressive or penalise purchaser,Liquidated damages or penalty,Whether payment a deposit to compel performance by the purchaser,Whether breach of contract by purchaser entitled vendors to rescind agreement and sue for damages including unpaid 20% of purchase price,Personal financial hardship not a basis for relief

Judgment:

CHOO HAN TECK JC

Cur Adv Vult

The facts are straightforward and not in dispute. The plaintiffs are a property development company. On 27 March 1996 one Loh Siok Hong (since deceased) obtained an option to purchase a flat in the plaintiffs` development known as #03-11 Block 51, Hindhede Walk, Springdale Condominium. Loh paid a booking fee of $47,950 being 5% of the purchase price. Clause 3 of the option provides as follows:

To exercise the option, you must sign the draft agreement of sale and purchase in triplicate and return it before the option expires. Thereupon we shall sign the agreement in triplicate and return a duly signed copy to you within two (2) weeks from the date we receive the agreement from you. Twenty (20) per cent of the purchase price (less the booking fee paid by you) shall be paid upon the exercise of this option or within 8 weeks from the date of this option, whichever is the later.

2.Clause 4 of the option provided that if the option is not exercised, the plaintiffs will refund 75% of the booking fee and the intending purchaser shall return the title deeds and draft contract and neither party shall have any claims against each other. The option was exercised by Loh on 27 March 1996, and the sale and purchase agreement (the agreement) was signed on 27 April 1997. The agreement was required to be executed in Form E of the Schedule to the Housing Developers Rules pursuant to rule 12(2) of the Rules. This is important for reasons which I shall revert shortly. The relevant parts of cl 3(1) of the agreement provide as follows:

Subject to para (4), the purchase price shall be paid by the purchaser to the vendor by instalments in the following manner:

(a) immediately upon signing this agreement or within eight (8) weeks from the date of the option to purchase, whichever is the later, a sum equal to twenty (20) percent of the purchase price; such sum to include the booking fee (if any) paid;

(b) within fourteen (14) days after receipt by the purchaser of the vendor`s notice in writing that the foundation work has been completed, a sum equal to ten (10) per cent of the purchase price;

3.Payment under cl 3(1) (a) and (b) became due by 22 May and 3 July 1996 respectively. Loh failed to pay the money due on both dates but subsequently tendered a cheque for $239,750 in payment for the sums due under cl 3(1)(a) and (b). However, the cheque was dishonoured. On 12 July 1996 the plaintiffs` solicitors served a notice under cl 5(3) of the agreement on Loh. Clause 5(3) provides as follows:

If any such unpaid instalments and interest remain unpaid for any period in excess of fourteen (14) days after its due date, the vendor shall be entitled at its option on giving to the purchaser or his solicitors not less than twenty-one (21) days` notice in writing to treat this agreement as having been repudiated by the purchaser and (unless in the meanwhile the unpaid instalments and interest shall have been paid) this agreement shall at the expiration of such notice (and in this respect time shall be of the essence) be annulled and in such an event, without prejudice to any other rights available to him at law or in equity, the vendor shall be entitled:

(a) to resell or otherwise dispose of the building unit as the Vendor shall see fit as if this agreement had not been entered into;

(b) to recover from the instalments (excluding payments for interest) previously paid by the purchaser all interest calculated in accordance with para (1) of this clause owing and unpaid; and

(c) to forfeit and retain for his own benefit a sum equal to twenty (20) per cent of the purchase price from the instalments (excluding payments for interest) previously paid by the purchaser.

4.The plaintiffs thus treated the agreement as repudiated by Loh`s breach of cl 3(1) and sued for payment of $143,850 being the balance of the 20% payment due under cl 3(1)(a). They took the view that cl 5(3)(c) permitted them to recover this amount, but not the money due under cl 3(1)(b) and, therefore, made no claim for it. The learned assistant registrar allowed the plaintiffs` claim for interest due and unpaid, but rejected the plaintiffs` claim for the sum of $143,850 on the grounds that the plaintiffs having terminated the contract could only sue for damages. She then directed that the plaintiffs amend their statement of claim to sue for damages instead of the sum of $143,850. The learned assistant registrar also ruled, on the defendants` application for a determination on a point of law and construction under O 14 r 12, that cll 3(1) and 5(3) of the agreement do not permit the plaintiffs to claim the balance of 20% of the sale price. Against these orders the plaintiffs appealed before me. It was noted that Loh died on 4 April 1997 and the defendants are the administrators of his estate.

5.Counsel for the defendants submitted that the contract should be read and interpreted literally. She submitted therefore, that cl 5(3)(c) permits the vendor plaintiffs to forfeit a sum equal to 20% of the purchase price only if such sum had `previously been paid`. This was basically the approach taken by the learned assistant registrar. Counsel submitted that this 20% per cent of the purchase price was not a deposit but a prepayment which must be refunded in the event that a contract was rescinded.

6.Counsel for the plaintiffs, Mr Peter, argued that it would be an anomaly if the plaintiffs can recover the 20% if the money was paid and not otherwise because it would unfairly benefit a bad payer. He relied extensively on Hyundai Heavy Industries Co Ltd v Papadopoulos [1980] 1 WLR 1129. In that case, the respondents Hyundai Heavy Industries contracted to build and sell a vessel to a Liberian company. The appellants provided a letter of guarantee of performance of contract by the buyers. The buyers defaulted payment of the second instalment of the contract price and the respondents rescinded the contract and sued the appellant guarantors. The appellants argued that the contract having been rescinded before the issue of the writ, there was thus no accrued right to unpaid instalments. The trial judge found the guarantors liable to pay the unpaid instalments. The guarantors` appeal to the Court of Appeal and the House of Lords were dismissed. Thus, relying on the judgments of the Law Lords, Mr Peter argued that a developer`s contract for the sale of a property is akin to a shipbuilding contract. He submitted that in a developer`s contract the developer was not merely selling a piece of land or a finished product in existence at the time of contract, but it was a contract where the developer undertook to design, build and sell a housing unit. He relied on the speech of Lord Edmund Davies who said that:

It has to be said, at the outset, that the assertion that the builders` exercise of their undoubted right to cancel

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