Lim Lay Bee and Another v Allgreen Properties Ltd

• Jurisdiction: Singapore
• Judge: Karthigesu JA
• Judgment Date: 04 November 1999
• Neutral Citation: [1999] SGCA 80
• Court: Court of Appeal (Singapore)
• Published date: 19 September 2003
• Year: 1999
• Plaintiff Counsel: Low Chai Chong and Lauw Yann Ching (Rodyk & Davidson)
• Defendant Counsel: B Vijayan Peter and Julia Eng (Ramdas & Wong)
• Subject Matter: Contract,Contractual terms,Construction of Statutory Form E prescribed by Housing Developers Rules 1990 for sale of strata title properties,Breach by purchaser,Failing to pay balance of first instalment,Termination of contract,Rights of parties,Whether developers' rights acquired before termination of contract survive its termination,Discharge,Rescission,Whether developers' rights which have accrued before recission will be extinguished,Equity,Relief,Against forfeiture,Financial hardship,Whether personal financial hardship is a valid basis for relief against forfeiture,Whether appellant entitled to plead provisions of agreement in a standard statutory form to be extravagant and unconscionable
• Citation: [1999] SGCA 80

Judgment:

LP THEAN JA

(delivering the judgment of the court): The agreement

1.The appellants are the administrators of the estate of one the late Loh Siok Hong (`Loh`). The respondents are the housing developers of a condominium known as `Springdale` at Hindhede Walk. On 27 March 1996, Loh was granted an option by the respondents to purchase a unit in the condominium, namely, [num ]03-11 in Block 51 (`the property`) at the price of $959,000, and pursuant to the terms thereof paid a booking fee of $47,950, which represented 5% of the purchase price. On the same day, he exercised the option; but the formal sale and purchase agreement was executed by the parties a month later, on 27 April 1996 (`the agreement`).

2.The agreement is in a statutory form, which is Form E then prescribed by the Housing Developers Rules 1990 for the sale of strata title properties. Under the agreement, the purchase price was payable by instalments, with the first instalment consisting of 20% thereof amounting to $191,800 (which included the booking fee of $47,950) being payable upon the signing of the agreement or within eight weeks from the date of the option, whichever was the later. Clause 3(1)(a) of the agreement, so far as material, provides as follows:

3(1) ... the purchase price shall be paid by the Purchaser to the Vendor by instalments in the following manner:

(a) immediately upon the signing of 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) per cent of the purchase price; such sum to include the booking fee (if any) paid;

...

The second instalment under cl 3(1)(b) was payable:

(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.Clause 3(1)(a) of the agreement is in fact a slight variation of the equivalent sub-clause provided for in Form E. Paragraph (a) of the sub-clause in Form E reads:

3(1) Subject to paragraph (4), the purchase price shall be paid by the Purchaser to the Vendor by instalments in the following manner:

(b) immediately upon the signing of this agreement a sum equal to 20% of the purchase price; such sum to include the booking fee (if any) paid;

...

The words `or within eight (8) weeks from the date of the Option to Purchase, whichever is the later` were added by the respondents. We assume that approval for this variation had been obtained from the Controller of Housing pursuant to r 12(3) of the Rules, as there was no challenge or dispute on the validity of cl 3(1)(a) of the agreement.

4.As Loh had paid the booking fee of 5% at the time of the grant of the option, the balance of the 15% amounting to $143,850 was payable, at the latest, on 22 May 1996. However, he failed to pay the amount on that day. Soon thereafter, the notice for payment of the second instalment of 10% of the purchase price, ie $95,900, was given and that payment became due on 3 July 1996. On 28 June 1996, Loh tendered a cheque for $239,750 in payment of the balance of the first instalment and also the second instalment. However, the cheque was dishonoured and was returned marked `Refer to Drawer` on 3 July 1996. Thereafter, Loh did not make, or attempt to make, any payment, and no further payment was made.

5. Termination of the agreement

In the event, the respondents proceeded to exercise their rights under cl 5 of the agreement. It is convenient at this stage to set out that clause in full, which reads as follows:

5(1) If any of the instalments referred to in clause 3 remains unpaid by the Purchaser at the expiration of the relevant period for payment referred to in that clause, interest on any such unpaid instalment or instalments shall commence to run from the day following the expiration of such period and shall be payable by the Purchaser until -

(a) such time as the unpaid instalment is paid; or

(b) the expiration of the notice to repudiate this agreement is given by the Vendor pursuant to paragraph (3),

whichever is the earlier.

(2) The interest payable under paragraph (1) of this clause shall be calculated from day to day at the rate of two (2) per cent above the average of the prevailing prime rates of the four major local banks (ie DBS, OCBC, OUB and UOB) rounded downwards to the nearest one-eighth of one (1) per cent.

(3) 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 paragraph (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 balance of the instalments prepaid by the Purchaser after making deductions in accordance with paragraphs (3)(b) and (c) shall be refunded to the Purchaser.

6. Proceedings

On 12 July 1996, the respondents served on Loh the 21 days` notice pursuant to cl 5(3). No payment was made by Loh prior to the expiration of that notice, and in accordance with that clause the agreement was annulled on 2 August 1996. Subsequently, on 24 August 1996, the respondents` solicitors wrote to Loh`s solicitors demanding payment of $143,850 being the balance of the first instalment and $95,900 being the second instalment, as well as late payment interests on the balance of the first instalment and on the second instalment respectively. As the demand was not met, the respondents commenced legal proceedings against Loh on 2 November 1996 claiming, inter alia: (i). the sum of $143,850 under cl 3(1)(a) of the agreement;

(ii). forfeiture of this sum pursuant to cl 5(3)(c) of the agreement;

(iii). interest of $2,270.07 on the sum of $143,850 being the balance of the first instalment; and

(iv). interest of $30.57 on the unpaid amount of $95,900 being the second instalment.

7.Loh passed away on 4 April 1997, and the appellants as administrators of his estate were substituted as the defendants in the action. On 14 November 1997, the respondents applied for summary judgment against the appellants seeking to recover the sum of $143,850 and interests as claimed. On 6 December 1997, the appellants applied for a determination of the effect of cll 3(1)(a) and 5(3) of the agreement under O 14 r 12 of the Rules of Court.

8.Both the applications were heard together before the assistant registrar on 22 December 1997. The learned assistant registrar held that on a plain and literal construction of cll 3(1)(a) and 5(3) the respondents were not entitled to claim the outstanding balance of $143,850; that cl 5(3)(c) allowed the vendors to forfeit an amount up to 20% of the purchase price where such amounts had already been paid by the purchaser; and that where the purchaser had paid less than 20%, as in the present case, the vendor was entitled to forfeit only whatever amount that had been paid. The learned assistant registrar determined that cl 5(3) did not entitle the vendor to claim the amount by which the payments fell short of the 20%. She gave leave to the respondents to amend the statement of claim to include a claim for damages and dismissed the respondents` claim for the outstanding sum of $143,850 but allowed their claims for interest of $2,270.07 and $30.57 respectively, and interest on these two sums at the rate of 6% per annum from the date of issue of the writ to the date of payment. The respondents appealed to a judge in chambers against the decisions of the learned assistant registrar on the two applications.

9. The decision below

The respondents` appeals were heard before Choo Han Teck JC. The learned judicial commissioner opined that cl 5(3)(c) was `clear and unambiguous`, but held that in the circumstances of the case the literal interpretation should not be applied. In coming to this conclusion, he was strongly persuaded by this court`s decision in Indian Overseas Bank v Cheng Lai Geok [1993] 1 SLR 470 . Turning to the facts of the case, the learned judicial commissioner found that the first instalment was intended to be a deposit, in that it was a payment to ensure performance of the agreement which the vendor was entitled to forfeit should the purchaser repudiate the contract. On the basis of this finding, the learned judicial commissioner held that the principles set out in Indian Overseas Bank v Cheng Lai Geok applied. He therefore ordered the appellants to pay the sum of $143,850 being the outstanding balance of the first instalment, as well as $2,270.07 and $30.57 as the interests for late payment. The appellants appealed.

10. The appeals

Before us, technically, there are two appeals which arose from the two applications before the assistant registrar. Both the appeals, however, raise the same issues and are heard together. The main issue in these appeals is whether the respondents are entitled under cll 3(1) and 5(3) of the agreement to recover the sum of $143,850 representing the balance of the first instalment. This issue turns on the true construction of these clauses.

11.By reason of...