Lim Xue Shan and Another v Ong Kim Cheong

• Jurisdiction: Singapore
• Judge: K S Rajah JC
• Judgment Date: 18 September 1990
• Neutral Citation: [1990] SGHC 63
• Docket Number: Suit No 1624 of 1982
• Date: 18 September 1990
• Published date: 18 February 2004
• Year: 1990
• Plaintiff Counsel: Roderick Martin and M Rasanayagam (Ramdas & Wong)
• Citation: [1990] SGHC 63
• Defendant Counsel: Cheong Yuen Hee (YH Cheong)
• Court: High Court (Singapore)
• Subject Matter: Purchase by foreigner,Illegality and public policy,'Desires to purchase',Violation of statute,Land,Conditions of sale,Minister disapproved of purchase,s 25(2) Residential Property Act (Cap 274),Whether deposit recoverable,Contract,ss 3(1)(c), (2)(c), 25 & 36 Residential Property Act (Cap 274),Whether deposit paid by purchaser recoverable,Staututory illegality,Sale of land,Words and Phrases,Sale and purchase of residential property,Foreign buyer

[Please note that this case has not been edited in accordance with the current Singapore Law Reports house style.]

Judgment reserved.

KS Rajah J:

1 By an agreement in writing dated 19 January 1981 (hereinafter called ‘the said agreement’) made between the defendant as vendor and theplaintiffs as purchasers, the plaintiffs agreed to purchase and the defendant agreed to sell the property known as No 55 Oei Tiong Ham Park, Singapore (hereinafter called ‘the said property’) for the sum of $1,310,000 subject to existing tenancy.

2 It is not disputed that under the said contract a sum of $131,000 has been paid by way of deposit to the defendant as vendor.

3 It is also not disputed that the said property is residential property within the meaning of the Residential Property Act (Cap 274) (the Act) and that both the plaintiffs (the purchasers herein), though permanent residents of Singapore, were foreign persons within the meaning of the Act and that any transfer of the said property to them, whether for consideration or by way of gift or otherwise, is prohibited by and would be null and void under s 3 of the Act and that, unless the purchasers had obtained the approval of the minister under s 25 of the Act, the purchasers would be committing an offence under s 36 of the Act.

4 On 28 April 1981, the Controller of Residential Property in response to the plaintiffs’ application dated 2 February 1981 for approval to purchase the said property and in compliance with s 25(11) of the Act conveyed to the plaintiffs’ solicitors by notice in writing bearing the same date that the minister had considered the plaintiffs’ application and had disapproved it.

5 The plaintiffs have in fact demanded of the defendant the return of the said deposit, but the defendant has refused and refuses to return the said $131,000.

6 It is in these circumstances that the plaintiffs have commenced proceedings against the defendant and claim the return of the said sum of $131,000.

7 The plaintiffs contend that the said agreement has been frustrated by the failure to obtain the minister’s approval and that the plaintiffs are accordingly entitled to recover the said deposit as money had and received for a consideration that has wholly failed.

8 In their amended statement of claim the plaintiffs plead that ‘at the time and in consideration of the plaintiffs entering into the said agreement the defendant orally agreed by himself and by his said solicitor with the plaintiffs and warranted to them as an agreement collateral to the said agreement and with the intent that the plaintiffs should rely thereon that the sale and purchase should be subject to the grant of approval by the minister to the plaintiffs to purchase or acquire the said property’. They also plead that ‘relying on the said oral agreement and the warranty the plaintiffs duly entered into the said agreement on 19 January 1981 as aforesaid’. ‘Further and in the alternative’, the plaintiffs say, ‘it was an implied term of the said agreement that if the minister’s approval was not obtained the said deposit of $131,000 would be repaid to the plaintiffs and the said agreement would be null and void.’

9 The plaintiffs also contend that prior to 19 January 1981 the defendant and his solicitor Choo Kwun Kiat knew that both the plaintiffs were foreign persons within the meaning of the Act. The defendant denies this and maintains that it was not until after the minister had refused his approval for the purchase of the said property did he come to know that the plaintiffs were Indonesian nationals.

10 On this single issue evidence was led on both sides. I accept the evidence of the defendant and of his then solicitor Mr Choo Kwun Kiat, who acted for him in the sale and purchase, on this issue and find that the defendant came to know of the plaintiffs being Indonesian nationals only after the minister had disapproved of the said purchase on 28 April 1981. It follows from this that there could not have been any oral agreement that the sale and purchase of the said property should be subject to the grant of approval by the minister to the plaintiffs to purchase and acquire the said property.

11 The defendant in his defence denies that he is liable to repay to the plaintiffs the said sum of $131,000 or any other sum for the reason that by virtue of s 3(1)(c) of the Act no foreign person shall purchase or acquire any residential property or estate or interest therein except by way of a mortgage, charge or reconveyance and that under s 3(2)(c) any such purchase or acquisition shall be null and void. The defendant further denies that there was any term implied or otherwise in the said agreement that the said deposit would be repaid to the plaintiffs if the minister’s approval was not obtained.

12 Mr Martin for the plaintiffs submitted that the issues before the court were basically four in number:

(a) Whether the plaintiffs acquired any interest (legal or equitable) in the property on signing the said agreement.

(b) Whether arising out of this the plaintiffs are, on the basis of money had and received, entitled to succeed in their claim against the defendant for the return of the said sum of $131,000.

(c) Whether the law would imply a term being written into the said agreement that the sale was to be subject to the minister’s approval and that whether, if the minister’s approval was not obtained, the said agreement ‘would go off’ and the said deposit of $131,000 would then have to be refunded to the plaintiffs.

(d) Whether the said agreement had been frustrated by the failure to obtain the minister’s approval for the sale and purchase and the plaintiffs are accordingly entitled to recover the said sum from the defendant by virtue of s 2(2) of the Frustrated Contracts Act (Cap 115).

Issue (1) — legal or equitable interest

13 It would be useful to set out the various provisions of the Act which have a bearing on this issue. Section 3 of the Act reads:

(1) Except as provided in this Act —

(a) no person shall, whether for consideration or by way of gift inter vivos or otherwise, transfer any residential property or any estate or interest therein to any foreign person;

(b) …

(c) no foreign person shall purchase or acquire any residential property or any estate or interest therein except by way of a mortgage, charge or reconveyance.

(2) Any —

(a) transfer of any residential property or of any estate or interest therein by any person to a foreign person made in contravention of subsection (1)(a);

(b) …

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