LKM Investment Holdings Pte Ltd v Goh Chin Soon Ricky

• Jurisdiction: Singapore
• Judgment Date: 28 August 1998
• Date: 28 August 1998
• Docket Number: Civil Appeal No 222 of 1997
• Court: Court of Appeal (Singapore)

LKM Investment Holdings Pte Ltd

Plaintiff

and

Goh Chin Soon Ricky

Defendant

[1998] SGCA 50

Yong Pung How CJ

,

M Karthigesu JA

and

Tan Lee Meng J

Civil Appeal No 222 of 1997

Court of Appeal

Contract—Contractual terms—Interpretation—Sale and purchase agreement—Vendor to purchase state land and transfer to purchaser—Vendor failed to effect purchase—Purchaser elected to forfeit deposit and effect purchase himself—Purchaser paid higher price than forfeited deposit—Purchaser claiming excess sum from vendor—Whether vendor liable for excess sum under the agreement—Whether interpretation should be in the context of preceding and subsequent clauses—Land—Sale of land—Interpretation of sale and purchase agreement

Pursuant to a sale and purchase agreement (“the agreement?), the appellant agreed to sell to the respondent seven plots of its own properties and two adjoining plots of state land. The appellant undertook to purchase the state land from the relevant government authority and transfer it to the respondent. For this purpose, $1.3m out of the purchase price was set aside and retained by the respondent until the appellant sent him the letter of offer for alienation of the state land. The appellant failed to obtain the letter by the agreed date. The agreement provided that in such event, the respondent could either rescind the agreement or forfeit the sum of $1.3m and proceed to purchase the state land directly from the relevant government authority. The respondent elected to pursue the latter course of action. The price paid by the respondent for the state land was $73,550 more than the sum forfeited. When the appellant sued the respondent, the respondent counterclaimed for the sum of $73,550 under cl 14 (4) of the agreement, which provided that “ [If] … the price at which the state land is purchased from the relevant government authority … exceeds [$1.3m], the excess sum shall be solely borne by the [appellants]?. The trial judge allowed the respondent’s counterclaim. The appellant appealed, contending that on its true construction, cl 14 (4) was only applicable when the appellant continued to bear responsibility for purchasing the state land and not when the respondent had forfeited the $1.3m.

Held, allowing the appeal:

In the context in which cl 14 (4) was found, it was only applicable when the appellant was the purchaser of the state land. Having regard to cll 14 (3), 14 (4), 14 (5) and 14 (6), it followed that if the respondent exercised his right to forfeit the $1.3m and opted to purchase the state land directly from the relevant government authority, he took the risk of the purchase price being higher than $1.3m. Such an interpretation was a sensible one. Construing cl 14 (4) in isolation without taking account of the clauses which preceded or followed it would expose the appellant to financial liability of an unknown extent and over which it had no control. It was most unlikely that the parties intended such a result: at [10] to [12].

Barton v Fitzgerald (1812) 15 East 530; 104 ER 944 (folld)

Prem Singh (Prem & Co) for the appellant

Thomas Tan (Haridass, Ho & Partners) for the respondent.

Tan Lee Meng J

(delivering the grounds of decision of the court):

1 The appellants, who agreed to sell seven of their own properties in Hemmant Road and Guillemard Road and two adjoining plots of state land to the respondent for $7m, were ordered by the court below to pay $73,550 to the respondent, a property developer, who paid $7,073,550 for all the said properties after he exercised his contractual right to purchase the said...