Mt Elizabeth Hospital Ltd v Allan Ng Clinic for Women and another appeal

• Jurisdiction: Singapore
• Judge: Karthigesu JA
• Judgment Date: 21 March 1994
• Neutral Citation: [1994] SGCA 47
• Date: 31 August 1994
• Docket Number: Civil Appeals Nos 122 and 149 of 1993
• Published date: 19 September 2003
• Year: 1994
• Plaintiff Counsel: VK Rajah and Aurill Kam (Rajah & Tann)
• Citation: [1994] SGCA 47
• Defendant Counsel: Davinder Singh and Rosalind Lazar (Drew & Napier)
• Court: Court of Appeal (Singapore)
• Subject Matter: Whether new agreement incorporated terms of original agreement,Sale of commercial property,Whether failure to include statutory forms rendered contract illegal or unenforceable,Option and sale and purchase agreement not in forms approved by Controller of Housing,Delay by vendor's default,Incorporation of terms,Rules 1985 Sale of Commercial Properties,Implied terms,Sale of Commercial Properties Act (Cap 281),Land,Whether tenant purchaser liable for rent until completion of sale,Whether option properly exercised,Open contract,Completion,Whether equity considered the agreement as done and accomplished,Conditions of sale,Substitution of old agreement to grant option by new one,Whether statutory forms to be implied into the contract,Contractual terms,Whether contract illegal or unenforceable,Contract,Sale of land

Cur Adv Vult

The facts

Allan Ng Clinic for Women Pte Ltd (ANC) are a company under which Dr Allan Ng (Dr Ng) practises as an obstetrician and gynaecologist and at the material time were the tenants of three consulting suite units, #14-06 to #14-08 (the units), in Mount Elizabeth Medical Centre (the Medical Centre). The units were owned by Mount Elizabeth Hospital Ltd (MEH) and rented to ANC under a tenancy agreement dated 18 July 1983 for a term of three years commencing from 1 September 1983. The tenancy agreement contained an option for renewal for a further term of three years at a revised rent. At that time, ANC owned three other units in the Medical Centre, namely, #07-07, #07-08 and #12-03 (the ANC units), which were rented out by ANC to other medical practitioners.

Dr Ng had always maintained a keen interest in purchasing the units. Even prior to entering into the tenancy agreement with MEH in 1983, he had approached MEH for the purpose but was informed then that it was not MEH`s policy to sell but only to rent units of the Medical Centre which they owned. In June 1985, the entire share capital of MEH was acquired by the present owners. After the change of ownership, Dr Ng resumed his attempts to purchase the units. To that end, he met with MEH`s representatives, Mr Michael Ford, a director of MEH and Mr Dennis Brown, the administrator of the Medical Centre, on 14 March 1986 and Mr Michael Ford alone on 27 April 1986 to discuss the purchase of the units. In the meantime, as the three-year tenancy of the units was coming to an end, Dr Ng gave notice to MEH on 5 May 1986 of ANC`s intention to exercise the option to renew the tenancy. In response, MEH wrote to ANC offering a renewal of the tenancy of the units for a term of two years at a revised rent and forwarding a form bearing the heading `confirmation to lease` to be completed and signed. ANC on 29 May 1986 signed and returned the confirmation to lease, thus agreeing to take up a further two-year tenancy of the units from 1 September 1986. The confirmation to lease stipulated that the tenancy would be subject to the terms of MEH`s standard tenancy agreement. On 2 June 1986, pursuant to the confirmation to lease, MEH forwarded the tenancy agreement to ANC for execution. However, the agreement was not signed because of the ongoing negotiations between the parties for the sale and purchase of the units. The parties met twice, once on 11 July 1986 and the second time on 17 November 1986. The aspect of the sale which was the subject of the long negotiations was the purchase price of the units. Finally, the parties agreed to a formula suggested by Mr Dennis Brown, which was `a price not exceeding $700 per square foot`.

On 9 December 1986, MEH sent to ANC a tenancy agreement for execution. The tenancy agreement was for a term of two years from 1 September 1986 and contained, inter alia, a clause, namely, cl 5(5), giving to ANC an option to purchase the units. Clause 5(5) also provided a form of a sale and purchase agreement of the units set out in a schedule to the agreement, which was designated as Sch A (Sch A). ANC made some amendments to the tenancy agreement including an amendment to cl 5(5) and returned it to MEH. By a letter dated 26 January 1987, MEH agreed substantially to ANC`s amendments and suggested some other amendments. Shortly thereafter, Dr Ng told Mr Dennis Brown that he agreed to all the amendments set out in MEH`s letter of 26 January. Thus an agreement was reached between the parties. We shall refer to the agreement then arrived at as `the January 1987 agreement`.

It is appropriate at this stage to set out in full cl 5(5), as amended, which is as follows:

In consideration of the sum of $1 now paid by the tenant to the landlord (the receipt of which the landlord hereby acknowledges) the landlord hereby agrees that if the tenant shall desire to purchase the premises hereby demised and shall after no less than 12 months into the term hereby granted give to the landlord one month`s notice in writing of such desire then the landlord hereby covenants that he will upon the expiration of such notice and upon payment of the non-refundable 10% of the purchase price according to the sale and purchase agreement in the form set out under Sch A together with all arrears of rent up to the expiration of the notice assure the demised premises to the tenant at a price not exceeding $700 per square foot. The tenant shall not be released from his obligations under this tenancy agreement until the sale and purchase of the demised premises is completed. The landlord hereby covenants to execute the sale and purchase agreement in the form set out in Sch A provided always that the terms under the sale and purchase agreement are satisfied and the tenant is not more than one month in arrears with his rental and/or in breach of any of the other covenants herein.

The Sch A referred to in cl 5(5) provided, inter alia, that the purchase was to be completed within three months after the signing thereof and that the sale of the units would be subject to the Singapore Law Society`s Conditions of Sale 1981 in so far as they are applicable to a sale by private treaty and are not varied by or inconsistent with the conditions therein.

However, as the units are commercial property, their sale was mandatorily regulated by the Sale of Commercial Properties Act (Cap 281) (the Act) and the Sale of Commercial Properties Rules 1985 (the Rules). Under s 4 of the Act and r 5(1) of the Rules, an option to purchase commercial property must be in the form prescribed, called Form B; under s 5 of the Act and r 7 of the Rules, an agreement for the sale and purchase of such property must also be in a statutory form, which is Form D, or a form approved in writing by the Controller of Housing (the Controller). It was abundantly clear that neither cl 5(5) nor Sch A was in the proper statutory form. Parties, however, appeared to have overlooked this at that time.

Notwithstanding the agreement reached in January 1987, Mr Dennis Brown told Dr Ng that they should meet to discuss the price further. The parties met on three occasions in February 1987. MEH proposed a discount of the purchase price based on the number of patients admitted to the Mount Elizabeth Hospital on the introduction of ANC. This was rejected by Dr Ng. On 2 and 11 March 1987, Dr Ng met Mr Dallas Riddle, the chief executive officer of MEH. At these meetings, Mr Riddle brought up new proposals, namely, a sale-swop proposal whereby MEH would sell the units to ANC in exchange for the latter selling the ANC units to MEH or a sale-rental proposal whereby MEH would sell the units to ANC in exchange for the latter renting the ANC units to MEH so that they would in turn sublet them to other doctors of their own choice. Neither of these proposals was accepted by Dr Ng.

Eventually, on 12 March 1987, Mr Dallas Riddle and Mr Dennis Brown came to see Dr Ng and handed him a letter, which read as follows:

Prior to the expiration of your lease on MEH Blk A medical office suites 14-06-07-08 on 31 August 1986 and subsequent to the latter date, various discussions have transpired and written documents have been exchanged regarding a lease option to purchase or purchase of said units.

None of these discussions or document exchanges have been finalized nor reduced to writing nor signed and delivered to both parties.

Therefore, we hereby withdraw all offers previously made by us and reject any and all counter offers or proposals made by you to us effective upon the handing of this letter to you.

In response, ANC through their solicitors wrote to MEH refuting the latter`s allegations and demanded that the tenancy agreement be forwarded to ANC for execution.

On 7 April 1987, ANC commenced an action in the High Court, Suit No 1010 of 1987 (the 1987 action), against MEH claiming a declaration that they were entitled to a renewed tenancy for a term of two years commencing from 1 September 1986 with an option to purchase the units in terms of cl 5(5). MEH`s defence was essentially that there was no concluded contract as there had been no agreement on the purchase price of the units.

The settlement agreement

In the meantime, Mr Dallas Riddle met Dr Ng and suggested a meeting with a view to settling amicably the matter in dispute. On 20 and 25 April 1987, they met and discussed the terms of a settlement (the settlement meetings). MEH repeated their proposals for a sale-swop or sale-tenancy agreement. Dr Ng finally accepted the sale-tenancy proposal of MEH whereby MEH would sell the units to ANC and the latter would rent the ANC units to MEH. The parties reached agreement also on the price of the units, the rents for the ANC units and other terms. We shall refer to this agreement as `the settlement agreement`. The settlement agreement was subsequently recorded in several letters of MEH and the most important letter was that of 18 May 1987 (the 18 May letter) which was as follows:

Dear Dr Ng,

Suit No 1010 of 1987 in respect of tenancy of units #14-06/07/08 Mount Elizabeth Medical Centre

We refer to the above and to the meeting on 25 April 1987 between yourself and our Mr Dallas Riddle and Mr Dennis Brown.

Following our discussion, an amicable settlement was agreed upon as follows:

(1) Allan Clinic for Women Pte Ltd as owners of the [ANC] units shall lease these premises to Mount Elizabeth Hospital Ltd inclusive of the following conditions:

(a)-(c) related to the time periods of the tenancy, and the rent payable by MEH for the ANC units, which are not material in this appeal.

(d) Mount Elizabeth Hospital Ltd and Allan Clinic for Women Pte Ltd shall forthwith execute a new lease in favour of Allan Clinic for Women for two years for the (units) at the rate of $12,018.90 per month inclusive of service charges. The new lease shall include an option to purchase the said units at $650 psf. The...