Ong Hun Seang and Others v Yeoh Oon Teik and Others

• Jurisdiction: Singapore
• Judge: Lim Teong Qwee JC
• Judgment Date: 19 July 1996
• Neutral Citation: [1996] SGHC 143
• Date: 19 July 1996
• Subject Matter: Sale of land,Duty of stakeholders in land sales transactions,Contract,Whether solicitors paid over moneys wrongly,Dispute over entitlement to stakeholding,s 23(2) Companies Act (Cap 50),Land,Special conditions of sale,Contractual terms,Whether vendors were under an implied term to cooperate with and/or assist the purchaser to obtain a licence,Licence required under Companies Act,Purchase of land by a non-profit company
• Docket Number: Suit No 1241 of 1992
• Published date: 19 September 2003
• Defendant Counsel: Harry Wee and Geraldine Chia (Braddell Brothers),Charles Ezekiel and Grace Ooi (Khattar Wong & Partners)
• Court: High Court (Singapore)
• Plaintiff Counsel: VK Rajah and Aurill Kam (Rajah & Tann)

The plaintiffs` claim against the first to the fourth defendants (collectively `vendors`) is primarily for the return of money paid to account of the price of 12 residential units at Wan Tho Ave upon failure of the contracts for sale and purchase and against the fifth defendants as stakeholders of part of that money. The fifth defendants were at all material times the solicitors retained by the vendors in respect of the sale. At the conclusion of the trial I gave judgment for the plaintiffs. These are my grounds.

The first defendant owned one of the units and the second defendant owned another. The fourth defendant owned two of the units. The remaining eight units were owned by the third defendant who is the father of the first and second defendants. The vendors intended to sell all 12 units en bloc and by 12 options in writing all dated 26 November 1991 they offered to sell the units for $208,330 each in respect of the ten units owned by the first, second and third defendants and at $208,350 each in respect of the remaining two units owned by the fourth defendant making a total of $2,500,000 for the 12 units. All the options are in the same terms except as to the identity of the vendor, the unit and the price and they are subject to the same conditions. Condition 8 of each option provides that the sale is subject to options being granted by the owners of the other 11 units. The options are addressed to the five plaintiffs by name followed by `(as Trustees for and on behalf of Zion Gospel Mission Ltd) and/or nominee` and are expressed to be given in consideration of an amount equal to 1% of the purchase price of the units received from them. For all the 12 units the plaintiffs paid a total of $25,000 for the options.

In accordance with the terms of the options they were exercised by the plaintiffs signing and delivering them to the fifth defendants as the vendors` solicitors with a further 9% of the price amounting in all to $225,000 to be held by the fifth defendants `as stakeholders pending completion`. These were delivered on 10 December 1991 by the plaintiffs` solicitors who wrote:

Please find enclosed herein:

(1) a cheque for $225,000 made in your favour, being the total sum of the 10% deposit (less option money) for the 12 units, which the ( sic) is to be held by you as stakeholders pending completion;

(2) the twelve options duly executed by five trustees for and on behalf of Zion Gospel Mission Ltd.

Kindly let us have your official receipt in favour of Zion Gospel Mission Ltd and all the prior title deeds relating to the 12 units in due course.

The fifth defendants acknowledged receipt of the letter and the enclosures and issued a receipt in favour of Zion Gospel Mission Ltd. Caveats dated 11 December 1991 were lodged in the Registry of Titles and in each case the caveator was The Zion Gospel Mission Ltd claiming interest as purchaser by virtue of the options and their exercise on 10 December 1991.

The completion date was 31 March 1992. On 14 February 1992 the plaintiffs` solicitors wrote to the fifth defendants with a request for a duly executed form DC2(CU) and on 11 March 1992 they wrote again this time with a request for form DC10 to be signed. Form DC2(CU) was an application to the Chief Planner for change of use from residential to `place of worship`. Form DC10 was an application also to the Chief Planner for outline planning permission to carry out `alterations and additions and change of use of existing three-storey residential flats to church, child care and kindergarten`. Not having received either the duly signed form DC2(CU) or form DC10 the plaintiffs` solicitors wrote to the fifth defendants on 13 March 1992 for these (and other documents) to be delivered on an urgent basis. On 18 March 1992 the fifth defendants delivered some of the documents and wrote to say that they would let the plaintiffs` solicitors have the duly signed forms DC2(CU) and DC10 `upon receipt of the same from [their] clients`. The same day they wrote to their clients the vendors enclosing the forms and said:

You may signify your consent by signing and returning the said forms. Otherwise, please let us have your instructions herein.

The letter said nothing about when the request for the forms to be signed had been made and also contained no advice at all as regards the signing of the forms. On 23 March 1992 the first defendant on behalf of the vendors wrote to the fifth defendants:

... we concluded that since it is so near completion date (seven days to be exact by the time this letter reaches your office), the buyers can apply the change of use under the respective names after 31 March 1992. The buyers have already waited for three months and we are sure they can wait another seven days.

In view of the above, we are returning the Form DC2 with Annexure and Form DC 10 unsigned to you.

The forms were returned unsigned and on 31 March 1992 the fifth defendants wrote to the plaintiffs` solicitors:

Please further note that the sale of the abovenamed property is not subject to your clients` obtaining approval to redevelop or to your clients` obtaining approval for change of use.

The purchase was not completed on 31 March 1992 and on 2 April 1992 the fifth defendants gave written notice to complete within 21 days. The plaintiffs` solicitors replied on 7 April 1992 to say:

Your clients` failure to sign and return to us the said forms have resulted in the following consequences:

(2) Our clients were and still are unable to proceed with their application for the minister`s licence under s 23(2) of the Companies Act.

Our clients are eager to complete but your clients have by withholding the said Forms prevented our clients from completing their intended purchase herein.

We are therefore instructed to and we do hereby give your clients notice to sign and return the said forms forthwith.

Further, please note that you are not to release the stakemonies or any part thereof before completion.

The forms referred to are forms DC2(CU) and DC10. After an exchange of correspondence the plaintiffs` solicitors wrote on 22 April 1992 to accept the breach and asked for confirmation that the deposit would be returned but the fifth defendants wrote on 23 April 1992:

We are instructed to inform you that if completion does not take place by 5pm today, our clients shall forfeit the 10% deposit paid by your clients.

Shortly before 5pm the same day the plaintiffs` solicitors gave written notice to the fifth defendants as stakeholders not to release to the vendors the money held by them. Completion did not take place that day or at all and on 27 April 1992 the fifth defendants released to the vendors the money held by them as stakeholders. It is not in dispute that the vendors have purported to forfeit the $250,000. The claim is for the return of the $250,000. There is a counterclaim by the vendors for a declaration that the deposit has been forfeited.

The plaintiffs` case against the vendors is that it was an implied term of each of the contracts that the vendors would cooperate with and/or assist the plaintiffs to obtain the licence under s 23(2) of the Companies Act to hold the units and that in breach of the contract the vendors failed or neglected to execute forms DC2(CU) and DC10. It is alleged that by reason of such breach the plaintiffs were unable to obtain the licence. The vendors deny the implied term and in particular they deny any obligation to execute these forms. They further allege that the failure to obtain the licence before the completion date is a breach of each of the contracts and the plaintiffs are not entitled to the return of the deposit. Finally they say that if the contracts are rendered illegal by the failure to obtain the licence then the plaintiffs are not entitled to the return of the deposit but they also say that if the contracts are performed `as envisaged` the acquisition by the plaintiffs would not be illegal. The argument is that the purchasers are the plaintiffs as individuals and not Zion Gospel Mission Ltd and they do not need any licence. The case against the fifth defendants is that as stakeholders they owed a duty to the plaintiffs to hold the $225,000 until completion or judicial determination of the rights of the parties or the consent of the parties to release the money. The fifth defendants say that their duty to hold the money as stakeholders pending completion came to an end upon expiry of the notice to complete and the plaintiffs` failure to comply with it so that the vendors were entitled to forfeit the 10% deposit. There were 12 contracts in all but I shall be referring to them as though there was only one contract for the sale of all the 12 units (collectively `land`) by the vendors to the plaintiffs.

Implied term

(1) Purchaser

The plaintiffs claim as trustees of Zion Gospel Mission Ltd (church) and in para 1 of the statement of claim it is alleged that the plaintiffs as trustees for and on behalf of the church are the purchasers of the land. The allegation is that the principal is the church and that it is the church that is the purchaser of the land.

There can be no doubt I think that the true purchaser was the church and the vendors knew that it was so. I have referred to the option and the way it is addressed. The option was exercised by the trustees for and on behalf of the church. This was stated in their solicitors` letter of 10 December 1991 and the fifth defendants as the vendors` solicitors acknowledged receipt of the letter and issued a receipt for the deposit in favour of the church. The third defendant in his affidavit said the first defendant informed him that the first plaintiff was a pastor and was acting for and on behalf of the church. He said that subsequently he met the first plaintiff and the first plaintiff assured him (and the first defendant)...