Pacific Rim Investments Pte Ltd v Lam Seng Tiong and Another

• Jurisdiction: Singapore
• Judge: Karthigesu JA
• Judgment Date: 08 July 1995
• Neutral Citation: [1995] SGCA 58
• Docket Number: Civil Appeal No 149 of 1994
• Date: 08 July 1995
• Year: 1995
• Published date: 19 September 2003
• Plaintiff Counsel: Cheong Yuen Hee and Lai Swee Fung (Toh Tan & Pnrs)
• Citation: [1995] SGCA 58
• Defendant Counsel: Michael Hwang and Tan Chuan Thye (Allen & Gledhill)
• Court: Court of Appeal (Singapore)
• Subject Matter: Whether court had jurisdiction to grant relief against forfeiture despite breach,Termination,Substantive or procedural right,Remedies,Purported termination by vendors for breach of provision for payment where time was of the essence,Equitable set-off,Whether set-off a substantive right available as a self-help remedy,Courts and Jurisdiction,Principles governing exercise of court's discretion,Whether equitable set-off available as a form of self-help remedy,Jurisdiction,Defences,Whether purchasers were entitled to exercise equitable set-off,Whether court had jurisdiction to grant relief against forfeiture,Whether purchasers could set off vendors' claim against their own,Interest payable by purchasers on late payment of instalment of purchase price,Equitable grounds necessary to support exercise of right,Whether justified,Court's jurisdiction to grant relief,Liquidated damages payable by vendors on late delivery of vacant possession,Sale of land,Equity,Land,Sale and purchase agreement,Breach by purchaser of contractual provision as to payment where time was of the essence,Relief against forfeiture of interest in land

Cur Adv Vult

This is an appeal against the decision of Warren LH Khoo J, in which he granted specific performance of the sale and purchase agreement dated 2 November 1992 (the agreement) made between the appellants (the vendors) and the respondents (the purchasers), whereby the vendors agreed to sell to the purchasers a semidetached house, No 41 Lorong Marzuki, Singapore (the property) at the price of $1m. [See [1995] 2 SLR 194 .] The proceedings were brought by the purchasers following a purported termination of the agreement by the vendors on 25 January 1994. The sale and purchase has since been completed on 15 September 1994 pursuant to the order of the learned judge.

The facts

When the agreement was signed in 1992, the property was then under construction. Although the vendors were not developers subject to the Housing Developers (Control and Licensing) Act (Cap 130) (the Act), the agreement was modelled on the form as prescribed by the Rules made under the Act. The agreement provided, inter alia, for payment of the purchase price by instalments. By cl 3 thereof, the purchasers were required to pay each instalment within 14 days after the receipt of a notice from the vendors that a particular stage of development has been completed. The progress payments which are material in this appeal are those under cl 3(1)(h) and (i) and these provisions are as follows:

(1)The purchase price shall be paid by the purchaser to the vendor by instalments and at the times following that is to say:

(h) within fourteen (14) days after receipt by the purchaser of the vendor`s notice to take possession ... a sum equal to twenty (20) per cent of the purchase price;

(i) on completion of the sale and purchase of the building unit in accordance with cl 14 hereof, the balance ten (10) per cent of the purchase price to be dealt with as follows:

(aa) two (2) per cent of the purchase price shall be paid forthwith to the vendor;

(bb) the remaining eight (8) per cent of the purchase price shall be paid to the purchaser`s solicitors as stakeholders, and the said sum or the balance thereof ( after any deduction has been made in accordance with cl 18 hereof and for moneys owing to the purchaser ) shall be paid to the vendor within seven (7) days ... . [Emphasis is ours.]

Under cl 4 time was made of the essence of the contract in respect of the payment of any instalment of the purchase price or any part thereof. The consequences of a failure to comply with cl 3 were provided for in cl 5, under which, essentially, the vendors were entitled to interest for the late payment of any instalment and the interest was to run from the end of the period as stated in the relevant notice of payment. Clause 5 also provided that if the instalment and interest were unpaid for any period in excess of 14 days after the expiry of the period stated in the notice, the vendors were at liberty to give the purchasers a further notice in writing of not less than 14 days of their intention to treat the agreement as having been repudiated by the purchasers and upon the expiry of the said notice, the agreement would be annulled, unless in the meanwhile such unpaid instalment and interest had been made within the period stated in the notice. Once again, time was expressed to be of the essence. If the agreement was so annulled, the vendors would be entitled to resell the property and forfeit 20% of the purchase price out of the instalments paid to them and refund the balance of the instalments, if any, to the purchasers.

Finally, it is also relevant to refer to cl 11, by which the vendors agreed to deliver vacant possession to the purchasers on or before 30 September 1993. In the event of a delay in giving vacant possession, the vendors were liable to pay to the purchasers liquidated damages at the rate of 10% pa on the total amount of all the instalments of the purchase price which had already been paid, calculated daily from 1 October 1993 to the actual date of giving of vacant possession.

Having set out in summary this contractual scheme, we now advert to the dispute which has arisen between the parties. By 30 July 1993, the purchasers had paid 70% of the purchase price as provided for under paras (a) to (g) of cl 3(1). The next stage is that under para 9(h), and it was for the vendors to give notice to the purchasers to take possession of the property. That they had failed to do prior to the date stipulated in cl 11, ie 30 September 1993. Only on 10 December 1993 did the vendors give to the purchasers the notice to take possession of the property under cl 3(1)(h) (cl 3(1)(h) notice). By that date, the vendors had become liable to pay to the purchasers liquidated damages under cl 11. Nevertheless, upon receipt of the cl 3(1)(h) notice, the purchasers were obliged to pay to the vendors 20% of the purchase price amounting to a sum of $200,000 within 14 days, ie by 24 December 1993. The purchasers, however, failed to comply with the cl 3(1)(h) notice and did not pay the vendors the sum of $200,000 by 24 December 1993. By 5 January 1994, the certificate of title to the property had already been issued and the vendors were in a position to complete. They, therefore, gave a notice pursuant to cl 3(1)(i) (the notice to complete), requiring the purchasers to complete the purchase and pay the last 10% of the purchase price within 14 days, ie by 19 January 1994. The amount payable was quantified by the vendors in the sum of $21,650 which included survey fees amounting to $1,650.

On 8 January 1994, the purchasers paid to the vendors a sum of $100,000 being part payment of the 20% of the purchase price under the cl 3(1)(h) notice. Following that, the vendors exercised their rights under cl 5 of the agreement, and on 10 January 1994 they served a notice under cl 5(1) (cl 5(1) notice) requesting the purchasers to pay the `outstanding progress instalment due under cl 3(1)(h) of the sale agreement together with interest thereon` within 14 days from the receipt of the notice, failing which the vendors would treat the agreement as having been repudiated by the purchasers. Thus, the expiry date of this notice was 25 January 1994. In response to the cl 5(1) notice, the purchasers paid the remaining $100,000 under cl 3(1)(h) on 12 January 1994. However, they did not pay the interest which had accrued from the late payment of the instalment under cl 3(1)(h). On 18 January 1994, the solicitors for the purchasers wrote to the solicitors for the vendors to explain their position in the following terms:

The interest for late payment of progress instalments amounts to $931.50.

Vacant possession was given to our clients today. The liquidated damages payable by your clients is $21,059.89.

Kindly note that at completion, we require a cashier`s order for the balance sum of $20,164.39 issued in favour of [respondents] ... .

In response, solicitors for the vendors, on 20 January 1994, wrote thus:

We refer to the above matter and to the teleconversation between our respective clerks on 19 January 1994 wherein we have informed you that our clients have executed the transfer and that we are ready to complete this matter.

We are instructed by our clients that they will charge your clients interest for late completion herein with effect from the 19th instant up to the actual date of completion.

We are also instructed by our clients that they are not agreeable to your clients` claim for liquidated damages for the period 30 September 1993 to 18 January 1994 amounting to $21,095.89.

It was unclear whether the vendors were `not agreeable` to the liability or the amount of liquidated damages. But, certainly there was liability on the part of the vendors to pay liquidated damages, and it seems to us that the dispute could relate only to the quantum.

On 22 January 1994 the purchasers` solicitors wrote the vendors` solicitors stating, inter alia, the following:

We wish to inform you that we are also ready to complete but are not prepared to do so unless you settle our clients` claim for liquidated damages at completion. Our computation is according to cl 11 of the said sale and purchase agreement. There will be no compromise over this. If you think our computation is not correct, please clarify ... .

In the circumstances, you are not entitled to charge interest as it is clear you are not in a position to complete this matter. Kindly note that if we do not hear from you by Monday, 24 January 1994, our clients will charge your clients interest for late completion with effect from 25 January 1994.

The vendors then replied on 24 January 1994 as follows:

... Your clients` claim for the liquidated damages should be for the period 1 October 1994 to 10 December 1994 amounting to $13,616.38 and not $21,059.89 as computed by you.

... In any event, any deduction for liquidated damages should be made from the balance of the progress instalment due under s 3(1)(i)(bb) of the sale agreement.

Our clients maintain that they are entitled to charge your clients interest for any late payment of the outstanding progress instalments.

For your information, the interest for late payment of the progress instalment due under cl 3(1)(h) of the sale agreement is $958.90. Our clients require this sum to be paid to us immediately.

However, the very next day, the vendors wrote to the purchasers informing them that the vendors regarded the agreement as having been repudiated by the purchasers, as the latter had defaulted in the payment of the late payment interest within 14 days of the cl 5(1) notice, and, therefore, the agreement had been annulled. Following the purported annulment of the agreement, the purchasers commenced proceedings against the vendors.

The decision below

Warren LH Khoo J, who heard the case, decided that the only issue was whether the vendors were entitled to treat the agreement as having been repudiated by the purchasers....