Peh Kwee Yong v Sinar Co (Pte) Ltd

• Jurisdiction: Singapore
• Judge: Punch Coomaraswamy J
• Judgment Date: 24 July 1987
• Neutral Citation: [1987] SGCA 12
• Docket Number: Civil Appeal No 47 of 1984
• Date: 24 July 1987
• Published date: 19 September 2003
• Year: 1987
• Plaintiff Counsel: M Karthigesu and Mary Tan (Ng Liang Poh & Co)
• Citation: [1987] SGCA 12
• Defendant Counsel: Teo Guan Teck (Teo Guan Teck & Co)
• Court: Court of Appeal (Singapore)
• Subject Matter: Land,Whether purchaser may annul sale and claim 10% deposit,Power of court to supervise exercise of right to rescind contract,Clause in option providing that purchaser may annul sale if answers to requisitions unsatisfactory to purchaser or their solicitors,Conditions of sale,Property affected by road widening,Sale of land,Legal requisitions

Cur Adv Vult

The property above described, Lot 3653 of Mukim IV with a house thereon known as No 9 First Avenue, Singapore (the property), was at the material time owned by Sinar Co (Pte) Ltd, the respondents. On 25 November 1982 the respondents, in consideration of a sum of $20,000 paid by Peh Kwee Yong, the appellant, by a document in writing called Option (the option), offered to sell to the latter the property at a price of $1,860,000 and on the terms and conditions as therein provided. One of the terms of the sale is cl 6 (cl 6), which is as follows:

The property is sold subject to your solicitors receiving satisfactory answers to all requisitions sent to or to be sent by them to the various Government departments and in the event of any of the answers to such requisitions being found unsatisfactory to you or your solicitors you may annul the sale in which event the 10% deposit paid by you shall forthwith be refunded to you without any interest or deductions whatsoever and neither party shall have any claims or demands against the other for costs damages or compensation whatsoever each party to pay his own legal costs in respect of the abortive sale and purchase. Provided if such replies to such requisitions are not received by the date of completion as aforesaid, then such requisitions shall be deemed to be satisfactory.

It is this term that has given rise to the present litigation.

Soon after receipt of the option, the appellant`s solicitors, on 30 November 1982 submitted to various government departments legal requisitions including a requisition to the Road Division of the Public Works Department (PWD). He also applied to the PWD, on 3 December 1982 for a road interpretation plan relating to the property. While awaiting the receipt of the answers to these requisitions, the appellant, on 4 December 1982 accepted the respondents` offer, and in accordance with the terms thereof paid to the respondents` solicitors a sum of $166,000, being the 10% of the purchase price less the initial payment of $20,000, to be held by the solicitors as stakeholders pending completion of the sale. A valid and binding agreement was thus made between the parties.

After the conclusion of the agreement, the appellant`s solicitors received the answers to the legal requisitions, all of which appeared to be quite innocuous. On 16 December 1982 or thereabout, the appellant`s solicitors further received the road interpretation plan relating to the property from the Road Division of the PWD which showed a narrow strip of the property abutting First Avenue being affected by a proposal for road widening. Immediately, the appellant`s solicitors wrote a letter dated 16 December 1982 to the respondent`s solicitors, informing the latter that the property was affected by road widening and also alleging that there was a misrepresentation made to the appellant that the land area of the property was over 14,000 sq ft whereas the actual land area was only 12,900 sq ft. The letter also intimated that the appellant reserved his rights to rescind the contract and to demand for a refund of the 10% of the purchase price, and enquired whether the respondents would agree to a reduction of the purchase price. The allegation of misrepresentation was not admitted to by the respondents and no reduction of the purchase price was agreed to.

On 4 January 1983 the appellant`s solicitors gave to the respondents` solicitors a notice in writing pursuant to cl 6 that the appellant would not be proceeding with the purchase of the property and demanded for the return of the 10% of the purchase price. The respondents` solicitors replied on 11 January 1983 stating, inter alia,that the answer to the requisition - which in the context of the letter meant the road interpretation plan - was not unsatisfactory and disputed that the appellant was entitled to annul the sale and purchase of the property. Consistently with the stand taken, the appellant did not proceed with completion of the purchase of the property under the agreement. Immediately after the time for completion as provided in the agreement had elapsed, the respondents` solicitors followed up with a letter dated 29 January 1983 to the solicitors for the appellant giving notice that the purchase was required to be completed within 21 days, and in default of completion by then, the respondents would treat the contract as at an end and forfeit and retain for their benefit the deposit paid by the appellant. Thereupon, the appellant, on 4 February 1983 applied to the High Court in Originating Summons No 78 of 1983 for numerous declarations, of which eventually only the following two declarations were pursued by the appellant, namely: (i) a declaration that pursuant to cl 6 the appellant was entitled to rescind and annul the sale and purchase of the property on the ground that the appellant had found that the answer to the requisition from the PWD unsatisfactory, in that the property was affected by a proposal for road widening, and (ii) a declaration that the appellant had effectively rescinded the purchase of the property on 4 January 1983. The application was resisted by the respondents and was heard before Lai Kew Chai J. At the instance of Lai Kew Chai J the appellant`s solicitors caused the portion of the property affected by the proposal for road widening to be surveyed, and on survey, it was found to contain an area of 30.6 sq m (329 sq ft). This area appeared to have been accepted by both parties.

It was argued on behalf of the appellant that under cl 6, the appellant was entitled to annul the sale and purchase of the property as the answer to the requisition, iethe road interpretation plan, was unsatisfactory to the appellant. The question whether or not the answer to the requisition was unsatisfactory depended on the subjective view of the appellant, and the appellant had found the answer unsatisfactory. This argument was of course founded on the express words in cl 6, namely, `in the event of any of the answers to such requisitions being found unsatisfactory to you or your solicitors`. The learned judge, however, rejected this argument and held that a true and natural construction of cl 6 must place it on an objective and reasonable basis and that only those answers to the requisitions which were unsatisfactory to a reasonably determined purchaser could entitle such a purchaser to annul the sale and purchase agreement. On the facts, he held that the area affected by the proposed road widening was so inconsequential that no reasonably determined purchaser would regard it as unsatisfactory, and he therefore refused to make the declarations sought by the appellant. In the result, the application was dismissed with costs.

Against that decision, this appeal is now brought. Before us three issues were raised:

(i) whether the application for the road interpretation plan relating to the property is a requisition within the meaning of cl 6;

(ii) whether, on a true construction of cl 6, the unsatisfactoriness of any of the answers to the requisitions is to be determined on a subjective or an objective basis, and

(iii) if such a question is to be determined on a subjective basis, whether the appellant could in the circumstances of the case validly rescind or annul the sale and purchase agreement, as he sought to do.

The first issue turns on what is meant by `requisition`; that word has not been defined in the sale and purchase agreement. Generally, amongst conveyancing lawyers in Singapore, requisitions connote standard forms of questionnaires prescribed by government departments in which members of the public are required to submit in their application for information relating to properties. But the term, `requisition`, is not a term of art and has no special or defined meaning even amongst conveyancing lawyers. In our view, there is no reason why it should not be given its ordinary and natural meaning, and in that sense, requisition is synonymous with enquiry or request for information. The application dated 3 December 1983 submitted by the appellant`s solicitors to the PWD for a road interpretation plan was in a standard form prescribed by the PWD and is an enquiry or request for information relating to the property. Again, amongst conveyancing lawyers in Singapore, the purpose of a road interpretation plan is well understood, and we need not repeat what we said, obiter, in Ng Khong Lim v Nancy Teo [1984-1985] SLR 247 . Suffice here to say that a road interpretation plan relating to a property generally gives information on the requirement, if any, present or future, of any road line or road widening on or affecting the property. On this basis, the application of 3 December 1983 submitted on behalf of the appellant to the PWD is in the ordinary sense a `requisition` and is a requisition for the purpose of cl 6. It therefore follows that the road interpretation plan issued by the PWD in response to the appellant`s application constitutes an answer to the requisition.

We next turn to consider the meaning and effect of the other controversial words in cl 6, namely, `in the event of any of the answers to such requisitions being found unsatisfactory to you or your solicitors`; the controversy is centred on the last five words. As a prelude to his submission on this point, Mr Karthigesu on behalf of the appellant sought to set out the background against which the sale and purchase agreement in this case was made. He pointed out that this was a case where the contract was not made in conformity to `the old established practice` where a contract for the sale and purchase of land would be entered into only after all the necessary searches and investigations had been carried out and a purchaser would then decide whether or not to enter into such a contract. The appellant, he said, was granted an option for which he paid a sum of $20,000 which was non-refundable, and within a...