Re 41B Lorong 17 Geylang, Singapore 388564

• Judge: Judith Prakash J
• Judgment Date: 11 July 2007
• Neutral Citation: [2007] SGHC 112
• Citation: [2007] SGHC 112
• Year: 2007
• Subject Matter: Legal requisitions,Option to purchase,Whether reply unsatisfactory,Conveyance,Sale of land,No intention to purchase property,Relevant considerations,Whether term to refund option moneys if legal requisitions unsatisfactory ought to be implied,Whether exercise of option effective,Property said to be affected by road reserve,Land,Recovery of option moneys
• Published date: 17 July 2007
• Plaintiff Counsel: Tan Siew Tiong (Lawhub LLC)
• Court: High Court (Singapore)
• Defendant Counsel: Prabhakaran Narayanan Nair (Ong Tan & Nair)

11 July 2007

Judith Prakash J:

Background

1 The defendant (“the vendor”) is the owner of the land and premises known as 41B Lorong 17 Geylang, Singapore (“the property”). On 2 September 2006, in consideration of the payment of $5,000, the vendor granted the plaintiffs (“the purchasers”), who are husband and wife, an option to purchase the property.

2 The option document was a rather clumsily drafted one. The first page contained the vendor’s offer to sell the property to the purchasers and stated that this offer could be accepted by the purchasers signing at the foot of the copy of the option that was marked “Acceptance Copy” and delivering the same duly signed together with five percent of the purchase price less the option money of $5,000 to the vendor’s solicitors on or before 4pm on 17 September 2006.

3 The next two pages of the document bore the heading “Terms of Sale” and contained 16 clauses. In the context of the present application, the relevant clauses were cll 7, 8, 9 and 14. These provided as follows:

7. The property is sold subject to the Purchaser’s Solicitors receiving satisfactory replies to their requisitions sent or to be sent by them to the various Government Departments including the MRTC, the Road Interpretation Plan from the Development Control Division and the Drainage Interpretation Plan from the Drainage Department and in the event of any of the replies to such requisitions being found unsatisfactory the Purchasers may annul the sale in which event all the monies paid by the Purchasers to the Vendors shall forthwith be refunded to the Purchasers without any interest or deduction whatsoever and neither party shall have any claims against the other for costs damages or compensation whatsoever (sic) each party to pay his/their own legal costs in respect of the abortive sale and purchase Provided that the Purchasers shall not raise any objection or be entitled to annul the sale if the property is affected by a Category 5 Road which may be shown on the Road Interpretation Plan and the Purchasers shall be bound to complete the purchase in accordance with and subject to the terms and conditions herein contained.

8. The option money Dollars Five Thousand Only (S$5,000.00) shall be treated as part payment towards the 5% deposit of the purchase price which shall be paid on the exercise of the option as aforesaid.

9. If this option is not exercised on or before the date hereby stipulated, this option herein contained shall lapse and the option money paid shall be forfeited.

…

14. This option when exercised shall constitute a binding contract.

4 It would be noted therefore that although there was only one document, it was capable of giving rise to two distinct contracts, a rather odd situation which, however, is commonly encountered in relation to real property transactions in Singapore. The first contract would be the unilateral contract (the option) constituted by the offer (for valuable consideration) by the vendor to sell the property to the purchasers if they signed the Acceptance Copy and paid the deposit by a certain date. The second would be the actual synallagmatic contract for the sale and purchase of the property (the sale contract) which would come into existence upon the proper exercise of the option by the purchasers. Which of the clauses of the Terms of Sale applied to which distinct contract would really be a matter of construction of each individual clause because the presentation of the document as a whole did not clearly differentiate between the two contracts. From my reading, it would appear that of the clauses under the Terms of Sale, only cl 9 related exclusively to the option. The other clauses, apart from cl 16 which dealt with payment of commission to the vendor’s agent and cl 1 which specified that the sale price was $285,000 (and therefore was applicable to both the option and the sale contract), related only to the sale contract. Clause 14 which read “this Option when exercised shall constitute a binding contract” must be interpreted as meaning that when the option was exercised, a binding sale and purchase contract in respect of the property would come into existence, rather than as meaning that there was no contract of any sort in existence before the exercise of the option.

5 After the option was granted, the purchasers’ solicitors, M/s K K Yap & Partners (“KKY”) sent out legal requisitions to the usual government bodies. On 15 September 2006, KKY received a reply from the Land Transport Authority (“LTA”), which reply took the form of the Road Interpretation Plan or Road Line Plan (“the RIP”). The RIP indicated that the property was affected by lines of road reserve as marked on that plan. These reserves were to allow the widening of Lorong 17 Geylang and the two back lanes that ran along the boundary lines of the property. The purchasers were concerned that the road reserves might adversely affect the property. Therefore KKY wrote to the vendor’s solicitors, M/s Ong Tan & Nair (“OTN”) asking for an extension of the deadline for the exercise of the option from 17 September 2006 to 25 September 2006 so that the purchasers could investigate the situation. On 18 September 2006, OTN replied to state that the vendor would not agree to any extension of the option and that the option had to be exercised by 18 September itself. It was made clear to KKY that there was no question of the vendor returning the option moneys paid if the purchasers did not exercise the option as the vendor did not accept that there had been an unsatisfactory reply to the LTA requisition.

6 The purchasers were in a dilemma. They wanted the option money back. They were afraid that if they did not exercise the option, the option money would be forfeited. They considered that to get the money back, they had no choice but to exercise the option. They therefore signed the Acceptance Copy of the option and their solicitors returned it to OTN together with a cheque for $9,250 being the balance of the five percent of the purchase price payable on exercise of the option. The contents of...