Sheriffa Taibah bte Abdul Rahman v Lim Kim Som

• Jurisdiction: Singapore
• Judge: Michael Hwang JC
• Judgment Date: 28 February 1992
• Neutral Citation: [1992] SGHC 43
• Docket Number: Suit No 5340 of 1984
• Date: 28 February 1992
• Published date: 19 September 2003
• Year: 1992
• Plaintiff Counsel: Cheong Yuen Hee and Tan Teng Muan (Mallal & Namazie)
• Citation: [1992] SGHC 43
• Defendant Counsel: Vincent Yeoh (Phang & Co)
• Court: High Court (Singapore)
• Subject Matter: When rescission available,Whether plaintiff could give good title free from encumbrances,Civil Law Act (Cap 43, 1988 Ed),Sale and purchase of property,Inducement,Whether contract frustrated,Failure to complete,Law Society's Conditions of Sale 1981 condition 29,Compulsory acquisitions,Land Acquisition Act (Cap 272, 1970 Ed) ss 3, 5, 6, 8, 10, 16, 17, 18, 33 40 & 48,ss 3, 5, 6, 8, 10, 16, 17, 18, 33, 40 & 48 Land Acquisition Act (Cap 272, 1970 Ed),Interest,Pleadings,Civil Procedure,Contract,'Acquisition',Effect of,Land,Discharge,Whether plaintiff entitled to discretionary interest,Land Acquisition Act (Cap 272, 1970 Ed) ss 3, 5, 6, 8, 10, 16, 17, 18, 33, 40 & 48,Discretion of court,Amendment,s 20 State Lands Encroachments Act (Cap 286, 1970 Ed),Costs,No evidence of reliance,Whether property became state land upon issuing of declaration of intended acquisition,Misrepresentation,Declaration of acquisition of property issued on day of notice to complete,Whether threat of acquisition of property was a defect in title,'Encumbrance',Whether notice of intended acquisition constituted an 'encumbrance',Whether notice to complete valid,Principles applied,Frustration,Words and Phrases,Vendor's duty of disclosure of defects in title,Failure of defendant to prove that words allegedly forming the misrepresentation were said,When application should be made

Cur Adv Vult

This case raises a number of interesting and important points of conveyancing law and practice arising from the compulsory acquisition of a property which has been sold but not yet conveyed.

The case may conveniently be dealt with in two segments:

(a) the arguments arising out of the undisputed facts; and

(b) the arguments arising out of the disputed facts.

I will deal first with the undisputed facts where most of the questions of law arise.

I The undisputed facts

(1) The facts

On 29 April 1983 the plaintiff, through her attorney, granted an option in writing (`P1/AB6`) to the defendant to purchase a piece of land known as Lot 1120 Mukim 2, together with the buildings erected on the property, described in the option as No 74 King`s Road (but in fact comprising six structures).

The purchase price of the property was $2,138,200, and the defendant paid to the plaintiff a sum of 5% of the purchase price amounting to $106,910 by way of option fee with a further 5% being payable on the exercise of the option within two weeks. On 12 May 1983 the option was duly exercised (`AB10`) and the further 5% paid. I will refer to the exercised option as `the agreement`.

The sale was subject to the Singapore Law Society`s Conditions of Sale 1981 (`the Law Society`s Conditions`) and was also subject to the title of the property being in order and free from encumbrances.

Under the terms of the agreement, the date fixed for completion was 7 July 1983. Completion did not take place on this date, and on 13 July 1983 the plaintiff`s solicitors gave the defendant a 21-day notice to complete (`AB11`) under condition 29 of the Law Society`s Conditions. On the same day, a declaration was issued on behalf of the President of the Republic of Singapore, stating that the property was required for a public purpose. Possibly, this acquisition was due to or precipitated by a fire on the property on 17 February 1983. On 19 July 1983 the declaration was published in the government gazette (`AB12`) pursuant to s 5 of the Land Acquisition Act (Cap 272, 1970 Ed) (now Cap 152)). I will refer to this enactment as `the Act` or `the Singapore Act`, and for the purposes of this judgment, I will refer to the text and section numbers of the 1970 edition under which the property was acquired. There is no significant difference between the two versions of the sections referred to in this judgment, save that in ss 5(2), (3) and 6, the word `declaration` in the 1970 edition has been amended to `notification` in the 1985 edition.

On 1 August 1983, the defendant`s solicitors wrote to the plaintiff`s solicitors (`AB13`/`DB17`) stating that, in view of the declaration in the gazette, the defendant did not intend to go through with the purchase. The defendant`s solicitors also made the following assertions:

(1) The defendant was entitled to take this position in view of cl 5 of the agreement (which I will discuss later).

(2) The Presidential declaration and gazette notification had prevented the plaintiff from conveying the property. The notice to complete was not valid, being dated the same day as the date of the declaration. The agreement had been frustrated.

(3) As the parties had agreed on the purchase price based on the common belief that the property was suitable for or capable of redevelopment, and the property had become liable to compulsory acquisition before the option date, the acquisition by the government entitled the defendant to rescind the contract for mutual mistake.

The letter concluded with a request for the refund of the 10% deposit.

The plaintiff, by her solicitors` telex dated 5 August 1983 (`PB21`), joined issue with these contentions and claimed to forfeit the deposit (presumably pursuant to condition 29(4)(b) of the Law Society`s Conditions as the plaintiff`s 21-day notice had by then expired). If the plaintiff`s course of action was legally correct, then the agreement would have been terminated by the plaintiff by this telex.

The compulsory acquisition was completed in due course, and on 23 August 1984 the Collector of Land Revenue awarded compensation of $450,000 which was paid (together with interest) to the plaintiff.

Possession under s 16 of the Act was taken by the Collector on 28 May 1985 and entry in the Registry of Deeds pursuant to s 18 was made on 1 June 1985. I will discuss the significance of these acts later.

(2) The plaintiff`s claims

On these facts, the plaintiff made the following claims (as set out in para 17 of the amended statement of claim):

(a) Purchase price $2,138,200.00

(b) Interest on the balance of the purchase price of $1,924,414.57 at the rate of 12% pa from 7 July 1983 to 5 August 1983 18,980.53

(c) Interest at the rate of 12% pa on the balance of the purchase price of $1,924,414.57 from 6 August 1983 until 19 August 1985 470,717.08 $2,627,897.61

Less

(i) 10% deposit paid $213,820.00

(ii) Compensation moneys and accrued interest received from the Collector of Land Revenue on 19 August 1985 $451,501.25 665,321.25 $1,962,576.36

Add

Interest at the rate of 12% pa on $1,962,576.36 from

(20) August until payment.

Alternatively, the plaintiff claimed damages for breach of contract.

(3) The defences on the undisputed facts

On the undisputed facts the defendant raised the following defences:

(1) Under condition 29(2) of the Law Society`s Conditions, a notice to complete `shall only be effective if the party giving the same at the time the notice is sent is ... ready able and willing to complete ...`. The plaintiff`s notice to complete was ineffective and null and void on 13 July 1983 (when the Presidential declaration was made, stating that the property was required for a public purpose), or alternatively, on 19 July 1983 (when the Presidential declaration was gazetted) because on one or other of those dates the plaintiff had her interest in the property converted to a right to compensation by virtue of the Act, and was precluded from completing the sale of the property to the defendant. The vendor was therefore not ready, able and will to complete.

(2) As performance of the agreement had become impossible, the agreement was frustrated and this released the defendant from further performance of the agreement because the plaintiff was unable to pass good title to the property and could not pass a title free from encumbrances.

(3) Alternatively, the sale and purchase agreement became frustrated or impossof performance because of a radical change in the subject matter of the contract.

(4) The law on the undisputed facts

These three defences are closely related and rest on the underlying proposition that, where a sale and purchase agreement for land has been entered into but not completed, the parties will be discharged from performance if, prior to completion, a notification under s 5 of the Act is issued. Although s 5 speaks of `notification`, the actual notification is commonly in the form of a Presidential declaration and I will use the terms `notification` and `declaration` interchangeably.

In his solicitors` letter of 1 August 1983 (AB13), the defendant relied on cl 5 of the agreement as the primary justification for his refusal to complete the sale and purchase. This clause provided that the sale and purchase was subject to satisfactory replies to legal requisitions filed with the various government departments. Although paras 6 and 7 of the original defence and counterclaim pleaded that the defendant was entitled to rescind pursuant to this clause, this particular defence was abandoned when the defence and counterclaim was first amended on 20 October 1984. Nothing therefore turns on this provision and the discussion that follows will focus on the issues raised by the three defences set out above.

There appears to be no previously reported case in Singapore directly on the point. However, conveyancers in Singapore have, no doubt, relied on the proposition which appears in every relevant English textbook to the effect that in such a situation there is normally no frustration of the sale and purchase agreement and the parties are bound to complete the purchase (see, for example, Barnsley`s Conveyancing Law and Practice (3rd Ed, 1988) at p 233). This means that the purchaser would, sooner or later after completion of the sale and purchase, have the land taken away by the state and receive in exchange an appropriate sum of compensation.

(a) Hillingdon : The authority normally cited for this proposition is Hillingdon Estates Co v Stonefield Estates Ltd [1952] Ch 627 The headnote to this case reads as follows:

In 1938 certain vendors contracted to sell and purchasers to buy freehold land in two portions, the contract providing that the purchasers should in each conveyance or transfer convenant not to use the land otherwise than as a building estate to be developed. The purchasers paid a deposit on the whole purchase price and completed the purchase of the first portion. That of the second was delayed by, among other things, the outbreak of war in 1939. In 1948 the local authority made a compulsory purchase order affecting, among other land, all of the second portion, and the purchase of it was never completed, the purchasers ultimately paying the vendors interest on the purchase price from 22 June 1939 to 31 January 1949. In 1949 the local authority gave the purchasers and the vendors notice of the order and served on them notices to treat. The purchasers brought an action alleging that they had entered into the contract on the footing that they would be able to develop the land after completion and claiming a declaration that they were discharged from liability under the contract and return of the interest. The defendants counterclaimed for specific performance of the contract so far as it related to the second portion:

Held, dismissing the action,

that, in such a case, where...