Soo Nam Thoong and another v Phang Song Hua

• Jurisdiction: Singapore
• Judge: Chan Seng Onn J
• Judgment Date: 01 July 2011
• Neutral Citation: [2011] SGHC 159
• Court: High Court (Singapore)
• Hearing Date: 15 June 2011
• Docket Number: Originating Summons No. 359 of 2011/K
• Plaintiff Counsel: Tan Lam Siong (L S Tan & Co)
• Defendant Counsel: Aqbal Singh s/o Kuldip Singh (Pinnacle Law LLC)
• Subject Matter: Land,Conveyance,Legal requisitions
• Published date: 06 July 2011

Chan Seng Onn J: Introduction

Originating Summons No. 359 of 2011/K deals with an application under s 4 of the Conveyancing and Law of Property Act (Cap 61, 1994 Rev Ed) (“CLPA”) regarding the sale of a two-storey shophouse at 145 and 145A Sims Avenue, Singapore 387467 (“the Property”). The Plaintiffs are asking for: (1) a declaration that the reply to the requisition of the Land Transport Authority (“LTA”) contained in Road Line Plan dated 28 April 2011 (PO: E263232001004H) (“ 28 April 2011 Road Line Plan”) relating to the Property is unsatisfactory; (2) a declaration that the Plaintiffs are entitled to rescind the Option to Purchase dated 1 April 2011 (“Option”) granted by the Defendant in respect of the Property pursuant to clause 10 thereof; (3) a declaration that the Plaintiffs’ notice of rescission in their said solicitors’ letter dated 28 April 2011 is valid; (4) an order that the Defendant do pay to the Plaintiffs the sum of S$285,000.00 being all the monies paid by the Plaintiffs to the Defendant together with interest at such rate and from such period as the court should think fit and costs of this application.

Facts Background to the Dispute

The Plaintiffs were granted the Option to purchase the Property, which was 217.5 sq m, for $2.85 million. In return for the Option, they paid an option fee of $28,500.00. On 15 April 2011, they exercised the Option and paid a further sum of $256,500 (10% of the purchase price minus the option fee). Following the exercise of the Option, the Plaintiffs’ solicitors sent their legal requisitions to the various relevant authorities, including the LTA. The original completion date of the Option was 10 June 2011.

In LTA’s reply contained in the 28 April 2011 Road Line Plan, the Plaintiffs’ solicitors noted that a substantial portion of the Property was coloured in red and required as Road Reserve. According to paragraph 3.1 of the Explanatory Note accompanying the 28 April 2011 Road Line Plan, the portions of land required as Road Reserve are to be:

set aside when development/redevelopment takes place on the subject lots or when road construction/ improvement is carried out by the Land Transport Authority, whichever is earlier.

(emphasis added)

The LTA confirmed in a letter dated 5 May 2011 that the land is required to be set aside when development/redevelopment takes place or when road construction/improvement is carried out by LTA, whichever is earlier.

The Plaintiffs estimated that about 40% of the Property was required as Road Reserve and will have to be set aside when either development/redevelopment or road construction/improvement is carried out. The Plaintiffs therefore argued that LTA’s reply was clearly unsatisfactory since the road reserve will require a substantial portion of the land to be surrendered to LTA and the existing building to be reconstructed when road construction or improvement is to be carried out by LTA. This will substantially diminish the Property’s value. Their solicitors gave notice to the Defendant’s solicitors on 28 April 2011 that the Plaintiffs were rescinding the agreement pursuant to clause 10 of the Option.

Clause 10 of the Option is set out as follows:

The sale and purchase herein shall be subject to the Purchaser’s solicitors receiving satisfactory replies to their legal requisitions and applications for Interpretation Plans to the various Government Departments and Land Transport Authority (LTA) insofar as such replies/Interpretation Plan relate to the Property and if any of such replies and/or Interpretation Plan are found to be unsatisfactory then this Agreement may be rescinded at the Purchaser’s Option and in such event the Vendor shall forthwith refund to the Purchaser all monies paid by the Purchaser to the Vendor or the Vendor’s solicitors but without any interest, compensation or deductions whatsoever and thereupon neither party shall have any claim or demand against the other for costs, damages, compensation or otherwise. PROVIDED ALWAYS that:

(a) the answers from the Property Tax Department Environmental Health, Public Works and Sewerage Departments and Building Control Division shall not be deemed unsatisfactory unless the same disclose that the property is affected by any notice or order which has not been complied with and which is incapable of being complied with by the Vendor before completion; (b) any road or drainage line schemes or proposals (whether actual or proposed or to be implemented only if there is any redevelopment of the property) affecting any part of the property shall be construed as satisfactory; (c) any reply to legal requisitions are not received by the date fixed for completion shall be deemed satisfactory.

[emphasis added in italics, emphasis in bold in original]

The Defendant’s solicitors replied on 29 April 2011 that the Plaintiffs had no right to rescind because of clause 10(b) of the Option.

The dispute thus centred on the legal interpretation of clause 10(b) of the Option.

The Legal Interpretation of Clause 10(b) of the Option The Plaintiffs’ Interpretation

The Plaintiffs’ interpretation gave clause 10 (b) a narrow ambit. The Plaintiffs argued that proviso (b) specifically contains the words in parentheses “(whether actual or proposed or to be implemented only if there is any redevelopment of the property)” (emphasis added). Proviso (b) thus failed to deal with the situation, in the present case, where the road reserve will also be implemented when road construction/improvement is carried out.

The Plaintiffs have thus read the words in the parentheses “(whether actual or proposed or to be implemented only if there is any redevelopment of the property)” as limiting what will be deemed as a satisfactory reply by the LTA. The limiting phrase “only if there is any redevelopment of the property” will apply to “actual”, “proposed” and “to be implemented”. Under such a reading, clause 10 (b) will not deprive the Plaintiffs of their right to rescind under the general provision of clause 10 which makes the Option “subject to satisfactory replies”.

The Defendant’s Interpretation

The Defendant’s interpretation gave clause 10(b) a very wide ambit. The Defendant argued that the key structure of clause 10(b) is: “any road or drainage line schemes or proposals… affecting any part of the property shall be construed as satisfactory” (emphasis added). The words in the parentheses thus do not limit what will be deemed as a satisfactory reply by the LTA, but they merely “amplified” the “plain meaning of the key structure of clause 10(b)”¹. Under such a reading, clause 10 (b) will deem satisfactory LTA’s reply that the Road Reserve will set aside the land when development/redevelopment takes place or when road construction/improvement is carried out by LTA, whichever is earlier.

The Defendant further argued that the words in parentheses “merely set out 3 scenarios where the key structure of the clause will have an impact”, as follows²:

(a) “Actual” road line schemes or proposals affecting any part of the property. In other words the authorities have implemented schemes and proposals which are taking place currently.

(b) “Proposed” road line schemes or proposals affecting any part of the property. In other words the authorities contemplate the implementation of the schemes and proposals in the future. ...

(c) Road line schemes or proposals affecting any part of the property which are “to be implemented only if there is any redevelopment of the property”. In other words, these schemes or proposals will not be implemented by the authorities unless and until the redevelopment of the property is initiated and commenced. …

Under such an interpretation, the phrase “only if there is any redevelopment of the property” applies only to “to be implemented”. The Preferred Interpretation

The crux of the interpretation of clause 10(b) therefore lies in the effect given to the words in the parentheses. Are they to be interpreted as (i) limiting what will be deemed satisfactory or (ii) enumerating merely an example of one of the scenarios that will be deemed a satisfactory reply? In my view, the Plaintiff’s interpretation is to be preferred and Clause 10 (b) has a narrow ambit.

(i) Clause 10 of the Option to be considered in its entirety

First, the nature of clause 10 of the Option should be considered in its entirety. Clause 10 of the Option consists of the general provision allowing the Purchaser to rescind the Option if the replies to the legal requisitions are found to be unsatisfactory, with the specific proviso of clause 10 (b) deeming certain types of replies as satisfactory. It is important to consider the commercial context of clauses such as Clause 10 of the Option, since the Court of Appeal case of Sandar Aung v Parkway Hospitals Singapore Pte Ltd [2007] 2 SLR(R) 891 (“Sandar Aung”) on reviewing the principles governing the construction of documents has at [29] stated that:

The key concept here is that of context. No contract exists in a vacuum and, consequently, its language must be construed in the context in which the contract concerned has been made. We would go so far as to state that even if the plain language of the contract appears otherwise clear, the construction consequently placed on such language should not be inconsistent with the context in which the contract was entered into if this context is clear or even obvious, since the context and circumstances in which the contract was made reflect the...