Tan Soo Leng David v Wee, Satku & Kumar Pte Ltd and Another

• Jurisdiction: Singapore
• Judge: G P Selvam JC
• Judgment Date: 11 February 1993
• Neutral Citation: [1993] SGHC 30
• Docket Number: Suit No 1860 of 1992
• Date: 11 February 1993
• Published date: 19 September 2003
• Year: 1993
• Plaintiff Counsel: Wong Meng Meng and Sim Mei Ling (Wong Meng Meng & Partners)
• Citation: [1993] SGHC 30
• Defendant Counsel: Chua Lee Ming (Lee & Lee),K Shanmugam and Maria Ho (Allen & Gledhill)
• Court: High Court (Singapore)
• Subject Matter: Words and Phrases,Sale subject to consent of lessor,Civil Procedure,Land,Right of court to dismiss action in summary procedure,'Refusal or non-receipt of consent',Sale of land,Nature of interest and right of option holder,Consent refused,Obligation of vendor lessee,Summary judgment

Cur Adv Vult

The facts

The underlying subject matter of this case is a clause in a contract for sale of a commercial leasehold property. It concerns a building known as Mount Elizabeth Medical Centre. It is owned by Mount Elizabeth Hospital Ltd, the second defendants.

By an agreement dated 24 January 1992 the second defendants sold to Wee, Satku & Kumar Pte Ltd, the first defendants, the residue of a leasehold of 99 years commencing from 1 October 1976 in respect of the 11th storey of the building (`the property`). The sale price was S$910,000.44. The lease contains a restrictive covenant in respect of user of the premises - that the property shall be used for the purposes of medical practice. There was, in addition, the following restriction on the assignment of the lease:

The purchaser [the first defendants] shall not let or sublet, sell or assign or transfer (otherwise than by way of security) the same without the prior written consent of the vendor [the second defendants] which consent shall not be unreasonably withheld if the intended letting or sub-letting, sale or assignment or transfer is to a medical practitioner (which expression shall include a body corporate) engaged in the practice of specialist medicine.

On 2 July 1992 the first defendants in consideration of $10,000 gave the plaintiff, an ophthalmologist, an option to purchase the property at the price of $1,212,000 (`the agreement`). The plaintiff paid the option fee of $10,000. The offer contained in the option to purchase remained open for acceptance until 15 July 1992. The agreement by cl 6 further provided in substance as follows :

The sale shall also be subject to consent of [the second defendants]. In the event such consent is refused or not received by the completion date (20 September 1992), the sale and purchase shall be deemed rescinded forthwith whereupon all moneys paid hereunder shall be refunded to you [the plaintiff] free of interest and no effect and neither party shall have any claim or demand against the other for damages, costs, compensation or otherwise.

The first defendants on 1 July 1992 sought the consent of the second defendants for the assignment of the lease to the plaintiff. They did this one day before the agreement was signed because originally the option was intended to be given on 1 July 1992 but was delayed by one day by consent of the parties.

On 14 July 1992 the second defendants stated that they were withholding their consent to the assignment of the lease. This was communicated to the plaintiff who was also informed that the option fee of $10,000 would be returned to him.

The action and applications

Notwithstanding the fact that the second defendants withheld their consent to the assignment and the $10,000 would be refunded, the plaintiff insisted on exercising his option and going on with the purchase. He tendered the ten percent deposit which was refused by the first defendants. On 11 September 1992 the plaintiff issued a writ against the first defendants claiming a declaration that their failure or refusal to proceed with the completion of the sale and purchase of the property was unreasonable and that they were entitled to proceed with the sale. Note that the allegation is `unreasonable` and not `unlawful`. He also sought an injunction restraining the first defendants from dealing with the property in a manner inconsistent with their obligations under the agreement. And finally, he claimed specific performance of the agreement and damages. Alternatively, he sought a declaration that the first defendants were entitled to proceed with the completion of the sale and purchase. His claim against the second defendants was for a declaration that their refusal of consent was unreasonable. He also asked for damages for the wrongful withholding of consent.

The plaintiff then filed an application seeking summary judgment against both defendants. By way of reflexive opposition both defendants filed an application each for dismissal of the plaintiff`s action on the grounds that it disclosed no reasonable cause of action, and/or it was frivolous or vexatious, and/or it was otherwise an abuse of the process of the court. All three applications were heard together and this decision will dispose of all three applications.

The law

The obligation of a vendor lessee who agrees to assign his lease subject to the owner`s consent as required under the lease depends on the terms of the agreement between him and the purchaser. It is essentially a question of construction of the agreement. Where the agreement provides that it is subject to the owner`s consent without more the lessee need only seek the consent of the owner. If the consent is refused even without valid ground the lessee is entitled to rescind the agreement. Under such an agreement the lessee is not required to remonstrate with the owner over the refusal or to take upon himself the expense and risk of litigation to force the owner to consent. See Lehmann v McArthur, [1868] LR 3 Ch App 496 Barrow v Isaacs & Son [1891] 1 QB 417 and Eastern Telegraph Co Ltd v Dent & Ors. [1899] 1 QB 835

In Lehmann v McArthur 1 a lease contained the restriction that the lessee would not assign the lease without the previous consent in writing of the owner, which consent should not be withheld unreasonably or vexatiously. The lessee agreed to sell the lease to a purchaser subject to the owner`s approval. It was assumed by both that the owner`s consent would not be refused. There was no express right to rescind the agreement. The owner subsequently refused his consent whereupon the lessee sought to rescind the agreement to assign the lease and transferred the lease for the benefit of the owner. The purchaser brought an action against the lessee seeking specific performance and against the owner seeking a decree to compel him to concur in the assignment and damages. It was argued for the purchaser that he was the equitable owner of the lease and that the property was subject to his rights. It was further argued that his rights could be defeated only if the owner showed reasonable cause for objecting. The Court of Appeal decided against the purchaser and held that the lessee was entitled to consider the agreement at an end as the lessee had sought the owner`s consent and it was refused. The lessee was not obliged...