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

• Judge: Judith Prakash J
• Judgment Date: 25 October 1997
• Neutral Citation: [1997] SGHC 266
• Citation: [1997] SGHC 266
• Defendant Counsel: Chua Lee Ming and Tan Kian Siew (Lee & Lee),K Shanmugam and Maria Ho (Allen & Gledhill)
• Published date: 19 September 2003
• Plaintiff Counsel: Harry Elias SC, Devinder Rai and Looi Teck Kheong (Harry Elias &Partners)
• Date: 25 October 1997
• Docket Number: Suit No 1860 of 1992
• Court: High Court (Singapore)
• Subject Matter: Whether clause valid,Sale subject to consent of third party,Wrongful lodgment,Third party refusing to consent,Declaratory relief,Clause stipulating that sale subject to consent of developers of property,Discretion of court to grant declarations,Restraints on dealings,O 15 r 16 Rules of the Supreme Court 1970,s 139(1) Land Titles Act (Cap 157),Whether purchaser wrong to lodge caveat,Whether purchaser has locus standi for declaratory relief against third party in absence of legal relationship,Third party proceedings,Land,Option rescinded,Whether void as a restraint on right to alienate,Duty of vendor to show all reasonable steps to obtain consent have been taken,Caveats,Sale of land,Whether Instrument of Restriction must be registered for restriction to be binding,Whether caveat allowed to remain wrongfully -s 112(1) Land Titles Act (Cap 157),Sale of property subject to consent of third party,Stipulation in agreement between developer and owner that subsequent sale of property be subject to developer's consent,Alternate duty to show impossibility of obtaining consent,Civil Procedure,Conditions of sale,Whether validity of clause dependent on restrictive covenant in principal agreement between vendor and developer,Restrictive covenants,Registration of restriction,Whether rescission on ground that consent was refused valid,Rescission by vendor,What constitute reasonable efforts

Judgment:

JUDITH PRAKASH

Cur Adv Vult

This case involves an option which the first defendant gave to the plaintiff to purchase a unit which it owns in the Mount Elizabeth Medical Centre (`the medical centre`). The first defendant had purchased the unit from the second defendant and the proposed sale to the plaintiff did not go through because the second defendant did not consent to it. The plaintiff now wants, inter alia, specific performance from the first defendant and various declarations relating to the position and conduct of the second defendant.

2. Background

The plaintiff is an ophthalmic surgeon who has been in specialist practice since 1976. The second defendant, Mount Elizabeth Hospital Ltd (sometimes hereafter `MEH`) is the owner of the Mount Elizabeth Hospital (`the hospital`) and was the developer of the medical centre. Sometime in 1988, MEH decided to redevelop the medical centre by building a new extension wing of medical consultant suites. Unit #11-11 Mount Elizabeth Medical Centre (`the property`) is located in the new wing and is the subject matter of this action.

3.The plaintiff wanted to purchase some units in the new wing. He wrote on 9 September 1988 to MEH to register his interest. Subsequently, his application was rejected. On the other hand, one Dr Satkunanantham s/o Kandiah, a specialist orthopaedic surgeon with the National University of Singapore who was considering going into private practice, successfully approached MEH for the purchase of a unit. Dr Satkunanantham together with Dr V Prem Kumar, another orthopaedic surgeon, and Dr Julian Wee, a plastic surgeon, set up the first defendant for the specific purpose of purchasing that unit.

4.The first defendant agreed to buy the property sometime in mid 1991 at a price of $910,000.44 and the sale and purchase agreement (`the principal agreement`) was dated 24 January 1992. The form of the principal agreement had been approved by the Controller of Housing. There were several restrictions on the property as set out in the third schedule to the principal agreement. One of these clauses, cl (f), has become a central issue in this action. It reads:

The Purchaser [ie the first defendant] shall not let or sub-let, sell or assign or transfer (otherwise than by way of security) the [property] without the prior written consent of the Vendor [ie the second defendant] which consent shall not be unreasonably withheld if the letting, 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.

The covenants contained in the third schedule of the principal agreement were not executed between the first defendant and MEH until 4 September 1992. The Instrument of Restriction was only lodged with the Registry of Land Titles and Deeds on 9 September 1992.

5.The first defendant was aware of the restriction. It had been highlighted to the three doctor-shareholders by their solicitors at the time the principal agreement was negotiated and signed. There were two separate requirements for any proposed sale: the intended buyer had to be a specialist and the sale would be subject to the consent of MEH.

6.The three doctors had purchased the property with the intention of coming out into private practice and using it as their clinic. They later changed their minds. They then tried to rent out the property, but were unsuccessful. Dr Wee had difficulty paying his portion of the mortgage payments and, after considerable discussion, sometime in May 1992, the first defendant decided to sell the property. Dr Wee was asked to make the arrangements.

7.Dr Wee contacted estate agents and dealt with one Ms Magdalene Lam. The agents were informed by Dr Wee that when marketing the unit they should only approach medical specialists. In order to check the position, Ms Lam called and spoke to Mrs Theresa Poh, a senior officer in the property department of MEH. Mrs Poh informed her that the property could be sold to a specialist but that the sale was subject to the consent of MEH. From her conversation with Mrs Poh, Ms Lam understood that the first defendant would have to produce the sale agreement to the management of MEH for approval.

8.Ms Lam approached several doctors for the sale of the property. One of these was the plaintiff. He was very interested. Ms Lam informed him of the need for MEH`s consent to any proposed sale. The plaintiff was eager to go ahead. On 27 June 1992, he signed an offer to purchase the property and issued a cheque for $10,000 in favour of Dr Wee as option money/part deposit. At the back of his cheque, he wrote: `This deposit shall be refunded in full if the Property cannot be sold to the Purchaser, Dr David Tan Soo Leng because of any covenant with the developer, Mount Elizabeth Hospital`. He also dictated this wording to Ms Lam and made her write it into the offer to purchase. The cheque should have been made in favour of the first defendant and therefore the plaintiff subsequently replaced it with another cheque. He wrote similar wording on the back of the second cheque.

9.The plaintiff was so eager to finalise the sale that he bypassed the agents and contacted Dr Wee directly several times. As a result, the two met on 28 June 1992. They discussed the terms of the proposed sale. After they reached an agreement on these, the plaintiff immediately wrote out an agreement (`the private agreement`) setting out the terms of the proposed sale pending the issue of the option. Part of the private agreement read:

the sale of the [property] to Dr Tan Soo Leng, David [is] subject to the condition that the sale of the [property] is approved by the Developer (Mount Elizabeth Hospital Pte Ltd). The Deposit will be refunded in full if the Developer does not approve this transaction.

In court, the plaintiff admitted that during this meeting, Dr Wee had informed him of the need to obtain MEH`s consent to the sale.

10.In the meantime, on 26 June 1992, the plaintiff had already spoken with his then lawyer, Mr VK Rajah, about the proposed sale. Mr Rajah advised him that in relation to units which had been sold by MEH before 1986, the plaintiff should look out for a `sell-back clause` which provided that any owner intending to sell his unit had to give MEH the first right of purchase. The property, however, was in the new wing and the first defendant had bought it in 1992. The `sell-back` clause would not have applied to it.

11.After signing the private agreement, the plaintiff sought confirmation of his ability to buy it from Mrs Poh. He spoke with her on 29 June 1992. He claimed that she told him that if the purchaser was a specialist practitioner, then the requirement of consent would be a mere formality. Mrs Poh, however, was sure that she had informed the plaintiff of the consent requirement and that she had not told him that it was merely a formality. The plaintiff also showed the private agreement to Mr Rajah and sought his advice. Mr Rajah told him that the private agreement was conditional upon MEH`s consent to the sale.

12.The formal option was signed on 2 July 1992. It was stated to be open for acceptance until 4pm, 15 July 1992; it would be exercised by the plaintiff signing the duplicate copy attached to the option and making payment of $111,200 being ten per cent of the sale price of $1,212,000 less the option fee. The date fixed for completion was 20 September 1992. For the purpose of the action, the most important clause of the option is cl 6. It reads:

The sale shall also be subject to the consent of the Developers, which said consent to the sale is required under the terms of the principal agreement. In the event such consent is refused or not received by the Completion Date (as defined in Clause 7 below), the sale and purchase herein shall be deemed rescinded forthwith whereupon all moneys paid hereunder shall be refunded to you free of interest and subject thereto the sale and purchase herein shall be cancelled and of no effect and neither party shall have any claim or demand against the other for damages, costs, compensation or otherwise.

13.On 1 July 1992, the first defendant`s solicitors, M/s Allen & Gledhill, wrote to MEH`s then solicitors, M/s Tan Rajah & Cheah, for their client`s consent to the proposed sale. On 8 July 1992, M/s Tan Rajah & Cheah wrote to MEH for instructions. The matter was considered by Mr James Robert Clapp who was then the chief executive officer of MEH and, after discussing the matter with Mrs Poh, he decided against giving consent. On 10 July 1992, MEH informed its solicitors of this decision.

14.On 14 July 1992, M/s Tan Rajah & Cheah notified the first defendant`s solicitors of the refusal of consent. This notification was immediately passed on to the plaintiff`s then solicitors, M/s Rajah & Tann. M/s Allen & Gledhill had taken the view that since consent was refused, the sale was automatically rescinded and therefore, in their letter to the plaintiff`s solicitors, they stated that they were requesting the first defendant to return the option fee to the plaintiff.

15.The plaintiff did not accept the rescission of the sale. Not only did he refuse to take back his $10,000 but on 15 July 1992, he purported to exercise the option by forwarding M/s Allen & Gledhill the acceptance copy duly signed together with a cashier`s order for the balance of the ten per cent deposit. On the same day, he lodged a caveat against the property claiming an interest as purchaser by virtue of the option dated 2 July 1992 so exercised by him.

16.In response to the plaintiff`s exercise of the option, the first defendant`s solicitors wrote to the plaintiff`s solicitors reiterating that the contract was no longer effective and returning the plaintiff`s cashier`s order for $112,200. The plaintiff`s response was to refuse to accept that the contract was no longer effective. His solicitors wrote to say that he...