Tan Han Yong v Kwangtung Provincial Bank

• Jurisdiction: Singapore
• Judge: Karthigesu J
• Judgment Date: 16 February 1993
• Neutral Citation: [1993] SGCA 12
• Docket Number: Civil Appeal No 175 of 1991
• Date: 16 February 1993
• Published date: 19 September 2003
• Year: 1993
• Plaintiff Counsel: Harry Elias and Chua (Harry Elias & Partners)
• Citation: [1993] SGCA 12
• Defendant Counsel: VK Rajah and Raymond Clement (Rajah & Tann)
• Court: Court of Appeal (Singapore)
• Subject Matter: Civil Procedure,s 4 Conveyancing and Law of Property Act (Cap 61),Whether court has discretion to amend originating summons to bring it outside the section,Claim by purchaser for compensation by originating,s 4 Whether court should exercise discretion to amend originating summons,Purchaser's claim for abatement of purchase price or rescission,Rectification of by court under O 2 r 1 of Rules of the Supreme Court 1970,Conveyancing and Law of Property Act (Cap 61),Whether claim properly brought,Material term of lease altered against purchaser's objection before completion,Sale of land,Mode of commencement of proceedings,Land,Whether relief properly brought by originating summons,Whether claim for damages or compensation,Conveyance,O 2 r 1 Rules of the Supreme Court 1970

The respondent bank was the vendor and mortgagee of the property, lot 2915 of Mukim 24 situate at Kallang with the building thereon known as No 2 Kampong Ampat, Singapore (`the property`). The mortgagor was a company known as New Art Printing Co Ltd (`New Art`). The property has been brought under the Land Titles Act (Cap 157) and certificate of title registered in vol 37 folio 161 of the Land Register has been issued in respect thereof. The tenure of the property is a leasehold estate comprised in the lease from the Republic of Singapore dated 27 July 1968 and is held subject to `any subsisting exceptions, reservations, covenants and conditions contained or implied in the lease ...`. At all material times there were, inter alia, two material conditions in the lease, namely, cll 1(v) and 1(vi) which were on the following terms:

(v) Not at any time during the said term without the previous consent in writing of the landlord to make any alteration or addition to any building now standing upon the said land and not without the same consent to erect or put up any building or erection whatsoever in addition to the building now standing upon the land.

(vi) Not to demise or assign the said land in whole or in part without first obtaining the approval of the landlord in writing which approval shall not be unreasonably refused after completion of the development ...

The landlord at all material times was represented by the Housing and Development Board (`HDB`).

On 23 February 1990, the respondents in exercise of their power of sale as mortgagees granted an option to the appellant to purchase the property at the price of $4,880,000. One of the terms of the option provided as follows:

The title shall be in order and free from encumbrances and shall be for a leasehold estate of the unexpired term of 99 years commencing from 1 July 1963.

On 2 March 1990, the appellant exercised the option, and a sale and purchase agreement (`the agreement`) was thereby made between the respondents and the appellant, and under the terms thereof completion of the sale and purchase was to take place on 2 July 1990, ie four months from the date of the exercise of the option.

After the exercise of the option, the appellant received from the respondents a copy of the letter dated 8 March 1990 written by HDB to the respondents` solicitors which stated, among other things, that under the terms of the indenture dated 26 October 1965 `the land was for the construction of a factory building and attendant office for the purpose of commercial printing and photo mechanical colour printing ...`. The letter drew attention to cl 1(v) of the lease and further stated if `the intending purchaser` required any change of use or any alteration to the building, HDB`s consent would be required and that HDB would consider giving the consent subject to (i) payment of a fee equivalent to 5% of the sale price of the property, (ii) `updating` of the non-assignment clause as previously conveyed to New Art, and (iii) alteration of use to comply with the chief planner`s approval and requirements. Following that letter, the appellant made requisitions to the relevant government authorities and found that before the date of the agreement, New Art had made additions/alterations to the property and change of use thereof on several occasions. The alterations and change of use had not been disclosed to the appellant by the respondents at the time of the agreement. The appellant`s solicitors thereupon called on the respondents` solicitors to produce the written consent of HDB to these alterations and change of use. Accordingly, the respondents` solicitors wrote to HDB and HDB replied on 8 June 1990. The reply revealed that HDB had consented to some alterations and that in respect of two alterations and changes HDB had indicated that they would consent to them subject to the execution of a supplemental deed to vary cl 1(vi) of the lease but that New Art did not execute the supplemental deed which had since then been left in abeyance. HDB also indicated by that letter that they would consent to the alterations and changes subject to the execution of the supplemental deed and payment of an administrative fee of $500. The supplemental deed proposed by HDB provided for the deletion of the subsisting cl 1(vi) of the lease and substituting therefor the following provisions:

(1) (vi)(a) Not to mortgage, lease, let, licence, sublet the said land in whole or in part or do anything in the like manner without first obtaining the consent of the Landlord in writing and which consent the Landlord may give on any terms and conditions as it in its entire and unfettered discretion deems fit and which terms and conditions shall include the levy of a fee.

(1) (vi)(b) Not to demise, transfer, assign or part with the possession of the said land or any part thereof in whatsoever manner and not to effect any form of reconstruction howsoever brought about including any form of amalgamation or merger with or takeover by another company, firm or body or party, without first obtaining the consent of the landlord in writing and such consent shall be given on such terms and conditions as the landlord may in its entire and unfettered discretion deem fit to impose and shall include either the payment of an administrative fee of $500 or the payment of a fee amounting to 10% based on either: (i) consideration payable or paid by the assignee for the land and buildings thereon; or (ii) the market value of the land and buildings thereon as determined by the landlord and whose decision shall be final and binding on the tenant; or (iii) the difference between the resale price and the purchase price paid by the existing tenant (whichever is the lowest).

It is obvious that the effect of the supplemental deed, if executed, would impose severe restrictions on the disposal of the property as compared to the terms of the lease existing at the time when the agreement was made. Understandably, the appellant refused to execute the supplemental deed which HDB required before approval for New Art`s alterations/changes would be granted. The respondents then turned to their mortgagor, New Art, and procured the execution of the supplemental deed by New Art in order to safeguard their interests as mortgagees against any action which HDB might take under cl 3 of the lease for the unauthorized alterations and changes. Clause 3 of the lease provided, inter alia, that a breach of any covenant by the tenant would entitle the landlord to enter upon and take possession of the property after service of one month`s notice upon the mortgagee to remedy the breach.

On 28 June 1990, the appellant took out an originating summons under s 4 of the Conveyancing And Law of Property Act (Cap 61) seeking, inter alia, a declaration that on the true construction of the terms of the agreement and in the events that had occurred, he was not bound to complete the purchase of the property subject to the terms of the supplemental deed without an abatement of 10% of the purchase price or such other abatement as the court may deem fit and just, or alternatively, the appellant was entitled to rescind the agreement and recover from the respondents the deposit of 10% of the purchase price with...