Tay Theng Khoon and Another v Lee Kim Tah (Pte) Ltd

• Jurisdiction: Singapore
• Judge: Warren Khoo L H J
• Judgment Date: 06 March 1992
• Neutral Citation: [1992] SGCA 18
• Docket Number: Civil Appeal No 29 of 1989
• Date: 06 March 1992
• Year: 1992
• Published date: 19 September 2003
• Plaintiff Counsel: Quek Mong Hua (Lee & Lee) and Loo Choon Chiaw (Loo & Partners)
• Citation: [1992] SGCA 18
• Defendant Counsel: Thevanathan Pillay (RCH Lim & Co)
• Court: Court of Appeal (Singapore)
• Subject Matter: Sale of land,Land,Words and Phrases,'Proposal',Contract,Whether master plan zoning restriction constitutes 'proposal of government',Right to withdraw from purchase,Construction of terms of agreement

Cur Adv Vult

The facts

The appellants in this case were at the material time the owners of a freehold property consisting of two contiguous lots of land marked on the government resurvey map as Lots 414-63 and 414-64 of Mukim XVII (`the property`). Lot 414-63 has an area of approximately 1505.2sq m on which there is, or once was, a house known as No 24 Lorong Biawak, Singapore, and Lot 414-64 is a narrow strip of land, with an area of 84.4sq m fronting the road.

On 23 December 1987, the appellants granted to one Tan Sim Guan (`Tan`) an option to purchase the property at the price of $858,706 on terms and conditions set out in the option. The option was to be exercised by 13 January 1988. The appellants had agreed that the benefit of the option could be assigned. On 13 January 1988, prior to the time of expiry of the offer, the respondents as the assignees of Tan, exercised the option thus bringing into effect a valid and binding agreement (`the agreement`) for the sale and purchase of the property.

For the purposes of this appeal, the material terms of the agreement are cll 7 and 8 and they provide as follows:

(7) ... the property is sold subject to the purchaser receiving satisfactory replies to all requisitions from the relevant competent authorities including that of the Traffic Manager, Mass Rapid Transit Corporation. If any such reply shall be unsatisfactory the purchaser shall have the right so long as they produce evidence thereof to the vendor to withdraw from the purchase in which case the vendor shall refund to the purchaser the deposit paid hereunder free of interest and thereupon this agreement shall absolutely cease and determine and be null and void and of no effect and neither party hereto shall have any claim whatsoever against the other provided always that no such reply shall be construed to be unsatisfactory if the property is affected by any notice under any statute which is capable of being complied with by and at the expense of the vendor so long as such notice shall have been served in respect of the property prior to the date of completion hereof nor shall the purchaser be entitled to withdraw from the purchase if the reply discloses that the property is not adversely affected by any drainage or other proposal of government and provided further that if no notice hereunder is received by the vendor from the purchaser within eight(8) weeks from the date hereof the purchaser shall be deemed to have received satisfactory replies and the purchaser shall not be entitled to withdraw from the purchase.

(8) Notwithstanding anything herein, the purchaser shall be entitled to withdraw from this purchase if the government shall deny planning permission for the development of the property for residential purposes. (Emphasis added.)

Prior to the grant of the option, there had been negotiations between the appellants and one Clement Low who at the time was interested in purchasing the property. While the negotiations were in progress, an application for the development of the property was submitted to the Development and Building Control Division (`DBCD`) of Public Works Department, Ministry of National Development. That application was made in the names of the appellants as the owners and of Clement Low as the prospective purchaser, and the layout plan for the proposed development was drawn by Clement Low`s architects, Messrs James Yip & Partners, who submitted the application to DBCD. The proposed development was the construction on Lot 414-63 of three units of two-storey terrace houses fronting Lorong Biawak and one unit of two-storey detached house at the rear. Subsequently, negotiations between the appellants and Clement Low were aborted but neither of them took any step to withdraw the application. Hence, at the date when the agreement was made that application was still pending before DBCD. Following the making of the agreement and pursuant to a discussion with the solicitors for the respondents, the solicitors for the appellants on 2 February 1988 informed DBCD of the sale of the property to the respondents and confirmed that the appellants had no objection to the respondents submitting to DBCD their plans for development. Later, on 5 February 1988, the solicitors for the appellants wrote to the solicitors for the respondents stating, inter alia, that they had been informally advised by DBCD that it might be quicker to await the outcome on that first application for planning permission, and if in-principle approval was given, to subsequently put in the respondents` final plans, rather than to now put in their initial plans, as much time would be wasted in the DBCD having to consider in-principle approval from scratch. In response, the respondents` solicitors by their letter of 13 February 1988 agreed to that suggestion. LP Thean J found, and this was not challenged before us, that this letter meant that the respondents agreed to accept the application which was then pending before DBCD. On the same day the solicitors for the appellants wrote again to the solicitors for the respondents informing them that they had learnt from DBCD that `in-principle planning permission for the development of the property for residential purposes` had been given and suggested that the respondents might wish to proceed with the lodgement of final plans for development. The approval in principle, in fact, was given by DBCD on 15 February 1988 as evidenced by their letter of that date written to Messrs James Yip & Partners. The approval was, however, subject to six conditions, one of which was as follows:

Rezoning of the portion of the site within public open space to residential zone together with payment of the requisite development charge.

On the same day of 15 February 1988 the respondents` solicitors wrote to the appellants` solicitors stating that they had received:

(i) a road interpretation plan showing that the property would be affected by road improvement. The improvement would involve the provision of a hammerhead shaped cul-de-sac made up of the whole of Lot 414-64 and a part of Lot 414-63, and

(ii) a reply from DBCD to their requisition showing that part of the property was zoned public open space and therefore not available for development for residential purposes (`the DBCD reply`).

These replies to the requisitions, they said, were unsatisfactory, and on behalf of the respondents they invoked cl 7 of the agreement and gave notice that the respondents reserved their right to withdraw from the purchase. Subsequently, by a letter dated 4 March 1988, they confirmed the respondents` withdrawal from the purchase of the property.

Soon thereafter, negotiations presumably took place between the appellants and the respondents with the view to resolving the differences, but these proved unsuccessful. In consequence, the appellants took out this vendor-purchaser`s summons claiming various reliefs against the respondents. Subsequent to the filing of the originating summons, the property was sold off at approximately the same price as the agreement price with the result that the determination of the summons would affect only the question of entitlement to the deposit paid. At the hearing before the learned judge, the respondents raised a further ground for withdrawing from the purchase. They invoked cl 8 of the agreement and maintained that they were entitled to withdraw on the ground that the government had refused planning permission for development of the property for residential purposes. Accordingly, there were, as the learned judge held, two main issues before him, namely:

(1) whether by reason of

(a) the road interpretation plan; and/or

(b) the reply from DBCD on zoning, the respondents were entitled under cl 7 of the agreement to withdraw from the purchase of the property; and

(2) whether there had been a denial or refusal by the government of planning permission for development of the property for residential purposes so as to entitle the respondents under cl 8 of the agreement to withdraw from the purchase.

The learned judge found in favour of the appellants on issue 1(a), ie he found that a reasonably determined purchaser buying the property for the purpose of residential development would not find the road interpretation plan of around 15 February 1988 unsatisfactory. The learned judge also found in favour of the appellants on issue 2. He found that the approval in principle for residential development subject to rezoning the public open space area and a development charge of $185,359 was not a denial of planning permission within cl 8 of the agreement. In his view, although the development charge was onerous and was not contemplated by the respondents at the time of the agreement, it was `... an incidence of liability flowing from the approval given by the DBCD which they must accept ...` and did not amount to a denial of planning permission. The respondents have not cross-appealed against the determination of those two issues.

As regards issue 1(b), the learned judge found that the reply by DBCD dated 9 February 1988 was an unsatisfactory reply. He further held that the reply was a government proposal which adversely affected the land. Consequently, he held that the respondents were entitled to withdraw under cl 7 of the agreement and ordered that the deposit of $85,870.60 paid under the agreement, together with the interest accrued from the deposit of that amount in an interest-bearing account in the joint names of the parties` solicitors, be paid to the respondents. He also ordered that the appellants pay to the respondents half the costs of the proceedings. The appellants appealed against these orders.

Whether the DBCD reply was satisfactory

The DBCD reply is dated 9 February 1988 and this indicated that the property was not affected by any government gazette notification and was zoned...