Teow Khek Soo and Another v Goh Tee Kow and Another

• Jurisdiction: Singapore
• Judge: Choo Han Teck JC
• Judgment Date: 12 February 1999
• Neutral Citation: [1999] SGHC 42
• Date: 12 February 1999
• Subject Matter: Damages,Whether the sellers are entitled to claim damages after forfeiting the deposit,Remedies,Contract
• Docket Number: Suit No 15 of 1998 (Summons in
• Published date: 19 September 2003
• Defendant Counsel: Gregory Vijayendran and Emiley Yeow (Wong Partnership)
• Court: High Court (Singapore)
• Plaintiff Counsel: Jimmy Yap (Donaldson & Burkinshaw)

Judgment:

CHOO HAN TECK JC

This was an action for breach of contract. The plaintiffs were the vendors in the contract for the sale of shares in a company called Nil-Burns Systems Pte Ltd (`the company`). The defendants were the purchasers. A sale and purchase agreement (`the agreement`) was concluded between them on 13 March 1997. The defendants subsequently failed to pay the balance purchase price and the plaintiffs commenced this action against them for breach of contract. By a summons-for-further directions the defendants applied for the matter to be determined on a preliminary point. Counsel for the plaintiffs was initially sceptical that the matter could be resolved in this way but eventually agreed that it could.

2.The basic facts were not disputed. The company`s business was essentially that of manufacturing fire-rated wooden doors. Its premises at Sungei Kadut were mortgaged to the Oversea-Chinese Banking Corporation. By the agreement the plaintiffs agreed to sell the 500,000 shares in the company to the defendants at the price of $3,430,000. Ten per cent of the purchase price was to be paid as a deposit on the signing of the agreement, and disbursed in the manner set out in cl 2. That was done and nothing turned on that except to note that the bulk of the deposit was paid out to creditors of the company as agreed in cl 2. The plaintiffs actually received only $30,000 themselves, but this was of no significance for the purposes of the issues before me. The balance of the purchase price was to be paid on the completion date which was agreed by the parties to be 26 November 1997. No payment was made on that date and the plaintiffs sued for damages. The defendants say that the agreement had been terminated and the plaintiffs were only entitled to the 10% deposit as agreed damages and no more. Whether the defendants were right depended on the construction of principally, cl 3 of the agreement. Thus the preliminary point which I was asked to rule was framed as follows:

a whether the sale and purchase agreement entered into between the plaintiffs and the defendants dated 13 March 1997 (`the agreement`) has been terminated under cl 3.2 of the agreement; and

b whether, by virtue of cl 3.2 of the agreement, the plaintiffs` remedies for non-completion are confined to the forfeiture of the deposit paid by the defendants.

Clause 3 reads as follows:

Late completion

3.1 Subject to the vendors being ready to complete, if the purchasers should fail to deliver the balance of the purchase price on the completion date, the purchasers shall pay interest at the rate of one per cent (1%) on such balance of the purchase price for every month or part thereof elapsing between the completion date and the date of full payment of the purchase price.

3.2 Subject to the vendors being ready to complete, if the purchasers should fail to deliver the balance of the purchase price within three (3) months from the completion date, this agreement shall be terminated and the deposit paid by the purchasers shall be forfeited to the vendors.

3.Mr Yap for the plaintiffs submitted that payment of the purchase price was a primary obligation of the defendants and that when they failed to make payment on 26 November 1997 they were in breach of contract. Thus, he argued, they cannot rely on their own breach to take advantage of cl 3.2....