The One Suites Pte Ltd v Pacific Motor Credit (Pte) Ltd

• Jurisdiction: Singapore
• Judgment Date: 09 April 2015
• Date: 09 April 2015
• Docket Number: Civil Appeal No 134 of 2014
• Court: Court of Appeal (Singapore)

The One Suites Pte Ltd

Plaintiff

and

Pacific Motor Credit (Pte) Ltd

Defendant

[2015] SGCA 21

Sundaresh Menon CJ

,

Chao Hick Tin JA

and

Andrew Phang Boon Leong JA

Civil Appeal No 134 of 2014

Court of Appeal

Contract—Contractual terms—Implied terms—Clause allowing for rescission upon refusal by Housing and Development Board—Whether implied obligation to use reasonable endeavours to obtain approval extending beyond point of refusal

Land—Sale of land—Sale subject to approval from Housing and Development Board—Whether Housing and Development Board refusing to approve

Land—Sale of land—Implied obligation to use reasonable endeavours to obtain approval—Scope of obligation to use reasonable endeavours

The appellant agreed to buy a property (‘the Property’) from the respondent. Clauses 12 (a) and 12 a of the option to purchase (‘OTP’) stipulated that the sale was subject to the approval of the Housing Development Board (‘the HDB’) and other authorities, and that the sale shall be rescinded and the moneys refunded if the HDB refused to approve the sale. The sale was also subject to ‘existing approved use’. A sum of $1.68 m was paid as a deposit.

The appellant made the necessary applications to the HDB and the other authorities, and responded to all of the clarifications. The National Environmental Agency (‘the NEA’) refused to approve the sale. The appellant wrote to inform the HDB that the NEA's consent had not been obtained and asked for a confirmation of the status of its application. The HDB replied that it was unable to grant in-principle approval because the consent of the NEA had not been obtained.

The respondent refused to refund the $1.68 m deposit and suggested that the appellant revise its proposed use of the Property and appeal to the NEA. The appellant declined. The respondent then approached the NEA and asked that it reconsider the appellant's application on the basis that the Property was to remain zoned for residential use and that there would be no change to the ‘existing use’ of the Property. The NEA acceded, but the appellant considered that the sale had been rescinded.

Held, allowing the appeal:

(1) The HDB had refused to approve the sale and purchase of the Property: at [21] .

(2) An implied term was subject to and could not contradict an express term of the contract. Since cll 12 (a) and 12 a of the OTP stipulated that the sale was subject to the HDB's approval and that the sale was rescinded upon the HDB's refusal, the implied obligation to use reasonable endeavours to obtain the approval of the HDB could not extend beyond the HDB's refusal. The scope of the obligation to use reasonable endeavours was a fact-centric one, and on the facts of the present case, the appellant had used reasonable endeavours up to the time of the HDB's refusal: at [23] to [26] , [29] , [37] , [40] and [43] .

(3) There were two ways to ascertain a temporal cut-off point in order to ascertain whether or not the duty to use reasonable endeavours had been fulfilled. If there was an express term stipulating when that cut-off point would be, that would resolve the issue. If there was no such express term, then a term might be implied to the effect that the requisite approval would need to be obtained within a reasonable time. In the present case, there was no need to imply a term as there was an express term stipulating the relevant temporal cut-off point, namely, when the HDB refused to give its approval: at [30] and [31] .

[Observation: Neither the Court of Appeal in Tan Soo Leng David v Wee, Satku & Kumar Pte Ltd[1994] 1 SLR (R) 426 nor the High Court in Tan Soo Leng David v Wee, Satku & Kumar Pte Ltd[1997] 3 SLR (R) 257 had laid down a normative rule or proposition that the obligation to use reasonable endeavours to obtain the consent of a third party would invariably extend to taking further steps after consent had been refused: at [32] to [42] .]

Bickel v Courtenay Investments (Nominees) Ltd [1984] 1 WLR 795; [1984] 1 All ER 657 (refd)

Brauer&Co (Great Britain) Ltd v James Clark (Brush Materials) Ltd [1952] 2 All ER 497 (refd)

Commonwealth Bank of Australia v Barker (2014) 88 ALJR 814 (refd)

Evergreat Construction Co Pte Ltd v Presscrete Engineering Pte Ltd [2006] 1 SLR (R) 634; [2006] 1 SLR 634 (refd)

Group Exklusiv Pte Ltd v Diethelm Singapore Pte Ltd [2003] 4 SLR (R) 582; [2003] 4 SLR 582 (refd)

Hargreaves Transport Ltd v Lynch [1969] 1 WLR 215 (refd)

Harish Bhasin v Larry Hrynew [2014] SCC 71 (refd)

HSBC Institutional Trust Services (Singapore) Ltd v Toshin Development Singapore Pte Ltd [2012] 4 SLR 738 (refd)

IBM United Kingdom Ltd v Rockware Glass Ltd [1980] FSR 335 (refd)

Jolley v Carmel Ltd [2000] 2 EGLR 153, HC (Eng) (refd)

Jolley v Carmel Ltd [2000] 3 EGLR 68, CA (Eng) (refd)

KS Energy Services Ltd v BR Energy (M) Sdn Bhd [2014] 2 SLR 905 (refd)

Lehmann v Mc Arthur (1868) LR 3 Ch App 496 (refd)

Lipmans Wallpaper Ltd v Mason&Hodghton Ltd [1969] 1 Ch 20 (refd)

Malik v Bank of Creditand Commerce International SA [1998] AC 20 (refd)

Mackay v Dick (1881) 6 App Cas 251 (refd)

Mid Essex Hospital Services NHS Trust v Compass Group UK and Ireland Ltd [2013] EWCA Civ 200 (refd)

Ng Giap Hon v Westcomb Securities Pte Ltd [2009] 3 SLR (R) 518; [2009] 3 SLR 518 (refd)

Ong Khim Heng Daniel v Leonie Court Pte Ltd [2000] 3 SLR (R) 670; [2001] 1 SLR 445 (refd)

Sembcorp Marine Ltd v PPL Holdings Pte Ltd [2013] 4 SLR 193 (folld)

Tan Soo Leng David v Wee, Satku&Kumar Pte Ltd [1994] 1 SLR (R) 426; [1994] 3 SLR 481, CA (distd)

Tan Soo Leng David v Wee, Satku&Kumar Pte Ltd [1997] 3 SLR (R) 257; [1998] 2 SLR 83, HC (distd)

Wee Kim San Lawrence Bernard v Robinson&Co (Singapore) Pte Ltd [2014] 4 SLR 357 (refd)

Yam Seng Pte Ltd v International Trade Corp Ltd [2013] 1 Lloyd's Rep 526 (refd)

Michael Palmer, Chew Kiat Jinn and Tan Gek Theng (Quahe Woo and Palmer LLC) for the appellant

Albert Balasubramaniam (Jing Quee&Chin Joo) and Chew Ching Ching (Ching Ching Pek Gan&Partners) for the respondent.

Andrew Phang Boon Leong JA

(delivering the grounds of decision of thecourt):

Introduction

1 This is an appeal against the decision of the High Court judge (‘the Judge’) in The One Suites Pte Ltd v Pacific Motor Credit (Pte) Ltd[2014] 4 SLR 806 (‘the GD’). We allowed the appeal and now give the detailed grounds for our decision.

The facts

2 The dispute arose out of a contract for the sale and purchase of the remainder of the lease over a property at 11 Leng Kee Road (‘the Property’). The Property was leased from the Housing and Development Board (‘the HDB’). The purchaser is The One Suites Pte Ltd (‘the Appellant’), a retailer of motor vehicles (except motorcycles and scooters). Cheong Sim Lam (‘Cheong’) is the sole director and shareholder of the Appellant. The vendor (and lessee of the Property) is Pacific Motor Credit (Pte) Ltd (‘the Respondent’).

3 On 27 July 2012, the Appellant exercised the option to purchase (‘OTP’). At that point in time, the Appellant had paid a total sum of $1.68 m (being 10% of the purchase price of the Property) to the Respondent as deposit under cl 3 (a) of the OTP.

4 Clause 10 of the OTP provided that the Property was sold subject to the ‘existing approved use’ (also referred to as ‘the Seven Uses’ (see the GD at [65])). Further, cl 12 of the OTP stated that:

1. (a) The sale and purchase herein is subject to the written approval from the Housing and Development Board ('HDB') or such other competent authority to the sale of the Property by the Vendor being obtained and the parties hereto hereby covenant with the other of them to comply with such relevant terms and conditions that may be laid down or imposed by the HDB on them respectively.

2. a. In the event, the HDB refuses to approve the sale and purchase herein the sale herein shall be rescinded and all moneys paid to account of the purchase price herein shall be refunded free of interest compensation or otherwise, ...

3. b. The Purchaser shall within two (2) weeks from the date of the exercise of Option, apply or submit the relevant application to the HDB and all other competent authorities (if applicable) for the necessary approval (s). ...

4. c. For the avoidance of doubt, if the approval letter by the HDB is subject to rectification of any unauthorised additions or alterations in the Property, for the purposes of enabling completion, the Vendor shall give the necessary undertaking to the HDB to attend to the rectification within the deadline given by the HDB.

5 After the OTP was exercised, Khattar Wong LLP (‘KW’), the solicitors acting for the Appellant, wrote to the HDB, the Urban Redevelopment Authority (‘the URA’) and the National Environment Agency (‘the NEA’) for their respective approvals for the sale and purchase of the Property.

6 The HDB and the NEA replied and sought clarifications from the Appellant. On 16 August 2012, Gary Tak Seng Leong (‘Leong’) from the HDB sent an e-mail to inquire as to, inter alia,the proposed use of the Property and specifically asked for a ‘business plan’. KW replied the following day stating that the Appellant would be using the Property for the Seven Uses; but no business plan was provided. On 21 August 2012, the NEA also sent a letter to seek clarifications on a number of matters. At Cheong's request, his brother-in-law, Jason Tan, attended to all of the NEA's clarifications.

7 On 27 August 2012, the URA replied to Cheong's application and stated that the Property was ‘approved for workshop, office and showroom use’.

8 In response to KW's reply on 17 August 2012 (see above at [6]), Leong from the HDB called for a meeting with the Appellant to enable him to understand the Appellant's business plan. KW then arranged for a meeting between the Appellant and the HDB on 12 September 2012.

9 On 3 September 2012, KW responded to the NEA's letter of 21 August 2012. KW informed the NEA that the...