Travista Development Pte Ltd v Tan Kim Swee Augustine

• Judgment Date: 18 June 2007
• Date: 18 June 2007
• Docket Number: Originating Summons No 538 of 2007
• Court: High Court (Singapore)

Travista Development Pte Ltd

Plaintiff

and

Tan Kim Swee Augustine and others

Defendant

[2007] SGHC 94

Judith Prakash J

Originating Summons No 538 of 2007

High Court

Contract–Breach–Construction of sale and purchase agreement–Obligation on property redevelopment company to use “best endeavours” to obtain qualifying certificate and to do so “without delays”–Whether actions taken satisfying “best endeavours” test –Whether sale and purchase agreement rescinded–Equity–Estoppel–Estoppel by convention–Principles–Whether any estoppel by convention in relation to specific date which bound property redevelopment company so that it was prevented from denying that that date was contractual completion date

The defendants were, collectively, the owners of the land and building at 55 Devonshire Road (“the property”). On 12 December 2006, the defendants entered into a sale and purchase agreement (“the agreement”) whereby they agreed to sell the property for $30.5m to the plaintiff, a company especially incorporated for the purposes of purchasing and redeveloping the property. The sole shareholder of the plaintiff was a British Virgin Islands company. Accordingly, the plaintiff was considered a foreign company for the purposes of purchasing land in Singapore and was required to apply to the Singapore Land Authority (“SLA”) for approval to purchase the property.

Pursuant to the agreement, the plaintiff made the necessary application to the SLA for the Qualifying Certificate (“QC”) on 21 December 2006. The application was approved by the SLA on 29 December 2006 and its approval letter imposed only one condition for the issue of the QC - the plaintiff had to submit a banker's or insurer's guarantee in the sum of $3.05m to guarantee that the plaintiff would comply with the terms of the QC.

Under cl 3.2 of the agreement, completion was to take place on the date falling six weeks after the issue of the QC or three months after the date of the agreement, whichever was the later; and under cl 7 (b) of the agreement, the plaintiff was under an obligation to use its “best endeavours” to obtain the QC and to do so “without delay”.

The plaintiff did not complete on 12 March 2007. On 13 March 2007, the defendants issued a 21-day notice to complete. The notice expired on 3 April 2007 without the plaintiff completing the purchase. However, on 3 April 2007, the plaintiff obtained financing for the development and construction of the project from a bank. The financing included the provision of the guarantee required by SLA. The guarantee was submitted to SLA and on 10 April 2007, the QC was issued.

The plaintiff commenced proceedings for, inter alia, a declaration that the plaintiff were at liberty to complete the sale and purchase of the property within six weeks from the date the QC was issued; and a declaration that the 21-day notice to complete was null and void.

The plaintiff submitted that the main issue was whether, on a true construction of cl 3.2, the plaintiff was entitled to complete its purchase of the property within six weeks from the date of the receipt of the QC from the SLA. To this end, the plaintiff contended, inter alia,that: (1) cl 3.2 had to be given its plain and ordinary interpretation and it was not open for the defendants to rewrite the agreement by insisting on 12 March 2007 as the exclusive completion date; and (2) the agreement contemplated on its express terms that the completion date, and therefore the date by which the requisite approval had to be obtained would be a moving one, with the date of receipt of the QC forming the outer limit if the QC was not obtained by 29 January 2007 (which was the date falling six weeks before the end of the three-month period after the agreement was executed).

The defendants, on the other hand, submitted that the issue was what the agreed date of completion of the sale of the property was in the light of the contractual requirement that the plaintiff use its best endeavours to obtain the QC without delay. To this end, the defendants contended, inter alia, that: (1) on the construction of cl 3.2, if the QC was received on or before 29 January 2007, completion would take place on 12 March 2007. That was because 12 March 2007 would be the later date compared to the date falling six weeks from receipt of the QC. However, if the QC was received after 29 January 2007, completion would take place six weeks from the date of that receipt, as that date would be later than 12 March 2007; and (2) the defendants submitted that the plaintiff had not used its best endeavours to obtain the QC without delay pursuant to cl 7 (b) and therefore was not entitled to argue that the completion date should be the date falling six weeks after receipt of the QC rather than the date falling three months after the execution of the agreement.

Held, dismissing the plaintiff's application and declaring that the agreement was rescinded:

(1) While the completion date was determined by the date of receipt of the QC, the plaintiff was not entitled to drag its feet in procuring the QC and thereby delay completion. The plaintiff had to act with determination and do whatever was reasonable in good faith to ensure that the QC was issued without delay: at [29].

(2) The plaintiff's evidence failed to show that it had exercised its best endeavours to procure the guarantee. Instead, the evidence revealed that the plaintiff did not approach banks simply to obtain the banker's guarantee but wanted an entire package to finance its development and purchase of the property. Whilst the plaintiff was entitled to approach the banks for whatever financing it needed, the plaintiff was still obliged to procure the banker's guarantee “without delay”. Accordingly, the plaintiff had acted in breach of cl 7 (b). The plaintiff had not used its best endeavours to obtain the QC without delay and was therefore not entitled to take advantage of its own failure to postpone completion of the sale. As such, the defendants were entitled to rescind the agreement when the 21-day notice period expired without completion being effected: at [29] and [34].

[Observation: There was also an estoppel by convention in relation to the date of 12 March 2007 which bound the plaintiff so that it was prevented from denying that that date was the contractual completion date. First, there was no dispute that the parties were in a contractual relationship. Second, it was clear from the documents that both parties understood and took the position that the completion date was 12 March 2007. Third, there was sufficient evidence of the damage caused to a number of the defendants by the non-completion on 12 March 2007 to make it unconscionable for the plaintiff to be allowed to go back on that completion date: at [44], [52] and [53].]

Candid Water Cooler Pte Ltd v United Overseas Bank Ltd [2006] 3 SLR (R) 216; [2006] 3 SLR 216 (refd)

Justlogin Pte Ltd v Oversea-Chinese Banking Corp Ltd [2004] 1 SLR (R) 118; [2004] 1 SLR 118, HC (refd)

MacarthurCook Property Investment Pte Ltd v Khai Wah Development Pte Ltd [2007] SGHC 93 (refd)

Oversea-Chinese Banking Corp Ltd v Justlogin Pte Ltd [2004] 2 SLR (R) 675; [2004] 2 SLR 675, CA (refd)

Singapore Island Country Club v Hilborne [1996] 3 SLR (R) 418; [1997] 1 SLR 248 (refd)

Land Titles Act (Cap 157, 2004 Rev Ed) s 128

Francis Goh and Gordon Oh (Central Chambers Law Corporation) for the plaintiff

Hri Kumar and Tham Feei Sy (Drew & Napier LLC) for the defendants.

Judith Prakash J

1 The defendants are, collectively, the owners of all the strata title units in the development known as 55 Devonshire Road, Singapore, also called Mayer Mansion (“the property”). On 12 December 2006, the defendants entered into a sale and purchase agreement (“the agreement”) whereby they agreed to sell the property to the plaintiff, Travista Development Pte Ltd, a company especially incorporated for the purpose of purchasing and redeveloping the property.

2 On 3 April 2007, the plaintiff commenced these proceedings whereby it asked the court for, inter alia,the following orders:

1. (a) adeclaration that the plaintiff shall be at liberty to complete the sale and purchase of [the property] at the office of the vendors' solicitors within six (6) weeks from the date of the receipt by the plaintiff of the Qualifying Certificate from the Land Dealings Unit by virtue of the express terms of the sale and purchase agreement made between the plaintiff and the defendants dated 12 December 2006; and

2. (b) a declaration that the 21 days' Notice to Complete issued by the defendants' lawyer dated 13 March 2007 was null and void.

3 The matter came on for hearing before me on 8 May 2007. By then, the plaintiff had filed four affidavits in support of its case and the defendants had filed six affidavits. The defendants had also asserted a counterclaim. After hearing the arguments, I took time for consideration. On 14 May 2007, I dismissed the plaintiff's application. Further, in respect of the defendants' counterclaim, I declared and adjudged:

(a) The 21-day notice issued to the plaintiff on 13 March 2007 was valid and effective.

(b) The agreement dated 12 December 2006 made between the plaintiff and the defendants was rescinded.

(c) The deposit of $3,050,000 paid by the plaintiff was validly forfeited by the defendants.

(d) The caveats set out in the schedule attached to the order were to be expunged from the land register on the Registrar of Land Titles.

(e) The plaintiff was to pay the defendants damages as may be assessed by the assistant registrar pursuant to s 128 of the Land Titles Act (Cap 157, 2004 Rev Ed).

4 Shortly after my decision was made, the plaintiff changed solicitors. The new solicitors wrote in for further arguments. They also filed a further affidavit in support of the plaintiff's case. The defendants' solicitors objected to the request for further...