Wardley Ltd v Datin Chong Mooi Lan and another (administratrix and administrator of the estate of Dato Tong Lee Hwa)

• Jurisdiction: Singapore
• Judgment Date: 23 March 1993
• Date: 23 March 1993
• Docket Number: Civil Appeal No 176 of 1991
• Court: Court of Appeal (Singapore)

Wardley Ltd

Plaintiff

and

Datin Chong Mooi Lan and another (administratrix and administrator of the estate of Dato Tong Lee Hwa, deceased)

Defendant

[1993] SGCA 17

L P Thean J

,

Warren L H Khoo J

and

M Karthigesu J

Civil Appeal No 176 of 1991

Court of Appeal

Land–Sale of land–Completion–Notice to complete given on day fixed for completion–Purchase not completed–Whether cl 29 of Singapore Law Society's Conditions of Sale 1981 applicable to sale agreement–Whether notice to complete premature and invalid

On 31 August 1984, the appellant (“Wardley”) agreed to sell a property known as Tunas Building (“the property”) to one Dato Tong Lee Hwa (“Tong”) or his “agreed assignee” for $34m. Wardley further agreed to provide the purchaser with financing in an amount up to 85% of the sale price. Completion was fixed for 24 November 1984 but due to the protracted negotiations over the terms of the loan agreement, it was extended to 8 December 1984. Finally, the parties and their respective solicitors met on 8 December 1984. At this meeting, Tong made certain proposals which Wardley found unacceptable. Before the parties parted company, Wardley's solicitor handed to Tong's solicitor a letter dated 8 December 1984 giving notice to complete within 21 days from the date of receipt of the notice. Tong did not complete the purchase of the property on the expiry of the 21 days' notice and Wardley forfeited $1m of his deposit pursuant to Special Condition 2 of the sale agreement. Clause 11 of the sale agreement incorporated the Singapore Law Society's Conditions of Sale 1981 (“the Society's Conditions”) “so far as they [were] applicable to a sale by private treaty and [were] not varied by or inconsistent with the Special Conditions and other terms” in the sale agreement.

On 27 June 1986, Tong commenced the present action claiming the refund of the amount forfeited. In the High Court, the judicial commissioner held that: (a) Wardley's notice to complete was invalid and ineffective as cl 29 of the Society's Conditions was inapplicable by virtue of cl 11 of the sale agreement; (b) in the circumstances, the notice to complete, which was given on the day fixed for completion, was not reasonable; and (c) the sum of $1m together with interest at 6% per annum from the date of the writ until judgment and costs were awarded to the respondents. Wardley appealed.

Held, dismissing the appeal:

(1) Whether cl 29 of the Society's Conditions applied to the sale agreement turned on the true construction of the relevant provisions of the sale agreement and the Society's Conditions. Sub-clause (1) of cl 29 governed the application of this clause and confined its application to a case where time was not of the essence of the contract in respect of the date fixed for completion. Since the sale agreement did not stipulate that time was of the essence of the contract, cl 29 was applicable unless it was varied by or inconsistent with the terms of the sale agreement. The only provision of the sale agreement which concerned the matters provided for in cl 29 was Special Condition 2. However, unlike Special Condition 2, cll 29 (2) and 29 (3) contained very comprehensive provisions covering the event in which a party failed to complete the transaction in question on the date fixed for completion. As these provisions were capable of independent application and were supplementary to Special Condition 2, they were applicable to the sale of the property: at [7], [8], [12] and [13].

(2) Since cl 29 of the Society's Conditions applied, the next issue was whether the service of the notice to complete was premature thus invalidating the notice. In this respect, the provision of cl 29 (2) was very clear. The commencement part of cl 29 (2) provided for a contingency, namely: if the sale was not completed on the date fixed for completion, and only on the occurrence of such contingency, did the right of either party (to the contract) to give to the other the notice to complete arise. In this case, Wardley's right to serve the notice to complete under cl 29 (2) arose only if the sale was not completed on 8 December 1984. At the time Wardley served the notice to complete, the date fixed for completion had not passed and the event that the sale was not completed on the date fixed for completion had not occurred. Wardley's right to serve the notice had not arisen at the time and as such, the service of the notice was premature and ineffective: at [7] and [14].

(3) As Wardley's notice was premature and invalid, Wardley was not entitled to treat Tong's failure to comply with the notice to complete as repudiation of the sale agreement and to forfeit the sum of $1m. The appeal was accordingly dismissed: at [19] and [21].

Afovos Shipping Co SA v Pagnan [1983] 1 WLR 195; [1983] 1 All ER 449 (folld)

Raineri v Miles; Wiejski (third party) [1981] AC 1050; [1980] 2 All ER 145 (folld)

Lim Chor Pee and Harish Kumar (Chor Pee & Co) for the appellant

Cheong Yuen Hee and Lai Swee Fung (Toh Tan & Partners) for the respondents.

Judgment reserved.

L P Thean J

(delivering the judgment of the court):

1 By an agreement dated 31 August 1984 (“the sale agreement”) the appellants as mortgagees agreed to sell the property known as Tunas Building (“the property”) to one Dato Tong Lee Hwa (“Tong”) or “agreed assignee” for $34m and to provide for the purchaser financing in an amount up to 85% of the sale price to enable the purchaser to complete the purchase. A deposit of $4m was paid to the appellants pursuant to the sale agreement immediately after it was signed. Under the terms of the sale agreement completion of the sale was fixed for 24 November 1984. At some point in time, prior to November 1984, the appellants accepted as the “agreed assignee”, Tong's Malaysian company, Chi Liung Holding Sdn Bhd (“Chi Liung”), for the purpose of the sale agreement.

2 The first drafts of the loan agreement, mortgage, Tong's personal guarantee and the deed of assignment of rental income from the property (collectively called “the security documents”) were received by the solicitors for Tong on or about 10 October 1984. The loan agreement contained, among other things, two conditions precedent to the loan: (a) the unconditional approvals of Bank Negara Malaysia and all other regulatory authorities in Malaysia for the borrower and the guarantor concerned to enter into the loan agreement and the guarantee; and (b) a legal opinion from a firm of lawyers in Malaysia acceptable to the appellants on such matter as they may require, including an opinion that the security documents would constitute legally valid and binding obligations of the borrower and the guarantor respectively and enforceable in accordance with their respective terms. These two conditions were objected to by Tong and as a result...