Chan Ah Beng v Liang and Sons Holdings (S) Pte Ltd and another application

Andrew Phang Boon Leong JA (delivering the judgment of the court):

[1] This is an appeal against the decision of the High Court Judge (“the Judge”) in Originating Summons No 251 of 2011 filed on 30 March 2011 (“the OS”) (see Liang & Sons Holdings (S) Pte Ltd v Chan Ah Beng [2011] SGHC 236 (“the GD”)).

[2] We should note, at the outset, that the Appellant had appointed M/s Kertar & Co (“KC”) to act for him in separate subordinate courts proceedings and also in the OS before the Judge (see [10]–[11] below). However, the Appellant discharged KC on 17 June 2011 and chose to appear in person before the Judge at the final hearing on 27 June 2011. Subsequently, the Appellant appointed M/s J S Yeh & Co (“JSY”), who had always acted for the Appellant in the conveyancing matter, to also act for him in this present appeal.

[3] The Appellant was the owner and occupier of the premises known as Apartment Block 201C, Tampines Street 21 #01-16, Singapore 523201 (“the Property”). He occupied and used the Property for his business of selling market produce.

[4] On 26 July 2010, the Appellant granted the Respondent an option to purchase the Property at $1.2m in exchange for an option fee of $12,000 (“the Option”). The Respondent exercised the Option on 12 August 2010.

[5] Clauses 10.1, 9, 8, 6, 10.3 and 4 of the Option are central to the present dispute and will be reproduced in full. Clause 10.1 of the Option states as follows:

Clause 9 of the Option states as follows:

Clause 8 of the Option states as follows:

Clause 6 of the Option states as follows:

Clause 10.3 of the Option states as follows:

Finally, Clause 4 of the Option states as follows:

[6] Clause 4 of the Option essentially incorporated the Singapore Law Society’s Conditions of Sale 1999 (“Conditions of Sale”) by reference. In particular, Conditions 6 and 8.2 are material to this case, and read as follows:

[7] On 6 September 2010, the Respondent’s solicitors, M/s Tan See Swan & Co (“TSS”), submitted the application for resale/transfer of the Property to HDB. HDB inspected the Property on or about 15 September 2010. On 9 November 2010, HDB wrote to both JSY and TSS stating that it was unable to process the resale application unless and until the Appellant rectified the following breaches that were discovered:

(a) Unauthorised cold room (chiller);

(b) Unauthorised brackets installed at frontage of the Property;

(c) Excessive display of goods at the common area; and

(d) Tampines Town Council’s (“the Town Council”) action against the Appellant in DC Suit No 3475 of 2010 (“the DC Suit”) for trespass arising from the display of goods at the common area without a Temporary Occupation Licence.

On 16 November 2010, HDB highlighted a further impediment to the sale of the Property, namely that the Appellant owed rental arrears in relation to two other HDB commercial properties that he occupied. The quantum of arrears was confirmed by HDB on 13 December 2010.

[8] On 17 December 2010, TSS first gave notice to JSY that the Respondent would charge interest for late completion pursuant to Condition 8.2 of the Conditions of Sale (“Condition 8.2”) (reproduced above at [6]). We pause to note – parenthetically – that Condition 8.2 is presently Condition 9.2 of the Law Society’s Conditions of Sale 2012 in a slightly amended form.

[9] We agree with the Appellant that the main impediment to the sale was the DC Suit as it was the definitive cause for HDB to withhold its consent to the sale of the Property. Hence, we do not intend to restate the unfolding of events in relation to the rest of the impediments. It suffices for the purposes of this appeal to note that the remaining impediments ceased being an issue in relation to the sale at various dates between the scheduled date of completion (18 November 2010) to the date that the OS was filed (30 March 2011).

[10] The Respondent’s director, Chuang Mui Yau (“Chuang”), exhibited the cause papers of the Town Council’s claim against the Appellant in the DC Suit in her third affidavit dated 21 June 2011. The pertinent details of the DC Suit are as follows:

(a) The Appellant had been issued eleven summonses between June 1993 and April 2009 for obstructing common property (all of which were compounded);

(b) Since 1 January 2007, the Appellant had required but had not been granted a Temporary Occupation Licence to display goods at the outdoor display area at the Property’s frontage;

(c) The action for trespass in the DC Suit commenced on 14 October 2010;

(d) On 10 November 2010, the Appellant through KC filed a defence and counterclaim, inter alia, denying the Town Council’s right to sue him;

(e) The Town Council obtained an order for an injunction against the Appellant on 10 November 2010, restraining him from using the common area at the Property’s frontage to display his goods;

(f) As a result of the Appellant’s persistent default in complying with the injunction order, a committal order was ordered against him on 18 March 2011; and

(g) On 27 April 2011, the Town Council obtained default judgment against the Appellant for his failure to comply with an earlier “unless” order.

[11] The Appellant’s persistent default in complying with the injunction order dated 10 November 2010 is evidenced by the following events:

(a) On 24 May 2011, at the second hearing before the Judge, KC showed to the Judge two photographs purportedly proving that the common area was clear of obstructions;

(b) However, on 25 May 2011, the Town Council’s solicitors wrote to KC and copied to TSS stating, inter alia, that the Appellant was found to have continued using the common area during the inspection on 23 May 2011;

(c) KC replied to the Town Council’s solicitors on 25 May 2011, reiterating that the Appellant had cleared all obstructions and enclosing the two photographs shown to the Judge at the second hearing on 24 May 2011 that purportedly proved that the common area was free of obstructions. KC also wrote to HDB, repeating the contents of their letter to the Town Council’s solicitors and requested approval of the sale;

(d) HDB replied on 25 May 2011 to both parties’ solicitors stating that it had been advised by the Town Council’s solicitors that the obstruction to the common area had not been removed. Hence, the Appellant’s application for the transfer of the Property was rejected. The Respondent was advised to resubmit the application after the Appellant had settled the DC Suit with the Town Council; and

(e) On the Respondent’s behalf, Chuang took it upon herself to visit the Property to verify the situation. He took photographs on 25 May 2011, 29 May 2011 and 20 June 2011, respectively and showed them to the Judge. The photographs show that merchandise was still displayed at the common property despite the Appellant’s claim to the contrary.

[12] In a similar vein, the Appellant’s persistent default in complying with the settlement of the default judgment obtained on 27 April 2011 is evidenced by the following events:

(a) On 6 June 2011, the Town Council’s solicitors wrote to the Appellant and copied to JSY, KC and TSS, stating that the settlement terms of the DC Suit were as follows:

(i) That the Appellant agreed and abided by the default judgment dated 27 April 2011,

(ii) That the Appellant agreed to pay costs and disbursements incurred in the DC Suit in the sum of $28,629.50;

(iii) In consideration of the settlement and payment of costs and disbursements, the Town Council will waive damages, inform the Court that they do not wish to further prosecute the contempt application and inform the HDB that the DC Suit has been completed; and

(iv) In consideration of the settlement, the Appellant irrevocably agrees to and will instruct TSS to release the agreed costs and disbursements to the Town Council upon completion.

(b) By way of a letter dated 10 June 2011 to the Town Council’s solicitors and copied to TSS, JSY replied accepting the terms of the settlement;

(c) On 14 June 2011, TSS wrote to JSY and copied to the Town Council’s solicitors. In its letter, TSS asked, inter alia, for the Appellant to give his irrevocable instructions to the Respondent to set aside the settlement sum to be paid to the Town Council upon completion;

(d) Also on 14 June 2011, the Town Council’s solicitors wrote to JSY and copied to TSS requiring TSS as solicitors for the purchasers to confirm that they have irrevocable instructions from the Appellant to pay the Town Council the settlement sum from the proceeds of the sale. The letter further stated that upon receipt of such confirmation, the Town Council will write to the HDB to confirm that the DC Suit has been settled;

(e) On 15 June 2011, TSS wrote to the Town Council’s solicitors and copied to JSY, confirming that the Respondent was agreeable to the arrangement provided that the relevant irrevocable instructions were duly provided for in writing by JSY; and

(f) On 17 June 2011, JSY replied to TSS’ letter of 14 June 2011 and copied to KC and the Town Council’s solicitors. Specifically in response to TSS’ request for the Appellant’s irrevocable instructions to set aside the settlement sum from the proceeds of the sale to pay to the Town Council, JSY said that they “confirm” it.

[13] At the request of KC, the Judge granted two adjournments on 3 May 2011 and 24 May 2011 to allow the Appellant to rectify his breaches. At the last hearing on 27 June 2011, the Appellant appeared in person (see the GD at [20]).

[14] The Judge found that it was plain from the history of the sale transaction that the Appellant had failed to comply with Clause 9 of the Option as he had not used his best endeavours to obtain HDB’s approval to the sale. In fact, the Appellant had, by his conduct, prevented HDB from granting the requisite approval in time for completion on 18 November 2010 (see the GD at [23]–[25]). The Judge therefore granted the Respondent the reliefs claimed, in particular:

(a) Specific performance by the Appellant of the Option within 14 days of the order of court, with liberty given to TSS to deduct a sum of $28,629.50 to pay to the Town Council’s solicitors upon completion;

(b) The Appellant be ordered to complete the sale of the Property to the Respondent within 14 days upon receipt of the approval from the HDB for the resale/transfer; and

(c) Damages by an account of rental at the rate of $8,000.00 per month or $266.69 per day for the period commencing from 18 November 2010 to the actual date of completion.

We pause to note an important point at this particular juncture: Although it was not specifically mentioned in the Order of Court, the Judge had in her GD explained that the damages (by way of an account of rental) were awarded pursuant to Clause 6 of the Option (see the GD at [22]).

(a) Interest for late completion at 10% per annum pursuant to Condition 8 of the Conditions of Sale commencing from 18 November 2010 until the actual date of completion; and

(b) Costs fixed at $6,000.00, excluding reasonable disbursements, to be reimbursed to the Respondent by the Appellant.

[16] As a preliminary matter, the Appellant applied to adduce fresh evidence before this court in relation to three categories of documents, as follows:

(a) Category 1: Eight documents that were not brought to the Judge’s attention by the hearing on 27 June 2011;

(b) Category 2: Twenty-one documents that had not yet come into existence before the hearing on 27 June 2011;

(c) Category 3: The Appellant’s depositions in paragraphs 4–9 of his Affidavit filed on 30 November 2011.

[17] It is settled law that in order to justify the reception of fresh evidence at the appellate stage, three conditions must be cumulatively fulfilled (see the leading English decision of Ladd v Marshall [1954] 1 WLR 1489 (“Ladd v Marshall”) at 1491):

[18] The Ladd v Marshall test has been cited and followed by this court on numerous occasions: see, for example, Cheong Kim Hock v Lin Securities (Pte) (in liquidation) [1992] 1 SLR(R) 497 at [21]; Cheng-Wong Mei Ling Theresa v Oei Hong Leong [2006] 2 SLR(R) 637 at [39]; and Sim Cheng Soon v BT Engineering Pte Ltd and another [2006] 3 SLR(R) 551 at [7]–[9]. The three conditions must be cumulatively satisfied: Su Sh-Hsyu v Wee Yue Chew [2007] 3 SLR(R) 673 at [15].

[19] The Appellant claims that these documents, which involve correspondence between parties’ solicitors, HDB and the Town Council, would demonstrate that he had used his best endeavours to obtain HDB’s approval to the sale.

[20] It is the Appellant’s case that the first limb of the Ladd v Marshall test is fulfilled since he could not have adduced these documents with reasonable diligence, as reasonable diligence on his part as a litigant-in-person would not have alerted him to the legal significance of the said documents.

[21] The Respondent – not surprisingly – disputes that the first Ladd v Marshall criterion is satisfied and raises several points. Firstly, being unrepresented per se cannot satisfy the first Ladd v Marshall criterion. Otherwise, it would always be open to unrepresented litigants to use this as a reason to adduce further evidence upon appeal. Further, there is no reason to think that the Appellant was not in possession of or was unaware of these documents at the material time since his conveyancing solicitors, JSY, had never ceased to act for him in the conveyancing matter. The Appellant has not raised such allegations either. The Appellant had chosen not to file any affidavit prior to the final hearing before the Judge and was fully content to rely on the evidence adduced by the Respondent in the three affidavits filed. In any event, the Appellant was unrepresented for only ten days prior to the final hearing on 27 June 2011.

[22] We agree with the Respondent’s arguments and find that these documents were in the possession of the Appellant or, at the very least, could have been easily obtained with reasonable diligence and ought to have been placed before the Judge at the proceedings below. In the circumstances, we did not allow this category of documents to be admitted.

[23] The Appellant claims that these documents may potentially demonstrate that he was not to be blamed for the delay in completion for the period commencing 28 June 2011 (the day after the court order was granted) to 26 July 2011 (the date of actual completion). Consequently, the Appellant argues that he should not be made to pay interest and damages (by an account of rent) in respect of that particular period of time.

[24] The first Ladd v Marshall criterion is clearly satisfied since the documents had not yet come into existence and were therefore impossible to obtain before the hearing on 27 June 2011. These documents might also have an important influence on the outcome of the case since the liability to pay interest for late completion under Condition 8 of the Conditions of Sale is dependent on the blameworthiness of the Appellant. Since the parties have not raised any issue with the credibility of those documents, the third Ladd v Marshall criterion was also satisfied.

[25] We therefore allowed this category of documents to be admitted.

[26] The third category of evidence which the Appellant sought to adduce relates to the depositions found in paragraphs 4 to 9 of the Appellant’s affidavit. The depositions in turn relate to both (a) the first category of evidence and (b) the second category of evidence. By logical extension, since we did not allow the first category of evidence to be admitted, we also did not allow the depositions relating to the first category of evidence to be admitted. However, although we allowed the second category of evidence to be admitted, we did not also allow the depositions relating to the second category of evidence to be admitted. As the contents of the documents in the second category of evidence can speak for themselves, we did not think that the depositions relating to the second category of evidence would probably have an important influence on this case. In the circumstances, therefore, we did not allow the third category of evidence to be admitted.

[27] Turning, then, to the substantive issues before this court, they are as follows:

(a) The consequences of admitting the twenty-one documents that had not yet come into existence before the hearing on 27 June 2011;

(b) Whether the Judge had erred in her finding of fact that the Appellant had breached Clause 9 of the Option by failing to use his best endeavours to obtain HDB’s approval;

(c) If the Appellant had indeed breached the terms of the Option, whether the Judge had erred in law by awarding the Respondent both interest and damages (by an account of rental), and if so, which relief should be awarded; and

(d) The Appellant’s appeal against the award of costs against him.

Issue 1: Consequences of admitting the twenty-one documents that had not yet come into existence before the hearing on 27 June 2011

[28] The Appellant’s case in this regard is that, at the time of the hearing on 27 June 2011 before the Judge, it was impossible to determine as a matter of fact whether the Appellant and/or the Respondent would have caused undue delay to the completion of the sale and be in breach of Clause 9 of the Option for a future period in time. Therefore, according to the Appellant, the Respondent’s alleged right to interest and/or damages by an account of rent from 28 June 2011 up to the actual date of completion had not yet accrued by the time the OS was disposed of. The Appellant therefore sought to rely on these documents to demonstrate that he was not to be blamed for the delay in completion for the period beginning 28 June 2011 (the day after the court order was granted) to 26 July 2011 (the date of actual completion).

[29] With respect, the Appellant’s argument is unpersuasive. If the Appellant was found to have caused undue delay to completion, surely he should be held liable to rent and/or damages in respect of the entire delay and not just up to the date of the OS. After all, the Appellant’s actions had the overall consequential effect of delaying completion that should have taken place as scheduled on 18 November 2010 but did not occur until 26 July 2011. It is of course possible that, after the OS was disposed of, the Respondent might be in breach of Clause 9 of the Option. Should such a situation occur, then a separate right would accrue to the Appellant which would enable him to bring an action against the Respondent for breach of contract. Such a right is independent of the Respondent’s right to damages and/or interest for the period between the contractual and actual date of completion, which had accrued by the time that the OS was disposed of.

[30] Hence, although we allowed these documents to be admitted, they did not ultimately have any bearing on the present appeal. Accordingly, we need not consider them further.

Issue 2: Whether the Judge erred in her finding of fact that the Appellant had breached Clause 9 of the Option by failing to use his best endeavours to obtain the HDB’s approval

[31] We should state, from the outset, that this ground of appeal was not raised in the Notice of Appeal filed by the Appellant. We will nonetheless address this issue since it arose during the course of the appeal.

[32] To appeal against the Judge’s finding of fact that he had not used his best endeavours to obtain HDB’s approval for the sale of the Property, the Appellant must show that the Judge’s finding of fact clearly went against the weight of the evidence and was plainly wrong. As Kan Ting Chiu J stated succinctly in the Singapore High Court decision of Ong Khim Heng Daniel v Leonie Court Pte Ltd [2000] 3 SLR(R) 670 at [42]:

[33] In a similar vein, Choo Han Teck J, in the Singapore High Court decision of Group Exklusiv Pte Ltd v Diethelm Singapore Pte Ltd [2003] 4 SLR(R) 582 (“Group Exklusiv”), observed thus (at [11]):

[34] And, in the Singapore Court of Appeal decision of Travista Development Pte Ltd v Tan Kim Swee Augustine and others [2008] 2 SLR(R) 474 (“Travista”), Chan Sek Keong CJ, delivering the grounds of decision of the court, observed thus (at [22]):

[35] It ought, however, to be noted that, whilst the relevant test is now well-established in the local legal landscape (see also, for example, the Singapore Court of Appeal decision Oversea-Chinese Banking Corp Ltd and another v Justlogin Pte Ltd and another [2004] 2 SLR(R) 675 at [21] (affirming Justlogin Pte Ltd and another v Oversea-Chinese Banking Corp Ltd and another [2004] 1 SLR(R) 118) and the Singapore High Court decisions of MacarthurCook Property Investment Pte Ltd and Another v Khai Wah Development Pte Ltd [2007] SGHC 93 at [61] and Indulge Food Pte Ltd v Torabi Marashi Bahram [2010] 2 SLR 540 at [64]), the actual decision arrived at by the court as to whether or not the contracting party concerned had in fact satisfied the duty to use best endeavours depends, in the final analysis, upon the precise factual matrix in question (see also Group Exklusiv at [11] (cited above at [33])). Indeed, this is inherent in the very nature of the test itself. Put simply, whilst the test is relatively easy to state, the actual decision itself is anchored heavily in the sphere of application.

[36] As a preliminary matter, we should highlight a point that the Judge did not specifically address. This relates to the governing date of completion in light of a “best endeavours clause” such as Clause 9 of the Option. As set out at [5] above, Clause 8 of the Option defined the completion date as “(i) within fourteen (14) weeks from the date of exercise of [the] Option; or (ii) within fourteen (14) days upon receipt of the HDB’s approval ... whichever date is later”. According to the principle established by this court in Travista, the governing date of completion should be construed as 18 November 2011 pursuant to Clause 8(i) of the Option. This is so unless the Appellant can demonstrate that, in spite of having used his best endeavours to resolve the issues that prevented HDB from granting approval, he could not have done so. To hold otherwise would “[render] nugatory [an] aspect of the appellant’s “best endeavours” obligations” (see ibid at [19]).

[37] As already alluded to above, the Appellant’s main argument before this court relates to the DC Suit. Counsel for the Appellant, Mr Yeh Siang Hui (“Mr Yeh”), submitted that the Appellant should not be found to be in breach of Clause 9 of the Option because using one’s best endeavours to obtain HDB’s approval to the sale does not equate to having to compromise or forego one’s rights against another party, even if the HDB makes the resolution of one’s dispute with the other party a condition precedent for the approval to the sale. This, Mr Yeh argues, is implied as a matter of law in any legal system through the two principles: that no person should be judged unheard and that every litigant has a right to a fair hearing.

[38] The Appellant’s argument, whilst attractive at first blush, was, in our view, fundamentally flawed. Let us elaborate.

[39] In considering the Appellant’s argument, the chronology of events is of the first importance. It will be recalled that the Respondent had exercised the Option on 12 August 2010. At that particular point in time (or, at the very least, shortly thereafter), the Appellant ought to have removed the display of his goods that were later to become the subject of the DC Suit. Indeed, it was clear beyond peradventure in so far as the Appellant was concerned that this display of his goods was, in the view of the Town Council, an ongoing breach of the Town Council’s rules and regulations. That this clear fact could not have escaped the Appellant’s attention was underscored by the fact that eleven summonses had been issued by the Town Council against the Appellant between June 1993 and April 2009 inasmuch as the Appellant was alleged to have obstructed the common property. Significantly (in our view), all these summonses had been compounded.

[40] More importantly, it ought to have been clear to both the Appellant and JSY that the continued display of the goods could – if not removed – seriously jeopardise the successful completion of the sale of the Property to the Respondent. Although the Appellant might not have foreseen the precise form which a concomitant legal action (viz, the DC Suit) would take, that is besides the point as any such legal action (with its attendant (and negative) consequences in so far as the transaction between the Appellant and the Respondent is concerned) ought to have been reasonably contemplated by the Appellant. It also bears emphasising that it was expressly provided in the HDB Terms and Conditions (which the parties had agreed to be bound to pursuant to Clause 10.1 of the Option (reproduced above at [5])) that the parties to the sale must not have any outstanding judgments or court cases against them. It is therefore not open for the Appellant to argue that he did not know that his persistent wrongdoing (and consequently, the DC Suit) would affect the HDB’s grant of approval for the sale.

[41] Put simply, the objective evidence with regard to the Appellant’s actions in so far as the display of his goods is concerned demonstrates a completely contrary approach to what he ought to have done. Notwithstanding the knowledge that the Property was supposed to be transferred to the Respondent by 18 November 2010, the Appellant persisted in displaying his goods, thus jeopardising this entire transaction. And it was this unreasonable conduct that led to the commencement of the DC Suit on 14 October 2010 – which was, significantly, approximately two months after the Respondent had exercised the Option to purchase the Property and approximately one month before the contractual date of completion on 18 November 2010. Mr Yeh’s argument to the effect that the Appellant was entitled to vindicate his legal rights vis-à-vis the DC Suit was therefore merely a legal red herring. In point of fact, had the Appellant exercised his best endeavours pursuant to Clause 9 of the Option, the DC Suit would not have been commenced in the first instance. Indeed, in the apt words of the Judge (see the GD at [23]):

[42] It is significant, in our view, that, notwithstanding the Appellant’s alleged ignorance of the HDB’s rules and regulations before the Judge (see the GD at [20]), he was in fact legally represented by both KC (until 27 June 2011) and JSY (in the conveyancing matter). In any event, as already noted above, the issue relating to the display of goods at the common property was a longstanding one – stretching as far back as 1993.

[43] That the Appellant’s conduct throughout was unreasonable and was the very antithesis of best endeavours was emphasised – most correctly, in our view – by the Judge. For example, the Judge referred to the Appellant’s “recalcitrance and pugnacious attitude” as being “not only inexcusable but reprehensible” (see the GD at [24]). In this regard, the fact that the Appellant had no intention whatsoever of removing the display of goods was clear from his conduct throughout as rooted in the objective evidence itself. This patent lack of bona fides was evident even after the DC Suit had been commenced. Indeed, the Appellant’s conduct after the DC Suit commenced (see the narrative at [11]–[12] above) constituted part of an integrated pattern of conduct that (it bears reiterating) stretched back to as far back as 1993.

[44] For example, the injunction was ordered against the Appellant on 10 November 2010 but he was found to have been in breach of that order even until as late as 20 June 2011. Had he simply complied with the said order, the committal proceedings would not have been commenced against him. The compliance with the terms of the injunction was a simple matter that was entirely within the Appellant’s control since he was operating his business at the Property at all material times. We also note that the Appellant was less than candid when he repeatedly claimed through KC that he no longer obstructed the common property with his goods when that was, in point of fact, untrue. Further, when the Judge pointed out to the Appellant at the final hearing that he was in breach of the Option due, inter alia, to the outstanding DC Suit, he did not deny his breaches. In fact, he even admitted that he had for 30 years displayed his goods at the common area and did not understand why he could not continue to do so. We should add that, even taking the Appellant’s arguments at their highest, his compliance with the said order was not at all incompatible with his defence of the DC Suit. Indeed, his non-compliance with the terms of an injunction was a flagrant breach of a court order that resulted in committal proceedings being commenced against him.

[45] In our view, it is also somewhat telling that, having been (as already noted) the cause of the DC Suit, the Appellant sought to benefit from this situation by giving notice (on 2 June 2011) to the Respondent’s solicitors that he (the Appellant) intended to rescind the sale pursuant to Clause 10.3 of the Option (reproduced above at [5]) in the event that the HDB did not grant written approval for the sale. It was clear beyond peradventure that, having been the cause of the DC Suit, Clause 10.3 was clearly inapplicable as the refusal by the HDB to grant written approval was, in the circumstances, clearly not “beyond the control of either parties [sic]”. Not surprisingly, therefore, the Respondent’s solicitors rejected the Appellant’s attempt to rescind the sale. More importantly, the Judge quite correctly observed thus (see the GD at [24]):

[46] It is evident from the facts that the Appellant had not done everything reasonable in good faith to settle the DC Suit so as to obtain the HDB’s approval to the sale in time for contractual completion on 18 November 2010. Having therefore found that the Appellant had not used his best endeavous to obtain the HDB’s approval and had thereby been in breach of Clause 9 of the Option, we turn now to consider the issue of the reliefs granted.

Issue 3: Whether the Judge had erred in law by awarding the Respondent both interest and damages (by an account of rental) and, if so, which relief should be awarded

[47] The Appellant’s case with regard to this particular issue is that the Judge had erred in law by awarding the Respondent both interest and damages (by an account of rent) as that would amount to double compensation.

[48] The resolution of this issue turns on the following sub-issues which will be dealt with seriatim:

(a) Whether the Respondent is entitled to recover damages (by an account of rent) for late completion pursuant to Condition 6 of the Conditions of Sale;

(b) Whether Condition 6 falls within the ambit of the liquidated damages provision under Condition 8 of the Conditions of Sale;

(c) The effect of Clause 6 of the Option; and

(d) The relief to be granted.

Whether the Respondent is entitled to recover damages (by an account of rent) for late completion pursuant to Condition 6 of the Conditions of Sale

[49] We will first consider the position under general law. As observed by the learned authors in Professor Robert M. Abbey & Mark B. Richards, A Practical Approach to Conveyancing (Oxford University Press, 13th Ed, 2011) at para 9.84:

The same principles are echoed in more details in J Farrand & A Clarke, Emmet and Farrand on Title (Sweet & Maxwell, 2010), as follows (at paras 8.015–8.016):

[50] It is clear, therefore, that, under general law, an innocent purchaser is entitled to rents or profits derived from the property from the contractual date of completion. Where the vendor is in possession of the property, this includes a fair occupation rent. The reasoning is simple – equity looks upon that as done which ought to be done. Hence, the purchaser becomes the owner of the property in equity from the date of contractual completion.

[51] We turn now to consider Condition 6 of the Conditions of Sale (reproduced above at [6]). In this regard, we would, with respect, disagree with the court’s view in Cheong Lay Yong v Muthukumaran s/o Varthan and another (K Krishna & Partners and another, third parties) [2010] SLR 16(“Cheong Lay Yong”) that Condition 6 of the Conditions of Sale is of no application to the issue of an innocent purchaser’s entitlement to rent (see Cheong Lay Yong at [49]–[53]). In Cheong Lay Yong, the court found Condition 6 to be confusing and ambiguous. According to it, Condition 6.2 provides that, after the date fixed for completion, the purchaser will be entitled to all rents and profits. However, the court reasoned, Condition 6.2 is expressly made subject to Condition 6.3, which draws a distinction between contractual completion and actual completion; in particular, it provides that the purchaser is not entitled to receive rent and profits until the date of actual completion. On the other hand, Condition 6.4 allows for apportionment of rent and profits “where necessary”, but it is unclear how the phrase “where necessary” is to be construed. Hence, the court was of the view that Condition 6 was of no application, and it proceeded to base his award of damages (by an account of rent) on other grounds. (The other aspects of the decision in Cheong Lay Yong relevant to the present appeal will be dealt with further below at [58]).

[52] We find that Condition 6 can be construed quite differently by drawing a distinction between entitlement under Condition 6.2 on the one hand and receipt under Condition 6.3 on the other. In other words, the purchaser is entitled to, inter alia, rent after contractual completion, but he is not to receive it until the date of actual completion. This interpretation accords with principles at general law to the effect that a purchaser is, in principle, entitled to rent after contractual completion since he becomes the beneficial owner of the property once the date fixed for completion has passed. One might then question the purpose of subjecting Condition 6.2 to Condition 6.3 and drawing, in the process, a distinction between entitlement and receipt. We surmise that one possible reason could be to avoid any uncertainty on the part of an existing third party tenant as to who he is obliged to pay the rent to. We pause here to note – parenthetically – that two learned commentators have observed that, absent reliance on Condition 6.2 as a basis for the award of rent, it is difficult to justify such an award on the equitable doctrine of conversion as applied to contracts for the sale of land (see Tham Chee Ho & Lee Pey Woan, “Contract Law” (2010) 11 SAL Ann Rev 239 at paras 11.130-11.132).

[53] Hence, on the plain reading of Condition 6 of the Conditions of Sale, the Respondent is entitled to rent after the date of contractual completion. We turn now to consider whether Condition 6 falls within the ambit of the liquidated damages provision under Condition 8 of the Conditions of Sale.

Whether Condition 6 falls within the ambit of the liquidated damages provision under Condition 8 of the Conditions of Sale

[54] We must emphasise, at the outset, that Condition 8 provides that the defaulting party who causes delay to completion must pay to the innocent party interest as liquidated damages. As the learned author in McGregor on Damages (Sweet & Maxwell, 18th Ed, 2009) (“McGregor”) states (at para 1-002):

[55] It is an established principle of law that an innocent party cannot claim unliquidated damages in addition to the liquidated damages which were designed to deal with the loss that has occurred; neither can it elect to ignore the liquidated damages provision and sue only for unliquidated damages (see, for example, the English decisions of Diestal v Stevenson [1906] 2 KB 345 and Talley v Wolsey-Neech (1978) 38 P & CR 45). However, the courts will allow unliquidated damages to be claimed in addition to liquidated damages if the damages which is the subject matter of the former claim arises wholly or partially from some other breach that does not fall within the ambit of the liquidated damages provision (see, for example, the English decisions of Aktieselskabet Reidar v Arcos Ltd [1927] 1 KB 352, Total Transport Corp v Amoco Trading Co, The Altus [1985] 1 Lloyd’s Rep 423). All these principles were succinctly stated in a leading textbook which we have already referred to as follows (see McGregor at paras 13-021-13-023):

[56] This leads us to the question of what was intended to be caught by the liquidated damages provision in Condition 8. The scope of a similar liquidated damages provision was considered by the Singapore Income Tax Board of Review decision of ZT v The Comptroller of Income Tax [2009] SGITBR 1 (“ZT”). In ZT, the appeal concerned the taxability of the compensation received by the appellant-purchaser for delay in completion under Condition 8(b) of the Law Society’s Conditions of Sale 1981 which reads as follows:

The tribunal found that (at [28]):

We are of the view that the above interpretation of the Law Society’s Conditions of Sale 1981 applies equally to the present Condition 8 of the Conditions of Sale 1999 (which is, in all respects, similar).

[57] Useful comparisons of the Singapore Conditions of Sale can be made with the equivalent English provisions. The most recent edition of the English equivalent is the Standard Conditions of Sale (5th Ed) (“UK Standard Conditions of Sale”). The equivalent provision catering to payment of interest is Condition 7.2 of the UK Standard Conditions of Sale which states as follows:

It is therefore implicit under Condition 7.2.3 of the UK Standard Conditions of Sale that the innocent party retains the right to claim for damages for delay, but any compensation paid will be deducted. Counsel for the Respondent, Mr Tan Hee Joek (“Mr Tan”), argued that the UK Standard Conditions of Sale are illustrative of how such conditions of sale are never intended to affect the rights of parties under general law unless they expressly provide so. Whilst we agree that this is the position under the UK Standard Conditions of Sale, Mr Tan has failed to address the fact that, unlike the UK Standard Conditions of Sale, Condition 8 of the Singapore Conditions of Sale expressly provides that damages are payable as liquidated damages. This is a material distinction which clearly affects the rights of parties by limiting the right to claim damages to liquidated damages pursuant to Condition 8 of the Singapore Conditions of Sale. We also note that the UK Standard Conditions of Sale require interest received to be credited in the claim for damages. The necessary implication must be that to award both would be to award double compensation (which is impermissible).

[58] In the circumstances, we are of the view that any rent received pursuant to Condition 6 does fall within the ambit of the liquidated damages provision in Condition 8 of the Conditions of Sale. We therefore differ from the approach adopted by the court in Cheong Lay Yong where both rent as well as interest as liquidated damages were awarded. The court’s primary motivation in awarding both heads of damages in Cheong Lay Yong was the unjust result that would arise if the actual loss incurred by the innocent purchaser was greater than the interest that could be claimed under Condition 8.2 (see Cheong Lay Yong at [58]). In such a scenario, the innocent purchaser stands to make a loss while the defaulting vendor stands to gain. We respectfully disagree as the purpose of liquidated damages is for parties to agree in advance a genuine pre-estimate of loss, especially when the value of the loss is susceptible to volatile market fluctuations. Any resulting injustice is merely circumstantial as it is also equally possible that an innocent purchaser would make a gain should (taking the present situation as an illustration) the property market subsequently decline. In fact, it seems that Condition 8.2 actually serves to offer some protection to the purchaser because, regardless of how unfavourable the property market may subsequently become, the purchaser will be assured that it will still be able to recover an acceptable sum. Since parties had expressly agreed to the sum fixed as liquidated damages and there was also no reason to classify the clause as a penalty, the law requires that parties be held to what they have bargained for (see above at [54]–[55]). In the circumstances, only interest pursuant to Condition 8 of the Conditions of Sale should have been awarded to the purchaser.

[59] On this issue, we further note Prof Yeo Tiong Min’s observations in his chapter on “Restitution” in the Singapore Academy of Law Annual Review (2010) 11 SAL Ann Rev 517 (at paras 21.44 to 21.50):

[60] We are therefore of the view that rent payable under Condition 6 does fall within the ambit of the liquidated damages provision under Condition 8.2. Since Condition 6 and Condition 8.2 are alternative remedies and Condition 8.2 specifically provides that interest is payable as liquidated damages, the Respondent must therefore be confined to claiming only interest pursuant to Condition 8.2.

[61] Having set out the position at general law and the position under the Conditions of Sale, we turn now to consider the effect of Clause 6 of the Option. A plain reading of Clause 6 (reproduced above at [5]) clearly entails that the Respondent’s right to receive monthly rental of $8,000.00 takes effect from the date immediately after the contractual date of completion. This right accrues independently and regardless of whether there was a breach of the terms of the Option. The question that now arises is this: Does Clause 6 of the Option entitle the Respondent to damages (by an account of rent) in addition to interest pursuant to Condition 8.2?

[62] As is the case with our analysis of Condition 8.2 above, the key principle that applies is that there must be no double compensation in favour of the Respondent should damages (by an account of rent) be awarded to the Respondent pursuant to Clause 6 of the Option in addition to interest pursuant to Condition 8.2. This is not only a general principle but is a foundational one that is rooted in logic, commonsense as well as justice and fairness. Looked at in this light, it is clear, in our view, that there would, in fact, be double compensation in favour of the Respondent should both the abovementioned sums be awarded. Let us elaborate.

[63] As already noted above (at [54]-[60]), liquidated damages awarded pursuant to Condition 8.2 are intended to encompass rent received by the Respondent. In the circumstances, awarding the Respondent both rent in the form of damages (by an account of rent) pursuant to Clause 6 of the Option and liquidated damages in the form of interest pursuant to Condition 8.2 would result in the Respondent being compensated twice over. It is worth noting, at this juncture, that although Clause 6 of the Option does operate differently from Condition 8.2 inasmuch as the former relates to a contractual obligation whereas the latter relates to a breach on the part of the Appellant, the substantive result is the same, viz, that the Respondent would be compensated twice over. It will be recalled that the Judge awarded the Respondent damages by an account of rental at the rate of $8,000 per month or $266.69 per day for the period commencing from 18 November 2010 to the actual date of completion (see above at [14(c)]) as well as interest (comprising liquidated damages) for late completion at 10% per annum pursuant to Condition 8 of the Conditions of Sale also commencing from 18 November 2010 until the actual date of completion (see above at [15(a)]). A moment’s reflection will reveal – in no uncertain terms – the double compensation in favour of the Respondent that results from such an approach.

[64] Accordingly, the Judge ought not to have awarded the Respondent damages (by an account of rent) pursuant to Clause 6 of the Option, in addition to interest pursuant to Condition 8.2. We therefore find in favour of the Appellant on this particular issue.

[65] We also note – parenthetically– that the parties executed the actual tenancy agreement as running for one year beginning on the day after actual completion (ie, 27 July 2011 to 27 July 2012), although the tenancy contemplated under Clause 6 envisaged a tenancy to commence on the day after the contractual completion date (ie, 19 November 2010). Clause 6 would appear to be based on the assumption that completion would be effected in accordance with the contract. In the circumstances, the aforementioned tenancy agreement was not, strictly speaking, executed pursuant to Clause 6 as such. The role Clause 6 plays in the context of the present proceedings centres (as we have seen) on the issue as to whether or not damages (by an account of rent) pursuant to Clause 6 may be recovered in addition to interest pursuant to Condition 8.2.

[66] The above analysis leads to the conclusion that the Respondent must be confined to claiming only interest as liquidated damages pursuant to Condition 8.2, and cannot claim (in addition) rent pursuant to Clause 6 of the Option.

[67] We note that Clause 4 of the Option provides that, in the event of an inconsistency between the Conditions of Sale and the terms of the Option, the terms of the Option should prevail. Clause 4, however, does not come into play in the present case. This is because Clause 6 (as noted above at [63]) is an express term of the contract embodying a contractual obligation which ought to be performed but which, if breached, would result in the award of damages. Hence, Clause 6 does not relate directly to the issue of damages as such, except in so far as it will assist the court in quantifying the measure of loss should that particular clause itself be breached. Condition 8, on the other hand, is a liquidated damages clause, dealing not, as such, with the parties’ obligations that are to be performed. Condition 8 deals, instead, with the consequences of a breach in the event of a delay by one party (which clause would, in the nature of things, constitute a genuine pre-estimate of all loss, including loss that would otherwise have been awarded to the Respondent as non-liquidated damages (which would of course include the amount awardable for breach of Clause 6)). In the circumstances, there is no inconsistency between Clause 6 and Condition 8; they are complementary in nature for the purposes of Clause 4. Clause 4 therefore does not come into play. Accordingly, the Respondent is entitled to interest for late completion pursuant to Condition 8.2 of the Conditions of Sale for the period from 19 November 2010 to 26 July 2011. The Appellant’s appeal against the Judge’s order for the (additional) award of damages by an account of rental to be paid to the Respondent is therefore allowed.