MEP Systems Pte Ltd v Azuma Engineering (S) Pte Ltd

Choo Han Teck J:

[1] The defendant granted an option to purchase dated 30 October 2008 to the plaintiff. The property in question was at all material times owned by the Jurong Town Corporation (“JTC”) and over which the plaintiff held a lease for 30 years (commencing from 18 January 1982). The operative clauses of the option to purchase read as follows:

[2] There was no dispute that the option was duly and properly executed. However, the “confirmation letter from the JTC” was not obtained within the time specified under the option. The option of purchase provided, by cl 23, that:

[3] The confirmation letter was not obtained by 14 November 2008 and so by cl 23, the defendant was granted an extension of one month to procure the letter. The defendant was unable to get the letter by 13 December 2008. The plaintiff’s director Ng Tock Ping, their lawyer Tan Kah Hin, their accounts manager, Margaret Foo and the defendant’s property agent Mike Yeo, met and Mike Yeo was told that the 14 December 2008 deadline had passed and the requisite confirmation letter from JTC had not been produced. On 19 December 2008 the plaintiff wrote to the defendant’s agent to rescind the option to purchase. The plaintiff thus prayed for a declaration that the option was rescinded and for the refund of $232,000 and $16,240 being the 10% deposit and GST paid upon exercise of the option to purchase on 17 November 2008.

[4] Mr Tan Cheng Kiong, counsel for the defendant, submitted that the JTC had no objections to the assignment and an extension of the lease. Whether JTC had indeed agreed with the defendant to the extension and assignment was important, but what was fundamental was that the defendant was to provide proof of that to the plaintiff as agreed. Otherwise the plaintiff was entitled to rescind the contract. A letter dated 11 December 2008 from the JTC to the defendant stated that:

This letter (approved for extension but silent on assignment) was not shown to the plaintiff until after 18 December 2008. More importantly, this letter was signed by JTC and sent to the defendant after 15 December 2008. The letter of approval of the extension and assignment was therefore a crucial document and cll 5.3, 5.4 and 23 of the option to purchase were therefore fundamental to the agreement between the plaintiff and the defendant. The non-compliance by the defendant entitled the plaintiff to rescind. The affidavit evidence showed that the defendant was still insisting on performance of the agreement even after 14 December 2008. Although the plaintiff engaged it in reply, the contract had already been rescinded. Accordingly in my view, the plaintiff was entitled to the declaration and orders prayed for.