New Dennis Arthur and another v Greesh Ghai Monty and another

Choo Han Teck J:

[1] 18 Ipoh Lane #18-02 Emery Point (“the Emery Point Property” or “the property”) was the Singapore holiday home of Dennis Arthur New and his wife, Karen Maria New (“the plaintiffs”). In 2010, the plaintiffs were looking to sell their holiday home. Meanwhile, another expatriate couple, Mr Ghai Monty Greesh and Ms Espadas Arevalo Amparo Maria (“the defendants”) were in search of a home of their own. Having already been once bitten with water leakage problems in their previous Hong Kong rental apartment, the defendants were twice shy when considering the purchase of the Emery Point Property. In fact, by their own account, the defendants made a total of three inspections of the property during the day and night – twice jointly and once by the second defendant alone but at all times accompanied by their housing agent, Azman Haron (“Azman”), and the plainitffs’ housing agent, Tommi Loy (“Loy”). The couple liked what they saw and made an offer to purchase the Emery Point Property on 30 November 2010. The plaintiffs issued the defendants an Option to Purchase (“OTP”) on 2 December 2010 which was to be exercised by 16 December 2010 with completion to take place on 31 January 2011. Pertinent to the present dispute, paragraph 9 of the OTP reads:

Paragraph 1 of the OTP reads:

In this regard, Condition 9 of the Law Society’s Conditions of Sale 1999 reads:

[2] The defendants, who were legally advised during the purchase, exercised the OTP on 16 December 2011. In the period before the proposed completion on 31 January 2011, the second defendant stated that she visited the Emery Point Property on three occasions. During the second visit on 25 January 2011, the second defendant (who was accompanied by Loy, Azman and Kelvin, a contractor) was shocked to find that there was a huge puddle of water in the master bedroom on the first floor. By this stage, the plaintiffs had removed their furniture and so the second defendant noticed, for the first time, other stain marks in the other bedrooms that had previously been concealed by the furniture. Even more alarming, according to the second defendant’s testimony, was the water running down the wall of a bedroom on the first floor. Thereafter, the second defendant met with the building manager, McCoy Young (“McCoy”) on 27 January 2011. He informed her that the Management Committee of Emery Point and many owners of the building were suing the building developer for various defects such as water leakage, malfunction of the intercom system and problems with the swimming pool. According to the second defendant, McCoy was shocked to hear that the property agents had not told the defendants about the pending lawsuits.

[3] As a result of the discovery of the water leakage, the defendants refused to complete the purchase of the property. Consequently, the plaintiffs commenced an action against the defendants seeking:

(a) Specific performance of the sale of the property and payment of $1,957,000.00, being the balance of the purchase price, by the defendants to the plaintiffs within 14 days from the date of Judgment;

(b) Specific damages flowing from the defendants’ alleged breach;

(c) Further and/or in the alternative, general damages to be assessed;

(d) Interest on the purchase price of $2,060,000.00 pursuant to Condition 8.1 of the Law Society’s Conditions of Sale 1999, at the rate of 10% per annum from 1 February 2011 to the day of actual completion; and

(e) Further and/or in the alternative interest on the specific and general damages at the rate of 5.33% from the date of the filing of the writ to the date of actual realisation.

The defendants, in their counterclaim, seek to rescind the contract on the basis that they were induced to enter into the contract due to Loy’s misrepresentations concerning the condition of the property.

[4] This claim turns on the factual question of what transpired between Loy and the defendants during the viewings of the property prior to the signing of the OTP. In this regard, it is incumbent on the defendants to establish that:

(a) Loy had made a false statement of fact to the defendants concerning the Emery Point Property; and

(b) This false statement induced the defendants to enter into the contract.

With respect to the first proposition, Loy categorically denied telling the defendants that there were no leaks in the Emery Point Property. On his account the defendants had inspected the property at least four times before the OTP was signed. Although his recollection of the dates of these visits was muddled, he was clear that during two viewings, the defendants brought along a few people whom Loy believed were building specialists, who would advise on renovation and structural works, and interior decorators. These building specialists would inspect the property during the viewing. For the viewing on 23 November 2010, Loy’s position was that the defendants did not ask any questions about the leakage. They did however ask Loy why some of the wallpaper was peeling. Loy’s reply was that he suspected that it could be due to poor workmanship. For the viewing on 28 November 2010, the defendants noticed that the floor near the opened window was wet. Loy informed them that this could have been caused by a window that he had opened to ventilate the place – it was raining at the time. The defendants asked Loy about whether there were any leaks in the property to which Loy replied that he did not know the answer.

[6] In contrast, the defendants’ testimony was that there were only three viewing on 22, 23 and 28 November 2010 before the OTP was signed on 2 December 2010 and that the first time they had brought anyone matching Loy’s description of a building specialist, contractor or interior decorator was on 18 December 2011, after the OTP was exercised on 16 December 2010. The defendants also denied that there was a fourth and final viewing before the OTP was signed where their experts had inspected the building. Taking the defendants’ case at its highest, Loy had told the defendants during the 23 November 2010 visit that there were no leakage problems. The water stain on the floor of the master bedroom on the first floor had been caused by a window that had been left open such that rainwater had blown into the property, while the peeling wallpaper in the master bedroom on the second floor was caused by the humid weather conditions in Singapore. Even if Loy had been less than forthcoming in answering the defendants’ queries, that alone is not sufficient to establish the defendants’ claim for misrepresentation. It is also necessary for me to consider whether Loy’s representations induced the defendants to enter into the contract. On this issue I find in favour of the plaintiffs.

[7] The second defendant explained that she could not tell conclusively from a visual inspection whether there was water leakage in the property. For that, she candidly conceded that she would have to hire an expert. As alluded to above at [1], the defendants had previously encountered water leakage problems in their rental apartment in Hong Kong where they had resided from 1998 to 2006. The water leakage in the Hong Kong apartment could not be solved for two years even though multiple contractors had been hired to perform repeated corrective works. In these circumstances, I find it difficult to understand why she would unquestioningly rely on Loy’s say-so on the water leakage instead of seeking the advice of her own expert. The second defendant’s three-pronged explanation that:

(a) Singapore was a “huge law-abiding society”;

(b) Loy was a certified property agent with a well-known agency; and

(c) Loy was an older gentleman, does not hold water.

[8] Significantly, she admitted that Loy did not possess the sort of technical expertise to decide whether a building was leaking and would not be able to tell any better than herself if there was a leakage.

[9] Similarly, the first defendant rigorously asserted that he expected Loy, as a certified agent, to have knowledge of the condition of the property. However, this assertion was significantly qualified by the first defendant’s earlier concession that a layperson (ie someone without the necessary expertise to carry out a survey to see whether there was a leakage) would not be able to tell conclusively whether the property had a leakage problem. These concessions are fatal to the defendants’ case because even if Loy had made the misrepresentations that the defendants’ alleged (see above at [6]), this did not induce the defendants to sign the OTP. It is also pertinent to note that the defendants’ were legally represented during the course of the transaction albeit by a different firm from the present (see above at [2]). Accordingly, the defendants’ claim for rescission must fail.

[10] In the light of this finding (viz, that even if Loy had falsely represented the condition of Emery Point Property, it did not induce the defendants to enter the contract), it is unnecessary for me to consider in detail the plaintiffs’ alternative submission that paragraph 9 of the OTP and/or Condition 9 of the Law Society’s Conditions of Sale 1999 (see above at [1]) precluded the defendants from raising misrepresentation in the first place. That said, my tentative view is that both clauses only go so far as to mirror the position at common law that there is no obligation on the seller to positively disclose to the buyer defects of quality, as opposed to latent defects of title, in the property (see Huang Ching Hwee v Heng Kay Pah and another [1992] 3 SLR(R) 452 (“Huang Ching Hwee”)). As such both clauses do not preclude a purchaser from successfully pleading that he or she was induced to contract by a positive misrepresentation on the part of the vendor or his or her representative.

[11] Courts will ordinarily be willing to specifically enforce a contract for the sale of land. The rationale being that, unlike most other goods, no two pieces of land are identical (“the sui generis rationale”). Consequently, damages, more often than not, are an inadequate remedy.

[12] However, the present case is the obverse to the common situation where the purchaser is eager to complete and is seeking the specific performance of the sale of the property. Here, the plaintiffs, as vendors, are seeking to foist the property on the unwilling defendants, as purchasers. In such cases, the argument for allowing specific performance is considerably weaker since the sui generis rationale is not engaged. This is because the property does not have a “particular value” to the vendor whose interest is purely financial in nature. In commenting on this unique scenario, the learned editors of Snell’s Equity (Sweet & Maxwell, 32nd Ed, 2010) note at para 17–011:

[13] The learned editors cite two cases in support of this proposition. Firstly, in Anders Utkilens Rederi A/S v O/Y Lovisa Stevedoring Co A/B and Keller Bryant Transport Co Ltd [1985] 2 All ER 669, which was a purchaser’s action for specific performance for the sale of property against the vendor, Gould J noted at 673 that:

In my opinion, the term “awkward exception” is just a polite form of grudging acknowledgement but not acceptance of its utility. I am of the view that if damages are adequate the vendor should not be granted an order for specific performance.

[14] The second case cited is that of Hope v Walter [1900] 1 Ch 257 (“Hope”) which can be concisely summarised by Lindley LJ’s pithy dicta at 258:

However, for the reasons set out above at [12], I believe that it would be setting the threshold too high if courts are only allowed to refuse specific performance against a purchaser when he would otherwise be exposed, as owner, to criminal liability (see Hope at 260). The Court of Appeal decision of Huang Ching Hwee (see above at [10]) is relevant. There, a vendor applied for a declaration that the purchasers were not entitled to rescind a contract for the sale of land and that he was entitled to forfeit their deposit. Following the exercise of the OTP, the purchasers discovered that the vendor had previously carried out substantial additions and alterations to the property in question without the requisite planning permission. Although the appeal was allowed on the basis that the unauthorised works did not constitute a latent defect of title at law which was subject to disclosure by the vendor, the Court of Appeal noted that since the vendor had elected not to proceed with his claim for specific performance in the court below, there was no need to consider it (see Huang Ching Hwee at [75]).

[15] As the plaintiffs have only a financial interest in the sale of the property their loss can adequately be compensated with damages. In this respect, although the plaintiffs’ Statement of Claim pleaded, as an alternative prayer, for general damages to be assessed, this was not quantified and particularised at any time in the course of proceedings. Further, plaintiffs’ counsel did not seek to have the trial bifurcated. In these circumstances, I find that nominal general damages in the sum of $1,000 should be awarded.

[16] Turning to the items for specific damages that were pleaded by the plaintiffs’ in their Statement of Claim, Mr Paul Seah’s cross-examination of the first plaintiff left me with no doubt that I should not grant the plaintiffs’ claims for airfares and hotel accommodation because these concerned:

(a) events that took place prior to when the dispute arose on 25 January 2011(see above at [2]);

(b) bookings for the second plaintiff and their five year-old daughter when it was the first plaintiff who was giving instructions to their solicitors via phone and email;

(c) bookings for which the first plaintiff conceded he was not sure why he had travelled to Singapore for; or

(d) double booked flights on the same date (ie 23 April 2011).