Ng Teck Sim Colin and another v Hat Holdings Pte Ltd and another

Belinda Ang Saw Ean J:

[1] This action concerns the sale of a property known as Villa 2, Ayara Surin, Phuket, Thailand (“the Property”). The present litigation brought into sharp focus the uniqueness of Thai law where ownership of the land is separate from that of the house built on the land. Under Thai law, separate transfers and registrations are required before legal ownership of both land and house can validly and effectively change hands. The sale transaction was plagued by troubles encountered along the way, which gave rise to misplaced suspicion and mistrust in the minds of the parties stemming from the unappreciated difference between Thailand’s and Singapore’s property law; it certainly did not originate from the parties’ desire to take advantage of each other. The plaintiffs, Colin Ng (“Colin”) and Maria Ng (“Maria”) (collectively, “the Ngs”) are the sellers of the Property. The first defendant, Hat Holdings Pte Ltd (“Hat”) is the purchaser of the Property. Samuel Foy Colflesh (“Samuel”) and the second defendant, Bolliger Hans Peter (“Bolliger”) are the directors of Hat. The Property was purchased by Hat for the use of Bolliger and his family. Samuel was the key person who represented Hat in the sale transaction.

[3] On 22 April 1999 (before the Ngs bought the Property), Sarot Tantipatanaseri (“Sarot”), an architect who worked with (but was not an employee of) Southern Land, was issued a license to construct several houses, including Villa 2 (“the Construction Permit”). The Construction Permit stated that Sarot was the owner of Villa 2, and that the permit was “valid until” 21 April 2001. The Construction Permit was purportedly transferred to the Ngs (“the Assigned Construction Permit”) on 23 March 2006. It is undisputed that the events giving rise to the dispute in this action started after 3 March 2008 when the Phuket Land Office rejected as defective the Assigned Construction Permit because it came into being after the Construction Permit had expired. I now move to the events in 2007.

[4] Bolliger first contacted Colin to ask if the Property was available for sale in October 2007. Thereafter, Maria negotiated the sale terms with Bolliger and, later, Samuel, both directly and through e-mail.

[5] After some negotiations, the parties agreed on the terms of the sale and executed an agreement on 12 December 2007. While the document was entitled an “Option to Purchase”, it was actually a sale and purchase agreement (“the Agreement”). The salient terms of the Agreement are as follow:

(a) The sale price for the Property was fixed at US$1.85m. Of this sum, US$1m was in respect of the Land, and the remaining sum of US$850,000 was in respect of Villa 2 and the fixtures attached thereto (“the Villa 2 Purchase Price”);

(b) The title shall be free from encumbrances and the Property was sold “as is where is”;

(c) The completion date was fixed for 4 February 2008, but this could be extended for up to 14 days at Hat’s request;

(d) Hat was deemed to have “full notice of the actual state and condition of the [Property] in all respects” and “shall not be entitled to raise any objection or requisition whatsoever in respect thereof”;

(e) The Agreement was to be construed in accordance with the laws of Singapore, “without regard to any principles on conflicts of law”. The parties agreed to irrevocably submit to the exclusive jurisdiction of the Singapore court.

On 14 December 2007, Hat transferred to the Ngs a total sum of US$277,500, purportedly as the deposit and option money for the Property.

[6] After the Agreement was executed, the parties exchanged the contacts of their respective Thai lawyers. The Ngs were represented by Surasak Pittisuree (“Surasak”) while Hat was represented by Pornchai Srisawang from the law practice of Tilleke & Gibbins International Ltd (“T&G”). On 4 January 2008, Maria sent Samuel and Bolliger an e-mail setting out the advice she had received from Surasak, namely that:

(a) the registration process for the Property had to be bifurcated (with the transfer of Villa 2 taking one month to complete due to the need to post a notice of the transfer application for 30 days at Villa 2 and elsewhere as designated by the local authorities); and

(b) Surasak had copies of the Title Certificate, the Assigned Construction Permit and House Registration Book and he confirmed that they were ready for registration.

Additionally, Maria suggested postponing the date of completion to 11 February 2008.

[7] T&G conducted due diligence on the Property and prepared a due diligence report dated 10 January 2008 for Samuel (“the DD Report”). The DD Report concluded that the freehold land was owned by Southern Land and leased to the Ngs under the 2001 Lease. The DD Report also recognised, in respect of Villa 2, the existence of both the Construction Permit and the Assigned Construction Permit. On 20 January 2008, Samuel sent an e-mail to the Ngs and Bolliger, describing the outcome of the due diligence exercise as “satisfactory”.

[8] In February 2008, numerous unsuccessful attempts were made to complete the sale transaction. (The reasons for the failed attempts are not material for this judgment.) On 28 February 2008, T&G informed Samuel that it had arranged to meet the Ngs’ lawyers and Southern Land’s representatives on 3 March 2008 with a view to register the lease and superficies (for the Land) and to file an application to register the sale of Villa 2. However, the Phuket Land Office rejected the application to register the transfer of Villa 2 on that day as the Assigned Construction Permit was invalid (see [3] above). The officers at the Phuket Land Office suggested that Sarot transfer Villa 2 to the Ngs in order for the Ngs to transfer Villa 2 to Hat.

[10] On 7 March 2008, the parties went to the Phuket Land Office to register the respective transfers of the Land and Villa 2. The Land was successfully transferred to Hat by: (a) terminating the 2001 Lease between the Ngs and Southern Land; (b) terminating the Ngs as superficies;(c) applying to register a fresh lease given by Southern Land to Hat; and (d) applying to register Hat as the superficiary of the Land. Notably, the fresh lease was effective from 7 March 2008 (“the 2008 Land Lease”). Hat paid the Ngs the balance of the purchase price for the Land on 12 March 2008. No dispute arises from the transfer of the Land.

[11] The transfer of Villa 2 did not materialise on 7 March 2008 as Sarot was worried about his potential income tax liability arising from his purported sale of Villa 2 (which was based on a standard form Sale and Purchase of House Agreement). On 10 March 2008, the Ngs provided Sarot with a Letter of Guarantee to cover any duty, fee, commission or tax arising from the “sale” of Villa 2. Sometime around 31 March 2008, Sarot provided a power of attorney (dated 12 March 2008) in favour of Adul Chueasaman, who was one of the Ngs’ lawyers in Thailand at that time, to facilitate the transfer of Villa 2 to Hat. During this period of time, the parties agreed to work towards handing over Villa 2 on 2 April 2008. Hat arranged to pay for the services required to upkeep Villa 2 and paid the common area dues for the second quarter of 2008 sometime on or around 23 April 2008.

[12] On 13 March 2008, Colin wrote to Samuel requesting part-payment for Villa 2 before its actual transfer. The Ngs’ rationale for requesting early payment was that the Land had already been transferred. This request triggered questions as to when registration of the transfer for Villa 2 would take place and there were extensive discussions on this point between Maria and Samuel. On 19 March 2008, Colin wrote to Samuel and Bolliger to inquire when the Ngs could expect payment (in part) for Villa 2. This inquiry prompted Bolliger to write a long e-mail to Samuel on 25 March 2008. In this e-mail, Bolliger questioned the legality of the Ngs’ title to Villa 2 and the physical structure of Villa 2 itself, whether Villa 2 could be made legal, and also whether Hat should be paying the Ngs when the latter was not the party transferring title to Villa 2. On 29 March 2008, Bolliger asked Samuel further questions relating, again, to the legality of Villa 2 and the implications of taking over possession of Villa 2 in the circumstances. Bolliger also stated that he was happy to delay taking possession of Villa 2. Samuel’s reply on the same day was that he was not sure why title to Villa 2 had not been transferred to the Ngs, and that the difference between having an illegal and legal house was only money. Samuel further opined that Hat taking possession of Villa 2 was the “best scenario” as it would remove the Ngs from their only possible claim (for possession), leaving Hat and Southern Land to resolve any consequential problems. Samuel concluded by stating that he was relaxed because: (a) the Land was in Thailand; (b) Hat had title to the Land; (c) Hat had not paid the US$850,000 over to the Ngs; and (d) Southern Land was professional.

[13] The attempts to conclude the transfer of Villa 2 and for Hat to enter possession of Villa 2 hit a snag on 2 April 2008, when Samuel offered to pay only 20% of the Villa 2 Purchase Price upfront and the remaining 80% on completion. Colin refused to allow Hat into possession of Villa 2 as he felt insulted by the offer.Subsequently, Colin suggested that Singapore lawyers (as stakeholders) hold the US$850,000, or that Hat pays 50% of the Villa 2 Purchase Price upfront with the remaining 50% to be paid after expiry of the 30-day notice period required for Villa 2. Samuel agreed, on 4 April 2008, that 50% of the Villa 2 Purchase Price would be paid on the first Friday after successful application at the Phuket Land Office, and the remainder on the first Friday following final completion. The parties’ respective Thai lawyers then arranged to meet at the Phuket Land Office on 9 April 2008 as Hat’s Thai lawyers were unable to attend earlier.

[14] Bolliger was forwarded a copy of Samuel’s e-mail to the Ngs dated 4 April 2008, and again, he wrote to Samuel to record his discomfort over the legality of Villa 2 in the light of the expired Construction Permit. Samuel’s response was that Hat’s Thai lawyers would ensure that it obtained a legal building before the sale was completed, and the deal as structured “[would] ensure this so long as it [went] as planned on 9 April”. Further, Samuel stated that Hat would approach the “owner” (presumably, Southern Land (see [12] above)) directly if the transaction failed on 9 April 2008, and that the “only difference between legal and illegal [in Thailand]” was money.

[15] On 9 April 2008, Samuel and the parties’ respective Thai lawyers successfully filed an application to register the sale and purchase of Villa 2 at the Phuket Land Office. On 11 April 2008, Bolliger sent Samuel yet another e-mail to question if he should ask the Ngs why they were selling a structure that was illegal, and whether Colin could be banned from practicing law in Singapore for selling something that did not belong to him.

[16] On Thursday, 10 April 2008, Maria wrote to Samuel to remind him that payment of the first 50% of the Villa 2 Purchase Price was due the next day. Nothing happened until 13 April 2008, when Samuel asked Maria how he should go about arranging for payment to stakeholders, apparently because he was accountable to his trustees on the payment to be made. Presumably, Samuel was thinking of British and Malayan Trustees Ltd, who is the majority shareholder of Hat. On 14 April 2008, Colin explained that the Ngs were still the sellers of the Property, but Sarot was the “registered house owner” who had executed a Power of Attorney allowing the Ngs’ Thai lawyers to transfer Villa 2. Samuel’s response to Colin’s explanation on the same day was that:

(a) Both parties should move away from their “lawyers” and “trustees” as it was “near impossible” to get them to accept to Colin’s proposal; and

(b) Hat would pay 50% of the Villa 2 Purchase Price, with the remaining amount “owing to be paid on the first Friday following completion”, if the Ngs would provide a “statement of joint liability” and “receipt for the funds being collected on [Sarot’s] behalf”.

Colin agreed to Samuel’s proposal in relation to payment of the Villa 2 Purchase Price (“the Oral Agreement”) and further stated that:

[17] Later on 14 April 2008, Samuel sent Colin another e-mail to clarify the terms of the joint liability statement, and asked that it included a “clause of non-performance on the part of the “registered owner”, and not simply to cover the event of [Sarot] making a claim on matters of the registration post-event”. Samuel explained that his greater concern was “non-performance” (presumably by Sarot), and not whether the Ngs or Hat would be able to defeat any claim raised by Sarot. Colin agreed to Samuel’s request. The parties arranged to meet later that day. At that meeting, Samuel made payment of 50% of the Villa 2 Purchase Price while the Ngs executed an indemnity in Hat’s favour in the event of any claim by Sarot, and further agreed to the following:

[18] The registration of the sale of Villa 2 to Hat was completed on 23 May 2008 pursuant to a “Sale and Purchase of House Agreement” entered into between Sarot and Hat. In particular, the document “Agreement to Sell Building” that was registered at the Phuket Land Office carried the following endorsement:

There is no dispute that registration was completed on 23 May 2008. Payment of the remaining unpaid 50% of the purchase price for Villa 2 (“the Final Payment”) was due on 30 May 2008. However, Samuel did not provide payment then, claiming that there was an “impasse”; that the matter was “under review”, and that his “Settlement sheet” was not ready. On 5 June 2008, Samuel asked Maria for a meeting without Colin and Bolliger to settle two remaining issues. Simultaneously, Samuel informed Bolliger about the meeting, claiming that the meeting was arranged because Maria had pressed to meet. In his e-mail to Bolliger, Samuel mentioned Bolliger’s “intention … [to have] the final sum owing discounted”. Samuel and Maria met on 6 June 2008. Samuel allegedly informed Maria of the Ngs’ breach of the Oral Agreement and that was why Hat would not be making the Final Payment in full. Maria denied that Samuel had said such a thing.

[19] On 6 June 2008, Samuel assured Maria that Bolliger would sign the cheque without any irrational deductions. On the side, Samuel and Bolliger exchanged a number of e-mails discussing how they could justify obtaining a 10% discount for the Property from the Ngs as full and final settlement, for example, by having Samuel include his fees (presumably for services rendered in the sale transaction). On 11 June 2008, Samuel offered to the Ngs payment of S$336,936 without any apparent explanation for the unilateral deduction of 10% of the Purchase Price of the Property and, as expected, the offer was rejected by the Ngs. As a consequence, on 16 June 2008, the Ngs’ lawyers sent Hat a Statutory Demand for the Final Payment, threatening to commence winding up proceedings if the full amount remained unpaid. Hat responded by commencing Originating Summons No 890 of 2008 (“OS 890/2008”) to restrain the Ngs from winding it up. In Samuel’s affidavit in support of Hat’s application, he alleged that the parties had reached an Oral Agreement for Sarot to issue a receipt to Hat (see [16] above), and that the Ngs’ failure to procure such a receipt meant that they were not entitled to Final Payment. Kan J ordered Hat to pay the Final Payment into court on 15 July 2008. OS 890/2008 was withdrawn upon payment.

[20] On 28 July 2008, the Ngs procured from Sarot a letter resembling the terms of the receipt that Hat alleged the Ngs did not produce. Sarot’s letter (“Sarot’s Receipt”) stated that he (Sarot) was “happy that [Villa 2] had been transferred out of [his] name” (having been a nominee holder to the Ngs hitherto) and that he was “not claiming money from anyone (be it [the Ngs] or [Hat]) for the transfer. In addition, the Ngs replaced the personal guarantee originally provided to Sarot (see [11] above) with a charge over the Ngs’ bank account in Thailand that had an account balance of Thai Baht 2m. On 26 August 2008, the Ngs (through its solicitors) made a without prejudice offer to Hat’s solicitors to pay the taxes and expenses associated with the transfer of Villa 2 and to provide the receipt and confirmation sought for (see [16] above), but Hat did not respond to the offer.

[21] The Ngs’ case is that the parties had agreed (on 14 April 2008) that the Final Payment (ie, US$425,000) would be paid on the first Friday following the date of registration of the sale and purchase of Villa 2. The registration of the sale and purchase of Villa 2 was completed on 23 May 2008, and the Final Payment became due and payable on 30 May 2008. However, in breach of the Agreement, Hat failed to pay the Final Payment, but instead, sought to tender payment of S$336,936.00 as “full and final settlement” of the purchase of Villa 2 on 11 June 2008. As such, the Ngs claim for the Final Payment.

[22] Hat’s defence is two-fold. First, Hat argues that it was an implied term or warranty of the Agreement that the Ngs would transfer “good, proper and perfect legal and beneficial title” to it. After Hat became aware that Sarot was the purported registered owner of Villa 2, it was agreed that the Ngs would procure Sarot to transfer legal ownership to Villa 2 to Hat. Hat claims that the parties entered into an oral agreement (“the Oral Agreement”) on or about 14 April 2008, and that the Ngs were in breach of the terms of the Oral Agreement in failing to:

(a) pay all taxes, costs and other expenses associated with the transfer of Villa 2 from Sarot to Hat; and

(b) procure a receipt from Sarot evidencing payment by Hat, and/or confirmation from Sarot that he has no further title, interest or any other claims in Villa 2 whatsoever.

As a result of the purported breach of the Oral Agreement, Hat claims to be entitled to withhold the Final Payment. I will refer to this defence as the “Oral Agreement Argument”.

[23] Next, Hat pleaded that it discovered, in April 2009, that Sarot’s title was defective and that “good, proper and perfect legal title” to Villa 2 was not transferred to Hat despite the purported registration on 23 May 2008. Sarot’s title to Villa 2 was defective based on the following grounds:

(a) Although Sarot was the holder of the Construction Permit, he was not the proper applicant and/or holder of that permit in respect of Villa 2.

(b) The transfer of the Construction Permit from Sarot to the Ngs on 23 March 2006 was not a valid way of transferring registered title to Villa 2 as Villa 2 was already constructed at that time. In any case, Sarot did not have good legal title to transfer, for the reason given above in (a).

[24] Consequently, Hat pleaded that the Ngs were in breach of the Agreement (as varied) which required them to transfer “good, proper and perfect legal title” to Villa 2. The Ngs were, therefore, not entitled to payment until they transferred “good, proper and perfect legal title” to Villa 2 to Hat. Hat’s counterclaim against the Ngs is in respect of: (a) their breach of the Agreement in failing to provide “good, proper and perfect legal title”, and (b) their breach of the Oral Agreement. At the end of the trial, Hat elected to claim solely for specific performance of the sale and purchase of Villa 2, and for damages arising from the Ngs’ failure to procure or transfer title to Villa 2 to Hat.

[25] From the parties’ pleaded case, there are two main issues for me to decide. The first is whether the Ngs were in breach of the alleged Oral Agreement. The second is whether the Ngs had transferred good title to Villa 2 to Hat. I will first consider the Oral Agreement Argument.

[26] Hat pleaded that the parties had reached an oral agreement under which the Ngs were to provide, inter alia, a confirmation from Sarot that he has no claims against Hat in relation to Villa 2 (“Confirmation”), and a receipt from Sarot evidencing payment by Hat of Thai Baht 7.5m (“Receipt”). Hat submits that the Ngs remained in breach of their duty to provide the Confirmation and Receipt. In its further and better particulars filed on 8 August 2008, 21 August 2008 and 11 September 2008, Hat took the position that this Oral Agreement was reached in a telephone conversation between the Ngs and Samuel in the afternoon of 14 April 2008. In trial, Samuel confirmed that such was the case.

[29] Hat’s principal defence is that it did not receive good title to Villa 2. The obligation to transfer good title requires the Ngs to deliver Villa 2 free from encumbrances, subject to two qualifications. Hat takes Villa 2 subject to any irremovable defects in title: (a) which are patent; or (b) of which it knew at the time of contracting (see Megarry & Wade, The Law of Real Property (Sweet & Maxwell, 7 Ed, 2008) (“M&W”) at para 15-074 -075 and the decision of Chao Hick Tin J in Lie Kee Pong v Chin Chow Yoon [1998] 1 SLR(R) 457 at [11] and [17]). There is no dispute that the Ngs were, at the time of entering into the Agreement, obliged to transfer good title to Villa 2 to Hat. Indeed, Colin accepted as much during cross-examination and the Ngs do not deny this in their submissions. Furthermore, the duty to deliver Villa 2 free from encumbrances is expressly provided for under cl 2 of the Agreement. However, the Ngs dispute that they were remiss in their obligation to transfer good title to Hat. They highlight that the test for whether good title is transferred was described in Manning v Turner [1957] 1 WLR 91 in the following terms (at p 94):

[30] During the course of the hearing, I asked, as a preliminary query, whether this court could determine the issues relating to title to Villa 2, since Villa 2 is located in Thailand. Both the Ngs and Hat take the position that this court could determine the dispute because their respective claims are founded in contract (viz, the Agreement), and this would be so, notwithstanding, the issues raised concerning title (to Villa 2) situated on foreign land.

[31] However, I note that an integral (and strongest) part of Hat’s defence is that the Ngs did not have good title and had failed to transfer good title to Villa 2 to it, and they were thereby in breach of their obligation to transfer good title. In support of this defence, in its closing submissions, Hat resolutely maintains that neither the Ngs nor Sarot had title to Villa 2, or was capable of transferring good title to it. The Ngs, however, deny that they were remiss in their obligation to transfer good title to Hat. Their expert witness, Supasak Chirasavinuprapand, opined that, at all material times, the Ngs, and not Southern Land, were the owners of Villa 2, and Sarot’s transfer of Villa 2 to Hat was valid. The Ngs also point out that Hat was “in contact” with Southern Land at the time Villa 2 was registered in Hat’s name on 23 May 2008 (see [18] above), as indicated on the Agreement to Sell Building that was lodged at the Phuket Land Office on that day. This, in turn, raises questions as to whether Announcement No 1522/2497, which requires the applicant (ie, Hat) to provide a letter from the freehold landowner (ie, Southern Land, according to Hat’s case) giving consent for the transfer of Villa 2, is notionally satisfied under Thai law, and the implication of that, if any, on the experts’ opinion that registration of a sale agreement between Southern Land and Hat for Villa 2 is required. Furthermore, Hat’s expert witness on Thai law, Mr Pichitpon Eammongkolchai (“Pichitpon”) points out that it is not settled under Thai law whether ownership of an existing building can be transferred through the grant of a right of superficies. As a result, in order for this court to determine whether the Ngs have satisfied their contractual obligation under the Agreement to transfer good title to Hat, it would have to determine a myriad of issues, arising under Thai law, relating to whether the Ngs or Sarot had title to transfer, and whether Hat had received good title to Villa 2.

[32] It is trite law that the court does not have the jurisdiction to entertain proceedings involving determination of title to foreign land (see Collins, Dicey, Morris & Collins on The Conflict of Laws (Sweet & Maxwell, 14 Ed, 2006) (“Dicey & Morris”) at para 23R-021). I will refer to this principle as the “Mocambique principle” (see Companhia de Mocambique v British South Africa Co [1892] 2 QB 358). On the other hand, the court can, in certain limited instances, make an order in an action, even if the action may concern foreign land. One such instance is where personal equities between the parties are involved (“the personal equities exception”). The circumstances under which the personal equities exception can arise were described by Parker J in Deschamps v Miller [1908] 1 Ch 856 as follows (at pp 863-864):

[33] The distinction between the Mocambique principle and the personal equities exception was clearly described and well illustrated by Peter Prescott QC (sitting as deputy High Court judge) in R Griggs Group Ltd v Evans [2005] 2 WLR 513 (“Griggs”), as follows (at [65]–[66]):

[34] I will now consider if the personal equities exception to the Mocambique principle applies here. On the facts of the present case, it is particularly significant that the personal equity must not depend, for its existence, on the law of the locus of the immovable property (see [32] above). The applicability of this requirement was considered in the following cases. In Tito v Waddell (No 2) [1977] 1 Ch 106 (“Tito”) at p 263-264, Megarry V-C took the view that the Mocambique principle would not apply where it is necessary for the plaintiff to prove his title to foreign land in order to establish his claim and enforce the equity. In other words, the Mocambique principle does not apply where proof of title is “incidental” to the main claim. On the facts of the case in Tito, although it was necessary for the plaintiff there to prove that he was a landowner, there was no suggestion of any dispute that the plaintiff was, indeed, the landowner. However, the opposite applies in the present case, as there is a substantial dispute as to whether good title had passed to Hat, be it from the Ngs or Sarot. This in turn raised questions as to whether the Ngs or Sarot had good title to transfer.

[35] In Couzens v Negri [1981] VR 824 (“Couzen”), the Supreme Court of Victoria took the view that the personal equities exception applied only where “no adjudication touching on the laws of another nation is directly involved”. The facts of this case are interesting. A liquidator sought directions from the court as to whether the company in liquidation owned the land or held it on trust for another company. The court dealt with the preliminary issue as to whether a determination of the issue of trust would offend the Mocambique principle and decided it did not. This was because (at p 828):

In other words, the dispute was as to the rights and obligations of the two companies inter se and did not relate to legal title to the land. No adjudication touching on the lex situs of the land concerned was necessary. Again, on this basis, Couzens is distinguishable from the present case.

[36] It is clear that the respective claims made by the Ngs and Hat are caught by the Mocambique principle. Quite plainly, the court will have to decide whether Hat had received good title to Villa 2 to resolve the dispute between the parties. Borrowing the language of Prescott QC (see [33] above), Hat’s case is, quite plainly: “Please decide that under Thai law the Ngs or Sarot were never the owners of Villa 2 and that as a consequence, we are not the current owners of Villa 2”. In other words, the issue of title does not arise incidentally, but is, instead, the principal issue in both of their claims (see, in this regard, the observations of Professor Adrian Briggs in Civil Jurisdiction and Judgments (LLP, 4 Ed, 2005) at para 4.07). Indeed, this is also implicitly recognised in Fawcett and Carruthers, Cheshire, North & Fawcett on Private International Law (Oxford University Press, 14 Ed, 2008), where the learned authors suggest (at p 482) that the personal equities rule can only apply where the contractual right “can only be pursued by an uncontested assertion of his title to foreign land” [emphasis added].

[37] The Mocambique principle is one based on considerations of comity of nations. It recognises that where land (and this includes the building thereon) is concerned, a sovereign is entitled to assert a double prerogative, to make laws for its own country and to have those laws adjudicated in its own courts exclusively (see Griggs at [78]). If so, then it would make no sense for this court to decide, based on Thai law, as to whether Hat had received good title to Villa 2. A judgment either way would, in effect, decide on a matter that should be left entirely to the prerogative of the Thai courts. As observed by Lord Wilberforce, determinations as to foreign title “[involve] possible conflict with foreign jurisdictions, and the possible entry into and involvement with political questions of some delicacy” (Hesperides Hotels Ltd v Muftizade [1979] AC 508 at p 537). The present case goes further as the dispute to title possibly involves issues relating to Thai custom and tradition of the community given the expert witnesses’ evidence that under Thai law, there is no official document to prove one’s title to a building, unlike the case of one’s title to land. Furthermore, an estoppel could arise as between the parties in Thailand subsequently, if this issue is finally decided by the Singapore courts. In these circumstances, I do not think that it is wise or expedient for this court to adjudicate on the issues of title that were raised by the parties.

[38] For completeness, I should state that I do not find the cases relied on by Hat, viz, Richard West and Partners (Inverness) Ltd v Dick [1969] 2 Ch 424 (a decision of the Chancery Division) and Ward v Coffin (1972) 27 DLR (3d) 58 (a decision of the New Brunswick Queens Bench Division) to be on point. In neither of these cases was the question of title disputed between the parties. In addition, I note that there are cases which suggest that the parties can consent to the court adjudicating on such disputes of title (see, for example, The Mary Moxham (1876) 1 PD 107 and Re Duke of Wellington [1948] Ch 118). However, given the sensitivities involved (see [34] and [37] above), I do not think that these authorities ought to be followed. Instead, I would align with the view of Somervell LJ in The Tolten [1946] P 135, where he opined that (at p 166):

To conclude, both the Ngs’ claims and Hat’s counterclaim involve the integral question of title that the court needs to resolve, and as such the claims are non-justiciable.

[39] The conclusion reached at [38] above is not the end of the matter for the Ngs. If the Ngs show that the issue of good title does not arise, for example, by operation of some waiver, estoppel or acceptance by application of some contractual principle, then arguably, it would not be in contravention of the Mocambique principle for this court to decide on the contractual dispute since no issue of good title would arise for determination. In this regard, the Ngs appear to have raised a host of such issues to resist Hat’s defence and counterclaim in their submissions, which I should further observe, were not from a model of brevity. I will now turn to consider these arguments.

[40] As highlighted above, while the Ngs were contractually obliged to transfer good title to Hat, this obligation does not extend to patent defects or defects of which Hat knew about at the time of contracting (see [29] above). In addition, the Ngs also argue that the defects alleged by Hat were matters of conveyance rather than matter of title. I will now consider if any of these exceptions apply.

[41] The learned authors of M&W describe the distinction between a latent and a patent defect in the following manner (at para 15-070):

[42] The defect here which Hat relies on is that Sarot did not have title to Villa 2. In my view, this is not a patent defect. The alleged defect was not one that was obvious to Hat, or arose by necessary implication from something visible to the eye. In this regard, the Ngs are right not to run an argument based on this ground.

[43] Given that Hat had conducted due diligence but did not object to the transfer of title to Villa 2 to it, could it then be said that Hat knew and had therefore accepted the defect? Hat highlights that the DD Report was a “Land title due diligence report” as stated on its cover page and did not concern itself with title to Villa 2. The DD Report seemingly suggested that the Ngs owned Villa 2 as under the heading “Chronology of Ownership of the Building”, it listed in detail the Construction Permit and the Assigned Construction Permit. The DD Report’s scope recognised that it was made for the purpose of the purchase of Villa 2. However, I note that no direct conclusion was drawn with respect to Villa 2, especially in the “Summary” Chapter, and that the title of the report suggested that it related only to the Land.

[44] The defect here is that Sarot did not have good title and, therefore, had nothing to transfer to Hat, despite the registration that took place on 23 May 2008. In this regard, it is not possible for me to hold that Hat knew of this at the time of agreeing to the One-Step Process or registration of Villa 2. The DD Report did not consider whether Sarot had title to Villa 2, and indeed, did not have to so consider as T&G was only concerned with the Ngs’ title. At the time Samuel agreed to the One-Step Process, as I found earlier, it was on the basis that Sarot had good title based on the Construction Permit. Samuel did not, at that time, proceed on the knowledge that Sarot had no good title to transfer. As a result, I am unable to hold that Hat knew about the defect at the time of the variation or transfer of title to Villa 2.

[45] There remains the argument that Hat, through its conduct, had waived its right to object to the defects in title, for example, by performing an act that a prudent purchaser would not normally have until the seller has shown good title (see Emmet on Title (Sweet & Maxwell, Looseleaf Ed, 2010) at paras 5.072-5.073). However, such acceptance of title will not be implied if the purchaser had continued to insist upon his objections to title (see Burroughs v Oakley (1819) 3 Swanst 159).

[46] Bown v Stenson (1857) 24 Beav 631 is an example where such acceptance of title was found. The purchaser there was contractually obliged to object to title within a specific period, failing which title would be considered accepted. The court found that the purchaser, after receiving the abstracts, had not raised any objections, but instead, sought and obtained possession to the property. Further, when asked by the seller’s solicitors for the draft conveyance, the purchaser’s solicitors did not object to title and, instead, promised part-payment of the purchase price. The court held (at p 636-637):

[47] On the facts of the case here, there is no evidence that Hat had completed registration of Villa 2 despite knowing that Sarot did not have good title to Villa 2. Therefore, in my view, there is no basis to hold that Hat had, in such circumstances, accepted or waived the defect in title.

[48] Clauses 2 and 3 of the Agreement outline the parties’ respective obligations on the issue of title and they state:

[49] Under cl 3 of the Agreement, Hat agreed not to require production of documents that were not in the Ngs’ possession, and that it would not “make any requisition or objection in respect thereof”. What then is the effect of this clause? Did it preclude Hat from objecting to title? I am aware that this argument was neither pleaded nor raised by the Ngs, but in the light of the decision that I will make, the fact that it is not pleaded is no reason to refrain from making the observations which follow. In Re National Provincial Bank of England and Marsh [1895] 1 Ch 190 (“Marsh”), the court dealt with a clause of a similar effect, which stated as follows:

[50] The purchasers subsequently discovered aliunde that the seller’s title was defective and sought to rescind the transaction. The court recognised that there were two possible interpretations to such clauses, viz (at p 193):

(a) the purchaser is precluded from making requisitions upon or inquiries from the vendor as to the latter’s title, but does not prevent the purchaser from showing that the vendor’s title is defective;

(b) the purchaser is precluded both from making requisitions upon or inquiries from the vendor as to the latter’s title, and also from making any inquiry or investigation to the vendor’s title anywhere.

[51] On the facts of that case, the court found that there were other terms in the contract to the effect that “title should not be inquired into”. As a result, the only reasonable meaning of the term would be that inquiry was “altogether precluded for every purpose”, and that the title was accepted by the purchaser without objection or inquiry (at p 195). Significantly, in one of the cases cited by the court, viz, Waddell v Wolfe (1874) 9 QB 515 (per Justice Blackburn), if the seller meant to express that the purchaser was bound to accept whatever the title was, he would need to do so in clear and unambiguous words (see Marsh at p 198 and, further, the decision of Chan Sek Keong JC in Algemene Bank Nederland NV v Tan Chin Tiong [1985-1986] SLR(R) 1154 at [7]).

[52] Here, I do not accept that Hat was precluded from raising any objection to title by reason of cl 3 of the Agreement. Clause 3 simply provides that Hat could not make any requisitions arising from documents not in the Ngs’ possession and object as a consequence – there is no language suggesting that Hat is precluded from independently investigating the Ngs’ title. Indeed, cl 3 is silent about the issue of title. In addition, a term that Hat was so precluded would contradict the obligation (which the Ngs admit to owing, see [37] above) to give good title to Villa 2. As such, even if the Ngs had raised this issue, I do not think that it would have assisted their case.

[53] The Ngs appear to argue that Hat is estopped from asserting that it required them (the Ngs) to transfer good title, relying (especially) on the e-mail sent by Samuel on 5 March 2008. In that e-mail, Samuel stated that Hat was seeking ‘“title” of some “kind”’, and that if the Ngs were unable to procure Sarot’s performance, they could transfer whatever they had to Hat, and leave Sarot to Samuel’s “devices”. In short, the Ngs are arguing that even if there was a mistake in using Sarot to procure the transfer of title to Villa 2 under the One-Step Process, Hat would have been estopped from requiring good title from the Ngs. It is trite principle that it is necessary to show an unequivocal representation and reliance on the representation in order to succeed under the doctrine of promissory estoppel (Chitty on Contracts (Beale gen ed) (Sweet & Maxwell, 2008, 30 Ed) (“Chitty on Contracts”) at para 3-086). Here, however, I do not think that Samuel had made an unequivocal representation that Hat did not require good title. Samuel had, as I mentioned earlier, premised his statements on the basis that Sarot had title to Villa 2 (see [9] above). In my view, this showed that Samuel was not, as the words read on their own might suggest, waiving Hat’s right to receive good title to Villa 2.

[54] Even if it was possible to construe the representation as unequivocal, the other difficulty is that there is no evidence that the Ngs had relied on this representation. Maria’s subsequent reply did not suggest that she had done anything in reliance of the representation. Furthermore, I found it telling that the Ngs did not make express mention to these representations made by Samuel in their respective Affidavits of Evidence-in-Chief, and nothing was said in cross-examination to suggest that they had relied on those representations. As such, even assuming that the Ngs had properly pleaded the ground of promissory estoppel, their claim would have failed on these grounds.

[55] A defect is considered a matter of conveyance if it is removable as of right by the seller (see Emmet on Title at para 5.007). These have to be acts that the seller can perform immediately and independently of others’ consent (id). I find it difficult to see how the defects alleged by Hat can be considered a matter of conveyance. To support its contention, the Ngs submitted that “there was no doubt that the Plaintiffs were the owners of [Villa 2]”, but did not explain how they could remove the alleged defects as of right or independently of others’ consent. I therefore dismiss this unmeritorious aspect of the Ngs’ argument.

[56] I will now deal with the Ngs’ submissions that Hat was not seeking to receive good title to Villa 2, relying on the e-mails sent between Bolliger and Samuel, especially Samuel’s responses (see above at [12] and [14]). I am of the view that these e-mails have little or no evidential value, insofar they are relied on to show that there was no requirement under the Agreement to transfer good title, as they would not have been probative of the objective intentions of the parties since they were not sent or copied to the Ngs at the time of the transaction (see generally Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design & Construction Pte Ltd [2008] 3 SLR(R) 1029 at [131]). Similarly, given that these e-mails were not made known to the Ngs, I do not think that it can be relied on to constitute any waiver, estoppel or acceptance by Hat.

[57] Hat’s case is that Southern Land has title to Villa 2. Its expert, Pichitpon, takes the position that regardless of whether the Ngs ever held title to Villa 2, at the time of the purported transfer of Villa 2 on 23 May 2008, Southern Land had and still has title to Villa 2. Hat adopts the same view in its submissions. For this very reason, Hat contends that the Ngs were remiss in their obligation to transfer good title to it, for if the Ngs had no title to Villa 2, they could not procure any transfer of good title to it (ie, Hat). At this juncture, I must emphasize that I cannot and do not make such a finding. Instead, I will consider the merits of Hat’s defence and counterclaim, by taking (without deciding) its case at its highest (ie, that Southern Land has title to Villa 2).

[58] As I mentioned earlier, the Ngs were under an obligation to transfer good title to Villa 2 to Hat. The mode of performance originally contemplated by the parties is enshrined under cl 9 of the Agreement, which states:

In other words, both parties contemplated, at the time of entering into the Agreement, an assignment of the Ngs’ interest in the Property.

[59] Insofar as the parties had originally contemplated that the transfer of title to the Property was to be by way of an assignment, it is clear that the intended mode of performance was subsequently varied by the parties. On 4 January 2008, Maria wrote to inform Samuel that Surasak, the Ngs’ Thai lawyers, had advised that the registration of the Property be carried out in two parts, viz, the Land and Villa 2. Samuel knew that the transfer would be bifurcated, as he was able to point out, subsequently on 20 January 2008, that the completion date may have to be pushed back due to the requirement to post a notice for 30 days in respect of Villa 2. Colin also gave unchallenged evidence to this effect. More tellingly, on 1 February 2008, Samuel sent Maria an e-mail suggesting that they meet up to “discuss an amendment to our [Agreement] which separates the two transactions (Land and [Villa 2])”. An agreement on how the Property would be transferred was eventually reached between the parties. On 5 February 2008, T&G proceeded to inform Surasak (ie, the Ngs’ Thai lawyers) that it was preparing two separate documents, first for Hat to purchase Villa 2 from the Ngs and, next, for Hat to register the lease for the Land with Southern Land. T&G also asked Southern Land to prepare documents to register the lease and superficies for the Land between Southern Land and Hat and stated that it (Hat) was preparing a Land Lease Agreement (presumably to be entered into by Southern Land and Hat). Those acts clearly evinced an intention to transfer Villa 2 and the Land separately. Importantly, Samuel had agreed with Maria’s statement that the parties agreed to split the payment into two parts, with one payment being due when the Land was transferred and the other being due when Villa 2 was transferred. It is therefore clear that the parties had agreed to vary the mode of performance, such that the Property would be transferred in two tranches, one for Villa 2 and another for the Land.

[60] Although the inspiration for the bifurcation came from Maria (on the advice of her Thai lawyers), it is clear that Hat was the driving force in effecting the bifurcation. As highlighted above (at [59]), Hat (through its Thai lawyers) contacted Surasak (the Ngs’ Thai lawyers) and Southern Land to complete the necessary documentation. More importantly, in the two e-mails which T&G sent to Southern Land and Surasak (which I have already referred to in the previous paragraph), T&G implicitly suggested that the 2001 Lease and the superficies agreement entered into between the Ngs and Southern Land would be cancelled, and that in its place, Hat would enter into and register a fresh lease and superficies agreement with Southern Land. This was, in substance, the procedure by which the transfer of title to the Land was eventually effected on 7 March 2008 (see above at [10]), and no dispute arises from this transfer of title to the Land.

[61] It is noteworthy that the 2008 Land Lease confers a number of valuable rights and imposes various obligations on Hat in respect of Villa 2, as follow:

(a) Clause 4.3 – Hat was to maintain Villa 2 and to keep it in good condition at its own expense;

(b) Clause 4.4 – Hat was entitled to make any additions, alterations, modifications or improvements to Villa 2 without Southern Land’s prior consent, subject to the law, with Southern Land agreeing to co-operate and sign all documents necessary to obtain a permit to do the same;

(c) Clause 4.5 – Hat was to pay for the general utility charges;

(d) Clause 5.1 – Hat was entitled to sublet or transfer Villa 2 without Southern Land’s consent;

(e) Clause 5.4 – Hat was entitled to insure Villa 2 throughout the term of the lease and would be the beneficiary of the policy; and

(f) Clause 5.9 – Southern Land admitted that Hat owned and had the right to deal with (including demolishing) “the building, structures, additions, alterations, modification or improvements constructed or made on the [Land]”.

The 2008 Land Lease is in pari materia with the 2001 Lease which the Ngs obtained from Southern Land. In this regard, two points are noteworthy. First, Hat effectively received, under the 2008 Land Lease, the same rights that the Ngs had prior to 7 March 2008 (when the 2001 Lease was terminated). As such, Hat stepped into the Ngs’ shoes on 7 March 2008 by entering into the 2008 Land Lease with Southern Land. Second, from the terms of the 2008 Land Lease (which took effect from 7 March 2008), it is clear that Southern Land had conferred on Hat a longer lease than the Ngs had prior to 7 March 2008 as well as a number of valuable rights in relation to Villa 2, rights which I should add are typically conferred to the owner of a building. Indeed, Pichitpon agreed during cross-examination that by cll 5.1 and 5.9 of the 2008 Lease, Southern Land recognised Hat as the owner of Villa 2 and that Hat could do whatever it wanted. However, the expert witnesses on Thai law (ie, Pichitpon and Supachai Arunthamsakul (Hat’s expert witnesses) and Supasak Chirasavinuprapand (the Ngs’ expert witness)), all agree that cl 5.9, by itself, did not confer legal ownership of Villa 2 on Hat. In other words, Hat was the de facto owner of Villa 2 and the only missing step towards Hat obtaining “good title” to Villa 2 would be the proper registration of a standard form sale and purchase agreement transferring title to Villa 2 into Hat’s name, as required by section 1299 of the Thai Civil and Commercial Code.

[62] At this juncture, again taking (without deciding) Hat’s defence at its highest, if Southern Land was indeed the legal owner of Villa 2, it would follow that the key to the present dispute was the mistake made by the parties in purporting to transfer good title to Villa 2 using Sarot and his Construction Permit (be it through the One-Step Process or the Two-Step Process). It follows that what ought to have been done on 7 March 2008 was for Southern Land to execute a standard form sale and purchase agreement in respect of Villa 2 and to thereafter register the same at the Phuket Land Office in order to transfer title to Hat.

[63] From that analysis, the next question which arises is: on whom should the responsibility of procuring the registration of the agreement to purchase Villa 2 by Hat from Southern Land rest? In my view, this obligation would fall squarely on Hat for the following reasons. Before entering into the 2008 Land Lease, it is clear that Hat was the driving force behind procuring the transfer of title to the Land and Villa 2, having sent out various e-mails seeking the relevant stakeholders to do the necessary. Once the 2001 Lease was terminated (ie, on 7 March 2008), the Ngs no longer had any contractual nexus with Southern Land. (There is no suggestion that Thai law is different from Singapore law.) It could not compel Southern Land to register title to Villa 2 in Hat’s name. Such power would have been vested in Hat by virtue of the 2008 Land Lease, which, as I have observed, conferred important rights and obligations, vis-à-vis Villa 2, on Hat. It should be noted that this arrangement (to cancel the 2001 Lease and execute the 2008 Land Lease) was suggested and put into practice by Hat and its lawyers. With the benefit of legal advice, Hat should or ought to have known that the implication of asking the Ngs to terminate the 2001 Lease and entering into a fresh lease with Southern Land (ie, the 2008 Land Lease) would have been that the Ngs were no longer in the position to ask Southern Land to register title to Villa 2 in Hat’s name. Hat itself had recognised that it could ask Southern Land to transfer title to Villa 2 if the One-Step Process failed (see [14] above). Having agreed to vary the mode of performing the Agreement to such an extent, it could not now turn the tables against Ngs and accuse the Ngs of being in breach of their obligation to confer good title, when Hat was the party that had not sought out Southern Land to effect transfer of title to Villa 2. Quite plainly, the Ngs had given Hat all the rights they had, and Hat was happy to receive these rights, knowing (objectively speaking) that by this process, all that remained was registration of title to Villa 2 with Southern Land which only it (ie, Hat), and not the Ngs, could effect.

[64] I must also point out that Hat had done various acts which were consistent with that of the owner of Villa 2. First, it entered into possession of Villa 2, as it had collected the keys to Villa 2 from Maria on 3rd June 2008. Furthermore, Hat paid for various utility charges in respect of Villa 2 from 1 April 2008 onwards (see [11] above). Again, these acts only serve to illustrate that Hat was happy to receive rights to Villa 2 under the 2008 Land Lease and that it had regarded itself as the de facto owner to Villa 2.

[65] For the above reasons, it seems to me that Hat has no case against the Ngs for breach of contract assuming one accepts its case at its highest.

[66] Even if, for the sake of argument, it was the Ngs who were in breach of contract, I do not see how the remedy of specific performance, which Hat is seeking, would be available. Where a person has agreed to sell land which he does not own, the court will not compel the purported owner to convey such land to him because it would be impossible for the purported owner to do so (see Chitty on Contracts at para 27-041 and The Law of Contract (Edwin Peel gen ed) (Sweet & Maxwell, 12 Ed, 2007) at para 21-033). As such, if Southern Land is the party with title to Villa 2 (as Hat contends), it would necessarily follow that the Ngs do not have title to Villa 2, and for this reason, no decree of specific performance can be made in Hat’s favour against the Ngs. On the other hand, if the Ngs had not been in breach of contract and the obligation to secure registration of title to Villa 2 resided with Hat, it would seem to me, to the contrary, that the order for specific performance ought to be made in the Ngs’ favour against Hat, given (for the above reasons) that Hat was the only party that could procure such registration from Southern Land.

[67] Having reached the conclusion that the dispute on title is non-justiciable on grounds of the Mocambique principle, the normal course would be for me to dismiss the action. However, I note that the circumstances of the present case are exceptional. Both parties had submitted, wrongly as I have concluded, that the Mocambique principle would not infect the present proceedings. In my view, resolution of the core dispute on title depends on a determination of Thai law by the Thai courts, and this court ought not to treat these questions of Thai law as questions of fact to be resolved based on the experts’ evidence (see also [37] above). Looking back to the time of the trial, the issues before me were not properly crystallised so much so that much time and effort were expanded by both parties in advancing and/or defending their respective cases. In addition, for the reasons explained above, it seems to me that even if I accept Hat’s case on the issue of title (a finding which I do not and cannot make), Hat would still not have succeeded against the Ngs for the alleged breach of their contractual obligation to give good title.

[68] Given the special circumstances as described, I propose to and do order a stay of the present action for the parties to sort out the fundamental issues relating to title, such that the Mocambique principle is not offended and only the contractual issues remain alive before this court. In this regard, the parties are to do the needful without any unnecessary delay. Having heard the diametrically opposed views held by the parties, they will probably need to obtain a conclusive ruling from the Thai courts as to whether Hat had received good title to Villa 2 through the One-Step Process, be it (inter alia) a consequence of the Ngs (or even Sarot) being able to give good title and/or of Southern Land’s involvement during the registration process which was after the 2008 Land Lease had been registered, giving Hat de facto ownership of Villa 2. Once a ruling from the Thai courts is obtained, this court will be placed in a position to determine the contractual rights or obligations of each party (including the claim against Bolliger). Meanwhile, the money which Hat has paid into court will remain there.

[70] In this judgment, the contractual issues between the Ngs and Hat, including the claim against Bolliger, are reserved pending the outcome of the stay order which takes effect from the date of this judgment until further order.