Bonsel Development v Tan Kong Kar: Condition Precedent & Property Sale

In Bonsel Development Pte Ltd v Tan Kong Kar, the Singapore Court of Appeal heard an appeal regarding the interpretation of a clause in a sale and purchase agreement. The clause stated that the sale was 'subject to' the sellers removing a caveat lodged by original purchasers. The sellers, Bonsel Development Pte Ltd, were unable to remove the caveat despite taking reasonable steps. The respondents, Tan Kong Kar and Another, claimed breach of contract. The Court of Appeal allowed the appeal, finding that the clause was a condition precedent to the performance of the contract, not its formation, and that the sellers were excused from performance.

1. Case Overview

1.1 Court

Court of Appeal

1.2 Outcome

Appeal allowed.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Court of Appeal case regarding a property sale agreement where completion was conditional on removing a caveat. Appeal allowed for the sellers.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
AnotherRespondentOtherAppeal DismissedLost
Bonsel Development Pte LtdAppellantCorporationAppeal AllowedWon
Tan Kong KarRespondentIndividualAppeal DismissedLost

3. Judges

Judge NameTitleDelivered Judgment
Chao Hick TinJustice of the Court of AppealYes
L P TheanJustice of the Court of AppealNo
Yong Pung HowChief JusticeNo

4. Counsels

Counsel NameOrganization
N SreenivasanRajah & Tann
Shankar KumarRajah & Tann
George PereiraPereira & Tan
C R RajahPereira & Tan

4. Facts

  1. Appellants were developers of a property initially sold to original purchasers.
  2. Original purchasers lodged a caveat but failed to make payments.
  3. Appellants granted respondents an option to purchase the property.
  4. Clause 10 of the option stated the sale was 'subject to' removing existing caveats.
  5. Appellants instituted proceedings to remove the caveat but failed.
  6. Appellants informed respondents they could not proceed with the sale.
  7. Respondents purchased another property at a higher price and sued for breach of contract.

5. Formal Citations

  1. Bonsel Development Pte Ltd v Tan Kong Kar, CA 201/1999, [2000] SGCA 45

6. Timeline

DateEvent
Original agreement signed between the appellants and the original purchasers.
Appellants gave original purchasers 21 days' notice to pay outstanding installments.
Original purchasers wrote to appellants requesting termination of the original agreement.
Appellants replied insisting original purchasers fulfill obligations.
Appellants granted respondents an option to purchase the property.
Appellants' solicitors wrote to respondents' solicitors regarding the caveat.
Respondents exercised the option and paid the deposit.
Appellants instituted proceedings against original purchasers to remove their caveat.
Scheduled completion date, but sale was not completed.
Appellants' solicitors informed respondents that appellants could not proceed with the sale.
Decision Date

7. Legal Issues

  1. Condition Precedent
    • Outcome: The court held that the clause in question was a condition precedent to the performance of the contract, not its formation.
    • Category: Substantive
    • Sub-Issues:
      • Condition precedent to formation of contract
      • Condition precedent to performance of contractual obligations
  2. Breach of Contract
    • Outcome: The court held that there was no breach of contract because the sellers had taken all reasonable steps to remove the caveat, which was a condition precedent to the sale.
    • Category: Substantive
  3. Interpretation of Contractual Terms
    • Outcome: The court interpreted the 'subject to' clause in the context of the entire agreement and the surrounding circumstances.
    • Category: Substantive
    • Sub-Issues:
      • Meaning of 'subject to' clause
      • Construction of contract to give business efficacy

8. Remedies Sought

  1. Declaration that the appellants were in breach of contract
  2. Order for damages to be assessed

9. Cause of Actions

  • Breach of Contract

10. Practice Areas

  • Commercial Litigation
  • Real Estate Law

11. Industries

  • Real Estate
  • Construction

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Lim Hwee Meng v Citadel Investment Pte LtdSingapore Court of AppealYes[1998] 3 SLR 601SingaporeCited for the distinction between a condition precedent to the existence of a contract and a condition precedent to the performance of obligations under the contract.
Smallman v SmallmanEnglish Court of AppealYes[1972] Fam 25England and WalesCited to support the principle that a 'subject to' clause does not necessarily mean there is no agreement at all, but rather that the operation of the agreement is suspended.
Chip Thye Enterprises Pte Ltd v Development Bank of Singapore LtdSingapore Court of AppealYes[1994] 3 SLR 613SingaporeCited to support the interpretation of a 'subject to' clause as not operating as a condition precedent to the formation of a binding agreement.
Lombardo v MorganSupreme Court of VictoriaYes[1957] VR 153AustraliaCited for adopting the distinction between the two types of condition precedent.
Perri & Anor v Coolangatta Investment Pty LtdAustralian High CourtYes[1982] 149 CLR 537AustraliaCited for adopting the distinction between the two types of condition precedent.
Selvadurai Pala Krishnan & Partners v Francis Adrian & Co Pte LtdHigh CourtYes[1985] 2 MLJ 182SingaporeDistinguished from the present case, as the buyers in that case contributed to the failure of the condition.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
No applicable statutes

15. Key Terms and Keywords

15.1 Key Terms

  • Condition precedent
  • Caveat
  • Option to purchase
  • Subject to
  • Completion date
  • Encumbrances
  • Business efficacy

15.2 Keywords

  • Contract
  • Property
  • Caveat
  • Condition Precedent
  • Singapore
  • Court of Appeal

17. Areas of Law

Area NameRelevance Score
Contract Law90
Breach of Contract80
Contracts75
Real Estate Transactions50
Property Law40

16. Subjects

  • Contract Law
  • Real Property
  • Civil Litigation