MacarthurCook v Khai Wah: Put & Call Option Termination Dispute
MacarthurCook Property Investment Pte Ltd and MacarthurCook Limited (collectively, "MacarthurCook") applied to the High Court of Singapore on 15 June 2007, seeking declarations against Khai Wah Development Pte Ltd regarding the interpretation and validity of a Put and Call Option Agreement. MacarthurCook sought declarations that the option could not be terminated unless specific conditions were met, that Khai Wah's termination notice was invalid, and that the option remained valid. The court dismissed MacarthurCook's application, finding that the option had terminated automatically due to unmet conditions and that Khai Wah's termination notice was valid.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Application dismissed with costs; declarations granted in favor of the respondent.
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
MacarthurCook's application for declarations regarding the validity of a Put and Call Option Agreement with Khai Wah was dismissed. The court found the option terminated automatically.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| MacarthurCook Property Investment Pte Ltd | Applicant | Corporation | Application Dismissed | Lost | Chelva Rajah, Tan Chuan Thye, Gitta Satryani Juwita |
| Macarthurcook Limited | Applicant | Corporation | Application Dismissed | Lost | Chelva Rajah, Tan Chuan Thye, Gitta Satryani Juwita |
| Khai Wah Development Pte Ltd | Respondent | Corporation | Declarations Granted | Won | Michael Hwang |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Judith Prakash | J | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Chelva Rajah | Wong & Leow LLC |
| Tan Chuan Thye | Wong & Leow LLC |
| Gitta Satryani Juwita | Wong & Leow LLC |
| Michael Hwang | Independent Practitioner |
4. Facts
- MacarthurCook sought to establish a real estate investment trust in Singapore.
- Khai Wah Development owned a leasehold interest in a property at 51 Benoi Road.
- The parties entered into a Put and Call Option Agreement on 5 December 2006.
- The agreement involved the sale and leaseback of the property.
- JTC's approval was required for the sale and leaseback transaction.
- The Satisfaction Period for fulfilling conditions expired on 31 January 2007.
- JTC granted approval on 2 February 2007, subject to the successful listing of the REIT.
- Khai Wah Development terminated the Option, citing the unmet conditions and the JTC's condition regarding the REIT listing.
5. Formal Citations
- MacarthurCook Property Investment Pte Ltd and Another v Khai Wah Development Pte Ltd, OS 239/2007, [2007] SGHC 93
6. Timeline
| Date | Event |
|---|---|
| Memorandum of understanding issued by MacarthurCook and accepted by Khai Wah Development. | |
| HLS responded to JTC explaining the respondent’s reasons for the transaction. | |
| Put and Call Option Agreement signed. | |
| Khai Wah Development applied to JTC for consent to the assignment of the property. | |
| MacarthurCook's solicitors requested an extension of time to agree on the service charge. | |
| HLS suggested an extension of the satisfaction period. | |
| Satisfaction Period expired. | |
| JTC granted approval of the sale and leaseback with conditions. | |
| Khai Wah Development's solicitors sent a letter to MacarthurCook's solicitors stating the Option had been terminated. | |
| Khai Wah Development's solicitors sent a further letter to MacarthurCook's solicitors reiterating the termination of the Option. | |
| Deed of Appointment and Retirement of Trustee dated. | |
| Call Option Expiry Date. | |
| Judgment reserved. |
7. Legal Issues
- Termination of Put and Call Option Agreement
- Outcome: The court held that the Option terminated automatically on 31 January 2007 due to unmet conditions and that the respondent's termination notice was valid.
- Category: Substantive
- Sub-Issues:
- Automatic termination due to unmet conditions
- Validity of termination notice
- Waiver of conditions
- Best endeavours obligation
- Best Endeavours Obligation
- Outcome: The court found that the respondent did not exercise its best endeavours because it did not impress on the JTC the need for a reply before 31 January 2007.
- Category: Substantive
- Sub-Issues:
- Failure to procure satisfaction of conditions
- Reasonable steps to obtain approvals
- Interpretation of Contractual Clauses
- Outcome: The court interpreted the word 'immediately' in its ordinary meaning and found that time was of the essence in the context of the Option.
- Category: Substantive
- Sub-Issues:
- Meaning of 'immediately'
- Time of the essence
- Commercial absurdity
8. Remedies Sought
- Declaration that the Option cannot be terminated
- Declaration that the termination notice is invalid
- Declaration that the Option is still subsisting
9. Cause of Actions
- Declaration regarding the interpretation of a Put and Call Option Agreement
- Breach of Contract (alleged)
10. Practice Areas
- Commercial Litigation
- Real Estate Law
11. Industries
- Real Estate
- Investment Management
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Justlogin Pte Ltd v Oversea-Chinese Banking Corp Ltd | High Court | Yes | [2004] 1 SLR 118 | Singapore | Cited for the principle that a party under a duty to use its best endeavours must show that it has done everything reasonable in good faith to obtain the required results within the time allowed. |
| IBM United Kingdom Ltd v Rockware Glass Ltd | N/A | Yes | [1980] FSR 335 | United Kingdom | Cited for the definition of 'best endeavours' as taking all reasonable steps which a prudent and determined man acting in his own interests and anxious to obtain the required result would have taken. |
| Intraco v Multipak Singapore Pte Ltd | Court of Appeal | Yes | [1995] 1 SLR 313 | Singapore | Cited for the principle that courts should not second-guess commercial decisions made by management as long as those decisions were honestly arrived at. |
| Howard Smith Ltd v Ampol Petroleum Ltd | Privy Council | Yes | [1974] AC 821 | N/A | Cited for the principle that courts should not substitute their opinion for that of management or question the correctness of management decisions on matters such as raising finance, if bona fide arrived at. |
| New Zealand Shipping Company Limited v Socit Des Ateliers Et Chantiers De France | N/A | Yes | [1919] AC 1 | N/A | Cited for the principle that a party who brings about an event by their own act or omission cannot insist upon a stipulation or compel the other party to insist upon it, because it would be taking advantage of their own wrong. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Conveyancing and Law of Property Act (Cap 61, 1994 Rev Ed) | Singapore |
| Jurong Town Corporation Act (Cap 150, 1998 Rev Ed), s 45(b) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Put and Call Option Agreement
- Satisfaction Period
- Condition 1 Approvals
- Condition 2 Approvals
- Best endeavours
- Automatic termination
- Sale and leaseback
- Real Estate Investment Trust
- JTC Condition
- Call Option Fee
15.2 Keywords
- Put and Call Option
- Termination
- Satisfaction Period
- Best Endeavours
- JTC Approval
- REIT
- Singapore
- Contract Law
- Property Law
16. Subjects
- Contract Law
- Property Law
- Real Estate
- Options Agreements
17. Areas of Law
- Contract Law
- Property Law
- Conveyancing Law