Ground & Sharp v Midview: Enforceability of Option to Purchase in 'Subject to Contract' Letters of Intent

Ground & Sharp Precision Engineering Pte Ltd appealed to the High Court of Singapore against the decision to strike out their claim against Midview Realty Pte Ltd. Ground & Sharp sought to enforce an option to purchase factory units based on letters of intent. The High Court, presided over by Judith Prakash J, dismissed the appeal, finding that the letters of intent were 'subject to contract' and the subsequent tenancy agreements did not include any option to purchase, thus no enforceable option existed.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Appeal Dismissed

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Appeal regarding option to purchase in letters of intent 'subject to contract'. Court dismissed appeal, finding no enforceable option in final agreements.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Ground & Sharp Precision Engineering Pte LtdPlaintiff, AppellantCorporationAppeal DismissedLost
Midview Realty Pte LtdDefendant, RespondentCorporationJudgment for DefendantWon

3. Judges

Judge NameTitleDelivered Judgment
Judith PrakashJudgeYes

4. Counsels

Counsel NameOrganization
Justin PhuaJustin Phua Tan & Partners
Lawrence Tan Shien LoonDrew & Napier LLC
Sandra Tan Pei MayDrew & Napier LLC

4. Facts

  1. Plaintiff and defendant signed letters of intent for lease of factory units.
  2. Letters of intent contained an option to purchase clause.
  3. Letters of intent were marked 'subject to contract'.
  4. Tenancy agreements were subsequently entered into but did not include the option to purchase.
  5. Plaintiff attempted to exercise the option based on the letters of intent.
  6. Defendant denied the existence of a binding option.
  7. Plaintiff lodged caveats against the units.

5. Formal Citations

  1. Ground & Sharp Precision Engineering Pte Ltd v Midview Realty Pte Ltd, Suit 33/2008, RA 214/2008, [2008] SGHC 160

6. Timeline

DateEvent
Letters of intent drafted by REA RealtyNetwork Pte Ltd
Plaintiff signed letters of intent
Defendant signed letters of intent
Plaintiff signed three letters of offer
Tenancy Agreements entered into
Lease commenced
Plaintiff purported to exercise option to purchase
Plaintiff submitted booking forms and cheques
Plaintiff's solicitors sent reminder letter
Plaintiff lodged caveats against the Units
Appeal dismissed

7. Legal Issues

  1. Enforceability of Option to Purchase
    • Outcome: The court held that the option to purchase was not enforceable because the letters of intent were 'subject to contract' and the final agreements did not include the option.
    • Category: Substantive
    • Sub-Issues:
      • Subject to contract clause
      • Omission of option in final agreements
    • Related Cases:
      • [2001] 3 SLR 437
      • [2008] SGCA 27
  2. Admissibility of Extrinsic Evidence
    • Outcome: The court held that the absence of a term regarding an option to purchase in either the offer letters or the Tenancy Agreements must therefore be conclusive.
    • Category: Procedural
    • Related Cases:
      • [2008] SGCA 27

8. Remedies Sought

  1. Declaration of binding option to purchase
  2. Order allowing caveats to remain
  3. Specific performance of the options

9. Cause of Actions

  • Breach of Contract
  • Specific Performance

10. Practice Areas

  • Commercial Litigation

11. Industries

  • Real Estate
  • Engineering

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Drummond-Jackson v British Medical AssociationNot AvailableYes[1970] 1 All ER 1094England and WalesCited for the principle that a cause of action must have a chance of success based on the pleadings alone.
The “Osprey”Not AvailableYes[2000] 1 SLR 281SingaporeCited for the principle that a claim that is obviously unsustainable is frivolous or vexatious.
Thomson Plaza (Pte) Ltd v Liquidators of Yaohan Department Store Singapore Pte LtdNot AvailableYes[2001] 3 SLR 437SingaporeCited for the meaning of 'subject to contract' and that there is no binding contract until a formal written contract has been executed.
Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design & Construction Pte LtdCourt of AppealYes[2008] SGCA 27SingaporeCited for the law on the significance of extrinsic evidence to contractual interpretation and the principle of objectively ascertaining contractual intention.
Goh Koon Suan v Heng Gek KiauNot AvailableYes[1990] SLR 1251SingaporeCited for the definition of vexatious claims.
Gabriel Peter & Partners v Wee Chong JinNot AvailableYes[1998] 1 SLR 374SingaporeCited for the principle that the categories of conduct rendering a claim frivolous, vexatious or an abuse of process are not closed.
Connell v National Companies and Securities CommissionNot AvailableYes15 ACLR 75AustraliaCited for the principle that a claim's forlorn nature is apparent on the documents.
Kim Hok Yung v Cooperatieve Centrale Raiffeisen-Boerenleenbank BANot AvailableYes[2000] 4 SLR 508SingaporeCited for the principle that a claim's forlorn nature is apparent on the documents.

13. Applicable Rules

Rule Name
O 18 r 19
O 20 rr 3, 4

14. Applicable Statutes

Statute NameJurisdiction
Land Titles ActSingapore
Evidence ActSingapore

15. Key Terms and Keywords

15.1 Key Terms

  • Letters of intent
  • Subject to contract
  • Option to purchase
  • Tenancy agreement
  • Caveat
  • Specific performance

15.2 Keywords

  • contract
  • option to purchase
  • real estate
  • tenancy
  • subject to contract

17. Areas of Law

Area NameRelevance Score
Contract Law85
Civil Practice75
Property Law60
Real Estate50
Leasing Agreements40

16. Subjects

  • Contract Law
  • Real Estate Law
  • Civil Procedure