The One Suites Pte Ltd v Pacific Motor Credit: Rescission of Property Purchase Due to HDB Approval Refusal

In The One Suites Pte Ltd v Pacific Motor Credit (Pte) Ltd, the High Court of Singapore addressed a dispute arising from an option to purchase (OTP) for a property. The One Suites Pte Ltd (the Purchaser) sued Pacific Motor Credit (Pte) Ltd (the Vendor) for the refund of a deposit, claiming the OTP was validly rescinded due to the Housing and Development Board’s (HDB) refusal to approve the sale. The Vendor counterclaimed for declarations, specific performance, and damages, seeking forfeiture of the deposit and withdrawal of the Purchaser’s caveat. The court dismissed the Purchaser’s claim, ordered the forfeiture of the deposit, and mandated the withdrawal of the caveat, finding the Purchaser had not taken all reasonable steps to obtain necessary approvals.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Purchaser's claim dismissed; deposit forfeited; caveat to be withdrawn.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

The One Suites sought to rescind a property purchase from Pacific Motor Credit due to HDB's refusal to approve the sale. The court dismissed the claim and ordered forfeiture of deposit.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
The One Suites Pte LtdPlaintiff, PurchaserCorporationClaim DismissedLostMichael Palmer, Chew Kiat Jinn
Pacific Motor Credit (Pte) LtdDefendant, VendorCorporationDeposit ForfeitedWonAlbert Balasubramaniam, Chew Ching Ching

3. Judges

Judge NameTitleDelivered Judgment
Edmund LeowJudicial CommissionerYes

4. Counsels

Counsel NameOrganization
Michael PalmerQuahe Woo & Palmer LLC
Chew Kiat JinnQuahe Woo & Palmer LLC
Albert BalasubramaniamIndependent Practitioner
Chew Ching ChingChing Ching, Pek Gan & Partners

4. Facts

  1. The Vendor was the lessee of a property at 11 Leng Kee Road leased from the HDB.
  2. The Purchaser was in the business of the retail sale of motor vehicles.
  3. The Vendor granted the Purchaser an option to purchase the property for $16.8 million.
  4. The sale was subject to HDB's written approval.
  5. The Purchaser sought NEA approval for the proposed use of the property, which was initially not supported.
  6. HDB indicated that NEA approval was required before it could grant in-principle approval.
  7. The Purchaser rescinded the OTP, claiming HDB's refusal to approve the sale.

5. Formal Citations

  1. The One Suites Pte Ltd v Pacific Motor Credit (Pte) Ltd, Suit No 56 of 2013, [2014] SGHC 183

6. Timeline

DateEvent
Cheong completed the purchase of a commercial property unit at Alexandra Road.
Cheong entered into a sale and purchase agreement to purchase a property at 3 Leng Kee Road.
Vendor granted the Purchaser the option to purchase.
Purchaser exercised the option to purchase.
KhattarWong LLP wrote to HDB for its consent to the sale and purchase of the Property.
Cheong applied to the Urban Redevelopment Authority to enquire on the approved use of the Property.
Cheong applied to the National Environment Agency for approval of the Purchaser’s proposed use of the Property.
Mr Leong issued an inquiry for the reason the Purchaser was buying the Property and the proposed use of the Property, including the Purchaser’s business plan.
KW replied stating that the Purchaser would be using the Property for the Seven Uses.
NEA sent the Purchaser a letter asking for clarifications on a number of matters.
The URA replied to the Purchaser’s inquiry, stating that the Property was approved for “workshop, office and showroom use”.
KW fixed a meeting between the Purchaser and HDB for 12 September 2012.
The Vendor’s conveyancing solicitors responded to NEA’s queries of 21 August 2012 stating that the Property would be used for the Seven Uses.
NEA’s Mr Chen Fu Yi sent an email to KW and Cheong requesting for them to furnish NEA with the necessary information required in NEA’s letter.
KW supplied NEA with the Purchaser’s further responses to NEA’s queries.
Cheong received the notice from NEA informing him that NEA was unable to support the Plaintiff’s application for NEA’s approval of the Purchaser’s proposed use of the Property.
Meeting with HDB took place.
KW wrote to Mr Leong, saying that Mr Leong had given instructions that in order to obtain HDB’s approval, HDB required clearance from all relevant government authorities, including NEA and URA.
Mr Leong wrote an email to the Vendor’s solicitors, Ching Ching, Pek Gan & Partners stating that KW has informed HDB that NEA’s consent has not be obtained for the Seven Uses and as such, HDB was “unable to process the request for transfer of lease” at the Property.
Cheong provided HDB with the details of his business plans for 3 Leng Kee Road.
Mr Leong wrote an email to KW stating that NEA’s approval for the proposed use is required before HDB can give in-principle approval for the transfer of lease.
KW wrote to CCPG stating the sale and purchase of the Property had been rescinded as a result of HDB’s refusal to approve and requested a refund of the Deposit.
CCPG responded to KW rejecting the Purchaser’s purported notice of rescission.
KW responded by noting that the Property was sold subject to the existing approved use (ie, the Seven Uses) and not just existing use.
CCPG replied saying that the Vendor was checking on the matter with NEA.
A meeting took place between two NEA officers and the Vendor’s director, Mr Tan Kah Tong.
CCPG wrote to KW disclosing that a meeting with NEA had taken place and that NEA’s concern was to highlight to the Purchaser that the Property was zoned residential.
KW replied, reiterating that they found no reasonable grounds to appeal against the decision by HDB which had taken into consideration NEA’s 11 Sep 2012 Letter.
KW issued the formal notice and demand to CCPG for the return of the Deposit.
KW wrote to CCPG again, reiterating the Purchaser’s demand of the Deposit.
CCPG wrote back stating that they expected to reply within the next seven days or so.
Tan wrote to NEA, urging it to review and reconsider their position as stated in NEA’s 11 Sep 2012 Letter.
NEA wrote to the Vendor by email stating that it was “currently seeking inputs from HDB/URA” on their appeal and that NEA would inform the Vendor on the outcome of the appeal upon URA and HDB’s reply.
NEA sent an email to Cheong stating that NEA had jointly assessed Cheong’s appeal with HDB and URA and that they had acceded to his appeal.
KW wrote to NEA to state that neither the Purchaser nor KW had lodged any appeal with NEA and were completely taken by surprise by the reference to an appeal by the Purchaser.
Tan wrote to the Purchaser stating that, inter alia, NEA’s approval of 23 November 2012 had retrospective effect as of 11 September 2012.
CCPG wrote a similar letter to KW.
The Purchaser received Tan's letter to NEA of 8 November 2012.
KW wrote to CCPG maintaining that the OTP had been terminated and cannot be revived by NEA’s letter dated 23 November 2012.
The Purchaser brought a claim against the Vendor for the refund of the deposit paid.
Court dismissed the Purchaser’s claim and ordered the forfeiture of the Deposit and the withdrawal of the Purchaser’s caveat against the Property.
Decision Date

7. Legal Issues

  1. Rescission of Contract
    • Outcome: The court held that the Purchaser's rescission of the contract was premature and therefore invalid.
    • Category: Substantive
    • Sub-Issues:
      • Failure to obtain necessary approvals
      • Reasonable endeavours to obtain approval
    • Related Cases:
      • [2013] 4 SLR 193
      • [1997] 3 SLR(R) 257
      • [2003] 4 SLR(R) 582
      • [2014] 2 SLR 905
  2. Implied Terms
    • Outcome: The court found that there was an implied term that the Purchaser had to use all reasonable endeavours to obtain the written approval of HDB and such other competent authority to the sale of the Property within a reasonable time.
    • Category: Substantive
    • Sub-Issues:
      • Duty to act with due diligence
      • Cooperation between parties
    • Related Cases:
      • [2013] 4 SLR 193
  3. Forfeiture of Deposit
    • Outcome: The court ordered the forfeiture of the deposit, finding it was a security for the Purchaser's performance of the contract.
    • Category: Substantive
    • Related Cases:
      • [2007] 3 SLR(R) 537
      • (1884) 27 Ch D 89

8. Remedies Sought

  1. Refund of Deposit
  2. Declaratory Orders
  3. Specific Performance
  4. Damages
  5. Forfeiture of Deposit
  6. Withdrawal of Caveat

9. Cause of Actions

  • Breach of Contract
  • Rescission of Contract

10. Practice Areas

  • Commercial Litigation
  • Real Estate Litigation

11. Industries

  • Real Estate
  • Automotive

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Sembcorp Marine Ltd v PPL Holdings Pte Ltd and another and another appealCourt of AppealYes[2013] 4 SLR 193SingaporeCited for the three-step test for implication of terms in fact.
Tan Soo Leng David v Wee, Satku & Kumar Pte Ltd and anotherHigh CourtYes[1997] 3 SLR(R) 257SingaporeCited for the principle that a party seeking to rescind a contract subject to third-party consent must show they took all reasonable steps to obtain that consent.
Group Exklusiv Pte Ltd v Diethelm Singapore Pte LtdHigh CourtYes[2003] 4 SLR(R) 582SingaporeCited to determine what constitutes a clear and conclusive rejection by an authority for the purpose of rescinding a contract.
KS Energy Services Ltd v BR Energy (M) Sdn BhdCourt of AppealYes[2014] 2 SLR 905SingaporeCited for the test for whether an “all reasonable endeavours” obligation had been fulfilled.
Travista Development Pte Ltd v Tan Kim Swee AugustineUnknownYes[2008] 2 SLR(R) 474SingaporeCited for the propositions regarding a “best endeavours” obligation.
Karaha Bodas Co LLC v Pertamina Energy Trading LtdCourt of AppealYes[2006] 1 SLR(R) 112SingaporeCited for the principle that any person whose interests might be affected by a declaration should be before the court.
London Passenger Transport Board v MoscropHouse of LordsYes[1942] AC 332England and WalesCited for the principle that, except in very special circumstances, all persons interested should be made parties before a declaration affecting their rights is made.
Latham Scott v Credit Suisse First BostonHigh CourtYes[2000] 2 SLR(R) 30SingaporeCited for the principle that the power to grant a declaration is discretionary, and where the court feels that a declaration will serve no useful purpose, no declaration will be granted.
Lee Chee Wei v Tan Hor Peow Victor and others and another appealCourt of AppealYes[2007] 3 SLR(R) 537SingaporeCited for the law relating to deposits in a sale and purchase contract and its recoverability.
Howe v SmithCourt of AppealYes(1884) 27 Ch D 89England and WalesCited for the principle that a deposit is an earnest to bind the bargain and creates a motive to perform the contract.

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

  • Option to Purchase
  • Rescission
  • Deposit
  • HDB Approval
  • NEA Approval
  • Reasonable Endeavours
  • Existing Approved Use
  • Seven Uses

15.2 Keywords

  • property purchase
  • rescission
  • HDB approval
  • deposit
  • contract law
  • real estate
  • Singapore

16. Subjects

  • Contract Law
  • Real Estate
  • Property Law
  • Sale of Land

17. Areas of Law

  • Contract Law
  • Property Law
  • Real Estate Law