Li Jialin v Wingcrown Investment: Forfeiture of Deposit, Remedies, and Pre-Judgment Interest

In an originating application before the General Division of the High Court of Singapore, Ms. Li Jialin and Mr. Li Suinan sought the return of $1,195,354.42 from Wingcrown Investment Pte Ltd, related to two failed attempts to purchase a residential property. The court, presided over by Kwek Mean Luck J, held that the Respondent was entitled to forfeit $380,000 as a true deposit and retain the remaining $326,243.07 pending an assessment of damages hearing. The Applicants' appeal against this decision was dismissed.

1. Case Overview

1.1 Court

General Division of the High Court of the Republic of Singapore

1.2 Outcome

The Respondent was entitled to forfeit $380,000 as a true deposit. The Respondent was to retain the remaining $326,243.07 pending the determination of its claim of equitable set-off in an assessment of damages hearing.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Singapore court case regarding the forfeiture of a deposit after a failed property purchase, focusing on remedies and pre-judgment interest.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Li JialinApplicantIndividualApplication DismissedLost
Li SuinanApplicantIndividualApplication DismissedLost
Wingcrown Investment Pte LtdRespondentCorporationPartial JudgmentPartial

3. Judges

Judge NameTitleDelivered Judgment
Kwek Mean LuckJudgeYes

4. Counsels

Counsel NameOrganization
Benaiah Lim Oon KuanCovenant Chambers LLC
Sara Ng Qian HuiCovenant Chambers LLC
Tay Yong SengAllen & Gledhill LLP
Toh Jia Jing VivianAllen & Gledhill LLP

4. Facts

  1. Applicants sought to purchase a residential property from the Respondent.
  2. Applicants defaulted on payment obligations under the first Sale and Purchase Agreement (SPA 1).
  3. SPA 1 was terminated, and the Respondent was entitled to forfeit a deposit.
  4. Applicants negotiated a fresh Option to Purchase (OTP 2) after termination of SPA 1.
  5. Applicants failed to complete the purchase under OTP 2 despite extensions.
  6. Respondent terminated OTP 2 and reserved the right to forfeit the deposit.
  7. Applicants demanded the return of the deposit, claiming it was not a true deposit and operated as a penalty.

5. Formal Citations

  1. Li Jialin and another v Wingcrown Investment Pte Ltd, Originating Application No 423 of 2023, [2023] SGHC 256

6. Timeline

DateEvent
Respondent issued the Applicants an Option to Purchase in respect of the Property
Parties entered into a Sale and Purchase Agreement
Sale and Purchase Agreement was annulled by the Respondent
Fresh Option to Purchase granted
Applicants exercised Option to Purchase
Applicants failed to complete purchase
Respondent served the Applicants a notice to complete
Respondent notified the Applicants that Option to Purchase had been terminated
Applicants sent letter of appeal
Respondent declined to return the sum of $1,195,354.42
Respondent completed the sale of the Property
Applicants issued a letter of demand
Respondent informed the Applicants that it would return $488,957.04 out of the $1,195,354.42
Respondent paid the sum of $488,957.04 to the Applicants
Hearing
Hearing
Judgment Date

7. Legal Issues

  1. Forfeiture of Deposit
    • Outcome: The court held that the Respondent was entitled to forfeit $380,000 as a true deposit.
    • Category: Substantive
    • Sub-Issues:
      • Reasonableness of deposit amount
      • Customary deposit rate
      • True deposit vs. part payment
    • Related Cases:
      • [2018] 3 SLR 534
      • [1993] AC 573
      • [2002] 3 HKLRD 319
  2. Equitable Set-Off
    • Outcome: The court held that the Respondent was entitled in principle to an equitable set-off and directed an assessment of damages.
    • Category: Substantive
    • Sub-Issues:
      • Validity of counterclaim
      • Connection to main claim
      • Sufficiency of evidence
    • Related Cases:
      • [1995] 2 SLR(R) 643
  3. Pre-Judgment Interest
    • Outcome: The court awarded interest on the sum of $488,957.04 and on any net sum found payable to the Applicants after the assessment of damages, with the rate and period to be determined at the assessment of damages.
    • Category: Procedural
    • Sub-Issues:
      • Entitlement to interest
      • Applicable interest rate
      • Interest accrual period
    • Related Cases:
      • [2016] 3 SLR 1308

8. Remedies Sought

  1. Declaration that the sum of $1,195,354.42 paid to the Respondent was not a true deposit
  2. Declaration that the forfeiture of the sum of $1,195,354.42 was an unenforceable penalty
  3. Order that the Respondent repay the sum of $1,195,354.42 (less the $488,957.04 already repaid) with interest

9. Cause of Actions

  • Breach of Contract
  • Claim for return of deposit

10. Practice Areas

  • Commercial Litigation
  • Real Estate Law

11. Industries

  • Real Estate

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Polyset Ltd v Panhandat LtdHong Kong Court of Final AppealYes[2002] 3 HKLRD 319Hong KongCited regarding the vendor not being entitled to forfeit a deposit representing 35% of the purchase price and the length of the completion period justifying a larger quid pro quo.
Hon Chin Kong v Yip Fook MunSingapore Court of AppealYes[2018] 3 SLR 534SingaporeCited for the framework on the forfeiture of contractual deposits, including the determination of whether the vendor had the power to forfeit, whether the sum is a true deposit, and whether the penalty rule applies.
Workers Trust & Merchant Bank Ltd v Dojap Investments LtdPrivy CouncilYes[1993] AC 573United KingdomCited for the principle that forfeiture of a deposit on a contract for the sale of land does not fall within the general rule against penalties.
Denka Advantech Pte Ltd and another v Seraya Energy Pte Ltd and another and other appealsSingapore Court of AppealYes[2021] 1 SLR 631SingaporeCited for reaffirming that the penalty rule is directed at secondary obligations which purport to be, but are not, a genuine pre-estimate of loss.
TG Master Pte Ltd v Tung Kee Development (Singapore) Pte Ltd and anotherSingapore High CourtYes[2022] SGHC 316SingaporeCited regarding the factors considered when determining reasonableness of a deposit.
Goh Liang Yong Jonah and another v Heng Kuek Hoy and anotherSingapore High CourtYes[2013] SGHC 203SingaporeCited for the construction of a clause materially identical to Condition 15.9(c)(i) to envisage and encompass the payment of further deposits.
Pacific Rim Investments Pte Ltd v Lam Seng Tiong and anotherSingapore Court of AppealYes[1995] 2 SLR(R) 643SingaporeCited for the principle that there may be an equitable right of set-off if not expressly excluded by contract and equitable considerations support such an exercise.
Wingcrown Investment Pte Ltd v Mannepalli Gayatri RamSingapore High CourtYes[2023] SGHC 1SingaporeCited as an example where the vendor brought a claim against the purchaser and did not rely upon any set-off.
Aqua Art Pte Ltd v Goodman Development (S) Pte LtdSingapore Court of AppealYes[2011] 2 SLR 865SingaporeCited for the principle that the sum had been paid as consideration for the grant of OTP 2 itself.
Grains and Industrial Products Trading Pte Ltd v Bank of India and anotherSingapore Court of AppealYes[2016] 3 SLR 1308SingaporeCited for the principle that interest should be awarded for the period starting from the date of their entitlement to the money until the date the money was repaid.
Noor Azlin bte Abdul Rahman and another v Changi General Hospital Pte Ltd and othersSingapore High CourtYes[2021] SGHC 10SingaporeCited for the principle that the Respondent had failed to provide an evidential basis supporting the rate of interest they proposed.
Crescendas Bionics Pte Ltd v Jurong Primewide Pte Ltd and other appealsSingapore High CourtYes[2023] 1 SLR 536SingaporeCited for the principle that any interest awarded should generally run from the date the loss accrued, the court retains a wide discretion to award interest from a later date.
Robertson Quay Investment Pte Ltd v Steen Consultants Pte Ltd and anotherSingapore Court of AppealYes[2008] 2 SLR(R) 623SingaporeCited for the principle that the general approach of awarding interest from the date the loss accrued is only the default starting point that represents the maximum period for which pre-judgment interest may be awarded.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Civil Law Act 1909 (2020 Rev Ed)Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Deposit
  • Option to Purchase
  • Sale and Purchase Agreement
  • Forfeiture
  • True Deposit
  • Penalty Rule
  • Equitable Set-Off
  • Pre-Judgment Interest
  • Notice to Complete
  • Earnest Money

15.2 Keywords

  • Deposit
  • Forfeiture
  • Property
  • Contract
  • Singapore
  • Interest
  • Remedies

17. Areas of Law

Area NameRelevance Score
Contract Law90
Deposits85
Remedies80
Liquidated Damages75
Penalties70
Damages65
Civil Procedure60
Interest55
Pre-judgment interest50
Formation of contract40
Breach of Contract40

16. Subjects

  • Contract Law
  • Property Law
  • Civil Procedure
  • Remedies