Li Jialin v Wingcrown: Assessment of Damages, Law Society Conditions of Sale, Mitigation

Li Jialin and Li Suinan appealed against the decision of the Assistant Registrar in HC/AD 12/2023, where Wingcrown Investment Pte Ltd was awarded $95,178.31 in damages due to the Purchasers' failed attempts to purchase a property. The High Court allowed the appeal, holding that Wingcrown must give credit for the $357,000 option fee, thereby reducing the damages to nil. The court addressed the applicability of the Law Society of Singapore’s Conditions of Sale 2012 and the principles of mitigation in assessing damages.

1. Case Overview

1.1 Court

General Division of the High Court of the Republic of Singapore

1.2 Outcome

Appeal Allowed

1.3 Case Type

Civil

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

Appeal regarding assessment of damages from failed property purchase. Court held Wingcrown must credit option fee, reducing damages to nil.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Li JialinAppellantIndividualAppeal allowedWon
Li SuinanAppellantIndividualAppeal allowedWon
Wingcrown Investment Pte LtdRespondentCorporationDamages reduced to nilLost

3. Judges

Judge NameTitleDelivered Judgment
Kwek Mean LuckJudge of the High CourtYes

4. Counsels

Counsel NameOrganization
Lee Ee YangCovenant Chambers LLC
Charis WongCovenant Chambers LLC
Kheshin Cheong Rui PinAllen & Gledhill LLP
Tay Yong SengAllen & Gledhill LLP
Toh Jia Jing VivianAllen & Gledhill LLP

4. Facts

  1. Purchasers entered into a sale and purchase agreement (SPA 1) with Wingcrown for a property at $1,785,000.
  2. Purchasers failed to make progress payments, leading Wingcrown to annul SPA 1.
  3. Wingcrown intended to forfeit $357,000 from progress payments.
  4. Purchasers requested to proceed again with the purchase, asking for the $357,000 not to be forfeited.
  5. Parties entered into an agreement for a fresh option to purchase (OTP 2) at a new purchase price of $1.9m.
  6. Purchasers exercised OTP 2 but were unable to complete the purchase.
  7. Wingcrown terminated OTP 2 and sought to forfeit the contractual deposit of $1,195,354.42.
  8. Wingcrown attempted to resell the property to Purchaser A, who also failed to complete the transaction.
  9. Wingcrown successfully sold the property to Purchaser B at a purchase price of $1,980,000.
  10. Purchasers commenced HC/OA 423/2023 seeking repayment of the deposit paid under OTP 2.
  11. Court of Appeal ruled that the $1,195,354.42 was not reasonable as an earnest and could not be forfeited as a deposit.

5. Formal Citations

  1. Li Jialin and another v Wingcrown Investment Pte Ltd, Originating Application No 423 of 2023 (Registrar’s Appeal No 160 of 2024), [2024] SGHC 314

6. Timeline

DateEvent
Purchasers entered into a sale and purchase agreement (SPA 1) with Wingcrown for the Property.
Wingcrown annulled SPA 1 due to the Purchasers' failure to make the requisite progress payments.
Wingcrown issued a fresh option to purchase (OTP 2) to the Purchasers.
Purchasers exercised OTP 2.
Scheduled Completion Date under OTP 2.
Wingcrown terminated OTP 2 due to the Purchasers' inability to complete the purchase.
Wingcrown contracted to resell the Property to Purchaser A.
Sale to Purchaser A was terminated.
Sale to Purchaser B was completed.
Purchasers commenced HC/OA 423/2023 against Wingcrown.
Oral Grounds of Decision for AD 12.
Hearing for RA 160.
Wingcrown Further Supplemental Written Submissions for RA 160.
Judgment reserved.

7. Legal Issues

  1. Assessment of Damages
    • Outcome: The court held that Wingcrown must give credit for the option fee, reducing the damages to nil.
    • Category: Substantive
    • Sub-Issues:
      • Failure to give credit for option fee
      • Failure to account for gains from mitigation
    • Related Cases:
      • [2023] SGHC 256
      • [2024] SGCA 48
  2. Liquidated vs. Unliquidated Damages
    • Outcome: The court found that Wingcrown had elected to pursue its rights under the Law Society Conditions of Sale and could not claim for unliquidated damages.
    • Category: Substantive
    • Related Cases:
      • Talley and Anor v Wolsey-Neech (1979) 38 P&CR 45
      • Wallace-Turner v Cole (1983) 46 P&CR 164
      • [2001] 3 SLR(R) 148
  3. Mitigation of Damages
    • Outcome: The court found that Wingcrown must give credit for the forfeited deposit received under OTP A ($139,650).
    • Category: Substantive
    • Related Cases:
      • British Westinghouse Electric and Manufacturing Company, Limited v Underground Electric Railways Company of London, Limited [1912] AC 673
      • [2017] 1 WLR 2581
      • [2010] 1 SLR 573
  4. Interpretation of Law Society Conditions of Sale
    • Outcome: The court held that Condition 15.10 applied and that the option fee was 'money paid on account of the purchase price.'
    • Category: Substantive
    • Sub-Issues:
      • Applicability of Condition 15.10
      • Definition of 'money paid on account of the purchase price'
    • Related Cases:
      • [2024] 1 SLR 690

8. Remedies Sought

  1. Repayment of Deposit
  2. Equitable Set-Off

9. Cause of Actions

  • Breach of Contract
  • Unjust Enrichment

10. Practice Areas

  • Commercial Litigation
  • Real Estate Litigation

11. Industries

  • Real Estate

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Li Jialin and anor v Wingcrown Investment Pte LtdHigh CourtYes[2023] SGHC 256SingaporeCited for the background of the case and the initial findings regarding the equitable set-off.
Li Jialin and another v Wingcrown Investment Pte LtdCourt of AppealYes[2024] SGCA 48SingaporeCited for the Court of Appeal's ruling that the deposit was not reasonable as an earnest and could not be forfeited, and that the Purchasers were entitled to recover the sum in unjust enrichment, subject to a set off.
Talley and Anor v Wolsey-NeechEnglish Court of AppealYesTalley and Anor v Wolsey-Neech (1979) 38 P&CR 45England and WalesCited to support the principle that a vendor must elect between a claim for liquidated and unliquidated damages.
Wallace-Turner v ColeUnknownYesWallace-Turner v Cole (1983) 46 P&CR 164England and WalesCited to support the principle that a vendor must elect between a claim for liquidated and unliquidated damages.
Harris Hakim v Allgreen Properties LtdCourt of AppealYes[2001] 3 SLR(R) 148SingaporeCited to support the principle that a vendor must elect between a claim for liquidated and unliquidated damages.
Ng and another v Ashley King (Developments) LtdChancery DivisionYesNg and another v Ashley King (Developments) Ltd [2011] Ch 115England and WalesCited for the principle that a vendor must give credit to any forfeited deposit by way of reduction of damages payable by the purchaser for the latter’s breach of contract.
TG Master Pte Ltd v Tung Kee Development (Singapore) Pte Ltd and anotherHigh CourtYes[2024] 1 SLR 690SingaporeCited for the principle that an option fee is paid in consideration for the grant of the option, rather than pursuant to an obligation to pay the purchase price under a sale and purchase agreement; distinguished by the court.
Bauer, Adam Godfrey and another v Wee Tien Liang, deceasedHigh CourtYes[2021] SGHCR 8SingaporeCited for the approach that the liquidated damages payable under Condition 15.10(b) included legal fees incurred due to the abortive sale, viz, wasted expenses.
British Westinghouse Electric and Manufacturing Company, Limited v Underground Electric Railways Company of London, LimitedHouse of LordsYesBritish Westinghouse Electric and Manufacturing Company, Limited v Underground Electric Railways Company of London, Limited [1912] AC 673United KingdomCited for the principle that the subsequent transaction, if to be taken into account, must be one arising out of the consequences of the breach and in the ordinary course of business.
Fulton Shipping Inc of Panama v Globalia Busines Travel SAU (formerly Travelplan SAU) of SpainUK Supreme CourtYes[2017] 1 WLR 2581United KingdomCited for the principle that the essential question was whether there was a sufficiently close link of causation between the benefit sought to be brought into account and the breach of the contract or by a successful act of mitigation.
Swiss Singapore Overseas Enterprises Pte Ltd v Exim Rajathi India Pvt LtdHigh CourtYes[2010] 1 SLR 573SingaporeCited for the principle that because the subsequent transaction that gave rise to the buyers’ profit was part of a continuous chain and not independent of or disconnected with the original breach, there was a need to take the subsequent gain into account in assessing the damages due to the buyers for the seller’s breach.
Assetco plc v Grant Thornton UK LLPEnglish High CourtYes[2019] EWHC 150 (Comm)England and WalesCited for the principle that it is not sufficient for the defendant to prove a “but for” causal link between its negligence and the mitigating act and that legal causation is also required.
Assetco plc v Grant Thornton UK LLPEnglish Court of AppealYes[2021] 3 All ER 517England and WalesCited for affirming the principle that it is not sufficient for the defendant to prove a “but for” causal link between its negligence and the mitigating act and that legal causation is also required.
Tan Chin Seng and others v Raffles Town Club Pte LtdHigh CourtYes[2005] 2 SLR(R) 302SingaporeCited for the principle that the compensating advantages to be deducted are those benefits that must arise directly from the breach of contract.
Supercars Lorinser Pte Ltd and another v Benzline Auto Pte LtdHigh CourtYes[2016] SGHC 281SingaporeCited for the principle that even if there was any agreement to purchase the 30 cars, the defendant would have mitigated its loss in respect of 19 of the cars by selling them, such that any loss arising from these 19 cars would not have been claimable.
Hussey and another v Eels and anotherUnknownYesHussey and another v Eels and another [1990] 1 All ER 449England and WalesCited for the principle that the subsequent resale was not part of a continuous transaction arising from the defendants’ negligent misrepresentation.
Apeco of Canada, Ltd v Windmill PlaceSupreme Court of CanadaYesApeco of Canada, Ltd v Windmill Place [1978] 2 SCR 385CanadaCited for the principle that the vacancy created by the appellant’s breach did not have any bearing on the new tenant’s decision to rent 17,000 square feet of accommodation.
Vinland Holdings Ltd v WisniowskiNova Scotia Court of AppealYesVinland Holdings Ltd v Wisniowski (NSCA) [1990] NSJ No 72CanadaCited for the principle that the rental to Mr Cabrera could not have been concluded if the respondent had not breached the original agreement.
Lazenby Garages Ltd v WrightUnknownYesLazenby Garages Ltd v Wright [1976] 1 WLR 459England and WalesCited for the principle that the sale of a second-hand car by the plaintiff to a subsequent purchaser six weeks later was held to have mitigated any loss suffered by the plaintiff from the defendant’s breach, even though the court considered that there was no available market for second-hand cars.
Alvin Nicholas Nathan v Raffles Assets (Singapore) Pte LtdCourt of AppealYes[2016] 2 SLR 1056SingaporeCited for the principle that the basis for awarding reliance loss is the assumption that were the contract performed, the claimant would have at least fully recovered the costs and expenditure incurred.
Triangle Auto Pte Ltd v Zheng Zi Construction Pte LtdHigh CourtYes[2000] 3 SLR(R) 594SingaporeCited for the principle that, after forfeiting the deposit, the seller was entitled to sue for additional damages for breach of contract based on the losses it had suffered and was able to prove, but that credit should be given to the deposit amount of $3,000.
Polyset Ltd v Panhandat LtdHong Kong Court of Final AppealYesPolyset Ltd v Panhandat Ltd (2002) 5 HKCFAR 234Hong KongCited for the principle that having forfeited the deposit for failure to complete, the vendor remains entitled at common law to sue for damages, giving credit for the forfeited deposit where such damages exceed its amount.
Thai Airways International Public Co Ltd v KI Holdings Co Ltd (formerly known as Koito Industries Ltd) and anotherUnknownYesThai Airways International Public Co Ltd v KI Holdings Co Ltd (formerly known as Koito Industries Ltd) and another [2016] 1 All ER (Comm)England and WalesCited for the principle that where a claimant as a result of a step reasonably taken to mitigate its loss receives money which it would not have received if the defendant had performed the contract, justice requires the sum received to be brought into account in the calculation of damages.
Essex v DaniellCourt of Common PleasYesEssex v Daniell (1875) LR 10 CP 538England and WalesCited for the principle that under ordinary circumstances, where the purchaser fails to complete, without any default on the part of the vendor, the latter is entitled to recover all the expenses he has incurred in preparing for the sale, and also the loss incurred upon a re-sale, that is, the difference of price, if any.
Ockenden v HenlyUnknownYesOckenden v Henly (1858) 120 ER 590England and WalesCited for the principle that where the conditions of sale provided for forfeiture of the deposit and recovery of deficiency in price together with expenses of resale, the deposit must be brought into account in assessing damages for the failed sale.

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

  • Assessment of Damages
  • Law Society Conditions of Sale
  • Mitigation of Damages
  • Option Fee
  • Liquidated Damages
  • Unliquidated Damages
  • Equitable Set-Off
  • Forfeited Deposit
  • Scheduled Completion Date
  • Resale
  • Wasted Expenses

15.2 Keywords

  • damages
  • assessment
  • law society conditions of sale
  • mitigation
  • option fee
  • property purchase
  • singapore

17. Areas of Law

Area NameRelevance Score
Damages Assessment85
Breach of Contract75
Contracts65
Contractual terms60
Real Estate50

16. Subjects

  • Contract Law
  • Real Estate
  • Damages
  • Civil Procedure