Apex court clears air on property deal: My reservations
Comments?
http://business.asiaone.com/Business...11-179261.html
Something not right here that disturbed me enough to make me try reading the honorable judge's judgment.
The result of which is that I have found suspect the eventual outcome (see a/m news report). The honorable judges (para 18 have IMHO, failed to answer my second concern.
Joseph Mathew and Another v Singh Chiranjeev and Another [2009] SGCA 51
Suit No: CA 200/2008, Decision Date: 29 Oct 2009,
Court: Court of Appeal
Coram: Andrew Phang Boon Leong JA, Chan Sek Keong CJ, V K Rajah JA
Counsel: Leslie Netto (Netto & Magin LLC) for the appellants, Boo Moh Cheh and Arthur Edwin Lim (Kurup & Boo) for the respondents
Andrew Phang Boon Leong JA (delivering grounds of decision of the court)
http://www.singaporelawwatch.sg/remweb/legal/ln2/rss/judgment/64650.html?utm_source=rss%20subscription&utm_medium=rss .
My understanding is that there are 2 concerns at hand in this case:
The first being whether the email/ phone correspondences constituted a valid 'option to purchase', (“option”).
The second one being the consequence one should suffer as a defaulting party, which in this case was by of the seller, Mr Joseph Mathew who refused to honor the 'option'.
Granted Mr Joseph Mathew has probably behaved in a less then honorable (disgraceful) manner by later refusing to sign the option form despite his 13May2007 email (reproduced below, from para 7 of 'Joseph Mathew and Another v Singh Chiranjeev and Another [2009] SGCA 51') clearly instructing Helene Ong (property agent) to sell his property via first accepting the check of $5060.
However, with the exception of my missing intriguing details that either might have included in the 'option contract', I believe that any default of the option by either party should only result in nett forfeiture of such said 'option fee' by the defaulting party to the other.
This is because though '1%, 3 weeks' deal might be 'market practice', such contract terms are not to be cast in stone as surely as there could be many variations, e.g.:
- Someone who wants to pay in full on the spot with lawyers to on hand.
- Contracting parties who agree that the option to purchase should be 10% in addition to the fulfillment of some other condition(s) etc.
Given the wide variation of contracts/ 'options' as the situation may be, an equitable mechanism for remedy must be found. One suggestion towards an amicable, equitable resolution would be for the defaulting party to compensate the other, an amount equal to the value of the 'option fee'.
What's sauce for the goose is sauce for the gander.
New scenarios can crop up during the option to purchase period that might hinder a sale can apply to all, e.g. gold discovered below the foundation, the buyer finding another property, the seller striking lottery so relieving him the need to liquidate property, lightning/ fire/ floods destroying part or all of the property, court orders blocking en-block sales wherein due procedure wasn't followed, geomancer comments etc; situations which would have obvious impact upon one's decision to buy/ sell a property. Baring any 'exceptional default penalties', either party should thus be allowed to void the sale upon forfeiture of some pre-contracted amount (the 'option fee').
It is thus beyond comprehensibility how the eventual sale at $506K could have occurred after June 2008(para 16/ see judgment: Singh Chiranjeev v Joseph Mathew [2008] SGHC 222) given that the property was “worth some $670K” at that time. Was Mr Matthew forced to sell has property by the courts?
In conclusion, I have no objections to (Singh Chiranjeev v Joseph Mathew [2008] SGHC 222) “if the appellants should refuse or neglect to sign the Option, the Registrar of the Supreme Court shall have the power to sign and grant the Option to the respondents on behalf of the appellants ”
However, anyone ordering/ forcing Mr Matthew to honor the 'option', without giving him the option to default (with equitable penalties) would in my opinion, be certainly acting beyond one's authority.
It is a shame that a 1% deposit can hold an entire property hostage under all conditions. That's tyranny.
PS: 'Option fee', in my opinion is a misnomer as it only becomes a fee for the defaulting party should the contract not be finally fulfilled.
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13May2007 email by Joseph Mathew, reproduced from
http://www.singaporelawwatch.sg/remweb/legal/ln2/rss/judgment/64650.html?utm_source=rss%20subscription&utm_medium=rss
7 The third key e-mail is the first appellant’s e-mail on 13 May 2007 to Helene in response to her earlier e-mails (“the Third E-mail”), and it reads as follows:[note: 3]
Dear Helene,
Understand that at this growing market, the property price is going up including rental market. However I am taking a decision to proceed to sell the property at this price of S$506K which is reasonably OK as my minimum expectation was S$510K which we couldn’t achieve.
After deducting agent fee and lawyer fee at least I should get minimum of S$500K. I had taken loan of S$250K and also paying heavy interest for the last one year (not much gain), also very less rental of S$1500 which is also not attractive. As discussed through phone I can only agree for an agent fee of S$4000 + tax which is reasonable. Also I can give more business for you through various contacts. Pleas [sic] raise the invoice accordingly.
· You can also deposit the cheque to my account POSB-026-XXXXX-X
· Pls send me the draft letter for Mr. Igwe so that I can sign the letter with effect from 14 May 07.
· My address as follows
Joseph Mathew
Keppel FELS Offshore,
Unit No. 3, 8th floor, Prism Tower A,
Mindspace, Malad West,
Mumbai – 400062
India.
· Also appreciate your follow up to find a suitable flat which can demand higher rental value (ex. Summerdale etc) or Any new EC coming up /any good deal.
Thanks for your understanding and support.
Best Regards
Joseph Mathew
[emphasis added; underlining in original]