Yeo Chock Min and another V Goh Ann Chuan and another [2017] SGHC 51

Introduction

Dealing in landed residential properties is sometimes not as straightforward as it appears to be.  Common issues like unauthorized alterations and additions, easements and encumbrances, road reserves and drainage reserves etc. are often important areas to note. In this article, we will be discussing a fairly recent case of Yeo Chock Min and another v Goh Ann Chuan and anorther [2017] SGHC 51

Facts

A corner terrace house (the “Property”) was advertised for sale and the land area of the Property was described as “2775 sqft / 258 sqm”. It was priced at $2,800,000.00. The purchasers who were the plaintiffs in this case viewed the Property on a few occasions and were shown the house from the entrance to the back, i.e. the boundary wall. On 2 July 2015, they instructed their solicitors to exercise the option to purchase and completion took place on 10 September 2015.

After the purchasers took possession of the Property, they wanted to renovate it. Part of the process involved engaging a surveyor to conduct a topographical survey and it was then that the purchasers discovered that the land size of 2775 sqft included a drain outside the back boundary wall of the Property. At the back of the Property after the boundary wall, there was a common drain that occupied about 272sqft of the land.

The purchasers then engaged solicitors to sue the vendors who are the defendants in this case. The purchasers sought the sum of $26,021.00 being damages, comprising the price difference for the shortfall in area and the difference in stamp duty they would otherwise have paid on a lower purchase price.

The two main causes of action are as follows:-

1. Misrepresentation
2. Breach of Contract

Misrepresentation

The purchasers testified that they bought the Property because they wanted a property that was between 2700 and 3000 sqft and they believed that the house was 2775 sqft as advertised. The Plaintiffs pleaded that they had relied on the Defendants’ and/or their agent’s representation on the land area. Each time they viewed the Property, they were showed up to the back of the house which ended at the boundary wall. They were never informed of the existence of a drain behind the boundary wall.

In order for the purchasers’ claim to succeed on misrepresentation, they must prove that the vendors or their agents represented to them that the land that the house sits on did not include the drain area. The court was of the view that by merely showing the purchasers the house up to the back without pointing out the drain was insufficient to prove that. Further, the court also found that it was insufficient merely to say that the advertisement stated that the Property was 2775 sqft because that was not a representation as to what the area does or does not include.

The purchasers also attempted to establish that the vendors were aware that the drain formed part of the Property. Even on the assumption that the vendors were aware of this, there was no evidence that the purcasers were laboring under the mistaken size of the Property. The purchasers therefore had not proven a willful suppression of material facts beyond mere silence.

As such on the grounds of misrepresentation, the court was of the view that without any false representation of facts by the vendors, the misrepresentation must fail.

Breach of Contract

The terms in the option to purchase did not expressly indicate that the Property does not include the drain area.

Clause 11 of the option to purchase does expressly stipulate that “the property is sold subject to satisfactory replies to the usual purchaser’s solicitors’ requisitions.” There was also a term in the option to purchase to states that “any drainage lines reserves or proposals shall be considered unsatisfactory if such lines reserves or proposals affect the building line of the property.” The purchasers had not claimed that the replies were unsatisfactory.

The legal requisition reply from PUB on drainage states that although “there is no Drainage Reserve within the site”, “surface runoff from the site and all neighbouring lots shall continue to be allowed to discharge through the common drain within the site. The boundary fence setback for maintenance of the common drain shall not be altered unless specific written permission is obtained from PUB Catchment and Waterways Department”. This reply makes it clear that although there are no drainage reserves, there is indeed a common drain within the Property.

The purchasers admitted that they were aware of the existence of the common drain per the requisition reply. Despite that, they went ahead to exercise the option without seeking clarifications.

Furthermore, other clauses in the option to purchase which are fairly standard clauses in most options did not strengthen the purchasers’ position. Clause 12 of the option clearly states that “the Purchaser is treated as having notice of the actual state and condition of the Property as regards…drainage and all other respects and is deemed to have inspected the Property.”. Clause 15 further states that the property is “sold subject to any restrictive covenants, easements…and all other rights whatsoever affecting the same.” The purchaser is obliged to inspect the Property before he decides whether to exercise the option to purchase, or at least he must ensure that any uncertainty is resolved in terms of the option before exercising it.

Therefore, based on the above, the court found that the purchasers did not have a case for breach of contract. The action was thus dismissed.

Concluding Thoughts

This case therefore highlights that in dealing with landed properties, it is imperative to understand the property thoroughly.

From the purchaser’s perspective, it is important to conduct full and proper due diligence on the property including ascertaining land size, boundaries and encroachment. If need be, the terms of the option to purchase should be drafted to adequately protect the interest of the purchaser to allow the purchaser recourse if need be. Clearly a standard option to purchase with the usual clauses would not be sufficient to fully protect the interest of parties in the transaction if there are special considerations to take into account. To avoid costly mistakes or a messy transaction, it pays to exercise prudence and care, especially where landed properties are concerned