[Chia Choo Ling and another v Phua Chiew Pheng and another [2010] SGDC 279]

A District Court decision in respect of an application by the Purchasers for an order that the Option to Purchase was validly exercised where the method of exercising was not in accordance with the strict terms of the Option.

Issues

The primary issue in this case was whether the Option to Purchase had been validly exercised to give rise to a legally binding contract for the sale and purchase of the HDB flat where the Purchasers failed to comply strictly with the terms of the Option for the purposes of exercising the Option to Purchase. In determining the primary issue, the Court was also asked to decide on the following:

(a) Whether strict compliance of the terms of the Option to Purchase was required for the exercise of the Option or compliance could be waived by the conduct of the   parties;

(b) Alternatively whether the Vendors were estopped by their conduct from insisting on strict compliance with the terms of the   Option;

Facts

The Vendors granted the Purchasers an Option to Purchase an HDB flat at Tiong Bahru estate (“the HDB Flat”) at the price of $350,000. The Option was in the standard prescribed form by the Housing and Development Board (“HDB”). Both the Vendors and Purchasers were not represented by agents. The Purchasers paid $1000 being the   Option fee and the said option was to be exercised by the Purchasers by signing on the option and delivering the said option together with a cheque for the sum of $4000 in favour of the Vendors by 22 June 2007 (“the expiry date”).

Prior to the expiry date, the Purchasers made several fruitless attempts to contact the Vendors for the purpose of ascertaining their whereabouts so that the duly signed option could be delivered to them. Due to their futile attempts at contacting the Vendors, the Purchasers sought legal advice and proceeded to exercise the Option by hand delivering a copy of the Option together with a cheque for the sum of $4000 and a covering letter by their  lawyer to the premises. However the Vendor was not around and the said option was received by an unidentified occupant of the Flat. At the same time, the Purchasers also sent a copy of the Option and their lawyer’s covering letter by way of ordinary post and Certificate of Posting.  The Purchasers’ position was that the Option to Purchase was validly exercised.

The Vendors on the other hand contended that the Purchasers failed to exercise the Option pursuant to the manner stated in Clause 5 of the Option. Clause 5 states as follows:

5.1 To exercise this Option, the Buyer must do all of the following on or before the Option Expiry:

(a) sign the “Acceptance” in this Option; and

(b) deliver the signed Option (original copy) to the Seller; and

(c) pay the Seller $4000 (“Option Exercise Fee”).

Furthermore, the Vendors also denied the allegation that they had failed, refused and or neglected to respond to the Purchaser’s attempts to contact them. The Vendors gave evidence that one of the Vendors had been taken ill on 20 and 21 June 2007 and as a result thereof, she turned off her mobile phone as she was on medical leave.

From the evidence adduced by both parties, the Court found that the Vendors were fully justified to take the position that the Option had not been properly and validly exercised. In arriving at this conclusion, the Court relied on the High Court   decision of Seah Kiat Seng v Amtel Exports Pte Ltd [1996] 2 SLR(R) 636 where the Court held that “in order for it to be turned into a binding contract, the said offer, in my opinion, must be accepted in exact compliance with its terms.”

Therefore in the context of the express language used in Clause 5 of the Option, the Court held that there was no binding contract between the parties as the Purchasers had failed to exercise the Option in the manner prescribed; namely delivering the original signed Option and the $4000 to the Vendor. Receipt by the unidentified occupant at the Flat did not constitute a delivery to the Vendor.

The Purchasers went further to claim that they had been prevented by the Vendors from exercising the Option in accordance with the express terms of the Option by being uncontactable. As such, they contended that the Vendors’ act of switching off the mobile phone and remaining uncontactable operated as a waiver of the strict terms of the Option and/or an estoppel. The Purchasers sought to rely on the ‘’prevention principal’’  –  that contracting parties are obliged to cooperate with each other to secure the performance of the contract and its corollary principle that a party in breach or default of this obligation to cooperate cannot take advantage of his own wrong.

The Court in considering the Purchasers’ argument above highlighted that the “prevention principle” would apply if the facts showed that the contractual right or benefit that a party is asserting or claiming is a direct result of that party’s prior breach of   contract.

The question the Court had to consider was whether the Purchasers’ failure to deliver the Option and pay the Vendors the $4000 was a direct result of the Vendors’ act in switching off her mobile phone i.e  whether the Purchasers’ non-compliance was  wholly attributable to the Vendors’ act.

Based on the facts and upon consideration, the Court was of the view that the Purchasers chose to vary the strict terms of the Option by hand delivering a copy of the Option and cheque to an occupant of the Flat which was not any of the Vendors, as well as sending copies of the Option and copies of the cheque to the Vendors by ordinary post and Certificate of Posting. The Vendors never received the original Option or   payment.

The Court went on to clarify that although in the normal course of property transactions in Singapore, exercising an option is usually effected by delivering by hand to the seller, this did not   preclude an option holder from exercising it by other means available including by post as long as it could be shown that the acceptance and option fee payable reached the seller before the expiry date.

Had the real cheque and original copy of the Option been despatched in similar fashion, they would have reached the Vendors on 22 June 2007 and the Option would have been duly exercised. The Court was also of the view that there was no compelling reason why the Vendors should conduct themselves in a manner that would jeopardise the sale of the Flat and that her reason for turning off her mobile phone due to her illness was valid.

Conclusion

In summary, the Court held that by not complying strictly with the terms of the Option to exercise the Option, there was no valid and binding contract between the parties. Further, the Vendors were not estopped by their conduct from insisting on strict compliance of the Option as the Purchasers’ non-compliance of clause 5 of the Option was not wholly attributable to the Vendors’ conduct.