Apex court clears air on property deal: My reservations (Ver 2.0)
Ver 1.0 accessible here: http://groups.google.com/group/soc.culture.singapore/msg/edb25174560759f7?hl=en
Comments?
http://business.asiaone.com/Business/My%2BMoney/Property/Story/A1Story20091111-179261.html
Something not right here that disturbed me enough (see news reports above) to make me try reading the honorable judge's judgment. Please advise if I've assumed/ devised anything to the contrary as I'm not legally trained, what is written here is mostly from the media report a/m.
The result of which is that I have found suspect the eventual outcome. The honorable judges (para 18) have IMHO, in their over emphasis upon the validity of an 'option' omitted answering the second, equally important issue.
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
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 should be 2 distinct issues at hand in this case:
- The first being whether the respective email/ phone correspondences constituted a valid 'option to purchase', (“option”).
- The second one being the consequence one should suffer as a defaulting party of an 'option to purchase', which in this case was by of the seller, Mr Joseph Mathew who refused to honor the option. I believe the courts have omitted/ erred on this issue.
Granted Mr Joseph Mathew has probably behaved in a despicable manner by later refusing to sign the option form despite his 13May2007 email (reproduced below, 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 acceptance of the buyer's check of $5060.
However, I believe that the courts (or Mr Matthew's lawyers) have made the glaring omission of either mis judging/ mis-advising Mr Matthew about his rights.
My opinion about the high/ appeal court/ advising lawyers is that the final decision was lacking/ illegal. The court/ lawyers, having laboriously decided that the 'option' contract was valid, did not seem to appropriately direct the case towards an amicable resolution. Viz allowing both parties to act upon a valid option; instead, compelling Mr Matthew to accept $506K for his property at a then $164K loss.
My contention is thus that having having decided upon the validity of the $5060 contract, the courts/ lawyers should have have appropriately (fairly) advised that in the absence of further contractual documentation, a defaulting party to the 'option' would be penalized up to $5060. i.e. the actual worth of the 'option'. It was the failure to offer such pertinent advise/ misjudgment that resulted in an unfair compromise Mr Matthew's interest and rights that caused him a $164K loss as a result.
(IMHO, any default of an 'option' by either party should only result in nett forfeiture of such said 'option fee' (or an approximate amount) by the defaulting party to the other. (i.e. the value to which the 'option contract' is worth in the absence of any other extenuating circumstances/ details.)).
I refer to:
http://www.propertyhub.com.sg/Singapore-Property-Information/Buy-and-Selling-Procedures/Steps-by-Steps-guide-to-Property-Buying.html
“4.(ii) Entering Sale and Purchase Agreement: The purchaser will need to put up another 9% of the agreed sale price known as Option Exercise Fee to accept the Option to Purchase (OTP) which will then form a valid sale contract, known as Sale and Purchase Agreement (SnPA). The two payments (Option fee and Option exercise fee) then form the down payment, which is 10% of the agreed sale price. The balance of the payment must be settled on or before legal completion date.”
The infancy of the Matthew- Singh contract is seen in the fact that as the 'option exercise fee' had not yet been paid/ accepted in this case, there wouldn't even be a valid 'SnPA'. So to be fair, this fact should also be taken into consideration.
The other fact I state would be in 2 distinct examples(simple terms):
1) house gets washed away by flood,
2) someone offers seller a better deal/ a mortgagee bank may object half way into the sale.
Each scenario will cause the respective party to withdraw from the deal due to physical/ legal impediment stymieing the sale (It can happen both ways). In the absence of elaborate contractual documentation except that an 'option fee' has been paid/ received (as in this case I assume), how should a fair judge decide this and the many other cases that are wont to come in terms of property restitution/ dispute resolution?
I repeat: “What's sauce for the goose is sauce for the gander.”
It is thus beyond comprehensibility how the eventual sale at $506K could have occurred after June 2008 given that the property was “worth some $670K” at that time. Was Mr Matthew forced to sell has property by the courts, if so, why so?
In conclusion, I have no objections to (Singh Chiranjeev v Joseph Mathew [2008] SGHC 222) that “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 (Matthew) ”
However, anyone forcing Mr Matthew to honor the 'option', without giving him the option to default (with contractually predetermined/ equitable penalties) would in my opinion, be certainly acting expediently but unjustly and certainly beyond one's authority.
Default of an option CANNOT costs more then the option's mutual worth.
It remains a shame that a 1% deposit can hold an entire property hostage under all conditions- a tyranny and a travesty of simple Justice. This judgment, if not repealed, will set precedence for a $1 option fee to hold a million dollar property hostage and at the mercy of legal intricacies; remaining a threat to the integrity of property investment in Singapore for years to come.
----
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.
- “ upon the respondents exercising the Option to Purchase the property, the appellants are to pay the said sum of $15,510.05 to the respondents”
I cannot understand why $15,510.05 is only paid when Mr Singh exercises option to purchase, if it's compensation for the nuisance Mr Singh (buyer) suffered (legal costs) as a result of Mr Matthew's (seller) mischief of refusing to physically sign the 'option' form as previously agreed to via email.
==========
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]
