Legal Cases: Aqua Art Pte Ltd v Goodman Development (S) Pte Ltd
Short Summary:
Foreign Buyer entered into agreement to purchase shophouses for commercial usage
Later realise the shophouses were partially zoned residential which makes them restricted to foreign purchasers
Buyer sought to have option and exercise fee returned
Initial judgement was in Seller’s favour
Buyer appealed against the decision and was successful, Seller had to refund monies paid
Facts of the case
Buyer entered into option to purchase a row of five 2-storey shophouses at 306–314 Tanjong Katong Road for commercial use (Restaurant). (the five shophouses were covered by a single certificate of title and thus had to be sold as one unit)
Buyer and Seller agreed on a price of $7.72m and buyer handed a cheque for $77,200 (being 1% of the purchase price) in consideration for an option to purchase.
Option was exercised and Buyer paid the Seller a sum of $308,800 (being 4% of the purchase price)
Buyer’s lawyers discovered that the Shophouses were zoned “residential with commercial at 1st storey”.
Which makes them restricted residential properties under the RPA, meaning the Buyer being a company whose members and directors were not all Singapore citizens, cannot purchase the shophouses under s 3(1)(c) of the RPA without the approval of the Land Dealings (Approval) Unit (“the LDAU”) of the Singapore Land Authority.
Buyer decided to purchase the shophouses anyway but under different terms and conditions. (If the shophouses were strata subdivided into ten separate units, they would no longer be regarded as restricted residential properties)
Buyer requested for extension of time for completion of the sale and purchase, and a new option to purchase to purchase the shophouses as ten separate units instead of one single unit
Seller rejected Buyer’s request, retaining the deposit paid
Subsequently, the Buyer applied to court for the following orders:
(a) that the Option be declared void under s 3 of the RPA; and
(b) that the Buyer withdraw its caveat lodged against the Properties.
Buyer alleged that the agent representing the Seller had misrepresented the zoning of the shophouses fully under commercial, and had paid the deposit and Option fee mistakenly
The Decision
The Judge dismissed the Buyer’s claim. The Judge found that the Buyer knew, at the time he exercised the option, that the Properties were partially zoned residential.
The Judge held that the contract was void for illegality, the Buyer had to show a strong case that it would only be fair and just for it to recover its money.
The Appeal
Buyer appealed, stating:
(a) the Seller’s agent had misrepresented
(b) they did no know the properties were partially zoned residential
(c) buyer was entitled to restitution of the said monies as it had operated under a mistake of fact
(d) the Respondent had been guilty of unconscionable conduct
Seller argued:
(a) Buyer could recover monies paid only if the party seeking restitution had been the victim of fraud, duress, oppression, or abuse of fiduciary position by the other party
(b) not been guilty of any unconscionable conduct
Refund of the Option fee
Since the Buyer had exercised the Option and paid the deposit under a mistake as to the zoning of the Properties, it was entitled to restitution of the deposit notwithstanding the fact that the contract for sale of the Properties was illegal.
Since the Option itself had been declared void, there was a total failure of consideration with respect to the $77,200 Option fee and the Buyer was therefore also entitled to restitution of the same.
The Conclusion
The Seller was ordered to refund both the deposit and Option fee (amounting to a total of $386,000) to the Buyer with interest at 4% from the date of the writ.
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