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Judgment :

2 Delivered by L P Thean JA

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4 The facts

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11 The trial judge's decision

12 8. The application was heard before Lim Teong Qwee JC. In a reserved judgment (reported

in < 1996 > 3 SLR 92) the learned judicial commissioner held that when a purchaser

has paid any part of the purchase money whether called a deposit or not or in addition to

it, he has a lien for so much of the purchase money he has paid and such a lien is an

interest in land capable of supporting a caveat under the then s 104(1) of the Land Titles

Act (Cap 157, 1985 ed) (which was repealed), and now s 115(1) of the Land Titles Act (Cap

157, 1994 ed). A purchaser acquires an equitable lien over the land upon payment of each

instalment of the purchase price in accordance with the sale and purchase agreement, and

if the agreement goes off and the purchaser is entitled to recover from the vendor any

part of the purchase money he has paid in accordance with the agreement, then and in every

such case the purchaser has an equitable lien over the land for such part of the purchase

money. This is so whether the agreement goes off because of a default on his part or on

the part of the vendor or without any default on the part of either, so long as the

purchaser has not lost his right to recover some part of the purchase money.

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15 The issues on appeal

16 11. Before us three issues have been raised, namely:

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18 Respondents' entitlement to lien

19 13. It is settled law that where a contract for the sale and purchase of land is

terminated or rescinded on the ground of any default or misconduct on the part of the

vendor, the purchaser is entitled to a lien on the property for the purchase moneys he has

paid to the vendor. In Rose v Watson < 1864 > 10 H L C 672 the purchaser rescinded

the contract for the sale and purchase of land on the ground of misrepresentations by the

vendor and claimed the refund of the money he had paid and a lien on the property for such

money. On the question of lien Lord Westbury LC in his speech said, at p 679:

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23 The learned Vice-Chancellor then went on to decide that the plaintiff had such a lien.

24 15. Wythes v Lee was followed in Whitbread & Co, Limited v Watt < 1901 > 1 Ch

911. In that case, the purchaser agreed to purchase a plot of land in a building estate

and pursuant to the contract paid a deposit to the vendor. It was expressly provided that

if within two years the vendor failed to build 300 houses, the purchaser would be entitled

to rescind the contract. The vendor did not build the 300 houses within that time, and in

accordance with the terms of the contract the purchaser rescinded the contract and claimed

a lien on the property for the deposit he had paid. Farwell J following Wythes v Lee and

Rose v Watson (supra) held that although there was no default on the part of the vendor

the purchaser was entitled to a lien on the property for the money he had paid upon his

rescission of the contract. He said, at p 915:

25 On appeal the Court of Appeal affirmed the decision of Farwell J: see < 1902 > 1

Ch 835. Both Vaughan Williams and Stirling LJJ held that the law as enunciated by Sir R T

Kindersley V-C in Wythes v Lee applied to the case before them.

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30 17. The authority which was relied heavily by the appellants in support of their

argument that where the contract goes off by reason of the default of the purchaser, the

purchaser is not entitled to the benefit of any lien on the property for the purchase

moneys he has paid to the vendor is Ridout v Fowler < 1904 > 1 Ch 658. In that case,

the purchaser of a property was let into possession by the vendor, and did not complete

the purchase, which led to litigation between them. Subsequently a judgment creditor of

the purchaser obtained by way of equitable execution an order appointing himself, upon

giving security, as receiver of the purchaser's interest in the property, and gave notice

to the vendor. In the meantime, the vendor and the purchaser came to a compromise under

which the contract was rescinded and the vendor paid to the purchaser a sum of 110 for

giving up possession of the property. The creditor later commenced an action against the

vendor claiming a lien or charge first against the property and secondly against the 110.

Farwell J held that that there was no estate in the land on which the order for

appointment could have operated, as there was no completion of the contract. Hence the

creditor had no charge upon the property. With regard to the 110 the learned judge held

that when the compromise was made and the amount was paid there was no receiver appointed

to receive it, as at that date the security for the appointment had not been given. The

learned judge had thus disposed of the claims of the creditor. By way of obiter, he went

on and said, at p 663:

31 18. It should be noted that in that case the creditor was claiming a lien on the

deposit, but the purchaser was in default and thereby lost his right to recover the

deposit. A deposit is a 'guarantee' or 'security' for the performance of the contract and

subject to the terms thereof is not refundable to the purchaser if the contract goes off

by reason of his default: see Howe v Smith (1884) 27 Ch D 89. On the other hand, where

moneys were paid on account of the purchase price, as distinguished from a deposit, then

subject to the terms of the contract, such moneys are recoverable by the purchaser: see

Mayson v Clouet and anor < 1924 > A C 980.

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33 20. In Frankcombe v Foster Investments Pty Ltd < 1978 > 2 NSWLR 41, the purchaser

on execution of the sale and purchase agreement paid to the vendor a deposit and later in

consideration of the vendor giving an extension of time to complete the purchase paid a

further sum on account of the purchase price. The purchaser did not complete the purchase,

and the vendor rescinded the contract. Holland J of the Supreme Court of New South Wales

held that the purchaser had repudiated the contract which entitled the vendor to rescind

the contract and the vendor had validly rescinded the contract, and in respect of the

caveat lodged by the purchaser claiming interest 'as purchaser' the learned judge held

that the purchaser had no reasonable cause for lodging such caveat, as it had repudiated

the contract. However, his Honour said obiter at p 57:

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35 Mr Mason submitted that the provision in cl.16 entitling the vendor to hold purchase

money as security for damages was incompatible with any such lien. I think that the only

incompatibility would be in reation to enforcement of the lien, not its existence. The

vendor, in a particular case, may be unable to prove damages or may prove an amount less

than the moneys held by the vendor. Clause 16 is reconcilable with a lien, if it operates

merely to postpone enforcement of the lien until damages, if any, have been awarded. <

Emphasis is ours >

36 21. This passage of the judgment of Holland J was followed by Kearney J also of the

Supreme Court of New South Wales in Cox v Parker < 1987 > NSW (SC) 11,208. There,

the purchaser paid a deposit and a further sum of $20,000 to account of the purchase price

pursuant to the contract. He defaulted and the vendor terminated the contract. The

purchaser lodged a caveat claiming a lien on the land for the payment of the $20,000.

Kearney J held that despite his default, the purchaser was entitled to the lien and

accordingly had the requisite caveatable interest. He said at p 11, 213:

37 The learned judge later said, at p 11, 214:

38 I consider that there is substance in the submissions advanced by the defendant on this

question. I find further support for the submission in the views expressed by Holand J in

Frankcombe v Foster Investments Pty Ltd < 1978 > 2 NSWLR 41 at 57. I consider that

his Honour's statement at p 57 to be consistent with the principle where his Honour says:

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43 23. We agree entirely with this statement of the law. The purchaser's lien is

essentially an equitable one, which has been developed to achieve substantial justice

between the parties. In Whitbread & Co, Limited v Watt < 1902 > 1 Ch 835, 838

Vaughan Williams L J said:

44 And in Hewett and ors v Court and anor (1982-1983) 149 CLR 639 at p 645 Gibbs CJ said:

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46 Clause 6(3) of the agreement

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48 While < an equitable lien > arises by implication of some equitable doctrine

applicable to the circumstances, its implication can be precluded or qualified by express

or implied agreement of the parties.

49 25. It is convenient at this stage to set out cl 6(3) which is as follows:

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54 (d) each party hereto shall pay its own costs in the matter.

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63 What is contended for on the < appellant's > part comes to this: 'Never mind that

the vendor has not paid as required under para (b). It can still go ahead and deal with

the shop unit as if there has never been any lien for the money it has not paid and will

not pay.' If para (a) is to have this effect I would have thought that a conveyancer would

have used a familiar expression such as freed and discharged from any lien for any money

payable by the vendor hereunder rather that the fiction as if this Agreement had not been

entered into . If the agreement had not been entered into no part of the purchase money

would have been paid in the first place and whatever money the vendor now holds without

any deduction and without any part of it being forfeited must have been received to the

use of the purchaser.

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68 32. The learned judicial commissioner in the course of his judgment (at p 103)

distinguished Bestland Development Pte Ltd v Lai-Tan Holdings Pte Ltd on the basis that in

that case the caveator being a creditor of the purchaser claimed interest in the caveat as

a chargee of the purchaser's interest qua a purchaser. Hence, when the sale and purchase

agreement went off, the purchaser no longer had an interest in the unit qua a purchaser.

It is true that in that case from the terms of the caveat lodged by the creditor such was

the nature of the creditor's claim. It is also true that where a purchaser has repudiated

the contract he no longer has an interest in the property qua a purchaser. His interest in

such case, if any, is a lien for the purchase moneys that have been paid: see Virginia

Developments Pte Ltd v Behem Investment Pte Ltd < 1988 > 2 MLJ 273, 276.

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73 36. On the other hand, para (b) imposes a clear and absolute obligation on the vendor

to refund to the purchaser the residue; it gives a corresponding right to the purchaser to

the residue. The purchaser's claim to the residue is one under the agreement under the

same clause which gives to the vendor the right to deal with or otherwise dispose of the

property. Thus para (b) expressly preserves the purchaser's entitlement to the residue and

thereby secures their lien for the residue. Hence, as between the vendor and the

purchaser, the latter has a lien on the property for the residue and this lien continues

to subsist until the vendor in fact deals with or otherwise disposes of the property. But

upon such dealing with or disposal of the property by the vendor, the purchaser by virtue

of the lien is entitled to the proceeds of such dealing or disposal to the extent of the

residue: his interest as lienholder lies in amount of the esidue: see Chip Thye

Enterprises Pte Ltd v The Development Bank of Singapore Ltd < 1994 > 3 SLR 613 where

the lienholder was held entitled to the balance of the proceeds of sale remaining in the

hands of the mortgagee after the discharge of the mortgage debt.

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75 Trustee for the purchaser in respect of the latter's lien

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81 Conclusion

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