[1999] SGHC 70

In the High Court of the Republic of Singapore

[1999] SGHC 70

Suit 1844/1998, RA 623/1998

Between

MP-Bilt Pte Ltd

… Plaintiff

And

Oey Widarto

… Defendant

grounds of decision

Contract — Contractual terms — Implied terms; Contract — Remedies; Contract — Remedies — Specific performance

This judgment is subject to final editorial corrections approved by the court and/or redaction pursuant to the publisher’s duty in compliance with the law, for publication in LawNet and/or the Singapore Law Reports.

MP-Bilt Pte Ltd v Oey Widarto

[1999] SGHC 70

Suit 1844/1998, RA 623/1998
G P Selvam J
26 March 1999

1 GP SELVAM J

2 The action

4 This case concerns an agreement for the sale and purchase of a flat in a condominium development called Ardmore Park which is presently under construction. It proposes to comprise 330 flats in three blocks. It is a billion dollar project. Only the affluent can afford to purchase the flats. The plaintiffs, the developers, brought this action to recover an unpaid progress payment from the defendant, the purchaser of one flat. They applied for summary judgment. The defendant is resisting the claim. The application was rejected and the defendant was given unconditional leave to defend. The reason for the resistance is novel and I have to defer stating it until after I have stated the background facts.

5 The facts

7 The agreement was made on 16 August 1996. It is in a form familiar to conveyancing lawyers. The area of the flat is stated to be 268 sq m, that is about 2,888 sq ft It is at the sixth level. The purchase price is $4,860,398 which works out to about $1,683 per sq ft.

13 Application for summary judgment

15 They have chosen a third alternative: they have sued the purchaser for payment of the first instalment based on the completion of foundation work. Then they sought summary judgment under O 14 for the sum of S$486,039.80 and interest on it.

18 2. The principles of sale and purchase should apply.

19 3. We have not breached the agreement because of an implied term.

20 4. Even if there was a breach, it is an anticipatory breach as it is an executory contract.

21 5. As a matter of public policy, it should be ventilated at trial.

22 White and Carter (Councils) Ltd v McGregor [1962] AC 413 and a number of additional authorities. The points raised by these authorities were novel. In the end, the court below was persuaded to give unconditional leave to defend on the ground that `this is in fact a claim for specific performance and it has not been pleaded as such in the statement of claim`.

24 Order 14 on points of law

26 Before I proceed to consider the merits of the application, I propose to make a brief reflection on O 14 proceedings. In Hua Khian Ceramics Tiles Supplies Pte Ltd v Torie Construction Pte Ltd [1992] 1 SLR 884 a rule of practice was stated to the effect that the courts should make a robust approach when considering applications for summary judgment particularly in commercial and construction cases where cash flow is the life blood to make commerce work. The rigour of that rule is being applied to good end. It has earned good reputation for Singapore.

27 The Supreme Court Practice 1999 para 14/4/12 headed `Questions of Law`.

Where the court is satisfied that there are no issues of fact between the parties, it would be pointless to give leave to defend on the basis that there is a triable issue of law, and this is so even if the issue of law is complex and highly arguable.

28 European Asian Bank AG v Punjab and Sind Bank (No 2) [1983] 2 All ER 508[1983] 1 WLR 642 (CA), Israel Discount Bank of New York v Hadjipateras [1983] 3 All ER 129[1984] 1 WLR 137 and more recently in Stocznia Gdanska v Latvian Shipping Co [1998] 1 All ER 883[1998] 1 WLR 574, where the House of Lords decided a point raised in an O 14 application. This practice has been approved and applied by the Singapore Court of Appeal in Tokyo Investment Pte Ltd & Anor v Tan Chor Thing [1993] 3 SLR 170 .

29 Implied terms must be reasonable, necessary and consistent with express terms

31 Now I shall consider the objections raised by the defendant. First this implied term. The defendant says that :

it was an implied term of the agreement and/or there was a common understanding or intention between the plaintiffs and the defendant that the defendant could defer payment of the instalment set out, inter alia, in cl 3(1)(b) of the agreement provided:

(a) the defendant pays to the plaintiffs all interest payable under cl 5(1) and 5(2) of the agreement; and/or (b) the plaintiffs did not accept the defendant`s failure to pay the said instalment within 14 days of the defendant`s receipt of the plaintiffs` notice in writing as a repudiatory breach of the agreement.

32 Liverpool City Council v Irwin [1977] AC 239 at 253 (HL) Lord Wilberforce said that the courts would be `willing to add a term on the ground that without it the contract will not work`. In Gyllenhammar International Ltd v Sour Brodogradevna Industrija [1989] 2 Lloyd`s Rep 403 at 415 Hirst J said with succinctness: `On well established principles a term would only be implied if it was reasonable, necessary, and consistent with the remainder of the contract.`

34 No duty to act reasonably in the choice of remedies

36 Next the defendant said that the plaintiffs ought to have mitigated damages. So, it becomes necessary to ascertain the law on the point. First, the rules of mitigation do not apply to the innocent party`s choice between different remedies open to him following the other party`s breach of contract: he is not bound to act `reasonably` in exercising his choice. See Chitty on Contracts (27th Ed) para 26-059. In Tredegar Iron and Coal Co (Ltd) v Hawthorn Brothers and Co [1902] 18 TLR 716, at pp 716-717 Collins MR gave a lucid statement of the law:

The plaintiffs could not maintain an action for damages except upon the footing that the contract had been broken. It was clear law that the repudiation was a nullity unless it was accepted by the other party to the contract. If the other party chose to treat the repudiation as a breach, then matters proceeded on the footing that there had been a breach and the damages must be assessed as for a breach on that date, and he would be bound to act reasonably in the circumstances, that was to say, to take advantage of any mitigating circumstances there might be. All the discussions as to how the damages were to be mitigated rested on the foundation that there had been a breach of the contract. The argument came to this, that the plaintiffs ought to have treated the repudiation as a breach, and that it was unreasonable in them not to have so treated it, seeing that the market was then a rising one. There was no foundation in the authorities for that proposition.` [Emphasis here and hereafter supplied.]

38 No duty to mitigate before breach. No duty to mitigate when debt is claimed

40 Common sense and authorities affirm the principle that there is no duty to mitigate where a debt is claimed. A creditor is entitled to recover a debt and it is independent of his duty to mitigate damages if and when he accepts a breach by the other party.

41 after the breach. By definition a debt is a sum of money fixed by the contract for the completed performance of a given obligation while the contract is alive. Damages arise and flow from a breach. It follows that once a debt has crystallized there is nothing for the creditor to mitigate. Once a debt always a debt. After a debt has fallen due the debtor cannot decide to dishonour it and convert it into damages. There being no claim for damages no duty to mitigate can arise. Instalments which have already accrued and due are recoverable as a debt even if the contract is rescinded subsequently. See White and Carter (Councils) Ltd v McGregor [1962] AC 413 at 445 (HL) and Stocznia Gdanska SA v Latvian Shipping Co [1998] 1 All ER 883[1998] 1 WLR 574(HL)

42 Workman, Clark & Co Ltd v Lloyd Brazileno [1908] 1 KB 968 the plaintiffs by a contract agreed to construct a ship. The agreed price was 89,800. It was payable in five instalments based on the completion of different stages of construction. When the first instalment fell due after due performance by the plaintiffs, the defendants failed and refused to pay it. They sought judgment under O 14 for the instalment amount on the ground that it was for `a debt or liquidated demand in moneys`. The defendants objected that it was not a claim for `a debt or liquidated demand as money`. They said that when a sum is payable in instalments an action of debt would not lie for one or more instalments before the whole is due - that is until the entire performance is completed. It was argued that the claim arising upon default in payment of such an instalment was a claim for damages and not a liquidated sum. The objection was overruled by the Master, the judge and the Court of Appeal. It was held that the claim was for `a debt or liquidated demand for money`. It was not a claim for damages.

I agree that, upon the true construction of this contract, it contains separate promises to pay five several sums on the happening of five several events. If that be so, it can make no difference that all the promises are contained in one document. But, even if, on its true construction, it must be regarded as one contract to pay the whole of the sum named as the price of the ship by five instalments, each instalment is to become due and payable upon the happening of the particular event specified in that behalf by the contract, eg the first instalment is to become payable upon the laying of the keel of the ship. In my opinion the claim for that instalment upon the happening of that event is a liquidated demand in money within the meaning of O III r 6: It has been argued that technically the claim arising upon default in payment of such an instalment is a claim for damages, and not for a liquidated sum. I confess that I cannot follow this argument.

It is, however, suggested that, by reason of some rule of law to be deduced from the old authorities as to the action of debt, or the principle upon which they were founded, the claim in this action is not for a `debt or liquidated demand in money` within the meaning of O III r 6. I cannot take that view. One knows that, in the case of contracts of this kind, eg contracts for the construction of ships or buildings, where the contractor has to incur heavy expenditure for labour and materials to be used in the work contracted for, it is the practice to insert provisions, such as were inserted in the present case, for payment of the contract price by instalments as the work proceeds, and I cannot understand why, or on what principle, the claim for such an instalment, when it becomes due according to the terms of the contract, should not be regarded as `a liquidated demand in money` within the meaning of O III r 6. It seems to me to answer exactly to the description contained in the rule as being a liquidated demand in money payable by the defendant under an express contract. The suggestion made, as I understand it, was that, because, in such a case, the shipbuilder, still having the ship, so far as she is built, in his hands, may be later on, if the purchaser finally makes default in carrying out his side of the contract, be in a position to dispose of the ship, possibly at a profit, the claim in respect of this instalment must be one for unliquidated damages only, and therefore is not within the words of the rule. I am unable to assent to this suggestion. It seems to me clear, from a business and common-sense point of view, that, if, in consideration of the shipbuilder`s finding materials and labour and carrying out the work of building the ship up to a certain stage, the purchaser agrees, when the work has reached that stage, to pay him a certain sum in cash, that is an express contract to pay a liquidated sum in that event, and within the meaning of the rule, and that it makes no difference in principle that four other instalments of the price of the work are subsequently to become payable on other events. I think that this contract is for the present purpose to be regarded as an express contract to pay five different liquidated sums of money upon five different events.

46 No duty to mitigate by discontinuing contractual performance

48 In White and Carter (Councils) Ltd v McGregor [1962] AC 413, Mr McGregor, the defendant, was a garage proprietor. White and Carter (Councils) Ltd, the plaintiffs, were advertising contractors. An agreement was made between them for the plaintiffs to display advertisements for his garage for three years. There was a default acceleration clause by which if any instalment, being due for payment, remained unpaid for a period of four weeks, the whole sum payable under the contract would fall due for payment. The contract was headed by a warning notice that it was not to be cancelled by Mr McGregor. The contract further provided that the contract was not subject to `countermand` by Mr McGregor. The defendant repudiated the agreement the very day it was made by saying that it was made without his authority. He was held to be wrong. The plaintiff did not accept the repudiation and thereby annul the agreement. They kept it alive. They went ahead and displayed the advertisement on litter bins as they had undertaken to do. After complete performance they sued for the full contract price. Be it noted that the plaintiffs` claim was not for damages or specific performance. It was `for a debt due under contract made for good consideration`. There was not even the faintest suggestion that it was in the nature of specific performance. The defendant contended that since he `repudiated the contract before anything was done under it the plaintiffs were not entitled to perform it and sue for the contract price, but can only sue for damages. The company did not sue for damages and so the action must be dismissed`. It would be well nigh impossible to quantify the damages in a case like that. This practical difficulty was not addressed by the defendant. His argument was made at an abstract level based on emotion. No principle of equity was invoked. Mr McGregor relied on a line by Portia in The Merchant of Venice and made the emotive pitch: `What the appellant company is seeking is its pound of flesh.`

It is trite that equity will not rewrite an improvident contract where there is no disability on either side. There is no duty laid upon a party to a subsisting contract to vary it at the behest of the other party so as to deprive himself of the benefit given to him by the contract. To hold otherwise would be to introduce a novel equitable doctrine that a party was not to be held to his contract unless the court in a given instance thought it reasonable so to do. In this case it would make an action for debt a claim for a discretionary remedy. This would introduce an uncertainty into the field of contract which appears to be unsupported by authority either in English or Scottish law.

51 Lever Brothers Ltd v Bell [1931] 1 KB 557 at 568: `It is important to uphold the binding force of contracts so far as possible, especially in commercial matters.` And I desire to add that courts should be slow to tinker with clearly worded commercial contracts in the name of discretionary justice.

52 Breach of Contract (2nd Ed, 1991) at pp 407-408 summarises the reasoning of the majority of the House of Lords with startling clarity in five paragraphs. They feature now as five fundamentals relating to repudiatiory breach of contract. The pages where the reasoning appears are indicated by the numbers in parenthesis:

First, a repudiation of obligation does not operate to terminate the performance of a contract, and McGregor could not rely on his repudiation as terminating performance. (444)

Secondly, a repudiation of obligation gives rise to an option: a plaintiff may either elect to terminate the performance of the contract or elect to continue performance. Thus, the appellants could elect to continue performance notwithstanding the right to terminate arising from McGregor`s repudiation of obligation. (427)

Thirdly, the ability to elect in favour of continuation of performance is not limited to situations in which the remedy of specific performance is available, and the fact that the appellants could not have obtained specific performance did not fetter their right of election. (429, 445)

Fourthly, there is no requirement that a promisee act reasonably when making an election, and the appellants did not have to prove that they had acted reasonably when electing for continuation rather than termination. (430)

Finally, the law governing the mitigation of damages is not relevant to an action to recover a debt due under a contract, and the appellants, in claiming the contract price, were doing no more than enforcing their right to recover a debt due. (445)

54 Attica Sea Carriers Corp v Ferrostaal-Poseidon Bulk Reederei GmbH [1976] 1 Lloyd`s Rep 250 (see below) agreed that an innocent party should be adequately compensated. The only compensation for non-payment of a debt is payment of the debt. The innocent party in other words is entitled to that no-loss end and is empowered to achieve it by an action for debt. The contract-breaker cannot escape his contractual liability or limit his liability by repudiating it and insisting that such repudiation be accepted by the innocent party. That is the immutable decisional law of England and Singapore.

55 White and Carter by implication affirmed the principle that the duty to mitigate affects only a claim to damages and not debt. In that case the claim was for a debt. It was argued for the defendant that the plaintiffs` claim in reality was that the defendant in respect of his repudiation and breach of contract was liable in damages . In other words by his own breach he converted the claim in debt to a claim in damages. The minority view was that the plaintiffs should have mitigated damages by not proceeding with the performance of the contract. This was rejected by the majority who held that the claim was in debt. Be it noted again that the plaintiffs had performed the contract unilaterally.

57 Lord Reid`s doctrine

59 I shall now consider the principal argument advanced before the court below and me that the plaintiffs were obliged to accept the defendant`s repudiation. The germ of that argument is a dictum of Lord Reid in White and Carter . He said:

It may well be that, if it can be shown that a person has no legitimate interest, financial or otherwise, in performing the contract rather than claiming damages, he ought not to be allowed to saddle the other party with an additional burden with no benefit to himself. If a party has no interest to enforce a stipulation, he cannot in general enforce it: so it might be said that, if a party has no interest to insist on a particular remedy, he ought not to be allowed to insist on it.

If I may revert to the example which I gave of a company engaging an expert to prepare an elaborate report and then repudiating before anything was done, it might be that the company could show that the expert had no substantial or legitimate interest in carrying out the work rather than accepting damages: I would think that the de minimis principle would apply in determining whether his interest was substantial, and that he might have a legitimate interest other than an immediate financial interest. But if the expert had no such interest then that might be regarded as a proper case for the exercise of the general equitable jurisdiction of the court.

62 Attica Sea Carriers Corp v Ferrostaal-Poseidon Bulk Reederei GmbH [1976] 1 Lloyd`s Rep 250, 255; Gator Shipping Corp v Trans-Asiatic Oil Ltd SA [1978] 2 Lloyd`s Rep 357, 372-374; Clea Shipping Corp v Bulk Oil International Ltd [1983] 2 Lloyd`s Rep 645. In Stocznia Gdanska SA v Latvian Shipping Co [1996] 2 Lloyds Rep 132 (CA) Straughton LJ posed this question at p 138: `Is an innocent party bound to treat a contract as repudiated, if he has no legitimate interest in future performance?`. The Lord Justice provided the following answer:

This doctrine stems from a passage in the speech of Lord Reid in White and Carter (Councils) Ltd v McGregor [1962] AC 413 at p 431. It has the support of this court in Attica Sea Carriers Corp v Ferrostaal-Poseidon Bulk Reederei GmbH [1976] 1 Lloyd`s Rep 250. It was applied by Mr Alec Kazantsis, a maritime arbitrator where the point does arise from time to time, in Clea Shipping Corp Ltd v Bulk Oil International Ltd (No 2) [1983] 2 Lloyd`s Rep 645, with the approval of Mr Justice Lloyd. I can readily accept that there is such a doctrine.

66 legal obligation or practical compulsion to complete performance of the contract in question and other contracts he has entered into on the basis of the contract in question.

68 Attica Sea Carriers Corp v Ferrostaal-Poseidon Bulk Reederei GmbH [1976] 1 Lloyd`s Rep 250 (CA), the plaintiffs, (Ferrostall) had chartered out their ship Puerto Buitrago to the defendants (Attica) for a period of 17 months. It was by way of a demise charter (a time-charter where the charterer supplies the crew). Six months later the ship broke down. The charterers in breach of their obligation sought to redeliver the ship without repairing it. The owners refused to accept re-delivery. It would have cost an estimated sum of US$2m to repair the ship and the value of the ship after repairs would be about US$1m. The owners lodged the action claiming hire at $46,000 a month until the vessel was repaired and re-delivered. Thus the primary purpose of the action was to compel the charterer to have the ship repaired. The secondary claim was in respect of unaccrued moneys being hire payable after the failure to repair. In effect, therefore, it was for specific performance of the obligation to repair the ship. Next the claim was for future hire and not an accrued debt. The claim was not for an accrued debt because the ship had not performed any service after it broke down. The owners were prepared to accept re-delivery only after repairs. The owners thus were seeking to unjustly enrich themselves by attempting to go far beyond a no-loss position. It was held on the facts of that case that the owners had actually accepted the repudiation. They were, therefore, rightly denied the remedy they sought and directed to recover damages. In this case we are in an entirely different realm.

69 White and Carter was not relevant to the Attica case. In Attica there was no claim for an accrued debt as it was in White and Carter . Additionally in Attica there was a finding that the owners had accepted the charterers` repudiation in that there was an effective redelivery of the ship to them. The ship was no longer in the charterers` possession. The owners` insistence that the charterers must repair the ship in effect meant that the owners were seeking an order for specific performance of the obligation to repair and continue to pay hire even though they no longer had possession of the ship. The ship was not earning hire. The future hire would form part of the compensation the owners would be entitled to under principles enunciated in Interoffice Telephones Ltd v Robert Freeman Co Ltd [1958] 1 QB 190 (CA), and Yeoman Credit Ltd v Waragowski [1961] 3 All ER 145[1961] 1 WLR 1124. Lord Denning MR with whom Orr LJ and Browne LJ concurred, decided against the owners. Lord Denning took the opportunity to make his critical comment on White and Carter . He spoke with his customary exuberance at p 255:

The House of Lords, by a majority of three to two, held that they were entitled to do so. The decision has been criticized in a leading textbook ( Cheshire & Fifoot, pp 600 and 601). It is said to give a `grotesque` result. Even though it was a Scots case, it would appear that the House of Lords, as at present constituted, would expect us to follow it in any case that is precisely on all fours with it. But I would not follow it otherwise. It has no application whatever in a case where the plaintiff ought, in all reason, to accept the repudiation and sue for damages - provided that damages would provide an adequate remedy for any loss suffered by him. The reason is because by suing for the money, the plaintiff is seeking to enforce specific performance of the contract - and he should not be allowed to do so when damages would be an adequate remedy.

71 The Alaskan Trader; Clea Shipping Corp v Bulk Oil International Ltd (No 2) [1983] 2 Lloyd`s Rep 645 is somewhat similar. There was a time charter. The ship broke down. The owners repaired the ship and sought to deliver the ship into the charterer`s service. The charterer refused delivery and thereby repudiated the contract. The owners left the ship to idle with a full crew also idling on board. The owners at first drew hire from a letter of credit. Then the owners paid the hire `without prejudice`. It was held that they were not entitled to the hire for the entire period during which the vessel was not under actual service. Lloyd J relied on Lord Reid`s doctrine in White and Carter . Their entitlement was restricted to damages and subject to the rules governing mitigation. The result of the decision was entirely consistent with the principle of Interoffice Telephones and Yeoman Credit cases. It was not a case on an accrued debt. The present case is in an entirely different realm.

72 Stocznia Gdanska SA v Latvian Shipping Co the appeal concerned decisions by four judges: Clarke J, Waller J, Longmore J and Colman J. Only one point of decision made by Clarke J is relevant to the present case. Lord Reid`s doctrine was not really relevant to the case since the repudiation had been accepted by the innocent party. It concerned a shipbuilding contract. It arose from a humble O 14 application. The plaintiffs were shipbuilders. They entered into six contracts to build six ships for the defendant buyers. Under each contract the price was payable in instalments. Work was begun on the ships. The buyers failed to pay the instalments due on keel-laying of two hulls. The plaintiffs rescinded the contracts and sued for damages in addition to the unpaid instalments. They applied for summary judgment for those claims. The defendants objected on the ground that the provisions in the contracts precluded the plaintiffs from recovering the unpaid instalments as they formed part of the damages. Clarke J granted them summary judgment for both. The Court of Appeal allowed the buyers` appeal from Clarke J on the ground that once the contracts were rescinded the innocent party`s rights were exclusively governed by the contract and the unpaid second instalments (although recoverable at common law) were not recoverable. On further appeal to the House of Lords it was held that the unpaid instalments of the price which had already accrued due were recoverable. The contract did not contain clear words to annul the accrued right to recover unpaid instalments of the price as a debt at common law. Lord Lloyd said at p 597:

The right to claim the keel-laying instalment had already accrued before the plaintiffs rescinded the contracts. It would take very clear language to deprive the plaintiffs of their right to recover those instalments in debt. I do not find such language in cl 5.05(2). The right to retain instalments which have already been paid does not exclude the right to recover instalments which have not been paid. I can see no purpose in drawing a distinction between paid and unpaid instalments, provided the instalments have fallen due under cl 5.02. The crucial distinction is between instalments which have fallen due (whether paid or unpaid) and instalments which have not fallen due. As will be seen, the remaining provisions of cl 5.02 work sensibly and fairly on that basis.

73 Stocznia lost their common law rights, was applied to the present case the plaintiffs in the present case by not rescinding would be in an even stronger position. The defendant cited the Stocznia case to support his stand on the repudiation point. In the end he was hoisted by his own petard. The relevant ruling on the accrued instalment unconditionally favours the plaintiffs` claim in this case.

74 Centex Homes Corp v Eugene H Boag & Anor [1974] 128 NJ Super 385. The plaintiffs were the developers of a condominium comprising more than 3,000 units. The defendants, Mr and Mrs Boag, signed a contract for the purchase of one apartment and paid $525 as deposit. Then they gave a cheque for $6,870. The two sums amounted to 10% of the purchase price. Then Mr Boag was transferred to a far away place. Mr Boag stopped payment and thereby repudiated the contract. The plaintiffs sued Mr and Mrs Boag for specific performance of the entire purchase agreement or, in the alternative, for liquidated damages. Be it noted that it was not a claim for a debt which had fallen due by reason of performance. The court held that under their law the remedy of specific performance was not available for the sale and purchase of a condominium house. Damages sustained by the developers were readily measurable and the damage remedy at law was wholly adequate. The alternative claim was dismissed on the basis of the peculiar wording of the contract. We are in a different world. Before me there is no claim for specific performance of the entire contract or part of a contract. What is before me is a claim for a debt which has fallen due by reason of the performance by the plaintiffs. Additionally, I do not believe the law of Singapore to be that specific performance is not available in respect of condominium units or HDB flats. That issue is not before me and accordingly I make no decision on it.

75 The issue of pleadings

77 It was held that the claim in the present case was for specific performance. By implication the statement of claim did not disclose a cause of action in debt. This is a startling proposition and requires a detailed discussion. From time out of mind under common law it was possible to obtain an order for specific performance of an obligation to pay a debt. To be sure, the only contractual obligations which at common law could be enforced by specific performance were those consisting debts. For everything else the remedy was damages. In practical terms, its significance was the mode of execution. It was given effect by the arrest and incarceration of the debtor. Even the admiralty court followed this procedure - the debtor and not the ship was arrested. Under the common law procedure of specific performance, debtors` prisons were overflowing. Gaolers had a field day torturing and tormenting debtors who in the fit of things were moneyless in order to extract moneys. Their monstrosity was a public scandal. Even the compassionate court of equity was unable to ameliorate their lot. Eventually mitigation came from Parliament. Arrest and imprisonment for debt were done away with in stages. The Debtors Act 1869 drove the last nail into the coffin. Section 4 of the Debtors Act pronounced that `with the exceptions hereinaftermentioned, no person shall be arrested or imprisoned for making default in payment of a sum of money.` Thereafter a debtor could not be taken in execution. Instead only his property was subject to execution. Paradoxically, when equity made an order of specific performance for payment of money or other obligations, it was enforced by the harsh remedy of committal. Thus equity imitated the common law by incarcerating debtors when it was no longer possible under common law.

81 Summary judgment for specific performance in Singapore

83 Now is a good moment to attend to Excelsior Hotel Pte Ltd v Hiap Bee (Singapore) Pte Ltd [1989] 2 SLR 902 . It concerned two sale and purchase agreements in respect of two shop units. The price was to be paid in instalments in accordance with the progress of the construction of the project. The agreements contained provisions in substance similar to cl 5 in this case before me. The purchasers defaulted in the payment of some instalments. The project was completed notwithstanding the purchasers` failure to pay some of the instalments. Upon inspection of the court file I found that the price of one unit was $363,800 and the other was $465,000. The outstanding amount on one was $60,000 and the other was $93,000, exclusive of interest. Vacant possession was offered but was not taken up. The vendors gave the required notice to complete but to no avail. So they issued a writ and then a summons seeking summary judgment for specific performance of the entire contract and liberty to exercise vendor`s lien by sale in case of default. What is the same thing, they wanted the purchasers to pay the outstanding instalments and service charges and complete the conveyance.

In any action begun by writ indorsed with a claim for specific performance of an agreement for the sale and purchase of any property with or without an alternative claim for damages or for rescission of such an agreement or for the forfeiture or return of any deposit made under such an agreement the plaintiff may, on the ground that the defendant has no defence to the action apply to the court for summary judgment.

85 Excelsior case had to be made under O 81 of the 1970 Rules. However, a developer was and is not under an obligation to ask for specific performance when only he has a debt claim. He should not ask for specific performance in such a case. Applications for summary judgment for specific performance can be made under O 14 of the Rules of Court 1996. This court is obliged to operate the present O 14 as it finds it. See The August 8th [1982-1983] SLR 32 [1983] 1 MLJ 281 ; sub nom The August 8 [1983] 2 AC 450 (PC).

86 Excelsior , it was argued by the purchaser that the remedy of specific performance was excluded by a clause in the agreement. The court disagreed and granted an order for specific performance within 28 days from the date of the order. There was also a declaration that the vendor had a lien on the units for the balance amount due. Finally the vendor was given liberty to apply to enforce the lien in the event of default in making payment of the amounts. The decision in Excelsior related to the special facts of the case. There was no claim for debt in that case because it was not an application under O 14. Besides Excelsior, there are many cases where the actual remedy sought was specific performance where the principles governing specific performance were applied. In all those cases there was no claim based on debt. MacQuarrie v A-G of Nova Scotia [1972] 32 DLR 603 was a case where the equitable remedy of specific performance was sought. Centex Homes Corp v Eugene H Boag [1974] 128 NJ Super 385 was another case where specific performance was sought. In all these cases the substantive principles governing that relief were rightly applied. The case before me is in a different universe.

87 Summary of propositions of law

89 It is now appropriate to summarise the law governing the rights of an innocent party in the case of a repudiatory breach by the other (the contract-breaker`). I propose to state it as propositions of law.

90 Commercial Law by Roy Goode (2nd Ed), p 119.

91 The Solholt; Sotiros Shipping Inc v Solholt Shmeiet [1983] 1 Lloyd`s Rep 605 at pp 608-609 (CA), White and Carter (Councils) Ltd v McGregor [1962] AC 413 and Fercometal SARL v Mediterranean Shipping Co SA [1989] AC 788.

92 Howard v Pickford Tool Co Ltd [1951] 1 KB 417 at 421, White and Carter (Councils) Ltd v McGregor [1962] AC 413, Interoffice Telephones Ltd v Robert Freeman Co Ltd [1958] 1 QB 190 (CA) and Overstone Ltd v Shipway [1962] 1 All ER 52[1962] 1 WLR 117 (CA).

93 McDonald v Dennys Lascelles Ltd [1933] 48 CLR 457, Workman, Clark & Co Ltd v Lloyd Brazileno [1908] 1 KB 968, Overstone Ltd v Shipway [1962] 1 WLR 117 (CA), White and Carter (Councils) Ltd v McGregor [1962] AC 413 and Stocznia Gdanska SA V Latvian Shipping Co [1998] 1 WLR 574.

94 Application of the law

96 The plaintiffs in this case have brought this action to recover a debt - an agreed sum of money which has unconditionally fallen due by reason of a prior promise contained in a contract. The action is brought to convert the contractual debt into a judgment debt so that they can avail themselves of the various modes of execution processes. The relief they have sought is not specific performance in the procedural or substantive sense of the expression. There is no law which requires them to give up their cause of action in debt and seek another relief. There is no defence to their claim based on debt. The defendant has not raised any valid point in opposition to the claim in debt. The allegations of hardship are all based on his distorted view of the plaintiffs` claim. It is precisely because the plaintiffs have not asked for the relief of specific performance and have chosen to sue on debt that they must succeed. This is not a claim in damages. Accordingly no duty to mitigate damages arises. They require the money to proceed with and complete the construction. The contract is structured on that basis. The Housing Developers (Control and Licensing) Act approves of their collecting and using the progress payments for the purpose of the construction and expenses related to the project. The Housing Developers (Project Account) Rules spell out the procedure for the collection and utilisation of the progress payments for the purpose of foundation works, soil investigation and construction of the building project. The progress payment may also be used for purposes of repayment of any loan for the construction of the building project and the interest and other charges on the loan. It is therefore imperative that the purchasers act reasonably and seasonably in discharging their financial obligations as stipulated in the agreement. On the true construction of the agreement and application of the law and the logic outlined above the defendant has not raised any plausible defence or bona fide triable issue.

99 Conclusion

100

101 By reason of the matters discussed above and by way of conclusion I say this: the defendant in this case asks this court to decide this case by his lights. The court, however, is duty-bound to decide it by the lights of the law. And by the lights of the law there will be judgment in favour of the plaintiffs for the amount claimed with contractual interest and costs.

G P Selvam J

Engelin Teh SC, Jill Tan and Thomas Sim (Engelin Teh & Young) for the plaintiffs/appellants
Ernest Lau and Thio Shen Yi (Thio Su Mien & Partners) for the defendants/ respondents