Property option fee: Woman loses appeal

PHOTO: Property option fee: Woman loses appeal
Above photo is The Swettenham Road property involved in the case, which lawyers say points to a need to clarify in any option-to-purchase contract whether the deal takes effect only after the option fee is paid.

A housewife submitted a cheque to pay a 1 per cent option- to-purchase fee concerning a $27.6 million Swettenham Road bungalow.

But the cheque for $276,000 bounced and the seller sued Madam Leong Miew Fong for the fee payable.

She did not file her defence in the case and the High Court ordered her to pay the $276,000 by default.

She applied to the High Court last month to set aside the judgment but did not succeed.

Yesterday, she failed in her appeal to avoid paying the fee even though the sale had been aborted.

In March, she had forwarded a cheque signed by her husband to the seller Swettenham19, a private firm dealing in real estate.

The option-to-purchase fee would give her the right to proceed with the acquisition of the 16,800 sq ft double-storey property near the Botanic Gardens.

But the cheque bounced as funds which her husband had expected to come into his bank account did not arrive, according to court documents filed.

In April, Swettenham19 sued Madam Leong for the fee and won.

Last month, Assistant Registrar Kevin Tan dismissed her move to set aside the outcome, pointing out that her failure to pay the fee did not prevent the seller from enforcing the option-to-purchase transaction, based on the terms of the valid contract. 

She appealed yesterday before Justice Tay Yong Kwang and said in court documents that she did not file a defence to the suit earlier because she was keen to negotiate and seek an amicable settlement with the owner.

She further claimed she did not want to "antagonise" the owner and had hoped the property would not be sold to another party.

Her lawyer Derek Kang urged the court to set aside the default judgment and allow Madam Leong to file her defence for a full hearing.

He argued the deal as claimed by Swettenham19 was a one-way deal and did not become a contract between both parties as no money had been paid by her.

This was an issue for the court to rule on in a trial, he said.

But lawyer George Pereira, representing Swettenham19, countered that Madam Leong's claim to have sought to settle the dispute amicably and therefore not filing a defence was not borne out by the facts.

He argued she could not take advantage of her own wrong by asserting that there was no contract since no payment was made when the cheque bounced.

Justice Tay agreed and dismissed her appeal with costs.

Lawyers said the case underscores the need to make clear in any option-to-purchase contract whether the deal takes effect only after the option-fee money is paid, to avoid a similar incident.