Businessman wanted out of car showroom deal, loses $1.7 million deposit

The car showroom in Leng Kee Road was sold by Pacific Motor Credit to Mr Cheong's company, The One Suites, in 2012.
The car showroom in Leng Kee Road was sold by Pacific Motor Credit to Mr Cheong's company, The One Suites, in 2012.PHOTO: SHIN MIN DAILY NEWS

His firm should have done more to secure approval of deal: Judge

A businessman who wanted out of a $16.8 million deal to buy a car showroom was ordered to forfeit his $1.68 million deposit instead.

Mr Cheong Sim Lam had argued that the National Environment Agency (NEA) and the Housing Board (HDB) did not give the approval needed for the change in ownership.

But the High Court decided that he should have done more to convince the government bodies into saying "yes".

The case involved a swanky showroom unit in Leng Kee Road, which was sold by Pacific Motor Credit to Mr Cheong's company, The One Suites, in 2012.

But before HDB's consent to the transfer could take place, NEA's approval was needed to address any pollution control issues in relation to unit use.

HDB also sought a business plan from One Suites to discuss the proposed use of the site.

When the company sought NEA's approval to use the premises as a car showroom and motor workshop in August 2012, it was rejected.

NEA pointed out that the long-term land use for the area was residential.

But Pacific had appealed, and persuaded NEA to change its mind, noted Judicial Commissioner Edmund Leow.

One Suites, represented by lawyer Michael Palmer, argued this happened only after the date set to complete the sale.

And this allowed the company to rescind the contract and seek a refund of the $1.68 million deposit paid.

But the judge made clear One Suites had an implied duty to undertake all reasonable steps to help complete the deal.

If the authorities had already considered all possible arguments, and clearly said "no", then it would have to be reasonable not to attempt an appeal.

But this was not the case here, said the judge, in a decision earlier this month.

Instead, One Suites had lost interest in buying the property and was looking for a chance to rescind the contract.

The $1.68 million paid by One Suites was meant as a security deposit to ensure it abided by the contract.

As Mr Cheong's company had breached the contract, Pacific, which was defended by lawyer Albert Balasubramaniam, was entitled to keep the deposit, ruled the judge.

But he declined Pacific's counter-application to order One Suites to go through with the sale, ruling it was inappropriate for the court to use its discretion in the circumstances of the case.

vijayan@sph.com.sg