Kwon Do Hyeong v Covenson Pte Ltd

Kwon Do Hyeong agreed in December 2021 to buy a penthouse at 8 Ardmore Park from Covenson Pte Ltd for $38.8m. After the government raised the Additional Buyers' Stamp Duty for foreigners from 20% to 30%, he asked for an 18-month option period while he applied for permanent residency. Covenson agreed in return for further payments during the option period. The option, granted on 23 December 2021, provided for an option fee of $388,000.00, Further Payment 1 of $1,552,000.00 and Further Payment 2 of $16,820,000.00, all of which were paid. He also rented and renovated the unit under a tenancy ending on 22 June 2023.

Mr Kwon exercised the option on 17 May 2023 but then told Covenson he would not complete. The contract terminated on 22 June 2023 when he did not comply with a notice to complete, and the unit was vacated only on 21 July 2023, without being reinstated. In HC/OA 1031/2024 in the General Division of the High Court, Mr Kwon sought the return of the two further payments, arguing they were advance part payments of the price that could not be forfeited. Covenson counterclaimed for reinstatement costs and for double rent for the month he held over.

1. Whether the further payments were consideration for the option or advance part payments of the purchase price
2. Whether exercising the option made the further payments refundable when the purchase was not completed
3. Whether Covenson proved its reinstatement costs
4. Whether Covenson had waived, or was estopped from claiming, double rent for the holding-over period

On the nature of the payments, the key question was what had to be paid to keep the option open. The 18-month period was far longer than usual and was requested by Mr Kwon for his own reasons, which kept the property off the market and left Covenson bearing the risk of falling prices and further cooling measures. The payments fell due before the option was exercised, when no sale contract yet existed, so they belonged to the option contract. Following TG Master Pte Ltd v Tung Kee Development (Singapore) Pte Ltd [2024] 1 SLR 690, they were part of the option fee and were fully earned.

On exercise, the court held that consideration paid for an option does not become refundable on non-completion unless the parties agreed otherwise. The recital on security for completion only meant the payments were credited toward the price. There was no total failure of basis, since Mr Kwon got the option and chose not to complete. The deposit framework therefore did not arise.

On reinstatement, Mr Kwon accepted he breached the tenancy, but Covenson's spreadsheet and invoice did not show what damage beyond fair wear and tear the costs related to, so that claim failed.

On double rent under s 28(4) of the Civil Law Act 1909, Covenson's offer to waive double rent was conditional on the unit being vacated and reinstated by 21 July 2023. As it was not reinstated, there was no waiver or estoppel.

The court dismissed Mr Kwon's application and Covenson's counterclaim for reinstatement costs, and allowed Covenson's counterclaim for additional rent of $40,000. It ordered costs of $35,000 and disbursements of $2,855.90 in Covenson's favour, to be paid out of the sums Mr Kwon had paid into court. Mr Kwon has appealed.