Land Law

Citation(2013) 14 SAL Ann Rev 426
Date01 December 2013
Published date01 December 2013
Introduction

20.1 The decided cases in the review period helped to further clarify the law in the areas of, inter alia, landlord and tenant, easements, adverse possession and strata title. In the latter, the duty of good faith on the part of collective sale committees and marketing agents was further elaborated upon. In the area of conveyancing, the case law also dealt with the issue of, inter alia, when the remedy of specific performance is available to the vendor.

Leases

Holding over and double rent

20.2 Under s 28(4) of the Civil Law Act (Cap 43, 1999 Rev Ed), a landlord has the option of charging double rent or double value where a tenant holds over after the determination of his or her tenancy. In UDL Marine (Singapore) Pte Ltd v Jurong Town Corp[2013] SGHC 236, the High Court clarified further the law on holding over and double rent. The plaintiff (tenant) was found to have held over from 1 January 2011 (the day following the expiry of the lease) to the date of repossession of the premises by the defendant (landlord) on 4 March 2011. The court rejected the defendant's claim that the holding over period extended beyond 4 March 2011. As the plaintiff had surrendered possession on that date, they no longer had any control over the premises.

20.3 On the issue whether double rent is based on the rent last paid by the tenant or the rent that the tenant would have to pay during the holding over period, the High Court took the view that it was the former. Otherwise, it would be no different from the option of charging double the value.

20.4 Sarawak Machineries Trading Co v Sii Hing Kung[2004] 2 MLJ 213 was distinguished. In that case, as there was an option in the tenancy agreement for renewal at a higher rent, it was held that the relevant rent was the higher rent in the option. In the instant case, there was no such provision.

20.5 In Overseas Union Enterprise Ltd v Three Sixty Degree Pte Ltd[2013] 3 SLR 1, the facts of which are noted below, the High Court held that the plaintiff (landlord) was entitled to recover double the prevailing rent under the relevant clause of the lease. The High Court noted that the only difference between the remedy claimable under s 28(4) of the Civil Law Act and that under the lease was that the latter permitted the plaintiff to recover not just the base rent but also the service charge. The service charge was used for the upkeep and maintenance of the building. The plaintiff incurred these expenses even when a tenant held over unlawfully. In the opinion of the High Court, if doubling the base rent was not a penalty, then doubling the service charge and adding it to the base rent did not make the relevant clause a penalty.

Distress for rent

20.6 This area of the law was further clarified by the High Court in Orchard Central Pte Ltd v Cupid Jewels Pte Ltd[2013] 2 SLR 667. The landlord (Orchard Central) had let two units in a commercial development to the tenant (Cupid Jewels) for the business of jewellery retailing. Subsequently, the parties entered into negotiations for a rental review and for the payment of the rental arrears in instalments. Later, the landlord obtained a writ of distress and seized all the goods found on the tenant's premises, including 576 items of jewellery. The tenant and Forever Jewels Pte Ltd (‘Forever Jewels’) applied for the release of all the distrained jewellery pursuant to ss 16 and 10 of the Distress Act (Cap 84, 1996 Rev Ed) respectively. The tenant's arguments were premised on the grounds, inter alia, that the landlord had failed to make full and frank disclosure to the assistant registrar when making the ex parte application for the writ of distress and that the goods were exempt from seizure under s 8(d) of the same Act. Forever Jewels argued that it was at all times the beneficial owner of the distrained jewellery and the landlord had actual knowledge of this fact.

20.7 In dismissing the applications, the High Court was of the view that the landlord's failure to disclose the background negotiations for a rental rebate and payment of the arrears in instalments would not necessarily justify a setting aside of the writ of distress on that ground alone. The landlord's omission was neither deliberate nor cynical. Furthermore, the subsequent negotiations were only commenced on a without prejudice basis and no unconditional agreement had been reached.

20.8 The procedural requirements in s 5 of the Distress Act were also satisfied. The words ‘due or payable’ therein should be given a plain linguistic construction to refer to a legal obligation to pay for rental under a tenancy agreement. The strict legal obligation to pay advance rental as specified in the lease agreement took effect on the first day of each calendar month without the issuance of a formal demand or notice. Until the offer for a rental rebate had been accepted by the tenant and the condition precedents for the offer satisfied, the accrued legal obligation to pay the full sum under the lease agreement had yet to be extinguished or varied. Based on the available evidence, the actual sum of rental arrears claimed for under the writ of distress was for less than 12 months. There was, accordingly, no substantive irregularity in the writ of distress that would render it void or invalid.

20.9 Although there was no reason in principle why the doctrine of promissory estoppel cannot arise to invalidate a writ of distress issued pursuant to the Distress Act, the High Court found that the doctrine was inapplicable based on the evidence in the case.

20.10 The distrained jewellery was also not exempt from seizure under s 8(d) of the Act. The phrase ‘otherwise dealt with’ therein should be construed as subject to the preceding words ‘carried, wrought, worked up’ under the ejusdem generis canon of construction. In the instant case, the High Court found that the sale of goods by the tenant on behalf of Forever Jewels did not come within the same genus of activities even if the tenant purports to be in the trade or business of ‘retailing’. No services in the course of the tenant's business were actually provided in relation to the jewellery and no work was done on or with the jewellery. The tenant was merely displaying the jewellery for sale at the premises through a particular form of arrangement entered into with Forever Jewels. In the result, the distrained jewellery was not in the tenant's possession ‘for the purpose of being … otherwise dealt with in the course of its ordinary trade or business’ within the meaning of s 8(d).

20.11 Similarly, Forever Jewels was not entitled to the release of the distrained jewellery under s 10 of the Distress Act. It had failed to discharge the burden of showing that the landlord had actual knowledge that the distrained jewellery belonged to Forever Jewels and not the tenant. In addition, in all the circumstances, the necessary inference that must have arisen to a reasonable customer was that the tenant was the owner of the jewellery displayed in the premises and sold solely by them. There was no fixed industry wide custom or practice to show that it was usual and customary in the jewellery retail trade to have goods on consignment.

Equitable set-off

20.12 In Overseas Union Enterprise Ltd v Three Sixty Degree Pte Ltd[2013] 3 SLR 1 (‘Overseas Union Enterprise Ltd’), the plaintiff let to the defendant the 39th floor of its hotel, the Mandarin Orchard, and retained control of the rest of the hotel, including the 38th floor. Disputes subsequently arose between the parties because of the design feature of the 38th and 39th floors. The public passenger lifts in the hotel did not go all the way up to the 39th floor but stop at the 38th floor. The public gains access to the 39th floor only from and through the 38th floor. Owing to the design feature, the defendant could not obtain a fire safety certificate for the 39th floor alone and abandoned its plans to operate a bar/lounge at the said floor. It, however, retained possession of the 39th floor. The plaintiff commenced proceedings against the defendant for, inter alia, payments in arrears and possession of the 39th floor. The defendant did not comply with the plaintiff's demand and counterclaimed for the losses it claimed to have suffered.

20.13 The defendant pleaded the defence of equitable set-off. In holding that equitable set-off was not available to the defendant, the High Court reiterated the principle that a tenant can assert equitable set-off against his landlord if the tenant's cross-claim against the landlord is so closely connected to the landlord's claim for rent as to go to the root of that claim. The tenant can even set up an unliquidated cross-claim for damages by way of equitable set-off. However, a clause in a lease which expressly or by clear words prohibits set-off will be effective to do so (see Batshita International (Pte) Ltd v Lim Eng Hock Peter[1996] 3 SLR(R) 563 at [12]; following British Anzani (Felixstowe) Ltd v International Marine Management (UK) Ltd[1980] QB 137 and Connaught Restaurants Ltd v Indoor Leisure Ltd[1994] 1 WLR 501).

20.14 Having regard to cll 4.1 and 6.1 of the lease which provided, inter alia, for the defendant to pay the base rent and service charge ‘without any demand, set-off, abatement or deduction whatsoever’, the High Court held that this was sufficient to exclude the right to equitable set-off as a substantive defence relying on the authorities of Star Rider Ltd v Inntrepreneur Pub Co[1998] 1 EGLR 53 and Altonwood Ltd v Crystal Palace FC (2000) Ltd[2005] EWHC 292 at [32].

Implied covenants

20.15 In Overseas Union Enterprise Ltd, the facts of which were noted above, the High Court also considered whether the plaintiff was in breach of the implied covenants of non-derogation of grant and of quiet enjoyment. The High Court distilled five principles from the case law as follows (at [60]):

(a) the covenant against non-derogation...

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