Land Law

Citation(2015) 16 SAL Ann Rev 540
Published date01 December 2015
Date01 December 2015
Formalities for agreements for leases

20.1 In Tiananmen KTV (2013) Pte Ltd v Furama Pte Ltd[2015] 3 SLR 433 (‘Tiananmen KTV’), the plaintiffs, who were tenants of premises owned by the defendant, commenced proceedings against the latter, alleging, inter alia, that the defendant's refusal to renew the leases was a breach of collateral contracts made between the parties. The plaintiffs claimed that various verbal representations were made by the defendant's property manager that the leases would continue as long as the defendant did not redevelop the premises into a hotel.

20.2 In dismissing the claim, the High Court found, inter alia, that there were no collateral contracts as alleged by the plaintiffs. The plaintiffs' position that there were collateral contracts was not based on cogent evidence but based purely on oral evidence without any corroborating document. Even if there were such collateral contracts, they were promises for future leases which constituted agreements for leases. The latter are legally enforceable promises, whereby the parties bind themselves, one to grant and the other to accept, a lease at a later date (citing Hill & Redman's Law of Landlord and Tenant (LexisNexis, 18th Ed) at para A 444). An agreement for a lease, therefore, constituted a contract for the future disposition of an interest in land and fell squarely within s 6(d) of the Civil Law Act (Cap 43, 1999 Rev Ed), which applies to contracts for the ‘disposition of immovable property, or any interest in such property’. As such, the collateral contracts were still unenforceable being agreements for leases which did not comply with the writing requirement in s 6(d) of the Civil Law Act.

20.3 It should be noted that the requirement of writing, among others, in s 6(d) of the Civil Law Act represents the formalities at law. Failure to comply with the formalities at law in s 6(d) does not mean that the agreements for leases, if they existed, were unenforceable at all. There is also the alternative position in equity to consider based on the doctrine of part performance which is part of Singapore law as laid down by the Court of Appeal in Joseph Mathew v Singh Chiranjeev[2010] 1 SLR 338. From the judgment in Tiananmen KTV, it was not clear if counsel for the tenants had raised the doctrine of part performance as an argument which would have given the High Court the opportunity to rule on the issue. The argument on part performance might not have been raised if it could not be supported on the facts.

Option to renew

20.4 In AREIF (Singapore I) Pte Ltd v NTUC Fairprice Co-operative Ltd[2015] 2 SLR 630 (‘AREIF (Singapore I) Pte Ltd’) (see also ‘Contract Law’ in this volume at pp 327–328, paras 12.56–12.57), the lease entered into between the plaintiff (landlord) and the defendant (tenant) contained an option to renew. One of the conditions in the option provided that the rent for a new lease was to be agreed between the parties. It was also a condition that the renewed lease had to be signed on or before 30 November 2013. Both conditions were not satisfied. The plaintiff took the position that it was under no obligation to grant the defendant a new lease pursuant to the option because both parties could not agree on the rent that the defendant was to pay under the new lease and because the defendant failed to sign a document embodying the terms of the new lease within the period prescribed in the option. The defendant asserted that it had fulfilled all the conditions in the option and was entitled to a new lease.

20.5 It transpired that before the 30 November 2013 deadline passed, the plaintiff had entered into discussions with a third party about a possible lease of the same premises. A letter of offer was issued to the third party on 22 November 2013. The plaintiff's offer was accepted by the third party on 18 December 2013. On 6 February 2014, the plaintiff informed the defendant that the option to renew had lapsed on 30 November 2013. A lease of the premises between the plaintiff and the third party was signed on 7 February 2014. The plaintiff and defendant then commenced separate proceedings against the other. The plaintiff claimed possession of the demised premises and for a mandatory injunction requiring the defendant to deliver vacant possession upon expiry of the lease. The defendant, on the other hand, sought specific performance of the plaintiff's obligation to grant it a new lease.

20.6 In allowing the plaintiff's claim, the High Court held that the plaintiff's obligation to grant the defendant a new lease never arose. This was because (a) it could not be said that the reason the two conditions were not satisfied was because the plaintiff breached one of its express or implied obligations under the option; and (b) the plaintiff did not waive its right to insist on compliance with the conditions to grant the defendant a new lease. Until and unless all conditions in the option were satisfied, the defendant had no entitlement to a new lease from the plaintiff. Further, having regard to Little v Courage Ltd[1995] CLC 164at 167–168, the plaintiff had, inter alia, no obligation to remind the defendant in advance of the contractual significance of the 30 November 2013 deadline; to take other steps to put the defendant on notice that it intended to insist on compliance with that deadline; and to keep the defendant informed of the commencement, content or status of the plaintiff's negotiations with the third party. The court also noted that there was no express obligation in the terms of the option requiring the plaintiff to act in good faith generally in connection with the defendant's option to renew or, more specifically, in negotiating rent under the new lease. Singapore law also does not recognise a general duty of good faith implied into contracts at common law (citing Ng Giap Hon v Westcomb Securities Pte Ltd[2009] 3 SLR(R) 518 at [47] and [60]). Parties in an existing contractual relationship thus retained the freedom to perform their contractual obligations in their own self-interest and in a manner which maximised their benefit, subject only to the limits imposed by the general law.

20.7 Having regard to the facts in AREIF (Singapore I) Pte Ltd, it could be argued that the plaintiff had an obligation not to put it out of its power to grant the defendant a new lease on or before the deadline of 30 November 2013 and that it was not in breach of this obligation. While the plaintiff did issue a letter of offer on 22 November 2013 to the third party, at a time when it was still open to the plaintiff and defendant to reach agreement on the rent for a new lease, the fact remained that the offer was not accepted until well after 30 November 2013. The mere fact that an offer was made before the deadline of 30 November 2013 was not fatal given that the plaintiff was free to revoke it any time before it was accepted. And by the time the offer was accepted by the third party, it was evident that the defendant was no longer able to comply with the conditions in the option, such that it was not entitled to a new lease from the plaintiff.

Implied easement

20.8 In Muthukumaran s/o Varthan v Kwong Kai Chung[2016] 1 SLR 1273 (‘Muthukumaran’), the sole issue for consideration by the Court of Appeal was whether the appellants, the owners of a two-storey shophouse, who did not have a staircase built within their property, had an implied easement of a right of way over the staircase of an adjacent shophouse owned by the respondents to gain access to the second floor of the appellants' shophouse under s 99(1) read with s 99(1A) of the Land Titles Act (Cap 157, 2004 Rev Ed) (‘LTA’). The third respondent had originally purchased the two units in question. The undisputed evidence was that none of the properties had a permanent staircase at the time the third respondent purchased the properties. Rather, each of the properties only had a bare ladder that allowed access to the second floor.

20.9 The court found that the right concerned qualified as an easement as it possessed the essential characteristics of an easement (citing, inter alia, the English Court of Appeal decision of Re Ellenborough Park[1956] 1 Ch 131 at 163), namely, (a) there must be a dominant and a servient tenement; (b) the easement must accommodate the dominant tenement, ie, is connected with its enjoyment and for its benefit; (c) the dominant and servient tenements must be owned or occupied by different persons; and (d) the right claimed must be capable of forming the subject matter of a grant, ie, the grantor and grantee are legally competent persons, and the right must be sufficiently definite (such that the right can be described with a certain degree of precision and scope).

20.10 The court next considered if the easement in question was acquired under the LTA as the land in question was registered land. The first method, which is by way of registration of the easement under ss 97 and 101 of the LTA, was not applicable on the facts. The other method of acquisition provided under the LTA was then considered by the court, namely, whether the appellants had acquired an implied easement of a right of way over the respondents' staircase under ss 99(1) read with 99(1A) of the LTA to gain access to their own shophouse.

20.11 Without making a definite finding on the merits, the court proceeded on the basis that the approvals received from the relevant authorities for works done fell within the meaning of ‘development approval’ under s 99(1) and the 1997 certified plan was the ‘subdivision plan’ contemplated within the meaning of ss 99(1) and 99(1A) of the LTA. However, the requirement in s 99(1A) that the easement be ‘appropriated or set apart’ on the subdivision plan, which essentially meant that the easement must be indicated on the subdivision plan, was not met as the purported easement in the instant case was not so indicated on the 1997...

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