Alvin Nicholas Nathan v Raffles Assets (Singapore) Pte Ltd

• Jurisdiction: Singapore
• Judge: Chao Hick Tin JA
• Judgment Date: 21 March 2016
• Neutral Citation: [2016] SGCA 18
• Year: 2016
• Date: 21 March 2016
• Published date: 24 March 2016
• Hearing Date: 01 February 2016
• Plaintiff Counsel: Suresh Damodara and Clement Ong Zi Ying (Damodara Hazra LLP)
• Citation: [2016] SGCA 18
• Defendant Counsel: Sim Bock Eng and Jasmine Chan Mei Wen (WongPartnership LLP)
• Court: Court of Appeal (Singapore)
• Docket Number: Civil Appeal No 40 of 2015

Chao Hick Tin JA (delivering the grounds of decision of the court):

This appeal concerned the question of damages due to a tenant following the premature termination of a lease agreement. The parties had entered into a two-year lease agreement, with an option to renew for another two years (“the Lease Agreement”). One year into the lease, the respondent-landlord (“the Respondent”) wanted to renovate the premises and thereby gave notice to terminate the lease prematurely. As a result, the appellant-tenant (“the Appellant”) had to find new premises for his business in a relatively short space of time. This caused the Appellant to first move into interim premises before he could find more suitable permanent premises.

Having, on 23 May 2012, successfully obtained judgment for breach of contract against the Respondent¹, the Appellant applied to court for an assessment of damages. After hearing the parties, the High Court judge (“the Judge”) assessed the amount due to the Appellant. However, dissatisfied with the award, the Appellant appealed to us. While a significant part of the present appeal involved quantifying the exact loss the Appellant suffered, an important question about the legal and conceptual basis for awarding and quantifying damages pursuant to a breach of contract arose and had to be clarified.

Background facts

The Appellant is a sole proprietor of several businesses. His main business is in the agency distributorship for Aviva Ltd’s investment and insurance products. He also runs a call service called “Eureka Call Centre System (S) Pte Ltd” which operates a centre for training of persons with disabilities.² The Appellant assumed occupation of 51 Merchant Road, #02-06 to #02-09, Merchant Square (“the Original Premises”) as a tenant under the Lease Agreement from December 2010. He used the Original Premises for his agency distributorship business. At this juncture, we should explain that the Lease Agreement was signed by the Appellant with the then-owner and landlord on 9 November 2010. The Lease Agreement was subsequently assigned by the then-owner to the Respondent, who took over as landlord.³ As mentioned at [1] above, the Lease Agreement was for a period of two years (from 15 December 2010 to 14 December 2012)⁴, with an option for the Appellant to renew the lease for another two years subject to an increase in rent upon renewal capped at 20%.⁵

In early October 2011, the Respondent informed the Appellant that the Original Premises would be extensively renovated from 1 March 2012 to December 2012.⁶ While the Appellant was initially told that he could remain in the Original Premises until December 2012⁷, he was subsequently informed in a letter from the Respondent dated 8 November 2011 that the Lease Agreement was to be terminated prematurely and that he had to surrender the Original Premises by 29 February 2012.⁸ Compensation of $39,583.36 was offered for the early termination.⁹ There was a further exchange of correspondence, in which the Respondent eventually revoked its notice of termination and retracted its demand for the Appellant to surrender the Original Premises by 29 February 2012¹⁰. At that point, the Appellant could not agree with the Respondent’s purported revocation of its notice of termination.¹¹ Neither could the parties reach an amicable settlement.

On 15 February 2012, in compliance with the Respondent’s initial demand that he surrender the Original Premises by 29 February 2012, the Appellant moved to new, but interim, premises at 1 Magazine Road, #03-01 to #03-02, Central Mall (“the Interim Premises”).¹² On 30 May 2012, the Appellant moved to his permanent premises at 1 Magazine Road, #07-07 to #07-11, Central Mall (“the Current Premises”), a few floors above the Interim Premises.¹³ The lease of the Current Premises only commenced on 16 July 2012 and renovations were still under way, but the Appellant had no alternative because the Interim Premises were not available beyond 31 May 2012.¹⁴ The sizes of and the costs of renting the various premises occupied by the Appellant are set out below¹⁵:

Premises	Size (sq ft)	Rental (per sq ft per month)
Original Premises	5,685	$4.82
Interim Premises	3,993	$5.99
Current Premises	8,073	$5.99

In his claim for damages before the Judge, the Appellant sought, inter alia, compensation for the costs of renovating the Original Premises, which was wasted because of the early termination of the Lease Agreement, as well as the costs of relocating to and renovating the Interim Premises and the Current Premises.

The decision below

The High Court awarded the Appellant the following damages (see Alvin Nicholas Nathan v Raffles Assets (Singapore) Pte Ltd [2015] SGHC 14 (“the Judgment”)): $150,000 for wasted costs, ie, the costs the Appellant incurred in renovating the Original Premises, but which was wasted in part because of the premature termination of the Lease Agreement¹⁶; $20,000 for the inconvenience of finding and moving into new premises¹⁷; $62,654.39 for the increased rent paid per square foot for the Current Premises as compared to the Original Premises, calculated on the basis of the total area of the Original Premises (ie, 5,685 square feet), and on the basis that the Lease Agreement would have been renewed for two years at a 20% increase in rent¹⁸; and $83,962 for the costs of relocating to the Interim Premises. The Judge held it was unreasonable to award the Appellant the costs of two relocations – first to the Interim Premises, and then to the Current Premises.¹⁹ The Appellant’s other claims were dismissed for being too remote.²⁰

The appeal

Before us, the Appellant challenged three aspects of the Judge’s award²¹. First, the Appellant submitted that the Judge erred in awarding him only $62,654.39 for the increased rent he had to pay. In arriving at the sum of $62,654.39, the Judge had regard to the Respondent’s expert’s assessment of the estimated additional rent which the Appellant needed to pay based on the higher rate of rental payable for the Interim Premises as well as the Current Premises. The Respondent’s expert’s assessment is summarised in the following table²²:

Estimated loss from 1 March 2012 to 14 Dec 2012
1	Interim Premises (1 Mar 12 to 31 May 12)	$14,099.28
2	Current Premises (16 Jul 12 to 14 Dec 12)	$33,456.23
3	Current Premises – Additional area (16 Jul 12 to 14 Dec 12)	Nil
Estimated loss from 15 December 2012 to 14 Dec 2014
4	Current Premises	$29,198.16
5	Current Premises – Additional area	Nil
Total	$76,753.67

Items 1 to 3 relate to the period prior to the renewal of the Lease Agreement, and were calculated on the basis that the rent of the Original Premises was $4.82 per square foot per month. Item 1 was calculated on the basis that an extra $1.17 had to be paid per square foot per month for the Interim Premises, which was 3,993 square feet. Item 2 was calculated on the basis that an extra $1.17 had to be paid per square foot per month for 5,685 square feet. The “Nil” award for item 3 represents the Respondent’s expert’s assessment that the Appellant should not be awarded the extra rent incurred for the additional area (2,388 square feet), it being the difference in area between the Original Premises and the Current Premises (“the Excess Area”). Item 4 represented the additional rent which the Appellant had to pay for the next two years on account of the increased rental for the Current Premises, giving consideration to the fact that the rental of the Original Premises would have been increased by 20%. Similar to item 3, item 5 gives nothing for the additional rental for the Excess Area from 15 December 2012 to 14 December 2014.

The Judge largely agreed with the Respondent’s expert’s estimate of the additional rental which the Appellant had to pay, but disapproved of awarding any damages for the increased rent paid during the period when the Appellant was occupying the Interim Premises (ie, item 1). This was because the Judge was of the view that the Appellant could have mitigated his losses by staying on in the Original Premises rather than moving for such a brief period into the Interim Premises until the Current Premises were ready for occupation.²³ Thus, the Judge awarded a sum of $62,654.39, which was derived by subtracting $14,099.28 (item 1 at [8] above) from the Respondent’s expert’s total estimated rental loss of $76,753.67.

On appeal, the Appellant first submitted that he should have been compensated for the increased rent incurred due to the Excess Area of the Current Premises, and, at the very least, that the Judge should have followed the Respondent’s expert’s estimate and awarded him the increased rent payable during the period he was occupying the Interim Premises.

Second, the Appellant submitted that the Judge erred by failing to award damages of $100,963.06 to compensate him for the costs of his relocation from the Interim Premises to the Current Premises (ie, the costs of the second relocation). The Judge reasoned that the Appellant could have avoided relocating twice by staying on in the Original Premises until the Current Premises were ready.²⁴ However, the Appellant submitted that he could not be expected to remain in the Original Premises beyond 1 March 2012 when the Respondent would be carrying out renovations thereto.²⁵ It was therefore not unreasonable for the Appellant to move to the Interim Premises first bearing in mind that it was the acts of the Respondent which brought about this state of affairs.²⁶

Third, the Appellant submitted that the Judge erred in awarding only $150,000 for wasted costs. On this item of claim, the Appellant argued that the Judge was wrong to have preferred the Respondent’s expert’s estimates to the Appellant’s expert’s estimates of wasted costs.²⁷

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