Art of Voice Company Pte Ltd v Flexible Space Pte Ltd

• Jurisdiction: Singapore
• Judge: Lee Li Choon
• Judgment Date: 20 November 2017
• Neutral Citation: [2017] SGDC 297
• Court: District Court (Singapore)
• Docket Number: District Court Suit No. 4123 of 2016
• Published date: 21 March 2018
• Year: 2017
• Hearing Date: 22 May 2017,14 September 2017,09 March 2017,08 March 2017,23 May 2017
• Plaintiff Counsel: Sanjiv Rajan (M/s Allen & Gledhill LLP)
• Defendant Counsel: Johnson Loo (M/s Drew & Napier LLC)
• Subject Matter: Tenancy Agreement - Breach of Contract - Past Consideration
• Citation: [2017] SGDC 297

District Judge Lee Li Choon: Background

The dispute before me concerns a tenancy agreement dated 3 November 2011 (the “Tenancy Agreement”) entered into between: Art of Voice Company Pte Ltd (the Plaintiff who was the tenant) (“P”); and Flexible Space Pte Ltd (the Defendant and the landlord) (“D”).

The Tenancy Agreement is in relation to Suites A,C and D of 27 Purvis Street #04-02 Singapore 188604 (the “Premises”)¹. In addition, a personal guarantee dated 4 November 2011 (the “Personal Guarantee”) was also entered into between D and Ms Linda Seet Jessica Gek Neo (“Jessica”) who is the sole shareholder and sole director of P².

P is a company incorporated in Singapore and is primarily engaged in the business of a commercial school, providing voice coaching and voice acting workshops for teenagers and working adults. D is a company incorporated in Singapore and is engaged in the business of, amongst other things, the provision of office space for lease. Mr Ho Shee Jan (“Mr Ho”) and Mr Albert Ho (“Albert”) who are father and son are the shareholders and directors of D.

According to D’s Albert, sometime in mid-January 2012, he received a phone call from Jessica who complained to him that she had seen “many foreign workers” coming in and out of #04-01. #04-01 is a unit leased to the owner of the Thai restaurant on Level 1 of the An Chuan Building where the Premises are located. Subsequently, on 6 February 2012, Jessica met up with Albert and Mr Ho. During that meeting, she complained about the smell of cooking coming from #04-01 and brought up the issue of foreign workers being seen around again. According to Albert, she tried to get Albert’s and Mr Ho’s consent to end the lease early. Immediately after the meeting, D received a letter dated the same day, i.e., 6 February 2012 giving “immediate notice of termination of [the] tenancy agreement”. In that letter which is from Jessica as Managing Director of P and addressed to Albert as Director of D, the issues of the presence of foreign workers and the cooking smell coming out of #04-01 were again brought up. The letter was however silent on the issue of “misrepresentations” as regards the Premises.

In the Statement of Claim, P’s claim is for a declaration that the Tenancy Agreement has been validly rescinded or alternatively for the return of the sum of $24,485.73 being the security deposit for the Tenancy Agreement and other expenses paid by P to D on the ground that Clause 3(l) of the Tenancy Agreement has been breached by D. P also claimed damages for misrepresentation under section 2 of the Misrepresentation Act.

D counterclaims against P for recovery of SGD 93,243.84, being the loss of the rental proceeds from the unexpired 23 months of the Tenancy Agreement less the rental from the replacement tenants obtained by D in mitigation of its loss, and other losses arising from P’s premature termination of the Tenancy Agreement. D also counterclaims against Jessica under the Personal Guarantee for the said loss suffered by D arising from P’s breach of the Tenancy Agreement.

Undisputed Facts

The following facts are not disputed: The Tenancy Agreement was supposed to have run for a period of 2 years, from 1 January 2012 to 31 December 2013, based on a monthly rental of SGD 7,300. The Premises is located on the 4th floor of a building known as An Chuan Building located along Purvis Street. Unit #04-02 is further sub-divided into four smaller units or “suites”, called Suites A, B, C and D. The dispute concerns Suites A, C and D which were the Premises in the Tenancy Agreement. In February 2012, P terminated the Tenancy Agreement, after the tenancy had come into effect for 1 month, and with 23 unexpired months left in the tenancy period. The following clause that is found in the Tenancy Agreement is material to the case: “3. The Tenant hereby agrees with the Landlord as follows:

…

(l) Not to use the said premises or any part thereof other than as an office in connection with and for the purpose of the Tenant’s business of providing training and consultancy services, and to obtain licences and permits at the Tenant’s [P’s] expense from the relevant authorities where necessary.” It is common ground that at the material time, the premises which are a residential property had been approved for use as an office under URA’s Home Office Scheme. The said scheme permits the Premises to be used as an office. It is not in dispute that Jessica extended the Personal Guarantee in her personal capacity to guarantee the performance of the Tenancy Agreement by P. The hardcopy of the Personal Guarantee was signed by Jessica on 4 November 2011, one day after the date indicated on the Tenancy Agreement of 3 November 2011. While the Tenancy Agreement was dated 3 November 2011, it was not disputed that in actual fact, the Tenancy Agreement was executed on 2 November 2011. Issues

On P’s claim, the main question before this Court is whether P is entitled to terminate the Tenancy Agreement. The answer to this question depends on the determination of the following issues: whether there was any misrepresentation by D that induced P to enter into the Tenancy Agreement which entitles P to rescind the Tenancy Agreement; whether D had nonetheless breached Clause 3(l) of the Tenancy Agreement, and whether such a breach entitles P to terminate the Tenancy Agreement.

D’s counterclaim is dependent on my findings on the above two issues that arise from P’s claim. On D’s counterclaim against Jessica, there is also a further issue with regard to the Personal Guarantee; that is whether the Personal Guarantee is enforceable against Jessica personally.

Whether there was any misrepresentation

In P’s pleadings, P asserts that D has made the following “misrepresentations” prior to the execution of the Tenancy Agreement:- The Premises (ie, Suites A, C and D) and the building in which the Premises are located (ie, An Chuan Building) were approved for use as an “office” only (which P calls “the 1st Representation”); and The Premises could be used for business as a “commercial school” (which P calls “the 2nd Representation”). [emphasis added] (Collectively, “the Representations”)

Based on P’s pleaded case, P’s case is that the above representations “were made by and/or are to be inferred from” the following:- On 25 October 2011 and 28 October 2011, orally by Albert to Jessica; An email dated 25 October 2011 from Albert to Jessica; and An email dated 2 November 2011 from Jessica to Albert and Albert’s reply on 2 November 2011.

P’s contention is that through the above, D had represented that the Premises were approved for “office use only” and that is false as it is common ground that the Premises were at the material time residential premises approved for use as an office under the Home Office scheme and were not for “office use only”. P’s further contention is that D misrepresented to P by saying that the Premises could be used as a commercial school when no approval to use the Premises as a commercial school had been obtained.

The essential elements of misrepresentation are as stated by the Court of Appeal in Panatron Pte Ltd v Lee Cheow Lee [2001] SGCA 49³ at [14] as follows:

“Basically there are the following essential elements. First, there must be a representation of fact made by the words or conduct. Second, the representation must be made with the intention that it should be acted upon by the plaintiff, or by a class of persons which includes the plaintiff. Third, it must be proved that the plaintiff had acted upon the false statement. …….(the other two elements apply only to a claim based on fraudulent misrepresentation which is not P’s claim here).”

Before I go on to examine the alleged representations, it is to be noted that the question as to the meaning of a particular representation is to be tested from the perspective of a reasonable person in the position of the representee (in this case, P’s Jessica) and in light of the circumstances pertaining at the time⁴.

The events started with Jessica responding to an advertisement on the website with the name, “Commercial Guru” prior to 25 October 2011. In the advertisement, the Premises owned by D and marketed by Savills (which were engaged by D to look for a tenant on D’s behalf) were described as for rental “as an office” and as a “brand new office for rent”. Thereafter, Jessica had viewed the premises on 25 October 2011. It is not disputed that Albert was not present at that viewing. The people who were present together with Jessica were Gina (Albert’s secretary), Ignatius (P’s estate agent), Apple Lin (D’s estate agent). After that, on the same day, she and Albert had a telephone conversation. This was followed by an email from Albert to Jessica on the same day as follows:

Hi Jessica

Good talking to you. The office suites you saw at 27 Purvis Street on the 5th floor are 450 sqft and 300 sqft respectively. The whole floor plate of the 5th floor is approx. 1,100 sqft.

The concept we have here is that each tenant is not restricted to the respective office space that he or she rents . Tenants have access to the reception, pantry and common areas, which is much more than the actual space of the respective office that the tenants pay for. If tenants need to meet and greet clients in a more formal setting, they may also use the reception and meeting facilities at 12 Purvis.

Hence the usual $ per sq ft benchmark based on the size of the office suites does not effectively reflect the rental cost.

We believe a good comparison would be the serviced offices where a tenant is charged based on headcount. For example, for a 2-man office, the rates would be between $2,000 and $3,000 per month i.e. $1000 to $1,500 per headcount per month. Our charges are between $375 to $700 per headcount.

Flexible Space is not a full...