Cupid Jewels Pte Ltd v Orchard Central Pte Ltd and another appeal

• Jurisdiction: Singapore
• Judge: Sundaresh Menon CJ
• Judgment Date: 13 January 2014
• Neutral Citation: [2014] SGCA 2
• Court: Court of Appeal (Singapore)
• Docket Number: Civil Appeal No 32 of 2013 and Civil Appeal No 33 of 2013
• Year: 2014
• Published date: 07 May 2014
• Hearing Date: 02 September 2013
• Plaintiff Counsel: David Nayar (David Nayar and Vardan),Suresh s/o Damodara (Damodara Hazra LLP)
• Defendant Counsel: and Philip Jeyaretnam SC, Ling Tien Wah and Tang Jin Sheng (Rodyk & Davidson LLP)
• Subject Matter: CIVIL PROCEDURE,Ex-parte application,duty of disclosure,LANDLORD AND TENANT,Distress for rent,STATUTORY INTERPRETATION,Construction of statute,purposive approach,Definitions,Interpretation Act,extrinsic aids
• Citation: [2014] SGCA 2

V K Rajah JA (delivering the grounds of decision of the court): Introduction

Pursuant to a Writ of Distress, Orchard Central Pte Ltd (“Orchard Central”) distrained, amongst other things, the jewellery found on the premises of its tenant, Cupid Jewels Pte Ltd (“Cupid Jewels”). The jewellery distrained had been delivered to Cupid Jewels by Forever Jewels Pte Ltd (“Forever Jewels”). Cupid Jewels and Forever Jewels filed separate applications for the release of the jewellery. Both of their applications were dismissed by a High Court judge (“the Judge”) (see Orchard Central Pte Ltd v Cupid Jewels Pte Ltd (Forever Jewels Pte Ltd, non-party) [2013] 2 SLR 667 (“the Judgment”)). Dissatisfied with the Judge’s decision, Cupid Jewels and Forever Jewels filed Civil Appeal No 32 of 2013 (“CA 32”) and Civil Appeal No 33 of 2013 (“CA 33”) respectively.

After considering the parties’ submissions, we dismissed both CA 32 and CA 33. We now give the detailed reasons for our decision.

Facts The parties

Cupid Jewels and Forever Jewels are, loosely speaking, “related companies” in the sense that they have the same directors and two common shareholders. Forever Jewels delivers jewellery to Cupid Jewels for the latter to sell. Orchard Central is the landlord of the commercial and retail development known as Orchard Central (“OC”).

The background to the dispute

On 25 May 2008, Orchard Central and Cupid Jewels entered into an agreement for Cupid Jewels to lease two units in OC (“the Premises”) from Orchard Central to carry out retail sales of jewellery (“the Lease Agreement”).¹ Pursuant to cl 1.2² read with Schedule 1³ of the Lease Agreement, Cupid Jewels was obliged to pay rent in advance on the first day of each calendar month of the three year term, comprising the higher of: (a) the base rent; or (b) the percentage rent calculated on the basis of Cupid Jewels’ gross sales for that month according to a formula set out in Schedule 3 of the same. ⁴

Possession of the Premises was handed over to Cupid Jewels on 9 June 2009 for renovations and Cupid Jewels commenced business at the Premises in September and December 2009 respectively. From August 2009, Cupid Jewels fell into rental arrears. The outstanding amount increased over the months and amounted to $891,507.99 by August 2010 when Orchard Central filed its application for the Writ of Distress.

In May 2010, Cupid Jewels began negotiations for rental review with representatives from Orchard Central and Far East Retail Consultancy Pte Ltd, the company responsible for leasing matters related to OC. On 1 June 2010, Orchard Central sent an email to Cupid Jewels offering varying rental rebates for September to November 2009 and January to May 2010.⁵ This was followed up with another email on 2 June 2010 (“the 2 June 2010 Email”) listing out the rebates in table form and stating as follows thereafter:⁶

With this, we enclose herewith a copy of our rebate letter with the respective months for your attention/execution. The original rebate letter will be sent to you shortly. Meanwhile, we would appreciate it if you could make payment for the outstanding rental by 4 June 2010, Friday … [emphasis in original]

The material portions of the formal rebate letter dated 2 June 2010⁷ (“the 2 June 2010 Rebate Letter”) that was attached in the 2 June 2010 Email are reproduced below:

We are pleased to inform you that we will be granting you following rebates on Base Rent for the following months on an ex-gratia basis for your premises.

…

Our offer is made in good faith on our part. We hope that this will help us move forward together to establish a fruitful and mutually beneficial relationship.

An acceptance of this offer would also indicate your unconditional acceptance of the confidentiality and non-disclosure provisions set out in Schedule 1 herein as well as full compliance with the following:

(1) Payment of outstanding for the Premises. (2) Acceptance must be accompanied by a cheque for full payment of the sum subject to subsequent clearance. (3) Rental must be kept current at all times. (4) Full compliance with the terms and conditions of the Lease Agreement.

We would be grateful if you could kindly confirm your acceptance of the above by signing on the duplicate copy of this letter and return it … no later than 9 June 2010.

…

If for any reason we do not receive the duly signed duplicate copy of this letter by the above stipulated date, the offer shall lapse absolutely without further notice from us. Please note that the Rent Rebate will only take effect on your fulfilment of the conditions precedent stated above.

It was undisputed that Cupid Jewels did not accept the offer made in the 2 June 2010 Rebate Letter. There were subsequent talks between the parties but no agreement was reached.

On 14 June 2010, Cupid Jewels sent an email proposing a rental package and requested an extension period for the rebates to cover August 2009 as well.⁸ On 17 June 2010, Orchard Central replied rejecting the proposed rental package but stated that it would honour the rebate previously offered if Cupid Jewels could “come up with a plan to settle the arrears up till May10 [sic], within a reasonable timeframe”.⁹ On 25 June 2010, Orchard Central requested for a response from Cupid Jewels “to move forward in this discussion”.¹⁰ On the same day, Cupid Jewels replied stating that it would have to revert the next week as its directors were outstation.¹¹

On 13 July 2010, Cupid Jewels sent an email requesting for the payment of rental arrears to commence in August 2010 in 24 monthly instalments.¹² On 27 July 2010, Orchard Central replied stating as follows (“the 27 July 2010 Email”):¹³

We have reviewed your request comprehensively and regret that we are unable to agree to your request of payment of your outstanding arrears in 24 months. We have reviewed, and request that all the arrears be paid by 31 December 2010.

We look forward to your installment plans, afterwhich, we can move our discussion forward.

On 29 July 2010, Cupid Jewels sent an email acknowledging receipt of the 27 July 2010 Email and notified Orchard Central that it would revert after meeting with its owners who were outstation at that time.¹⁴ From 29 July 2010 to 5 August 2010, the parties continued to correspond in relation to the provision of audited sales reports and sales statements.¹⁵

The applications filed

On 6 August 2010, Orchard Central filed an ex parte application in the High Court for a Writ of Distress for the sum of $891,507.99 (being the outstanding rent for the period between August 2009 to August 2010) under s 5 of the Distress Act (Cap 84, 1996 Rev Ed) (“the Act”).¹⁶ This was granted by an Assistant Registrar (“AR”). That same day, pursuant to Writ of Distress No 2 of 2010¹⁷, the sheriff seized goods found on the Premises comprising 579 pieces of jewellery (“the Distrained Jewellery”), furniture, displays and office equipment.¹⁸

On 16 August 2010, Cupid Jewels filed an application for the release of the Distrained Jewellery under s 16 of the Act.¹⁹ On 19 August 2010, Forever Jewels filed a separate application for the release of the Distrained Jewellery under s 10 of the Act.²⁰ These applications were eventually heard together.

The decision below

The Judge dismissed Cupid Jewels’ application on the following grounds: The fact of the negotiations were material and should have been disclosed, but on balance, this omission did not justify setting aside the Writ of Distress (see the Judgment at [20]–[29]). The conditions under s 5 of the Act were satisfied as: Cupid Jewels was obliged to pay the full sum of $891,507.99 under the Lease Agreement (see the Judgment at [30]–[36]); and The relevant period of rent did not exceed 12 months (see the Judgment at [37]–[39]). Cupid Jewels failed to prove detriment and reliance and thus could not invoke the doctrine of promissory estoppel (see the Judgment at [40]–[54]). The Distrained Jewellery did not fall within s 8(d) of the Act and were thus not exempt from seizure (see the Judgment at [55]–[74]).

The Judge dismissed Forever Jewel’s application as well, for the following reasons: Forever Jewels failed to prove that Orchard Central had actual knowledge that the Distrained Jewellery belonged to it (see the Judgment at [77]–[79]). The doctrine of reputed ownership in s 12(a) of the Act applied to preclude the release under s 10 of the same (see the Judgment at [80]–[86]).

Issues before this Court

The issues before this Court in the present appeals are substantially the same as those before the Judge below, namely: CA 32: non-disclosure of material facts before the AR; the conditions in s 5(1) of the Act; promissory estoppel; and exemption from seizure under s 8(d) of the Act. CA 33: the conditions in s 12(a) of the Act; and the conditions in s 10(2) of the Act.

Cupid Jewels’ appeal in CA 32

We turn first to the issues that arose in Cupid Jewels’ appeal in CA 32.

Non-disclosure of material facts before the AR

The Judge rejected Cupid Jewels’ preliminary point that an even higher level of disclosure should apply to ex parte applications for a Writ of Distress (see the Judgment at [22]). He held that the general principles governing ex parte applications were applicable, and, upon applying these principles, concluded that the negotiations between the parties as to the repayment of rental arrears were material and should have been disclosed before the AR (see the Judgment at [24]–[26]). However, upon balancing Orchard Central’s culpability and the gravity of the omission with the potential prejudice that might have been suffered by Cupid Jewels as a result of the omission, the Judge found that it would be entirely disproportionate to set aside the Writ of Distress, and thus exercised his discretion not to do so (see the Judgment at [27]–[29]).

Cupid...