EQUITABLE LEASES, SUBDIVISION AND SECTION 4, PLANNING ACT

• Date: 01 December 2002
• Published date: 01 December 2002

Golden Village Multiplex Pte Ltd v Marina Centre Holdings Pte Ltd 1

1 While it is accepted that dealings with land registered under the Land Titles Act2 including transfers, mortgages, and leases over seven years must be registered in order to effect the desired transaction under the Act,3 the issue of whether other informal methods of dealing with the registered interest, which under general law may give rise to equitable interests, has not been questioned in the local courts. The other provisions of the LTA seem to indicate that this is not an issue under the LTA. For a start, section 3 of the LTA repeals all laws only ‘so far as they are inconsistent with the provisions of the Act in their application to registered land’. Then section 115 allows any person claiming ‘an interest in land’ to lodge a caveat and section 4 defines ‘an interest in relation to land’ as ‘any interest in land recognised as such by law, and includes an estate in land’. Thus it has been accepted that equitable interests and equity generally can operate on registered land under the LTA.4 This is also the position in other jurisdictions where the Torrens system of land registration applies.5 Notwithstanding this, it was only as recently as 1985 when it was finally determined that the doctrine of Walsh v Lonsdale,6 which lays down that an agreement to lease is good as an equitable lease where specific performance is available, applied in Australia.7 In Singapore the same issue was raised in Golden Village Multiplex Pte Ltd v Marina Centre Holdings Ltd8 involving an agreement to lease a part of a building for 15 years and where it was expressly stipulated in the agreement that the tenant shall not request for a registered lease and that the tenant shall not request for a subdivision.9

2 Thus on the facts of the case the issues were first whether there was a lease for fifteen years. More particularly, could there be an equitable lease under the doctrine of Walsh v Lonsdale10 when there was an express stipulation that the registered lease will not be asked for by the tenant? Second, could such a lease in equity exist in respect of registered land? Third, if there was an equitable lease for fifteen years, was such a lease a ‘subdivision’ requiring planning approval under the Planning Act?

3 Before discussing each of these issues in turn, it would be helpful if the facts of the case were briefly stated. Marina Centre Holdings Pte Ltd (Marina) the owner of a multi level building, Leisureplex, entered into an agreement for a lease of several levels of the building with Golden Village Multiplex Pte Ltd (Golden Village) in 1995. The lease was to be for 15 years and the spaces leased were to be used as a cinema complex. The agreement also stated that the tenant shall not require the landlord to execute the lease nor to apply for subdivision of the building or any part thereof. Four years after the entry of the agreement Golden Village requested Marina to execute a lease in registrable form. This request was refused. Golden Village then applied to the High Court for a declaration that, inter alia, the agreement was void and illegal, being in breach of the provisions of the Planning Act. The High Court dismissed the application. On appeal to the Court of Appeal, LP Thean JA delivering the judgment of the Court, affirmed the decision of the court below.

Application of the Doctrine of Walsh v Lonsdale11

4 The doctrine of Walsh v Lonsdale provides that where there is an agreement for a lease, so long as specific performance is available, there is a lease which is good in equity, notwithstanding that the requirements for a valid legal lease eg a deed, may not be satisfied and the lease is void at law.12 At first instance, Woo Bih Lih JC adopted the Australian High Court authorities including Progressive Mailing House Pty Ltd v Tabali Pty Ltd13 and Chan v Cresdon Pty Ltd14 which unequivocably applied the doctrine of Walsh v Lonsdale to unregistered leases of land governed by

the Torrens system of land registration.15 The Court of Appeal agreed with Woo JC.16

5 At general law, it is clear; the doctrine will apply only where the remedy of specific performance is available.17 The basis of the equitable lease arising in such a situation is the equitable maxim, equity regards as done that which ought to have been done.18 Where on the facts specific performance is not possible, there will be no equitable lease. In Warmington v Miller19 the landlord could not specifically perform his part of the agreement without being in breach of the terms of the head lease, which prohibited him from subletting without consent. In these circumstances the English Court of Appeal held that there was no equitable lease for the agreed period as the contract was not specifically enforceable.

6 It should be noted that in Golden Village, the parties had expressly stipulated that the tenant should not ask for a registered lease. Accordingly if the finding of an equitable lease is based on specific performance, ie the execution of a registered lease, then in this case such an execution is not possible — at least not without the tenant breaching a term of the contract. On this point the Court of Appeal held that specific performance was not to be taken narrowly as actually enforcing the terms of the contract. Thean JA who delivered the judgment of the Court took a wide approach and held that specific performance included the granting of an injunction to prevent the breach of the terms of the contract.20 Again Thean JA looked to the Australian authority of Chan v Cresdon Pty Ltd to support this wide approach to the remedy of specific performance.

7 It is suggested that on the facts of the instant case, the contract could be specifically performed. The agreement is not one which is inherently incapable of being specifically enforceable. On the contrary, since it is a contract relating to land, it is prima facie specifically enforceable.21 The difficulty on the facts of the instant case is simply that the tenant had

agreed not to ask for a registered lease, ie he had agreed that he would not ask for specific performance of the contract to lease. Unlike the position in Warmington v Miller, where specific performance would have meant that the landlord would be in breach of a contract with a third party, in Golden Village, the landlord could grant a registered lease if he was so inclined or if he was ordered to do so. In Golden Village, the restraint was on the tenant himself who agreed not to ask for a registered lease, which would involve subdivision of the building. By asking for a decree of specific performance the tenant would be in breach of a stipulation in the contract.22 Should this make a difference? Arguably it should not as the landlord can ‘waive’ the breach. The stipulation exists for the benefit of the landlord. Thus it is arguable that he can choose not to enforce it or ‘waive’ it on the principle that where a provision is made for the protection of a party, that party may waive such protection.23 It is only for so long as he insists on it that there will be no registered lease. Thus in Golden Village there is nothing to prevent the landlord from specifically performing the contract if he chose to do so. In this sense it is not impossible for the landlord to execute a registered lease. Hence it is argued that there is an equitable lease.

8 The term in the agreement that the tenant should not ask for a registered lease is not void or illegal. While a registered title is recommended for all the advantages that it brings, yet it is not illegal to deal with registered land outside of the LTA.24 Accordingly there is no good reason for preventing the landlord from enforcing this provision.

9 The Court of Appeal chose to approach the issue of availability of specific enforceability from a wider perspective, that it does not only refer to the execution of the contract but also includes situations where the party seeking to breach the contract may be injuncted from so doing. This wide approach to the remedy of specific performance is not a new concept. It has long been accepted that where a contract has a negative...