Forum Development Pte Ltd v Global Accent Trading Pte Ltd and Another Appeal

• Jurisdiction: Singapore
• Judge: Karthigesu JA
• Judgment Date: 30 December 1994
• Neutral Citation: [1994] SGCA 145
• Docket Number: Civil Appeals Nos 167 and
• Date: 30 December 1994
• Published date: 19 September 2003
• Year: 1994
• Plaintiff Counsel: Terence Wong (Francis Khoo & Lim)
• Citation: [1994] SGCA 145
• Defendant Counsel: Govindarajalu Asokan and Julian Chin (Rodyk & Davidson)
• Court: Court of Appeal (Singapore)
• Subject Matter: Innocent,Misrepresentation,Contract,Principle of restitutio in integrum,Misrepresentation by appellant's agent,Rescission

Cur Adv Vult

Forum Development Pte Ltd, to whom we shall refer as `the landlord`, is the appellant in both these appeals. It owns a shopping complex in Orchard Road called `Forum Galleria`. The respondent in both appeals is Global Accent Trading Pte Ltd, to whom we shall refer as `the tenant`.

By a lease dated 27 February 1990, the landlord let to the tenant units B1-45, 46 and 47 of Forum Galleria (the demised premises) for a term of three years from 19 March 1990 to 18 March 1993 at a monthly rent of $14,931 and a monthly service charge of $1,659 for the purpose of a European cafe, to be called Cafe Al Fresco, selling French pastry, Italian gelato and other cafe items. The tenant duly entered into possession of the demised premises but then commenced proceedings for the rescission of the lease on 1 February 1991 by Suit No 233/91 and eventually left the demised premises altogether on 20 July 1991. However, the tenant paid rent only up to 31 January 1991.

In Suit No 233/91, which is the subject matter of CA 167/93, the tenant claimed a rescission of the lease, ab initio, for misrepresentation, and for the return of all rents and service charges and the initial deposit of three months` rent paid to the landlord as well as for other consequential losses including loss of profit and the cost of renovating the demised premises. In Suit No 306/92, which is the subject matter of CA 168/93, the landlord claimed for arrears of rent and damages for wrongful repudiation of the lease. At the trial, the landlord`s claim for arrears of rent and damages for wrongful repudiation of the lease was, by agreement of the parties, treated as a counterclaim in the tenant`s action. The learned judicial commissioner found that the tenant was induced to enter into the lease by the innocent misrepresentation of a material fact, allowed the tenant`s claim for the rescission of the lease, ab initio, and ordered the return to the tenant of the rents and service charges and the deposit paid, together with interest at 6% pa from the date of commencement of the proceedings in Suit No 233/91 but did not allow the tenant`s claim for other consequential losses which included loss of profit and the cost of renovating the demised premises. He dismissed the landlord`s claim for arrears of rent and damages for wrongful repudiation of the lease. Against these orders the landlord has appealed. The tenant, by a respondent`s notice in CA 167/91, claims the additional recompense for consequential losses which were not allowed by the learned judicial commissioner.

It was contended by counsel that if the landlord fails in CA 167/93, the landlord should also fail in CA 168/93. This is only partially correct, for in broad terms the principal question to be decided in CA 167/93 is whether the tenant was induced to enter into the lease for the demised premises by the representations made on behalf of the landlord and, if so, whether those representations were false, which in all the circumstances entitled the tenant to rescind the lease, ab initio. If this question is answered in the affirmative it must necessarily follow that the landlord would not be entitled to the claim for arrears of rent and damages for wrongful repudiation of the lease. But one question will still remain to be answered in CA 168/93 and that is whether the landlord is entitled to be compensated for the period the tenant remained in occupation of the demised premises after commencing proceedings to rescind the lease, namely, from 1 February 1991 to 20 July 1991.

The tenant had from October 1988 operated a European cafe by the name of Cafe Al Fresco in Holland Village, which, it was said, had proved a tremendous success, and desired to open a second Cafe Al Fresco. Thomas Dorn (Dorn) representing the tenant contended that the success of Cafe Al Fresco at Holland Village was due to it being able to attract casual passers-by who chanced upon the cafe. Accordingly, in about October 1989, he instructed property agents Richard Ellis to find premises which would have `lots of pedestrian traffic` passing by, preferably in Orchard Road. In about November 1989 Dorn was shown Forum Galleria and put in touch with the landlord`s leasing manager Evelyn Chan who told him that the demised premises would be available for renting.

The demised premises described at the trial as basement units were not in fact basement units. They were on the ground floor of Forum Galleria but the ground floor of Forum Galleria was below the road level of Orchard Road. In fact Forum Galleria was set back and separated from the side walk or pavement of Orchard Road by a `sunken pedestrian mall` which ran between Orchard Road and Forum Galleria, at the same level as the demised premises. The `sunken pedestrian mall` had access from Orchard Road down by a flight of stone steps. However, the view from the side walk or pavement of Orchard Road into the demised premises was obstructed by a brick wall extending upwards from the side of the `sunken pedestrian mall` abutting Orchard Road.

Dorn saw potential in the demised premises for his intended cafe and accordingly entered into negotiations with Evelyn Chan. They first met on 27 December 1989. Dorn recalled this meeting in his evidence. In particular he recalled that Evelyn Chan had mentioned that Forum Galleria would be upgraded both internally and externally. Of special interest to him was that Evelyn Chan had mentioned that the brick wall which blocked the view of the demised premises from the sidewalk or pavement of Orchard Road would be replaced by glass panels and that this would be done by the end of 1990. Dorn said that he was `relieved` by what Evelyn Chan had told him because, although he desired premises in Orchard Road for the second Cafe Al Fresco, he was disturbed by the presence of the brick wall which he thought would curtail exposure of his intended cafe to the voluminous pedestrian traffic along Orchard Road. To quote his own words -`once wall gone we would have desired exposure to Orchard Road pedestrian traffic.`

Evelyn Chan in her evidence confirmed that first meeting with Dorn on 27 December 1989. She also confirmed that she told Dorn that the brick wall in question would be replaced by a glass wall by December 1990 and maintained that she had shown him an isometric projection of the `sunken pedestrian mall` which showed that the brick wall in question would be replaced by a `70mm thk clear glass panel` (the glass wall). Dorn did not recall seeing the isometric projection of the `sunken pedestrian mall` on 27 December 1989 but recalls seeing it at his next meeting with Evelyn Chan on 9 January 1990. Evelyn Chan also confirmed the meeting on 9 January 1990 and that the isometric projection of the `sunken pedestrian mall` was discussed and the completion date of `the glass wall` again stated as being `by December 1990`.

Dorn`s evidence was that the meeting of 9 January 1990 confirmed his decision to rent the demised premises. This is how he put it - `Confirmed our first opinion business wonderful if wall gone, opened up to Orchard Road. Reconfirmed decision to take unit. May show losses until such time latest 31 December 1990. Look forward to better business than at Holland Village.`

On 10 January 1989, the tenant`s property agents, Richard Ellis wrote to Evelyn Chan stating - `Thank you once again for the meeting yesterday ... . After inspecting the site once again yesterday, they would like to confirm that they are definitely keen to lease the spaces and are agreeable to your asking rental of $15 psf per month. Cafe Al Fresco is also willing to lease the premises immediately in spite of the ongoing renovations.`

Based on this evidence the learned judicial commissioner found that the landlord had indeed made a representation that the brick wall in question would be replaced by `the glass wall` by December 1990; that the representation was...