Hiap Huat Pottery (S) Pte Ltd v TV Media Pte Ltd

JurisdictionSingapore
JudgeKarthigesu JA
Judgment Date23 October 1998
Neutral Citation[1998] SGCA 67
Docket NumberCivil Appeal No 116 of 1998
Date23 October 1998
Published date19 September 2003
Year1998
Plaintiff CounselKhoo Boo Jin (Wee Swee Teow & Co)
Citation[1998] SGCA 67
Defendant CounselSteven Seah and Timothy Ng (Drew & Napier)
CourtCourt of Appeal (Singapore)
Subject MatterContract,Whether collateral contract can exist independently without main agreement,No main agreement or transaction found,Breach of agreement collateral to agreement to lease,Collateral contracts
Judgment:

KARTHIGESU JA

(delivering the grounds of decision of the court): This was a straightforward appeal. It concerned the question of whether Justice Lai Siu Chui in the court below erred in finding that there was a collateral contract which was breached by the appellants notwithstanding the absence of a main contract.

2. The facts

The essential facts to the appeal were these. The appellants were at all material times the owners of a shop unit at #03-01, Centrepoint Singapore (the premises).

3.The respondents were at all material times a local company in the business of retailing products directly through television advertisements or from their own outlets. They are commonly known, as their name indicated, as TV Media, and their television advertisements are known as `infomercials`.

4.Sometime in December 1995, the respondents decided to expand their business, as a result of which Soh, the respondents` general manager, was instructed by Robertson, the respondents` managing director, to look out for suitable locations for new retail outlets. One such suitable site was the premises, with another being at Wisma Atria Shopping Centre along Orchard Road and a third at Junction 8 Shopping Centre at Bishan Place. The premises were introduced to the respondents by one Yeo, a property consultant with Jones Lang Wootton (JLW), who were informed by the premises` outgoing tenant Artbox that their lease for the premises was expiring.

5.In February 1996, the respondents commenced, through Yeo, negotiations with the appellants for the lease of the premises for the former`s business expansion. On 8 February 1996, after a meeting between Soh, Yeo and the appellants` property manager Mak, certain terms were agreed with the appellants with respect to the leasing of the premises. These terms, summarised briefly, were as follows: (i). that the respondents would pay a gross monthly rent of S$16 per square foot (`psf`);

(ii). that upon confirmation of the respondents as tenants, they would take possession of the premises on 1 April 1996;

(iii). that there would be a rent free fitting-out period but this period was subject to confirmation, as the respondents requested for two months while the appellants` standard period was one month; and

(iv). that the duration of the lease would also be confirmed, whether it would be the appellants` standard lease of two years with a renewable option of another two years or the respondents` desired lease length of three years with an option to renew for that same period.

6.On the same day, Yeo sent a fax to the appellants setting out the above terms. This fax was marked `subject to contract`, although this was subsequently disputed by Robertson and Soh. The appellants did not reply to the fax. On 14 February 1996, however, by a letter signed by Mak, the appellants wrote to the respondents as follows:

We wish to record that your company is interested to lease the premises at 176, Orchard Road #03-01 (1808 sq ft). The rental rate is $16 psf (gross). If you are agreeable to that rate, kindly indicate below and return the same to us.

As spoken to [Yeo] of [JLW], we are in the midst of obtaining the in-principle approval from the Centrepoint Management. Once this is done, we shall look into the detail of the proposed tenancy.

7.It was the respondents` stand at all material times that they were keen to lease the premises, as a result of which Soh wasted no time in countersigning the abovementioned letter on the respondents` behalf and returning it to the appellants. Prior to this, on 7 February 1996, the respondents requested that JLW obtain from the appellants the first right of refusal for the premises. On 13 February 1996, the respondents further wrote to the appellants, through Yeo, requesting the appellants to reply to the various undecided matters as stated, including the first right of refusal for the premises. During the trial, the appellants claimed they neither received this letter, nor did they agree to any of the respondents` requests.

8.Nonetheless, thinking that they had secured the lease of the premises, the respondents apparently rejected the other potential units at Wisma Atria and Junction 8. As far as the respondents were concerned, they understood that the negotiations on 8 February 1998, confirmed by the letter of 14 February 1996, represented an agreement for a lease subject to the approval of CPL Property Investments (CPL), the managers of Centrepoint, that the respondents` trade blended in with Centrepoint`s trade mix. In the words of Robertson, he believed that CPL would accept the respondents as tenants for the premises, and that any approval required was `a mere formality`. His belief was reinforced by the respondents` receipt of a copy of a letter from the appellants dated 23 February 1996 to CPL requesting permission for the respondents to make a presentation of their products and marketing concepts to the board of CPL.

9.On 12 March 1996, in a new twist of events, Soh suddenly heard from Yeo that the respondents were in fact not the first offeror for the premises but that Esprit Retail Pte Ltd (Esprit) were. They specialised in the business of retailing fashion garments. This was subsequently confirmed when the respondents received a letter from the appellants the next day which stated, amongst other matters, the following paragraph:

As spoken to [Yeo], we are requesting Centrepoint Management to table for approval for TV`s media trade should the approval for the first offeror, M/s Esprit is not granted.

We believe that she is following up on the information that we required.

10.This outraged the respondents. Attempts to contact Mak to clarify the matter proved futile, as Mak apparently refused to answer any of Soh`s calls. In the event, the respondents did not secure the premises. It was leased to Esprit. The respondents subsequently discovered that much of the appellants` assurances that they would be submitted to CPL`s board for consideration were all lies, and the appellants never had the intention of doing so. In May 1996, the respondents took up a corresponding lease in unit #03-11 at Centrepoint at a gross rental of S$18 psf, and commenced an action against the appellants on 11 April 1996 for breach of contract to lease the premises and/or a breach of collateral agreement against the appellants for failing to submit them to CPL`s board for consideration. In addition, in a last ditch attempt to secure the premises, they took out an injunction in March preventing the appellants from putting Esprit`s trade to CPL`s board for approval for the lease but this injunction was subsequently discontinued when it failed to achieve its desired purpose.

11. The trial below

In the court below, there were substantial disputes as to what transpired between the appellants` and respondents` representatives as to the lease of the premises. The respondents` case was that there was an agreement between them and the appellants that they were the first and only offerors to the premises and that they would be submitted to CPL`s board for consideration of the lease. The appellants` stand however was that at all material times the respondents knew that there was a prior interested party to the premises and the respondents would only obtain the lease to the premises in the event of that prior party`s rejection.

12.Notwithstanding the fact that the learned judge accepted the respondents` evidence almost in its entirety, she came to the conclusion that they had nevertheless failed to support their claim for a breach of an agreement to lease. Citing Walsh v Lonsdale [1882] 21 Ch 9, which she termed the `locus classicus on an agreement to lease`, the learned judge made the following findings (at [para ] 63 of her grounds of decision):

On the evidence, I accept the [appellants`] submissions that no agreement was reached with the [respondents] at the meeting on 8 February 1996. It was clear from the testimony of both parties` witnesses that they had to revert to each other on the two aspects of the lease - the [appellants] to consider the [respondents`] request for 3+3 and 2 months` fitting-out period and, the [respondents] to revert on whether they accepted the [appellants`] standard terms (if their request on the two items was rejected). Even if the words subject to contract and approval were omitted from JLW`s fax of 8 February 1996 and later faxes (as not being within the contemplation of the parties which submission of the [respondents] I accept), I am of the view that there was no agreement to lease as at 8 February 1996 or later, whether made orally or in writing or both. If a contract had been concluded on 8 February 1996, the [respondents] would not subsequently had requested the [appellants`] (through JLW) for the first right of refusal. The fact that Mak would not otherwise have agreed to pay JLW a commission of 70% of one month`s gross rent is neither here nor there, in either party`s favour. The point to note is, JLW did not attempt to collect and was not paid, the commission. [The learned judge`s emphasis.]

13.However, as regards the respondents` claim that the appellants had breached a collateral contract by not submitting them and the suitability of their trade, as offerors of the premises, to CPL for consideration and approval, the learned judge found that there was much justification in this claim. Rejecting the evidence of the appellants, particularly that of Mak, the person responsible for negotiating the lease of the premises between the appellants and respondents, she held (at [para ] 67 and 68 of her grounds of decision):

67 I have no doubt that Mak, in colloquial parlance, was stringing the [respondents] along; indeed I would go further to say that his conduct was reprehensible. For reasons...

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