HSBC Trustee (Singapore) Ltd and Another v Lycee Francais de Singapour

• Jurisdiction: Singapore
• Judge: Karthigesu JA
• Judgment Date: 15 March 1996
• Neutral Citation: [1996] SGCA 12
• Date: 15 March 1996
• Subject Matter: Whether third party entitled to retain benefits obtained through inducement of breach,Appeals,Trusts,Withdrawal,O 15 r 6 & O 57 r 11 Rules of the Supreme Court,Inducement by third party,Civil Procedure,Whether court should allow withdrawal if party was necessary to the appeal,Breach of trust,Remedy available to co-appellants in light of such application
• Docket Number: Civil Appeal No 102 of 1995
• Published date: 19 September 2003
• Defendant Counsel: Lim Chor Pee and Arivanantham s/o Krishnan (Chor Pee & Co),Michael Khoo, Josephine Low and Cheah Kok Lim (Michael Khoo & BB Ong)
• Court: Court of Appeal (Singapore)
• Plaintiff Counsel: Koh Juay Kherng and Roy Yeo (Lee & Lee)

The facts

The appellant, the Swiss Club, owns a large area of land in the Bukit Tinggi/Swiss Club Road vicinity (the land). As the Swiss Club is not a legal entity, the legal estate in the land was vested originally in certain natural persons. Subsequently, by an indenture dated 20 August 1971 these persons appointed HSBC Trustee (Singapore) Ltd (the trustee) as a custodian trustee of the land. The indenture was registered with the Registry of Deeds in Vol 1869 No 14. The respondent, Lycee Francais De Singapour (Lycee Francais) is a company incorporated in Singapore and runs the French School here.

With more land than it required, the Swiss Club, in 1980, looked for lessees to take up some of the unused land which was zoned for community building. In 1982, agreements for leases were made with several lessees, one of whom was Lycee Francais. The agreement for a lease made with Lycee Francais was dated 30 October 1982 and was entered into by the trustee expressly `as trustee for and on behalf of members of the Swiss Club`. It was an agreement to grant a lease of a portion of the land (the demised premises) for a term of 100 years commencing from 1 July 1981. Under cl 2(a) of the agreement, Lycee Francais was to use the demised premises for the purpose of a school and this obligation was to continue in full force and effect even after the execution of the lease. In January 1991, a separate document of title to the demised premises was issued and the trustee in pursuance of the agreement executed a formal lease of the demised premises in favour of Lycee Francais. The formal lease incorporated the special covenants and conditions set out in a memorandum of lease which was registered with the Registry of Titles on 14 December 1990. The memorandum of lease specifically identified the trustee as `custodian trustee for and on behalf of the Members of the Swiss Club`.

Under the memorandum of lease, there were specifically two clauses of the special covenants and conditions which pertained to this case, namely, cll 1(vi) and (vii). Clause 1(vi) provided as follows:

Not to demise, mortgage, charge or assign or sublet or transfer the demised premises in whole or in part without first obtaining the approval of the Lessor in writing which approval shall not be unreasonably refused in the case of a respectable and responsible mortgagee, chargee, assignee or sub-tenant.

Clause 1(vii) phrased in absolute terms provided thus:

Not to use or to permit or suffer the demised premises or any building thereon or any part thereof to be used otherwise than for the purposes as approved in writing by the lessor and without prejudice to the foregoing restriction not to use the demised premises or any part thereof for any illegal or immoral purpose and not to carry on, or permit or suffer to be carried on in or upon the demised premises or any part thereof any noisome dangerous or offensive trade or business which may be or become a nuisance or annoyance to the owners tenants or occupiers of premises adjoining or adjacent thereto or to the lessor.

Sometime in 1992, Lycee Francais felt that the demised premises were inadequate to meet its needs as the enrolment of the French School had increased significantly since 1982. It was also under pressure from the French Embassy to look for a larger piece of land for the school. To finance the purchase of new premises, Lycee Francais decided to sell its leasehold interest in the demised premises and Jones Lang Wootton, a property consultant firm, were consulted, and they were instructed to look for potential buyers. They eventually introduced Lycee Francais to the National University of Singapore Society (NUSS), which expressed an interest in buying the demised premises for the purpose of building a clubhouse and recreational facilities for its members. For the purpose of the sale of the leasehold interest to NUSS, Lycee Francais would require the lessor`s approvals for the assignment of the lease and the change of use of the demised premises. While the negotiations between Lycee Francais and NUSS were in progress, an application was made by Jones Lang Wootton on Lycee Francais` behalf to the Urban Redevelopment Authority for approval of rezoning of the demised premises from `educational institution` to `recreational club`. Provisional permission for rezoning was granted on 24 March 1993. In the meantime, a request was made to the Land Office for a new site to build a school. An `in-principle` offer was made to Lycee Francais of a piece of land at Ang Mo Kio which Lycee Francais found suitable. The letter of offer from the Land Office dated 5 March 1993 stated, inter alia, that Lycee Francais should signify its acceptance of the offer on terms and conditions therein set out within two weeks by depositing with the Land Office the sum of $590,088. This sum was paid by Lycee Francais on 17 March 1993, and it was paid on terms that it would be forfeited, if the land offered was not eventually taken up within two weeks after notice from the Land Office. Significantl y, the negotiations with NUSS, the application to the authority for rezoning and the request to the Land Office for a piece of land, all these, took place even before Lycee Francais approached the Swiss Club for the relevant approvals under the lease.

Sometime in March 1993, the President of Lycee Francais, Patrick Marie Hays, instructed Benjamin LeBlond, the supervisor of the French School, to approach the President of the Swiss Club to seek the necessary approvals. Two approvals were required: one under cl 1(vi) and the other under cl 1(vii) of the special covenants and conditions in the memorandum of lease. The then president of the Swiss Club was one Grieder. Accordingly, LeBlond called on Grieder to seek the approvals of the Swiss Club. However, the latter asked LeBlond to take the matter up with the incoming president, Fritz Bruegger. On 19 March 1993, LeBlond met Bruegger to discuss the intended sale of the leasehold interest in the demised premises to NUSS and the latter`s proposed use of the demised premises as a clubhouse. LeBlond was asked to write officially to the Swiss Club for the requisite approvals. This meeting was duly reported by LeBlond to Hays. Soon thereafter, on 29 March 1993, an agreement in principle, was reached between Lycee Francais and NUSS whereby Lycee Francais agreed, subject to contract, to sell its leasehold interest in the demised premises to NUSS for $17m.

On 12 April 1993 pursuant to their earlier discussion, LeBlond on behalf of Lycee Francais wrote to the Swiss Club and the letter read as follows:

As we mentioned to you verbally, we would like to receive your approval, in writing, for us to pass the lease title we have with you, to another party, of course, for the balance of the lease, ie more or less 85 years.

Our potential buyer intend to use the premises as a private, social and recreational club and not in any case for industrial, housing or commercial purposes.

We thank you very much in advance for your reply which we hope to receive as soon as possible.

Following that letter, on 16 April 1993 there was a meeting at a lunch at the Movenpick restaurant in which representatives of Lycee Francais, the Swiss Club and NUSS respectively were present. Present at the lunch also were Ms Pauline Tan, the solicitor for Lycee Francais, and Ms Loh Lay Bee, the solicitor for the Swiss Club. After the meeting, Ms Loh recorded in her attendance note the principal matters discussed. According to the attendance note Bruegger sought information on the NUSS, and the representative of the NUSS gave a brief account of the background and activities of the association and what was intended to be built on the demised premises. Bruegger was also informed that NUSS had not submitted any plans to the building authority or appointed any architect, for the simple reason that the association was not willing to incur any expenditure without first obtaining from the Swiss Club consent to the assignment and the change of use. Bruegger expressed certain concerns and said that the matter would have to be raised and decided at an Extraordinary General Meeting (EGM) of the Swiss Club. There are two paragraphs of the attendance notes which bore some relevance to the matter before us, as will be apparent shortly and are reproduced below verbatim:

Mr Bruegger commented that although their consent to the assignment cannot be unreasonably withheld, there is no such qualification as to their consent to the change of use. Mr Hazra [NUSS`s representative] agreed on that. Mr Bruegger said that before they can decide on the change of use, they need more information. He is concern that if the lease is assigned, the result may be that the traffic flow will increase substantially. He also pointed out that there is presently two clubs in that area and there may not be any need for a third club.

As such, presently he require sufficient details to make an informed decision. He also said that the matters is very important and he would not be making the decision unilaterally. When he has sufficient details, he will call an EGM, and the decision will be made there and then. Depending on the circumstances then, he may request Mr Hazra to attend the EGM to answer any question any Swiss Club`s member may raise. He will also probably require the Swiss Club`s legal counsel to attend the meeting.

Over the next two months, there was no further development on the matters discussed at the meeting. In particular, NUSS did not send to Bruegger any information of NUSS as requested and no EGM of the Swiss Club was called.

Bruegger went on leave on 11 June 1993 to Switzerland. Hays presumably was then feeling the pressure of time. He consulted Lycee Francais` solicitor, Ms Tan and it was decided that Lycee Francais should write to the trustee instead seeking the consent or approval. A draft was put up by Ms Tan and was amended by Hays. On 23 June 1993,...