Jewellery Industries (S) Pte Ltd v Sintat Rent-a-Car Pte Ltd

• Judge: Judith Prakash JC
• Judgment Date: 07 May 1993
• Neutral Citation: [1993] SGHC 101
• Citation: [1993] SGHC 101
• Defendant Counsel: Goh Yong Hong (Wong & Goh)
• Published date: 19 September 2003
• Plaintiff Counsel: Ambika Rajendram (Cheow Hin & Partners)
• Date: 07 May 1993
• Docket Number: Originating Summons No 1175 of
• Court: High Court (Singapore)
• Subject Matter: Agreements for leases,Option to renew,Whether option void for uncertainty,Validity and enforceability,Landlord and Tenant

Background

The question posed by this originating summons was whether a clause contained in a tenancy agreement which purportedly conferred on the tenant an option to renew the tenancy for a further period was a valid and enforceable option.

There was no dispute as to the material facts. By a tenancy agreement dated 1 November 1989, the plaintiffs leased to the defendants commercial premises in Henderson Industrial Park (`the premises`) for a period of three years commencing on that date and ending on 31 October 1992, at a monthly rental of $12,000. Clause 3(c) of the tenancy agreement (`the option`) provided:

(3) And the landlord hereby agrees with the tenant as follows:

...

(c) provided always that the landlord does not intend to sell or dispose of [the premises] the landlord shall on the written request of the tenant made not less than three (3) months before the expiration of the term hereby created and if there shall not at the time of such request be any existing breach or non-observance of any of the covenants on the part of the tenant hereinbefore contained grant the tenant (at the tenant`s costs and expenses (sic) to execute a renewed tenancy (sic) and counterpart thereof) an extension of two (2) years from the expiration of the term hereby created subject only to the right of the landlord to review the rental payable and upon such terms and conditions as may be agreed by the parties hereto with the exception of the present provision for renewal.

By letter dated 20 July 1992 the defendants purported to exercise the option. In the letter the defendants asked the plaintiffs: `Please let us know the new rental payable together with the terms and conditions of the new agreement.`

Subsequently (the precise date was not in evidence) the plaintiffs informed the defendants that they intended to sell the premises and that accordingly the option could not be exercised. The defendants disputed the plaintiffs` ability to nullify the option on the basis that an intention to sell would only prevent the option being exercised if the plaintiffs had entered into an agreement for sale of the premises. Their solicitors contended in a letter dated 11 August 1992 to the plaintiffs` solicitors that: `In the absence of an actual sale, [the plaintiffs] are obliged to grant [the defendants] an extension of two years ...`. The defendants` solicitors also proposed that an arbitrator be appointed to determine the proper interpretation of the clause. This suggestion was not accepted by the plaintiffs.

The defendants did not vacate the premises on 31 October 1992. On 6 November the plaintiffs` solicitors wrote to the defendants` solicitors stating, inter alia, that:

(i) there had not been an agreement to renew the tenancy in all respects including the renewed rental and the terms and conditions of the renewed tenancy;

(ii) the tenancy had therefore expired on 31 October 1992;

(iii) the defendants` continuing occupation of the premises was unlawful and amounted to a holding over for which the defendants were liable to the plaintiffs.

The letter concluded by demanding that the premises be delivered to the plaintiffs within seven days from the date thereof and giving the defendants notice that, in default, proceedings for recovery of possession would be commenced.

On the same day, on a without prejudice basis, the plaintiffs offered to grant the defendants a further tenancy for two years at a rental of $20,000 a month but otherwise on the same terms and conditions as contained in the original tenancy agreement (excluding the option for renewal). In response the defendants indicated that they were agreeable to an extension of two years on the terms and conditions of the tenancy agreement subject only to a rent based on the current prevailing rate. They suggested that an independent valuer be appointed to carry out a valuation of the premises and that the expense of such an appointment be shared equally by the parties.

The plaintiffs rejected the defendants` suggestions and on 11 December 1992 they filed this originating summons. Basically the reliefs sought by the plaintiffs were first, the recovery of possession of the premises; secondly, that the defendants be ordered to pay mesne profits from 1 November 1992 at the rate of $24,000 a month until vacant possession was delivered up; thirdly, interest on mesne profits; and finally, costs on the indemnity basis.

Construction of option clause

The plaintiffs contended that the option was void for uncertainty. This meant that I was required to analyse the terms of the option carefully whilst being cognizant of the fact that the court is reluctant to hold void for uncertainty any provision which, like the option, was intended to have legal effect. Such a provision must be approached with reasonable goodwill when determining whether it embodies such uncertainty of concept as to make it void. See Brown v Gould [1971] 2 All ER 1505[1972] Ch 53[1971] 3 WLR 334 Brown v Gould [1971] 2 All ER 1505[1972] Ch 53[1971] 3 WLR 334 was also a case in which the court had to determine...