Kim Seng Orchid Pte Ltd v Lim Kah Hin (trading as Yik Zhuan Orchid Garden)

• Court: High Court (Singapore)
• Judge: Chan Seng Onn J
• Judgment Date: 11 January 2017
• Neutral Citation: [2017] SGHC 4
• Citation: [2017] SGHC 4
• Published date: 31 August 2017
• Plaintiff Counsel: Arivanantham s/o Krishnan (Ari, Goh & Partners)
• Defendant Counsel: Chan Yew Loong Justin and Ng Sze Yen Charmaine (Tito Isaac & Co LLP)
• Docket Number: Suit No 132 of 2016 (Registrar’s Appeal No 323 of 2016)
• Hearing Date: 03 October 2016
• Date: 11 January 2017
• Subject Matter: Effect of counterclaim,Formation,Landlord and tenant,Rights of sublessees,Contract,Acceptance,Renewal of sublease,Civil procedure,Subleases,Summary judgment

Chan Seng Onn J: Introduction

The plaintiff sub-leased part of its premises to the defendant. The sub-lease agreement contained a contractual mechanism for renewal or extension of the sub-lease. By the time the sub-lease expired, the defendant had not sought to trigger that mechanism. Instead, the defendant simply remained in occupation and began plying the plaintiff with cheques for purported payment of rental and property tax, none of which the plaintiff accepted or encashed. The plaintiff then commenced legal action to repossess the occupied premises and the defendant argued that it was entitled to continue in occupation because there was an implied agreement between the parties for a renewal of the sub-lease. The plaintiff sought and was granted summary judgment. I dismissed the defendant’s appeal against the assistant registrar’s decision.

One of the arguments raised by the defendant on appeal was that he should have been granted unconditional leave to defend in light of his subsisting counterclaim. This raised before me the issue of the proper approach to be taken to applications for summary judgment where the defendant has brought a counterclaim. Over the years, a number of principles have been outlined in the case law on various aspects of this overall inquiry. In these grounds, I seek to amalgamate and reconcile these principles and place them into a practical framework that may be useful in structuring the analysis.

The defendant has appealed against my decision and I now set out my grounds.

Facts The parties

The plaintiff is a company which has the primary business activity of growing orchids and ornamental plants for sale.¹

The defendant is a sole proprietor. He trades as Yik Zhuan Orchid Garden and is similarly in the business of growing orchids and ornamental plants for sale.²

The Premises

In 1999, the plaintiff entered into an agreement to lease 11 Lim Chu Kang Lane 6, Singapore 718927, which is located at Lot 1174X Mukim 12 (“the Leased Premises”),³ from the President of the Republic of Singapore. The lease period was for a period of 20 years commencing on 18 August 1991.⁴

The defendant subsequently became an occupier of about 20% of the Leased Premises.⁵ I will refer to the portion of the Leased Premises occupied by the defendant as “the Sub-Leased Premises”. In 2009, the plaintiff commenced Suit No 765 of 2010/G (“S 765/2010/G”) against the defendant, seeking various relief including the recovery of Sub-Leased Premises from the defendant, on the basis that there was no valid or subsisting basis for the defendant to occupy the Sub-Leased Premises.⁶

On 20 December 2011, the plaintiff entered into a further lease agreement with the President of the Republic of Singapore in respect of the Leased Premises, with a lease period from 18 August 2011 to 31 December 2014.⁷

The Compromise Agreement

The dispute between the plaintiff and defendant in S 765/2010/G was settled with the entry of both parties into a sub-lease agreement on 23 May 2012.⁸ The parties have referred to this sub-lease agreement as “the Compromise Agreement” in their submissions and for convenience I will utilise the same reference. The Compromise Agreement is the central feature of the current dispute and it is accordingly necessary for me to describe its contents in some detail.

Under the Compromise Agreement, the plaintiff agreed to sub-lease the Sub-Leased Premises to the defendant. Clause 1 of the Compromise Agreement states:⁹ 1. The Sub-Lease Agreement shall be effective as between the Parties from 23rd May 2012 to 31 December 2014, expressly subject to extension(s)/renewal(s) as are mutually agreed between the Lessee and Sub-Lessee. Nothing herein shall bind either of the parties to enter into a further Sub-Lease Agreement or any extension(s)/renewal(s) beyond 31 December 2014. Further, the Lessee is not under any obligation to renew the Lease between the Lessee and the Singapore Government or to grant any such lease to the Sub-Lessee. As may be observed, cl 1 not only sets out the sub-lease period but also makes provision for the possible extension or renewal of the sub-lease.

Clause 5 places an obligation on the defendant as sub-lessee to pay 20% of the total sum payable by the plaintiff as sub-lessor to the Singapore Land Authority (“the SLA”), such total sum being the rental cost paid by the plaintiff as lessee of the Leased Premises to the SLA as lessor.¹⁰

Clause 6(b) sets out the requirements and procedure for renewal and extension of the sub-lease. The relevant portions of cl 6(b) read as follows:¹¹

Renewal And Extension of The Lease and Sub-Lease Agreement with effect from 1st January 2015

b. Upon the request by the Sub-Lessee no later than 6 months before the expiry of the current extended Lease on 31 December 2014, the Sub-Lessee shall pay to the Lessee the sum of S$32,500.00 per annum being ex-gratia payments in addition to the sub-letting payments contingent upon the renewal or extension of the Lease and Sub-Lease beyond 31st December 2014, expressly subject to the mutual agreement of the parties:-

…

iii. The sum of S$32,500.00 shall be paid by the Sub-Lessee to the Lessee within seven (7) days of receipt of the approval from the Singapore Land Authority and or any other relevant authority for the time being empowered to approve the Sub-lease; iv. For each year of the Lease thereafter, the said sum of $32,500.00 per annum shall be paid by the Sub-Lessee to the Lessee directly on the 1st day of each year with expiry of the fresh lease;

…

The Compromise Agreement is signed by one Yeo Bee Hua on behalf of the plaintiff and by the defendant himself.¹²

Dispute between the parties

The plaintiff entered into a further lease agreement with the Government of the Republic of Singapore on 29 December 2014, extending its lease of the Premises for 2 years and 6 months. The lease period commenced on 1 January 2015 and would end on 30 June 2017.¹³

The defendant did not vacate the Sub-Leased Premises following 31 December 2014. Between 29 December 2014 and 28 January 2015, the defendant sent the plaintiff the following four cheques: On 29 December 2014, a cheque for $2,469.38; On 12 January 2015, two cheques for $5,000 and $15,000 respectively; and On 28 January 2015, a cheque for $2,469.38. The defendant claimed that these cheques were for “payment of monthly rent … and property tax” as well as for “3 months’ rental deposit”.¹⁴ The plaintiff returned all four cheques to the defendant.¹⁵

According to the defendant, the plaintiff sent him a letter dated 10 February 2015 informing him that the plaintiff did not agree to a renewal of the sub-lease under the Compromise Agreement.¹⁶

Thereafter, further cheques were sent by the defendant to the plaintiff, purportedly for monthly payment of property tax at the rate of $2,469.38 per month (as the defendant alleges).¹⁷ A total of 17 such cheques, each for the sum of $2,469.38, were submitted by the defendant from March 2015 to July 2016.¹⁸ These 17 further cheques were not returned by the plaintiff to the defendant, but the plaintiff never encashed any of them.¹⁹

The plaintiff faxed the defendant monthly utilities bills in respect of the Sub-Leased Premises from January 2015 to May 2016.²⁰ Upon receipt of the utilities bills, the defendant issued cheques to the plaintiff for payment of those bills and the plaintiff would thereafter encash those cheques and issue handwritten receipts to the defendant acknowledging payment.²¹ The defendant sent the plaintiff a total of 16 such cheques from January 2015 to May 2016, each for sums ranging from approximately $200 to $500.²²

Legal proceedings S 132/2016

On 5 February 2016, the plaintiff filed Suit No 132 of 2016 (“S 132/2016”) against the defendant.

In brief, the plaintiff claimed that it had suffered loss and damage as a result of the defendant’s continued wrongful occupation of the Sub-Leased Premises. It sought inter alia repossession of the Sub-Leased Premises, damages and mesne profits for the period of occupation of the Sub-Leased Premises by the defendant beyond 31 December 2014. The defendant denied that he was in wrongful occupation and filed a counterclaim, seeking by way of relief its “[c]ontinued occupation of the [Sub-Leased] Premises”.²³

Summary judgment

On 27 June 2016, the plaintiff filed Summons No 3127 of 2016 (“SUM 3127/2016”), which was an application for summary judgment under O 14 of the Rules of Court (Cap 322, R 5, 2014 Rev Ed) (“the Rules of Court”). This was heard by an assistant registrar on 30 August 2016. The assistant registrar granted the plaintiff’s application. At this juncture, it suffices for me to summarise the assistant registrar’s decision. I will describe his findings and reasons in greater detail subsequently during my evaluation of the parties’ submissions.

The assistant registrar began by observing that cl 6(b) of the Compromise Agreement provides the mechanism for the renewal of the sub-lease. He found, however, that the requirements set out in cl 6(b) were not satisfied. The defendant did not make the necessary request for renewal within 6 months from 31 December 2014, and failed to pay the plaintiff $32,500 in ex gratia payments. Further, there was no express mutual agreement between the parties as required under cl 6(b). The assistant registrar found that the plaintiff had proven a prima facie case against the defendant.

The assistant registrar went on to consider whether the defendant had a bona fide defence that raised triable issues of fact or law. He found that the defendant failed to satisfy the court that he had such a defence. The assistant registrar rejected the defendant’s arguments that (i) there was an implied agreement between the parties for the renewal of the sub-lease; (ii) the plaintiff was estopped from preventing the defendant’s...