Lee Tat Realty Pte Ltd v Limco Products Manufacturing Pte Ltd and Others and Another Action

• Jurisdiction: Singapore
• Judge: Chao Hick Tin J
• Judgment Date: 02 May 1998
• Neutral Citation: [1998] SGHC 150
• Docket Number: Suits Nos 109 of 1990 and 441 of
• Date: 02 May 1998
• Published date: 19 September 2003
• Year: 1998
• Plaintiff Counsel: CS Lee (CS Lee)
• Citation: [1998] SGHC 150
• Defendant Counsel: Lisa Chong (Lisa Chong & Partners)
• Court: High Court (Singapore)
• Subject Matter: Lease provides for forfeiture of security deposit for any breach,Covenants,Whether notice valid,Whether tenant entitled to relief against forfeiture,ss 18(1), 18(3), 18(4)Conveyancing and Law of Property Act (Cap 61, 1985 Ed),Whether provision a liquidated damages clause or penalty,Whether any actual loss resulting from breach,Notice to remedy breaches of covenants,Landlord and Tenant,Recovery of possession

Judgment:

CHAO HICK TIN J

These are two actions consolidated to be heard together pursuant to an order of court dated 23 November 1996. In Suit No 109/90, the plaintiff is Lee Tat Realty (Pte) Ltd (Lee Tat), who is the owner of lot 626 TS17 together with a seven-storey building erected thereon and known as Soo Poo Flatted Factory (hereinafter referred to as `the building` or `the premises` as may be appropriate). By a tenancy agreement dated 18 March 1989 made between Lee Tat and Limco Products Manufacturing Pte Ltd (Limco), the former demised the premises to the latter for a term of three years with effect from 15 January 1989 at a monthly rent of $35,000. By this action Lee Tat sought to recover possession of the premises, and mesne profits, on the ground that Limco had breached the terms of the lease agreement and had failed or neglected to remedy the breaches in spite of the fact that a notice had been given.

2.There are two other defendants to S 109/90. As no appearance was entered by them, default judgment was accordingly obtained against them. Nothing in the present trial concerned them except that they were the two entities to whom Lee Tat alleged Limco had sub-letted, or given possession of, a portion of the premises.

3.In the other action, Suit No 441/92, where Limco is the plaintiff and Lee Tat the defendant, Limco claims for the refund of the security deposit upon Limco giving up possession of the premises on the expiry of the duration of the tenancy. Lee Tat asserts that it is entitled to forfeit the deposit because Limco has not restored the premises to the condition as at the commencement of the tenancy.

4. The complaints

The bases upon which Lee Tat sought to forfeit the lease and recover possession of the premises were set out in a letter of 22 December 1989 from Lee Tat`s solicitors to the solicitors of Limco (`the notice`). As the validity of this notice is challenged by Limco, I shall set it out in full:

Pursuant to s 18(1) of the Conveyancing and Law of Property Act (Cap 61), we hereby give your clients notice on behalf of our clients that our clients intend to enforce the forfeiture of the lease by reason of the following breaches:

(1) In breach of cll 3(4), 3(5) and 3(6), your clients have failed to maintain the demised premises in good order and condition.

(2) In breach of cl 3(9), your clients have used the building or part thereof otherwise than as office and factory for light industries, in particular, using the second and fourth floors as warehouse.

(3) In breach of cl 3(11), your clients have used the demised premises for retail or warehouse sale, in particular, using the ground floor as a demonstration cum sales room for computers.

(4) In breach of cll 3(9), 3(10) and 3(13), your clients have used part of the premises as sleeping quarters for persons other than the watchman or security guards.

(5) In breach of cl 3(15), your clients have installed electrical fittings, glass doors in place of existing wooden doors and have made alterations and additions without our clients` written consent.

(6) In breach of cl 3(33), your clients have signed, or sub-let or part with the possession or part of the demised premises to SMI Pte Ltd and MCM Singapore Pte Ltd.

(7) In breach of cl 3(34), your clients have fixed or otherwise exhibited upon the demised premises signs or advertisements on the exterior of the demised premises without the consent of the landlord.

In accordance with s 18(1) of the Act referred to above, we hereby give your clients notice that in so far as the breaches mentioned above are capable of remedy, the breaches must be remedied within seven (7) days of the date hereof and in any case, reasonable compensation in money must be made to our clients. Unless all these breaches are rectified within seven (7) days from the date hereof, our clients shall proceed with such application as they may think fit and in the meantime, our clients reserve all their rights.

5.On 29 December 1989 Limco`s solicitors replied to the notice and gave the following answers to the allegations:

1 Your para (1)

Our clients deny the allegation. If there are specific areas of failure to maintain the premises, please specify.

2 Your para (2)

The building is used as a factory by our clients to manufacture its products, ie personal computers. After manufacturing, it is only natural that our clients have to store the boxes containing personal computers in the factory, hence one would find a store in every factory. It would be unreasonable to suggest that by storing its own goods, a building has become a warehouse.

3 Your para (3)

The ground floor is the reception cum waiting area and showroom for our clients` products. It is only natural for a light industry factory to display its products to visitors or prospective buyers. We cannot see how this amounts to a breach of cl 3(11) of the tenancy agreement and we also cannot see how the use of the ground floor as showroom could hurt your clients in any way.

4 Your para (4)

Our clients have not permitted any part of the premises to be used as sleeping quarters for persons other than the watchman or security guard.

5 Your para (5)

Our clients deny having made any alterations to your clients` fixtures and fittings. In any event, even if there are minor alterations, your clients are protected by cll 3(46) and 3(47). We cannot see how the reasonable use of the premises can affect your clients` interest.

6 Your para (6)

Our clients deny having parted possession of any part of the premises as the companies mentioned are associate companies who are licencees.

7 Your para (7)

Our clients deny having breached cl 3(34). Even if they are in breach, it is a technical one. Our clients hereby request your clients` permission to exhibit their registered name and logo on the exterior of the demised premises.

In this reply Limco also mentioned the fact that it had complained about leaks in the roof which Lee Tat refused to attend to and said `the leaks started a few months after our clients went into possession and could not have been due to wear and tear.`

6.On 2 January 1990 Lee Tat`s solicitors merely noted the explanations of Limco and said it would let the court decide the matter. Suit No 109/90 was commenced on 17 January 1990. Limco has raised three defences to the claim for forfeiture: (i) the notice of 22 December 1989 was bad; (ii) Limco did not commit any breach as alleged; (iii) even if Limco did commit any breach, in the circumstances, it be granted relief against forfeiture.

7. Validity of notice

I shall first examine the issue of the validity of the notice. Under s 18(1) of the Conveyancing and Law of Property Act it is provided that a right of re-entry or forfeiture for breach of covenants in a lease shall not be enforceable by action or otherwise unless a notice `specifying the particular breaches complained of ...` has been given and the tenant must be given a reasonable period of time to remedy the breach, if capable of remedy or to make reasonable compensation in money.

8.Limco contends that the notice failed to satisfy the requirement prescribed by s 18. Woodfall`s Law of Landlord and Tenant , Vol 1 at p 865, has this to say:

The notice ought to be such as will enable the tenant to understand with reasonable certainty what it is that he is required to do, and so distinct as to direct the attention of the tenant to the particular things of which the landlord complains in order that the tenant may have an opportunity of remedying them before an action for forfeiture is brought against him.

A similar statement of law is set out in 27 Halsbury`s Laws of England (4th Ed) at para 434.

9.The passage in Woodfall was taken from the judgment of North J in Fletcher v Nokes [1897] 1 Ch 271 where the notice given merely stated that the tenant had `broken the covenants for repairing the inside and outside of` the house. North J was there construing the English pari materia provision of our s 18 and he said:

I do not mean that the landlord need to go through every room in a house and point out every defect. But the notice ought to be so distinct as to direct the attention of the tenant to the particular thing of which the landlord complains ... The plaintiff has not condescended upon any details, and in my opinion, the notice is not sufficient ...`

10. Fletcher v Nokes was followed and taken one step further in Gregory v Serle [1898] 1 Ch 652 where the notice informed the lessee that he `has not kept the said premises well and sufficiently repaired and the party and other walls thereof.` Kekewich J held this notice to be bad. However, the same notice also set out two other breaches, namely, failure to paint outside every third year and failure to paint and whiten inside every seventh year, and although these two breaches were clearly specific, Kekewich J held that the notice as a whole was still bad. He explained:

It may be true that the distinct breaches are sufficiently specified, but according to the judgments to which I have referred, and particularly that of North J, the tenant has not had an opportunity of considering what he has to do in order to avoid the forfeiture. I do not think it is enough for the landlord to say to the tenant `At all events you must do this.` That is not sufficient information. The tenant is entitled to look at the matter in this way: `Suppose I do spend money in painting and whitening, still I have to make good the other breach, which may be much more onerous, and involve me in much greater expense, and so, after I have painted and whitened, I may have my lease forfeited because I have not complied in some unspecified way with another covenant`. Those considerations seem to me to show that the notice cannot be saved as a whole because a part of it is good.

11.Counsel for Limco also drew my attention to Pannell v City of London Brewery Co [1900] 1 Ch 496 which ought to be distinguished from Gregory v...