Leivest International Pte Ltd v Top Ten Entertainment Pte Ltd

• Jurisdiction: Singapore
• Judge: Kan Ting Chiu J
• Judgment Date: 06 January 2006
• Neutral Citation: [2006] SGHC 1
• Date: 06 January 2006
• Subject Matter: Tenant failing to obtain valuation report on market rent of premises when proposing rent sum for the renewed lease as required under terms of lease,Renewal,Whether landlord's "without prejudice" acceptance of late payment and rent thereafter amounting to waiver of alleged breach,Landlord and Tenant,Whether tenant's exercise of option valid,Tenant purporting to exercise option to renew lease,Covenants,Whether such failure amounting to repudiation of lease made pursuant to agreement,Tenant failing to make immediate payment to landlord's solicitors under agreement after cheque for payment bounced
• Docket Number: Originating Summons No 204 of 2004
• Published date: 11 January 2006
• Defendant Counsel: B Mohan Singh (K K Yap and Partners)
• Court: High Court (Singapore)
• Plaintiff Counsel: Pang Xiang Zhong (Peter Pang and Co)

6 January 2006 Judgment reserved.

Kan Ting Chiu J:

1 The parties in these proceedings are Leivest International Pte Ltd (“Leivest”), the owner of premises known as 40 Orchard Road, #04-35/36 and #05-18A Orchard Towers, Singapore 238875 (“the premises”), and Top Ten Entertainment Pte Ltd (“Top Ten”), the occupant of the premises.

2 Top Ten has been in occupation of the premises since 1984, when it leased them from Premier Theatre Pte Ltd under a lease dated 21 January 1985 (“the 1985 lease”). The premises have changed ownership since then. In 1986, Lucky Red Investments Pte Ltd became the owner, and in March 2002, Leivest took over.

3 After Leivest came on the scene, disputes arose over Top Ten’s occupation of the premises. Leivest commenced proceedings in Suit No 634 of 2002, claiming possession of the premises. Top Ten resisted the claim and brought a counterclaim. When the action came on for hearing before Justice Tay Yong Kwang in October 2003, the parties reached a settlement.

4 The terms were set out in a letter dated 31 October 2003 from M/s Allen & Gledhill, solicitors for Top Ten at that time, to M/s Peter Pang & Co, solicitors for Leivest:

1. Subject to fulfilment of the other conditions, Leivest International Pte Ltd (“Leivest”) will grant a new tenancy to Top Ten Entertainment Pte Ltd (“Top Ten”) upon the following terms:-

1.1. The term will be for 1 year from 1 December 2003 plus an option for a further 1 year.

1.2. The rental of the premises will be $52,000 per month.

1.3. The hiring charges for all the furniture fittings and equipment will be $1 per month.

1.4. Leivest will pay for all charges imposed in respect of the premises by the MCST [the Management Corporation of Orchard Towers].

1.5. The rental for the option period will be fixed in the manner set out in Clause 6 of the current Tenancy Agreement except that the fair market rate will be determined by two licensed valuers, one to be appointed by each party. If the two licensed valuers are unable to agree on the fair market rate, but if there is less than 10% difference between their valuations of the fair market rate, the average of the two valuations shall be the fair market rate. If the difference between the valuations is 10% or more, the two licensed valuers must appoint a third licensed valuer whose sole valuation of the fair market rate shall be taken as the fair market rate for the new term. Each party must appoint its own valuer before 30 September 2004 and the two valuers must produce their valuations by 15 October 2004. If a third valuer is to be appointed (who must be from one of the following five (5) firms:

a. Jones Lang LaSalle Property Consultants Pte Ltd

b. Colliers International Singapore Pte Ltd

c. DTZ Debenham Tie Leung SEA Pte Ltd

d. CB Richard Ellis Pte Ltd

e. Knight Frank Pte Ltd

pursuant to this clause, then such appointment must be made by 30 October 2004 and the third valuer must produce his valuation by 15 November 2004. Each party will pay his own valuer. The fees of the third valuer will be borne equally by both parties.

1.6. Top Ten shall accept that pursuant to the Assignment dated 23 October 2003, the air-conditioning system and the rest of the items in the List of Inventory attached to the current Tenancy Agreement have been assigned by Lucky Red Investments Ltd to Leivest.

1.7. The rent deposit will be three months rental. The existing deposit of $225,000 will be adjusted to $156,000 and the difference of $69,000 will be refunded to Top Ten by way of deduction from the amount payable by Top Ten to Leivest as set out below.

1.8. Top Ten will be granted the right of first refusal to purchase the premises if Leivest decides to sell.

1.9. The other terms of the new Tenancy Agreement will be the same in the current lease subject only to necessary changes.

2. On or before the execution of the new Tenancy Agreement:

2.1. Top Ten will pay all arrears of rental and hiring fees amounting to $372,000 (less the credit of $69,000 for refund of rent deposit).

2.2. Top Ten will pay Messrs Peter Pang & Co the sum of $20,000 for legal charges incurred in respect of Suit No. 767 of 2003/R.

2.3. Top Ten will issue a letter of consent to Messrs Arthur Loke Bernard Rada & Lee to release the $66,000 held as stakeholders to Messrs Peter Pang & Co.

3. Top Ten will by 5 November 2003, pay all arrears of MCST charges up to November 2003 (including interests if any) directly to MCST.

4. Leivest agrees to pay for air-conditioning repair charges of $17,347.60 and also will pay for the further repairs described in the quotation for $28,000 given to Top Ten by its contractors. The sums of $17,347.60 and $16,889.70 already paid by Top Ten will be set-off against the amount payable by Top Ten to Leivest as set out in the preceding paragraph. The balance will be set-off against future rental payments.

5. The net sum payable to Leivest under 2.1 and 4 above will therefore be $268,762.70.

6. Upon compliance with (1) and (2) above, Suit No. 767 of 2003/R, Suit No. 634 of 2002/E (except for the ongoing proceedings between Top Ten and Lucky Red Investments Ltd) and MC Summons No. 20346 of 2003 will be discontinued by all relevant parties with each party bearing its own legal costs and expenses (subject to Top Ten’s contribution of $20,000 towards Leivest’s legal charges in Suit 767 of 2003/R). Top Ten will also:

a. withdraw its counter-claim against Leivest and Loi Kai Meng, Loi Yan Yi and Loi Win Yen on terms that each party will bear its own legal costs;

b. withdraw in court all allegations against Leivest, Loi Kai Meng, Loi Yan Yi and Loi Win Yen save those that are relevant to the Counterclaim against Lucky Red Investments Ltd;

c. remove the Caveat filed against Leivest on 7 October 2003.

7. Default on any of the payments shall be deemed a fundamental breach and Leivest will be entitled to treat the tenancy as immediately repudiated by Top Ten and will be entitled to vacant possession of the premises forthwith and to recover all payment of all monies agreed to be paid herein.

5 For some unknown reason this letter was occasionally wrongly stated to be dated 30 October 2003 in these proceedings.

6 Pursuant to this agreement, a lease was executed by the parties and was stamped on 31 October 2003 (“the 31 October 2003 lease”). The lease was for one year commencing 1 December 2003.

7 The settlement did not bring harmony between the parties. They instituted further legal proceedings against each other. The first is Originating Summons No 204 of 2004, filed by Leivest (“OS 204”) and the second is Suit No 809 of 2004 filed by Top Ten (“S 809”).

8 As both actions arose from the same background, there was a large degree of overlap in the issues raised. The actions were consolidated by the time they came on for hearing.

Originating Summons No 204 of 2004

9 OS 204 was converted to one commenced by a writ, and the parties filed the usual pleadings.

10 In its Statement of Claim, Leivest claimed that Top Ten had not complied with the terms of settlement of 31 October 2003 in that it failed to pay the agreed costs of $20,000 to Peter Pang & Co under term 2.2, that it failed to make payment of maintenance charges for November 2003 by 5 November 2003 under term 3 (this allegation was not pursued after it was established that the maintenance charges for November 2003 were not due on 5 November 2003), and that it failed to pay interest on the late maintenance charges by 5 November 2003 under term 3.

11 Leivest sought a declaration that the 31 October 2003 lease was repudiated and demanded that Top Ten deliver possession of the premises to it and pay it mesne profits or damages.

12 Top Ten’s defence was that the $20,000 had been tendered in time, although the cheque was dishonoured. However, a second payment was made on 12 November 2003 and accepted.

13 With regard to the complaint on the late payment of the maintenance interest, Top Ten pleaded that Leivest had agreed to give time to Top Ten to negotiate with the Management Corporation on the interest, and that the interest was paid to the Management Corporation on 12 November 2003.

14 Top Ten also pleaded that Leivest had issued a rent invoice for the month December 2003 to Top Ten and Top Ten had paid the rent for that month to Leivest, which was accepted.

15 On the fixtures on the premises, Top Ten pleaded that when it entered into possession under the lease of 1 January 1985, the premises were a bare shell. The fittings consisted of old furniture and fittings, an air-conditioning plant and electrical fittings. This was confirmed by the evidence of Top Ten’s managing director, Peter Bader, who also added that the cinema seats were removed by the owners. Leivest did not contradict this. Loi Win Yen, a director of Leivest, claimed that under a term in the tenancy agreement, all additions made to the premises by the tenant belonged to the landlord, but that was an obvious misreading of the term. Top Ten, on the other hand, also asserted that it had brought onto the premises fixtures, furniture, fittings, equipment and other items which it was entitled to remove.

16 It counterclaimed for relief from forfeiture under s 18A of the Conveyancing and Law of Property Act (Cap 61, 1994 Rev Ed) or the equitable jurisdiction of the court, and a declaration that it is entitled to remove the fixtures and other additions it put into the premises at the determination of the lease.

17 Leivest in its Reply pleaded that the 1 December 2003 rent invoice was a “routine invoice” issued by its accounts department, that it did not accept the tender of rent as payment pursuant to the invoice and that there was no waiver of its rights.

Suit No 809 of 2004

18 In S 809, Top Ten relied on cl 6 of the 31 October 2003 lease which provided that:

If the Tenant shall be desirous of taking a lease of the demised premises for a further term of one (1) year from the expiration of the term hereby granted at the rent and...