Lim Chin San Contractors Pte Ltd v Shiok Kim Seng

• Jurisdiction: Singapore
• Judgment Date: 18 January 2013
• Date: 18 January 2013
• Docket Number: Civil Appeals Nos 76 and 78 of 2012
• Court: Court of Appeal (Singapore)

Lim Chin San Contractors Pte Ltd

Plaintiff

and

Shiok Kim Seng (trading as IKO Precision Toolings) and another appeal

Defendant

[2013] SGCA 6

Sundaresh Menon CJ

and

V K Rajah JA

Civil Appeals Nos 76 and 78 of 2012

Court of Appeal

Damages—Appeals—Assessment of damages—Whether assessing court was bound by principles laid down by trial court—Whether assessing court had in fact departed from said principles—How much should parameters set in trial decision limit assessing court

Damages—Assessment—Assessment of equitable compensation—Reliance loss approach—Expectations-based approach

Equity—Satisfaction—Minimalist approach—Flexibility to ensure appropriate remedy to each case's equity—Role of proportionality

The respondent relied on two representations made by the appellant in entering into two tenancy agreements for a unit in the appellant's building: that a mezzanine floor could be built to substantially increase the floor area, and that the premises could be purchased by the respondent. The respondent then constructed a mezzanine floor which almost doubled the usable space at the premises. However, the mezzanine was subsequently found to be in breach of planning regulations and was removed pursuant to a court order applied for by the appellant.

The judge below (‘the Judge’) found that the appellant's representations gave rise to a proprietary estoppel. He made an order for equitable compensation, the quantum of which was to be assessed by the Registrar (‘the original decision’). No appeal was brought against this decision and the matter went for assessment. The parties subsequently appealed against the assessment of the assistant registrar (‘the AR’). That appeal was heard by the same Judge as had made the original decision. The Judge issued a judgment by which he varied the AR's decision on the assessment (‘the AD decision’). The parties appealed against this.

Held, dismissing CA 78/2012 and partially allowing CA 76/2012:

(1) As neither party had appealed against the original decision, it was res judicata and so the Judge, in making the AD decision, was bound by his own judgment in the original decision: at [30] .

(2) The Judge did in fact depart impermissibly from the terms of the original decision, which had contemplated that to satisfy the equity that had arisen in the respondent's favour, the equitable compensation due to the appellant should be assessed using a reliance-based approach. The Judge then substituted this with an order awarding reliance losses for the money spent by the respondent and the expectation losses for the appellant's failure to sell the premises to the respondent: at [34] .

(3) Even if the Judge had not expressly said so, any assessment of equitable compensation payable to the appellant would have been subject to certain implicit limits: at [36] and [37] .

(4) The Court had to ensure that the remedy it gave the appellant was sufficient to satisfy the equity that had arisen from the proprietary estoppel claim, and no more. Specifically, it was not necessarily tied to the claimant's expectations. In taking a minimalist approach, the court had to ensure that the remedy would be proportionate and not go beyond the minimum required to satisfy the maximum extent of the equity: at [38] to [43] .

(5) The AR's decision on the assessment of the compensation payable had failed to take into account some key facts: the respondent's losses were incurred during a period when there was no subsisting tenancy agreement; at the point of the second tenancy's expiry, the respondent had not taken any steps to enforce whatever rights he might have had to acquire the premises in question; and in view of the grim economic circumstances at the material time, some of the losses could have been incurred regardless of where the respondent's business was situated and it would not have been equitable to impose the liability for such losses on the appellant: at [47] to [52] .

(6) Proportionality was a crucial factor that should have been taken into account; to that end, the AR's assessed sum would have been grossly disproportionate to the strength of the respondent's equity, the extent of his reliance upon the representations, the benefits he had already enjoyed and the strength of any real expectation he might have had: at [53] to [56] .

Gillett v Holt [2001] Ch 210 (refd)

Ho Yew Weng Alan James v Poh Eng Wah Mark t/a SG Vehicles Trading [1997] SGHC 179 (refd)

Hong Leong Singapore Finance Ltd v United Overseas Bank Ltd [2007] 1 SLR (R) 292; [2007] 1 SLR 292 (folld)

Jennings v Rice [2003] 1 P & CR 100 (refd)

Lim Chin San Contractors Pte Ltd v Shiok Kim Seng [2011] 1 SLR 433 (refd)

Chia Swee Chye Kelvin (Samuel Seow Law Corporation) for the appellant in CA 76 of 2012 and the respondent in CA 78 of 2012

Eugene Tan Kon Yeng and Eng Cia Ai (Drew & Napier LLC) for the respondent in CA 76 of 2012 and the appellant in CA 78 of 2012

Judgment reserved.

Sundaresh Menon CJ

(delivering the judgment of the court):

Introduction

1 The present cross appeals arise out of an assessment of damages, which had first been heard before the assistant registrar (‘the AR’). Both parties appealed against the AR's decision to the High Court judge (‘the Judge’). The Judge's decision on the assessment of damages appeal was delivered on 31 May 2012 and this included an addendum that he provided after hearing further arguments. That decision is reported as Lim Chin San Contractors Pte Ltd v Shiok Kim Seng [2012] 3 SLR 595 (‘the AD Decision’). In the AD Decision, the Judge referred to an earlier judgment that he himself had delivered after hearing the trial of the matter which dealt with the issue of liability. It was pursuant to the earlier judgment that damages came to be assessed. The earlier judgment is reported as Lim Chin San Contractors Pte Ltd v Shiok Kim Seng [2011] 1 SLR 433 (‘the Original Decision’).

Facts

Parties to the dispute

2 Lim Chin San Contractors Pte Ltd (‘Lim Contractors’) is the developer of Alpha Industrial Building (‘the Building’) and the owner of the premises known as unit #05-11 (‘the Premises’) in the Building. The managing director of Lim Contractors is one Lim Chin Leong (‘Mr Lim’).

3 Shiok Kim Seng (‘Mr Shiok’) was the tenant of the Premises from January 2005. Although the lease expired at the end of 2008, Mr Shiok remained in possession of the Premises until September 2010. Before renting the Premises, Mr Shiok had run a business as a middleman trading in precision tooling. When he decided to go into the business of manufacturing precision tooling he required new premises, which for his purposes, had to have a floor area of at least 517m².This was the context in which he leased the Premises. He has now vacated the Premises and his business has ceased. He is also facing several bankruptcy petitions.

Background to the dispute

4 Lim Contractors and Mr Shiok entered into the following written tenancy agreements (collectively referred to as ‘the Tenancy Agreements’):

(a) An agreement dated 9 December 2004 (‘the First Tenancy Agreement’), under which Lim Contractors agreed to lease the Premises to Mr Shiok for two years (from 1 January 2005 to 31 December 2006) at a monthly rent of $3,200 (not inclusive of GST).

(b) An agreement signed sometime in March 2007 (‘the Second Tenancy Agreement’), under which Lim Contractors agreed to rent the Premises to Mr Shiok for two years (the term was to begin retrospectively on 1 January 2007 and was to expire on 31 December 2008) at the same monthly rent of $3,200 (not inclusive of GST).

5 In the Original Decision, the Judge found that Mr Lim had made two representations to Mr Shiok which had induced the latter to take a lease of the Premises from Lim Contractors. These representations were:

(a) that a mezzanine floor could be built to substantially increase the floor area of the Premises (see the Original Decision at [13] ) (‘the First Representation’); and

(b) that the Premises could be purchased by Mr Shiok (see the Original Decision at [26] and [29] to [30] ) (‘the Second Representation’).

The First Representation and the Second Representation are collectively referred to as ‘the Representations’.

6 Pursuant to the Representations, Mr Shiok constructed a mezzanine floor in the Premises. The contractor that he engaged for this work was Heng Loong Construction, of which Mr Lim was a partner. The renovation work (which included the cost of constructing the mezzanine floor) took five or six months and cost $106,176.03 (see the Original Decision at [6] ). The addition of the mezzanine floor almost doubled the usable space at the Premises from approximately 270m² to 539m². This suited Mr Shiok's purposes, since, as noted above, he required a floor area of at least 517m²to enable him to conduct the business of manufacturing precision tools (see above at [3] ). Following the construction of the mezzanine floor, Mr Shiok operated his business from the Premises.

7 The mezzanine floor was subsequently found to be irregular by the Building and Construction Authority (‘BCA’) as it caused the gross floor area to exceed the permitted limit and was contrary to planning regulations. Despite being required to do so, Mr Shiok was unwilling to remove or otherwise regularise the mezzanine floor. On 4 November 2009, Lim Contractors obtained a Court order permitting it to enter the Premises and take the necessary steps to remove the mezzanine floor. The mezzanine floor was eventually removed on 29 and 30 January 2010.

8 As to the Second Representation, the Judge found that there had been some attempt by Mr Shiok to raise the subject of a purchase in 2006 at which time, on Mr Lim's initiative, it was deferred until 2007 following the anticipated issuance of the certificate of statutory completion (‘CSC’) of the Premises (see the Original Decision at [29] ). But Mr Shiok never took steps to...