Station Hotel Co v Malayan Railway Administration

• Judge: Chao Hick Tin J
• Judgment Date: 03 September 1993
• Neutral Citation: [1993] SGCA 62
• Citation: [1993] SGCA 62
• Defendant Counsel: Mohan Pillay and Abel Lee (Drew & Napier)
• Published date: 19 September 2003
• Plaintiff Counsel: Tan Hee Liang (Tan See Swan & Co)
• Date: 03 September 1993
• Docket Number: Civil Appeals Nos 150 and
• Court: Court of Appeal (Singapore)
• Subject Matter: s 151(1)(g) Control of Rent Act (Cap 58),Whether notice to quit invalid for reasons of illegality,Meaning of 'recoverable rent',Whether landlords waived rights to recover possession,Whether landlords entitled to recover possession,Mesne profits,Sub-letting at rent exceeding 110% of recoverable rent,Subleases/ underleases,Sub-letting of rent-control premises,Whether trial judge correct in determining 'standard rent' of premises,Rent and service charges,Whether property tax should be included in assessment,Landlord and Tenant,Whether measured by the actual value of premises if premises are rent controlled

Cur Adv Vult

In CA 150/92, Station Hotel Co, the tenants of the hotel situate within the Railway Station building at Keppel Road appeal against an order by Goh Joon Seng J granting recovery of possession of the said hotel to the landlords, the Malayan Railway Administration, who were the plaintiffs in the case. In CA 151/92, the landlords appeal claiming higher mesne profits than was awarded by the learned trial judge.

The facts

The facts of the case are mostly undisputed. The Malayan Railway Administration (`the landlords`), a Malaysian body corporate, are the owners of the rent-controlled Keppel Road Railway Station, which includes a hotel known as Station Hotel (`the hotel` or `the demised premises`). The demised premises comprise a bar and restaurant, and some 34 rooms.

In January 1978, the Station Hotel Co (`the tenants`) went into occupation of the demised premises pending finalization of a lease of the same from the landlords.

From November 1979 to January 1980, the tenants sub-let the bar and restaurant part of the demised premises to Chin Station Cocktail Lounge Pte Ltd (`the sub-tenants`) at $4,000 a month; from February 1980 to December 1982 this rental was increased to $4,500. The tenants did not notify the landlords of this sub-letting as required by s 21 of the Control of Rent Act (`the Act`). Instead, when the landlords wrote to them on 3 January 1980, after hearing rumours about this unauthorized sub-letting, the tenants wrote back on 10 January 1980 denying any sub-letting and claiming that they had only employed a firm of managers to assist in the running of the bar and restaurant.

After further negotiations the lease of the demised premises was eventually signed on 7 March 1981, for a term of five years commencing (retrospectively) on 1 January 1978. The monthly rents payable under the lease were:

(a) $1,250 from 1 January 1978 to 30 September 1979;

(b) $4,387.80 for October 1979;

(c) $4,866.60 for November and December 1979;

(d) $5,631.10 for January 1980;

(e) $7,500 from February 1980 to 31 December 1982.

In addition, the tenants were to pay the landlords $703.13 for property tax.

The sub-tenancy arrangement as to the hotel`s bar and restaurant ended on 31 December 1982. On 2 March 1983, the sub-tenants wrote to the landlords informing them of the particulars of the sub-letting, but although apprised of this fact the landlords continued to accept rents up to July 1983, when they served a notice of quit on the tenants requiring them to deliver vacant possession of the demised premises by 31 July 1983. The tenants refused to comply with the notice.

On 6 November 1984, the landlords commenced an action for the recovery of possession and damages. They contended that the tenants by sub-letting part of the demised premises for a rent that exceeded 110% of the `recoverable rent` of the demised premises had breached s 15(1)(g) of the Act, and thus they were entitled to re-entry and vacant possession of the demised premises.

Paragraph (g) of s 15(1) entitles a landlord to obtain recovery of possession of any premises comprised in a (rent-controlled) tenancy on the following ground, namely:

where the tenant having sub-let the premises or part thereof receives in respect of that sub-letting, rents (excluding any municipal services paid by the tenant) for any sub-let part of the premises in excess of the recoverable rent for that part, or rents which exceed in the aggregate 110% of the recoverable rent paid by the tenant himself including the apportioned rental or value of any part of the premises retained by the tenant or not sub-let by him.

There are two limbs in para (g). On the pleadings and as argued below the landlords` claim for repossession fell within the second limb in s 15(1)(g). In the appellate hearing before us, they attempted to establish an alternative claim falling within the first limb, but as this was not pleaded in their re-re-amended statement of claim nor argued before the learned trial judge below, we are of the view that this contention should not be entertained. The landlords must be regarded as having relied on the second limb of s 15(1)(g), and that alone.

The tenants in their defence contended, inter alia, that they had not sub-let at a rent in excess of the maximum permitted under s 15(1)(g), and even if they had, the landlords by accepting rent after knowledge of such sub-letting had waived their rights or were estopped from relying on such fact. The tenants also contended that by continuing to collect rent in excess of the `recoverable rent` allowed by the Act, the landlords had acted unlawfully.

The hearing at first instance

The Act provides for the protection of tenants of certain buildings by fixing the rent chargeable by landlords so as to prevent exploitation in times of, eg war. Section 2 of the Act defines `standard rent` as:

(a) if the rent has been fixed by the Board prior to the commencement of this Act, the rent so fixed;

(b) if the rent has not been fixed by the Board prior to the commencement of this Act, the rent of the premises as at 1st August 1939; or in the case of premises which were then unlet, unoccupied or unbuilt, the rent at which the premises were first let after 1st August 1939.

In addition, `premises` as in the context to which rent is charge is defined, inter alia, as:

any dwelling-house, flat, factory, warehouse, office, counting house, shop, school and any other building whether of permanent or temporary construction in which persons are employed or work and any part of any such building let or sub-let separately ...

After extensive records searches, parties could only find one previous letting of property within the Railway Station building by the landlords prior to the present lease. This was in November 1947 and was at a monthly rent of $1,525. However, the property held under the 1947 lease comprised only a portion of that held under the present lease: the area held under the first lease was 13,192 sq ft while that under the second lease was 46,476 sq ft. The learned trial judge thus held that the 1947 lease was not over the same premises (as defined in s 2) as in the instant case and therefore the present lease was the first lease of the demised premises after 1 August 1939. This finding was accepted by the tenants` then counsel and while it was attacked on appeal before us we declined to hold otherwise.

In accordance with the definition of `standard rent`, the learned trial judge took as the rent `at which the premises were first let` the rent that was initially charged under the present lease which he held was $1,953.13 ($1,250 plus the $703.13 property tax indemnity to be paid by the tenants). He equated this standard rent with the term `recoverable rent` as used in s 15(1)(g).

Having established the recoverable rent at $1,953.13, he then went on to see whether this had been exceeded to the extent that would contravene s 15(1)(g) by the amount collected by the tenants` sub-letting. The learned trial judge found as a fact that in collecting $4,000 and then $4,500 from the sub-tenants, the tenants were receiving rents in considerable excess of 110% of the $1,953.13 recoverable rent and had clearly breached the section.

He went on to hold that the fact that the landlords had consistently been getting rent far in excess of the standard rent, as evidenced from the various increases in rent provided for in the tenancy agreement, while unlawful, did not bar them from seeking to recover possession under s 15. This illegality did not taint the validity of the notice to quit issued to the tenants.

He also held that there had been no waiver or estoppel on the part of the landlords; he cited the case of Oversea-Chinese Banking Corpn Ltd v Eastern Auto Co Ltd , as being authority for the contention that a landlord`s acceptance of rent after knowledge that the tenants had brought themselves within s 15(1)(g) did not amount to a waiver such as would preclude the court from making an order for recovery of possession.

Having taken all matters into consideration, the learned trial judge made several orders. He firstly ordered the tenants to deliver vacant possession of the demised premises to the landlords on the ground under s 15(1)(g). Next, he ordered the tenants to pay the landlords $1,963.13 per month in mesne profits which were damages suffered due to their continued trespass in refusing to comply with the notice to quit. Finally, he ordered that the landlords repay the tenants the rents unlawfully received in excess of the lawful standard rent (such a remedy is specifically envisaged by s 3(4) of the Act). [See [1993] 1 SLR 839 .]

The tenants appealed against the order for vacant possession, and the landlords appealed against the sum awarded them for mesne profits.

Civil Appeal No 150/92: The tenants` appeal

The grounds of appeal

The tenants/appellants contended that the learned trial judge erred (1) in fixing the recoverable rent of the demised premises at $1,953.13; and (2) in not apportioning the rent between the sub-let and non-sub-let parts of the demised premises to decide that the rent collected under the sub-tenancy exceeded the recoverable rent by 110%, or in not requiring the landlords/respondents to prove this excess by a similar calculation. By reason of this, the learned trial judge erred in finding that the tenants had breached s 15(1)(g) of the Act and that they were liable to an order for repossession by the landlords.

Even if the tenants had been in breach of s 15(1)(g), they further contended that the learned trial judge erred (3) in failing to consider that the landlords` continuing acceptance of rent amounted to a waiver of their right to repossession; and (4) in finding that the tenants` tenancy was validly terminated notwithstanding the landlords` unlawful collection of rent in excess of the standard rent.

At the hearing before us, the tenants raised an...