Masa-Katsu Japanese Restaurant Pte Ltd v Amara Hotel Properties Pte Ltd

• Judge: Lim Teong Qwee JC
• Judgment Date: 23 June 1998
• Neutral Citation: [1998] SGHC 207
• Citation: [1998] SGHC 207
• Defendant Counsel: Gopal Krishnan Nair (G Raman & Partners)
• Published date: 19 September 2003
• Plaintiff Counsel: Benjamin Goh (Bernard Rada & Partners)
• Date: 23 June 1998
• Docket Number: Originating Summons No 9 of 1998
• Court: High Court (Singapore)
• Subject Matter: Whether option for renewal exercisable by fax,Tenant claiming rectification of agreement,Agreements for leases,Landlord and Tenant,Landlord objecting to option for renewal clause

Judgment:

LIM TEONG QWEE JC

By this originating summons issued on 6 January 1998 the plaintiff (which I shall refer to as the tenant) seeks the determination of a question as to the time to exercise an option for renewal of a lease and claims certain reliefs arising out of the determination of the question and certain other reliefs. At an early stage of the hearing the tenant applied to amend the statement of the questions and reliefs and the defendant (which I shall refer to as the landlord) did not oppose the application and I allowed it. The amendment effectively introduced new reliefs in substitution for some others. On 3 March 1998 the tenant further applied to amend the statement of the reliefs claimed by adding a claim for rectification of the lease. The application was opposed on the ground that it was made very late. I allowed the amendment.

2.The reliefs claimed in the amended form are as follows: (a). Prayer 1 claims an order that the landlord grants to the tenant a renewal of the lease in accordance with the terms of an agreement comprised in an offer to lease dated 19 September 1994 from the tenant and a letter of acceptance dated 27 September 1994 from the landlord and varied by a letter dated 10 February 1995 from the landlord.

(b). Prayer 2 claims an order for repayment by the landlord of sums overpaid by the tenant for rent, service charge and security deposit.

(c). Prayer 3(1) claims rectification of a lease dated 5 September 1995 and prayer 3(2) claims a declaration and certain orders arising out of the lease as rectified.

(d). Prayers 4 to 7 claim damages, interest, accounts and inquiries and costs as claimed in the original prayers 5 to 8.

3.On 3 March 1998 I made no order on prayer 1 and on prayer 2 I ordered repayment of the amount overpaid. On prayer 3(1) I ordered the lease to be rectified and on prayer 3(2) I granted the declaration asked for in para (a). I made no order on prayer 4 for damages and on prayer 6 for accounts and inquiries and I awarded costs to the tenant. On 19 March 1998 I heard further arguments at the request of the landlord and varied the order as to costs. These are my grounds.

4. Rectification

On 19 September 1994 the tenant wrote to the landlord a letter (which I shall refer to as the offer letter) making an offer to take a lease of the premises at [num ]01-17 of the building complex known as The Amara at 165 Tanjong Pagar Rd subject to certain terms and conditions set out in the offer letter. The relevant terms and conditions were:

2 Lease Period

Three (3) years with an option to renew for a further period of three (3) at prevailing market rental or at the current rental plus 30% whichever is the lower upon the terms and conditions to be agreed.

3 Rent

The rental including service charge is to be $10 per square foot per month payable in advance on the lst day of each calendar month.

4 Security Deposit

The security deposit in cash to be equivalent to Three (3) months` rent and service charge in the sum of S$60,000 (Singapore Dollars: Sixty Thousand only). This amount is subject to change, pending on an independent survey of the area once the unit has been renovated ...

5 Fitting-Out

A rent-free period of six (6) weeks from the date of possession of the premises will be granted for the fitting out of the premises ...

6 Commencement Date of Lease

The commencement date of lease shall be upon the expiry of the fitting-out period

...

8 Lease Documents

Upon acceptance of our offer we will execute a lease within 14 days from date of receipt of the lease documents ...

9 Permitted Use

For use as Japanese Restaurant serving sushi, sashimi and tempura dishes from grilled counter, steamed speciality dishes and other Japanese food.

10 Forms of Lease

(1) The lease shall be drafted on such further terms and conditions as your solicitors deem fit for the purpose of our trade.

The offer letter was substantially in the form provided by the landlord with changes agreed upon between the parties.

5.On 27 September 1994 the landlord replied by letter (which I shall refer to as the acceptance letter) the relevant part of which said:

We are writing to confirm our acceptance of your offer and advise that our solicitors are preparing the lease agreement and will revert to you in due course.

As stipulated in cl 10(3) of your offer letter, you shall submit the additions/alterations and signage plans of the unit for our approval before doing the same.

The management of Amara Hotel Properties Pte Ltd takes this opportunity to wish you all the best in your business endeavour.

The tenant paid part of the security deposit in accordance with the terms in the offer letter and took possession for the purpose of fitting out the premises.

6.The tenant encountered difficulties in regard to the fitting out works and on 19 December 1994 it wrote to the landlord to request an extension of three weeks. The six-week period for fitting out was due to expire on 28 December 1994. The request was at first turned down but following a meeting between representatives of the parties and a further letter from the tenant the landlord agreed to an extension. In its letter of 10 February 1995 (which I shall refer to as the variation letter) the landlord said:

After much consideration, we have agreed to extend the fitting-out period for another two weeks instead of the one week that we originally allowed for. Hence, the lease of unit [num ]01-17 The Amara will commence on 12 January 1995.

The letter went on to say:

Thus, proceed to remit rental payments to us for the months of January and February 1995. For the time being, the rental payment due to us will be based on the approximate area of the premises. We will keep you informed once the actual area has been established and will refund the balance, if any, back to your company ...

As regards to your proposal to amend the lease period to five years with an option to renew for another five years, we regret to inform you that your proposed amendment is unacceptable to us. The lease period for the above unit will thus remain at three years with an option to renew for another three years.

The tenant was already in possession and would have been in possession since 16 or 17 November 1994 when the fitting out period commenced. The fitting out works had been completed and both the landlord and the tenant had incurred expenditure. Rent had been paid and continued to be paid at $20,000 a month based on the estimated area.

7.On 26 April 1995 the landlord sent to the tenant the lease prepared by its solicitors. A copy of that lease was not produced but two clauses were not acceptable to the tenant and on 3 July 1995 the landlord agreed to exclude one of those two clauses and the tenant agreed to the other clause apparently after an explanation from the landlord. In due time the parties signed the lease which was dated 5 September 1995. The lease is a 57-page document with three schedules one of which sets out 19 paragraphs of rules and regulations of the building complex which the tenant must observe and comply with.

8.There were mistakes in the lease. The clauses affected in respect of which rectification is claimed fall into two groups broadly. One group comprises provisions as to the rent, service charge and security deposit. The tenant`s case is that an agreement for a lease had already been concluded by the correspondence, ie the offer letter dated 19 September 1994, the acceptance letter dated 27 September 1994 and the variation letter dated 10 February 1995. In that agreement the rent including service charge was $10 per sq ft per month and the security deposit was three months` rent and service charge. The amount of the rent and service charge was to be adjusted according to the area to be ascertained by an independent survey. The lease fixed the rent and service charge at $20,000 per month based on the estimated area of 2,000 sq ft. There was no provision for any adjustment upon the area being ascertained.

9.The landlord did not oppose rectification in respect of the clauses of the lease in this group and I made an order accordingly. It is clear on the evidence that before the lease was signed the parties had agreed on all the material terms of an agreement for a lease. The premises were identified. The rent and service charge were agreed. The term of the lease was agreed and the commencement date was fixed by reference to an agreed timetable. Rent had been asked for unconditionally (save as to adjustment on ascertainment of the actual area) and duly paid. The parties have acted upon the faith of the correspondence. They undoubtedly considered themselves bound as landlord and tenant of the premises although the offer letter of 19 September 1994 contains certain terms two of which call for some consideration.

10.Paragraph 8 of the offer letter says that upon acceptance of the offer the tenant will execute a lease within 14 days of receipt of the lease documents. Clearly it was contemplated that the arrangements between the parties would be recorded in a formal document. The question is whether the execution of a lease by the tenant is a condition of the bargain or whether it is a mere expression of the desire of the parties as to the manner in which the transaction which has already been agreed to will in fact go through. See Von Hatzfeldt-Wildenburg v Alexander [1912] 1 Ch 284 per Parker J at p 289.

11.I am unable to read into para 8 of the offer letter a condition precedent to the creation of an agreement that the lease documents should be signed and nothing in the language of any part of the offer letter or of the acceptance letter or the variation letter leads me to do so. The offer letter does not say so. It does not say that upon the offer being accepted there is nevertheless to be no agreement until the tenant has signed the lease. It does not say anything of the kind and nothing in the correspondence suggests such a construction....