Midlink Development Pte Ltd v The Stansfield Group Pte Ltd

• Jurisdiction: Singapore
• Judge: V K Rajah JC
• Judgment Date: 20 August 2004
• Neutral Citation: [2004] SGHC 182
• Docket Number: Suit No 503 of 2003
• Date: 20 August 2004
• Year: 2004
• Published date: 26 August 2004
• Plaintiff Counsel: Ranjeet Singh and Amerjeet Singh (Francis Khoo and Lim)
• Citation: [2004] SGHC 182
• Defendant Counsel: Gregory Vijayendran and Mohamed Gul (Wong Partnership),Lim Kim Hong (Kim and Co)
• Court: High Court (Singapore)
• Subject Matter: Whether subsequent conduct of parties consistent with conclusion of such tenancy agreement between them,Whether silence following offer tantamount to acceptance,Oral agreement between parties,Whether application should be allowed,Pleadings,Formation,Contract,Acceptance,Agreement not engrossed and executed,Formalities,Section 6(d) Civil Law Act (Cap 43, 1999 Rev Ed),Civil Procedure,Whether necessary to expressly plead defence of non-compliance with s 6(d) Civil Law Act to rely on such defence at trial,Amendment,Application to amend pleadings made nine days after judgment entered

20 August 2004

V K Rajah JC:

1 Silence is golden – so the saying goes. In a purported contractual setting, however, this is not always axiomatic. Silence or unarticulated intentions can sometimes lead to and culminate in acrimonious litigation. This is a paradigm case.

2 The plaintiff is the landlord of Midlink Plaza, a mixed user complex in Middle Road. The defendant is in the business of providing courses, preparing students for degree programmes as well as executive education.

3 In November 1995, the defendant leased a single unit from the plaintiff. As the defendant’s business expanded, it progressively leased additional premises from the plaintiff. Between 1997 and April 2001, nine further units were leased (“the premises”). Units initially leased in 1997 and 1998 had their terms duly renewed. Eventually the parties agreed on a common termination date for the premises – the end of June 2002 (“the expiry date”). As the parties enjoyed a cordial relationship, their initial practice of documenting all issues ultimately crystallised into one where only important issues were documented.

4 Prior to the expiry date, the parties met to discuss future arrangements to lease the premises. On 25 April 2002, Tan Teng Siah (“TTS”), the plaintiff’s manager, had discussions with Kanappan s/o Karuppan Chettiar (“KC”), the managing director of the defendant, as well as Cenobia Majella (“CM”), the defendant’s executive director. KC and CM are husband and wife and to all intents and purposes function as the operating minds and hands of the defendant. TTS, on the other hand, was not an ultimate decision maker and had to refer critical issues to the plaintiff’s managing director.

5 The meeting of 25 April 2002 ended inconclusively. There are varying accounts of what transpired between TTS, KC and CM. Surprisingly, even KC and CM seem to differ on crucial points. The parties agreed to meet again to address unresolved issues.

6 TTS, KC and CM met again on 2 May 2002. TTS claimed that at this meeting an agreement was reached to lease the premises for a further period of two years at a reduced rental of $3.05 per square foot per month (“psf”) as opposed to the earlier rental of $3.10 psf. KC and CM vigorously disputed this. As far as they were concerned, the matter was left unresolved at this meeting; TTS, they claimed, was to have followed up with draft documentation for the defendant’s further consideration.

7 On 2 July 2002, the plaintiff issued a credit note in favour of the defendant for $2,628.45. The credit note was captioned “Reduction of Rental Deposit” and included the following description: “being reduction of rental deposit for leases of unit …” as well as “Old deposit $162,963.90 (17523 sf x $3.10 x 3) less new dep $160,335.15 (17523 sf x $3.05 x 3)” [emphasis added]. There is no question that this note was duly received by the defendant and that the benefit of the credit was accepted. On 5 July 2002, the plaintiff forwarded to the defendant engrossed new tenancy agreements for execution (“the tenancy agreements”). The tenancy agreements reflected the new rental and were substantially similar to the earlier agreements. The defendant has not taken serious issue with the contents of the tenancy agreements in its correspondence, pleadings, evidence or submissions, save for the absence of a termination clause. The covering letter addressed to KC reminded the defendant to “kindly sign, stamp (at stamp office) and return us the duplicate copy within the next 7 days”. This the defendant did not do. However, it continued to duly and promptly pay the reduced rental charges (“adjusted rental”) at the beginning of each month on receipt of the plaintiff’s invoices, in accordance with the practice established during the earlier leases. Nothing eventful happened until the end of September 2002.

8 On 27 September 2002, the plaintiff sent a reminder to the defendant, stating that the duplicate copies of the “lease agreements” had yet to be received. It requested that these be returned within the next three days. This was not done. The parties tried to meet but were unable to do so until 12 December 2002. In the meantime, the defendant continued to duly pay the adjusted rental without reservation or qualification. It is also incontrovertible and of crucial significance that the defendant failed to inform the plaintiff of its position on the tenancy agreements until early December – assuming that its defence is accepted in the first place.

9 On 12 December 2002, TTS, KC and CM met again. KC had requested that Michael Cope (“MC”), the defendant’s academic vice-president cum director, attend the meeting as well. Again, what the parties discussed is in dispute.

10 On 7 January 2003, the defendant submitted a tender to lease a building at 11 Penang Lane. The tender proved to be successful and the defendant was duly notified on that very same day. On 15 January 2003, the defendant gave the plaintiff notice of “termination of lease” of two units. CM’s letter to TTS stated that the defendant “will not be requiring the … units” and would be returning both units by 31 March 2003. The plaintiff responded the very next day disputing the defendant’s right to terminate the leases and insisting on adherence to the “contractual agreement to lease … the premises up to 30 June 2004”. The relationship, not surprisingly, soured rapidly after mid-January 2003.

11 The defendant thereafter refused to make further rental payments. The plaintiff, in turn, initiated distress proceedings for outstanding rentals for the months of February and March 2003. On a without-prejudice basis, the defendant settled the rental claims but nevertheless vacated the premises in May 2003.

12 Cursory efforts by the defendant to assist the plaintiff in locating substitute tenants proved to be unfruitful. Sustained efforts by the plaintiff to secure new tenants were also to no avail. The rental market was admittedly weak throughout the relevant period. Not long after the defendant vacated the premises, the plaintiff initiated these proceedings.

13 In these proceedings, the plaintiff claims the outstanding rental under the alleged tenancy agreements as damages. The defendant in turn denies that there was a fresh two-year tenancy and demands the return of the rental deposit. At the conclusion of the proceedings, I granted judgment in favour of the plaintiff. The defendant has now appealed against my judgment.

14 It was clear to me from the outset that the contrasting versions given by TTS, KC and CM of the meetings on 25 April, 2 May and 12 December 2002 are irreconcilable. Careful attention must therefore be accorded to the credibility of the witnesses in assessing the strength of the rival contentions. It is also important to weigh the evidence against the conduct of the parties. In this connection, the exchange of correspondence between the parties is both illuminating and cogent.

The pleadings

15 The plaintiff alleges that the tenancy agreement commencing 1 July 2002 was evidenced “partly in writing and partly by conduct”. In addition to the “oral agreement” reached on 2 May 2002 fixing rental at $3.05 psf for two years, it is alleged that the relevant aspects of the defendant’s conduct pointing to a concluded contract include a reduction in the rental deposit and rent as well as subsequent adjusted rental payments from July 2002 to December 2003, and extended air-conditioning hours from 8.00am to 10.00pm instead of 8.00am to 6.00pm effective 1 July 2002. Reliance was also placed on the defendant’s silence upon receipt of the engrossed tenancy agreements dispatched on 5 July 2002 (which the plaintiff construed as assent) and, finally, the defendant’s renovations of the premises in June 2002.

16 The defendant denies the existence of any binding tenancy agreement. The defence asserts that there was a practice and course of dealing between the parties that contemplated the sending of a letter of offer as a precursor to a binding contract. The meeting on 2 May 2002 between the parties, it claimed, concluded with an agreement that the plaintiff would send to the defendant a letter of offer followed by a draft tenancy agreement for both one- and two-year terms for the defendant’s “perusal and election” [emphasis added]. It is also asserted that the defendant took the very same position with its other landlord at Midlink Plaza. Furthermore, the defence contends that at two meetings on 27 September 2002 and 12 December 2002 the plaintiff was informed unequivocally that there was no binding tenancy agreement. The relationship was merely that of a tenancy at will or at most a monthly tenancy. The defence emphatically asserts that since the tenancy agreements were not signed there could have been no other manner of legal relationship between the parties.

Evidence

25 April 2002 meeting

17 The defendant’s evidence relating to the discussions at this meeting is clearly incongruous with its pleadings. It was expressly pleaded that the rental of $3.05 psf was agreed upon at this meeting, leaving other “salient terms” that included a termination clause and rent-free period open for future discussion. In his affidavit, KC repeated what had been pleaded. CM, on the other hand, asserted in her evidence that the rent was never agreed to at all, let alone resolved at this meeting. This is wholly at variance with KC’s evidence and totally belies the defendant’s subsequent conduct in effecting payment of the adjusted rent. In addition, she added that the termination clause was crucial in light of problems arising from “the building’s central air-conditioning, pest control and toilet facilities”.

18 TTS testified that during the discussions he had initially proposed leaving the rent at $3.10 psf. He had also offered to increase the air-conditioning hours for the premises and had given the defendant a worksheet detailing the additional costs that would be incurred as a consequence of...