Nova Management Pte Ltd v Amara Hotel Properties Pte Ltd and Another

• Judge: G P Selvam JC
• Judgment Date: 24 December 1992
• Neutral Citation: [1992] SGHC 330
• Citation: [1992] SGHC 330
• Defendant Counsel: James Ponniah (Wong & Lim)
• Published date: 19 September 2003
• Plaintiff Counsel: Lim Chor Pee (Chor Pee & Co)
• Date: 24 December 1992
• Docket Number: Suit No 1587 of 1991
• Court: High Court (Singapore)
• Subject Matter: Enforceability,Staututory illegality,Defendants'entitlement to costs,Late introduction of defence by amendment to defence,Performance of contract would result in violation of law,Costs,s 3 Public Entertainments Act (Cap 257),Defence succeeded,r 5 Public Entertainments Rules 1969,Civil Procedure,Agreement for plaintiffs to manage and operate a discotheque,Illegality and public policy,Whether agreement was enforceable,Defence of illegality of contract,Contract,Public entertainment licence to be obtained by defendants

The question before me was: Whether an agreement for the management of a discotheque by the plaintiffs was illegal and therefore void ab initio and/or unenforceable. The operation of a discotheque requires a licence under the Public Entertainments Act (Cap 257) (`the Act`) and the rules made under the Act - the Public Entertainments Rules 1969 (`the Rules`).

The answer to the question has implications beyond this case because the answer will apply to a number of other statutes requiring the licencing of business which they regulate.

The management agreement

The first defendants own a building where they run the Amara Hotel. The building is situated at 165 Tanjong Pagar Road, Singapore. In addition to the hotel the building includes a shopping complex. The first defendants were desirous of converting the fourth level of the building which was originally designed as a shopping unit into a discotheque. They, however, did not have the know-how to set up and operate a discotheque. The plaintiffs were a member of a group which possessed extensive experience and reputation in the management of discotheques. So at the request of the first defendants the plaintiffs agreed to convert the premises into a discotheque, and upon completion manage and operate it.

The agreement between the plaintiffs and the first defendants was made on 8 July 1988. The base operating term under the agreement was a period of 36 months commencing on the formal opening of the discotheque. Clause 23 of the agreement gave the plaintiffs the right to extend the base operating term for a further term of three years provided certain conditions were satisfied.

The Public Entertainments Act

The Act was enacted to provide for the regulation of public entertainments. Section 3 of the Act provides:

No public entertainment shall be provided except -

(a) in an approved place; and

(b) in accordance with a [public entertainment] licence issued by the Licensing Officer.

Under s 18, any person who provides or assists in providing any public entertainment without a licence under the Act or in contravention of any condition of a licence or the Act or any rules made thereunder commits an offence punishable by a fine of up to $5,000. A licence issued under the Act has a maximum life span of 12 months. It is not renewable as of right. The licence in effect is a suitability certificate for the provider of public entertainment to operate a discotheque. And therefore the licence holder is personally responsible for the observance of the conditions of a licence. For this reason the licence is issued only to a natural person irrespective of whether the application for it was made by a natural person or by a company or a firm which provides the public entertainment.

Rule 5 of the Rules says: `No licensee shall transfer or lend his licence to any other person.`

The first defendants` position under the agreement

By the terms of the agreement the first defendants were required `to obtain the unconditional approval of the relevant authority for change of use of premises from shop to discotheque`. This of course was for the start-up of the discotheque.

When the discotheque was set up and ready for operation, the first defendants became `responsible for applying for and obtaining the licence and maintaining it throughout the duration of the operating term`. The first defendants were required to adduce proof to the plaintiffs that they had obtained the licence to operate the discotheque and to sell alcoholic liquor for consumption in the discotheque up to 3am daily. The cost of the licence, however, was to be paid by the plaintiffs.

The plaintiffs` position

The principal duties imposed on the first plaintiffs by the agreement are set out below:

(a) The plaintiffs, at their own cost and expense, were to operate and manage the discotheque.

(b) They were to provide and secure for consumption in the discotheque beverage and food. The plaintiffs were given the right to decide the prices.

(c) The plaintiffs were required to employ and pay an adequate staff for the purpose of operating the discotheque to provide the necessary furniture, sound equipment, light fittings and other paraphernalia for use in the discotheque.

(d) The plaintiffs were required to use the premises solely for carrying on the business of a fully licensed discotheque and for all activities in connection with such business.

The agreement further provided that subject only to any express limitation contained in the agreement the plaintiffs had control over the management and operation of the discotheque and the provision of the services set out in the agreement. It also said that the plaintiffs, in performing their obligations under the agreement, were to be free from interruption or disturbance and to be able to take any action needed to ensure such freedom. If the operation of the discotheque were interrupted or discontinued as a result of the loss or forfeiture of the licence for any reason whatsoever, the agreement was not terminated but the plaintiffs were entitled to apply for such licence as may be necessary for the operation of the discotheque and the sale of liquor. I shall refer to this as `the cl 9 right`.

The dispute

The plaintiffs set up the discotheque as required by the agreement. It formally opened for business as `Dreams Disco` on 21 December 1988. The plaintiffs operated it. The licence was applied for by the first defendants. The licence holder was a person nominated by the first defendants. At the material time the second defendant, a nominee of the first defendants, was the licence holder.

In June 1991 the second defendant advised the authorities that he had no power to ensure the observance of the terms and conditions of the public entertainment licence he held. The authorities charged him in court and he was convicted and fined. No new licence was applied for and the existing licence was due to expire on 1 August 1991.

On 29 July 1991 the plaintiffs commenced this action alleging that the first defendants had terminated or attempted to terminate the agreement and procured the non-renewal of the public entertainment licence by causing the second defendant to refuse to apply for its renewal. Next it was alleged that the first defendants terminated the agreement without a valid ground.

Based on the above the plaintiffs claimed reliefs which included a declaration that the notice to terminate the agreement was null and void and an injunction to restrain the first defendants from acting on the notice of termination. The termination issue was not part of the proceedings before me. The plaintiffs further asked for:

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