Orchard Central Pte Ltd v Cupid Jewels Pte Ltd (Forever Jewels Pte Ltd, non-party)

• Jurisdiction: Singapore
• Judge: Lee Seiu Kin J
• Judgment Date: 22 February 2013
• Neutral Citation: [2013] SGHC 46
• Date: 22 February 2013
• Docket Number: Originating Summons No 813 of 2010
• Published date: 27 February 2013
• Plaintiff Counsel: Ling Tien Wah and Ho Chun Yoong Charles (Rodyk & Davidson LLP)
• Hearing Date: 03 May 2012,12 March 2012,13 March 2012,14 March 2012
• Defendant Counsel: David Nayar (David Nayar and Vardan),Suresh Damodara (Damodara Hazra LLP)
• Court: High Court (Singapore)
• Subject Matter: Landlord and Tenant,Distress for Rent

Lee Seiu Kin J :

These proceedings concern two related applications for the release of goods seized by a landlord of commercial premises under a writ of distress issued on 6 August 2010. The first application was brought by the tenant, and the second application was brought by a third party claiming to have beneficial ownership over the seized goods.

Background Parties to the dispute

The plaintiff, Orchard Central Pte Ltd (“Orchard Central”), is the landlord of a commercial and retail development located at 123 Orchard Road known as Orchard Central (“OC”).

The defendant, Cupid Jewels Pte Ltd (“Cupid Jewels”), leased two units in OC, #01-D1 and #02-07 (hereafter the “Premises”), from Orchard Central for the purpose of carrying out the retail sales of jewellery.

The non-party, Forever Jewels Pte Ltd (“Forever Jewels”), is described as the “sister company” of Cupid Jewels.¹ Cupid Jewels and Forever Jewels share the same directors and two common shareholders.

The negotiations over the Lease Agreement

Sometime in October 2007, Marjory Lim Bee Teen (“Lim Bee Teen”) – the managing director of Forever Jewels – and Rosalind Lim Kah Nai (“Lim Kah Nai”) – executive director of Cupid Jewels – commenced negotiations with representatives from Far East Retail Consultancy Pte Ltd (“Far East”), the company responsible for the conduct of leasing matters relating to OC.

On 25 May 2008, a lease agreement was entered into for the Premises for a period of three years (“the Lease Agreement”). Pursuant to cl 1.2 and Schedule 1 to the Lease Agreement, the rent payable was either a base rent of a fixed sum per month or a percentage rent of 5% of the monthly gross sales turnover, whichever was higher.

In March 2009, before Cupid Jewels took possession of the Premises, Lim Kah Nai wrote to Far East seeking a review of rental rates as “the current market situation [was] working against all of [them]” and because “the tenant mix and occupancy [had] yet to reach the projected figures that were presented to [Cupid Jewels]”.² Far East agreed to offer a rental assistance of $13,294 to be distributed between June and October 2009.

Possession of the Premises was handed over to Cupid Jewels on 9 June 2009 for renovations, and Cupid Jewels commenced business at OC in two phases; the unit located on Level 2 opened in September 2009 and the unit located on Level 1 opened in December 2009.³

The negotiations over the payment of rental arrears

Sometime in May 2010, the director of retail operations of Cupid Jewels, Louis Chua How Meng (“Louis Chua”), began negotiations with representatives from Far East and Orchard Central for a rental review. On 1 June 2010, Jaylyn Ong, the general manager of Orchard Central, offered a rental rebate ranging from 40% to 60% of the base rent for the months of September 2009 to November 2009 and January 2010 to May 2010.⁴ A formal rebate letter was forwarded to Louis Chua on 2 June 2010 with the following conditions⁵:

Our offer is made in good faith on our part. We hope that this will help us to move forward together to establish a fruitful and mutually beneficial relationship.

An acceptance of this offer would also indicate your unconditional acceptance of the confidentiality and non-disclosure provisions set out in Schedule 1 herein as well as full compliance with the following: (1) Payment of outstanding [sic] for the Premises. (2) Acceptance must be accompanied by a cheque for full payment of the sum subject to subsequent clearance. (3) Rental must be kept current at all times. (4) Full compliance with the terms and conditions of the Lease Agreement.

We would be grateful if you could kindly confirm your acceptance of the above by signing on the duplicate copy of this letter and return it ... no later than 9 June 2010.

...

If for any reason we do not receive the duly signed duplicate copy of this letter by the above stipulated date, the offer shall lapse absolutely without further notice from us. Please note that the Rent Rebate will only take effect on your fulfilment of the conditions precedent stated above.

[emphasis added]

Cupid Jewels did not sign the rebate letter or confirm acceptance of the offer. Louis Chua gave evidence during cross-examination that, after the offer lapsed on 4 June 2010, there was a subsequent meeting with representatives from Far East and Orchard Central, including Jaylyn Ong and Chan Iz-lynn, who was taking over the matter from Jaylyn Ong. The parties discussed the possibility of reviewing the rent, but there is no evidence that any agreement was reached.⁶

Louis Chua responded via email on 14 June 2010, proposing a rental package with a base rent of $15,000 plus a graduated percentage rent of the sales turnover. Louis Chua also requested Far East to consider extending the proposal retrospectively from August 2009.⁷ Chan Iz-lynn replied on 17 June 2010. She rejected Louis Chua’s proposal for a new retrospective rental package, but stated that Orchard Central would “honour our rebate committed as shown in the list, provided that [Cupid Jewels] come [sic] with a plan to settle the arrears up till May10 [sic], within a reasonable timeframe” [emphasis added].⁸

The next email correspondence on rental from Louis Chua was not until 13 July 2010, in which he requested for payment of rental arrears to commence in August 2010, in 24 monthly instalments.⁹ On 27 July 2010, Chan Iz-lynn replied with the following message¹⁰:

... We have reviewed your request comprehensively and regret that we are unable to agree to your request of payment of your outstanding arrears in 24 months. We have reviewed, and request that all the arrears be paid by 31 Dec 2010.

We look forward to your instalment plans, afterwhich [sic], we can move our discussion forward.

Louis Chua sent an email acknowledging receipt on 29 July 2010, and notified Chan Iz-lynn that the owners of Cupid Jewels were presently “outstation” and that he would “revert on plans after meeting with the owners”.¹¹ From 29 July 2010 to 5 August 2010, Louis Chua continued to correspond with other representatives of Far East on the provision of audited sales reports and sales statements.¹² Procedural history

On 6 August 2010, Orchard Central filed an ex parte application for a writ of distress for the sum of $891,507.99 being the amount due in respect of outstanding rent for the period from August 2009 to August 2010. Writ of Distress No 2 of 2010 (the “Writ of Distress”) was granted by the Assistant Registrar (the “AR”), and the sheriff seized all the goods found on the Premises on the same day pursuant to the writ of distress. The seized goods included 576 items of jewellery (the “distrained jewellery”), furniture, displays and office equipment.

On 16 August 2010, Cupid Jewels filed Summons No 3835 of 2010 (“Cupid Jewels’ Application”) for the release of all the distrained jewellery pursuant to s 16 of the Distress Act (Cap 84, 1996 Rev Ed). A separate application Summons No 3916 of 2010 was filed by Forever Jewels (“Forever Jewels’ Application”) on 19 August 2010 for the distrained jewellery to be released to the custody of Forever Jewels pursuant to s 10 of the Distress Act.

Both applications came before me for hearing on 7 September 2010. I dismissed Cupid Jewels’ Application and granted leave for the parties to cross-examine the deponents of the affidavits filed in this matter.

Cupid Jewels appealed against my dismissal of its application. The Court of Appeal restored Cupid Jewels’ Application to be heard together with Forever Jewels’ Application: see Cupid Jewels Pte Ltd v Orchard Central Pte Ltd [2011] 3 SLR 492 (“Cupid Jewels (CA)”).

The applications for release of the distrained jewellery

Cupid Jewels’ Application was premised on the following grounds: Orchard Central had failed to make full and frank disclosure to the AR when making the ex parte application for the Writ of Distress. The application for the Writ of Distress did not satisfy the procedural requirements under s 5 of the Distress Act. Orchard Central was estopped from enforcing its strict legal rights to take out the Writ of Distress as it had made a representation to Cupid Jewels that a rental rebate would be granted and that the latter would have until 31 December 2010 to pay the rental arrears in instalments. Cupid Jewels was entitled to the release of the distrained jewellery under s 16 of the Distress Act as the goods were exempt from seizure under s 8(d) of the same act.

Forever Jewels argued that the distrained jewellery should be released to it under s 10 of the Distress Act as it was at all times the beneficial owner of the distrained jewellery and Orchard Central had actual knowledge of this fact.

Cupid Jewels’ Application

I preface my discussion of Cupid Jewels’ Application by noting that a number of arguments were raised in submissions by Forever Jewels. Orchard Central took the position that Forever Jewels had no locus standi to raise any issues that relate solely to the grounds of Cupid Jewels’ Application. However, as Cupid Jewels indicated its adoption of Forever Jewels’ submissions without reservation, I will, for completeness, consider these supplementary arguments where relevant.

Issue I: Was there material-nondisclosure?

Cupid Jewels argued that Orchard Central had failed to make full and frank disclosure to the AR while taking out the application for the Writ of Distress. In particular, Orchard Central had allegedly failed to inform the AR of the ongoing negotiations between the parties for the payment of the rental arrears only by 31 December 2010 or the pending offer for a rental rebate conditional upon the proposal of an acceptable instalment plan for repayment by Cupid Jewels. Cupid Jewels further submitted that the court should adopt an even stricter view than that generally taken in relation to ex parte applications, as the execution by...