Oriental Investments (SH) Pte Ltd v Catalla Investments Pte Ltd

• Judgment Date: 10 December 2012
• Date: 10 December 2012
• Docket Number: Suit No 276 of 2010/J
• Court: High Court (Singapore)

Oriental Investments (SH) Pte Ltd

Plaintiff

and

Catalla Investments Pte Ltd

Defendant

[2012] SGHC 245

Philip Pillai J

Suit No 276 of 2010/J

High Court

Contract—Misrepresentation—Damages—Tenant incurring expenses that would have been incurred had regulatory approval been obtained—Whether damage proven

Contract—Misrepresentation—Damages—Tenant running profitable business on premises without regulatory approval for structures—Whether damage proven

Contract—Misrepresentation—Rescission—Tenant seeking to rescind tenancy that had already been terminated by effluxion of time—Whether tenant entitled to rescission

Contract—Misrepresentation—Statements of intention—Landlord stating that regulatory approval could be obtained for structures and that it would assist tenant in applying for regulatory approval—Whether statements were statements of fact—Whether statements were actionable misrepresentations

Contract—Misrepresentation Act—Whether landlord made non-fraudulent misrepresentations—Section 2 (1) Misrepresentation Act (Cap 390, 1994 Rev Ed)

Equity—Estoppel—Promissory estoppel—Whether landlord estopped from relying on condition precedent in agreement to renew tenancy—Whether landlord wrongfully repudiated existing lease

Landlord and tenant—Recovery of possession—Landlord resorting to self-help remedy of re-entry to forfeit lease—Whether landlord entitled to forfeiture

The plaintiff tenant, Oriental Investments (SH) Pte Ltd (‘the Plaintiff’), was at all material times acting through and represented by its director Kevin Guay Kim Hua (‘Kevin’); and the defendant landlord, Catalla Investments Pte Ltd (‘the Defendant’), was at all material times acting through and represented by its general manager, James Lim Keow Leng (‘James’).

In February 2005, Kevin negotiated with James to lease an outdoor refreshment area (‘the Premises’) from the Defendant, for the purpose of operating food stalls. Kevin wanted to construct a canopy over the premises and to build a fifth kiosk (‘the Structures’) in addition to the existing four kiosks. As regulatory approval from the Urban Redevelopment Authority (‘URA’) was required for these alterations, James represented to Kevin that he would guide and help Kevin sort out the paperwork, and to help him appoint an architect to submit plans to obtain the necessary approval from URA. As a result of James' representations, the Plaintiff engaged a contractor to construct the Structures. The Plaintiff then entered into a three-year tenancy (‘the First Tenancy’) with the Defendant over the Premises from 1 June 2005 to 31 May 2008.

James submitted the first application to the URA in August 2006. The application was rejected. On 20 November 2006, James sent a letter to Kevin stating that the Plaintiff had breached cl 3.7 of the First Tenancy and was to remedy the breach within 21 working days, and expressly reserving the Defendant's right to terminate the First Tenancy. However, James later told Kevin that the letter was ‘for reference only’ and had no legal effect. The Defendant did not subsequently exercise its right to terminate the First Tenancy.

On 1 October 2007, the Defendant offered the Plaintiff a renewal of the First Tenancy (‘the Second Tenancy’) for another two years from 1 June 2008 to 31 May 2010. Both Kevin and James signed the letter of offer for the Second Tenancy. There was a condition precedent at para 5 of the letter of offer that the additional drink kiosk had to be removed prior to the renewal of the First Tenancy.

On 28 March 2008, James sent Kevin a letter stating that there was no valid renewal of the First Tenancy, demanding the Premises to be reinstated by 31 May 2008. Kevin maintained that the Second Tenancy was valid. The relationship between the parties soured. In April 2008, Kevin found out for the first time from the architect that despite several applications to URA, the requisite approval had not been obtained.

On 1 June 2008, the Defendant re-entered the Premises to take vacant possession and dismantled the Structures. Subsequently, the Defendant sent the Plaintiff a cheque for the sum of $1,410.96, being the remainder of the Plaintiff's security deposit of $114,000, which the Plaintiff refused to accept. On 20 April 2010, the Plaintiff commenced the present suit for misrepresentation; breach of contract; breach of collateral contract; and wrongful repudiation of the Second Tenancy.

Held, allowing the claim:

(1) The fact of damage was an element of a claim based on misrepresentation and had to be proven on a balance of probabilities. The Plaintiff was unable to show any damage suffered during the First Tenancy as a result of the misrepresentations made by the Defendant. All the Plaintiff's claims for misrepresentation therefore failed: at [65] and [71].

(2) By the time the Defendant took vacant possession on 1 June 2008, the Plaintiff had already obtained the full benefit of the First Tenancy. The Plaintiff ran a profitable business on the Premises for the entire duration of the First Tenancy. No evidence was adduced by the Plaintiff to show that their present dispute with the Defendant had affected its business in any way during the term of the First Tenancy. The Plaintiff did not suffer any losses in the form of wasted rent or loss of business profits: at [66].

(3) The cost of erecting the Structures, engaging the architect, and applying to URA would have been incurred regardless of whether the Defendant made the misrepresentations. The Plaintiff did not suffer any damage in the form of wasted expenditure. As the Plaintiff did not enter into the First Tenancy with any option to renew, it was obliged to remove the Structures at the end of the First Tenancy. The cost of removing the Structures could not be considered damage: at [67] and [68].

(4) A necessary precondition to award rescission as a remedy for misrepresentation was that the performance of the contract could in fact be reversed and the representee had to be able to give back to the representor whatever he had received under the contract. The remedy of rescission was no longer available because the First Tenancy had already determined through the effluxion of time: at [75].

(5) The condition in agreement to grant the Second Tenancy that the additional drink kiosk had to be removed prior to the renewal of the First Tenancy was a condition precedent. However, by its consistent conduct and representations to the Plaintiff, the Defendant was estopped from relying on the condition precedent under the doctrine of promissory estoppel. The Plaintiff was able to show that (a)the Defendant made a clear and unequivocal promise; (b)the Plaintiff acted in reliance on the promise; and (c)as a result of the reliance the Plaintiff suffered detriment: at [80] and [82] to [92].

(6) There was a valid agreement between the parties for the Defendant to grant the Plaintiff the Second Tenancy starting from 1 June 2008. By entering the Premises and taking vacant possession on 1 June 2008, the Defendant was in repudiatory breach of the Second Tenancy: at [95].

[Observation: The right to re-enter the demised premises and forfeit the lease or tenancy was the most draconian weapon in the armoury of the landlord whose tenant had committed a breach of covenant. Where a tenant wrongfully held over, the landlord was statutorily entitled to double rent or double value at its option for the entire period of the wrongful holding over under s 28 (4) of the Civil Law Act (Cap 43, 1999 Rev Ed). When in doubt, the landlord might first obtain a judgment or a declaration of its rights and proceed to apply to court for a writ of possession. In addition, ss 18 and 18 A of the Conveyancing and Law of Property Act (Cap 61, 1994 Rev Ed) prescribe stringent conditions that a landlord had to satisfy before a tenant lost the right to relief against forfeiture. A prudent landlord having an independent common law self-help right of forfeiture would need to weigh the advantages of exercising this right against its entitlement to double rent for wrongful holdovers, and the availability of court processes to mitigate against the risk of liability for wrongful termination of the lease: at [97] to [102].]

Hughes v Metropolitan Railway Co (1877) 2 App Cas 439 (refd)

Panatron Pte Ltd v Lee Cheow Lee [2001] 2 SLR (R) 435; [2001] 3 SLR 405 (folld)

Persimmon Homes (South Coast) Ltd v Hall Aggregates (South Coast) Ltd [2008] EWHC 2379 (TCC) (refd)

Civil Law Act (Cap 43, 1999 Rev Ed) s 28 (4)

Conveyancing and Law of Property Act (Cap 61, 1994 Rev Ed) ss 18, 18 A

Misrepresentation Act (Cap 390, 1994 Rev Ed) s 2 (1)

Rules of Court (Cap 322, R 5, 2006 Rev Ed) O 45 r 3, O 45 r 3 (2) , O 45 r 3 (3)

Wang Tsing I Arthur (Tan Kim Seng & Partners) for the plaintiff

Phua Cheng Sye Charles and Stephen Cheong (Tan Kok Quan Partnership) for the defendant.

Judgment reserved.

Philip Pillai J

1 This is a dispute between a landlord and its tenant. The plaintiff tenant, Oriental Investments (SH) Pte Ltd (‘the Plaintiff’), was at all material times acting through and represented by its director Kevin Guay Kim Hua (‘Kevin’); and the defendant landlord, Catalla Investments Pte Ltd (‘the Defendant’), was at all material times acting through and represented by its general manager, James Lim Keow Leng (‘James’).

The facts

Background

2 Kevin is in the food business. Sometime in early 2005, Kevin started negotiating with James to rent an outdoor refreshment area (‘the Premises’) from the Defendant. Kevin alleges that, pursuant to certain representations made by James, he spent over $300,000 on renovations before a tenancy agreement was entered into and before regulatory approval was obtained for his planned renovations. The planned renovations included erecting a canopy and a fifth drink stall (for which regulatory approval had not been obtained) on the Premises in addition to four existing stalls (for...