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

• Jurisdiction: Singapore
• Judge: Philip Pillai J
• Judgment Date: 10 December 2012
• Neutral Citation: [2012] SGHC 245
• Court: High Court (Singapore)
• Docket Number: Suit No 276 of 2010/J
• Year: 2012
• Published date: 14 December 2012
• Hearing Date: 27 May 2011,06 January 2012,26 May 2011,11 October 2011,24 May 2011,25 May 2011
• Plaintiff Counsel: Wang Tsing I Arthur (Tan Kim Seng & Partners)
• Defendant Counsel: Phua Cheng Sye Charles and Stephen Cheong (Tan Kok Quan Partnership)
• Subject Matter: Contract,misrepresentation,Equity,estoppel,promissory estoppel,relief,against forfeiture,Landlord and tenant,termination of leases,forfeiture
• Citation: [2012] SGHC 245

Philip Pillai J:

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

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 which regulatory approval had already been obtained). These facts were not in dispute. For convenience, I shall refer to the canopy and the fifth drink stall collectively as “the Structures”.

Kevin alleges that during the negotiations James represented that (a) regulatory approval from the Urban Redevelopment Authority (“URA”) for the Structures could be obtained; (b) the Defendant did not object to the erection of the Structures; and (c) James would help the Plaintiff apply for the necessary approvals. Unsurprisingly, James denies ever making these representations to Kevin.

On 19 July 2005, the Plaintiff entered into a tenancy agreement (“the First Tenancy”) with the Defendant for three years, backdated to start from 1 June 2005 and ending on 31 May 2008. The agreed rental for the First Tenancy was $32,000 a month for the first year and $38,000 a month for the second and third years. These facts were not in dispute.

After entering into the First Tenancy, James made various submissions to URA through another firm known as SA Lim Architects (“SA Lim”). However, James could not obtain approval for the Structures. URA had insisted in its letters to SA Lim that the Structures on the Premises must be removed. These facts were not in dispute. Kevin avers that James did not tell him about the problems, and that he only discovered the problems when he personally approached SA Lim in April 2008, less than two months before the termination of the First Tenancy.

On 1 October 2007, the Defendant offered the Plaintiff a renewal of the existing tenancy agreement for another two years (“the Second Tenancy”) from 1 June 2008 to 31 May 2010 at an increased rental of $52,000 per month. The Second Tenancy, which was signed by both parties on 10 October 2007, contained certain condition precedents. Whether or not there was valid and unconditional acceptance of the Second Tenancy by the Plaintiff and whether certain condition precedents were fulfilled were two issues disputed by both parties. Much of the present case turns on the findings of fact relating to the letter of offer dated 1 October 2007 concerning the Second Tenancy, which I will consider later.

Shortly after signing the letter of offer dated 1 October 2007, parties started disputing whether or not the Plaintiff’s purported acceptance of the Second Tenancy was valid. The relationship between the parties deteriorated so badly that by April 2008, the Plaintiff and the Defendant would only communicate with each other through their lawyers. From April to May 2008, the Plaintiff asserted that the offer for the Second Tenancy was validly accepted and hence there was a binding tenancy for another two years, whereas the Defendant denied the validity of the Second Tenancy because certain condition precedents stated therein were not fulfilled.

On the morning of 1 June 2008, the day immediately following the expiration of the First Tenancy, the Defendant re-entered the Premises at about 7.15 am and took vacant possession by removing the Plaintiff’s fixtures including the Structures. The Plaintiff then brought the present action.

Plaintiff’s case The representations

Kevin avers in his Affidavit of Evidence-in-Chief (“AEIC”) that sometime before February 2005, one Alex Ng (“Ng”) informed him that the Defendant was looking for a new operator for the Premises. Kevin went with Ng to view the Premises, and found the Premises to be suitable for use as an outdoor refreshment area (“ORA”). While they were at the Premises, Kevin and Ng met James (“the February 2005 meeting”) who introduced himself as the General Manager of the Defendant. Kevin and Ng both aver in their respective AEICs that, at the February 2005 meeting, Kevin informed James that he had previously operated stalls only in foodcourts, and that he had no prior experience or expertise in operating an ORA business. Kevin further avers that at this meeting, James offered to guide and help him sort out the paperwork, and to help him appoint an architect to submit plans to obtain the necessary approval from URA for any alteration or addition that had to be made to the Premises.¹

Kevin’s case is that at the February 2005 meeting, he told James that he intended to construct a canopy structure over the ORA so that his patrons could be sheltered from poor weather. Kevin avers that James assured him that the construction of the canopy did not pose any problems as it “only involved submission of plans to the relevant authorities for approval” and that James further suggested that Kevin could construct an additional fifth kiosk at the side of the Premises to sell drinks. As a result, Kevin incorporated the Plaintiff company in March 2005 to contract the First Tenancy with the Defendant.

Engaging Kingsville

After some negotiation, the parties agreed that the rental payable for the First Tenancy was $32,000 a month for the first year and $38,000 a month for the second and third years. This fact is not in dispute. Kevin’s avers that after the February 2005 meeting, he arranged for his own contractor to view the Premises for a price quotation to build the Structures. When James heard about this, he recommended Kingsville Pacific Pte Ltd (“Kingsville”) to Kevin, because Kingsville had prior experience and would be able to secure the necessary approval from the authorities expeditiously.

In late March 2005, Kingsville quoted Kevin $320,000 to construct the Structures. Kevin avers that he engaged Kingsville even though he had received lower quotations for the same work from other contractors, and even though he had not yet entered into the First Tenancy. Kevin alleged that Kingsville provided both himself and James with the proposed plans of the Structures. Although James knew that works were ongoing, the Defendant did not raise objections whilst Kingsville constructed the Structures. Kevin’s case is that he was under the impression that James would proceed to apply for approval from URA on the Plaintiff’s behalf after the construction of the Structures was complete because James promised to do so. James denies making such a promise.

In late May 2005, the Plaintiff took possession of the Premises and commenced business. Soon after, the Plaintiff received a letter from the Building and Construction Authority (“BCA”) dated 2 June 2005 informing it that the Structures did not conform to the plans which were earlier approved by the URA and confined to four kiosks only. Kevin avers that he was shocked to receive the letter, and that he wanted to seek clarification directly from the URA. However, he avers that James told him that the authorities would not entertain him because he was neither the landlord nor the owner of the Premises. Kevin further avers that James told him not to worry because the proposed plans had already been submitted to URA for approval and that he should concentrate on running his business. Trusting James, Kevin stopped asking him questions.

The First Tenancy

The First Tenancy agreement, which was to last for three years, was executed in July 2005; and was backdated to begin on 1 June 2005 and end on 31 May 2008. Kevin avers that, because of his limited command of the English language, of which James was aware, James had to explain the terms of the First Tenancy to him. Kevin further avers that James assured him repeatedly not to worry about the details of the contract as long as he paid the rent on time each month. James denies making such assurances.

Subsequently, Kevin claimed that whenever he met James at the Premises, he would ask James about the status of the URA approval and James would tell him that the plans had already been submitted and that he should wait patiently. Kevin avers that he never received copies of the submission of plans to URA or any details from James or from Kingsville.

The 20 November 2006 letter

Sometime in March 2006, Kevin avers that James mentioned that there were problems with obtaining the approval although he did not give any further details or explanation. To Kevin’s surprise, he received a letter from the Defendant dated 20 November 2006 (“the 20 November 2006 letter”), stating that the Plaintiff had breached cl 3.7 in the First Tenancy:

We have advised you on several occasions, that the Management do not allow and will not be held liable for any unauthorized works but we noted that the premises has been altered and below are the findings: 1. As stated on the tenancy agreement, the demised premises is inclusive of Kiosks 1 to 4 of area 6,000 sq ft, and including an office space at unit 01-08 but an additional kiosk has been erected and tables and chairs are being displayed at the excess open area, which exceeds the leased area of 6,000 sq ft. Under Clause 3.7 …, no alternations [sic] and additions are allowed, with [sic] the prior consent from the landlord and under Clause 3.7.2 — if any A & A is...