Parkway Properties Pte Ltd and Another v United Artists Singapore Theatres Pte Ltd and Another and Another Case

• Jurisdiction: Singapore
• Judge: Chao Hick Tin JA
• Judgment Date: 27 February 2003
• Neutral Citation: [2003] SGCA 7
• Citation: [2003] SGCA 7
• Defendant Counsel: Christopher Stephen Soh (Arthur Loke Bernard Rada & Lee)
• Published date: 17 December 2003
• Plaintiff Counsel: Tan Wee Kheng Kenneth SC, Kwek Yiu Wing Kevin (Kenneth Tan Partnership)
• Date: 27 February 2003
• Docket Number: Civil Appeal No 83 of 2002
• Court: Court of Appeal (Singapore)
• Subject Matter: Defence of change of position,Restitution,Whether defendants meeting requirements of defence,Money had and received

Delivered by Chao Hick Tin JA

1 This was an appeal against a decision of the High Court which granted a judgment in favour of the respondents, United Artists Singapore Theatres Pte Ltd ("UAST") and Pacific Media PLC ("Pacific Media"), on their claim against the appellants, Parkway Properties Pte Ltd ("Parkway") and the Management Corporation Strata Title Plan ("MCST"), for the return of a sum of $1,846,900 paid by the respondents to the appellants on the ground that there was a total failure of consideration. We heard the appeal on 22 January 2003 and dismissed it. We now give our reasons.

2 Since, in this appeal before us, the parties had not differentiated between Parkway and MCST and between UAST and Pacific Media, references in these Grounds to either Parkway or UAST shall include MCST and Pacific Media respectively, unless the context otherwise indicates.

The facts

3 The facts of the case giving rise to the present action were largely undisputed because they were fairly well documented.

4 Situated along Marine Parade Road is a large shopping mall called the Parkway Parade Shopping Centre ("the Shopping Centre"). At all material times, Parkway owned 76% of the strata lots in the Shopping Centre. The MCST was the statutory corporation established under the Land Titles (Strata) Act which owned and maintained the common property of the Shopping Centre. Being the holder of the majority of the strata lots, Parkway effectively controlled the MCST.

5 Sometime in the early nineties, Parkway mooted the idea of converting some of the common areas in the Shopping Centre into a 7-screen cineplex. This involved the demolition of the play deck and construction of a cinema structure from the car park below. The object behind this development plan was to draw repeat visitors to the Shopping Centre and thus improve the human traffic therein. The first party with whom Parkway discussed the development project was Golden Village Entertainment (S) Pte Ltd. However, that discussion soon ended with no deal concluded.

6 In 1994, Parkway initiated discussions with UAST with a view to realizing that idea. UAST were then managing and/or operating a number of cinemas in Singapore.

7 The discussions with UAST envisaged the latter taking on the role of the developer of the cineplex where they would design, manage and operate it. There would be a Conditional Agreement and Lease Agreement between Parkway and UAST. UAST would fork out the funds required to develop the structure, fit out and operate the cineplex. This plan will hereinafter be referred to as "the original plan".

8 Many drafts of the Conditional Agreement and Lease Agreement were put up. The first was dated 4 December 1995. Negotiations on the drafts were protracted and stretched over some 3-4 years, caused in part by various difficulties which arose from time to time, among which was the imposition of a development premium (DP) by the authorities. The DP was originally fixed by the Land Office at $17.644 million, excluding GST. After several appeals, the Land Office eventually agreed in January 1998 to lower the sum to $8.469 million, without GST. It was understood between the parties that UAST would contribute $3.465 million towards the payment of the DP. On 25 April 1998, Parkway paid to the Land Office the sum of $872,487 towards the DP. Much later, on 14 January 1999, UAST reimbursed Parkway the sum of $346,900, being its share of that payment which Parkway made to the Land Office.

9 In the meantime, between 1998 and early 1999, UAST underwent some structural changes, with Pacific Media becoming the new owner of UAST. That was also the period when this region was reeling under the Asian financial crisis.

10 In March 1999, due to financial constraints, Pacific Media felt that there was a need to alter the basis of cooperation between UAST and Parkway, as UAST were no longer able to continue as the developers of the project. It was proposed that MCST be the developers and UAST would only be responsible for fitting out the works and operating the cineplex under a lease agreement. This plan will hereinafter be referred to as "the revised plan".

11 At about this time, Parkway was also talking to Cathay Organisation as a possible alternative operator of the cineplex. In June 1999, Parkway informed the URA that the layout of the development would have to be reduced by 10-15% as required by a new potential party (presumably referring to Cathay). On account of this reduction, MCST even asked the Land Office for an adjustment of the DP payable.

12 In the meantime, from March 1999, the parties also discussed, in relation to the revised plan, what sort of rental UAST should be paying for using and operating the cineplex. One proposal explored was that UAST was to contribute $3,046,900 towards the DP and the base rent payable was to be reduced either to $2.75 psf (from $3.75 psf) or 15% of net admissions revenue, whichever was higher. This was not acceptable to Parkway who counter suggested $3.25 psf or 16% of net admission revenue, whichever was higher.

13 On 8 April 1999, Parkway paid the second instalment of $906,331.50 to the Land Office. In making this payment, Parkway also informed the Land Office that there would be a change in the name of the applicant/developer. However, Parkway never informed UAST of their intention to pay that instalment nor did they ask UAST to contribute a share of that payment.

14 On 5 May 1999, the MCST wrote to UAST stating that, in view of UAST’s inability to proceed with the original plan, the previous arrangement whereby UAST were to develop the cineplex was "null and void" and that the MCST would take over the project as the developers. On 13 May 1999, UAST replied confirming their agreement to MCST taking over as developers and stating –

"I sincerely regret the inconvenience caused and wish to re-confirm our commitment and continued interest in negotiating a new contract to fit out and operate the cinema. We are ready willing and able to proceed immediately."

15 On 20 May 1999, Chor Pee & Partners (CPP), acting for MCST, wrote to Arthur Loke & Partners (ALP), the solicitors for UAST, confirming the taking over of the development by MCST and stating that the transfer was subject to the following conditions –

"3. after the satisfactory taking over of the development of the proposed cineplex by our clients and/or nominees within the said two-week period, Parkway Properties Pte Ltd will refund to your clients (without interest) the sum of $346,900 which was paid by your clients towards the Differential Premium; and

4. subject to all of the above, each party shall not require from the other any reimbursement of costs an expenses (including but not limited to administrative costs, legal costs, costs of appeal, submission fees and processing fees) which were incurred by that party in respect of the proposed agreements and/or the development of the proposed cineplex and the matter shall be treated as null and void and neither party shall have any claims against the other in respect thereof "

16 On 21 May 1999 Parkway wrote to UAST reiterating that once the handing over of the project to MCST was completed, Parkway would "return (without deductions or interest) the $346,900 paid on 14 January 1999". It was clear that upon the transfer, Parkway wanted a clean break and that thereafter UAST were to have no further rights in the development. As for UAST’s desire to operate the cineplex, that was a separate matter to be negotiated and agreed upon.

17 However, the repayment of $346,900 which Parkway undertook to make to UAST was, in fact, never effected because the parties were then negotiating on the revised plan, and Pacific Media, as the owner of UAST, offered to make some good faith deposit. So the sum of $346,900 was allowed to be retained by Parkway as part-payment of the good faith deposit required by Parkway although ALP had, on 16 July 1999, written to Parkway asking for the return of that sum to Pacific Media. In the words of Gary Quick, a witness for UAST, the refund of that sum was then "rolled into the new proposal."

18 We should add that the requirement of a deposit as a good faith money was again mentioned by Parkway in its letter of 21 June 1999, marked "without prejudice and subject to contract", where it indicated that the revised plan of UAST was being reviewed by MCST which had also requested –

"… an undertaking from your organisation – as a form of financial commitment during this period of finalisation of the proposed terms and conditions. The form of financial commitment may be in a confirmation of your financial status to commit to the proposed project with a reference from your bank and with a ‘performance guarantee’".

We should add that in the subsequent correspondence between the parties, Parkway had also marked their correspondence "subject to contract".

19 Apparently UAST were not willing or able to provide a banker’s performance bond. But they were prepared to provide $500,000 as good faith money which would be forfeited should UAST fail to complete the project. They also stated that –

"This offer is made without prejudice and subject to contract expressly on the understanding that it would be available to us to complete the contract and would not be held by you once the cineplex had commenced operations."

20 On 13 July 1999, Pacific Media assured Parkway that they had the financial ability to operate the cineplex and re-affirmed the offer to place $500,000 as good faith money in addition to the $346,000 which was to be refunded to UAST. Pacific Media wrote:-

"I believe that you currently have a deposit from us of $345,000 (sic) towards the premium payable to the Land Office. I would be happy to give you a further deposit of $500,000 upon signing a lease making a total of $845,000. This money would be used as a final payment of our portion of the premium …

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