Pontiac Land Pte Ltd v P-Zone Services Pte Ltd

• Jurisdiction: Singapore
• Judge: Lee Seiu Kin J
• Judgment Date: 02 June 2010
• Neutral Citation: [2010] SGHC 171
• Plaintiff Counsel: Yeo Soo Mong Tony, DK Rozalynne PG Dato Asmali and Low Jiawei (Drew & Napier LLC)
• Docket Number: Suit No 507 of 2008
• Date: 02 June 2010
• Hearing Date: 18 January 2010,11 August 2009,05 August 2009,06 August 2009
• Subject Matter: Agreements for leases,Landlord and tenant
• Year: 2010
• Citation: [2010] SGHC 171
• Defendant Counsel: Spencer Gwee Hak Theng (Spencer Gwee & Co)
• Court: High Court (Singapore)
• Published date: 11 June 2010

Lee Seiu Kin J: Introduction

The plaintiff is a property development company incorporated in Singapore. In 1976 the plaintiff, through a joint venture company, co-developed the Parklane Shopping Mall (“Parklane”) at 35 Selegie Road. The defendant, also a Singapore company, has as its principal business the management and operation of car parks. It is the owner, manager and operator of the car park at Parklane.

In 1997, the plaintiff sold to Rockingham Investment Pte Ltd (“Rockingham”) its interest in the following units in Parklane: Car park levels 1 to 7 (“the Property”); and Units #01-30 and #01-31. However the plaintiff wanted to retain a space of about 300 sq ft at level 5 of the car park (“the Premises”) for 75 years, which was the remainder of the leasehold of the land occupied by Parklane. The plaintiff’s solicitors advised that this could be achieved by incorporating a term in the option to purchase requiring the purchaser to execute 11 consecutive tenancy agreements (“TA”), ten of which were for a duration of seven years less one day, and the 11th for a duration of five years. All the TAs were identical save for the commencement dates, and consecutive TAs were separated by a break of one day. This meant that the first lease, which ran from 17 March 1998 to 16 March 2005, would be followed by the second, running from 18 March 2005 (after a one day break on 17 March 2005) to 17 March 2012, and so forth until the 11th TA commences on 27 March 2068. As for the one day gap between consecutive TAs, the purchaser would grant a licence to the plaintiff for that day, free of any fee. All the TAs provided that the plaintiff would pay an annual rent of $1.00 for the Premises, which was payable in advance on the first day of each year. The sale and purchase was completed sometime in 1998 and on 5 November 1998, Rockingham executed 11 TAs granting the plaintiff the tenancies described above. It should be noted that the price paid by Rockingham to the plaintiff took into account the fact that these 11 TAs were granted in respect of the Premises for peppercorn rent. The plaintiff used the Premises as a storeroom and its staff went there only sporadically.

The plaintiff’s senior vice president of marketing, Teh Hwee Chuan (“Teh”), gave evidence on the background to the suit. When property prices surged in 2007, he made a check of properties owned or occupied by the plaintiff. He was unable to find any record which showed that the plaintiff had been paying the annual rent for the Premises, and he could not be sure if the rent for the entire 75 years had been paid in one lump sum. Teh said that it was out of an abundance of caution when, on 4 April 2007, he sent a letter to Rockingham together with payment for the entire duration of the 11 TAs. Rockingham replied on 11 April 2007 through its solicitors, Robert Wang & Woo LLC, to inform the plaintiff that it had sold the Property to Eng Soon Hin Construction Pte Ltd (“ESH”) and that the transfer was effected on 7 February 2001. In response to a subsequent request for clarification by the plaintiff, Robert Wang & Woo LLC advised on 9 July 2007 that the terms of the sale to ESH included a clause stating that ESH acknowledged that the sale was subject to the TAs. The solicitors added that they understood that ESH had since sold the Property to the defendant.

On 19 July 2007, the plaintiff wrote a letter to ESH which was accompanied by a tender of payment of rent for the entire 75 years. However this letter was returned as the address on it was an outdated one. The plaintiff sent a second letter dated 23 July 2007, to another address obtained from the Registry of Companies, but it was also returned undelivered. The plaintiff then sent, by courier, a letter dated 3 August 2007 addressed to the three directors of ESH jointly to each of them at their residential addresses. Each of the letters forwarded copies of the 19 July 2007 letter to ESH and requested them, as directors of ESH, to procure the response of ESH to the 23 July 2007 letter. ESH replied by letter dated 5 September 2007 in which it stated as follows:

Pursuant to the leases between [Rockingham] and you, you have breached the lease agreement by failing to pay rent in advance on the first day of each year. Therefore, we hereby return you your cheque … [for] $75.00.

As you are the Defaulting Party in breach of the said lease agreement, we are giving you written notice once again that the said lease agreement is terminated.

We noticed that you have not vacated the premises and please vacate and hand over the keys of the premises by 11 September 2007 … If you do not vacate by the stipulated date we shall, without further notice to you, take all necessary actions such as to dispose away all your items and you shall be fully liable for all our expenses and costs.

The plaintiff, through its solicitors, replied on 11 September 2007 pointing out that it had tendered rent to ESH which was rejected and that it was entitled to apply for relief from forfeiture against eviction for non-payment of rent under s 18A of the Conveyancing and Law of Property Act (Cap 61, 1994 Rev Ed) (“CLPA”). On 5 November 2007, ESH replied to deny that the plaintiff was entitled to relief against forfeiture and claimed that the plaintiff had abandoned the tenancy. In the letter, ESH pointed out that it had written to the plaintiff on 17 March 2005 (“the 2005 Termination Letter”) terminating the “First Tenancy Agreement” and that it had not heard from the plaintiff thereafter. In the same letter, ESH advised, for the first time, that it had sold and transferred the Property to the defendant. It should be noted that the transfer was in fact effected on 15 September 2006, some ten months before the first of the plaintiff’s letters to ESH. The plaintiff asked for and obtained a copy of the 2005 Termination Letter, after which it wrote to ESH to deny that it had ever received it and asked for evidence that it had been sent.

On 27 November 2007, the plaintiff wrote to the defendant for the first time. The letter explained the background to the matter and stated that the plaintiff was recently informed by Rockingham that it had sold the Property to ESH, who in turn advised that it had sold the Property to the defendant. The plaintiff explained that rent was not tendered earlier as it had only just been notified of the change in ownership, and tendered payment of rent for the years 2006 to 2008 by way of cheques attached to the letter. The defendant’s solicitors replied on 17 December 2007, rejecting payment of rent on the basis that the defendant had no knowledge of the plaintiff’s interest and had therefore purchased the Property free of encumbrances. Subsequent communications are not particularly material to the issue of liability. Suffice it to say that parties exchanged further letters setting out their positions and reserving their rights on the matter.

The agreed documents established that the following took place. On 22 June 2000 Rockingham granted ESH an option to purchase the Property, which ESH accepted on 2 January 2001. The option expressly provided that the sale was subject to, inter alia, the tenancies of the Premises held by the plaintiff. This sale was completed on 7 February 2001. Five years later, on 21 July 2006, ESH and the defendant executed a sale and purchase agreement for the Property. However, although cl 5 provided that the sale was subject to “all existing tenancies and licences”, there was no specific mention in the sale and purchase agreement of the TAs nor the plaintiff.

The Witnesses

While there were three witnesses in the trial, significant evidence came from only one of them. The plaintiff’s witnesses were Teh and one of its employees, Woo Siew Kiong. Their evidence did not pertain to anything of great controversy between the parties. The defendant’s sole witness was its director, Liew Ming Nyuk (“Liew”). Her evidence on two important issues of fact was very much in dispute. These were (a) whether ESH had written and served the 2005 Termination Letter; and (b) whether the defendant had knowledge of the plaintiff’s interest in the Property prior to its purchase of the same.

I had a poor impression of the credibility of Liew as a witness. She had changed her positions several times in the course of her testimony when the questions became awkward for her. I had noted this in the following instances: When Rockingham granted ESH the option to purchase the property in 2000, that option expressly provided that it was to be sold subject to the plaintiff’s tenancy. In para 12 of her affidavit...