Popular Book Co Pte Ltd v Sea Sun FurnishingPte Ltd

• Jurisdiction: Singapore
• Judge: Chan Sek Keong J
• Judgment Date: 08 March 1991
• Neutral Citation: [1991] SGHC 39
• Docket Number: Originating Summons No 1215 of 1990
• Date: 08 March 1991
• Published date: 19 September 2003
• Year: 1991
• Plaintiff Counsel: Shantini Ramachandra (Wee Ramayah & Partners)
• Citation: [1991] SGHC 39
• Defendant Counsel: Lim Yong (Lim Hua Yong)
• Court: High Court (Singapore)
• Subject Matter: Landlord and Tenant,Termination of leases,Construction of clause,Revised rent,Whether rent to be determined by the landlord under the clause should be fair and reasonable rent,Option to renew lease

This is a summons for construction of cl 4(6) of a lease dated 10 March 1988 made between the plaintiffs as tenants and the defendants` predecessors in title, viz Thomson Plaza (Pte) Ltd as landlords in respect of two units of shop premises (the premises) in Thomson Plaza. The term of the lease (the lease) was for three years commencing from 15 March 1988 at the rent of $14,364 payable quarterly.

On 21 September 1990, the defendants became the owners of the premises. On 26 September 1990, the plaintiffs wrote to the defendants and requested the renewal of their lease for a further term of three years. The request was made under cl 4(6) of the lease which provides as follows:

The landlord shall at the written request of the tenant, made not less than six (6) months before the expiration of the term hereby created and if there shall not at the time of such request be any existing breach or non-observance of any of the covenants on the part of the tenant herein contained and at the tenant`s expense grant to the tenant a further term of the demised premises the lease for which must be signed by the tenant at a date not less than two (2) weeks before the expiration of the term hereby created. The renewed term be for a period of three (3) years commencing from the date immediately following the expiration of the term hereby created, at a revised rent to be determined by the landlord and upon terms and conditions as shall be imposed by the landlord. Provided always that within two (2) weeks of the receipt of the landlord`s notification of the revised rent, terms and conditions, the teshall in writing inform the landlord whether the revised rent, terms and conditions are acceptable or otherwise. In the event that the revised rent, terms and conditions are not acceptable to the tenant and/or if the tenant shall fail to sign the lease for the renewed term by the date stipulated above then this option shall lapse and the landlord shall be free of all obligations whatsoever to grant to the tenant any further term.

On 2 October 1990, the plaintiffs were informed by the defendants` solicitors that their clients were prepared to renew the lease for a further term of three years at a rent of $28,728 payable quarterly. This offer was confirmed in a notification given under cl 4(6) on 16 October 1990. The plaintiffs rejected the notification on the ground that the rent was unconscionable and far in excess of the market rate.

In this action, the plaintiffs have sought the determination of the following questions:

(1) (a) whether upon the true construction of cl 4(6) of the lease of the premises at Units #03-17 and #03-18 Thomson Plaza 301 Upper Thomson Road, Singapore dated 10 March 1988 and made between the defendants` predecessors in title, Thomson Plaza (Pte) Ltd, and the plaintiffs and/or by terms implied in the lease the revised rent determined by the landlord was to be a fair and reasonable rent, and

(b) if so, whether in default of agreement between the plaintiffs and the defendants of what is fair and reasonable rent, the revised rent was to be fixed by a single independent arbitrator, and

(c) whether in fixing the revised rent, the arbitrator should fix a rent which it would be reasonable for the parties to agree or a rent assessed objectively on the basis of the open market rent at which the said premises might reasonably be expected to be let or a rent assessed on some other basis.

Counsel for the plaintiffs has submitted that there are three types of options for renewal of leases: (1) where there is no formula for quantifying the rent and no machinery to determine it; (2) where there is a stated formula but no...