RBC Properties Pte Ltd v Defu Furniture Pte Ltd

JurisdictionSingapore
JudgeSundaresh Menon CJ
Judgment Date17 December 2014
Neutral Citation[2014] SGCA 62
Year2014
Date17 December 2014
Published date14 January 2015
Hearing Date29 July 2014
Subject MatterBreach,Rescission,Contract,Misrepresentation,Misrepresentation Act,Repudiatory Breach
Plaintiff CounselGoh Yihan (instructed) and Nicholas Narayanan (Nicholas & Tan Partnership LLP)
Citation[2014] SGCA 62
Defendant CounselKirindeep Singh, June Hong and Edwin Chua (Rodyk & Davidson LLP)
CourtCourt of Appeal (Singapore)
Docket NumberCivil Appeal No 19 of 2014
Andrew Phang Boon Leong JA (delivering the judgment of the court): Introduction

In deciding any given case, it is axiomatic that the court concerned must apply the law to the relevant facts. Whilst the law to be applied is objective and universal, the facts that the law is applied to are varied and specific. Unsurprisingly, therefore, the decision or result of a case is heavily dependent (in the final analysis) on the specific facts concerned.

That this is so is demonstrated in no uncertain terms by the main issue that has to be decided in this appeal, which concerns the respondent lessee’s (Defu Furniture Pte Ltd, hereinafter known as “the Respondent”) claim to rescind a lease entered into with the appellant lessor (RBC Properties Pte Ltd, hereinafter known as “the Appellant”) on the grounds of misrepresentation. The lease was in respect of the first storey of an industrial building (“the Premises”) and its sole permitted use under the lease was as a furniture showroom. The misrepresentation complained of was the Appellant’s assurance that all necessary approvals had been obtained for the Premises to be used as a furniture showroom, which, it is argued, was never the case because the Singapore Land Authority (“the SLA”), acting on behalf of the State, had not in fact given its approval for the premises to be so used. Such a misrepresentation would, of itself, entitle the Respondent to rescind the lease. However, the Respondent claims that it is further entitled, under s 2(1) of the Misrepresentation Act (Cap 390, 1994 Rev Ed) (“the Misrepresentation Act”, the provision is hereinafter simply referred to as “s 2(1)”), to damages for losses suffered, because the Appellant did not have (within the meaning of s 2(1)) any reasonable ground to believe that all necessary approvals for the use of the premises as a furniture showroom had been obtained, and was therefore liable as if the misrepresentation had been made fraudulently.

In the court below, the High Court Judge (“the Judge”) held that the Appellant did in fact make a misrepresentation to the Respondent in the terms complained of, and (more importantly) that such a misrepresentation fell within the ambit of s 2(1) as the Appellant did not have any reasonable ground to believe that the facts it had represented to the Respondent were true (see Defu Furniture Pte Ltd v RBC Properties Pte Ltd [2014] SGHC 1 (“the Judgment”)). The Appellant has appealed, inter alia, against this particular finding.

On the correct and holistic appreciation of all the facts that are before us, we do not entertain any serious doubt whatsoever that the Appellant did make a misrepresentation to the Respondent, who relied on that misrepresentation in entering into the lease and thereby suffered loss. Accordingly, we are of the view that the Respondent is entitled to rescind the lease, which is an equitable remedy that generally applies to all forms of misrepresentation, whether the claim is mounted under the Misrepresentation Act or at common law. The crux of the appeal before us (which formed the main thrust of the Appellant’s case) is the closely related (and indeed, crucial) issue: can the Appellant avail itself of the statutory defence in s 2(1), viz, that it had reasonable ground to believe, and did believe up to the time the lease was entered into, that the facts it had represented were true? If so, the misrepresentation would be wholly innocent as the presumption in s 2(1) would be defeated, and whilst the Respondent would still be entitled to the rescission of the lease and an indemnity for obligations it had taken on under the lease, it would not, under that self-same provision, be entitled to damages as if the misrepresentation had been made fraudulently. As we shall see, the determination of this particular issue is clearly fact-centric and therefore requires a nuanced and contextual consideration of all the relevant facts.

Whilst this issue constitutes the crux of the present appeal, it is by no means the only issue before us. Indeed, it is important at this juncture to note that there is another – and no less important – issue which was also raised in the court below, viz, whether or not the Appellant was (in the alternative) liable to the Respondent for breach of contract. The Judge declined to render a decision on this particular issue in light of his decision in favour of the Respondent with regard to s 2(1) (see also below at [43] and [133]), and the primary focus of the parties’ submissions to this court was (not surprisingly) therefore also on s 2(1). However, as we were of the view that this was also an important issue, we invited counsel for the parties to elaborate upon it further during oral submissions before this court – not least because if this court is of the view that the Appellant is not liable under s 2(1), that would not be the end of the matter inasmuch as it could still be potentially liable for breach of contract.

Nevertheless, given the focus by the parties on s 2(1), we will deal with their (rather comprehensive) arguments in this particular regard first before proceeding to consider the issue relating to breach of contract. Before we turn to a discussion of these various issues, it might be apposite first to set out briefly both the factual background as well as the decision of the trial court.

Background facts

The Appellant is the sub-lessee of a five-storey industrial building located at 11, Bedok North Avenue 4, known as the Richland Business Centre (“the Property”). The Property was originally developed in 2006 by a company known as RLG Development Pte Ltd (“RLG”), a sister company to the Appellant. Pursuant to a building agreement dated 16 August 2006 (“the Building Agreement”), RLG leased the plot of land at Bedok North Avenue 4 under a 30-year lease from the President of the Republic of Singapore (in effect, the State). RLG undertook to develop the land in accordance with the relevant conditions of tender and, in particular, to develop it in accordance with its zoning status.

At that time, the relevant zoning provisions were those expressed in the Urban Redevelopment Authority’s (“the URA”) Master Plan Written Statement 2003 (“the Master Plan 2003”). Under the Master Plan 2003, that plot of land was zoned for Business 2 use (“B2 use”), which meant that it could only be used for clean industry, light industry, general industry, warehouse, public utilities and telecommunication uses and other public installations. The Master Plan 2003 also permitted “ancillary uses”, but restricted such uses to “40% of the total floor area”, and further stipulated that “the types of B2 and ancillary uses that may be allowed are subject to the evaluation of the competent authority and other relevant authorities”.

It is not disputed that from the very beginning of the development process, RLG’s intention was to utilise the Premises as a showroom. It drafted plans to this effect and on 5 October 2006, obtained provisional permission from the URA for its development plans (“the Provisional Permission”). This was followed, on 24 April 2007, by written planning permission from the URA to erect a “5 storey single-user light industrial development comprising showroom at 1st storey and warehouse from 2nd to 4th storey and ancillary office at 5th storey” (“the Written Permission”). It is not disputed that the Written Permission amounted to the URA’s approval for the Premises to be used as an ancillary showroom. The URA’s prevailing guidelines also stipulated a minimum size for the showroom and that the showroom was not be used for retail sales such as cash and carry transactions, but only for the display of items (such as furniture) which could then be ordered and delivered separately. On this basis, RLG began construction of the Property, which was completed in 2008.

Following the completion of the Property, RLG entered into a lease numbered 26784 with the President of Singapore as lessor on 22 August 2008 (“the State Lease”). The essential terms were that, in consideration for the sum of $5.118 million paid by way of premium, the State leased to RLG the plot of land at Bedok North Avenue 4, with all buildings erected thereon for 30 years from 16 August 2006. Clause 1(i) of the State Lease provides that RLG was to develop the land at its cost and expense:

… in accordance with the Building Agreement dated the 16th day of August 2006 made between the Lessor and the Lessee and also in accordance with the plans approved or to be approved by the Competent Authority under the Planning Act (Cap 232) and all relevant Competent Authorities.

It is not disputed that the “Competent Authority” under the Planning Act (Cap 232, 1998 Rev Ed) (“the Planning Act”) referenced in this clause was the URA.

In so far as restrictions on use are concerned, the relevant clause is clause 2 of the State Lease which reads as follows:

2. And it is hereby agreed between the Lessor and the Lessee as follows: -

The said development on the said land – may be for any use or uses that may be permitted by the Competent Authority under the Planning Act (Cap. 232) for a ‘Business 2’ zoning in accordance with the Master Plan Written Statement; shall have a total gross plot ratio not exceeding 2.0 (“maximum GPR”) but not less than 1.6. The provisions of sub-clause (i) shall apply unless a variation or change thereof is approved in writing by the Lessor, which approval may be given subject to such terms and conditions as the Lessor may impose and provided that if such variation or change will in the opinion of the Lessor result in an enhancement of the value of the said land the Lessee shall pay the Lessor within such time as may be specified by way of differential premium such amount as the Lessor may determine as the amount representing the enhanced value of the said land. For the...

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