Ritzland Investment Pte Ltd v Grace Management & Consultancy Services Pte Ltd

• Jurisdiction: Singapore
• Judge: Vinodh Coomaraswamy J
• Judgment Date: 07 April 2014
• Neutral Citation: [2014] SGHC 62
• Court: High Court (Singapore)
• Docket Number: Suit No 493 of 2013 (Summons No 4457 of 2013)
• Published date: 30 April 2014
• Year: 2014
• Hearing Date: 13 January 2014,05 February 2014,03 December 2013
• Plaintiff Counsel: Ms Ng Hui Min and Mr Sim Junhui (Rodyk & Davidson LLP)
• Defendant Counsel: Mr Andrew Wu (Allister Lim & Thrumurgan)
• Citation: [2014] SGHC 62

Vinodh Coomaraswamy J: Introduction

The plaintiff is the lessor of the entire property known as 231 Mountbatten Road, Singapore 397999. The property comprises a number of blocks. This dispute relates to Block C. The plaintiff sub-let units #03-02 to #03-04 on the third storey of Block C to the defendant by a letter of offer dated 12 September 2011.¹ A few months later, the plaintiff sub-let the entire first storey of Block C to the defendant by a letter of offer dated 17 February 2012.²

On 30 May 2013, the plaintiff sued³ the defendant asserting that the defendant had breached its obligations in respect of both sub-leases. The plaintiff claimed from the defendant arrears of rent, interest on those arrears and damages arising from the defendant’s breaches of both sub-leases.⁴ It also sought a declaration that it had lawfully exercised its right of re-entry under one of the sub-leases.⁵ On 28 August 2013, the plaintiff applied under O 14 of the Rules of Court (Cap 322, R 5, 2006 Rev Ed) for summary judgment on its entire claim against the defendant.⁶ The ground of the application was the usual one: that the defendant had no bona fide defence to the plaintiff’s claim.⁷

On 3 December 2013, having heard the parties’ submissions, I entered judgment for the plaintiff, but in respect of only part of its claim and under only one of the sub-leases. The defendant, being dissatisfied with my decision, has appealed to the Court of Appeal. Therefore, I now set out the reasons for my decision insofar as they are relevant to the defendant’s appeal.

The summary judgment application

The plaintiff’s application for summary judgment mirrored the prayers in its statement of claim and sought the following principal relief:⁸ In respect of the sub-lease over the entire first storey of Block C (“Premises A”): Judgment for rental arrears of $92,876.19; alternatively for such other sum as the court deemed fit; and Interest at the rate of 5% in respect of the principal arrears of $87,744.72 from 23 May 2013 to the date of full payment by the defendant. In respect of the sub-lease covering units #03-02 to #03-04 on the third storey of Block C (“Premises B”): A declaration that the plaintiff had lawfully exercised its right of re-entry over Premises B; and Judgment for arrears of rent of $281.10; alternatively for such other sum as the court deemed fit. Damages to be assessed.

Because the plaintiff’s application for summary judgment included a prayer for a declaration, the entire summary judgment application had to be heard and disposed of by a judge in chambers rather than by an Assistant Registrar.

Having heard the parties’ submissions on 3 December 2013, I made the following orders:⁹ I gave the plaintiff judgment on Premises A in the sum of $87,744.72 plus interest (“1st order”); I gave the defendant unconditional leave to defend the plaintiff’s claim in respect of Premises B (“2nd order”); I entered judgment against the defendant for damages to be assessed arising from the defendant’s repudiatory breach of the sub-lease of Premises A (“3rd order”); I fixed the costs of the application at $5,000 and ordered the defendant to pay the plaintiff half of that sum plus half of the plaintiff’s disbursements (“4th order”); and I ordered that the remaining half of the costs of the application and of the disbursements be costs in the cause (“5th order”).

On 10 December 2013, the defendant applied for leave to present further arguments to me¹⁰ pursuant to s 28B of the Supreme Court of Judicature Act (Cap 322, 2007 Rev Ed) (“SCJA”) and O 56 r 2 of the Rules of Court.¹¹ I acceded to the defendant’s request and heard the further arguments on 13 January 2014. After hearing the defendant’s further arguments, which I describe in more detail at [112] below, I decided not to vary the orders I had made on 3 December 2013.¹² I also ordered the defendant to pay costs of $1,000 (including disbursements) to the plaintiff for the hearing on 13 January 2014.¹³

The defendant has appealed my 1st, 3rd, 4th and 5th orders.¹⁴ These orders relate only to Premises A. In respect of Premises B, I gave the defendant unconditional leave to defend the plaintiff’s claim. I accepted that there were triable issues as to: (1) whether the plaintiff had breached its obligation to pay rent under the sub-lease of Premises B, (2) whether the plaintiff had validly exercised its right of re-entry over Premises B and (3) whether the provision in the sub-lease of Premises B for interest on unpaid arrears at 5% per month was a penalty clause. The plaintiff of course has no right of appeal against an order giving unconditional leave to defend (see s 34(1)(a) of the SCJA). I therefore refer to Premises B in these grounds only where it is necessary for the factual context.

The master lease and the sub-leases The plaintiff’s master lease of 231 Mountbatten Road

The property at 231 Mountbatten Road comprises buildings and over 22,000 square metres of land owned by the Government of Singapore.¹⁵ It was formerly the site of Haig Boys’ School.¹⁶ As is usual, the Government left it to the Singapore Land Authority (“SLA”) to handle all dealings with the property on its behalf.¹⁷ Following a successful tender in 2007, the SLA awarded the plaintiff the right to lease the property for a tenure of 3+3+3 years starting on 9 January 2008 and ending on 8 January 2017.¹⁸ The award therefore contemplated a series of 3 master leases for 3 years each.

The first in this series of master leases was dated 14 January 2008.¹⁹ By that master lease, the plaintiff took a lease of the property for the 3-year term from 9 January 2008 to 8 January 2011,²⁰ with an option to renew the lease for another term of 3 years.²¹

The SLA confirmed to the plaintiff by a letter dated 2 July 2008²² that the Government had given a 9-year commitment to lease the property to the plaintiff ending 8 January 2017 and that that commitment was subject only to: (1) the plaintiff giving written notice of its intention to renew the lease 6 months before the term was to expire; (2) the rent for the renewed term being agreed; and (3) the plaintiff not then being in breach of the master lease.²³

In December 2010, the plaintiff complied with the SLA’s conditions for renewal of the master lease. It thus secured the second master lease of the property on 17 December 2010²⁴ for the further 3-year term from 9 January 2011 to 8 January 2014.²⁵

In September 2013, while these proceedings and the summary judgment application were pending, the plaintiff once again complied with the SLA’s conditions for renewal of the master lease. It thus secured the third (and final) master lease on 23 September 2013²⁶ for the further (and final) 3-year term from 9 January 2014 to 8 January 2017.²⁷

The defendant sub-leases other parts of 231 Mountbatten Road

The sub-leases for Premises A and Premises B which form the subject-matter of this action were not the first letting transactions between the plaintiff and the defendant involving the property. By a tenancy agreement dated 27 May 2011,²⁸ the plaintiff sub-let to the defendant certain units on the second storey and the whole of the third storey of Block A for a 3-year term from 15 November 2010 to 14 November 2013.²⁹

The 27 May 2011 tenancy agreement was a formal and comprehensive sub-lease setting out in detail the unconditional and contingent rights and obligations of the plaintiff and the defendant. Three aspects of this transaction are important for present purposes: The first recital to this tenancy agreement expressly recited:³⁰ that the Government, acting through the SLA, had awarded the plaintiff the right to lease 231 Mountbatten Road for 3+3+3 years; that the current master lease would expire on 8 January 2014; and that the plaintiff was in the process of executing a renewal of that master lease.³¹ Clauses 2.1 to 2.3 of this tenancy agreement read with the second recital to it expressly entitled the plaintiff to terminate the sub-lease at any time without any obligation to compensate the defendant if the SLA were to terminate the master lease and require the return of 231 Mountbatten Road. On the same day that the plaintiff and defendant executed the 27 May 2011 tenancy agreement, they also executed a facility charges agreement.³² Clause 1 of this agreement provided that the defendant would have to pay to the plaintiff commencing 1 January 2011 a monthly facility charge of $12,480 in addition to the rent of $28,800 stipulated in the 27 May 2011 tenancy agreement.

Sub-lease for Premises B

By a letter of offer dated 12 September 2011, the plaintiff offered to grant the defendant a sub-lease of Premises B for a 3-year term from 1 October 2011 to 30 September 2014 at a rent (including facility and utilities charges but excluding goods and services tax (“GST”)) of $17,100 per month.³³

In addition to expressly identifying the parties, the premises, the rent and the term of the sub-letting of Premises B, this letter of offer also expressly provided for the defendant’s right to renew the sub-lease for Premises B (subject to SLA renewal of the master lease), the tenant’s obligation to pay a security deposit, the plaintiff’s obligation as landlord to maintain common areas, the tenant’s obligation to pay stamp duty on the sub-lease and the tenant’s obligation to reinstate Premises B upon expiry of the sub-lease.

The defendant accepted the terms set out in this letter of offer by countersigning and returning it to the plaintiff.

On 9 May 2012, the plaintiff and defendant entered into a formal tenancy agreement for Premises B³⁴ embodying and expanding upon the terms set out in the preceding letter of offer. There was only a minor difference of form between the terms of the tenancy agreement and those set out in the letter of offer. The tenancy agreement stipulated the rent for Premises B as $9,000 per...