Sheng Siong Supermarket Pte Ltd v Carilla Pte Ltd

• Jurisdiction: Singapore
• Judgment Date: 14 September 2011
• Date: 14 September 2011
• Docket Number: Suit No 272 of 2010
• Court: High Court (Singapore)

Sheng Siong Supermarket Pte Ltd

Plaintiff

and

Carilla Pte Ltd

Defendant

[2011] SGHC 204

Andrew Ang J

Suit No 272 of 2010

High Court

Contract—Contractual terms—Admissibility of evidence—Parol evidence rule—Whether evidence extrinsic to tenancy agreement admissible—Sections 93 and 94 Evidence Act (Cap 97, 1997 Rev Ed)

Contract—Contractual terms—Conditions—Lease of commercial premises—Annex to tenancy agreement including plans depicting supermarket—Whether lease conditional on premises being permitted by Housing and Development Board to be used as supermarket—Whether plans in annex evince parties' intentions that lease be conditional on premises being permitted to be used as supermarket

Contract—Contractual terms—Rules of construction—Contextual approach to contractual interpretation

The plaintiff sought to rent from the defendant a three-storey leasehold property (‘the Premises’) of which the Housing & Development Board (‘the HDB’) was the reversionary owner. A Main Term Sheet (‘MTS’) was drafted by the defendant and signed by parties on 14 January 2009. Clause 10 of the MTS (‘Clause 10’) provided that ‘40% of GFA [General Floor Area] is for retail and 60% GFA is for entertainment, offices, child care, etc. Tenant usage comprises supermarket, wet market, thematic F&B, offices and others’. The MTS further provided that those terms would be incorporated into the final tenancy agreement. After two drafts, the final tenancy agreement (‘the executed Tenancy Agreement’) was executed on 6 March 2009. The plaintiff signed and returned the executed Tenancy Agreement to the defendant, along with two cheques: one for $453,210 (ie, comprising a four-month security deposit and money for legal fees) and another for $22,954 to the Commissioner of Stamp Duties. All versions of the tenancy agreement omitted various terms contained in the MTS, in particular Clause 10. Nevertheless, Annex 1 of the executed tenancy agreement included a plan of the Premises which, both parties agreed at trial, depicted a supermarket. The HDB subsequently rejected proposals that the Premises be used, inter alia, as a supermarket and suggested other uses, such as a ‘hotel or hostel’. The defendant conveyed this to the plaintiff and asked that it adjust its use of the Premises accordingly. The plaintiff then brought this action seeking, inter alia, the return of the security deposit of $450,000 and the legal fee of $3,210 paid to the defendant and the reimbursement of the stamp duty of $22,954 paid to the Inland Revenue Authority of Singapore. The plaintiff took the position that the lease was conditional on the Premises being permitted to be used at least in part as a supermarket, relying in particular on the plans in Annex 1 of the executed Tenancy Agreement (‘the Plans’) . The defendant denied this, and counterclaimed, inter alia, for a declaration that the executed Tenancy Agreement was repudiated by reason of the plaintiff's breach and a declaration that the security deposit of $450,000 was to be forfeited pursuant to the executed Tenancy Agreement. In particular, the defendant objected to the plaintiff adducing certain evidence, on the basis that such evidence was extrinsic evidence and thus inadmissible for the purposes of construing the terms of the executed Tenancy Agreement.

Held, allowing the claim in part and dismissing the counterclaim:

(1) The plaintiff was entitled to adduce extrinsic evidence to aid contractual interpretation by demonstrating the context of the executed Tenancy Agreement, as long as the evidence was merely to ‘illuminate the contractual language’ and not as a pretext to contradict, vary, add to or subtract from the terms of the executed Tenancy Agreement. It was not a pre-requisite that the executed Tenancy Agreement had to contain a latent ambiguity. However, the evidence sought to be admitted had to be relevant, reasonably available to all contracting parties and relating to a clear or obvious context: at [30] to [36].

(2) Seeking to establish whether the Plans represented an express provision that the lease was conditional upon the Premises being permitted to be used as a supermarket was merely interpreting the executed Tenancy Agreement in its proper context, not an exercise in contradicting, varying, adding to or subtracting from the terms of the executed Tenancy Agreement. This was because such a reading would fall within the scope of meaning that the Plans were capable of bearing: at [37] and [38].

(3) The contextual evidence strongly showed that the Plans objectively represented the parties' intention that the lease was conditional on the use of the Premises as a supermarket. All the evidence sought to be admitted was relevant, reasonably available to all contracting parties and relating to a clear or obvious context: at [42] to [56].

(4) Although there was a qualification in the First Schedule of the executed Tenancy Agreement (‘the Qualification’) that seemed to suggest that the Plans were merely for the purpose of identifying the Premises, the court was not precluded, albeit in the narrowest of circumstances, from finding in light of the context of the contract that the language employed in a contract could not have been what the parties intended. Both on the face of the executed Tenancy Agreement and in light of its context, the parties could not have intended that the Qualification meant that the Plans were only for the purpose of identifying the Premises. Accordingly, the Qualification did not preclude a finding that the Plans represented the parties' intentions, objectively construed, that the lease was conditional on the Premises being permitted to be used as a supermarket: at [57] to [62].

(5) Therefore, the executed Tenancy Agreement had been frustrated following the HDB's rejection of the proposed plans to use the Premises as a supermarket: at [76] and [77].

(6) Accordingly, the remaining sums payable under the executed Tenancy Agreement ceased to be payable by the plaintiff. The plaintiff was entitled to recover the sums paid to the defendant pursuant to the executed Tenancy Agreement (ie, the security deposit of $450,000 and the legal fee of $3210) , less the expenses incurred by the defendant in relation to addition and alteration works and preparation of the proposal submitted to the HDB. However, the plaintiff's claim for reimbursement of the stamp duty of $22,954 paid was dismissed: at [79], [80] and [87].

[Observation: Had the plaintiff brought an action for rectification of the executed Tenancy Agreement, the court would have been inclined to allow such an action in the alternative. There seemed to be ample evidence that all three conditions for rectification on the basis of a unilateral mistake were satisfied, and there was no evidence of any circumstances that would bar the remedy of rectification in this case. In any case, the court had already held that the parties' intentions could be given effect through a proper contextual construction of the executed Tenancy Agreement: at [66] to [71].)

The plaintiff's submissions with regard to, inter alia, total failure of consideration, non est factum, common mistake, unconscionablity on the part of the defendant and collateral agreement were all dismissed: at [81] to [84].]

Chartbrook Ltd v Persimmon Homes Ltd [2009] 1 AC 1101 (refd)

Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696 (folld)

Doherty v Monroe Eckstein Brewing Co 191 NYS 59 (1921) (refd)

Industrial Development and Land Co v Goldschmidt 206 P 134 (1922) (refd)

Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 (folld)

Lee Chee Wei v Tan Hor Peow Victor [2007] 3 SLR (R) 537; [2007] 3 SLR 537 (refd)

National Carriers Ltd v Panalpina (Northern) Ltd [1981] AC 675 (folld)

RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd [2007] 4 SLR (R) 413; [2007] 4 SLR 413 (refd)

Sandar Aung v Parkway Hospitals Singapore Pte Ltd [2007] 2 SLR (R) 891; [2007] 2 SLR 891 (folld)

United Dominions Trust Ltd v Western BS Romanay, Third Party [1976] QB 513 (folld)

Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design & Construction Pte Ltd [2008] 3 SLR (R) 1029; [2008] 3 SLR 1029 (folld)

Evidence Act (Cap 97, 1997 Rev Ed) ss 93, 94

Frustrated Contracts Act (Cap 115, 1985 Rev Ed) ss 2, 2 (1) , 2 (2) , 2 (3)

Housing and Development Act (Cap 129, 2004 Rev Ed) s 50

Legal Profession Act (Cap 161, 2009 Rev Ed) ss 33, 34

Stamp Duties Act (Cap 312, 2006 Rev Ed)

Willie Yeo and Lim Chee San (Yeo Marini & Partners) for the plaintiff

Marina Chin (Tan Kok Quan Partnership) for the defendant.

Judgment reserved.

Andrew Ang J

Introduction and facts

1 This case concerns the interpretation of a leasehold agreement and whether it is conditional upon the premises being capable of being used for a certain purpose.

2 The defendant, Carilla Pte Ltd (‘Carilla’) , purchased a three-storey leasehold property with a land area of about 1417.4 m² located at 535 Kallang Bahru, Singapore 339351 (‘the Premises’) , from Eng Wah Theatres Organization Pte Ltd in September 2008. The reversionary owner of the property is the Housing & Development Board (‘the HDB’) .

3 The plaintiff, Sheng Siong Supermarket Pte Ltd (‘Sheng Siong’) , operates a well known chain of supermarkets, air-conditioned wet markets and food courts. The property was introduced to Sheng Siong by Gabriel Goh Seh Hui (‘Gabriel Goh’) of CJ Goh Partnership LLP, who had himself been introduced the property by Jeffrey Lau Chun Wei (‘Jeffrey Lau’) of Huttons Real Estate Group, an agent for Carilla.

How the dispute came about

4 The parties met on 13 October 2008 at Sheng Siong's office to discuss renting the Premises. They discussed, amongst other things, the following:

(a) the viability of setting up a supermarket and food court on the Premises;

(b) a potential rental rate of $2.50 per square foot for three or more years to...