SM Integrated Transware Pte Ltd v Schenker Singapore (Pte) Ltd

• Judge: Judith Prakash J
• Judgment Date: 30 March 2005
• Neutral Citation: [2005] SGHC 58
• Citation: [2005] SGHC 58
• Defendant Counsel: Boo Moh Cheh and Mohamed Ibrahim (Kurup and Boo)
• Published date: 20 April 2005
• Plaintiff Counsel: Kannan Ramesh, Ang Wee Tiong and Dawn Chew (Tan Kok Quan Partnership)
• Date: 30 March 2005
• Docket Number: Suit No 594 of 2003
• Court: High Court (Singapore)
• Subject Matter: Section 6(d) Civil Law Act (Cap 43, 1994 Rev Ed), s 2 Interpretation Act (Cap 1, 2002 Rev Ed),Whether requirement under s 6(d) Civil Law Act that agreement be in writing and signed by party to be charged therewith fulfilled,Whether e-mails fulfilling "in writing" requirement,Defendant arguing negotiations for lease of warehouse never completed,Formalities,Whether lease agreement subject to implied condition precedent,Whether e-mail correspondence between parties constituting sufficient memorandum or note of agreement,Agreement for leases,Whether signature requirement satisfied,Landlord and Tenant,Whether concluded contract between parties for lease of warehouse existing,Agreements for leases,Whether essential terms of contract agreed to unconditionally by parties,Contract,Plaintiff alleging loss and damage suffered due to defendant's repudiation of lease of plaintiff's warehouse,Whether failure of alleged condition precedent to materialise operating to release defendant from performance of obligations under lease agreement

30 March 2005 Judgment reserved.

Judith Prakash J:

1 The plaintiff, SM Integrated Transware Pte Ltd (“SMI”), has brought this action against the defendant, Schenker Singapore (Pte) Ltd (“Schenker”), to recover damages it claims it has incurred by reason of Schenker’s failure to take up a lease of a warehouse at 7 Kwong Min Road, Singapore (“the warehouse”). Schenker denies that there was any concluded lease for the warehouse so as to render it liable in damages to SMI.

The facts

Events in 2002

2 Both parties to this action are companies incorporated in Singapore who are in the business of providing third party logistics services. The warehouse was built by SMI on land that it had leased from the Jurong Town Corporation (“JTC”) and has the capacity to store dangerous goods.

3 In October 2002, the warehouse was occupied by a company called Richland Logistics Pte Ltd (“Richland”) but its lease was due to expire shortly. SMI was therefore interested in finding a new occupant for the warehouse. At the same time, Schenker was trying to obtain a contract from a company called Merck Pte Ltd (“Merck”) to handle its dangerous goods in Singapore. Schenker’s own warehouse did not have enough capacity to receive the Merck goods if the contract was awarded and Schenker was therefore looking to lease some additional warehouse space in Singapore.

4 On 30 October, Mr Daniel Heng Yew Khiang who was then the general manager of SMI, met with Mr Roman Claus Luth, an employee of a company associated with Schenker. At that meeting and in subsequent discussions and correspondence, Mr Luth represented Schenker although he was not directly employed by it. The two men discussed the proposed lease of the warehouse to Schenker as well as the provision by SMI of certain trucking services to Schenker. Mr Heng said that Mr Luth told him that Schenker had already seen the warehouse and was keen to lease it. Mr Heng thought that the warehouse would be used to service various customers of Schenker. According to Mr Heng, Mr Luth did not inform him of who Schenker’s customers were or the type of products that would be stored in the warehouse. Mr Luth, on the other hand, said that he told Mr Heng that Schenker was looking for additional warehouse space because Merck was going to appoint Schenker to handle its dangerous goods.

5 The meeting was followed by an exchange of e-mail correspondence. I should note here that throughout the negotiations and their subsequent dealings, the parties contacted each other by telephone and by e-mail. They also had personal meetings. No traditional correspondence in the form of letters was exchanged between them.

6 In Mr Heng’s e-mail to Mr Luth of 30 October, he stated that SMI would consider a lease of three years plus an option to renew for a further three years and would look into the cost of installing another cargo lift in the warehouse. He also gave details of other services that SMI could provide. On 1 November, several e-mails were exchanged between Mr Luth and Mr Heng regarding the arrangements for Schenker to view the warehouse and SMI’s quotation for trucking of dangerous cargo. Mr Luth asked that the quotation and letter of intent in relation to the lease of the warehouse be provided as soon as possible.

7 Later that same day, Mr Luth, Mr Tan Tian Tye, the general manager of Schenker’s logistics division, and some other Schenker staff viewed the warehouse. Mr Heng and Ms Yong Choon Fah, a real estate agent employed by SMI to market the warehouse, discussed the monthly rental and the duration of the lease with them.

8 On 5 November, Mr Heng sent Mr Luth an e-mail with an attached letter of intent marked “Subject to Contract” in relation to the lease of the warehouse. Mr Heng stated in the e-mail that SMI was seeking a monthly rent of $48,000. The letter of intent itself did not go into much detail. It stated only that SMI wished to enter into a service agreement with Schenker for the provision of the warehouse for warehousing and related logistics services and that the commencement date would be 1 January 2003 with other terms and conditions to be discussed. The letter of intent required Schenker to confirm its acceptance by signing and returning the same to SMI within 14 days.

9 Schenker did not sign the letter of intent. On 18 November, Mr Heng telephoned Mr Luth and asked what the position was. According to Mr Luth, he replied that Merck had not as yet come to a decision to appoint Schenker to handle its goods but he expected the decision to be made the same day. Until the decision was made, Schenker would not be able to commit itself to renting the warehouse. Mr Heng agreed to give Schenker an extension of time until close of business that day. Mr Heng’s version of this conversation was that Mr Luth had said that Schenker was waiting for its “customers” to revert and that Merck’s name was not specifically mentioned.

10 On 25 November, Schenker asked for a further extension of time. In his e-mail to Mr Heng, Mr Tan said that Schenker was eager to make the transaction happen but as its “customer” was then making the final evaluation of Schenker’s offer, Schenker could only give a tentative decision on 27 November and a confirmed decision on 29 November in line with its customer’s timetable. SMI agreed to extend time till noon on 27 November. That day Mr Tan and Mr Luth went to SMI’s office where they met Mr Heng and Ms Jean Chai, the finance and administration manager of SMI. After the meeting, Mr Heng sent Schenker an e-mail summarising what he thought both parties had agreed to. This was, firstly, that there would be an extension of time up to 29 November for Schenker to confirm that it would lease the warehouse. Secondly, the monthly rental would be $43,000. Thirdly, regarding Schenker’s request that the lease commence on 1 January 2003, SMI would, upon Schenker’s confirmation that it was taking the warehouse, do its best to persuade Richland to vacate by that date.

11 On 28 November, Mr Tan informed SMI that Schenker had had a good meeting with Merck and Schenker was expecting to get good news from Merck shortly. On the same day, Mr Luth sent a draft logistics service proposal to Mr C K Ho of Merck. On 9 December, Mr Ho sent Schenker an amended copy of its logistics service agreement that set out the various logistics services that Schenker was to provide to Merck and proposed a commencement date of 15 January 2003 for the Merck contract. Ten days later, Mr Tan telephoned Mr Ho and asked him whether Merck was awarding Schenker the contract since Schenker had to confirm the lease of the warehouse. Mr Ho told him that he did not foresee any problem and that Schenker should go ahead with that lease.

12 Later that same afternoon (19 December), Mr Tan called Mr Heng. After repeating what Mr Ho had said, Mr Tan informed Mr Heng that Schenker would therefore like to lease the warehouse from SMI. According to Mr Tan, he also cautioned Mr Heng that, as at that time, he had not received written confirmation from Merck and that Schenker needed the draft lease contract to be vetted and approved by its solicitors. Mr Heng asked for an e-mail to confirm Schenker’s intention to take the lease. On 20 December, Mr Tan sent Mr Heng an e-mail stating “This serve [sic] to confirm that Schenker will proceed with the leasing of the warehouse as per our discussion. Please arrange to hand over the warehouse to us by 15 Jan 03”. Mr Heng then instructed Ms Yong to prepare a draft of the formal agreement.

13 Ms Yong drew up a document entitled “Handling Service Agreement” (“handling agreement”). The handling agreement provided for SMI to provide Schenker, for a period of two years from 1 February 2003 to 31 January 2005, with warehousing and logistics services and also two trucks and such other services as might be required from time to time during the term of the agreement. Schenker was to pay SMI $43,000 per month as rental/handling charges for the exclusive use of the warehouse and, secondly, for any other services provided by SMI, with charges at such rates as the parties might mutually agree from time to time. The draft handling agreement was given to Mr Tan for Schenker’s consideration. On 30 December, Mr Tan, having vetted the draft, sent an e-mail to Mr Heng stating that he wanted the handling agreement amended to include various matters including the provision of a one-month rent-free period for the setting up of operations. Mr Heng replied the same day to say that SMI agreed to a two-week rent-free period. The next day, Mr Tan stated that whilst Schenker would try and set up its operations within two weeks of the date of handing over of the warehouse, if it was unable to do so, it would need to get back to SMI to extend the rent-free period to a month.

Events in 2003

14 On 7 January 2003, Mr Tan forwarded the draft handling agreement to Schenker’s solicitors for their comments and advice. According to Mr Tan, it was Schenker’s usual procedure to send all final drafts of fresh contracts to its solicitors for vetting before agreeing to such contracts. It was also Schenker’s practice to heed the comments and follow the solicitors’ recommendations very closely.

15 In the meantime, Richland had indicated to SMI that it wished to extend the duration of its lease. SMI told Richland that this was not possible as the warehouse had been committed to Schenker. Richland was not pleased about having to move out. A meeting was then called for all parties to discuss the date of the handover of the warehouse.

16 The meeting took place on 8 January at SMI’s office. Mr Tan attended on behalf of Schenker and one Mr Lim Chwee Kim represented Richland. They discussed the date on which Richland would vacate and hand over the warehouse and the possible dates on which Schenker could be allowed to enter the warehouse to do fitting-out works. Mr Heng found the atmosphere of the meeting to be tense. On the one...