Superluck Properties Pte Ltd v Modern Beauty Salon (S) Pte. Ltd. and Others
| Jurisdiction | Singapore |
| Judge | Chiah Kok Khun |
| Judgment Date | 17 August 2017 |
| Neutral Citation | [2017] SGDC 230 |
| Court | District Court (Singapore) |
| Hearing Date | 06 March 2017,18 April 2017,07 March 2017 |
| Docket Number | District Court Suit No. 2045 of 2013 |
| Plaintiff Counsel | Mr Rabi Ahmad (M/s Rabi Ahmad & Co) |
| Defendant Counsel | Mr Kevin Kwek & Mr Christopher Yeo (M/s Legal Solutions LLC) |
| Subject Matter | Contract,discharge,breach,Landlord and tenant,covenants,quiet enjoyment |
| Published date | 26 August 2017 |
Does a tenant have to deliver up the keys to the premises if he intends to terminate the tenancy in the face of a breach by the landlord? This is the question that arises out of this case. The question arises in the context of a more general question of what is required to constitute an act of acceptance of a repudiation of contract.
Where there is an anticipatory breach of an executory contract and the innocent party wishes to treat himself as discharged, he must accept the repudiation. If the innocent party does not accept the repudiation, he would not be able to terminate the contract and exercise the full range of his rights and remedies that have arisen by reason of the other party’s breach.1 The contract in this case is a tenancy agreement. The Plaintiff, Superluck Properties Pte Ltd was the owner and landlord of the property known as Robinson Towers which was located at 30 Robinson Road, Singapore 048546 (“the Building”). The Building is no longer in existence. It was demolished not long after the dispute in this case arose. The Defendant was the tenant of one of the units, Unit #B1-00 of the Building (“the Premises”) under a tenancy agreement dated 16 December 2011 (“the Tenancy Agreement”). The Defendant, Modern Beauty Salon (S) Pte Ltd and its related company, Splendid Overseas Pte Ltd (“Splendid”) were long term tenants of the Plaintiff. They had been leasing the Premises since 2002.
Pursuant to the Tenancy Agreement, Splendid renewed the tenancy of the Premises for a further term of two years commencing 1 January 2012 and ending 31 December 2013, at a monthly rent of $29,073 which comprised base rent and a service charge. The Defendant took over the tenancy from Splendid with effect from 1 September 2012 pursuant to a novation agreement. Under the novation agreement, Splendid’s security deposit in the sum of $87,219 for the Tenancy Agreement was treated as having been paid by the Defendant. The dispute occurred in the course of this two-year term of the tenancy. The novation agreement does not feature in the dispute.
The Defendant is in the business of providing beauty and wellness services and has been operating in Singapore for close to 20 years. Pursuant to clause 3.1 of the Tenancy Agreement, the Defendant was to use the Premises as a beauty salon/office.2 There does not appear to be any disagreement that the Defendant operated an upmarket beauty salon and wellness spa at the Premises.
On 30 November 2012, the Plaintiff gave the Defendant six months’ notice to deliver up the Premises pursuant to a notice of termination of tenancy under clause 5.14 of the Tenancy Agreement, as it intended to demolish and redevelop the Building.3 The Defendant was required to hand over the Premises by 31 May 2013.4 The Premises were to be reinstated to its bare condition before the handing over.
On 31 December 2012, the Defendant entered into a tenancy agreement with Royal Holdings Development Pte Ltd for a tenancy at a new unit at No. 22 Malacca Street, RB Capital Building.5 The new tenancy was to take effect from 16 February 2013. The Defendant started renovation of the new unit; and by 20 March 2013 had moved part of its machinery and equipment from the Premises to the new unit.6
The incident at the Premises that gave rise to the disputeOn 25 March 2013, the Premises was flooded with sewage water (“the Incident”). The Defendant notified the Plaintiff at about 10.45am of the Incident. The Plaintiff’s technician Mr Murphy Wong (“Wong”) attended at the Premises. Wong subsequently traced the source of the sewage water to the ejector pump room.7
The Defendant’s position is that being in the business of operating a beauty and wellness spa, the Incident, which resulted in the Premises being inundated with foul-smelling and unhygienic sewage water, made it impossible for the Defendant to use the Premises at all. The Premises therefore became unfit for occupation and use as a beauty salon/office from the date of the Incident. The Defendant contends that the Incident was a breach that was serious enough to be deemed as a repudiatory breach of the Tenancy Agreement. The Defendant says that it accepted this repudiatory breach by the Plaintiff and the Tenancy Agreement was terminated on the day of the Incident. On the same day (25 March 2013), the Defendant informed the Plaintiff of its position that the Premises was no longer fit for occupation and could not be used for its business.8 As such, the Defendant took the position that it was not liable for rent and service charge due on the Premises from the date of the Incident onwards; and stopped payment for the same. By an email the following day, the Defendant informed the Plaintiff that since it had left the Premises, it no longer required air-conditioning in the Premises.9 On 28 May 2013, the Defendant returned the keys of the Premises to the Plaintiff.10
The Plaintiff on the other hand, takes the position that the Defendant has breached the Tenancy Agreement by failing to pay the Plaintiff the rent for the Premises for the period between 1 March 2013 and 31 May 2013 amounting to $102,141.94 or $103,062.30 if inclusive of accrued interest charges. The Plaintiff also states that the Defendant had breached the Tenancy Agreement by failing to reinstate the Premises to its bare condition as requested by the Plaintiff and as provided for in the Tenancy Agreement. The Plaintiff forfeited the security deposit, which the Defendant has paid to the Plaintiff pursuant to the novation agreement subject to its right to recover against the Defendant for any shortfall in rent and service charges; and losses, damages and expenses incurred by it, because of the Defendant’s failure to reinstate the Premises.
The parties’ contentions At the outset, it should be noted that the Defendant admits that the Plaintiff is entitled to be paid $24,083.70 (inclusive of GST) in rent and service charge for the period from 1 March 2013 to 24 March 2013.11 The period ends just before the day of the Incident. The Defendant further accepts that the Plaintiff is entitled to the following additional charges claimed by the Plaintiff relating to the outstanding rent for the period:
The total amount that the Defendant accepts that the Plaintiff is entitled to be paid is therefore $30,034.99 (inclusive of GST), out of the $103,062.30 claimed.
As for rental claimed by the Plaintiff for the remaining period of the tenancy up to 31 May 2013, the Defendant’s position is that the Plaintiff is not entitled. This portion of the Plaintiff’s claim amounted to $73,027.31. The thrust of the Plaintiff’s case is that the Incident had resulted in the Plaintiff breaching its covenants of quiet enjoyment of the Premises. The Incident resulted in a repudiatory breach of the Tenancy Agreement. The Defendant has accepted the Plaintiff’s repudiatory breach of the Tenancy Agreement and accordingly, the Plaintiff is not entitled to claim for rent and service charge from the date of the Incident onwards. In the alternative, the Plaintiff says that the Incident rendered the Premises unfit for occupation and use, invoking Clause 5.6 of the Tenancy.
The Defendant’s case is therefore that the Plaintiff is not entitled to be paid rent and service charge for the period from the date of the Incident. The Plaintiff would only be entitled to be paid $30,034.99 (inclusive of GST) as set out above. As the security deposit of $87,219.00 held by the Plaintiff is more than this amount, the balance sum of $57,184.01 ($87,219.00 less $30,034.99) is to be returned to the Defendant.
The Defendant further submits that it was not required to bear any reinstatement costs as the Plaintiff was in repudiatory breach of the Tenancy Agreement. The Defendant contends that in any event, the Building was demolished in June 2013, shortly after the Defendant handed over the Premises to the Plaintiff on 28 May 2013.13 The Defendant also takes the position that the Plaintiff has in any event not proven that it had actually carried out the reinstatement works or that it had actually suffered any additional costs, loss or damage arising from such reinstatement works.14
The Defendant has a counterclaim for the return of the balance of the security deposit amounting to $57,184.01 set out above. The counterclaim in fact mirrors the Defendant’s case in respect of the Plaintiff’s claim against it.
The Plaintiff’s claim is for payment of the rental up to 31 May 2013.15 It is also claiming for damages arising from the failure of the Defendant to reinstate the Premises to bare condition.16 The thrust of the Plaintiff’s case is that the Incident was caused by the Defendant’s own action. The Plaintiff contends that the Defendant’s staff and/or its customers had indiscriminately disposed of waste products into the drainage and toilet system causing a pipe in the ejector pump system to be choked, and resulting in the Incident. The Plaintiff also relies on a clause in the Tenancy Agreement that disclaimed the responsibility of the Plaintiff for damage caused to the Defendant17 and another clause that obliged the Defendant to keep the drainage system clean and unblocked.18 Beyond attributing the cause of the Incident to the Defendant, the Plaintiff does not appear to take issue as to whether the Incident itself caused damage to the Premises. What is disputed is the extent of the damage and whether the Incident amounted to a repudiatory breach of the Tenancy Agreement.19
The Plaintiff advances a separate contention that in any event, the Defendant did not accept the repudiation. Instead, the Defendant had waived and affirmed the...
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