Tan Soo Leng David v Lim Thian Chai Charles and Another

• Jurisdiction: Singapore
• Judge: Warren Khoo L H J
• Judgment Date: 30 March 1998
• Neutral Citation: [1998] SGHC 89
• Docket Number: District Court Appeal No 74 of 1995
• Date: 30 March 1998
• Published date: 19 September 2003
• Year: 1998
• Plaintiff Counsel: Palakrishnan and Malathi Das (Palakrishnan & Partners)
• Citation: [1998] SGHC 89
• Defendant Counsel: Richard Ang (Ang JW & Partners)
• Court: High Court (Singapore)
• Subject Matter: Damages,Contract,Whether landloards required to stem loss,Whether landlords' measures in seeking a new tenant reasonable,Remedies,Whether tenant in default entitled to criticise adequacy of mitigating steps taken by landloards,Mitigation

Judgment:

WARREN LH KHOO J

This is an appeal from the decision of the learned district judge Emily K Wilfred arising from a claim for arrears of rent by the landlords under a tenancy agreement.

2.The tenancy agreement was in respect of a specialist clinic in the Mount Elizabeth Centre. The premises were owned by Dr Lim and his wife, the plaintiffs. The tenant, the defendant, was also a doctor. Both doctors are specialists in their respective fields.

3.The tenancy agreement was entered into on 1 June 1992. It was for three years starting on that date and ending 31 May 1995. The rent was $5,000 a month, payable in advance at the beginning of every month. However, within a short period of a month, the defendant changed his mind about renting the premises. He had decided to buy another unit in the centre.

4.On 1 July, he wrote a letter to Dr Lim indicating that he was going on with the purchase and expressing the hope that the two of them, being old friends, could come to an amicable settlement about the tenancy. Dr Lim and his wife, however, were not so minded. On 4 July, they replied through their solicitors saying that they were holding the defendant liable for all loss and damages resulting from any unilateral termination of the tenancy. On 6 July, the lawyers wrote again. It was a letter headed `Without Prejudice`. They told the defendant that they did not agree to the defendant`s termination of the tenancy unilaterally. However, `on a without prejudice basis, and merely to assist you, our clients will consider a new tenant to be provided by you as your substitute, provided the new tenant is acceptable to our clients and you pay our clients for all loss and damages suffered by our clients.`

5.On the other hand, the defendant, being committed to the purchase of his own premises, did not take physical possession of the tenanted premises.

6.On 23 July, the defendant phoned Mrs Lim. There is much conflict of evidence as to what was said. According to the defendant, he told Mrs Lim that he was terminating the tenancy; that he intended to advertise in the Singapore Medical Association newsletter for prospective tenants. According to him, Mrs Lim agreed to the proposal to advertise; she also agreed to accept the return of one set of keys so as to facilitate the viewing by prospective tenants. Later that day, the defendant sent the plaintiffs a fax, the relevant parts of which read as follows:

As a gesture of goodwill and as spoken with [Mrs Lim] this morning, I have offered to pay to advertise in SMA for new tenant.

7.The defendant in this fax requested the plaintiffs to confirm their agreement to the text of the advertisement, which he set out. The fax continued:

As I promised, I will return one set of keys to you or your staff to facilitate viewing of the unit.

8.Mrs Lim disputes much of what the defendant says about the phone conversation. She says that all that the defendant wanted to know was whether he could use the plaintiffs` address and phone number in the advertisement; whether the plaintiffs would pay for the advertisement and whether he could leave a set of keys with her to facilitate viewing of the premises. She says she told him that it was his advertisement, he should pay for it himself and he should not use her address and phone number. As for the keys, she had to consult her lawyers.

9.Mrs Lim says that when she got the fax from the defendant after the phone conversation, she was very annoyed at the tenor of the fax. She could not understand why he should use words like `goodwill` `offer to pay` and promise to return the keys. After consultation with the plaintiffs` solicitor, she told Dr Tan that she would not accept the return of the keys. She also protested against what she saw as inaccuracies in the defendant`s fax.

10.The learned district judge preferred Mrs Lim`s evidence as to what happened on 23 July. Her honour came to the view that the plaintiffs did not `accept` the termination of the tenancy by reason of events that occurred on that day. This is fortified by the fact that the plaintiffs continued to demand rent afterwards.

11.What happened after that is that the defendant kept the keys to the premises. The learned district judge found that the keys were not returned until 23 May 1993. However, the plaintiffs themselves also took steps to try to get tenants. I shall refer to these efforts later. It suffices to say at this moment that it was not until May 1993 that they succeeded in getting a tenant at the same rent as that under the tenancy with the defendant. The new tenancy commenced on 1 July 1993.

12.The plaintiffs claimed the sum of $55,067.40, representing arrears of rent and other charges under the tenancy agreement for the period 1 July 1992 to 30 June 1993. The defendant resisted the claim on the ground that the plaintiffs had `accepted` the defendant`s repudiation of the tenancy agreement, by reason of the events that occurred on 23 July; that having accepted the repudiation, the plaintiffs were only entitled to damages, rather than rent; that the plaintiffs were under a duty to mitigate damages, but they failed to discharge it; alternatively, the plaintiffs were entitled at the most to the rent for the period of 23 days up to 23 July, and this should be set off against the three-month rent deposit in their hands.

13.As the starting point for these arguments, the plaintiffs raised the question whether the ordinary contractual principles of repudiation and acceptance applied to a tenancy or whether a tenancy could only be determined by one of the ways recognised by common law, the relevant one being surrender by operation of law. They raise the same question before me.

14.For a start, it is necessary to say a few words about what is meant by accepting a repudiation. There was a certain amount of confusion in the course of the proceedings below. There were occasions when it seems to have been assumed that it meant that the plaintiffs agreed to the termination on the basis that the defendant was thereby released from any liability except for the rent accruing up to the date of acceptance. This must have been the assumption, for instance, in the defendant`s contention that by reason of the plaintiffs` acceptance of his termination on 23 July 1992, all that the plaintiffs could claim was rent accruing up to that date. The contention in effect equates acceptance of a repudiation with an agreement to discharge the tenant from further liability under the tenancy.

15.This is not the sense in which the word is properly used in the context of repudiation and acceptance. The acceptance by the innocent party of a repudiation is not a consensual act. All that it means is that he accepts as a fait accompli that the guilty party does not intend to perform the contract. He will not expect the other party to perform his part of the contract; neither will he himself continue to perform his part of the contract. But the guilty party has committed a breach, and the right of the innocent party to damages is in no way affected.

16.Of course, it is possible for the parties to a contract to agree to terminate it, either unconditionally or on terms. The agreement to terminate may be reached by the offer to terminate from one party and the acceptance of that offer by the other party. But acceptance in that sense is entirely different from the acceptance of a repudiatory breach, which is the subject under consideration.

17.To return to the question: does the principle of repudiation and acceptance apply to tenancies? The issue emanates from the more fundamental question concerning the nature of a lease. Is it essentially a purchase of rights in real property, or is it no more than a bundle of contractual rights and obligations? These questions have not in terms been decided in Singapore, but they have been debated and decided in other common law jurisdictions. They have sometimes been dealt with in connection with the contractual doctrine of frustration. In Total Oil Great Britain Ltd v Thompson Garages (Biggin Hill) Ltd [1972] 1 QB 318, Denning MR said in relation to the lease under consideration before him:

The lease is a demise. It conveys an interest in land. It does not come to an end like an ordinary contract on repudiation and acceptance. There is no authority on this point, but there is one case which points the way. It is Cricklewood Property and Investment Trust Ltd v Leighton Investment Trust Ltd [1945] AC 221. Lord Russell and Lord Goddard were both of opinion that frustration does not bring a lease to an end. Nor, I think, does repudiation and acceptance.

18.The Cricklewood case, referred to by Lord Denning, did not deal with the question of repudiation and acceptance. It dealt with the question of frustration. The House of Lords in that case was evenly divided over the question whether the doctrine of frustration was capable of applying to leases of land. But, more recently, in National Carriers Ltd v Panalpina (Northern) Ltd [1981] A C 675, a differently constituted House of Lords rejected by a firm majority the view that, in principle, the doctrine could never apply to leases. There was a near consensus that the doctrine was capable of application notwithstanding that leases created interest in land. On the facts in that case, however, it was found that the lease was not frustrated. In the course of their speeches, several of their lordships referred with approval to the following passage from Laskin J`s judgment in the Canadian Supreme Court case of Highway Properties Ltd v Kelly Douglas & Co Ltd [1972] 2 WWR 28:

It is no longer sensible to pretend that a commercial lease, such as the one before the court, is simply a conveyance and not a contract. It is equally untenable to persist in denying resort to the full armoury

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