Thomson Plaza (Pte) Ltd v Liquidators of Yaohan Department Store Singapore Pte Ltd (in liquidation)

CourtHigh Court (Singapore)
JudgeChoo Han Teck JC
Judgment Date06 July 2001
Neutral Citation[2001] SGHC 172
Citation[2001] SGHC 172
Plaintiff CounselHarish Kumar and Thomas Sim (Engelin Teh & Partners)
Defendant CounselSuhaimi Lazim and Pradeep Pillai (Shook Lin & Bok)
Docket NumberCompanies Winding Up No 325 of (Summons in Chambers No 603083 of 2000)
Date06 July 2001
Published date11 November 2003
Subject MatterDe novo hearing,Liquidator rejecting claims,Whether binding and enforceable contract exists between parties,Agreement to lease,Winding up,Words and Phrases,Whether claim for costs accruing before liquidation qualify as preferential claim,Meaning and effect of phrase,Formation,Subject to contract,Approach of court to application,Application to court for relief,Proof of debt,Contract,Insolvency Law,Whether claim for restoration of premises as can be made,Preferential claim,"Subject to contract",Formal lease not executed

: In this case, the applicants, Thomson Plaza (Pte) Ltd (`Thomson Plaza`) made an attempt to recover $3,598,111.57 as damages for breach of contract against the liquidators of Yaohan Department Store Singapore Pte Ltd (in liquidation) (`Yaohan`).

Thomson Plaza were the owners of a building, also called Thomson Plaza (`the premises`). Yaohan became the lessees of Thomson Plaza in 1979. The lease was renewed several times. The last tenancy period was from 1 August 1994 to 31 July 1997.

On 24 October 1997, Yaohan was placed under judicial management. Ong Yew Huat, Fang Ai Lian and Wong Tui Sun of Ernst & Young were appointed as the judicial managers of Yaohan.

The judicial managers saw no purpose in continuing with the judicial management. So they passed a resolution for Yaohan to be wound up by the court. Provisional liquidators were appointed on 12 December 1997. By an order of court dated 16 January 1998, Yaohan was ordered to be wound up. The same persons who were judicial managers were appointed the liquidators.

Proofs of debt were lodged by creditors with the liquidators. One of them was by Thomson Plaza. The statement of account was for the sum of $3,598,111.57. The details were as follows:

Duty to restore premises $ 2,379,300.00
Duty to deliver in good repair $ 10,197.00
Duty to pay rent $ 1,205,444.89
Interest for late payment of rent $ 3,169.57
$ 3,598,111.57

Paragraph 1 of the Statutory Declaration verifying the Proof of Debt (General Form) made by one Yong Tseng Hah, on 3 March 1998 read as follows:

That Yaohan Department Store Singapore Pte Limited the abovementioned company was, at the date of the commencement of the winding up (namely, the 12th day of December, 1997) and still is justly and truly indebted to (see note (a) overleaf) Thomson Plaza Pte Ltd in the amount of ($3,598,111.57) for damages for breach of contract as shown by the account on the reverse. [Emphasis is added.]

So, the proof was against the company for damages . It was not a claim for debts incurred by the judicial managers or the liquidators in those capacities. Additionally it is not to be forgotten that the winding-up order was made in January 1998 after possession of the premises was surrendered with all the fittings. The proof of debt was accompanied by a letter dated 2 March 1998 from DBS Property Services which read as follows:

We hereby lodge the Proof of Debt (Form 77) in respect of our claims.

All our rights are reserved in full. The submission of the Proof of Debt shall not constitute or be construed in any way as any waiver on our part of any of our rights or any release of [ sic] discharge of any of your obligations or liability, including but not limited to any personal liability you may have incurred in the liquidation or judicial management of the company. This submission shall also be without prejudice to our position that our claims fall within costs and expenses of the winding up pursuant to section 328(1)(a) of the Companies Act (Cap 50) and, as such, our claims rank as preferential claims ahead of all unsecured creditors.

Please keep us informed of the status of our claims.

Before the expiry of the lease on 31 July 1997, an agreement was reached in principle between Thomson Plaza and Yaohan. It was agreed that Thomson Plaza would grant Yaohan a fresh lease of the premises for a term of one and a half years from 1 August 1997 to 31 January 1999. It was contained in a letter of offer dated 19 May 1997. Clause (j) of the letter is important. It read as follows:

This tenancy shall be subject to all the terms and conditions as contained in the specimen Lease Agreement. On or before commencement of the tenancy, a formal Lease of the same form as the specimen Lease Agreement shall be executed between you and the Landlord. [Emphasis is added.]

The tenancy was expected to commence on 1 August 1997 for one and a half years. The intended lease agreement was not signed on or before the commencement of the tenancy. Yaohan did not execute the formal lease but continued to occupy the premises.

Then Yaohan was placed under interim judicial management. Later, there were orders for judicial management and winding up as mentioned earlier. The judicial managers continued to pay rent on a month-to-month basis. Thomson Plaza accepted the rent. Thomson Plaza`s property managers, Property Services Pte Ltd (DBS Property Services) acknowledged and asserted that there was a month-to-month tenancy held by the judicial managers in a letter to the judicial managers. Their letter dated 28 October 1997 said this:

Dear Sirs

Yaohan Department Store Singapore Pte Ltd

Lease of Part of Unit 01-01 & Units 03-25 to 03-31

Thomson Plaza

We refer to the recent discussions we had with your Mr Ong Yew Huat in relation to the lease of the above premises.

As you know, until now, the Company has still not executed the Lease Agreement in accordance with our Letter of Offer dated 19 May 97. Notwithstanding the same, the Company continues to occupy the premises on a month to month basis and you have as judicial managers continued to pay rental as such.

Please note that we

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