Yess Marina Pte Ltd v Liu Wen Wey and Another

• Jurisdiction: Singapore
• Judge: Laura Lau Chin Yui
• Judgment Date: 22 February 2006
• Neutral Citation: [2006] SGDC 28
• Court: District Court (Singapore)
• Year: 2006
• Published date: 01 April 2009
• Plaintiff Counsel: Michael Por and Siva S Krishnasamy (Tan Lee & Partners)
• Defendant Counsel: L Dason (Steven Lee, Dason & Khoo)
• Subject Matter: Res Judicata,Plaintiff applying for writ of distress for outstanding rent,Defendants applying for writ to be set aside,District Court setting aside writ of distress on appeal,District Judge determining based on affidavits that air-conditioning system in rented premises flawed and defective and that defendants entitled to equitable set-off such that accrued rent could be applied against defendants' claim for damages arising out of plaintiff's breach of contract,Defendants contending that issue of defendants' right to equitable set-off res judicata and thus ought not to be re-litigated at the trial,Whether issue res judicata or subject to issue estoppel,Whether defendants treating issue as such in pleadings and at trial,Whether evidence before District Judge during proceedings to set aside writ of distress same as evidence adduced at trial,Contract,Breach,Tenancy agreement,Tenancy agreement between plaintiff and defendants for defendants to run pool saloon and cafe in plaintiff's premises,Plaintiff claiming that defendants in breach of agreement by failing to pay rent, service charges and GST,Defendants counterclaiming that plaintiff in breach of tenancy agreement by failing to provide adequate air-conditioning system and to rectify faults in system,Plaintiff averring that problems with system caused by defendants' contractors,Whether defendants entitled to contend that plaintiff should have recourse against contractors as the latter had been acting as independent contractors,Whether plaintiff under contractual duty to ensure that electrical works by defendants' contractors did not damage air-conditioning system and to rectify faults caused by such damage,Whether defendants having unilaterally determined tenancy agreement by abandoning premises,Contractual terms,Implied terms,Tenancy agreement requiring plaintiff to provide and install air-conditioning system in rental premises,Plaintiff not informed by defendants and could not have known of air-conditioning requirements of pool saloons,Whether term should be implied into agreement that plaintiff should install air-conditioning system in conformity with specific requirements of pool saloon,Whether term should be implied that plaintiff should install new air-conditioning system,Whether term should be implied that plaintiff to provide and install working air-conditioning system,Whether plaintiff in breach of any such implied term,Equity,Defences,Equitable set-off,Defendants claiming to be entitled in equity to set off against any accrued rent the deposits and advance rental held by plaintiff as result of plaintiff's breach of its covenant to install, maintain and repair air-conditioning system,Whether plaintiff having breached tenancy agreement in installation, maintenance and repair of system,Whether defendants' right of equitable set-off arising on facts of case
• Citation: [2006] SGDC 28

22 February 2006 Judgment reserved.

District Judge Laura Lau Chin Yui:

1 This dispute arises from a tenancy agreement made between the Plaintiffs, Yess Marina Pte Ltd and the Defendants, Liu Wen Wey and Lian Wee Jin. The Plaintiffs are the lessees of the land and building known as Yess Leisure, situated at 25 Shenton Way, Singapore. The landlords are the Singapore Land Authority. From this building, the Plaintiffs sub-divided an area of 6,167 square feet into the sub-units numbered #01-08/09/10 (“the premises”) and sub-let the premises to the Defendants. The tenancy agreement was made in writing between the parties on 17 April 2003. Under the tenancy agreement, the premises were to be used by the Defendants solely as a pool saloon cum café. It was stipulated that the tenancy was for a fixed term of 3 years, commencing from 16 June 2003 and ending on 15 June 2006. The Defendants agreed to pay a monthly rent of $17,267.60, a monthly service charge of $9,250.50 and goods and services tax (“GST”) of $1,060.72 at 4%, payable in advance on the 1^st day of each month. The Defendants have, however, ceased to occupy the premises since 29 October 2003.

The Plaintiffs’ claim as pleaded

2 The Plaintiffs’ contended that the Defendants had breached the tenancy agreement by failing to pay the rent, service charge and GST for the months of July to November 2003, amounting to $119,716.21. Accordingly, the Plaintiffs claimed against the Defendants the sum of $119,716.21, an order for delivery of vacant possession of the premises, double rent from the date of the writ until the date of delivery of vacant possession, damages for loss of rent, service charge and GST from the date of vacant possession until the end of the term i.e. 15 June 2006 at $27,578.32 per month, interest at 10% per annum on these sums from the respective due dates to the date of judgment or payment and costs on an indemnity basis as between solicitor and client.

The Defence and Counterclaim

3 The Defendants stated that the Plaintiffs’ offer to sub-let the premises to them was contained in a letter of offer dated 4 February 2003. Further to this letter of offer, the Plaintiffs agreed, by a further letter dated 17 February 2003, to install the airconditioning system on the premises with maintenance after the warranty period to be undertaken by the Defendants and also, to lower the ceiling to appropriate heights. The Defendants signed their acceptance of the Plaintiffs’ offer on 17 February 2003. The tenancy agreement was subsequently signed by the parties on 17 April 2003. All in all, the Defendants paid to the Plaintiffs a 3-month rental and service charge deposit, one month’s advance rental and a renovation deposit of $9,000 on the understanding that it was to be refunded to the Defendants on completion of the Defendants’ renovation works. Under the terms of the tenancy agreement, the Defendants were given a fitting out period of 8 weeks, free of rent and service charge, commencing from the date of possession. The 3-year tenancy was to commence on the day after the expiry of the fitting out period. By a letter dated 19 April 2003, the Plaintiffs specified that the fitting out period would commence on 21 April 2003 and rental would accordingly, be payable from 16 June 2003. But, as the Defendants have contended, the Plaintiffs agreed to extend the rent-free period to 23 June 2003, due to the late completion of the Plaintiffs’ ceiling and airconditioning works.

4 The crux of the Defendants’ case is that the Plaintiffs were in breach of a fundamental term of the tenancy agreement as they had failed to hand over the premises as contracted for in the tenancy agreement. Further, the Plaintiffs had breached the express covenant in the tenancy agreement by which the Defendants were entitled to enjoy quiet possession of the premises. Specifically, the premises were “not in a fit state for occupation for the purpose of running a pool saloon and cafe, in that the airconditioning system installed by the Plaintiffs failed resulting in poor and sometimes no cooling of the premises and numerous leakages of the airconditioners”. Although the Plaintiffs were duly notified of the faults in the airconditioning, both verbally and in writing, they failed to repair or rectify the airconditioning system which continued to leak. The defects in the airconditioning system disrupted the Defendants’ business and the water leakages caused damage to their property.

5 According to the Defendants, another instance of the Plaintiffs’ breach of their obligations under the tenancy agreement came to light on 1 September 2003 when the Defendants were advised by a professional engineer that the ceiling installed by the Plaintiffs at the premises was not in a proper or safe condition. At a meeting on 2 September 2003 between the Plaintiffs’ and the Defendants’ representatives, the airconditioning system and safety issues concerning the improperly installed ceiling were discussed. Despite assurances by the Plaintiffs and despite the Defendants’ assistance in providing recommendations from a mechanical engineer, once again no steps were taken to rectify the ceiling or the leaking airconditioning system. Due to the defective airconditioning and the unstable ceiling installation, the Defendants had to cancel scheduled events which were related and essential to their business, including their grand opening.

6 Notwithstanding their obligations under the tenancy agreement, the Plaintiffs failed or refused to rectify the airconditioning system and the improper ceiling installation, as a consequence of which, the Defendants have been unable to operate their pool saloon and café at the premises. The Defendants averred that by reason of the Plaintiffs’ breach, the rental was by an implied term of the agreement, suspended until such time that the premises were rendered fit for occupation and use as a pool saloon and café.

7 The Defendants asserted that despite the Plaintiffs’ own breaches of the tenancy agreement, the fact that they were put on notice of the suspension of rental until rectification works were carried out and their retention of the 3-month rental deposit, one month advance rental and a renovation deposit totalling $116,133.12, the Plaintiffs made an ex-parte application and obtained leave of court to issue a writ of distress against the Defendants for the alleged outstanding rent of $56,815.96. The writ of distress was issued on 6 November 2003. Although the issuance of the writ of distress operated as a waiver of forfeiture, the Plaintiffs re-entered into possession of the premises on 4 December 2003 and locked up the premises. The Plaintiffs had thereby evinced an intention not to be bound by the tenancy agreement. On their part, the Defendants accepted the Plaintiffs’ repudiatory breach and the tenancy was brought to at an end.

8 Accordingly, the Defendants denied the Plaintiffs’ claims. Even if the Defendants should be liable to the Plaintiffs for the sum of $119,719.21 or any sum, the Defendants averred that they were entitled to a set-off against and in diminution of this amount by reason of the deposits and advance rental held by the Plaintiffs amounting to $116,133.12. As the Defendants were entitled by law to apply an equitable set-off of their claims for damages as a result of the Plaintiffs’ breach of their covenant to install, maintain and repair the airconditioning system, against any accrued rent, the Defendants were thus entitled to withhold the rent, if due.

9 The Defendants counterclaimed special damages amounting to $282,202.48 comprising the costs incurred in renovating the premises and purchase of a computer system as well as repairs to the computer system as a result of water damage. They further sought the return of the rental deposit, advance rent totalling $107,133.12 and renovation deposit of $9,000; general damages to be assessed for loss of profits, relocation costs and for conversion and/or detinue in the value of their possessions and belongings including business appurtenances, sporting equipment, computer system and tenants’ fittings as well as the possessions and belongings of their customers which were still within the premises.

The Reply and Defence to Counterclaim

10 Although the Defendants did pay the Plaintiffs a 3-month rental and service charge deposit, the payment was effected after much delay as the Defendants’ cheques were repeatedly dishonoured. Eventually, the Defendants paid the initial one-month deposit via a cashier’s order and the balance 2 months’ deposit, in cash. Likewise, the Defendants delayed in the payment of the renovation deposit which should have been paid prior to the commencement of renovation work which started on 28 April 2003. The renovation deposit was only paid on 23 May 2003. The Plaintiff asserted that they had rightfully retained the renovation deposit as the Defendants have not complied with the conditions for its refund. The refund was subject to the Defendants providing the Plaintiffs with

(a) drawings and approvals from the relevant authorities regarding the internal fitting out works and sprinkler systems from FSSB;

(b) M & E plans duly endorsed by the professional engineer;

(c) licences and certificates for the operation of the premises; and

(d) payment for the temporary use of water and electricity.

11 The extension of the rent-free fitting out period was given by the Plaintiffs on a goodwill basis. The delay in the renovation works was occasioned by the Defendants’ contractor, D & M Interior Design & Trading (“D & M”), whose electrical sub-contractor had not laid the electrical wires on time so that the Plaintiffs’ airconditioning and ceiling works could not proceed. Due to their delay, the Plaintiffs’ contractors’ schedule was delayed.

12 On 20 June 2003, the premises were handed over to the Defendants in a fit state for occupation. The Defendants had been operating their business at the...