Oriental Investments (SH) Pte LTD V Catalla Investments Pte LTD PDF

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[2013] 1 SLR 1182.

fm Page 1182 Thursday, April 4, 2013 4:09 PM

1182 SINGAPORE LAW REPORTS [2013] 1SLR

Oriental Investments (SH) Pte Ltd


v
Catalla Investments Pte Ltd
[2012] SGHC 245

High Court Suit No 276 of 2010/J


Philip Pillai J
2427 May; 11 October 2011; 6 January; 10 December 2012
Contract Misrepresentation Damages Tenant incurring expenses that would
have been incurred had regulatory approval been obtained Whether damage
proven
Contract Misrepresentation Damages Tenant running profitable business on
premises without regulatory approval for structures Whether damage proven
Contract Misrepresentation Rescission Tenant seeking to rescind tenancy
that had already been terminated by effluxion of time Whether tenant entitled to
rescission
Contract Misrepresentation Statements of intention Landlord stating that
regulatory approval could be obtained for structures and that it would assist tenant in
applying for regulatory approval Whether statements were statements of fact
Whether statements were actionable misrepresentations
Contract Misrepresentation Act Whether landlord made non-fraudulent
misrepresentations Section 2(1) Misrepresentation Act (Cap 390, 1994 Rev Ed)
Equity Estoppel Promissory estoppel Whether landlord estopped from relying
on condition precedent in agreement to renew tenancy Whether landlord
wrongfully repudiated existing lease
Landlord and tenant Recovery of possession Landlord resorting to self-help
remedy of re-entry to forfeit lease Whether landlord entitled to forfeiture

Facts
The plaintiff tenant, Oriental Investments (SH) Pte Ltd (the Plaintiff), was at
all material times acting through and represented by its director Kevin Guay
Kim Hua (Kevin); and the defendant landlord, Catalla Investments Pte Ltd
(the Defendant), was at all material times acting through and represented by
its general manager, James Lim Keow Leng (James).
In February 2005, Kevin negotiated with James to lease an outdoor refreshment
area (the Premises) from the Defendant, for the purpose of operating food
stalls. Kevin wanted to construct a canopy over the premises and to build a fifth
kiosk (the Structures) in addition to the existing four kiosks. As regulatory
approval from the Urban Redevelopment Authority (URA) was required for
these alterations, James represented to Kevin that he would guide and help
Kevin sort out the paperwork, and to help him appoint an architect to submit
plans to obtain the necessary approval from URA. As a result of James
representations, the Plaintiff engaged a contractor to construct the Structures.
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The Plaintiff then entered into a three-year tenancy (the First Tenancy) with
the Defendant over the Premises from 1 June 2005 to 31 May 2008.
James submitted the first application to the URA in August 2006. The
application was rejected. On 20 November 2006, James sent a letter to Kevin
stating that the Plaintiff had breached cl 3.7 of the First Tenancy and was to
remedy the breach within 21 working days, and expressly reserving the
Defendants right to terminate the First Tenancy. However, James later told
Kevin that the letter was for reference only and had no legal effect. The
Defendant did not subsequently exercise its right to terminate the First Tenancy.
On 1 October 2007, the Defendant offered the Plaintiff a renewal of the First
Tenancy (the Second Tenancy) for another two years from 1 June 2008 to 31
May 2010. Both Kevin and James signed the letter of offer for the Second
Tenancy. There was a condition precedent at para 5 of the letter of offer that the
additional drink kiosk had to be removed prior to the renewal of the First
Tenancy.
On 28 March 2008, James sent Kevin a letter stating that there was no valid
renewal of the First Tenancy, demanding the Premises to be reinstated by
31 May 2008. Kevin maintained that the Second Tenancy was valid. The
relationship between the parties soured. In April 2008, Kevin found out for the
first time from the architect that despite several applications to URA, the
requisite approval had not been obtained.
On 1 June 2008, the Defendant re-entered the Premises to take vacant possession
and dismantled the Structures. Subsequently, the Defendant sent the Plaintiff a
cheque for the sum of $1,410.96, being the remainder of the Plaintiffs security
deposit of $114,000, which the Plaintiff refused to accept. On 20 April 2010, the
Plaintiff commenced the present suit for misrepresentation; breach of contract;
breach of collateral contract; and wrongful repudiation of the Second Tenancy.

Held, allowing the claim:


(1) The fact of damage was an element of a claim based on misrepresentation
and had to be proven on a balance of probabilities. The Plaintiff was unable to
show any damage suffered during the First Tenancy as a result of the
misrepresentations made by the Defendant. All the Plaintiffs claims for
misrepresentation therefore failed: at [65] and [71].
(2) By the time the Defendant took vacant possession on 1 June 2008, the
Plaintiff had already obtained the full benefit of the First Tenancy. The Plaintiff
ran a profitable business on the Premises for the entire duration of the First
Tenancy. No evidence was adduced by the Plaintiff to show that their present
dispute with the Defendant had affected its business in any way during the term
of the First Tenancy. The Plaintiff did not suffer any losses in the form of wasted
rent or loss of business profits: at [66].
(3) The cost of erecting the Structures, engaging the architect, and applying to
URA would have been incurred regardless of whether the Defendant made the
misrepresentations. The Plaintiff did not suffer any damage in the form of
wasted expenditure. As the Plaintiff did not enter into the First Tenancy with
any option to renew, it was obliged to remove the Structures at the end of the
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1184 SINGAPORE LAW REPORTS [2013] 1SLR

First Tenancy. The cost of removing the Structures could not be considered
damage: at [67] and [68].
(4) A necessary precondition to award rescission as a remedy for
misrepresentation was that the performance of the contract could in fact be
reversed and the representee had to be able to give back to the representor
whatever he had received under the contract. The remedy of rescission was no
longer available because the First Tenancy had already determined through the
effluxion of time: at [75].
(5) The condition in agreement to grant the Second Tenancy that the
additional drink kiosk had to be removed prior to the renewal of the First
Tenancy was a condition precedent. However, by its consistent conduct and
representations to the Plaintiff, the Defendant was estopped from relying on the
condition precedent under the doctrine of promissory estoppel. The Plaintiff
was able to show that (a) the Defendant made a clear and unequivocal promise;
(b) the Plaintiff acted in reliance on the promise; and (c) as a result of the
reliance the Plaintiff suffered detriment: at [80] and [82] to [92].
(6) There was a valid agreement between the parties for the Defendant to
grant the Plaintiff the Second Tenancy starting from 1 June 2008. By entering the
Premises and taking vacant possession on 1 June 2008, the Defendant was in
repudiatory breach of the Second Tenancy: at [95].
[Observation: The right to re-enter the demised premises and forfeit the lease or
tenancy was the most draconian weapon in the armoury of the landlord whose
tenant had committed a breach of covenant. Where a tenant wrongfully held
over, the landlord was statutorily entitled to double rent or double value at its
option for the entire period of the wrongful holding over under s 28(4) of the
Civil Law Act (Cap 43, 1999 Rev Ed). When in doubt, the landlord might first
obtain a judgment or a declaration of its rights and proceed to apply to court for
a writ of possession. In addition, ss 18 and 18A of the Conveyancing and Law of
Property Act (Cap 61, 1994 Rev Ed) prescribe stringent conditions that a
landlord had to satisfy before a tenant lost the right to relief against forfeiture. A
prudent landlord having an independent common law self-help right of
forfeiture would need to weigh the advantages of exercising this right against its
entitlement to double rent for wrongful holdovers, and the availability of court
processes to mitigate against the risk of liability for wrongful termination of the
lease: at [97] to [102].]

Case(s) referred to
Hughes v Metropolitan Railway Co (1877) 2 App Cas 439 (refd)
Panatron Pte Ltd v Lee Cheow Lee [2001] 2 SLR(R) 435; [2001] 3 SLR 405 (folld)
Persimmon Homes (South Coast) Ltd v Hall Aggregates (South Coast) Ltd [2008]
EWHC 2379 (TCC) (refd)

Legislation referred to
Civil Law Act (Cap 43, 1999 Rev Ed) s 28(4)
Conveyancing and Law of Property Act (Cap 61, 1994 Rev Ed) ss 18, 18A
Misrepresentation Act (Cap 390, 1994 Rev Ed) s 2(1)
Rules of Court (Cap 322, R 5, 2006 Rev Ed) O 45 r 3, O 45 r 3(2), O 45 r 3(3)
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[2013] 1SLR Catalla Investments Pte Ltd 1185

Wang Tsing I Arthur (Tan Kim Seng & Partners) for the plaintiff;
Phua Cheng Sye Charles and Stephen Cheong (Tan Kok Quan Partnership) for the
defendant.

10 December 2012 Judgment reserved.


Philip Pillai J:

1 This is a dispute between a landlord and its tenant. The plaintiff


tenant, Oriental Investments (SH) Pte Ltd (the Plaintiff), was at all
material times acting through and represented by its director Kevin Guay
Kim Hua (Kevin); and the defendant landlord, Catalla Investments Pte
Ltd (the Defendant), was at all material times acting through and
represented by its general manager, James Lim Keow Leng (James).

The facts

Background

2 Kevin is in the food business. Sometime in early 2005, Kevin started


negotiating with James to rent an outdoor refreshment area (the
Premises) from the Defendant. Kevin alleges that, pursuant to certain
representations made by James, he spent over $300,000 on renovations
before a tenancy agreement was entered into and before regulatory
approval was obtained for his planned renovations. The planned
renovations included erecting a canopy and a fifth drink stall (for which
regulatory approval had not been obtained) on the Premises in addition to
four existing stalls (for which regulatory approval had already been
obtained). These facts were not in dispute. For convenience, I shall refer to
the canopy and the fifth drink stall collectively as the Structures.

3 Kevin alleges that during the negotiations James represented that


(a) regulatory approval from the Urban Redevelopment Authority (URA)
for the Structures could be obtained; (b) the Defendant did not object to the
erection of the Structures; and (c) James would help the Plaintiff apply for
the necessary approvals. Unsurprisingly, James denies ever making these
representations to Kevin.

4 On 19 July 2005, the Plaintiff entered into a tenancy agreement (the


First Tenancy) with the Defendant for three years, backdated to start from
1 June 2005 and ending on 31 May 2008. The agreed rental for the First
Tenancy was $32,000 a month for the first year and $38,000 a month for the
second and third years. These facts were not in dispute.

5 After entering into the First Tenancy, James made various


submissions to URA through another firm known as SA Lim Architects
(SA Lim). However, James could not obtain approval for the Structures.
URA had insisted in its letters to SA Lim that the Structures on the
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Premises must be removed. These facts were not in dispute. Kevin avers
that James did not tell him about the problems, and that he only discovered
the problems when he personally approached SA Lim in April 2008, less
than two months before the termination of the First Tenancy.

6 On 1 October 2007, the Defendant offered the Plaintiff a renewal of


the existing tenancy agreement for another two years (the Second
Tenancy) from 1 June 2008 to 31 May 2010 at an increased rental of
$52,000 per month. The Second Tenancy, which was signed by both parties
on 10 October 2007, contained certain condition precedents. Whether or
not there was valid and unconditional acceptance of the Second Tenancy by
the Plaintiff and whether certain condition precedents were fulfilled were
two issues disputed by both parties. Much of the present case turns on the
findings of fact relating to the letter of offer dated 1 October 2007
concerning the Second Tenancy, which I will consider later.

7 Shortly after signing the letter of offer dated 1 October 2007, parties
started disputing whether or not the Plaintiffs purported acceptance of the
Second Tenancy was valid. The relationship between the parties
deteriorated so badly that by April 2008, the Plaintiff and the Defendant
would only communicate with each other through their lawyers. From
April to May 2008, the Plaintiff asserted that the offer for the Second
Tenancy was validly accepted and hence there was a binding tenancy for
another two years, whereas the Defendant denied the validity of the Second
Tenancy because certain condition precedents stated therein were not
fulfilled.

8 On the morning of 1 June 2008, the day immediately following the


expiration of the First Tenancy, the Defendant re-entered the Premises at
about 7.15am and took vacant possession by removing the Plaintiffs
fixtures including the Structures. The Plaintiff then brought the present
action.

Plaintiffs case

The representations

9 Kevin avers in his affidavit of evidence-in-chief (AEIC) that


sometime before February 2005, one Alex Ng (Ng) informed him that the
Defendant was looking for a new operator for the Premises. Kevin went
with Ng to view the Premises, and found the Premises to be suitable for use
as an outdoor refreshment area (ORA). While they were at the Premises,
Kevin and Ng met James (the February 2005 meeting) who introduced
himself as the general manager of the Defendant. Kevin and Ng both aver in
their respective AEICs that, at the February 2005 meeting, Kevin informed
James that he had previously operated stalls only in foodcourts, and that he
had no prior experience or expertise in operating an ORA business. Kevin
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further avers that at this meeting, James offered to guide and help him sort
out the paperwork, and to help him appoint an architect to submit plans to
obtain the necessary approval from URA for any alteration or addition that
had to be made to the Premises.

10 Kevins case is that at the February 2005 meeting, he told James that
he intended to construct a canopy structure over the ORA so that his
patrons could be sheltered from poor weather. Kevin avers that James
assured him that the construction of the canopy did not pose any problems
as it only involved submission of plans to the relevant authorities for
approval and that James further suggested that Kevin could construct an
additional fifth kiosk at the side of the Premises to sell drinks. As a result,
Kevin incorporated the Plaintiff company in March 2005 to contract the
First Tenancy with the Defendant.

Engaging Kingsville

11 After some negotiation, the parties agreed that the rental payable for
the First Tenancy was $32,000 a month for the first year and $38,000 a
month for the second and third years. This fact is not in dispute. Kevins
avers that after the February 2005 meeting, he arranged for his own
contractor to view the Premises for a price quotation to build the
Structures. When James heard about this, he recommended Kingsville
Pacific Pte Ltd (Kingsville) to Kevin, because Kingsville had prior
experience and would be able to secure the necessary approval from the
authorities expeditiously.

12 In late March 2005, Kingsville quoted Kevin $320,000 to construct the


Structures. Kevin avers that he engaged Kingsville even though he had
received lower quotations for the same work from other contractors, and
even though he had not yet entered into the First Tenancy. Kevin alleged
that Kingsville provided both himself and James with the proposed plans of
the Structures. Although James knew that works were ongoing, the
Defendant did not raise objections whilst Kingsville constructed the
Structures. Kevins case is that he was under the impression that James
would proceed to apply for approval from URA on the Plaintiffs behalf
after the construction of the Structures was complete because James
promised to do so. James denies making such a promise.

13 In late May 2005, the Plaintiff took possession of the Premises and
commenced business. Soon after, the Plaintiff received a letter from the
Building and Construction Authority (BCA) dated 2 June 2005 informing
it that the Structures did not conform to the plans which were earlier
approved by the URA and confined to four kiosks only. Kevin avers that he
was shocked to receive the letter, and that he wanted to seek clarification
directly from the URA. However, he avers that James told him that the
authorities would not entertain him because he was neither the landlord
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nor the owner of the Premises. Kevin further avers that James told him not
to worry because the proposed plans had already been submitted to URA
for approval and that he should concentrate on running his business.
Trusting James, Kevin stopped asking him questions.

The First Tenancy

14 The First Tenancy agreement, which was to last for three years, was
executed in July 2005; and was backdated to begin on 1 June 2005 and end
on 31 May 2008. Kevin avers that, because of his limited command of the
English language, of which James was aware, James had to explain the terms
of the First Tenancy to him. Kevin further avers that James assured him
repeatedly not to worry about the details of the contract as long as he paid
the rent on time each month. James denies making such assurances.

15 Subsequently, Kevin claimed that whenever he met James at the


Premises, he would ask James about the status of the URA approval and
James would tell him that the plans had already been submitted and that he
should wait patiently. Kevin avers that he never received copies of the
submission of plans to URA or any details from James or from Kingsville.

The 20 November 2006 letter

16 Sometime in March 2006, Kevin avers that James mentioned that


there were problems with obtaining the approval although he did not give
any further details or explanation. To Kevins surprise, he received a letter
from the Defendant dated 20 November 2006 (the 20 November 2006
letter), stating that the Plaintiff had breached cl 3.7 in the First Tenancy:
We have advised you on several occasions, that the Management do not allow
and will not be held liable for any unauthorized works but we noted that the
premises has been altered and below are the findings:
1. As stated on the tenancy agreement, the demised premises is
inclusive of Kiosks 1 to 4 of area 6,000 sq ft, and including an office
space at unit 01-08 but an additional kiosk has been erected and tables
and chairs are being displayed at the excess open area, which exceeds
the leased area of 6,000 sq ft.
Under Clause 3.7 , no alternations [sic] and additions are allowed,
with [sic] the prior consent from the landlord and under Clause 3.7.2
if any A & A is being done, the tenant should submit proper
documentations to the Landlord.

You have failed to effect all of the terms stated above. Under this
circumstances, the Landlord may pursue to this matter further, upon giving
you a grace period of fourteen (14) days to make good all the additions and
alternations [sic] but, in view of our good working relationship, we are willing
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to settle this matter amicably by giving you an extended grace period of twenty-
one (21) working days to make good all of the above.

No further notice shall be given after the grace period, expiring on


December 18, 2006. We reserve all rights to terminate this lease, reinstate the
demised premises to its original condition at the Tenants cost and legally
pursue this matter if you fail to act on the above stated.

[emphasis added]

17 Kevin avers that when he approached James about this letter, James
told him that the purpose of the letter was just to serve as a record and
had no real consequence. Kevin further avers that the Defendant did not
at any time during the First Tenancy act upon its reserved rights under the
20 November 2006 letter. Thereafter, nothing significant happened until
August 2007, when Kevin avers that James handed him a letter to pay the
following sums, which he duly paid to James in cash:

Item Cost
Resubmission of plans to URA $2,500
Professional fees for architect $15,000

The 1 October 2007 letter and the Second Tenancy

18 On 1 October 2007, James sent the Plaintiff a two-paged letter (the


original 1 October 2007 letter), offering to renew the First Tenancy for a
further period of two years at an increased rent of $52,000 per month. The
content of the original 1 October 2007 letter is not in dispute, and it states:
Date: October 1, 2007Our Ref: CI/048905-01/07

Dear Mr Kevin

Re: Letter Of Offer Leasing Of Outdoor Area (Kiosks 1 to 4) At 100


Orchard Road Hotel Meridien & Shopping Centre Singapore 238840

We refer to the above and are pleased to offer you renewal of the lease as
follows:

Term [initld by James] [2] 3 years commencing June 1, 2008


Rental [initld by James] [S$50,000] S$ 52,000.00

Important Note: All of the above are subjected to the following terms and
conditions


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5 This offer is only valid, for outdoor kiosks of 1 to 4. Additional drink


kiosk erected by the tenant during the existing tenancy period must be
removed, prior to renewal of lease.
6 Approval of additional sitting area are required to be submitted to
URA/SLA for approval. The Landlord will charge you accordingly for
any submission/approval fees, upon approval permission.

Thank you.

Yours faithfully, I have read and accept the above.


[Signature J1] X [Signature K1]
James Lim Oriental Investments
General Manager (SH) Pte Ltd
Catalla Investments Pte Ltd [dated 10/10/2007]

[emphasis added]

19 Kevin avers that the original 1 October 2007 letter he received was
already signed by James in ink both at the bottom of the first page and at
Signature J1. After receiving the original 1 October 2007 letter, Kevin
negotiated with James, with the result that Kevin agreed to dismantle the
fifth drinks stall and James agreed to reduce the rent from $52,000 per
month to $50,000 per month. On the other unresolved issue of URA
approval for the canopy, Kevin avers that James assured him that the
canopy merely required a resubmission of plans for approval. James then
amended in his own handwriting the relevant terms on the first page of the
original 1 October 2007 letter to reflect the agreed shorter term and
reduction in rent. James also initialled to the left of each handwritten
amendment and signed the bottom of the first page.

20 Kevin avers that he then went back to his own office, where he signed
the original 1 October 2007 letter by affixing Signature K1 and his
company stamp on each page. Kevin then made a photocopy of this original
1 October 2007 letter now duly stamped and signed by both parties on both
pages. Kevin avers that he had intended to keep the original 1 October 2007
letter himself and to hand James the photocopy that he made.

21 I pause to note that Kevin did not produce in evidence the original
1 October 2007 letter which he had retained. Instead, Kevin produced a
photocopy of the original 1 October 2007 letter signed by James and himself
(Kevins copy). James produced the photocopy of the original 1 October
2007 letter that Kevin had given to him (James copy).

22 It is absolutely crucial to distinguish between Kevins copy and James


copy of the same letter in evidence, Essentially, James copy is identical to
Kevins copy save in one material aspect. At the spot marked X (see [18]
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above) to the left of Signature K1, James copy contains a further


handwritten inscription written in blue ink (the Inscription) which reads:
NOTE: Pending ON HOLD for confirmation [Signature K2]
[Signature J2]
[emphasis added]

23 Below the Inscription, there is on both pages a second signature of


James (Signature J2) in the same blue ink. To the right of the Inscription
on both pages, there is a second signature of Kevin (Signature K2) in a
markedly darker shade of blue ink. Much of the present case turns on the
explanation for the Inscription, Signature J2 and Signature K2 which
were found on both pages of James copy but absent on Kevins copy.

24 Kevins case is that he accepted the offer contained in the original


1 October 2007 letter which had already been signed on both pages by
James and he put his signature, Signature K1, on it. He then made a
photocopy of the original 1 October 2007 letter now signed by both parties,
with the intention of giving the photocopied fully signed letter to James.
Kevin said during cross-examination that:
[Signature K2] was mine as well, but because when I gave [James] this letter
of offer, it was a photocopy. I kept the original. Im afraid it will not be valid,
that is why I signed one more signature. [emphasis added]

25 Kevins case was that he was afraid that his photocopied


Signature K1 would not be valid, and so he voluntarily affixed a second
Signature K2 in blue ink on both pages of the photocopied letter in order
to authenticate the photocopy. Kevins case was that when he affixed
Signature K2 on the photocopy and gave it to James, neither the
Inscription nor James second signature, Signature J2, was found on the
photocopy. Kevin avers that James had subsequently inserted the
Inscription and Signature J2 onto the photocopy without his knowledge
or consent.

26 James denies all the above allegations regarding the sequence of


events and avers in his AEIC that the Inscription was added by Kevin
himself when he signed the Second Tenancy.

Subsequent correspondence and falling out

27 Kevin avers that, after signing and returning to James the


photocopied 1 October 2007 letter, he assumed that the Plaintiff had validly
entered into the Second Tenancy for two years beginning 1 June 2008.
Nothing significant happened until Kevin received another letter from the
Defendant dated 22 January 2008, where James stated that there was no
renewal of the First Tenancy because Kevin had breached certain terms of
the First Tenancy. James also demanded that the Plaintiff vacate the
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1192 SINGAPORE LAW REPORTS [2013] 1SLR

Premises when the First Tenancy expired on 31 May 2008. When Kevin
approached James about the letter, James refused to discuss the matter any
further, although he allegedly stated that the Defendant had no agreement
to let the Premises to another ORA operator.

28 Subsequently, James sent Kevin another letter dated 28 March 2008


(the 28 March 2008 letter) stating that there was no valid renewal of the
First Tenancy and reminding the Plaintiff to hand over the Premises in its
original condition by 31 May 2008. Thereafter, the parties relationship
broke down so badly that they only communicated through their respective
legal counsel. Kevins counsel alleged that the Defendant through James
had made some representations which the Plaintiff was entitled to rely on
and in fact relied on, and insisted that the Second Tenancy was valid. The
Defendants counsel, on the other hand, denied all the Plaintiffs allegations,
and insisted that the Plaintiff vacate the Premises by 31 May 2008.

Re-entry on 1 June 2008

29 On 1 June 2008, at about 7.15am, the Defendant as the landlord


forcibly re-entered the Premises in order to take vacant possession. The
Defendant erected hoardings around the Premises in order to prevent
representatives of the Plaintiff from entering while its agents dismantled
(a) the canopy and its surrounding awning structures; (b) the fifth kiosk;
and (c) all of the Plaintiffs tables and structures within the Premises.
Subsequently, the Defendant sent the Plaintiff a cheque for the sum of
$1,410.96, being the remainder of the Plaintiffs security deposit of
$114,000, which the Plaintiff refused to accept.

30 On 20 April 2010, the Plaintiff commenced an action against the


Defendant on four causes of action: (a) misrepresentation; (b) breach of
contract; (c) breach of collateral contract; and (d) wrongful repudiation of
the Second Tenancy through reliance on the equitable doctrine of
promissory estoppel.

Defendants case

31 While the Defendant disputed and denied many of the allegations


made by the Plaintiff, only the following disputes of fact would, depending
on my findings, have a material bearing on the outcome of the present case:
(a) that prior to entering into the First Tenancy, James represented
to Kevin at the February 2005 meeting that
(i) Kevin could construct the Structures on the Premises;
(ii) the Defendant had no objection to the Structures; and
(iii) James would help Kevin obtain the necessary approval
from URA and the National Environment Agency (NEA) for
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the Structures (collectively referred to as the Alleged


Representations);
(b) that James told Kevin that the 20 November 2006 letter was
just to serve as a record and had no real consequence; and
(c) that James added the inscription and Signature J2 to the
1 October Letter only after Kevin had affixed Signature K1 allegedly
to authenticate the photocopy of the 1 October 2007 letter and not to
signify his agreement to put the Second Tenancy on hold.
32 The events that Kevin avers occurred after he signed and returned to
James the photocopied 1 October 2007 letter were all based on
documentary and contemporaneous evidence and were not disputed by the
Defendant.

The witnesses
33 During the trial that lasted 5 days, the Plaintiff called the following
witnesses:
(a) Kevin;
(b) Yeo Pei Lin, Thyline (Yeo), a representative from the URA;
and
(c) Teo Kim Swa (Teo), an architect from SA Lim.
34 The Defendant called the following witnesses:
(a) James; and
(b) Richard Yong Yuen Sen (Yong), a director of Kingsville.

My findings of fact

Evaluation of parties
35 After hearing the evidence and observing the demeanour of each
witness, I find every witness, except for James, to be coherent and consistent
and I accept their evidence. In contrast, I find James to be an evasive
witness. The version of events that James recounted in his AEIC was
significantly different from the evidence that he gave during trial. I was not
impressed by the fact that James often changed his story, albeit sometimes
only slightly, when pressed for details. Therefore, I do not find James
evidence to be reliable.

Whether James made the Alleged Representations


36 On the issue of whether James made the Alleged Representations, I
observe that Kevins capital investment of over $300,000 in constructing the
Structures even before he entered into the First Tenancy is certainly
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1194 SINGAPORE LAW REPORTS [2013] 1SLR

unusual given Kevins lack of experience in running an ORA business.


Kevin was making an upfront capital investment of over $300,000 against a
three-year lease at a total rental of $1,296,000. I accept Kevins evidence that
the Defendant was much more experienced than the Plaintiff in this
business. I find on a balance of probabilities that James must have made
some representations to Kevin as to what he would do to help Kevin even
before Kevin entered into the First Tenancy. I shall now proceed to
determine, from the evidence, the content of these representations.

James knew about the Structures in March 2005

37 The parties did not dispute that the construction of the Structures was
completed before an application for URA approval had been made or
before they formally entered into the First Tenancy. Kevin alleged that
James knew about his plans to construct the Structures in as early as March
2005, whereas James claimed that he only found out about the Structures in
May 2005 when he was walking by the Premises. Under cross-examination,
James initially took the position that he did not know about or notice the
construction of the canopy until May 2005, which according to him was the
earliest time that he could have found out about the works:
Q: [You said] that a tenant cannot make changes to your premises, so
my question to you was that if they constructed a fifth kiosk and a
canopy and when you noticed it, would you not tell them to either stop
the construction or, if they have completed it, to tear it down? Is that
not correct, would you not do that?
A: Yes.

Ct: Where is your office in relation to the five kiosks?

A: #01-02 of the food court.

Ct: If construction is going on, would you notice it and how soon would
you notice it?

A: I would not have noticed because there would be partition board.

Ct: Putting up a canopy across the four kiosks and to a fifth, and building a
fifth kiosk is not exactly minor alterations to the four kiosks.

A: Yes.

Ct: So when they started working on this sometime in March or April,


right through May, are you telling me you never noticed it until it was
up in May, 16 May?

A: Not in March or April. Only in May.

[emphasis added]
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[2013] 1SLR Catalla Investments Pte Ltd 1195

38 However, after some questioning, James changed his position on this


issue and admitted that he knew about the construction of the canopy and
the fifth kiosk earlier, in March 2005 instead of May 2005:
Ct: Yes, that is what I tried to establish. So that basically, March, you
already knew of what he was planning to do and it was not on 16 May
that you finally discovered what he did.
A. Yes.

39 This is just one of the examples where James evidence in his AEIC
did not stand up to scrutiny when probed. Accordingly, I shall approach his
testimony with some caution. On the other hand, I find that Kevins
evidence is coherent because the evidence that Kevin gave throughout the
trial were relatively consistent with his AEIC. I therefore accept Kevins
evidence and find that James knew about the construction of the Structures
in as early as March 2005 and did not object to them. I infer from this fact
that the Defendant through James had impliedly consented to the
construction of the Structures right from the start, when James
recommended Kingsville to the Plaintiff.

James represented that he would help apply for URA approval

40 I next find that, in the absence of any credible explanation to the


contrary, which the Defendant has been unable to furnish, James voluntary
and exclusive engagement of SA Lim to submit plans to the URA on the
Plaintiffs behalf for the entire period of August 2006 to April 2008 suggests
that, on a balance of probabilities, James must have represented to Kevin
before the First Tenancy that he would help him do so, and he was later
performing his representations.

41 The fact that James exclusively conducted all correspondence with


SA Lim regarding submission of plans to the URA was borne out during the
cross-examination of SA Lims representative, Teo, whose evidence I
accept:
Q. Can you confirm who of Catalla Investments instructed you for
these works?
A. Throughout this whole period of involvement, Ive been dealing with
James Lim.

42 Under cross-examination, Teo testified that right until April 2008


when he was approached by Kevin, he was under the impression that his
firms services were hired by the Defendant and that nobody at his firm was
aware of the Plaintiffs existence. Even after URA rejected the first
submission, James continued to instruct SA Lim exclusively. Teos evidence
was that James was the one who gave him instructions to submit a second
set of plans to URA in August 2006:
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1196 SINGAPORE LAW REPORTS [2013] 1SLR

Q. [W]ould it be correct that this second set of plans were submitted


with the knowledge of James Lim of Catalla Investments?

A. Yes, certainly.


Q. [B]esides James Lim, did you speak to my clients about the second set
of plans before it was submitted?
A. No.

43 There was no reason for Teo to lie. In fact, Teo had to be subpoenaed
by the Plaintiff to give evidence in court. Teo gave evidence that after
looking at the Structures, he was already aware that it would be difficult to
obtain URA approval because it would involve pushing the limits of what
URA would usually permit and he had communicated the difficulty that he
had anticipated to James back in 2006:
A: Of course before we go in with a submission, we actually talk to URA.
We actually discuss with them. And as in all authorities, when certain
areas are grey, they will say: please submit plans and we will evaluate.
And thats what we did.
Ct: This is something that happened in 2006, so it is already done, it is
there. The canopy is there, the fifth kiosk is there, the tables are all
there. So you have seen something on the ground.
A: Yes.
Ct: And your brief is to seek approval.


A: Actually when we came in with these plans, certainly we know a lot of
things would not be allowed, but in trying to push the limits, we were
trying very hard
Q: By looking at the contents, can you give us a brief summary of what
was the response from URA as far as you can understand?
A: I think what this letter means is that our attempt to push the limit has
failed now. URA did not agree, despite all the supporting reasons we
have given.
Q: Now, when you received this letter from URA, was it communicated
by you to James Lim of Catalla Investments?
A: Well, I dont have the records, it is so long ago, but Im quite certain
that by e-mail or some means we would have communicated, me and the
client.
Ct: Communicated to whom?
A: To James Lim, that is.

[emphasis added]
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[2013] 1SLR Catalla Investments Pte Ltd 1197

44 I accept Teos evidence that he conveyed such a concern to James.


However, despite knowing that the submissions had been rejected by URA
twice, James did not convey these problems to Kevin. I accept Kevins
evidence that he only found out about these problems when he approached
Teo personally in April 2008, as Kevins evidence was corroborated by Teos
evidence given under cross-examination:
Q: Can I confirm that even from the time you were instructed in August
2006 to the date of 13 December 2010, when you received the last letter
from URA, you were not introduced to my clients?
A: No, I was not introduced to the client. To, I mean, Oriental
Investments.
Q: And that would it be correct to say that the first time you met them
would be in April 2008, when they came to your office?
A: I cant remember the exact date, but it appears from the transcript given
to me that I remember I did meet them in my office and we had a
discussion, but I cant remember the exact date. That is the first time
that I met them, in 2008.
[emphasis added]

45 Based on the evidence above, James must have represented to Kevin


that the Plaintiff could construct the Structures first and obtain the
necessary regulatory approval later, and that James would help the Plaintiff
apply for the approval. This explained why James dealt exclusively with SA
Lim although it was not necessary for him to do so. This also explained
Kevins surprise when he found out in April 2008, barely two months
before the determination of the First Tenancy, that regulatory approval
from the URA was not forthcoming. I find on a balance of probabilities that
James made the Alleged Representations to Kevin.

James represented that he would help apply for NEA approval

46 I am fortified in my finding that James made the Alleged


Representations by looking at James unusual conduct in obtaining an NEA
licence for the Plaintiff to operate a drink stall from the fifth kiosk. It was
undisputed that after Kevin signed the First Tenancy, James was able to
apply for and obtain a licence through Great Treat Pte Ltd (Great Treat),
a subsidiary of the Defendant of which James was a director. It was also
undisputed that the licence was used by the Plaintiff for his business. Under
cross-examination, when asked to explain his actions, James could not
furnish any convincing reasons as to why he had taken the trouble to apply
to the NEA for a licence on the Plaintiffs behalf. The following transpired
during a lengthy cross-examination of James:
Ct: No, the question is very simple. Why did you use Great Treat to apply
for an NEA licence for a fifth kiosk whilst the plaintiff applied for an
NEA licence himself for the four kiosks?
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1198 SINGAPORE LAW REPORTS [2013] 1SLR

A: I already said earlier that kiosk one to kiosk four, the plaintiffs leased
from us and he could obtain licences. The fifth kiosk he did not lease
from us and there was no tenancy agreement. How could he get the
licence?

Ct: You still havent fully explained why in the case of the fifth kiosk you
took the trouble of applying for the licence when he could have done it
himself, as well as the other four, which he did.
A: He did not get permission. He did not get the architect to do the
submission, and in NEA there was no record of the fifth kiosk.

Ct: So how does the fact that you applied for the NEA licence under your
own name enable you to get the NEA licence regardless of the
unauthorised structure? How come you can get it and he cant?
A: As for the kiosk, the NEA asked me what they were for. I told NEA
that I took the drinks from my food court to bring out to the stall for
sale, and there was no cooking and there was no drink there and then
prepared. I told NEA that I was informed that the application was in
the process, and I asked them to give me a temporary licence for them
to operate in the meantime.
When [Kevin] approached me for assistance to apply for the licence I
went down to NEA and gave a letter of undertaking, to undertake that
in case of any food poisonings our company would be responsible.
Therefore I requested [Kevin] to sign an undertaking with me to cover
back-to-back.

Ct: [S]o that is where I started my point ten minutes ago, which was, very
simply, you could do it for whatever reason and he could not do it.
Right? So you help him. Right? Then the question becomes why.

A: The kiosk has no address and he couldnt put kiosk five, and I used my
licence to undertake this licence. The kiosk has no address and I used
my licence to undertake this kiosk licence. So he is doing something
that is an offence which I have to bear the responsibility for.
[emphasis added]

47 I find that James could not explain why he had bothered to apply for
an NEA licence through Great Treat and on the Plaintiffs behalf. Even if I
were to accept James evidence that he had objected to the unapproved fifth
kiosk right from the outset and that he had made the Defendants position
known to the Plaintiff, such evidence would be contradicted by his later
application to NEA for a licence to operate a drink stall from the
unapproved fifth kiosk using Great Treat, a subsidiary of the Defendant. If
it was clear that the NEA would not issue a permit to the Plaintiff, I do not
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find it probable that the Defendant, who was much more experienced than
the Plaintiff in these matters, would voluntarily undertake to incur
additional legal liability.

48 The irresistible inference which I draw from James application to


NEA is that he made the Alleged Representations to Kevin to the effect that
he would help the Plaintiff obtain all the necessary regulatory approvals if it
were to enter into the First Tenancy. James subsequent application to NEA
for a drink licence for the fifth kiosk through Great Treat is evidence that he
was performing certain promises that he had made to Kevin. Otherwise, in
the absence of such a representation or undertaking, I find it difficult to
accept that James would go to such great lengths to assist Kevin in
obtaining a licence for an unapproved structure that the Defendant had
allegedly objected to. I therefore find that the Plaintiff has proven on a
balance of probabilities that the Defendant through James had made the
Alleged Representations at the February 2005 Meeting.

Whether Defendant intended 20 November 2006 letter to have legal effect

49 I turn next to whether the Defendant intended the 20 November 2006


letter to have legal effect, and if so, what legal effect. The Plaintiffs case is
that James had assured Kevin repeatedly that the 20 November 2006 letter
was for reference only and was not intended to have any legal effect. On
the other hand, the Defendants case is that the 20 November 2006 letter
gave the Plaintiff the requisite notice that it intended to rely on cl 3.7 to
terminate the First Tenancy or any subsequent renewals based on the First
Tenancy.

50 On the totality of the evidence, I accept the Plaintiffs case. I find that
the 20 November 2006 letter did little to inform Kevin about what was
transpiring between James and SA Lim as was suggested by James in his
AEIC. Under cross-examination, Kevin painted a different picture from the
version of events that James suggested:
Q: Okay. You said, you told the court that James said that the defendants
would be responsible for the submission of approvals for the drink
kiosk and canopy, but these three letters that I referred to you, signed
by Mr James Lim, say totally the opposite.
A: These three were written by him. I knew it. May I speak?
Ct: Sure.
A: Each time after I received this letter, I would look for him. I would ask
why had I breached the contract, but what he answered was that this
was just for reference. For these three times I get the same answer from
him.
Q: So, witness, you did not reply to the three letters to set the record
straight?
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1200 SINGAPORE LAW REPORTS [2013] 1SLR

A: No, I went straight to him.

[emphasis added]

51 I believe Kevins evidence and I find that it is more likely than not that
James orally assured Kevin that the 20 November 2006 letter was a mere
formality and the Defendant did not intend for it to have any effect. Even
though Kevins command of the English language was not good enough for
him to understand the content of the entire letter, his receipt of the letter
was sufficient for him to speak to James about it. I believe Kevins evidence
in court that the 20 November 2006 letter made him so worried about
breaching the contract that he approached James three times on the same
issue, each time to be told by James that the 20 November 2006 letter was
written for reference only.

52 I therefore do not accept the Defendants submission that the


20 November 2006 letter gave the Plaintiff sufficient notice that it had
breached cl 3.7 in the First Tenancy agreement. From their dealings, James
must have been fully aware of Kevins limited command of the English
language. If the Defendant had intended the 20 November 2006 letter to
have any legal effect, James should have made it clear and should not have
told Kevin that it was for reference only when Kevin approached him
repeatedly to clarify the effect of the 20 November 2006 letter. Although the
Defendant in the 20 November 2006 letter reserved its right to terminate
the First Tenancy if the Plaintiff did not remedy the breach of cl 3.7 within
21 working days, I note that this course of action was not in fact pursued by
the Defendant. There was also no evidence to suggest that such a course of
action was contemplated by the Defendant at that point in time.

53 I therefore find that Kevins evidence and the parties actual conduct
are consistent with the mutual understanding that the 20 November 2006
letter was not intended to have legal effect. Kevin was not aware of the
problems with obtaining URA approval until he approached SA Lim in
April 2008, which was very late in the day considering that the First
Tenancy would terminate on 31 May 2008. I therefore reject the
Defendants reliance on the 20 November 2006 letter to show that the
Plaintiff had notice in as early as 2006 that regulatory approval from URA
was not forthcoming. I accordingly accept Kevins evidence as stated
at paras 49 to 52 of his AEIC:
49. I was shocked to receive these letters as I had thought that James had
done the submission of plans and drawings and obtained approval
from the authorities for the alterations and additions at the demised
premises. I had not at any time before the letter from BCA heard from
James that the authorities did not approve the alterations and additions
at the demised premises or that there was no approval from the
authorities for the alterations and additions at the demised premises.
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[2013] 1SLR Catalla Investments Pte Ltd 1201

50. I approached James on the matter and in my conversation with James,


I told him that he knew exactly how much I had spent in doing up the
alterations and additions
51. I even suggested to go down to the authorities to seek clarification on
why the alterations and additions could not be approved but James told
me not to waste my time as the authorities would not entertain me as I
was not the landlord or owner of the demised premises.
52. James then told me not to worry as plans and drawings for the
alterations and additions had been submitted by the Defendants to the
authorities for approval and asked me to concentrate on running my
business as he and his architect would sort out the issue of approval
for me. Trusting him, I did not question James any further as I did not
want to jeopardise my relationship with James.
[emphasis added]

Whether the agreement in 1 October 2007 letter was valid

54 I turn next to the last factual issue relating to the nature and effect of
the Inscription, Signature K2 and Signature J2 on James copy of the
1 October 2007 letter which was absent on Kevins copy. The Plaintiffs case
was simply that Signature K2 served the purpose of authenticating the
photocopied Signature K1 and not to signify agreement to the Inscription
which was not there when Kevin inscribed his Signature K2. On the other
hand, the Defendants case was that Kevin added Signature K2 and the
Inscription because he wanted to put the Second Tenancy on hold until
further notice. In James AEIC filed on 23 March 2011, he stated at para 37:
37. A second option to renew was sent on 1 October 2007 which similarly
provided for an extension of the lease for a further 2 years commencing
1 June 2008 for 4 kiosks only (the Second Option). It was, as with the First
Option, an expressed term and condition precedent for the extension of the
lease that the Unauthorised Additions had to be removed prior to the renewal
of the lease unless approval was obtained by the SLA/URA. This letter was
executed by the Plaintiffs on 10 October 2007 with a handwritten note by the
[Kevin] stating PendingOn Hold for Confirmation on both pages of the
Second Option. According to [Kevin], this was because he was undergoing
some marital problems at the material time and needed to sort them out
before he could commit fully to the Second Option. However, [Kevin] never
reverted to the Defendants as to whether the Plaintiffs would be confirming
the Second Option. The Second Option therefore was deemed to have lapsed
on 22 October 2007 as stated on the second page of the Second Option.
[emphasis added]

55 However, during cross-examination in court, James changed his


mind on who wrote the Inscription and readily agreed with the Plaintiffs
counsel that it was he who wrote the inscription on Kevins behalf and not
Kevin as he had affirmed in his AEIC. This was yet another instance where
James evidence in his AEIC was inconsistent with his evidence in court:
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1202 SINGAPORE LAW REPORTS [2013] 1SLR

Q: Now, can you confirm that [the inscription was] written by you?
A: Yes.
Q: Then can I ask you to look at your affidavit, if you turn to page 19
at para 37? Do you confirm that that is incorrect?
A: That is so. He said it and I write it on his behalf and I asked him to
countersign.
Q: So you are changing what [you] have said in paragraph 37?
A: He couldnt write in English and we were not allowed him to write in
the Chinese, that is why I wrote on his behalf and asked him to
countersign.
Q: Okay. But thats not what you said in paragraph 37, yes.
A: Yes.
[emphasis added]

56 After admitting that the Inscription was written by him, James had
initially said during cross-examination that he wrote it on Kevins behalf
and on Kevins instructions, and he asked Kevin to countersign next to the
inscription with Signature K2 because Kevin could not write in English.
James initially said that the Inscription PendingON HOLD for
confirmation were Kevins exact words:
Ct: So you kept a photocopy with the PendingON HOLD for
confirmation. So did he tell you what is the meaning of PendingON
HOLD for confirmation? These are these your words or his words?
A: Written by me.
Ct: Yes, written by [you]. You say he doesnt speak English so he told
you something and then you write or what?
A: I write; I write on the photocopy.
Ct: What did you write? You write in your own words or did he tell you in
Mandarin then you translate?
A: Oh, he tell me in the English say that PendingON HOLD first, yah.
Ct: He can tell you in English but he doesnt know how to write?
A: Yah, thats right.

Ct: Did he tell you anything? He actually told you PendingON HOLD
for confirmation?
A: For confirmation.
Ct: Right, he just say that?
A: Thats right.
Ct: But did he tell you what does that mean?
A: He never [told] me the [meaning].
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Ct: He signed the document first and then you write this in or you write
this in then he signed?
A: He said it first and I wrote it down, he then signed.
[emphasis added]

57 However, upon further questioning, James changed his story again


slightly and said that he wrote the Inscription on his own accord, which
suggests that the inscription was not, as James had previously insisted,
written on Kevins instructions:
A: The letter of offer I type it and I signed the letter of offer and gave it to
him. [Kevin] took the letter of offer and signed and gave it to me on the
10th of October. I kept the photocopy. He took the original copy. There
was no such wording on the original copy. Between 10th and 22nd
October, he said he has some family problems and he said that the offer
that he signed, he asked me to keep it pending, on hold. I was worried
that he would change his mind again, so I took out my photocopy and I
wrote it on the photocopy and asked him to sign. [emphasis added]

58 Shortly after, and upon further questioning, James changed his story
yet again, this time stating that the Inscription was not written in Kevins
presence when he signed the 1 October 2007 letter at James office on
10 October 2007, but was added later by him:
Q: Now, witness, you just told the Court that it was sometime between the
10th and the 21st that you spoke to [Kevin] and it was after that
conversation that you wrote PendingON HOLD for confirmation.
Is that correct?
A: Yes, it [was] mentioned by him. That is why I took out my photocopy
and wrote those words and asked him to [countersign].
Q: So it was not on the day when he gave you the copy on the 10th of
October?
A: No, it was not signed on 10th of October.
Q: So youre changing what you told the Court earlier because you told the
Court earlier on the 10th of October you met with [Kevin], he returned
the document to you and you wrote those words down. But now youre
saying that after the 10th, you met him again sometime between the
10th and the 21st and it was then that you wrote those words down. Is
that correct?
A: He took the original on the 10th of October. It could be on the same
day that he came to me again and I did not have the original with
me. Otherwise, I would have written those words on the original.
Q: So now youre saying that it may have been on the 10th of October or it
may be sometime between the 10th and the 21st when those words
were written down. Is that correct?
A: Yes. But it was written after he had signed the original on the 10th of
October. That is why his copy didnt have the second signature.
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1204 SINGAPORE LAW REPORTS [2013] 1SLR

Ct: How do you know? All you said so far is this is the only document you
had. He didnt have the original with him because had he had the
original with him, he would have written the same thing on that
document.
A: Yes. I had only the copy, so I wrote on the copy I had. I went to my office.
I went to my office to get the copy and wrote those words on the copy.
Q: So it cannot be at the same time when he gave you the copy because you
just said that you had to go back to the office to take it. So it must have
been a different time from the time when he handed you the
document.
A: Could be on the same day, perhaps a different time.

[emphasis added]

59 I am not at all impressed by James credibility as a witness. Besides not


being able to furnish any credible explanation as to why he wrote the
Inscription, he changed his evidence in court three times within a short
span of 15 minutes. James started by saying that Kevin had asked him face-
to-face to add the Inscription in its exact words. Within several minutes,
James told the court a completely different story, saying that he had written
the Inscription when he went back to his office after his meeting with
Kevin.

60 I find James explanation of the Inscription to be contrived. If Kevin


had wished to put the accepted offer in the 1 October 2007 letter on hold, he
did not need to return his duly signed copy to James. In October 2007, the
Plaintiff still had more than six months to the end of the First Tenancy to
decide whether to proceed or to renegotiate. In my view, it is most unusual
for a landlord with the commercial experience of the Defendant to enter
into a valid and binding lease renewal signed by the tenant and at the same
time put the renewal on hold at the request of the tenant without any
indication of how long it was to be on hold. When asked in court why the
Defendant had acted in such an unusual manner, James gave the following
reasons, which I find unconvincing:
Ct: By youre a businessman, okay. When you sign a document and say, I
accept, okay, if you dont come back to me by the 21st of October and
you dont pay me the 3 months rental, I walk away. I have you on the
hook.
A: Yes, I agree.


Ct: So you can say I give you another week. I can change theIm trying
to understand why did you do what you did or why would he do
what he did. What are you trying to gain [by saying] I can extend
the time?
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[2013] 1SLR Catalla Investments Pte Ltd 1205

A: It was a request made by him. If I did not follow what he told me to do,
then perhaps he would think that I was not going to renew his lease and I
would change my mind.
Ct: No, no. But hes already signed the document and given it to you. So
once he signs, hes on the hook.
A: Well, he might change his mind and that is why he asked me
Ct: No, but once he has signed, I dont care whether he changes his mind,
hes on the hook. You are all businessmen. You sign document
knowing what you sign.
A: Yes, I agree.
[emphasis added]

61 When contrasted with James version of events, Kevins case was


much more convincing. Kevins case was simply that the inscription was
not on the 1 October 2007 letter when he signed it on 10 October 2007.
After considering the totality of the evidence, I believe Kevin and I find that
the Inscription and Signature J2 were not on the 1 October 2007 letter
when he signed it. Therefore, it follows that Kevin did not agree to have the
Second Tenancy put on hold or subject to confirmation.

The legal issues

Misrepresentation in relation to the First Tenancy

62 On the issue of misrepresentation, I have found that the Defendant


through James had made the Alleged Representations to the Plaintiffs
representative Kevin:
(a) that the construction of the Structures on the Premises did not
pose any problems because it only involved submission of plans to
the relevant authorities for approval;
(b) that the Defendant would have no objections to the Plaintiff
erecting the Structures; and
(c) that James would help the Plaintiff apply for the necessary
regulatory approval for the Structures.

63 There are three types of misrepresentation: fraudulent, negligent and


innocent misrepresentation. Each attracts different remedies. All three were
pleaded by the Plaintiff. The authors of The Law of Contract in Singapore
(Andrew Phang Boon Leong gen ed) (Academy Publishing, 2012) explain
the difference between the three types of misrepresentation at p 663:
A representees right to relief may be grounded in the law of torts (for
fraudulent and negligent misrepresentations), in equity (for purely innocent
misrepresentations) and in statute (for non-fraudulent misrepresentations).
As we shall see, there are differences in the elements that must be established
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1206 SINGAPORE LAW REPORTS [2013] 1SLR

for each. The term misrepresentation therefore, is really [a] convenient


shorthand for all of these disparate causes of action, all of which are based on
a false pre-contractual statement.

64 Turning first to the claim in fraudulent misrepresentation, the


Plaintiff has the burden of proving the five elements of the tort of deceit set
out by the Court of Appeal in Panatron Pte Ltd v Lee Cheow Lee [2001]
2 SLR(R) 435 at [14]:
The essentials of this tort have been set out by Lord Maugham in Bradford
Building Society v Borders [1941] 2 All ER 205. Basically there are the
following essential elements. First, there must be a representation of fact
made by words or conduct. Second, the representation must be made with
the intention that it should be acted upon by the plaintiff, or by a class of
persons which includes the plaintiff. Third, it must be proved that the
plaintiff had acted upon the false statement. Fourth, it must be proved that the
plaintiff suffered damage by so doing. Fifth, the representation must be made
with knowledge that it is false; it must be wilfully false, or at least made in the
absence of any genuine belief that it is true. [emphasis added]

65 The most significant obstacles for the Plaintiff are the fourth and fifth
elements. The fact of damage is an essential element of a claim based on the
tort of deceit. This can be contrasted with a claim for breach of contract
where the fact of damage is not an element of the claim, and nominal
damages can be recovered in the absence of damage or where damages
cannot be proved on a balance of probabilities. In the Plaintiffs statement
of claim (Statement of Claim) at para 67], the Plaintiff particularised the
damage that he had suffered as a result of the misrepresentations as follows:
The damage suffered by the Plaintiff included the monies invested by them in
the form of rental over the three years, sums over $300,000 paid to Kingsville
for the Works carried out, monies paid to the architect for the submissions of
application for planning permission, loss of profit etc.

66 I shall next evaluate each of the Plaintiffs pleaded damage. On the


issue of wasted rent and loss of business profits, by the time the Defendant
took vacant possession on 1 June 2008, the Plaintiff had already obtained
the full benefit of the First Tenancy. The Plaintiff ran a profitable business
on the Premises for the entire duration of the First Tenancy. Since no
evidence was adduced by the Plaintiff to show that their present dispute
with the Defendant had affected its business during the term of the First
Tenancy in any way, I find that the rent paid by the Plaintiff was not wasted
and the Plaintiff did not suffer damage in the form of loss of business
profits during the period of the First Tenancy.

67 On the issue of the cost of erecting the Structures, engaging the


architect, and applying to URA, I find that those costs would have been
incurred regardless of whether James made the misrepresentations.
Although Kevin alleged that he received lower quotations from other
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contractors apart from Kingsville, he did not adduce evidence of the lower
quotations. In any event, regardless of which contractor Kevin engaged, he
would also have had to incur the cost of engaging an architect and applying
to URA for approval. These expenditures therefore cannot be considered
damage suffered by the Plaintiff as a result of James misrepresentations.

68 On the issue of the cost of removing the Structures, I note that it was
Kevin and not James who suggested building the Structures in the Premises.
Importantly, Kevin did not enter into the First Tenancy with any option to
renew the tenancy for a second term. Given that the Defendant was not
obliged to renew the tenancy, the First Tenancy would have expired on
1 June 2008 and the Plaintiff would have been obliged to remove the
Structures. Therefore, it is in my view improper to take into account the
cost of removing the Structures at the end of the tenancy.

69 From my analysis, I find the Plaintiffs characterisation of the damage


it had suffered to be misconceived. Looking at the facts, it is difficult for me
to see how the Plaintiff has suffered any damage by entering into the First
Tenancy, and the Plaintiffs claim for fraudulent misrepresentation fails for
this reason.

70 However, for the sake of completeness, I shall also make findings on


the fifth element of the tort of deceit concerning the Defendants
knowledge. On the evidence, I find that the Plaintiff has not shown on a
balance of probabilities that James made the representations with
knowledge that the representations were false, or in the absence of any
genuine belief that they were true. If that were the case, it would have been
quite inexplicable for James to apply for URA approval three times on the
Plaintiffs behalf. I note that the threshold for proving fraud is always an
extremely high one for a plaintiff to cross, and I find that the Plaintiff in the
present case has not come anywhere close to meeting this threshold.

71 In short, the First Tenancy was for a period of three years with no
option to renew. I find that even though James did not obtain regulatory
approval on the Plaintiffs behalf as he represented that he would, the
Plaintiff has not proven that it suffered damage during the First Tenancy as
a result of the misrepresentations made by James. Additionally, the Plaintiff
has not proven that the Defendant made the representations knowing that
they were false or without any genuine belief that they were true. Therefore,
the Plaintiffs claim in fraudulent misrepresentation must fail.

72 I next turn to evaluate the Plaintiffs alternative claim in non-


fraudulent misrepresentation, relying on s 2(1) of the Misrepresentation
Act (Cap 390, 1994 Rev Ed) (the Misrepresentation Act). Section 2(1) of
the Misrepresentation Act, which deals with non-fraudulent
misrepresentation, states:
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Damages for misrepresentation


2.(1) Where a person has entered into a contract after a misrepresentation
has been made to him by another party thereto and as a result thereof he has
suffered loss, then, if the person making the misrepresentation would be liable
to damages in respect thereof had the misrepresentation been made
fraudulently, that person shall be so liable notwithstanding that the
misrepresentation was not made fraudulently, unless he proves that he had
reasonable ground to believe and did believe up to the time the contract was
made that the facts represented were true.
[emphasis added]

73 The rationale of s 2(1) of the Misrepresentation Act is explained by


the authors of The Law of Contract in Singapore at p 755 as follows:
Prior to the enactment of the Misrepresentation Act, a non-fraudulent
misrepresentation which induced a representee to enter into a transaction,
gave, in general, the representee no right to damages unless the
misrepresentation was a term of the contract. Rescission, unless that right
was lost, was the only remedy. With the passing of the Act, the representee is
now able to claim for damages for any non-fraudulent misrepresentation in
respect of which he could have recovered damages had the misrepresentation
been fraudulent.

74 Section 2(1) of the Misrepresentation Act gives the representee a


statutory right to damages in cases of non-fraudulent misrepresentation.
The only remedy available at common law to the representee is the remedy
of rescission. However, whether the misrepresentation was fraudulent or
non-fraudulent, the plaintiff is required to prove that he suffered loss as a
result of the misrepresentation. I have found at [69] above that the Plaintiff
has been unable to establish any loss or damage. Therefore, any claim based
on s 2(1) of the Misrepresentation Act necessarily fails as well.

75 I note in passing that in the Plaintiffs Closing Submissions dated


6 January 2012, the Plaintiffs counsel asked the court at para 81 to award
the remedy of rescission with respect to the First Tenancy. The term of the
First Tenancy has already determined through the effluxion of time. The
remedy of rescission is not available for the determined First Tenancy, and I
can do no better than to quote John Cartwright, Misrepresentation, Mistake
and Non-Disclosure (Sweet & Maxwell, 3rd Ed, 2012) at para 452:
[452] Restitution must be possible. Rescission of the contract for
misrepresentation involves the contract being retrospectively avoided, and
any performance already made under the terms of the contract being
reversed, so that the parties are placed in the position in which they would
have been had there been no contract. In principle, therefore, a necessary
precondition to rescission being available is that performance of the contract
can in fact be reversed: and so, for example, the representee must be able to
give back to the representor whatever he received under the contract. As
Crompton J said in Clarke v Dickson:
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When you enunciate the proposition that a party has a right to rescind,
you involve in it the qualification, if the state of things is such that he
can rescind. If you are fraudulently induced to buy a cake you may
return it and get back the price; but you cannot both eat your cake and
return your cake.
[emphasis added]

76 The outcome, while surprising, is not unfair once one recognises that
the Plaintiffs cause of action against the Defendant lies not in the
Defendants misrepresentation with respect to the First Tenancy, but in the
Defendants repudiatory breach of the Second Tenancy, which I shall turn
to next.

Repudiatory breach of the Second Tenancy


77 In the light of my finding that the 1 October 2007 letter, duly signed
by Kevin, constituted a valid acceptance of the offer contained therein, I
shall now deal with the issue of whether the Defendants effecting of vacant
possession amounted to a repudiatory breach of the agreement to grant the
Second Tenancy.

Condition precedent
78 The Defendants counsel submitted that the agreement to grant the
Second Tenancy was not valid because the Plaintiff did not fulfil the
condition precedent at para 5 of the 1 October 2007 letter, which states:
This offer is only valid, for outdoor kiosks of 1 to 4. Additional drink kiosk
erected by the tenant during the existing tenancy period must be removed,
prior to renewal of lease.

79 Whether a clause is a condition precedent is a matter of construction.


In the English High Court (Technology and Construction Court) decision
of Persimmon Homes (South Coast) Ltd v Hall Aggregates (South Coast) Ltd
[2008] EWHC 2379 (TCC), Coulson J held at [298] that:
It is trite law that, if one partys obligation to do something under a contract
is contingent upon the happening of a particular event, the circumstances of
that event must be identified unambiguously in the contract. It must be clear
beyond doubt how and in what circumstances the relevant obligation has
been triggered.

80 In my view, para 5 of the 1 October 2007 letter should be construed as


a condition precedent. If the Defendant is entitled to rely on para 5, the
agreement to renew the lease is not valid until the Plaintiff satisfies the
condition precedent.
81 However, the Plaintiff argues that the Defendant is not entitled to rely
on the condition precedent stated in para 5 because by its consistent
conduct and representations to the Plaintiff, the Defendant is estopped
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from such reliance under the doctrine of promissory estoppel. Having


found that para 5 is a condition precedent, I shall turn next to the issue of
whether the Defendant is estopped from relying on para 5.

Promissory estoppel

82 The doctrine of promissory estoppel protects a partys reliance on


promises not supported by consideration, on the basis that the party has
acted on the promise to his detriment and it is now inequitable for the
promisor to go back on his promise. The doctrine is often described as a
shield in order to prevent a promisor from insisting on his strict legal rights,
and (at least on a conventional view) promissory estoppel cannot be used as
a sword by the promisee to found an independent cause of action.

83 It is trite that the three elements that a promisee must prove in order
to successfully raise a promissory estoppel are: (a) the promisor made a
clear and unequivocal promise; (b) the promisee acted in reliance on the
promise; and (c) as a result of the reliance the promisee suffered detriment:
see generally The Law of Contract in Singapore at pp 229237. Additionally,
the promisee must show that it is inequitable for the promisor to resile from
his promise. The effect of the Plaintiff raising a promissory estoppel
successfully in the present case is that the Defendant would be estopped
from relying on the condition precedent in para 5, without first giving the
Plaintiff an opportunity to remedy the breach in order to satisfy the
condition precedent.

(1) The first element

84 On the first element of a clear and unequivocal promise, the


relevant promise is the Defendants promise not to rely on para 5. I have
earlier found that the Defendant through James had since the start of the
First Tenancy consistently represented to and promised the Plaintiff that
the Defendant did not object to the construction of the unapproved
Structures. In fact, the Defendant went further to offer to help the Plaintiff
apply for planning permission from URA, as evinced by the Defendants
dealings with the architecture firm SA Lim even to the exclusion of the
Plaintiff. Although the Defendant vehemently denied making such a
promise, it is in my view extremely telling that immediately following
para 5 of the 1 October 2007 letter, para 6 states:
6. Approval of additional sitting area are required to be submitted to
URA/SLA for approval. The Landlord will charge you accordingly for any
submission/approval fees, upon approval permission. [emphasis added]

85 I find that the presence of para 6, which was drafted by the Defendant,
directly contradicts the Defendants case. If it were true, as the Defendant
maintained it was, that the onus was always with the Plaintiff to apply for
the relevant approval, the Defendant would not have bothered to insert
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para 6 into the 1 October 2007 letter. The landlord is usually not involved in
the submission of the tenants plans or the payment of approval fees. In my
view, the existence of para 6 strongly suggests that, even as late as on
1 October 2007, the parties understanding was that the Defendant was still
responsible for applying for regulatory approval from URA on the
Plaintiffs behalf.
86 Although the Defendant had through the 20 November 2006 letter
put on record that it had objected to the Plaintiffs alterations very early on,
I believe Kevin when he said that when he approached James on the matter,
James had assured him that the 20 November 2006 letter was just to serve
as a record and had no real consequence. The 20 November 2006 letter,
therefore, was insufficient notice to the Plaintiff that the Defendant
intended to resile from its promise that it would not object to the
unapproved Structures.
87 In addition, the very fact that the Defendant did not take any steps
during the First Tenancy to enforce cl 3.7 was consistent with the Plaintiffs
case that the Defendant had intended the 20 November 2006 letter to be
only a formality. While silence or mere inaction would ordinarily not
amount to a clear and unequivocal promise, I infer the element of a clear
and unequivocal promise from the Defendants inaction following the
strongly worded 20 November 2006 letter, viewed in the light of (a) the
Defendants generally nonchalant attitude towards the unapproved
Structures; (b) James active recommendation of a contractor, Kingsville;
and also (c) the extent of James involvement in assisting the Plaintiff to
apply for approvals for the Structures.

(2) The second element


88 I next turn to the second element of reliance on the promise. The
authors of The Law of Contract in Singapore explain at p 231 the element of
reliance as follows:
The second requirement that needs to be satisfied is that the promisee must
have acted in reliance on the promise. Generally, such reliance is evidenced by
the promisees change of position on the faith of the promise, that is, by doing or
omitting to do something which he would otherwise not have done or omitted
to do. [emphasis added]

89 This second element raises little difficulty in the present case. I find
that the Plaintiff had relied on the Defendants promise by leaving the task
of applying for regulatory approval in his hands and not actively exploring
ways to modify the Structures in order to obtain approval. I accept Teos
evidence that the additional cost to modify the canopy so that the relevant
approvals could be obtained was substantial:
A: But I think the scope of work can be quite a fair bit, because they have
to now make sure that that whole canopy is not blocking. They have to
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segment it, you know, and then the height has to be changed. So there
is quite a bit of structural work. They probably had to dismantle it, cut
it down, weld it, you know, to bring it to the controlled height. So some
of these works are quite extensive, and perhaps that is the reason why it
didnt proceed, you know. Because that is the only way that URA will
approve it, and we had to pursue that along that line. But whether the
client towards the end will do it, you know, that is beyond me

90 I also find that, had Kevin known the problems faced by SA Lim in
obtaining approval, he would have been willing to, and would have
incurred at least part of the modification cost in order to continue carrying
on business on the Premises. Kevin did not do so earlier because he had
relied on James promise. Under cross-examination, Kevin evinced an
intention to regularise the set-up of his ORA and an intention to explore
methods of apportioning the losses resulting from James misrepresentation
that he would obtain approval for the fifth kiosk and the canopy after
installing them:
A. I discussed with [James] that I agree to remove the drinks kiosk, but
subsequently he told me to remove the entire canopy, so I asked him,
Who is going to pay for the charges? I already spent more than
$300,000 to erect this. Do you think it is reasonable for me to it was
you who told me that I could obtain the approval. After three years you
told me otherwise. About two years plus. He told me that it cannot be
approved. Do you think I can accept it?

(3) The third element

91 I now turn to the third element of detriment. The current position of


the law in Singapore on what constitutes detriment for the purposes of
promissory estoppel is summarised by the authors of The Law of Contract
in Singapore at p 234 as follows:
More recently, in Lam Chi Kin David v Deutsche Bank AG [2010] SGHC 50,
Steven Chong JC (as he then was) explained that the term detriment may be
understood to include: (a) the incurrence of time and expense; (b) incurring a
liability; (c) a change of position; and (d) the deprivation of a benefit. The
former two categories conform to the general understanding of detriment in
a narrow sense because they involve the actual incurrence of time, money or
liability. On the other hand, the latter two categories constitute detriment in
the broad sense since such detriment would only arise if the promisor were
permitted to resile from its promise. In Chong JCs view, either form of
detriment is sufficient because the doctrine has consistently been held to
apply in circumstances when it was inequitable either in the narrow or
broader sense of detriment for the promisor to resile from his promise and
to enforce his strict legal rights. On appeal, the Court of Appeal disagreed
with Chong JCs application of these principles to the facts but did not disagree
with the learned judges exposition of the law. [emphasis added]
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92 The present case falls squarely within the situation described in


Hughes v Metropolitan Railway Co (1877) 2 App Cas 439 (Hughes), which
was summarised in Spencer Bower, Turner and Handley: Actionable
Misrepresentation (Butterworths, 4th Ed, 2000) at p 481 as follows:
The locus classicus of this species of detriment is none other than Hughes v
Metropolitan Railway Co (1877) 2 App Cas 439 (Hughes). In that case, the
owner of the freehold gave six months notice to the lessee to repair the
premises. The lessee, however, made an offer to purchase the owners
leasehold interest. Unfortunately, the negotiations which went on for some
time did not result in the sale whereupon the owner gave the lessee notice of
ejectment for failing to complete the repairs on time. The court found that
the owner was estopped from enforcing its strict legal rights because the
lessee had changed his position by relying on the owners implied promise
that he would not be required to repair the premises while the negotiations
were underway.

93 I agree with the Plaintiff that the estoppel raised in Hughes would
apply and the Defendant is estopped from relying on the Plaintiffs non-
fulfilment of the condition precedent in para 5 unless the Defendant gives
the Plaintiff a reasonable amount of time to rectify the breach.

(4) Conclusion

94 From the foregoing analysis, I find that the Plaintiff in the present
case has successfully raised the shield of promissory estoppel by proving the
three elements of representation, reliance and detriment. It is clear from all
my findings that the Defendants course of conduct throughout the First
Tenancy gave the Plaintiff the impression, and rightfully so, that the
Defendant would not enforce cl 3.7 in the First Tenancy. The Defendant
had even represented that it would help the Plaintiff apply for regulatory
approval.

95 In my view, this is exactly the sort of situation where equity would


intervene to prevent the Defendant from going back on its word. I find that
the Defendant is estopped from relying on the condition precedent in
para 5 of the 1 October 2007 letter. As a result, the agreement to enter into
the Second Tenancy on 1 June 2008 was valid and the Second Tenancy
came into existence on the specified date. By entering the Premises and
taking vacant possession, I find the Defendant to be in repudiatory breach
of the Second Tenancy.

The Plaintiffs remaining claims

96 I turn next to the Plaintiffs remaining claim in breach of collateral


contract. I find that on the face of the Plaintiffs Statement of Claim at
paras 14 to 17, the Plaintiff has not pleaded with sufficient particularity the
content of the alleged collateral contract, how the alleged collateral contract
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was breached, and what damage the Plaintiff suffered as a result. The claim
in breach of collateral contract is therefore bound to fail.

Observations
97 This case has brought into focus the consequences of a landlords
exercise of its right to re-enter premises in order to forfeit a lease which is
subsequently found to have been unlawful. In this regard, Kevin Gray and
Susan Francis Gray in Elements of Land Law (Oxford University Press,
5th Ed, 2009) observe at p 470:
The right to re-enter the demised premises and forfeit the lease or tenancy is
the most draconian weapon in the armoury of the landlord whose tenant has
committed a breach of covenant. Most written leases contain [a] forfeiture
clause As will appear later, the exercise of the landlords right of re-entry is
heavily qualified by the courts discretion to grant relief against forfeiture.

98 Before a landlord decides to exercise its forfeiture rights the following


are germane considerations. First, where a tenant wrongfully holds over,
the landlord is statutorily entitled to double rent or double value at its
option for the entire period of the wrongful holding over under s 28(4) of
the Civil Law Act (Cap 43, 1999 Rev Ed):

Double rent or double value on holding over by tenant


(4) Every tenant holding over after the determination of his tenancy shall
be chargeable, at the option of his landlord, with double the amount of his
rent until possession is given up by him or with double the value during the
period of detention of the land or premises so detained, whether notice to
that effect has been given or not.

99 Second, a landlord may apply for a writ of possession, first having


obtained a judgment or declaration of its right to possession through
O 45 r 3 of the Rules of Court (Cap 322, R 5, 2006 Rev Ed):

3. Enforcement of judgment for possession of immovable property


(O. 45, r. 3)

(2) A writ of possession to enforce a judgment or order for the giving of
possession of any immovable property shall not be issued without the leave of
the Court except where the judgment or order was given or made in a
mortgage action to which Order 83 applies.
(3) Such leave shall not be granted unless it is shown that every person in
actual possession of the whole or any part of the immovable property has
received such notice of the proceedings as appears to the Court sufficient to
enable him to apply to the Court for any relief to which he may be entitled.

100 It is evident that several protective mechanisms are in place within


O 45 r 3. The issuance of a writ of possession requires leave of court (O 45
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r 3(2)) which will only be granted the court is satisfied that every person in
actual possession of the immovable property has received notice sufficient
to enable him to apply to court for relief (O 45 r 3(3)).

101 Sections 18 and 18A of the Conveyancing and Law of Property Act
(Cap 61, 1994 Rev Ed) prescribe stringent conditions that a landlord must
satisfy before a tenant loses the right to relief against forfeiture. The authors
of Tan Sook Yees Principles of Land Law (LexisNexis, 3rd Ed, 2009) explain
these conditions at p 498:
In order to forfeit the lease, the landlord would have to satisfy the following
requirements: (a) the landlord must demonstrate that the tenants breach of
covenant entitles the landlord to re-enter and forfeit the lease; (b) there has
not been waiver of the breach by the landlord; (c) the landlord must satisfy all
the statutory requirements governing forfeiture including the relevant notice
provisions before re-entry; and (d) exercise the power of re-entry by either
physically re-entering the premises or serving the tenant with a writ of
possession. The tenant can still apply to the Court to ask for relief against
forfeiture. [emphasis added]

102 A prudent landlord having an independent common law self-help


right of forfeiture would need to weigh the advantages of exercising this
self-help right of forfeiture against its entitlement to double rent for
wrongful holdovers, and the availability of court processes to mitigate the
risk of unlawful repossession and termination which may subsequently
expose it, as here, to liability for wrongful termination of the lease.

Conclusion

103 In the light of the above analysis, I find that the Plaintiff succeeds on
its cause of action based on the Defendants wrongful repudiation of the
Second Tenancy, as set out in paras 26 and 28 of the Plaintiffs Statement of
Claim:

Wrongful repudiation of Lease as renewed by the Defendants

26. However, wrongfully and in breach of the terms of the Lease as


renewed, the Defendants have, by their solicitors letter dated 30 May
2008 to the Plaintiffs solicitors and the Defendants wrongful actions
as referred to in paragraph 13 [t]hereof, evinced an intention not to be
bound by the terms of the Lease as renewed and they have repudiated
the same.

28. By reason of the matters as set out in the preceding paragraphs, the
Plaintiffs have lost the benefit of the Lease as renewed and lost the
revenue/profits they would otherwise have received under it and have
thereby suffered loss and damage.
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104 The Plaintiff is therefore entitled to damages for such wrongful


repudiation, to be assessed by the Registrar on a loss of profit basis for the
period of 1 June 2008 to 31 May 2010, taking into account the Plaintiffs
liability to pay rent during the same period as well as its duty to mitigate its
loss. I would award simple interest of 5.33% per annum on the Registrars
award of damages starting from 1 June 2008, the day on which the
Plaintiffs cause of action arose. The Defendant is to return the security
deposit of $114,000 less costs actually incurred to remove the Structures.
105 I further award the Plaintiff costs of the proceedings before me, to be
agreed or taxed.

Reported by Lim Sing Yong.

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