Top Ten Entertainment v Lucky Red: Rent Reduction & Legality of Hiring Charges
In Top Ten Entertainment Pte Ltd v Lucky Red Investments Ltd, the Singapore High Court addressed a dispute over rent arrears and the legality of hiring charges in a lease agreement. Top Ten Entertainment, the tenant, counterclaimed against Lucky Red Investments, the landlord, seeking a declaration that the hiring charge provision was void and a refund of hiring charges paid. The court dismissed Top Ten's claim and allowed Lucky Red's counterclaim for unpaid rent, finding no evidence of intent to deceive the tax authority and upholding the enforceability of the lease agreement.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Plaintiff’s claim dismissed. Defendant’s counterclaim allowed.
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Singapore High Court case involving Top Ten Entertainment and Lucky Red Investments over rent arrears and the legality of hiring charges in a lease agreement.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Top Ten Entertainment Pte Ltd | Plaintiff by counterclaim | Corporation | Claim Dismissed | Lost | Michael Hwang, Ginny Chew |
| Lucky Red Investments Ltd | Defendant by counterclaim | Corporation | Counterclaim Allowed | Won | Anthony Bevin Netto, S Maginthran, Peter Pang |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Tay Yong Kwang | Judge | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Michael Hwang | Allen and Gledhill |
| Ginny Chew | Allen and Gledhill |
| Anthony Bevin Netto | Netto Tan and S Magin |
| S Maginthran | Netto Tan and S Magin |
| Peter Pang | Peter Pang and Co |
4. Facts
- Top Ten was the tenant of the premises from 1 December 1984.
- The premises were originally fitted out and used as a cinema.
- The lease agreements included a component for hiring charge for furniture and fittings.
- The apportionment of the rent for the premises and the hiring charge was done at Loi’s direction.
- Lucky Red never insisted on its strict legal rights and Loi agreed with Peter Bader that the rent could be paid within the first ten days of the month.
- Top Ten claimed that the hiring charge of $11,000 was not payable as it was a fraud on the revenue authority.
- The Property Tax Department had assessed the annual value of the premises as $612,000, which worked out to be a rental of $51,000 per month.
5. Formal Citations
- Top Ten Entertainment Pte Ltd v Lucky Red Investments Ltd (by counterclaim), Suit 634/2002, [2004] SGHC 40
6. Timeline
| Date | Event |
|---|---|
| Top Ten became the tenant of the premises. | |
| First lease dated. | |
| Lucky Red purchased the premises from Premier Theatre Pte Ltd. | |
| Second lease granted to Top Ten. | |
| Third lease dated. | |
| Top Ten informed Lucky Red that many items in the inventory were no longer on the premises. | |
| Lease for one year beginning from 1 December 1993 was signed. | |
| Fourth lease began. | |
| Sixth lease by way of a letter from Lucky Red to Top Ten. | |
| Sixth lease began. | |
| Seventh lease dated. | |
| Dispute arose regarding rent reduction. | |
| Seventh lease began. | |
| Lucky Red's solicitors demanded payment for arrears of rent. | |
| Top Ten found out that the Property Tax Department had assessed the annual value of the premises. | |
| Sale and purchase agreement between Lucky Red and Leivest International Pte Ltd. | |
| Leivest became the owner of the premises. | |
| Leivest's solicitors demanded payment of rent from Top Ten. | |
| Suit commenced by Leivest against Top Ten for arrears of rent and for possession. | |
| Judgment issued. |
7. Legal Issues
- Legality of Hiring Charge
- Outcome: The court found that the hiring charge was at most an over-estimation and was not done with the intention of deceiving the tax authority.
- Category: Substantive
- Sub-Issues:
- Fraud on revenue authority
- Failure of consideration
- Related Cases:
- [1945] 62 TLR 85
- [1951] 2 All ER 264
- [1936] 1 KB 169
- Agreement to Reduce Rent
- Outcome: The court was satisfied that Loi agreed initially to reduce the rent from $70,000 to $56,000 per month for the first six months of 1999 only and later agreed to extend the reduction of rent for another six months.
- Category: Substantive
- Sub-Issues:
- Consideration for rent reduction
- Oral agreement vs. written agreement
8. Remedies Sought
- Declaration that the provision pertaining to the hiring charge in the lease agreement was null and void
- Return of hiring charges paid
9. Cause of Actions
- Breach of Contract
- Money had and received
10. Practice Areas
- Commercial Litigation
- Lease Agreements
11. Industries
- Entertainment
- Real Estate
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Chartered Bank v The City Council of Singapore | Singapore | Yes | [1959–1986] SPTC 1 | Singapore | Cited for the proposition that depreciation based on original cost was the only proper method of determining a fair commercial value for the hiring of movable property. |
| Tan Chong Realty (Pte) Ltd v Chief Assessor | Valuation Review Board | Yes | [1959–1986] SPTC 338 | Singapore | Cited regarding the practice of allowing a straight line depreciation of 20% per annum on capital sums expended on furnishing over 5 years. |
| Miller v Karlinski | N/A | Yes | [1945] 62 TLR 85 | N/A | Cited as an example of a case where the scheme was clearly calculated to deceive the revenue authorities and served no other purpose. |
| Napier v National Business Agency Ltd | N/A | Yes | [1951] 2 All ER 264 | N/A | Cited as an example of a case where the scheme was clearly calculated to deceive the revenue authorities and served no other purpose. |
| Alexander v Rayson | N/A | Yes | [1936] 1 KB 169 | N/A | Cited as an example of a case where the scheme was clearly calculated to deceive the revenue authorities and served no other purpose. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Companies Act (Cap 50, 1994 Rev Ed) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Hiring charge
- Rent reduction
- Lease agreement
- Apportionment of rent
- Inventory
- Revenue authority
- Annual value
- Arrears of rent
15.2 Keywords
- Lease
- Rent
- Hiring Charge
- Singapore
- High Court
- Landlord
- Tenant
16. Subjects
- Landlord and Tenant
- Lease Agreements
- Tax Law
17. Areas of Law
- Landlord and Tenant Law
- Contract Law