Somerset Investments v Far East Technology: Guarantee, Collateral Contracts & Distress for Rent
Somerset Investments Pte Ltd, formerly known as Liang Court Pte Ltd, sued Far East Technology International Ltd, formerly known as Far East Holdings International Ltd, in the High Court of Singapore before Tay Yong Kwang J, regarding a guarantee dated 15 April 1999. The guarantee was provided by Far East Technology for a tenancy granted by Somerset Investments to RFC Far East Café Pte Ltd for the Rainforest Café. Somerset Investments claimed $2,616,810 under the guarantee, while Far East Technology resisted the claim, alleging a collateral agreement, failure of a condition precedent, manifest errors in the claim, and an invalid demand. The court ruled in favor of Somerset Investments, allowing the claim with costs.
1. Case Overview
1.1 Court
High Court1.2 Outcome
Plaintiff's claim allowed with costs.
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Somerset Investments sued Far East Technology over a guarantee related to a Rainforest Cafe tenancy. The court ruled in favor of Somerset Investments.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Somerset Investments Pte Ltd (formerly known as Liang Court Pte Ltd) | Plaintiff | Corporation | Claim allowed with costs | Won | |
| Far East Technology International Ltd (formerly known as Far East Holdings International Ltd) | Defendant | Corporation | Claim Dismissed | Lost |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Tay Yong Kwang | Judge | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Paul Wong | Rodyk and Davidson |
| Jonathan Seng | Rodyk and Davidson |
| Chia Foon Yeow | Tan Peng Chin LLC |
4. Facts
- The plaintiff is the landlord of Liang Court.
- The defendant is the guarantor for the tenant, RFC Far East Café Pte Ltd.
- The tenant defaulted on rent payments.
- The plaintiff executed a writ of distress over the restaurant.
- The plaintiff sent a letter of demand to the defendant for $2,616,810 under the guarantee.
- The defendant claimed there was a collateral agreement that the plaintiff breached.
- The defendant claimed the plaintiff's demand was invalid.
5. Formal Citations
- Somerset Investments Pte Ltd (formerly known as Liang Court Pte Ltd) v Far East Technology International Ltd (formerly known as Far East Holdings International Ltd), Suit 1411/2002, [2004] SGHC 96
6. Timeline
| Date | Event |
|---|---|
| Guarantee dated | |
| Tenancy agreement dated | |
| Rainforest Cafe opened | |
| Writ of distress executed | |
| Lotting process carried out | |
| Auction sale conducted | |
| Plaintiff re-entered and took possession of the tenanted premises | |
| Letter of demand issued to the defendant | |
| Second letter of demand sent to the defendant | |
| Action commenced | |
| Decision date | |
| Plaintiff made an offer to settle |
7. Legal Issues
- Breach of Contract
- Outcome: The court found that the tenant was in breach of the tenancy agreement.
- Category: Substantive
- Collateral Contract
- Outcome: The court found that there was no collateral contract as alleged by the defendant.
- Category: Substantive
- Validity of Demand under Guarantee
- Outcome: The court held that the letter of demand of 25 October 2002 was a valid demand under the guarantee, although it was erroneous as to the amount owing.
- Category: Substantive
- Related Cases:
- [1987] Ch 335
- (1984) 51 ALR 609
- Termination of Tenancy
- Outcome: The court held that the tenancy was terminated on 31 July 2002.
- Category: Substantive
8. Remedies Sought
- Monetary Damages
9. Cause of Actions
- Breach of Guarantee
10. Practice Areas
- Commercial Litigation
11. Industries
- Real Estate
- Food and Beverage
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Bank of Baroda v Panessar | High Court | Yes | [1987] Ch 335 | England and Wales | Cited for the principle that a demand to a guarantor is valid if it makes clear that the creditor requires payment of a sum which is actually due, even if the amount is not precisely stated. |
| Bunbury Foods Pty Ltd v National Bank of Australasia Ltd | High Court of Australia | Yes | (1984) 51 ALR 609 | Australia | Cited for the principle that a notice demanding payment of loan moneys which did not specify the amount then owing by the debtor company was valid. |
13. Applicable Rules
| Rule Name |
|---|
| O 59 r 27 of the Rules of Court (Cap 322, R 5, 1997 Rev Ed) |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| No applicable statutes | |
15. Key Terms and Keywords
15.1 Key Terms
- Guarantee
- Collateral Contract
- Writ of Distress
- Turnover Rent
- Landlord's Contribution
- Tenancy Agreement
- Validity Period
- Manifest Error
15.2 Keywords
- guarantee
- collateral contract
- distress for rent
- tenancy agreement
- Singapore
- High Court
17. Areas of Law
| Area Name | Relevance Score |
|---|---|
| Guarantee | 90 |
| Contract Law | 85 |
| Landlord and Tenant Law | 75 |
| Collateral Contract | 70 |
| Distress for Rent | 60 |
16. Subjects
- Contract Law
- Guarantee
- Landlord and Tenant
- Distress for Rent