HSBC v Toshin: Rent Review Mechanism Dispute in Ngee Ann City Lease

HSBC Institutional Trust Services (Singapore) Ltd, as trustee of Starhill Global Real Estate Investment Trust, filed an originating summons against Toshin Development Singapore Pte Ltd, concerning the rent review mechanism for Takashimaya's premises at Ngee Ann City. HSBC sought declarations that the rent review mechanism was inoperable due to Toshin's actions and requested an inquiry into the prevailing market rental value. The High Court dismissed HSBC's application, finding that the rent review mechanism was still operable.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Plaintiff's application dismissed

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

The High Court dismissed HSBC's application, finding the rent review mechanism in the Ngee Ann City lease was operable despite Toshin's prior valuer engagements.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
HSBC Institutional Trust Services (Singapore) Ltd (trustee of Starhill Global Real Estate Investment Trust)PlaintiffTrustApplication DismissedLost
Toshin Development Singapore Pte LtdDefendantCorporationApplication DismissedWon

3. Judges

Judge NameTitleDelivered Judgment
Lai Siu ChiuJudgeYes

4. Counsels

Counsel NameOrganization
Ang Cheng HockAllen & Gledhill LLP
William OngAllen & Gledhill LLP
Magdalene SimAllen & Gledhill LLP
Cavinder BullDrew & Napier LLC
Gerui LimDrew & Napier LLC
Adam ManiamDrew & Napier LLC
Yarni LoiDrew & Napier LLC

4. Facts

  1. The dispute concerned the rent review mechanism for Takashimaya's premises at Ngee Ann City.
  2. The plaintiff alleged the defendant acted to make the rent review mechanism inoperable.
  3. The defendant unilaterally hired seven out of eight valuation firms before the rent review.
  4. The plaintiff claimed the valuers' findings would be tainted by conflicts of interest.
  5. The lease agreement stipulated a three-step rent review mechanism.
  6. The plaintiff sought declarations that the rent review mechanism was inoperable.
  7. The defendant's 2010 valuations were done on a 'best rent' basis.

5. Formal Citations

  1. HSBC Institutional Trust Services (Singapore) Ltd, (trustee of Starhill Global Real Estate Investment Trust) v Toshin Development Singapore Pte Ltd, Originating Summons No 376 of 2011, [2012] SGHC 8
  2. HSBC Institutional Trust Services (Singapore) Ltd, (trustee of Starhill Global Real Estate Investment Trust) v Toshin Development Singapore Pte Ltd, Civil Appeal No 108 of 2011, [2012] SGCA 48

6. Timeline

DateEvent
Lease commenced between Toshin Japan and Orchard Square Properties Private Limited
Orchard Square Properties assigned its interest in the lease to the plaintiff
Toshin Japan transferred its interest in the lease to the defendant
Defendant began unilaterally hiring valuation firms
Defendant concluded unilaterally hiring valuation firms
Parties began negotiations for rent review exercise
SISV issued a letter regarding potential conflict of interest
Defendant sent a letter to SG REIT enclosing five of the 2010 valuation reports
Plaintiff filed Originating Summons No. 376 of 2011
New Rental Term was scheduled to commence
Hearing was held
Plaintiff’s application dismissed
Decision Date
Appeal to this decision in Civil Appeal No 108 of 2011 was dismissed by the Court of Appeal

7. Legal Issues

  1. Operability of Rent Review Mechanism
    • Outcome: The court found that the rent review mechanism was still operable.
    • Category: Substantive
    • Sub-Issues:
      • Conflict of interest
      • Bias
      • Improper influence
      • Unfair advantage
    • Related Cases:
      • [2002] 1 BCLC 65
  2. Independence of Valuers
    • Outcome: The court found no justification for the independence of the valuers to be compromised by an allegation of bias or conflict of interest.
    • Category: Substantive
    • Sub-Issues:
      • Conflicts of interest
      • Apparent bias
      • Actual bias
    • Related Cases:
      • [2002] 1 BCLC 65
      • [2005] 4 SLR(R) 604
      • [1968] 3 WLR 694
  3. Unfair Advantage in Rent Review
    • Outcome: The court found that the defendant had not obtained any unfair advantage by engaging seven of the eight valuers in 2010.
    • Category: Substantive
    • Sub-Issues:
      • Shopping around for lowest valuations
    • Related Cases:
      • (1983) 153 CLR 455

8. Remedies Sought

  1. Declaration that the rent review mechanism was inoperable
  2. Order for an inquiry as to the prevailing market rental value of the premises

9. Cause of Actions

  • Breach of Contract

10. Practice Areas

  • Commercial Litigation
  • Real Estate Litigation

11. Industries

  • Real Estate
  • Retail

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Nugent v Benfield Greig Group plcEnglish Court of AppealYes[2002] 1 BCLC 65England and WalesCited regarding the independence of valuers and potential conflicts of interest arising from previous valuations.
Tang Kin Hwa v Traditional Chinese Medicine Practitioners BoardHigh CourtYes[2005] 4 SLR(R) 604SingaporeCited for the principle that apparent bias can impeach decisions of the judiciary and other tribunals to protect public confidence in the legal system.
Metropolitan Properties Co (F.G.C.) Lt v Lannon and orsNot AvailableYes[1968] 3 WLR 694England and WalesCited for the principle that justice must be rooted in confidence, which is destroyed when right-minded people perceive bias.
Re Shankar Alan s/o Anant KulkarniNot AvailableYes[2007] 1 SLR(R) 85SingaporeCited regarding the test for apparent bias.
Gollin & Co v Karenlee NomineesHigh Court of AustraliaYes(1983) 153 CLR 455AustraliaCited regarding the principle that a party should not 'shop around' for the lowest valuations in a rent review exercise.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
No applicable statutes

15. Key Terms and Keywords

15.1 Key Terms

  • Rent review mechanism
  • Prevailing market rental value
  • Licensed valuers
  • Conflicts of interest
  • Apparent bias
  • Unfair advantage
  • Lease Agreement
  • Originating Summons
  • Valuation
  • Best rent

15.2 Keywords

  • rent review
  • lease
  • valuation
  • conflict of interest
  • bias
  • Ngee Ann City
  • Takashimaya

17. Areas of Law

Area NameRelevance Score
Rent Review90
Commercial Leasing80
Contract Law75
Real Estate60
Valuation Law50

16. Subjects

  • Contract Law
  • Real Estate
  • Leases
  • Valuation