RBC Properties v Defu Furniture: Misrepresentation & Lease Rescission
In RBC Properties Pte Ltd v Defu Furniture Pte Ltd, the Singapore Court of Appeal heard an appeal regarding the rescission of a lease agreement. Defu Furniture Pte Ltd (the Respondent) sought to rescind a lease with RBC Properties Pte Ltd (the Appellant) based on misrepresentation concerning the necessary approvals for using the leased premises as a furniture showroom. The High Court initially ruled in favor of the Respondent, but the Court of Appeal allowed the appeal in part, finding that while a misrepresentation occurred, it was innocent. The court put the Respondent to an election between rescinding the Lease for a wholly innocent misrepresentation or rescinding the Lease for a repudiatory breach of contract accompanied by a claim in damages for that breach.
1. Case Overview
1.1 Court
Court of Appeal1.2 Outcome
Appeal Allowed in Part
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Singapore Court of Appeal: Defu Furniture rescinds lease with RBC Properties due to misrepresentation about showroom approvals. Damages denied.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| RBC Properties Pte Ltd | Appellant | Corporation | Appeal Allowed in Part | Partial | Goh Yihan, Nicholas Narayanan |
| Defu Furniture Pte Ltd | Respondent | Corporation | Put to election | Other | Kirindeep Singh, June Hong, Edwin Chua |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Sundaresh Menon | Chief Justice | No |
| Andrew Phang Boon Leong | Justice of the Court of Appeal | Yes |
| Steven Chong | Judge | No |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Goh Yihan | Nicholas & Tan Partnership LLP |
| Nicholas Narayanan | Nicholas & Tan Partnership LLP |
| Kirindeep Singh | Rodyk & Davidson LLP |
| June Hong | Rodyk & Davidson LLP |
| Edwin Chua | Rodyk & Davidson LLP |
4. Facts
- RBC Properties Pte Ltd (Appellant) leased premises to Defu Furniture Pte Ltd (Respondent) for use as a furniture showroom.
- The lease stated the permitted use was as an ancillary showroom for furniture.
- The Respondent claimed the Appellant misrepresented that all necessary approvals had been obtained for the showroom use.
- The Singapore Land Authority (SLA) later claimed a differential premium was required for the showroom use, which had not been obtained.
- The Appellant attempted to pass the cost of the differential premium to the Respondent.
- The Respondent sought to rescind the lease due to the misrepresentation.
- The Appellant had copies of the Head Lease and the State Lease.
5. Formal Citations
- RBC Properties Pte Ltd v Defu Furniture Pte Ltd, Civil Appeal No 19 of 2014, [2014] SGCA 62
6. Timeline
| Date | Event |
|---|---|
| Building Agreement signed between RLG Development Pte Ltd and the President of the Republic of Singapore. | |
| RLG Development Pte Ltd obtained provisional permission from the Urban Redevelopment Authority for its development plans. | |
| Urban Redevelopment Authority granted written planning permission to erect a 5-storey light industrial development with showroom. | |
| RLG granted RBC Properties Pte Ltd a lease of the Property. | |
| RLG entered into State Lease with the President of Singapore. | |
| RLG assigned its interest in the Property to AMB Changi South DC1 Pte Ltd. | |
| RBC Properties Pte Ltd wrote to the Urban Redevelopment Authority to ask if the Premises were approved for use as a showroom. | |
| The Lims made a second visit to the Premises. | |
| Defu Furniture Pte Ltd signed and returned a letter of offer to lease the Premises. | |
| Parties entered into a lease agreement. | |
| Defu Furniture Pte Ltd took possession of the Premises and commenced fitting it out. | |
| Singapore Land Authority wrote to AMB in relation to a proposed racking system. | |
| Mr. Kamphorst of RBC Properties Pte Ltd was informed of the Singapore Land Authority’s letter. | |
| Defu Furniture Pte Ltd halted its fitting out works. | |
| Singapore Land Authority wrote again to AMB to particularise the premium it was charging for the racking system alone. | |
| Singapore Land Authority sent a further letter to M/s Lee & Lee, the solicitors acting for AMB. | |
| Singapore Land Authority wrote to Prologis Changi South 1 Pte Ltd. | |
| Singapore Land Authority wrote again to Prologis Changi South 1 Pte Ltd. | |
| Prologis and the Singapore Land Authority succeeded in negotiating a reduction in the differential premium. | |
| RBC Properties Pte Ltd suggested a compromise. | |
| Defu Furniture Pte Ltd commenced proceedings, announced its intention to rescind the Lease and proceeded to reinstate the Premises. | |
| Reinstatement works concluded. | |
| Keys were accepted by RBC Properties Pte Ltd. | |
| Decision Date |
7. Legal Issues
- Misrepresentation
- Outcome: The Court of Appeal found that the Appellant made a misrepresentation, but it was an innocent misrepresentation.
- Category: Substantive
- Sub-Issues:
- Innocent Misrepresentation
- Negligent Misrepresentation
- Fraudulent Misrepresentation
- Breach of Contract
- Outcome: The Court of Appeal found that the Appellant was in repudiatory breach of the terms of the Lease.
- Category: Substantive
- Sub-Issues:
- Repudiatory Breach
- Exclusion Clause
- Outcome: The Court of Appeal found that the exclusion clause in the Lease did not exclude liability for the Appellant’s misrepresentation.
- Category: Substantive
8. Remedies Sought
- Rescission of Lease
- Refund of Payments
- Damages for Misrepresentation
9. Cause of Actions
- Misrepresentation
- Breach of Contract
10. Practice Areas
- Commercial Litigation
11. Industries
- Real Estate
- Furniture
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Defu Furniture Pte Ltd v RBC Properties Pte Ltd | High Court | Yes | [2014] SGHC 1 | Singapore | The High Court Judge held that the Appellant did in fact make a misrepresentation to the Respondent and that such a misrepresentation fell within the ambit of s 2(1) as the Appellant did not have any reasonable ground to believe that the facts it had represented to the Respondent were true. The Court of Appeal overturned this finding. |
| Howard Marine and Dredging Co Ltd v A Ogden & Sons (Excavation) Ltd | English Court of Appeal | Yes | [1978] 1 QB 574 | England and Wales | Cited for the proposition that the Appellant could not have had reasonable ground to believe that the representations it made were true, where it had special knowledge from reliable documents in its possession that would have demonstrated that the representations were false. |
| Solle v Butcher | English Court of Appeal | Yes | [1950] 1 KB 671 | England and Wales | Cited as the principle under which the Lease was alleged to be voidable for mistake in equity. |
| Derry v Peek | House of Lords | Yes | (1889) 14 App Cas 337 | England and Wales | Cited as the leading decision on the tort of fraudulent misrepresentation or deceit. |
| Wee Chiaw Sek Anna v Ng Li-Ann Genevieve (sole executrix of the estate of Ng Hock Seng, deceased) and another | Court of Appeal | Yes | [2013] 3 SLR 801 | Singapore | Cited for the principle that fraud or deceit is separate and distinct from negligence or carelessness. |
| Angus v Clifford | English Court of Appeal | Yes | [1891] 2 Ch 449 | England and Wales | Cited for the observation that recklessness did not mean not taking care, it meant indifference to the truth. |
| Raiffeisen Zentralbank Osterreich AG v Archer Daniels Midland Co | Singapore High Court | Yes | [2007] 1 SLR(R) 196 | Singapore | Cited for the principle that dishonesty is the touchstone which distinguishes fraudulent misrepresentation from other forms of misrepresentation. |
| Hedley Byrne & Co Ltd v Heller & Partners Ltd | House of Lords | Yes | [1964] AC 465 | England and Wales | Cited as the landmark decision establishing the tort of negligent misrepresentation. |
| Donoghue v Stevenson | House of Lords | Yes | [1932] AC 562 | Scotland | Cited for the objective standard of reasonableness in the tort of negligence. |
| Broome v Speak | English Court of Appeal | Yes | [1903] 1 Ch 586 | England and Wales | Cited for the principle that the subjective state of mind of the defendant was instrumental in the objective assessment of reasonableness, and thereupon in the finding of liability. |
| Shepheard and another v Broome | House of Lords | Yes | [1904] AC 342 | England and Wales | Cited for the principle that the subjective state of mind of the defendant was instrumental in the objective assessment of reasonableness, and thereupon in the finding of liability. |
| Smith New Court Securities Ltd v Citibank NA | House of Lords | Yes | [1997] AC 254 | England and Wales | Cited for the principle that the measure of damages awarded for the tort of fraudulent misrepresentation or deceit includes all loss that flowed directly from the entry into the contract in question, regardless of whether or not such loss was foreseeable. |
| Wishing Star Ltd v Jurong Town Corp | Court of Appeal | Yes | [2008] 2 SLR(R) 909 | Singapore | Cited for the principle that the measure of damages awarded for the tort of fraudulent misrepresentation or deceit includes all loss that flowed directly from the entry into the contract in question, regardless of whether or not such loss was foreseeable. |
| Royscot Trust Ltd v Rogerson | English Court of Appeal | Yes | [1991] 2 QB 297 | England and Wales | Cited for the holding that the measure of damages to be awarded under s 2(1) ought to be that measure which would have been awarded for fraudulent misrepresentation or deceit. |
| Ng Buay Hock and another v Tan Keng Huat and another | Singapore High Court | Yes | [1997] 1 SLR(R) 507 | Singapore | Cited with apparent approval, with the court referring to that case as reflecting what the “prevailing opinion” appeared to be. |
| Newbigging v Adam | English Court of Appeal | Yes | (1886) 34 Ch D 582 | England and Wales | Cited for the distinction between the indemnity to which the plaintiff is entitled for innocent misrepresentation and damages. |
| Forum Development Pte Ltd v Global Accent Trading Pte Ltd and another appeal | Court of Appeal | Yes | [1994] 3 SLR(R) 1097 | Singapore | Cited for the principle that the proper relief to be granted in the case of innocent misrepresentation is a rescission of the contract and an indemnity of all obligations under the contract. |
| Whittington v Seale-Hayne | English High Court | Yes | (1900) 82 LT 49 | England and Wales | Cited for the principle that the indemnity for innocent misrepresentation applies to both parties, as the formula “giving and taking back on both sides” suggests; and it follows that the representee can recover only those benefits which he was obliged to give, and in return the representor re-assumes those burdens which he was obliged to pass under the contract, and vice versa. |
| William Sindall plc v Cambridgeshire County Council | English Court of Appeal | Yes | [1994] 1 WLR 1016 | England and Wales | Cited for the principle that in general, where the misrepresentation is relatively unimportant in relation to the subject matter of the contract, damages in lieu of rescission may be an appropriate relief. |
| San International Pte Ltd (formerly known as San Ho Huat Construction Pte Ltd) v Keppel Engineering Pte Ltd | Court of Appeal | Yes | [1998] 3 SLR(R) 447 | Singapore | Cited for the principle that the Appellant evinced by word or conduct an intention that it was unable or unwilling to perform its obligation to lease the Premises to the Respondent. |
| RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd and another appeal | Court of Appeal | Yes | [2007] 4 SLR(R) 413 | Singapore | Cited for the principle that the Appellant evinced by word or conduct an intention that it was unable or unwilling to perform its obligation to lease the Premises to the Respondent. |
| Howard-Jones v Tate | English Court of Appeal | Yes | [2012] 2 All ER 369 | England and Wales | Cited for the principle that rescission of the contract such as to unwind it from the beginning (rescission for misrepresentation, in contrast, involving an allegation that there was a defect in the formation of the contract), but is, rather, legal shorthand for accepting a repudiatory breach of contract, absolving either party from further performance, and allowing the innocent party to claim damages for breach. |
| AXA Sun Life Services Plc v Campbell Martin Ltd & Ors | English Court of Appeal | Yes | [2011] 2 Lloyd’s Rep 1 | England and Wales | Cited for the principle that the exclusion of liability for misrepresentation has to be clearly stated. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| Misrepresentation Act (Cap 390, 1994 Rev Ed) | Singapore |
| Planning Act (Cap 232, 1998 Rev Ed) | Singapore |
| Unfair Contract Terms Act (Cap 396, 1994 Rev Ed) | Singapore |
15. Key Terms and Keywords
15.1 Key Terms
- Misrepresentation
- Lease
- Rescission
- Differential Premium
- Showroom
- State Lease
- Head Lease
- Ancillary Use
- Urban Redevelopment Authority
- Singapore Land Authority
15.2 Keywords
- Misrepresentation
- Lease
- Rescission
- Commercial Property
- Singapore Law
16. Subjects
- Contract Law
- Real Estate Law
- Commercial Law
17. Areas of Law
- Contract Law
- Misrepresentation
- Lease Law