Defu Furniture v RBC Properties: Rescission of Lease for Misrepresentation

In Defu Furniture Pte Ltd v RBC Properties Pte Ltd, the High Court of Singapore heard a case regarding the rescission of a lease. Defu Furniture, the plaintiff, sought rescission of a lease agreement with RBC Properties, the defendant, based on misrepresentation. RBC Properties counterclaimed for breach of lease. The court, presided over by Justice Vinodh Coomaraswamy, found in favor of Defu Furniture, granting rescission of the lease and awarding damages for negligent misrepresentation. The defendant's counterclaim was dismissed.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Judgment for Plaintiff

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Defu Furniture seeks rescission of a lease with RBC Properties for misrepresentation. The court found in favor of Defu Furniture, allowing rescission and damages.

1.7 Decision Date

1 January 2014

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
Defu Furniture Pte Ltd	Plaintiff	Corporation	Judgment for Plaintiff	Won	Kirindeep Singh, June Hong, Ravin Periasamy
RBC Properties Pte Ltd	Defendant	Corporation	Counterclaim Dismissed	Lost	Nicholas Narayanan

3. Judges

Judge Name	Title	Delivered Judgment
Vinodh Coomaraswamy	Judge	Yes

4. Counsels

Counsel Name	Organization
Kirindeep Singh	Rodyk & Davidson LLP
June Hong	Rodyk & Davidson LLP
Ravin Periasamy	Rodyk & Davidson LLP
Nicholas Narayanan	Nicholas & Tan Partnership LLP

4. Facts

The defendant advertised the premises as a "warehouse showroom."
The plaintiff, a furniture company, was looking for a showroom to rent.
The defendant represented to the plaintiff that the premises could be used as a showroom without further approval.
The SLA considered use of the Premises even as an ancillary showroom to be a breach of Prologis’s obligation under the State Lease.
The plaintiff relied on the defendant's representation and entered into a sub-lease.
The SLA demanded a differential premium for the change of use to a showroom.
The plaintiff refused to pay the increased rent to cover the differential premium and sought to rescind the sub-lease.

5. Formal Citations

Defu Furniture Pte Ltd v RBC Properties Pte Ltd, Suit No 726 of 2011, [2014] SGHC 1
Defu Furniture Pte Ltd v RBC Properties Pte Ltd, Civil Appeal No 19 of 2014, [2014] SGCA 62

6. Timeline

Date	Event
2006-08-16	Building Agreement signed
2007-04-24	URA granted RLG planning permission
2008-04-24	Head Lease granted
2008-08-22	State Lease executed
2008-09-16	RLG assigned its interest in RBC to Prologis
2010-04-01	Furniture and Furnishings Pte Ltd expressed interest in leasing the Premises
2011-01-01	Plaintiff viewed the Premises for the first time
2011-01-25	Plaintiff proposed to take a lease of the Premises
2011-01-27	Defendant gave the plaintiff a draft letter of offer
2011-02-01	Plaintiff viewed the Premises for the second time
2011-02-16	Plaintiff signed and returned the Letter of Offer
2011-02-18	Defendant accepted the Letter of Offer
2011-02-25	Defendant sent a draft sub-lease to the plaintiff
2011-03-11	Plaintiff and the defendant executed a sub-lease for the Premises
2011-04-01	Plaintiff went into possession of the Premises
2011-04-01	Plaintiff paid the stamp duty on the Sub-Lease
2011-04-01	Plaintiff paid a fitting out deposit to the defendant
2011-04-21	SLA wrote to Prologis objecting to the change of use
2011-04-25	Prologis granted in-principle approval for fitting-out works
2011-04-27	Defendant gave in-principle approval for fitting-out works
2011-05-27	Prologis's director of asset management, Mr Alan Ling, met representatives of the SLA
2011-05-27	Mr Kamphorst emailed the URA
2011-06-01	Mr Kamphorst asked Mr Lim Jr to stop the fitting-out works
2011-06-06	Mr Kamphorst agreed that the plaintiff would not have to pay rent during the period that its fitting-out works were suspended
2011-06-09	The SLA and the URA had a joint meeting with Prologis
2011-06-20	Prologis’s lawyers, Lee & Lee, wrote to SLA on Prologis’s behalf
2011-06-21	SLA wrote again to Prologis
2011-06-28	The plaintiff sent a letter through its lawyers, Rodyk & Davidson LLP, asking for an update on the situation by 30 June 2011
2011-07-05	SLA repeated its clarification via a letter to Prologis
2011-07-08	Defendant wrote to Prologis
2011-07-11	Defendant wrote to Prologis
2011-07-18	Prologis wrote to the defendant
2011-07-21	Defendant wrote to Prologis
2011-07-26	Prologis wrote to the defendant
2011-07-28	Defendant wrote to Prologis
2011-09-14	Mr Ling emailed Mr Kamphorst to inform him that SLA had reduced the differential premium
2011-09-15	Mr Kamphorst pressed Mr Ling to respond by 23 September 2011
2011-09-21	Defendant proposed a solution to the plaintiff
2011-10-14	Plaintiff commenced proceedings
2011-12-01	Reinstatement works commenced and concluded
2011-12-31	Plaintiff met the defendant’s facilities manager, one Mr Tan, on site and tried to deliver to him the keys to the Premises
2012-01-06	Rodyk wrote to the defendant to give notice that it would deliver the keys to the defendant on 9 January 2012
2012-01-09	Rodyk couriered the keys to the defendant
2012-02-14	Joint inspection took place
2012-02-17	Mr Kamphorst followed up with a list of nine outstanding items of reinstatement works to be done
2012-02-25	Defendant put the Premises back onto the letting market with an online advertisement
2012-02-27	Mr Lim Jr contacted Mr Kamphorst
2012-03-12	Mr Kamphorst returned and confirmed the completion of the reinstatement works
2012-03-12	Plaintiff returned possession of the Premises to the defendant, and the defendant accepted the return
2012-05-07	Defendant leased the Premises to Gain City Best-Electric Pte Ltd
2014-01-02	Judgment reserved

7. Legal Issues

Misrepresentation
- Outcome: The court found that the defendant made a negligent misrepresentation to the plaintiff, inducing them to enter into the sub-lease.
- Category: Substantive
- Sub-Issues:
  - Negligent Misrepresentation
  - Innocent Misrepresentation
  - Exclusion of Liability for Misrepresentation
  - Inducement
  - Reasonable Reliance
Rescission
- Outcome: The court held that the plaintiff was entitled to rescind the sub-lease due to the defendant's misrepresentation.
- Category: Substantive
Breach of Contract
- Outcome: The court did not find a repudiatory breach of contract by the defendant.
- Category: Substantive
- Sub-Issues:
  - Repudiatory Breach
Exclusion Clause
- Outcome: The court held that the exclusion clause in the sub-lease was unreasonable and therefore ineffective to exclude liability for misrepresentation.
- Category: Substantive
- Sub-Issues:
  - Reasonableness of Exclusion Clause

8. Remedies Sought

Rescission of Lease
Refund of Security Deposit
Damages for Misrepresentation

9. Cause of Actions

Misrepresentation
Breach of Contract
Unjust Enrichment

10. Practice Areas

Commercial Litigation
Real Estate Law

11. Industries

Real Estate
Furniture

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Bell v Lever Brothers	N/A	Yes	[1932] AC 161	N/A	Cited regarding the doctrine of common mistake which renders a contract void ab initio at common law.
Solle v Butcher	N/A	Yes	[1950] 1 KB 671	N/A	Cited regarding the equitable doctrine which permits equity to intervene to relieve a mistaken party from its contractual obligations even though the mistake is not sufficiently fundamental to warrant relief at common law.
Grist v Bailey	N/A	Yes	[1967] Ch 532	N/A	Cited regarding the equitable doctrine which permits equity to intervene to relieve a mistaken party from its contractual obligations even though the mistake is not sufficiently fundamental to warrant relief at common law.
Hedley Byrne & Co Ltd v Heller & Partners Ltd	N/A	Yes	[1964] AC 465	N/A	Cited regarding common law liability in tort for negligent misrepresentation.
Spandeck Engineering (S) Pte Ltd v Defence Science & Technology Agency	N/A	Yes	[2007] 4 SLR(R) 100	N/A	Cited regarding the synthesis of the law governing when a duty of care arises in the tort of negligence.
Howard Marine & Dredging Co Ltd v A Ogden & Sons (Excavation) Ltd	N/A	Yes	[1978] QB 574	N/A	Cited regarding whether the representor could have reasonable grounds for making a misrepresentation when he had or ought to have had special knowledge from the more reliable documents in his possession which would falsify the representation he made.
Doyle v Olby (Ironmongers) Ltd	N/A	Yes	[1969] 2 QB 158	N/A	Cited regarding the measure of damages for fraudulent misrepresentation.
Lee Chee Wei v Tan Hor Peow Victor and others and another appeal	N/A	Yes	[2007] 3 SLR(R) 537	N/A	Cited regarding the effect of an entire agreement clause.
Inntrepreneur Pub Co v East Crown Ltd	N/A	Yes	[2000] 2 Lloyd’s Rep 611	N/A	Cited regarding that an entire agreement provision does not preclude a claim in misrepresentation.
Ng Buay Hock v Tan Keng Huat and another	N/A	Yes	[1997] 1 SLR(R) 507	N/A	Cited regarding that damages under s 2(1) of the Misrepresentation Act are to be calculated as damages in tort and as though the misrepresentation were fraudulent.
Royscot Trust Ltd v Rogerson	N/A	Yes	[1991] 2 QB 297	N/A	Cited regarding that damages under s 2(1) of the Misrepresentation Act are to be calculated as damages in tort and as though the misrepresentation were fraudulent.
Smith New Court Securities Ltd v Scrimgeour Vickers (Asset Management) Ltd	N/A	Yes	[1997] AC 254	N/A	Acknowledged the academic criticism of Royscot Trust but expressed no view on the controversy.
Car and Universal Finance Co. Ltd v Caldwell	N/A	Yes	[1965] 1 QB 525	N/A	Cited regarding that an act of rescission is an unequivocal act of election by the plaintiff, not the defendant.
Forum Development Pte Ltd v Global Accent Trading Pte Ltd and another appeal	N/A	Yes	[1995] 1 SLR 474	N/A	Cited regarding that an indemnity in equity is available to indemnify the rescinding party only against losses suffered as a result of performing its obligations under the rescinded contract.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute Name	Jurisdiction
Misrepresentation Act 1967 (c 7) (UK)	United Kingdom
Planning Act (Cap 232, 1998 Rev Ed)	Singapore
State Lands Act (Cap 314, 1996 Rev Ed)	Singapore
Application of English Law Act (Cap 7A, 1994 Rev Ed)	Singapore
Unfair Contract Terms Act 1977	United Kingdom

15. Key Terms and Keywords

15.1 Key Terms

Misrepresentation
Rescission
Sub-Lease
Differential Premium
Ancillary Showroom
State Lease
Head Lease
Fitting-Out Works
Reinstatement
Letter of Offer

15.2 Keywords

Misrepresentation
Lease
Rescission
Showroom
Commercial Property
Singapore
Contract Law

16. Subjects

Contract Law
Real Estate Law
Commercial Law
Leases
Misrepresentation

17. Areas of Law

Misrepresentation
Contract Law
Lease Law
Equity