Lucky Realty v HSBC Trustee: Contractual Interpretation & Rent Review Clause

The Court of Appeal of Singapore heard an appeal by Lucky Realty Co Pte Ltd (“Appellant”) against HSBC Trustee (Singapore) Ltd (“Respondent”) concerning the interpretation of a rent review clause in a lease agreement. The dispute arose over whether the rent review should be based on the entire Lot 5245N or only Block D. The Court of Appeal allowed the appeal, finding that the 'existing development' referred to Block D, based on the negotiations and correspondence between the parties.

1. Case Overview

1.1 Court

Court of Appeal

1.2 Outcome

Appeal Allowed

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Court of Appeal interprets a rent review clause in a lease agreement between Lucky Realty and HSBC Trustee, focusing on the 'existing development'.

1.7 Decision Date

3 December 2015

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
HSBC Trustee (Singapore) Limited	Respondent	Corporation	Appeal Dismissed	Lost	Lee Bik Wei of Allen & Gledhill LLP Ang Ann Liang of Allen & Gledhill LLP Lee May Ling of Allen & Gledhill LLP Edwin Tong of Allen & Gledhill LLP
LUCKY REALTY COMPANY PTE LTD	Appellant	Corporation	Appeal Allowed	Won	Kee Shu’en Theodora of Lee & Lee Julian Tay Wei Loong of Lee & Lee April Cheah Wenyi of Lee & Lee

3. Judges

Judge Name	Title	Delivered Judgment
Sundaresh Menon	Chief Justice	No
Chao Hick Tin	Justice of the Court of Appeal	No
Andrew Phang Boon Leong	Justice of the Court of Appeal	Yes

4. Counsels

Counsel Name	Organization
Lee Bik Wei	Allen & Gledhill LLP
Ang Ann Liang	Allen & Gledhill LLP
Lee May Ling	Allen & Gledhill LLP
Edwin Tong	Allen & Gledhill LLP
Kee Shu’en Theodora	Lee & Lee
Julian Tay Wei Loong	Lee & Lee
April Cheah Wenyi	Lee & Lee

4. Facts

Public Trustee demised Lot 3041V to the Appellant in 1975 for 60 years.
Lot 3041V was subdivided into Lot 5245N and Lots 5247L and 5246X.
Appellant erected four buildings (Blocks A to D) on the land.
Appellant sold off units in Blocks A, B, and C to third parties.
A dispute arose over the Appellant's redevelopment of Block D.
The parties entered into a deed of variation in 1996 to revise the rent.
The Respondent sought to increase the rent based on the entire Lot 5245N.

5. Formal Citations

Lucky Realty Co Pte Ltd v HSBC Trustee (Singapore) Ltd, Civil Appeal No 135 of 2014, [2015] SGCA 68
HSBC Trustee (Singapore) Ltd v Lucky Realty Co Pte Ltd, , [2015] 3 SLR 885
Y.E.S F&B Group Pte Ltd v Soup Restaurant Singapore Pte Ltd (formerly known as Soup Restaurant (Causeway Point) Pte Ltd), , [2015] 5 SLR 1187
Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design & Construction Pte Ltd, , [2008] 3 SLR(R) 1029
Sembcorp Marine Ltd v PPL Holdings Pte Ltd and another and another appeal, , [2013] 4 SLR 193
Arnold v Britton, , [2015] 2 WLR 1593
Multi-Link Leisure Developments Ltd v North Lanarkshire Council, , [2011] 1 All ER 175
OCBC Capital Investment Asia Ltd v Wong Hua Choon, , [2012] 4 SLR 1206
Sandz Solutions (Singapore) Pte Ltd and others v Strategic Worldwide Assets Ltd and others, , [2014] 3 SLR 562

6. Timeline

Date	Event
1948-01-01	Mr. Koh Sek Lim passed away.
1975-02-25	Public Trustee demised Lot 3041V to the Appellant.
1977-03-01	Lease commenced.
1991-08-30	OCBC Trustee Limited took over as the trustee.
1994-02-01	Dispute arose over Appellant's redevelopment of Block D.
1994-05-26	Meeting with the Committee of Beneficiaries of the estate was convened.
1995-02-01	Negotiations took place by way of a series of letters between February and September 1995.
1995-09-23	Appellant accepted terms and conditions for rent revision.
1995-12-18	Appellant purported to register the variation of the Contract.
1996-12-17	Deed of variation dated 17 December 1996.
1999-05-21	Respondent’s predecessor informed the Appellant of the first rent increase.
2005-06-07	Respondent’s predecessor informed the Appellant of the second rent increase.
2006-01-17	Respondent was appointed trustee to the estate of Mr Koh Sek Lim.
2009-05-08	Respondent wrote to the Appellant to increase the annual rent to $1.3m.
2009-05-13	Appellant replied indicating its astonishment at the proposed increase.
2009-05-20	Respondent wrote back stating that $1.3m was the market rate.
2009-06-01	Respondent disclosed its own valuation report.
2009-06-15	Appellant replied disagreeing with the $1.3m figure.
2014-04-28	Respondent filed Originating Summons No 391 of 2014.
2014-07-25	Parties appeared before the Judge.
2014-08-21	Appellant filed its notice of appeal.
2015-04-13	Judge issued the Grounds of Decision.
2015-12-04	Court of Appeal allowed the appeal.

7. Legal Issues

Contractual Interpretation
- Outcome: The court interpreted the rent review clause in favor of the appellant, finding that 'existing development' referred to Block D.
- Category: Substantive
- Sub-Issues:
  - Ambiguity in contract terms
  - Use of extrinsic evidence
  - Objective intention of parties
Rent Review Clause
- Outcome: The court determined that the rent review should be based on Block D only, not the entire Lot 5245N.
- Category: Substantive
- Sub-Issues:
  - Scope of rent review
  - Definition of 'market rent'
  - Interpretation of 'existing development'

8. Remedies Sought

Declaration on the construction of the Deed of Variation
Order for recalculation of yearly rent
Interest
Costs

9. Cause of Actions

Breach of Contract (alleged)
Interpretation of Contract

10. Practice Areas

Commercial Litigation
Real Estate Litigation

11. Industries

Real Estate
Property Development

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
HSBC Trustee (Singapore) Ltd v Lucky Realty Co Pte Ltd	High Court	Yes	[2015] 3 SLR 885	Singapore	Decision appealed from; the Court of Appeal differed from the High Court's interpretation of the rent review clause.
Y.E.S F&B Group Pte Ltd v Soup Restaurant Singapore Pte Ltd (formerly known as Soup Restaurant (Causeway Point) Pte Ltd)	Court of Appeal	Yes	[2015] 5 SLR 1187	Singapore	Cited for setting out the applicable principles of contractual interpretation.
Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design & Construction Pte Ltd	Court of Appeal	Yes	[2008] 3 SLR(R) 1029	Singapore	Cited as a key authority on the contextual approach to contractual interpretation in Singapore.
Sembcorp Marine Ltd v PPL Holdings Pte Ltd and another and another appeal	Court of Appeal	Yes	[2013] 4 SLR 193	Singapore	Cited as a key authority on the contextual approach to contractual interpretation in Singapore.
Arnold v Britton	UK Supreme Court	Yes	[2015] 2 WLR 1593	United Kingdom	Considered in relation to the situation where the meaning of the text in a contract is plain and unambiguous but would lead to an absurd result.
Multi-Link Leisure Developments Ltd v North Lanarkshire Council	UK Supreme Court	Yes	[2011] 1 All ER 175	United Kingdom	Cited for the principle that the text ought always to be the first port of call for the court.
OCBC Capital Investment Asia Ltd v Wong Hua Choon	Court of Appeal	Yes	[2012] 4 SLR 1206	Singapore	Cited for the importance of documentary evidence over oral testimony.
Sandz Solutions (Singapore) Pte Ltd and others v Strategic Worldwide Assets Ltd and others	Court of Appeal	Yes	[2014] 3 SLR 562	Singapore	Cited for the vagaries of witnesses’ ability to remember and recall certain details.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute Name	Jurisdiction
Civil Law Act	Singapore
Evidence Act	Singapore

15. Key Terms and Keywords

15.1 Key Terms

Rent review clause
Existing development
Market rent
Lot 5245N
Block D
Deed of variation
Contractual interpretation
Objective intention
Extrinsic evidence
TOP Date

15.2 Keywords

contractual interpretation
rent review
lease agreement
real estate
Singapore
HSBC Trustee
Lucky Realty
Block D
Lot 5245N

17. Areas of Law

Area Name	Relevance Score
Contract Law	90
Contractual Interpretation	70
Rent Review Clause	60
Deeds of Variation	50
Estoppel	30
Property Law	20

16. Subjects

Contract Law
Real Estate
Leases
Property Law