Ngee Ann Development v Takashimaya: Lease Interpretation & Prevailing Market Rental Value Dispute

Ngee Ann Development Pte Ltd, the appellant, and Takashimaya Singapore Ltd, the respondent, were in dispute over the interpretation of a lease agreement for commercial space in Ngee Ann City. The Court of Appeal of Singapore, on 6 July 2017, dismissed Ngee Ann Development's appeal, holding that the 'prevailing market rental value' for lease renewal should be determined based on the existing configuration of the premises, not a hypothetical 'highest and best use' configuration. The court found that the parties intended a long-term partnership, and imposing a hypothetical configuration would undermine Takashimaya's contractual freedom.

1. Case Overview

1.1 Court

Court of Appeal of the Republic of Singapore

1.2 Outcome

Appeal Dismissed

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Dispute over lease renewal rent for commercial space in Ngee Ann City. Court held 'prevailing market rental value' refers to existing configuration.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Ngee Ann Development Pte LtdAppellantCorporationAppeal DismissedLost
Takashimaya Singapore LtdRespondentCorporationAppeal DismissedWon

3. Judges

Judge NameTitleDelivered Judgment
Sundaresh MenonChief JusticeNo
Judith PrakashJustice of the Court of AppealNo
Steven ChongJustice of the Court of AppealYes

4. Counsels

Counsel NameOrganization
Ang Cheng HockAllen & Gledhill LLP
Koh Zhen-Xi, BenjaminAllen & Gledhill LLP
Chng Zi Zhao JoelWongPartnership LLP
Lim Wei LeeWongPartnership LLP
Yeo Khirn Hai AlvinWongPartnership LLP
Rajan MenonRHTLaw Taylor Wessing LLP

4. Facts

  1. Ngee Ann Development leased commercial space to Takashimaya in Ngee Ann City.
  2. The lease commenced in 1993 with an initial term of 20 years and six renewal options.
  3. Takashimaya Japan owns 26.3% of Ngee Ann Development.
  4. The lease stipulated that renewal rent would be the 'prevailing market rental value'.
  5. Disagreement arose over whether the rental value should be based on the existing configuration or a hypothetical 'highest and best use' configuration.
  6. Takashimaya's department store occupies a significant portion of the leased premises.
  7. Ngee Ann Development sought to include a provision allowing valuers to consider reconfiguration, which Takashimaya objected to.

5. Formal Citations

  1. Ngee Ann Development Pte Ltd v Takashimaya Singapore Ltd, Civil Appeal No 137 of 2016, [2017] SGCA 42

6. Timeline

DateEvent
Ngee Ann Development and Takashimaya entered into a conditional agreement
Lease commenced for an initial term of 20 years
Parties entered into a supplemental agreement
Ngee Ann Development invoked procedure to have prevailing market rental value determined by a licensed valuer
Ngee Ann Development informed Dr Lim of his appointment as valuer
Dr Lim produced a valuation report
Parties executed instruments in relation to the Lease as well as a Variation of Lease
Dr Lim produced a valuation report
Mr Teo wrote to Dr Lim regarding rental rates
Dr Lim replied to Mr Teo
Mr Teo wrote to Dr Lim disputing rental calculation
Dr Lim explained rental rate differences
Takashimaya gave notice to Ngee Ann Development of its intention to exercise its option to renew the Lease
Joint Appointment Letter was issued to the Valuers
Ngee Ann Development sent written representations to the Valuers
Ngee Ann Development commenced Suit No 292 of 2015 against Takashimaya
Judgment reserved
Judgment delivered

7. Legal Issues

  1. Interpretation of Lease Agreement
    • Outcome: The court held that the 'prevailing market rental value' should be determined based on the existing configuration of the premises.
    • Category: Substantive
    • Sub-Issues:
      • Meaning of 'prevailing market rental value'
      • Determination of rental value based on existing or hypothetical configuration
    • Related Cases:
      • [2017] SGCA 42
  2. Role of Expert Determination
    • Outcome: The court clarified the permissible scope of curial intervention when parties have agreed to expert determination.
    • Category: Procedural
    • Sub-Issues:
      • Scope of court's intervention in expert determinations
      • Jurisdiction of expert valuers
    • Related Cases:
      • [1976] 1 WLR 403
      • [2006] 1 SLR(R) 634
      • [2009] 2 SLR(R) 385
      • [1996] CLC 1125
      • [1992] 1 WLR 277
      • [2011] EWCA Civ 826
      • [1993] 1 WLR 23
      • [2014] EWCA Civ 994
      • [1991] 2 EGLR 103
      • [1999] 1 EGLR 65

8. Remedies Sought

  1. Declaration that Takashimaya was in breach of the lease
  2. Declaration that the prevailing market rental value must take into account the existing configuration

9. Cause of Actions

  • Breach of Contract
  • Declaratory Relief

10. Practice Areas

  • Commercial Litigation
  • Real Estate Law

11. Industries

  • Real Estate
  • Retail

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Campbell v EdwardsEnglish Court of AppealNo[1976] 1 WLR 403England and WalesCited regarding the grounds for intervention when an expert has made a determination.
Evergreat Construction Co Pte Ltd v Presscrete Engineering Pte LtdSingapore High CourtNo[2006] 1 SLR(R) 634SingaporeCited regarding the grounds for intervention when an expert has made a determination.
The Oriental Insurance Co Ltd v Reliance National Asia Re Pte LtdSingapore High CourtNo[2009] 2 SLR(R) 385SingaporeCited regarding the grounds for intervention when an expert has made a determination.
Mercury Communications Ltd v The Director General of TelecommunicationsEnglish Court of AppealYes[1996] CLC 1125England and WalesCited for the principle that parties should not pre-empt an expert's decision by asking the court to decide the matter in advance and the permissible scope of curial intervention.
Jones v Sherwood Computer Services plcEngland and Wales High CourtNo[1992] 1 WLR 277England and WalesCited regarding the court's role in decisions entrusted to experts.
Barclays Bank PLC v Nylon Capital LLPEnglish Court of AppealYes[2011] EWCA Civ 826England and WalesCited regarding the court's role in determining the jurisdiction of an expert.
R v Monopolies and Mergers Commission, ex parte South Yorkshire Transport LtdEngland and Wales High CourtNo[1993] 1 WLR 23England and WalesCited regarding the distinction between ambiguity and conceptual imprecision.
Premier Telecom Communications Group Ltd v WebbEnglish Court of AppealNo[2014] EWCA Civ 994England and WalesCited regarding the effect of an error of law on the part of an expert.
Nikko Hotels (UK) Ltd v MEPC plcEngland and Wales High CourtNo[1991] 2 EGLR 103England and WalesCited regarding the finality of an expert's decision on a question of construction.
National Grid Company Plc v M25 Group LtdEnglish Court of AppealYes[1999] 1 EGLR 65England and WalesCited as an illustration of the court's approach to determining the scope of an expert's decision-making authority.
Y.E.S. F&B Group Pte Ltd v Soup Restaurant Singapore Pte Ltd (formerly known as Soup Restaurant (Causeway Point) Pte LtdSingapore Court of AppealYes[2015] 5 SLR 1187SingaporeCited for the principle that the text of the parties' agreement should be the first port of call in contractual interpretation.
Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design & Construction Pte LtdSingapore Court of AppealYes[2008] 3 SLR(R) 1029SingaporeCited for the principle that the primary source of understanding what the parties meant is their language interpreted in accordance with conventional usage.
Bank of Credit and Commercial International SA v AliHouse of LordsNo[2002] 1 AC 251United KingdomCited regarding the interpretation of language in accordance with conventional usage.
Mercury Communications Ltd v Director General of Telecommunications and anotherHouse of LordsYes[1996] 1 WLR 48United KingdomCited regarding the court's reluctance to give a ruling on the meaning of words to be applied by another decision-maker before he has had a chance to express his own views about it.
British Shipbuilders v VSEL Consortium plcEngland and Wales High CourtNo[1997] 1 Lloyd’s Rep 106England and WalesCited regarding the court's jurisdiction to determine a question as to the limits of an expert's remit.
Sembcorp Marine Ltd v PPL Holdings Pte Ltd and another and another appealSingapore Court of AppealYes[2013] 4 SLR 193SingaporeCited for the three-step process to the implication of terms in fact.
Burns Philp Hardware Ltd v Howard Chia Pty LtdNew South Wales Court of AppealNo(1987) 8 NSWLR 642AustraliaCited regarding the meaning of 'prevailing market rental value' and whether it has been judicially settled.

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

  • Prevailing market rental value
  • Demised Premises
  • Existing configuration
  • Highest and best use
  • Renewal rent
  • Joint Appointment Letter
  • Valuation
  • Lease
  • Option period
  • Rent review

15.2 Keywords

  • lease
  • rental value
  • commercial property
  • contract interpretation
  • Singapore
  • Ngee Ann City
  • Takashimaya
  • expert determination

17. Areas of Law

Area NameRelevance Score
Landlord and Tenant Law90
Commercial Leasing70
Contract Law60
Property Law50
Interpretation40

16. Subjects

  • Lease Interpretation
  • Contract Law
  • Real Estate
  • Valuation