Strait Colonies v SMRT Alpha: Misrepresentation & Contract Rescission in Lease Agreement

Strait Colonies Pte Ltd appealed to the Court of Appeal of the Republic of Singapore against the decision of the High Court in favor of SMRT Alpha Pte Ltd, concerning a dispute over rent due under a lease agreement. Strait Colonies argued that SMRT Alpha had misrepresented the permitted use of the leased premises. The court dismissed the appeal, finding that Strait Colonies had affirmed the lease agreement despite the misrepresentation. The judgment was delivered on July 4, 2018.

1. Case Overview

1.1 Court

Court of Appeal of the Republic of Singapore

1.2 Outcome

Appeal dismissed with costs on the indemnity basis.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Tenant Strait Colonies' appeal against landlord SMRT Alpha was dismissed. The court found Strait Colonies affirmed the lease agreement despite landlord's misrepresentation.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Strait Colonies Pte LtdAppellantCorporationAppeal DismissedLost
SMRT Alpha Pte LtdRespondentCorporationJudgment for RespondentWon

3. Judges

Judge NameTitleDelivered Judgment
Tay Yong KwangJudge of AppealYes
Steven ChongJudge of AppealNo
Quentin LohJudgeNo

4. Counsels

Counsel NameOrganization
Suhaimi Bin LazimMirandah Law LLP
Chiong Song NingMirandah Law LLP
Wah Hsien-Wen TerenceDentons Rodyk & Davidson
Chew Di Shun DicksonDentons Rodyk & Davidson
Ling Tien WahDentons Rodyk & Davidson

4. Facts

  1. The respondent is the landlord and retail operator of Kallang Wave Mall.
  2. The appellant is in the business of providing food and beverage and live entertainment services.
  3. The respondent gave the appellant a letter of offer for a five-year lease permitting the appellant to use the Premises as a pub with live music.
  4. The Urban Redevelopment Authority rejected the respondent’s application for planning permission to change the use of the Premises to restaurant cum pub.
  5. The respondent conveyed the Urban Redevelopment Authority’s decision to the appellant.
  6. The parties signed the Lease Agreement.
  7. The appellant took possession of the Premises and carried out fitting works.
  8. The appellant obtained a liquor licence from the Police Licensing & Regulatory Department.
  9. The appellant commenced business at the Premises.
  10. The respondent commenced legal proceedings against the appellant, claiming outstanding rent, late payment interest, and damages.

5. Formal Citations

  1. Strait Colonies Pte Ltd v SMRT Alpha Pte Ltd, Civil Appeal No 100 of 2017, [2018] SGCA 36

6. Timeline

DateEvent
Appellant submitted a concept proposal and business budget plan for the lease of certain units at the Mall.
Respondent gave the appellant a letter of offer for a five-year lease.
Appellant accepted the Letter of Offer.
Parties prepared a five-year lease agreement.
Respondent submitted an application to the Urban Redevelopment Authority for planning permission.
The Urban Redevelopment Authority rejected the respondent’s application.
Respondent conveyed the Urban Redevelopment Authority’s decision to the appellant.
Parties signed the Lease Agreement.
Appellant took possession of the Premises.
Appellant obtained a liquor licence from the Police Licensing & Regulatory Department.
Appellant commenced business at the Premises.
Respondent gave the consent and undertaking required by the Urban Redevelopment Authority.
The Urban Redevelopment Authority gave its formal planning permission for the Premises to be used as a restaurant with ancillary bar and ancillary live entertainment.
The Police Licensing & Regulatory Department issued to the appellant a revised liquor licence.
Appellant’s restaurant, bar and club on the Premises had become fully operational.
Appellant paid the respondent the remaining rent for the month of December 2014.
Respondent issued a supplemental letter to the Letter of Offer and the Lease Agreement informing the appellant of the actual floor area after final survey.
Respondent demanded payment of the outstanding rent for the period from January to April 2015.
Appellant made partial payment of $64,143.16 towards the outstanding rent.
Appellant made partial payment of $10,000 towards the outstanding rent.
Respondent’s solicitors issued a notice of forfeiture demanding payment of $551,166.88 and late payment interest.
Parties met to resolve the dispute.
Appellant ceased its operations and vacated the Premises.
Respondent re-entered and repossessed the Premises.
Respondent commenced legal proceedings against the appellant.
Respondent found a new tenant to take over the lease of the Premises.
Court hearing.
Judgment Date.

7. Legal Issues

  1. Misrepresentation
    • Outcome: The Judge agreed with the appellant that the respondent had made implied representations by stating in the Letter of Offer that it permitted the appellant to use the Premises as a “Pub cum F&B” including a “bar and club” with “[l]ive music and dance mix”. These representations were false and the respondent knew that they were false.
    • Category: Substantive
    • Sub-Issues:
      • Fraudulent misrepresentation
      • Negligent misrepresentation
      • Innocent misrepresentation
  2. Affirmation of Contract
    • Outcome: The court held that knowledge of the facts giving rise to the right of rescission is sufficient for affirmation to take place. The court also found that the appellant was aware of its legal right of rescission when it affirmed the Lease Agreement.
    • Category: Substantive
    • Sub-Issues:
      • Knowledge of facts
      • Knowledge of legal rights
      • Clear and unequivocal election
    • Related Cases:
      • [2005] 3 SLR(R) 283
      • (1974) 131 CLR 634

8. Remedies Sought

  1. Outstanding Rent
  2. Late Payment Interest
  3. Damages
  4. Rescission of Contract

9. Cause of Actions

  • Breach of Contract
  • Misrepresentation

10. Practice Areas

  • Commercial Litigation

11. Industries

  • Hospitality
  • Real Estate

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
RBC Properties Pte Ltd v Defu Furniture Pte LtdHigh CourtYes[2015] 1 SLR 997SingaporeCited for the general rule that a representee who can establish misrepresentation will be entitled to rescind the contract.
Peyman v LanjaniEnglish Court of AppealYes[1985] Ch 475EnglandCited for the proposition that an election to affirm a contract requires knowledge of the facts giving rise to the right to rescind and knowledge that the law gives him that right. Declined to be followed.
Wishing Star Ltd v Jurong Town CorpHigh CourtYes[2005] 1 SLR(R) 339SingaporeCited for the proposition that an election could only be made by someone with full knowledge of his legal rights. Overruled on appeal, but the Court of Appeal did not comment on this aspect of the decision.
The Pacific VigorousHigh CourtYes[2006] 3 SLR(R) 374SingaporeCited for the proposition that an election could only be made by someone with full knowledge of his legal rights. Statement considered obiter dicta.
Jurong Town Corp v Wishing Star LtdCourt of AppealYes[2005] 3 SLR(R) 283SingaporeCited for the principle that a binding election requires the injured party to communicate his choice to the other party in clear and unequivocal terms.
Sargent v ASL Developments LtdHigh Court of AustraliaYes(1974) 131 CLR 634AustraliaCited for the principle that conduct constituting affirmation must be unequivocal. Departed from Peyman position.
Goldzone (Asia Pacific) Ltd v Creative Technology Pte LtdHigh CourtYes[2011] SGHC 103SingaporeCited for the principle that no election can be said to have been made unless the misled party is broadly aware of the true facts.
Aero-Gate Pte Ltd v Engen Marine Engineering Pte LtdHigh CourtYes[2013] 4 SLR 409SingaporeCited as a case that generally held that it was sufficient that the representee had full knowledge of the facts when affirming the contract.
Chng Heng Tiu v Sime Derby Holdings LtdHigh CourtYes[1977–1978] SLR(R) 372SingaporeCited for the remark that only when a party to a contract has become aware of his rights or his strict rights at law can he elect to reject or affirm. Statement considered obiter dicta.
Kendall v HamiltonUnknownYes(1879) 4 App Cas 504UnknownCited in Peyman for the dictum of Lord Blackburn that there cannot be election until there is knowledge of the right to elect. Must be read in its proper context.
Scarf v JardineUnknownYes(1882) 7 App Cas 345UnknownCited for Lord Blackburn's view that knowledge of the facts is sufficient for a person to make an election between his rights.
Clough v London and North Western Railway CoUnknownYes(1871) 7 Ex 26UnknownCited for Lord Blackburn's view that knowledge of the facts is sufficient for a person to make an election between his rights.
Evans v BartlamHouse of LordsYes[1937] AC 473EnglandCited for conflicting views on whether full knowledge of rights or full knowledge of facts is required for election.
Young v Bristol Aeroplane Co LtdHouse of LordsYes[1946] AC 163EnglandCited as a case that turned on a question of statutory construction and provides no support for Peyman.
The KanchenjungaHouse of LordsYes[1990] 1 Lloyd’s L R 391EnglandCited for Lord Goff's observation that if, with knowledge of the facts giving rise to his right to reject, a party nevertheless unequivocally elects not to do so, his election will be final and binding upon him.
Chai Cher Watt (trading as Chuang Aik Engineering Works) v SDL Technologies Pte Ltd and another appealCourt of AppealYes[2012] 1 SLR 152SingaporeCited for the remark that the party waiving his right should at least have knowledge of the facts giving rise to those rights.
Coastal Estates Pty Ltd v MelevendeSupreme Court of VictoriaYes[1965] VR 433AustraliaCited for the view that a representee in a case involving fraudulent misrepresentation cannot be presumed to have knowledge of his right to elect under the contract.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Misrepresentation Act (Cap 390, 1994 Rev Ed)Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Lease Agreement
  • Misrepresentation
  • Affirmation
  • Rescission
  • Letter of Offer
  • Representations on Live Entertainment
  • Representations on Operating Hours
  • Representations on Catering
  • Representations on Take-out

15.2 Keywords

  • Contract
  • Misrepresentation
  • Lease
  • Singapore
  • Commercial
  • Property

17. Areas of Law

Area NameRelevance Score
Misrepresentation90
Rescission85
Contract Law80
Breach of Contract75
Commercial Leasing60

16. Subjects

  • Contract Law
  • Misrepresentation
  • Leases