Radha Properties v Lim Poh Suan: Option Clause Enforceability & Prevailing Market Rate Dispute
Radha Properties Pte Ltd (plaintiff) sought specific performance from Lim Poh Suan, Ong Chin Tiong, and Chong Sian Cheen (defendants) to enforce an option clause in a tenancy agreement for lease renewal at 727 Clementi West Street 2 #01-256 Singapore 120727. The plaintiff also sought a declaration that the option clause was valid and binding. The General Division of the High Court dismissed the application, holding that the option clause was unenforceable because the parties had not agreed on the 'prevailing market rate' for the renewed lease. The court ordered the plaintiff to pay costs of S$8,000 to the defendants.
1. Case Overview
1.1 Court
General Division of the High Court1.2 Outcome
Plaintiff's application dismissed.
1.3 Case Type
Civil
1.4 Judgment Type
Grounds of Decision
1.5 Jurisdiction
Singapore
1.6 Description
Court held an option clause to renew a lease at the 'prevailing market rate to be mutually agreed upon' was unenforceable due to lack of agreement.
1.7 Decision Date
2. Parties and Outcomes
| Party Name | Role | Type | Outcome | Outcome Type | Counsels |
|---|---|---|---|---|---|
| Radha Properties Pte Ltd | Plaintiff | Corporation | Application Dismissed | Lost | Lee Jun Yong Daniel |
| Lim Poh Suan | Defendant | Individual | Judgment for Defendant | Won | Joel Raj Moosa |
| Ong Chin Tiong | Defendant | Individual | Judgment for Defendant | Won | Joel Raj Moosa |
| Chong Sian Cheen | Defendant | Individual | Judgment for Defendant | Won | Joel Raj Moosa |
3. Judges
| Judge Name | Title | Delivered Judgment |
|---|---|---|
| Chan Seng Onn | Senior Judge | Yes |
4. Counsels
| Counsel Name | Organization |
|---|---|
| Lee Jun Yong Daniel | Tan Peng Chin LLC |
| Joel Raj Moosa | Quahe Woo & Palmer LLC |
4. Facts
- The plaintiff sought to renew a lease based on an option clause.
- The option clause stipulated a 'prevailing market rate to be mutually agreed upon'.
- The parties could not agree on the 'prevailing market rate'.
- The plaintiff obtained a valuation report estimating the market rent at S$9,500.
- The defendants claimed an expression of interest for S$16,000.
- The lease was for property at 727 Clementi West Street 2 #01-256 Singapore 120727.
- The plaintiff gave written notice of its exercise of the Option Clause to renew the lease on 28 January 2022.
5. Formal Citations
- Radha Properties Pte Ltd v Lim Poh Suan and others, Originating Summons No 311 of 2022, [2022] SGHC 139
6. Timeline
| Date | Event |
|---|---|
| Colliers International Consultancy & Valuation (Singapore) Pte Ltd provided a valuation report. | |
| Plaintiff gave written notice of its exercise of the Option Clause to renew the lease. | |
| Expiration of the lease. | |
| Hearing date. | |
| Judgment issued. |
7. Legal Issues
- Enforceability of Option Clause
- Outcome: The court held that the option clause was void and unenforceable due to the lack of agreement on the 'prevailing market rate'.
- Category: Substantive
- Sub-Issues:
- Uncertainty of terms
- Agreement to agree
- Interpretation of Contractual Terms
- Outcome: The court interpreted the phrase 'prevailing market rate to be mutually agreed upon' as requiring mutual agreement, making the clause unenforceable without such agreement.
- Category: Substantive
- Sub-Issues:
- Meaning of 'prevailing market rate'
- Requirement of mutual agreement
8. Remedies Sought
- Specific Performance
- Declaration that the option clause was valid and binding
9. Cause of Actions
- Specific Performance
- Breach of Contract
10. Practice Areas
- Commercial Litigation
- Real Estate Law
11. Industries
- Real Estate
12. Cited Cases
| Case Name | Court | Affirmed | Citation | Jurisdiction | Significance |
|---|---|---|---|---|---|
| Climax Manufacturing Co Ltd v Colles Paragon Converters (S) Pte Ltd | High Court | Yes | [1998] 3 SLR(R) 540 | Singapore | Cited for the proposition that the court should be reluctant to hold void for uncertainty any contract which was intended to have legal effect. |
| Rudhra Minerals Pte Ltd v MRI Trading Pte Ltd (formerly known as CWT Integrated Services Pte Ltd) | Court of Appeal | Yes | [2013] 4 SLR 1023 | Singapore | Cited for the position that an existing contract is not invalidated unless the failure to reach agreement on terms to be agreed renders the contract as a whole unworkable or void for uncertainty. |
| British & Malayan Trustees Ltd v Sindo Realty Pte Ltd (in liquidation) and others | High Court | Yes | [1999] 1 SLR(R) 61 | Singapore | Cited for the proposition that as long as it was conceptually possible to ascertain the substance of the agreement reached in respect of a clause, there was no uncertainty, and the clause should not be voided simply because its application was of some difficulty. |
| Masa-Katsu Japanese Restaurant Pte Ltd v Amara Hotel Properties Pte Ltd | High Court | Yes | [1998] 2 SLR(R) 662 | Singapore | Cited regarding the interpretation of an option for renewal clause, but distinguished by the court. |
| Brown v Gould | English Court | Yes | [1972] Ch 53 | England and Wales | Cited regarding the interpretation of an option to renew clause, but distinguished by the court. |
13. Applicable Rules
| Rule Name |
|---|
| No applicable rules |
14. Applicable Statutes
| Statute Name | Jurisdiction |
|---|---|
| No applicable statutes | |
15. Key Terms and Keywords
15.1 Key Terms
- Option Clause
- Prevailing Market Rate
- Tenancy Agreement
- Lease Renewal
- Mutual Agreement
- Specific Performance
15.2 Keywords
- Option Clause
- Lease Renewal
- Prevailing Market Rate
- Specific Performance
- Contract Law
- Singapore
- Real Estate
16. Subjects
- Contract Law
- Real Estate
- Leases
- Options
17. Areas of Law
- Contract Law
- Landlord-Tenant Law