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Grounds publishedDecided 13 Apr 2015
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High Court

HSBC Trustee (Singapore) Ltd v Lucky Realty Co Pte Ltd

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[2015] SGHC 93Case no. Originating Summons No 391 of 2014

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  1. Vinodh Coomaraswamy J:

  2. [1] In 1975, a lessor let a parcel of land on a 60-year lease. In exchange, the lessee agreed to pay a fixed yearly rent. In 1976 and 1977, the lessee erected upon the land a strata development comprising four buildings. The lessee then retained all of the strata units in one of the buildings for itself and sold virtually all of the strata units in the other three buildings to third parties. In 1995, to compromise a dispute, the lessor and lessee varied the lease to permit the lessor to increase the rent every five years to the prevailing market rent or by 10%, whichever was higher. The two first rent increases were uncontentious. The parties have, however, been deadlocked since the time for the third rent increase in 2009. The lessor’s position is that the lessee is obliged to pay rent under the lease for the entire parcel of land demised to it under the lease. The lessee’s position is that it is obliged to pay rent only for the one building that it retains. In these proceedings, the lessor seeks as its primary relief a declaration that its position is correct and that the lessee’s position is wrong.

  3. The facts

  4. The parties

  5. [2] The lessor and plaintiff is HSBC Trustee (Singapore) Limited, a trust company and a member of the HSBC group. The lessee and defendant is Lucky Realty Company Pte Ltd, a property developer and a member of the Far East Organisation. The parcel of land demised under the lease is in Bedok. At the time of the lease, it was registered as Lot 3041 of Mukim 27. The freehold of Lot 3041 was owned by one Mr Koh Sek Lim until he passed away in 1948. Clause 1 of Mr Koh’s will settled Lot 3041 on certain trusts.

  6. [3] In 1975, the trustee of Lot 3041 was the Public Trustee. In 1991, OCBC Trustee Limited took over as the trustee. In 2006, HSBC Trustee (Singapore) Limited took over as the trustee. The change of trustees over the years is of no legal relevance to the dispute before me. I shall therefore refer to the trustee of the demised land at any given time simply as “the Trustee”.

  7. The lease

  8. [4] On 25 February 1975, the Trustee demised Lot 3041 to Lucky Realty for a term of 60 years commencing 1 March 1977 and ending on 28 February 2037. The lease obliged Lucky Realty to pay a yearly rent of $3,877.15 for the demise. This rent is in fact a ground rent in that it was to be paid solely for the use of the land. The rent was fixed at that annual figure for the entire 60-year term of the lease: it contained no provision for the rent to be increased nor, for that matter, for it to be decreased.

  9. [5] The operative part of the lease provides as follows:

  10. The land is developed and subdivided

  11. [6] Clause 1(iii) of the lease obliged Lucky Realty to develop Lot 3041 by erecting buildings upon it. In 1976 and 1977, Lucky Realty duly erected four two-storey buildings on the land. The buildings are known as Blocks A to D. The position of these four blocks in Lot 3041 can be seen in the diagram set out at [7].

  12. Compulsory acquisition

  13. [7] Lot 3041 was eventually subdivided in two ways. First, Lot 3041 was subdivided into one large lot and two smaller lots. A diagram showing this subdivision is set out below.

  14. [8] The entire shaded area is Lot 3041 as it stood at the time of the lease. Lot 5247L, halfway up the left side of the shaded area, was then the location of a septic tank and sewage works. The State compulsorily acquired this lot for a sewage treatment plant. Lot 5246X at the bottom of the shaded area was a road. The State compulsorily acquired this lot also. The remainder of Lot 3041 was known after the subdivision as Lot 5245N.

  15. [9] The subdivision and compulsory acquisition reduced the area of the demised land by 2,042.8 square metres, or about 11%, from 18,947 square metres to 16,904.2 square metres. But the rent under the lease, being a fixed rent, did not change. Lucky Realty continued to be obliged to pay the Trustee $3,877.15 yearly. It duly did so.

  16. Strata development

  17. [10] The second subdivision was carried out to enable Lucky Realty to realise a capital sum from its development of the land. It divided Lot 5245N into a strata subdivision comprising a total of 119 strata units: (i) 33 strata shops on the first storey of Blocks A, B and C; (ii) 33 strata flats on the second storey of those three blocks; (iii) a single strata market on the first storey of Block D; and (iv) 52 strata shops on the second storey of that block.

  18. [11] Lucky Realty eventually sold 64 out of the 66 strata units in Blocks A, B and C to third party purchasers. It effected the sale by assigning to the purchasers the benefit of its remaining term under its 60-year lease over those units.

  19. [12] Lucky Realty did not sell the 53 units in Block D or the two remaining units in the other blocks. Instead, it retained these 55 strata units for itself, preferring to generate a recurring income from them rather than a one-off capital sum.

  20. The 1995 variation

  21. [13] In February 1994, a dispute arose between the Trustee and Lucky Realty. The Trustee discovered that Lucky Realty was redeveloping Block D from a two-storey market with shop units above into a two-storey shopping centre. The Trustee considered this to be a breach of cl 1(vi) of the lease. That clause prohibits Lucky Realty from making any alterations or additions to any of the buildings on the demised land without the prior consent in writing of the Trustee. Solicitors appointed by the Trustee wrote a letter before action to Lucky Realty. Lucky Realty took the position that it was not in breach of the lease; alternatively, that any breach was, at the very most, a technical breach.

  22. [14] The Trustee and Lucky Realty then entered into negotiations to resolve their dispute. The negotiations were protracted but ultimately resulted in a binding compromise. By an exchange of letters ending on 23 September 1995, the Trustee and Lucky Realty agreed to vary the obligation to pay rent under the lease. This variation is today evidenced by a Deed of Variation signed, sealed and delivered by lessor and lessee on 17 December 1996.

  23. [15] The 1995 variation effected only one textual change to the original lease. It deleted the existing habendum and replaced it with a new and more detailed one comprising three limbs. The last of these three limbs expressly provides that, save as varied by the 1995 variation, all other express and implied provisions of the original lease remain in full force and effect.

  24. [16] The result of the new habendum was two-fold. First, Lucky Realty accepted an immediate increase in the rent from $3,877.15 per annum to $120,000 per annum backdated to take effect from 15 June 1994. Second, Lucky Realty granted the lessor the right, on 15 June 1999 and on that date every five years thereafter, to increase the yearly rent “to the market rent prevailing at the time” or by 10% of the existing rent, whichever was higher. It is the scope of this right of the Trustee to increase the rent to the “market rent” which lies at the heart of this dispute.

  25. The Trustee reviews and increases the rent

  26. [17] The first two rent increases – for the five year periods from 1999 to 2004 and from 2004 to 2009 – were uncontentious. With effect from 1999, the Trustee increased the rent by exactly 10%, from $120,000 per annum to $132,000 per annum. The Trustee relied for this increase on the minimum 10% increase specified in the rent escalation clause. With effect from 2004, the Trustee increased the rent by 13.6%, to $150,000 per annum. The Trustee based this increase “on the market rental value of the said property in 2004”. Lucky Realty has duly paid all rent as claimed by the Trustee right up to 2009.

  27. [18] The third rent increase was to take place in 2009. The Trustee, by now having changed to the plaintiff, took the view that the lease entitled the Trustee to charge rent – and obliged Lucky Realty to pay rent – for the entirety of Lot 5245N. On this basis, about a month before the rent increase in 2009 was due to take effect, the Trustee gave notice that it intended to increase the rent from $150,000 per annum to $1.3m per annum. The Trustee supported this figure with a valuation showing that $1.3m was indeed the prevailing market rent for the whole of Lot 5245N. Astonished, Lucky Realty contended in response that it was obliged to pay rent only in respect of Block D. It presented a valuation showing that the prevailing market rent for Block D alone was only $168,000 per annum.

  28. [19] Each party has doggedly maintained its position since 2009. Lucky Realty has in the meantime continued paying $150,000 per annum to the Trustee, being the rent fixed at the last uncontentious rent increase.

  29. The Trustee commences these proceedings

  30. [20] On 28 April 2014, the Trustee commenced these proceedings against Lucky Realty. In summary, the Trustee seeks:

  31. (a) A declaration that the five-yearly increase of the yearly rent is to be calculated by reference to the whole of Lot 5245N and not by reference only to Block D.

  32. (b) An order that every future five-yearly revision of the yearly rent be carried out on the same basis.

  33. (c) An order that Lucky Realty pay a yearly rent recalculated on this basis for the five-year periods commencing in 1999 and 2004.

  34. [21] At the commencement of the hearing before me, counsel for the Trustee withdrew its claim for a retrospective increase in the yearly rent summarised at [20(c)] above. He concedes – rightly in my view – that any such claim is time-barred. The only claim before me, therefore, relates to the rent that Lucky Realty is obliged to pay from 2009 onwards.

  35. Construction of the rent escalation clause

  36. [22] Each side relies for its case only on the true construction of the express terms of the lease. More specifically, Lucky Realty does not rely on any of the following to oppose the Trustee’s submissions on the true construction of the lease: an argument that the lease does not set out the parties’ complete agreement, an implied term in the lease (whether of law or of fact), a collateral contract, an actionable misrepresentation or an operative mistake. Equally, Lucky Realty does not seek the equitable remedy of rectification. This is an important point. If there were a basis to do so, it was at all material times open to Lucky Realty to raise any or all of these grounds by way of counterclaim against the Trustee pursuant to O 28 r 2 of the Rules of Court (Cap 322, R 5, 2014 Rev Ed).

  37. [23] Accordingly, the single question before me is whether, on a true construction of the lease, Lucky Realty’s obligation to pay the “yearly rent” and the Trustee’s right to achieve the prevailing “market rent” extends to the whole of Lot 5245N or whether it is confined to Block D only.

  38. [24] The Trustee submits that the ordinary meaning of the plain words of the lease is that the “yearly rent” and “market rent” relates to the whole of Lot 5245N. Lucky Realty submits in response that the rent escalation clause must be construed in the light of the facts and circumstances surrounding the 1995 variation, including the parties’ pre-contractual negotiations and their subsequent conduct. Its case is that recourse to this extrinsic evidence shows that the terms “yearly rent” and “market rent” as used in the lease refer to the rent for Block D only.

  39. The contextual approach

  40. [25] Our law on the proper approach to construing a contract is set out in two seminal decisions of the Court of Appeal: Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design & Construction Pte Ltd [2008] 3 SLR(R) 1029 (“Zurich”) and Sembcorp Marine Ltd v PPL Holdings Pte Ltd and another and another appeal [2013] 4 SLR 193 (“Sembcorp”). These cases firmly entrench the contextual approach to construing contracts in our law and clearly explain how that approach is to be applied. Given the breadth of the survey and the depth of the analysis in each of these two cases, I need look only at them in order to derive the principles which I must apply to construe the lease contextually.

  41. Zurich

  42. Zurich: the facts

  43. [26] Zurich involved a dispute over the terms of a policy of insurance between an insured and its insurer. The insured commenced action in the District Court claiming that the insurer was obliged under the policy to indemnify it against certain loss and damage. The District Court found in favour of the insurer and against the insured, holding that the insured’s claim was excluded by the natural and ordinary meaning of a special condition of the policy.

  44. [27] The High Court allowed the insured’s appeal. It agreed with the District Court that the insured’s claim was excluded by the natural and ordinary meaning of the special condition. But having received extrinsic evidence of the genesis of the insurance policy, the High Court held that that special condition was inoperable. The extrinsic evidence showed that the “insured had relied upon the insurer to provide cover for a specific purpose which was made known to the [insurer] prior to the issue of the policy”. The High Court therefore held that it would be “contrary to all sense of justice and fair play” to give effect to the natural and ordinary meaning of this special condition in the light of its findings on the extrinsic evidence.

  45. Four important points extracted from Zurich

  46. [28] The Court of Appeal reversed the High Court and restored the District Court’s decision. In doing so, the Court of Appeal began by setting out the five principles of the contextual approach from Lord Hoffmann’s judgment in Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 at 912–913 (“Investors Compensation Scheme”). These principles are quoted in Zurich at [56] and need not be repeated here. The Court of Appeal then refined the contextual approach as it is to be applied in Singapore.

  47. [29] From the Court of Appeal’s judgment in Zurich, I extract four important points which govern my approach to answering the deceptively simple question before me.

  48. [30] First, the goal of construing a contract is to determine and give effect to the intention of the parties, objectively ascertained. Thus:

  49. My focus in construing the lease, therefore, must remain on ascertaining the objective intention of the parties even “in the face of conflicting subjective interpretations advanced by ingenious counsel.” That is so even on the modern and more liberal contextual approach to construction. The subjective intentions of the parties, even if they could be determined with certainty, are ordinarily immaterial to construing their contract. That is obviously the case if one party leaves its subjective intentions wholly unexpressed at the time of contracting. That is also the case even if one party expresses its subjective intention to the other party at the time of contracting, but fails to reflect that subjective intention within the contract in an objectively ascertainable manner. That is even the case even if both parties share that subjective intention. This does not leave entirely without remedy a party to a contract who finds a unilateral or even a shared subjective intention defeated by the objectively ascertainable meaning of the contract. It merely means that it is not the function of the contextual approach to contractual interpretation to supply that remedy.

  50. [31] The second important point which I extract from Zurich is that achieving a result which is just and fair in all the circumstances of the case is not the purpose of construing a contract. The purpose of construing a contract is to give the contract a meaning which represents fairly the parties’ objectively ascertained intention. That outcome is axiomatically the just and fair result of construing a contract. Achieving justice and fairness which goes beyond that outcome is the objective – to varying degrees and with varying flexibility – of other contractual doctrines which come into play, both at law and in equity, after ascertaining the parties’ objective intention. The difficulty in Zurich was that the High Court, asked to do no more than to construe the insurance policy, relied on extrinsic evidence to nullify the parties’ objectively ascertained intention in order to achieve what it considered to be a just and fair result. As the Court of Appeal said, “amorphous notions based on justice and fairness did not warrant the Judge straying beyond the confines of the Policy” in that way.

  51. [32] The third important point I extract from Zurich is that an exercise in construction must ascribe to the words and phrases chosen by the parties in their contract some meaning, and that that meaning must be a legitimate meaning. It is therefore wrong to give those words a meaning which is beyond the contours of their penumbral meaning. It is equally wrong to give those words no meaning at all. Thus, the Court of Appeal held in Zurich that treating an exclusion clause as entirely inoperable went beyond the limits of what a court can legitimately do when construing a contract:

  52. [33] The fourth and final important point I extract from Zurich is that the contextual approach not only permits but obliges the court to have regard to evidence extrinsic to the words used by the parties within the four corners of a written contract in order properly to give effect to the intention of the parties objectively ascertained. But there are limits. The extrinsic evidence must in every case satisfy the criteria set out in Zurich.

  53. [34] The criteria established by Zurich which are relevant to the present case are the following (internal cross-references omitted):

  54. The Zurich criteria applied to Zurich’s facts

  55. [35] The Court of Appeal in Zurich, having reversed the decision of the High Court, had to go on to ascertain objectively the parties’ intention. To do so, the Court of Appeal started with the natural and ordinary meaning of the words of the contract. It then considered whether the extrinsic evidence proffered as an aid to construction could be taken into account. The particular type of extrinsic evidence proffered by the insured in Zurich was evidence of the parties’ pre-contractual negotiations. The Court of Appeal held that our law of contract, unlike English law, has no absolute rule prohibiting the use of this type of extrinsic evidence as an aid to construction. Like all other extrinsic evidence, this type of extrinsic evidence may be used as an aid if, but only if, it satisfies the three criteria set out at [132(d)] of Zurich itself.

  56. [36] On the facts of Zurich, however, the Court of Appeal held that the extrinsic evidence did not satisfy these criteria and therefore had to be rejected as an aid to construction. The Court of Appeal’s construction exercise could therefore go no further. Having started with the plain and ordinary meaning of the parties’ words, it ended with that meaning.

  57. Sembcorp

  58. [37] Sembcorp, decided five years after Zurich, strongly endorses Zurich (at [46]) while revisiting and supplementing three points from Zurich which are of significance to the present case.

  59. [38] First, Sembcorp draws a distinction between “interpretation” and “construction” of a contract. “Interpretation” is “the ascertainment of the meaning which the expressions in a document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties at the time of the contract” (at [33]) [emphasis in original]. “Construction”, on the other hand, “is the composite process that seeks to ascertain the parties’ intentions, both actual and presumed, arising from the contract as a whole without necessarily being confined to the specific words used” (at [31]) [emphasis in original]. I have endeavoured to observe this distinction when using those terms in this judgment.

  60. [39] Second, Sembcorp emphasises the importance of drawing the distinction in every case between the substantive law of contract and the adjectival law of evidence. The contextual approach to construction and the supporting principles and guidelines are part of our substantive law of contract (Sembcorp at [43]). Their objective is to determine the rights and liabilities of contractual counterparties. The objective of the law of evidence, on the other hand, is to determine whether the existence or non-existence of a particular fact may be proved (s 5 of the Evidence Act (Cap 97, 1997 Rev Ed)); and, if so, to regulate the means by which it may be proved (Sembcorp at [40], [43]).

  61. [40] The third point of importance to emerge from Sembcorp builds on this insight to analyse more closely the inevitable interplay when construing a contract between the law of contract and the law of evidence. This analysis leads the Court of Appeal to articulate two factors, one legal and one pragmatic, which are implicit in its earlier analysis in Zurich and which militate against taking too robust an approach to the use of extrinsic evidence as an aid to construction. The legal constraint arises from our statutory law of evidence. The pragmatic constraint is necessitated by the nature of our system of adversarial litigation. Taken together, these constraints justify not only the Zurich criteria but also justify applying those criteria with particular caution when a litigant proffers certain types of extrinsic evidence as an aid to construction.

  62. [41] The legal constraint on taking too robust an approach to using extrinsic evidence as an aid to construction arises from the fact that our law of evidence is primarily statute-based whereas our law of contract is primarily common law. The nature of statutory rules as compared to common law rules means that our law of evidence is less flexible than our law of contract. The result is that the principles of both bodies of law cannot develop or evolve in parallel through judicial decision at the same time and in the same way. The position in English law is, of course, different. In England, the law of contract and the law of evidence are both primarily common law and can therefore evolve together, virtually without any need to draw a distinction between the two, in the same judicial decisions.

  63. [42] Our statutory law of evidence therefore has a controlling influence on the development of our common law of contract when it comes to the contextual approach to construction. It would be pointless for our law of contract to permit – or for us even to consider allowing it to evolve so as to permit – particular types of extrinsic evidence to be used as an aid to construing a contract if our law of evidence lays down statutory rules which operate to exclude that evidence, either absolutely or ordinarily. To put it another way, the universe of extrinsic evidence which our common law of contract accepts, or can evolve to accept, as legitimate aids to construction can never be anything other than a subset of the evidence rendered admissible by our statutory law of evidence.

  64. Four types of extrinsic evidence

  65. [44] For present purposes, it is useful to consider how the two constraints identified in Sembcorp operate on particular types of extrinsic evidence by dividing that evidence into four broad types:

  66. (a) Evidence of the circumstances surrounding the contract;

  67. (b) Evidence of the subjective intentions of the parties;

  68. (c) Evidence of the parties’ pre-contractual negotiations; and

  69. (d) Evidence of the parties’ subsequent conduct, ie their conduct after entering into the contract.

  70. Circumstances surrounding the contract

  71. [45] The first type of extrinsic evidence is evidence of the circumstances surrounding the contract. The legal and practical constraints to receiving extrinsic evidence of this type as an aid to construction are significantly lower than for the other three types. Extrinsic evidence of this type is proffered to place the court in the same position as the parties when they entered into the contract. It enables the court, in order to construe objectively the words used by the parties in their contract, to have regard to the “facts and circumstances which were (or ought to have been) in the mind of the [drafter] when he used those words” (Sembcorp at [64]). Zurich establishes that these surrounding circumstances are not limited to matters of fact but can also include the legal and regulatory background (at [131]) and the object or purpose for which the parties entered into the contract (at [53]). Zurich also establishes that there is no need to find any sort of ambiguity in the parties’ contract before turning to evidence of this nature as an aid to construction.

  72. [46] There is no tension between the law of contract and the law of evidence with regard to this type of extrinsic evidence. The law of evidence, by virtue of s 94(f) of the Evidence Act, admits evidence of this type for this purpose without restriction (Zurich at [121]; Sembcorp at [55] and [63]). The law of contract then accepts all of the evidence of this type which is admitted by the Evidence Act also to be a legitimate aid to construction. Indeed, acknowledging the importance of this type of extrinsic evidence lies at the very heart of the contextual approach. It may even be argued that the effect of the contextual approach is to take evidence of this type entirely outside any exclusionary rule, whether as a matter of evidence or as a matter of contract. Thus, s 94(f) of the Evidence Act takes this evidence outside the exclusionary evidential rule set out in s 94 of the same Act. Further, the second of Lord Hoffmann’s principles in Investors Compensation Scheme, as modified in Bank of Credit and Commerce International SA v Ali and others [2002] 1 AC 251 (“BCCI v Ali”) at [39] permits evidence of this type to be used as an aid to construction as a primary rule of construction rather than as an exception to an exclusionary rule.

  73. [47] The significance of the pragmatic constraint when using evidence of this type as an aid to construction is much reduced. As Lord Hoffmann said in Chartbrook Ltd and another v Persimmon Homes Ltd and another [2009] 1 AC 1101 at [38] (cited in Sembcorp at [67]), “surrounding circumstances are, by definition, objective facts which will usually be uncontroversial”.

  74. The parties’ subjective intentions

  75. [48] The second type of extrinsic evidence is evidence of one or both parties’ subjective intentions. As in the case of evidence of the first type, but for the opposite reason, there is no tension between the law of contract and the law of evidence with regard to this type of extrinsic evidence. The law of contract permits evidence in this type to be used as an aid to construction, but only if there is an ambiguity in the contract, and even then, only if the ambiguity is latent (Zurich at [51] and [132(d)]; Sembcorp at [59]). This type of extrinsic evidence therefore cannot be used as an aid to construction if there is no ambiguity at all or if there is an ambiguity which is patent rather than latent. There is no tension with the law of evidence because the Evidence Act mirrors these limitations on the admissibility of this type of extrinsic evidence in s 94 to s 100.

  76. [49] As in the case of the evidence of the first type, the significance of the pragmatic constraint when using evidence of this type as an aid to construction is much reduced, once again for the opposite reason. Given that evidence of this type is ordinarily inadmissible under the law of evidence, the scope for a litigation adversary and the court to be inundated with this type of evidence is regulated primarily by the rules of evidence. They operate as a prior constraint to exclude the evidence even before the law of contract can operate upon it.

  77. Pre-contractual negotiations and subsequent conduct

  78. [51] Sembcorp’s reiteration (at [72]) of Zurich’s warning (at [127] and [129]) against taking too liberal an approach to the use of extrinsic evidence is made especially forcefully with respect to extrinsic evidence of the third and fourth types (at [38]). Indeed, it could be said that the practical significance of Sembcorp, like Zurich, is to permit evidence of these two types to be used as an aid to construction while warning of the serious consequences of being too liberal in doing so.

  79. Evidence Act does not apply to these proceedings

  80. [52] I am undoubtedly bound by the contextual approach set out in Zurich and Sembcorp in construing the parties’ contract. That is because the body of principles which comprises the contextual approach is part of the law of contract. These principles operate whenever and wherever a court must ascertain the objective meaning of a contract in order to make a final determination of the parties’ rights and liabilities in accordance with law. They operate whether that final determination is made in an action commenced by writ or upon an application commenced by originating summons. They operate whether that final determination is made summarily upon affidavit evidence alone or after the court receives evidence viva voce.

  81. [53] The provisions of the Evidence Act regulating the admissibility of extrinsic evidence do not, however, apply to the proceedings before me. Those provisions are found in Part II of the Evidence Act. Section 2(1) of the Act expressly provides that Part II of the Act “shall apply to all judicial proceedings in or before any court, but not to affidavits presented to any court or officer nor to proceedings before an arbitrator”. Part II of the Act applied to the proceedings at first instance in Zurich and Sembcorp because they were judicial proceedings commenced by writ and resolved at trial. When the parties’ rights and liabilities are finally determined at trial, the underlying findings of fact are made on viva voce evidence received in accordance with the Evidence Act. What is before me are judicial proceedings commenced by originating summons. In proceedings of this type, designed for litigation in which it is unlikely that there will be any substantial dispute of fact, the court ordinarily determines the parties’ rights and liabilities summarily, upon affidavit evidence alone (see O 38 r 2(2) of the Rules of Court). The effect of s 2(1) of the Evidence Act is therefore to disapply the entirety of Part II of the Evidence Act to all of the evidence before me.

  82. [54] The relationship between the law of evidence and the law of contract in the contextual approach to construing a contract is therefore of especial significance in the proceedings before me. The question arises as to whether I am bound to apply the law of evidence at all in determining the Trustee’s application. The answer must be yes. It cannot be that the law, taken as a whole, permits me to reach a final determination of the parties’ rights and liabilities in these proceedings free of all rules of evidence when I would have been bound by the Evidence Act if the parties had chosen instead to litigate their dispute at a trial in proceedings commenced by writ.

  83. [55] When then is the source of the law of evidence which I apply, if it is not the Evidence Act? I am bound by our common law of evidence. The common law continues to be one of the sources of our law of evidence Sembcorp at [38]. This is so even though s 2(2) of the Evidence Act repeals common law rules of evidence. That is because it does not repeal all common law rules of evidence. It repeals only those common law rules of evidence which are inconsistent with the rules of evidence set out in the Evidence Act (see Robert Margolis, “The Concept of Relevance: In The Evidence Act And The Modern View” (1990) 11 Sing LR 24 at 26).

  84. [56] Common law rules of evidence which are not inconsistent with the Evidence Act continue to form part of our law of evidence, although their operation is now masked in proceedings to which the Evidence Act applies. To put it another way, to the extent that the rules of evidence at common law at the time the Evidence Act was enacted in Singapore in 1893 found their way into the Act, those common law rules – at the very least – were not repealed when the Act came into force. Those rules remain part of our common law of evidence. They continue to apply to judicial proceedings which fall outside the Evidence Act. Sembcorp’s historical analysis of s 94 to s 100 of the Evidence Act (Sembcorp at [39]–[65]) shows that the principles captured in those rules are indeed consistent with the common law of evidence as it stood at the time our Evidence Act was enacted. Those rules therefore continue to form part of our common law of evidence. I am bound, therefore, to apply those common law rules to determine whether the existence or non-existence of a particular fact may be proved in the proceedings before me and, if so, how it may be proved.

  85. [57] This is an important point. There is only one body of principles applicable to construing contracts in our substantive law of contract. No doubt that body of principles is independent of the law of evidence. But there should also be only one body of principles which determines what evidence that body of contractual principles can operate upon. If we had no common law of evidence, or if our common law of evidence were not consistent with s 94 to s 100 of the Evidence Act, there would be potential for the final judicial determination of a particular dispute to differ depending on how a plaintiff chooses to commence proceedings and how a plaintiff chooses to end proceedings with a final judgment. That should not be and cannot be the case. A dispute over how a contract is to be construed must yield the same final judicial determination whether the contract is construed at trial in an action (to which Part II of the Evidence Act does apply) or whether it is construed on a summary judgment application, on a striking out application, on an originating summons or even in arbitration (to all of which Part II of the Evidence Act does not apply).

  86. [58] For these reasons, I am bound not only to apply the contextual approach to construction set out in Zurich and Sembcorp but also to apply the common law rules of evidence which find their statutory analogue in s 94 to s 100 of the Evidence Act and which are preserved by s 2(2). Any other approach risks countenancing arbitrary differences in outcome resulting from procedural happenstance.

  87. Applying the contextual approach

  88. Text before context

  89. Starting with the parties’ words

  90. [59] Neither Zurich nor Sembcorp is authority for the proposition that the contextual approach starts with extrinsic evidence. Even under the modern contextual approach, and all the more so with the cautionary notes sounded in both Zurich and Sembcorp, it remains the case that “the primary source for understanding what the parties meant is their language interpreted in accordance with the conventional usage.” (See Zurich at [57] citing Lord Hoffmann’s speech in BCCI v Ali at [39].) Text comes before context. Thus, even the contextual approach must start with a consideration of the words chosen by the parties themselves to express their agreement. This is clear from Zurich’s quotation, with approval, of the following passage from an academic text likening the “context” of a contract to a series of concentric circles of meaning:

  91. [60] As the Court of Appeal said in Zurich at [130], “the way in which the task of interpretation is to be carried out” is that:

  92. [61] Neither Zurich nor Sembcorp, therefore, permits a party to throw all available extrinsic evidence into a heap together with the words of the contract and then invite the court to rummage with it through the heap to see what turns up. The position is quite the contrary. The contextual approach starts with the innermost of the concentric circles of meaning: the natural and ordinary meaning of the words, phrases and sentences chosen by the parties to express their contractual intention in the document. What Zurich and Sembcorp do is threefold. First, they make clear that although the construction exercise starts with the natural and ordinary meaning of the words chosen by the parties, it does not necessarily end there. Second, they remove a legal rule which sets an artificial a priori barrier in moving from a consideration of the parties’ language in the contract itself to any consideration of the external context. That barrier is replaced by the Zurich criteria, which regulate how the contextual approach can legitimately transition from the internal to the external. The end point of every construction exercise now lies, at least potentially, in the last of the series of circles of meaning adverted to in the passage quoted at [59] above. Third, both Zurich and Sembcorp reconciled the modern contextual approach, developed in England alongside the English common law of evidence, with the statutory strictures of our Victorian Evidence Act.

  93. Starting with the parties’ words is not unduly narrow

  94. [62] It could be argued that it is unduly technical and narrow to apply Zurich by starting with the parties’ words and then progressing in sequence through concentric circles of meaning. There are indeed passages in Zurich which could be read as suggesting a more liberal approach. But read in context and read with Sembcorp, these passages do not point against the manner in which I intend to apply Zurich.

  95. [63] At [110] of Zurich, the Court of Appeal says as follows:

  96. [64] These italicised words might be read to suggest that the court must have reference to the extrinsic circumstances even before it interprets the words of the contract. But read in context, and bearing in mind the Court of Appeal’s reference in the paragraph quoted to the earlier passage in its judgment at [47]–[49], it is clear that all that the Court of Appeal is saying here is that the traditional approach to construction was wrong to require a finding of ambiguity as a prerequisite to have regard to any type of extrinsic evidence at all, even evidence of the first type (see [44] above). This must be so: it is often impossible to make a finding of ambiguity without reference to material extrinsic to the document. Therefore, the traditional rule is potentially circular. This passage from Zurich does not, however, support a broader proposition that the contextual approach permits or requires a court to begin with extrinsic evidence rather than with the language of the agreement being construed.

  97. [65] So too, the passage at [130] of Zurich, cited more fully at [60] above, might be read to suggest that the words of the contract and the extrinsic material must be considered together at the first circle of meaning. But the opening words of [130] refer to “the second issue outlined at [124] above.” That second issue is “the way in which the task of interpretation is to be carried out.” Those words – “the court will first take into account the plain language of the contract together with relevant extrinsic material which is evidence of its context” – are therefore not intended to suggest that the plain language of the contract and the relevant extrinsic material are interchangeable and equivalent starting points in the construction exercise. The two are put together in that sentence only in order to explain how the entire process of construction – encapsulated in those words – can under the modern contextual approach legitimately lead a court to “put on the contractual term in question an interpretation which is different from that demanded by its plain language.” This passage, too, does not support the proposition that the construction exercise under the modern contextual approach permits or requires a court to start with extrinsic evidence rather than with the language of the agreement being construed.

  98. [66] Further, as a matter of principle and logic, it must be the case that the starting point in the construction exercise must be the language chosen by the parties. One cannot call extrinsic evidence in aid in a vacuum. The purpose of the construction exercise is not for a court to conduct a roving inquiry into every aspect of the parties’ bargain extrinsic to their contract. The purpose of the construction exercise is to ascertain objectively the parties’ contractual intention. It is only in light of the words which the parties actually use that it becomes possible to identify those crevices of meaning which extrinsic evidence might illuminate.

  99. [67] In short, there is no longer in our law a bright dividing line between the plain language of the contract and extrinsic evidence of its context. But that is not to say that there is no dividing line at all. Instead, there is now a principled dividing line which permits a court to have regard to extrinsic evidence if and only if the evidence satisfies the Zurich criteria and, of course, is admissible in evidence. If the result is that no extrinsic aids to construction are available, a court is left with nothing but the words the parties themselves chose. Even under Zurich, therefore, the starting point remains – and indeed must be – the natural and ordinary meaning of the plain language which the parties have used to express their rights and obligations.

  100. [68] In accordance with contextual approach, therefore, I start with the parties’ language and progress through the circles of meaning in the principled way signposted by Zurich, and subject to the Sembcorp constraints. In the course of that, I will consider whether I can legitimately take into account the extrinsic evidence proffered by Lucky Realty, and if so, its effect on the construction of the lease.

  101. The parties’ intention objectively ascertained

  102. The first circle of meaning: the operative part of the lease

  103. [69] As I noted at [22] above, both parties have framed the dispute before me purely as a matter of construction. Further, the construction which is disputed is of the lease subject to the 1995 variation. The operative part of the lease as varied in 1995 provides as follows:

  104. The crucial issue I have to determine is the meaning to be ascribed to the terms “yearly rent” and “market rent” in cl (b) of the habendum. The Trustee claims that the plain meaning of both terms is the yearly rent and the market rent for the whole of Lot 5245N. Lucky Realty maintains that both terms understood in context mean the market rent for Block D only.

  105. [70] I start with the first circle of meaning: the phrases, sentences and paragraphs used by the parties in this part of the lease (see the passage quoted at [59] above). These words comprise a description of the demised land followed by the habendum. It describes the demised land as “[t]he whole of Lot 3041 of Mukim XXVII together with the buildings in the course of construction thereon”. I make four points. These points do no more than state the obvious, but these obvious points set the foundation for what follows. First, the lessor demises to Lucky Realty Lot 3041. Second, it demises to Lucky Realty not just a part of Lot 3041 but the whole of Lot 3041. Third, it demises to Lucky Realty not just the whole of the land comprised in Lot 3041 but also the buildings in the course of construction upon it. Finally, it is in exchange for the demise that Lucky Realty agrees to pay the “yearly rent”. That is the significance of the word “therefor” in paragraph (a) of the habendum which I have italicised at [69] above.

  106. [71] All of this suggests that the objective meaning of the terms “yearly rent” and “market rent” in cl (b) of the habendum is the yearly rent and market rent for the whole of Lot 3041.

  107. The second circle of meaning: the rest of the lease

  108. [72] The words of the operative part of the lease, however, leave unanswered what is meant by “the buildings in the course of construction” on Lot 3041. I therefore move then to the next circle of meaning: the lease as a whole. A consideration of the whole of the lease illuminates what is meant by those words.

  109. [73] The word “buildings” appears in many provisions outside the operative part of the lease. All of these provisions speak of Lucky Realty’s obligations as they stood at 1975. Thus, cl 1(iii) of the lease specifically obliged Lucky Realty “to erect … the buildings on the demised land … in conformity with plans … submitted by [Lucky Realty] to the Local Government Building Authority.” Clause 1(v) obliged Lucky Realty to keep the buildings, once erected, in tenantable repair throughout the term of the lease. Clause 1(vi), as I have said, obliged Lucky Realty not to make any alterations or additions to the buildings without the lessor’s consent in writing. Clause 1(vii) obliged Lucky Realty to permit the lessor to enter onto the demised land to view the state of repair of the “buildings”. And cl 1(viii) of the lease obliged Lucky Realty to insure the “demised buildings” in the joint names of lessor and lessee.

  110. [74] The parties’ intention objectively ascertained as at the time of the 1995 variation, therefore, is that the word “buildings” in the description of the demised land is to comprise the buildings that Lucky Realty bound itself contractually in 1975 to construct upon Lot 3041. Further, the parties in their lease consistently refer only to “buildings”, ie in the plural and collectively. There is no attempt to distinguish any one of the buildings from the others. The ordinary meaning of “buildings” in this context is therefore “all buildings”.

  111. [75] All of this again suggests that “yearly rent” and “market rent” in cl (b) of the habendum is to be a rent for not just the whole of the demised land, but is also to be a rent referable to all of the buildings on that land.

  112. Third circle of meaning: extrinsic evidence

  113. [76] I move next to the third circle of meaning: evidence of matters which are extrinsic to the contract. I have before me extrinsic evidence that, by the time of the 1995 variation, Lot 3041 had been subdivided, with two of the subdivisions compulsorily acquired by the State. I have before me also extrinsic evidence that the result of that subdivision and compulsory acquisition was to extinguish the parcel of land known as Lot 3041 and to create a new and smaller parcel of land known as Lot 5245N which the Trustee continues to own.

  114. [77] It is common ground that the term “Lot 3041” in the lease should be construed as “Lot 5245N”. Indeed, that is self-evident. But I prefer to arrive at that conclusion through explicit analysis rather than by concession or by treating it as axiomatic. This is because Lucky Realty submits that if I can legitimately have recourse to extrinsic evidence to conclude that “Lot 3041” ought to be construed as “Lot 5245N”, it is equally legitimate for me to have recourse to other extrinsic evidence to conclude that “yearly rent” and “market rent” ought to be construed as “yearly rent for Block D only” and “market rent for Block D only”. I do not accept that submission. I therefore now analyse why the law permits me to have recourse to the extrinsic evidence, summarised at [76] above, to construe “Lot 3041” as “Lot 5245N”.

  115. “Lot 3041” ought to be construed as “Lot 5245N”

  116. [78] In order for me to use the extrinsic evidence of the extinction of Lot 3041 and the creation of Lot 5245N as an aid to construing the lease, I must first consider the admissibility of this evidence and, if it is admissible, I must then apply the Zurich criteria bearing in mind the Sembcorp constraints. Although, as I have explained above, the Evidence Act does not apply to these proceedings, I shall, purely for ease of exposition, refer to each common law rule of evidence which I must apply by the section number of the equivalent statutory rule.

  117. [79] As a matter of the law of evidence, this extrinsic evidence is prima facie excluded by s 94 of the Evidence Act because the evidence is adduced for the purpose of varying or contradicting a written agreement which both parties accept is complete. Indeed, not only is the written agreement complete, there is no ambiguity at all on the face of the document as to the identity of the demised land. It is “Lot 3041”.

  118. [80] Zurich, however, is authority that extrinsic evidence of this type is admissible under the proviso to s 94 found in s 94(f) of the Evidence Act. This evidence shows how the language of the lease is related to facts existing at the time of the 1995 variation. It is also admissible under s 97 of the Act. It shows that this language in the lease, although plain, was used in a peculiar sense because it is meaningless in reference to the facts existing at the time of the 1995 variation. Lot 3041 did not exist at the time of the 1995 variation. A reference to it is meaningless. This evidence is also not excluded by s 96 of the Evidence Act. That rule of evidence excludes extrinsic evidence meant to show that the plain language of a document which does apply accurately to existing facts was not meant to apply to those facts. The 1995 variation did not apply accurately to existing facts because no parcel of land known as Lot 3041 then existed. This evidence is therefore outside the scope of any exclusionary rule of evidence.

  119. [81] As a matter of the law of contract, this evidence is a permissible aid to construction because it satisfies the Zurich criteria. First, it is clearly relevant, adduced to elucidate the very subject-matter of the lease. Second, it is evidence that was reasonably available to both parties at the time of contracting. The compulsory acquisition and renaming of the remainder of Lot 3041 as Lot 5245N was (and is) an undisputed fact and a fact which was known to both parties at the time of the 1995 variation. Finally, it relates to a clear and obvious context. Given that Lot 3041 did not exist at the time of the 1995 variation, what else, objectively speaking, could the parties have intended the subject-matter of that variation to have been other than that part of Lot 3041 which remained in the lessee’s ownership after the compulsory acquisition, ie Lot 5245N?

  120. [82] The clear and obvious context supplied by this extrinsic evidence is also supported by returning to the second circle of meaning. The subdivision of Lot 3041 and the compulsory acquisition of parts of it is an event which the parties contemplated and accommodated in their lease. Thus, cl 1(iv) obliged Lucky Realty to maintain the roads, drains, sewers and septic tank on Lot 3041 but only “until the roads, drains, sewers, septic tank made or laid on or in the demised land shall be taken over by the Government or other competent authority”. The parties took the compulsory acquisition of the road and septic tank into account prospectively, when they struck their bargain in 1975. Looked at retrospectively in 1995, those events provide a clear and obvious objective context to the words the parties used when they adjusted their bargain then.

  121. [84] A consideration of the whole of the lease in light of the surrounding circumstances therefore demonstrates that the parties’ intention objectively ascertained in 1995 was for Lot 5245N to constitute the demised land, being the only part of the extinguished Lot 3041 still owned by the Trustee in 1995. That in turn informs the meaning to be ascribed to the “yearly rent” that Lucky Realty bound itself to pay under the lease and to the “market rent” which Lucky Realty agreed to pay, subject to conditions, with effect from 1999.

  122. [85] It is important to note that the extrinsic evidence I am now considering permits me only to construe “Lot 3041” as “Lot 5245N”. There is nothing whatsoever in this extrinsic evidence which permits me to construe what was demised to Lucky Realty under the lease, and what Lucky Realty was obliged to pay the yearly and market rent for, as being anything other than the whole of Lot 5245N or as being referable to anything other than all of the buildings erected upon it.

  123. The extrinsic evidence relied upon by Lucky Realty

  124. [86] It is at this point in the construction exercise that Lucky Realty relies on additional extrinsic evidence to argue that “yearly rent” and “market rent” ought to be construed as “yearly rent for Block D only” and “market rent for Block D only”. Lucky Realty arranges this evidence under four heads:

  125. (a) First, Lucky Realty relies on extrinsic evidence of the parties’ pre-contractual negotiations to argue that the common basis of the parties’ negotiations leading up to the 1995 variation was that its obligation to pay rent was confined to Block D.

  126. (b) Second, Lucky Realty relies on the fact that the increased rent under the 1995 variation was backdated to the date on which it received the temporary occupation permit (“TOP”) for Block D.

  127. (c) Third, Lucky Realty relies on the term “existing development” in cl (b) of the habendum as referring to Block D only.

  128. (d) Fourth, Lucky Realty relies on the parties’ conduct subsequent to the 1995 variation in deciding not to procure all the assignees of strata units in Blocks A, B and C to enter into a variation of all of their leases to reflect the 1995 variation to their head lease.

  129. [87] I hold that I cannot take any of this extrinsic evidence into account in construing the lease. All of this evidence is either inadmissible or fails to satisfy the Zurich criteria.

  130. Two points on admissibility

  131. [88] Sembcorp is a reminder that the first step in considering whether any extrinsic evidence may be used as an aid to construction is to apply the evidential rules as to admissibility. I therefore consider admissibility of the evidence proffered by Lucky Realty as a preliminary issue, before examining the content of the extrinsic evidence.

  132. [89] A large part of the extrinsic evidence relied upon by Lucky Realty appears in the affidavit of its principal deponent, Ms Ong Sook Mor. I hold that evidence to be inadmissible. A large part of the extrinsic evidence relied upon by Lucky Realty is adduced for the purpose of establishing the parties’ subjective intent. I hold that evidence also to be inadmissible.

  133. Extrinsic evidence from Ong Sook Mor is inadmissible

  134. [90] Ms Ong Sook Mor is a Director in the Sales Admin and Leasing Division of the Far East Organisation. In the third paragraph of her affidavit, Ms Ong asserts the following:

  135. A paragraph to this effect is routinely included in all affidavits. When it is included in an affidavit sworn and filed for the purposes of interlocutory applications, it is innocuous enough. It is merely a convenient way of alerting the reader to the deponent’s intention to rely on O 41 r 5(2) of the Rules of Court. That rule provides that “[a]n affidavit sworn for the purpose of being used in interlocutory proceedings may contain statements of information or belief with the sources and grounds thereof”. Of course, that rule does not require the deponent to include a paragraph to this effect in order to rely on that rule. And including a paragraph to this effect does not, in itself, comply with the requirements of that rule. It is still necessary for the deponent, in the body of her affidavit, to identify clearly which evidence is within her personal knowledge and which evidence is not and, where evidence falls into the latter category, to identify equally clearly her sources for the information she deposes to and her grounds for the beliefs she deposes to. But if an affidavit filed for the purposes of interlocutory proceedings does all of that, no serious complaint can be made if it includes a paragraph to the same effect as Ms Ong Sook Mor’s paragraph 3.

  136. [91] A paragraph to this effect, however, should not form any part of an affidavit sworn and filed for the purposes of a final determination of the parties’ rights and liabilities in any proceedings. Evidence on information or on belief is prima facie inadmissible for that purpose. That is so whether the proceedings are commenced by originating summons or by writ and whether the final determination is to take place in open court or in chambers.

  137. [92] The rights and liabilities of the parties in proceedings commenced by writ are typically determined with finality at trial. The contents of affidavits filed as the deponents’ evidence in chief for trial are governed by s 62 of the Evidence Act read with O 38 r 2(5) of the Rules of Court. The general rule is that evidence of fact at trial must be given from personal knowledge in order to be admissible. Any exceptions to that general rule must be found in the Evidence Act or in the common law of evidence which was not repealed by s 2(2) of the Act. Those exceptions can be raised and applied pre-trial pursuant to O 38 r 3 of the Rules of Court or in the course of the trial itself, as the evidence is adduced and objection is taken.

  138. [93] The rights and liabilities of the parties in proceedings commenced by originating summons are determined with finality in chambers. The rights and liabilities of the parties in proceedings commenced in writ may also be determined with finality in chambers – under O 14, under O 18 r 19 or under O 27. Where that determination takes place in chambers, the contents of the affidavits are governed by O 41 r 5(1). That rule is to the same effect as s 62 of the Evidence Act. It provides that “an affidavit may contain only such facts as the deponent is able of his own knowledge to prove”. The exception to this rule in O 41 r 5(2) is unavailable because proceedings aimed at securing judgment are not interlocutory proceedings. The exceptions in Parts I to III of the Evidence Act are also unavailable, as they have no application to affidavits. Any exceptions to the general rule found in O 41 r 5(1) must therefore be found elsewhere in the Rules of Court (see eg O 14 r 2(8)) or in the common law of evidence.

  139. [94] If a deponent of any affidavit sworn for the purpose of being used at a hearing which finally determines the parties’ rights and liabilities intends to rely on any exception to the requirement for direct evidence, whatever the source of that requirement, the deponent should identify that exception in her affidavit and set out the evidence necessary to establish that the evidence proffered comes within the exception. Thus, if Lucky Realty wishes me to receive and consider the extrinsic evidence set out in Ms Ong Sook Mor’s affidavit in determining finally the parties’ rights and liabilities, it must establish that her evidence of fact is direct evidence as required by O 41 r 5(1) or comes within a recognised exception to that requirement.

  140. [95] It is clear from the contemporaneous documents that Ms Ong Sook Mor was not personally involved in the historical events on which Lucky Realty relies as extrinsic evidence. Having acknowledged in paragraph 3 of her affidavit that some parts of her evidence are not within her personal knowledge, she makes no attempt to distinguish in the body of her affidavit between the evidence which is within her personal knowledge and the evidence which is not. More specifically, at no point in her evidence of these historical events does she assert that that evidence is within her personal knowledge. I therefore have no basis on which to find that Ms Ong Sook Mor has any personal knowledge of the historical extrinsic evidence at all. That evidence, to the extent that it is contentious, is therefore wholly inadmissible.

  141. [96] In closing, I should note that the Trustee’s affidavits also contain a paragraph to the same effect as paragraph 3 of Ms Ong Sook Mor’s affidavit. The Trustee’s deponent too fails to make clear which parts of her evidence are within her personal knowledge and which parts are not. But the Trustee is not relying on contentious extrinsic evidence to support its construction of the lease. It relies simply on the plain words of the lease. The significance to the Trustee’s case of this evidential defect is much less significant than it is to Lucky Realty’s case.

  142. Evidence of subjective intent is inadmissible

  143. [97] The second point of admissibility I consider is in relation to the extrinsic evidence proffered by Lucky Realty insofar as its purpose is to prove the parties’ subjective intent. Both Zurich and Sembcorp make clear that even on the modern contextual approach, extrinsic evidence of subjective intent is excluded as an aid to construction unless there is an ambiguity and unless also that ambiguity is latent. This is the effect of both the law of evidence and of the law of contract.

  144. [98] The only material ambiguity in the lease is a latent ambiguity as to the meaning of “Lot 3041” in light of the facts and circumstances surrounding the 1995 variation. That ambiguity arises because no lot with the number 3041 existed in 1995. I have resolved that ambiguity definitively by receiving, without objection but also in accordance with the law, extrinsic evidence of the extinction of Lot 3041 and the creation of Lot 5245N.

  145. [99] Once that has been determined, there is no remaining ambiguity as to the extent of Lucky Realty’s rights and obligations in respect of the demised land. That is so whether one construes the lease as it stood when the parties entered into it in 1975 or as it stood after they varied it in 1995. When the parties entered into the lease in 1975, it was clear on the face of the lease that Lucky Realty took on lease the whole of Lot 3041 and all of the buildings then in the course of construction on it. It was also clear on the face of the lease that in exchange for that, Lucky Realty obliged itself to pay rent for the whole of that land and referable to all of those buildings. That obligation is unambiguous. The 1995 variation left this bargain unchanged save only that the parties’ reference to Lot 3041 is to be construed as a reference to Lot 5245N. Lucky Realty’s obligation to pay rent was unambiguous before the 1995 variation and remained unambiguous after the 1995 variation is properly construed. In those circumstances, the fact that Lucky Realty had, by the time of the 1995 variation, subdivided Blocks A, B, C and D into strata units and sold virtually all of the units in three of those blocks on long leases cannot, as a matter of construction, introduce an ambiguity into the words defining Lucky Realty’s obligation to pay rent where none previously existed.

  146. [100] In the absence of any ambiguity, extrinsic evidence is wholly inadmissible for the purpose of establishing the parties’ subjective intent in entering into the 1995 variation. That is so whether the subjective intent alleged is a subjective intent of Lucky Realty which was never expressed to the Trustee, a subjective intent of Lucky Realty which was expressed to the Trustee or even a subjective intent which was expressed and shared by both Lucky Realty and the Trustee. That rule appears harsh but is necessary in order to achieve certainty in contract, particularly where (as here) the parties’ contract creates proprietary rights and where those rights are alienable to third parties. The nature of the document being construed and its commercial character are legitimate considerations in construing it (see Zurich at [132(a)], cited at [34] above). Every contract has only one true construction. A third party who purchases the freehold of Lot 5245N from the Trustee has no way of extracting from the lease any of these subjective intentions insofar as they remain unexpressed in the parties’ objective intention manifested by the words which they chose to define their rights and obligations read in context. If subjective intention – even a shared subjective intention – determines the one true construction of the lease, the purchaser will find itself bound by an unexpressed subjective intention to confine to Block D alone the obligation to pay rent, even though the purchaser was never a party to that intention and would ordinarily be in no position to discover it. That cannot be correct.

  147. [101] If the heart of Lucky Realty’s complaint is that the 1995 variation failed to capture the subjective intent of one or both of the parties, its remedy lies in the contractual principles relating to mistake or in the equitable doctrine of rectification. Its remedy does not lie in stretching the contextual approach to construction beyond the principled limits set in Zurich and Sembcorp. I therefore hold that none of the extrinsic evidence proffered by Lucky Realty may be used for the purpose of establishing the parties’ subjective intent in entering into the 1995 variation.

  148. [102] I now turn to consider one by one the four heads of extrinsic evidence upon which Lucky Realty relies.

  149. First head: basis of fixing $120,000 in 1995

  150. Available evidence of pre-contractual negotiations

  151. [103] Under the first head, Lucky Realty seeks to adduce extrinsic evidence of the parties’ pre-contractual negotiations to show that its obligation to pay the “yearly rent” and the lessor’s right to revise the yearly rent to a “market rent” should be construed as being referable to Block D alone. Lucky Realty’s case is that this was the common basis of the parties’ negotiations preceding the 1995 variation. In view of my holding at [100] above, I consider this evidence only insofar as it casts a different light on the meaning of the words used by the parties objectively ascertained and not insofar as it is evidence of the parties’ subjective intent.

  152. [104] In order for me to use extrinsic evidence of the parties’ pre-contractual negotiations as an aid to construing “yearly rent” and “market rent”, the evidence must be admissible in accordance with the law of evidence and must satisfy the Zurich criteria, bearing in mind the Sembcorp constraints.

  153. [105] The only deponent from either party who is able to give direct evidence of the pre-contractual negotiations is Ms Lydia Sng, a property valuer with Knight Frank Cheong Hock Chye & Bailieu. She advised the Trustee and the beneficiaries in these negotiations. She, together with a senior colleague, also represented the Trustee in conducting the negotiations with Lucky Realty. She has filed two affidavits in these proceedings. Both of them support Lucky Realty’s case. Her evidence is that both the Trustee and Lucky Realty proceeded in the negotiations leading up to the 1995 variation on the basis that the increased “yearly rent” of $120,000 and the “market rent” in the rent escalation clause were referable only to Block D and not to the whole of Lot 5245N.

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