Khng Thian Huat and Another v Riduan bin Yusof and Another

V K Rajah JC:

[2] The first and second plaintiffs, who are husband and wife respectively, are the owners of 95 Telok Kurau Road, Singapore 279022 (“the property”). The first defendant was the tenant of the property. The second defendant, the first defendant’s wife, owned and managed a kindergarten at the property for the duration of the first defendant’s tenancies. The first tenancy initially ran from 1 January 1995 to 31 March 1997 (“the first tenancy”) but was subsequently extended from 1 April 1997 to 31 March 2000 (“the second tenancy”).

[3] In January 2000, the first plaintiff signed a letter of intent (“the letter of intent”) with the first defendant to let the property for a further period from 1 April 2000 to 31 March 2003 (“the third tenancy”). The material terms of the third tenancy were contained in the letter of intent that also stipulated that “[a]ll other terms and conditions shall be stated in an official lease agreement to be signed by both parties” (“the official lease”). For a variety of reasons, the precise details of which are now largely irrelevant, the official lease was not signed.

[6] Soon after the letter of intent was signed, the parties’ relationship rapidly deteriorated. The first defendant was habitually late in making rental payments. Promises were made and repeatedly broken; excuses were given and inexplicably forgotten; deadlines for payment were serially overlooked by the first defendant. The defendants claimed to be having cashflow problems. Quite understandably the plaintiffs became increasingly frustrated. The defendants in turn claimed that the plaintiffs lacked empathy and had themselves repeatedly reneged on their oral commitments. Deep feelings of mistrust and unhappiness permeated the parties’ relationship. The official lease was not signed. In these proceedings each side vehemently and unflinchingly assigned the sole responsibility for this unhappy state of affairs to the other side.

[7] After a lapse of several months, matters came to a head on 2 March 2001. The plaintiffs sent a letter to the first defendant asserting that the property was being occupied purely on a periodic basis, thereby denying the validity and indeed existence of the third tenancy. The exchange of solicitors’ correspondence that swiftly followed only served to exacerbate the tension between the parties. In addition, the plaintiffs received a notice from the Urban Redevelopment Authority (“URA”) drawing their attention to complaints about the usage of the property. The complaints related to noise and traffic congestion generated by the kindergarten’s operations. The URA warned the plaintiffs that if the complaints were not satisfactorily addressed it would have to reappraise approval of the existing usage of the property. The plaintiffs drew the defendants’ attention to this letter but were not satisfied with the measures taken by the defendants. On 29 March 2001, the plaintiffs’ solicitors served on the defendants a notice of “termination”. The defendants immediately rejected the unilateral termination of their occupancy rights and refused to vacate the premises. In addition, they refused the plaintiffs any access to the property when the plaintiffs sought to inspect it.

[8] The plaintiffs then asserted that the first defendant was liable for double rent pursuant to s 28(4) of the Civil Law Act (Cap 43, 1999 Rev Ed) for wrongfully holding over the property. Proceedings were commenced against the defendants in the District Court. The plaintiffs’ claim exponentially increased with the passage of time. After the plaintiffs’ claim for summary proceedings failed, the proceedings were transferred by consent to the High Court. The double rent claimed in these proceedings extended from 1 May 2001 to 10 April 2003, the latter being the date the plaintiffs finally gained access to the property. After deducting the rental payments actually paid during this period, the plaintiffs’ total claim for double rent amounted to $458,000. I dismissed the plaintiffs’ claim on the basis that, notwithstanding the omission to sign the official lease, both parties had by their earlier conduct acknowledged and accepted the existence of the third tenancy. The plaintiffs have not appealed against this decision.

[9] The plaintiffs also claimed compensation for the damage caused by the defendant’s failure to hand over the property in the same condition as it was at the commencement of the third tenancy. It could not really be disputed that there was some damage to the property caused by the defendants. The real issues were the degree of damage, the apportionment for fair wear and tear and the quantum of the claim. Both parties engaged experts to assess the quantum. The disparity between their respective experts’ evidence was unfortunately quite substantial. Acceding to the court’s suggestion, both parties’ solicitors sensibly agreed to abide by the decision of a court-appointed expert on the issue of identifying and quantifying the alleged damage to the property. The agreed terms of reference negotiated by the parties included the following stipulations:

The terms of reference also directed the court expert to allow both parties to make submissions and adduce evidence for her consideration. The court expert subsequently carried out three site inspections and duly met the parties’ experts. The court expert thereafter concluded that the defendants were responsible for damage to the property in the sum of $110,575.00, in addition to the sum of $15,595.00 which the parties’ experts had earlier jointly accepted as the sum due from the defendants. She also stated that it would have taken seven weeks to repair the damage and reinstate the property.

[10] I accepted the court expert’s views and findings. Defence counsel had no complaints about the process the court expert had employed in arriving at her conclusions, which to all intents and purposes appeared to be amply and objectively supported by facts. Indeed, it was plainly not open to the defendants to take issue with her “decision” in light of the explicit agreement the parties had reached that it was to be “final and binding”. Damages were awarded only against the first defendant qua tenant and on the basis of the plaintiffs’ pleaded case. The first defendant was held liable for damages in the sum of $79,170.00 derived in the following manner:

(a) compensation in the sum of $110,575.00 as assessed by the court expert, plus the sum of $15,595.00 agreed as being due to the plaintiffs by the parties’ experts;

(b) loss of use of property for seven weeks assessed on the basis of the applicable rental amounting to a total of $40,250.00;

(c) reimbursement of the sum of $2,750.00 being the portion of the court expert’s fees paid earlier by the plaintiffs;

less credit for the sum of $90,000.00 which had been held by the plaintiffs as a security deposit for the third tenancy.

[11] The sole legal issue to be determined in relation to the plaintiffs’ claim for property damage was whether the first defendant was obliged to deliver the property inclusive of the additions and alterations (“alterations”) made to the property before the commencement of the third tenancy. The defendants obdurately took the position that they were contractually obliged to deliver the property to the plaintiffs in its original state, ie at the commencement of the first tenancy.

[12] I upheld the defendants’ submission only in so far as it asserted that the terms of the third tenancy were identical to that of the second tenancy mutatis mutandis. The legal obligation apropos the restoration of the property is contained in cl 2(I) of the second tenancy agreement, which reads:

[13] A simple interpretation of this clause clearly reveals that it was untenable for the defendants to argue that they should strip the property of all authorised alterations effected to the property. The operative phrase “at the commencement of the said tenancy” axiomatically refers to the commencement of the third tenancy and not the commencement of the first tenancy as tenuously construed by the defendants. I accepted the plaintiffs’ counsel’s assertion that the word “said” refers to the last antecedent reference to the word that follows the word “said” (in this case “term”): Esdaile v Maclean (1846) 15 M & W 277; 153 ER 854. Indeed, the second tenancy expressly employs the phrase “the said term” as referring to the duration of that tenancy.

[14] Alterations that had been effected during the first and second tenancies had become de facto fixtures and fittings by the time the third tenancy commenced and were important accretions to the property that the defendants could no longer remove on a whim without the plaintiffs’ prior consent. Indeed, it is pertinent to note that defendants’ counsel did not seriously contend that the relevant alterations had not become “fixtures and fittings”. It should be noted that contractual clauses similar to the clause in question are usually inserted for the protection of landlords, who may at their option require that the property be restored to its original state or that the property be vacated with the alterations left intact. It ought to be recognised, however, that different considerations may come into play when machinery and proprietary equipment are involved. In the final analysis it is a matter of objectively ascertaining the parties’ intentions.

[15] It was abundantly clear that by removing the authorised alterations the defendants were motivated purely by malice and ill will. The plaintiffs had unequivocally requested that they do not tamper with or remove the alterations made to the property. The plaintiffs had intended to continue with the usage of the property as kindergarten premises and the defendants had more than an inkling of such an intention. The approved statutory usage of the property as a kindergarten would expire only on 5 April 2006. The defendants were fully aware that there was no legal requirement to remove the alterations.

The importance and specific relevance of the parties’ conduct in assessing costs is now legislatively encapsulated in O 59 r 5 of the Rules of Court (Cap 322, R 5, 2004 Rev Ed) (“ROC”). The sub-rule, inter alia, now states that:

While the parties’ conduct prior to and/or during the proceedings is usually only one of the multifarious factors to be considered in determining the appropriate costs order, in certain cases it may take centre stage. Where a party has no other recourse but to initiate proceedings so as to obtain a measure of certitude in a situation engendered by the other party’s capricious or tempestuous behaviour, the court will usually pay particular attention to the parties’ conduct in deciding what the appropriate costs order ought to be.

The Court of Appeal did not demur from this approach in dismissing the appeal.

[22] These proceedings arose primarily because of the defendants’ failure to pay the rent timeously after signing the letter of intent. The plaintiffs had initially adopted a restrained and pragmatic approach. Indeed, throughout the duration of the earlier tenancies they did not take issue with several delays in rental payment. They were however finally constrained to take a stand during the third tenancy in light of the defendants’ recalcitrant and capricious behaviour. It can be fairly said that the defendants forced the plaintiffs’ hands culminating in the initiation of these proceedings; the plaintiffs were compelled to state and stake their legal position in an attempt to define more precisely their rights given the unsatisfactory state of affairs then prevailing between the parties.

[23] In this case it is relevant to take into account the parties’ conduct both prior to as well as during the trial proceedings. The first defendant did not testify in these proceedings; instead, he left it entirely to the second defendant to bear the evidential cross. I found the second defendant to be an unsatisfactory witness prone to bouts of theatrics and evasiveness. Indeed, even counsel for the defendants in his submissions conceded that the second defendant’s conduct was “undeniably disruptive of the proceedings”. This regrettably and unnecessarily added to the length of the hearing and exacerbated the already palpable tension between the parties. It seemed patently clear to me from the evidence that it was the second defendant, and not the first defendant, who called all the shots and who was indeed largely instrumental in creating the unhappy state of affairs between the parties.