Tiananmen KTV (2013) Pte Ltd & Ors v Furama Pte Ltd [2015] SGHC 83

The case of Tiananmen KTV (2013) Pte Ltd & Ors v Furama Pte Ltd concerned an application for an interim injunction. The Singapore High Court examined, amongst other issues, whether the requirement for writing prescribed by the Civil Law Act for dispositions of immovable property applied to certain orally concluded collateral contracts that the plaintiffs claimed existed. The court found that the requirement for writing applied in this instance and this was one of the reasons that the application was rejected.

Background

Over the course of 20 years, the plaintiffs (and/or their predecessors) entered into several leases for premises owned by the defendant. The most recent tenancy agreements expired on 31 January 2015 (the “Relevant Tenancy Agreements”) after the defendant rejected the plaintiffs’ requests for further lease extensions beyond this date. This precipitated the current action where the plaintiffs asserted that the defendant’s refusal to renew their leases was a breach of certain alleged collateral agreements and further that the defendant had made various fraudulent misrepresentations which the plaintiffs had relied on to their detriment.

Specifically, the plaintiffs alleged that during the course of negotiations prior to the conclusion of the Relevant Tenancy Agreements, the defendant had made representations that the various leases would be renewed at the end of their stated terms as long as the defendant had no plans to redevelop the premises (the “Alleged Representations”). The plaintiffs further alleged that these Alleged Representations gave rise to Alleged Collateral Agreements to the same effect (the “Alleged Collateral Agreements”).

The defendant denied making the Alleged Representations and/or the Alleged Collateral Agreements and relied on, inter alia, various correspondence between parties where the defendant had expressly conveyed to the plaintiffs in the course of prior lease extensions that the various leases would not be renewed at the end of their stated terms, including when the Relevant Tenancy Agreements expired.

In response, the plaintiffs referred the court to major renovations they had undertaken to the premises as proof of the existence of the Alleged Representations. The defendants in turn pointed to correspondence which showed that it had specifically advised the plaintiff not to “over renovate” as there would be no further lease extensions after the expiry of the relevant lease terms.

After the expiry of the Relevant Tenancy Agreements, the defendant ceased supply of electricity to the premises and further took other remedial actions in accordance with the Relevant Tenancy Agreements and related electricity supply agreements. This prompted the present proceedings where the plaintiff sought an interim injunction to restrain the defendant from these actions and from re-entering the premises.

Interim injunctions

The court began its deliberations by noting that an applicant for an interim injunction needs to show that (i) first, there is a serious question to be tried for a permanent injunction at trial and that (ii) secondly, the balance of convenience favoured the grant of an interim injunction. Factors such as the conduct of the parties and whether damages were an adequate remedy are relevant to determining where the balance of convenience lies. The court should then take whichever course of action appears to carry the lower risk of injustice.

In this case, the court found that the interim injunction sought by the plaintiffs was in substance amandatory interim injunction, and that a higher threshold applied to such injunctions because injunctions of a mandatory nature often had a more drastic effect as they would frequently disrupt the status quo of the affairs relating to the dispute at hand.

Collateral contracts

The plaintiffs’ primary argument was that the defendant had breached the Alleged Collateral Agreements between the parties by refusing to grant further lease extensions after the Relevant Tenancy Agreements expired. In their view, the Alleged Representations formed the basis of the Alleged Collateral Agreements. In this regard, the plaintiffs submitted that there was a serious question to be tried since there was a dispute of fact as to whether the Alleged Representations were indeed made.

In response, the defendant argued that an entire agreement clause in the Relevant Tenancy Agreements would negate the existence of the Alleged Collateral Agreements. The defendant also pointed out that the Relevant Tenancy Agreements contained no option to renew and expressly stated that the relevant lease terms would not be extended after the leases expired.

After considering the arguments made, the court found that the Alleged Collateral Agreements were not based on cogent evidence as they were based purely on oral evidence without any corroborating document. In this regard, the court also found it strange that the plaintiffs would commence significant renovation works on the premises without anything in writing if indeed there were such Alleged Collateral Agreements. Ultimately, the court found that the correspondence exchanged between parties was consistent with the defendant’s position that there were no such Alleged Collateral Agreements.

Applicability of writing requirement

Section 6(d) of the Civil Law Act prescribes that contracts “for the sale or other disposition of immovable property or any interest in such property” must be in writing for an action to be brought based on the “promise or agreement” of such sale or disposition of immovable property. The Alleged Collateral Agreements in question constituted agreements for leases, which the plaintiffs contended did not fall within the ambit of section 6(d). The plaintiff’s position was that a lease would be caught by section 6(d) but not an agreement for lease since an agreement for lease was once removed from the lease.

The court disagreed, finding that an agreement for a lease must satisfy the writing requirement before an action may be brought based on the agreement. As the Alleged Collateral Agreements were essentially promises for future leases and constituted agreements for leases, no action could be brought upon them because they were not in writing.

Fraudulent misrepresentation

The plaintiffs claimed fraudulent misrepresentation in the alternative (that is, on the basis that the Alleged Collateral Agreements did not exist).

The plaintiffs claimed that they were entitled to the injunction sought since their case would likely succeed if the defendant was found to have made the Alleged Representations. It was their contention that the Alleged Representations were false given that the defendant had evinced an intention not to continue leasing the premises to the plaintiffs.

In response, the defendant submitted that the plaintiffs had no real prospect of obtaining a permanent injunction at trial as they were essentially seeking to specifically enforce the fraudulent misrepresentations that they claimed the defendant had made, and specific performance is not available as a remedy for the tort of fraudulent misrepresentation.

The court agreed with the defendant, noting that the purpose of tortious remedies is to place the victim into the position in which he would have been if the tort had not been committed. In the context of fraudulent misrepresentation, the law intervenes to restore the victim to the position prior to the fraudster’s representation. The nature of specific performance is incompatible with this goal because if granted for a claim of fraudulent misrepresentation, an order for specific performance would essentially undo the wrong in a wholly different way. Instead of placing the victim in the position as if the misrepresentation had never been made, the order would place him in a position as if the misrepresentation were true. This would be tantamount to compelling the fraudster to make good his lie, not the losses flowing from his lie.

Judgment

For the reasons outlined above, the court dismissed the plaintiffs’ application for the interim injunction.