Overseas Union Enterprise Ltd v Three Sixty Degree Pte Ltd: Lease Dispute over Fire Safety Certificate and Occupancy Load

Overseas Union Enterprise Ltd (OUE) sued Three Sixty Degree Pte Ltd (Three Sixty) in the High Court of Singapore, before Vinodh Coomaraswamy JC, for breach of a lease agreement, seeking unpaid rent, service charges, utilities charges, and possession of the leased property. Three Sixty counterclaimed, alleging OUE breached the covenant of quiet enjoyment, an implied term of fitness for purpose, and a covenant against derogation from grant. The court found Three Sixty in breach of the lease for failing to pay rent and other charges, rejected Three Sixty's counterclaim, and ruled in favor of OUE, ordering Three Sixty to pay the outstanding amounts, double rent for holding over, and surrender possession of the property.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Judgment for Plaintiff

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

OUE sued Three Sixty for unpaid rent and possession of property. Three Sixty counterclaimed for breach of quiet enjoyment and fitness for purpose. Court ruled for OUE.

1.7 Decision Date

2. Parties and Outcomes

Party NameRoleTypeOutcomeOutcome TypeCounsels
Overseas Union Enterprise LtdPlaintiffCorporationJudgment for PlaintiffWon
Three Sixty Degree Pte LtdDefendantCorporationCounterclaim DismissedLost

3. Judges

Judge NameTitleDelivered Judgment
Vinodh CoomaraswamyJudicial CommissionerYes

4. Counsels

Counsel NameOrganization
Olivia LowTSMP Law Corporation
Melvin ChanTSMP Law Corporation
Tan SpringKhattarWong LLP

4. Facts

  1. OUE leased Level 39 of the Mandarin Orchard Singapore to Three Sixty for three years.
  2. Three Sixty intended to operate a bar/lounge with a royal theme at Level 39.
  3. Public access to Level 39 is only via an internal staircase from Level 38, which OUE controlled.
  4. SCDF treated Level 38 and Level 39 as one compartment for fire safety purposes.
  5. SCDF agreed to grant Three Sixty an FSC subject to a combined occupancy load of 120 persons.
  6. Three Sixty abandoned its FSC application and plans to operate a bar/lounge.
  7. Three Sixty paid $415,000 to OUE as advance payments.
  8. Three Sixty failed to secure an FSC due to issues with the application process and SCDF requirements.
  9. OUE terminated the Lease due to Three Sixty’s failure to pay rent and service charges.
  10. Three Sixty retained possession of Level 39 despite the termination of the Lease.

5. Formal Citations

  1. Overseas Union Enterprise Ltd v Three Sixty Degree Pte Ltd, Suit No 839 of 2011/Q consolidated with Suit No 840 of 2011/G, [2013] SGHC 71

6. Timeline

DateEvent
Three Sixty Degree Pte Ltd incorporated
Letter of intent signed as precursor to the Lease
Lease commenced; Three Sixty went into possession of Level 39
URA approved change of use for Level 39 from Restaurant to Nightclub cum restaurant
Fit-out period ended
Three Sixty became obliged to pay rent to OUE
Three Sixty obtained a Fire Safety Certificate for Level 39
Power trip occurred at Level 39
SCDF raised queries arising from Three Sixty’s applications
Three Sixty had a consultation with the SCDF on its second set of applications
SCDF rejected the waiver application
Three Sixty applied to the URA for change of use of Level 39 from Night Club cum Restaurant to Bar/Pub
URA approved the application
Another meeting with the SCDF followed
Another meeting with the SCDF took place
SCDF confirmed conditions by letter
OUE proposed an apportionment of 90 persons for Level 39 and 30 persons for Level 38 in emails
OUE proposed an apportionment of 90 persons for Level 39 and 30 persons for Level 38 in emails
OUE proposed an apportionment of 90 persons for Level 39 and 30 persons for Level 38 in a formal letter
Final meeting with the SCDF was held
Three Sixty installed the smoke stop lobby
Three Sixty submitted a further waiver application to the SCDF
SCDF responded allowing the waiver on the same conditions as those stated in the SCDF’s letter of 1 April 2011
OUE commenced first action in the Magistrates’ Court
SCDF rejected Three Sixty's application for an FSC
SCDF rejected Three Sixty's application for an FSC
OUE demanded payment of all payments in arrears
OUE gave notice that it exercised its right to re-enter Level 39 and to terminate the Lease
OUE commenced second action in the District Court
Judgment reserved

7. Legal Issues

  1. Breach of Contract
    • Outcome: The court found that Three Sixty was in breach of the Lease by failing to pay base rent, service charge, and utilities charges.
    • Category: Substantive
    • Sub-Issues:
      • Failure to pay rent
      • Failure to pay service charges
      • Failure to pay utilities charges
  2. Quiet Enjoyment
    • Outcome: The court found that OUE did not breach the covenant to provide quiet enjoyment of Level 39 to Three Sixty.
    • Category: Substantive
  3. Derogation from Grant
    • Outcome: The court found that OUE did not breach its obligation not to derogate from its grant of tenancy to Three Sixty.
    • Category: Substantive
  4. Implied Term of Fitness for Intended Purpose
    • Outcome: The court found that OUE did not breach an implied term that Level 39 is fit for its intended purpose.
    • Category: Substantive
  5. Termination of Lease
    • Outcome: The court found that OUE was entitled to terminate the Lease and to obtain vacant possession of Level 39.
    • Category: Substantive
  6. Double Rent for Holdover Period
    • Outcome: The court found that OUE was entitled to payment of double the prevailing rent for the hold over period on and from 9 September 2011 to the date of delivery of vacant possession of Level 39.
    • Category: Substantive
  7. Equitable Set-Off
    • Outcome: The court found that Three Sixty's right to rely on equitable set-off as a substantive defence was excluded by the Lease.
    • Category: Procedural

8. Remedies Sought

  1. Monetary Damages
  2. Possession of Property
  3. Double Rent

9. Cause of Actions

  • Breach of Contract
  • Breach of Covenant of Quiet Enjoyment
  • Breach of Implied Term of Fitness for Purpose
  • Breach of Covenant Against Derogation from Grant

10. Practice Areas

  • Commercial Litigation
  • Real Estate Law

11. Industries

  • Hospitality
  • Real Estate

12. Cited Cases

Case NameCourtAffirmedCitationJurisdictionSignificance
Pacific Rim Investments Pte Ltd v Lam Seng Tiong and anotherCourt of AppealYes[1995] 2 SLR(R) 643SingaporeCited for the principle that a valid equitable set-off operates as a self-help remedy and enables a person lawfully to withhold a payment which is contractually due to his counterparty.
Batshita International (Pte) Ltd v Lim Eng Hock PeterCourt of AppealYes[1996] 3 SLR(R) 563SingaporeCited for the principle that a clause in a lease which expressly or by clear words prohibits set-off will be effective to do so.
British Anzani (Felixstowe) Ltd v International Marine Management (UK) LtdN/AYes[1980] QB 137England and WalesCited for the principle that a clause in a lease which expressly or by clear words prohibits set-off will be effective to do so.
Connaught Restaurants Ltd v Indoor Leisure LtdN/AYes[1994] 1 WLR 501England and WalesCited for the principle that a clause in a lease which expressly or by clear words prohibits set-off will be effective to do so.
Star Rider Limited v. Inntrepreneur Pub CoN/AYes[1998] 1 EGLR 53England and WalesCited for the principle that a provision requiring payment “without any deduction or set off whatsoever” is sufficient to exclude equitable set-off.
Altonwood Limited v Crystal Palace F.C. (2000) LimitedN/AYes[2005] EWHC 292England and WalesCited for the principle that even a reference to “set-off” alone, without the word “whatsoever”, is sufficient to exclude all species of set-off, including equitable set-off.
Norman; in the matter of Forest Enterprises Limited v FEA Plantation LimitedN/ANo[2011] FCAFC 99AustraliaCited to show that it is not necessary to decide whether the word “deduction” is sufficient by itself to exclude equitable set-off, whether or not coupled with “whatsoever”.
Federal Commerce & Navigation Co Ltd v Molena Alpha IncN/AYes[1978] QB 927England and WalesCited for the distinction between set-off and cross-claim in the context of a creditor's right to take action if a sum is not paid.
Forefront Medical Technology (Pte) Ltd v Modern-Pak Pte LtdHigh CourtYes[2006] 1 SLR(R) 927SingaporeCited for the distinction between terms implied in fact and terms implied in law.
Southwark London Borough Council v Tanner and othersHouse of LordsYes[2001] 1 AC 1England and WalesCited for the principle that there is generally no term implied in law in a lease that the premises will be fit for the purposes for which they are leased and for the implied covenant for quiet enjoyment and a covenant against derogation from grant.
Hart v WindsorN/AYes(1843) 12 M & W 68England and WalesCited for the principle that there is generally no term implied in law in a lease that the premises will be fit for the purposes for which they are leased.
Edler v AuerbachN/AYes[1950] 1 KB 359England and WalesCited for the principle that there is generally no term implied in law in a lease that the premises will be fit for the purposes for which they are leased.
Wheeldon v BurrowsN/AYes(1878) 12 Ch D 31England and WalesCited for the principle that the doctrine of non-derogation from grant can give rise to a species of proprietary rights.
Progressive Mailing House Pty Ltd v Tabali Pty LtdN/AYes(1985) 157 CLR 17AustraliaCited for the principle that the ordinary principles of contractual construction apply equally to leases.
Investors Compensation Scheme Ltd v West Brunswick Building SocietyN/AYes[1998] 1 WLR 896England and WalesCited for the modern approach to the construction of commercial contracts.
Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design & Construction Pte LtdCourt of AppealYes[2008] 3 SLR(R) 1029SingaporeCited for the contextual approach to contractual construction.
Sheng Siong Supermarket Pte Ltd v Carilla Pte LtdHigh CourtYes[2011] 4 SLR 1094SingaporeCited for the application of the Zurich approach to the construction of a lease.
Wee Siew Bock and another v Chan Yuen Yee Alexia Eve and another appealCourt of AppealYes[2012] 3 SLR 1053SingaporeCited for the test of whether there is a derogation from the grant of a proprietary right.
Creative Technology Ltd v Aztech Systems Pte LtdHigh CourtYes[1996] 3 SLR(R) 673SingaporeCited for the principle that the doctrine of non-derogation from grant is of general application and is not confined to leases or even to contracts concerning real property.
Cold Storage Singapore (1983) Pte Ltd v Management Corporation of Chancery Court and othersHigh CourtYes[1989] 2 SLR(R) 180SingaporeCited for the principle that the covenant against non-derogation from grant does not amount to an implied obligation on the landlord to underwrite the profitability of the tenant’s business.
O’Cedar Ltd v Slough Trading Co LtdN/AYes[1927] 2 KB 123England and WalesCited for the principle that the covenant against non-derogation from grant does not amount to an implied obligation on the landlord to underwrite the profitability of the tenant’s business.
Robinson v KilvertN/AYes(1888) 41 ChD 8England and WalesCited for the principle that a landlord has no implied obligation to take measures outside the reasonable contemplation of the parties with regard to the demised premises unless these measures were specifically bargained for in the lease.
Harmer v Jumbil (Nigeria) Tin Areas LtdN/AYes[1921] 1 Ch 200England and WalesCited for the principle that even non-physical interference can constitute substantial interference with the ordinary enjoyment of premises in the context of both covenants.
Cold Storage Singapore (1983) Pte Ltd v Management Corporation of Chancery Court and othersCourt of AppealYes[1991] 2 SLR(R) 992SingaporeCited for upholding the reasoning of Chan Sek Keong J that the covenant against non-derogation from grant does not amount to an implied obligation on the landlord to underwrite the profitability of the tenant’s business.
Dunlop Pneumatic Tyre Company, Limited v New Garage and Motor Company, LimitedN/AYes[1915] AC 79England and WalesCited for the classic principles to guide the court in deciding whether a particular clause for remedies is a penalty clause.
Hong Leong Finance Ltd v Tan Gin Huay and anotherCourt of AppealYes[1999] 1 SLR(R) 755SingaporeCited for adopting the principles in Dunlop Pneumatic Tyre Company, Limited v New Garage and Motor Company, Limited for deciding whether a particular clause for remedies is a penalty clause.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute NameJurisdiction
Civil Law Act (Cap 43, 1999 Rev Ed)Singapore

15. Key Terms and Keywords

15.1 Key Terms

  • Fire Safety Certificate
  • Occupancy Load
  • Lease
  • Quiet Enjoyment
  • Derogation from Grant
  • Equitable Set-Off
  • Fit-Out Period
  • Service Charge
  • Utilities Charges
  • Double Rent
  • Vacant Possession

15.2 Keywords

  • lease
  • fire safety certificate
  • occupancy load
  • quiet enjoyment
  • derogation from grant
  • contract
  • Singapore

17. Areas of Law

Area NameRelevance Score
Landlord and Tenant Law95
Contract Law90
Breach of Contract85
Property Law80
Estoppel30

16. Subjects

  • Lease Agreements
  • Commercial Property
  • Fire Safety Regulations
  • Contractual Obligations