Mall tenant told to pay $2.7m to landlord

The owner of a restaurant and bar in Kallang Wave Mall that closed down, after failing to pay rent for eight months, has been ordered to pay $2.7 million to the landlord.

The Court of Appeal yesterday upheld an earlier High Court decision that landlord SMRT Alpha was entitled to recover from Strait Colonies more than $562,000 in outstanding rent and late payment interest, and $2.16 million in damages for breach of contract.

Strait Colonies operated Straits Express Restaurant & Bar at the mall between December 2014 and September 2015. It also ran a club, China One, in Clarke Quay.

In March 2014, Strait Colonies agreed to operate a business at the mall, which is part of the Singapore Sports Hub. The five-year lease agreement stated the premises could be used as a "pub cum F&B" outlet with live music.

In May, SMRT Alpha applied to the Urban Redevelopment Authority (URA) to change the use of the premises from "restaurant" to "restaurant cum pub". But URA said the premises can be used only as a "restaurant with ancillary bar" for three years.

Strait Colonies then asked for a cut in rent as it could not operate under its original business model, but was unsuccessful.

The lease was signed in August 2014, after which Strait Colonies carried out fitting works at the premises while it sought to convince URA to approve "ancillary live entertainment". The restaurant and bar became fully operational in December that year.

On Feb 12, 2015, SMRT Alpha raised the rent as the floor area was slightly larger than previously stated. Strait Colonies objected but to no avail.

The tenant then began to fall behind in paying rent. SMRT Alpha gave it until Sept 30 to submit a settlement plan. That day, Strait Colonies vacated the premises.

SMRT Alpha sued Strait Colonies, which argued it was entitled to rescind the contract because the landlord had misrepresented the use of the premises.

The High Court accepted that the landlord had made misrepresentations. But the tenant had affirmed the contract by taking possession of the premises, doing fitting works, opening for business and paying rent initially.

Strait Colonies appealed but the three-judge apex court said yesterday, among other things, that the contract holds since the company signed it without any qualifications after learning of URA's decision. The court also found Strait Colonies was aware of its legal right to rescind the contract, pointing to text messages from its director in August 2014 saying the firm may have to "walk away"and "close the chapter".

A version of this article appeared in the print edition of The Straits Times on July 06, 2018, with the headline 'Mall tenant told to pay $2.7m to landlord'. Print Edition | Subscribe