Soup Restaurant loses sublease suit; Dian Xiao Er succeeds in appeal

The three-judge court held that Dian Xiao Er was not wrongfully staying on the premises.
The three-judge court held that Dian Xiao Er was not wrongfully staying on the premises.PHOTO: ST FILE

SINGAPORE - The tables have been turned on popular eatery Soup Restaurant in its dispute with former sister company-turned-rival restaurant chain Dian Xiao Er over a sublease.

The spat was over 69 sq m of space at Soup Restaurant's VivoCity outlet that it had sublet to Dian Xiao Er, its next-door neighbour.

The two chains became sister companies under the same group in 2006 but went their separate ways in 2012 following a legal battle.

They returned to court last year after Soup sued Dian Xiao Er owner, YES F&B, for wrongfully staying on its VivoCity premises.

The two restaurants leased their units separately from the landlord. But in 2009, YES wanted to expand Dian Xiao Er's dining area and kitchen and asked for additional space from Soup. Both sides signed a agreement drafted without any legal help.

In November last year, the High Court agreed with Soup Restaurant that the sublease was terminated in October 2012, and ruled that Dian Xiao Er had wrongfully remained on the premises.

But Court of Appeal reversed the decision in a recent written judgment.The three-judge court held that Dian Xiao Er was not wrongfully staying on the premises and hence, do not have to pay any damages to Soup.

The case hinged on the interpretation of the sublease agreement between Soup and YES. The crucial clause said that the sublease "shall survive as long as the company's lease with the landlord is not terminated".

Soup argued that "the company's lease" referred to a specific three-year lease it signed with the landlord. It argued that Dian Xiao Er should move out since the lease expired in October 2012.

But YES argued that "the company's lease" in fact refers to a generic lease between Soup and the landlord; the sublease is automatically renewed as long as Soup leases its unit from the landlord.

Last November, the High Court agreed with Soup's interpretation. But the Court of Appeal came down on the side of YES, ruling that two businesses had intended for the sublease to continue so long as Soup continues to lease its unit from the landlord.

"Today, YES and Soup are competitors in the food and beverage industry. However, it is important to bear in mind that, when the contract... was entered into, in October 2009, the complexion of their relationship was very different," Judge of Appeal Andrew Phang said.