Landlord wins non-lease renewal case

Landlord wins non-lease renewal case

Singapore - In a ruling which has implications in landlord and tenant agreements, including commercial and residential leasing arrangements, the High Court last week ruled that a tenant cannot assume that the landlord has automatically agreed to renew a tenancy just because monthly rental payments were accepted for months following the end of the official tenancy period.

In the case involving plaintiff and landlord C&P Holdings Pte Ltd (C&P) against defendant and tenant Kuehne+Nagel Pte Ltd (K&N), Justice Quentin Loh ruled on July 16 that a three-year lease was not validly extended despite the tenant K&N e-mailing the landlord C&P about 17 months in advance to say that it will exercise its right to extend the (tenancy) contract.

Landlord C&P never replied to the K&N e-mail, remained silent and did not warn its tenant that the lease was going to expire. Rather, C&P continued to invoice the tenant and accepted payment of rental after the lease expired.

Justice Loh agreed with plaintiff's lawyer that the tenant's e-mail was only an "expression of future intention", and added that the landlord was entitled to remain silent about this statement of future intention.

He added that the landlord's "silence can only amount to a representation when there is a duty to speak or disclose, and the landlord had neither the duty to respond to the tenant's expression of its intention to extend the lease nor the duty to inform the tenant that the lease term had expired".

He ruled that the landlord had no duty to tell the tenant the lease was going to expire or had expired, and added that the landlord's act of continuing to invoice the tenant and accept rental payment did not mean the lease was extended by two years as per the contract. Rather, after the three-year tenancy expired on Jan 8, 2009, "a periodic" month-to-month tenancy was created which either party could terminate by giving one month's notice to the other.

The property involved was a 50,000 sq ft warehouse space, first taken in January 2006, then extended to 110,000 sq ft by April 2007. In May that year, K&N sent C&P a note saying "as per clause 2.02, we will exercise our right to extend the contract to a five-year term from April 1, 2007, to March 31, 2012".

The judge noted that the correct extension should have been for another two years from Jan 9, 2009, to Jan 8, 2011. But C&P did not respond to this e-mail for more than 22 months.

The case has general application to all kinds of leases, including residential and commercial leases, as it implies that tenants cannot assume their tenancy is extended beyond the original lease period just because they continue to pay rent. When the original contract expires, what tenants have is a periodic tenancy which the landlord can terminate by giving one or more months' notice.

The plaintiff, C&P, was represented by Suresh Divyanathan of Oon & Bazul LLP, while defendant K&N was represented by Thomas Tan and Janice Choy of Haridass Ho & partners.

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