Restaurant chains back in court again

Restaurant chains Soup Restaurant and Dian Xiao Er are fighting in court again, following a legal battle in 2012 which ended with the two previously related businesses going their separate ways.

The current fight is over 69 sq m of shop space - a part of the Soup Restaurant outlet at the VivoCity mall it had sublet to its next-door neighbour, herbal roast duck chain Dian Xiao Er.

The two restaurants leased their premises separately from the landlord, VivoCity.

However, in 2009, Dian Xiao Er wanted to expand and asked for additional space from Soup Restaurant, which at the time was its parent company. Dian Xiao Er used the sublet space to expand the dining area and the kitchen of its restaurant.

Now, Soup Restaurant, which is known for its samsui ginger chicken, is alleging that Dian Xiao Er remained unlawfully on the premises for two years as it refused to move out when the sublease came to an end in October 2012.

Dian Xiao Er, however, contends it was entitled to stay as there was an automatic renewal of the sublease after its expiry.

However, it handed back the space to Soup Restaurant on Oct 1.

A four-day trial started in the High Court yesterday to determine whether Dian Xiao Er's parent company, YES F&B, is liable to Soup Restaurant for unlawful possession.

The case hinges on the court's interpretation of the sublease agreement - whether it came to an end as claimed by Soup Restaurant or was automatically renewed as claimed by Dian Xiao Er.

If Soup Restaurant wins, it will ask for an order that Dian Xiao Er give an account of its profits during the unlawful stay.

It is seeking damages, to be assessed by the court, including rent, potential loss of profits, and interest.

The Soup Restaurant group was the majority shareholder of Dian Xiao Er for six years from 2006. The other 49.02 per cent was held by the married couple who founded Dian Xiao Er.

In 2010, the couple sued Soup Restaurant, alleging minority oppression. The dispute was eventually settled in 2012, with the couple buying over Soup's stake.

The Dian Xiao Er outlet at VivoCity started operating in October 2006; Soup Restaurant took up the space next to it in October 2009. However, their lease agreements with VivoCity were independent of each other.

On Oct 18, 2012, when Soup Restaurant's lease expired, it signed a new lease. Its lawyer, Mr Edwin Tong, argued that the termination of the head lease must result in the sublease coming to an end.

But Dian Xiao Er, represented by Mr Adrian Tan, argues the opposite - that its sublease with Soup was also renewed when the latter signed a new lease.

This article was first published on Oct 15, 2014.
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