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Shophouse in upmarket area - near Raffles Hotel: 

LANDLORD : You owe us rent
TENANT      : But you said we don’t have to pay
 
The construction firm had an agreement to rent and re-develop three pre-war shophouses, two of them near Raffles Hotel.

Then they hit three snags, one after another.

First, there were tenants who refused to move out as planned.

Then, the landlords - a trust - changed plans and wanted a much bigger building at one site.

Finally, the death of one of the trustees led to further delays.

The company and the surviving trustee later reached an agreement to waive rent for more than a year.

But there were more problems when new trustees took over as the landlords.

They refused to accept the rent waiver and fought a legal battle, going all the way to the Court of Appeal to seek $300,000 from the company.

COURT ALLOWS RENT WAIVER

The court ruled against them and allowed the company the rent waiver.

The story goes back to 1996, when the three shophouses were in a dilapidated state.

The company, A Formation Construction, entered into an agreement with the trustees, brothers Awad Omar Harharah and Shaik Mohamad Omar Harharah, to rent and re-develop the shophouses.

The brothers were holding the properties under a trust established in the will of Mr Shaik Roubayak Khalid, who died in 1934.

The rent for two shophouses on Purvis Street was to be $10,000 a month for 25 years, and the one at Amoy Street was to be $3,000 a month for 20 years.

The landlords were to recover the properties from the tenants by 9 Dec 1998 and A Formation would then bear the cost of re-developing them.

The construction firm was expected to earn rental income by subletting the properties after redevelopment.

But some of the tenants refused to move out and there was a delay in settling the compensation for them.

DEVELOPMENT HAMPERED

The development was also hampered because the landlords asked for a five-storey building to be erected instead of a two-storey one as was originally planned at the Purvis Street site.

Then Mr Awad died in January 1999 and it took four months to appoint a new trustee.

Till then, plans and forms could not be approved by the authorities as the trustees’ signatures were needed.

In the end, the properties were vacated only in February 2001 - a delay of more than two years.

After negotiations, A Formation and the trustees agreed that the company need not pay rent for the period of 9 Dec 1998 to 31 Dec 1999, which amounted to more than $154,000.

The redevelopment went ahead.

Then there was one last complication.

Three new trustees were appointed and they would not accept the rent waiver agreement reached when Mr Shaik Mohamad was still a trustee.

The new trustees, led by Mr Abdul Jalil, took legal action in October 2004, demanding not just the unpaid rent, but also interest at 12 per cent a year.

That brought the total sum to more than $300,000.

A Formation, represented by Mr Anthony Netto of Teo Keng Siang & Partners, said the agreement it signed with Mr Shaik Mohamad was legally binding and had waived the rent.

TRUSTEES’ SUIT DISMISSED

On 26 Sep last year, Justice Judith Prakash dismissed the trustees’ suit, saying that Mr Shaik Mohamad’s agreement was valid.

Mr Abdul Jalil then went to the Court of Appeal.

He even hired a Senior Counsel to bolster his appeal.

But on 28 May, Chief Justice Chan Sek Keong upheld Justice Prakash’s decision.

In the appeal, Mr Abdul Jalil’s lawyer had argued that the offer of the waiver was made by the Omar Harharah brothers, and not the present trustees.

But CJ Chan said this argument had no merit.

If the waiver was binding on the trust, it also applied to future trustees, including Mr Abdul Jalil.

Mr Abdul Jalil could not be reached for comment.

When contacted, Mr Netto said his client was happy with the judgment.

The lawyer added that his client continues to lease the properties, which have been sub-let to businesses like Killiney Kopitiam.

Source : The New Paper - 14 Jun 2007