Nightclub sued by landlord for unpaid rent relies on Covid-19 curbs in defence
A now-closed Geylang nightclub, which did not pay more than $360,000 in rent for 10 months between March 2020 and April last year, was sued by its landlord for breach of contract.
The landlord, Lachman's Emporium, applied to the High Court for summary judgment, asking the court to rule in its favour without going through a full trial.
But the former tenant, Lookers Music Cafe, argued that it has a "strong and viable defence" because the closure of night-time entertainment venues due to Covid-19 made it impossible for the premises to be used for its intended purpose.
The defendant contended that the four-month rental waiver it received under Covid-19 temporary relief measures was not adequate.
On Thursday (Jan 27), the High Court dismissed the landlord's summary judgment application and ruled that the case should go for trial.
In a written judgment, Justice Choo Han Teck said the defendant has raised an issue to be determined by the court in a trial.
"There is a triable issue as to whether using the premises as a music lounge is a commonly held purpose shared by both parties.
"If so, the contractual obligations might have been rendered radically or fundamentally different from what was agreed upon in the contract," said the judge.
The defendant is relying on the legal doctrine of frustration, which discharges parties from their obligations when unforeseen events make it impossible for a contract to be fulfilled or radically changes what had been agreed to in the contract.
Mere hardship or mere increase in cost to fulfill the contract will not result in a frustrating event.
In its suit, the landlord is claiming rent amounting to $366,400, as well as interest of $25,281.60 for non-payment of the rent.
Under the tenancy agreement, dated Dec 26, 2019, the landlord agreed to lease the premises to the defendant for two years, from Jan 1, 2020 to Dec 31, 2021.
The agreement required the defendant to use the premises as a "pub/bar/cabaret/night club/discotheque/karaoke lounge only".
On March 26, 2020, bars, cinemas and nightclubs were closed, as part of measures to curb the spread of Covid-19.
The tenancy agreement was terminated in April 2021.
That month, the landlord applied to the Urban Development Authority (URA) for the premises to be used as a restaurant, or bar and bistro.
On May 10, the URA gave temporary permission for the change of use of the premises, subject to certain conditions. The premises remain vacant to date.
Justice Choo said that in the present case, the primary obligation to lease has not been rendered impossible by Covid-19 nor Covid-19 measures.
However, a contract may also be frustrated when the effect of an unforeseen event thwarts the common purpose of the parties when they entered into the contract, said the judge.
He said the fact that the landlord applied for temporary permission to use the premises as a restaurant reinforced his view that the landlord had intended the premises to be used as a music lounge.
"With the imposition of Covid-19 measures and the closure of night-time entertainment venues, it was obvious that this purpose cannot be achieved," he said.
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