Somerset Investments Pte Ltd (formerly known as Liang Court Pte Ltd) v Far East Technology International Ltd (formerly known as Far East Holdings International Ltd)

Parties

Procedural Posture

Suit 1411/2002 (high Court) / Judgment (10 May 2004)

Legal Issues

1. 1 Whether a collateral agreement existed and, if so, whether breach voided the guarantee
2. 2 Whether the guarantor's liability was subject to a condition precedent that the landlord's contribution be equal or close to S$3,200,000
3. 3 Whether particular payments (Ban Chuan View invoice and rental arrears set-off) fell within the scope of the works secured by the guarantee

Ratio Decidendi

No enforceable collateral agreement was proved and, even if it existed, its breach would not void the independent guarantee; the guarantee's language ('up to' S$3.2m) imposed a maximum not a condition precedent, the payments challenged (Ban Chuan View invoice and rental set-off) were payments for works within the tenancy agreement and thus within the guarantee, the 25 October 2002 demand was a valid demand despite computational errors because it was not prejudicial and the certificate could be corrected for manifest error, the tenancy was effectively terminated on 31 July 2002 for practical purposes so the demand fell within the three-month validity period, and judgment was therefore...

Court Disposition

Judgment for plaintiff limited to S$2,616,810; contractual interest awarded; costs to plaintiff on standard basis at 100%.

Orders

• Judgment for plaintiff against defendant for S$2,616,810
• Contractual interest at 8% per annum with monthly rests on amounts disbursed from respective dates of disbursement until payment