Takashimaya in rent dispute with landlord Ngee Ann City

Business associates for more than 22 years, the landlord of Ngee Ann City and its anchor tenant, department store Takashimaya, are tussling in a dispute over rent.

In a High Court hearing that started yesterday, Ngee Ann Development and Takashimaya are seeking to resolve a deadlock as they cannot agree on the interpretation of a 2014 agreement on how rental rate is to be valued.

The two parties signed a lease in 1993 for 20 years, with Takashimaya entitled to six options to renew for 10 years each.

Under the lease, the rental rate is to be reviewed every five years; if they cannot agree on the value, it will be determined by a valuer.

In 2013, after Takashimaya exercised the first option, Ngee Ann proposed to revise the rent to $19.83 per square foot (psf) a month, more than double the existing rate of $8.78 psf.

To support the increase, Ngee Ann included a valuation report based on a reconfigured layout that reduced department store space and increased the area for speciality shops. The latter usually commands higher rent.

After Takashimaya rejected the report, they agreed to each nominate one valuer and take the average of the two valuations.

They also agreed that any correspondence to the valuers had to be copied to the other side.

But Ngee Ann sent a letter to the valuers, telling them to use a hypothetical layout, without copying it to Takashimaya, in what it later said was an “administrative oversight”.

Takashimaya then proposed that they first agree on valuation to be based on the existing layout. Ngee Ann insisted that they accept the two valuation reports.

Ngee Ann, represented by Senior Counsel Ang Cheng Hock, sued Takashimaya to compel it to follow the agreement. Takashimaya, represented by Senior Counsel Alvin Yeo, contended that the determination of rental value must take into account the existing configuration.

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