ST : Shatec in $4m rental dispute

Oct 1, 2010

Shatec in $4m rental dispute

Company sues tourism training school over lease on building space

By Selina Lum



HOSPITALITY and tourism training school Shatec is being sued for nearly $4million in a rental dispute.

The company that has filed the lawsuit, multimedia products manufacturer and distributor General Magnetics, claims it had leased out space in its building in Toa Payoh to Shatec, but the school repeatedly pushed back the handover date.

It also refused to take over the premises or to formalise the tenancy agreement, said General Magnetics. The company, in its suit filed last week in the High Court, is claiming $3.98 million in rent from August last year to 2012.

In the second half of 2008, it appointed Savills to handle the leasing out of the first three storeys of its five-storey GenMag building in Lorong 4 Toa Payoh.

It said in court filings that around October, Shatec - set up in 1983 as the training arm of the Singapore Hotel Association - indicated through Savills that it was keen to rent the space and use it as a food catering and ancillary training centre.

General Magnetic, represented by Mr Adrian Wong, claims there was an agreement to lease out the premises to Shatec. A letter dated Nov 3, 2008 offered Shatec the five floors, totalling 104,185 sq ft, at $1.30 per sq ft.

The rent for the first three floors, about $86,000, was payable in advance, while that for the fourth and fifth floors was to be paid on handover.

General Magnetics claims that the terms and conditions were 'unconditionally and irrevocably' accepted by Shatec. To formalise the lease, draft agreements were circulated.

In March last year, General Magnetics told Shatec that it was ready to hand over the first three floors, but Shatec refused to take delivery until approvals from the relevant authorities were obtained.

It was later agreed that the first three floors would be handed over on the Housing Board's approval, and the fifth floor, two months after that.

On April 23, General Magnetics received in-principle approval from HDB to change the use of the premises to a food catering and training centre, and told Shatec it would hand over the building by May 1.

Shatec asked for this to be delayed until May 30. General Magnetics delayed the handover to May 15, and a draft agreement with this new date was sent to Shatec, but it went unsigned.

Later, the handover was again pushed to June 29, and still Shatec asked for another extension.

On July 13, when the school was asked again to finalise the tenancy agreement, it said the document had to be cleared by its board, which would take a few weeks.

After the board meeting, the two sides could not agree on the issues of the capping of rent and the availability of the fourth floor.

General Magnetics then pressed Shatec to sign the agreement by Aug 25. The school brought up three matters to be resolved, and the deadline was pushed to Sept 1.

That day, Shatec asked for two more rent-free months to fit out the building, but General Magnetics rejected this.

At a meeting on Sept 9, Shatec asked General Magnetics to waive a month's rent. The company said it would waive half a month's rent if Shatec returned a signed copy of the agreement.

The school asked for more time. In its suit, General Magnetics said it has not received a signed agreement from Shatec.

Contacted by The Straits Times, Shatec said it will be 'vigorously defending the claim'.

selinal@sph.com.sg


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Key dates

· October 2008: Shatec indicated it was keen to rent General Magnetics' five-storey building in Toa Payoh.

· March 2009: General Magnetics told Shatec it was ready to hand over the first three floors, but Shatec refused to take delivery.

· April 2009: General Magnetics received in-principle approval from the HDB to change the use of the premises to a food catering and training centre.

· July 2009: When Shatec was again asked to finalise the tenancy agreement, it said the agreement had to be approved by its board.

· Sept 1, 2009: Shatec asked for two more months rent-free so it could fit out the building, but General Magnetics rejected this.

· Sept 9, 2009: At a meeting Shatec asked General Magnetics to waive a month's rent, and again asked for more time.