Hao Mart sues PropNex unit, agent for more than S$3.5 million over Taste Orchard lease

[SINGAPORE] Supermarket chain Hao Mart has filed a lawsuit against a wholly owned unit of PropNex and one of its agents, alleging misrepresentation in the leasing of the Taste Orchard premises, formerly known as OG Orchard Point.

The statement of claim filed on Aug 29 alleged that Michael Tan, an agent with PropNex Realty, had misrepresented to Hao Mart director Dr Tan Kim Yong that he – acting as a middleman – would undertake fiduciary duties to the supermarket operator in leasing the building at 160 Orchard Road. Hao Mart is seeking S$3.5 million and other damages against the agent and the wholly owned unit of mainboard-listed PropNex.

Hao Mart’s lease was terminated by landlord OG just over 18 months into a seven-and-a-half-year lease. It must vacate along with its sub-tenants and hand over the premises by Dec 31.

In February 2024, Hao Mart commenced operations at the premises, relaunching it as Taste Orchard. It was billed as a five-storey food and beverage haven, spanning more than 155,000 square feet of retail space that included Hao Mart’s Eccellente supermarket across three storeys.

In Hao Mart’s statement of claim, Dr Tan cited a WhatsApp message from Michael Tan dated Nov 14, 2021, that read: “You know I will always fight for you... you know my style and the good standing relationship between us, whatever I can squeeze I sure will.”

In the letter of intent (LOI) addressed to OG, Michael Tan referred to Hao Mart as “our prospect”, and assisted the claimant in negotiating with OG to obtain for Hao Mart a rent-free period of eight months.

Hao Mart is accusing Michael Tan of having represented, both verbally and in the LOI, that he and PropNex would act in Hao Mart’s best interests, and that Hao Mart would not need to seek legal or other professional advice.

It said that these representations were false.

The alleged misrepresentations included a provision that “all maintenance to be undertaken for the podium by the tenant including utilities, maintenance of elevators/escalators and air-cons and internal toilets” would not be an issue for the claimant. However, Hao Mart said costs were incurred for the maintenance.

Hao Mart also said the defendant’s statement that the property’s “as is where is” condition – including all fixtures, air-conditioners, ducts and lights – would not be an issue was another example of misrepresentation. It added that it suffered loss and damages as a result.

Dr Tan claimed that Hao Mart had relied on Michael Tan’s advice that it would not have to inspect the premises, nor seek legal advice or engage the services of consultants within the tight time constraints, before signing the LOI and lease agreement.

Michael Tan had also allegedly promised to sell one of Dr Tan’s properties within a reasonable time after the execution of the LOI, with the proceeds to serve as working capital for the Orchard Point project.

Hao Mart claimed that Michael Tan’s failure to sell any of Dr Tan’s properties led it to take an interest-bearing loan from OG.

It said that if Michael Tan and PropNex were acting for the landlord, OG, they ought to have known they were in a position of conflict of interest when they undertook fiduciary duties to the claimant.

Hao Mart said the losses it suffered included about five months of rent, totalling around S$3.5 million, that it had to pay even though it was unable to fully operate due to delays in the handover of the premises.

It further claimed that it had incurred costs of S$5.6 million to comply with regulatory approvals, although this was not listed among the claims it is making against the defendants. However, the claimant reserves the right to amend particulars of its losses over the course of the legal proceedings.

Defendants deny claims

PropNex and Michael Tan are contesting the claims, saying that the agent was representing OG and not Hao Mart in the transaction, and thus had no obligation to act in the best interests of the claimant.

In a defence filed on Sep 11, Michael Tan denied making the misrepresentations alleged by Hao Mart. He disputed having undertaken any fiduciary duties to the claimant, and denied making the statement that the premises’ maintenance and conditions would not be an issue.

The defence wrote that the claimant was advised by its own representatives with regard to the LOI and tenancy agreement.

The defendants claimed that no misrepresentation was made by Michael Tan about the timely handover of the premises, or the sale of Dr Tan’s properties to help fund the project. Michael Tan had no obligations to do these, the defence added, saying that he had nonetheless sought to obtain a mutually beneficial outcome for OG and Hao Mart in the transaction, hence the WhatsApp message he sent to Dr Tan.

PropNex and Michael Tan also argued that Hao Mart is not entitled to rely on the Misrepresentation Act as there was no contract between them, and that they were not liable for any losses incurred by Hao Mart.