PARK HOTEL GROUP MANAGEMENT PTE. LTD. v AW ENG HAI & 2 Ors

Facts

In June 2013 Ascendas Hospitality Real Estate Investment Trust (AH-REIT) leased a property at 1 Unity Street for ten years to Park Hotel CQ Pte Ltd (PHCQ), which ran a hotel there. After PHCQ defaulted on rent during the COVID-19 pandemic, AH-REIT terminated the lease and took possession on 28 August 2021. It then ran the hotel itself through a related manager, AIMPL, and from 1 October 2022 leased it to another related entity, AHBT. From March 2023 the hotel was partly closed for refurbishment and was later relaunched under a new brand.

PHCQ was wound up on 19 November 2021. Its liquidators admitted in full AH-REIT's proof of debt, which included $20,387,563.30 in damages for net rent from 28 August 2021 to 27 June 2023, being the lease rent less the income earned from the hotel. The appellant, Park Hotel Group Management Pte Ltd, a creditor that had managed the hotel for PHCQ, applied to reduce or expunge the proof. The High Court in [2025] SGHC 97 reduced other items but upheld this one, and the appellant appealed in Civil Appeal No 16 of 2025.

Issues

1. Whether AH-REIT took reasonable steps to mitigate its loss by appointing a related manager and leasing the property to a related entity
2. Whether the judge erred in relying on the profit and loss breakdown to fix the income earned
3. Whether AH-REIT could claim its full loss for the period when the hotel was partly closed for refurbishment

Holding

The Court of Appeal allowed the appeal in part. It expunged the claim of $6,202,644.35 for net rent from 1 January 2023 to 27 June 2023, gave AH-REIT liberty to file a fresh proof for that period supported by monthly profit and loss statements, and otherwise upheld the admission of the claim. Each party was to bear its own costs of the appeal.

Reasoning

On mitigation, the test is whether the steps taken were reasonable, not whether they were the best possible. AH-REIT and its related entities were experienced hotel operators, and appointing a related manager let the hotel earn revenue almost immediately, whereas finding an outside tenant would have meant marketing, tendering and fitting out while the hotel stood closed. With Singapore emerging from the pandemic and little of the lease left, it was speculative to assume a better tenant could have been found. The deduction also credited all the operating profit, not just the rent AHBT paid. Although the liquidators bore the legal burden of proving the debt, once they produced evidence of reasonableness the appellant bore an evidential burden to show more could have been earned, and it adduced nothing, including on its claim that management fees were excessive.

On the profit and loss breakdown, AH-REIT's representative had affirmed that the figures related only to the property. The appellant, whose related company had run the hotel for years, was well placed to challenge particular items but raised only a general complaint that the figures could not be verified.

On the refurbishment, a claimant cannot recover loss it could have avoided but for its own unreasonable action. The hotel had been trading profitably without refurbishment, and the works were chiefly for rebranding rather than necessary repairs. The lease clauses relied on concerned the tenant's duty to reinstate, not a landlord's right to redesign. The reduced income from the partial closure was therefore avoidable and not recoverable from PHCQ. Because the figures did not separate the refurbishment months, the court expunged the claim for the whole of that part of 2023 and allowed a fresh, documented proof.

From the judgment