14 Flyer tenants demand compensation

Source : Straits Times - 6 Feb 2009

A GROUP of tenants at the Singapore Flyer has decided to demand compensation from the attraction’s management over the incident on Dec 23 last year in which the giant wheel stalled.

A law firm representing the 14 tenants - the attraction has 30 in all - sent a letter of demand to the Flyer yesterday alleging breaches in their tenancy agreements.

The letter was also sent to GWC Holdings, a firm linked to the Flyer, and both companies’ directors.

The 14 tenants include Select Service Partner Singapore, which runs the Popeyes Chicken restaurant, Robert’s Coffee and sports bar O’Learys; Apex-Pal International, which runs Japanese restaurant Hibiki; and international retail chain Sunglass Hut.

They claim the Singapore Flyer, which they called the ’sole attraction of the area’, was not properly designed and maintained.

The giant observation wheel had broken down on Dec 23, causing 173 visitors to be stranded in mid-air for up to six hours.

This breakdown, they added, caused human traffic to become ‘non-existent’, and led to the Flyer becoming ‘no longer viable or profitable’.

Lawyer Navinder Singh of Navin & Co LLP, which is representing the tenants, said: ‘They now need prompt positive action to address their claims.’

The Flyer’s management has been given five days to admit it is liable and to offer compensation.

The letter did not specify what compensation was being sought.

The Straits Times understands that this was deliberately left unsaid to allow for negotiations, but that monetary compensation, or an agreement to allow early termination of leases, are among the options tenants hope to explore.

However, in a response last night, a Flyer spokesman dismissed the demand as ‘baseless’, adding: ‘The company will take all steps to protect its position. There is no breach in our agreement with our tenants.’

The spokesman expressed regret at the latest turn of events, saying the Flyer has been supportive of its tenants all along, including ‘those who have not been able to pay rent on time way before the Dec 23 incident’.

The letter of demand is the latest legal action to hit the beleaguered attraction.

One of its directors has asked the High Court to allow his auditor to access the Flyer’s financial records, while an audio company is demanding $10.8 million for an aborted effort to set up a commentary system.

There are also indications that the Flyer may be facing deeper trouble. The Commercial Affairs Department has received documents regarding the Flyer’s finances, including an audit report - since dismissed by the Flyer - which questioned its profitability.

At the root of the latest turn of events is a feeling among tenants that the Flyer has not done enough to help them during the breakdown, which occurred during what was expected to be a high point for the attraction in terms of the number of visitors - the Christmas and New Year holidays.

Tenants were given a one-week rental rebate, but many said it was not enough, as the attraction was closed for a month.

Some say they want more to make up for poor business even before the breakdown. Sunglass Hut, for instance, said it is hoping for at least six months’ rental waiver.

Yesterday, the Flyer’s spokesman said it will continue to work with and encourage tenants to ‘re-look their product mix and pricing structures to help drive patronage to the Flyer’, adding that the management has been meeting tenants for the past few weeks to ‘work out a mutually beneficial resolution to all parties’.

But these have failed to make headway. Tenants described how an idea to revamp the tenant mix and spaces, and bring in facilities such as a foodcourt, had hit a raw nerve.

Said Ms Serene Tjokro-Lau, director of Jalapeno’s Pepper: ‘We are paying premium rent and we were told the Flyer would be an upscale place with one-of-a-kind concepts. Everyone paid a bomb for renovations and branding because of that.’

Ms Tjokro-Lau’s company, Santorie, is one of the 14 tenants represented in the letter.

Yesterday, a Flyer executive committee member, Mr Chng Hee Kok, said these plans were only at the discussion stage.

When contacted, tenants who were not part of the action said they would sit on the fence, for now. Those staying clear tend to be smaller businesses such as jewellery stand Brilliante Collection.

Its managing director, Mr Richard Lim, said: ‘We would rather be subtle about this and wait for the outcome of our meeting with the management before deciding what to do.’