(delivering the Judgment of the Board): This appeal turns upon the construction of the proviso in the rent clause of a lease dated July 23, 1957 granted by the appellant's predecessor in title Chin Cheng Realty (Private) Limited to the respondent Dr. Hirendra Lal Bannerji. At the conclusion of the hearing their Lordships allowed the appeal and indicated that they would give their reasons later. This they now do.

By clause 1 of the lease premises known as number 322-F Changi Road Singapore were let to Dr. Bannerji:-

"1. TO HOLD the demised premises unto the Tenant for the term of TEN years from the 1st day of August, 1957, PAYING THEREFOR Monthly during the said term the rent of Dollars ONE HUNDRED AND TEN ($110.00) the first payment thereof to be made on the 1st day of August, 1957, and subsequent payments to be made between the 1st and the 7th day of every English Calendar month. PROVIDED However that if the assessment on the said premises shall at any time within the said period be increased or decreased then and in such event the said rent shall also be proportionately increased or decreased accordingly."

The lease contained an option to renew expressed in the following terms:-

"3(c) That the Landlords will on the written request of the Tenant made three calendar months before the expiration of the term hereby created and if there shall not at the time of such request be any existing breach or non-observance of any of the covenants on the part of the Tenant hereinbefore contained at the expense of the Tenant grant to him a lease of the demised premises for a further term of TEN years from the expiration of the said term at the same rent and containing the like covenants and provisoes as are herein contained including the present covenant for renewal.

There is no dispute that the lease is, under Singapore law, a perpetually renewable lease.

By clause 2(c) the tenant covenanted:-

"To pay all City Council charges for electricity, gas and water supplied to the said premises;"

By clause 3(b) the landlord covenanted:-

"To pay all rates taxes assessments and outgoings payable by law in respect of the demised premises, other than those referred to in Clause 2(c) above;"

The first ten-year term passed uneventfully. Dr. Bannerji, the tenant, regularly paid the rent of $110 a month and the charges for electricity, gas and water and the landlords paid the rates which were at the commencement of the term $39.60 a month a sum assessed by taking 36% of the annual value of the premises fixed by the Municipal Commissioners at $1320 per annum pursuant to the Municipal Ordinance. In 1961 a property tax was substituted for the rates by the Property Tax Act (Cap. 144); but in practice this made no difference to the landlords' liability because the property tax was assessed in the same way as the rates namely at 36% of the annual value which remained unchanged.

As the first ten-year term drew towards a close Dr. Bannerji wrote to the landlords to exercise his option to renew the lease for a further ten years. Despite repeated requests by Dr. Bannerji and his solicitors the landlords never granted a new lease. However, Dr. Bannerji remained in possession of the premises and continued to pay the rent and it is conceded that Dr. Bannerji was contractually entitled to the grant of a second ten-year lease on the expiry of the old lease on July 31, 1967.

As the result of a revaluation of the premises in 1974 the annual value was increased from $1320 to $2880. The rate of tax remained at 36% and the tax payable by the landlord was thus increased from $39.60 a month to $86.40 a month expressed in annual terms an increase from $475.20 a year to $1036.80 a year an increase of 118.18%.

On March 15, 1974 the landlords wrote to Dr. Bannerji notifying him of the increase in annual value from $1320 to $2880 and demanding under clause 1 of the lease an increased rent of $240 a month with effect from March 11, 1974. The landlords had arrived at th