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Quality of JusticeArticles in this section: Significant Decisions of the Court of Appeal
Amendments to the Rules of Court Changes to the Supreme Court Practice Directions SIGNIFICANT DECISIONS OF THE COURT OF APPEALMetalform Asia Pte Ltd v Holland Leedon Pte Ltd [2007] SGCA 6, [2007] 2 SLR 268The appeal concerned the important question of when the Court may restrain a creditor of an undisputed debt from presenting a winding-up petition against a debtor company. The appellant company sought an injunction to restrain the respondent from filing a winding-up petition until after the appellant’s alleged cross-claim for damages under a sale and purchase agreement had been determined. The Court of Appeal held that security for a claim did not reduce the quantum of the claim and that a partially secured cross-claim was therefore still a cross-claim for the full amount claimed. Where there was a cross-claim for a sum equal to or exceeding the undisputed debt, the debtor company did not have to show that the winding-up petition was bound to fail before it could obtain an injunction to restrain the creditor from filing such a petition. Instead, an injunction would be granted if there was a likelihood that the winding-up petition might fail or if it was unlikely that a winding-up order would be made. This was grounded in the policy consideration that the commercial viability of a company should not be put in jeopardy by the premature presentation of a winding-up petition against the company where it had a serious cross-claim based on substantial grounds. The Court of Appeal, however, made it clear that irreparable harm to the company’s business and reputation was not determinative, but only one of the factors – albeit a significant one – to be taken into account in determining whether the court would exercise its discretion to restrain the presentation of a winding-up petition. Skandinaviska Enskilda Banken AB (Publ), Singapore Branch v Asia Pacific Breweries (Singapore) Pte Ltd and other appeals [2007] SGCA 9, [2007] 2 SLR 367The respondent’s finance manager used the respondent’s name fraudulently to obtain credit facilities for his own use from the appellant banks. Upon discovery of the fraud, the respondent set up a special committee, comprising staff from PricewaterhouseCoopers (“PWC”) and Drew and Napier LLC, to investigate. In proceedings commenced by the appellant banks against the respondent, the banks sought specific discovery of a draft report prepared by PWC. The Court of Appeal held that the report in question was protected by litigation privilege. There was no requirement that the chance of litigation had to be higher than 50% before litigation privilege could be invoked; instead, satisfaction of the general criterion of a “reasonable prospect” of litigation was sufficient. As regards legal advice privilege, the Court of Appeal opined that the English decision of Three Rivers District Council v Governor and Company of the Bank of England (No 5) [2003] QB 1556 was not inconsistent with Singapore law, specifically, s 128 of the Evidence Act (Cap 97, 1997 Rev Ed). The court in that case adopted an exceedingly narrow meaning of a “client” for the purpose of legal advice privilege. This did not conflict with s 128, which restricts an advocate and solicitor from disclosing communications, contents of documents or advice given to his client if such communication occurred in the course and for the purpose of his employment as advocate and solicitor. Although this point was not material to its decision, the Court of Appeal further observed that the modern relationship between a client and his legal adviser might require a broader and more flexible approach to legal advice privilege vis-à-vis communications from third parties. Pertamina Energy v Karaha Bodas [2007] SGCA 10 [2007] 2 SLR 518This case concerned contempt of court committed in the context of a Mareva injunction. The facts were unusual in that it was the injunctee (the party against whom the injunction had been granted), rather than the injunctor (the party in whose favour the injunction had been granted), who alleged thwarting or frustration of the injunction. The first respondent (“KBC”) and PT Pertamina were parties to a business venture that was cancelled by Presidential Decrees issued by the Indonesian Government. Arbitration proceedings in Switzerland resulted in an award against PT Pertamina. Pursuant to the arbitral award, KBC obtained a domestic Mareva injunction (“the Singapore injunction”) against the appellant (“Petral”), which was 99.83% owned by PT Pertamina, a day after KBC obtained a worldwide injunction against Petral in Hong Kong. The Singapore injunction contained the standard exception (“Exception 2”) that Petral was not prohibited from dealing with or disposing of its assets in the ordinary and proper course of its business, and that Petral would give KBC a weekly account of money spent in that regard. Petral informed KBC by letter of a transfer of funds from Bank Mandiri in Singapore to Dah Sing Bank in Hong Kong to effect payments as itemised in the letter; that letter was furnished pursuant to Exception 2. Using this information, KBC applied to the High Court in Hong Kong and obtained an order by which it was able to garnish the moneys transferred by Petral to Dah Sing Bank. The Court of Appeal held that KBC had committed a clear contempt of court. The letter from Petral to KBC was legally compelled; therefore, there arose an implied undertaking that KBC would not utilise the information contained in the letter for a collateral purpose. KBC had breached this undertaking. The second respondent, a solicitor and partner at the Hong Kong office of a UK law firm (the third respondent), was in charge of the conduct of KBC’s enforcement proceedings in Hong Kong. He was held liable in contempt for aiding and abetting the thwarting of the terms of Exception 2 and the breach by KBC of its implied undertaking. Mohammad Zam bin Abdul Rashid v Public Prosecutor [2007] SGCA 11, [2007] 2 SLR 410The appellant battered his wife so severely that she died. He pleaded guilty to a charge of culpable homicide not amounting to murder under s 304(a) of the Penal Code (Cap 224, 1985 Rev Ed). The appellant was diagnosed as suffering from a mental disorder which made him unable to control his impulses, such that he was a potential danger to the public and required close supervision. The High Court sentenced him to life imprisonment. In his appeal against sentence, the appellant sought to bring in new evidence of the availability of familial support if he was released from prison. In disallowing the application, the Court of Appeal held that the rule in s 55(1) of the Supreme of Judicature Act (Cap 322, 1999 Rev Ed) (“SCJA”) and s 257 of the Criminal Procedure Code (68, 1985 Rev Ed) (“CPC”) permitting the appellate court to grant leave to adduce further evidence to avoid a miscarriage of justice was to be balanced by the public interest in the finality of trial, and that further evidence would be admitted only in extraordinary circumstances. The Court of Appeal stated that even though the Ladd v Marshall test for adducing fresh evidence in civil cases might be useful in criminal cases, the relevant sections in the SCJA and the CPC were the more direct starting points of reference and the court had to remain mindful of the higher burden of proving guilt in a criminal case. In the appellant’s case, as there was inadequate evidence of family support, and in view of the seriousness of the offence and the manner in which it was committed, the Court of Appeal held that the sentence of life imprisonment was not inappropriate. Leong Wai Kay v Carrefour Singapore Pte Ltd [2007] SGCA 26, [2007] 3 SLR 78The respondent company brought proceedings against the appellant for the recovery of bribes which the appellant had accepted while employed by the respondent. The appellant had in earlier criminal proceedings pleaded guilty to receiving bribes, and had been ordered to pay a penalty to the State under s 13(1) of the Prevention of Corruption Act (Cap 241, 1993 Rev Ed) (“PCA”). The question on appeal was whether the appellant remained liable to pay the same amount to the respondent as a civil debt pursuant to s 14(1) of the PCA. The Court of Appeal decided that criminal proceedings under s 13 of the PCA were distinct from the civil recovery process under s 14, and that payment of a penalty under s 13 did not preclude a claim under s 14. The Court of Appeal took the view that as the Legislature had not provided that the two sections were to be subject to the principle against double disgorgement, it must have intended that double disgorgement could act as a further deterrent against corruption. Tee Soon Kay v Attorney-General [2007] SGCA 27, [2007] 3 SLR 133In this case, the Court of Appeal pronounced that public officers had no legal or constitutional right to a pension. The appellants, who were public officers on the pension scheme when they were first employed by the Government, had opted irrevocably in 1973 to convert to the Central Provident Fund (“CPF”) scheme. More than 30 years later, the appellants sought to revert to the pension scheme. They argued that s 9(d) of the Pensions Act (Cap 225, 2004 Rev Ed) (“PA”) conferred on them a legal right to a pension upon their paying back the amounts which the Government had paid into their respective CPF accounts, and that their purported irrevocable option in 1973 to join the CPF scheme was null and void as their pension rights were constitutionally entrenched and could not be waived. The Court of Appeal dismissed the appeal on the basis that s 8(1) of the PA made it clear that a public officer had no legal right to a pension. Consistent with the plain reading of that section and the relevant Commonwealth case law, a public officer had at best a legitimate expectation, but not an entitlement, that he would be granted a pension. In any event, even if the threshold obstacle of the plain meaning of s 8(1) was cleared, any legal right to a pension had to be grounded upon some legal provision. this regard, s 9(d) did not have the effect of conferring a right on public officers to receive a pension. Rather, the section was intended to debar public officers who made CPF contributions from receiving pensions. The Court further ruled that even if a public officer had a legal right to a pension under the PA, such a right was not a constitutional right. In particular, Article 112(1) of the Constitution merely protected a public officer against future legislation that might adversely affect his legitimate expectation to a pension, and did not positively confer on the officer a right to a pension. According to the Court, the irrevocable option given to the appellants in 1973 to join the CPF scheme was perfectly valid, and the appellants were simply seeking to resile from a contract. Public Prosecutor v Fernandez Joseph Ferdinent [2007] SGCA 34, [2007] 4 SLR 1In this case, the respondent was driving his car along an expressway. His car swerved and hit a motorcycle travelling along the same road. Upon impact, the respondent did not stop and continued with his journey; the motorcyclist was flung off and sustained multiple injuries. The interpretation of two provisions in the Road Traffic Act (Cap 276, 2004 Rev Ed) (“RTA”) came under the spotlight. The first question was whether ss 84(1) and 84(4) of the RTA were distinct offences, and the Court of Appeal answered this in the positive, as these two provisions comprised separate elements and entailed separate considerations. The second question related to the interpretation of the word “move” in s 84 (4) of the RTA. The Court of Appeal found that the use of this term did not entail any requirement that the vehicle involved in the accident should have been initially stationary at the accident site. The focus of s 84 (1) was to ensure proper accountability after an accident, and s 84 (4) was concerned with the preservation of evidence. Spandeck Engineering (S) Pte Ltd v Defence Science & Technology Agency [2007] SGCA 37, [2007] 4 SLR 100In this case, the Court of Appeal decided that a single test should determine the imposition of a duty of care in all claims arising out of negligence, irrespective of the type of damages claimed. It held that there was no justification for a general exclusionary rule precluding recovery for economic loss; neither was there a need to adopt a different test for such cases. In the Court of Appeal’s view, to continue with a different approach with respect to pure economic loss would be doctrinally untidy and, more pertinently, would not address the concern of indeterminate liability which sometimes, but not always, resulted from claims of such nature. Ultimately, the adoption of a single test would eliminate the perception that there were two or more co-existing tests which were equally applicable. That would in turn bring coherency, consistency and reliability to the test for determining whether a duty of care should be imposed. The Court of Appeal further explained that this single, unified test was a two-stage test comprising of, first, proximity and, second, policy considerations, with the application of this test to be preceded by the threshold question of factual foreseeability. JSI Shipping v Teofoongwonglcloong [2007] SGCA 40, [2007] 1 SLR 460This is an important Court of Appeal decision clarifying and restating the law of professional negligence in the context of statutory audits. The case elucidates key principles governing processional negligence and the standard of care expected of auditors. The appellant (“JSS”) was a client of the respondent accounting firm (“TFWL”). JSS brought an action against TFWL for damages resulting from the latter’s alleged breaches of its contractual obligations and its duty of care in the course of auditing JSS’s accounts for three financial years. JSS’s Asia Director (“Riggs”) had siphoned off the company’s funds by, among other things, misstating his remuneration. JSS alleged that TFWL had failed to verify Riggs’ entitlement to remuneration despite having become aware of the need for objective verification. The Court of Appeal elaborated on the standard of care expected of an auditor in relation to the objective verification of financial particulars, and concluded that TFWL had been negligent in failing to adequately verify Riggs’ remuneration by simply accepting whatever Riggs said about his remuneration. The Court of Appeal found TFWL’s choice of alternative audit evidence vis-à-vis Riggs’ remuneration to be an “error of judgment based on a misguided assumption of sufficiency and reliability”. TFWL had failed to comply with the standard of care by not making proper inquiries, not carrying out any appraisal of the system of oversight and control exercised by JSS and not testing the operation of such system. However, JSS’s damages were reduced by 50% in view of the company’s contributory negligence, i.e., the failure of the company’s other director to oversee and monitor the company, hence permitting Riggs’ defalcations to go undetected. Wong Keng Leong Rayney v Law Society of Singapore [2007] SGCA 42, [2007] 4 SLR 377The appellant, an advocate and solicitor, was ensnared in one of a series of sting operations mounted by a particular law firm against lawyers suspected of paying referral fees to estate agents in return for conveyancing business. The appellant was charged with contravening the Legal Profession Act (Cap 161, 2001 Rev Ed). At the hearing before the Disciplinary Committee, he submitted that he had no case to answer, but this argument was dismissed and he was called upon to enter his defence. The appellant then applied for leave to apply for judicial review of the Disciplinary Committee’s decision on this point. In addressing the appellant’s contention that there had been a wrongful admission of inadmissible evidence which constituted an error of law amenable to judicial review, the Court of Appeal held that there had been no entrapment on the facts, neither had the evidence been illegally obtained. There was no principle that improperly or unfairly but not unlawfully obtained evidence was inadmissible unless there would be unfairness at trial because the prejudicial effect of the evidence exceeded its probative value. The Court of Appeal further decided that the objective of such proceedings was to uphold the standards of the legal profession and was different from the objectives of criminal proceedings. In particular, more weight should be placed on maintaining public confidence in the standards of the legal profession than in protecting the integrity of the disciplinary process. First Currency Choice Pte Ltd v Main-Line Corporate Holdings Ltd [2007] SGCA 50This appeal concerned a claim for infringement of a patent which allowed dynamic currency conversion for card payment systems. In upholding the trial judge’s finding that the patent was valid and, in particular, involved an inventive step, the Court of Appeal stated that simplicity in itself was not a bar to inventiveness. The Court of Appeal took into account the fact that no other party had introduced such an automatic system to decipher a payment card’s operating currency, and decided that the invention represented a genuine advance on the state of the art. On the issue of sufficiency of disclosure, the Court of Appeal held that the patent specifications must embody the invention with sufficient particularity to enable the invention to be understood and implemented without the need for further inventions or prolonged study. However, the specifications need not be so detailed as to allow the invention to be performed without any trial or experiment at all. Having decided that the patent had been infringed, the Court of Appeal went on to consider the plea of innocent infringement which was ultimately rejected. It held that such a plea was not available to an infringer who had been informed of the existence of a patent application. Lau Siew Kim v Yeo Guan Chye Terence [2007] SGCA 54The respondents sought a declaration that the appellant held certain properties on trust for the estate of their late father. The Court of Appeal laid down the modern approach to be adopted in relation to the equitable presumptions of resulting trust and advancement, characterising the presumption of resulting trust as a rebuttable presumption of law, rather than merely a presumption of fact that might be applied based on the Judge’s discretion. While acknowledging that these equitable presumptions had been the subject of criticisms, the Court of Appeal was of the view that they continued to be relevant in the modern context, although their application had to reflect contemporary societal norms. The Court of Appeal also clarified that the applicability of the above equitable presumptions should proceed by means of a two-stage inquiry. Since the presumption of advancement had arisen in equity to remedy the unjust operation of the presumption of resulting trust in certain circumstances, the court must first determine if a presumption of resulting trust had arisen on the facts. Only if a resulting trust existed could the court go on to the next step of considering whether the presumption of advancement should apply to displace the presumption of resulting trust. Jonathan Lock Han Chng v Jessiline Goh [2007] SGCA 56The appellant sued the respondent in the Subordinate Courts for damages arising out of a minor traffic accident. The parties managed to reach a settlement agreement after mediation through the court dispute resolution (“CDR”) process. A subsequent dispute over disbursements of about $60 escalated into a series of heavily contested applications, culminating in the respondent seeking to set aside the court order which the appellant had extracted based on the initial court-mediated settlement. When the matter ultimately came before the Court of Appeal, it decided that the CDR process contemplated that the terms of a court-mediated settlement would be embodied in an order of court. To give efficacy to CDR, a court-mediated settlement must bind the parties in the same way as a contract would. The Court of Appeal explained that in the course of CDR, the CDR settlement judge would first carry out his mediatory function, but, once the parties reached a court-mediated settlement, he would resume his judicial role as a district judge and could enter judgment against the losing party according to the terms of the settlement. The court order extracted in the Subordinate Courts pursuant to the court-mediated settlement was therefore given effect. In the Court of Appeal’s view, both parties’ counsel had subverted the rationale behind the CDR process, and had acted without regard to their respective clients’ interests as well as the wider public interest in not wasting judicial resources. The Court of Appeal cautioned that although a lawyer should pursue his client’s interest vigorously, this should only be done with the client’s informed consent and when doing so did not lead to overall loss to the client. AMENDMENTS TO THE RULES OF COURTThe Rules of Court (Amendment) Rules 2007 were gazetted on 1 June 2007 and came into effect on 1 July 2007. The main amendments under these Rules include:
Changes to The supreme court Practice Directions
Three Practice Directions were issued by the Supreme Court in 2007. Practice Direction No. 1 of 2007 pronounced that the default rate of interest applied by the Supreme Court would henceforth be determined based on the average prime lending rate of the ten leading banks and finance companies for the preceding half year. Following from this, the previous interest rate of 6% per annum was adjusted to 5.33% per annum with effect from 1 April 2007, until further notice by the Chief Justice. Practice Direction No. 2 of 2007 was issued to inform all practitioners that the new edition of The Supreme Court Practice Directions (2007 Ed.), effective 1 August 2007, was released to cater primarily to proceedings using the Electronic Filing System. It also announced various miscellaneous amendments concerning directions on the use of the Electronic Queue Management System, changes to the timeframe for attempting personal service of court documents and make it mandatory for lawyers requesting for the vacation or adjournment of hearings other than trials to seek the opposing counsel’s consent. Parties to an appeal from a tribunal under Order 55 of the Rules of Court must now also tender the notes of proceedings, grounds of decision and any skeletal arguments or bundles of authorities before the hearing of the appeal. Practice Direction No. 3 of 2007, which took effect on 1 January 2008, affects the jurisdictional threshold for the transfer to the High Court of matrimonial proceedings under Part X of the Women’s Charter (Cap 353, 1997 Rev Ed) and proceedings under s 17A(2) of the Supreme Court of Judicature Act (Cap 322, 2007 Rev Ed) respectively. Only ancillary matters in cases involving assets of net value of $1.5 million and above will be transferred to the High Court for determination. |
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Timeliness of Justice