Case Update

Civil Procedure | Contract | Criminal Procedure | Land Law | Legal Profession

Wiltopps (Asia) Ltd v Drew & Napier (sued as a firm) & Anor [2000] 3 SLR 244
High Court — Suit No 1042 of 1993
Lee Seiu Kin JC
2 November 1998, 25 January 1999

Time — Filing and exchange of affidavits of evidence-in-chief — Time limits disregarded — Orders of court disregarded

Unless order — Whether evidence of real contract — Whether order made without obligations — Whether consideration flowed from defendants to plaintiffs — Setting aside — Whether by fresh proceedings — Grounds that would justify setting aside unless order — Whether plaintiffs’ conduct contumacious and contumelious — Whether court to exercise its discretion to set aside unless order

Ooi Oon Tat (Kenneth CP Tan & Liew) for the plaintiffs.
Andrew Ong (Rajah & Tann) for the first and second defendants.

The plaintiffs arrested a tug for breach of towage contract and for the return of certain payments in 1981. The first defendants entered an appearance for the tug-owners. The Court of Appeal gave judgment for the plaintiffs. In the present action, the plaintiffs claimed against the first defendants on the basis that the latter had, in breach of their warranty of authority and/or in breach of duty to the plaintiffs, continued to act in the previous admiralty action and appeal, having taken instructions from the second defendants, a non-party to the proceedings.

The plaintiffs filed the writ of summons on 13 May 1993. The statement of claim was filed 11 months later. After the reply to the defence, there was a lapse of 14 months before the plaintiff’s solicitors filed a notice of intention to proceed on 21 September 1995. The court then directed that affidavits of evidence-in-chief be filed and exchanged within three months. This was not done. Later, the court again made a similar order, this time to be complied with within two months. This was further extended twice, to 28 February 1998. On 27 February 1998, the plaintiffs’ solicitors wrote to the defendants’ solicitors and asked if they were ready to file and exchange affidavits. The defendants’ solicitors were ready. However thereafter, there was no reply from the plaintiffs.

After further delay, the defendants’ solicitors wrote directly to the plaintiffs on 19 March to ask them to exchange affidavits within seven days, failing which they would make the necessary application to the court. The plaintiffs replied on 25 March. However, out of two witnesses, the affidavit of one witness was not ready. On 31 March, the defendants filed for an order that unless the plaintiffs filed and served on the defendants both the witnesses’ affidavits of evidence-in-chief within three days, the plaintiffs’ action would be dismissed with costs without further order.

The assistant registrar gave an unless order for the filing and exchange of affidavits of evidence-in-chief by 11 April 1998. No exchange took place. Instead, the plaintiffs’ solicitors applied for a two-week extension. The defendants’ solicitors objected to this application. During the hearing of this application, when it came to the turn of the plaintiffs’ solicitors to reply to the defendants’ submissions, the plaintiffs’ solicitors applied for leave for the application to be withdrawn. The assistant registrar then gave order accordingly.

Following this, on 20 May 1998, the defendants’ solicitors sent a draft judgment dismissing the plaintiffs’ claim pursuant to the unless order, to the plaintiffs’ solicitors for their approval. The plaintiffs’ solicitors did not approve the draft judgment, arguing that there had been no default. The assistant registrar directed that there was no requirement for the plaintiffs to approve the draft judgment and default judgment was extracted. The assistant registrar dismissed the plaintiffs’ application to set aside the default judgment. The plaintiffs appealed to the High Court against this dismissal. Throughout this whole period, the plaintiffs changed their solicitors five times.

Held, dismissing the appeal:

An unless order may evidence a real contract between the parties or an order made without obligations. In every case, it was necessary to discover which meaning was used. Here the unless order was made pursuant to an application by the defendants that gave the plaintiffs three days to comply with the order. The plaintiffs’ solicitors offered to consent to the order if they were given seven days, to which the defendants’ solicitors agreed. There was thus consideration flowing from the defendants to the plaintiffs. The unless order gave effect to the contract between the parties.

As the plaintiffs failed to comply with the order and the plaintiffs’ solicitors had withdrawn the application for extension of time of the unless order, the unless order remained in effect. Being an order made by consent of the parties, the parties were bound by it. It was only if the unless order itself was set aside by fresh proceedings would the plaintiffs have been able to avoid the default judgment.

Once the default occurred, the unless order operated to dismiss the action ‘without further order’. There was no question of setting aside the default judgment which was a consequence of the unless order and the subsequent default. This was an agreement between the parties concerning substantive rights. A consent order of this nature could only be set aside on grounds that would justify the setting aside of a contract. The plaintiffs’ conduct was so contumacious and contumelious that the court would not exercise its discretion to set aside the order.

[Editorial Note: The plaintiffs’ appeal vide CA 275/98 was dismissed by the Court of Appeal (Yong Pung How CJ, Goh Joon Seng and Tan Lee Meng JJ) on 19 May 1999.]

Eltraco International Pte Ltd v CGH Development Pte Ltd [2000] 3 SLR 177
High Court — Suit No 214 of 2000
Woo Bih Li JC
17 May, 23 June 2000

Performance bond — Interlocutory injunction to restrain receipt of payment under performance bond — Entitlement to call on performance bond — Whether necessary to establish breach of contract — Whether contractual terms precluded beneficiary from calling on performance bond — Whether unconscionable for beneficiary to receive moneys under performance bond — Whether genuine dispute between parties

Christopher Chuah (Drew & Napier) for the plaintiffs.
Stanley Wong (Jing Quee & Chin Joo) for the defendants.
Zaheer Merchant (Madhavan Louis Partnership) for the insurers.

The plaintiffs were engaged by the defendants as the main contractors in respect of a building project. Pursuant to the contract, the plaintiffs procured the issuance of a performance bond for the sum of S$2,438,800 by QBE Insurance (International) Limited (‘QBE’) in favour of the defendants (the ‘bond’). As a result of alleged outstanding defects in the works, the defendants made a demand on the bond for S$2,438,000 on 18 February 2000. The plaintiffs objected to the call. The defendants commenced an action in the High Court against QBE for the sum due under the bond. The plaintiffs applied for interlocutory injunction restraining the defendants from receiving the sum of S$2,438,000 or any part thereof under the bond and for a stay of proceedings against QBE.

Held, allowing the application subject to certain qualifications:

The terms of the bond did not require the defendants to establish a breach of contract by the plaintiffs before being entitled to call on the bond. On a proper construction of cll 42 and 43 of the contract, they did not preclude the defendants from calling on the bond without first procuring rectification works.

As there were genuine disputes between the parties even though the extent of the disputes and the costs of rectification works were not clear, it was not unconscionable for the defendants to receive moneys under the bond.

The court deducted $600,000 (being part of the retention sum held by the defendants) and $200,000 (being undisputed variation works) from the total sum of $2.4m claimed by the defendants under the bond. Accordingly, the defendants were restrained from receiving more than $1.6m pending the final resolution of the disputes.

[Editorial Note: The plaintiffs have appealed to the Court of Appeal vide CA 67/2000.]

PT BII Finance Centre v Eunike Juwita & Anor [2000] 3 SLR 233
High Court — Suit No 1478 of 1997
Lai Siu Chiu J
26–29 October 1998, 29 January 1999

Guarantee — Undertaking — Solicitors undertaking to pay amounts due under guarantee subject to conditions and after making certain deductions — Amount due under guarantee to be paid from proceeds of sale of property — Whether deposit paid under option formed part of sale proceeds — Whether solicitors entitled to release deposit to first defendant

See LAND LAW.

Gunalan s/o Govindarajoo v Public Prosecutor [2000] 3 SLR 430
High Court — Criminal Revision No 13 of 2000
Yong Pung How CJ
4, 19 July 2000

Abuse of process — Whether subsequent proceedings on carnal connection charges following breach proceedings oppressive — Whether breach proceedings should be stayed to be held concurrently or after proceedings for subsequent offence — Whether prejudice suffered from failure to stay breach proceedings

Autrefois convict — Breach proceedings regarding whether juvenile should be transferred to another approved school — Whether breach proceedings concerned facts or offences substantially similar to subsequent carnal connection charges — Whether order made in breach proceedings constituted conviction

S Gogula Kannan (SK Kumar & Associates) for the petitioner.
Jennifer Marie and Gilbert Koh (Deputy Public Prosecutor) for the respondent.

The petitioner was found guilty of certain property offences in May 1998 and was ordered to reside at Salvation Army Gracehaven (‘Gracehaven’) for 24 months (‘first order’). On 25 November 1999, the superintendent of Gracehaven instituted breach proceedings under s 44(2)(a) of the Children and Young Persons Act (Cap 38) (the ‘breach proceedings’) against the petitioner. The juvenile court called for a progress report. In the report, presented on 14 December 1999, the superintendent stated that the petitioner often absconded from the home. While at large, he mixed with undesirable peers, smoked and loitered in the streets, and also engaged in sex with a female resident of the home. The juvenile court transferred the petitioner to the Singapore Boys’ Home (‘SBH’) for the unexpired period of the first order. On 27 January 2000, the petitioner was found guilty of three counts of carnal connection with a girl under 16 years, an offence under s 140(1)(i) of the Women’s Charter (Cap 353), and sent to SBH for 24 months (‘second order’). Subsequently, a petition was made to the High Court, asking that it exercise its power of revision to quash the finding of guilt made in respect of the carnal connection charges or to alter the second order by reducing the period of residence in SBH on the grounds of autrefois convict and abuse of process.

Held, dismissing the petition:

The claim of autrefois convict failed because the breach proceedings did not concern facts or offences that were even substantially similar to that of the carnal connection proceedings on 27 January 2000, and because the breach proceedings did not involve the trial of a specific charge but the determination of the continued suitability of the petitioner at the home based on representations made by the manager of the home. The order sending the petitioner to SBH for the unexpired period of the first order was consequently merely a transfer order and did not amount to a conviction. The second order imposed on the petitioner therefore could not be said to be a second conviction on substantially the same facts or offence.

In order for the court to quash the petitioner’s finding of guilt on the ground of abuse of process, the petitioner had to show that the bringing of the carnal connection proceedings against him was oppressive. This the petitioner tried to do unsuccessfully, by asserting procedural irregularity through an application of Ng Kwok Fai v PP [1996] 1 SLR 568 that was wholly out of context, and by asserting the suffering of prejudice which was not demonstrated.

PT BII Finance Centre v Eunike Juwita & Anor [2000] 3 SLR 233
High Court — Suit No 1478 of 1997
Lai Siu Chiu J
26–29 October 1998, 29 January 1999

Land Law — Conveyancing — Deposit — Whether standard conveyancing practice that deposit must be held by solicitor for vendor as stakeholder pending completion — Matter of contract whether parties intended to have stakeholding arrangement

James Leslie Ponniah and Leong Sue Lynn (Wong & Lim) for the plaintiffs.
Beh Lip Leng and B Uthayachanran (Beh & Partners) for the first defendant.
Tan Kok Quan SC and Chia Boon Teck (Lee & Lee) for the second defendants.

The plaintiffs provided certain factoring facilities to PT Salmonatimbo pursuant to a factoring agreement dated 8 July 1996. In consideration of the plaintiffs forbearing to sue the company for its failure to service the factoring facilities, the first defendant executed a guarantee and indemnity (the ‘guarantee’) in favour of the plaintiffs to secure the obligations of the company under the factoring agreement. The first defendant was the legal owner of a property in Singapore which was then subject to a mortgage in favour of The Bank of East Asia Limited (‘BOEA’). Under the guarantee, the first defendant agreed to pay on demand to the plaintiffs all sums owed by the company from the proceeds of sale of the property after deducting the amount due to BOEA for the discharge of the mortgage. Clause 7 of the guarantee further provided, inter alia, that the defendants shall give an undertaking to the plaintiffs or their solicitors to pay from the sale proceeds of the property the ultimate balance owing by the company to the plaintiffs after making full payments to BOEA (the ‘cl 7 undertaking’).

The plaintiffs requested for the cl 7 undertaking several times but the second defendants were unable to give such an undertaking without the instructions of their clients. Eventually, the second defendants gave an undertaking to pay from the ‘sale proceeds’ on completion of the sale of the property the amount of moneys covenanted to be paid under the guarantee subject to the fulfilment of three preconditions and after the settlement of certain sums including the redemption moneys owing to BOEA (the ‘undertaking’). It was undisputed that the undertaking was intended by the parties to replace the cl 7 undertaking.

At the time the undertaking was given, a purchaser had exercised an option to purchase the property from the first defendant and 10% of the purchase price (the ‘deposit’) was paid to the second defendants who then released it to the first defendant in accordance with the terms of the option to purchase. The plaintiffs knew of the existence of such an option to purchase even though they were not privy to the exact terms thereof.

On 4 April 1997, the plaintiffs made a demand for payment from the first defendant under the guarantee. On 7 April 1997, the first defendant instructed the second defendants to release to the plaintiffs the sum of $63,711.62, being the balance of the sale proceeds held by the second defendants at that time after deducting the deposit and all other items stipulated in the undertaking. The plaintiffs claimed that the second defendants had not discharged their obligations under the undertaking. It was contended, inter alia, that the first defendant was not entitled to deduct the deposit from the sale proceeds.

Held, dismissing the plaintiffs’ claim:

The terms of the option to purchase specifically authorised the release of the deposit to the first defendant. There was no standard conveyancing practice that the deposit in a sale and purchase agreement must necessarily be held by the solicitor for the vendor as a stakeholder pending completion. It was essentially a matter of contract whether the parties intended to have a stakeholding arrangement in respect of the proceeds of sale and in this case, the first defendant and the purchaser had decided against such an arrangement.

Having regard to the fact that a prudent solicitor would only give an undertaking over client’s money which he held and that it was entirely a matter of contract whether the second defendants held the deposit as stakeholders, a reasonable person in the position of the plaintiffs should not so readily assume that the use of the word ‘sale proceeds’ must necessarily mean 100% of the sale proceeds in the circumstances under which the undertaking was given. The second defendants had discharged their obligations by paying over the sum of $63,711.62, being the balance of the sale proceeds held by the second defendants at the time of the plaintiffs’ demand for payment after making all the deductions stipulated in the undertaking.

PT BII Finance Centre v Eunike Juwita & Anor [2000] 3 SLR 233
High Court — Suit No 1478 of 1997
Lai Siu Chiu J
26–29 October 1998, 29 January 1999

Solicitor’s undertaking — Construction of undertaking — Whether obligations undertaken by solicitors were fulfilled — Meaning of ‘sale proceeds’ in context of undertaking

See LAND LAW.