Cases

Civil Procedure | Companies and Corporations

CIVIL PROCEDURE

Development Bank of Singapore Ltd v Bok Chee Seng Construction Pte Ltd [2002] 3 SLR 547
Court of Appeal — Civil Appeal No 4 of 2001
Yong Pung How CJ, Chao Hick Tin JA and Tan Lee Meng J
22 July, 12 August 2002

Pleadings — Scope of pleadings — Whether presumptions of law must be pleaded

Deborah Barker SC and Chan Kia Pheng (Khattar Wong & Partners) for the appellants.
Tan Cheng Yew (Tan Jin Hwee, Eunice & Lim Choo Eng) for the respondents.

The plaintiff company had two shareholder-directors, Mr Peh and Mr Phua. In February 1997, the plaintiff opened an account with the defendant, the operation of which was governed by ‘the original mandate’ documents. Under the original mandate, the account was only to be operated jointly by the directors. In July 1997, the defendant received some documents rescinding the original mandate, and providing for the account to be operated solely by Mr Phua. The defendant then honoured all cheques drawn on the account according to the new mandate.

In October 1997, Mr Peh’s solicitors told the defendant that there was a dispute between the directors and asked it to freeze the account. The plaintiff’s solicitors told the defendant not to accede to that request. The defendant informed Mr Peh’s solicitors that they could freeze the account only with a directors’ resolution or court order.

Mr Peh started proceedings about a year later under the Companies Act s 216. In December 1998, he obtained a court order which declared, inter alia, that the resolution effecting the new mandate was void.

The plaintiff then sued the defendant for $186,938.38, which had been paid out under cheques drawn on the account while Mr Phua was the sole signatory. The district judge held that the respondent had a valid defence under the rule in Turquand’s case. Her decision was reversed on appeal, because the High Court judge found that the defendant had failed to plead that defence. The defendant appealed.

Held, allowing the appeal:

The defendant had pleaded all material facts, even if it had not specifically mentioned Turquand’s rule. The plaintiff had pleaded facts to show that the defendant could not rely on Turquand’s rule. Hence the High Court judge had erred in holding that the parties had not pleaded the facts relating to the application of Turquand’s rule.

The plaintiff was not taken by surprise. It was not prejudiced because it had placed all relevant facts before the trial judge.

In any case, Turquand’s rule is a presumption of regularity. A presumption of law need not be pleaded. The burden was not on third parties like the defendant to show that they could rely on Turquand’s rule.

The district judge’s findings of fact showed that the defendant did not have notice of facts which would have deprived it of the protection of Turquand’s rule. It would also be too onerous to require a bank to investigate all allegations of fraud, without more.

COMPANIES AND CORPORATIONS

Rule in Turquand’s case — Applicability of rule

See CIVIL PROCEDURE