A Second Bite Denied

Enforcement of Foreign Judgments and the Fraud Exception in Singapore

The position of the Singapore courts on the enforceability of foreign judgments is clearly stated in this article through the use of case law.

It is a general principle of law in proceedings to enforce a foreign judgment that the foreign judgment is usually accepted by the enforcing court as conclusive on the merits and it cannot be impeached for any error of fact or of law made by the foreign court (Godard v Gray (1890) LR 6 QB 139). However, one of the recognised exceptions to this general principle is where it is established that the foreign judgment was obtained by fraud. In Singapore, the fraud exception applies under both the common law (Ralli v Anguilla (1915) 15 SSLR 33) and statutory regimes¹ for the enforcement of foreign judgments. For decades, however, the scope of the defence of fraud has been the subject of much judicial debate and criticism.

In England,² a foreign judgment could be unravelled and the merits re-litigated in the enforcing forum where the defence of fraud is established. Fresh evidence of the fraud is not required. In light of the contradiction between this approach to the defence of fraud and the principle that foreign judgments are conclusive as to their merits, the courts in Canada³ and Australia⁴ have departed from the position in England and held that the defence of fraud only applies to impeach a foreign judgment if there is new material evidence to establish the fraud alleged, which evidence could not have been obtained earlier with reasonable diligence, and is of a nature to make it reasonably probable that the judgment was obtained by fraud in the foreign proceedings.

The position in Singapore has only recently been considered and conclusively settled in the Court of Appeal decision of Hong Pian Tee v Les Placements Germain Gauthier Inc [2002] 2 SLR 81. The Court of Appeal preferred the Canadian-Australian approach to the English approach and held that the defence of fraud may be re-litigated only where fresh evidence of the fraud was adduced.

The Position in England
The leading English authority is the Court of Appeal decision in Abouloff v Oppenheimer (1882) 10 QBD 295 which laid down the principle that a foreign judgment could be impeached for fraud even though no fresh evidence of the fraud had been discovered and despite the allegation of fraud having been dealt with in the foreign proceedings. This principle was subsequently upheld in Vadala v Lawes (1890) 25 QBD 310 and in Syal v Heyward [1948] 2 KB 443.

More recently, the Court of Appeal in Jet Holdings Inc v Patel [1990] 1 QB 335 has reaffirmed the old English authorities and the position on the fraud exception. The House of Lords in Owens Bank Ltd v Bracco [1992] 2 AC 443 took a similar view, considering itself bound by the decisions of Abouloff v Oppenheimer and Vadala v Lawes. Lord Bridge held, in relation to the fraud exception, that 'if the law is now in need of reform, it is for the legislature, not the judiciary to effect it' (at 489).

Various writers, judges in foreign jurisdictions and the English judges themselves have raised objections to this construction of the fraud exception. In the English Court of Appeal decision of House of Spring Gardens Ltd & Ors v Waite & Ors [1990] 2 All ER 990, Stuart-Smith LJ stated, in respect of the old English authorities, that:

These cases have been considerably criticised over the years; they were decided at a time when our [English] courts paid scant regard to the jurisprudence of other countries. Nevertheless, we are bound by them ... . [at 997]

However, Stuart-Smith LJ opined that it would be an abuse of process to allow the same issues to be re-litigated where they had already been decided upon in the foreign court. His Lordship stated that:

The question is whether it would be in the interests of justice and public policy to allow the issue of fraud to be litigated again in this court, it having been tried and determined [in the foreign originating court]. In my judgment it would not; indeed I think it would be a travesty of justice ... . Public policy requires that there should be an end to litigation and that a litigant should not be vexed more than once in the same cause. [at 1000]

In the Privy Council decision of Owens Bank Ltd v Etoile Commerciale SA [1995] 1 WLR 44, the court managed to effectively overcome the problem by deciding that where the issue had already been decided by the foreign court, it would be an abuse of process to contend fraud in the absence of plausible evidence disclosing at least a prima facie case. Lord Templeman examined the English authorities acknowledging that the rule regarding fraud had been subject to 'widespread and long standing academic criticism'.

Instead of dealing with various arguments of fraud raised by the judgment creditors, Lord Templeman proceeded to decide the matter on the basis of abuse of process, being the alternative ground cited by the Court of Appeal in House of Spring Gardens Ltd v Waite. His Lordship held that:

There is nothing in the authorities that precludes a party from obtaining summary judgment or an order striking out a pleading on the grounds of abuse of process where fraud is alleged. It is axiomatic that where fraud is alleged, full particulars should be given. Where allegation of fraud has been made and determined abroad, summary judgment or striking out in subsequent proceedings are appropriate remedies in the absence of plausible evidence showing at least a prima facie case of fraud. No strict rule can be laid down; in every case, the court must decide whether justice requires the further investigation of alleged fraud or requires that the plaintiff, having obtained a foreign judgment, shall no longer be frustrated in enforcing that judgment. [at 51]

The Position in Canada
In the early 1900s, the Canadian courts decided to depart from the principle of fraud laid down by the early English cases. This approach is summarised by Garrow J in the case of Jacobs v Beaver (1908) 17 OLR 496:

The fraud relied on must be something collateral or extraneous, and not merely the fraud which is imputed from the alleged false statements made at the trial, which were met by counter-statements by the other side, and the whole adjudicated upon by the court and so passed on into the limbo of estoppel by the judgment. This estoppel cannot be disturbed except upon the allegation and proof of new and material facts, or newly discovered material facts that were not before the former court, and from which are to be deduced the new proposition that the former judgment was obtained by fraud. [at 506]

More recently, in the case of Union of India v Bumper Development Corp [1995] 7 WWR 80, Fraser J cited Jacobs v Beaver with approval, stating that the principle therein was consistent with the law of res judicata. Fraser J also stated that 'the Canadian authorities appear[ed] to represent the proper view' (at 97), as compared with the English principle laid down in Abouloff v Oppenheimer, which did not bind him. Accordingly, the submission that the foreign judgments were unenforceable because they were obtained by fraud was rejected as there was no new evidence before the enforcing court nor was there evidence which could not have been put before the original court if it had been chosen to do so.

The Position in Australia
The courts in Australia have adopted a similar position as the courts in Canada. In the case of Wentworth v Rogers (No 5) (1986) 6 NSWLR 534, Kirby P opined that:

... the reasoning [in Abouloff v Oppenheimer] might be no more than a reflection of the attitudes of the English judiciary at the apogee of the English empire. Certainly, the decision, and others like it, have been criticised and the difference of approach remarked ... . [at 541]

In 1990, the New South Wales Commercial Division in the case of Keele & Anor v Findley & Anor (1990) 21 NSWLR 444, held that the same principles governing applications to set aside a local judgment by reason of fraud (particularly the requirement of new and cogent evidence of fraud) are required for applications resisting the enforcement at common law of a foreign judgment allegedly obtained by fraud. In his judgment, Rogers CJ examined the authorities in England, Australia, Canada and New Zealand and set down his reasons that led to the decision to apply the fraud exception as it had been crafted in Canada:

Firstly, there is no authority in this country [Australia] where the point has squarely arisen for decision. Secondly, there is a respectable line of judicial authority in Canada which I believe represents the correct view. Thirdly, it is important that, what I believe to be an error, should not be transplanted into this country in a matter of such importance in the administration of justice ... . Fourthly, every academic writer I have consulted accepts the Canadian thinking in preference to the English cases. Fifthly, the historical evolution of the state of the English authorities readily explains how the present error came about. Finally, the English judges seem to accept in several instances, that the same rules should apply to enforcement of local and foreign judgments in the face of allegations of fraud. [at 457]

The Position in Singapore
Prior to Hong Pian Tee v Les Placements Germain Gauthier, there was no decision in Singapore dealing with the scope of the defence of fraud. Accordingly, the Court of Appeal was required to examine the approaches to the fraud exception taken by the various jurisdictions before coming to its decision as to the position Singapore would apply in this regard.

The decision of Hong Pian Tee v Les Placements Germain Gauthier Inc [2001] 3 SLR 418 involved an appeal by the defendant, Hong Pian Tee ('Hong'), against the decision of Honourable Judicial Commissioner Choo Han Teck ('Choo JC') granting summary judgment to the plaintiffs, Les Placements Germain Gauthier Inc ('LPGGI'), on a claim based on a judgment obtained in the Superior Court of the Province of Quebec, District of Montreal, Canada. Hong alleged that the Canadian judgment had been obtained by fraud and accordingly, LPGGI's claim should be allowed to go to trial in order that Hong's allegations of fraud may be re-litigated in Singapore.

By way of background, LPGGI is a company incorporated in Canada. On or about 25 April 1995, the LPGGI entered into a loan agreement with Wiraco Trading Pte Ltd ('Wiraco'), a company incorporated in Singapore, whereby LPGGI agreed to lend Wiraco a sum of C$350,000. Hong's wife was a director and shareholder of Wiraco. As part of the loan arrangement, Hong agreed to personally guarantee repayment of the loan extended by LPGGI to Wiraco.

Wiraco, however, defaulted in repaying the loan. Despite demands, Wiraco and Hong failed to comply with their repayment obligations to LPGGI. In accordance with the exclusive jurisdiction clause in the loan agreement, LPGGI commenced proceedings in Canada against Wiraco and Hong. Hong initially disputed the jurisdiction of the Canadian Court and contended that the action should be stayed on the ground of forum non conveniens. However, Hong's challenge was dismissed. Hong did not appeal this decision but proceeded to defend himself on the merits.

A three-day trial followed in the Canadian Court where Hong alleged that he did not guarantee a loan from LPGGI to Wiraco. Instead, he claimed that the guarantee he executed was in respect of a personal loan from the former President of LPGGI, one Germain Gauthier, to Wiraco that never materialised. Hong relied upon a document which he signed (apart from the loan agreement itself between LPGGI and Wiraco which he was also a party to) confirming his personal guarantee which was addressed to Germain Gauthier at LPGGI's address. The Canadian Court rejected Hong's defence finding, inter alia, that Germain Gauthier was acting on behalf of LPGGI and held that Wiraco and Hong were jointly and severally liable to LPGGI for repayment of the loan, interest and costs. Dissatisfied with the decision, Hong appealed to the Court of Appeal of Quebec. It was decided that the appeal had no chance of success and accordingly it was struck off.

Thereafter, LPGGI commenced an action in Singapore for the enforcement of the Canadian judgment against Hong. Proceedings were not commenced against Wiraco as it was already in liquidation. Since Canada was not a country gazetted under the statutory regimes in Singapore, enforcement was sought under the common law regime. After the action was instituted in Singapore, an application for summary judgment was filed on the basis that Hong did not have a defence to the action.

Hong raised various defences in the summary judgment proceedings at first instance and before Choo JC, on appeal. However, these defences were abandoned before the Court of Appeal with the exception of the defence of fraud. It was Hong's contention that one Pierre Gauthier, the former managing director and shareholder of Wiraco and son of Germain Gauthier, had fraudulently used the document executed by him in relation to the personal loan from Germain Gauthier, for purposes of the loan arrangement between LPGGI and Wiraco. This allegation was raised in Canada as well but it failed to persuade the court of Hong's case. Hong was now hoping for a second bite at the cherry in Singapore.

The Court of Appeal, having examined the various approaches taken by the courts in the different jurisdictions in relation to the fraud exception, held that the approach taken by the Canadian and Australian courts was preferable to the English position. The Court of Appeal was of the view that the Canadian-Australian approach was consistent with the doctrine of comity of nations, finality of litigation and principles governing the treatment of fraud vis-à-vis domestic judgments.

Further, the Court of Appeal stated that to re-litigate allegations of fraud which had been considered and adjudicated upon by the foreign court would be tantamount to the enforcing court sitting in an appellate capacity over a final decision of a competent court of another jurisdiction. The Court of Appeal declined to take such an approach.

Instead, the Court of Appeal held that the fraud exception in Singapore may be applied only where:

1. the allegations of fraud relate to extrinsic fraud; or
2. in the event that intrinsic fraud is alleged, where fresh evidence is adduced; which evidence could not have been uncovered with reasonable diligence on the part of the judgment debtor during the foreign proceedings and which would have been likely to make a difference in the eventual result of the case.

Accordingly, Hong was not allowed to re-litigate his allegations of fraud. The Court of Appeal dismissed his appeal and summary judgment was awarded in favour of LPGGI.

Conclusion
The decision of the Court of Appeal in Hong Pian Tee v Les Placements Germain Gauthier Inc has clarified uncertainties in the law in Singapore relating to the recognition and enforcement of foreign proceedings at common law. Particularly with regard to the defence of fraud, the Court of Appeal's decision to adopt the more enlightened approach of the Australian and Canadian courts, instead of allowing themselves to be shackled by the technical and historical limitations of the English courts, is a most welcome development in the laws of Singapore.

Sivakumar Murugaiyan & Parveen Kaur Nagpal
Sant Singh Partnership

Endnotes