Cases

Civil Procedure

Romar Positioning Equipment Pte Ltd v Merriwa Nominees Pty Ltd

[2004] 4 SLR 573

Court of Appeal — Civil Appeal No 8 of 2004

Yong Pung How CJ, Chao Hick Tin JA and Lai Siu Chiu J

26 August; 21 September 2004

Civil Procedure — Pleadings — Amendments — Whether late amendments to Reply introducing inconsistent plea not found in Statement of Claim should have been allowed

Contract — Contractual terms — Condition precedent — Whether signing and forwarding of Deed condition precedent to obligation to pay under Deed

Contract — Contractual terms — Implied terms — Deed signed in counterparts — Whether necessary to imply term requiring forwarding of signed Deed to other party

Jimmy Yim SC (Drew & Napier LLC), Josephine Chong and Victor Leong Wai Ming (Chan Kam Foo & Associates) for the appellant; and

B Mohan Singh (K K Yap & Partners) for the respondent.

This was an appeal against the decision of the judge awarding judgment to Merriwa Nominees Pty Ltd (‘respondent’) on 8 January 2004 and ordering Romar Positioning Equipment Pte Ltd (‘appellant’) to render an account, inter alia, of moneys owed to the respondent. The appellant is a Singapore company. It is in the business of manufacturing, supplying and acting as consultants in automated welding equipment and metal work machinery. The respondent is a company incorporated in Western Australia with a place of business at Perth. It is in the business of providing specialised drilling technology and services.

The respondent entered into a Service Agreement with the appellant to train and provide personnel to the appellant to enable the appellant to fulfil its obligations under an agreement to an Indian company (‘Reliance’) to provide technical assistance, direction and supervision for the installation of a network of fibre optic cables throughout India. Although the appellant alone contracted with Reliance, it was agreed that the contracted works would be provided by both parties. By September, the appellant had paid the respondent US$165,000 for the latter’s share of the services provided to Reliance. Reliance subsequently delayed in paying invoices issued by the appellant. This led to the respondent accusing the appellant of withholding payments under the Service Agreement.

On 7 February 2002, at a meeting in Australia, an agreement was reached that the appellant would pay the respondent a sum of US$325,000 (‘the settlement sum’) in full and final settlement of all claims between them in connection with the Service Agreement. The settlement sum would be paid in three instalments. It was further agreed that a settlement agreement (‘the Deed’) would be drawn up and the parties would sign it in counterparts. Subsequently, the appellant signed and forwarded a copy of the Deed to the respondent. However, no copy of the Deed signed by the respondent was forwarded to the appellant. Clause 1(a) of the Deed provided that the first instalment would be paid ‘upon the signing of this agreement’.

On 8 February 2002, the appellant made the first payment of US$250,000 to the respondent together with a request for a copy of the signed Deed. This was followed by another written request on 16 May 2002. The appellant paid the second instalment of US$50,000 on 31 May 2002. On 28 June 2002, the appellant made a third request for the signed Deed, giving notice therein that final payment when due would only be set aside unless the appellant received a copy of the signed Deed. By a letter dated 29 July 2002 from the respondent’s solicitor to the appellant, the respondent gave notice that it no longer considered itself bound by the Deed because of alleged misrepresentations by the appellant’s managing director. Two days earlier, the appellant had obtained a draft for US$25,000 in payment of the final instalment due that day. However, the draft was never tendered to the respondent.

The respondent sued the appellant for its failure to make payment under the Service Agreement. The Statement of Claim also pleaded that the Deed was vitiated due to misrepresentation on the part of the appellant. On the first day of trial, the respondent obtained leave from the court to amend its Reply to include a new plea that the Deed was not effective because the respondent had not received the final instalment, since cl 7 of the Deed stated that the Deed was not effective until the respondent had received all three instalments.

The trial judge ruled in favour of the respondent on the ground that the appellant’s defence of accord and satisfaction based on the Deed was not made out. There was no finding of misrepresentation. The Deed was held to be ineffective because the final instalment was not paid on time. The appellant’s main argument on appeal was that payment of the instalments was conditional upon the appellant’s receipt of a copy of the signed Deed.

Held, allowing the appeal:

It was a condition precedent to the appellant’s obligation to pay under the Deed, that the respondent would first sign and secondly forward a copy of the signed Deed to the appellant in exchange for payment of the first instalment. As the respondent failed to furnish a copy of the signed Deed to the appellant, the latter’s obligation to pay the settlement sum did not arise. The appellant did not waive its right to be given a copy, judging by its repeated requests to the respondent for the document, notwithstanding its payment of the first and second instalments. Therefore, the non-production of the Deed was a valid defence and the appellant was perfectly entitled to withhold payment of the final instalment.

The parties had arrived at a binding oral agreement, but they also agreed that a formal deed of settlement would be drafted to reflect that agreement. This was to ensure that there was written proof of such a settlement. It was further agreed that the parties would sign the Deed in counterparts, for one party to ensure that the other party had signed. It was therefore reasonable and necessary to imply a term that the Deed, signed by the respondent, would be forwarded to the appellant before the appellant was required to make any payment under 
the Deed.

Observation: The delay in the respondent’s application to amend the Reply was unjustified. It resulted in the appellant becoming aware of the respondent’s new plea that the Deed was unenforceable due to non-payment of the final instalment, only on the first day of trial. This arguably prejudiced the appellant. Further, the respondent should have applied to amend its Statement of Claim to include this new and inconsistent plea rather than to have slipped it in by way of the Reply. Accordingly, since the respondent succeeded on its claim below based purely on its Amended Reply, this appeal could also have been allowed by reversing the order made below for the amendment, had it been necessary 
to do so.

Legislation

Economic Expansion Incentives (Relief from Income Tax) (Amendment No 2) Act 2004 (A48/2004)

The Economic Expansion Incentives (Relief from Income Tax) (Amendment No 2) Act 2004 (A48/2004) was gazetted on 25 November 2004.

The Economic Expansion Incentives (Relief from Income Tax) Act (Cap 86) is amended with effect from 27 February 2004 to implement tax changes announced in the 2004 Budget Statement, namely:

*     to extend the tax relief period of up to 15 years to be granted to a pioneer enterprise or a pioneer service company; and

*     to extend the scope of the technopreneur investment incentive to cover all forms of start-ups, and to re-name the incentive as enterprise investment incentive (‘EII’). The EII scheme allows eligible investors to claim tax deductions, equal to the capital losses they incurred from the sale of qualifying shares or liquidation of approved start-ups.

Broadcasting (Amendment) Act 2004 (A55/2004)

Pursuant to the Broadcasting (Amendment) Act (Commencement) Notification 2004 (S750/2004), the amendments to the Broadcasting Act (Cap 28) came into force on 1 January 2005.

The amendments implement Singapore’s obligations under Art 16.6 of the US–Singapore Free Trade Agreement. The amendments relate to dealings in unauthorised decoders and the unauthorised decoding of encrypted programmes. These activities will constitute offences. Persons found to be carrying on these activities will be potentially liable to the lawful provider of a broadcasting service who had broadcast the encrypted programme, or the owner of the copyright in 
the programme.

Countervailing and Anti-Dumping Duties (Amendment) Act 2004

The Countervailing and Anti-Dumping Duties (Amendment) Act 2004 came into operation on 30 December 2004.

Essentially, a new s 45A is introduced to tighten Singapore’s existing anti-dumping rules. It allows the Ministry of Trade and Industry (‘MTI’) to make regulations specific to the exports from each of Singapore’s Free Trade Agreement (‘FTA’) partners, according to what has been agreed in the relevant FTA. The regulations would either modify the application of the Countervailing and Anti-Dumping Duties Act (Cap 65B) provisions to goods from Singapore’s FTA partners, or exempt such goods from its provisions

Income Tax (Amendment) Act 2004 (A49/2004)

The Income Tax (Amendment) Act 2004 (A49/2004) was gazetted on 30 November 2004. The changes under the Income Tax (Amendment) Act 2004 will come into force from various dates. The key changes relate to the following:

•    tax policy changes from 2004 Budget Statement, eg reduction of corporate tax rate from 22% to 20% effective from year of assessment 2005 and subsequent years of assessment;

•    marriage and parenthood tax changes;

•    tax changes for limited liability partnerships; and

•    tax policy changes: taxing stock options for taxpayers leaving Singapore

Goods and Services Tax (Amendment) Act 2004 (A50/2004)

The Goods and Services Tax Act (Cap 117A) is amended with effect from 8 December 2004 to facilitate the following:

•    zero-rate services ancillary to the handling of ships or aircrafts and the handling or storage of goods carried in a ship or aircraft;

•    introduce a scheme to ease the cash flow burden of exporters in a qualifying industry. To begin with, the scheme will apply to the supply of marine fuel oil from oil majors or oil traders to bunker suppliers in the bunkering industry;

•    clarify that zero-rating is allowed only where the services are made contractually to, and beneficially for, a person outside Singapore; and

•    facilitate electronic transactions via Inland Revenue Interactive Network (‘IRIN’), the new IT system of the Inland Revenue Authority of Singapore (‘IRAS’).

Property Tax (Amendment) Act 2004 (A59/2004)

The Property Tax Act (Cap 254) is amended with effect from 8 December 2004 to the following purposes:

•    facilitate electronic transactions via IRAS’s new IT system; and

•    empower the Minister to appoint Deputy Chairmen for the Valuation Review Board.

Elizabeth Wong

Allen & Gledhill