Ong & Ong Pte Ltd v Fairview Developments Private Limited

• Jurisdiction: Singapore
• Judge: Lee Seiu Kin J
• Judgment Date: 18 March 2014
• Neutral Citation: [2014] SGHC 48
• Court: High Court (Singapore)
• Hearing Date: 05 November 2013
• Docket Number: Suit No 369 of 2011 (Summons No 5235 of 2013)
• Plaintiff Counsel: Mohan Pillay and Ang Wee Jian (MPillay)
• Defendant Counsel: Hri Kumar Nair SC (instructed) (Drew & Napier LLC) and Jimmy Yap (Jimmy Yap & Co)
• Subject Matter: Civil Procedure,Offer to settle,Offer to settle encompassing plaintiff's claim and defendant's counterclaim,Defendant accepting offer to settle after counterclaim was determined,Whether offer to settle remained open for acceptance,Order 22A Rules of Court (Cap 322, R 5, 2006 Rev Ed)
• Published date: 16 September 2015

Lee Seiu Kin J:

In this summons the defendant applied for a declaration that its acceptance on 24 September 2013 of the plaintiff’s offer to settle dated 28 July 2011 was valid and that the action had been settled on the following terms: The defendant is to pay to the plaintiff the sum of S$2,588,666. The defendant is to pay to the plaintiff the plaintiff’s costs of the claim and counterclaim to be taxed if not agreed: on a standard basis, from the date of commencement of these proceedings on 20 May 2011 to 11 August 2011; and on an indemnity basis, from 12 August 2011 up to the date of the defendant’s notice of acceptance (ie, 24 September 2013). The defendant is to pay to the plaintiff interest at 1.5% per annum, for the period from 20 May 2011 up to the date of payment. The plaintiff is to discontinue its claims against the defendant within seven days of payment of the sum of S$2,588,666, interest and costs.

On 5 November 2013, after hearing submissions from both sides, I made an order in terms of the application and granted costs to the defendants fixed at $5,000 plus disbursements. On the application of counsel for the plaintiff, I granted leave to appeal as the matter concerned a novel point of law. The plaintiff filed the appeal on 2 December 2013 and I now give my grounds of decision.

The issue in this appeal is whether the plaintiff’s offer to settle of 28 July 2011 had expired prior to the defendant’s acceptance on 24 September 2013.

Background

The background to the matter is as follows. The plaintiff commenced this action, Suit No 369 of 2011, on 20 May 2011. The claim was for a sum of $10,138,128.28, which consisted of two parts: Loss of prospective fees for architectural works not carried out amounting to $5,626,653.31; and Fees of $4,511,474.97 for certain architectural work carried out.

The defendant in turn counterclaimed for the sum of $23,410,000. This was for loss and damage suffered as a result of the plaintiff’s delay in providing the defendant with a letter of release after the defendant terminated the plaintiff’s services.

On 28 July 2011, some two months after the writ was filed, the plaintiff’s solicitors, M/s MPillay (“MPillay”), sent a letter (“the OTS”) to the defendant’s then solicitors, M/s Kelvin Chia Partnership. In it, the plaintiff offered to settle its claim against the defendant for the sum of about $2.6m. The letter stated as follows: The Plaintiff offers to fully and finally settle all of the Plaintiff’s claims, all of the Defendant’s counterclaims and all matters arising in this Suit on the following terms: The Defendant is to pay to the Plaintiff the sum of S$2,588,666; If this Offer to Settle is accepted by the Defendant no later than 14 days from today, i.e. by 11 August 2011: a) Parties will bear their own legal costs from the date of commencement of these proceedings on 20 May 2011 to the date of the Defendant’s notice of acceptance (if any); and b) The Settlement Sum shall be inclusive of interest accrued from the date of commencement of these proceedings on 20 May 2011; 3. If this Offer to Settle is accepted by the Defendant after 11 August 2011: a) The Defendant is to pay to the Plaintiff the Plaintiff’s costs: a. on a standard basis, from the date of commencement of these proceedings on 20 May 2011 to 11 August 2011, b. on an indemnity basis, from 12 August 2011 up to the date of the Defendant’s notice of acceptance (if any); b) The Defendant is to pay to the Plaintiff interest at 1.5% per annum, for the period from 20 May 2011 up to the date of payment; 4. Costs to be paid pursuant to this Offer to Settle, to be taxed if not agreed; and 5. The Plaintiff is to discontinue its claims against the Defendant, and the Defendant is to discontinue its counterclaim against the Plaintiff, within 7 days of payment of the sums payable pursuant to this Offer to Settle.

On 8 February 2012, the plaintiff applied in summons no 603 of 2012 for bifurcation of the suit to determine the issues of liability and quantum in separate trials. The court granted the application on 7 March 2012. The trial on liability was heard in October 2012. On 26 March 2013, I issued my decision, allowing part of the plaintiff’s claim and dismissed the rest. I also dismissed the defendant’s counterclaim. I ordered damages to be assessed by the registrar.

On 22 April 2013, a few days before expiry of the period to file notice of appeal against my decision, the defendant’s solicitors, M/s Jimmy Yap & Co (“JYC”), wrote to MPillay to ask if the plaintiff was “prepared to accept the outcome of the matter without taking the matter further to the Court of Appeal” [emphasis in original]. The letter further stated that if the plaintiff was prepared to do so, the defendant would also not appeal. MPillay replied on 23 April 2013 stating that “[i]f your client’s proposal is made with the intention of avoiding further time and costs, please be reminded that our client’s Offer to Settle remains open for acceptance”. There was no further correspondence on this matter and on 25 April 2013, both parties filed notices of appeal against that part of my decision that found the defendant liable to the plaintiff with damages to be assessed. However the defendant did not appeal against the dismissal of its counterclaim.

On 24 September 2013, the Court of Appeal heard the appeals. The plaintiff’s appeal was allowed and the defendant’s appeal dismissed. Later that same day, JYC sent to MPillay a document entitled “Notice of Acceptance of Plaintiff’s Offer to Settle”. This document (“the NOA”) purported to accept the OTS. It stated as follows:

The Defendant accepts your Offer to Settle dated the 28th day of July 2011 on the following terms:

1. The Defendant is to pay to the Plaintiff the sum of S$2,588,666. 2. The Defendant is to pay to the Plaintiff the Plaintiff’s costs of the Claim and Counterclaim to be taxed if not agreed: on a standard basis from the date of commencement of these proceedings on 20 May 2011 to 11 August 2011; b) on an indemnity basis, from 12 August 2011 up to the date of this Notice of Acceptance. 3. The Defendant is to pay to the Plaintiff interest at 1.5% per annum for the period from 20 May 2011 up to the date of payment. 4. The Plaintiff is to discontinue its claims against the Defendant within 7 days of payment of the aforesaid sum of $2,588,666, interest and costs. By a letter dated 25 September 2013 from MPillay to JYP, MPillay stated, among other things, that the OTS “remained open for acceptance so long as the Court had not disposed of the matter in respect of which the OTS was made” and as “that had ceased to be the case before [the defendant’s] purported acceptance”, the OTS was “no longer capable of being accepted”. There was further exchange of correspondence between the solicitors on whether the defendant’s purported acceptance of the OTS was valid and therefore had compromised the action, but such correspondence are not relevant for my determination of the issue. The defendant’s submissions

The defendant’s position was that the OTS did not specify a time for acceptance. Order 22A r 3(2) of the Rules of Court (Cap 322, R5, 2006 Rev Ed) (“ROC”) states that an offer may be withdrawn at any time after the expiry of 14 days from the date of service of the offer on the other party, provided that at least one day’s prior notice is given. Order 22A r 3(5) of the ROC provides that, if not withdrawn, the offer may be accepted at any time before the court disposes of the matter in respect of which the offer is made. As no such notice was given in this case, it remained open for acceptance at the time the NOA was served.

The defendant submitted that, at the time of the NOA, the court had not disposed of the matter in respect of which the OTS was made (O 22A r 3(5)). This was because the OTS was made in respect of the entire suit as it dealt with both issues of liability and damages. As at the date of the NOA, 24 September 2013, only the issue of liability had been disposed of. The issue of damages, which remain to be assessed, has not yet been disposed of.

The defendant highlighted that the OTS was an offer to “fully and finally settle all of the Plaintiff’s claims, all of the Defendant’s counterclaims and all matters arising in the Suit”. While it was a term of the OTS that the defendant was to discontinue its counterclaim against the plaintiff, it had become irrelevant by 24 September 2013 because there was no counterclaim for the defendant to discontinue. The defendant further pointed out that, even after the defendant’s counterclaim had been dismissed by the High Court, the plaintiff itself had maintained, by way of a letter, that the OTS remained open for acceptance by the defendant.

The defendant also submitted that its position made eminent sense. Its argument was as follows: The defendant’s position may be tested by looking at the matter from the plaintiff’s perspective. Pursuant to O 22A r 9(1) of the ROC, where an offer to settle made by a plaintiff: is not withdrawn and has not expired before the disposal of the claim in respect of which the offer to settle is made; and is not accepted by the defendant, and the plaintiff obtains a judgment not less favourable than the terms of the offer to settle; the plaintiff is entitled to costs on the standard basis to the date the offer to settle was served, and costs on the indemnity basis from that date, unless the court orders otherwise. Could the plaintiff rely on O 22A r 9(1) of the ROC, and its OTS if it were subsequently awarded damages of more than S$2,588,666 (assuming the OTS was neither accepted nor withdrawn in the interim)? The answer must be “yes”. Otherwise, the plaintiff would be put in the absurd situation of its OTS being nullified, and losing the advantage of making...