ANC Holdings Pte Ltd v Bina Puri Holdings Bhd

Judgment Date03 May 2013
Date03 May 2013
Docket NumberSuit No 599 of 2011
CourtHigh Court (Singapore)
ANC Holdings Pte Ltd
Plaintiff
and
Bina Puri Holdings Bhd
Defendant

[2013] SGHC 97

Vinodh Coomaraswamy JC

Suit No 599 of 2011

High Court

Contract—Illegality and public policy—Common intention between parties on entering into agreement that one party would employ bribery in performing its part of agreement—Whether that precluded party from enforcing its rights under agreement

Contract—Illegality and public policy—Party relying on illegality as defence despite not having pleaded it—Whether party could so rely—Whether court had duty to take cognisance of evidence of illegality regardless of how evidence emerged and even though neither illegality nor underlying facts were pleaded by way of defence

The plaintiff and the defendant entered into a written agreement (‘the Agreement’) under which the plaintiff agreed to assist Bina Puri Saudi Co Ltd (‘Bina Puri Saudi’), a subsidiary of the defendant, in securing housing construction projects in Saudi Arabia. In exchange, the defendant agreed to pay the plaintiff a commission of 5% of the value of the projects that Bina Puri Saudi secured.

Thereafter, Bina Puri Saudi submitted bids for two public housing projects planned by the Saudi General Housing Authority (‘the Authority’). Both of these bids succeeded. The plaintiff claimed the commission from the defendant under the Agreement, on the basis that it was the effective cause of Bina Puri Saudi securing the projects. The defendant declined to pay the commission. The plaintiff commenced this action to recover the commission.

On the pleadings, the plaintiff's claim turned entirely on the single question of whether the plaintiff's services were the effective cause of Bina Puri Saudi's securing the projects. During the trial, however, the defendant's witnesses gave evidence that it had been the joint intention of plaintiff and defendant in entering into the Agreement that the plaintiff would assist Bina Puri Saudi to secure the projects by paying bribes. The defendant contended, on the basis of this evidence, that the plaintiff was precluded from enforcing its claim by the doctrine ex turpi causa, non oritur actio, even though the defendant had never pleaded either this defence or the necessary underlying facts.

There were four issues for decision. The first was whether the plaintiff was the effective cause of the Authority awarding the projects to Bina Puri Saudi. The second was whether the defendant was precluded from relying on ex turpi causa as a defence by reason of its failure to plead it. The third was whether the plaintiff and the defendant had the common intention to secure the award of the projects to Bina Puri Saudi by the plaintiff paying bribes. The fourth was whether this common intention of the parties rendered the plaintiff's claim unenforceable under the ex turpi causa doctrine.

Held, dismissing the plaintiff's claim:

(1) On the first issue, the plaintiff failed to establish that it was the effective cause of Bina Puri Saudi knowing of the construction projects planned by the Authority. It also failed to establish that it had advised Bina Puri Saudi on how to price its bids competitively for the projects. The plaintiff could adduce evidence only of surrounding circumstances from which a court could infer that the plaintiff was the effective cause of Bina Puri Saudi's securing the projects. But these circumstances were insufficient in themselves to discharge the plaintiff's burden of proving on the balance of probabilities that it was the effective cause of Bina Puri Saudi's securing the projects, given that the plaintiff could not show even one specific way in which it had rendered assistance to Bina Puri Saudi.

(2) On the second issue, the defendant's failure to plead illegality did not preclude it from raising and relying on ex turpi causa doctrine as a defence. Once there was evidence which engaged the doctrine - in this case, evidence that the Agreement had an illegal object or was intended to be performed in an illegal manner - the court had a positive duty to take cognisance of it, regardless of how the evidence might have emerged and even though the underlying facts were not pleaded, provided that the court was satisfied that it had all the relevant facts before it. The court was so satisfied in the present case, because the plaintiff had had adequate opportunity to address the evidence of illegality put forth by the defendant's witnesses: at [84] to [86] and [98] to [101].

(3) On the third issue, there was no doubt that both plaintiff and defendant intended that the plaintiff would make some form of payments to third parties in Saudi Arabia for the purpose of securing the projects. It was not credible that these payments were intended as legitimate compensation for market intelligence and other assistance provided by those third parties to advance Bina Puri Saudi's bids; and there was contemporaneous documentary evidence supporting the oral evidence of the defendant's witnesses that the intended payments were to be bribes. Therefore, it was more likely than not that the common intention of plaintiff and defendant in entering into the Agreement was that the plaintiff would pay bribes in order to ensure that Bina Puri Saudi secured the projects.

(4) On the fourth issue, the Agreement was a contract entered into with the intention of committing an illegal act. No court could permit the plaintiff to enforce its rights under the Agreement: at [139].

[Observation: Strictly speaking, ex turpi causa was not a defence even though it was often referred to as such. It was in truth a doctrine, not a defence, and a doctrine founded not on principle but on high policy. Applying the doctrine and upholding the underlying policy on the facts of a certain case had the effect of affording the defendant in that case a defence, but only incidentally so: at [78].]

Ashmore, Benson, Pease & Co Ltd v AVDawson Ltd [1973] 1 WLR 828 (refd)

Edler v Auerbach [1950] 1 KB 359 (folld)

Emporium Holdings (Singapore) Pte Ltd v Knight Frank Cheong Hock Chye & Baillieu (Property Consultants) Pte Ltd [1994] SGCA 147 (refd)

Hall v Hebert (1993) 101 DLR (4 th) 129 (refd)

Holman v Johnson (1775) 1 Cowp 341; 98 ER 1120 (refd)

Koon Seng Construction Pte Ltd v Chenab Contractor Pte Ltd [2008] 1 SLR (R) 375; [2008] 1 SLR 375 (folld)

National Aerated Water Co Pte Ltd v Monarch Co, Inc [2000] 1 SLR (R) 74; [2000] 2 SLR 24 (refd)

Nova Management Pte Ltd v Amara Hotel Properties Pte Ltd [1992] 3 SLR (R) 918; [1993] 2 SLR 289 (folld)

Sim Tony v Lim Ah Ghee [1994] 2 SLR (R) 910; [1994] 3 SLR 224 (folld)

St John Shipping Corp v Joseph Rank Ltd [1957] 1 QB 267 (refd)

Stone & Rolls Ltd v Moore Stephens [2009] 1 AC 1391 (refd)

Tinsley v Milligan [1994] 1 AC 340 (refd)

United Project Consultants Pte Ltd v Leong Kwok Onn [2005] 4 SLR (R) 214; [2005] 4 SLR 214 (refd)

Rules of Court (Cap 322, R 5, 2006 Rev Ed) O 18 r 8

P E Ashokan and Sheryl Cher (Khattar Wong LLP) for the plaintiff

Chia Foon Yeow (Loo & Partners LLP) for the defendant.

Judgment reserved.

Vinodh Coomaraswamy JC

[Editorial note: Paragraphs 1-147 are summarised in the headnote, while paras 1-18, 71-102 and 136-147 (summarised in the headnote in holdings (2) and (4) and the ‘Observation’) are reported below in full.

The ‘Case (s) referred to’ and ‘Legislation referred to’ in the headnote list the cases and legislation which are referred to in the paragraphs reported below.

The complete text of the judgment (unreported version) is available on Law Net.]

Overview

1 This is an action in contract for a fixed sum of money. Pursuant to a written agreement between the plaintiff and the defendant, the plaintiff agreed to assist a subsidiary of the defendant in securing housing construction projects in Saudi Arabia. In consideration for that, the defendant agreed to pay the plaintiff a commission of 5% of the value of the projects that the subsidiary secured. The plaintiff's case is that it fulfilled its obligation under the agreement. It therefore claims from the defendant its commission in the sum of S$4,632,273.81.

2 On the pleadings, the plaintiff's claim turned entirely on the single question of whether the plaintiff's services were the effective cause of the defendant's subsidiary securing the projects. During the trial, however, an issue arose entirely outside the pleadings. The defendant's witnesses gave evidence that it had been the joint intention of both the plaintiff and the defendant in entering into the agreement that the plaintiff's assistance to the defendant's subsidiary would consist of paying bribes to secure the projects. The defendant contends - on the basis of this evidence - that the plaintiff is precluded from enforcing its claim by the doctrine ex turpi causa, non oritur actio(‘ex turpi causa’). The defendant contends that the plaintiff is so precluded even though the defendant has never pleaded either this defence or the necessary underlying facts. The plaintiff, not unnaturally, strenuously denies the defendant's allegation of fact and also its entitlement in law to rely on ex turpi causa.

Background facts

3 The plaintiff is a company incorporated in Singapore. It was incorporated on 6 April 2010. Chan Lai Thong (‘Chan’), a Singaporean, is its managing director and a shareholder. Dr Abdallah Adel M Alfageer (‘Dr Abdallah’) is a Saudi national and a director and shareholder of the plaintiff.

4 The defendant is a public company incorporated in Malaysia. It is listed on the Kuala Lumpur Stock Exchange. Through its subsidiaries, the defendant is in the business of holding investments, civil and building engineering management and property development, amongst other business. The defendant's key personnel are:

(a) Matthew Tee Kai Woon (‘Tee’), Executive Director.

(b) Lee Seng Fong (‘Lee’), General Manager for Projects.

(c) Syed Nasser bin Syed Omar (‘Syed Nasser’), Group...

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