Bank of India v Rai Bahadur Singh
| Jurisdiction | Singapore |
| Judgment Date | 18 January 1994 |
| Date | 18 January 1994 |
| Docket Number | Civil Appeal No 184 of 1992 |
| Court | Court of Appeal (Singapore) |
[1994] SGCA 7
L P Thean JA
,
S Rajendran J
and
Warren L H Khoo J
Civil Appeal No 184 of 1992
Court of Appeal
Contract–Formation–Capacity of parties–Contract entered into by minors–Whether contract void or voidable–Whether Infants Relief Act 1874 (c 62) (UK) applicable–English Law–Applicability–Whether Infants Relief Act 1874 (c 62) (UK) applied in Singapore by reason of s 5 (1) Civil Law Act (Cap 43, 1988 Rev Ed)–Whether issue part of “mercantile law generally”–Proviso in s 5 (1) Civil Law Act (Cap 43, 1988 Rev Ed) applied–Whether applicable to common law or written law only
The appellant was a bank which granted facilities to a company. The facilities were secured, inter alia, by a letter of set-off and appropriation (“letter of set-off”) executed by the respondents. The letter empowered the appellant to set off all debts owing to it by the company with money from the respondents' accounts with the bank. At the time of execution of the letter, the respondents were above 18 but below 21 years of age. A fixed deposit account was then opened by the respondents with the appellant. Three years later, when the respondents were over 21 years of age, the first respondent requested the extension of the fixed deposit account and the appellant complied.
Two years later, pursuant to the letter of set-off, the appellant appropriated the sum of money in the respondents' fixed deposit account as a set-off against the company's debts. The respondents commenced an action against the appellant to recover this sum of money. The respondents claimed that the letter of set-off was void and unenforceable as against them by reference to the English Infants Relief Act 1874 (c 62) (UK) (“the Act”) on the basis that the Act was applicable by reasons of s 5 (1) of the Civil Law Act (Cap 43, 1988 Rev Ed), as at the date of its execution they were under 21 years of age. The respondents applied for summary judgment but the assistant registrar gave the appellant unconditional leave to defend. On appeal, the judge allowed the appeal and entered judgment against the appellant. The crucial question before the judge was whether the letter of set-off was void by reference to the Act, on the basis that the Act was applicable in Singapore by reason of s 5 (1) of the Civil Law Act. The judge held that s 5 (1) of the Civil Law Act applied. He characterised the issue as one with respect to mercantile law generally and, having done that, he proceeded to identify the mercantile law that would be administered in England in the like case at the corresponding period and found that the law applicable was the Act, and he was satisfied that the Act was “a law dealing with mercantile law generally”. Under the Act, all contracts (other than contracts for necessaries) made by infants were rendered absolutely void. Accordingly, he held that the letter of set-off was void. The appellant appealed.
In considering the application of s 5 (1) of the Civil Law Act, there were three questions which had to be resolved: Firstly, whether the issue was one with respect to mercantile law generally. Secondly, if the answer to the first question was in the affirmative, whether the concluding part of s 5 (1), namely, “unless in any case other provision is or shall be made by any law having force in Singapore” (“the proviso”) applied. Thirdly, if the answer to the second question was in the negative, then what was the law with respect to that issue which was administered in England in the like case at the corresponding period, if the same issue had arisen or had to be decided in England.
Held, dismissing the appeal:
(1) The issue whether the letter of set-off was void or voidable went beyond the capacity to enter into a contract and into the realm of legal consequences of that contract. However, that legal consequence of the contract alone did not render the issue as one with respect to mercantile law. The issue was one concerning the rights and obligations of the parties to the contract, and on the basis of the definition of mercantile law, that department of law normally regulating “the rights and obligations of persons engaged in business adventures”, it was an issue with respect to mercantile law. If the transaction in the present case was made by adults, mercantile law would undoubtedly apply in determining their rights and obligations thereunder, and the issue whether the transaction was void or voidable would be clearly one with respect to mercantile law. It did not cease to be an issue with respect to mercantile law merely because the transaction was entered into by minors. As such, the judge was correct in his conclusion that the issue was one with respect to mercantile law: at [17].
(2) The proviso to s 5 (1) barred a consideration of English law, if there was a provision of local law governing the determination of the issue. Adopting a purposive approach, the term “any law” meant “any written law” and did not include common law. If the word “law” included common law, it would be extremely wide and the proviso would have the effect of emasculating s 5 (1). That clearly could not be the intention of the Legislature. Also, the words “provision is or shall be made by any law having force in Singapore” were wholly inappropriate if the words “any law” meant or referred to common law as well: at [18] and [21].
(3) The question, therefore, was what the mercantile law in England was, with respect to the issue, which would be administered in the like case at the corresponding period. The issue which was to be determined was whether a mercantile transaction entered into by minors was void or voidable. The law which would be administered in determining the issue at that time would be the Act. Although the Act on the face of it was not a mercantile statute, yet the provisions thereof impinged on mercantile transactions entered into by minors. In that respect and to that extent, those provisions were mercantile law. Accordingly, the Act was applicable in the determination of the issue and under the Act, the letter of set-off was absolutely void: at [24].
Seng Djit Hin v Nagurdas Purshotumdas & Co (1920) 14 SSLR 181, CA (refd)
Seng Djit Hin v Nagurdas Purshotumdas & Co [1923] AC 444, PC (refd)
Shaik Sahied bin Abdullah Bajerai v Sockalingam Chettiar [1933] AC 342 (folld)
Vulcan Match Co v Herm Jebsen & Co (1884) 1 Ky 650 (refd)
Application of English Law Act (Cap 7A, 1994 Rev Ed)
Charter of Justice 1826 (c 85) (UK)
Civil Law Act (Cap 43,1988 Rev Ed)s 5 (1) (consd)
Civil Law Ordinance (Cap 24,1955 Rev Ed)ss 2, 3 (g), 5 (1)
Bills of Exchange Ordinance1949 (No 75 of 1949) (Malaya)
Infants Relief Act 1874 (c 62) (UK)
Malaysia Act 1963 (Act 26 of 1963) (Malaya)s 74
Minors' Contracts Act 1987 (c 13) (UK)
Modification of Laws (Bills of Exchange) (Extension) Order 1965 (LN 260 of 1965) (M'sia)
Wong Boon Teck and Victor Sim (Khattar Wong & Partners) for the appellant
Dedar Singh Gill (Drew & Napier) for the respondents.
Judgment reserved.
L P Thean JA(delivering the judgment of the court):
1 The appellants are a bank. In 1986 they granted facilities to the company S Pritam Singh Co Pte Ltd (“the company”), which were secured, inter alia, by an instrument called the letter of set-off and appropriation (“letter of set-off”) executed by the two respondents abovenamed. The letter of set-off was signed by both of them on 26 March 1986, and as of that date, both of them were above 18 but below 21 years of age. The material terms of the letter of set-off are as follows:
Bank of India
Singapore branch
Dear Sirs
In consideration of your...
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