Chok Boon Hock v Great Eastern Life Assurance Co Ltd
| Judge | Goh Joon Seng J |
| Judgment Date | 11 July 1998 |
| Neutral Citation | [1998] SGHC 234 |
| Subject Matter | Agency agreement,Contract,Striking out,Whether implied term to exercise discretion reasonably,Collateral contracts,Estoppel,Whether agreement construed by reference to commercial purpose,Variation to agent's commission,Whether conduct gives rise to collateral contract not to make variation without prior consultation,Pleadings,Equity,Statement of claim,Estoppel by convention,Principles,Agent consulted on previous variations,O 18 r 19 Rules of Court 1996,Civil Procedure,Contractual terms |
| Plaintiff Counsel | Kenneth Tan SC (instructed) and Stephen Soh (Bernard, Rada & Partners) |
| Published date | 19 September 2003 |
| Court | High Court (Singapore) |
| Defendant Counsel | K Shanmugam SC and Andrew Ho (Allen & Gledhill) |
The defendant is a life assurance company. It has been in business in Singapore since 1908.
2.The defendant conducts its business principally through agents. The agents are classified in various tiers and designations in rising order of seniority as follows:
| First tier: | (i) | standard agents |
| (ii) | senior agents | |
| (iii) | agency supervisor/carrer agents | |
| Second tier: | divisional sales officers | |
| Third tier | group sales managers |
3.The plaintiff became a standard agent of the defendant pursuant to the terms of an agency agreement dated 2 June 1983 (`the agency agreement`). He rose through the ranks and became a group sales manager (`GSM`) pursuant to an agreement dated 8 February 1993 (`the GSM agreement`).
4.Clause 4(a) of the agency agreement states:
The remuneration of the agent shall be by way of commission at the rate and subject to the terms specified in the Schedule of Commission attached to and forming part hereof ...
5.The Schedule of Commission in setting out the commission structure for an agent also states:
This schedule is subject to variation from time to time at the sole discretion of the company which shall give 30 days written notice thereof to the agent at his last known address` [`the variation proviso`].
6.Clause 17 of the agency agreement states:
The agreement may be terminated:
(a) by either party upon 30 days notice in writing assigning no reason therefor;
...
(c) if the agent does not accept any variations in the Schedule.
...
7.The relevant clauses of the GSM agreement state:
2 The company agrees to pay and the life assurance sales representative agrees to accept as compensation in full for all services rendered under this agreement the commission as set forth in the Schedule of Commission attached hereto or at such rate and manner as the company may at its discretion prescribe from time to time.
...
10 This agreement shall automatically cease in the event of:
(a) the termination of the life assurance sales representative`s agency agreement with the company [referring to the agency agreement];
...
11(a) Either party hereto may terminate this agreement by giving the other 30 days notice in writing to that effect...
...
17 This agreement supersedes all previous agreements, if any, entered into by both parties, except the agency agreement.
...
8.The Schedule of Commission attached to the GSM agreement in setting out the commission structure for a GSM also states in item 13.2 (`the variation clause`):
13.2 The company may at its discretion from time to time vary all quotas, persistency ratio and all commissions in this schedule, but the company is required to give the life assurance sales representative a minimum of three months notice in writing always ending on 31 December, of its intentions to make any variation.
9.The plaintiff was a member of the Great Eastern Life Sales Representatives Guild (`the Guild`) since 1983. The Guild is a registered society formed by the agents of the defendant to promote their interests. Membership of the Guild is voluntary.
10.On 16 September 1996, the plaintiff and other GSMs were requested to attend a meeting to be held on 18 September 1996 at which a presentation of the new commission structure would be made by the management of the defendant. At this meeting it was announced that there would be reduction in the commission payments under the new commission structure with effect from 1 January 1997.
11.A further briefing was given by the defendant to the GSMs on 20 September 1996 on the proposed variations to the commission structure.
12.On 23 September 1996, the defendant wrote to the agents, including the plaintiff, giving written notice of the variations to the commission structure with effect from 1 January 1997.
13. The proceedings
On 16 August 1997, the plaintiff commenced these proceedings for principally a declaration that the variations to the commission structure are invalid and of no effect. The reasons are set out in [para ] 13 to [para ] 17 of the statement of claim.
14.On being served with the writ endorsed with the statement of claim, the defendant entered appearance and applied by summons-in-chambers 7000 of 1997 (`SIC 7000`) under O 18 r 19 of the Rules of Court 1996 and under the inherent jurisdiction of the court for an order that the statement of claim be struck out and the action dismissed with costs. The grounds for the application are that the statement of claim
(i) ... discloses no reasonable cause of action against the defendant;
(ii) ... is scandalous, frivolous or vexatious;
(iii) ... may prejudice, embarrass or delay the fair trial of the action; and
(iv) ... is an abuse of the process of the court.
At the same time, the defendant also filed its defence.
15.When SIC 7000 came up for hearing before the assistant registrar, he made an order in terms of the defendant`s application with costs fixed at $4,000. The plaintiff appealed. The appeal came before me. I dismissed it with costs. The plaintiff has appealed to the Court of Appeal. I now give my reasons.
16. My reasons
To deal with SIC 7000, it is necessary to set out extensively [para ] 13 to [para ] 17 of the statement of claim. They read:
13 The plaintiff says that the aforesaid changes to the commission rates and/or to the commission payment terms are invalid and/or unjustified, for the following reasons:
13.1 the changes are in breach of his agreements with the company. In this regard, the company is not entitled to rely on the terms of the variation clauses [referring to the variation proviso in the agency agreement and the variation clause in the GSM agreement] as these terms are wholly contrary to and/or inconsistent with the main object, intention and/or commercial purpose of the agreements in question, namely, to pay commission and/or remuneration to the plaintiff, at the agreed rates, in exchange for the plaintiff`s services in canvassing proposals and/or securing policies on behalf of the company and/or in recruiting, training and supervising the various agents under his charge; and
13.2 further, or in the alternative, the agreements in question were also entered into on the company`s standard terms and the variation clauses are unreasonable and/or void under s 3 of the Unfair Contract Terms Act (Cap 396), in that they purport to allow the company to vary the commission rates and/or commission payment terms as it pleases without any or any reasonable restriction or qualification whatsoever.
14 Further, or in the...
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