Crest Capital Asia Pte Ltd and others v OUE Lippo Healthcare Ltd (formerly known as International Healthway Corp Ltd) and another

• Jurisdiction: Singapore
• Judge: Judith Prakash JCA
• Judgment Date: 24 May 2021
• Neutral Citation: [2021] SGCA 57
• Published date: 28 May 2021
• Docket Number: Civil Appeal No 113 of 2020
• Year: 2021
• Hearing Date: 29 January 2021
• Plaintiff Counsel: Tan Chee Meng SC, Chng Zi Zhao Joel, Leo Zhen Wei Lionel, Wong Zheng Hui Daryl and Li Yiling Eden (WongPartnership LLP)
• Citation: [2021] SGCA 57
• Defendant Counsel: Toby Landau QC (instructed), Tham Lijing and Rachel Low Tze-Lynn (Tham Lijing LLC),Lee Eng Beng SC, Cheng Wai Yuen Mark, Chow Chao Wu Jansen, Sasha Anselm Gonsalves and Dawn Seow (Rajah & Tann Singapore LLP)
• Court: Court of Appeal (Singapore)
• Subject Matter: Judgment and orders,Civil Procedure,Costs

Steven Chong JCA (delivering the judgment of the court): Introduction

This judgment deals with two issues occasioned by this court’s decision in allowing the appeal by the fourth and fifth appellants in CA/CA 113/2020 (“VMF3” and “VMIII”, respectively), while dismissing the appeal by the first to third appellants (“Crest Capital”, “Crest Catalyst” and “EFIII”, respectively) (collectively, the “Crest Entities”): see Crest Capital Asia Pte Ltd and others v OUE Lippo Healthcare Ltd (formerly known as International Healthway Corp Ltd) and another and other appeals [2021] SGCA 25 (“the Appeal Judgment”).

The first issue pertains to a consequential order (“the Consequential Order”) sought by VMF3 and VMIII (the “Consequential Order Issue”):

that the sums VMIII paid the [respondents] in satisfaction of the judgment sum be restored to VMIII, together with interest at 5.33% p.a. calculated from the date of receipt.

The second issue pertains to how costs should be ordered in relation to the respondents’ claims against VMF3 and VMIII, both at first instance and on appeal (“the Costs Issue”).

In the Appeal Judgment at [3], we cautioned that when different principals are represented by the same set of lawyers, it is essential to undertake a separate factual inquiry as to whether the acts or omissions of their representatives and/or agents can be attributed to each of the principals. An omission to do so may lead the parties to overlook this critical distinction, resulting in the court treating these principals alike although they might in fact be situated differently. The risk of unintended consequences in treating all the principals alike can also occur in a post-judgment scenario when one of the principals, as a judgment debtor, pays the full judgment debt in discharge of the joint and several liability of all the principals. That risk materialised in this case precisely because one of the appellants, VMIII, paid the judgment debt and the costs in discharge of the joint and several liability of all the Crest Entities. Through the two issues outlined above, VMIII seeks to undo the unintended consequences of its payment of the judgment debt and costs on behalf of all the Crest Entities.

After due consideration of the parties’ respective submissions on the two issues, our decision, in brief, is as follows: On the Consequential Order Issue, the sums paid by VMIII to the respondents should not be restored to VMIII. The sums paid by VMIII were, in our view, meant to discharge the joint and several liability of the same indivisible judgment debt on behalf of all the Crest Entities. Therefore, VMIII should look to Crest Capital, Crest Catalyst and EFIII for reimbursement of the funds that it had paid out on behalf of all the Crest Entities. On the Costs Issue, the costs order at first instance should be upheld. VMIII should likewise look to Crest Capital, Crest Catalyst and EFIII for reimbursement of the costs that it had paid out on behalf of all the Crest Entities. As for the costs order on appeal, the respondents are to pay VMF3 and VMIII costs fixed at $30,000 inclusive of disbursements. Such costs are to reflect the limited ground on which their appeals succeeded.

Consequential Order Issue Background

At first instance, the Crest Entities were found to be jointly and severally liable (along with others) to the respondents to the tune of some $12.6m. Thereafter, the respondents’ solicitors, Rajah & Tann Singapore LLP (“R&T”) wrote to the Crest Entities’ solicitors at the time, WongPartnership LLP (“WongP”) demanding that the Crest Entities pay the judgment sum by late July 2020. In the same month, the Crest Entities filed a notice of appeal, and applied for a stay of execution. However, the stay application was eventually withdrawn.

In early August 2020, the respondents commenced various enforcement proceedings against the Crest Entities. On 18 August 2020, Tham Lijing LLC took over from WongP as solicitor for VMF3 and VMIII. On 28 August 2020, after Tham Lijing LLC had taken over as solicitor for VMF3 and VMIII, WongP proposed to R&T for the judgment sum to be paid over three instalments in return for a stay of the enforcement proceedings. It is not disputed that this proposal by WongP was agreed to by all the Crest Entities on 29 August 2020. VMIII thereafter paid the sum of about $10.3m to the respondents for the judgment debt and the interest accruing thereon.

After VMF3’s and VMIII’s appeals were allowed, Tham Lijing LLC wrote to R&T, demanding repayment of the sums referred to in the preceding paragraph with interest. R&T declined to do so.

The parties’ positions VMF3 and VMIII

VMF3 and VMIII rely on the established principle that upon a successful appeal, “the appellate court will direct the respondent to restore to the appellant the money paid or the property transferred under the original order”: see Charles Mitchell. Paul Mitchell and Stephen Watterson, Goff & Jones: The Law of Unjust Enrichment (Sweet & Maxwell, 9th Ed, 2016) (“Goff & Jones”) at para 26-02. According to them, VMIII paid out the $10.3m under legal compulsion, due to (a) the enforcement proceedings against it; and (b) its joint and several liability for the judgment sum. Since VMIII is no longer liable to the respondents, the bases underlying VMIII’s payments are extinguished. Therefore, if the respondents are not ordered to repay the $10.3m to VMIII, it would be tantamount to rendering VMIII’s appeal nugatory and penalising VMIII for complying with the orders at first instance.

The respondents

The respondents raise six grounds to oppose the Consequential Order sought by VMF3 and VMIII: First, the $10.3m was neither paid only by VMIII, nor paid to discharge only VMIII’s liability. There was no suggestion that (i) the $10.3m was paid only on behalf of VMIII and VMF3; or that (ii) the $10.3m was paid in exchange for a stay of the enforcement proceedings only as against VMF3 and VMIII. On the contrary, the $10.3m was paid by VMIII on behalf of all the Crest Entities, and received by the respondents on that basis. That the money was paid by VMIII does not mean that the money was paid on behalf of VMIII alone. Second, the correspondence between R&T and WongP resulted in a binding contract between the respondents and the Crest Entities, where the Crest Entities undertook to make payments to the respondent and in exchange, the respondents agreed to withdraw the enforcement proceedings. There is no provision in this alleged contract that the sums paid by VMIII are to be refunded to VMIII in the event that VMIII’s appeal succeeds. Third, the respondents were not unjustly enriched. There remains the alleged contract between the Crest Entities and the respondents (see [(b)] above) which bar any claims in unjust enrichment. Further, there is no total failure of consideration since the $10.3m payment discharged Crest Capital, Crest Catalyst and EFIII’s liability, which was upheld on appeal. For the same reasons, the respondents have detrimentally changed their position. Fourth, it would be unfair for the respondents to repay the $10.3m and to revert to having an unsatisfied judgment debt against Crest Capital, Crest Catalyst and EFIII. The respondents have proceeded on the basis of the judgment sum being satisfied in full and have therefore not taken any further enforcement steps against Crest Capital, Crest Catalyst and EFIII. Fifth, the respondents submit that it is for a judgment debtor who is jointly and severally liable with others, and who pays the judgment debt on behalf of all the judgment debtors, to seek contribution from the other judgment debtors. VMIII should therefore look to the other judgment debtors, ie, Crest Capital, Crest Catalyst and EFIII, and not the respondents for reimbursement of the $10.3 million or any part thereof. Sixth, there is neither evidence that the $10.3m actually came from VMIII nor evidence as to why VMIII would pay the entire judgment debt for Crest Capital, Crest Catalyst and EFIII notwithstanding the finding of joint and several liability of all the Crest Entities by the court below. In fact, the precise position of these three entities as regards VMIII’s application for the Consequential Order remains unknown to this court. In fact, the post-judgment correspondence suggested otherwise, in that the Crest Entities requested the respondents to inform the banks that they wished to apply the funds in VMIII’s and EFIII’s bank accounts (which were subject to garnishee orders) towards the satisfaction of the judgment sum.

Our decision

In our view, it will be helpful to first explain the basis of the rule for the restitution of benefits conferred pursuant to a judgment that is subsequently reversed (which, for convenience, shall be referred to as the “restitutionary rule”). Tham Lijing LLC did not explicitly state that this restitutionary rule is based on unjust enrichment, and we think for good reason. Even the treatise cited by Tham Lijing LLC does not rationalise the restitutionary rule on the basis of unjust enrichment. Instead, the restitutionary rule is justified as part of the court’s “procedural mechanisms whose function is to reduce the risk of judicial error”: Goff & Jones at 26-05. Put differently, the restitutionary rule is rationalised as a practical instrument through which the court can undo the judgment below and results thereof, ie, as a rule of judicial policy. As explained by Lord Nicholls in Nykredit Mortgage Bank PLC v Edward Erdman Group Ltd (formerly Edward Erdman (an unlimited company)) [1997] 1 WLR 1627 at 1637: “when ordering repayment the [court] is unravelling the practical consequences of orders made by the courts below and duly carried out by the unsuccessful party”.

While we set out our reasons in relation to both bases below, in our judgment, the outcome on the facts of this case as regards the Consequential Order...