Cytec Industries Pte Ltd v APP Chemicals International (Mau) Ltd

• Jurisdiction: Singapore
• Court: High Court (Singapore)
• Judge: Andrew Ang J
• Judgment Date: 06 August 2009
• Neutral Citation: [2009] SGHC 177
• Citation: [2009] SGHC 177
• Defendant Counsel: Adrian Tan and Julian Kwek (Drew & Napier LLC)
• Plaintiff Counsel: Yap Yin Soon and Edmund Tham (Allen & Gledhill LLP)
• Published date: 07 August 2009
• Docket Number: Suit No 160 of 2007 (Registrar's
• Date: 06 August 2009
• Subject Matter: Whether equitable defence applied to legal remedy in aid of legal right,Laches,Whether acknowledgment stopped time bar from running,Admissibility of evidence,Equity,Defences,Section 26(2) Limitation Act (Cap 163, 1996 Rev Ed),Limitations of actions,Whether correspondence subject to "without prejudice" privilege,Seller suing for debt owing for purchased goods,Striking out,Civil Procedure,Evidence,Correspondence amounting to acknowledgment of debt,Correspondence contained implied admission of debt

6 August 2009

Andrew Ang J:

Introduction

1 The plaintiff applied for summary judgment in Summons No 777 of 2009 for recovery of a debt owed by the defendant. In so doing, the plaintiff sought to rely on correspondence between its credit re-insurers and the defendant that were marked “without prejudice”. The defendant then applied, by way of Summons No 1974 of 2009 to strike out the portions of the plaintiff’s affidavit referring to and exhibiting such correspondence on the basis that they were privileged.

2 Both the plaintiff’s summary judgment application and the defendant’s striking out application were heard by the same assistant registrar (“AR”). The AR dismissed the striking out application and granted judgment for the plaintiff with respect to part of the alleged debt. In respect of the remainder, the AR gave the defendant conditional leave to defend. The defendant appealed against the entirety of the AR’s decisions in both summonses in Registrar’s Appeals Nos 173 and 174 of 2009 (the former relating to the summary judgment application and the latter to the striking out application). At the conclusion of hearing the Registrar’s Appeals, I dismissed them both and now give my detailed grounds of decision.

Background

3 The defendant is a Mauritian entity, which purchased chemical products from the plaintiff, a Singapore company, as evidenced by 16 purchase orders and their corresponding invoices, bills of lading and bills of exchange. Payments for the purchased goods fell due between 11 November 2000 and 5 May 2001 but were not made, resulting in a debt totalling US$1,626,494.89 (“the Debt”). The plaintiff commenced proceedings for its recovery on 13 March 2007, which was more than six years after 11 of the 16 unpaid invoices had fallen due.

4 At the material time, the defendant was owned and controlled by Asia Pulp & Paper Company Ltd (“APP Singapore”), a Singapore company which had guaranteed the defendant’s payment obligations to the plaintiff. In separate proceedings, namely, Suit No 161 of 2007 which centred around the guarantee provided by APP Singapore, the plaintiff had obtained judgment against APP Singapore in respect of the Debt (see Cytec Industries Pte Ltd v Asia Pulp & Paper Co Ltd [2009] 2 SLR 806). APP Singapore had not disputed the Debt in those proceedings.

5 Here, although the defendant apparently could not dispute the existence of the Debt, it refused to admit to it. Additionally, it pleaded the defence of laches to argue that it would be inequitable for the plaintiff to lay claim to the Debt after such a long period during which documents relating to the Debt had been misplaced and the defendant’s employees who had knowledge of the Debt became no longer contactable. In the alternative, the defendant argued that the amounts due in respect of 11 of the 16 unpaid invoices were time-barred under s 6(1)(a) of the Limitation Act (“the Act”) (Cap 163, 1996 Rev Ed).

6 In response, the plaintiff argued that the defendant had acknowledged the Debt pursuant to s 26(2) of the Act by way of correspondence between the defendant and Coface RBI, the credit re-insurers for the plaintiff. The first was a letter dated 31 July 2001 (“the Coface letter”) from Coface RBI to Dr Raymond Liu (“Dr Liu”), an employee of the defendant at the time, which read as follows:

WITHOUT PREJUDICE

AND SUBJECT TO CONTRACT

…

Dear Raymond

I am embodying a proposal for settlement in this short note:

(a)	APP shall procure a third party payment to Bayer and Cytec for the sum of US$13 million and legal costs within 21 days of any settlement agreement. In return, and subject to the matters below, a new credit insurance line of US$11.7 million shall be granted to APP by Coface.
(b)	APP, Bayer and Coface will jointly agree an annual purchase volume within 48 hours from the date hereof.
(c)	APP will accept drafts for new deliveries maturing at 60 days from sight for a maximum order per month of US$1.2 million. If the draft is unpaid at maturity an avalisation from a Japanese Trading House acceptable to Coface shall be required within 5 working days.
(d)	This offer shall lapse at 1600 hours Singapore time on 3 August 2001.

…

Yours sincerely

[signed]

Guy Lepage

Chairman

7 Subsequently, on 2 August 2001, Dr Liu sent an e-mail (“the Raymond Liu e-mail”) to Guy Lepage as follows:

WITHOUT PREJUDICE

…

Dear Mr. Lepage:

I am sorry to inform you that we can not accept your proposal dated 31 july [sic] 2001. The proposal we offered in the meeting on 31 July 2001 in Singapore is already the best we can do to resolve the overdues considering the difficult situation we are currently in. Please kindly reconsider our proposal so we can start to discuss with Bayer and estimate the volume/value of purchase that we plan to re-route through Bayer/other trading firms. The payment scheme will follow our 110% program, that is the overdue payment will be paid to you in advance based on the 110% value of our purchases. In return you will provide credit insurance coverage to the purchase with 180 days terms.

I hope we can find an agreeable solution soon. Looking forward to hearing from you.

Yours sincerely,

Raymond Liu

[emphasis added]

8 To understand the references to “Bayer” and “110% program” in the above correspondence, it is apposite to refer to my decision in Lanxess Pte Ltd v APP Chemicals International (Mau) Ltd [2009] 2 SLR 769 (“Lanxess Pte Ltd”), an appeal against which was dismissed by the Court of Appeal on 7 July 2009. That was a case brought by Lanxess Pte Ltd against the same defendant in this suit seeking recovery of debts that had been assigned to it by Bayer (South East Asia) Pte Ltd, that is, “Bayer”. In Lanxess Pte Ltd, the defendant had purchased chemical products from Bayer but failed to make full payment. The parties eventually agreed on an instalment payment scheme, that is, the “110% program” referred to in the Raymond Liu e-mail whereby Bayer would continue to supply chemical products to the defendant but would charge a 10% premium over the sale price (see Lanxess Pte Ltd at [14] and [30]). This premium would go towards repayment of the outstanding amounts owed by the defendant to Bayer (ibid). The defendant did not dispute the existence of the debt owed to Bayer, merely whether it had been validly assigned to Lanxess Pte Ltd. That case concluded that Bayer had validly assigned the defendant’s debt to Lanxess Pte Ltd, which was entitled to repayment of that debt.

Issues

9 Four main issues arise in the Registrar’s Appeals before me:

(a) Whether the correspondence in question, namely, the Coface letter and the Raymond Liu e-mail, were subject to “without prejudice” privilege and hence inadmissible.

(b) Whether the plaintiff had made out a prima facie case as to the defendant’s liability for the Debt.

(c) Whether the plaintiff’s claim was time-barred.

(d) Whether the defence of laches was applicable.

10 The first issue relates to Registrar’s Appeal No 174 of 2009 and the remainder to Registrar’s Appeal No 173 of 2009. I will proceed to deal with each of them in turn, but note at the outset that there is substantial overlap between the first and third issues as both would require determining whether there was an acknowledgment of the Debt pursuant to s 26(2) of the Act.

Whether the correspondence in question was subject to “without prejudice” privilege

11 Counsel for the defendant argued that the Coface letter and the Raymond Liu e-mail (see [6] and [7] above) were protected by “without prejudice” privilege as they were expressly labelled as such and were part of negotiations aimed at settlement of a dispute concerning, inter alia, the Debt. According to the defendant, citing Sin Lian Heng Construction Pte Ltd v Singapore Telecommunications Ltd [2007] 2 SLR 433 (“Sin Lian Heng”), even if it might be said that there was an admission of liability in the correspondence, “without prejudice” privilege would still apply to negotiations on quantum. The defendant contended that such was the case here. Further, as could be seen from the English Court of Appeal decision in Forster v Friedland (Unreported, November 1992), “without prejudice” privilege is not limited only to negotiations aimed at resolving the legal issues between the parties but would include any negotiations that were genuinely aimed at the avoidance of litigation.

12 The plaintiff, on the other hand, relied on the analysis of Bradford & Bingley plc v Rashid [2006] 1 WLR 2066 (“Bradford & Bingley”) in Greenline-Onyx Envirotech Phils, Inc v Otto Systems Singapore Pte Ltd [2007] 3 SLR 40 at [17] (“Greenline-Onyx”) for three situations where the “without prejudice” privilege would not apply:

(a) Correspondence discussing only the repayment of an admitted liability (rather than negotiating a compromise to a disputed liability).

(b) The use of a statement as an acknowledgment under s 26(2) of the Act.

(c) The reliance on clear admissions or statements of fact that did not form part of an offer to compromise.

The first represented the view of the majority of the law lords in Bradford & Bingley (see [20] below), and the latter two were derived from two separate minority opinions (see [33] and [34] below). I note that the Court of Appeal in Greenline-Onyx applied Bradford & Bingley in its entirety without endorsing the approach of the majority or the minority, leaving it open as to which view represented the correct balance between the “without prejudice” rule and the principle of acknowledgment. Because the contents of the letter in question clearly fall within all these formulations of principle expressed by their Lordships in Bradford & Bingley, the Court of Appeal was of the view that it was not necessary to decide which of the formulations ought to be followed for purposes of their judgment. Similarly, in the present case, the plaintiff argued that on all three counts, the Coface letter and the Raymond Liu e-mail were not subject to...