Greenline-Onyx Envirotech Phils, Inc. v Otto Systems Singapore Pte Ltd

• Jurisdiction: Singapore
• Judge: Chan Sek Keong CJ
• Judgment Date: 26 April 2007
• Neutral Citation: [2007] SGCA 25
• Citation: [2007] SGCA 25
• Date: 26 April 2007
• Published date: 11 May 2007
• Plaintiff Counsel: Tan Kah Hin (Choo Hin & Partners)
• Docket Number: Civil Appeal No 78 of 2006
• Defendant Counsel: Teh Ee-von (Infinitus Law Corporation)
• Court: Court of Appeal (Singapore)
• Year: 2007

26 April 2007

Chan Sek Keong CJ (delivering the grounds of decision of the court):

1 This was an appeal against the decision of Judith Prakash J (“the trial judge”) in Otto Systems Singapore Pte Ltd v Greenline-Onyx Envirotech Phils, Inc[2006] 4 SLR 924 (“Otto”), who allowed the application by the respondent for leave for trial of the preliminary issue under O 33 rr 2 and 5 of the Rules of Court (Cap 322, R 5, 2006 Rev Ed) as to whether the appellant had, by its letter dated 23 May 2002 and/or other documents, acknowledged its debt to the respondent.

2 At the conclusion of the hearing of the appeal, we unanimously dismissed the appeal and reaffirmed the decision of the trial judge. We now give the reasons for our decision.

Facts

3 The appellant is a company incorporated in the Philippines and it carries on the business of waste management and waste collection, transportation and disposal. The respondent is a company incorporated in Singapore and is in the business of supplying waste disposal and waste management equipment and apparatus. In 1996 and 1997, the appellant bought equipment from the respondent and made only partial payment.

4 The parties entered into a settlement agreement, to provide for the payment of the outstanding balance, which the appellant failed to adhere to. The appellant had drawn cheques in favour of the respondent but some of these cheques were dishonoured, the last one being dishonoured in June 1998. Towards the end of 2000, the appellant stopped paying altogether despite the fact that there was still an outstanding balance.

5 On 18 April 2002, the respondent’s Filipino lawyers made a demand for payment in a letter that stated the outstanding balances due as the total sum of S$670,000 and DM66,376.52. The appellant was also notified that legal proceedings would be commenced against them if they failed to reply within five days. The appellant’s Filipino lawyers replied on 29 April 2002 requesting for a meeting to discuss the settlement of any outstanding debt obligations of the appellant to the respondent. The lawyers also indicated that they would be reviewing the appellant’s records to determine the total amount that it had paid to the respondent for the equipment. The next day, the respondent’s lawyers rejected the request for a meeting but asked the appellant for its proposals regarding payment of the outstanding amount.

6 The appellant’s lawyers replied by a letter dated 23 May 2002 (“the First Letter”) which referred to the appellant’s “outstanding obligation … to Otto Systems” and that it “is prepared to present to Otto Systems its proposal for payment of its outstanding obligation” which “amounts to the total of S$399,561.03 and DEM251,976.00.”. On 5 August 2002, the appellant’s lawyers sent the respondent’s lawyers a proposed schedule of payments (“the Second Letter”), indicating that the appellant would pay the respondent a total of S$407,061.03 and DM221,738.88. The respondent refused to accept this payment schedule.

7 In October 2002, a joint affidavit was filed by the appellant in proceedings in the Philippines which concerned the respondent’s re-filing of a complaint against the appellant for issuing the dishonoured cheques in 1998, restating that the amounts owing to the respondent were, as per the First Letter, S$399,561.03 and DM251,976. On 18 November 2002, the respondent presented the appellant with a different schedule based on the amounts of S$407,061.03 and DM251,976. However, the parties did not reach an agreement on these figures either.

Case before trial judge

8 The present action initially commenced in the Singapore Subordinate Courts in June 2004 for the sum of 2m Philippine pesos or its Singapore equivalent, this being the amount in the cheque drawn by the appellant in favour of the respondent on 25 May 1998. The action was later transferred to the Singapore High Court and the respondent amended its statement of claim to include an alternative claim based on the First Letter. The relevant portions of the amended statement of claim are reproduced below:

12. Further, in spite of not having adhered to the Settlement Agreement, the Defendants made ad hoc payments to the Plaintiffs in an attempt to settle their outstanding debt with the Plaintiffs. As at 31 December 2000, according to the Defendants’ calculations, the sum of S$399,561.03 and DEM251,976.00 remained outstanding. The Defendants had acknowledged their debt to the Plaintiffs through their solicitors letters dated 23 May 2002 and 5 August 2002.

13. In their solicitors’ letter dated 5 August 2002, the Defendants had proposed a payment scheme to repay the outstanding debt. However negotiations broke down and no further payments were made.

9 In response, the appellant amended its defence by inserting the following paragraphs:

14 Paragraph[s] 12 and 13 of the Amended Statement of Claim are not admitted.

14[a] On 18^th April 2002 the Plaintiff demanded payment for S$670,000.00 and DEM 66,376.52.

14[b] The Defendant by their solicitors’ letter of 23^rd May disputed the sums aforesaid, inter alia, in that the currency conversion rate under the 1997 Agreement between the parties was not applied. The Defendant’s preliminary computation was S$399,561.03 and DEM 251,976 which sums were revised to S$407,061.03 and DEM 221,738.88 by way of the [Defendant’s] solicitors’ letter of 5 August 2002.

14[c] The Plaintiffs through their solicitors’ letter of [18 November 2002] rejected the said letter of 5 August 2002.

14[d] The parties could not agree on any amounts and as such there was no admission to any sum or sums.

14[e] The Plaintiffs in view of the [impasse] aforesaid, re-instituted proceedings in The Philippines without success.

14[f] In any event, the sums of S$407,061.03 and DEM 221,738.88 were covered by arrangement referred to in paragraph 7 of the Amended Statement of Claim and are, accordingly, time barred.

10 The respondent also applied to court under O 33 rr 2 and 5 of the Rules of Court and obtained an order for the trial of a preliminary issue – whether the appellant had, by the First Letter and/or other documents, acknowledged its debt to the respondent. The main argument raised by the appellant before the trial judge at the hearing of the preliminary issue was that the First Letter was a without-prejudice offer to pay the amounts stated therein, and that since the offer was rejected by the respondent, it could not be admitted in evidence as an acknowledgment of a debt.

11 The trial judge rejected this argument and held that since the First Letter was referred to by both parties in their amended pleadings, it was admissible in evidence, and that it was an admission of a debt of S$399,561.03 and DM251,976 owing to the respondent.

Issues on appeal

12 The issues raised by the appellant in this appeal were as follows:

(a) whether the trial judge was correct in admitting the First Letter, which was not marked “without prejudice”, in evidence; and

(b) whether the trial judge was correct in finding that the First Letter amounted to a clear admission of the debt.

Was the First Letter written without prejudice, although not so marked?

13 Counsel for the appellant argued that the First Letter was written in the course of negotiations to agree on the amount still owing to the respondents, that it was effectively a counter-offer on the amount the appellant was prepared to pay to the respondent, and that the respondent did not agree to the amount or the schedule of payments. Accordingly, there was no agreement and the First Letter was...