Hwa Lai Heng Ricky v DBS Bank Ltd and another appeal and another application

• Jurisdiction: Singapore
• Judge: Chan Sek Keong CJ
• Judgment Date: 22 February 2010
• Neutral Citation: [2010] SGCA 5
• Plaintiff Counsel: Goh Kok Leong and Sunita Carmel Netto (Ang & Partners)
• Docket Number: Civil Appeals Nos 108 and 109 of 2008 and Summons No 416 of 2009
• Date: 22 February 2010
• Hearing Date: 22 October 2009,09 September 2009
• Subject Matter: Civil Procedure
• Year: 2010
• Citation: [2010] SGCA 5
• Defendant Counsel: Lek Siang Pheng, Tan Ky Won Terence and Melissa Thng Hui Lin (Rodyk & Davidson LLP)
• Court: Court of Appeal (Singapore)
• Published date: 03 March 2010

Andrew Phang Boon Leong JA (delivering the grounds of decision of the court): Introduction

Hwa Lai Heng Ricky (“the Appellant”) took out two related appeals against the decision of the High Court in DBS Bank Ltd v Yamazaki Mazak Singapore Pte Ltd and Another [2008] SGHC 181 (“DBS Bank Ltd”). Civil Appeal No 109 of 2008 (“CA 109”) pertained to the refusal of the High Court judge (“the Judge”) to allow the Appellant to amend his defence. Civil Appeal No 108 of 2008 (“CA 108”) pertained to the Judge’s decision to uphold summary judgment which was given in favour of DBS Bank Ltd (“the Respondent”) on the basis that the Appellant’s case had not disclosed any viable defences. Both appeals were heard together with Summons No 416 of 2009 (“SUM 416”), which was taken out by the Respondent for: (i) an extension of time to file its case; and (ii) leave to admit further evidence in the form of a Scheme Funding Line Agreement (“the SFL Agreement”) between the Economic Development Board (“the EDB”) and itself, and evidence to the effect that it had not received funds to finance a loan extended by it to an entity known as Sin Yuh Industries (Pte) Ltd (“SY Industries”). All three matters arise out of the same factual matrix.

The factual background

SY Industries wished to purchase certain machine units from a company known as Yamazaki Mazak Singapore Pte Ltd (“Yamazaki”). The Respondent was willing to finance part of that purchase through a loan amounting to $1.94 million (“the Loan”), provided that, inter alia, SY Industries furnished satisfactory evidence that 40 per cent of the purchase price for those machine units had, in fact, been paid to the seller, Yamazaki.

On 16 December 2002, at the request of SY Industries, the Appellant, who was then an assistant sales manager of Yamazaki, wrote a letter to the Respondent. In that letter, he falsely represented that Yamazaki had received certain payments from SY Industries which amounted to 40 per cent or more of the purchase price. In reality, all that Yamazaki had received were post-dated cheques that had not yet been cleared. However, on 10 March 2003, the Respondent, who had been deceived by the Appellant’s letter, disbursed the full Loan quantum of $1.94 million to SY Industries. SY Industries proved to be financially unsound. Most of the post-dated cheques SY Industries issued to Yamazaki could not be cleared. Further, SY Industries never paid any of the instalments that were due to the Respondent, and, by 26 March 2004, a winding up order had been made against the former in the High Court.

The Appellant was prosecuted for cheating. On 23 June 2005, he was convicted by the District Court. That decision was upheld on appeal (see Hwa Lai Heng Ricky v PP [2005] SGHC 195). Subsequently, the Respondent also brought a civil claim for damages against both Yamazaki and the Appellant based on the tort of fraudulent misrepresentation or deceit.

The decision below

The Respondent succeeded in obtaining summary judgment against the Appellant on 18 March 2008. The learned Assistant Registrar (“the AR”) granted the application because: (i) the findings of the criminal court coincided with all the essential ingredients in the Respondent’s cause of action; and (ii) the Appellant had not managed to raise any viable defences. In coming to his decision, the AR refused to take into account certain defences the Appellant had raised, namely that: the Respondent could not recover in excess of 30 per cent of the Loan amount, which was allegedly the proper measure of its loss, as there was an arrangement between the Respondent and EDB, pursuant to which loss arising from the Loan would be shared between them in a ratio of 30:70 respectively (“the 30:70 Loss Sharing Arrangement”); and the relationship between the Respondent and EDB vis-à-vis the giving of the Loan was that of agent and principal, respectively, such that EDB (and not the Respondent) was the proper party to bring the action against the Appellant (“the Agency Argument”). The AR refused to take these points into account on the basis that they had not been pleaded in the Appellant’s Defence, and in any event, they did not raise any triable issues.

Following the AR’s decision, the Appellant applied to amend his Defence to include the points above which the AR had not taken into account. The application was heard by the learned Senior Assistant Registrar (“the SAR”), who dismissed the application. The basis of the SAR’s decision was that: (i) the amendments had been prayed for only post-summary judgment; and (ii) the proposed defences, in any event, were not viable and would not have changed the outcome of the decision to award the Respondent summary judgment.

Dissatisfied with the outcome, the Appellant appealed against the decisions of the AR and SAR in the High Court. Both appeals were dismissed, also essentially on the basis that none of the points raised by the Appellant had any merit. However, as 26 of the 31 machine units had been recovered by the Respondents and sold, the Judge rightly reduced the judgment sum of $1.94 million entered by the AR by the net sales proceeds of the 26 machines (ie, the sale proceeds less only the necessary expenses incurred by the plaintiff to effect the sale) (see DBS Bank Ltd at [33]).

Consequently, the Appellant brought before us CA 108 (against the decision of the High Court with respect to the summary judgment) and CA 109 (with respect to the decision of the High Court in respect of the application to amend his Defence). The Respondent subsequently took out SUM 416 (for an extension of time to file its case and to adduce further evidence). These have already been briefly mentioned above (at [1]). At the hearing before this court on 9 September 2009 (in respect of SUM 416), we granted the Respondent an extension of time to file its case. We also directed that the remaining prayers in SUM 416 and the two appeals be consolidated into a single hearing. When the parties next appeared before us, we dealt, first, with the appeal in CA 109 (together with the related application in SUM 416 in so far as the Respondent’s application for leave to adduce further evidence was concerned) before proceeding to consider the appeal in CA 108.

CA 109 and SUM 416

As already mentioned, we heard both CA 109 and SUM 416 together, not least because they were, of course, closely related.

In so far as the appeal in CA 109 is concerned, the general approach which ought to be taken towards amendments of pleadings in the post-judgment context is clear, and is embodied within the following observations by Yong Pung How J in the High Court decision of Invar Realty Pte Ltd v Kenzo Tange Urtec Inc and another [1990] 2 SLR(R) 66 (“Invar Realty”) at [21]:

While a court may have a wide power of amendment even after a final judgment, the appropriate cases in which such a power should be exercised must necessarily be very limited. Whether or not a court should do so will be in the discretion of the court, and will depend on the facts of each case, including in particular the nature and implications of the amendment sought. In all cases, a court will have to bear in mind the fundamental principle of all courts that there must be a finality to litigation.

Whilst finality is important, there is, as V K Rajah JC very pertinently pointed out in the High Court decision of Chwee Kin Keong and others v Digilandmall.com Pte Ltd [2004] 2 SLR(R) 594 at [85] (affirmed in Chwee Kin Keong and others v Digilandmall.com Pte Ltd [2005] 1 SLR(R) 502), “a constant tension in our legal system to accommodate the Janus-like considerations of fairness and finality”. This tension is elaborated upon by the learned judge, who observed thus (id at [84]–[85]): 84 It is axiomatic that a court will generally be cautious if not reluctant to effect any amendments once the hearing has commenced; even more so once the evidential phase of the proceedings has been completed. Lord Griffiths in Ketteman v Hansel Properties Ltd [1987] AC 189 at 220 stated:

[T]o allow an amendment before a trial begins is quite different from allowing it at the end of the trial to give an apparently unsuccessful defendant an opportunity to renew the fight on an entirely different defence.

85 Having stated the general rule, it is imperative that the rationale underlying this approach be understood. RRules of court which are meant to facilitate the conduct of proceedings invariably encapsulate concepts of procedural fairplay. They are not mechanical rules to be applied in a vacuum, devoid of a contextual setting. Nor should parties regard pleadings as assuming an amoeba-like nature, susceptible to constant reshaping. Rules and case law pertaining to amendments are premised upon achieving even-handedness in the context of an adversarial system … In short, where does the justice reside?

And, in the recent decision of this court in Review Publishing Co Ltd and another v Lee Hsien Loong and another appeal [2010] 1 SLR 52, Chan Sek Keong CJ, delivering the judgment of the court, set out a comprehensive overview of this area of the law, as follows (at [110]–[114]): 110 …O 20 r 5(1) of the Rules of Court (Cap 322, R 5, 2006 Rev Ed) gives the court a wide discretion to allow pleadings to be amended at any stage of the proceedings on such terms as may be just. Order 20 r 5(1) reads:

Subject to Order 15, Rules 6, 6A, 7 and 8, and this Rule, the Court may at any stage of the proceedings allow the plaintiff to amend his writ, or any party to amend his pleading, on such terms as to costs or otherwise as may be just and in such manner (if any) as it may direct. [emphasis added]

111 In Chwee Kin Keong v Digilandmall.com Pte Ltd [2005] 1 SLR(R) 502 (“Chwee Kin Keong”), this court said at [101]:

Under O 20 r 5(1) of the Rules of Court (Cap 322, R 5, 2004 Rev Ed), the court may grant leave to amend a...