Indo Commercial Society (Pte) Ltd v Ebrahim and Another

• Jurisdiction: Singapore
• Judge: Michael Hwang JC
• Judgment Date: 31 August 1992
• Neutral Citation: [1992] SGHC 230
• Docket Number: Suit No 2963 of 1986
• Date: 31 August 1992
• Year: 1992
• Published date: 19 September 2003
• Plaintiff Counsel: Aziz Tayabali (Aziz Tayabali & Associates)
• Citation: [1992] SGHC 230
• Defendant Counsel: Defendants (unrepresented) absent
• Court: High Court (Singapore)
• Subject Matter: Whether plaintiff has right of electing for award in local currency,Whether Privy Council decision on appeal from another jurisdiction binding,Judgment in foreign currency to be converted to local currency at date when plaintiff was given leave to levy execution,Foreign currencies debt,Court judgments,Civil Procedure,Whether entering unconditional appearance to a writ amounted to submission to jurisdiction,Binding force,Submission,Whether there is a cause of action in damages for late payment of damages,Damages,Jurisdiction,Courts and Jurisdiction,Contract,Claim for exchange loss,Binding authority of Privy Council and House of Lords decisions,Remedies,Miliangos principle

Cur Adv Vult

In this case I have to consider if the Miliangos doctrine applies in Singapore, in the light of a previously overlooked Privy Council decision. If it does apply, I also have to consider whether it is a mandatory or optional rule.

The defendants were the plaintiff`s agents in the Middle East to procure purchasers for the purchase of timber or plywood from the plaintiff. In the statement of claim, the plaintiff`s claim against the defendants was stated to be for US$33,556.45 or its equivalent in Singapore dollars, as money had and received by the defendants for the use of the plaintiff. This claim was made up as follows:

(a) On 24 June 1984 the defendants received US$16,000 which was intended to be used to clear the plaintiff`s goods but instead, on 11 October 1984, the defendants paid to a third party a sum of US$8,454, leaving a balance of US$7,546 held by the defendants to the use of the plaintiff.

(b) On an unknown date, the defendants also obtained from another consignee a sum of UAE Dirhams 304,980.42 (equivalent to US$83,010.45) for timber sold and delivered by the plaintiff to another third party, out of which two sums of US$27,000 and US$30,000 were paid by the defendants to the plaintiff on 12 January 1985 and 19 February 1985 respectively, leaving a balance of US$26,010.45 held by the defendants to the use of the plaintiff.

The plaintiff made numerous requests to the defendants for payment, but no payment was made. The statement of claim (as amended) claimed the sum of US$33,556.45 or its equivalent in Singapore dollars, but did not specify the date on which conversion was to be made.

Although the defendants originally engaged solicitors to contest the action and a defence was filed on their behalf, their solicitors eventually discharged themselves and the defendants did not appear on the day of trial, 26 June 1992. Plaintiff`s counsel accordingly applied for judgment under O 35 r 1(2) of the Rules of the Supreme Court 1970. However, counsel asked for judgment to be entered for the plaintiff, not for the sum of US$33,556.45, but for the equivalent sum in Singapore dollars at the prevailing rate of exchange as at the date of the writ, 25 April 1986. As counsel did not have the appropriate exchange rate for that date available, the matter was adjourned for him to ascertain the rate as well as for him to furnish legal authorities in support of his request. Counsel returned on 9 July 1992 and tendered a written submission, and I then reserved judgment to consider his submissions.

Counsel`s submissions are based on an article Judgments in Foreign Currencies by Justice PE Nygh in (1980) 22 Mal LR 1 and, in particular, on a passage at p 13:

If the plaintiff does exercise a choice to claim in sterling what should be the date of conversion? It is submitted that in such a case it should be the date the claim is made. The breach-date rule is now totally discredited and it has nothing to recommend it. If the loss was incurred in foreign currency and the plaintiff chooses not to claim in that currency, the last possible date for restitution would have been the date on which the loss is formally claimed in sterling.

To understand this passage in context, it is necessary to discuss more fully the problem which is the subject of Justice Nygh`s article.

The old English rule, which was followed throughout the Commonwealth, was that a court could only give judgment in its own currency, and, where a debt was expressed in foreign currency, it had to be converted into local currency as at the date which the debt was payable, or, in the case of damages arising from breach of contract or tort, as at the date when the breach of contract occurred or the damage in relation to which compensation was claimed was suffered. This principle is known as the `breach-date rule` (or the `sterling breach-date rule`) and was laid down authoritatively by the English Court of Appeal in Di Ferdinando v Simon, Smits & Co Ltd [1920] 3 KB 409 in relation to damages for breach of contract, affirmed by the House of Lords in SS Celia v SS Volturno [1912] 2 AC 544 in relation to damages for tort and again re-affirmed by the House of Lords in Re United Railways of Havana and Regla Warehouses Ltd [1961] AC 1007[1960] 2 All ER 332 in relation to a contract debt.

The demise of the breach-date rule in England effectively dates from the decision of the House of Lords in Miliangos v George Frank (Textiles) Ltd [1976] AC 443[1975] 3 All ER 801 which held that an English court could give judgment for a sum of money expressed in foreign currency and, if it was necessary to execute on the judgment, the judgment in foreign currency would be converted to local currency at the date when the plaintiff was given leave to levy execution. The actual decision in Miliangos [1976] AC 443[1975] 3 All ER 801 was specifically limited first, to the case of debts (as distinguished, in particular, from claims for damages in contract or tort) and, secondly, to contracts governed by a foreign system of law and whose money of account and payment was that of the foreign country in question (or possibly of another foreign country). However, the Miliangos principle has since been extended by a number of decisions to: (a) damages for breach of contract ( Services Europe Atlantique Sud (SEAS) v Stockholms Rederiaktiebolag Svea of Stockholm ; `The Folias` [1979] AC 685[1979] 1 All ER 421 ) and for the commission of a tort ( Owners of the mv Eleftherotria v Owners of the mv Despina R ; ` The Despina R `6); (b) restitution under the English Law Reform (Frustrated Contracts) Act 1943 ( BP Exploration Co (Libya) Ltd v Hunt (No 2) [1979] 1 WLR 783[1979] 123 SJ 455 at pp 840-841); (c) debts due ( Barclays Bank International Ltd v Levin Brothers (Bradford) Ltd [1977] QB 270[1976] 3 All ER 900 ); and (d) claims for liquidated ( Federal Commerce and Navigation Co Ltd v Tradax Export SA; `The Maratha Envoy` [1977] QB 324[1977] 2 All ER 41[1978] AC 1 at pp 341-342, 349, 354) and unliquidated (` The Folias `5) damages arising under contracts whose proper law is English.

Two questions arise for consideration:

(a) does the Miliangos principle apply in Singapore?

(b) if so, does it give a plaintiff the option of asking for judgment in local currency or for conversion of the judgment sum from the foreign to local currency at a date other than the date of execution?

Does the Miliangos principle apply in Singapore?

It may seem strange to ask this question when Miliangos [1976] AC 443[1975] 3 All ER 801 has been applied on a number of occasions in Singapore (see ` The Vishva Pratibha` ; Sarathi Co v `Vishva Pratibha` (Owners of); Port of Bombay, India [1980] 2 MLJ 265 Ooi Han Sun v Bee Hua Meng [1991] 3 MLJ 219 Tatung Electronics (S) Pte Ltd v Binatone International Ltd [1991] 3 MLJ 212 and Wardley Ltd v Tunku Adnan & Anor [1991] 3 MLJ 366 ) as well as in Malaysia (see Lee Tai Hoo v Lee Swee Keat [1987] 1 MLJ 304 Popular Industries Ltd v Eastern Garment Manufacturing Sdn Bhd [1989] 3 MLJ 360 and Re P Suppiah ( Tara Rajaratnam , Judgment Creditor )16). However, a problem arises with a decision of the Privy Council that runs contrary to the Miliangos principle, namely, Syndic in Bankruptcy of Salim Nasrallah Khoury v Khayat [1943] AC 507 which was not apparently cited in any of the cases I have mentioned. This case was an appeal from the Supreme Court of Palestine on an issue involving the interpretation of s 72(4) of the Palestine Bills of Exchange Ordinance, which is in pari materia with s 72(4) of the English Bills of Exchange Act 1882 (now repealed), as well as s 72(d) of the Singapore Bills of Exchange Act (Cap 23). Section 72(4) of the Palestine Ordinance provided:

Where a bill is drawn out of but payable in Palestine, and the sum payable is not expressed in the currency of Palestine, the amount shall, in the absence of some express stipulation, be calculated according to the rate of exchange for sight drafts at the place of payment on the day the bill is payable.

It will be seen that this section applies the breach-date rule to bills of exchange. In Khoury v Khayat [1943] AC 507 the question was at what date foreign bills payable in Palestine had to be converted into local currency, the Supreme Court of Palestine having refused to apply this section and having held that the relevant date was the date of actual payment. Lord Wright, delivering the judgment of the Board, said (at p 513):

There can, their Lordships apprehend, be now no doubt as to the English law on this point. It is true that different views have been taken at different times and by different systems of law. Indeed, there are at least four different rules which might be adopted. The rate of exchange might be determined as at the date at which payment was due, or at the date of actual payment, or at the date of the commencement of proceedings to enforce payment, or at the date of judgment. English law has adopted the first rule, not only in regard to obligations to pay a sum certain at a particular date, but also in regard to obligations the breach of which sounds in damages, as for an ordinary breach of contract, and also in regard to the satisfaction of damages for a wrongful act or tort. The general principles on which that rule has been based are explained by the Court of Appeal in Di Ferdinando v Simon, Smits & Co [1920] 3 KB 409, a case of an ordinary breach of contract. The rule, however, was established many years before then. It was again enunciated by the House of Lords in SS Celia v SS Volturno [1912] 2 AC 544, where the claim was for damages in tort consequent on a collision.

Lord Wright then went on to elaborate on the reasoning of the House of Lords in the latter case and concluded (at p 514):

The [Palestine] ordinance only declares what the English rule is, and, as it is, so it has been for many

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