Lanxess Pte Ltd v APP Chemicals International (Mau) Ltd

CourtHigh Court (Singapore)
JudgeAndrew Ang J
Judgment Date30 January 2009
Neutral Citation[2009] SGHC 25
Citation[2009] SGHC 25
Defendant CounselSiraj Omar and See Chern Yang (Premier Law LLC)
Plaintiff CounselYap Yin Soon and Edmund Tham (Allen & Gledhill LLP)
Published date04 February 2009
Docket NumberSuit No 730 of 2006
Date30 January 2009
Subject MatterContract,Assignment,Requirements for legal and equitable assignment,Section 4(8) Civil Law Act (Cap 43, 1999 Rev Ed)

30 January 2009

Judgment reserved

Andrew Ang J:

1 The plaintiff is a company incorporated in Singapore involved in the business of trading and supplying chemicals. The defendant is a company incorporated in Mauritius and part of the Asia Pulp & Paper group of companies (“APP group”), carrying on the business of trading in chemical products. In the years 1999 to 2001, the APP group used the defendant as the contracting party to purchase goods from a company then known as Bayer (Singapore) Pte Ltd for the use of various mills within the APP group. To reassure Bayer (Singapore) Pte Ltd, the defendant’s obligations and debts were guaranteed by Asia Pulp & Paper Company Pte Ltd (“APP”), which is also a shareholder of the defendant. The plaintiff’s claim arises from numerous invoices issued by Bayer (Singapore) Pte Ltd to the defendant in the years 2000 to 2001 for chemical products supplied to the defendant. It is not disputed that a significant portion of the amount set out in these invoices is unpaid and remains outstanding. Claiming to be the assignee of the benefit of the amounts still owing under these transactions, the plaintiff brought the present suit for US$10,199,553.12 (“the debt”) with interest, or damages.

2 The plaintiff argued that there was an assignment (“the first assignment”) from Bayer (South East Asia) Pte Ltd, formerly known (until 27 November 2000) as Bayer (Singapore) Pte Ltd (“BSEA(1)”), to Bayer Polyurethanes Asia Pte Ltd on 1 January 2002 via the Agreement for Sale and Purchase of Business (“ASPB”). On 2 January 2002, Bayer Polyurethanes Asia Pte Ltd changed its name to Bayer (South East Asia) Pte Ltd (“BSEA(2)”) and BSEA(1) changed its name to Bayer Trading Pte Ltd. There was a notice in the Straits Times on 10 January 2002 (“the Straits Times advertisement”) stating:

The Board of Bayer Polyurethanes Asia Pte Ltd would like to inform you of the integration of Bayer (South East Asia) Pte Ltd with its operation and the change of its name to Bayer (South East Asia) Pte Ltd with effect from 2 January 2002.

3 The plaintiff further argued that there was a second assignment from BSEA(2) to itself on 1 July 2004 via an Asset Purchase Agreement (“APA”) dated 1 July 2004 and evidenced by a Deed of Assignment (“the Deed”) dated 8 November 2005 (“the second assignment”). On 7 August 2004, Bayer Trading Pte Ltd (formerly BSEA(1)) was dissolved by way of members’ voluntary winding up.

4 The defendant admitted at [4] of its amended defence that it did order chemical products from Bayer (Singapore) Pte Ltd on various occasions between 1999 and early 2001. Those products were delivered to various paper mills that were part of the APP group and the relevant invoices were sent to the defendant; the defendant further admitted that in respect of those invoices an amount equal to the debt remains unpaid. The defendant denied, however, that there was any assignment in law or equity of the right to recover this debt. The defendant also denied that there was ever any common assumption or agreement between the plaintiff and defendant that the debt would be paid to the plaintiff.

5 The issues before me were: whether the two alleged assignments were valid in law under s 4(8) of the Civil Law Act (Cap 43, 1999 Rev Ed) (“the Act”), or in equity; alternatively, if neither assignment was valid, whether the defendant was estopped by convention from denying its obligation to pay the debt to the plaintiff.

The law on assignment

6 The requirements for a legal assignment are set out in s 4(8) of the Act which provides:

Any absolute assignment by writing under the hand of the assignor, not purporting to be by way of charge only, of any debt or other legal chose in action of which express notice in writing has been given to the debtor, trustee or other person from whom the assignor would have been entitled to receive or claim such debt or chose in action, shall be and be deemed to have been effectual in law, … to pass and transfer the legal right to such debt or chose in action, from the date of such notice, and all legal and other remedies for the same, and the power to give a good discharge for the same, without the concurrence of the assignor.

7 There are three requirements under s 4(8): the assignment must be absolute and not by way of charge only; it must be in writing under the hand of the assignor; and express notice in writing must be given to the person liable to the assignor under the assigned chose in action. In Salim Anthony v Sumitomo Corp Capital Asia Pte Ltd (“Salim Anthony”) [2004] 3 SLR 331, Lai Siu Chiu J considered what constitutes notice of assignment and affirmed the authorities cited to her at [91]–[92]:

91 … compliance with s 4(8) of the Act is not the only legal requirement. The notice of assignment must also be clear and unambiguous. For this proposition, I refer to the plaintiff’s citation of an extract from Cheshire, Fifoot & Furmston’s Law of Contract (Second Singapore and Malaysian Edition) (Butterworths Asia, 1998) where the author stated (at 861):

The one essential in all cases is that the notice should be clear and unambiguous. It must expressly or implicitly record the fact of assignment, and must plainly indicate to the debtor that by virtue of the assignment the assignee is entitled to receive the money.

92 The notice must also be unconditional. The plaintiff referred to an extract from Chitty on Contracts vol 1 (28th Ed, 1999) where the authors, in commenting on s 136 of the UK Law of Property Act 1925 (“the LPA”), which provision is in pari materia with s 4(8) of the Act, had this to say (at para 20-016):

Under the statute notice in writing to the debtor is necessary. It is “wrong to suppose that a separate document purposely prepared as a notice, and described as such, is necessary in order to satisfy the statute. The statute only requires that information relative to the assignment shall be conveyed to the debtor, and that it shall be conveyed in writing.” … Beyond this, however, the statute has been strictly construed, and it has been held that the notice must be unconditional …

8 Thus not only must there be express notice in writing, but the notice must also be clear, unambiguous and unconditional. A mere statement of intention to assign is thus insufficient. However, there is no prescribed form of notice, nor is there a need for a separate document for the specific purpose of notifying the debtor; the fact of assignment may be implicitly recorded and it would suffice for information relative to the assignment to be conveyed in writing to the debtor. In Salim Anthony ([7] supra), Lai J found that the notice of assignment was defective and invalid because the transferee was not identified, there were conditions attached to the transfer and the actual transfer had not yet taken place. The notice also referred to a purported assignment agreement which could not have existed on the specified date; the notice was neither clear nor unambiguous.

9 The plaintiff cited Van Lynn Developments Ltd v Pelias Construction Co Ltd [1969] 1 QB 607, where the English Court of Appeal held that under s 136(1) of the Law of Property Act 1925 (which is substantively similar to s 4(8) of the Act) written notification of the assignment had to be given to the debtor so that he should know to whom he had to pay the debt, and the fact that the letter in question did not state the date of the assignment and wrongly stated that notice of the assignment had already been given (“an inaccurate surplusage” which could be ignored) did not prevent it from being valid notice for the purposes of the section. Davies LJ added (at 614), that in Denney, Gasquet and Metcalfe v Conklin (“Denney”) [1913] 3 KB 177, good notice was given by way only of a letter which did not mention an assignment at all but referred to a deed of arrangement, and did not mention the amount that had been assigned but was merely a request for an account showing all dealings as between the debtor and the assignor. The letter in question read (Denney at 178):

Dear Sir,

Re Yourself and Walter Derham.

The trustees of the deed of arrangement, dated the 5th of December, 1907, and executed by Mr. Walter Derham, have instructed us to apply to you for an account showing all dealings between yourself and Mr. Walter Derham. The reason of this application is that there appears from Mr. Derham's books to be a considerable debt due from you to him for money advanced.

An early reply will oblige.

10 Thus, in Denney ([9] supra) there was no demand for payment as such; nor was there evidence that the defendant actually made payment pursuant to such notice. Nevertheless, Atkin J found that (at 180–181):

… this letter, though not worded with the precision of a more formal notice, does indicate with sufficient certainty to the defendant that Derham has executed a deed which assigns to the trustees the debt formerly due to him; and that the debt when the amount is ascertained must be paid to the trustees and not to Derham.

11 Finally, Widgery LJ pointed out at 615 (as was cited in part by Lai J in the extract from Chitty at [7] above) that:

… the only formality required by the section is that express notice in writing be given to the debtor. The section does not speak of “a notice”: it speaks of “notice.” Accordingly, it is wrong to suppose that a separate document purposely prepared as a notice, and described as such, is necessary in order to satisfy the statute. The statute only requires that information relative to the assignment shall be conveyed to the debtor, and that it shall be conveyed in writing. … Once it is appreciated that the section requires no more, it becomes obvious that the objection to the notice in this case, that it was not intended as a notice but merely to record the fact that notice had already been given, must fail.

12 As for equitable assignments, there is no requirement of notice to the debtor or even the assignee; what...

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