Michael Vaz Lorrain v Singapore Rifle Association

• Jurisdiction: Singapore
• Judge: Andrew Phang Boon Leong JA
• Judgment Date: 20 July 2020
• Neutral Citation: [2020] SGCA 72
• Plaintiff Counsel: Lee Hwee Khiam Anthony and Huineng Clement Chen (Bih Li & Lee LLP)
• Docket Number: Civil Appeal No 60 of 2019
• Date: 20 July 2020
• Hearing Date: 06 July 2020
• Subject Matter: Offer to settle,Civil Procedure
• Year: 2020
• Defendant Counsel: Wong Hin Pkin Wendell, Chen Jie'an Jared, Wong Zi Qiang, Bryan and Andrew Chua Ruiming (Drew & Napier LLC)
• Court: Court of Appeal (Singapore)
• Citation: [2020] SGCA 72
• Published date: 23 July 2020

Belinda Ang Saw Ean J (delivering the judgment of the court): Introduction and background facts

The sole issue in this judgment is whether an offer to settle that contains a term requiring the discontinuance of an action can be validly accepted after a judgment on the merits. At the outset, we note that this appears to be the first time that this issue is squarely before us.

The facts can be stated briefly. The respondent, the Singapore Rifle Association (“SRA”), is a member of the Singapore Shooting Association (“SSA”). The appellant, Mr Michael Vaz Lorrain (“Mr Vaz”), is the president of SSA’s council. On 8 February 2017, SRA commenced HC/S 109/2017 (“Suit 109”) against Mr Vaz, alleging that he had breached a mediation agreement and/or a duty of confidence. Mr Vaz did not dispute liability. Accordingly, interlocutory judgment for damages to be assessed was entered against Mr Vaz on 23 May 2017.

In due course, damages were assessed and on 25 February 2019, the High Court judge (“the Judge”) awarded damages in favour of SRA in the sum of $8,100 along with interest and costs. Subsequently, he also held that O 22A r 9(3) of the Rules of Court (Cap 322, R 5, 2014 Rev Ed) did not apply to an offer to settle made by Mr Vaz on 3 April 2017 (“the OTS”) as it was not more favourable than the judgment sum obtained by SRA and the costs it had incurred up to the date of the OTS. The terms of the OTS are as follows:¹

[Mr Vaz] offers to settle this proceeding on the following terms: 1. [Mr Vaz] be restrained whether acting by himself, his servants, agents or any of them or otherwise howsoever from disclosing and/or using any Confidential Information or any part thereof including but not limited to the Published Statement (as defined in the Statement of Claim); 2. [Mr Vaz] pays [SRA] the sum of S$25,000 within 14 days of acceptance of this Offer to Settle; and 3. Within three (3) working days of the receipt of the sum of S$25,000, [SRA] will file its Notice of Discontinuance of Claim.

In CA/CA 60/2019 (“CA 60”), Mr Vaz appealed against the damages and costs assessed by the Judge. On 5 May 2020, prior to the hearing of the appeal before us, SRA purportedly accepted the OTS.² The parties accepted that CA 60 should be withdrawn but consent to a withdrawal was not forthcoming because of costs. Pursuant to O 57 r 11(3)(a) of the Rules of Court, this court was asked to determine whether the OTS provided for costs. The dispute was on whether O 22A r 9(2) of the Rules of Court applied to the OTS. Order 22A r 9(2) provides for certain costs consequences where “an accepted offer to settle does not provide for costs”. Mr Vaz contended that the OTS did not provide for costs, while SRA took the contrary position. The parties were thus directed to file submissions in respect of that issue.

In the course of reviewing the parties’ costs submissions, we noted that the OTS contained a term requiring SRA to file a “Notice of Discontinuance of Claim” within three working days of the receipt of the sum of $25,000 (see [3] above). We also noted that SRA had prepared its Notice of Discontinuance in readiness for filing after accepting the OTS. In context, the term requiring SRA to file its “Notice of Discontinuance of Claim” in the OTS meant that the action had to be discontinued, apparently despite the fact that judgment had already been given in the High Court. We therefore directed the parties to file further submissions on the following preliminary issue:

The court would like the parties to address it on the preliminary point as to whether the [OTS] could be validly accepted in law in the first instance after a judgment on the merits. In considering this question, the parties are to have regard to the terms of the OTS which have to be complied with upon acceptance of the OTS. In this case, the Acceptance of Offer is dated 5 May 2020 and the OTS requires discontinuance of the claim. Can the OTS be validly accepted if the term requiring discontinuance of the claim is not capable of compliance after judgment on the merits?

For convenience, we refer to a term that requires the action to be discontinued as a “Discontinuance Term”. In addition, unless otherwise stated, a “judgment” refers to a first instance judgment that completely disposes of the cause of action or matter (both with regard to liability and damages).

The parties’ further submissions

We summarise the parties’ further submissions before turning to our analysis of the preliminary issue. The outcome of our decision on the preliminary issue could well dispose of the initial issue that the parties had sought directions on, namely, whether the OTS provided for costs.

Mr Vaz advances the following submissions: Mr Vaz acknowledges that he had previously taken the position that the OTS was capable of acceptance by SRA. He considered that the Discontinuance Term did not prevent SRA from accepting the OTS, relying on the decision of this court in NTUC Foodfare Co-operative Ltd v SIA Engineering Co Ltd and another [2018] 2 SLR 1043 (“NTUC Foodfare”). There, the offer to settle likewise contained a Discontinuance Term. Notwithstanding his previous position, Mr Vaz now submits that the OTS could not be validly accepted by SRA. Distinguishing NTUC Foodfare, he argues that once the High Court had delivered judgment, the Discontinuance Term could not be complied with. Hence, the OTS lapsed and ceased to be open for acceptance.

We turn to SRA’s submissions: SRA notes that the OTS did not state a time for acceptance. Order 22A r 3(5) of the Rules of Court provides that “[w]here an offer to settle does not specify a time for acceptance, it may be accepted at any time before the Court disposes of the matter in respect of which it is made”. It was held in NTUC Foodfare that the matter is disposed of only when the appellate court renders its decision on the merits (at [17]). SRA argues that the fact that the OTS contained a Discontinuance Term did not mean it was incapable of being accepted. In this connection, SRA refers to NTUC Foodfare and another previous decision of this court, Ong & Ong Pte Ltd v Fairview Developments Pte Ltd [2015] 2 SLR 470 (“Ong & Ong”). The offers to settle in both cases contained a Discontinuance Term. Nonetheless, SRA accepts that a “Notice of Discontinuance … is typically filed before a first instance judgment is rendered”.³

Whether the OTS which contained a Discontinuance Term could be accepted after judgment

We turn to our analysis of the preliminary issue.

In construing an offer to settle, the law should focus on the intentions of the offeror as determined objectively. This is no different from a normal contractual offer (see, for example, Norwest Holdings Pte Ltd (in liquidation) v Newport Mining Ltd [2010] 3 SLR 956 at [34]). The Discontinuance Term in the OTS is unambiguous and an offer to settle with such a term clearly suggests that, objectively construed, the offeror only intended for the offer to settle to be capable of acceptance before judgment was obtained. In our view, the Discontinuance Term contemplates the existence of an outstanding cause or matter not disposed of which is within the scope of the offer to settle, and it is in such an unchanged circumstance that the offer to settle remains open for acceptance. Accordingly, if the Discontinuance Term is not capable of compliance because there is already a judgment on the merits, it would follow that an offer to settle that requires discontinuance is an impotent offer under O 22A that is incapable of acceptance once judgment has been obtained.

In the present case, the OTS was served on 3 April 2017, approximately one month after Mr Vaz filed and served his defence admitting liability but not damages. At the hearing of SRA’s application for summary judgment on 23 May 2017, Mr Vaz consented to interlocutory judgment on liability and damages were to be assessed. On the issue of costs after assessment of damages, on 14 March 2019, the Judge, who was apprised of the OTS, fixed costs. He also ruled that O 22A r 9(3) did not apply to Mr Vaz’s OTS as the offered settlement sum was not more favourable than the damages obtained by SRA and the costs it had incurred up to the date of the OTS. It is clear that Suit 109 had concluded by 14 March 2019.

In the circumstances, the anterior question in relation to whether the OTS could be accepted after judgment is whether an action can be discontinued after judgment. For the reasons that follow, we are satisfied that the question must be answered in the negative as a matter of principle and coherence. We then explain why the cases cited by SRA, namely, NTUC Foodfare and Ong & Ong, can be distinguished for present purposes.

An action can only be discontinued before judgment

We begin by considering the well-established doctrine of merger. Pursuant to this doctrine, once a judgment has been given on a cause of action, the cause of action merges with the judgment of the court and ceases to exist as an independent entity. There is no doubt that the doctrine is part of Singapore law (see the decision of this court in Chiam Heng Hsien (on his own behalf and as partner of Mitre Hotel Proprietors) v Chiam Heng Chow (executor of the estate of Chiam Toh Say, deceased) and others [2015] 4 SLR 180 at [155]).

In Salijah bte Ab Latef v Mohd Irwan bin Abdullah Teo [1995] 3 SLR(R) 233 at [23], the High Court, citing George Spencer Bower and Alexander Kingcome Turner, The Doctrine of Res Judicata (Butterworths, 2nd Ed, 1969) at para 427, referred to the doctrine of merger as follows:

… the merger doctrine, is ‘that any cause of action which results in a judgment of [a] … judicial tribunal, whereby relief is granted to the plaintiff, or other “actor” in the proceedings, is in contemplation of law merged in the judgment, as soon as it is pronounced, and thereby loses its individual vitality and disappears...