Multi-Pak Singapore Pte Ltd (in receivership) v Intraco Ltd

CourtCourt of Appeal (Singapore)
JudgeGoh Joon Seng J
Judgment Date06 February 1993
Neutral Citation[1993] SGCA 9
Citation[1993] SGCA 9
Defendant CounselTang Khin Wai and Raymond Wong (Lee & Lee)
Plaintiff CounselSundaresh Menon and Anita Dorett (Wong Meng Meng & Partners)
Published date19 September 2003
Docket NumberCivil Appeal No 6 of 1992,Civil Appeal No 45 of 1994
Date29 December 1994
Subject MatterAdding a new cause of action,Pleadings,Civil Procedure,Whether new cause of action arose out of the same facts or substantially the same facts as already pleaded in the statement of claim,Amendment

Cur Adv Vult

The appellants are a company now under receivership. The respondents are a trading company who were the recipients of a cheque from the appellants dated 6 June 1984 for $2,371,079.62. The proceeds of this cheque were paid into the respondents` account on 21 June 1984.

On 24 July 1985 the appellants` receivers caused a writ to be issued against the respondents, claiming the said sum of $2,371,079.62 as money lent by the appellants to the respondents or held by the respondents on resulting trust for the appellants.

On 13 August 1985 the respondents filed a defence, denying any such loan or trust.
Further or in the alternative, they pleaded that the payment was made in discharge of the appellants` obligations under a contract dated 24 May 1984; the cheque was consideration for the assignment by the respondents to the appellants of debts owed to the respondents by two companies, City Carton Co Pte Ltd and Box Pak (S) Pte Ltd (`the debtor companies`). The debtor companies are not related to the appellants, but Box Pak (S) Pte Ltd is a subsidiary of City Carton Co Pte Ltd.

More than a year later, on 23 October 1986, the appellants amended their statement of claim with leave of court.
First, they added three other defendants: the second and third defendants were at all material times directors of the appellants and of the debtor companies; the fourth defendant was the financial controller of the appellants and of the debtor companies between 1 June 1984 and early 1985. They were never served and so were never real parties to this action but it is nonetheless convenient for present purposes to refer to them as the second, third and fourth defendants.

Secondly, the appellants added two new causes of action.
The first new cause of action was that all the defendants had allegedly known that the debtor companies were insolvent and/or incapable of paying their debts so they would also have known that the debts assigned by the respondents to the appellants were worthless. It was thus alleged that the second and third defendants had acted in breach of their duties to act honestly and diligently as directors of the appellants, and that the defendants were thereby liable to the appellants in damages for the tort of conspiracy. Further, para 10 of the amended statement of claim, in particular, stated as follows:

Further or alternatively, in the circumstances that Intraco received the said sum of $2,371,079.62 in the full knowledge of all the circumstances relating to its payment, it received the said sum with actual or constructive knowledge that such payment was a misapplication of the plaintiffs` assets, and is liable to repay the said sum to the plaintiffs as a constructive trustee of the said money.

The second new cause of action essentially involved an allegation that the so-called contract of 24 May 1984 was in fact only created subsequent to the issue of the writ and is immaterial for present purposes.

On 26 February 1987 the respondents filed an amended defence.
This averred that they had entered into the contract of 24 May 1984 in good faith, that they had no knowledge, actual or constructive, of any breach of duties on the part of the second and third defendants or of any misapplication of the appellants` assets. The respondents averred that on or about 21 June 1984, the date the appellants` cheque was paid into the respondents` account, the respondents had issued two cheques dated 5 June 1984, one for $2m for subscription of shares allotted by the appellants and one for $371,079.62 as a loan to the appellants. More details were provided in two sets of further and better particulars, one served on 7 July 1987 pursuant to a request dated 26 March 1987, and the other on 6 October 1987 pursuant to a court order dated 9 September 1987.

On 9 July 1988 the respondents filed a re-amended defence and counterclaim for $371,079.62, which they asserted was an interest-free loan, as yet not repaid, made by them to the appellants.
On 1 August 1988 the appellants filed their reply and defence to counterclaim and thereafter pleadings closed.

On 26 April 1988, orders of court were made for discovery and inspection.
The action was subsequently fixed for hearing in January 1992. Only on 29 October 1991 did the appellants give discovery. On 14 November 1991 the respondents gave discovery. For this delay neither party is blameless, but for the moment it is sufficient to note that it was not till this point that the appellants had notice of a document which indicated a link between the allegedly worthless receivables and the share subscriptions. This document was one of the respondents` internal memoranda; it was entitled `Conversion of Owings by City Carton (Pte) Ltd and Box Pak (Pte) Ltd to Equity in Multi-Pak Singapore Pte Ltd` and dated 5 June 1984, some 12 days after the contract of 24 May 1984 alleged by the respondents to have been entered into between the parties. It detailed the financial straits of City Carton, describing it as being on `the verge of bankruptcy`, and introduced a `rescue operation`, which

envisages Multi-Pak ... taking over City Carton as its subsidiary and injecting new cash into it ... As part of the rescue operation, the shareholders of Multi-Pak have offered Intraco to take over the entire $2.4m owings by City Carton in exchange for shares in Multi-Pak. We have agreed to this in principle because if we stay with City Carton and the rescue operation does not materialize, there is every danger that we would end up recovering perhaps less than 5% of the original debts. As the offer stands, we would end up as a shareholder of Multi-Pak and recover some of the money by the commission from selling paper.

The conversion does not involve any cash injection on our part but it seems just the only way for us to recover our credit.

On 6 December 1991, during the court vacation, the appellants` solicitors wrote to the respondent`s solicitors, stating that they intended to apply to re-amend the statement of claim by adding two matters:

(a) a claim for relief based on wrongful...

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