Nomura Regionalisation Venture Fund Ltd v Ethical Investments Ltd

• Jurisdiction: Singapore
• Judge: Chao Hick Tin JA
• Judgment Date: 15 August 2000
• Neutral Citation: [2000] SGCA 43
• Date: 15 August 2000
• Subject Matter: Whether an appellate court should interfere,Civil Procedure,Whether extension should be granted,Notice of appeal,Whether appeal is hopeless,Notice served out of time due to mistake by solicitors' staff,Whether mistake of solicitor or solicitors' staff can be sufficient ground to grant extension,Discretion exercised by judge,Extension of time to serve notice of appeal to opposing solicitors,O 56 r 1(3) Rules of Court 1997,Appeals
• Docket Number: Civil Appeal No 12 of 2000
• Published date: 19 September 2003
• Defendant Counsel: Choi Yok Hung, Lynette Chew and Teo Chee Seng (Chee & Teo)
• Court: Court of Appeal (Singapore)
• Plaintiff Counsel: Ang Cheng Hock and Bernice Loo (Allen & Gledhill)

(delivering the grounds of judgment of the court): This was an appeal against the decision of the High Court granting an extension of time to the respondents to serve a notice of appeal on the appellants` solicitors. Having heard arguments of the parties, we dismissed the appeal and now give our reasons.

The background

We shall first set out the essential facts in brief which gave rise to the action between the parties. The appellants are a venture company incorporated in Singapore. The respondent company agreed to subscribe for 50 units of shares in the appellants at US$100,000 per unit. The agreement between the parties provided that half of the amount due (half of US$5m) would be payable on application and the second half would be made on certain specified events. It also provided for the consequences of default:

Provided that the second instalment payment for all subscribers shall be payable at any time upon the Company giving not less than 30 days` prior written notice to each Shareholder specifying the time and place for the payment of the second instalment.

If a Shareholder fails to pay any call or instalment of a call on its due date, the Directors may at any time thereafter,

(a) serve a notice on him requiring him to pay the entire unpaid balance together with any interest and expenses that may have accrued. Such notice shall specify a day (not less than 14 days from the date of service of that notice) on or prior to which and the place where payment required by the notice is to be made and if such moneys are not paid on or prior to the date specified in the notice, the Shares in respect of which such notice has been given may be forfeited by a resolution of the Directors to that effect. Such forfeiture shall include all dividends declared in respect of such Shares and not actually paid before the forfeiture. Any shares so forfeited may be disposed of by the Directors as they think fit and all proceeds of disposal (if any) shall accrue to the Company. The proceeds of disposal in excess of the unpaid instalment, the accrued interest thereon and any such expenses will not be returned to the Shareholder; and or

(b) commence any legal proceedings or enforce payment of the said unpaid moneys.

On 12 December 1996, pursuant to the agreement, the appellants allotted shares to the respondents amounting to 50 Units. The first instalment payment of half the value of the 50 Unit, that is US$2.5m, was paid up by the respondents to the appellants upon application. On 30 April 1997, the appellants gave written notice to the respondents requiring that payment of the second instalment of US$2.5m be made by 2 June 1997. The respondents were reminded that failure to make payment might result in the respondents` shares being forfeited as provided for in the agreement. The respondents nevertheless failed to make the second instalment payment.

On 17 June 1997, a further written request was issued by the appellants to the respondents. However, the respondents only made part payment of US$500,000 in September 1997.

On 10 November 1996, the appellants` solicitors wrote to the respondents asking that the latter make payment of the remaining US$2m by 17 November 1997. Again, the respondents were informed in this letter that failure to make payment could result in the forfeiture of their shares as provided for in the agreement. However, the respondents still failed to make payment as required. On 5 December 1997, the respondents wrote to the appellants asking for more time to make payment. On 16 December 1997, the appellants` solicitors enquired when the respondents proposed to pay for the balance. To that, there was no response from the respondents.

Thus, on 27 April 1998, the appellants instituted Suit 623/98, against the respondents seeking specific performance of the agreement, or, in the alternative, damages. On 4 December 1998, on the appellants` application, the learned Deputy Registrar ruled that there was no defence on the part of the respondents and granted summary judgment to the appellants. He ordered specific performance of the agreement, and that the respondents should pay US$2m to the appellants. On 9 February 1999, the respondents` appeal against the summary judgment was dismissed by the judge-in-chambers.

Notwithstanding the summary judgment, the respondents still failed to make the payment as ordered. So on 26 February 1999, the appellants applied for an order that the summary judgment for specific performance be discharged, without prejudice to all the appellants` rights and remedies against the respondents for breach of the agreement, and for an order that damages for breach of the agreement by the respondents be assessed. On 12 March 1999, the court granted the appellants` application.

However, on 1 April 1999, before damages were assessed, the appellants changed their mind and sent a notice of intention to forfeit to the respondents, requiring that the respondents pay the balance sum of US$2m by 22 April 1999, failing which their shares would be forfeited. On 14 April 1999, the appellants sent a second letter rectifying certain errors contained in the previous notice of intention, but without changing the deadline of 22 April 1999. On 26 April 1999, the appellants` board of directors passed a resolution forfeiting the share allotted to the respondents, pursuant to powers conferred under the articles of association. On 3 May 1999, the forfeited shares were cancelled by a members` resolution, and the appellants wrote to inform the respondents accordingly.

Some six months later, on 19 October 1999, the respondents applied to the court seeking equitable relief against forfeiture of their shares in the appellants and for the appellants to expedite their assessment of damages. On 3 December 1999, the assistant registrar dismissed the application. On 13 December 1999, the respondents` previous solicitors M/s Drew & Napier filed a notice of appeal on the respondents` behalf. Three days later their present solicitors, M/s Chee & Teo, took over the conduct of the matter. Under O 56 r 1(3) of the Rules of Court (Cap 322), the notice of appeal was required to be served on the solicitors M/s Allen & Gledhill, within seven days of filing (excluding Saturdays, Sundays and public holidays), namely, by 22 December 1999. However, it was only served on 8 January 2000.

The explanation given by the respondents` solicitor, Teo Chee Seng, as set out in an affidavit, was that he had specifically instructed the litigation secretary of his firm to serve the notice of appeal and the notice of change of solicitors on M/s Allen & Gledhill. He even telephoned her from Hong Kong to confirm that she had done so. However, on 7 January 2000, he discovered that the papers had been wrongly served on M/s Drew & Napier. According to him, the litigation secretary said that the court clerk was on leave and she had asked the despatch clerk to serve the papers instead. She admitted to having given wrong instructions to the despatch clerk. Later that same day on 7 January, at about 6pm, Teo Chee Seng instructed one of his staff to immediately serve the relevant papers on M/s Allen & Gledhill. As the service was effected after 4pm, under the rules of court it was deemed to have been served on the following day, namely, 8 January 2000 (Saturday). On 10 January 2000 (Monday), the respondents` solicitors filed an application to extend time for service of the notice of appeal.

Lai Siu Chiu J granted the respondents` application for an extension of time to serve the notice of appeal on the appellants and adjourned the substantive hearing of the Registrar`s Appeal to a later date, with the express object of enabling the appellants` solicitor to prepare himself for the substantive argument. [See [2000] 2 SLR 686.] The appellants were dissatisfied with the extension of time granted by Lai Siu Chiu J and thus appealed to us.

Decision below

In coming to her decision, Lai Siu Chiu J held that the principle governing an application to extend time to serve a notice of appeal filed within time was no different from that to extend time to file a notice of appeal. This was because an appeal would only come into being where the notice was both filed and served.

The learned judge felt that there was no general rule that a mistake of the solicitor would never be sufficient to justify an extension of time. Applying the factors which this court in Pearson v Chen Chien Wen Edwin [1991] SLR 212 reaffirmed to be applicable, namely, the length of the delay, the reasons for the delay, the chances of succeeding on appeal and the degree of prejudice, (hereinafter referred to as `the four factors`), Lai Siu Chiu J noted that the delay in service was about two and a half weeks. It was neither short nor was it prolonged. Service was not effected because of an inadvertent mistake of the litigation secretary. No prejudice was shown to have arisen if an extension of time was granted. It was a case of `wrong service, not non-service.` While accepting that an extension of time should not be granted if the appeal was hopeless, she was not able to say that such was the position here.

Appeal

In the appeal before us, the arguments of counsel for the appellants centred on mainly two of the four factors set out in Pearson , namely, reasons for the delay and merits of the case. Counsel contended that a mistake by a solicitor or his staff could not amount to a sufficient ground for granting an extension of time....