Ohm Pacific Sdn Bhd v Ng Hwee Cheng Doreen

JurisdictionSingapore
JudgeKarthigesu JA
Judgment Date30 May 1994
Neutral Citation[1994] SGCA 85
Docket NumberCivil Appeal No 23 of 1993
Date30 May 1994
Published date19 September 2003
Year1994
Plaintiff CounselSri Ram and K Parasoram (Param & Pnrs)
Citation[1994] SGCA 85
Defendant CounselC Arul and Ng Poh Liang (C Arul & Pnrs)
CourtCourt of Appeal (Singapore)
Subject MatterLegal Profession,Delay in application for leave to amend,Client,Power of attorney,Civil Procedure,Statement of claim,Gratuitous,Amendment,Retainer,Duties of agent,Agency,Duty of disclosure,Scope of donee's duty,Pleadings,Duties,Solicitor acting for two related parties,Conflict of duty and interest

Cur Adv Vult

The background

The appellants, OHM Pacific Sdn Bhd, are a company incorporated in Malaysia for the purpose of a joint venture between one Halim bin Mohammad (`Halim`) and one Bernt Forsell (`Forsell`) to purchase and operate a vessel `Peony` (`the vessel`).
Halim and his friends held 51% of the shares of the appellant company. Under an agreement dated 18 May 1984 the appellants agreed to purchase the vessel from the Hong Kong sellers and paid to them a deposit amounting to 10% of the purchase price. However, the appellants were unable to raise the balance of the purchase price in time to complete the purchase. Bridging finance was therefore arranged and was provided by Pacific Navigation Pte Ltd (`Pacific Navigation`), a company incorporated in Singapore in which Forsell and his wife, the respondent, were directors and shareholders. Because the finance was provided by Pacific Navigation, the vessel was, upon completion of the purchase, registered in the name of that company in Singapore. As part of the arrangement between the appellants and Pacific Navigation relating to the bridging finance, three documents were executed by or on behalf of the appellants on or about 18 October 1984, namely: (i) a management agreement appointing Pacific Navigation as the sole managing agents of the vessel, (ii) a charterparty of the vessel to Australasia Bulk Shipping Pte Ltd, and (iii) a power of attorney appointing the respondent as the attorney of the appellants. In addition, there was a trust deed executed by Halim in favour of Forsell in respect of 1% of the shares in the appellant company. The appellants finally managed to obtain a loan from a bank in December 1984, and the loan was secured by a mortgage of the vessel coupled with corporate guarantees of Pacific Navigation and OHM Maritime Sdn Bhd, a company belonging to Halim`s family. On 12 April 1985, the vessel, which had changed the name to Ohm Mariana, was permanently registered in Malaysia in the name of the appellants.

After the completion of the purchase of the vessel, Pacific Navigation operated the vessel as agents for the appellants and this continued until February 1985 when the operation changed hands.
Subsequently, differences arose between the appellants and Pacific Navigation and on 19 September 1985 Pacific Navigation instituted an admiralty action in rem against the vessel claiming a sum exceeding S$300,000 in respect of disbursements made by them as agents for the appellants on account of the vessel and claiming also agency and other fees and commission. The action was heard in the High Court and later came on appeal before this court and judgment was given on 31 May 1993: see `The Ohm Mariana` ex `Peony`; Pacific Navigation Co Pte Ltd v Owners of and All Other Persons Interested in the Ship or Vessel Ohm Mariana ex `Peony` .

The present suit was brought against the respondent soon after the commencement of the admiralty action in rem and relates closely to the three documents executed by the appellants, which were prepared by the respondent`s firm, Ng & Co.
The appellants in the statement of claim, as subsequently amended, averred that the respondent, being their solicitor, failed to disclose to them her interests in Pacific Navigation, and that the respondent failed to discharge her duty as their attorney to prevent the arrest of the vessel or to ensure that the power of attorney was properly executed.

The judgment

The action was heard before Kan Ting Chiu JC who found that there was a contract of retainer between the appellants and the respondent. However, the learned trial judge held that the respondent`s failure to disclose her interest in Pacific Navigation was `not an actionable wrong in the circumstances` as it did not cause any loss or injury to the appellants. It was further held that the power of attorney had not been created for the benefit of the appellants and therefore the respondent, being a gratuitous attorney, was not obliged to act under the power for the appellants` benefit. In any event, even if the respondent was obliged to take action, she was not obliged to provide the funds, which the appellants admittedly did not have, for securing the release of the vessel. It was also held that the respondent`s failure and/or inability to act did not cause any loss to the appellants as the latter were not prevented from entering into negotiations for the release of the vessel and the failure of those negotiations had nothing to do with the respondent.

At the hearing, the appellants through Halim alleged that the respondent had tampered with the management agreement by substituting certain pages thereof with pages fabricated by her.
The learned trial judge, however, held that the court was unable to make a determination of that issue as it had not been pleaded. An application for leave to make the necessary amendments to the statement of claim at a very late stage of the hearing was refused.

Application for leave to amend

Before we consider the substantive issues in this appeal, we should dispose of first a procedural point: the question of the application for leave to amend the statement of claim which was refused by the trial judge. Order 18 r 7 of the Rules of the Supreme Court requires every pleading to contain all the material facts but not the evidence by which those facts are to be proved. Central to the appellants` case is the fact that the respondent preferred her own interests to that of the appellants. If the allegation of fabrication is but evidence of the respondent preferring her own interests, it follows that it was unnecessary to plead fabrication in the statement of claim. Indeed counsel for the appellants said in his closing submission before the trial judge that the alleged tampering was evidential backing for the appellants` allegation that the respondent was preferring her own interests to that of the appellants. On the other hand, counsel have proceeded, both here and below, on the basis that it was a material fact which ought to have been pleaded. In our opinion, the allegation of fabrication of the management agreement was a material fact which ought to have been pleaded. What the appellants in fact alleged was that the respondent, in order to support the admiralty action in rem and arrest of the vessel, deliberately substituted certain pages of the management agreement (after it was executed by Halim) with pages fabricated by her. Implicit in such allegation is an element of fraud on the part of the respondent. In the premises, the sole question is whether the learned trial judge erred in law in refusing to give leave to the appellants to amend their statement of claim. In this regard the learned trial judge`s reasoning was this:

I refused the application. The proposed amendment sought to introduce new and serious charges of fraud against the defendant. The plaintiffs were aware of the documents well before the hearing commenced. They had alleged tampering in Pacific Navigation`s admiralty suit which was heard earlier. The basis for the proposed amendments came up by that time. The pleadings should be amended then, and the documents could have been sent for examination and the document examiner`s reports could be obtained. The fact that the documents were sent for examination during the hearing reflected delay in the application to amend and did not justify it.



In refusing the application, I took into account:

(a) The proposed amendments were not amendments to clarify the issues in dispute, but were amendments to add a new issue for the first time. Lord Griffith`s comments in Ketteman v Hansel Properties Ltd [1987] AC 189 at 220D on the different treatments to be given to such amendments to a defence apply with equal force to amendments to a statement of claim.

(b) The sheer length of delay of the application - it was made on 4 February 1993, after the first instance judgment in the admiralty suit was delivered on 11 March 1992 and after the hearing of the present action commenced on 3 August 1992. As stated in para 20/5-8/11 of the Supreme Court Practice 1993 , `the Court should not readily allow at the trial an amendment, the necessity for which was abundantly apparent months ago, and then not asked for`.

(c) That an amendment will not be allowed at a hearing which introduces a charge of fraud - Behn v Bloom [1911] 132 LTJ 87.



The events surrounding the application for leave to amend should be clearly borne in mind.
The appellants pleaded in para 2D of the statement of claim as to the appointment of Pacific Navigation under a management agreement which was alleged to be undated but signed on or about 18 October 1984. In para 5 of the defence the respondent disputed the allegation that the said agreement was undated, averring that it was dated 14 November 1984. The appellants specifically joined issue with the respondent regarding the latter`s contention by para 1D of the reply. On 12 June 1992, before the trial began, the appellants amended their reply by inserting `Particulars of Findings of Facts` after para 1D of the reply, where they pleaded that `the first four pages of the management agreement relied on by Pacific Navigation were fabricated and substituted in place of the first four pages of the agreement signed by Mr Halim and it was done either for the purpose of effecting the arrest of the ship or sustaining the arrest.` There the appellants purported to rely on the findings of fact made by the High Court in the related admiralty suit. That amendment, however, was struck out by the learned trial judge at the commencement of the trial on 3 August 1992. The application for leave to amend the statement of claim was not...

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