Ong & Ong Pte Ltd v Fairview Developments Pte Ltd

• Jurisdiction: Singapore
• Judgment Date: 18 March 2014
• Date: 18 March 2014
• Docket Number: Suit No 369 of 2011 (Summons No 5235 of 2013)
• Court: High Court (Singapore)

Ong & Ong Pte Ltd

Plaintiff

and

Fairview Developments Pte Ltd

Defendant

[2014] SGHC 48

Lee Seiu Kin J

Suit No 369 of 2011 (Summons No 5235 of 2013)

High Court

Civil Procedure—Offer to settle—Offer to settle encompassing plaintiff's claim and defendant's counterclaim—Defendant accepting offer to settle after counterclaim determined—Whether offer to settle remaining open for acceptance—Order 22 A Rules of Court (Cap 322, R 5, 2006 Rev Ed)

The plaintiff brought a claim against the defendant, and the defendant in turn asserted a counterclaim. On 28 July 2011, some two months after the writ was filed, the plaintiff made an offer to settle ‘all of the Plaintiff's claims, all of the Defendant's counterclaims and all matters arising in this Suit’. One of the terms of the offer to settle therefore was that the plaintiff was to discontinue its claims against the defendant, and the defendant was to discontinue its counterclaim against the plaintiff.

The suit was then bifurcated into separate trials for liability and quantum. After hearing the parties on liability, the trial judge allowed part of the plaintiff's claim, dismissed the defendant's counterclaim and ordered damages to be assessed by the registrar. Both parties appealed against the part of the decision that found the defendant liable to the plaintiff. The dismissal of the defendant's counterclaim, however, was not appealed against.

Before the Court of Appeal, the plaintiff's appeal was allowed and the defendant's appeal dismissed. Immediately following the decision on appeal and before the assessment of damages, the defendant purported to accept the plaintiff's offer to settle. The ‘Notice of Acceptance of Plaintiff's Offer to Settle’ served by the defendant excluded any mention that (a) the plaintiff's offer to settle was concurrently to settle the plaintiff's claim and the defendant's counterclaim, and (b) the defendant's obligation to discontinue its counterclaim. The plaintiff took objection as it viewed that the offer to settle was ‘no longer capable of being accepted’.

The defendant applied for a declaration that its acceptance of the plaintiff's offer to settle was valid.

Held, granting the declaration:

(1) The nub of the plaintiff's position was that the offer to settle self-destructed upon the defendant's counterclaim being finally determined. The problem was that this position, even if it was tenable, was not explicit. It was equally possible for the plaintiff to argue, if the offer to settle had not been accepted by the defendant and the plaintiff obtained judgment for a more favourable sum, that the offer to settle had all the time remained open for acceptance and asked for indemnity costs. Consequently, it meant that the defendant could not have eliminated the possibility that it would be made to pay indemnity costs by virtue of O 22 A r 9 of the Rules of Court:at [53] .

(2) Faced with an ambiguity, the court ought to come down in favour of clear drafting in terms of unambiguous offers and expiry dates. These factors were entirely within the control of the offeror. If the acceptance of the offer to settle was to be limited by time or circumstances, the offeror had to state so clearly. Any ambiguity would be interpreted contra proferentem. To hold otherwise in this case would have been to arm the plaintiff with a double-edged sword against the defendant:at [54] .

(3) In so far as the plaintiff relied on an implied term that the offer to settle would no longer be open for acceptance if the counterclaim was settled, that interpretation was not available to the plaintiff as the offer to settle would be interpreted contra proferentem:at [20] and [56 (b) ] .

(4) As for the plaintiff's submission that defendant's acceptance was not on the terms of the offer to settle, the court would look at the substance of the offer rather than the strict form when considering whether a purported acceptance was valid. If, by the time of the defendant's acceptance of the offer to settle, the counterclaim had been determined, there would be no need for the defendant to undertake to discontinue it:at [17] , [19] and [56 (a) ] .

(5) The fact that the defendant had served its acceptance very late in the proceedings did not operate to deprive it of the right to accept the offer to settle. Order 22 A of the Rules of Court envisaged acceptance at any time before final determination. So long as the offer had not been withdrawn, the risk of indemnity costs being incurred continued. There was therefore no reason in this case for the court to disallow acceptance at any stage:at [22] and [56 (c) ]

[Observation: Prior to 1993, the Rules of the Supreme Court provided a specific regime under O 22 to make an offer to settle with consequences on costs. The O 22 payment into court regime contemplated that the court might take into account money paid into court to settle all or some of the causes of action and all or some of the counterclaims. The default position was that where a party accepted the payment, he was only entitled to costs up to the time of receipt of the notice of payment. However, there was a residual discretion on the part of the court to make a different order in accordance with the circumstances of the case:at [24] and [30] .

There was a significant lacuna in O 22 as it was only applicable where the action pertained to the payment of a sum of money, and was only available to a defendant, or a defendant to a counterclaim after the writ was filed. Thereafter, the courts developed an extra-statutory inducement for parties to settle through the exercise of its discretionary powers to order costs. A written offer to settle ‘without prejudice save as to costs’, also called a Calderbank offer, could be shown to the court and taken into consideration on the question of costs if the outcome of the trial turned out to be less favourable than the offer. However, a Calderbank offer, unlike the statutory regime under O 22 and O 22 A of the Rules of Court, did not bind the court to award costs in any particular manner but was one factor that the court would take into consideration in the exercise of its discretion to award costs. It was also only available to a party who could not have protected his position by payment into court:at [31] , [34] , [35] and [39] .

In 1993, the Rules of the Supreme Court and the Rules of the Subordinate Courts were amended to include O 22 A. The introduction of O 22 A took place against a backdrop of similar statutory procedures relating to offers to settle in British Columbia, Ontario, New South Wales and Victoria. The offer to settle procedure in these four jurisdictions had a common purpose of encouraging settlement, which was effected by a common measure of penalising a party who rejected a reasonable offer with costs (and correspondingly, rewarding the other party with such costs). The experiences in these jurisdictions demonstrated, firstly, the feasibility of instituting an offer to settle regime that was considerably broader in scope than payment into court or Calderbank offers and, secondly, that having such a regime could save legal costs and judicial time in ways that were not possible with payment into court or Calderbank offers. Furthermore, the arguments in favour of settlement that underlined payment into court or Calderbank offers would apply with equal force to an offer to settle regime. Order 22 A, when enacted, overlapped with payment into court as a means to initiate settlement and also effectively replaced the Calderbank offer:at [40] , [48] , [49] and [51] .]

Butcher v Wolfe [1999] 2 FCR 165 (refd)

Calderbank v Calderbank [1976] Fam 93 (refd)

Chrulew v Borm-Reid & Co [1992] 1 WLR 176 (refd)

Colgate Palmolive Ltd v Markwell Finance Ltd [1990] RPC 197 (refd)

Cutts v Head [1984] Ch 290 (refd)

Data General (Canada) Ltd v Molnar Systems Group Inc (1991) 85 DLR (4 th) 392 (refd)

Desanto and Cretzman, Re (1986) 53 OR (2 d) 732; 1986 Can LII 2663 (distd)

Endurance 1, The [1998] 3 SLR (R) 970; [1999] 1 SLR 661 (refd)

FSM v Clarke [2000] BCSC 96 (refd)

Fuyawa Enterprise Pte Ltd v Lim Han Tee [1996] SGHC 300 (folld)

Ip Yun Ha v Dennis Wee Realty Pte Ltd [2011] SGDC 15 (distd)

Jacuzzi Canada Ltd v AMantella & Sons Ltd (1988) 31 CPC (2 d) 195 (refd)

Jet Holding Ltd v Cooper Cameron (Singapore) Pte Ltd [2006] SGHC 20 (refd)

Lie Djioe Boei v Huang Han Jiang [2000] SGHC 107 (refd)

Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721 (refd)

Man B&W Diesel SEAsia Pte Ltd v PTBumi International Tankers [2004] 3 SLR (R) 267; [2004] 3 SLR 267 (refd)

Mutual Community Ltd v Lorden Holdings Pty Ltd (28 April 1993, SC) (Vic) (refd)

Niagara Structural Steel (St Catharines) Ltd v WD La Flamme Ltd (1987) 19 CPC (2 d) 163 (refd)

SBS Transit Ltd v Koh Swee Ann [2004] 3 SLR (R) 365; [2004] 3 SLR 365 (refd)

Shi Fang v Koh Pee Huat [1996] 1 SLR (R) 906; [1996] 2 SLR 221 (refd)

Singapore Airlines Ltd v Tan Shwu Leng [2001] 3 SLR (R) 439; [2001] 4 SLR 593 (refd)

Rules of Court (Cap 322, R 5, 2006 Rev Ed) O 22 A r 3 (2) , O 22 A r 3 (4) , O 22 A r 3 (5) , O 22 A r 9 (consd) ;O 22 r 1, O 22 r 3, O 22 r 6, O 22 r 13, O 59 r 3 (8) , O 59 r 5 (a) , O 59 r 10 (2)

Rules of the Subordinate Courts (Cap 321, R 1, 1993 Ed) O 22 r 13, O 22 A

Rules of the Supreme Court (Cap 322, R 5, 1990 Ed) O 22 r 13, O 22 A

General Rules of Procedure in Civil Proceedings 1986 (Vic) r 26

Rules of Civil Procedure (Ontario) (Can) r 49

Rules of the Supreme Court (UK) O 22 r 14

Supreme Court Rules (British Columbia) (Can) r 37 (formerly r 57)

Supreme Court Rules 1970 (NSW) Pt 22, Pt 52 r 17

Mohan Pillay and Ang Wee Jian (MPillay) for the plaintiff

Hri Kumar Nair SC (instructed) and Jimmy Yap (Jimmy Yap & Co) for the defendant.

Lee Seiu Kin J

1 In this summons the defendant applied for a declaration that its acceptance on 24 September 2013 of the plaintiff's offer to settle dated 28...