Ong & Ong Pte Ltd v Fairview Developments Pte Ltd

• Jurisdiction: Singapore
• Judge: Chao Hick Tin JA; Andrew Phang Boon Leong JA
• Judgment Date: 23 January 2015
• Neutral Citation: [2015] SGCA 5
• Date: 23 January 2015
• Docket Number: Civil Appeal No 163 of 2013
• Published date: 27 January 2015
• Plaintiff Counsel: Mohan Pillay and Ang Wee Jian (MPillay)
• Hearing Date: 20 August 2014
• Defendant Counsel: Hri Kumar Nair SC, Shivani Retnam and Harsharan Kaur (Drew & Napier LLC) and Yap Neng Boo Jimmy (Jimmy Yap & Co)
• Court: Court of Appeal (Singapore)
• Subject Matter: Civil Procedure,Offer to settle,Contract,Formation

Chao Hick Tin JA (delivering the judgment of the court): Introduction

This is an appeal brought by the Appellant, Ong & Ong Pte Ltd, against the decision of the High Court judge (“the Judge”) in Ong & Ong Pte Ltd v Fairview Developments Pte Ltd [2014] 2 SLR 1285 (“the GD”) where the Judge held that a settlement agreement had come into being when the Respondent accepted the offer to settle (“the OTS”) made by the Appellant under O 22A of the Rules of Court (Cap 322, R 5, 2006 Rev Ed) (“the Rules of Court”). The reason being that at the time the Respondent accepted the OTS, it had not lapsed contrary to what the Appellant asserted.

The Respondent contends that a valid settlement was reached on the following terms:¹ The Respondent was to pay to the Appellant the sum of $2,588,666. The Respondent was to pay to the Appellant the Appellant’s costs of the claim and counterclaim to be taxed if not agreed: on a standard basis, from the date of commencement of these proceedings on 20 May 2011 to 11 August 2011; and on an indemnity basis, from 12 August 2011 up to the date of the Respondent’s notice of acceptance (ie, 24 September 2013). The Respondent was to pay to the Appellant interest at 1.5% per annum, for the period from 20 May 2011 up to the date of payment. The Appellant was to discontinue its claims against the Respondent within seven days of payment of the sum of $2,588,666, interest and costs.

Facts

The facts which gave rise to the action, the OTS and eventually the settlement as found by the Judge, are as follows. The Appellant is an architectural firm which was engaged by the Respondent. The services of the Appellant were subsequently terminated by the Respondent and this led to a dispute resulting in the Appellant instituting, on 20 May 2011, Suit No 369 of 2011 (“the Suit”). The Appellant claimed against the Respondent a total sum of $10,138,128.28 on two grounds: (1) the loss of prospective fees for architectural works not carried out amounting to $5,626,653.31; and (2) fees due to the Appellant in the sum of $4,511,474.97 on the basis of quantum meruit, for certain architectural services already performed.

The Respondent responded with a counterclaim for $23,410,000, being losses and damages it suffered on account of the Appellant’s delay in furnishing the Respondent with a letter of release after the Appellant’s services were terminated by the Respondent. The alleged losses suffered by the Respondent were due to the increase in development charges which the Respondent needed to pay to the authorities in respect of the land proposed to be developed caused by the delay on the part of the Appellant in issuing the letter of release.

On 28 July 2011, some two months after the institution of the Suit, the Appellant’s solicitors, M/s MPillay (“MPillay”) served on the Respondent’s then solicitors, M/s Kelvin Chia Partnership, an OTS to settle the claim and the counterclaim in the Suit in the following terms:

The [Appellant] offers to fully and finally settle all of the [Appellant’s] claims, all of the [Respondent’s] counterclaims and all matters arising in this Suit on the following terms:

1. The [Respondent] is to pay to the [Appellant] the sum of S$2,588,666; 2. If this Offer to Settle is accepted by the [Respondent] no later than 14 days from today, i.e. by 11 August 2011: a) Parties will bear their own legal costs from the date of commencement of these proceedings on 20 May 2011 to the date of the [Respondent’s] notice of acceptance (if any); and b) The Settlement Sum shall be inclusive of interest accrued from the date of commencement of these proceedings on 20 May 2011; 3. If this Offer to Settle is accepted by the [Respondent] after 11 August 2011: a) The [Respondent] is to pay to the [Appellant] the [Appellant’s] costs: a. on a standard basis, from the date of commencement of these proceedings on 20 May 2011 to 11 August 2011, b. on an indemnity basis, from 12 August 2011 up to the date of the [Respondent] notice of acceptance (if any); b) The [Respondent] is to pay to the [Appellant] interest at 1.5% per annum, for the period from 20 May 2011 up to the date of payment; 4. Costs to be paid pursuant to this Offer to Settle, to be taxed if not agreed; and 5. The [Appellant] is to discontinue its claims against the [Respondent], and the [Respondent] is to discontinue its counterclaim against the [Appellant], within 7 days of payment of the sums payable pursuant to this Offer to Settle.

[emphasis added]

On 7 February 2012, pursuant to an application by the Appellant, the court ordered that the trial of the Suit be bifurcated. The trial on liability was heard in October 2012. On 26 March 2013, the Judge granted interlocutory judgment allowing the Appellant’s claim for the fees for architectural works already performed, but not for the loss of prospective fees for works not yet performed and at the same time dismissing the Respondent’s counterclaim (“the Interlocutory Judgment”). The Judge ordered that damages due to the Appellant be assessed by the Registrar.

On 22 April 2013, a few days before the deadline for appealing the Interlocutory Judgment, the Respondent’s solicitors, M/s Jimmy Yap & Co wrote to MPillay, asking whether the Appellant was “prepared to accept the outcome of the matter without taking the matter further to the Court of Appeal”, and that if the Appellant was amenable to that, the Respondent “will also accept the outcome and not proceed with the Appeal”. It further stated that “[i]n other words, both parties will not Appeal against the decision of the learned trial judge”.²

MPillay replied a day later, on 23 April 2013, stating simply that, “[i]f [the Respondent’s] proposal is made with the intention of avoiding further time and costs, please be reminded that [the Appellant’s OTS] remains open for acceptance”.³ The Respondent did not accept the OTS. Instead, on 25 April 2013, both parties appealed against the Interlocutory Judgment in relation to the Appellant’s claims against the Respondent.⁴ However, the Respondent did not appeal against the Judge’s dismissal of its counterclaim.

A hearing on costs was subsequently fixed to be heard before the Judge on 13 May 2013. Prior to that hearing, by a letter dated 10 May 2013, MPillay informed the court that “costs of the trial should be reserved [until] after the assessment of damages by the Registrar, due to the existence of an Offer to Settle”.⁵ At the hearing on 13 May 2013, the notes of the Registrar recorded Mr Mohan Pillay from MPillay to have said that:⁶

There was an OTS, which will depend on assessment. Suggest to defer order for costs until after assessment of damages.

On 24 September 2013, the Court of Appeal heard the cross appeals. The Appellant’s appeal was allowed and the Respondent’s appeal dismissed. Later, on the same day, the Respondent sent a document entitled “Notice of Acceptance of Plaintiff’s Offer to Settle” (“the NOA”) purporting to accept the OTS. The NOA read as follows:

The [Respondent] accepts your Offer to Settle dated the 28th day of July 2011 on the following terms:

1. The [Respondent] is to pay to the [Appellant] the sum of S$2,588,666. 2. The [Respondent] is to pay to the [Appellant] the [Appellant’s] costs of the Claim and Counterclaim to be taxed if not agreed: a) on a standard basis, from the date of commencement of these proceedings on 20 May 2011 to 11 August 2011; b) on an indemnity basis, from 12 August 2011 up to the date of this Notice of Acceptance. 3. The [Respondent] is to pay to the [Appellant] interest at 1.5% per annum, for the period from 20 May 2011 up to the date of payment. 4. The [Appellant] to discontinue its claims against the [Respondent] within 7 days of payment of the aforesaid sum of $2,588,666, interest and costs.

The main difference between the NOA and the OTS is that the NOA did not mention that the Respondent was to discontinue its counterclaim against the Appellant. Of course, at that point in time there was no longer a counterclaim for the Respondent to discontinue since it was dismissed by the Judge and the time for appeal against that dismissal had lapsed on 26 April 2013.

On 25 September 2013, MPillay replied to the NOA stating that the OTS “remained open for acceptance so long as the Court had not disposed of the matter in respect of which the OTS was made” and as “that had ceased to be the case before [the Respondent’s] purported acceptance”, the OTS was “no longer capable of being accepted”.⁷

Thereafter, on 4 October 2013, the Respondent instituted the present proceedings seeking a declaration from the court that its acceptance of the OTS was valid.

The Court of Appeal eventually released its grounds of decision for the appeal on 20 January 2014 in Fairview Developments Pte Ltd v Ong & Ong Pte Ltd and another appeal [2014] 2 SLR 318 (“Ong & Ong (CA)”).

The O 22A offer to settle regime

It is apposite at this juncture to briefly describe the essential elements of the offer to settle regime provided for under O 22A of the Rules of Court.

The regime under O 22A is not unique to Singapore. Similar regimes are also found in other common law jurisdictions such as British Columbia, Ontario, New South Wales and Victoria. The GD (at [23]–[51]) helpfully traced the origin of O 22A and also provided a comparative analysis of the regimes in those jurisdictions which we do not propose to rehash here at length.

The purpose of O 22A, which this court in The “Endurance 1” [1998] 3 SLR(R) 970 at [41] cited with approval from the Ontario Court of Appeal decision in Data General (Canada) Ltd v Molnar Systems Group Inc (1991) 85 DLR (4th) 392, is to:

… encourage the termination of litigation by agreement of the parties – more speedily and less expensively...