Park Regis Hospitality Management Sdn Bhd v British Malayan Trustees Limited & Ors

• Jurisdiction: Singapore
• Judge: George Wei JC
• Judgment Date: 11 December 2013
• Neutral Citation: [2013] SGHC 268
• Court: High Court (Singapore)
• Docket Number: Suit No 201 of 2011 (Registrar’s Appeals Nos 98 of 2013 and 99 of 2013, Summons No 2366 of 2013)
• Year: 2013
• Published date: 08 January 2014
• Hearing Date: 12 September 2013
• Plaintiff Counsel: Cheah Yew Kuin and Michelle Lee (Wong & Leow LLC)
• Defendant Counsel: Lee Eng Beng, SC and Matthew Teo (Rajah & Tann LLP)
• Subject Matter: Civil Procedure,Pleadings,Striking Out,Tort,Inducement of Breach of Contract
• Citation: [2013] SGHC 268

George Wei JC: Introduction

These were appeals from the decision of the learned Assistant Registrar David Lee Yeow Wee (“the AR”) to strike out the appellant’s action against the respondents, and consequentially, dismiss the appellant’s application to amend their statement of claim. I considered the arguments of the parties bearing fully in mind the principles of striking out, most importantly, that it must be plain and obvious that there was no merit in the claim before the claim was to be struck out. After considering the issues before me, I am of the view that the AR did not err in law and fact in striking out the action (apart from potentially one point of law pertaining to the “Release Rule”) and therefore am dismissing both appeals.

The Facts The Parties

The appellant, Park Regis Hospitality Management Sdn Bhd (“Park Regis”), is a hotel management company registered in Malaysia and is part of the Staywell Hospitality Group (“Staywell”). Staywell manages a network of 35 hotels in the Asia Pacific region under the brands, Leisure Inn and Park Regis. The appellant was the plaintiff in the hearing below.

British & Malaysian Trustees Limited (“BMT”) is the trustee of Allco Property Return on Investment Fund (“the Fund”). BMT was the 1st defendant in the hearing below. The assets of the Fund are redeemable preference shares in Taragon Capital Malaysia Sdn Bhd (“Taragon”). Taragon is a company registered in Malaysia and is in the business of property development and investment.

The 1st respondent, Allco Funds Management (Singapore) Limited (“Allco Funds”), is the manager of the Fund. Allco Funds was the 2nd defendant in the hearing below. The 2nd respondent, Allco FMS Investments Pte Ltd (“Allco FMS”), is the registered legal and beneficial owner of all the units in the Fund. Allco FMS was the 3rd defendant in the hearing below.

Background to the Dispute and Claims

According to Park Regis’ submissions, in 2005 and 2007, BMT as trustee of the Fund invested some RM45m in Taragon in connection with a proposed development of a hotel on certain parcels of land in Kuala Lumpur, Malaysia. This was done by BMT subscribing to 20 million units of redeemable preference shares and 25 million units of RPS-B shares in Taragon. These redeemable preference shares were held on trust for the benefit of the Allco FMS.

On 16 August 2010, an Operating Agreement (“the OA”) was signed between Park Regis and Taragon. Park Regis was appointed operator of the hotel for an initial term of three years, with five automatic renewals for further terms of three years each.

On 21 February 2011, Taragon entered into an agreement to sell the hotel to Grace Hub Sdn Bhd (“Grace”) which was a subsidiary of Furama Hotels International Management Pte Ltd (“Furama”) for RM150m (“the SPA”). The SPA contained an express provision that if the OA was not terminated within 30 days of the date of the SPA, the SPA would automatically be “rescinded”. This provision was set out in cl 3.2 of the SPA which was entitled “Conditions Precedent”.

On 21 February 2011, Taragon served a notice of termination of the OA on Park Regis pursuant to cl 3.5 of the OA. By letter dated 25 February 2011, the notice of termination was rejected by Park Regis. In the letter, Park Regis expressly affirmed the OA and put Taragon on notice that it remained ready and willing to give full effect to the OA.

Legal Proceedings

On 17 March 2011, Park Regis sued Taragon in Malaysia for breach of the OA, and one day later, also applied for an injunction to restrain the sale of the hotel to Grace. At the preliminary hearing on 31 March 2011, an interim injunction was granted with the hearing date for the injunction set down for 18 April 2011.

In Singapore, on 25 March 2011, Park Regis then commenced Suit No 201 of 2011 against Furama, Grace and Allco Funds for conspiracy to induce Taragon to commit a breach of contract with Park Regis.

However, on 14 April 2011, shortly before the injunction hearing date in Malaysia, Park Regis and Taragon entered into a Resolution Agreement (“the RA”) whereby Park Regis was to receive RM7.5m. The application for an injunction in Malaysia was withdrawn and the proceedings in Malaysia against Taragon for breach of the OA were discontinued. As a result of the RA, Park Regis discontinued the action against Furama and Grace on 13 May 2011.

The Singapore action against Allco Funds was, however, not discontinued. On 17 August 2011, Park Regis amended the claim so as to include BMT and Allco FMS as defendants. (This statement of claim hereafter referred to as “SOC (Amendment No.1)”.) Then on 6 June 2012, Park Regis took out Summons No 2800 of 2012 to amend the statement of claim in order to, inter alia, add two additional defendants, namely Tan Aik Kiat (“Tan”) and Ferrier Hodgson Pte Ltd (“Ferrier”). This (proposed) statement of claim has been referred to as “1st Draft SOC-2.” At about the same time, the Respondents took out Summons No 3728 of 2012 to strike out the entirety of the Park Regis claim.

Both summonses were heard together by the AR on 11 October 2012. At a further hearing on 14 November 2012, the AR “invited” Park Regis to consider further aligning its proposed amendments (found in 1st Draft SOC-2) in line with its submissions on the alleged breaches of the OA. This resulted in a second draft of the “1st Draft SOC-2” on 21 November 2012 (hereafter referred to as the “2nd Draft SOC-2”).

On 15 March 2013, the AR found in favour of the Respondents and struck out the claim. The AR also dismissed the application to amend the statement of claim (this would be the 2nd Draft SOC-2).

The two appeals that came before this court was therefore Park Regis’ appeal against the AR’s decision to strike out the statement of claim, (“RA 98/2013”) and his decision refusing to grant leave to amend the statement of claim as set out in 2nd Draft SOC-2 (“RA 99/2013”). Apart from these two appeals, Park Regis also took out Summons No 2366 of 2013, which was an application for leave to adduce the 13th affidavit of Simon Wan dated 6 May 2013 (“Sim-13”) in support of these two appeals.

For completeness, BMT had also taken out a separate striking out application (Summons No 3752 of 2012) against Park Regis. BMT was successful in their application, and Park Regis did not appeal against this.

The Assistant Registrar’s Decision

The following provides a brief overview of the learned AR’s decision, and I shall elaborate further below where relevant.

At the very outset of his brief grounds of decision dated 15 March 2013 (“the GD”), the learned AR at [4] summarised the key issue before him as the following question:

[H]aving entered into a particular bargain to resolve a dispute with the counterpart to an agreement, should that party be allowed to pursue claims against other defendants for more damages to be paid, essentially re-writing the bargain that he had struck to settle the dispute?

This was of course with reference to, as mentioned above, the RA that Park Regis had entered into. Eventually, the AR answered the question posed above in the negative – Park Regis should not be allowed to pursue its claims against the other parties. In doing so, the AR felt that (what I shall refer to as) the “Release Rule” applied in Singapore. The Release Rule is a common law doctrine which states that where one joint tortfeasor is released from liability, this also discharges the other tortfeasors from liability, based on the premise that the cause of action against all the joint tortfeasors is one and indivisible.

Even if the Release Rule did not apply, the AR found that there was simply no breach of the OA. Even if there was a breach, the AR held that Park Regis did not suffer any damage from the breach. Therefore, Park Regis’ claim for conspiracy to induce a breach was bound to fail. Accordingly, the learned AR struck out Park Regis’ action. Park Regis’ application to amend their statement of claim was consequentially dismissed.

The issues in this appeal

There were three (main) issues before the court in this appeal: Whether leave should be granted to Park Regis to adduce further evidence for the appeals (“the Preliminary Issue”). Whether the Respondents could rely on the RA and the application of the Release Rule in Singapore such that Park Regis no longer had a claim against them (“Issue 1”). Whether there was a breach of the OA, and if so, whether the breach led to any loss suffered by Park Regis (“Issue 2”).

Issue 1 and Issue 2, although distinct issues by themselves, must be viewed in the context of a striking out application. Therefore, I considered these issues with the perspective of whether it was “plain and obvious” that there was no merit to Park Regis’ claim against the Respondents.

The Preliminary Issue – whether leave should be granted to Park Regis to adduce further evidence The Applicable Law

The law pertaining to adducing further evidence in an appeal is not controversial, and is guided by the three conditions set out in Ladd v Marshall [1954] 1 WLR 1489 (“the Ladd v Marshall Test”) and summarised by Jeffrey Pinsler SC in Principles of Civil Procedure (Academy Publishing, 2013) (“Principles of Civil Procedure”) at para 24.057. Under the Ladd v Marshall Test, three conditions must be satisfied before the court will grant leave to adduce evidence on an appeal: the new evidence could not have been obtained with reasonable diligence by that party at trial; the further evidence is such that it would probably have an important influence on the result of the case, though it need not be decisive; and the evidence is such as is presumably to be believed.

However, it has also been clarified that strictly speaking, the Ladd v Marshall Test only applies to appeals from a trial (albeit with certain qualifications). In Lian Soon Construction Pte Ltd v Guan Qian Realty Pte Ltd ...