Progress Software Corp (S) Pte Ltd v Central Provident Fund Board

JurisdictionSingapore
CourtCourt of Three Judges (Singapore)
JudgeChao Hick Tin JA
Judgment Date28 February 2003
Neutral Citation[2003] SGCA 6
Citation[2003] SGCA 6
Subject MatterWhether successful party should be deprived of part of costs,Central Provident Fund Act (Cap 36, 2001 Rev Ed),Whether 'payable' can be defined as actual payment,Meaning of 'payable' can be determined from language of statute,Principles,Costs,Successful party had not acted improperly or unreasonably,Civil Procedure,Meaning of 'payable',Whether necessary to refer to case law,Statutory Interpretation,Aids to construction,'Payable',Central Provident Fund Act (Cap 36, 2001 Rev Ed) ss 2, 7, 58, First Schedule para 5,Construction of statute,Words and Phrases,Definitions
Plaintiff CounselSarjit Singh Gill SC, Dylan Lee (Shook Lin & Bok)
Docket NumberCivil Appeal No 104 of 2002
Defendant CounselEdmond Pereira, L R Penna (Edmond Pereira & Partners)
Published date17 December 2003
Date28 February 2003

Delivered by Yong Pung How CJ

Facts

1 The appellants were a private company incorporated in Singapore. They were a subsidiary of Progress Software Corporation, a NASDAQ listed company based in Massachusetts, United States of America. The respondents were the Central Provident Fund Board, a statutory board established under the Central Provident Fund Act (Cap 36) ("the CPF Act").

2 The appellants were required by s 7(1) of the CPF Act to make contributions into the CPF Fund for their employees. The rates for contributions were set out in the First Schedule of the CPF Act. The amount payable by each employer depended on whether the contribution was for "ordinary" or "additional" wages. The definition of "ordinary" and "additional" wages was found in s 5 of the First Schedule:

5. For the purpose of this Schedule —

(a) …

(d) "additional wages" means any remuneration other than ordinary wages;

(e) "ordinary wages for the month" means the amount of remuneration due or granted wholly or exclusively in respect of employment during that month and payable before the due date for the payment of contribution for that month;

The important difference between these two types of wages was that an employer’s CPF contribution on "ordinary" wages was capped and subject to a maximum limit (currently set at $6,000), whereas there was no such limit for contributions on "additional" wages. The practical effect of this regime was that an employer would generally pay lower contributions into the fund if its employee’s wages were classified as "ordinary" wages.

3 Under s 2 of the Central Provident Fund Regulations (Cap 36, Regulation 15), all contributions to the fund which are payable by an employer must be paid not later than 14 days after the end of the month in respect of which the contributions are payable.

4 The present appeal concerned the contributions payable for four of the appellants’ former employees. These employees received a two-part remuneration package which comprised both a fixed and a variable component. The fixed component was paid as a monthly salary. No dispute arose in relation to the fixed component. The dispute in the present appeal arose in relation to the former employees’ variable commission component ("VCC"), which was calculated on a monthly basis but was usually paid at irregular intervals. Under the terms of the remuneration package, the appellants had the sole discretion to defer the payment of an employee’s VCC.

5 In 1996, the appellants wrote to the respondents to clarify whether the VCC should be classified as "ordinary" or "additional" wages. The respondents replied that the VCC should be classified as "ordinary wages". The appellants have accordingly been paying CPF contributions for the VCC as if it was "ordinary wages".

6 In 2000, the respondents called for the appellants’ records as part of its practice of conducting periodic checks. During this check, the appellants’ financial manager was summoned to produce various documents and to answer queries. Further correspondence took place between both parties, in which the appellants were asked to give additional details on the nature of the VCC. At the end of 2000, the respondents reconfirmed that the VCC should be considered "ordinary wages".

7 In 2001, the respondents wrote to the appellants informing them that the VCC had been re-assessed as "additional wages". It accordingly demanded additional payment from the appellants for their outstanding contributions and penalty interest for late payment. The appellants paid the amount demanded, but under protest.

8 Fearing that the respondents would reject their payment which was made under protest, and instead commence criminal prosecution, the appellants applied to the Court by way of Originating Summons to seek a determination as to whether the VCC should be considered "ordinary" or "additional" wages. The appellants also sought a declaration that the sums paid under protest should be refunded.

9 The respondents applied to strike out the Originating Summons on the grounds that the matter should have been commenced by judicial review. The striking out application was dismissed by the Deputy Registrar. The respondents appealed unsuccessfully against the Deputy Registrar’s decision. Both parties then appeared before the trial judge in the court below.

The decision below

10 The trial judge found in favour of the appellants on the procedural issue, and held that the appellants were entitled to proceed by means of an Originating Summons in seeking a determination as to whether the VCC should be classified as "ordinary" wages. The appellants did not appeal against the trial judge’s decision on this procedural issue.

11 The substance of the present appeal stemmed from the fact that the trial judge found in favour of the respondents on the substantive issue. The trial judge stated in his grounds of decision that he was inclined towards the respondents’ interpretation of "payable", which was that the VCC could not be classified as "ordinary wages" because it was not payable before the due date for the payment of contributions for each month. The trial judge thus held that the term "payable" in the CPF Act must signify that any payment that is due will be paid within that period. The trial judge also held that "ordinary" wages cannot include deferred payments.

12 The trial judge thus dismissed the appellants’ application with costs to be taxed if not agreed.

The appeal

13 Several issues were raised before us. After hearing counsel for both parties, we dismissed the appeal, and awarded costs on the substantive issue to the respondents. We now give our reasons.

"Payable" is distinct from actual payment

14 The appellants argued that the trial judge erred in his interpretation of "payable" under the CPF Act. They argued that "payable" cannot be defined as actual payment. Rather, "payable" should be defined as a legal obligation to pay. The appellants went on to argue that the VCC should accordingly be classified as "ordinary wages" because the facts showed that they were obliged to pay the VCC on a monthly basis. The appellants relied on the following English cases in support of their proposition.

15 Secretary of State for Employment v Crane [1988] IRLR 238 was a case in which a company could not afford to pay its employee’s salary. In deciding whether the salary still remained "payable" under the contract, the Employment Appeal Tribunal stated:

The phrase ‘in which no remuneration was payable by the employer’ seems to us a perfectly simple phrase. Was the remuneration legally required to be paid by the employer to the employee during any particular week? (emphasis added)

16 Morton v The Chief Adjudication Officer [1988] IRLR 444 was a case in which an employee was awarded compensation for wrongful dismissal. However, the employers in question were in liquidation. The employee argued that the compensation awarded could not be considered "payable" as there was little chance that it would actually be paid. She thus claimed to be statutorily entitled to unemployment benefits. The Court of Appeal disagreed, and held that "it is perfectly clear that a sum may properly be regarded as ‘payable’ … even though it has not yet been paid."

17 It seemed clear to us that the English position on the interpretation of "payable" is that the term cannot be equated with actual payment. According to the English cases, a sum...

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