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

• Jurisdiction: Singapore
• Judge: Choo Han Teck JC
• Judgment Date: 08 August 2002
• Neutral Citation: [2002] SGHC 174
• Citation: [2002] SGHC 174
• Defendant Counsel: Edmond Pereira and LR Penna (Edmond Pereira & Partners)
• Published date: 19 September 2003
• Plaintiff Counsel: Sarjit Singh Gill SC, Dylan Lee and Chua Beng Chye (Shook Lin & Bok)
• Date: 08 August 2002
• Docket Number: Originating Summons No 601579 of
• Court: High Court (Singapore)
• Subject Matter: Application by defendants to strike out on basis of incorrect mode of commencement,Dismissal of defendants' application,No appeal against dismissal,Originating processes,Sch 1 paras 5(d) & 5(e) Central Provident Fund Act (Cap 36, 2001 Ed),reg 2(1) Central Provident Fund Regulations (Cap 36, Rg 15, 1998 Ed),O 53 Rules of Court,'Additional wages',Plaintiffs not having statutory right of appeal to courts,Appeals,Words and Phrases,Plaintiffs' application by way of originating summons,Whether variable component in plaintiffs' salary package constitutes 'additional wages' or 'ordinary wages',Civil Procedure,Whether plaintiffs ought to commence application under O 53 of Rules of Court,'Ordinary wages',Provident Fund,'Back door' appeal,Whether plaintiffs' application a 'back door' appeal,Whether issue res judicata,Contributions,Mode of commencement of proceedings

Judgment

GROUNDS OF DECISION Cur Adv Vult

1. The plaintiff is a private company incorporated in Singapore and is a subsidiary of Progress Software Corporation, a NASDAQ listed company in the United States Of America. This is an application brought by the plaintiff in respect of the Central Provident Fund ("CPF") payments of four of its employees. Under their employment contracts, the remuneration of these employees is structured as having two component parts described in the affidavit of Christopher Yeo, the plaintiff's managing director, as a fixed component (comprising about 60% of the total remuneration) and a variable component (comprising the balance 40%). The fixed component was expressed as an annual package and contributions to the CPF were paid on a monthly basis. The variable component was determined monthly but paid at various intervals. At this point it will be useful to mention that remuneration for the purposes of calculating contributions under the Central Provident Fund Act, Ch 36 fall into two broad categories. First, there is the "ordinary wages", and secondly, there is "additional wages". These are defined in 5 (d) and (e) of the First Schedule to the Act as follows:

"(d) "additional wages" means any wages 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."

All CPF contributions must be paid "not later than 14 days after the end of the month in respect of which the contributions are payable" as required under reg 2 of the CPF Regulations (1987).

2. The employees concerned in this case were paid a fixed monthly salary in respect of which no dispute arises. They were also paid commissions depending on whether they met the sales target set for them by the company. The plaintiff says that the commissions do not depend on collections but on invoices generated by the employee. Therefore, it takes the view that any commission due is easily computable at the end of each month and should therefore form part of the ordinary wages of the employee. If that is right, then the total contributions to the CPF, including the variable component (the commissions), is subject to the maximum of 36% from the employee (up to a maximum of $2,160) and 20% (up to a maximum of $1,200) from the employer - these amounts are those payable at the material time. The figures and percentages may vary from time to time. On the other hand, if the variable component is regarded as "additional wages", which, in the opinion of the Board, it is, then additional contributions are required to be made from the "additional wages". The additional contributions are not subject to the maximum prescribed for contributions from the "ordinary wages".

3. According to Christopher Yeo, as at 1 July 1996 the Board accepted that the variable component is part of "ordinary wages". On 4 August 2000 the plaintiff's records from 1997 to 2000 were called for as part of the Board's "periodic checks". The plaintiff's then Finance Manager was summoned to produce various documents and answer queries by the Board. Eventually, the Board wrote by letter dated 15 November 2000 to the plaintiff stating that the "commission payments should be treated as "Ordinary Wages". However, on 22 January 2001, the Board wrote to the plaintiff stating that the plaintiff had not made correct contributions to the CPF for their employees for the period between October 1998 and July 2000 and re-assessed the commission payments to be "additional wages". A sum of $13,728 was demanded by the Board as additional payment. This amount was subsequently revised to $12,048 after an exchange of correspondence between the board and the plaintiff's solicitors. The plaintiff disputes the view taken by the Board and so it paid the amount under protest. It also paid certain sums being interest for late payment (also under protest). These payments were demanded and paid in respect of a single employee (Anne Seow). On 28 June 2001 the Board demanded payment of additional sums for similar reason in respect of three more employees of the plaintiff. A sum of $98,530 was demanded and paid under protest. On 15 October 2001 the Board revised the amount to $100,221 and the plaintiff paid the balance of $1,691, again under protest. Fearing that the Board may reject the payment and commence criminal prosecution the plaintiff made this application on 19 October 2001.

4. The application was made by way of an Originating Summons in which the plaintiff seeks a determination by this court as to whether the variable component of the four employee's remuneration ought to be classified as "ordinary wages" and not "additional wages", and at the same time, prayed for a declaration that the plaintiff and its four employees are entitled to a refund of the payment made under protest. The Board applied through its solicitors to strike out this Originating Summons on the ground that it was misconceived because the application ought to be made as an O 53 proceedings. The application to strike out was dismissed by the Deputy Registrar and the Board appealed. The appeal before a judge-in-chambers was dismissed on 15 April 2002. The Board declined to appeal further but its counsel Mr. Pereira maintained that the procedure is wrong and took it as a preliminary objection before me at the hearing of the Originating Summons. Mr. Dylan for the plaintiff, not surprisingly, responded by claiming that this objection is res judicata and that the issue had been raised an disposed.

5. Counsel for the Board, Mr. Pereira, made a strong submission on the Or. 53 point as follows. The Board was established as a statutory body under the CPF Act. The different rates of contributions as well as the different types of wages are prescribed in the First Schedule which may be amended from time to time by the Minister. The contributions are paid into a fund administered by the Board. The fund and contributions to it are administered by the Board; and in this regard, any...