Soon Aik Marine & Engineering Pte Ltd v 'Hoesheng' (Owners) (Central Provident Fund Board, intervener)

• Jurisdiction: Singapore
• Judge: Chan Sek Keong JC
• Judgment Date: 27 March 1987
• Neutral Citation: [1987] SGHC 8
• Date: 27 March 1987
• Subject Matter: Contributions,s 3(1) (n) High Court (Admiralty Jurisdiction) Act (Cap 6, 1970 Ed),Employee,Arrears in employees' contributions,Whether CPF has right to sue as trustee for unpaid contributions,Admiralty and Shipping,Provident Fund,Intervention by CPF to recover arrears of CPF contributions of seamen from proceeds of sale of ship,Admiralty jurisdiction and arrest,s 35 Central Provident Fund Act (Cap 121, 1970 Ed),s 3(1)(n) High Court (Admiralty Jurisdiction) Act 1961 (Cap 6, 1970 Ed),Whether court has jurisdiction to hear CPF's claim,Whether court has jurisdiction to hear CPF Board,Action by CPF to recover arrears of CPF contributions of seamen from proceeds of sale of ship
• Docket Number: Admiralty Suit No 6 of 1986
• Published date: 19 September 2003
• Defendant Counsel: Steven Chong (Drew & Napier),Govind
• Court: High Court (Singapore)
• Plaintiff Counsel: M Karthigesu (Cooma Lau & Loh & M Karthigesu)

Cur Adv Vult

This is an application by the mortgagee-interveners (the mortgagees) to set aside the order of the assistant registrar giving leave to Central Provident Fund Board (the board), a statutory board established under the Central Provident Fund Act (Cap 121, 1970 Ed) (the CPF Act), to intervene in these proceedings for the purpose of claiming against the proceeds of sale of the vessel `Hoesheng`. The board`s claim is for recovery of Central Provident Fund contributions (CPF contributions) due to certain members of the crew from the owners of the vessel.

The relevant facts are that on 4 January 1986, the plaintiffs commenced this admiralty action against the owners of the vessel `Hoesheng` for the cost of repairs carried out to it during April 1985 to November 1985; a warrant of arrest was issued on the same day and duly served on the vessel on 6 January 1986. Following this arrest, the vessel together with the lubricating and gas oil on board was sold under an order of court and realized the sum of $1,004,092. Various sums have been paid out by orders of court leaving a balance of $90,000 to be claimed by the board and the mortgagees.

It is common ground that the members of the crew for whose account or benefit the board is making this claim are employees and the owners of the `Hoesheng` are their employers within the meaning of those expressions in the CPF Act and that the said owners were wound up by order of court on 28 February 1986. Although s 328(1)(e) of the Companies Act (Cap 185, 1970 Ed) gives priority to CPF contributions in a limited amount in a winding up, the board was unable to recover such arrears in the winding up because of the ship mortgage in favour of the mortgagees; hence, the board`s intervention in these proceedings.

Both counsel for the board and the mortgagees have also agreed that for the purpose of this application CPF contributions are to be regarded as part of the wages of the affected seamen on the authorities of The Fairport (No 3) [1966] 2 Lloyd`s Rep 253, The Westport (No 4) [1968] 2 Lloyd`s Rep 559 and The Halcyon Skies [1976] 1 Lloyd`s Rep 461. In these cases, contributions towards provident funds and pension funds, both contractual or voluntary, were accepted by the courts as wages of employees. It can hardly be doubted that in Singapore, CPF contributions are part of the total wages an employer is prepared to pay for the services of an employee (see also Lord Reid in Parry v Cleaver [1970] AC 1 at p 16).

Counsel, however, had a difference of opinion as to whether the board`s claim for arrears of wages was a claim for damages for breach of contract (of employment) or a claim for a debt. Counsel for the board referred to The Halcyon Skies [1976] 1 Lloyd`s Rep 461 as authority for the proposition that such claim lies in damages whereas counsel for the mortgagees argued that it lies in debt, and he referred to The Fairport (No 3) [1966] 2 Lloyd`s Rep 253 and The Westport (No 4) [1968] 2 Lloyd`s Rep 559. In my view, the distinction in the cause of action is not relevant in the present case. In the English actions, the claims were founded on breaches of contracts of employment. Brandon J, in The Halcyon Skies [1976] 1 Lloyd`s Rep 461, after analysing the decisions of Karminski J in The Fairport (No 3) [1966] 2 Lloyd`s Rep 253 and The Westport (No 4) [1968] 2 Lloyd`s Rep 559 and also Hewson J`s decision in The Fairport [1965] 2 Lloyd`s Rep 183, came to the conclusion that the cause of action in each of those cases and in The Halcyon Skies [1976] 1 Lloyd`s Rep 461 was for damages for breach of contract to pay wages. Plainly, this must be so where a contract of employment existed. His Lordship then went on to hold that the admiralty jurisdiction in wages had long extended to claims founded in damages as well as in debt and that such claims were claims for wages within the meaning of s 1(1)(o) of the Administration of Justice Act 1956 (the 1956 Act) (now replaced by s 20(1)(n) of the Supreme Court Act 1981), which is in pari materia with s 3(1)(n) of the High Court (Admiralty Jurisdiction) Act 1961 (Cap 6, 1970 Ed) (the 1961 Act).

In the present case, the claim of the board is for arrears of CPF contributions which (as we shall see) the employer is, by statute, liable to pay to a statutory fund, of which the board is a statutory trustee, established for the benefit of the employees. The liability of the employer to pay CPF contributions vis-a-vis the board is founded in statute and not in contract. The board`s claim cannot therefore lie in damages for breach of contract but must perforce be for recovery of a statutory debt.

The CPF Act came into force on 1 July 1955. It established the board as a corporate body with perpetual succession (ss 3 and 4(7)). It also established the CPF fund into which shall be paid all contributions authorized under the Act and out of which shall be met all payments authorized under the Act (s 6(1)). An employer is required by law to pay CPF contributions in respect of each of his employees at rates prescribed from time to time, consisting of one part from him and one part from the employee (s 7(1)). The employer is entitled to recover the employees` contributions from the monthly wages of the employee by deducting therefrom the amount recoverable from the employee (s 7(2)). Withdrawals by members of the fund of moneys credited to their respective accounts as to amounts, purposes and times of withdrawals are regulated under ss 12-18. The board is expressly appointed the trustee of the fund (s 6(2)) and is required to credit to each member of the fund the amount of every contribution paid (by collection or recovery) to the fund for him and interest paid by the board from time to time under the Act (s 11(2)). The amount in the fund that is credited to a member belongs to him absolutely. The board is given power to invest the moneys in the fund in trustee investments and buildings and is also imposed with a statutory obligation to pay interest at a prescribed minimum rate or such higher rate approved by the Minister. The repayment of moneys credited to each member is statutorily guaranteed by the government as it must provide loans to the board if the board does not have sufficient funds to pay withdrawals by members; such loans have to be repaid to the government (s 6(5)). The board may sue for and recover any sum due to the fund as if it were a debt due to the government (s 35).

It is clear that the statutory scheme of a provident fund does not give the employee the right to sue his employer for payment to himself of CPF contributions payable in accordance with the CPF Act. Correspondingly, the employer has no right to pay CPF contributions directly to the employee or set it off against the employee`s debts except under s 7(2). However, where an employee has contracted to pay CPF contributions as prescribed by the CPF Act as a term of a contract of employment, the employee may sue for specific performance of that term for the benefit of the fund: see Beswick v Beswick [1968] AC 58.

Counsel for the board submitted that ss 6, Part III (ss 12-18), 35 and 38 of the CPF Act make it clear that the board is a trustee not only of the fund but also of each individual member thereof and that, as such, the board is entitled to invoke the admiralty jurisdiction of this court to recover arrears of CPF contributions due to members of the crew. It was also contended that the primary purpose of s 35 was to give priority to the board`s claim as if it were a government debt and not to enable the board to sue in its own name.

Two main grounds were advanced by counsel for the mortgagees in support of the application: firstly, it is said that the board is not a maritime claimant in that its claim is an in personam claim against the owners of the ship; secondly, whilst conceding that arrears of CPF contributions formed part of the wages of the seamen concerned, counsel for the mortgagees contended that this court does not have jurisdiction to determine and hear the board`s claim because s 3(1)(n) of the 1961 Act permits only the master and the crew to do so.

Two other subsidiary arguments were made: (a) that the board is only a trustee of the moneys in the fund and not a trustee of unpaid or future CPF contributions; therefore it has no right to sue as trustee for unpaid or future contributions: any such right the board has is by virtue solely of s 35 which, by its terms, has changed the fundamental nature of the claim of the...