Star Cruise Services Ltd v Overseas Union Bank Ltd

• Jurisdiction: Singapore
• Judgment Date: 30 April 1999
• Date: 30 April 1999
• Docket Number: Suit No 432 of 1998
• Court: High Court (Singapore)

Star Cruise Services Ltd

Plaintiff

and

Overseas Union Bank Ltd

Defendant

[1999] SGHC 111

G P Selvam J

Suit No 432 of 1998

High Court

Betting, Gaming and Lotteries–Gaming contracts–Effect of contract rendered void under gaming law on related transactions–Whether securities given in respect of gaming contracts void–Transactions abroad–Territorial scope of Section 6 Civil Law Act (Cap 43, 1994 Rev Ed)–Bills of Exchange and Other Negotiable Instruments–Payee–Whether cashier's orders constitute bills of exchange–Rebutting presumption of consideration–Whether cashier's orders represent moneys won by gaming–Civil Procedure–Pleadings–Action for money had and received–Defence of “change of position ” not pleaded–Whether defendant can raise defence of “change of position ” at closing submissions–Civil Procedure–Pleadings–Foreign law not pleaded–Foreign law a matter of fact–Whether court obliged to take judicial notice–Conflict of Laws–Choice of law–Contract–Gaming contracts–Relevance of law of flag for transactions on board ship when not in international waters–Restitution–Applicable principles–Place of enrichment–Statutes–Scope of application–Place of issue–Place of payment–Place of enforcement–Section 6 Civil Law Act (Cap 43, 1994 Rev Ed)–Whether provisions are rules of public policy or procedure mandating application of law of forum–Proof of foreign law–Application of law of forum in absence of proof–Contract–Consideration–Void contract–Effect on related transactions–Illegality and public policy–Gaming and wagering–Restitution–Unjust enrichment–Principles applicable–Absence of consent of owner in the transfer–Absence of consideration from recipient–Restoration of money to rightful owner–Whether rightful owner's negligence a bar to restitution–Words and Phrases–“Nudum pactum ”

The plaintiff Star Cruise Services Ltd (“SCS”) claimed the sum of $900,000 from the defendant Overseas Union Bank Ltd (“OUB”) for money due on bills of exchange,viz the three cashier's orders issued by OUB in SCS's favour. OUB counterclaimed for over $9.1m as money had and received on 25 cashier's orders which were fraudulently issued and paid by one of OUB's staff Siak to SCS. The payments were made in respect of gambling transactions taking place on board a cruise ship flying the flag of Panama while it was outside Singapore waters. The plaintiff did not plead that the applicable law was the law of Panama or the change of position defence to the defendant's counterclaim. The plaintiff argued that Panama law and not Singapore law governed the issues of the case, and that under Panama law, there was consideration for the purported bills of exchange.

Held, dismissing the plaintiff's claim and allowing the defendant's counterclaim:

(1) The three cashier's orders were not bills of exchange. They exhibited words prohibiting transfer and therefore were not negotiable as defined by s 8 (1) of the Bills of Exchange Act (Cap 23, 1999 Rev Ed). These cashier's orders constituted OUB's promise to pay SCS. However, SCS was entitled to treat the cashier's orders either as bills of exchange or promissory notes at its option under s 5 (2) of the Bills of Exchange Act. SCS had opted to treat them as bills of exchange and could take advantage of the statutory presumption of consideration. However, this merely shifted the evidentiary burden to OUB to negate the consideration: at [15] and [16].

(2) The question whether there had been consideration for the cashier's orders was governed by Singapore law. The law of the flag was irrelevant. At the relevant time the ship was not sailing in international waters but in territorial waters of one country or another, and the fact that the gaming contracts were made outside Singapore did not take them outside the application of Singapore law. Singapore law applied because SCS had relied on Singapore law to argue its case that there was consideration; the bills of exchange were issued in Singapore; the action to enforce the bills of exchange took place in Singapore; Singapore was the place of payment for the bills of exchange; and the close connection of the parties with Singapore: at [83], [84] and [85].

(3) Sections 6 (2) and 6 (5) of the Civil Law Act formed the procedural law of Singapore which applied to any action brought in Singapore: at [86] to [90].

(4) The peremptory language of ss 6 (1), 6 (2) and 6 (5) of the Civil Law Act (Cap 43, 1994 Rev Ed) reflecting the underlying public policy behind the provisions meant that parties could not evade the provisions by choosing another system of law to govern their transactions: at [91].

(5) SCS had not raised the application of any foreign law in its pleadings. In general foreign law must be pleaded and proven by the party seeking to rely on it. The court was not required to take judicial notice (though it was sometimes done as a matter of fact) of foreign law, and would apply Singapore law in the absence of proof. However, since both parties had in fact filed affidavits on foreign laws, the court could consider such evidence: at [76] and [77].

(6) A contract made void by statute was nudum pactum. It had no legal force and could not give rise to any legal obligations. Any security such as a bill or note given in respect of it was also void: at [61] and [67].

(7) Section 6 (1) of the Civil Law Act rendered void any accessory contracts before the actual game and derivative contracts after it: at [69].

(8) The amounts represented by the three cashier's orders were moneys won by gaming and the entire transaction was accordingly void under Singapore law: at [108].

(9) OUB's counterclaim in restitution was governed by Singapore law as the law of the place where the enrichment took place: at [110] and [111].

(10) The action for money had and received lay against a defendant who won the plaintiff's money from a third party. The action in such a case was based on the wider principle that a person who had been unjustly enriched at the expense of another was required to make restitution to the other: at [119] and [120].

(11) The essential elements of the claim in money had and received were the lack of consent of the owner of the money and the absence of consideration from the recipient. Consequently, the recipient taking without consideration could not complain about the negligence of the owner. The law when deciding between two innocent parties preferred the one who had suffered a loss to the one who had not: at [121], [123] and [124].

(12) OUB's promises to pay in the 25 cashier's orders were not supported by consideration, as the underlying gambling transactions could not give rise to any valid debts to be discharged: at [127], [128], and [131].

(13) SCS had not pleaded “change of position” and it was not open to it to raise the defence in closing submissions: at [135].

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Edwards v Bates and Savery (1844) 7 Man & G 590; 135 ER 238 (refd)

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Richardson v Moncrieffe (1926) 43 TLR 32 (refd)

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Swan v Bank of Scotland (1836) 10 Bligh NS 627; 6 ER 231 (refd)

William Hill (Park Lane) Ltd v Rose [1948] 2 All ER 1107; (1948) 65 TLR 34 (refd)

Woolf v Freeman [1937] 1 All ER 178 (refd)

Bills of Exchange Act (Cap 23,1999 Rev Ed)ss 3 (1), 5 (2),8 (1),30 (1)

Civil Law Act (Cap 43,1994 Rev Ed)s 6 (consd)

Common Gaming Houses Act (Cap 49,1985 Rev Ed)

Interpretation Act (Cap 1,1997 Rev Ed)s 9A

Excessive Gaming Act 1664 (c 7) (UK)

Gaming Act 1710 (c 19) (UK)

Gaming Act 1845 (c 109) (UK)s 18

Gaming Act 1892 (c 9) (UK)s 1

Marine Insurance Act 1745 (c 37) (UK)

Unlawful Games Act 1541 (c 9) (UK)

Alvin Yeo, Tan Kay Kheng and Doris Lai (Wong Partnership) for the plaintiff

Davinder Singh SC, Hri Kumar and Ajay Advani (Drew & Napier) for the defendant.

G P Selvam J

The claim and counterclaim

1 The plaintiffs, Star Cruise Services Ltd, are a corporation created and registered in the Isle of Man whose motto incidentally is “whichever way it is thrown it will stand”. According to a listing circular dated 11 February 1998 published in...