Swee Wan Enterprises Pte Ltd v Yak Thye Peng

• Jurisdiction: Singapore
• Judge: Hoo Sheau Peng J
• Judgment Date: 08 December 2017
• Neutral Citation: [2017] SGHC 313
• Court: High Court (Singapore)
• Docket Number: Suit No 67 of 2017 (Registrar’s Appeal No 230 of 2017)
• Year: 2017
• Published date: 13 July 2018
• Hearing Date: 22 September 2017,14 September 2017
• Plaintiff Counsel: Vikram Nair and Lim Tiong Garn Jason (Rajah & Tann Singapore LLP)
• Defendant Counsel: Tan Sia Khoon Kelvin David (Vicki Heng Law Corporation)
• Subject Matter: Evidence,Admissibility of evidence,"Without prejudice" communications
• Citation: [2017] SGHC 313

Hoo Sheau Peng J: Introduction

The defendant filed an application to strike out or expunge references to two documents in the plaintiff’s Statement of Claim and in an affidavit filed on the plaintiff’s behalf (which exhibited copies of those documents) on the ground that the documents were protected by “without prejudice” privilege. The Assistant Registrar (“AR”) held that the documents were not privileged and therefore dismissed the defendant’s application. I allowed the defendant’s appeal against the AR’s decision. The plaintiff has appealed against my decision.

Background The Statement of Claim

The plaintiff, Swee Wan Enterprises Pte Ltd, commenced the present action against the defendant, Mr Yak Thye Peng, its shareholder and former director, to recover $1,805,156.62. It pleaded in its Statement of Claim that,¹ between 2006 and 2009, while a director of the plaintiff, the defendant caused the plaintiff to issue five cheques to himself amounting to $1,825,156.62, a sum which he then withdrew without authority from the plaintiff’s bank account for his personal use. On or around May 2014, Ms Yak Chau Wei (“Ms Yak”), one of the plaintiff’s present directors, discovered the issuance of the cheques. As the defendant had issued the plaintiff a cheque for $20,000 on 6 February 2007, the plaintiff claimed, as against the defendant, the repayment of a debt of $1,805,156.62, being $20,000 less than the total sum in the five cheques.

In paragraph 12 of the Statement of Claim, reference was made to a letter from Providence Law Asia LLC dated 27 February 2015 (“the Letter”). Immediately below, paragraph 13 referred to an undated note of acknowledgment signed by the defendant (“the Note”). These were the two documents which the defendant claimed were subject to “without prejudice” privilege. The two paragraphs read as follows: 12. On or around 27 February 2015, [the plaintiff’s] previous solicitors, Providence Law Asia LLC, issued a letter of demand to [the defendant] (the “27 February 2015 Letter”). In the 27 February 2015 Letter, it was stated, among other things, that: (a) Based on investigations carried out by [the plaintiff], [the plaintiff] had discovered that [the defendant] caused [the plaintiff] to issue the cheques stated at paragraph 4 above to himself; (b) [The defendant] had acknowledged and/or agreed that he had caused [the plaintiff] to issue the cheques stated at paragraph 4 above to himself; and (c) [The defendant] had acknowledged and/or agreed that he owes [the plaintiff] the sum of S$1,805,156.62. 13. On or around 2 March 2015, [the defendant] signed a document acknowledging and/or agreeing to the matters stated in the 27 February 2015 Letter. Accordingly, [the defendant] has also acknowledged and/or agreed in writing that he owes [the plaintiff] the sum of S$1,805,156.62.

The Defence

The Defence filed by the defendant contained a number of additional facts that were relevant for present purposes: The plaintiff and another company, Swee Wan Trading Pte Ltd (“SWT”), are run as a family business.² The defendant and his brother, Mr Yak Tiong Liew, are both shareholders in the plaintiff and in SWT.³ Ms Yak is Mr Yak Tiong Liew’s daughter.⁴ In or around 2012, it was discovered that money had been misappropriated from the plaintiff and SWT.⁵ The plaintiff and SWT commenced legal proceedings against the relevant parties to recover the money. These legal proceedings were Suit Nos 235 and 236 of 2014 (which, since they were consolidated, I will refer to as “the Suit”). One of the defendants in the Suit filed a counterclaim alleging that the defendant in the present case and Mr Yak Tiong Liew had both “taken out” money from both the plaintiff and SWT.⁶ The Suit was later resolved pursuant to a settlement agreement dated 10 April 2015, to which Mr Yak Tiong Liew and the defendant were parties.⁷

As regards the plaintiff’s claim for the return of $1,805,156.62, the defendant admitted to having received sums of money.⁸ However, he denied any liability to repay the sum claimed. He stated that he was entitled to the money as a shareholder of the plaintiff and/or SWT, or alternatively because the money was advanced on a mutual understanding between Mr Yak Tiong Liew and him that it would not have to be repaid.⁹

The application

As summarised at [1], the plaintiff applied to strike out or expunge (a) paragraphs 12 to 13 of the Statement of Claim; and (b) paragraphs 10(d) and (e) of an affidavit filed by Ms Yak in response to the defendant’s application for discovery of documents, in which she referred to the Letter and the Note, and exhibited copies of them. The crux of the application was whether the two documents were protected by “without prejudice” privilege. The AR found that they were not, and thus dismissed the application.

The appeal The law

The applicable legal principles are well-settled. At common law, “without prejudice” privilege attaches to communications that are made for the purpose of settling a dispute. Being privileged, such communications are inadmissible in evidence. The rationale is to encourage parties to speak frankly, without the fear that anything said in the course of negotiations might be used against them should the dispute be litigated. This furthers the law’s policy of encouraging parties to settle their disputes rather than litigate them (Greenline-Onyx Envirotech Phils, Inc v Otto Systems Singapore Pte Ltd [2007] 3 SLR(R) 40 at [14]).

Section 23 of the Evidence Act (Cap 97, 1997 Rev Ed) is, as the Court of Appeal held in Mariwu Industrial Co (S) Pte Ltd v Dextra Asia Co Ltd and another [2006] 4 SLR(R) 807 (“Mariwu”) at [24], a statutory expression of this common law principle. Before turning to s 23, I find it apposite first to refer to s 17 of the Evidence Act, which defines an “admission” as:

… a statement, oral or documentary, which suggests any inference as to any fact in issue or relevant fact, and which is made by any of the persons and under the circumstances hereinafter mentioned.

In general, admissions are relevant and may be proved as against the person who makes them: see s 21 of the Evidence Act. Section 23(1) is an exception to this, and provides as follows:

Admissions in civil cases when relevant

23.—(1) In civil cases, no admission is relevant if it is made — (a) upon an express condition that evidence of it is not to be given; or (b) upon circumstances from which the court can infer that the parties agreed together that evidence of it should not be given.

The effect of s 23(1), which declares admissions made in either of the two situations listed therein to be not relevant, is that evidence cannot be given of such admissions.

Section 23(1)(a) applies to all communications expressly made on a “without prejudice” basis (Mariwu at [24]). It should be noted that attaching a “without prejudice” label to a communication does not conclusively or automatically render it privileged (Cytec Industries Pte Ltd v APP Chemicals International (Mau) Ltd [2009] 4 SLR(R) 769 (“Cytec”) at [16]). The presence of such words would, however, place the burden of persuasion on the party who contends that they should be ignored (Quek Kheng Leong Nicky and another v Teo Beng Ngoh and others and another appeal [2009] 4 SLR(R) 181 at [22], citing Sin Lian Heng Construction Pte Ltd v Singapore Telecommunications Ltd [2007] 2 SLR(R) 433 (“Sin Lian Heng”) at [60]).

Section 23(1)(b) is the provision applicable to communications which, though not expressly made on a “without prejudice” basis, were made in the course of negotiations to settle a dispute (Mariwu at [24]). Whether or not the “without prejudice” privilege attaches must be determined by objectively construing the document as a whole in the context of the factual circumstances (Cytec at [16]). The court will seek to determine, on a reasonable basis, the intention of the author and how it would have been understood by a reasonable recipient (The Enterprise Fund II Ltd v Jong Hee Sen [2017] 3 SLR 487 at [17]).

The existence of a dispute and the attempt to compromise it are at the heart of the “without prejudice” privilege (Cytec at [17]). Since only a document made in the course of negotiations to settle a dispute is privileged, privilege cannot be invoked where no dispute exists (Mariwu at [30]). For example, if, in a letter, a debtor admits liability to pay a debt, and merely asks for more time to pay, that letter is not privileged because the debtor has already admitted liability for the debt and there is no question of a settlement or compromise of that debt (see Sin Lian Heng at [44]–[45]).

Further, where the issue is whether or not there was a settlement agreement concluded as a result of negotiations, “without prejudice” communications are admissible to prove the existence or the terms of the settlement agreement. However, if the court finds that no settlement agreement was concluded, those communications will continue to be privileged (Ng Chee Weng v Lim Jit Ming Bryan and another [2012] 1 SLR 457 (“Ng Chee Weng”) at [94]–[95]).

It is well established that the privilege can be waived. Waiver requires the consent of both parties (Krishna Kumaran s/o K Ramakrishnan v Kuppusamy s/o Ramakrishnan [2014] 4 SLR 232 at [22]). The court will normally accept that the privilege has been waived where both parties agree expressly (especially in writing) that the communications may be used in judicial proceedings. More often than not there is no express agreement, but it is open to the court to determine that parties have impliedly consented to waiving the privilege (Jeffrey Pinsler, SC, Evidence and the Litigation Process (LexisNexis, 5th Ed, 2015) at para 15.024).

Parties’ positions

In his submissions on appeal, the defendant argued that in the Letter, the plaintiff was proposing to compromise its claim to the sum of $1,805,156.62 by...