Tao Commodity Trader Inc v Fortis Bank (Nederland) N.V.

• Jurisdiction: Singapore
• Judge: Dawn Tan Ly-Ru AR
• Judgment Date: 19 February 2004
• Neutral Citation: [2004] SGHC 30
• Published date: 01 March 2004
• Court: High Court (Singapore)
• Plaintiff Counsel: Toh Kian Sing (Rajah & Tann),Nazim Khan (UniLegal LLC)

19 February 2004 Judgment reserved.

Assistant Registrar Dawn Tan Ly-Ru:

1. This was an application made by way of summons-in-chambers (“the SIC”) for an order that the “purported service” on 31 October 2003 of the writ of summons of even date (“the writ”) on the defendants be set aside; alternatively, that the High Court did not “by virtue of such purported service” obtain jurisdiction over the defendants.

2. I allowed the application and now give my reasons.

The facts

3. The essential facts were not in dispute. The defendants are a bank incorporated in The Netherlands, and have a registered office at their place of incorporation in Rotterdam, The Netherlands. The defendants were formerly registered under Part XI, Division 2 of the Companies Act (Cap. 50) (“the Act”) as a “foreign company” (as defined in section 4 of the Act) on 19 June 2000. In compliance with section 368(1)(e) of the Act, the defendants named as their agents two employees, Gijsbert Schot (“Schot”) and Petrus Adrianus de Ruijter (“de Ruijter”), who were “authorised to accept on [their] behalf service of process and any notices required to be served” on the defendants. Schot and de Ruijter were also the Deputy General Manager and General Manager respectively of the defendants.

4. On 23 June 2000, the Monetary Authority of Singapore granted to the defendants a licence to transact banking business in Singapore. In 2001, due to a “global rationalisation” of the defendants’ overseas banking operations and pursuant to a Business Transfer Agreement dated 10 October 2001 (“the BTA”), the defendants sold and transferred their business operations in Singapore to Fortis Bank S.A./N.V., the parent company of the defendants. The BTA provided, inter alia, that the defendants’ employees would be employed by Fortis Bank S.A./N.V., and Schot was named as one such employee.

5. Subsequent to the conclusion of the BTA, the defendants closed their Singapore branch. The defendants stated, and it is not disputed, that since 31 March 2002, the defendants have not had a place of business in Singapore nor have they carried on any form of business in Singapore. Accordingly, and in accordance with section 377 of the Act, the defendants lodged with the Registrar a Form 90 notice (“Notice by Foreign Company of Cessation of Business”) on 1 April 2002 informing that they had ceased to have a place of business or to carry on business in Singapore. The Registry of Companies and Businesses (“RCB”) acknowledged the lodgement of the notice on 4 April 2002, and the defendants’ name was duly removed from the register upon the expiry of 12 months from that date, by 4 April 2003. The defendants did not, however, lodge a Form 81 (“Notice by Foreign Company of Cessation of Agency”) or Form 82 notice (“Notice by Agent of Foreign Company of Cessation of Agency”), as they believed that this was not necessary.

6. On 31 October 2003, the plaintiffs purported to serve the writ indorsed with a Statement of Claim on the defendants in Singapore by serving the same on Schot at his residential address at 14 Bin Tong Park, Singapore 269795. The plaintiffs say that Schot allegedly accepted service of the writ without any protest, but the defendants say that the circumstances surrounding the purported service were such that Schot could not reasonably be expected to protest. The writ was enclosed in an envelope addressed personally to Schot, and Schot did not know that the writ was inside when he acknowledged receipt of the envelope and its contents thereon. In any event, on 7 November 2003, Messrs Rajah & Tann, solicitors for the defendants, informed UniLegal LLC, solicitors for the plaintiffs, that the defendants had ceased to be registered under the Act. This was followed by Messrs Rajah & Tann’s letter of 11 November 2003 protesting the validity of the purported service of the writ and inviting the plaintiffs to withdraw the same, failing which their instructions were to take out an application to set aside service.

The arguments

7. The defendants contended that when they ceased to be registered under the Act, both Schot and de Ruijter also ceased employment with them (although Schot is currently the General Manager of Fortis Bank S.A./N.V.) and hence ceased to have any authority to accept service of process in Singapore on behalf of the defendants. The fact that the defendants had ceased to maintain a place of business or to carry on any form of business was significant because this meant that service of the writ was effected on a company which to all intents and purposes no longer maintained a corporate presence in Singapore.

8. Moreover, service was purportedly effected pursuant to section 376(b) of the Act, which provides for service of any document required to be served on a foreign company by addressing the same to an agent of the company and leaving it at or sending it by post to his registered address. This mode of service was not available to the plaintiffs, and such service was not good service, because section 365 made it clear that section 376 and the other provisions in Division 2 applied only to companies that were registered. As such, section 376(b) was not applicable to the defendants as they had ceased to be registered at the time of the purported service of the writ. To hold that section 376(b) was applicable would also make no sense in light of section 376(c), which specifies how service on a company that has ceased to maintain a place of business in Singapore is to be carried out (addressed to the foreign company and left at or sent by post to its registered office in the place of its incorporation). If a company such as the defendants could be served pursuant to section 376(b), this would render section 376(c) otiose.

9. It followed that section 370, and in particular section 370(2), (3), (4) and (5) (which deals with the procedures for the appointment and replacement of agents), being a provision in Division 2, was not applicable once the defendants had ceased to be registered. Accordingly, section 370(2)(a) (an agent shall continue to be the agent of the company until he ceases to be such in accordance with section 370(4)) was not applicable, nor was the cessation of an agent’s status governed by section 370(4). The defendants were not obliged to comply with either section 370(3) (lodging with the Registrar a written notice stating that the agent has ceased to be or will cease to be such) or section 370(5) (appointing another agent where the company is left with only one agent in Singapore). Consequently, the defendants were under no obligation to lodge Forms 81 or 82, these notices not being documents that “ought to have been lodged” before the date the Form 90 notice was lodged (section 377).

10. Finally, once the defendants ceased to be registered because they no longer maintained a place of business or carried on any business in Singapore, the nexus for obtaining jurisdiction in Singapore also ceased to exist.

11. The plaintiffs, in contrast, submitted that the status of the defendants’ agents as such could only be terminated in accordance with the provisions of the Act, that is, section 370(2), (3) and (4). This was not done in the instant case. In addition, the defendants’ cessation of business did not affect the status of the agents: sections 368(1)(e) read with 370(2)-(4), together with sections 376(b), (c) and 377(1). The plaintiffs also relied on the English decisions of Rome and another v Punjab Bank (No. 2) [1990] BCLC 20, Sabatier v The Trading Company (1927) 1 Ch 495 and Employers’ Liability Assurance Corporation, Limited v Sedgwick, Collins and Company, Limited (1927) AC 95.

12. On a plain reading of the authorities cited and the relevant provisions, in particular sections 370(2)-(4) and 376(b), until an agent ceases to be such by filing the requisite notice, service on such an agent by addressing the writ to him and leaving it at or sending it by post to his registered address is good service. Service of the writ on Schot, whose name remained on the RCB’s records as the defendants’ agent as at the date of service, was thus good service. Additionally, even after the defendants ceased to maintain a place of business or to carry on business in Singapore and had filed a Form 90 notice under section 377, a literal interpretation of section 370(2)-(4) mandated the filing of either a Form 81 or Form 82 notice; the status of an agent was independent of the defendants’ cessation of business in Singapore or otherwise.

13. Further, the defendants’ position that neither Schot nor de Ruijter had the authority to accept service of process on behalf of the defendants was untenable, in view of de Ruijter’s filing on 9 July 2002 (some three months after the defendants lodged their Form 90 notice) of a “Statutory Declaration Verifying Balance Sheet.” In any case, the defendants’ belief that the lodgement of Forms 81 or 82 was unnecessary, or their ignorance of the need to do so, was irrelevant because the requirement was strict and the defendants’ erroneous belief did not mitigate their duty to comply.

The application

14. For the avoidance of doubt, I should clarify at the outset that the sole question raised in the SIC and submitted to this court for determination, and correspondingly the ambit of this decision, was the validity of the purported service of the writ. Counsel for the plaintiffs, Mr Nazim Khan, thought that by the second prayer in the SIC the defendants were taking the position that Singapore was not the appropriate or convenient forum for the resolution of the dispute between the parties. Mr Khan therefore sought to show, in paragraphs 34-59 of the first affidavit of the plaintiffs’ Chief Executive Officer, Julio D. Sy. Jr. filed on 3 December 2003, why Singapore was the appropriate forum.

15. I did not think that the second prayer admitted of the interpretation Mr Khan placed upon it, and nor did the defendants. In an affidavit affirmed...