The Enterprise Fund II Ltd v Jong Hee Sen

JurisdictionSingapore
JudgeHoo Sheau Peng JC
Judgment Date24 November 2016
Neutral Citation[2016] SGHC 259
Plaintiff CounselTan Wei Ser Venetia (Colin Ng & Partners LLP)
Date24 November 2016
Docket NumberSuit No 72 of 2016 (Registrar’s Appeal Nos 183 and 184 of 2016)
Hearing Date08 August 2016,15 August 2016
Subject Matter"Without prejudice" communications,Evidence,Admissibility of evidence
Published date29 November 2016
Defendant CounselNandwani Manoj Prakash and Lester Lin (Gabriel Law Corporation)
CourtHigh Court (Singapore)
Citation[2016] SGHC 259
Year2016
Hoo Sheau Peng JC: Introduction

In these two closely-related Registrar’s Appeals, the dispute centred on whether certain communications between the parties were protected by “without prejudice” privilege. The assistant registrar (“the AR”) decided that no privilege attached to the communications. Consequently, she dismissed two applications by the defendant to stop the plaintiff’s use of the communications – the first being an application to strike out a portion of the statement of claim (“the SOC”) (“the striking out application”), and the second being an application to expunge certain portions of two affidavits filed on behalf of the plaintiff (“the application to expunge”). This led the defendant to file the Registrar’s Appeals. Having considered the parties’ arguments, I took the view that “without prejudice” privilege applied to the communications, save for the correspondence from the plaintiff’s lawyers that initiated the exchange (which the defendant agreed could be relied on by the plaintiff). Accordingly, I allowed both appeals. As the plaintiff has appealed against my decisions, I set out my detailed reasons below.

Brief facts

I begin with some brief facts, in so far as they are relevant for present purposes. The plaintiff, The Enterprise Fund II Ltd, is a public company in the business of fund management. The defendant, Jong Hee Sen, is a director of International Healthway Corporation Limited (“IHCL”), a healthcare services and facilities provider.

On 6 July 2013, as part of a deal involving the plaintiff’s 20,833,000 shares in IHCL (“the IHCL Shares”), the defendant along with four others (collectively, “the Warrantors”) signed a deed of undertaking (“the Deed”) in favour of the plaintiff.

Clause 2.1(a) of the Deed provided that within nine months of purchase of the IHCL Shares by the plaintiff (“the Sale Period”), the Warrantors would be jointly and severally liable to use reasonable endeavours to procure, on the plaintiff’s behalf, the sale of the IHCL Shares to other parties. The sale price was to be no less than $0.576 per share or the last traded price on the Singapore Exchange Securities Trading Limited, whichever was higher.

Clause 2.1(b) provided that if the consideration received from the sale of the IHCL Shares fell short of the target sale proceeds of $11,999,808 (“the Sale Proceeds Target”, which was arrived at by multiplying $0.576 by the total number of the IHCL Shares), the Warrantors were obligated to purchase or procure the purchase of the remainder of the IHCL Shares at a price which would make up the shortfall from the Sale Proceeds Target.

It was undisputed that none of the IHCL Shares were sold to other parties or purchased by the Warrantors during the Sale Period.

On 1 December 2015, the plaintiff’s lawyers sent the defendant an email headed “Letter of Demand”, stating:

Please find attached the letter of demand, issued on behalf of our client, The Enterprise Fund II Ltd. The letter is in relation to the deed of undertaking dated 6 July 2013, entered into between, inter alia, yourself and our client.

Please acknowledge receipt of this letter and we hope to receive your response as soon as possible.

The attached letter dated 1 December 2015 was titled “Re: DEED OF UNDERTAKING DATED 6 JULY 2013 LETTER OF DEMAND”. For convenience, I shall refer to this letter simply as “the LOD”. The LOD summarised the matters described at [3]–[6] above, stated that “contrary to the terms of [the Deed]” the defendant had not purchased or procured the purchase of any of the IHCL Shares, and further stated:

Without prejudice to our client’s rights, we are now instructed to and do hereby write, on behalf of our client, to request your written proposal to resolve the aforesaid claim, for our client’s due consideration, within no later than five (5) days from the date of this letter. TAKE NOTE that if you fail to comply with the aforesaid request, our client reserves the right to proceed as it may deem fit to enforce its claim, without further reference to you, including commencing legal proceedings, in which event our client will further look to you for the costs of such proceedings. We trust however that legal proceedings will not be necessary and that you will comply with this request promptly upon receipt thereof.

[bold and underlined bold in original; emphasis added in italics]

The defendant sent a short reply to the plaintiff’s lawyers by email on 3 December 2015 (“the Reply Email”), stating that he was overseas on business and requesting an extension of time of five days to respond so as to meet with the plaintiff’s representatives to discuss a “firm payment plan”.

The contemplated meeting took place on 8 December 2015. Following this meeting, on the same day, the defendant sent the plaintiff’s lawyers an email alluding to the meeting and enclosing a written proposal contained in a letter (collectively “the Proposal”). Broadly speaking, the Proposal was for the defendant to pay a lower sum, calculated as a certain percentage of what he considered to be the shortfall, so as to resolve the plaintiff’s claim.

As it transpired, no final agreement was reached and the defendant made no payments to the plaintiff. The plaintiff subsequently commenced these proceedings to enforce cl 2.1 of the Deed, which it alleged had been breached by the defendant.

The applications

In the course of the proceedings, the defendant lodged the striking out application, so as to strike out para 5 of the SOC which stated:

The Plaintiff, through their solicitors’ letter dated 1 December 2015, requested for the Defendant to provide a written proposal to resolve the Defendant’s failure to perform his obligations under the Deed of Undertaking. By an email dated 8 December 2015 at 10.03 PM, the Defendant sent his written proposal for payment, which does not properly address the Plaintiff’s claim. [emphasis added]

Subsequently, the defendant took out the application to expunge, so as to remove certain portions of two affidavits filed on behalf of the plaintiff, as well as the copies of the LOD and the Reply Email which were exhibited thereto. The first affidavit was by one Lim Chu Pei dated 13 April 2016, which was filed to resist the striking out application. The second affidavit was by one Tan Yang Hwee dated 26 April 2016, and was filed in support of the plaintiff’s summary judgment application.

The decisions below

As stated at the outset, the basis for the defendant’s applications was that the communications – being the LOD, the Reply Email and the Proposal – were protected by “without prejudice” privilege. In the interest of avoiding repetition, I shall not set out the specific arguments mounted by the parties, and shall simply deal with their substance in the course of my analysis. The AR noted that at the heart of “without prejudice” privilege was the existence of a dispute and an attempt to compromise it, regardless of whether the label “without prejudice” was used. She considered the communications as a whole, with the Deed as the backdrop. She found that there was no dispute between the parties, and that there had been an implied admission of liability or, at least, no firm denial of it. This was consistent with the defendant’s proposal to make payment to the plaintiff. She also relied on certain phrases used by the defendant which she considered to point towards the admission of liability. She then applied the principle that open communications designed to discuss the repayment of an admitted liability, rather than to negotiate a compromise to a disputed liability, were not protected by “without prejudice” privilege. Thus, she dismissed both applications.

My decisions The law on “without prejudice” privilege

It is trite that a communication protected by “without prejudice” privilege may not be disclosed or relied on in court. The rule is rooted in “the public policy of encouraging litigants to settle their differences rather than to litigate them to the finish”, without being discouraged by the concern that “anything said in the course of negotiations may be used to their prejudice in the course of the proceedings”: see Greenline-Onyx Envirotech Phils, Inc v Otto Systems Singapore Pte Ltd [2007] 3 SLR(R) 40 (“Greenline-Onyx”) at [14]. This common law rule has been given a statutory basis in s 23(1) of the Evidence Act (Cap 97, 1997 Rev Ed), which states:

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.

Where apparently open communications such as those in the present case are concerned, s 23(1)(b) is the relevant limb of the provision. In that regard, the Court of Appeal stated, in Mariwu Industrial Co (S) Pte Ltd v Dextra Asia Co Ltd and another [2006] 4 SLR(R) 807 (“Mariwu”) (at [24]):

… This situation will cover cases where even though a statement is not expressly made “without prejudice” the law holds that it is made without prejudice because it was made in the course of negotiations to settle a dispute … [emphasis added]

Whether a communication is made in the course of negotiations to settle a dispute must be determined by objectively construing it as a whole in the context of the factual circumstances (Cytec Industries Pte Ltd v APP Chemicals International (Mau) Ltd [2009] 4 SLR(R) 769 (“Cytec”) at [16]; Sang Kook Suh and another v Mace (UK) Limited [2016] EWCA Civ 4 at [24]). To put it differently, the court will seek to determine “what, on a reasonable basis, the intention of the author was and how it would be understood by a reasonable recipient” (Schering Corporation v CIPLA Ltd and another [2004] EWHC 2587 Ch at...

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3 cases
  • Swee Wan Enterprises Pte Ltd v Yak Thye Peng
    • Singapore
    • High Court (Singapore)
    • 8 December 2017
    ...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])......
  • Vmax Marine Pte. Ltd. v Singapore Salvage Engineers Pte Ltd
    • Singapore
    • District Court (Singapore)
    • 21 February 2024
    ...While the Plaintiffs disputed that it received a copy of the BIMCO Contract, in The Enterprise Fund II Ltd Vaughan Jong Hee Sen [2017] 3 SLR 487 at [40], [42]-[45], the High Court held that whether a document is reasonably available is to be objectively discerned. There need not be actual a......
  • The Social Outcast Pte Ltd v OSEAS Pte Ltd
    • Singapore
    • District Court (Singapore)
    • 28 February 2023
    ...an inference detrimental to his case) is not necessarily also an admission of liability (The Enterprise Fund II Ltd v Jong Hee Sen [2017] 3 SLR 487 at [19]). In my view, the Defendant’s Second Public Statement did not give rise to a clear and unequivocal admission of liability in relation t......

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