ECICS Holdings Ltd (formerly known as Export Credit Insurance Corp of Singapore Ltd) v TKM (Singapore) Pte Ltd

JurisdictionSingapore
JudgeKarthigesu JA
Judgment Date24 March 1994
Neutral Citation[1994] SGCA 49
Docket NumberCivil Appeal No 162 of 1992
Date24 March 1994
Published date19 September 2003
Year1994
Plaintiff CounselJames Goudie QC and Cecilia Thomas (Shook Lin & Bok)
Citation[1994] SGCA 49
Defendant CounselPeter Goldsmith QC and Molly Lim (Wong Yoong Tan & Molly Lim)
CourtCourt of Appeal (Singapore)
Subject MatterInterest rate,s 9 Civil Law Act (Cap 43, 1988 Ed),Trial judge's discretion,Interest on claim,Rate applicable,Whether exercised correctly,Cross border transaction,Currency of loss in sterling,Parties based in Singapore and payment under policy in Singapore dollars,Claim by policy holder on export credit insurance,Whether award of interest should be at rate applicable to judgment currency or rate applicable to currency of loss,Export credit insurance,Pecuniary loss insurance,Insurance,Relevant factors to consider in exercising discretion,Whether interest at rate of currency of loss proper,Interest period

The appellants, ECICS Holdings Ltd (formerly known as Export Credit Insurance Corporation of Singapore Ltd) (`ECICS`) appealed against the judgment of GP Selvam JC [as he then was] given on 14 September 1992 in favour of the respondents, TKM (Singapore) Pte Ltd (`TKMS`) on claims by TKMS under an export credit insurance policy with ECICS covering the confirmation by TKMS of exports from Belgium to Nigeria. At the end of the hearing of the appeal we dismissed it and indicated we would give our reasons in writing later. This we now do.

The facts out of which the claim arose were somewhat involved and complex.
They have been dealt with comprehensively and, if we may say so, with admirable detail in the very carefully considered judgment of the learned judicial commissioner which is reported at [1993] 1 SLR 1041 . In summary, the salient findings of fact made by him were as follows. For convenience we use the same terms and expressions used by him.

(1) TKM-UK confirmed, on behalf of TKMS, exports of Caterpillar spare parts from Belgium to a customer in Nigeria.

(2) TKM-UK had carried out this business on its own behalf since 1971. TKM-UK obtained export insurance credit insurance from ECGD in London. However, when ECGD extended the waiting period before which a claim would not be accepted for delay in transfer of funds from a buyer, the business was transferred to ECICS.

(3) ECICS accepted the Nigerian business, and under the terms of the policy, the waiting period for a transfer was 180 days from the date of local payment until maturity. The business had to be carried out through Singapore and was therefore transferred to TKMS. The business continued to be carried out by TKM-UK on behalf of TKMS under an agency agreement which had been approved by ECICS in advance.

(4) The customer in Nigeria made local currency deposits, but, due to foreign currency shortages in Nigeria, sterling remittances were not made under bills of exchange. Four claims were made by TKMS under the policy.

(5) Although debt rescheduling arrangements were agreed with the Nigerian government (`the Paris Club agreement`) under which payments of principal and interest were to be made by instalments, at the date of trial TKMS had not been paid the amounts outstanding except:

(a) one payment of principal of which the relevant proportion of 85% was £456,964.49 equivalent to S$1,383,140.11;

(b) interest in respect of the period 1 January 1987 to 30 June 1991; and

(c) one payment of capitalized interest referable to the period prior to 1 January 1987 for which credit was given in the interest calculation.



The learned judicial commissioner found that ECICS` defence was essentially to put TKMS to proof of its claim.
This was no defence at all. On the evidence, he had no difficulty in coming to the conclusion that ECICS had encouraged the transfer of business from TKM-UK to TKMS. In his judgment, he said:

... in the circumstances, the plaintiffs` [TKMS`] case that they had suffered loss under the policy was firmly established and they are entitled to a decision on the question of liability.



He went on to say:

The purpose of the policy with which this case is concerned is protection of the policy-holder against delay in payment. The loss caused by the delay is primarily financing costs - namely interest charged by a bank. Those financing costs would be incurred whilst the plaintiffs were kept out of the principal amount. That was the loss covered under the policy and that was the essence of the obligation of ECICS. ECGD was only prepared to give cover for a waiting period of 12 months. That being unacceptable, the business was transferred to ECICS in the name of TKMS because ECICS agreed to a waiting period of six months. No further delay was in the minds of the parties. As ECICS failed to pay on time, the plaintiffs, in all justice, should be suitably compensated for the failure of ECICS to pay on time.



The purpose of the policy and proceedings, therefore, was to put TKMS in the same position as if the moneys had been paid on due date, for it was clearly envisaged that if the claim was not paid on time, the plaintiffs would have to continue to bear the borrowing costs of the insured bills.


We entirely agree.

The learned judicial commissioner accordingly found ECICS liable under the policy to indemnify TKMS against the loss suffered, and ordered, inter alia, payment of:

(i) the principal sum of S$14,901,212;

(ii) interest on the principal amount from 1 July 1991 to the date of judgment at the rate of 11% pa in the sum of S$1,981,757.45; and

(iii) interest on 85% of the amounts of the four claims under the policy at the rate of 11% pa commencing from one month after the respective dates of the presentation of each of the claims until 31 December 1986 in the sum of S$4,597,892.43.



It should be noted that under the policy the currency of payment was in Singapore dollars.
It should also be noted that TKMS did not claim interest for the period 1 January 1987 to 30 June 1991 as the interest for that period had been received from the Central Bank of Nigeria on behalf of the customer under the debt rescheduling arrangements.

ECICS appealed only against that part of the judgment which awarded interest.
In short, that the learned judicial commissioner had erred in awarding interest, which was in his discretion under s 9 of the Civil Law Act (Cap 43, 1988 Ed), at the rate of 11% pa, and that he had erred in the assessment of the interest which ought to be paid to TKMS having regard to payments of an interest nature received from Nigeria. TKMS countered with a respondent`s notice. However, since we dismissed ECICS` appeal and confirmed the entirety of the learned judicial commissioner`s judgment and his reasons therefor, no mention need be made to the respondent`s notice.

It was not disputed by ECICS, and, indeed, it could not have been disputed by them, that the court has a discretion both as to the rate of interest as well as to the period for which interest will be awarded under s 9 of the Civil Law Act.
See Lim Cheng Wah v Ng Yaw Lim per L P Thean J (as he then was) and BP Exploration Co (Libya) Ltd v Hunt (No 2) under the English parallel provision of s 3(1) of the Law Reform (Miscellaneous Provisions) Act 1934. This discretion is subject only to the caveat that it must be applied judicially: per Robert Goff J in BP Exploration Co (Libya) Ltd v Hunt (No 2) at p 846. Furthermore, it is now well settled that an appellate court will only interfere with the exercise of...

To continue reading

Request your trial
1 books & journal articles
  • SELECTED CASE LAW DEVELOPMENTS IN CIVIL PROCEDURE
    • Singapore
    • Singapore Academy of Law Journal No. 1995, December 1995
    • December 1, 1995
    ...on its own motion. 61 The High Court decision is reported at [1993] 1 SLR 1041. The judgment of the Court of Appeal is cited at [1994] 2 SLR 137. 62 See ECICS Holdings Ltd v TKM (S’pore) Pte Ltd[1994] 2 SLR 137. 63 [1994] 2 SLR 137, at pp 142—143. 64 Ibid, at p 141. The Court of Appeal will......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT