Tribune Investment Trust Inc. v Soosan Trading Company Ltd

• Jurisdiction: Singapore
• Judgment Date: 07 July 2000
• Date: 07 July 2000
• Docket Number: Civil Appeal No 91 of 1999
• Court: Court of Appeal (Singapore)

Tribune Investment Trust Inc

Plaintiff

and

Soosan Trading Co Ltd

Defendant

[2000] SGCA 33

Yong Pung How CJ

,

L P Thean JA

and

Chao Hick Tin JA

Civil Appeal No 91 of 1999

Court of Appeal

Civil Procedure–Mareva injunctions–Inquiry into damages–Whether injunction wrongly granted–Whether damage caused to party against whom injunction granted–Commercial Transactions–Sale of goods–Breach–Proof of existence of contract–Whether formal written contract exist–Intention to contract inferred from correspondence and contemporaneous conduct of parties–Objective determination of intention to contract–Fundamental mistake as to contracting party–Evidence–Witnesses–Whether adverse inference drawn for failure to call witness–Section 116 (g) Evidence Act (Cap 97, 1997 Rev Ed)–Tort–Inducement of breach of contract–Elements of tort–Existence of contract–Knowledge of existence of contract–Intention to interfere–Tort–Conspiracy–To injure by lawful means–Elements of tort–Predominant purpose by conspirators to cause injury

The appellant was a shell company belonging to a large shipbrokering firm (“GMCO”) that was controlled by one GM. In August 1996, Dalzavod, a Russian company, approached GMCO to buy or to find a buyer for its floating dock PD 177. At around that time, the respondent was looking to purchase a floating dock and came to know of PD 177 through one of its shipbrokers, Dasan. Thereafter, numerous correspondences by fax and telex were exchanged between Dasan and GM concerning the possible sale of PD 177. According to the respondent, it was its intention to contract directly with Dalzavod for the purchase of PD 177, and not GM, GMCO or the appellant, of whom it had no knowledge. However, the appellant claimed that it was its intention to purchase PD 177 from Dalzavod and thereafter resell it to the respondent for a profit.

The appellant entered into a memorandum of agreement (“the first MOA”) with Dalzavod on 30 September 1996. The first MOA stipulated that the contract would be null and void if the notice of acceptance was not received by Dalzavod within ten working days from the date of afloat inspection of the dock by the appellant. The appellant never conducted an afloat inspection of the dock but nonetheless gave a qualified notice of acceptance. The foregoing events were not conveyed to Dasan or to the respondent in writing, who did not seem to be aware of the appellant's intention to purchase and resell PD 177 at a profit. The appellant's role in the entire transaction was made known to the respondent only when the appellant's name appeared for the first time in the draft copy of the intended memorandum of agreement (“the second MOA”) between the appellant and the respondent, which was faxed by GM to Dasan in October 1996. The parties never signed the document.

Subsequently, a meeting was arranged between Dalzavod and the respondent during which Dalzavod informed the respondent that the first MOA involving the appellant had become null and void as a result of certain non-fulfilment of its terms by the appellant. Thereafter, an agreement was reached between Dalzavod and the respondent for the sale and purchase of PD 177 at US$10.8m.

The appellant then commenced Suit No 2178 of 1996 in the High Court against Dalzavod for breach of the first MOA and for inducing a breach of the purported contract made between the appellant and the respondent. The hearing did not go to trial as the parties reached a settlement and consent judgment in the sum of about US$1.67m was entered in favour of the appellant. At the same time, the appellant also commenced the present suit against the respondent. Three causes of action were advanced: (a) in tort, for inducing a breach of the first MOA; (b) in tort, for conspiring with Dalzavod to injure the appellant; and (c) for breach of the purported contract between the appellant and the respondent for the sale and purchase of PD 177. The appellant also obtained an ex parteMareva injunction against PD 177 which was later discharged. The trial judge dismissed all three of the appellant's claims and further ordered an inquiry as to the damages suffered by the respondent as a result of the injunction. The appellant appealed.

Held, dismissing the appeal:

(1) A claim in tort for inducing a breach of contract should be distinguished from a claim in tort for unlawful interference. The two torts were substantively different and the elements required to satisfy both causes of action were separate and distinct: at [15].

(2) To establish a claim in tort for inducement of breach of contract, the plaintiff must show that the procurer acted with the requisite knowledge of the existence of the contact, although knowledge of the precise terms was not necessary, and that the procurer had the intention, which was to be determined objectively, to interfere with the performance of the contract. In addition, the contract in question must be shown to be a valid one: at [17].

(3) Based on the evidence, the appellant failed to prove the existence of a valid and binding contact between itself and Dalzavod which was capable of being breached by the latter, at the respondent's instigation: at [22], [23] and [24].

(4) On the assumption that there was a valid contract between Dalzavod and the appellant (which the court had found there was none), there was also no reason to disturb the trial judge's finding of fact that the respondent had no knowledge of any contract between the appellant and Dalzavod. Dalzavod had represented to the respondent that the first MOA between Dalzavod and the appellant had been cancelled and it was perfectly reasonable for the respondent to rely on such representation and assurance: at [25], [27], [28] and [29].

(5) The trial judge was correct in finding that the appellant failed to prove that the respondent intended to induce a breach of contract between Dalzavod and the appellant. Since the appellant had not proven both the elements of knowledge and intention on the part of the respondent, its claim in tort for the inducement of breach of contract was not made out: at [30], [32] and [34].

(6) As the respondent was not a fiduciary of the appellant, it was not under any duty to act in the utmost interest of the appellant to its own detriment. The events which occurred were all part of the normal course of everyday commercial transactions conducted between large business enterprises at arm's length. The law did not and should not impose a duty of due diligence on businessmen who conducted such sale and purchase transactions on a daily basis: at [33].

(7) A conspiracy by lawful means was established when two or more persons combined together with the aim of injuring the plaintiff, resulting in damage. The plaintiff must prove a “predominant purpose” by the conspirators to cause injury or damage to the plaintiff: at [37].

(8) There was no evidence to show that there was a contract between the appellant and Dalzavod, or that the respondent had any knowledge of such a contract. Consequently, it was impossible to show any predominant purpose on Dalzavod's and the respondent's part to cause injury or damage to the appellant. Even if a contract was proved and the respondent knew of such a contract, it would have been entitled to rely on the defence of justification in that its purpose in contracting with Dalzavod was to legitimately further its own self-interest: at [38].

(9) Since no formal written agreement was ever entered into or signed by the parties at any time, the existence of any contract must be inferred from the written correspondence and contemporaneous conduct of the parties at the material time. The question of whether or not there was an intention by the parties to enter into a legally binding contract should be determined objectively: at [39]to [41].

(10) On the facts, the plaintiff's claim in contract failed as there was no consensus ad idem between the parties. There was a fundamental mistake as to whom the contracting party was in that the respondent's intention was at all times to contract with Dalzavod only. Thus, there was never a meeting of the minds leading to a binding contract being concluded. A person could not make another a contracting party with himself, when he knew or ought to have known that the other intended to contract not with him but with another: at [46] and [47].

(11) In deciding whether or not to enforce an undertaking to abide by any order for damages, the court had a discretion which was to be exercised by reference to all the circumstances of the case. The appellant failed to show that there was a substantial risk of dissipation of assets by the respondent at the time when the Mareva injunction was sought. As a result, the respondent was deprived of the use of PD 177 for nearly three weeks, and this must have caused it some loss. In the premises, the order for inquiry should not be disturbed: at [54] and [55].

[Observation: The question of whether or not an adverse inference should be drawn depended on all the evidence adduced and the circumstances of the case. There was no fixed and immutable rule of law for drawing such inference. Where the plaintiff had not made out its claim to the requisite standard, it would not be necessary to draw an adverse inference against the defendant. The drawing of an adverse inference, at least in civil cases, should not be used as a mechanism to shore up glaring deficiencies in the opposite party's case, which on its own was unable to meet up to the requisite burden of proof. Instead, the procedure existed in order to render the case of the party against whom the inference was drawn, weaker and thus less credible of belief: at [50].]

British Motor Trade Association v Salvadori [1949] Ch 556; [1949] 1 All ER 208 (refd)

Cundy v Lindsay (1878) 3 App Cas 459 (folld)

Emerald Construction Co Ltd v Lowthian [1966] 1 WLR 691; [1966] 1 All ER 1013 (distd)

J T...