Wong Sing Lee t/a Hiap Lek Automobile Trading v Lim Chow Sheng

• Jurisdiction: Singapore
• Judge: Loo Ngan Chor
• Judgment Date: 10 October 2016
• Neutral Citation: [2016] SGMC 49
• Court: District Court (Singapore)
• Docket Number: MC Suit No 22115 of 2012, District Court Appeal No HC/DCA 18 of 2016
• Year: 2016
• Published date: 15 November 2016
• Hearing Date: 06 May 2016,01 July 2016,22 February 2016
• Plaintiff Counsel: Alan Koh (M/s Oracle Law Corporation)
• Defendant Counsel: Patrick Yeo (M/s Khattarwong LLP)
• Subject Matter: Assignment,NIMA claim,champerty - assignment of debt,assignment of cause of action - plaintiff had legitimate commercial interest,plaintiff did not need to rely on underlying transaction,administration of justice not put at risk,dominus litis
• Citation: [2016] SGMC 49

District Judge Loo Ngan Chor: Introduction:

The defendant has obtained the leave of the High Court to appeal my decision in the circumstances that may be briefly set out. I now also set out the full reasons for my decision.

Circumstances:

The circumstances which I set out next are uncontroversial and are mostly taken from the Statement of Claim. Some additional information concerning the relevant background workings of the industry pertaining to non-injury motor accident claims has been added to more fully flesh out the background with a view to helping understand the defendant’s appeal.

In an earlier suit, MC Suit No. 29797/2009 (“the earlier suit”), Mdm Shahidah bte Abdul Rahman (“Shah”) had sued the defendant for damages consequent on a road traffic accident. On 11th April 2012, the earlier suit was amicably resolved when the defendant agreed to pay Shah the sum of $8101 (“the settlement sum”) in full and final settlement of her claim.

The plaintiff was the owner of the motor car work shop which repaired Shah’s damaged car. In the way in which this little segment of the industry has been organised for decades, Shah had not paid for the costs of repairs to her car and incidental costs. Her damages were to be recovered through steps to be taken by a law firm, Oracle Law Corporation (“Oracle”), appointed by the plaintiff pursuant to a “letter of authorisation”ⁱ (summarised at [16] below) signed by Shah in favour of the plaintiff.

Subsequent to the settlement, as the plaintiff was anxious that the settlement sum should be paid to him directly, the plaintiff instructed Oracle to prepare a deed of assignment. This was done and Shah signed the deed of assignment dated 2nd May 2012.ⁱⁱ (The deed of assignment is summarised at [17] below.) Notice of the assignmentⁱⁱⁱ was duly given by Oracle’s letter dated 24th May 2012^iv to NTUC Income Insurance Cooperative Limited, the defendant’s insurer, through the defendant’s lawyers, KhattarWong, in the earlier suit. KhattarWong had been appointed by NTUC. Oracle’s said letter in fact enclosed not only the notice of assignment but also the deed of assignment and a discharge voucher^v signed by Shah.

On 27th July 2012, by way of a letter^vi of that date, KhattarWong forwarded NTUC’s cheque^vii for the settlement sum to Oracle. Disregarding the assignment of which it had notice, NTUC made out the cheque in favour of Shah.

Oracle returned the cheque by way of their letter dated 6th August 2012^viii to the defendant’s lawyers, repeating the request that the cheque be made payable to the plaintiff.

KhattarWong replied with their letter dated 13th August 2012^ix that their “clients do not want to issue the cheque to [the plaintiff].”

In the circumstances set out above, the plaintiff sues the defendant for the settlement sum pursuant to the assignment.

In the Defence filed in this action, the assignment and notice thereof were not really in dispute in that while the plaintiff was put to proof of the assignment, the defendant did not at the trial challenge the due execution or inherent validity of the assignment. The defence was in point of substance found in paragraph 4 of the Defence, which averred that “the purported assignment … is champertous and therefore void and unenforceable.”^x

The Defence also pleaded at paragraph 3 what the settlement sum comprised. It became apparent in his closing submissions that the defendant was relying on a number of components of the settlement sum to raise the issue of the alleged champerty.

The settlement sum ($8101) indisputably contained the following amounts:

1.	Cost of repairs (inclusive of survey report fees, traffic Police report fees and agreed downtime fees)	$5500.00
2.	Interest at 5.33% on $5500	$714.40
3.	Legal costs	$1498.00
4.	Disbursements	$388.60

It was also not disputed at trial that, of the sum of $5500 agreed as being Shah’s damages, $4800 was for repair costs. The larger amount included other ingredients for loss of use, survey and traffic police report fees, without breaking them down into numbers.

Oracle, who represented Shah, also prepared the assignment and represented the plaintiff in this suit.

KhattarWong who represented the defendant in the earlier suit, again represented the same defendant in the present suit.

The letter of authorisation:

The letter of authorisation signed by Shah authorised the plaintiff to instruct lawyers to prosecute or negotiate a settlement of Shah’s claim for damages, including her loss of use of the car, and surveyors to determine the cost of repairs. It also contained Shah’s agreement on terms to make up for reasonable expenses incurred by the plaintiff on Shah’s behalf, should her claim fail or come up short.

The assignment:

The deed of assignment dated 2nd May 2012 bore the apparently stamped, capitalised words at the top of the first page which said “Without prejudice to injury claim”. Under the heading “assignment”, before the operative words, the deed stated that the assignment was given “In consideration of your agreement to repair my/our motor vehicle registration no…. and to defer demanding for payment of the costs of repair which was damaged as a result of an accident with vehicle registration no….and to pay the legal costs of my/our solicitors”. This was then followed by the operative words which stated that “I/we HEREBY ASSIGN absolutely… the proceeds of my/our claim in [the earlier suit] inclusive of interest, costs and disbursements to be agreed or taxed.”

The defendant’s complaint:

The defendant’s complaint in his closing submissions may be said to comprise the following points arising from the principle that the court should look at the totality of the transaction in determining whether it smacks of maintenance and champerty: While the plaintiff claimed to be entitled to the entire settlement sum, he only had a legitimate interest in the cost of repairs amounting to $4800 of the settlement sum. Oracle was involved in all aspects of the case down to the present: in the earlier suit, the assignment and the instant suit. The plaintiff was dominus litis in that he controlled the conduct of the earlier suit. Because the plaintiff had no legitimate interest in all the components of the settlement sum and was dominus litis, he thus “wantonly and officiously intermeddled with the Assignor’s claim.”^xi Indeed, Shah did not even how much of the settlement sum was for her loss of use. In relying on the assignment, the plaintiff was “trying to circumvent the laws of maintenance and champerty” which presumably – “presumably” because this was not articulated – tainted the authorisation behind the earlier suit. Since Shah had “not paid for any sums, ie costs of repair, rental fees, legal costs and disbursements, out of her own pocket”, and the plaintiff had control of the earlier suit, the plaintiff “was able to inflame both his costs of repair and [Shah]’s other claims.”^xii

I should point out that the DCS contains extracts from the testimony of the plaintiff and Shah at the trial which have been mis-ascribed one to the other, so that the extracts should be read with care.

The legal principles:

The prohibition of maintenance and champerty is perhaps centuries old. This principle was first stipulated in times of yore when first it became known that there were persons who funded litigation on the prospect of a share in the spoils if they eventuated.

The scope of the prohibition has in more recent times been restricted so that the area of the permissible has enlarged; certain instances of suggested maintenance and champerty, which might in the past have been struck down, may no longer be so.

In Lim Lie Hoa v Ong Jane Rebecca [1997] SGCA 17, the Court of Appeal, in dismissing the appeal, examined inter alia three leading English cases and pronounced on the current principles surrounding maintenance and champerty.

I shall be referring to Lim Lie Hoa and Camdex International Ltd v Bank of Zambia [1998] QB 22 to support a number of propositions, which would also serve to address the defendant’s complaint at [18]. These propositions are that: Maintenance becomes champerty when there is additionally an agreement to share in the spoils of the litigation. The issue of maintenance and champerty does not arise when the assignment is not of a bare cause of action, but of a debt. The assignment of a bare cause of action to someone with legitimate interest in the cause of action would not be struck down as maintenance. The fact that an assignee stands to make a profit from the matter assigned does not result in an otherwise proper assignment being struck down as being maintenance or champerty. Even if the underlying contract is champertous, it does not taint the assignment if, in suing, the assignee does not need to rely on the underlying contract.

Champerty a sub-set of maintenance:

At [22] to [24], the court said this: 22 The appellants put at the forefront of their appeal their contention that the assignment and the P/A are champertous or savour of maintenance and were void as contrary to public policy. They say that the assignment and the P/A were champertous in two ways. First, the assignment was made in consideration of a promise by the respondent to pay to the second appellant a proportion of the amounts recovered in these proceedings and was therefore champertous. Secondly, the assignment and the P/A were executed in pursuance of a broader arrangement made between on the one hand the respondent and the second appellant and on the other hand Gomar Leasing whereby the latter agreed to finance the present proceedings in consideration of receiving a share of the fruits of the litigation. Accordingly, the assignment and the P/A were champertous and therefore void. 23 Maintenance and champerty have been...