Sin Yong Contractor Pte Ltd (in liquidation) v United Engineers (Singapore) Pte Ltd

• Jurisdiction: Singapore
• Judge: Andrew Ang J
• Judgment Date: 25 March 2008
• Neutral Citation: [2008] SGHC 43
• Court: High Court (Singapore)
• Published date: 27 March 2008
• Year: 2008
• Plaintiff Counsel: Alvin Yeo SC and Janice Goh (WongPartnership) and Andrew J Hanam (Andrew & Co)
• Defendant Counsel: Andre Yeap SC, Adrian Wong and Dominic Chan (Rajah & Tann LLP)
• Subject Matter: Contract,Civil Procedure
• Citation: [2008] SGHC 43

25 March 2008

Andrew Ang J:

1 The plaintiff sub-contractor, Sin Yong Contractor Pte Ltd (“Sin Yong”) (a company in liquidation), instituted Suit No 446 of 2007 to seek payment from the defendant main contractor, United Engineers (S) Pte Ltd (“UE”), for work done in a series of sub-contracts for the installation of fire protection systems in projects undertaken by UE. What distinguished this case from other run of the mill cases in construction contracts is that secret payments had been made by Sin Yong to an agent of UE for more than ten years. UE attempted to have the dispute determined summarily.

2 Before going further, I will set out the background by starting with the civil action filed four years ago by the main contractor to recover those secret payments.

3 In Suit No 13 of 2004 (“Suit No 13”), UE sued Lee Lip Hiong (“Lee”), Tan King Hiang (“Tan”) and Sin Yong for moneys paid as bribes to Lee by Tan and Sin Yong over the period, from 1991 to 2002. Lee was UE’s engineering manager from 1989 to early 2003. His duties were primarily to negotiate, award, enter into and/or administer contracts with main contractors and sub-contractors for UE’s construction projects. Tan was the sole proprietor of Sin Yong Contractor which was subsequently corporatised on 22 October 1999 as “Sin Yong Contractor Pte Ltd” of which Tan was a director and shareholder. Sin Yong was in the business of installing commercial fire protection systems, such as sprinklers, and had been awarded numerous UE contracts.

4 In that suit, Senior Assistant Registrar Kwek Mean Luck (“SAR Kwek”), on 8 September 2004, granted judgment for UE in the sum of $365,758 against all three defendants for the recovery of all bribes paid by Tan personally or on behalf of Sin Yong to Lee. An appeal by Sin Yong was heard and dismissed by Judith Prakash J on 30 September 2004. Thereafter, Tan was made a bankrupt and Sin Yong was placed in liquidation by UE.

5 It is noteworthy that this bribery had come to light only because Tan, the giver of the bribe, had tipped off the Corrupt Practices Investigation Bureau (“CPIB”) in January 2003. As a result, and prior to Suit No 13, Lee had in August 2003 pleaded guilty to ten counts of accepting gratification (with 95 other charges taken into consideration) and was convicted, imprisoned and fined under the Prevention of Corruption Act (“the Act”) for receipt of bribes totalling $364,758.

6 According to the Statement of Facts in relation to the charges which Lee pleaded guilty to, Lee had proposed to Tan in the late 1970s that Sin Yong could be awarded with the subcontracts, provided that Tan agreed to increase his quoted price for each unit of fire sprinkler installed by $1 or by an amount suggested by Lee. Pursuant thereto, Lee would instruct Tan on the amount Tan was to quote for each subcontract so as to ensure that the amount was within the budget of UE. After Sin Yong was awarded the contract, Tan would have to pay Lee a sum of money computed according to the total number of fire sprinklers to be installed multiplied by the unit price increment as suggested by Lee. Tan had agreed to this proposal.

7 In 2007, Sin Yong obtained sanction of the Official Receiver and commenced the present Suit No 446 of 2007 against UE for the recovery of 53 unpaid invoices aggregating $491,934.48 for the installation of sprinkler systems between 2001 and 2003.

8 In response, UE took out Summons No 4306 of 2007 and an order was made by SAR Tan Ken Hwee (“SAR Tan”) pursuant thereto. The present appeal relates to the order that SAR Tan made.

9 By way of Summons No 4306 of 2007, UE sought, inter alia:

(a) a determination of a question of law pursuant to O 14 r 12 of the Rules of Court (Cap 322, R5, 2006 Rev Ed) (“Rules of Court”), namely, whether Sin Yong’s claim in this action is tainted with illegality and/or contrary to public policy and/or unenforceable; and

(b) an order that Sin Yong’s claim be dismissed and/or struck out pursuant to O 14 and/or O 18 r 19 of the Rules of Court and/or the inherent jurisdiction of the court.

10 After hearing parties on 8 October 2007, SAR Tan ordered, inter alia, that:

1. insofar as the Defendants [UE] may be able to demonstrate that the invoices that are the subject of the Plaintiffs’ [Sin Yong] claim in this action correlate to a project or works or a contract that was entered into with the connivance of Tan King Hiang [Tan] and Lee Lip Hiong [Lee] in furtherance to the corrupt activities that they engaged in, as was determined in Suit No. 13/2004/C, the Plaintiffs’ case in this action would be tainted with illegality and would be unenforceable;

2. the Defendants be granted liberty to make a further application under O 18 r 19 of the Rules of Court and/or the inherent jurisdiction of the Court to strike out the Plaintiffs’ action.

11 For the purposes of the present appeal, Tan filed an affidavit stating his account of the circumstances under which the bribery took place. He stated that payments were made to Lee only out of duress and after the contracts had been awarded and not before. Lee had extorted the bribes from him by refusing to acknowledge completion of works and payments by UE were thus withheld. The payments that were made to Lee were, according to Tan, not bribes but extorted payments. Tan denied that he was asked to increase the price of the sprinklers, let alone agree with Lee to do so. This entire account, Tan said, was told to CPIB in 2003 and was also in his pleadings for Suit No 13. Tan further sought to show that the prices Sin Yong charged UE was 33% to 50% lower than what was charged for other companies.

12 Tan’s affidavit also drew attention to an affidavit Lee had provided for the purposes of Suit No 13 whilst in prison. In Lee’s affidavit, he explained that he had chosen not to contest the accuracy of the Statement of Facts for fear that the prosecution would withdraw its offer to proceed only with ten charges and to take the remaining 95 charges into consideration. Whatever motives Lee may have had in providing that affidavit, the import of Lee’s affidavit was to suggest that the real circumstances surrounding the bribery might not have been accurately recounted in the Statement of Facts.

13 In this regard, counsel for UE argued that since Tan was the one who had tipped off the CPIB, the Statement of Facts would, accordingly, reflect what Tan had earlier told the CPIB. However, I did not think the fact that Tan was the informant meant that it inexorably followed that the Statement of Facts necessarily recorded Tan’s account accurately.

14 After hearing parties on 19 November 2007, I allowed the appeal, setting aside SAR Tan’s order with costs below and in the appeal to be in the cause. UE subsequently requested leave for further arguments and, after granting such leave, I heard parties again on 8 January and 30 January 2008. After further arguments, I affirmed my original decision on 19 November 2007 and ordered that costs of the further arguments be the plaintiff’s costs in the cause. My reasons are set out below.

Summons No 4306 of 2007

15 To recapitulate, UE made two applications by way of Summons No 4306 of 2007: first, a determination of a question of law pursuant to O 14 r 12, namely, whether the unpaid invoices were tainted by illegality and thus unenforceable; second, an application to strike out under O 18 r 19 of the Rules of Court. The latter application was essentially predicated upon the premise that Sin Yong’s pleadings reveal no reasonable cause of action because the unpaid invoices were tainted by illegality. The issue of illegality was therefore the key question I had to consider.

16 UE’s arguments before me were essentially four-tiered. First, UE argued that Sin Yong was estopped by Suit No 13 from disputing that it was part of a conspiracy to commit a crime, which UE described as the payment of bribes to Lee for the purposes of securing UE contracts, for the smooth administration of such contracts and the subsequent inflation of the invoices by the bribe amount (“the conspiracy”). The precise content of the conspiracy is germane to the present appeal and ought to be borne in mind. Second, UE submitted that the corollary of Sin Yong being a party to the conspiracy was that the underlying contracts had an illegal purpose, and therefore the law would not assist such a party in recovering the fruits of its crime.

17 In further arguments, UE argued that the mere fact of bribery was a form of fraud, which ipso facto renders the contracts unenforceable. Alternatively, notwithstanding that the underlying subject matter of the contracts was legal, viz, the installation of sprinklers and payment pursuant thereto, the contracts were nevertheless tainted by illegal performance and were thus unenforceable.

Estoppel and conspiracy

18 After careful consideration, I rejected UE’s argument that issue estoppel prevents Sin Yong from asserting that it was not a party to a conspiracy.

19 UE argued that issue estoppel was made out because the fact that the conspiracy existed had already been decided in and/or formed a necessary ingredient of the judgment in Suit No 13 where SAR Kwek granted judgment to UE, and that since Prakash J had dismissed the appeal, it clearly showed that she too disagreed with Sin Yong’s arguments in that suit.

20 Counsel for Sin Yong raised the point that judgment was entered in Suit No 13 pursuant to an application made by UE under O 27 r 3 of the Rules of Court, which reads:

Judgment on admission of facts (O. 27, r. 3)

3. Where admissions of fact are made by a party to a cause or matter either by his pleadings or otherwise, any other party to the cause or matter may apply to the Court for such judgment or order as upon those admissions he may be entitled to, without waiting for the determination of any other question between the parties, and the Court may give such judgment, or make such order, on the application as it thinks...