High Court · Decided 8 April 2015

ARS v ART and another

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[2015] SGHC 78Case no. Suit No [AA]

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Quentin Loh J:
Introduction
[1] The gravamen of the plaintiff’s claim lies in the alleged involvement of the first defendant in the replacement of the plaintiff as the close-circuit television (“CCTV”) supplier for the Integrated Security System (“ISS”) in the redevelopment of a specific project.
[2] A significant portion of the case revolves around the numerous disputes of fact between the parties. This judgment will be unfortunately lengthy to deal with the numerous factual allegations made by the parties. This is not helped by the fact that these disputes arose from events that took place in 2001-2002 and for various reasons, which I shall come to, the trial in Singapore only came to be held some 12 years later. Given the best of intentions, witnesses’ evidence of events that occurred so long ago may not be most reliable. They may have well been coloured by the onset of subsequent events and the disputes that have arisen. To compound matters, unlike other cases where the documentary evidence becomes an important aid to witnesses’ recollection and oral evidence, the objective evidence by way of relevant contemporaneous documents is very limited in this case. Another factor that hampered the fact-finding process is that some relevant witnesses were not called to give evidence; perhaps not without some excuse, as there were multiple proceedings in various jurisdictions, and because of conflicting interests.
[3] Before I delve into the minutiae, I should state my conclusion at the outset. Having considered the matter and the evidence before me, I find that there is insufficient evidence to support the plaintiff’s claims. The plaintiff has failed to discharge its burden of proof and I accordingly dismiss its claims against the first defendant.
Background facts
The parties
[4] The plaintiff is [ARS], a corporation incorporated under the laws of Japan. It manufactures a whole range of CCTV products since 1975. [Saul] is the major shareholder, director and the President of the plaintiff. He is the “brains” of the operations of the plaintiff and its related companies, and makes all the major decisions for them.
[5] The first defendant is [ART], a corporation incorporated under Swiss law. It is the ultimate holding company of a group of companies (referred to as [Z]) which provides electronic security products and services, fire protection products and services, valves and controls, and other industrial products. [BA] is a business division and major segment of the [Z] group of companies, comprising the subsidiaries owned directly and indirectly by the first defendant (as the ultimate holding company), carrying on the business of designing, manufacturing, installing and servicing of electronic security systems, fire protection, detection and suppression systems, sprinklers and fire extinguishers, among others. To be clear, it is not disputed that [BA] is not a legal entity.
[6] The second defendant, [ARU], is the Singapore branch of [BB] which is a wholly owned subsidiary of the first defendant. The second defendant owns and operates under the business name of [BC], even though its operations are not confined to the fire and security-related businesses which operate under [BC]. The plaintiff’s claims against the second defendant were struck out as they were time-barred under the Limitation Act (Cap 163, 1996 Rev Ed).
Facts leading up to the replacement of the plaintiff as the CCTV supplier for the [Project]
[7] The redevelopment of the specific project started in or around late 1999. It encompassed the construction of [xxx] of [xxx], [xxx] and [xxx], which were to be implemented in five separate phases. The disputes comprised in this action are in relation to the first phase of the project (henceforth referred to as “the [Project]”). [XA] and [XB] were the employers and the clients in the [Project]. The main consultant for the [Project] was [XC], which was succeeded by [XD] during the course of the [Project], and the security consultant was [XF].
[8] In or around 2000, [XG] won a tender issued by [XB] for the consulting, design, engineering and project management of security, communication and computerised systems for the initial phase of the [Project]. [XG] is a company incorporated in Israel in 1977 as a consulting and engineering firm in the field of security and communication. At that time, [XG]’s credentials included the design and supervision of the [overseas project] in Israel. The plaintiff’s Israeli affiliate, [ARS (Israel)], a company incorporated in Israel, is a CCTV supplier and had actively cooperated with [XG] on many projects for which [XG] was the consultant, including the [overseas project]. [Saul] is also the major shareholder and director of [ARS (Israel)], which is under the charge of his son-in-law, [Abel].
[9] [Saul] claims that he learnt about the [Project] from [Michael], the principal of [XG]. What happened next is one of the points of contention between the parties. The plaintiff claims that [ARS (Israel)] entered into discussions with another company, [KA], with a view to collaborate and pursue the ISS package of the [Project] (“the ISS sub-contract”). [KA] is a system integrator/designer, distributor and installer of access control, alarms and integrated systems, CCTV and digital CCTV recording systems in Israel. [KA] had previously worked with [ARS (Israel)] for the supply and installation of security systems in several of the [projects] in Israel, including the [overseas project]. As a result of the discussions with [KA], the plaintiff and [ARS (Israel)] allegedly reached an oral agreement with [KA] to cooperate to pursue the ISS sub-contract (“the [First] Agreement”). The alleged terms of the [First] Agreement are set out below at [16]. The first defendant does not admit the existence of the [First] Agreement.
[10] In due course, [XA] issued the Request for Information and Pre-Qualification for Design, Installation, Integration, Commissioning and Management of Integrated Security System for the Redevelopment of the [Project] in Singapore (“the RFI”). The submission date for the RFI was 10 May 2001. The parties who were interested in submitting a tender for the ISS sub-contract had to meet the pre-qualification requirements set out in the RFI, namely:
(a) the tenderer had to be either a Singapore company or an entity (either a foreign company or a joint venture) which included a Singapore company that will provide the support, commissioning and management of the ISS during the defects liability period and the warranty period; and
(b) the tenderer had to have experience and a track record in [projects] of significant value and at least one project involving video transmission and camera control of [xxx] cameras through decentralized system of [xxx] video matrices to [xxx] monitors in [xxx] separate control centres.
[11] The parties who were shortlisted at the RFI stage would be nominated as the final bidders for the Request for Proposal (“the RFP”), which was the final and closed stage of the tender for the ISS sub-contract. The successful party at the RFP stage would then be nominated as the sub-contractor.
[12] One of the parties interested in the ISS sub-contract was [BD], a company incorporated under the laws of Singapore and in the business of trading, installing and maintaining fire safety devices and apparatuses, among others. The first defendant is the ultimate holding company of [BD]. As alluded to earlier (see [9] above), [KA] had plans to secure the ISS sub-contract. [Saul] introduced [BD] and [KA] to each other, and this eventually resulted in the formation of the joint venture company known as [JVC] on or around 8 May 2001. [KB], which is a part of the same group of companies as [KA] with common offices and directors, was added to the joint venture in order to meet the minimum capital and financial requirements under the RFI which [KA], by itself, would not have met.
[13] [JVC] eventually won the bid for the ISS sub-contract on 21 February 2002.
[14] The circumstances preceding the formation of [JVC], apart from the introduction by [Saul], are heavily contested by the parties. The plaintiff’s contention, essentially, is that there was an oral agreement between the plaintiff, [ARS (Israel)] and [BD] to the effect that it would only offer the plaintiff’s CCTV products if [BD] manages to enter into a joint venture to bid for the ISS sub-contract as a result of [Saul]’s introduction (“the [Second] Agreement”). The alleged terms of the [Second] Agreement is set out below at [17]. The plaintiff asserts that [Saul] introduced [BD] and [KA] to each other after having been assured by [BD] and [KA] that they would abide by the [First] Agreement and [Second] Agreement (“the [Two] Agreements”). The first defendant denies the existence of both agreements.
[15] At the RFI and RFP stages, the plaintiff was [JVC]’s proposed CCTV supplier. However, the plaintiff was subsequently replaced by [PT]. The parties dispute the circumstances surrounding the replacement of the plaintiff as the CCTV supplier for the ISS sub-contract. The plaintiff contends that notwithstanding the existence of the [Two] Agreements, the plaintiff was replaced with [PT] on the pretext that the plaintiff’s CCTV sub-system did not comply with the RFP specifications and the requirements of [XA]. This is denied by the first defendant. The plaintiff submits that it is the circumstances under which the plaintiff was replaced as the CCTV supplier for the ISS sub-contract and the involvement of the first defendant which gave rise to the claims. The plaintiff’s case is that the first defendant was involved in the replacement of the plaintiff through certain key personnel in [BC] who were representatives of the first defendant and/or acted for and on behalf of the first defendant, namely:
(a) [Paul], the managing director of [BC];
(b) [Amos], the vice president of [BC]; and
(c) [Ben], the director of finance for [BC].
The alleged terms of the [Two] Agreements
[16] According to the plaintiff, the [First] Agreement was concluded between the plaintiff, [ARS (Israel)] and [KA] on the following terms:
(a) [KA] will participate in the tender as an integrator for the ISS sub-contract;
(b) [ARS (Israel)] will provide full support to [KA] in the tender process for the ISS sub-contract;
(c) the plaintiff will supply all the CCTV and the digital recording equipment for the ISS sub-contract which would be shipped directly out of Japan; and
(d) the plaintiff (given its extensive experience in the Singapore market through the operations of its Singapore affiliate, [ARS (Singapore)]) would assist [KA] in setting itself up in Singapore for the tender and if necessary, assist [KA] in finding a suitable local joint venture partner.
[17] As for the [Second] Agreement, the plaintiff asserts that it was concluded between the plaintiff, [ARS (Israel)] and [BD] on the following terms:
(a) the plaintiff will introduce to [BD] a suitable joint venture partner to participate in the tender (RFI process) and bid for the ISS sub-contract;
(b) [BD] will accept the prices that [ARS (Israel)] had agreed with the other (intended) joint venture party [ie, [KA]] for the plaintiff’s CCTV equipment to be supplied for the tender and the ISS sub-contract, if successful; and
(c) [BD] will leave all negotiations on pricing, equipment selection, payment for the plaintiff’s CCTV equipment to the other joint venture party [ie, [KA]] and [BD] would abide by any agreement reached between the plaintiff, [ARS (Israel)] and the other joint venture party [ie, [KA]] on these issues.
[18] At this juncture, I pause to note that it was stated in the plaintiff’s closing submissions that one of the terms of the [Second] Agreement provides that:
[Y] is the common name in [ARS], [ARS (Israel)] and [ARS (Singapore)].
[19] While this term is based on [Saul]’s Affidavit of Evidence-in-Chief (“AEIC”), it was never pleaded in the Statement of Claim. It is trite law that the court cannot make a finding based on facts which have not been pleaded: Ong Seow Pheng and others v Lotus Development Corp and another [1997] 2 SLR(R) 113 at [41]. I will not make any finding or decision based on the term which had not been pleaded. This, of course, would become immaterial if I find that the [Second] Agreement does not exist.
The foreign proceedings preceding Suit No [AA]
[20] As a result of the replacement of the plaintiff as the CCTV supplier for the ISS sub-contract, several actions were commenced in a few jurisdictions over a number of years.
[21] In June 2003, the plaintiff instituted proceedings against the first defendant in the United States District Court for the Southern District of New York (“US District Court (SDNY)”), where it alleged that the first defendant was liable for interfering with an alleged agreement between [ARS (Israel)] and [KA] and an alleged agreement between [ARS (Israel)] and [JVC]. The Court refused to exercise its jurisdiction over the claim and dismissed the action on 24 January 2005.
[22] In August 2003, [ARS (Israel)] commenced proceedings against [BD] and [KA] in the Israeli courts, alleging that they were liable for, among other things, breach of the [Two] Agreements. The Court stayed proceedings in favour of arbitration in Singapore. [ARS (Israel)] claims that it had never signed the agreement containing the arbitration clause. The plaintiff, in the current proceedings, takes the same position. Be that as it may, [ARS (Israel)], on 25 April 2011, commenced arbitration proceedings against [BD] and [KA] in the Singapore International Arbitration Centre (“SIAC”). On 6 September 2012, [ARS (Israel)] tried to go back to the Israeli courts on the basis that [BD] and [KA] had pleaded the defence of limitation in the arbitration proceedings. On [BD]’s application, the District Court of Tel-Aviv-Yaffo struck out [ARS (Israel)]’s claim on the basis of estoppel on 5 June 2014. The first defendant tries to rely on the observations made by the Court in the Israeli proceedings here, but this has been challenged by the plaintiff. I will address this point below (at [26]–[27]).
[23] In October 2006, after the US District Court (SDNY) dismissed the action, the plaintiff brought fresh proceedings against the first defendant in the United States District Court for the District of New Jersey (“US District Court (NJ)”), alleging that the first defendant had, among other things, induced [JVC] and [KA] to breach the [Two] Agreements. The Court dismissed the claims for lack of jurisdiction on 9 April 2008.
[24] In November 2008, the plaintiff commenced proceedings against the first defendant in the United States Superior Court of New Jersey, alleging that the first defendant was liable for inducing the breach of the [Two] Agreements. On 3 August 2009, the Court stayed the proceedings on the ground of forum non conveniens in favour of the dispute being litigated in Singapore and on the first defendant’s undertaking not to raise the defence of limitation before the Singapore courts. As a result, the plaintiff commenced the present action on 1 October 2009.
[25] The foreign proceedings are raised by the first defendant for two reasons. First, the first defendant seeks to rely on these proceedings to show the frivolous and vexatious nature of the plaintiff and [ARS (Israel)]. The significance of this argument, however, has not been made apparent by the first defendant. I earlier refused to grant the first defendant’s application to strike out the action. I do not think that the first defendant has provided any basis for me to revisit this issue (at least in relation to the merits of the case), and accordingly, I will refrain from doing so. Secondly, the first defendant relies on the differences in the descriptions of the [Two] Agreements in the pleadings filed in these foreign proceedings to support its submission that the [Two] Agreements do not exist. I will deal with this point when I address the issue concerning the existence of the [Two] Agreements ([114]–[130] below).
[26] I should also deal with the first defendant’s attempt to rely on the observations made by the District Court of Tel-Aviv-Yaffo on 5 June 2014. The first defendant essentially relied on certain paragraphs in the judgment to argue that [ARS (Israel)] allegedly acted in a manner “which constitutes abuse of legal procedure” and also questioned if [ARS (Israel)] had acted in “good faith”. The plaintiff contends that this is irrelevant as [ARS (Israel)] is not a party to the present case. The plaintiff submits in the alternative that the first defendant was adducing fresh evidence without leave to do so since the decision of the District Court of Tel-Aviv-Yaffo was released only after the conclusion of the hearing in the present case. In any event, the plaintiff states that [ARS (Israel)] disputes the decision on the basis that [BD] and [KA] had tendered false evidence to the District Court of Tel-Aviv-Yaffo, and [ARS (Israel)] is preparing to appeal against the decision.
[27] I do not think that the first defendant should be entitled to rely on the observations made by the District Court of Tel-Aviv-Yaffo. I note that the judgment was not properly adduced or admitted into evidence by the Court. It was merely tendered as part of the first defendant’s Supplementary Bundle of Documents after the hearing was over. Moreover, I have doubts on the relevance of the judgment. The judgment does not fall within ss 42–44 of the Evidence Act (Cap 97, 1997 Rev Ed) (“the EA”). Neither has the first defendant shown that the existence of the judgment is a fact in issue or is relevant under s 45 of the EA. I would therefore not take into account the observations of the District Court of Tel-Aviv-Yaffo in deciding the merits of this case.
The plaintiff’s claims in Suit No [AA]
[28] In the present case, the plaintiff’s claims against the first defendant can be summarised as follows:
(a) the first defendant induced and/or procured [KA] and/or [BD] to breach the [First] and [Second] Agreements respectively;
(b) the first defendant conspired with [KA] and/or [BD] to breach the [Two] Agreements with intention of injuring the plaintiff;
(c) the first defendant conspired with [KA] and/or [BD] to maliciously publish false words about the design/business of [Y] by way of three letters dated 4 October 2002, 25 October 2002 and 12 December 2002 with intention of injuring the plaintiff; and
(d) the plaintiff is entitled to a claim in unjust enrichment as the first defendant have been “unjustly enriched” at the expense of the plaintiff by reason of the first defendant’s “tortious conduct”.
First claim: Inducement of a breach of contract
[29] The plaintiff’s first claim is that the first defendant had induced or procured [KA] and [BD] to breach the [First] Agreement and [Second] Agreement respectively. To establish its claim, the plaintiff must show, apart from the act of inducement and the breach of the contract, that:
(a) the defendant acted with the requisite knowledge of the existence of the contract; and
(b) the defendant intended to interfere with the performance of the contract.
[30] This is the “two-fold requirement” set out by the Court of Appeal in Tribune Investment Trust Inc v Soosan Trading Co Ltd [2000] 2 SLR(R) 407 (“Tribune Investment”) at [17]. As a prerequisite, the plaintiff must also prove the existence of a valid and binding contract that was capable of being breached by the other contracting party at the instigation of a third party (at [22]–[24] of Tribune Investment).
Whether the [Two] Agreements had been concluded by the relevant parties?
[31] As briefly alluded to earlier (see [9] and [12] above), the plaintiff’s claims rest on the existence of the [Two] Agreements, while the first defendant alleges they do not exist. This is a point of significant dispute between the parties and a large part of the parties’ submissions has been devoted to this issue.
[32] For the reasons set out below, I find that the plaintiff has failed to prove on the balance of probabilities that the [Two] Agreements exist. Given that the plaintiff cannot prove the existence of the [Two] Agreements, he accordingly cannot establish the breach of the [Two] Agreements and it follows that the plaintiff’s claim in inducement of a breach of contract must fail.
The plaintiff’s case
[33] The plaintiff’s case, in relation to the [First] Agreement, is that [ARS (Israel)] and [KA] entered into discussions around late 2000 with a view to collaborate for the ISS sub-contract. At these discussions, the plaintiff and [ARS (Israel)] were represented by [Saul] and [Abel] respectively, and [KA] was represented by [Gabriel] and [Ian]. [Ian] was the Managing Director and General Manager of [KA] at that point in time. According to the plaintiff, the discussions concluded with an oral agreement (ie, the [First] Agreement) between the plaintiff, [ARS (Israel)] and [KA].
[34] As for the [Second] Agreement, the plaintiff’s case is that the first defendant and [BC] came to know about a large [xxx] project in Asia around early April 2001, and [Paul], the Managing Director of [BC] and the director of [BD] at the material time wanted the first defendant, [BC] or one of the first defendant’s affiliate companies to be involved in the [Project]. [Paul] sent an email dated 13 April 2001 to the regional managers of [BC] to enquire if any of them were working on a large [project] in Asia. In response, [Jacob], the General Manager of [BD], stated in his email dated 15 April 2001 that [BD] was teaming up with other parties for the RFI stage of the [Project]. The plaintiff asserts that at the end of April 2001, which was less than two weeks before the submission date for the RFI, [BD] had no chance of getting nominated as one of the final bidders for the RFP stage as they had “no or little products to offer, little or no design on hand to submit, and no partner with sufficient experience or expertise in ISS in [xxx] to enter into a joint venture with”. Around the same time, which was around late April 2001, [Zachary], sales manager of [BD], contacted [Tobias] of [ARS (Singapore)] to propose a joint venture for the ISS sub-contract. This was the second time, according to the plaintiff, that [Zachary] had approached [ARS (Singapore)]. At around the same time, [Gabriel] informed [Saul] that [KA] was no longer proceeding with their intended joint venture partner in Singapore. At this point in time, [Saul] decided that he would try to pair [BD] with [KA] for the ISS sub-contract.
[35] The plaintiff asserts that [Saul], acting on behalf of the plaintiff and [ARS (Israel)], entered into discussions with [BD] and [KA] around late April 2001 with a view of having them enter into a joint venture to bid for the ISS sub-contract. In particular, the plaintiff alleges that during the telephone discussions between [Saul] and [Zachary] on or around 27 and 30 April 2001, [Zachary] agreed on behalf of [BD] to the terms of the alleged [Second] Agreement. The plaintiff adds that [Zachary] was informed of the material terms of the [First] Agreement, and had confirmed that he was authorised by [Jacob] to commit [BD] and to agree to the plaintiff’s terms. The plaintiff also alleges that a few days after the discussions between [Saul] and [Zachary], [Saul] told [Jacob] over the telephone about the material terms of the [First] Agreement, and [Jacob] re-confirmed his agreement to the terms of the [Second] Agreement “with full knowledge and understanding” that the plaintiff was assisting [BD] in setting up the joint venture so as to benefit from eventually being able to supply them with the plaintiff’s CCTV sub-system for the ISS sub-contract. Thereafter, [Saul] informed [Gabriel] that he had found [KA] a suitable joint venture partner. According to the plaintiff, [Gabriel] agreed to abide by the [First] Agreement if the joint venture was successful. [Gabriel] also agreed to protect the plaintiff’s interest when [Saul] told him about the terms of the [Second] Agreement. The plaintiff’s case was that [Saul] introduced [BD] to [KA] only after the [First] Agreement and [Second] Agreement had been concluded. As a result of [Saul]’s efforts, [JVC] was formed one or two days before the closing date for the submission of the RFI.
[36] Pursuant to the [Two] Agreements, the plaintiff and [ARS (Israel)] provided [JVC] with the CCTV sub-system solution during the RFI/RFP tender stages and supported [JVC] throughout the tender process.
[37] On or around October 2001, the plaintiff claims that [ARS (Israel)] and [KA] agreed that the price of the CCTV sub-system to be supplied to [JVC] for the ISS sub-contract will be US$2,692,060.00. This would be in accordance with the [Two] Agreements, that is, [KA] would negotiate with [ARS (Israel)] on pricing, equipment selection and payment for the plaintiff’s CCTV, and [BD] would abide by any agreement reached between [KA] and [ARS (Israel)]. The plaintiff explained that the negotiation on the pricing was done by [ARS (Israel)] (instead of the plaintiff) because the parties to the [First] Agreement agreed that [ARS (Israel)] would sell to [KA] the CCTV sub-system and the plaintiff, as the supplier of the CCTV sub-system, would then bill [ARS (Israel)] for it.
[38] As noted above, on 21 February 2002, [JVC] was awarded the ISS sub-contract.
[39] Around May 2002, [BD] requested for suppliers to reduce their prices. According to the plaintiff, [Ian] and [Saul] negotiated and agreed to a 2.5% special discount for the plaintiff’s CCTV sub-system for the ISS sub-contract. This reduced the price to US$2,624,758.50.
[40] On or around 13 August 2002, [ARS (Israel)] received a purchase order dated 12 July 2002 from [JVC] through [KA] for the sum of S$4,619,575.84 (based on the discounted price of US$2,624,758.50) (“the Purchase Order”). However, the Purchase Order required [ARS (Israel)] to not only supply (as previously agreed) but also to install, test and commission the CCTV sub-system. Further, the Purchase Order was subject to the approval of the Critical Design Review (“CDR”) submission by [XA], in accordance with what the plaintiff alleges to be a “fictitious subcontract agreement” (“the CCTV sub-contract”). The plaintiff disputes the terms of the Purchase Order as they were not in accordance with the [Two] Agreements which the plaintiff says were known to [JVC] through [KA] and [BD]. The plaintiff also asserts that the CCTV sub-contract was fictitious as it was never discussed, made known or signed between the plaintiff, [ARS (Israel)], [KA], [BD] or [JVC]. The plaintiff says that [Saul] complained to [Ian] about the Purchase Order and CCTV sub-contract. As the CDR meeting was scheduled for the next day, they agreed that [Ian] would get [JVC] to eliminate all the unilateral terms raised by [BD] at a later stage and that they will first concentrate on obtaining the necessary approval.
The first defendant’s case
[41] On the other hand, the first defendant’s case is that it was not privy to the alleged discussions between the plaintiff, [ARS (Israel)] and [KA] and it does not accept that the [First] Agreement was concluded by the parties. The first defendant denies that there was any representation or promise by [Zachary] (or any representative of [BD]) to [Saul] and/or any agreement between them that [BD], as part of [JVC], would only offer the plaintiff’s CCTV sub-system in the tender and/or the bid for the ISS sub-contract. The first defendant also asserts that [Zachary] had no actual or apparent authority to enter into any such alleged agreements on behalf of [BD], and that [Zachary] had not represented to [Saul] that he was authorised by [Jacob] to commit [BD] to any such agreements.
[42] The first defendant accepts that [Saul] introduced [BD] to [KA] for the purpose of tendering for the ISS sub-contract, and that [JVC] was formed shortly before the submission date for the RFI. The first defendant further accepts that a 2.5% discount was offered for the plaintiff’s CCTV sub-system in or around May 2002, but denies that it was ever accepted by [JVC].
[43] The first defendant claims that the Purchase Order was issued by [BD] in July 2002 prior to [JVC]’s discovery in or around August or September 2002 that the plaintiff’s CCTV sub-system did not fully comply with the RFP specifications and/or [XA]’s requirements for the CCTV sub-system. The first defendant asserts that, contrary to the plaintiff’s case, [XA] had not approved the plaintiff’s CCTV sub-system design at the material time.
My decision: The [Two] Agreements do not exist
[44] I will now set out my detailed findings and reasons for my conclusion that on a balance of probabilities, the plaintiff has failed to prove the existence of the [Two] Agreements by considering the following:
(a) the written correspondence;
(b) the oral evidence;
(c) the conduct of the parties;
(d) the inconsistency with the terms of the Joint Venture Agreement;
(e) the inconsistency with the pleadings in the foreign proceedings;
(f) the failure to call certain witnesses; and
(g) the uncertainty in the terms of the [First] Agreement.
[45] I start with a discussion on the burden of proof and the guiding principles in order to ascertain the existence of an oral agreement.
(1) Burden of proof
[46] The first defendant submits that the burden of proof is on the plaintiff to show that the [Two] Agreements exist. The plaintiff, on the other hand, appears to be suggesting otherwise (citing s 105 of the EA).
[47] In my judgment, the burden of proof lies squarely with the plaintiff. It is the plaintiff’s case that the first defendant induced [KA] and [BD] to breach the [Two] Agreements. The burden is on the plaintiff to establish, on the balance of probabilities, every element of its claim. This includes the very basis of its claim, ie, the existence of the [Two] Agreements. This was the position taken by the Court of Appeal in Tribune Investment at [22]–[24] and I have no basis or reason to depart from it.
[48] For completeness, I should add that s 105 of the EA does not support the plaintiff’s contention that the first defendant has the burden of proving that the [Two] Agreements do not exist. In Cooperatieve Centrale Raiffeisen-Boerenleenbank BA (trading as Rabobank International), Singapore Branch v Motorola Electronics Pte Ltd [2011] 2 SLR 63 (“Rabobank”) at [31], the Court of Appeal accepted that “the legal burden of proving a pleaded defence rests on the proponent of the defence, unless the defence is a bare denial of the claim”, and went on to explain that the rule is consistent with the general principle underlying ss 103 and 105 of the EA, viz, that he who asserts must prove. Unlike the defendant in Rabobank (at [34]), the first defendant does not admit to the existence of the [First] Agreement, and denies having concluded the [Second] Agreement. Further, it is the evidential burden, which is not expressly provided for in the EA, that may shift from one party to the other: Rabobank at [30], citing Britestone Pte Ltd v Smith & Associates Far East, Ltd [2007] 4 SLR(R) 855 at [58]–[59]. Accordingly, there is no doubt that the plaintiff is the party who bears the legal burden of proof to show, among other things, that the [Two] Agreements had been validly concluded by the relevant parties.
(2) Guiding principles
[49] Having dealt with the burden of proof, I should set out the guiding principles that I adopt in order to ascertain the existence of an oral agreement. The Court of Appeal in Tribune Investment stated at [39] that in a situation where no formal written agreement was entered into or signed by the parties, the existence of any contract “must thus be culled from the written correspondence and contemporaneous conduct of the parties at the material time”. At [40], the Court of Appeal reiterated that “the test of agreement or of inferring consensus ad idem is objective”.
[50] In ascertaining the existence of an oral agreement, the courts have emphasised the significance of the relevant documentary evidence. In OCBC Capital Investment Asia Ltd v Wong Hua Choon [2012] 4 SLR 1206 (“Wong Hua Choon”) at [41], the Court of Appeal explained that:
[51] In the same vein, the Court of Appeal in Ng Chee Chuan v Ng Ai Tee (administratrix of the estate of Yap Yoon Moi, deceased) [2009] 2 SLR(R) 918 at [19] opined that:
[52] Notwithstanding that, the Court of Appeal in Gay Choon Ing v Loh Sze Ti Terence Peter and another appeal [2009] 2 SLR(R) 332 (“Gay Choon Ing”) at [60] acknowledged that there may be cases with little or no documentary evidence:
[53] I distil the following guiding principles on the proper approach for determining the existence of an oral agreement as set out in the cases cited above:
(a) in ascertaining the existence of an oral agreement, the court will consider the relevant documentary evidence (such as written correspondence) and contemporaneous conduct of the parties at the material time;
(b) where possible, the court should look first at the relevant documentary evidence;
(c) the availability of relevant documentary evidence reduces the need to rely solely on the credibility of witnesses in order to ascertain if an oral agreement exists;
(d) oral testimony may be less reliable as it is based on the witness’ recollection and it may be affected by subsequent events (such as the dispute between the parties);
(e) credible oral testimony may clarify the existing documentary evidence;
(f) where the witness is not legally trained, the court should not place undue emphasis on the choice of words; and
(g) if there is little or no documentary evidence, the court will nevertheless examine the precise factual matrix to ascertain if there is an oral agreement concluded between the parties.
[54] I would add to [53(d)] above that, in the present case, a fortiori, where some 12 or more years have passed since the disputed events took place, oral testimony may become even less reliable.
[55] Bearing in mind the burden of proof and the principles set out above, I now turn to evaluate the evidence before me.
(3) Written correspondence
[56] I first note that the alleged [Two] Agreements were not reduced into writing. Neither was there any written record of the discussions which allegedly led to the conclusion of the [Two] Agreements. The first defendant submits that given the value of the deal and the sophistication of the parties involved, the lack of documentary evidence would suggest that the [Two] Agreements were never actually concluded. While it may have been advisable for parties to reduce their agreement into writing (see Forefront Medical Technology (Pte) Ltd v Modern-Pak Pte Ltd [2006] 1 SLR(R) 927 at [86]), I do not think that the failure to do so would necessarily be fatal to the plaintiff’s case as an oral agreement is still an agreement (save for the excepted categories). The crucial question is then whether the existence of the agreement can be ascertained from the evidence available, including written correspondence and contemporaneous conduct of the parties at the material time.
[57] The plaintiff submits that there is email correspondence which incontrovertibly shows that the [Two] Agreements exist. In this respect, the plaintiff relies on the email correspondence between [KA] and [BD] in March 2002. In response to [Jacob]’s proposal in an email to [Ian] dated 12 March 2002 for [JVC] to “seriously consider alternatives” notwithstanding that they have presented the names of the preferred vendors, [Aaron] from [KA] (signing off as “[Ian] and [Aaron]”) stated in his email to [Jacob] dated 18 March 2002:
[58] The same was repeated by [KA] a few months later, in the email from [Joseph] (on behalf of [Ian]) to [Zachary], dated 3 June 2002:
[59] The plaintiff also refers to a chain of email correspondence between [Zachary], [Amos] (Vice President for Fire and Services of [BC] as at June 2002), and [James] (Procurement Manager for [BD]) which suggests the existence of a “handshake” agreement:
(a) Email from [James] to [Zachary], copied to [Amos] among others, dated 1 April 2002:
(b) Email from [Amos] to [James] and [Zachary], copied to [Jacob] among others, dated 3 April 2002:
(c) Email from [Jacob] to [Amos], [James] and [Zachary], dated 8 April 2002:
(d) Email from [Amos] to [Jacob], [James] and [Zachary], dated 8 April 2002:
[60] At the hearing, [Zachary] agreed during cross-examination that the emails showed that [James] was concerned about [Saul]’s assertion that there was an agreement concluded by handshake between [BD] and the plaintiff. [Zachary] also agreed that he and [Jacob] did not, in those emails, deny that there was an agreement by handshake.
[61] The first defendant argues, in relation to the email correspondence between [KA] and [BD] in March 2002 (see [57] above), that it is unclear what [KA] meant when it said that [KA] and [BD] have obligated themselves “for synchronization”. Moreover, the first defendant says that this set of email correspondence also does not shed light on the existence of the [Second] Agreement. As for the email correspondence between [James], [Zachary] and [Jacob] (see [59] above), the first defendant points out that they do not show [Zachary] or [Jacob] acknowledging or confirming the existence of an agreement by handshake.
[62] I agree with the first defendant that the email correspondence does not incontrovertibly show that the [Two] Agreements exist.
[63] It should be noted that [Aaron]’s email to [Jacob] dated 18 March 2002 (see [57] above) was in response to [Jacob]’s email of 12 March 2002. [Jacob] was asking [KA] to “seriously consider alternatives” notwithstanding that they have presented the name of preferred vendors. If the [Two] Agreements were in existence and binding on both [KA] and [BD], it is strange that [Jacob] would ask [KA] to seriously consider “alternatives” as that would have entailed breaching the [Two] Agreements. Further, [Jacob] used the word “preferred” vendor, which does not indicate a firm commitment to use a particular vendor.
[64] [Aaron]’s response to [Jacob] was not to say, eg, “we cannot use alternatives as we are under a contractual obligation”, or “we have agreed”, or “we are bound to use [Y]’s CCTVs”; instead [Aaron] states that [Jacob] should “feel free to enter into negotiations” and ask for quotations “from anyone who can assist us”. [Aaron] then adds that “[i]t is also important for prices comparison” [emphasis added], which underlies the independence of the first sentence from the second. This first paragraph is then followed by a second paragraph where [Aaron] states that “we do have obligations for 2 suppliers … as we have obligated ourselves for synchronization.” Again, [Aaron] does not use the words like “we have agreed” or “we have an agreement to use” or “we are contractually bound to use”. Instead, [Aaron] explains the obligation in the context of having “obligated [themselves] for synchronization” which seems to refer to a technical obligation arising from “synchronization” of [JVC]’s proposal to [XA] with the CCTV equipment and systems of the plaintiff which points to compatibility or well-matched or well-meshed equipment with a proposed system or process. Indeed, the use of the word “synchronization” appears to be consistent with [Zachary]’s evidence that he (as well as [BD]) was under the impression at the start that “the tender [was] fully written based on [the plaintiff’s] specifications” which, as it turned out, was not true.
[65] I accept that in [Joseph]’s email to [Zachary] dated 3 June 2002 (see [58] above), the statement -“we promised to use their equipment” -may be read as “we agreed” to use their equipment, but it could equally be read to mean a moral, not legal, obligation. Further, read in context, the promise arose because these vendors helped them through the tender stage, and that points to a moral obligation.
[66] In my view, these emails should be read in their entirety and in context. Having done so, I find that they point to a moral obligation and not a legal obligation to use the plaintiff’s equipment.
[67] It is also noteworthy that no email, note or letter has been produced which states or refers to an obligation to use the plaintiff’s CCTV equipment because of an “agreement” to do so. Also, in none of the emails produced did [BD] acknowledge that the [Two] Agreements exist.
[68] Taken together, this runs contrary to plaintiff’s suggestion that [KA] acknowledged the existence of the [First] Agreement in the email correspondence to [BD], let alone show incontrovertibly that the [Two] Agreements exist.
(4) Oral evidence
[69] I now turn to the oral evidence of the key witnesses in the present case, namely [Saul] and [Zachary]. [Zachary]’s evidence, in a nutshell, is that he did not enter into the [Second] Agreement on behalf of [BD], and he had no knowledge of the [First] Agreement. [Saul], on the other hand, testified to the contrary.
(A) My assessment of [Saul]’s evidence
[70] The only witness for the plaintiff was [Saul]. His son-in-law, [Abel] was not called as a witness. [Abel]’s absence was conspicuous given that he was in charge of [ARS (Israel)],was a director of the plaintiff, and had also dealt with [KA] in Israel together with [Saul]. [Saul]’s excuse was that [Abel] did not have much knowledge of what happened in Singapore as he was only “handling the case in Israel” whereas [Saul] was the one handling this case in Singapore. [Tobias] of [ARS (Singapore)] was also not called. [Saul] stated under cross-examination that he closed [ARS (Singapore)] a few months before the hearing but was still in touch with [Tobias]. [Saul] also did not attempt to get any evidence from [KA]’s [Gabriel] and [Ian] as witnesses. [Saul] stated under cross-examination that he knows [KA] well:
(a) notes of evidence, 26 May 2014, page 27, lines 22–25:
(b) notes of evidence, 26 May 2014, page 40, lines 2–3:
[71] [Saul] claims he and [KA] have worked on many projects together over the years, but the evidence on the existence of the alleged [First] Agreement comes only from [Saul]. Having said this, I do recognise that the plaintiff is also in litigation with [KA] in Israel and in arbitration with them in Singapore. Be that as it may, this consideration does not apply to [Abel] and [Tobias] who were involved in the material events and would have been able to give evidence for the plaintiff in these proceedings. It was put to [Saul] that these witnesses were not called because he knew they would give adverse evidence to his case. [Saul] denied this but did not offer any reason other than that the documentary evidence is sufficient to prove its case.
[72] It is also convenient at this stage to record my assessment of [Saul]’s oral evidence. He was 76 years of age and quite hard of hearing. A computer screen had to be set before him to enable him to read the questions put to him. I found [Saul] to be a witness who only wanted to tell “his story” and was unfortunately not willing to concede or acknowledge much else. This was so even when the few contemporaneous documents were read and questions were put to him. I need only to raise one example. At the hearing, an email dated 6 September 2002 from [Jason] of the technology branch of [XA] to [John], who was also from [XA], was read to [Saul]. The content reads:
[73] The email was clearly inconsistent with his AEIC, in which [Saul] claimed it was [JVC] that raised issues to [XA] and “poisoned” [XA] against the plaintiff. [Saul]’s response was first, “[t]hat’s what you say” and then “I disagree”. He also tended to refuse to answer questions or answered before the question was completed. Even if I gave him appropriate latitude due to his hearing problem, it did not account for the frequent recurrence of such behaviour. I therefore do not place much reliance on his oral evidence.
(B) My assessment of [Zachary]’s evidence
[74] The plaintiff says that [Zachary]’s evidence on the discussion that he had with [Saul] which, according to the plaintiff, led to the conclusion of the [Second] Agreement in April 2001 should be treated with caution because he gave conflicting evidence. At one point during the cross-examination, when [Zachary] was asked if he agrees that he had concluded the [Second] Agreement on behalf of [BD], he said that:
[75] Later in the day, when asked the same question albeit in a slightly different manner, [Zachary] testified twice that he cannot recall the details of the discussion. The plaintiff’s point is that [Zachary] could not possibly disagree with [Saul] on whether there was a valid agreement concluded between the plaintiff and [BD] in April 2001 if he could not recall the details of the discussions.
[76] Apart from that, the plaintiff points to three other instances where it submits that [Zachary] had given inconsistent evidence. The first instance is when [Zachary] was asked if he was present at the 28 March 2002 meeting between the plaintiff and [BD] during which [Saul] allegedly informed [James] about the [First] Agreement and [Second] Agreement. This was the meeting which led to the chain of email correspondence within [BD] on the alleged “handshake” agreement (see [59] above). [Zachary]’s evidence during cross-examination was that he does not recall such a meeting, and even if there was one, he was “definitely not there”. This was contradicted by the evidence of [Saul] and [James]. Both of them testified that [Zachary] was present at the meeting of 28 March 2002.
[77] The second instance occurred when [Zachary] was asked if he was present at the meeting with [XA] during which the alleged non-compliances of the plaintiff’s CCTV sub-system were raised. He initially insisted that he was not there, but subsequently conceded that he was present at the meeting. In particular, the plaintiff cites the following extract from the notes of evidence and asserts that it shows [Zachary] interrupting counsel for the plaintiff, Mr Paul Wong (“Mr Wong”), and saying that he was not present at the meeting with [XA]:
[78] I do not agree that it was [Zachary] who said the words “I wasn’t there at that point in time”. To my mind, it was clearly a part of the question by Mr Wong. It certainly appears so on the face of the record. In particular, I note that the alleged interruption ended with “..., Mr [Zachary]” and in my view, it would be highly unusual for [Zachary] to speak this manner. Accordingly, there is no real basis to allege that [Zachary] had given inconsistent evidence on this point.
[79] The third instance is when [Zachary], in his affidavit filed for the Israeli proceedings, stated that the CCTV sub-contract (which gave rise to the allegedly fictitious Purchase Order) mandates that any dispute between the plaintiff and [JVC] must be referred to arbitration. The plaintiff asserts that this is inconsistent with [JVC]’s letter faxed to the plaintiff on 9 October 2002, which stated that the CCTV sub-contract was null and void in light of the cancellation of the Purchase Order for the plaintiff’s CCTV sub-system. In fact, the plaintiff’s position was that the CCTV sub-contract was never signed. [Zachary] could not explain for the inconsistency when asked during cross-examination. The plaintiff submits that [Zachary] knew, at the time when he signed the affidavit in 2004, that the contents of the affidavit were false. This is because [Zachary] was the one who had asked [KA] to forward the CCTV sub-contract to the plaintiff and it would follow that he must have been the one to receive the signed copy of the CCTV sub-contract. Be that as it may, [Zachary] could not answer when asked during cross-examination if the plaintiff had signed the CCTV sub-contract.
[80] In light of the various inconsistencies, the plaintiff submits, therefore, that [Zachary] is not a credible witness and that [Saul]’s evidence in relation to the discussion which allegedly led to the conclusion of the [Second] Agreement should be preferred.
[81] The first defendant submits that [Zachary]’s credibility cannot be questioned simply because he cannot recall certain specific events which occurred more than ten years ago. The first defendant further argues that while [Zachary] does not recall the time and exact details of the discussion, he testified that he was certain he did not conclude any agreement with [Saul]. The first defendant also tries to rely on the fact that [Zachary] was not a willing witness and had to be compelled to testify by way of a subpoena to argue that [Zachary]’s evidence is reliable and should be given significant weight.
[82] My assessment of [Zachary] is that he is a truthful witness. He was direct in his answers, did not try to evade questions and frankly admitted he could not remember certain facts. I note that [Zachary] joined [BD] around 2000. He left in 2003 and gave evidence in court around 11 years after he left [BD] of events that took place some 12 years earlier. He had no reason to be partial to [BD]. He was subpoenaed as he had declined to give any AEIC for [BD]. Whilst I disagree with the first defendant’s submission that this fact alone means greater weight should be accorded to [Zachary]’s evidence, his evidence has to be assessed in all its facets and this is certainly one facet that I take into account. It does show that he did not come forward as a willing supporter of [BD] and the evidence he gave was consistent with someone who was neutral.
[83] In my assessment of witnesses’ credibility, I would prefer [Zachary]’s evidence over [Saul]’s. There was no suggestion that [Zachary] had the time and opportunity to peruse documents before he gave his evidence. As noted earlier, these events took place some 12 years ago and he had left [BD] since 2003. His answers many a time that he could not remember appeared to me to be truthful and not evasive. I also observed him reading the document when a question was put to him on that document; he certainly did not show any signs of familiarity with its contents nor was he able to rebut any suggestion by counsel by referring to other emails or documents.
[84] I do not agree with the plaintiff’s submission that [Zachary] cannot deny the existence of the [Second] Agreement since he cannot recall the details of the discussions with [Saul]. In my view, it is quite possible for [Zachary] to say that he does not recall the details of the discussions with [Saul] and at the same time reject the suggestion that the alleged [Second] Agreement was concluded. I accept [Zachary]’s evidence that he was a sales manager in [BD], which was a relatively junior appointment that would not give him the authority to commit his company to a contract. [Zachary] would have had to report to his superior, [Jacob], the general manager of [BD]. So whilst [Zachary] could not remember the details of his discussion with [Saul], it is perfectly consonant with the truth and his assertion that he would not have entered into a commitment or contract with [Saul] because of his limited authority. It was not disputed that this was a large contract for [BD] and although it only involved Phase 1, if all went well, there were four other phases to be separately tendered where [XA] and its consultants would be favourably disposed to awarding them to [BD]. I also accept [Zachary]’s evidence that the discussions were still in their early stages. Given the lack of authority on his part to commit [BD], [Zachary] would not have entered into such an agreement. It is also worth noting that this was not a simple contractor-supplier arrangement. It was a large contract, involving a sensitive project with prospects of further contracts and a relatively sophisticated system was being called for. Further, [BD] was entering into a joint venture with a company that it had not previously dealt with.
[85] I need to also comment on the fact that parts of certain documents were read out to [Zachary], the contents of which were clearly not something he was very familiar with, and questions were then put to him in cross-examination for his agreement with certain propositions. Whilst I hasten to add that Mr Wong was not doing anything improper, and that his cross-examination was fair and within the bounds of propriety, it was evident that when [Zachary] was being read something he had not seen for more than ten years (or that he may not even have read at the material time). He could only answer from what he had just read. Some of the questions, however, posited a fact as their basis extrapolated from the text and concerned something that happened some 12 years ago. To illustrate the point, I reproduce an extract from the notes of evidence below:
The email Mr Wong was referring to was an email from [John] to its security consultant, [XF], in September 2002. It was not apparent whether [Zachary] had seen it at the material time or whether he had read it recently, ie, before the trial, to refresh his memory. The latter was unlikely given the way he read the document whilst on the witness stand. The last question contained a number of propositions, taken as fact. First, it presumes that [XA] does not have “specific knowledge” of the plaintiff’s CCTV sub-system. That is not really true because [Zachary]’s earlier answer is that their technology branch is “pretty technically sound” and they would have come to possess specific knowledge of the plaintiff’s CCTV sub-system as they had to evaluate the same. Secondly, another proposition works itself into the question, viz, [XA] seems to have obtained information that the plaintiff’s CCTV sub-system cannot do certain things. That too is incorrect. [XA] was evaluating the plaintiff’s CCTV sub-system, and it certainly could have acquired that information from their evaluation. It also ignores what was just read out from the email from [John] to [XF]: “[d]uring the course of discussion with [JVC] regarding the design of the CCTV sus-system, we realised that …” [emphasis added]. This line of cross-examination cannot found a submission therefore that someone had “poisoned” the ear of [XA] that the plaintiff’s CCTV sub-system was inadequate or did not meet the RFP requirements.
[86] Having considered the oral evidence of [Zachary], I accept his evidence and make the following findings:
(a) It was [ARS (Singapore)]’s [Tobias], an acquaintance, who first contacted [Zachary] about the [Project] and asked him to consider partnering with someone else, not local, who was interested in the tender.
(b) [Zachary] did not come to any agreement or understanding with [Saul] that the joint venture, if entered into, would only use the plaintiff’s CCTV sub-system and no other CCTV sub-systems.
(c) He probably agreed that [BD] will submit the plaintiff’s proposal but qualified it by saying: “if the product is of full compliance and the price is of a correct price level”, because he would be in no position to have the authority to commit on all the terms that were going to be laid down. He was only a sales manager at that point in time, and was not the one who would make the “final decision”. Also, at that point in time when he spoke to [Saul], it was at an early stage, and “it is not possible that [he] will go into such detailed agreement with a vendor at that stage”.
(d) To the proposition that the plaintiff was replaced because of its price, there is some truth in that. It is also a fact that [PT] entered the picture at an earlier stage, around April 2002, and despite [PT]’s price being some $1.9m lower than the plaintiff’s price, [JVC] continued with the plaintiff’s equipment as part of its proposal to [XA].
(e) However, [Zachary] was very clear in his mind that there was a technical non-compliance issue with the plaintiff’s CCTV as far as [XA] was concerned. Notably, the [XA]’s “ground people” were not happy with the [Y] solution. Furthermore, when the tender was called, [BD] was under the impression that the tender was fully written on the plaintiff’s specification, but after [JVC] secured the contract, when [BD] was working with [XA]’s “ground people”, that assumption turned out to be untrue because a lot of the specifications “has been changed” and it was not a “[Y] solution”.
(f) [Saul]’s evidence that at the last meeting, [XA] was very impressed by his cameras, which they thought were state-of-the-art and could pick up things very clearly from afar, and had said “[p]lease, we want your system”, is not true.
[87] I also do not think that it is fair to doubt [Zachary]’s credibility just because he could not explain why he stated in his affidavit filed in the Israeli proceedings that the arbitration clause in the CCTV sub-contract would apply. While he had testified that he cannot remember if the CCTV sub-contract was signed by the plaintiff, and I appreciate that the plaintiff’s position is that it was never signed, it does not follow that [Zachary] must have been lying when he stated in his affidavit that the arbitration clause would apply. It is possible that at that point in time he might have seen a signed copy of the CCTV sub-contract (if there was one) or he might have been told by someone that it was duly signed (even if it was not). His evidence is that he cannot remember now. It is also possible that he might have been advised that the arbitration clause incorporated in the CCTV sub-contract remains effective despite termination (see Heyman v Darwins Ltd [1942] AC 356). Hence, I do not think that it can be said that [Zachary] would have in all likelihood been lying in his affidavit filed in the Israeli proceedings.
[88] The plaintiff submits, in the alternative, that [Saul] had spoken to [Jacob] about the terms of the [First] Agreement, and that [Jacob] had also agreed to the terms of the [Second] Agreement. The plaintiff says that [Saul]’s evidence on this point had not been challenged, and [Jacob] had not been called as a witness to rebut [Saul]’s evidence. I do not consider that [Saul]’s assertion alone would suffice. As the Court of Appeal in Wong Hua Choon observed at [40], the “subjective statements of witnesses alone are, in the nature of things, often unhelpful” [emphasis in original]. Accordingly, I would hesitate to put much weight on [Saul]’s evidence on its own. As noted above, [Saul] did not call [Abel] or [Tobias]. Whilst counsel for the first defendant, Mr Dhillon Dinesh (“Mr Dhillon”), challenged [Saul] on the absence of these witnesses, Mr Wong did not challenge [Jacob]’s absence from the first defendant’s witnesses. As [Gabriel] and [Ian] were also not called as witnesses, I am left with the evidence of [Saul] and [Zachary]. On balance, and bearing in mind that the reliability of his evidence would have suffered from the considerable passage of time, I accept the evidence of [Zachary] on the main points mentioned above.
(4) Conduct of the parties
[89] Apart from the written correspondence and the oral evidence of the witnesses, the plaintiff submits that the conduct of the parties also suggests that the [Two] Agreements exist. The plaintiff raises two points: first, the plaintiff assisted [BD] and [KA] in the tender for the ISS sub-contract and became the preferred vendor for the supply of the CCTV sub-system; secondly, [JVC] issued the Purchase Order for the plaintiff’s CCTV sub-system without going through the usual procedure (which requires three quotations) and despite there being a cheaper quotation.
[90] I have my reservations about using the conduct of parties to prove the existence of a contract. There may be some cases where there is clear conduct which points one way and not to another, but given the complex relationships between human beings, more often than not, conduct can be explained by a number of reasons which does not have only one explanation or there may be varying degrees of weight pointing to one conclusion. For this reason, the Court of Appeal stated in Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design & Construction Pte Ltd [2008] 3 SLR(R) 1029, in the context of construction of a contractual term, at [132(d)] that:
[91] The plaintiff submits that, since the first defendant did not proffer any explanation for [Saul]’s assisting [JVC], it is inconceivable that the plaintiff would have acted as such without an arrangement in place to protect its interest and it follows that the parties must have concluded the [Two] Agreements.
[92] The first defendant’s response is that even though [James] was informed that the plaintiff was regarded as the preferred vendor for the CCTV sub-system, it does not necessarily follow that there must have been an oral agreement to that effect. The first defendant argues that there is a fundamental difference between having a preference for a certain vendor because its equipment was commercially attractive and technically suitable for the project and having an obligation to use the vendor because of a legally binding agreement with the vendor.
[93] I agree with the first defendant’s submission in this point. There is no doubt of the following facts, and I so find. On its own, [BD] would not qualify to tender for this project. On its own, [KA] (whether it lost its Singapore partner as alleged by [Saul], and on which I make no finding as to its truth since no one from [KA] came to give evidence) would not have qualified to tender for this project (see [10(a)] above). [KA] and [Saul] had co-operated on other projects in Israel before and had a business relationship (see [9] above). [KA] and [Saul] had the requisite track record having taken part in the construction of the [overseas project] in Israel (see [9] above), which was visited by [XA]. It is not denied that the [JVC] came to be set up because of [Saul]’s introduction. Neither does the first defendant appear to be contesting [James]’s evidence that the plaintiff was selected by [JVC] at the pre-tender stage as the “most commercially attractive” vendor with the “most technically suitable” solution for the CCTV sub-system. This would make sense because [Saul]’s track record of having been a vendor of the CCTV system for the [overseas project] would only add to its attractiveness to [XA] when [XA] evaluated the tenders. Further, [XA] had an Israeli consultant, [Michael], who was acquainted with [Saul] and [KA] (see [8]-[9] above). The introduction of [BD] and [KA] to each other and the setting up of the [JVC] was rushed because the looming deadline for the RFI was on 10 May 2001 (see [10] above) and it was only on 8 May 2001 that [Jacob] emailed [Amos], referring to a meeting with “[Gabriel] and [Ian]” and recommending the signing of the Memorandum of Understanding without delay.
[94] It is also a fact that [Saul] was not in a position, on his own, to supply the plaintiff’s CCTV sub-system to [XA] as this came as a part of the Phase 1 contract. There is some evidence that the whole contract was worth about $28m to $29m and the CCTV sub-contract was around $4.855m with the CCTV component at US$2,692,060.00 (which was subsequently reduced by 2.5% to US$2,624,758.50). From [Saul]’s perspective, putting [KA] and [BD] together would have earned him their gratitude. Putting them together would also serve his purpose as the plaintiff could be their “preferred vendor”. I find that this was what happened here. There is a specific meaning of the phrase “preferred vendor” in the context of a construction contract. A “preferred vendor” or supplier of some particular equipment by a contractor means just that, ie, the contractor would prefer to use this supplier’s equipment. However, that would invariably be subject to the approval of the employer or its consultants. That cannot be guaranteed. A contractor could therefore never be absolutely certain (except perhaps in a very small percentage of cases where the supplier of such equipment is extremely reputable and is about the only one making reliable equipment or machinery that is used worldwide) that its preferred vendor would be endorsed; committing itself to the preferred vendor or supplier at that stage would not have made any business sense. It is therefore of some significance when the evidence shows the plaintiff being referred to as a “preferred vendor”, and it makes sense for [Zachary] to say that, at the early stage, all he could agree to, if at all he could, was to use the plaintiff’s CCTV sub-system provided that it “is of full compliance and the price is of a correct price level”. [Saul], [KA] and [BD] felt then that putting forward the plaintiff’s CCTV sub-system for [JVC]’s tender would carry weight and give comfort to [XA] because of their prior collaboration on what [Saul] claimed was a “model” modern [project] which [XA] had visited through their facilitation. Furthermore, [Michael], another Israeli known to [Saul], was one of the consultants of [XA] who was also involved in the [overseas project] in Israel (see [8] above). That assumption must have worked in part because the tender was awarded to [JVC] in February 2002. I therefore do not accept that the plaintiff would not have acted as it did but for the existence of the [Two] Agreements.
[95] The plaintiff also submits that the fact that [JVC] issued the Purchase Order for the plaintiff’s CCTV sub-system without going through the usual procedure (which requires three quotations) and notwithstanding that there was a cheaper quotation clearly supports its contention that the [Two] Agreements exist. At the hearing, [Zachary] accepted that the other quotation for the CCTV sub-system was $1.9m cheaper than the plaintiff, and going with the plaintiff’s CCTV sub-system would have reduced the first defendant’s profit margin by at least 5%. The plaintiff argues that the first defendant decided to go with the plaintiff’s CCTV sub-system despite the lower profit margin because of the [Two] Agreements.
[96] This submission fails to recognise that there may be other reasons why this was done. [KA] and [BD] may very well have felt gratitude to [Saul], as I so find, and felt a moral obligation to try their best to use the plaintiff’s CCTV sub-system for the [Project]. As [Zachary] candidly admitted, he was grateful to [Saul] for introducing [KA] to [BD], and that he was under the impression that the plaintiff’s CCTV sub-system was in full compliance with the technical requirements (which obviates the need to make changes later). Hence, despite the significantly lower price of [PT]’s CCTV sub-system at an early stage, [JVC] continued to go along with the plaintiff. Also, as noted above, the Israeli connection was a perceived advantage with [XA] and there was the reputational factor; there was no evidence that [PT] had a similar track record of supplying CCTV sub-system for such projects. Accordingly, I disagree with the plaintiff that these two points amounted to conduct that proved the existence of the [Two] Agreements.
[97] The first defendant also raises four points in respect of the conduct of the parties which it argues would show that the [Two] Agreements were never concluded. First, the plaintiff and [JVC] were still negotiating on the price even after the [Two] Agreement was allegedly concluded. Secondly, [JVC] issued two requests for quotation even after the March 2002 meeting during which [Saul] was said to have informed [James] about the [Two] Agreements. Thirdly, the plaintiff and [ARS (Israel)] did not appear to have objected to the Purchase Order and the CCTV sub-contract. Fourthly, the plaintiff did not write to [BD] to allege that there was a breach of the alleged [Second] Agreement when [JVC] decided to replace the CCTV supplier with [PT]. I will deal with each point in turn.
[98] As to the first point, the first defendant argues this is contrary to the plaintiff’s position that there was an initial agreement for US$2,692,060.00 which was subsequently reduced by 2.5% to US$2,624,758.50 (see [39] above). The first defendant highlights the fact that [ARS (Israel)], in its letters to [KA] dated 20 May 2002 and 2 June 2002, consistently used the term “offer” to refer to the initial quotation dated 18 October 2001 sent by [ARS (Israel)] to [KA] and the subsequent discounted price. According to the first defendant, this would have led a reasonable person in the place of the promisee (ie, [JVC]) to think that it was a mere offer. The first defendant also claims that the plaintiff was cognizant of the fact that there was no binding agreement until a purchase order was issued by [JVC]. The first defendant argues that this was why [Saul] had to demand for the Purchase Order to be issued immediately to [ARS (Israel)] in early August 2002.
[99] However, I do not agree that this shows that the [Two] Agreements do not exist. The terms of the [Two] Agreements, as alleged by the plaintiff, do not require [JVC] to agree with the price of the plaintiff’s CCTV equipment. Instead, the [Second] Agreement provides that [BD] would leave the negotiations on the pricing, among other things, to [KA] and accept the prices agreed between the plaintiff and [KA]. Hence, the fact that [JVC] never agreed on the price for the plaintiff’s CCTV equipment would not necessarily militate against a finding that the [Two] Agreements exist. In fact, the conduct of the plaintiff in negotiating with [KA] solely rather than [JVC] or [BD] would appear to be consistent with the alleged terms of the [Two] Agreements.
[100] As to the second point, [Saul]’s evidence was that he informed [James] about the [Two] Agreements during their meeting in March 2002. Even then, [James] still issued the two requests for quotation dated 12 and 19 April 2002. [Saul]’s evidence was that he ignored them as it was in breach of the [Second] Agreement. The first defendant submits that the conduct of [James] shows that [BD] did not see itself as having reached an agreement on price with the plaintiff. The inference to be drawn, according to the first defendant, is that the [Second] Agreement does not exist. For the same reason above, I do not agree. Another explanation, which is equally plausible, is that [James] is acting in breach of the [Second] Agreement.

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ARS v ART and another

Laws this judgment relies on

Grounds of decision

Introduction

Background facts

The parties

Facts leading up to the replacement of the plaintiff as the CCTV supplier for the [Project]

The alleged terms of the [Two] Agreements

The foreign proceedings preceding Suit No [AA]

The plaintiff’s claims in Suit No [AA]

First claim: Inducement of a breach of contract

Whether the [Two] Agreements had been concluded by the relevant parties?

The plaintiff’s case

The first defendant’s case

My decision: The [Two] Agreements do not exist

(1) Burden of proof

(2) Guiding principles

(3) Written correspondence

(4) Oral evidence

(A) My assessment of [Saul]’s evidence

(B) My assessment of [Zachary]’s evidence

(4) Conduct of the parties