Chia Kim Huay (litigation representative of the estate of Chua Chye Hee, deceased) v Saw Shu Mawa Min Min and another

Chan Seng Onn J:

[1] The purpose of the offer to settle mechanism prescribed under Order 22A of the Rules of Court (Cap 322, R 5, 2006 Rev Ed), which is derived from rule 49 of the Rules of Civil Procedure, Ontario RRO 1990, Reg 194, is to “encourage termination of litigation by the agreement of the parties — more speedily and less expensively than by judgment of the court at the end of the trial”: per Morden ACJO in Data General (Canada) Ltd v Molnar Systems Group (1991) 85 DLR (4th) 392 at 398. Ironically, it was the construction of an offer to settle under Order 22A that lay at the heart of the dispute in the present matter.

[2] This matter raises the interesting question of whether and, if so, to what extent, do ordinary contractual principles of offer and acceptance apply to the statutory regime of offers to settle under Order 22A. The theoretical answer to the question must be that ordinary contractual principles apply to the extent that they are not inconsistent with what the Rules of Court expressly provide. However, as will be seen in the present case, the application of theory to practice is not as straightforward as it seems.

[3] On 15 April 2009, Chua Chye Hee (“the Plaintiff”) was involved in a motor accident with Saw Shu Mawa Min Min (“the 1 Defendant”). As a result of the accident, the Plaintiff was rendered tetraplegic. At the material time of the accident, the First Defendant was an employee of GEA Westfelia Separator (SEA) Pte Ltd (“the 2 Defendant”).

[5] After determining the issue of liability, the 2 Defendant’s insurer, Allianz Global Corporate and Specialty AG, Singapore Branch stepped in to defend the suit on behalf of the 1 and 2 Defendants. For convenience, I shall refer to the insurer as “the Defendant”, since it was the party who made the relevant offer to settle to the Plaintiff in this suit.

[6] On 9 March 2011, the Defendant made an offer to settle under Order 22A to the Plaintiff at $352,316.08, representing the estimated loss of the Plaintiff’s earnings calculated based on a 3 year multiplier.

[7] On 21 March 2011, the Plaintiff made an offer to settle under Order 22A to the Defendant at the sum of $594,954.60, representing the estimated loss of his earnings calculated based on a higher multiplier of 5.75 years. The Plaintiff also gave the Defendant full access to his medical records. On 3 May 2011, the Defendant’s medical expert conducted an independent examination of the Plaintiff.

[8] On 17 June 2011, based on the medical examination and their first offer to settle, the Defendant made a second offer to settle under Order 22A to the Plaintiff at $435,000.00. The Defendant wrote a letter to the Plaintiff in Form 33, stating:

[9] The figure of $435,000.00 is an intermediate figure between the Defendant’s first offer to settle at $352,316.08; and the Plaintiff’s first offer to settle at $594,954.60. Attached to this second offer to settle is another letter which set out the following table:

[10] The dispute in the present case is whether or not this second offer to settle from the Defendant dated 17 June 2011 (“the Defendant’s second offer to settle”) had been validly accepted by the Plaintiff.

[11] On 23 August 2011, the Plaintiff made a second offer to settle to the Defendant at $600,000, inclusive of all interim payments. However, the Defendant did not accept this offer to settle and nothing in this case turns on this second offer to settle made by the Plaintiff.

[12] In summary, the Plaintiff and the Defendant each made two offers to settle pursuant to Order 22A. However, as will be seen, this case turns solely upon whether the Defendant’s second offer to settle was validly accepted.

[13] On 27 August 2011, which was a Saturday, the Plaintiff’s counsel accepted the Defendant’s second offer to settle via two modes:

(a) by sending a facsimile in Form 35 at 6.26 pm to the Defendant’s counsel, (“the 1 Acceptance”); and

(b) by personally posting an acceptance in Form 35 to the address of the Defendant’s counsel at about 6.45 pm (“the 2 Acceptance”).

[14] The 1 and 2 Acceptances were similarly worded:

[15] Mr Chua Chean Veen, the Senior Executive Claims of the Defendant, stated in his affidavit that he was advised by his counsel that:

(a) the 1 Acceptance was received by facsimile on Monday, 29 August 2011; and

(b) the 2 Acceptance was received by post on Wednesday, 31 August 2011.

[16] The parties seemed to dispute the exact timing when the Defendant’s counsel received the 2 Acceptance. I note that the Plaintiff produced a copy of the 2 Acceptance with a stamp at the bottom right hand corner which stated:

[17] As the authenticity of this document or the stamp therein was not disputed, I therefore found that the earliest time that Defendant’s counsel had been physically served the 2 Acceptance was 2.09 pm on 31 August 2011.

[18] At 11.06 am on 29 August 2011, the Plaintiff passed away. Although the Plaintiff’s counsel had posted the 2 Acceptance two days prior to the Plaintiff’s death, the 2 Acceptance was however received by the Defendant’s counsel two days after the Plaintiff’s death.

[19] After the Plaintiff passed away, both the Plaintiff’s and the Defendant’s counsel wrote to each other disputing whether or not the Plaintiff had validly accepted the Defendant’s second offer to settle via either the 1 Acceptance or the 2 Acceptance. In the meantime, the Defendant’s counsel did not withdraw the Defendant’s second offer to settle.

[20] On 8 December 2011, on the instructions of Chia Kim Huay, the litigation representative of the estate of the Plaintiff (hereinafter also referred to as the “Plaintiff” where the context applies), the Plaintiff’s counsel served another acceptance in Form 35 (“the 3 Acceptance”) on the Defendant’s counsel accepting the Defendant’s second offer to settle, which the Defendant’s counsel took no steps to withdraw despite knowing full well that the Plaintiff had already passed away more than three months ago. The service and receipt of the 3 Acceptance was not disputed. The Defendant’s second offer to settle was finally withdrawn by Defendant’s counsel on 13 January 2012 using Form 34.

[21] On 23 December 2011, the Plaintiff filed Summons No 5809 of 2011 praying for judgment to be entered for the Plaintiff on the terms of the Defendant’s second offer to settle, which the Plaintiff contended had been validly accepted. In response, the Defendant filed Summons No 135 of 2012 on 10 January 2012 seeking the following declaratory relief:

(a) a declaration that the Defendant’s second offer to settle was not validly accepted by the Plaintiff before he passed away on 29 August 2011; and

(b) a declaration that the Defendant’s second offer to settle had determined on the death of the Plaintiff on 29 August 2011 and was thereafter no longer capable of being accepted.

[22] I heard the both counsel on 26 March 2012 and granted the prayers of the Plaintiff in Summons No 5809 of 2011 and dismissed Summons No 135 of 2012. I ordered the Defendant to pay:

(a) general damages of $360,139.61;

(b) special damages of $71,117.71;

(c) pre-judgment interest of $3,742.67; and

(d) costs and reasonable disbursements of both Summonses to be fixed at $2,500 with the usual consequential orders to follow.

[23] After making the above order, the Defendant’s counsel wrote in to request for further arguments to be made. After considering the further arguments, I confirm my decision and I shall now give the grounds for my decision.

[24] The only legal issue in the present case before me is simply which, if any, of the three acceptances made by the Plaintiff are valid? As long as the Plaintiff can successfully show that at least one acceptance has been validly served and received while the Defendant’s second offer to settle is still valid, the Defendant’s second offer to settle must have been validly accepted.

[25] Before going into the specifics of the Order 22A mechanism, it is important to appreciate the rationale behind the relevant rules. The Court of Appeal cautioned in The “Endurance 1” [1998] 3 SLR(R) 970 at [39] that:

[26] The Court of Appeal went on to explain the rationale of Order 22A in The “Endurance 1” [1998] 3 SLR(R) 970 at [41]:

[27] In my opinion, the above rationale must be kept in mind in considering to what extent ordinary principles of contract law (ie rules of offer and acceptance, the postal acceptance rule etc.) are applicable to the offer to settle regime under Order 22A of the Rules of Court. This will in turn help resolve the legal issues in the present case.

[28] The very title “offer to settle” and the language of Order 22A suggest that Order 22A cannot be understood in a vacuum without reference to ordinary principles of contract law such as concepts of offer and acceptance. However, being a statutory mechanism, Order 22A modifies the ordinary rules of contract law and imposes certain statutory restrictions, including formality requirements, on the parties should they choose to invoke Order 22A. I shall first examine the areas in which the offer to settle mechanism under Order 22A departs from the ordinary rules of contract at common law.

[29] Parties to a lawsuit often make offers to each other in order to try to settle the lawsuit out of court. Such an offer, however, is not an “offer to settle” within the meaning of Order 22A. Order 22A is a statutory mechanism which requires parties to specifically invoke through the use of certain prescribed forms.

[31] Once Order 22A is invoked, the common law rules of offer and acceptance are statutorily modified. For example, while the party making the offer remains free to stipulate the terms of the settlement under Order 22A rule 1, the party making the offer cannot withdraw the offer at any time. The party making the offer must keep the offer to settle open for not less than 14 days pursuant to Order 22A rule 3(1):

[32] Order 22A rule 3(2) mandates that the offer to settle which does not specify a time for acceptance may only be withdrawn after 14 days by giving at least one day’s prior notice of the intention to withdraw. Order 22A rule 3(3) requires the notice of withdrawal to be in Form 34. This means that after the party making the offer gives notice to withdraw the offer in Form 34, the party who received the offer still has one day to accept the offer before it is withdrawn.

[33] Furthermore, under Order 22A rule 6(2), an offer to settle remains open for acceptance until it is withdrawn or when the court disposes of the matter in respect of which it was made, notwithstanding that it has been previously rejected or the other party has responded with a counter-offer:

[34] This marks another departure from the common law - ie, where a counter-offer is treated as a rejection of the earlier offer such that the earlier rejected offer cannot be subsequently accepted. Order 22A rule 6(1) requires an offer to settle to be accepted by serving an acceptance of offer in Form 35 on the party who made the offer.

[35] With the rationale of Order 22A and the differences between Order 22A and the common law in mind, I now turn to consider the issue as to whether any of the acceptances were valid.

[36] The Defendant’s counsel submitted that (i) the 1 Acceptance was not valid because it was sent by facsimile; and (ii) it was clear on his firm’s letterhead that his firm did not accept service of court documents by facsimile. Order 22A rule 6(1) states that:

[37] Order 62 rule 6 sets out the manner of effecting ordinary service when the rules so require. The relevant paragraphs of Order 62 rule 6 which were applicable on 27 August 2011 state:

[38] The letterhead of the law firm of the Defendant’s counsel contains the following text enclosed in a box near the bottom of the page and is used on all letters sent out by the firm:

[39] I accept the submissions of the Defendant’s counsel that the 1 Acceptance by facsimile on 27 August 2011 was clearly not in compliance with Order 62 rule 6(1)(c). There is no evidence to show that the party serving and the party to be served had agreed on other modes of service pursuant to Order 62 rule 6(1)(d). Therefore, I find that the 1 Acceptance was not valid.

[40] The 2 Acceptance was posted on 27 August 2011. The Plaintiff passed away on 29 August 2011, and the 2 Acceptance was received only on 31 August 2011. Whether or not the 2 Acceptance was valid depends on:

(a) whether the postal acceptance rule applies to Order 22A; and

(b) whether the Plaintiff’s death caused the offer to determine on 29 August 2011.

[41] The Plaintiff’s counsel submitted that the 2 Acceptance was valid because the postal acceptance rule operated to deem the acceptance to have been served on the Defendant on 27 August 2011, before the Plaintiff passed away. Further or in the alternative, the Plaintiff’s counsel submitted that the Defendant’s second offer to settle did not determine upon the Plaintiff’s death and was subsequently validly accepted on 31 August 2011. He argued that there was no scope within Order 22A for implying terms that were not stated in the Defendant’s second offer to settle itself. The Defendant could have framed the terms of the offer to settle in any way it wished, but it chose not to specify the condition that the offer is deemed withdrawn upon the Plaintiff’s death. The Defendant was fully informed of the medical condition of the Plaintiff. By choosing the statutory mechanism under Order 22A which required a notice period of one day before the offer can be withdrawn, the Defendant knowingly ran the risk of the Plaintiff passing away before it could withdraw the offer.

[42] The Defendant’s counsel submitted that the postal acceptance rule does not apply to service of court documents. He also submitted that the 2 Acceptance was not valid because the Defendant’s second offer to settle had determined immediately upon the Plaintiff’s death and could not be accepted after the Plaintiff died on 29 August 2011.

[43] The postal acceptance rule is explained in The Law of Contract in Singapore (Andrew Phang Boon Leong gen ed) (Academy Publishing, 2012) at p 133:

[44] I am not persuaded that the postal acceptance rule applies to accepting an offer to settle under Order 22A. Order 22A rule 6(1) requires an offer to be accepted by “serving” an acceptance of offer in Form 35 on the party who made the offer (see [36] above). This formality requirement goes beyond the common law requirement of communicating the acceptance to the offeror. The offeror must be served the acceptance in Form 35, and “service” of documents is dealt with specifically under Order 62 of the Rules of Court. The Rules of Court clearly override the common law rules of acceptance of offers in the event of any inconsistency.

[45] Order 62 rule 6(1)(b) allows service of any document to be effected by post. Section 2(5) of the Interpretation Act (Cap 1, 2002 Rev Ed) sets out the requirements that must be met before the service by post can be deemed to be effected:

[46] In the context of service of documents, section 2(5) of the Interpretation Act modifies the postal acceptance rule at common law. While the postal acceptance rule deems an acceptance sent by post to be effective at the point of posting the letter of acceptance, section 2(5) of the Interpretation Act deems service to be effected only:

(a) by properly addressing, prepaying and posting a letter containing the document; and

(b) at the time at which the letter would be delivered in the ordinary course of post.

[47] I therefore hold that the postal acceptance rule has no application in the context of service of documents by post, as the common law rule has been statutorily modified by section 2(5) of the Interpretation Act. I accordingly reject the Plaintiff’s counsel submission that the postal acceptance rule applies and the acceptance should be deemed validly made when it was posted by the Plaintiff on 27 August 2011. In the absence of submissions to the effect that the 2 Acceptance should be deemed to have been served at a date earlier than the date of actual receipt (ie 31 August 2011) under section 2(5) of the Interpretation Act, I find that the 2 Acceptance took effect only when it was actually delivered to and received by the Defendant on 31 August 2011 and not any earlier.

[48] This case therefore turned on whether or not the Defendant’s second offer to settle determined on the Plaintiff’s death. If it did not, then it would not matter that the 2 Acceptance took effect only on 31 August 2011. The submissions of the Defendant’s counsel appeared to rest on the assumption that the Defendant’s second offer to settle automatically determined upon the Plaintiff’s death.

[49] The Plaintiff’s counsel, on the other hand, submitted that the Defendant’s second offer to settle remained valid until it was withdrawn, which was very much later on 13 January 2012. Therefore, the 2 Acceptance received by the Defendant on 31 August 2011 was valid, notwithstanding the Plaintiff’s death on 29 August 2011 and the inapplicability of the postal acceptance rule.

[50] The outcome of this issue would depend on whether or not the Defendant’s second offer to settle determined upon the death of the Plaintiff. The starting point of the analysis is, once again, to look at the rules at common law relating to the effect of death on offers; and see whether the common law rules have been modified by statute.

[51] The common law rules relating to death of an offeree are unfortunately not very well settled. At common law, the death of either the offeror or the offeree may have an effect on the validity of the offer, depending on the nature of the offer. The authors of The Law of Contract in Singapore explained at p 121:

[52] Whether or not the personal representatives of the estate of the deceased may accept an offer made prior to deceased’s death depends on whether the offer to the deceased was a personal one or not. Michael Furmston and G J Tolhurst in Contract Formation: Law and Practice (Oxford University Press, 2010) stated at p 32:

[53] I agree with the above view. Whether or not an offer is considered “personal” to the offeree is matter of construction, depending on the facts of each case. The exercise is not a technical one and must be approached with a certain degree of common sense.

[54] On the facts of this case, I do not construe the Defendant’s second offer to settle as a personal offer. Section 10 of the Civil Law Act (Cap 43, 1999 Rev Ed), which deals with the effect of death on certain causes of action, states:

[55] Section 10(1) of the Civil Law Act states that all causes of action vested in the deceased shall survive for the benefit of his estate. Causes of action that survive the death of a plaintiff cannot be considered personal in nature since the action could be continued by the personal representatives of the deceased. If the cause of action cannot be considered personal, I am not persuaded that an offer to settle purporting to settle the surviving cause of action can be considered personal. Since there is nothing in Order 22A to suggest that the statutory regime is intended to be different from the common law in this regard, I accordingly find that the Defendant’s second offer to settle was not personal and did not determine upon the death of the Plaintiff on 29 August 2011.

[56] The Defendant’s counsel argued that this outcome was not in line with the spirit of Order 22A. However, as pointed out by the Plaintiff’s counsel (whose arguments on this point I accepted), the Defendant was free to frame its offer to settle on any terms and conditions as it wished. The authors of The Law of Contract in Singapore explain at p 118:

[57] Having not qualified its offer in express terms, the Defendant is now indirectly asking the court to imply a condition that the Defendant’s second offer to settle determined upon the death of the Plaintiff. Keeping in mind that the rationale of Order 22A is to encourage settlement rather than prolong it, the court should be extremely slow to imply terms into offers to settle which are otherwise clearly worded and unambiguous, as was in this case. This case serves as a reminder that the more expressly the terms and conditions are stated in an offer to settle, the lesser the need to rely on the doctrine of implied terms. However, as neither counsel had addressed me on the issue of implied terms, I make no findings on this issue; and by implication, the Defendant’s second offer to settle stands solely on its express terms.

[58] I shall deal with one final argument on this issue. The Defendant’s counsel cited the table (see above at [9]) sent together with the Defendant’s second offer to settle setting out the breakdown of each component used in arriving at the settlement figure of $435,000.00. It was argued that the table should be taken into account because it evinced components that would not have applied if the Plaintiff had passed away.

[59] Order 22A rule 1 requires all offers to settle to be in Form 33. This formality requirement was not satisfied because the table was sent separately from Form 33, and the Form 33 served on the Plaintiff did not make any reference to the table. Therefore, the table is irrelevant as it did not form part of the Defendant’s second offer to settle. In any event, even if the table formed part of the Defendant’s second offer to settle, the Plaintiff only had to agree with the final monetary figure and not with each component given in the breakdown. Even if the Plaintiff had disagreed with every component in the table, he could still have validly accepted the Defendant’s second offer to settle as long as he agreed with the final sum proposed.

[60] In the light of the reasons given above, I find that the Defendant’s second offer to settle was validly accepted by the Plaintiff when the 2 Acceptance was served on the Defendant on 31 August 2011.

[61] In the light of my findings above, the issue of the validity of the 3 Acceptance becomes irrelevant. The Defendant’s counsel submitted at length that, whatever the position the law was on the 1 and 2 Acceptances, the Plaintiff (i) had waived his right; (ii) was estopped; or (iii) was otherwise precluded from making the 3 Acceptance. However, the validity of all the acceptances made after the Plaintiff’s death on 29 August 2011 (ie the 2 and 3 Acceptances) would turn on whether the Defendant’s second offer to settle determined upon the Plaintiff’s death. Since I have already found that the offer did not determine upon the Plaintiff’s death (see above at [48] to [58]), and that the 2 Acceptance was valid, I do not need to deal with the 3 Acceptance separately. Even if the Defendant’s counsel had prevailed on the issues he had raised with respect to the 3 Acceptance, the 2 Acceptance was still an insurmountable hurdle for him.

[62] For the foregoing reasons, I confirm my decision and the orders that I made in chambers on 26 March 2012 stated at [22] above.