TMT Asia Limited v BHP Billiton Marketing AG (Singapore Branch) and another [2019] SGCA 60

Introduction

The appellant was the plaintiff and the respondents were the defendants in the action in the High Court. The respondents applied to strike out the appellant’s claim on the grounds that continued prosecution of the claim would be an abuse of process because (i) the respondents had made a settlement offer which would give the appellant all the reliefs it sought in the claim and (ii) the proceedings had been commenced for a collateral purpose. At the hearing of the respondents’ application to strike out, the High Court Judge (“the Judge”), instead of proceeding under O 18 r 19 of the Rules of Court (Cap 322, R 5, 2014 Rev Ed) (“ROC”), directed that pursuant to O 14 r 12 and/or O 33 r 2, a preliminary point or issue be decided first. That preliminary point mirrored the issue in the striking out application: ie, whether the appellant was entitled to continue with the action in the light of the settlement offer. The Judge answered the issue in the negative and struck out the appellant’s claim.

There were two key issues in the appeal. The first was whether the respondents were estopped from applying to strike out the appellant’s claim for being an abuse of process by an earlier decision of an assistant registrar (“the AR”) declining to strike out the appellant’s claim on those same grounds (“the res judicata issue”). The second was whether the Judge was correct in holding that the appellant’s continued prosecution of its claim in the light of the respondents’ offer to settle was an abuse of process (“the abuse of process issue”).

On 21 August 2019, we heard the matter and dismissed the appeal. We now give the reasons for our decision.

Background

The appellant, TMT Asia Limited (“TMTA”), is a shipping company. The respondents, BHP Billiton Marketing AG (Singapore Branch) and BHP Billiton Marketing Asia Pte Ltd (collectively, “BHPM”), are part of the BHP Billiton Group (“BHPB”), one of the world’s leading producers of iron ore. The parties were involved in trading forward freight agreements (“FFAs”), which are forward contracts on freight commonly used to hedge against market fluctuations and thereby manage freight price risk.

Sometime between September and November 2012, TMTA purchased various FFAs based on the Baltic Capesize Index Time Charter Basket Average 4 Routes (“BCI”). The purchases were made through brokers using multilateral trading facilities (“MTFs”) and were cleared on the Singapore Exchange. According to TMTA, BHPM manipulated freight prices for Capesize vessels by procuring contracts for fixtures of Capesize vessels in such quantities as to artificially inflate the freight rates reported on the BCI, thereby manipulating iron ore prices and causing TMTA to suffer loss. Among other things, TMTA claimed that BHPM was in breach of s 208(a) of the Securities and Futures Act (Cap 289, 2006 Rev Ed) (“SFA”), which prohibited manipulation of (or attempts to manipulate) the price of a “futures contract” in a “futures market”.

BHPM denied the claim and the loss. In particular, BHPM denied that the FFAs were “futures contract[s]” for the purposes of the SFA.

The procedural history leading up to this appeal is set out in the table below:

Decision of the High Court

As noted at [2] above, there were two main issues before the Judge: (i) whether the AR’s decision gave rise to an issue estoppel precluding litigation of the abuse of process issue; and (ii) if not, whether TMTA’s continuance of its claim was an abuse of the court’s process in light of BHPM’s Offer.

On the res judicata issue, the Judge held that the AR’s decision did not give rise to any issue estoppel. He noted that four cumulative elements must be satisfied before an issue estoppel arises (Lee Tat Development Pte Ltd v Management Corporation of Strata Title Plan No 301 [2005] 3 SLR(R) 157 (“Lee Tat”) (at [14]–[15])): (a) there must be a final and conclusive judgment on the merits; (b) the judgment must be of a court of competent jurisdiction; (c) there must be identity between the parties; and (d) there must be identity of subject matter. The Judge found limbs (b)–(d) met but not limb (a). He considered that the AR’s decision was not final and conclusive, at least not in relation to the preliminary point before him because the AR’s decision was in respect of an application to strike out under O 18 r 19 of the ROC whereas the preliminary issue before him was to be determined under O 14 r 12 and/or O 33 r 2, which have a different threshold from O 18 r 19. The AR did not decide that there was no abuse of process but rather that the point was arguable and hence did not merit a striking out. Therefore, the AR’s decision was not final and conclusive on the abuse of process issue which remained open for the Judge to determine pursuant to O 14 r 12 and/or O 33 r 2 of the ROC (GD at [31]).

The Judge also noted that there were new developments in the legislative scheme of the SFA since the AR’s decision. In particular, the provisions of the SFA which were engaged in Suit 580 have been amended substantially so that the significance of the action as a test case for the interpretation of those previous provisions was diminished. The Judge observed that the interpretation of those previous provisions remained relevant to causes of action that arose before the amendments came into operation as the amendments would not have retrospective effect (GD at [26] and [29]).

On the abuse of process issue, the Judge held that the continuance of TMTA’s claim would be an abuse of the court’s process because it would serve no useful purpose in the light of the Offer, under which TMTA would receive all the reliefs it was seeking in its claim, applying the decision of the English Court of Appeal in Balk v Otkritie International Investment Management Ltd and others [2017] EWCA Civ 134 (“Balk”). In Balk, the claimant had obtained an order against Balk for the payment of about US$37m in damages. In separate proceedings, Balk claimed that certain deductions should be made from the sum awarded to the claimant to account for recoveries which the claimant had already made. Balk was unsuccessful at first instance but obtained leave to appeal. By the time the appeal was heard, the claimant had made an open offer to give Balk credit for the sums that the appeal was concerned with. Balk did not respond substantively to the offer. The English Court of Appeal dismissed the appeal in light of the offer. Balk should have accepted the offer as the claimant was ready to concede all it had asked for and more. In those circumstances, a hearing on the merits would have been an exercise in futility and would have run counter to all the modern principles of case management which include encouraging the settlement of disputes and making the best use of scarce judicial resources. The court therefore found that Balk was abusing the process of the court by her refusal to engage with the claimant’s open offer and insisting on proceeding with the appeal (GD at [46]–[49]).

In the present appeal, the relevant terms of the Offer were as follows:

The Judge rejected all five of TMTA’s reasons for refusing to accept the Offer (GD at [50]–[65]). On appeal, the reasons were reduced to three. TMTA’s reasons and the Judge’s decision on each are set out below:

(a) First, the Judge rejected TMTA’s contention that it was entitled to a finding on the liability of BHPM (since the Offer was made without admission of liability). A finding of liability was not the relief sought by TMTA. It was the basis on which TMTA was seeking relief in the sum of US$81,500 (GD at [51]–[54]).

(b) Second, the Judge rejected TMTA’s contention that the Offer had, on its own terms, expired on 1 February 2016; BHPM had in subsequent affidavits stated that the offer remained open for acceptance and it was clear that TMTA did not intend to accept it (GD at [55]–[57]).

(c) Third, the Judge rejected TMTA’s contention that it would have been unreasonable to have expected TMTA to accept an Offer that remained subject to contract. The Judge was of the view that this was a mere excuse as KW could have asked R&T to remove the requirement for a formal contract if indeed TMTA was genuine about accepting the offer (GD at [58]–[60]).

The parties’ cases

Appellant’s case

TMTA’s case on appeal was that (a) the AR’s decision that there was no abuse of process warranting a striking out was res judicata and, in any case, (b) it was not an abuse of process for TMTA to continue with its claim without accepting the Offer.

On the res judicata issue, TMTA submitted that the AR’s decision was final and conclusive on the issue of whether there had been an abuse of process warranting a striking out (ie, limb (a) of Lee Tat). There was no real distinction between the threshold for striking out under O 18 r 19 (considered by the AR) and under O 14 r 12 and/or O 33 r 2 read with O 33 r 5 of the ROC (considered by the Judge). TMTA also submitted that there was a complete identity of subject matter (ie, limb (d) of Lee Tat) as the same arguments that BHPM raised in relation to the effect of the Offer had all been raised before the AR for the purpose of arguing that there had been an abuse of process. Having considered all of those arguments, the AR decided that there was no abuse of process and BHPM could have but did not appeal against the AR’s decision. The parties were therefore estopped from re-opening the issue of abuse of process and the Judge was wrong to have done so through the backdoor using O 14 r 12 and/or O 33 r 2.

Respondents’ case

BHPM submitted that the appeal should be dismissed because: (a) the AR’s decision did not create any issue estoppel and (b) TMTA’s refusal to engage with and accept the Offer made the continuation of proceedings an abuse of process.

On the res judicata issue, BHPM echoed the Judge’s finding that limb (a) of Lee Tat (final and conclusive) was not made out. It argued further that limb (d) (identity of subject matter) was also not made out. There was a marked difference in the issues before the AR and the Judge. The issue before the AR was whether it was so plain and obvious that TMTA’s claim was an abuse of process that it warranted a striking out, whereas the Judge was concerned simply with whether TMTA’s claim was an abuse of process. Further, there could be no res judicata where there had been a material change in circumstances and the amendments to the SFA were such a material change in that they diminished the public importance of the issues raised.

Issues to be determined

It should be clear from the foregoing that two key issues fall for determination:

(a) The res judicata issue: Whether the abuse of process issue was res judicata as a result of the AR’s decision.

(b) The abuse of process issue: Whether the TMTA’s continuation of its action was an abuse of the court’s process in the light of the Offer.

The res judicata issue

Limb (a) – final and conclusive

It was undisputed that the first striking out application (which was eventually dismissed on appeal by Prakash J) did not give rise to any issue estoppel because the Offer had not yet been made at that time. It was the second striking out application (filed after the Offer was made) which TMTA relied on for issue estoppel as this application was dismissed by the AR and BHPM did not appeal.

As mentioned, the Judge’s approach was to direct that the abuse of process issue be framed as a preliminary point for determination pursuant to O 14 r 12 and/or O 33 r 2 of the ROC. The Judge then held that continuance of TMTA’s claim would be an abuse of process and struck out the claim. The Judge considered that the AR’s decision did not preclude his determination of the abuse of process issue (now framed as a preliminary point) because the thresholds for determination under O 18 r 19 and O 14 r 12 and/or O 33 r 2 were different. He was of the view that the AR only decided, pursuant to O 18 r 19, that this was not a plain and obvious case of abuse of process which warranted a striking out, not that there was no abuse of process.

We respectfully disagree. The question before the AR and the preliminary point before the Judge entailed essentially the same inquiry, which was whether continuance of TMTA’s action would be an abuse of the court’s process. In our view, there is no difference in the threshold applicable for a finding of abuse of process under O 18 r 19 and a preliminary determination of that same issue made pursuant to O 14 r 12 and/or O 33 r 2 of the ROC. When a court strikes out (or declines to strike out) an action for abuse of process under O 18 r 19, that is a final and conclusive finding on the issue of abuse of process. The threshold for striking out is that the facts disclose a “plain and obvious” case of abuse of process. This same threshold applies whether the issue of abuse of process is decided as a preliminary point under O 14 r 12 and/or O 33 r 2 or determined in an application to strike out under O 18 r 19 of the ROC. In our view, the Judge ought not to have invited BHPM to file an application under O 14 r 12 or under O 33 r 2 and should have dealt with BHPM’s application under O 18 r 19 instead.

We therefore held that the AR’s decision (under O 18 r 19) that TMTA’s continuation of the action was not an abuse of process was a final and conclusive determination in respect of the abuse of process issue as there was no appeal against that decision. Limb (a) of Lee Tat was therefore made out.

Limb (d) – identity of subject matter

However, we were of the view that no issue estoppel arose because limb (d) of Lee Tat, that there be identity of subject matter, was not satisfied. The general principle in respect of this limb is that there will not be identity of subject matter if the prior decision cannot be said to have traversed the same ground as the subsequent proceeding owing to a change in the facts and circumstances which gave rise to the earlier decision (Goh Nellie v Goh Lian Teck and others [2007] 1 SLR(R) 453 at [34]).

The key difference between the situations that existed at the time of the second and the third striking out applications respectively was the fact that amendments were made to the SFA some seven months after the AR’s decision in the second striking out application. With these amendments, s 208 of the SFA was repealed and replaced by s 201B, thereby removing the terms “futures contract” and “futures market” and replacing them with new terms like “derivatives contract” and “organised market” with their own definitions. The effect of these amendments was that the issues of whether an FFA is a “futures contract” and whether the MTFs they are traded on are a “futures market” were no longer relevant to causes of action arising after the amendments came into operation.

Whether or not the proceedings raised issues of public interest (ie, the questions of interpretation of the SFA) was clearly a relevant and material factor in the AR’s analysis of the abuse of process issue. In her brief oral grounds, the AR acknowledged that BHPM had offered to settle the claim in full but considered this overshadowed by the fact that the case would raise issues of public interest or important questions of law:

Because the facts and circumstances forming the backdrop to the abuse of process issue were changed materially by the SFA amendments, it could not be said that the subject matter of the dispute before the AR was identical to that which was before the Judge. Accordingly, in our view, the abuse of process issue was not res judicata.

The abuse of process issue

Against this, TMTA argued that the continuation of its claim was not an abuse of process because of the important issues of public interest which it raised. However, this submission was premised on the expectation that the court’s determination as to whether FFAs are “futures contract[s]” and whether the MTFs on which they were traded are “futures market[s]” would be of interest beyond the parties to the present dispute. This consideration effectively disappeared when the SFA was amended and those terms were replaced with new statutory terms, the “derivatives contract” and the “organised market”.

At the hearing before us, counsel for TMTA, Ms Deborah Barker SC, argued that the present case would still be of interest to potential litigants with causes of action that arose before the amendments to the SFA came into operation on 8 October 2018. However, Ms Barker was unable to point to any potential or pending litigation which involves the repealed statutory terms.

Ms Barker also suggested that, despite the change in terminology resulting from the SFA amendments, the court’s interpretation of the terms “futures contract” and “futures market” might nonetheless be of guidance in the interpretation of the new statutory terms. We did not see why this should be so especially when the issues raised in Suit 580 do not involve a comparison of the pre- and post-amendment statutory regimes. Any determination made in Suit 580 on the scope of the terms in the pre-amendment SFA would therefore be unlikely to be authoritative or of assistance to cases which are subject to the post-amendment regime.

After the Offer was made, it was clear that the primary benefit of proceeding to trial could no longer be that of TMTA obtaining compensatory relief. That relief could have been obtained by TMTA simply by accepting the Offer. It became incumbent on TMTA to point to other reasons why it should be allowed to continue with its action despite the Offer.

TMTA attempted to show some other reason why it was entitled to continue with its action. With a trial, it could obtain vindicatory relief since the Offer was made without any admission as to liability. The Judge rejected this submission and held that a finding of liability was not an independent relief sought by TMTA but was instead the basis on which compensatory relief was sought (GD at [53]).

In our view, seeking vindicatory relief in the form of a formal finding of liability or a declaration of non-liability, in the face of an open offer to agree to all reliefs sought in an action without any admission of liability, may be justified in only very special circumstances. For example, let us consider a claim for damages resulting from a very grave defamation, where the defendant pleads justification but subsequently makes an offer to pay damages while refusing to withdraw the pleaded justification. In such a situation, if the plaintiff could show that he may suffer serious practical consequences, for instance, that the defamation would affect his professional status, it is arguable that the plaintiff should be allowed to continue with the action in order to vindicate his reputation completely at trial and remove all the stains resulting from the defamation. TMTA’s action certainly did not come within this sort of very special circumstances as it was essentially a commercial claim. It should therefore not be permitted to carry on with its action for the professed reason of obtaining vindication.

Conclusion

We therefore dismissed TMTA’s appeal although for reasons which differ from those given by the Judge. In summary:

(a) The issue of abuse of process was not res judicata. Although the AR’s decision was a final and conclusive decision on the issue of abuse of process, it could not be said that there was complete identity of subject matter because the facts and circumstances which prevailed at the time of the hearing before the AR had changed materially by the time the matter came before the Judge. In particular, the statutory provisions in the SFA on which the legal issues in the trial were based had been repealed, thereby diminishing significantly or even totally the public interest in proceeding with the trial as a test case for those issues.

(b) TMTA’s continuation of its action in the light of BHPM’s Offer was an abuse of the court’s process. There was no practical benefit to be gained from proceeding to trial, with the attendant time needed and the costs to be incurred, given that the Offer would have given TMTA all the compensatory reliefs that it sought in the action.

(a) of the hearing before the Judge fixed at $10,000 inclusive of disbursements;

(b) of the application for leave to appeal (because of the amount in dispute in the action) fixed at $5,000 inclusive of disbursements;

(c) of the appeal fixed at $30,000 inclusive of disbursements.

In respect of the costs of Suit 580, at the hearing before the Judge on 29 August 2018, BHPM gave an undertaking that if TMTA accepted the Offer, the first respondent would implement the settlement by setting off the sums stated in para 5(a) of the Offer from the amount awarded in the English Judgment. We therefore ordered that the costs of Suit 580 be taxed or agreed.