Court of Appeal · Decided 29 November 2013

EFT Holdings, Inc and another v Marinteknik Shipbuilders (S) Pte Ltd and another

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[2013] SGCA 64Case no. Civil Appeal No 3 of 2013 and Summons No 3558 of 2013

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Laws this judgment relies on

Evidence Act 1893

Grounds of decision

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Sundaresh Menon CJ (delivering the judgment of the court):
[1] This is an appeal against the decision of the High Court Judge (“the Judge”) in Suit No 571 of 2010 (“the Suit”) dismissing the appellants’ claim against the respondents in respect of an alleged conspiracy by unlawful means. The Judge’s decision is reported as EFT Holdings, Inc and another v Marinteknik Shipbuilders (S) Pte Ltd and others [2013] 1 SLR 1254 (“the Judgment”). The present appeal raises some important issues as to the requisite mental element that must be established to sustain a claim for conspiracy by unlawful means; and on the principles and practice of pleading and proof of foreign law, in particular, in the context of a tort with foreign elements. At the end of the hearing, we reserved our decision and invited the parties to make further submissions on the issue of the mental element that must be proved for the tort of unlawful means conspiracy. We address all these issues, as well as the appeal against the Judge’s factual findings, in this judgment.
Background to the appeal
Parties to the dispute
[2] The first respondent, Marinteknik Shipbuilders (S) Pte Ltd (“Marinteknik”) is a company incorporated in Singapore. Marinteknik is in the business of building and repairing ships, tankers and other ocean-going vessels. One David Liang and his family own Marinteknik. The second respondent, Priscilla Lim (“Ms Lim”), has been a director of Marinteknik since 8 January 1993.
[3] The first appellant (“1 Appellant”) is a company incorporated in the United States of America. On 30 June 2008, the 1 Appellant agreed to invest US$19.193m to acquire shares in Excalibur International Marine Corporation (“EIMC”), a company that had been incorporated in Taiwan on 29 June 2006. The second appellant (“2 Appellant”) is a subsidiary of the 1 Appellant and was incorporated in Taiwan on 6 November 2008 to hold the acquired shares in EIMC. EIMC is a ferry operator that had been granted a licence to operate a ferry service across the Straits of Taiwan.
[4] There were two other parties to the Suit. Mr Hsiao Zhong-Xing (“Mr Hsiao”), who was the third defendant in the Suit, was a director of EIMC. The fourth defendant in the Suit, Mr Lu Tso-Chun (“Mr Lu”), was thought to be a shareholder of EIMC pursuant to an agreement he entered into with EIMC on 11 July 2006 (“the Investment Agreement”).
[5] In the Suit, which was filed on 2 August 2010, the appellants claimed that the respondents, Mr Hsiao and Mr Lu had together engaged in a conspiracy by unlawful means to artificially inflate EIMC’s paid-up capital by creating false documents which resulted in EIMC’s equity and assets being overstated in its financial statements for the financial year ended 31 December 2007. The appellants claimed that Mr Lu never actually paid for the shares allotted to him in EIMC, contrary to what was stated in a number of documents. The overstated paid-up capital led the appellants to believe that EIMC was financially robust and induced them to invest in EIMC. The appellants sued for damages or a refund of the invested sum of US$19.193m. Mr Hsiao and Mr Lu did not enter an appearance to the Suit, and default judgment was entered against them.
The transaction between the respondents and EIMC for two catamarans
[6] The facts giving rise to the dispute date back to November 2005 soon after Marinteknik commenced building two catamarans, Hull 189 and Hull 190 (“the Hulls”), with a view to selling them. It was apparently a seller’s market in the shipbuilding industry at that time and Marinteknik received many enquiries concerning the possible purchase of the Hulls. EIMC was among those that expressed interest in the Hulls. Mr Bill Duan (“Mr Duan”) of MaxMart Shipping & Trading Co, Ltd, who Ms Lim knew as EIMC’s shipbroker in Taiwan, introduced Mr Hsiao to Ms Lim. Mr Lu also visited Marinteknik’s shipyard in Singapore with Mr Duan and Mr Hsiao in November 2005 to discuss the purchase of the Hulls. Ms Lim was keen to sell the Hulls to EIMC to “give Marinteknik-built catamarans an opening into the cross-strait trade between Mainland China and Taiwan”. At that time, Mr Lu was not yet (even ostensibly) a shareholder of EIMC though the impression conveyed was that he was somehow connected with it.
[7] On 15 November 2005, Marinteknik and Mr Lu entered into two contracts for the sale and purchase of the Hulls (“the 2005 Shipbuilding Contracts”). The purchase price for each hull was originally US$25m, but this was subsequently increased to US$27.5m on 15 June 2006 due to some modification work.
[8] According to Ms Lim, Mr Lu told her in late April or early May 2006 that he wanted the 2005 Shipbuilding Contracts to be novated to EIMC. Mr Duan subsequently contacted her in early May 2006 to confirm that EIMC would “take over” the 2005 Shipbuilding Contracts from Mr Lu and that Mr Hsiao was in the process of securing bank financing for EIMC for this purpose. Between May 2006 and early July 2006, EIMC kept Ms Lim informed of its efforts to secure bank financing for the Hulls.
[9] In early July 2006, Ms Lim, evidently assured that EIMC had obtained bank financing for the Hulls, travelled to Taiwan in order to finalise matters in relation to EIMC’s purchase of the Hulls. During her visit to Taiwan from 11 to 15 July 2006, Mr Duan and Mr Hsiao introduced Ms Lim to Mr Leo Wang from Union Insurance Company (Taiwan) (“Union Insurance”) and representatives from several other banks. These banks included Industrial Bank of Taiwan, Fuhwa Bank (Taiwan) (“Fuhwa Bank”), and Taishin International Bank (Taiwan) (“Taishin Bank”). The banks appeared keen to extend loans to EIMC in the light of the opening of direct links in transport and trade between Taiwan and China, and this further assured Ms Lim that EIMC would be able to meet its payment obligations under the 2005 Shipbuilding Contracts.
[10] In the meantime, EIMC and Mr Lu signed the Investment Agreement dated 11 July 2006 in Taiwan. This provided, among other things, that Mr Lu would be allotted 48,750,000 ordinary shares in EIMC, and in return, Mr Lu would novate the 2005 Shipbuilding Contracts to EIMC. It was implicit in cl 2 of the Investment Agreement that Mr Lu had paid US$15m to Marinteknik for the Hulls and that the parties had agreed to enter into a tripartite agreement with Marinteknik (“the Tripartite Agreement”) under which EIMC would assume Mr Lu’s remaining debt of US$40m to Marinteknik. It is undisputed that Mr Lu had not in fact paid US$15m to Marinteknik when the Tripartite Agreement was signed. Marinteknik had in fact issued a letter dated 30 August 2006 rescinding the 2005 Shipbuilding Contracts as EIMC had yet to meet its payment obligations despite repeated promises that it would do so.
[11] The Hulls were completed before 8 December 2006.
[12] Between 30 August 2006 (when Marinteknik issued its letter rescinding the 2005 Shipbuilding Contracts) and 9 April 2007, Mr Hsiao repeatedly urged Ms Lim to give EIMC more time to pay for the Hulls. Ms Lim testified that although the 2005 Shipbuilding Contracts had been rescinded by the letter of 30 August 2006, Marintekink “kept the [2005 Shipbuilding Contracts] alive” at Mr Hsiao’s request. As a matter of law, this was a contradiction in terms but we understand it to mean that Marinteknik continued to hope that a resolution could be found on the basis of the terms on which the 2005 Shipbuilding Contracts had been entered into. Ms Lim explained that she was keen for the Hulls to be deployed in the cross-strait route between China and Taiwan, and she had been told that EIMC had the exclusive licence to operate the ferry service there. Ms Lim also referred Mr Hsiao to one of her business contacts, Mr William Kim of Wooribank, Singapore (“Wooribank”), for his assistance in obtaining bank financing. EIMC kept Ms Lim informed of its attempts to secure bank financing from Wooribank, Union Insurance and other banks in Taiwan. However, when payment for the Hulls had still not been made by 9 April 2007, Marinteknik sent a letter of that date to EIMC stating that the 2005 Shipbuilding Contracts had been “officially rescinded”.
[13] According to Ms Lim, Ms Hsiao at this time asked for yet another chance for EIMC to comply with its payment obligations under the 2005 Shipbuilding Contracts. Ms Lim was given to understand that EIMC needed to show that Mr Lu had paid US$15m for the Hulls and that EIMC had acquired title to the Hulls. This, she was told, would “enable Taiwanese banks to refinance the purchase price of [the Hulls]” [emphasis added]. Between 9 and 24 April 2007, Ms Lim claimed that she was told by Mr Hsiao and by various banks (including The Chinese Bank (Taiwan), Wooribank, Chiao Tung Bank (Taiwan), Industrial Bank of Taiwan and Fuhwa Bank) that the banks would provide a letter of credit or a telegraphic transfer of monies for the Hulls on EIMC producing documentary evidence that the Hulls had been paid for and that it had title to the Hulls. Once such evidence was produced, the banks would register a mortgage over the Hulls and release payment of the money to Marinteknik. According to Ms Lim, once the payment from the banks was made to the tune of US$40m, the Hulls would be delivered against EIMC paying the remaining sum of US$15m.
[14] Mr Hsiao apparently told Ms Lim that EIMC had to show evidence of title to the Hulls in the form of “affidavits”. On 24 April 2007 at Marinteknik’s shipyard in Singapore, Marinteknik, EIMC and Mr Lu signed two “affidavits” in relation to the 2005 Shipbuilding Contracts (“the Transfer Affidavits”). The Transfer Affidavits stated that Mr Lu and EIMC had paid for the Hulls in full and in consideration of the payment, “100 percent of shares” in the Hulls were transferred to Mr Lu. The Transfer Affidavits also stated that Mr Lu had paid US$7.5m for each hull, and EIMC had paid US$20m for each hull. Ms Lim said that she agreed to assist EIMC because Mr Hsiao told her that he would provide evidence by 24 April 2007 that monies would be remitted for the Hulls. In any case, the Transfer Affidavits would not in fact transfer ownership of the Hulls to EIMC.
[15] When Ms Lim did not receive evidence of the remittance of monies by the close of business on 24 April 2007, she called Mr Hsiao, wanting it “to be placed on record” that EIMC had not paid for the Hulls. On Mr Hsiao’s suggestion, Marinteknik, EIMC and Mr Lu agreed to enter into two addenda also dated 24 April 2007 (“the Transfer Affidavits Addenda”). The Transfer Affidavits Addenda stipulated, among other things, that EIMC agreed that Mr Lu had never paid Marinteknik US$7.5m for the Hulls and that title to the Hulls had not been transferred to EIMC. The Transfer Affidavits Addenda also provided that the Transfer Affidavits would become null and void if payment for the Hulls was not made by 24 July 2007.
[16] On 6 July 2007, Mr Hsiao sent Ms Lim two letters. The first was a letter dated 5 July 2007 from the Industrial Bank of Taiwan (“IBT”) addressed to Marinteknik in relation to the Hulls. IBT stated that they were “progressing into the final stages of the conditions precedent to the issuance of the letters of credit”. The second letter was from EIMC to Marinteknik also dated 5 July 2007, and also in relation to the Hulls. This letter stated that EIMC “now [had] exclusive licensing support from the TaiChung Harbor Bureau and support from the wharf and ticketing offices, cargo and touring groups”. It also stated that EIMC had increased its paid-up capital to US$15m and “our book recognize the paid-up capital to increase around USD25 million totally very soon”. EIMC also stated in the same letter that it was “working very hard with our Bankers to fulfil the issuance of the letters of credit which we expect to receive very soon”. Mr Hsiao also expressed that that EIMC “hope[d] to sign many more vessels with [Marinteknik]”.
[17] On 7 July 2007, Ms Lim wrote to Mr Hsiao noting that EIMC had provided documentary evidence of its attempts to obtain financing despite the 2005 Shipbuilding Contracts having been “officially cancelled”. Ms Lim also stated as follows:
[18] On 13 July 2007, Marinteknik signed a “Letter of Undertaking” under which it agreed to assist EIMC to sell the Hulls to any third party at 75% of the “original price sold to [EIMC]” in the event that EIMC was not able to fulfil the conditions of a loan obtained from its bankers. Under the terms of the “Letter of Undertaking”, if Marinteknik was able to sell the Hulls at a price higher than 75% of the price that it had transacted with EIMC, it could keep the difference. Marinteknik would also receive a fee of “two percent (2%) from the Bankers based on the 75% original purchase price by the Buyer/Owner”. Ms Lim testified that Fuhwa Bank and Taishin Bank required Marinteknik to execute this as they wanted the assurance that Marinteknik would help them to sell the Hulls should EIMC default on its bank loans.
[19] On 15 January 2008, EIMC still had not paid for the Hulls, and Marinteknik sold the Hulls to a Hong Kong company, Giant Dragon Sea Transport Company Limited, at US$30m for each hull.
The Ocean Lala, the Hull 189A and the Hull 190A
[20] In April 2008, Mr Hsiao told Ms Lim that he wanted to purchase a secondhand catamaran for its ferry service. He approached Ms Lim with a view to purchase the Ocean Lala (then called the Nixe 2), a Marinteknik-built vessel which was then trading in Spain. Marinteknik had built this vessel and sold it to a Spanish ferry operator in April 2004. The registered owner of the Nixe 2 in April 2008 was Eurolineas Maritimas SA (“Eurolineas”).
[21] On 17 June 2008, EIMC entered into a memorandum of agreement (“MOA”) with Ezone Capital Limited (“Ezone”), a company incorporated in the British Virgin Islands, to purchase the Nixe 2 for €16m. Ms Lim was a director and shareholder of Ezone. Initially, Mr Hsiao wanted Marinteknik to approach Eurolineas in relation to the purchase of the Nixe 2. However, Marinteknik did not wish to be involved in this transaction because it was not in the business of purchasing secondhand vessels. At the same time, Eurolineas was not comfortable dealing with EIMC directly as EIMC was a new entrant to the shipping industry with no track record. It was thus agreed that Ezone would purchase the Nixe 2 from Eurolineas and sell it to EIMC at a profit.
[22] EIMC apparently remained keen to purchase two vessels from Marinteknik. Mr Hsiao told Ms Lim that EIMC could lose its ferry licence unless it could show that it had a contract to buy vessels from Marinteknik. The contract had to bear the same hull numbers and specifications as the Hulls because EIMC had used the specifications and the numbers of the Hulls to apply for its ferry licence.
[23] Marinteknik and EIMC eventually agreed to execute two documents titled “Memorandum of Understanding” dated 30 April 2008 (“April MOUs”) for Hull 189A and Hull 190A. The April MOUs stated that the price of Hull 189A and Hull 190A was €26m each, and that the sum of US$7.5m paid as down payment for each of the Hulls would be “transferred” to pay for Hull 189A and Hull 190A. Mr Hsiao apparently told Ms Lim that if EIMC could tender evidence that US$15m had been paid for these vessels, the bank would provide a “letter of credit or transfer” for the full purchase price. On 15 May 2008, Mr Hsiao told Ms Lim that “the funds are ready”, and the April MOUs were executed and notarised on the same day. However, the funds did not in fact come in that day. Marinteknik, EIMC and Mr Lu therefore executed two addenda also dated 30 April 2008 (“April MOUs Addenda”) to state that the US$7.5m was never paid to Marinteknik and that the April MOUs would be treated as “null and void” if the first instalment for Hull 189A and Hull 190A was not paid by 9 June 2008.
[24] On 9 June 2008, Ms Lim wrote to EIMC stating that it would be rescinding the contracts for the building of Hull 189A and Hull 190A because the first instalment payment for these two vessels had not been made by that date.
Events leading to the appellants’ investment in EIMC
[25] On 20 June 2008, Mr Jack Jie Qin (“Mr Qin”), the 1st Appellant’s chairman and chief executive officer, visited Taiwan. During this trip, acquaintances of Mr Jen-Ho Chiao (“Mr Chiao”), a director of EIMC, told Mr Qin of a business opportunity arising from the opening of trade links between Taiwan and China. They asked if he was interested to meet Mr Chiao, an influential man and a political figure. He met Mr Chiao for the first time on 23 June 2008. On 24 June 2008, Mr Qin and one Ms Phoebe Liu (Mr Qin’s friend) met Mr Chiao and Mr Hsiao at EIMC’s office in Taiwan. According to Mr Qin, he was shown the following documents during a business presentation on 24 June 2008 (“the Documents”):
(a) the 2005 Shipbuilding Contracts;
(b) the Investment Agreement;
(c) the Tripartite Agreement;
(d) the Transfer Affidavits;
(e) Lloyd’s Register Certificate Nos SNG 0401068 and SNG 0401070 dated 25 August 2006 which certified that the Hulls were 90% complete as at that date;
(f) two reports from Richie & Bisset (Far East) Pte Ltd dated 12 December 2006 on the valuation of the Hulls; and
(g) EIMC’s audited financial statements for the financial years ended 31 December 2006 and 31 December 2007 (which were certified on 31 March 2008) (“the 2006/2007 Financial Statements”).
[26] According to Mr Qin, Mr Chiao told him that EIMC had signed the 2005 Shipbuilding Contracts with Marinteknik, a well-known shipbuilding company. Mr Chiao also told him that the Hulls had been sold and the proceeds of sale were used to purchase another two vessels from Marinteknik. These vessels would be completed in two to three years. He was told that without the investment, EIMC could lose its ferry licence, and that Ms Lim had recommended that EIMC purchase the Nixe 2. He was also told that Ms Lim had prepared the Documents except for the Investment Agreement. Mr Qin noted and queried a liability of NTD 1.3b recorded as “payable” in the 2006/2007 Financial Statements. Mr Chiao told him that this liability was due to loans obtained by EIMC in 2007 to finance the purchase of the Hulls. Mr Qin assumed that this liability had been discharged and that “new liabilities were incurred for the purchase of the two new vessels”. He claimed that he was persuaded that EIMC was a financially strong and robust company given that its assets were more than its liabilities and decided to invest in EIMC.
[27] The investment was effected in the following manner: On 30 June 2008, the 1 Appellant entered into a subscription agreement (“Subscription Agreement”) with EIMC, agreeing to invest US$19.193m for 58,800,000 shares in EIMC. We pause to note that the Subscription Agreement appeared to have been hurriedly prepared and entered into so that the Nixe 2 could be purchased. Pending the incorporation of the 2 Appellant, the 1 Appellant advanced US$19.93m to EIMC under a loan agreement (“the Loan Agreement”). After the 2 Appellant was incorporated, the 1 Appellant transferred a further sum of another US$19.93m to the 2 Appellant on or about 22 October 2008, with which the latter paid EIMC for its shares. EIMC then used this money to repay the 1 Appellant for the amount it had earlier received under the Loan Agreement.
[28] As for the purchase of the Nixe 2, EIMC paid Ezone €1.6m on 7 July 2008 and €12.4m on 30 July 2008. The bulk of the purchase price for the Nixe 2 was obtained from the loan provided to EIMC by the 1 Appellant. After receiving payment for the Nixe 2 from EIMC, Ezone entered into a Memorandum of Agreement with Eurolineas on 31 July 2008 to purchase the Nixe 2 for €12.95m. The Nixe 2 was delivered to EIMC on 19 August 2008, with €2m of the purchase price still outstanding to Ezone. The Nixe 2 was eventually renamed the Ocean Lala.
[29] The 1 Appellant took over the management of EIMC in November 2008. It appeared that the cross-strait ferry services started in June 2009. However, after one year of operation, the Ocean Lala sustained severe weather damage and was declared a constructive total loss.
[30] On 26 November 2009, the appellants filed Originating Summons No 1359 of 2009 for pre-action discovery against the respondents, and subsequently commenced the Suit claiming damages for unlawful means conspiracy, dishonest assistance and knowing receipt. By the time of the trial before the Judge, the appellants had decided to pursue only the claim for conspiracy by unlawful means.
[31] We should also mention that on 16 June 2010, Ezone commenced arbitral proceedings against EIMC in London claiming the balance owed by EIMC for the Ocean Lala. EIMC brought a counterclaim against Ezone, alleging that the Ocean Lala was not fit for its intended purpose. As at 1 March 2012, the arbitral tribunal had not rendered its award, and the parties did not provide further information as to the outcome of the arbitration.
The decision below
[32] The Judge dismissed the Suit on the basis that the appellants had failed to plead and prove Taiwan law in respect of its claim for conspiracy by unlawful means. Although the parties did not plead or raise any issue of Taiwan law in relation to the claim for unlawful means conspiracy, the Judge thought that the parties had proceeded on the incorrect basis that the laws of Taiwan and Singapore on unlawful means conspiracy should be treated as identical. On 22 November 2012, after closing submissions had been tendered, the Judge invited the parties to consider whether the appellants were required to plead and prove the actionability of the claim for unlawful means conspiracy under Taiwan law. The appellants’ counsel in the court below, Mr Hee Theng Fong (“Mr Hee”), submitted that Singapore was the place of the tort and that there was no need to plead and prove Taiwan law.
[33] The Judge disagreed with Mr Hee. She held that Taiwan was the place of the tort (the Judgment at [77]), and that the double actionability rule required the appellants to show that the wrongs were actionable under the laws of both Taiwan (the place where the tort was committed) and Singapore (the forum). She also held that the presumption that the foreign law should be treated as being the same as Singapore law would not avail in this case. The Judge held that the laws of Taiwan were likely to be different from Singapore, as Taiwan is a civil law jurisdiction and the court could take notice of that fact (the Judgment at [85]). Since the appellants had failed to prove actionability of their claim under Taiwan law, the Suit was dismissed.
[34] However, for completeness, the Judge also considered the claim for unlawful means conspiracy and found that it was not made out. In this regard:
(a) The Judge held that the mental element for the tort of unlawful means conspiracy is actual intention or reckless indifference. A defendant’s foresight that his or her conduct might or will in all probability damage the plaintiff is not sufficient (the Judgment at [67]).
(b) The appellants could not show that the respondents were party to a combination to mislead the appellants into investing in EIMC (the Judgment at [125]). There was no evidence that Mr Chiao’s and Mr Hsiao’s representations were made and that the Documents were shown to Mr Qin on behalf of the respondents or with their knowledge. The fact that the Transfer Affidavits Addenda were withheld from Mr Qin spoke of deceit and fraud on the part of Mr Hsiao and EIMC rather than the respondents (the Judgment at [121]–[122]). Even if the respondents knew that the Documents would be shown to Mr Qin and did not stop Mr Chiao or Mr Hsiao from doing so or had reckless disregard for whether the Documents would be used to defraud potential investors, this was not sufficient to show that they were party to the conspiracy (the Judgment at [125]–[126]).
(c) Between 24 April 2007 and 24 July 2007, at least as far as the respondents were concerned, the plan hatched with EIMC, Mr Hsiao and Mr Lu had been to obtain money from the banks in Taiwan by deception with a view to enabling EIMC to purchase the Hulls. The Transfer Affidavits had been designed to “show a false picture of Mr Lu’s interests in [the Hulls]” to enable EIMC to issue paid-up shares in Mr Lu’s name and then to obtain loan facilities by deception (the Judgment at [138]).
(d) The Judge rejected the appellants’ argument that the respondents continued to perpetuate a “fraud” well into 2008 as evidenced by the April MOUs. The April MOUs and the April MOUs Addenda were signed before Mr Qin had met or even heard of Mr Chiao and Mr Hsiao and well before Mr Qin visited Taiwan on 20 June 2008 (the Judgment at [142]). There was no evidence that the respondents knew that a potential investor who would first appear on the scene in June 2008 would come to rely on the Documents which had been issued in connection with a different transaction (the Judgment at [153]).
(e) It followed from the failure to prove that the respondents were party to a conspiracy to cheat the appellants into investing in EIMC that the element of intention for a claim for unlawful means conspiracy was not satisfied.
[35] We should also mention that there were related proceedings taken out in Taiwan as described in the Judgment (at [12]–[18]). The Judge did not find any of these proceedings relevant to the issues and as they did not arise in this appeal, we need say no more about them.
The parties’ cases in this appeal
[36] In the present appeal, the appellants submit that it is for the respondents to plead and prove that the claim for unlawful means conspiracy was not actionable under Taiwan law. As all parties proceeded on the assumption that the laws in Taiwan and Singapore on unlawful means conspiracy were the same, the Judge should not have found for the appellants on this issue. The appellants further submitted that an agreement between the respondents, Mr Lu and Mr Hsiao and the requisite intention to defraud the appellants could be inferred from the contemporaneous documentary evidence. In oral submissions, the appellants’ counsel, Mr Alvin Yeo, SC (“Mr Yeo”), argued for a mens rea of reckless indifference instead (see below, at [66]–[67]), and we address this in the portion of this Judgment where we deal with what we have termed “Issue 3”.
[37] The respondents on the other hand submit that the failure to plead foreign law was fatal to the appellants’ claim and the presumption that the lex fori applies where foreign law is not pleaded should not avail in this case. The respondents also submit that the appellants did not rely on the Documents but had invested in EIMC on the basis of Mr Chiao’s representations about the potential for profits arising out of the cross-strait ferry business. The appellants could not show that Mr Qin had in fact been given the Documents at the meeting on 24 June 2008. In any event, a person of Mr Qin’s expertise would have known from the 2006/2007 Financial Statements that EIMC was not financially robust.
The issues before this court
[38] The first issue that arises for our determination is the factual issue of what had been agreed between the respondents, Mr Lu and Mr Hsiao and whether it extended to misleading the appellants into investing in EIMC through the creation of documents which conveyed a false impression of EIMC’s financial health. We term this “Issue 1”.
[39] We then consider whether the Judge should have dismissed the Suit on the ground that the appellants did not plead and prove that its claim for unlawful means conspiracy was actionable in Taiwan. This we term “Issue 2”. Finally under Issue 3, we examine whether the elements of the claim for unlawful means conspiracy, and in particular, whether the elements of combination and intention, were made out in this case.
Issue 1: The nature of the agreement between the respondents, Mr Lu and Mr Hsiao
What was the plan between the respondents, Mr Lu and Mr Hsiao?
[40] The Judge found that the contents of the Transfer Affidavits were plainly false and had been designed to lead the banks to believe that Mr Lu and EIMC had paid for the Hulls (the Judgment at [135]). She accepted Ms Lim’s testimony that the Transfer Affidavits and the Transfer Affidavits Addenda were referable to the sale and purchase of the Hulls (the Judgment at [135]) and that the objective of the plan between EIMC, Mr Hsiao, Mr Lu and the respondents was to deceive the banks into advancing the necessary funds that would enable EIMC to pay for the Hulls. We agree with the Judge’s findings on this at least insofar as the respondents are concerned.
[41] In our view, the evidence revealed that from 15 November 2005 to the time the April MOUs and the April MOUs Addenda were signed, the respondents had consistently been under the impression that financing for the purchase of the Hulls would come from banks rather than by way of an equity injection. The 2005 Shipbuilding Contracts expressly contemplated that bank financing would be used to fund the purchase of the Hulls. Clause 3.04 of the 2005 Shipbuilding Contracts provided that 80% of the purchase price for each of the Hulls would be paid on approval of a bank loan with payment to be made by an irrevocable letter of credit or a telegraphic transfer.
[42] The correspondence between the parties also reveals that the category of financiers contemplated by the respondents, Mr Hsiao and Mr Lu were the banks. Between May 2006 and early July 2006, EIMC sent Ms Lim a series of e-mails evidencing its attempts to secure bank financing to meet its payment obligations under the 2005 Shipbuilding Contracts.
(a) On 5 May 2006, Mr Duan emailed Ms Lim referring to a letter from Mr Hsiao which stated that they had approached Chiao Tung Bank (Taiwan) which had agreed to extend a loan of 80% of the purchase price for the Hulls, and to issue a bankers’ guarantee or a letter of credit after it had registered its interest in the Hulls. On 16 May 2006, Mr Hsiao informed Ms Lim that there would be a delay in the remittance of funds for the Hulls because of “some change in EIMC’s shareholders”, but he expected US$2.5m for Hull 189 and US$2.5m for Hull 190 to be transferred to Marinteknik’s bank account with Malayan Banking Berhad of Singapore, by 22 May 2006 and 29 May 2006 respectively. The letter of credit for the balance purchase price was expected to be issued not later than 29 May 2006.
(b) On 8 June 2006, Mr Duan informed Ms Lim that it had approached yet another bank, Union Insurance which was part of the Chinese Bank (Taiwan) (“the Chinese Bank”), to obtain financing for the purchase of the Hulls. On 26 June 2006, Mr Hsiao also sent an email to Ms Lim through Mr Duan’s co-broker, one Mr Andrew Lau, informing her that in his discussion with the Chinese Bank on the “L/C schedule” for the Hulls, he had said that EIMC had paid a deposit of US$10m for the Hulls (even though this was not true). Mr Hsiao asked Ms Lim to “keep the secret of this discussion with the bank to smoothly speed up the process of the bank loan”. It was evident from this that EIMC had resorted to presenting a false picture of its interest in the Hulls to attempt to procure bank financing.
(c) Even after the 2005 Shipbuilding Contracts were “rescinded” by Marinteknik on 30 August 2006 and 9 April 2007, Mr Hsiao continued to keep Ms Lim informed of negotiations with various banks for financing. On 16 April 2007, Ms Lim sent a letter to Mr Hsiao referring to a conversation regarding the Hulls, and stated as follows:
(a) Ms Lim testified that notwithstanding her letter of 16 April 2007, she was willing to sell the Hulls to EIMC if EIMC could secure bank financing.
[43] The Transfer Affidavits and the Transfer Affidavits Addenda were also executed in response to Mr Hsiao’s pleas for assistance in showing evidence of title to the Hulls to the banks in Taiwan so that EIMC could negotiate a suitable refinancing arrangement. Similarly, Marinteknik and EIMC signed the April MOUs on Mr Hsiao’s instigation, to enable EIMC to negotiate with the banks on the basis that Marinteknik was building vessels for EIMC.
[44] In our judgment, it is clear that the respondents agreed to participate in a plan with Mr Hsiao and Mr Lu where they would practice a deceit on the banks in Taiwan in order to enable EIMC to obtain bank financing with which to complete the sale and purchase of the Hulls.
The documents created to carry out the plan
[45] To perpetrate the false impression that EIMC had made a down payment or had acquired title to the Hulls with a view to enabling EIMC to secure loans more easily, several documents containing false statements were created. The Investment Agreement provided that Mr Lu agreed to invest “his assets” in the form of the Hulls in return for shares in EIMC. It also stated that Mr Lu had paid US$15m to Marinteknik for the Hulls when this was not true. Although the respondents were not party to the Investment Agreement, some of these false statements were at least implicitly repeated in the Tripartite Agreement which was executed by Ms Lim on behalf of Marinteknik, Mr Lu, and Mr Hsiao. According to Ms Lim, she signed the Tripartite Agreement (which was undated) during her visit to Taiwan between 11 and 16 July 2006. The Tripartite Agreement stated that EIMC had paid US$100,000 to Marinteknik on 7 July 2006 and that this was part of the “final balance money” paid by Mr Lu to Marinteknik. Thereafter, EIMC would take on Mr Lu’s liability under the 2005 Shipbuilding Contracts. Notably, the Tripartite Agreement also provided for payment of the balance purchase price by way of a letter of credit. The Tripartite Agreement stated:
When she was cross-examined on the Tripartite Agreement, Ms Lim insisted that the Tripartite Agreement did not convey the impression that US$15m had already been paid to Marinteknik, and that this was a US$15m “credit” to Mr Lu which would be paid on delivery of the Hulls to EIMC. Whatever might have been in Ms Lim’s mind, the reasonable impression conveyed by the Tripartite Agreement was that the only outstanding obligation under the 2005 Shipbuilding Contracts was payment of the aggregate sum of US$39.9m for the Hulls.
[46] The Transfer Affidavits also stated that the Hulls were paid for in full and that EIMC had title to the Hulls. These were executed with a view to assist EIMC to increase its paid-up capital to reflect the consideration of US$15m from Mr Lu (which he had not in fact given). This was confirmed in the Transfer Affidavits Addenda. The addendum for Hull 189 stated that:
The deadline of 24 July 2007 was stipulated to reflect Marinteknik’s willingness to assist EIMC in obtaining bank financing for a limited period of time only. After the Transfer Affidavits Addenda had been executed, EIMC assured Ms Lim that it was working hard to secure bank financing (see above, at [16]).
[47] As for the April MOUs and the April MOUs Addenda (which had not been shown to Mr Qin), these documents also were created to enable EIMC to convey the false impression to the banks in Taiwan that Mr Lu paid US$15m for the Hulls. The April MOUs Addenda provided that:
[48] The appellants argue that these documents support their case that Ms Lim was ambivalent as to the source of financing, the respondents’ only interest being that EIMC could raise the funds to pay for the Hulls in full. While it might be true that securing payment for the Hulls was the uppermost concern of the respondents, it cannot be overlooked that the only scheme that was ever discussed between the parties in order to achieve this, was one to get a bank in Taiwan to finance the transaction. This was the only plan to which the respondents were privy to as evidenced by the documents, the discussions and the correspondence between the parties.
EIMC and/or its officers use the documents to procure the appellants’ investment
[49] According to the appellants, Mr Hsiao and Mr Chiao showed Mr Qin the 2005 Shipbuilding Contracts, the Investment Agreement, the Tripartite Agreement and the Transfer Affidavits on 24 June 2008 to persuade him to invest in EIMC by conveying the impression that EIMC was financially robust.
[50] As noted by the Judge, there was no evidence that Ms Lim knew that EIMC had approached the appellants. Ms Lim’s undisputed evidence was that she had known nothing about the appellants and the investment that they had made until the pre-action discovery proceedings were initiated in November 2009. The first time Mr Qin met Mr Chiao was on 23 June 2008, which was more than a month after the April MOUs were notarised (though these were not show to Mr Qin) and more than a year after the last of the documents that Mr Qin did see and to the creation of which the respondents were privy, had been created. We agree with the Judge that what Mr Chiao and Mr Hsiao did with the Documents was different from what had been contemplated by Marinteknik when it executed the Tripartite Agreement and the Transfer Affidavits. We also note that based on Mr Qin’s account of what had transpired at his meeting with Mr Chiao on 20 June 2008, Mr Chiao had assured him that (1) EIMC had sold the Hulls and used the proceeds to purchase other vessels; (2) Ms Lim had prepared most of the documents; and (3) a liability reflected on EIMC’s 2006/2007 Financial Statements was in respect of loans obtained by EIMC to purchase the Hulls. These were additional falsehoods that were not in any way attributable to the respondents on the basis of the evidence presented. Most crucially, it is evident that the falsehood practised on Mr Qin had nothing whatsoever to do with raising funds to pay the respondents for the Hulls (which had, by then, been sold). The interest in selling the Hulls had all along been the only interest that the respondents had; in particular, they never had any interest in a fraud by the principals of EIMC to rob a potential equity investor. In our judgment, the respondents were not a party to the fraudulent plan that was carried out by EIMC and its principals, which was an altogether different plan to the one that had been hatched with the respondents but which was not ultimately carried out.
Issue 2: Whether the Judge should have dismissed the Suit on the appellants’ failure to plead the actionability of its claim under Taiwan law
[51] Against this factual backdrop, we turn to the choice of law issue which was the ground on which the Suit was dismissed by the Judge.
Choice of law rule for tort
[52] For a tort to be actionable in Singapore, the alleged wrong must be actionable not only under the law of the forum (the lex fori) but also under the law of the place where the wrong was committed (the lex loci delicti) (Rickshaw Investments Ltd and another v Nicolai Baron von Uexkull [2007] 1 SLR(R) 377 (“Rickshaw”) at [53]). This is subject to the flexible exception recognised in Red Sea Insurance Co Ltd v Bouygues SA [1995] 1 AC 190 that a tort might be actionable even if one of the limbs of the double actionability rule is not satisfied. The flexible exception might apply where the lex fori and/or lex loci delicti “are purely fortuitous and the application of either or both limbs of the ‘double actionability rule’ would result in injustice and unfairness” (Rickshaw at [56]–[58]). These principles apply to actionability of claims in tort wherever committed (Halsbury’s Laws of Singapore vol 6(2) (LexisNexis, 2013) (“Halsbury’s Singapore”) at para 75.373; Rickshaw at [64]).
[53] To identify the place where the tort was committed, the court applies the “substance of the tort” test by examining the series of events constituting the elements of the tort to determine where, in substance, the cause of action arose (Wing Hak Man and another v Bio-Treat Technology Ltd and others [2009] 1 SLR(R) 446 at [26]). The key factors to consider for the tort of conspiracy are “the identity, importance and location of the conspirators, the locations where any agreements or combinations took place, the nature and places of the concerted acts or means, the location of the plaintiff and the places where the plaintiff suffered losses” (Halsbury’s Singapore at para 75.378).
[54] In this case, the Judge found that Taiwan was the place where the tort arose. She found that the representations were made and the Documents were shown to Mr Qin in Taiwan to procure his investment in EIMC, a company incorporated in Taiwan. The Documents had been used with the intention of obtaining financing in Taiwan for the purposes of EIMC’s cross-strait ferry business. The Investment Agreement and Tripartite Agreement were signed in Taiwan. The appellants suffered their losses in Taiwan. On the other hand, the relevant (and relatively modest) connections to the forum are that the Transfer Affidavits and the Transfer Affidavits Addenda were signed in Singapore. As for the place where the alleged agreement or combination was formed, this was a neutral factor because Mr Hsiao, Mr Chiao and Ms Lim met in Singapore and in Taiwan and corresponded by email as well. On balance, the factors leant in favour of a finding that Taiwan was where, in substance, the tort was committed. Having considered the matter, we see no reason to interfere with the Judge’s finding in this respect. Nor did the appellants argue that the Judge erred in this finding.
Principles on the pleading of foreign law
[55] The appellants’ main contention on this issue was that the onus lay on the respondents, if they wished to rely on this, to plead the non-actionability of the claim for unlawful means conspiracy under Taiwan law, and given that they had not pleaded this, the Judge should not have dismissed the Suit on this point. The appellants argue that, at the very least, they should have been given the opportunity to adduce evidence of Taiwan law to address the Judge’s concern. In this regard, the appellants filed Summons No 3558 of 2013 (“the Summons”) on 11 July 2013 for leave to adduce, by way of further evidence in this appeal, an affidavit dated 9 July 2013 by Sam-Rong Hwang, a partner with Formosa Transnational Attorneys at Law in Taiwan, enclosing an expert report on the following questions:
(a) whether under Taiwan law, there is a civil cause of action for unlawful conspiracy which is the same as, or substantially similar to the action for unlawful means conspiracy under Singapore law;
(b) if so, what are the elements necessary to establish this cause of action under Taiwan law; and
(c) whether an actionable wrong in Taiwan is made out on the facts of the appellants’ case.
[56] We first turn to the applicable principles on pleading and proof of foreign law. In Dicey, Morris and Collins on The Conflict of Laws (Sweet & Maxwell, 15th Ed, 2012) (“Dicey, Morris and Collins”), the learned authors note (at paras 9-002 to 9-004):
The learned authors then proceed to list exceptions to the rule that the court does not take judicial notice of foreign law, including where the foreign law is a notorious fact (such as the fact that roulette is not unlawful in Monte Carlo: Saxby v Fulton [1909] 2 KB 208 at 211) or if the content of the foreign law is, at least in part, determined by a rule under English law or if the foreign law is the same as or substantially similar to English law (Dicey, Morris and Collins at paras 9-005 to 9-006).
[57] These principles are premised on the notion that the court lacks knowledge of foreign law and must be informed of its content by evidence from the parties and not take judicial notice of it (Richard Fentiman, “Law, Foreign Laws, and Facts” (2006) 59 Current Legal Problems 391 (“Law, Foreign Laws, and Facts”) at p 396). In the Singapore context, regard must also be had to s 59 of the Evidence Act (Cap 97, 1997 Rev Ed) which sets out the facts of which judicial notice shall be taken and for which proof is not required. Although foreign law is treated as a question of fact in England and in Singapore (see Pacific Recreation Pte Ltd v S Y Technology Inc and another appeal [2008] 2 SLR(R) 491 at [54]), there is discernible discomfort amongst courts in the common law tradition with the characterisation of foreign law as a pure question of fact, due to the legal quality inherent in this “fact”, and for this reason foreign law has sometimes been described as a “special fact” (Law, Foreign Laws, and Facts at p 396). This has given rise to issues, in particular, in the establishment of the content of foreign law (Law, Foreign Laws and Facts at pp 392–393). For example, the Singapore courts have taken judicial notice of the likelihood that foreign law may differ in content from Singapore law in cases of forum non conveniens (Halsbury’s Singapore at para 75.297; JIO Minerals FZC and others v Mineral Enterprises Ltd [2011] 1 SLR 391 at [96] citing Rickshaw at [43]).
[58] Notwithstanding these difficulties, it remains established by the various case authorities that, in general, if foreign law is not pleaded, Singapore courts will simply apply Singapore law (Halsbury’s Singapore at para 75.296). This is subject to exceptions, for example, where a mandatory pleading of foreign law is required as a matter of law (Goh Chok Tong v Tang Liang Hong [1997] 1 SLR(R) 811 (“GCT”) at [84]; see also Parno v SC Marine Pte Ltd [1999] 3 SLR(R) 377 at [44]). In GCT, the defendant applied to strike out a claim for defamation on the ground that the plaintiff had not pleaded actionability of this claim under the law of Malaysia (the place where the slander was uttered and the tort of authorising the publication was committed). The High Court in GCT held that in relation to the double actionability rule, a plaintiff is not required to plead actionability under a foreign law, and in the absence of such pleading, a tort claim involving foreign elements may be treated as if it were a domestic Singapore case (GCT at [85]–[89]). The Law Reform Committee of the Singapore Academy of Law in a report of 31 March 2003 titled “Reform of the Choice of Law Rule Relating to Torts” also noted that while the pleading of the applicable law for tortious claims is desirable, it is not mandatory in Singapore (at paras 29–30). In commenting on GCT, Yeo Tiong Min in “Private International Law: Recent Developments in Singapore” (1997) 1 Singapore Journal of International & Comparative Law 560 observed (at p 586) that:
[59] In Dicey, Morris and Collins at para 35-121, the learned authors also note that:
[60] In Richard Fentiman, International Commercial Litigation (Oxford University Press, 2010) at para 6.01, the learned author also states that under English law, the pleading of foreign law is “generally voluntary”, and parties are “likely to plead foreign law only where English law offers no equivalent claim or defence; or where foreign law is significantly more advantageous than English law; or where the pleading of foreign law is mandatory” (see also James McComish in “Pleading and Proving Foreign Law in Australia” (2007) Melb U L Rev 400).
[61] In this case, the parties did not plead or raise any issue of foreign law in relation to the claim of unlawful means conspiracy (for example, to argue that the claim was not actionable under Taiwan law or that there was a defence under Taiwan law that the respondent could avail itself of) (the Judgment at [80]). In a tortious claim involving foreign elements, the claimant is not obliged to plead the applicability of foreign law, and in our judgment, there is no reason or basis for imposing any such burden on the plaintiff (see also Richard Fentiman, Foreign Law in English Courts: Pleading, Proof and Choice of Law (Oxford University Press, 1998) (“Foreign Law in English Courts”) at pp 101–103 who notes that the view that a claimant must plead actionability under the lex loci delicti, having decided to sue in England and have English law apply, is hard to justify either on authority or principle). In our judgment, the primary rationale for the double actionability rule in general lies in the consideration that an alleged tortfeasor who commits an act or omission in one jurisdiction should not be liable to suit in another without being afforded the opportunity to contend that for one reason or another, whether it be the lack of such a head of liability or the availability of a defence in the place where the alleged tort was committed, he would not have been liable there and so should not be liable in the forum (see also Halsbury’s Singapore at para 75.372). This explains why the rule exists primarily for the benefit of the defendant, whose burden it should be to raise the issue and prove the difference. Where, as here, he does not raise any difference in the law of the place of the tort, there is accordingly no conflict of laws issue raised by the parties, and the court simply applies the forum’s law (see also, GCT at [87]–[89]).
[62] In the circumstances that availed in this case, the Judge ought simply to have applied Singapore law. The Judge should have assessed the claim purely as a domestic matter governed by Singapore law, which is how the case was pleaded. It follows that in our judgment, the Judge erred in dismissing the Suit on the basis of the appellants’ failure to plead actionability under Taiwan law.
[63] The Judge distinguished GCT on the basis that it involved the choice of law rule for a claim for defamation and not unlawful means conspiracy. However, it does not seem to us that this distinction featured materially in the reasoning of the court in GCT. Nor do we think that there is any basis in principle for confining the rule to actions in defamation. It also follows from this that there was no need, on the facts of this case, to consider the applicability of the presumption of similarity or identity of laws (ie, the presumption that foreign law is the same as the lex fori in absence of proof) which is concerned with the ascertainment of the content of foreign law. In Law, Foreign Laws and Facts at p 406, the learned author in discussing the presumption of similarity or identity of laws observed that:
[64] We note that in OMG Holdings Pte Ltd v Pos Ad Sdn Bhd [2012] 4 SLR 201 (“OMG Holdings”) at [39] and [42], the court appeared to require the parties to plead foreign law in relation to a claim in passing off, and noted that the presumption that the foreign law is the same as the lex fori would not apply if an injunction is sought to restrain acts of passing off committed in the foreign jurisdiction. The court in OMG Holdings relied on a series of cases where the courts refused injunctions to restrain alleged acts of passing-off in other jurisdictions on the basis that evidence on foreign law had not been adduced and the claim was not shown to be actionable in the foreign jurisdiction. We do not think that OMG Holdings or the cases relied upon by the court (such as Alfred Dunhill Ltd v Sunoptic SA [1979] FSR 337 (“Alfred Dunhill”)) are of assistance to the appellants (see also, Foreign Law in English Courts at p 103). Alfred Dunhill may have to be seen in light of the nature of the application sought, which was an interlocutory injunction to restrain acts of passing off in another jurisdiction. In such circumstances, it would not be surprising if the court were to require proof that the act to be restrained is in fact illegal in the place where it would otherwise be done.
Issue 3: Whether the elements of the tort of unlawful means conspiracy are satisfied on the facts of this case
[66] The nub of the appeal on the substantive question of the tort of unlawful means conspiracy turned on the mental element that would support a finding of liability on the part of the respondents. Mr Yeo accepted that Ms Lim had no actual knowledge of Mr Qin at the time the Documents were shown, nor of the representations made by Mr Chiao and Mr Hsiao on 24 June 2008, nor even of the fact that EIMC had found a potential investor who would provide it with funds. After all, the fraud on the appellants was not to raise funds in order to pay for the Hulls, which had always been the extent of the respondents’ interest. On the contrary, Mr Qin was told that the Hulls had already been purchased and paid for and then sold, and that EIMC had purchased other vessels, which were currently under construction, with the sale proceeds (see above, at [26]). Mr Qin decided to invest in the company because he thought that it was a good business proposition.
[67] However, Mr Yeo’s case was that the appellants were part of the class of persons who stood to be injured by the wrongful acts of the respondents because it would have been within the contemplation of Ms Lim, as a business person, that EIMC might approach not just banks but investors to inject money into EIMC whether by way of loan or equity. Mr Yeo also submitted that the mental element for unlawful means conspiracy would be satisfied if the respondents knew or ought to have known that the Documents which had been created with their participation, could be used for other fraudulent purposes by Mr Lu, Mr Hsiao or the principals of EIMC to deceive private investors other than banks into investing in EIMC on the basis of the false impression of EIMC’s financial strength, but were recklessly indifferent as to whether this would transpire. During the hearing of this appeal, we expressed the concern that if we accepted Mr Yeo’s conception of the mental element for unlawful means conspiracy, the tort of conspiracy would begin to look very much like a species of negligence.
[68] In addressing this issue, it might be useful for us to first examine the history of the tort of unlawful means conspiracy and the developments that have taken place thus far, with particular attention paid to developments that have taken place in England.
History of the tort of conspiracy by unlawful means
[69] Hazel Carty, in her article, “The economic torts in the 21 century” (2008) 124 LQR 641 (“Carty LQR”) sets out a succinct summary of the history and evolution of the law on unlawful means conspiracy in England (and indeed, the group of torts commonly labelled as “economic torts”) before the decision of OBG Ltd and another v Allan and others [2008] 1 AC 1 (“OBG”) (at p 164):
[70] It is noteworthy that most leading textbooks on the subject have categorised conspiracy claims in tort as part of a cluster of economic torts (see for example, Gary Chan Kok Yew, The Law of Torts in Singapore (Academy Publishing, 2011) (“The Law of Torts in Singapore”); Clerk & Lindsell on Torts (Sweet & Maxwell, 20th Ed, 2010) (“Clerk & Lindsell”) at para 24-01; Francis Trindade, Peter Cane & Mark Lunney, The Law of Torts in Australia (Oxford University Press, 4th Ed, 2007) (“The Law of Torts in Australia”); Peter T Burns and Joost Bloom, Economic Interests in Canadian Tort Law (LexisNexis, 2009)), alongside the tort of procuring a breach of contract, unlawful interference and intimidation. This perspective seems to have spawned the search for a unifying theory of economic torts which was eventually rejected in the United Kingdom in OBG; but this in turn has since been somewhat obscured by the more recent pronouncement of the House of Lords in Revenue and Customs Commissioners v Total Network SL [2008] 1 AC 1174 (“Total Network”) (see Hazel Carty, An Analysis of the Economic Torts (Oxford University Press, 2nd Ed, 2010) (“Carty”) at pp 166–168).
[71] At least a few propositions seem clear. The first is that there appears to be two types of settings in which such torts might arise. The first has been termed the “3-party setting” which envisages the involvement of a third party or intermediary either as the primary wrongdoer (eg, the intermediary who actually breaches the contract in the tort of inducement of breach of contract, as was laid down in Lumley v Gye [1843] EWHC QB J73) or as the victim of the wrongful act of the defendant (eg, in the tort of unlawful interference with business—also known as the tort of causing loss by unlawful means—such as where a defendant intends to injure the claimant by wrongful interference with a third party’s actions) (see generally, Carty at pp 17–18 and pp 155–156; OBG at [46]–[47]). However, liability can also arise in a “2-party setting” where the defendant intentionally causes loss to the claimant without acting through an intermediary. This can be seen in torts such as intimidation and conspiracy. Conspiracy, of course, could also arise in a “3-party setting”: see Lord Mance in Total Network at [117] citing Lonrho plc v Fayed and others [1992] 1 AC 448 (“Lonrho v Fayed HL”).
[72] The second proposition is that many though not all of these torts require that there be some unlawful means or the presence of an element of unlawfulness (The Law of Torts in Singapore at para 15.004; see also The Law of Tort (Ken Oliphant gen ed) (LexisNexis, 2nd Ed, 2007) (“Oliphant”) at para 29.6). This is unsurprising given that the common law has recognised the need to protect and encourage lawful competition in a free market system. Lord Nicholls of Birkenhead observed in OBG (at [142]) that:
In fact, it has been suggested that neither malicious hindrance with another person’s business nor general “unfairness” renders conduct that is otherwise lawful, unlawful (Oliphant at para 29.2).
[73] One notable exception to this was the tort of “conspiracy to injure” or what is now known as “lawful means conspiracy”, where liability can arise merely by reason of damage flowing from a combination regarded as illegitimate because it had, at its essence, the predominant purpose of injuring the claimant, “without proof of further illegality” (Clerk & Lindsell at para 24-07). In Crofter Hand Woven Harris Tweed Company, Limited, and others v Veitch and Another [1942] AC 435 at 462, Lord Wright said:
[74] The tort of lawful means conspiracy has been castigated as an anomaly which has been allowed to survive only because of its vintage. The attempt to justify its existence rested largely on the much-criticised rationale that “a combination may make oppressive or dangerous that which if it proceeded only from a single person would be otherwise, and the very fact of the combination may shew that the object is simply to do harm, and not to exercise one’s own just rights” (The Mogul Steamship Company, Limited v McGregor, Gow, & Co, and Others [1889] 23 QBD 598 at 616). As long ago as thirty years, Lord Diplock in Lonrho Ltd and another v Shell Petroleum Co Ltd and another (No 2) [1982] 1 AC 173 (“Lonrho v Shell”) noted the deficiencies in this rationale (at 189) in these terms:
[75] Notably, two decades later, Lai Kew Chai J in Panatron Pte Ltd v Lee Cheow Lee and Others [2000] SGHC 209 picked this theme up and suggested that the time had come to reconsider the law’s historical recognition of the tort of conspiracy by lawful means (at [85]):
[76] Another exception to the general applicability of the second proposition to this cluster of torts is the tort of interference with a contractual relationship, short of inducing a breach of it (see Lord Hoffmann’s discussion of Quinn v Leathem [1901] 1 AC 495 (“Quinn”); GWK Ltd v Dunlop Rubber Co Ltd (1926) 42 TLR 376 and DC Thomson & Co Ld v Deakin [1952] 1 Ch 646 (“DC Thomson”) in OBG at [15]–[29]). The foundation for a unified theory which treated the tort of inducing a breach of contract (“the Lumley v Gye tort”) as a species of the tort of actionable interference with contractual rights which extended to forms of interference other than persuasion, procurement or inducement was laid down by Jenkins LJ in DC Thomson (OBG per Lord Hoffmann at [26]–[27]). Subsequently, in Torquay Hotel Co Ltd v Cousins and Others [1969] 2 Ch 106 at 138, Lord Denning said “[t]he time has come when the [Lumley v Gye tort] should be further extended to cover ‘deliberate and direct interference with the execution of a contract without that causing any breach’”, including cases where the defendant prevents or hinders the intermediary from performing the contract. This extension of the Lumley v Gye tort was endorsed by Lord Diplock in Merkur Island Shipping Corporation v Laughton (The Hoegh Anapa) and others [1983] 2 AC 570 at 608. Today, the notion that these two torts are subsumed one within the other has been curtailed, if not jettisoned, following the House of Lords’ decision in OBG. The House of Lords in OBG held that the Lumley v Gye tort and the tort of causing loss by unlawful means should be kept as distinct torts because the rationale underlying each of these two torts is different (OBG per Lord Hoffmann at [32]–[33] and [38]; see also OBG per Lord Nicholls at [188]–[189]; per Lord Walker of Gestingthorpe at [264]; per Baroness Hale of Richmond at [303]; and per Lord Brown of Eaton-under-Heywood at [319]–[320]). As explained in Carty at p 24, the Lumley v Gye tort depended “on the third party’s liability for contract breach, resulting from the defendant’s persuasion” and is a species of secondary liability, while the tort of causing loss by unlawful means was ambivalent as to the nature of the interest which is damaged, and is a species of primary liability (see also OBG per Lord Hoffmann at [32]–[33]). The House of Lords accordingly rejected the notion of a unified theory that underlay the Lumley v Gye tort and the tort of causing loss by unlawful means.
[77] A third proposition that may be gleaned from the authorities is that these torts require some element of “intention” or “intentional harm” for liability to be imposed (Carty at p 170; The Law of Torts in Australia at pp 269–270), and that other, lesser, mental states would not suffice. In fact, it was thought in many cases that it was the element of intentional infliction of harm that might form the basis of a unified theory, although this premise too has been criticised (see Carty at p 19). Lord Lindley in Quinn characterised the Lumley v Gye tort as a species of the tort of causing loss by lawful means, on the basis of a wider principle which imposed liability for “all wrongful acts done intentionally to damage a particular individual and actually damaging him” (Quinn at 535; see also Carty LQR at p 645). This placed emphasis on the subjective intent of causing harm coupled with the objective fact of resulting harm to justify making unlawful that which would otherwise be lawful.
[78] Beyond this, not much else was clear. Was the scope of the required intention the same for all torts? Was there even a unifying theory? Was it possible to follow in the footsteps of Lord Atkin whose historic judgment in M’Alister (or Donoghue) (Pauper) v Stevenson [1932] 1 AC 562 paved the way for the development of a unified theory of liability for unintended physical harm caused by a failure to take reasonable care to avoid foreseeable risks of injury, in the field of intentional acts done with the aim of causing economic harm (usually carried out in a commercial context)? Were each of these torts all still valid and relevant (see, for example, the forgoing discussions on unlawful interference with contractual relations falling short of breach and on lawful means conspiracy)? There have also been questions as to whether there remains a basis or a need for a separate tort of unlawful means conspiracy in a “2-party setting” where the same question of liability could be analysed and resolved by reference to the framework applicable to the primary tort accompanied by the doctrine of joint tortfeasorship (see Carty LQR at p 669).
Position in England today in relation to economic torts
OBG
[79] Some of these questions might be thought to have been settled, in England at least, by the House of Lords’ decision in OBG. OBG was hailed as endorsing a “back to basics” approach with a return to the true import of economic torts and an accompanying abstentionist judicial philosophy exemplified in Thomas Francis Allen v William Cridge Flood and Walter Taylor [1898] 1 AC 1 (more commonly known as Allen v Flood) (Carty at pp 24–25). In OBG, the House of Lords concluded that there is no unified theory for the cluster of torts grouped under the label of “economic torts” (see, for example, Lord Walker in OBG at [264]). OBG did not deal squarely with the question of unlawful means conspiracy. But it dealt with a number of other torts, including the Lumley v Gye tort and the tort of causing loss by unlawful means. Indeed, the court’s views on the lack of a unified theory underlying “economic torts” are illuminating. Lord Hoffmann, in particular, (at [32]) associated himself with the views of Peter Cane who said in “Mens Rea in Tort Law” (2000) 20 Oxford JLS 533 (at 552) that:
[80] The House of Lords in OBG also agreed that the element of intention is a requirement across the spectrum of the various economic torts, even though the precise scope and content of that element of intention that had to be made out for liability to be imposed for each tort might be different depending on the rationale and interest underlying each individual tort (OBG per Lord Hoffmann at [62]; per Lord Nicholls at [164]–[167]). The notion of a unifying theory having been jettisoned, it becomes essential for the court to be sensitive to the different justifications and conceptual underpinnings for each tort and to guard against importing notions and ideas from the analytical framework applicable to one tort into that for another as if there were a unifying theory. A philosophical division in the House of Lords as to the underlying rationale for the tort of causing loss by unlawful means in a “3-party setting” (which might have implications on the development of other economic torts) translated into divergent views on what would constitute the requisite “unlawful means”. The genesis for the philosophical division is encapsulated in Lord Nicholls’ speech in OBG at [153]–[155]:
[81] Lord Hoffmann, whose views on this issue represented those of the majority, thought that the tort was meant to “enforce basic standards of civilised behaviour in economic competition, between traders or between employers and labour” (in OBG at [56]). However he felt that this was subject to the significant limitation that the “unlawful means” be limited to civil wrongs for which the intermediary could maintain an action (per Lord Hoffmann at [49]; per Baroness Hale at [302]; and per Lord Brown at [320]). The key question was whether the use of any means that entailed the happenstance of some law or regulation being breached would suffice to constitute “unlawful means” even if the breach in question did not translate into or give rise to a civil right of action on the part of the third party, and even if did not affect the third party’s freedom to deal as he pleased with the plaintiff. Lord Hoffmann thought not in OBG at [51]:
[82] Lord Hoffmann emphasised that “the court should be similarly cautious in extending a tort which was designed only to enforce basic standards of civilised behaviour in economic competition”, “[o]therwise there [would be] a danger that it will provide a cause of action based on acts which are wrongful only in the irrelevant sense that a third party has a right to complain if he chooses to do so” (OBG at [56]). Lord Hoffmann was doubtful as to whether the requirement of a causal connection between the wrongful conduct of the defendant and the loss suffered by the plaintiff would be a sufficient limiting factor for the imposition of liability (OBG at [58]). In arriving at the view that the unlawful means must in general be actionable by the third party, Lord Hoffmann referred to Lonrho v Shell as an illustration of a failed attempt to found a cause of action on the fact that the conduct alleged to have caused loss was contrary to law but not actionable by the third party (OBG at [55]). It is true that on the facts of Lonrho v Shell the wrongful conduct in question there, an alleged breach of a sanctions order that attracted penal consequences, was not actionable as a civil wrong. However, it should be noted, as was observed in Total Network, (see, for example, per Lord Hope at [38]) that this did not appear to be the basis of Lord Diplock’s reasoning in Lonrho v Shell since his real preoccupation was with the failure to show the requisite intention to injure.
[83] Unlike Lord Hoffman’s more measured approach, Lord Nicholls in OBG considered that “unlawful means” encompassed “all acts which a person is not permitted to do” and “covers common law torts, statutory torts, crimes, breaches of contract, breaches of trust and equitable obligations, breaches of confidence, and so on” (OBG at [151]). While acknowledging that the element of unlawful means served as a limitation on the boundaries of liability (OBG at [147]), he preferred a broader concept of “unlawful means” of illegality with the brake of “instrumentality” (OBG at [159]) and see below at [93]. Lord Nicholls (at [152]) also thought it:
[84] Lord Walker took a more tentative view. While noting the divergent views of Lord Hoffmann and Lord Nicholls on the issue of “unlawful means”, he said as follows (in OBG at [269]–[270]):

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EFT Holdings, Inc and another v Marinteknik Shipbuilders (S) Pte Ltd and another

Laws this judgment relies on

Grounds of decision

Background to the appeal

Parties to the dispute

The transaction between the respondents and EIMC for two catamarans

The Ocean Lala, the Hull 189A and the Hull 190A

Events leading to the appellants’ investment in EIMC

The decision below

The parties’ cases in this appeal

The issues before this court

Issue 1: The nature of the agreement between the respondents, Mr Lu and Mr Hsiao

What was the plan between the respondents, Mr Lu and Mr Hsiao?

The documents created to carry out the plan

EIMC and/or its officers use the documents to procure the appellants’ investment

Choice of law rule for tort

Principles on the pleading of foreign law

Issue 3: Whether the elements of the tort of unlawful means conspiracy are satisfied on the facts of this case

History of the tort of conspiracy by unlawful means

Position in England today in relation to economic torts

OBG