Focus Energy Ltd v Aye Aye Soe (Standard Chartered Bank, Singapore Branch, garnishee) and another matter

Tay Yong Kwang J:

[2] An Assistant Registrar heard both Garnishee Orders to Show Cause on 29 October 2009. After hearing arguments, the Assistant Registrar adjourned both matters to 6 November 2009 to allow AAS to apply for a stay of execution of the Garnishee Orders to Show Cause.

[3] The application for a stay of execution of the Garnishee Orders to Show Cause was subsequently heard on 6 November 2009 by an Assistant Registrar who dismissed it. The Assistant Registrar also dealt with both Garnishee Orders to Show Cause on 6 November 2009.

[4] Before the Assistant Registrar, counsel for AAS, Mr Solomon Richard, argued that O 49 r 7(1) of the Rules of Court (Cap 322, R5, 2006 Rev Ed) (“the ROC”) requires the judgment creditor to produce a certificate indicating that the Monetary Authority of Singapore (“MAS”) has given its permission under the Exchange Control Act (Cap 99, 2000 Rev Ed) (“the ECA”) for the payment to the judgment creditor if the judgment creditor is resident outside the scheduled territories named in the ECA. However, the Assistant Registrar agreed with counsel for Focus Energy, Mr Harish Kumar, who argued that since MAS issued a circular on 25 May 1978 (MAS 1103, Reference: ID Circular 6/78 dd 25.5.78) (“the MAS Circular”) effectively lifting all exchange controls, MAS was deemed to have given its permission for such payment and there was no question of non-compliance with O 49 r 7(1). The Assistant Registrar therefore made a final order in respect of each of the Garnishee Orders to Show Cause. SCB was ordered to pay to Focus Energy US$1,349,528.81, S$36,530.74 and EUR708,985.42 while UOB was ordered to pay to Focus Energy US$15,040.65 and S$312,181.80.

[5] AAS appealed against the final orders against SCB (Registrar’s Appeal No 427 of 2009) and against UOB (Registrar’s Appeal No 428 of 2009). Both appeals were heard before me on 14 January 2010. I dismissed both appeals for the reasons set out below.

[6] O 49 r 7 of the ROC provides:

[7] The ECA provides in s 7(1) and s 8(1):

S 2(1) of the ECA defines “scheduled territories” as:

[8] The list of countries in the said First Schedule does not include Myanmar (or its former name, Burma), the alleged country of residence of the judgment creditor to whom payment is to be made. Focus Energy does not agree that it is resident in Myanmar. It was incorporated in the British Virgin Islands (listed in the said First Schedule as one of the “scheduled territories”). While it is registered as a branch in Myanmar and has previously operated an oil concession there, it maintains that it is resident in the British Virgin Islands for the purposes of the ECA and therefore does not reside outside the “scheduled territories”. This issue was not decided by the Assistant Registrar as both parties focused their arguments on the issue whether a MAS certificate was required under O 49 r 7(1) on the assumption that payment was going to be made to an entity resident outside the “scheduled territories”. Before me, the parties proceeded on the same basis.

[9] The MAS Circular is in the following terms:

[10] Mr Solomon argued before me that since Focus Energy is resident in Myanmar and Myanmar is not a scheduled territory under the ECA, O 49 r 7(1) of the ROC requires a certificate from MAS before the Court can make an order requiring the garnishee to make payment to Focus Energy, the judgment creditor. Since no such certificate was provided, Mr Solomon asked that the final orders be set aside. Where the MAS Circular was concerned, Mr Solomon submitted that the MAS Circular was not legally binding and that the Assistant Registrar was wrong in law to have given it more weight than the ECA.

[11] Parliament conferred on MAS the power to grant exemptions from any provision of the ECA imposing any obligations or prohibitions. Section 33 of the ECA provides:

[12] Parliament also conferred on MAS the power to grant permission, consent or authority or to give directions. Section 38 of the ECA makes it clear that such power is extremely broad. The provision states:

In particular, the phrase “general or special” in both s 38(1)(a) and s 38(2)(a) denotes that this power may be exercised with respect to a particular individual or group or generally. The phrase “if so given shall be valid for all purposes” in s 38(2)(c) encompasses legal proceedings such as garnishee orders.

[13] When MAS issued the MAS Circular, exempting all persons from the obligations and prohibitions imposed under the various sections of the ECA, it was exercising its powers under the ECA although it did not specify which particular provision it was invoking. The Assistant Registrar was therefore only recognising the valid exercise by MAS of its statutory powers under the ECA. The MAS Circular effectively exempts all persons from all exchange control for all forms of payments or capital transfers.

[14] The Interpretation Act (Cap 1) applies to the ROC (see O 1 r 3 of the ROC and the definition of “written law” and “subsidiary legislation” in s 2 of the Interpretation Act). Applying the purposive approach mandated in s 9A of the Interpretation Act (Cap 1) in interpreting O 49 r 7(1) of the ROC, it is evident that the purpose of requiring a certificate from MAS is to ensure that no provision in the ECA will be infringed by the payment in question. This is made even clearer by O 49 r 7(2) (see [6] above). Taking into account the blanket exemption granted to all persons by way of the MAS Circular, the purpose for which a certificate is required by O 49 r 7(1) has already been satisfied. MAS is deemed to have given its permission for such payment to the judgment creditor resident outside the “scheduled territories”. Another way of looking at the issue is to say that all prohibitions in the ECA have been effectively suspended since 1 June 1978 and there is no exchange control, and hence no need for permission regarding any payment, in respect of any territory until such time as the MAS Circular is revoked or modified. AAS has not shown any evidence that the MAS Circular is no longer in force or has been modified in any way.

[15] One can envisage that if an application were made now to the MAS for a certificate pursuant to O 49 r 7(1), MAS will surely refer to the MAS Circular and state that no permission for payment is required as all exchange controls have been lifted and remain so.

[16] By virtue of the MAS Circular, it is not necessary under O 49 r 7(1) of the ROC to obtain a certificate from MAS indicating its permission for the payment before the Court makes an order requiring a garnishee to pay money to a judgment creditor who is resident outside the “scheduled territories”. The Assistant Registrar was therefore correct in making the final orders directing the two garnishees to pay the relevant amounts to Focus Energy.