Court of Appeal · Decided 24 July 2015

The “STX Mumbai” and another matter

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[2015] SGCA 35Case no. Civil Appeal No 80 of 2014 and Summons No 4235 of 2014

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Grounds of decision

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Andrew Phang Boon Leong JA (delivering the grounds of decision of the court):
Introduction
[1] The Appellant supplied bunkers to the Respondent’s vessel, STX Mumbai (“the Vessel”), on terms which required payment to be made within 30 days. Three days before the payment date arrived, the Appellant issued a letter of demand to the Respondent’s agent, STX Corporation, demanding immediate payment of the contract price by the close of the same business day. This demand for accelerated payment was founded on a set of circumstances which, in the Appellant’s view, demonstrated that payment would not be forthcoming when it fell due under the contract. In essence, these circumstances had to do with the poor financial health of the group of companies that the Respondent appeared to be a part of and this was evidenced, in particular, by the insolvency of another company, STX Pan Ocean Pte Ltd (“STX Pan Ocean”), which was also named as the “group owner” of the Vessel. No payment was received pursuant to the letter of demand and so the Appellant proceeded to commence in rem proceedings and arrested the Vessel the next day. The Appellant did so on the basis that the bunker supply contract had been repudiated by reason of the Respondent’s anticipatory breach, claiming that the Respondent had evinced a clear intention to renounce the contract by refusing to comply with the letter of demand or, alternatively, that the circumstances were such that it was impossible in any event for the Respondent to have made payment when the time arrived under the contract.
[2] The Respondent applied to strike out the in rem action. It succeeded before the Assistant Registrar whose decision was upheld on appeal to the High Court (see The “STX Mumbai” [2014] 3 SLR 1116 (“the GD”)). In the Judge’s view, the Appellant’s action was legally unsustainable. She noted that certain facts were disputed by the parties – for example, whether the Respondent was even the party liable in personam for the bunkers (see below at [7]) – but found that even if these facts were assumed in favour of the Appellant, the Respondent was not in anticipatory breach of the contract. In gist, the Judge held that insolvency per se did not automatically amount to a repudiatory breach in law and, further, that this principle applied a fortiori in the present case because what the Appellant had sought to rely on when it issued the letter of demand was not the insolvency of the party liable in personam for the bunkers (viz, the Respondent) but that of a separate corporate entity altogether (viz, STX Pan Ocean). In the absence of any attempt to lift the corporate veil, the insolvency of the latter could not be imputed onto the former. Hence, the Appellant had no legal basis for issuing the letter of demand. Accordingly, the Respondent’s failure to comply with the demand could not be construed as a renunciation of its contractual obligations. Not surprisingly, the Judge also rejected the Appellant’s alternative argument to the effect that the Respondent had (owing again to STX Pan Ocean’s insolvency) placed itself in a situation which would render it impossible for it to meet its obligation to pay on the date fixed for payment.
[3] This was sufficient for the Judge to strike out the in rem action but she went on to consider, by way of obiter dicta, a novel legal point which touched on the scope of the doctrine of anticipatory breach. Simply put, the question was this – does the doctrine of anticipatory breach apply only to executory contracts or does its application extend further to executed contracts? In offering her tentative views on this issue, the Judge stated that she was inclined to prefer the former, more circumscribed, position with the result that, if applied to the present facts, the Appellant’s claim would have no legal foundation to rest on. There was, after all, no dispute that this case concerned an executed contract since the Appellant had fully performed its obligation to supply the bunkers and the only obligation which remained was on the part of the Respondent to make payment at a future date. However, as this particular argument was not canvassed by the parties, the Judge noted that she could not base her decision on it (see the GD at [54] and [55]). Fortunately, we were not faced with a similar constraint as this issue was in full legal play before this court. We will therefore consider it first as a matter of logic as well as commonsense. Put simply, if the exception applied (ie, the doctrine of anticipatory breach did not apply to executed contracts), then that would be the end of the matter and the present appeal would have to be dismissed on this point alone as it was clear – at least on the facts of this particular case – that the contract concerned was an executed one. However, as we note later on in this judgment, we are of the view that the exception is not good law in the Singapore context.
[5] In the result, we decided to set aside the Judge’s decision to strike out the Appellant’s claim. For completeness, we should also mention that the Judge had set aside the arrest of the Vessel and found the Appellant liable for wrongful arrest and continuance of the same, ordering, in this last-mentioned connection, an inquiry as to the sum of damages payable. However, in light of our decision not to strike out the action, we allowed the Appellant’s appeal against the setting aside of the arrest and reserved the question of wrongful arrest to the trial judge to be considered after the relevant findings have been made. These are the detailed grounds of our decision.
Background facts
The parties
[6] The Appellant, Transocean Oil Pte Ltd, is a locally incorporated company in the business of supplying bunkers. The Respondent, POS Maritime VX SA, is a Panamanian incorporated company and the registered owner of the Vessel.
The Appellant supplies bunkers to the Vessel
[7] On 15 May 2013, the Appellant received an order from a company known as STX Corporation (see above at [1]) for the supply of bunkers to the Vessel. The buyer named in the purchase order was stated thus – “M.V. STX MUMBAI AND/OR MASTER AND/OR OWNERS, MESSERS. STX Corporation”. We should highlight that this – the identity of the buyer – was the source of a fundamental disagreement between the parties. The arguments ran as follows:
(a) The Appellant understood the above description in the purchase order to mean that it had contracted with the Respondent as owner of the Vessel. Although it had dealt with STX Corporation, STX Corporation had simply placed the order for the bunkers as the Respondent’s agent.
(b) On the other hand, the Respondent claimed that the Appellant’s contract was concluded directly with STX Corporation. In support of this contention, the Respondent relied on an affidavit filed by its representative, Mr Lee Sun Haing (“Mr Lee”), wherein the Vessel was stated as being on bareboat charter to STX Pan Ocean at the material time and, further, that STX Pan Ocean had independently arranged with STX Corporation for the latter to procure the supply of bunkers to the Vessel. In other words, the Respondent’s case, effectively, was that there was a chain of contracts for the supply of the bunkers with the Appellant as the ultimate seller who had contracted only with STX Corporation. On this view, the Respondent could not be said to be the “relevant person” liable in personam for the bunkers and, accordingly, the Appellant had improperly invoked the court’s in rem jurisdiction under s 4(4) of the High Court (Admiralty Jurisdiction) Act (Cap 123, 2001 Rev Ed) when it arrested the Vessel.
[8] We were not required to resolve this difference in views. In the proceedings below, the Respondent was content to take the Appellant’s case at its highest for the purposes of the striking out application and, as a consequence, the parties proceeded on a set of facts which were assumed in favour of the Appellant. This included the fact that STX Corporation had acted as agent for the Respondent in relation to the bunkers stemmed by the Vessel and that the Respondent was also the person liable in personam for these bunkers (see the GD at [20]). In light of the common ground between the parties in so far as these proceedings are concerned, we will say no more about this aspect of the case.
[9] Returning to the factual matrix at hand, STX Corporation received a reply from the Appellant the next day, 16 May 2013, which concluded the contract between the parties. The Appellant indicated its agreement to supply bunkers according to the specifications in the purchase order and, importantly, made explicit provision for the payment term to be 30 days. It should further be mentioned that the Appellant had also sought, in its reply, to incorporate its latest standard terms and conditions into the contract. As alluded to earlier at [4], the Appellant’s standard terms were not adduced in the proceedings below but as it was of particular relevance to that strand of the Appellant’s argument regarding the date on which it was entitled to receive payment under the contract, the Appellant filed Summons No 4235 of 2014 primarily to seek leave to adduce these standard terms as fresh evidence on appeal. At the hearing, counsel for the Respondent, Mr Gerald Yee, stated that he was not objecting to the application. We allowed the Appellant’s standard terms to be introduced into the record.
[10] The bunkers were duly supplied by the Appellant to the Vessel two days later on 18 May 2013. This was evidenced by a bunker delivery note signed off by the master of the Vessel and also a tax invoice issued by the Appellant. This invoice stated that the total contract price for the bunkers was US$571,451.68 and that payment was to be made by way of telegraphic transfer. Notably, it also provided that the due date for payment was on 16 June 2013, which was a Sunday.
The circumstances leading up to the arrest of the Vessel
[11] A flurry of events took place in the week prior to 16 June 2013 which, the Appellant claimed, led it to believe that payment would not be made when the due date did arrive. The Appellant therefore argued that it was justified in arresting the Vessel two days earlier (14 June 2013).
[12] We pause here to mention that besides the Vessel, the Appellant had also dealt with STX Corporation for the supply of bunkers to four other vessels, viz, STX Alpha, STX Delicata, Asita Sun, and Cape Race. The point which is relevant to note about these other vessels is their ownership structure. Of the four vessels just mentioned, only STX Delicata was similar to the Vessel inasmuch as both were owned by the Respondent and named STX Pan Ocean as “group owner”. The three remaining vessels, on the other hand, were not owned by the Respondent. Nor was STX Pan Ocean named as “group owner” of any of them. Notwithstanding this last-mentioned distinction, however, the Appellant’s stated understanding was that all these vessels were “part of a conglomerate of related companies” such that defaults in payment by any of them would cause the Appellant to fear that the Respondent would default in its obligation to pay in respect of the Vessel.
[13] This brings us to the first of the events which the Appellant submitted put it on alert regarding the likelihood of it receiving timely payment. This occurred on 10 June 2013 and related to STX Alpha. On this date, the sum of US$250,353.58 fell due under the contract for the supply of bunkers to STX Alpha but no payment was received by the Appellant. Thereafter, the representatives of the Appellant and STX Corporation had a telephone conversation which was followed up by an email from the former dated 11 June 2013. In this email, the Appellant informed STX Corporation that payment was outstanding under the contract, that its management was taking an extremely harsh view of the matter, and that it was prepared to exercise its full legal rights to enforce its claim, including arresting STX Alpha, if the contract sum was not paid by 14 June 2013.
[14] The next day, 12 June 2013, the Appellant learnt from a news report that one of STX Pan Ocean’s charter vessels, New Ambition, had been arrested in Seattle for unpaid bunkers in excess of US$1m. Importantly, the same source also reported that STX Pan Ocean (a Korean incorporated company) had filed for bankruptcy in South Korea. We pause to note that although the Judge had gathered from the news report that STX Pan Ocean had taken this step on or about 10 June 2013 (see the GD at [9]), the evidence before us shows that STX Pan Ocean had in fact obtained a bankruptcy order from the Seoul Central District Court some days earlier on 7 June 2013.
[15] The foregoing events led the Appellant to send an email to STX Corporation on 13 June 2013, demanding immediate payment of a global sum of US$2,845,987.78 by the close of the same business day. The said sum was an aggregation of the contract prices for all the five vessels in respect of which STX Corporation had placed orders for bunkers. This was notwithstanding the fact that, by the time of the Appellant’s email, the contract price had actually fallen due only for STX Alpha. For ease of reference, the various vessels and the fixed payment dates under their respective contracts are set out as follows:
(a) STX Alpha – 10 June 2013
(b) The Vessel (ie, STX Mumbai) – 16 June 2013
(c) STX Delicata – 23 June 2013
(d) Asita Sun – 23 June 2013
(e) Cape Race – 23 June 2013
[16] The Appellant’s email was sent only to STX Corporation and time-stamped at 5.36pm local time (which corresponded to 6.36pm in Seoul, South Korea). The email enclosed separate letters of demand addressed to STX Corporation and the respective registered owners of the vessels above. In each of these letters, the Appellant essentially alluded to the events outlined earlier at [13]–[14] – viz, that payment had not been forthcoming in respect of STX Alpha and STX Pan Ocean’s insolvency – as the basis for its demand for accelerated payment. The Appellant then concluded by stating that if payment was not received by the close of business on 13 June 2013, it would accept the various bunker supply contracts as having been repudiated on the ground of the respective owners’ “anticipatory breaches” and that it would commence legal proceedings to recover the outstanding sum.
[17] As it turned out, no payment was received by the Appellant on 13 June 2013 pursuant to the aforementioned letters of demand.
The arrest of the Vessel and subsequent events
[18] The next day, 14 June 2013, the Appellant obtained a warrant of arrest for the Vessel in the morning (around 10.36am) and served it on her in the afternoon (around 3.50pm). The Appellant’s in rem action was premised on the Respondent’s alleged anticipatory breach which, the Appellant claimed, could be established on two alternative grounds – (a) first, that the Respondent had renounced the contract by refusing to comply with the 13 June 2013 letter of demand; and (b) second, that it would in any event have been impossible for the Respondent to make payment on the due date given the financial difficulties that afflicted the STX group of companies which it was a part of.
[19] On 26 June 2013, the Respondent’s solicitors wrote to the Appellant’s solicitors requesting the security breakdown in respect of the Vessel and this was duly furnished on the same day. The Respondent eventually put up the security some four weeks later on 22 July 2013 and the Vessel was released.
The procedural history
[20] Prior to the Vessel’s release, on 16 July 2013, the Respondent made an application in Summons No 3613 of 2013 (“SUM 3613/2013”) to, inter alia, (a) strike out the Appellant’s in rem action; (b) set aside the warrant of arrest; and (c) claim for damages on grounds of the wrongful arrest and/or wrongful continuance of arrest of the Vessel.
[21] SUM 3613/2013 came up for hearing before the Assistant Registrar on 14 August 2013. It was allowed in so far as an order was made for the in rem action to be struck out on the basis that it was legally unsustainable. However, no further orders were made in respect of the Respondent’s other prayers.
[22] The Appellant subsequently filed Registrar’s Appeal No 297 of 2013 (“RA 297/2013”) to appeal against the Assistant Registrar’s striking out order while the Respondent cross-appealed in Registrar’s Appeal No 298 of 2013 (“RA 298/2013”) to set aside the arrest and claim damages for wrongful arrest. Both RA 297/2013 and RA 298/2013 were heard by the Judge on 8 November 2013, 21 February and 19 May 2014.
The decision below
[23] The Judge dismissed the Appellant’s appeal in RA 297/2013. Like the Assistant Registrar, she was of the view that the Appellant’s action was legally unsustainable because even if the factual substratum was assumed in the Appellant’s favour, there was nevertheless no valid basis for holding the Respondent in anticipatory breach of the contract (when the Vessel was arrested on 14 June 2013) on the ground either of its renunciation or impossibility of performance.
[24] The Appellant’s renunciation argument failed because, in the Judge’s view, there was no basis for it to issue the 13 June 2013 letter of demand in the first place; hence, the Respondent’s non-compliance with the same could not be interpreted as evincing a clear refusal to perform its payment obligation when the time came (see the GD at [43]). In this regard, the Judge noted that the “set of circumstances” alluded to by the Appellant in the said letter (see above at [16]) was not capable of supporting a claim for anticipatory breach by the Respondent. To begin with, the Appellant’s reliance on the non-payment of bunkers in respect of the STX Alpha was flawed because that vessel was not owned by the Respondent nor was STX Pan Ocean its “group owner” (see the GD at [34]). We pause to mention that the Judge’s reasoning on this point should be understood against the fact that, in the proceedings below, the parties were only on common ground in so far as STX Pan Ocean, STX Corporation, and the Respondent were part of the same group of companies (see the GD at [20]). The Appellant was therefore left essentially to rely on STX Pan Ocean’s insolvency as the basis of its demand for immediate payment but that too was ultimately found by the Judge to be “misguided” because: (a) the Appellant had not sought to lift the corporate veil and so could not impute STX Pan Ocean’s insolvency onto the Respondent (see the GD at [35]); and (b) in any event, it was clear as a matter of common law that insolvency per se did not automatically amount to a repudiatory breach in the absence of an early termination or acceleration of payment clause in the contract or some other clear words or conduct by the promisor manifesting an intention not to adopt the contract (see the GD at [36]–[37]).
[25] The Appellant’s alternative argument from impossibility rested essentially on STX Pan Ocean’s insolvency and, unsurprisingly, the Judge was similarly unpersuaded by it given that it was afflicted by the same underlying problem: there being no attempt to lift the corporate veil in respect of STX Pan Ocean, its insolvency could not have any relevant connection to the Respondent’s ability to make payment under the contract. Further, the Judge noted that insolvency per se did not imply that a party was necessarily incapacitated in respect of its obligations under the contract since it was still possible for the liquidator to elect to adopt the contract (see the GD at [47]).
[26] In light of the above, the Judge held that the Appellant’s claim against the Respondent was legally unsustainable. She therefore upheld the Assistant Registrar’s decision to strike out the Appellant’s in rem action. However, she proceeded to further consider, by way of obiter dicta, the novel (and logically anterior) legal issue that was mentioned at [3] earlier, viz, whether the doctrine of anticipatory breach distinguished between executory and executed contracts in a way which excepted the latter from its application. After surveying a range of Commonwealth authorities as well as a host of academic commentary on this issue, the Judge finally arrived at the “entirely provisional” (see the GD at [55]) view that there was, on balance, “a strong case for the exception to fully apply in the present case based on the facts assumed” (see the GD at [74]). If that were so, then the Appellant’s claim would effectively be defeated on a preliminary legal point, viz, that it was not even open to the Appellant to avail itself of the doctrine of anticipatory breach given the wholly executed nature of the contract in the present case. The Judge, however, did not rule conclusively on this issue (see also above at [3]).
[27] Turning to the Respondent’s cross-appeal in RA 298/2013, the Judge held that it followed automatically from her decision to strike out the in rem action that the legal basis for the arrest had been removed; hence, the warrant of arrest was set aside (see the GD at [2] and [23]). The Judge also held the Appellant liable for the wrongful arrest of the Vessel and ordered an inquiry as to the damages payable. In support of this finding, the Judge took a particularly dim view of the 13 June 2013 letter of demand which she noted was sent after office hours in South Korea yet demanded immediate payment on the very same day. According to the Judge, this tight deadline was “designed to achieve and create a semblance of refusal to pay” that was clearly artificial (see the GD at [79]).
The parties’ arguments on appeal
The Appellant’s case
[28] The Appellant appealed against the whole of the Judge’s decision. The crux of its case remained premised on the doctrine of anticipatory breach but the focus was now placed primarily on the ground of impossibility of performance by the Respondent. The Appellant had two strings to this particular bow.
[29] First, the Appellant maintained that it could properly rely on STX Pan Ocean’s insolvency to determine that the Respondent would not be able to pay for the bunkers supplied to the Vessel when the time arrived under the contract. The Appellant submitted that it was not fatal that no attempt had been made to lift the corporate veil because the proceedings were still at a very early stage and so, as more evidence came forward in the course of discovery, the Appellant could yet amend its pleadings to lift the corporate veil. The Appellant also submitted that in so far as the Judge had held that insolvency can never amount to an anticipatory breach, that reasoning was flawed because it failed to account for the facts of each case. The Appellant pointed out that, in this case, the facts were such that the financial state of STX Pan Ocean was highly germane to the question of whether timely payment was possible under the contract – as things stood, there was already a sufficient body of evidence to suggest that STX Pan Ocean could well be the alter ego of the Respondent. This evidence comprised the following:
(a) STX Pan Ocean was listed as the “group owner”, operator, and manager of the Vessel which suggested that the Respondent – who had not furnished evidence of any independent bank account or funds – was essentially a one-ship company.
(b) STX Pan Ocean and the Respondent shared the same office address in South Korea as reflected in the bareboat charter (the authenticity of which, it should be mentioned, the Appellant disputed).
(c) The person who had been affirming the affidavits in these proceedings on the Respondent’s behalf, viz, Mr Lee (see above at [7(b)]), was the same person who had signed the alleged bareboat charter on behalf of STX Pan Ocean.
(d) In an affidavit filed in support of STX Pan Ocean’s application to be placed under a scheme of arrangement sometime in July 2013, STX Pan Ocean’s representative had described the Vessel as its vessel and identified the Appellant as “a creditor of [STX Pan Ocean]”.
[30] Secondly, the Appellant sought to raise a new argument which turned on the proper interpretation of cl 9 of its standard terms and conditions. The relevant part of this clause reads as follows:
[31] There was no dispute that the due date for payment on 16 June 2013, falling as it did on a Sunday, was a “non-business day”. This therefore raised the question as to what was the nearest business day to 16 June 2013 on which payment ought to have been made. In the Appellant’s submission, this was the preceding day (ie, 15 June 2013) since Saturday was considered a business day in Singapore. However, the Appellant went further to submit that, even though Saturday was a business day, no clearing of funds paid by telegraphic transfers took place on Saturdays; hence the contract sum should have been received into the Appellant’s designated account by 14 June 2013 (a Friday) at the latest. It was significant in this respect, though, that there was no evidence of arrangements having been made to make payment before the in rem writ was issued on 14 June 2013 itself; hence, as the Appellant submitted, it was “virtually impossible” for the Respondent to have made payment on that date. The Appellant had an alternative submission on this point. It argued that even if it were wrong in identifying 14 June 2013 as the proper date for payment to be made, the evidence suggested that outward telegraphic remittances from the biggest local banks could take up to four days such that the contract sum could only have been received into the Appellant’s designated account sometime in the middle of the week commencing 17 June 2013. If this alternative submission were correct, then, regardless of how cl 9 was interpreted, the impossibility of performance on the part of the Respondent would be placed beyond all doubt.
[32] On the novel issue regarding the scope of the doctrine of anticipatory breach, the Appellant submitted that the majority of the Commonwealth jurisdictions surveyed by the Judge were not settled on this issue. Further, there were strong reasons to reject the exception favoured by the Judge as had been canvassed in numerous academic writings. For example, the exception could (if recognised) lead to unjust outcomes since a party which had yet to perform its obligations under an executory contract would be entitled to seek immediate recourse but a party who had wholly performed its part of an executed contract would have to wait until the other party’s obligations fell due under the contract.
[33] Finally, the Appellant submitted that if the in rem action was not struck out, then it should follow as a matter of course that its arrest of the Vessel was not wrongful. Accordingly, the order for an inquiry into the damages payable should be set aside.
The Respondent’s case
[34] The Respondent submitted that, first and foremost, the Judge’s tentative observations in respect of the exception to the doctrine of anticipatory breach should be endorsed by this court. This exception was supported by a principled rationale which was that a party who had no obligation left to perform ought not to be able to hasten the other party’s obligation to make payment by a fixed date by invoking the doctrine of anticipatory breach. If this exception were accepted as forming part of Singapore law, then the rest of the Appellant’s arguments would be rendered moot.
[35] However, assuming that the Respondent was wrong on the above point, it went on to submit that there was, in any event, no basis for holding that the contract was anticipatorily repudiated on 14 June 2013 by reason of the alleged impossibility of performing it.
[36] In so far as the Appellant’s reliance on STX Pan Ocean’s insolvency was concerned, the Respondent echoed the Judge’s observations that this was not only misguided, given that the Appellant had not pleaded that the corporate veil should be pierced, but that it was also a non sequitur because it was premised on the imperfect assumption that the mere fact of insolvency meant that the contract was rendered incapable of being performed (see, in this regard, above at [25]).
[37] In so far as the Appellant’s new argument in respect of its standard terms and conditions was concerned, the Respondent submitted that the Appellant’s interpretation of cl 9 was flawed. In the Respondent’s view, Saturday (ie, 15 June 2013) was not a business day and so the nearest business day to 16 June 2013 was in fact the following day, which was a Monday. Accordingly, on the Respondent’s construction of cl 9, payment under the contract was due only on 17 June 2013. In any event, the Respondent submitted that since cl 9 contemplated payment being “credited to the counter of the bank designated by the [Appellant]” (see above at [30]), telegraphic transfer was not the only possible mode of payment; it was open to the Respondent to make payment by cheque or cash over-the-counter and this could still be done by the contractual due date of 16 June 2013.
[38] The Respondent also submitted that the Judge was correct, in so far as RA 298/2013 was concerned, to set aside the warrant of arrest and to order that damages be paid for wrongful arrest. Pertinently, the Respondent highlighted in this appeal that the Appellant had failed to disclose material information in its ex parte application for the warrant of arrest. In particular, it was a material fact that the other vessels such as STX Alpha were clearly not owned by the Respondent, yet the Appellant did not disclose this and sought to rely, instead, on their indebtedness to claim that the Respondent would not be able to make payment for the bunkers supplied to the Vessel. According to the Respondent, this material non-disclosure was both a ground for setting aside the warrant of arrest and a clear demonstration that the arrest was the result of either bad faith or gross negligence such as to justify an order of damages.
The issues before this court
[39] Based on the parties’ respective submissions, we distilled four issues:
(a) First, in respect of the Appellant’s appeal against the Judge’s decision to strike out its in rem claim:
(i) Can the Appellant rely on the doctrine of anticipatory breach notwithstanding that the contract in this case is an executed contract? (“Issue 1”)
(ii) If so, is the Appellant’s claim nevertheless still legally unsustainable because, in so far as it continues to be premised on the insolvency of STX Pan Ocean, insolvency can never amount to an anticipatory breach? (“Issue 2”)
(b) In the event that the Appellant’s in rem claim is not struck out:
(i) Should the warrant of arrest nevertheless be set aside on the independent ground raised by the Respondent in this appeal, viz, the Appellant’s non-disclosure of material facts? (“Issue 3”)
(ii) Does it follow as a matter of course that the Judge’s finding of wrongful arrest should be overturned and the order for assessment of damages set aside as argued by the Appellant? (“Issue 4”)
Our decision
Issue 1: Can the Appellant rely on the doctrine of anticipatory breach even though this case involves an executed contract?
The theoretical difficulties with the doctrine
[40] The doctrine of anticipatory breach has had a chequered history (see generally Sir Michael Mustill, “Anticipatory Breach of Contract: The Common Law at Work” in Butterworth Lectures 1989-90 (Butterworths, 1990)). As we shall see, this is due, in the main, to the fact that its very basis is none too clear to begin with. Now, even after a brilliant doctoral thesis exploring its multifarious aspects as well as difficulties (see the published version by Qiao Liu, (simply and aptly) entitled Anticipatory Breach (Hart Publishing, 2011) (“Liu”)), its problems nevertheless continue to trouble the courts in various jurisdictions. One particular problem has reached our legal shores in the present case. It can be simply stated but is not easily resolved: does the doctrine of anticipatory breach apply to a contract that has already been executed by the innocent party? Put simply, if the innocent party has already performed all its obligations pursuant to the contract concerned, is it then disentitled from invoking the doctrine of anticipatory breach? Must the innocent party wait until the time for performance has arrived before it can sue the other party for (actual) breach of contract? If so, then it would follow that the doctrine of anticipatory breach would only apply in the context of (bilateral) executory contracts. It would also follow that the doctrine is not applicable in the context of unilateral contracts. We digress briefly to clarify that our use of the term “unilateral contract” here (and in the rest of this judgment) is intended to refer only to situations in which the innocent party has performed all its obligations under the contract, which is, in substance, the same situation that we are presented with here. In short, what we mean by the term “unilateral contract” in the present context is no more than what is in effect an executed bilateral contract. Indeed, Prof Carter has, in a similar vein, interestingly referred to a bilateral contract which was executed as “a second type of unilateral contract” [emphasis added] (see J W Carter, “The Breach of Unilateral Contracts” (1982) 11 Anglo-American Law Rev 169 at 169). The complexities arising from the particular issue just stated are, as we shall see, inextricably bound up with the difficulties surrounding the very nature of anticipatory breach in the first place. So it is to this last-mentioned (and foundational) point that our attention must first turn. However, before proceeding to do so, we note that there is no direct authority as such in the Singapore context on this particular issue (though cf the very recent commentary on a decision of this court in Tan Hock Keng v L & M Group Investments Ltd [2002] 1 SLR(R) 672 in Goh Yihan, Lee Pey Woan & Tham Chee Ho, “Contract Law” (2014) 15 SAL Ann Rev 217 at paras 12.119–12.131).
[41] At first blush, the doctrine of anticipatory breach appears to embody a logical contradiction: how can the innocent party (let us now and hereafter call it “the plaintiff” for the convenience of exposition) be permitted to sue the other party (let us now and hereafter call it “the defendant”, again for the convenience of exposition) for breach of contract when the time for performance has yet to arrive? If the time for performance has arrived and the defendant has breached one or more of the terms of the contract, then that would of course be a situation of an actual breach. It is far less intuitive to state in the same breath, however, that the defendant is equally in breach of contract even though the date of actual performance has yet to arrive. In fairness to the defendant, ought it not to be penalised only when the time to perform has arrived and it either refuses to perform its contractual obligations or performs one or more of these obligations in an unsatisfactory fashion? Does it not seem unduly harsh to penalise the defendant in advance of the time when it is expected to perform? However, we would interject here to point out that, in so far as these arguments appear to be centred on notions of general unfairness to the defendant, they are, to an extent, balanced out by the fact that an integral part of the doctrine of anticipatory breach lies in the fact that the plaintiff must also demonstrate that it was able and willing to perform its part of the contract – in particular, as a learned author aptly put it, the plaintiff would ordinarily be required “to show (1) that non-completion of the contract was not [its] fault and (2) that [it] was disposed and able to complete it, and would have done so, had the [party in breach] not renounced it” (see Francis Dawson, “Metaphors and Anticipatory Breach of Contract” [1981] CLJ 83 (“Dawson”) at 90 and 99). Nevertheless, this still leaves unanswered the question as to why the plaintiff ought to be able to sue in advance of the time of performance by the defendant, notwithstanding the fact that the defendant has clearly evinced an intention not to perform its obligations under the contract.
Rationalising the doctrine – the traditional view centred on an implied promise
[42] The explanation as well as justification for permitting the plaintiff to sue for anticipatory breach is not premised on an actual breach by the defendant since, ex hypothesi, the time for performance has not arrived yet; this is notwithstanding the fact that the defendant has signalled clearly that it will not be performing (ie, would breach) the contract when the time for performance in fact arrives. What many writers have done is to proffer an alternative explanation as well as justification instead. In particular, they have premised the plaintiff’s right to sue for anticipatory breach of contract on the actual breach by the defendant of a separate (albeit implied) promise that the defendant would not prevent the plaintiff from performing its contractual obligations which simultaneously constitute the conditions precedent to the plaintiff’s entitlement to the performance of the defendant’s obligations pursuant to the same contract (see generally, eg, Dawson at 99 and 100–101). Looked at in this light, what the court is effectively seeking to ensure is that the contract is not rendered an exercise in futility. This last-mentioned (and more general) point is an extremely important one in the context of the present case – a point to which we shall return below (at [45] and [47]).
[43] It is precisely at this juncture that the difficulties bedevilling the specific legal issue that is the focus of the present case appear. Put simply, if the plaintiff (the Appellant in this case) has performed all its obligations under the contract, then there is nothing that the defendant (the Respondent in this case) in fact prevents by its repudiation or renunciation of its obligations (albeit in advance) under the contract. If so, then the very basis upon which the plaintiff is permitted to sue the defendant for an anticipatory breach of contract has disappeared. In essence, there has been no breach of the separate (and implied) promise to the effect that the defendant would not prevent the plaintiff from performing its obligations under the contract in order to obtain the benefit of the defendant’s performance of its obligations under the same contract. As Prof Dawson puts it (see Dawson at 102):
[44] Indeed, the court below in the present case noted – for broadly similar reasons (albeit by way of obiter dicta) – that the doctrine of anticipatory breach did not apply to executed contracts (such as that which existed on the facts of the present case). If, in fact, the logic of the analysis set out in the preceding paragraph is accepted, this would appear to be the correct answer to the legal issue that is the focus in the present appeal. However, we would respectfully differ and hold, instead, that the doctrine of anticipatory breach does apply not only to executory contracts but also to executed contracts. Let us elaborate.
[45] To begin with, it is true that if the plaintiff has already performed all its obligations under the contract, then there is nothing which the defendant can prevent the plaintiff from performing. There is therefore no (actual) breach as such of the implied promise on the part of the defendant that it would not prevent the plaintiff from performing its (the plaintiff’s) obligations under the contract. However, we are of the view that, even in a situation where the plaintiff has already performed all its obligations under the contract, the defendant would nevertheless be in anticipatory breach if it states, in advance, that it will not perform its obligations under the contract when the time for the actual performance of these obligations arrives. This is because there would, in our view, be an actual breach of another separate (as well as implied) promise by the defendant to the effect that it (the defendant) would not act in such a manner so as to render the plaintiff’s performance of its obligations towards completion of the contract an exercise in futility. It cannot be gainsaid that by announcing (albeit in advance) that it would not be performing its obligations under the contract when the time for the actual performance of these obligations arrives, the defendant is, necessarily, rendering the plaintiff’s performance of its obligations under the contract an exercise in futility. It is obvious, at this juncture, that this is precisely the same general purpose and rationale which underlies the application of the doctrine of anticipatory breach to executory contracts (see above at [42]).
[46] The analysis proffered in the preceding paragraph is also surely one that is just and fair. More importantly, it is also logical as well as coherent. Put simply, how could the plaintiff in the situation of an executed contract (in which it had in fact performed all of its obligations under the contract) be in a worse position compared to a situation in which it (the plaintiff) had yet (although it was able and willing) to perform all of its obligations under the same contract? However, that would be precisely the legal result (in both form as well as substance) if we were to hold that the doctrine of anticipatory breach did not apply to executed (as opposed to executory) contracts. Indeed, in our view, such a result would not only be contrary to logic but would also militate against commonsense as well as a just and fair result. Indeed, on a related note, if the plaintiff chooses not to exercise its option to terminate the contract concerned in a situation of anticipatory breach, it might not be able to exercise its legal rights against the defendant for breach of contract later if, owing to a subsequent event amounting to frustration, the contract is discharged by operation of law (see, eg, the oft-cited English decision of Avery v Bowden (1855) 5 E & B 714 (which was also referred to by, inter alia, Viscount Simon LC in the leading House of Lords decision of Heyman and another v Darwins, Limited [1942] AC 356 at 361)). Further, the damages which the plaintiff will obtain as a result of the defendant’s breach of contract will be subject to the established rules and principles with regard to proof, causation, quantification as well as mitigation (although we should point out that there remain issues that require to be dealt with in this connection as evidenced by the very recent decision handed down by the UK Supreme Court in Bunge SA v Nidera BV (formerly known as Nidera Handelscompagnie BV) [2015] UKSC 43 (“Bunge”) at [13] which had, in turn, considered the previous House of Lords decision of Golden Strait Corporation v Nippon Yusen Kubishka Kaisha [2007] 2 AC 353 (more commonly referred to as “The Golden Victory”)).
[47] Returning to the current issue (viz, that it is just and fair for the doctrine of anticipatory breach to apply not only to executory contracts but also to executed contracts), it is important to reiterate the point that permitting the doctrine of anticipatory breach to apply to executed contracts as well does not entail any compromise in principle as it can (as explained above at [45]) be justified on the basis of a separate implied promise (albeit of a somewhat different character from that used to rationalise an anticipatory breach of an executory contract). However, the purpose and principle underlying both types of implied promises remain the same: they serve to ensure not only that there is a just and fair result but also that the contract concerned is not rendered an exercise in futility. Indeed, what is a key consideration, in our view, relates to the conduct of the defendant. If the defendant has evinced a clear intention that it will not perform its obligations under the contract, then it is only just and fair that the plaintiff be permitted, in law, to rescind the contract (if it so chooses) and/or claim damages on the basis of an anticipatory breach of contract – regardless of whether the contract is executed or executory. Although the factual scenarios in both these last-mentioned situations are literally different, there is, in substance, no difference whatsoever when each situation is examined at a deeper level and compared with each other.
An alternative rationale – the modern view centred on the defendant’s conduct
[48] It should be noted, at this juncture, that the analysis with regard to the issue as to whether or not the doctrine of anticipatory breach applies to both executory and executed contracts has hitherto been confined to the sphere of implied promises. This is perhaps not surprising, given the (perceived) need to accommodate two propositions that were in seeming tension with each other –that, on the one hand, there could be no actual breach of the defendant’s contractual obligations at a time when those obligations had yet to fall due and that, on the other hand, it was nevertheless just and fair (having regard to its conduct) to hold the defendant liable for an actual breach of contract. The implied promise was therefore a conceptual as well as practical device that served to bridge the gap and appeared to resolve the aforementioned tension. However, the use of implied promises is – even at the best of times – somewhat strained and artificial. Yet, by analogy with the way in which the use of an implied term initially dominated the way the doctrine of unjust enrichment was perceived as well as explained, this is perhaps not surprising – especially when the doctrine of anticipatory breach is viewed in the context of its formative years. Indeed, the leading (English) decisions (viz, Hochster v De la Tour (1853) 2 E & B 678 and Frost v Knight (1872) LR 7 Exch 111 (“Frost”)) reflect this early vintage of the doctrine itself and so the question arises as to whether (again, by analogy with the development of the law of unjust enrichment) an alternative and more modern (yet no less principled) way of explaining the basis of the doctrine of anticipatory breach is available. We would suggest that there is. But before proceeding to elaborate upon it, we should note that the use of the implied promise has not found favour in recent times – thus buttressing the case for the alternative and more modern approach just alluded to (and which we would now endorse). The implied promise approach has, for example, been clearly rejected by both Prof Liu (see Liu at pp 32–33 and 37–39 (although he does observe (at p 33) that “it has not been subject to any formal denunciation”); see also the view of the Hon Justice William Gummow in the Foreword to Liu at pp viii–ix) and Prof Carter in his seminal treatise on breach of contract (which is also the leading work on this important area of the law of contract in the Commonwealth) (see J W Carter, Carter’s Breach of Contract (LexisNexis Butterworths Australia, 3rd Ed, 2011) (“Carter”) at para 7-20). The following observations by a learned author over four decades ago might also be usefully noted (see E Tabachnik, “Anticipatory Breach of Contract” [1972] Current Legal Problems 149 (“Tabachnik”) at 151):
[49] Let us therefore now turn to consider the alternative approach.
[50] In our view, whilst the focus of the case law has been on ascertaining an implied promise upon which an actual breach can be based, it ought to be borne in mind that even that particular analysis is premised (in turn) on a very important (indeed, crucial) fact (which we have already referred to earlier at [47]) – that the defendant has evinced a clear intention that it will not perform its obligations under the contract. As Prof Stoljar aptly observed (see Samuel Stoljar, “Some Problems of Anticipatory Breach” (1974) 9 Melbourne Univ L Rev 355 at 361, citing Frost at 115):
And (albeit in a more general vein with respect to the merits of the doctrine of anticipatory breach), the following observations by Prof Ballantine are also apposite (see Henry Winthrop Ballantine, “Anticipatory Breach and the Enforcement of Contractual Duties” (1924) 22 Michigan L Rev 329 (“Ballantine”) at 352):
[51] Our views are very much aligned with those of Prof Stoljar and Prof Ballantine. If it is the case that the defendant has evinced a clear intention that it will not perform its obligations under the contract, then we see little reason why this very fact might not itself form the basis for holding that, in principle and logic, an actual breach has, in substance, occurred – notwithstanding the fact that the time for the defendant’s performance has yet to arrive under the contract. The defendant is not prejudiced simply because its conduct clearly signals that it would not be performing its obligations under the contract. Indeed, if the contrary is sought to be argued (ie, that the defendant is indeed prejudiced), then that argument would apply equally to the analysis that centres on an implied promise. If, on the other hand, there is – as we have already noted – no prejudice involved, then there is (as we have just stated) nothing preventing the court (in both principle and logic) from utilising the defendant’s conduct as itself evincing a present (ie, actual) breach of its obligations under the contract – albeit notified in advance to the plaintiff. This seems to us to be a much less convoluted way of understanding the basis underlying the doctrine of anticipatory breach, whilst simultaneously avoiding the artificiality surrounding the use of the device of the implied promise. Indeed, if this alternative approach towards the doctrine of anticipatory breach is adopted, it follows, a fortiori, that it would not matter whether the contract was executed or executory. If there is a breach justifying the plaintiff in electing to treat the contract as discharged (which we elaborate upon below at [64]–[78]), the doctrine of anticipatory breach could be applied, regardless of whether the contract is executed or executory.
[52] At this juncture, we should pause (by way of what would appear to be a slight digression) to consider an issue of terminology. It will be noticed that in the alternative and more modern approach which we have set out and endorsed in the preceding paragraph, we have referred to the defendant’s clear refusal to perform its obligations under the contract (albeit notified in advance) as involving an actual breach (cf Maredelanto Compania Naviera SA v Bergbau-Handel GmbH, The Mihalis Angelos [1971] 1 QB 164 per Lord Denning MR at 196). However, Prof Liu has argued against the use of the term “actual breach” in light of the fact that, the time for performance not having yet arrived in the situation of an anticipatory breach, no “actual” breach as such could therefore occur. In the circumstances, the learned author prefers the use of the terms “present breach” and “inferential breach” instead (see Liu at pp 35–37; cf also Carter at para 7-21). With respect, this appears to be more a matter of terminology (and even semantics). We do not differ, in substance, from Prof Liu and it might well be the case that the use of the term “present breach” (as well as “inferential breach”) – as opposed to “actual breach” – might avoid any confusion to the extent that an anticipatory breach is not to be equated with the breach of an actual contractual obligation since, ex hypothesi, the time for performance has yet to arrive.
[53] Returning to the substantive issue at hand, and in addition to the general points of principle referred to above which underpin the alternative and more modern approach which we endorse, there is in fact case law as well as weighty academic authority which further support this particular approach.
(1) The case law
[54] Turning first to the relevant case law, the leading English decision is Moschi v Lep Air Services Ltd and others [1973] AC 331 (“Moschi”), which permitted the operation of the doctrine of anticipatory breach in the situation where the contract was executed (this decision was in fact also cited by the Judge in the GD at [60]). This was also the case in the earlier English Court of Appeal decision of Synge v Synge [1894] QB 466.
[55] However, as Prof Carter notes, the position in Australia (which is summarised admirably in Carter at para 7-82) “remains uncertain” (see ibid) – although Prof Liu endorses and cites extensively from one particular decision of the High Court of Australia (viz, The Progressive Mailing House Proprietary Limited v Tabali Proprietary Limited (1985) 157 CLR 17 (“Progressive Mailing House”)) in arriving at the conclusion that the doctrine of anticipatory breach does apply to executed as well as unilateral contracts (see below at [61]). The case of Progressive Mailing House, though, should be contrasted with another decision of the High Court of Australia, viz, Mackenzie v Rees and another (1941) 65 CLR 1 where Dixon J had (at 15–16) cited with approval the American position of excepting executed contracts from the doctrine of anticipatory breach. Both these contrasting cases, it should be mentioned, were also cited by the Judge at [64] and [63] of the GD, respectively.
[56] It should also be noted that there are two specific jurisdictions which appear to suggest that the doctrine of anticipatory breach does not apply to executed (as well as unilateral) contracts. The first is, of course, that from which this proposition first originated – the USA (see generally, for example, E Allan Farnsworth, Farnsworth on Contracts vol II (Aspen Publishers, 3rd Ed, 2004) at para 8.20). Even then, there are still some state jurisdictions in the USA (such as Texas, New Hampshire and Florida) which do not endorse this proposition and whose views are therefore consistent with that which has been adopted in the present judgment (see generally, eg, Donald A Wiesner & Janisse Klotchman, “Anticipatory Breach and the Unilateral Contract: A Decade of the Status Quo?” (1982) 8 U Dayton L Rev 61, especially at 75–80).
[57] The second jurisdiction is Canada, where there is also a decision (also referred to by the Judge in the GD at [68]) which holds that the doctrine of anticipatory breach is not applicable in the context of executed contracts. This is the decision of the New Brunswick Supreme Court (Appellate Division) in Melanson v Dominion of Canada General Insurance Co [1934] 2 DLR 459 (“Melanson”). The crux of the decision (delivered on behalf of the court by Baxter J) is encapsulated within the following observations (at [9]):
[58] With respect, the reasoning by Baxter J in Melanson quoted in the preceding paragraph is not, in the final analysis, persuasive for the reasons which we have already set out above (at [45]–[46]) and (perhaps even more importantly) does not take into account the alternative and more modern approach presently considered.
(2) The academic authority
[59] Turning now to the relevant academic authority, Prof Carter echoes the view we have expressed above (at [46]), observing as follows (see Carter at para 7-80 (significantly, the sub-heading to this particular paragraph is entitled “The argument from principle”)):
[60] It should also be noted that Prof Carter, in discussing Moschi, observed thus (see Carter at para 7-81; see also Liu at p 162):
[61] Prof Liu also rejects the proposition that the doctrine of anticipatory breach is not applicable in relation to executed as well as unilateral contracts. As already noted (above at [40]), his work is the only one which focuses specifically on the doctrine of anticipatory breach and his views in this particular regard merit extensive quotation as follows (see Liu at pp 164–167):
[62] It is also significant, in our view, that the Judge acknowledged (in the GD at [69]–[72]) that the academic commentary was critical of the proposition that the doctrine of anticipatory breach did not apply in the context of executed contracts (citing, inter alia, Carter). We have focused on Carter and Liu as they are, respectively, the leading works in the Commonwealth on the law relating to discharge by breach in general and the law relating to anticipatory breach in particular. It is highly significant that both works endorse the proposition that the doctrine of anticipatory breach does indeed apply to executed contracts (and not merely to executory contracts).
A brief summary of our views thus far
[63] For the reasons set out above (at [45]–[62]), we would respectfully differ from the views expressed by the Judge and hold that the doctrine of anticipatory breach applies to both executed and executory contracts. For the avoidance of doubt, we also hold that the doctrine applies to unilateral contracts (which, as has been clarified above at [40], concern a similar situation as that which obtains in respect of bilateral executed contracts). We would add that we would prefer the alternative and more modern approach that justifies this holding – an approach that is not only grounded in sound general principle but also has the support of both modern case law as well as academic authority (see generally above at [54]–[62]).
Anticipatory breach and the application of the principles in RDC Concrete
[64] But what, then, would justify the plaintiff in electing to treat the contract concerned as discharged in the context of the doctrine of anticipatory breach? We pause to observe (parenthetically) that this is an important issue in the context of the present case because, as we point out below (at [75]), the specific ground of impossibility of performance which was relied on by the Appellant in the court below, and which is the focus of the present appeal, necessarily invites clarification of this particular issue. In this regard, the Judge, understandably, did not need to consider this issue as she had held that insolvency could not, in this case, constitute an anticipatory breach to begin with (much less an anticipatory repudiatory breach). However, as our analysis below demonstrates (see especially at [85]–[89]), this is a point on which we respectfully differ from the Judge; hence, it becomes necessary for us to consider the circumstances in which a plaintiff may be justified in electing to treat the contract as discharged in the context of an anticipatory breach and, in particular, whether the defendant’s impossibility of performance constitutes one such circumstance. This would, in our view, depend on whether or not the legal principles first set out by this court in RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd and another appeal [2007] 4 SLR(R) 413 (“RDC Concrete”) apply – a point which was in fact canvassed during oral submissions before this court in the present appeal. In RDC Concrete, this court set out the various situations which would justify the plaintiff’s election to treat the contract concerned as discharged as a result of the defendant’s breach of contract. It is important to emphasise that not every breach of contract by the defendant will enable the plaintiff to elect to treat the contract as discharged. As this court observed (by way of a summary of the applicable legal principles) in Man Financial (S) Pte Ltd (formerly known as E D & F Man International (S) Pte Ltd) v Wong Bark Chuan David [2008] 1 SLR(R) 663 (at [153]–[158]):
[65] An anticipatory breach would typically fall under Situation 2 above (see, for a similar observation, Bunge at [12]) and we pause here to mention that an argument based on Situation 2 was canvassed in the court below although, as we have alluded to above at [28], this was not (correctly in our view) emphasised by the Appellant before this court. An anticipatory breach would not, however, fall under Situation 1 above (absent the existence in the contract of an actual term which falls within the ambit of Situation 1). It might be apposite at this juncture to note that a renunciation within the meaning of Situation 2 would, ex hypothesi, entail the plaintiff being deprived of substantially, or even all (depending on when the renunciation is rendered) of, the benefit it was intended that it (the plaintiff) should obtain under the contract. Indeed, cases of renunciation of a contract within the ambit of Situation 2 would – by their very nature – be anticipatory in nature. What, then, about Situation 3(a) and Situation 3(b)?
[66] First, if a defendant is in anticipatory breach of a condition of the contract within the ambit of Situation 3(a), we would think that that would be sufficient to entitle the plaintiff to elect to treat the contract as discharged. Indeed, even in a situation of actual breach of a condition, the focus is not on the actual nature and consequences of the defendant’s breach of the condition as such but, rather, on the nature of the term(s) concerned. However, as Prof Carter has observed, “[a] promisee may treat the prospective breach of a condition as an anticipatory breach provided it is clear that the breach will occur” [emphasis added] (see Carter at para 7-38). In this regard, Prof Carter refers – correctly, in our view – to the key requirement of a (serious) absence of readiness or willingness to perform on the part of the defendant (see Carter at para 7-15). The following observations by Popplewell J in the recent English High Court decision of Geden Operations Ltd v Dry Bulk Handy Holdings Inc, The Bulk Uruguay [2014] 2 All ER (Comm) 196 (“The Bulk Uruguay”) (at [18]) may also be usefully noted:
[67] Secondly, if there is an anticipatory breach which falls within the ambit of Situation 3(b), it would appear, in our view, that such a breach would also entitle the plaintiff to elect to treat the contract concerned as discharged. However, could it be argued that Situation 3(b) is one in which the court concerned must know what the actual nature and consequences of the breach are before ascertaining whether the plaintiff is deprived of substantially the whole benefit which it was intended to obtain from the contract and, to the extent that the situation of an anticipatory breach necessarily excludes the possibility of such knowledge (since, ex hypothesi, the time for actual performance would have yet to materialise), it might be inadvisable for the court to treat an anticipatory breach as falling within the ambit of this particular situation (ie, Situation 3(b))? Such an argument does appear attractive at first blush. However, there are difficulties with it. Let us elaborate.
[68] The first difficulty is that, even in a situation of an actual breach of contract, the court would – in many cases at least – be required to extrapolate or project to some extent (albeit not speculate), particularly if no concrete evidence is forthcoming, as to what the actual nature and consequences of the (here, actual) breach might be. Nevertheless, the parties could adduce, for example, expert evidence (for the court’s consideration) as to what the nature and consequences of the defendant’s breach are likely to be. And, to take another example, in the House of Lords decision of Federal Commerce and Navigation Co Ltd v Molena Alpha Inc and others [1979] AC 757, the court took into account the umpire’s findings. But if this is the case, then the distinction or line between the situation of an actual breach of contract on the one hand and an anticipatory breach of contract on the other would be a very fine (or even non-existent) one – depending, of course, on the particular facts of the case concerned.
[69] The second – and very closely related – difficulty is that, on a practical level, even in the situation of an anticipatory breach, by the time the court hears the case, the actual nature and consequences of that breach might, in any event, be known, given the passage of time between the date of the breach and the date(s) of the trial itself (cf also Tabachnik, especially at 153 as well as Ballantine at 340). And, as was made clear by a majority of the House of Lords in The Golden Victory (whose opinions were recently affirmed by the UK Supreme Court in Bunge at [23]), there is no principled reason why the court should be precluded from taking into account such events which occur subsequent to a breach of contract in assessing the actual nature and consequences of the breach (although, it should be mentioned, that these observations were made in the specific context of the quantification of damages). Once again, therefore, the distinction or line between an actual breach of contract on the one hand and an anticipatory breach of contract on the other would be a very fine (or even non-existent) one – depending, of course (and once again), on the particular facts of the case concerned. This is not surprising, given the complexity of life and the myriad permutations of facts that are possible.
[70] There is yet a third difficulty which is – for reasons that will be apparent in a moment – also very closely related to the first two difficulties and might, on one view at least, be perceived as being buttressed by them. Put simply, there is both case law and weighty academic authority supporting the view that an anticipatory breach may also fall within the ambit of Situation 3(b).
[71] There is, first, the House of Lords decision of Afovos Shipping Co SA v Romano Pagnan and Pietro Pagnan (trading as R Pagnan & F.lli) [1983] 1 WLR 195 (“The Afovos”), in which Lord Diplock was clearly of the view that there could indeed be an anticipatory breach which might entitle the plaintiff concerned to elect to treat the contract as discharged pursuant to what has been termed Situation 3(b) in RDC Concrete. More recently, the English Court of Appeal in Valilas v Januzaj [2015] 1 All ER (Comm) 1047 also expressed no difficulty in performing a “multi-factorial” (see at [53], per Floyd LJ; see also at [31], per Underhill LJ) or “fact-sensitive” (see at [60], per Arden LJ) assessment in line with the Hongkong Fir approach to determine whether certain anticipatory breaches concerning timeous payment under an oral agreement threatened by the claimant would have the effect of depriving the defendant of substantially the whole benefit which the parties had intended for him to receive under the agreement (reference may also be made to the decision of this court in Sports Connection Pte Ltd v Deuter Sports GmbH [2009] 3 SLR(R) 883 at [61]–[64] (which was not, however, a situation of anticipatory breach)). We note, however, that, in so far as the first of these two aforementioned decisions (viz, The Afovos) is concerned, Prof Carter has expressed some reservations (see Carter at para 7-37). However, his reservations extend only to the fact that Lord Diplock did not appear to have recognised the possibility of the doctrine of anticipatory breach applying to an anticipatory breach of a condition (which is Situation 3(a) in RDC Concrete). We agree with Prof Carter in this particular regard as we have already expressed the view (above at [66]) that, if a defendant is in anticipatory breach of a condition of the contract within the ambit of Situation 3(a) in RDC Concrete, we would think that that would be sufficient to entitle the plaintiff to elect to treat the contract as discharged (reference may also be made to John E Stannard & David Capper, Termination for Breach of Contract (Oxford University Press, 2014), especially at para 7-07). The following observations by Popplewell J in The Bulk Uruguay (at [15]) are also apposite:
[72] There is also the view of Prof Carter, who is the foremost expert on the law of breach of contract in the Commonwealth and whose work we have already referred to above (see, in this particular regard, [71] above; and see ibid at paras 7-37 and 7-39). And, consistently with the view we have just expressed with regard to the analysis the court might have to engage in as well as the evidence to which the court might need to have regard, Prof Carter observes as follows (Carter at para 7-39):

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The “STX Mumbai” and another matter

Grounds of decision

Introduction

Background facts

The parties

The Appellant supplies bunkers to the Vessel

The circumstances leading up to the arrest of the Vessel

(a) STX Alpha – 10 June 2013

(b) The Vessel (ie, STX Mumbai) – 16 June 2013

(c) STX Delicata – 23 June 2013

(d) Asita Sun – 23 June 2013

(e) Cape Race – 23 June 2013

The arrest of the Vessel and subsequent events

The procedural history

The decision below

The parties’ arguments on appeal

The Appellant’s case

The Respondent’s case

The issues before this court

Our decision

The theoretical difficulties with the doctrine

Rationalising the doctrine – the traditional view centred on an implied promise

An alternative rationale – the modern view centred on the defendant’s conduct

(1) The case law

(2) The academic authority

A brief summary of our views thus far

Anticipatory breach and the application of the principles in RDC Concrete