Vita Life Sciences Limited and Another v Arthur Andersen and Another

[2] The plaintiffs’ claim against the defendants was based on an alleged breach of contract and/or negligence on the part of the first defendant in connection with its audits of various financial statements of the second plaintiff and the latter’s parent company. The plaintiffs did not proceed with the action as against the second defendant, and so the first defendant, Messrs Arthur Andersen, was the sole defendant in these proceedings (for convenience, hereinafter referred to as “the defendant”). The defendant is the applicant in the present application, while the plaintiffs are the respondents.

[3] At a pre-trial conference (“PTC”) on 19 October 2007, the parties took directions on, inter alia, the timelines for the filing and exchange of affidavits of evidence-in-chief (“AEICs”). The court also directed that the action be set down by 24 December 2007, and fixed trial dates for 21 January 2008 to 1 February 2008.

[4] On 31 October 2007, the defendant served on the plaintiffs an OTS made pursuant to O 22A of the Rules of Court (Cap 322, R 5, 2006 Rev Ed) (“the Rules”) in the following terms:

The OTS was dated 31 October 2007, and as we shall see later, was accepted by the plaintiffs on 10 January 2008. For convenience, I will refer to this OTS in the judgment as “the defendant’s OTS”.

[5] In the meanwhile, the parties proceeded to exchange their AEICs. While it appeared that the plaintiffs had some difficulty in complying with the original timelines given by the court, the parties eventually exchanged their AEICs on 19 December 2007, and the taking of objections to the contents of the AEICs was completed by 2 January 2008. There was, however, some delay in the setting down for trial and although the set down date had already been extended to 8 January 2008, the matter still had not been set down by 9 January 2008. In any event, on 9 January 2008, the Registry of the Supreme Court (“the Registry”) wrote to the parties informing them to attend before the court for a PTC on 11 January 2008. I should also mention that it was also on 9 January 2008 that the plaintiffs served an OTS of their own (“the plaintiffs’ OTS”) on the defendant. However, since the plaintiffs’ OTS did not form the basis of the settlement between the parties, it is unnecessary for me to set out its terms in the judgment.

[6] On 10 January 2008, the defendant served on the plaintiffs a notice of its intention to withdraw the defendant’s OTS pursuant to O 22A r 3 of the Rules. On the same day, however, within the notice period for the withdrawal of the defendant’s OTS, the plaintiffs accepted the defendant’s OTS. It bears mention that no question arose as to whether or not the defendant’s OTS was capable of being accepted by the plaintiffs on 10 January 2008; rightly so, given the requirement in O 22A r 3(2) of the Rules of providing at least one day’s prior notice of the intention to withdraw the offer. In other words, both parties were agreed that there was a valid acceptance of the defendant’s OTS on 10 January 2008. Accordingly, before the parties were due to attend before the court on 11 January 2008 for the PTC, they had reached an out-of-court settlement.

[7] On 11 January 2008, the parties duly attended before the registrar having conduct of the PTC (“the PTC Registrar”). The parties’ solicitors informed the PTC Registrar that the parties had settled, and then went on to provide the court with the terms of the settlement, which were the terms set out in the defendant’s OTS. The PTC Registrar then recorded that “By consent, judgment [was] so entered”.

[10] On 18 February 2008, the defendant’s solicitors took out the present application which prayed for, inter alia, the following orders:

(a) the Extracted Order be set aside and/or revoked and/or expunged;

(b) directions be given, if necessary, for parties to see the PTC Registrar to settle the terms of the Extracted Order; and

(c) the plaintiffs pay the defendant costs of the proceedings from the date 14 days after the date of service of the defendant’s OTS (ie, 14 November 2007) to the date when the defendant’s OTS was accepted by the plaintiffs (ie, 10 January 2008).

[11] There were two main issues that arose in the present application:

(a) Whether O 22A r 9(2) of the Rules applied to the defendant’s OTS (“the OTS issue”); and

(b) Whether the Extracted Order should be set aside and/or revoked and/or expunged (“the Extracted Order issue”).

[12] Before dealing with these issues in seriatim, it will be helpful to detail the way in which I dealt with some preliminary issues that emerged at the hearing itself. First, a concern of mine was to ensure that the minute sheet of the PTC Registrar (“the Court minute sheet”) properly recorded and reflected the proceedings as they transpired during the PTC on 11 January 2008. In particular, I wanted to dispose of any issue as to whether what was recorded on the Court minute sheet was not what was informed to the PTC Registrar and/or intended by the parties at that relevant time. To my mind, if there were any slight doubt (held by either party) as to the accuracy of the Court minute sheet, the proper course would be for the parties to see the PTC Registrar to clarify those doubts. Ultimately, my concerns proved to be unfounded as the parties confirmed before me that the Court minute sheet properly recorded what was told to her by counsel during that PTC. This effectively disposed of the prayer in the defendant’s application for directions to be given for the parties to see the PTC Registrar to settle the terms of the Extracted Order. Since there was no doubt that the Court minute sheet was an accurate reflection of the proceedings before the court, there was no necessity for the parties to go back to the PTC Registrar to seek clarification.

[13] Secondly, I wanted to find out whether the fact that the settlement was reached by means of an accepted OTS under the Rules was mentioned to the PTC Registrar. To this question, counsel could not give me a conclusive answer one way or the other: both counsel endeavoured to check their respective attendance notes for a record of the same but were unable to confirm either way. Be that as it may, the parties did however confirm that the information provided to the PTC Registrar was premised on the plaintiffs’ acceptance of the defendant’s OTS and not on some other agreement or fresh settlement entered into by the parties. I should state briefly why this was of some concern to me. In my view, if the parties had appeared before the PTC Registrar merely to record a consent judgment per se, even though the terms of that consent judgment might have been identical to that of an accepted OTS, that would have taken the matter beyond the realms of the OTS regime under O 22A of the Rules and the parties would have to stand and fall by the terms of the freely agreed consent judgment (save for the existence of any grounds upon which an agreement can be set aside: see below at [62])).

[14] I should state that I am of the view that this remains one possible way of dealing with the matter before me, notwithstanding the inconclusive inquiries into whether or not an OTS was mentioned to the PTC Registrar. This is because I find it both reasonable and logical to hold that since the parties have decided to enter a “by consent judgment”, neither party should be allowed to interfere with such a judgment so entered where the only basis for doing so is that the judgment has turned out to be a bad decision for one side, or has an effect that is unintended by one party. In this connection, I urge counsel to be extra mindful of the implications of entering a consent judgment before embarking on such a step in any proceedings.

[15] Nonetheless, having said that, there are a number of factors which persuaded me not to deal with the matter in this manner. First, the plaintiffs’ counsel conceded that the manifest intention of the parties when the terms of the settlement were informed to the PTC Registrar was to give effect to the defendant’s OTS. I do note, however, that counsel for the plaintiffs did qualify this by maintaining his position that the parties had elected to have the terms of the defendant’s OTS recorded as a consent judgment per se. Indeed, counsel for the plaintiffs had, as one of his strands of argument, placed much emphasis on the effect of a consent judgment which, according to him, was exhaustive of the rights of the parties. However, the plaintiffs did not vigorously pursue this line of argument, preferring instead to focus on the substantive merits of the issue of whether O 22A r 9(2) of the Rules applied to the defendant’s OTS. This is the second reason why I elected not to summarily decide the matter in this manner. Finally, and perhaps most crucially, it seems to me that it would be overly technical to rule in this way since such a decision would clearly favour form over substance in a situation which does not call for such an approach – where there is no evidence before me that the parties had intended for the consent judgment (and its attendant terms) to be entered independently of the defendant’s OTS and be treated as a stand-alone agreement between the parties.

[16] While noting that the Extracted Order issue (and in a related vein, the issue of the consent judgment as discussed above) could effectively determine the outcome of this matter quite apart from the OTS issue, I have decided to address the latter in priority to the former for the simple reason that the OTS issue is clearly the issue that is at the heart of the dispute between the parties. It is also on this issue that there appears to be a lack of local jurisprudence.

[17] I therefore turn first to the OTS issue, viz, whether O 22A r 9(2) of the Rules applied to the defendant’s OTS. Order 22A r 9(2) of the Rules provides as follows:

Since the OTS in question, viz, the defendant’s OTS, was made by the defendant, we are solely concerned with limb (b), assuming of course that O 22A r 9(2) of the Rules applies in the first place. For this, we have to look at the operative words “[w]here an accepted offer to settle does not provide for costs”. Thus, the issue in the present case is quite simply whether the defendant’s OTS constitutes an OTS that does not provide for costs.

and pointed out that this rule was in pari materia with O 22A r 9(2) of the Rules.

[23] In this connection, the plaintiffs relied on the observations of Woo Bih Li J in SBS Transit Ltd (formerly known as Singapore Bus Service Ltd) v Teo Chye Seng Douglas [2005] SGHC 15 (“the SBS Transit case”) as support for their case. In that case, the learned judge made the following obiter remarks on O 22A r 9(2) of the Rules (at [31]):

The plaintiffs contended that Woo J took extra precaution in paraphrasing the situations in which O 22A r 9(2) of the Rules applied. The plaintiffs submitted that it was significant that Woo J chose to use the same words as set out in O 22A r 9(2) of the Rules, viz, “where an offer to settle does not provide for costs”, and did not state, for example, that O 22A r 9(2) of the Rules would apply “in so far as the offer to settle does not provide for costs of the entire action” (emphasis added) – which in essence was the interpretation the defendant was urging the court to adopt.

[24] Similarly, the plaintiffs also cited dicta from the Ontario Court of Appeal case of Rooney (Litigation Guardian of) v Graham (2001) Carswell Ont 887, 198 DLR (4th) 1 (sub nom Rooney v Graham) 144 OAC 240, 53 OR (3d) 685 (“Rooney”), where Laskin JA (Rosenberg JA concurring) made the following observations concerning r 49.07(5) of the Ontario Rules, at [43]:

The plaintiffs submitted that the dicta, much like the observations of Woo J in the SBS Transit case (supra, [23]), also supported their contention that O 22A r 9(2) of the Rules only applied when the OTS contained no provision for costs.

The judge then proceeded to discuss the sole remaining issue of costs. The plaintiffs submitted that this distinguished Bickmore from the present case as the court in Bickmore had actually heard the matter (i.e. the divorce) and could therefore make an order with respect to the proceedings before it. According to the plaintiffs, this tied in neatly with their submission that the court was making its own order on costs in the exercise of its discretion, and not making a determination on whether r 49.07(5) of the Ontario Rules applied. The plaintiffs therefore submitted that the observations made by the court in Bickmore were again obiter.

[28] Finally, the plaintiffs pointed to a passage of the court’s judgment in Bickmore (supra, [20]), where the court stated as follows (at [20]):

The plaintiffs argued that the above passage also indicated that the court was not engaged in the process of determining whether r 49.07(5) of the Ontario Rules applied. This was because if the court was determining such a question, there would be no issue of a “justifiable assumption” on the part of the wife – in such a situation, r 49.07(5) of the Ontario Rules either applied or it did not.

[30] It is a fundamental principle of statutory interpretation (as laid down by Lord Tindal CJ in The Sussex Peerage (1844) 11 Cl. & F 85 at 143) that:

Likewise, in F A R Bennion, Statutory Interpretation (Butterworths, 4th Ed, 2002), the learned author observes (at p 471):

The propositions cited above are trite law and our courts have consistently reiterated this fundamental principle: see for example, PP v Low Kok Heng [2007] 4 SLR 183 (“Low Kok Heng”) at [30]; Ng Chin Siau v How Kim Chuan [2007] 4 SLR 809 (“Ng Chin Siau”) at [35].

[31] However, I note that any discourse on the construction of statutes in Singapore must take place against the backdrop of s 9A of the Interpretation Act (Cap 1, 2002 Rev Ed) (“Interpretation Act”). An extensive and comprehensive discussion of this provision has already been undertaken in Low Kok Heng at [39] to [57]. I can do no better than to make reference to the relevant portions of that discussion where appropriate. Section 9A of the Interpretation Act provides:

[32] A useful summary of the legal effect of s 9A of the Interpretation Act can be found in Low Kok Heng (at [57]):

It is therefore plain that a purposive approach is to be adopted in the construction of O 22A r 9(2) of the Rules; and the purposive approach will take precedence over a literal interpretation.

[34] In Tearle v Smith (supra, [19]), the settlement in that case arose as a consequence of a written OTS by the defendant, the material paragraph of which read as follows (id, [2]):

An issue to be decided in that case was the amount of disbursements requested by the plaintiff. The defendant took the position that the amount of disbursements should be reduced because some of the disbursements were incurred after the date of the offer and should therefore not be allowed. In support of his position, the defendant relied on r 49.07(5)(a) of the Ontario Rules (supra, [16]). However, the court held (at [7]) that “… this Rule [i.e. r 49.07(5) of the Ontario Rules] does not apply because the offer in this case provides for the disposition of costs”. The court then proceeded to make the observation (at [8]) that,

[36] I have already stated at some length above (supra, [26] – [28]) the plaintiffs’ arguments which seek to distinguish Bickmore (supra, [20]) from the present case. While I do not agree entirely with the plaintiffs’ submissions, I am of the view that Bickmore can and should be distinguished from the present case.

[40] The second reason why Bickmore (supra, [20]) can be distinguished from the present case actually lies in the reasoning of the court in Bickmore itself (at [20]):

I have already made reference to paragraph [20] of Bickmore in my discussion of the plaintiffs’ submissions above (at [28]). However, I found this paragraph significant for a different reason. It will be helpful to remind ourselves that the wife in Bickmore was the plaintiff in those proceedings, and the party which was claiming its entitlement to costs under r 49.07(5) of the Ontario Rules. She was also the person who received the OTS, i.e the offeree. In contrast, in the present case, O 22A r 9(2)(b) of the Rules is slightly different from r 49.07(5) of the Ontario Rules in that the former provides for two sets of costs – one for the plaintiff and the other for the defendant – while differentiating these costs by reference to certain significant dates. This means that the defendant is also entitled to certain costs under O 22A r 9(2)(b) of the Rules. The significance of this in the present case is that the defendant which is the party claiming its entitlement to costs under O 22A r 9(2)(b) of the Rules is the party who made the offer, i.e. the offeror.

[42] In my judgment, it is therefore abundantly clear that the cases of Tearle v Smith (supra, [19]) and Bickmore (supra, [20]) do not assist the defendant’s interpretation of O 22A r 9(2) of the Rules since both cases are easily distinguishable. But what about the defendant’s argument that its interpretation of O22A r 9(2) of the Rules would promote the objective behind O 22A of the Rules?

[43] At the outset, I should state that I agree wholly with the defendant’s submissions on the rationale behind O 22A of the Rules – that the OTS regime under O 22A of the Rules is to “encourage parties to make reasonable offers to settle and to facilitate the early settlement of litigation” (see Singapore Civil Procedure 2007 (Sweet & Maxwell Asia, 2007) at p 423). However, at the risk of stating the obvious, I am mindful that the settlement of litigation that is encouraged through O 22A of the Rules is nonetheless a settlement between the parties. Therefore, while O 22A of the Rules exists to facilitate such settlements, it is ultimately up to the parties to reach a consensus on the terms of their agreement. As Prof Jeffrey Pinsler SC in Singapore Court Practice 2006 (Jeffrey Pinsler gen ed) (Lexis Nexis, 2006) pertinently observes (at p 571), “[t]he flexibility of the ‘offer to settle’ lies in giving a party the complete freedom to formulate the offer to suit the circumstances of the case”.

[46] In this connection, I note that the common law principles of interpretation come into play only when their application coincides with the purpose underlying the statutory provision in question: see Ng Chin Siau at [40]. In this regard, the observations of the court in Ng Chin Siau (at [40]) are apposite:

In my view, the present case is one good example of a “successfully drafted piece of legislation”: the same conclusion is reached when a literal or purposive reading of O 22A r 9(2) of the Rules is taken – O 22A r 9(2) of the Rules only applies where an OTS makes no provision whatsoever on costs.

[49] I now turn to consider the Extracted Order issue, viz, whether the Extracted Order should be set aside and/or revoked and/or expunged. In particular, I consider whether this issue has any material bearing on the conclusion I have just reached on the OTS issue.

On 18 January 2008, the plaintiffs’ solicitors wrote back to the defendant’s solicitors. By this letter, the plaintiffs’ solicitors forwarded the Draft Order (supra, [9]) dated 11 January 2008 for the defendant’s solicitors’ approval, informing the defendant’s solicitors that they had inspected the minutes recorded by the PTC Registrar at the PTC on 11 January 2008 and had ascertained that the Draft Order was in accordance with the same. Further, and in any event, the plaintiffs’ solicitors also disputed the application of O 22A r 9(2) of the Rules to the defendant’s OTS.

[53] On 24 January 2008, the plaintiffs’ solicitors wrote to the Registry requesting that the Draft Order be extracted. In this letter, the plaintiffs’ solicitors stated that

[54] It would appear that the plaintiffs’ solicitors, in their letter to the Registry, had omitted to make any mention of the defendant’s solicitors’ letter dated 21 January 2008.

[55] Thereafter, the defendant’s solicitors wrote various letters to the Registry, as well as the plaintiffs’ solicitors, objecting to the extraction of any order of court, and in any event, the Draft Order on, inter alia, the following grounds:

(a) The defendant could not be deemed to have consented to the terms of the Draft Order as O 42 r 8 of the Rules did not apply in these circumstances – there was no judgment in favour of any party, and in any event, the defendant’s solicitors had written to the plaintiffs’ solicitors on 21 January 2008 stating their objections to the extraction of any order of court.

(b) There was no basis for any judgment or order against the defendant as the defendant’s OTS was a without prejudice offer to settle made pursuant to O 22A of the Rules.

(c) It was not recorded anywhere in the Court minute sheet that “Judgment be entered against [the defendant]” as stated in the Draft Order. Instead, the PTC Registrar had merely recorded “judgment so entered” which had to mean that judgment was recorded on the terms of the settlement. As such, the Draft Order was incorrectly worded.

(d) The Draft Order did not provide for the costs implications under O 22A r 9(2) of the Rules.

[56] In response to the series of letters from both parties, the Registry replied by way of a letter dated 29 January 2008 to both sets of solicitors, directing them to attend before the Duty Registrar to resolve the issue.

[58] The plaintiffs’ solicitors adopted a different view of matters: they objected to the defendant’s solicitors’ proposal to obtain a special hearing date; instead, they maintained their position that they were only to see the Duty Registrar to settle the Draft Order. In essence, the plaintiffs’ solicitors did not think that it was necessary for the court to make any determination on any issue other than the settling of the terms of the Draft Order. This was because they did not see any “live” issue that was in dispute and held the position that there was none. As it turned out, parties could not agree on an appointment before the Duty Registrar. As a result, the plaintiffs decided to write to the Registry on 14 February 2008 in the following terms:

[59] The defendant’s solicitors’ did try once again to state their objections to the approval of the Draft Order by writing to the Registry on 14 February 2008 immediately after receipt of the plaintiffs’ solicitors’ letter of even date. However, the Extracted Order was extracted on 14 February 2008.

[60] Both parties made elaborate submissions on the steps and procedures that are involved in the extraction of an order of court. As I have mentioned above, I do not consider it necessary to examine in any great detail these submissions. Briefly, the plaintiffs relied on O 42 rr 8(1) and 8(2) of the Rules to establish that the defendant could be taken to have consented to the Draft Order and that therefore, the plaintiffs were entitled to proceed to have the Draft Order extracted. The defendant, on the other hand, had two main complaints: first, it argued that it would have been evident from the parties’ correspondence that there was a disagreement between the parties as to the terms of the order of court to be extracted. As such, the plaintiffs’ solicitors in proceeding to have the Draft Order extracted were in clear contravention of para 64 of the Supreme Court Practice Directions (2007 Ed) and O 42 rr 8(3) and 8(4) of the Rules. Secondly, the Extracted Order was not in accordance with the minutes of the court because the Extracted Order should not read as “[j]udgment be entered against [the defendant]” since the PTC Registrar merely recorded in the Court minute sheet that “judgment [is] so entered”. The defendant contended that the order made by the PTC Registrar was merely an order recording the terms of the settlement as agreed between the parties and could not in any way be construed as a judgment that was entered against the defendant.

[61] I find it unnecessary to express any view on the issue of whether there has been any non-compliance with the Rules. In my view, the paramount issue is really whether there are any grounds to set aside the Extracted Order, which is in form and in substance the manifestation of a consent judgment (assuming for the moment that that is true). I think that there is a subtle difference between the setting aside of a consent judgment and an order of court that represents the consent judgment, and the impugning of the extraction process undertaken in relation to that order of court. And even if we remove the assumption that the Extracted Order is a manifestation of a consent judgment, electing instead to treat the proceedings before the PTC Registrar at the PTC on 10 January 2008 as a mere recording of the terms of a settlement between the parties rather than the entering of a consent judgment, in my opinion, setting aside the order of court that results from those proceedings is once again different from attacking the process by which the order of court is obtained.

[62] In my judgment, I see no practical purpose in setting aside the Extracted Order since the defendant has accepted that the Court minute sheet is an accurate reflection of the proceedings before the court as well as a proper record of the intentions of the parties at the relevant time. To be sure, the defendant has not contended that the Extracted Order (or for that matter, the consent judgment) should be set aside on grounds of fraud or on any of the grounds upon which an agreement can be set aside. Similarly, the defendant has not alleged any slip in drawing up the Extracted Order and that there has been an error in expressing the manifest intention of the court. In this regard, I refer to a passage in Bakery Mart Pte Ltd v Ng Wei Teck [2005] 1 SLR 28 which I found to be instructive (although acknowledging that the principles stated therein are in relation to the issue of when a consent judgment or order will be set aside), at [11]:

[63] In summary, I can see no good reason to set aside and/or revoke and/or expunge the Extracted Order. If I decide to do so, the plaintiffs’ solicitors can and will draw up, and then extract, another order of court on substantially the same terms (which will this time – I suppose – meet the approval of the defendant’s solicitors). I do not think that that should be necessary in the present circumstances.