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  • Events Archive 2013
    Directions Continuing Legal Education Resources Media Press Releases Speeches Publications Online References Sample Clauses Directory of Law Practices Latest Singapore Rankings Events Upcoming Events Archive Events Archive 2013 Events Archive 2012 Events Archive 2013 Alternate Dispute Resolution in Singapore Presentation for Law Students Association Radboud University Nijmegen Date April 29 2013 Venue Supreme Court Building Organiser Singapore Academy of Law Program Description About 40 postgraduate law students from the Law Student Association of the Radboud University Nijmegen Netherlands were in Singapore for a study programme Mr Loong Seng Onn Executive Director of the Singapore Mediation Centre and Senior Director of the Singapore Academy of Law and Mr Samuel Leong Counsel at the Singapore International Arbitration Centre presented on ADR in Singapore The students were then led on a Supreme Court tour and visited Maxwell Chambers Premier to learn more about the ADR facilities in Singapore Alternate Dispute Resolution in Singapore Presentation for Summer Programme Students Santa Clara University School of Law Date June 10 2013 Venue Supreme Court Building Organiser Singapore Academy of Law Program Description About 20 postgraduate law students from Santa Clara University were in Singapore for a 10 week study and internship programme from 27 May to

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  • Events Archive 2012
    that both countries offer and how they can tap on these opportunities to expand their businesses regionally and globally As parties to a cross border transaction look forward to a fruitful relationship it is also critical for them to consider the various challenges and options available to resolve any business dispute particularly relating to cross border expeditiously This seminar will share information on the future prospects and business opportunities Singapore and India offer as well as how to resolve any business disputes expeditiously economically and equitably Alternate Dispute Resolution in Singapore Presentation for Summer Programme Students Santa Clara University School of Law Date June 5 2012 Venue Supreme Court Building Organiser Singapore Academy of Law Program Description About 20 students participated in Santa Clara University s overseas summer study and internship programme in Singapore from 30 May to 27 July 2012 A session to share on mediation and arbitration in Singapore was organized for the students in the aim to promote the Singapore legal system and ADR in Singapore Committee members and the interns mentors were also invited for a networking reception Alternate Dispute Resolution in Singapore Presentation to NTU Mayor Class Date July 18 2012 Venue Supreme Court Building Organiser Singapore Academy of Law Program Description Chinese government officials attending the NTU Mayors Class went through an ADR presentation and networking reception The objective of the event was to showcase Singapore law through an introduction to the Singapore legal and judicial system along with presentations on ADR in Singapore The networking reception offered a good platform for the officials to interact with some PSLC members and lawyers from local law firms This event was attended by about 40 participants Arbitration and Choice of Law Involving Parties from China India and ASEAN Date August 22 2012 Venue Supreme Court Building

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  • Ch.16 Singapore Company Law
    to appoint a liquidator to get in the assets of the company to which the creditors have a prior claim before the members of the company Accordingly in such circumstances directors must ensure that the affairs of the company are properly administered and that its property is not dissipated or exploited to the prejudice of the creditors see Winkworth v Edward Baron Development Co Ltd 1987 1 All ER 114 D Duty at Common Law to Avoid Conflicts of Interest 16 3 7 As a fiduciary a duty of loyalty is imposed on a director vis à vis the company As a result a director is obliged not to place himself in a position where his duty to the company may conflict with his own interests see Chew Kong Huat v Ricwil Singapore Pte Ltd 2000 1 SLR 385 Kumagai Zenecon Construction Pte Ltd v Low Hua Kin 2000 2 SLR 501 One particular application of this duty is that a director is not permitted without the fully informed consent of the company to make a profit in connection with the director s position Thus if a director comes across a business opportunity while discharging his role as a director he cannot personally take advantage of such an opportunity unless the company has with full knowledge of the facts permitted him to do so This permission may be given by the rest of the board assuming the other board members giving approval are independent and do not stand in any way to benefit personally or by the members in general meeting see Dayco Products Singapore Pte Ltd v Ong Cheng Aik 2004 4 SLR R 318 E Duty at Common Law to Act for Proper Purposes 16 3 8 The management of a company is generally vested in the board of directors and the board will often have other more specific powers such as the power to issue shares under section 161 of the Act provided that the directors have obtained a specific or general mandate to do so Such powers must be exercised for proper purposes Even if directors have acted in good faith in what they believe is in the best interests of the company they may have exercised certain powers in an improper manner For example it has been held that where the power to issue shares was used to facilitate a takeover bid for a company that was not a proper exercise of such a power even though the directors felt that they were acting in the company s best interests see Howard Smith Ltd v Ampol Petroleum Ltd 1974 AC 821 F Effect of Breach of Fiduciary Duties 16 3 9 If a director places his own interests above those of the company the director will be liable for any loss caused to the company If the director has profited from his position without the informed consent of the company the director may have to account for the profits to the company Where the director has contracted with the company e g the director has sold an asset to the company the company may be able to avoid the contract if the contract with the company was entered into in breach of the director s fiduciary obligations to the company Where a third party has entered into a contract with the company knowing that the directors of the company have acted improperly the company may also be able to avoid the contract vis à vis the third party Return to the top SECTION 4 ENFORCEMENT OF CORPORATE RIGHTS A The Proper Plaintiff Rule 16 4 1 As a company has a personality separate from that of its members a member of the company cannot sue to enforce rights that belong to the company This is known as the proper plaintiff rule namely that the company is the proper plaintiff in respect of any rights that it has see Foss v Harbottle 1843 2 Hare 461 Ng Heng Liat v Kiyue Co Ltd 2003 4 SLR 218 Where a company has rights to be enforced or is being sued the usual body that is empowered to decide whether the company should either bring an action or defend the claim is the board of directors in whom the power of management is usually vested B Derivative Actions 16 4 2 Notwithstanding the proper plaintiff rule there may be occasions where a member of the company is entitled to bring an action on behalf of the company Where a member does this the action is referred to as a derivative action as the right is derived from the company The member is not suing to enforce any rights that belong to him personally In such actions the company is included as a nominal defendant so that any decision of the court will bind the company as well 1 The need for derivative actions to counter illegitimate abuse of power 16 4 3 A member may bring a derivative action at common law in respect of a wrong done to the company where the wrongdoer is the person who has control of the company and is in a position or has used such control to prevent a proper action from being brought against him The wrong done may have arisen because the person in control of the company has appropriated the company s assets for himself or it may consist of an abuse of the powers vested in the wrongdoers e g where the majority shareholders attempt to use their voting power in an illegitimate manner In such a situation the wrongdoers would use their control of the company to prevent a claim from being brought against themselves Accordingly a member will be allowed to institute a derivative action against the wrongdoers if the member is bringing the claim bona fide for the benefit of the company in circumstances where there is no other remedy available If the action is being brought for an ulterior motive or in bad faith the court is entitled to take that into account in determining if it is in the best interests of the company that the action should proceed see Sinwa SS HK Co Ltd v Morten Innhaug 2010 4 SLR 1 Statutory Derivative Action 1 Statute empowers certain individuals to institute derivative actions 16 4 4 In addition to the common law derivative action discussed above sections 216A and 216B of the Act make provision for a statutory derivative action This action is potentially available to any member of a company the Minister of Finance in certain cases or any other person who in the discretion of the court is a proper person to make an application under the section Such persons are potential complainants under sections 216A and 216B 2 Statutory derivative actions require the company to pay reasonable legal fees incurred by the complainant 16 4 5 Section 216A 2 of the Act provides that a complainant may apply to the court for leave to bring an action or arbitration in the name and on behalf of the company or intervene in an action or arbitration to which the company is a party for the purpose of prosecuting defending or discontinuing the action or arbitration on behalf of the company The court will only grant leave if the court is satisfied under section 216A 3 of the Act that the complainant has given 14 days notice to the directors of the company of the complainant s intention to apply for leave the complainant is acting in good faith and it appears to be prima facie in the interests of the company that the action or arbitration be brought prosecuted defended or discontinued One advantage of the statutory derivative action is that if the court authorizes the bringing of the action or arbitration it can order the company to pay reasonable legal fees and disbursements incurred by the complainant in connection with the action Under the common law derivative action the risk of legal costs falls on the person bringing the action 16 4 6 Section 216B 1 states that an application under section 216A shall not be stayed or dismissed by reason only that it is shown that an alleged breach of a right or duty owed to the company has been or may be approved by the members of the company However evidence of approval by the members may be taken into account by the court in making an order under section 216A Return to the top SECTION 5 SHAREHOLDER REMEDIES A The Oppression Remedy 1 Section 216 allows certain individuals to seek recourse if they are being oppressed 16 5 1 In addition to the ability to bring a common law or statutory derivative action to protect the legitimate interests of the company there are two other important remedies open to shareholders who feel that their interests are being prejudiced The first arises under section 216 of the Act Section 216 1 provides that any member or holder of a debenture of the company or the Minister of Finance in certain cases may apply to the court for an order that the affairs of the company are being conducted in a manner oppressive to one or more of the members or holders of debentures or in disregard of their interests as members shareholders or holders of debentures of the company A similar application may be made if an act of the company has been done or is threatened which unfairly discriminates against or is otherwise prejudicial to one or more of the members or holders of debentures Section 216 is commonly referred to as the oppression remedy 2 The Court will make orders as it thinks fit to remedy the matters complained of 16 5 2 Where such an application is made and the court after hearing the evidence is satisfied that the complaint is a valid one the court may with a view to bringing an end or remedying the matters complained of make such order as it thinks fit Such orders may include directing or prohibiting any act or canceling or varying any transaction or resolution regulating the conduct of the affairs of the company in future authorizing civil proceedings to be brought in the name of the company providing for the purchase of the shares and debentures of the company by other members or holders of debentures or the company itself or even winding up the company 3 Courts are only concerned that there should be standards of fair dealing in place not whether the company is well managed 16 5 3 Section 216 of the Act is intended to provide relief to members or holders of debentures where those in control of the company exhibit conduct that is equivalent to abuse or wrongdoing vis à vis such members and holders of debentures The courts are not concerned whether a company is well managed Business decisions are for the board to make and the courts will not generally second guess business decisions Nor are the courts concerned that a member or some members are frequently outvoted It is part and parcel of corporate administration that decisions are taken by the majority What the courts are concerned with is whether the affairs of the company are being run by those in control in such a way that there is a visible departure from the standards of fair dealing and a violation of the conditions of fair play which a shareholder or debenture holder is entitled to expect see Re Kong Thai Sawmill Miri Sdn Bhd 1978 2 MLJ 227 This may arise where key shareholders are excluded from management where shareholders are deprived of information about the company where the dominant members are clearly preferring their own interests and where the patriarch of a family company behaves in an autocratic manner just to give some common examples 16 5 4 Similarly section 216 of the Act should not be invoked where the essence of the complaint is that a wrong has been done to the company In such instances the more appropriate route is for the plaintiff to apply for leave to commence a derivative action against the wrongdoers Having said this Singapore courts recognize that the distinction between a personal wrong to which section 216 applies and a corporate wrong to which the proper remedy should be a derivative action is not always clear Wrongful acts committed against a company may amount to a personal wrong against minority shareholders insofar as such acts can have an adverse effect on the company s assets and the value of the shares in the company As such it is suggested that one key question is whether the plaintiff seeks relief from misconduct in which case a derivative action should be commenced or the misconduct is evidence on which the plaintiff asserts that he has been oppressed as a member or debenture holder see Ng Kek Wee v Sim City Technology Ltd 2014 4 SLR 723 B Winding Up on the Just and Equitable Ground 16 5 5 Under section 254 1 i of the Act the court may wind up a company where it is just and equitable to do so This is also an important remedy for shareholders as it provides a means for disgruntled shareholders to use the winding up process to disengage from a company 16 5 6 The just and equitable ground for winding up has been used in a number of different circumstances For example where the main object of the company cannot be achieved or has been departed from aggrieved members of the company may petition for the company to be wound up Similarly a company may be wound up if it engages in acts that are entirely outside of what can fairly be regarded as having been within the general contemplation and understanding of the members when they became members of the company Another situation where the just and equitable ground has been used is where the company s business has been carried on in a fraudulent manner In addition where the company is a quasi partnership in that the way the business is run resembles how a partnership is managed despite the use of the corporate form and further trust and confidence among the members has been irretrievably damaged the court may order the winding up of the company since the members can no longer work with one another 16 5 7 Section 254 2A states that instead of making a winding up order the Court has the discretion if it is of the opinion that it is just and equitable to do so to make an order for the shares of one or more members to be purchased by the company or other members on terms to the satisfaction of the Court Return to the top SECTION 6 SHARES 1 Definition of a share 16 6 1 A share is the interest of a shareholder in the company measured by a sum of money for the purpose of liability in the first place and of interest in the second but also consisting of a series of mutual covenants entered into by all the shareholders between themselves in accordance with section 39 1 of the Act see Borland s Trustee v Steel Brothers Co Ltd 1901 1 Ch 279 2 Rights and liabilities of shareholders 16 6 2 As mentioned earlier the liability of a member shareholder is to contribute to the company only that amount unpaid on the shares taken up by the member shareholder This is what is meant by limited liability A shareholder is entitled to participate in the life of the company on the terms set out in the company s constitution and to the extent allowed by the Act These will often determine the exact rights of the shareholder Some of the usual rights of shareholders include being entitled to a pro rata share of any dividends that are declared and paid having a pro rata share of any assets remaining upon a winding up after the creditors of the company have been paid and having the power to appoint and remove the directors of the company 3 Types of shares 16 6 3 Generally speaking there are two broad classes of shares ordinary shares and preference shares Preference shares as the name suggests are shares that confer some preference on the holders of those shares That preference may be in the form of dividends or return of capital For example the terms of a preferential share may provide that the holders of those shares are entitled to a particular rate of dividend before any dividends may be paid to holders of ordinary shares A Maintenance of Capital 1 Capital must be maintained and not returned to company members 16 6 4 As a general rule though this is now subject to many exceptions a company under Singapore law is required to maintain its capital in the sense that it cannot return capital to its members This general rule is intended to protect creditors Creditors of a company are said to give credit to the company on the faith that the capital of the company will be applied only for the purposes of the business and therefore have a right to insist that such capital be kept and not returned to the shareholders see Re Exchange Banking Co 1882 21 Ch D 519 2 Rules that the company must adhere to 16 6 5 Arising from this general principle the following 5 propositions may be made a company may not purchase its own shares or those of its parent company see section 76 1A a of the Act a company may not lend money on the security of its own shares or those of its parent company see section 76 1A b of the Act a public company cannot give financial assistance to a third party to purchase the company s shares or those of its parent company see section 76 1 of the Act a company cannot pay dividends except out of available profits section 403 of the Act a company cannot reduce its capital or otherwise return assets to its members except to the extent the Act permits this see section 78A of the Act 3 Only profits can be returned to company members 16 6 6 This is not to say that members of a company cannot obtain any return on their investment Indeed if a company makes profits in a particular year the company may pay dividends to its shareholders out of the profits made The rules relating to capital maintenance also do not mean that members of the company must contribute to the company when trading losses have occurred which have depleted the company s capital A member s liability to the company is limited only to the amount he has agreed to contribute to the company when the shares are issued to him The rules relating to capital maintenance simply mean that absent profits a company must not take any steps that in effect return capital to its shareholders 4 A company may purchase its own shares under certain circumstances 16 6 7 One of the exceptions now permitted by the Act is that a company may in certain circumstances purchase or otherwise acquire its own shares if it is expressly permitted to do so by its constitution see section 76B 1 of the Act Generally it will be necessary to convene a general meeting of shareholders to pass a resolution in some instances a special resolution allowing the company to buy back its shares Pursuant to section 76B 3 of the Act the total amount of shares that can be bought during the relevant period shall not exceed 20 or such other percentage as the Minister may prescribe of the total number of shares of the type of shares being purchased This limitation does not apply to redeemable preference shares see section 76B 3D of the Act The relevant period is defined in section 76B 4 as the period commencing from the shareholders resolution authorizing the purchase and expiring on the date when the company next has to hold its Annual General Meeting or the date of the next Annual General Meeting whichever is the earlier Payment for share buy backs may be made out of the company s capital or profits so long as the company is solvent see section 76F 1 of the Act This ensures that creditors are not prejudiced In addition directors and the Chief Executive Officer of a company should not authorize any buy backs if they know that the company is not solvent see section 76F 3 of the Act Where a company purchases its ordinary shares it may keep them as Treasury shares provided the amount held by the company does not exceed 10 of the class of shares in question see sections 76H and 76I of the Act B Reduction of Capital 16 6 8 Notwithstanding the capital maintenance rules the Act permits a reduction of capital in certain circumstances Sections 78A 1 and 3 of the Act provide that a company may unless its constitution excludes or restricts it reduce its share capital in any way and in particular do all or any of the following extinguish or reduce the liability on any of its shares in respect of share capital not paid up cancel any paid up capital which is lost or unrepresented by available assets pay off any paid up share capital which is in excess of the needs of the company 16 6 9 Any reduction of capital must be authorized by a special resolution and the company must in general meet solvency requirements see sections 78B and 78C of the Act Creditors may pursuant to section 78D of the Act object to the reduction and if there are any such objections the court will cancel the reduction if the court is satisfied that the creditors claims have not been secured or they are insufficient safeguards for such claims and it is not the case that such security or safeguards are unnecessary see section 78F of the Act If there are no objections from creditors the share reduction will take effect upon certain formalities being complied with and no order of court is required see section 78E 1 and 2 of the Act 16 6 10 A reduction of capital is also possible by way of special resolution subject to court approval In such cases the capital reduction does not take effect until it receives approval by an order of court see section 78G of the Act Return to the top SECTION 7 DEBENTURES AND CHARGES A Definition of a Debenture and its Terms 16 7 1 A company will frequently have to borrow money for its business operations Often when it does so a document known as a debenture will be created Simply put a debenture is a document that either creates a debt or acknowledges it see Levy v Abercorris Slate and Slab Co 1887 37 Ch D 260 16 7 2 When a company borrows money it will often give security to its creditor for the loan Where a debtor gives security to a creditor the creditor obtains a proprietary interest in the property of the debtor over which security has been granted This proprietary interest in those assets allows the creditor to have priority to those assets ahead of ordinary creditors of the debtor should the debtor not be able to pay its debts One common form of security that companies provide to its creditors is a charge over its assets The debenture that creates or acknowledges the debt will frequently also contain the terms of the charge that is created B Definition of a Charge and its Terms 16 7 3 A charge is a non possessory form of security i e the validity and efficacy of the security is not dependent on the secured creditor having possession of the security given For example a company that needs to use the machinery in its factory can still grant security by way of a charge over such machinery to the bank that has provided the financing to purchase the machinery The bank need not take possession of the machinery for the charge to be effective Being non possessory in nature the charge can also be taken over intangible assets such as shares and book debts 16 7 4 A charge arises where in a transaction for value the company and its creditor show an intention that property existing or future will be made available as security for the payment of a debt and that the creditor shall have a present right to have such property made available as security even though the present legal right can only be enforced at a future time usually when there is a default see National Provincial and Union Bank of England v Charnley 1924 1 KB 431 at pp 449 450 1 Fixed and floating charges 16 7 5 Company charges may be fixed or floating A fixed charge is one that attaches to specified assets that are presently owned by the chargor or that may be acquired in the future e g a company may grant a fixed charge over all the machinery presently in its factory and any machinery subsequently acquired for the factory As the fixed charge immediately attaches to the specified assets either at the creation of the charge or upon later acquisition the company cannot dispose of the charged assets to a third party If the company does so this is a breach of the terms of the charge and the third party will not obtain good title to the assets unless the third party has provided value for the purchase and did not know of the existence of the fixed charge 16 7 6 A floating charge on the other hand is a security interest that does not at its inception specifically attach to any assets of the chargor company The charge is said to float over the assets in question until some act occurs which causes the charge to attach to the assets From that time the charge effectively becomes a fixed charge The acts which cause the floating charge to crystallize i e to attach to the assets may be contractually provided for in the debenture Thus the parties may provide that in certain circumstances the floating charge will automatically crystallize without the parties having to do anything else or that in certain circumstances the chargee may give notice of crystallization to the company thereby causing the charge to crystallize Floating charges may also crystallize in other ways e g if the company goes into liquidation or if it ceases to be a going concern 16 7 7 The advantage of floating charges is that they can be taken over assets which as a class are constantly changing For example where the assets of a company largely comprise perishable goods or raw materials it is impractical to obtain a fixed charge because the goods have to be sold within a relatively short period or are intended to be used in the manufacturing process If a fixed charge over such assets is created it will be extremely inconvenient for the company to have to obtain the permission of the chargee each time the company wishes to sell its goods or consume its raw materials A floating charge will enable the chargor company to sell or otherwise use such assets and it is only when the charge crystallizes that the power to deal with the assets comes to an end On the other hand when the assets are not intended to be dealt with in the ordinary course of business such as in the case of machinery or a parent company s shares in its subsidiary a fixed charge would be more appropriate 2 Registration of charges 16 7 8 Under section 131 of the Act certain charges created by companies have to be registered with the public authority responsible for corporations Failure to do so will render the charge void against the liquidator or other secured creditors of the company As a chargee will often wish to enforce a charge when the company is insolvent this provides an incentive to chargees to ensure that any charge created in their favour is registered within the 30 day period after the creation of the charge as required by section 131 1 of the Act Where a charge has not been registered within the 30 day period it may be possible to obtain an extension of time under section 137 of the Act e g if the omission to register was accidental or does not prejudice the position of creditors or members of the company 16 7 9 Under section 131 3 g of the Act all floating charges must be registered As for fixed charges only those that fall within those charges described in section 131 3 of the Act require registration Return to the top SECTION 8 COMPANIES IN DISTRESS A Schemes of Arrangement 16 8 1 There may be occasions where it is desirable to rearrange the rights of the company its creditors and shareholders particularly where the company is in a financially perilous position On such occasions it may be difficult to obtain the unanimous consent of all creditors and shareholders Accordingly section 210 of the Act provides for schemes of arrangement to be binding on the company its creditors and shareholders as the case may be where the requisite majority is obtained subject to approval by the court Schemes of arrangement are most often used where it is desirable to compromise creditors claims against an insolvent company 1 Application for a scheme of arrangement and the requisite documents 16 8 2 For a scheme of arrangement to take effect it will be necessary first of all to make an application to court under section 210 1 of the Act for an order summoning one or more meetings of the creditors members of the company or holders of units of shares of the company If the court is minded to make such an order a proposal must then be tabled before the relevant meetings and approved by the requisite majority unless the court orders otherwise of the creditors or class of creditors members or class of members or the holders of units of shares or class of holders of units of shares The default majority required is such numbers as amounts to three fourths in value of the class in question present and voting either in person or by proxy see section 210 3AB of the Act To allow the relevant parties to exercise their votes in an informed manner section 211 1 of the Act states that every notice summoning the meeting must contain a statement explaining the effect of the compromise or arrangement and in particular stating any material interests of the directors and the effect thereon of the compromise or arrangement in so far as it is different from the effect on the like interests of other persons If this is not done and the creditors and members do not have sufficient information on which to make an informed decision the court may later decline to approve the scheme even though it may have been approved by the requisite majority see Re Dorman Long Co 1934 Ch 635 Wah Yuen Engineering Pte Ltd v Singapore Cables Manufacturers Pte Ltd 2003 3 SLR 629 2 The Court may make such alterations as it thinks are just 16 8 3 Any scheme will be binding only if the court approves it and such approval may be subject to such alterations or conditions as the court thinks just see section 210 4 The requirement of the court s approval serves as an additional crucial check to ensure the integrity of voting outcome s at the scheme creditors meeting s and the objective fairness of the proposed scheme see The Royal Bank of Scotland NV v TT International Ltd 2012 2 SLR 213 Re Dorman Long Co 1934 Ch 635 B Judicial Management 16 8 4 Where a company is in financial difficulty but there is a reasonable prospect of rehabilitating the company or of preserving all or part of the business as a going concern or that otherwise the interests of creditors would be better served than by resorting to a winding up the company or its creditors may apply to court for an order that the company be placed under the judicial management of a person known as a judicial manager see section 227A of the Act 1 The order must satisfy several conditions 16 8 5 Upon such an application by the company its directors or creditors section 227B 1 of the Act provides that the court may make a judicial management order if the court is satisfied that the company is or will be unable to pay its debts Additionally the court must be satisfied that the order if made would be likely to achieve one or more of the following purposes namely the survival of the company or the whole or part of its undertaking as a going concern the approval under section 210 of the Act of a compromise or arrangement between the company and any such persons as are mentioned in that section the more advantageous realization of the company s assets than would occur in a winding up 2 Motives for the application must be honourable and without ill intent 16 8 6 The court must be vigilant to ensure that the judicial management procedure is not directly or indirectly used by the directors and shareholders of the company to the detriment of creditors The motives of the application should therefore be clearly honourable The court must also show great heed to the wishes and views of creditors since the assets of an insolvent company in effect belong to creditors see Re Genesis Technologies International Pte Ltd 1994 3 SLR 390 at p 392 The court is obliged to dismiss an application for a judicial management order however if the making of such an order is opposed by a debenture holder of debentures secured by a floating charge see sections 227B 4 and 5 of the Act 3 Role of the judicial manager 16 8 7 If the court makes an order for judicial management the business and property of the company will be managed by a judicial manager see section 227B 2 As the role of the judicial manager is to rehabilitate the company or to preserve part or all of its business as a going concern section 227G 1 of the Act provides that on the making of a judicial management order the judicial manager shall take into his custody or control all the property to which the company is or appears to be entitled Section 227G 2 goes on to state that during the period for which the order is in force all the powers and duties of the directors shall be exercised and performed by the judicial manager and not by the directors The judicial manager may do all such things as are necessary for the management of the affairs of the company and shall do all such things as the court may sanction see section 227G 3 of the Act 4 Benefits of judicial management vis à vis premature liquidation 16 8 8 The benefit of judicial management is that it allows a company that is not hopelessly insolvent some breathing space to reorganize its affairs If this can be done successfully this will benefit all creditors and members of the company The alternative may be a forced and premature liquidation that is not in the interests of most creditors and members Accordingly when a judicial management order is made section 227D 1 provides that

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  • Ch.08 The Law of Contract
    in its own name sue and be sued in its own name acquire own hold and develop property hold a common seal and may do and suffer such other acts and things as any body corporate may lawfully do and suffer see s 5 1 Section 5 2 also extends s 41 of the Companies Act to apply to a limited liability partnership Return to the top SECTION 7 PRIVITY OF CONTRACT Third party Enforcement of Contractual Rights Generally not Permitted 8 7 1 As a general proposition only persons who are party ie privy to a contract may enforce rights or obligations arising from that contract This is sometimes referred to as the privity rule 8 7 2 A third party who is not privy to a contract is generally not allowed to bring any legal action in his or her own name for breach of contract against a contracting party who fails to perform his or her contractual obligations even if such failure of performance has caused the third party to suffer a loss When is Someone Party or Privy to a Contract 8 7 3There is no clear definition as to when a person is is not privy to a contract Generally a party who is an offeror or offeree will be privy to the contract However it seems that merely being mentioned in the contract is not enough 8 7 4 It is nevertheless possible to have a multilateral contract where there are multiple offerees one or more of whom accept the offer on behalf of the others or where there are multiple offerors one or more of whom make the offer on behalf of the others In either case each offeree or offeror is a joint party to the contract and the privity rule will not apply to them Non statutory Exceptions to the Privity Rule 8 7 5 The privity rule is not absolute It is subject to many exceptions Apart from the possibility of a multilateral or multi party contract mentioned above some other exceptions can be found in the law relating to a agency b trusts or c land in relation to covenants which run with the land or lease For an in depth discussion of these other legal techniques to circumvent the privity rule please see Chapters 15 and 18 Statutory Exceptions to the Privity Rule 8 7 6 There are also statutory exceptions Most of these are only applicable to specific and narrowly defined cases Two examples of such statutes include a the Bills of Exchange Act Cap 23 1985 Rev Ed see Chapter 22 on Banking Law and b the Bills of Lading Act Cap 384 1994 Rev Ed see Chapter 25 on Shipping Law Of more general application the Singapore Parliament enacted the Contracts Rights of Third Parties Act Cap 53B 2002 Rev Ed in 2001 Contracts Rights of Third Parties Act 8 7 7 Section 1 provides that the Contracts Rights of Third Parties Act has no retrospective effect it cannot apply to any contract formed before 1 January 2002 Section 1 also provides that the Act does not apply to any contracts which were formed on or after 1 January 2002 but before 1 July 2002 unless the contracting parties expressly provided in their contract for it to do so Contracts formed on or after 1 July 2002 are always subject to the Act 8 7 8 Where the Act applies it gives a third party a statutory right to enforce a term of a contract against a party who is in breach of his or her obligations under the contract the promisor even though even though the third party is a volunteer who has not provided any contractual consideration see s 2 5 8 7 9 This may occur if either a the contract expressly provides that the third party may enforce a term of the contract in his or her own right s 2 1 a or b the contract purports to confer a benefit on the third party s 2 1 b However s 2 1 b is qualified a third party will not be granted the direct statutory right of suit in the absence of an express provision permitting him or her to do so if on a proper construction of the contract it appears that the parties did not intend the term to be enforceable by the third party s 2 2 8 7 10 This statutory right of enforcement is not just limited to cases where the promisor is under an obligation to act to confer a positive benefit on the third party Negative benefits such as the benefit of a term excluding or limiting the third party s legal liabilities to the promisor may also be enforced s 2 5 8 7 11 The third party s statutory right of enforcement against the promisor is qualified in a number of ways First the third party s statutory right of recovery may be qualified by a defence or set off which the promisor would have been able to assert vis à vis the other party to the contract the promisee s 4 Second any sum to be recovered by the third party pursuant to the Act may be reduced to take into account sums recovered by the promisee from the promisor in respect of the promisor s breach s 6 8 7 12 Once third party rights are created under the Act certain restrictions are imposed on the ability of the parties to the contract to vary or rescind their contract if this would extinguish or alter the third party s rights under the Act s 3 8 7 13 Though wider in its scope than many of the other legal techniques for circumventing privity the Act is not of universal application Section 7 of the Act sets out a number of situations where the Act does not apply Excluded cases include a contracts on a bill of exchange promissory note or other negotiable instrument b the statutory contract binding a company and its members under s 39 of the Companies Act Cap 50 2006 Rev Ed c limited liability partnership agreements as defined under the Limited Liability Partnerships Act Cap 163A 2006 Rev Ed d third party enforcement of any term of an employment contract against an employee and e third party enforcement of any term apart from any exclusion or limitation of liability for the benefit of the third party in a contract for carriage of goods by sea or a contract for the carriage of goods or cargo by rail road or air if such contract is subject to certain international transport conventions Return to the top SECTION 8 DISCHARGE OF CONTRACT Discharge by Performance 8 8 1 If all the contractual obligations as defined by the terms of the contract are fully performed the contract is brought to an end or discharged by performance In theory such performance must be precise However trivial defects in performance may be ignored as being negligible or de minimis In addition where full performance is only possible with the cooperation of the other party as is almost invariably the case with obligations of payment or delivery tender of performance in circumstances where the other party refuses to accept it is generally deemed to be equivalent to full performance so as to discharge the contract Non or Defective Performance 8 8 2 In the event that a contractual obligation is not performed or is performed defectively in a non trivial fashion Singapore law provides for a variety of legal responses and remedies depending on the nature of the failure of performance Lawful Excuses for Breach of Contract 8 8 3 If the failure of performance is not subject to any lawful excuse the contract is said to be breached In this context lawful excuses may take the following forms Discharge by Agreement 8 8 4 First just as parties are free to agree to bind themselves to a contract they are free to negotiate with each other to release themselves from the obligations of that contract Such agreement may well have been built into the original contract for example where parties agree that their original agreement be terminable by giving notice of termination or upon lapse of a specified period of time Alternatively contracting parties may release themselves from the obligations of the original contract by entering into a subsequent contract of release Where each contractual party is still subject to contractual obligations which have yet to be performed the mutual release of their outstanding obligations is generally effective under Singapore law without the need for any further formalities or any other consideration However where the party who is owed the obligation in question does not have any outstanding obligations under the original contract the party seeking to be released from that obligation will have to provide some form of valuable consideration in exchange for the release In the alternative the release must be executed under seal to be effective 8 8 5 Secondly it may be that the obligation which has not been performed is conditional upon the prior occurrence of certain specified events these may be external events or some contractually specified counter performance by the other party to the contract 8 8 6 Thirdly the parties may contractually provide for non performance following from certain events to be excused so as not to amount to a breach for example in the form of a force majeure clause At the very least such a clause will hold all parties innocent of liability for non performance following the specified force majeure event More detailed force majeure clauses may also make provision for issues such as the return and refund of advance payments reimbursements for expenses incurred in preparation of the performance of the contract and so forth Such provisions will generally be given effect by Singapore law Discharge by Frustration 8 8 7 Fourthly where the reason for the failure of performance lies in events beyond the control of the contracting parties and which neither party could have reasonably foreseen the contract is said to be frustrated In such cases there are statutory rules which set out the extent to which advance payments made before the frustrating event intervened may be refunded and work done in preparation of the performance of the contract in advance of the frustrating event may be reimbursed see Frustrated Contracts Act Cap 115 1985 Rev Ed s 2 2 and s 2 4 respectively Section 2 3 of the Frustrated Contracts Act also empowers the Singapore courts to make valuations of any non money benefits which may have been conferred by one contracting party on another prior to the frustrating event and to order the recipient of those benefits to pay for such value received Effects of a Breach of Contract 8 8 8 In the absence of a lawful excuse a breach of contract has two significant effects Contract Damages 8 8 9 First if the breach of contract by one contracting party the party in breach causes loss to the other the aggrieved party the party in breach may be ordered by the courts to compensate the aggrieved party in money damages for those losses in lieu of the primary obligations left unperformed under the contract However contractual damages which are compensatory and not punitive in nature is not the only judicial remedy available Other types of remedies may be available in lieu or sometimes in addition to damages depending on the nature of the obligation which has been breached See Section 13 below Right to Elect to Discharge for Breach 8 8 10 Second the breach may give the aggrieved party the right to bring the contract to an end ie to discharge the contract for breach In this connection it is useful to distinguish actual breaches of contract wherein the breach occurs at the actual time of performance as specified by the contract from anticipatory breaches of contract wherein the breach is said to occur in advance of the contractually stipulated time of performance Actual Breach Giving Rise to Right of Discharge 8 8 11 In the case of an actual breach of contract the aggrieved party may elect to discharge the contract for breach if the contractual term which has been breached is a a condition or b an innominate term the breach of which deprives the aggrieved party of substantially the whole of the benefit of the contract In such a case the aggrieved party may choose to discharge the contract for breach 8 8 12 The aggrieved party has no such power of election if the contractual term which has actually been breached is a a warranty or b an innominate term the breach of which does not deprive the aggrieved party of substantially the whole of the benefit of the contract In such a case the contract will persist despite the breach unless the contract is brought to an end by some other event 8 8 13 For details as to how a contract term may be categorised as a condition a warranty or an innominate term see Paragraphs 8 5 9 to 8 5 10 above Discharge by Actual Breach 8 8 14 If the aggrieved party is entitled to discharge the contract and elects to do so the contract is brought to an end prospectively That is the contract ceases to bind the parties to the contract from the time the election is effectively communicated to the other contracting parties Such communication may take the form of words acts or even in exceptional cases silence Prior to that time such an election may be withdrawn Following an effective discharge the parties are released from all outstanding contractual obligations Affirmation of Contract Following an Actual Breach 8 8 15 The aggrieved party may choose however not to discharge the contract Instead the aggrieved party may choose to affirm the contract thereby giving the party in breach another opportunity to rectify the non performance or defective performance If so the entire contract is kept alive and the aggrieved party loses the right to have the contract discharged although the right to sue the party in breach and recover money damages for any losses incurred as a result of the delay in procuring full performance may well be retained unless the aggrieved party also elects to waive his or her right to compensatory money damages Anticipatory Repudiatory Breach 8 8 16 A breach of contract may also occur anticipatorily in advance of the time of actual performance If this breach is also repudiatory where the evidence demonstrates that one party intends not to be bound by the terms of the contract nor to honour his or her contractual obligations as and when they fall due the aggrieved party has the right to choose whether to discharge or to affirm the contract Repudiatory intentions will be more readily proved where there are clear and express communications by the purported party in breach to such effect However they can also be inferred from actions or steps taken by the purported party in breach which render it impossible for his or her obligations to be performed when they become due Effect of Discharge by Anticipatory Repudiatory Breach 8 8 17 Significantly a party aggrieved by an anticipatory repudiatory breach may exercise his or her right to discharge the contract immediately without waiting until the time of actual performance If the aggrieved party elects to discharge the contract the contract is immediately and prospectively brought to an end The aggrieved party is then entitled to sue the party in breach for damages as compensation for any loss suffered by the aggrieved party as a result of the non performance of the contract Effect of Affirmation Following an Anticipatory Repudiatory Breach 8 8 18 On the other hand the aggrieved party may elect to affirm the contract If so the contract continues to bind all parties to the contract and the anticipatory breach is ignored Consequently once the aggrieved party affirms the contract there can be no liability for money damages for that anticipatory breach since it is treated as if the breach never occurred Limits on Right of Election to Affirm Contact 8 8 19 Although the aggrieved party s right of election to discharge affirm a contract following an actual anticipatory breach is largely unqualified the English case of White Carter Councils Ltd v McGregor 1962 AC 413 suggests that this right is limited under English law However it is arguable that the limitation is less strict in Singapore In MP Bilt Pte Ltd v Oey Widarto 1999 3 SLR 592 the Singapore High Court adopted the limitations set out in White Carter v McGregor that the aggrieved party may only elect to affirm a contract despite the other contracting party s breach if the aggrieved party was reasonably able to perform his or her part of the contract without the need for any cooperation from the party in breach and if the aggrieved party had a legitimate interest in doing so However the High Court stated that these limitations would not apply when the aggrieved party is under a legal obligation or practical compulsion to complete performance of the contract in question and other contracts he has entered into on the basis of the contract in question at p 607 Consequently it appears that an aggrieved party s freedom to elect to affirm a contract may be less strongly curtailed in Singapore as compared with the case in England Return to the top SECTION 9 MISTAKE Introduction 8 9 1 If one or both parties enter into a contract under a misapprehension of its basis or of an important aspect of the transaction the contract may either be completely void or voidable In the latter case the contract is valid until it is rescinded or set aside by the mistaken party This distinction is critical for determining third party rights see Paragraph 8 9 12 below Whether a mistake has the effect of rendering a contract void or voidable depends on the manner in which the mistake arises Mutual Mistake 8 9 2 If A contracts with B believing that he is purchasing X but B is in fact intending to sell Y to A there is no contract between A and B because they have failed to reach any agreement on the subject matter of the contract Mistakes of this nature are commonly referred to as mutual mistakes A transaction entered into under a mutual mistake relating to a fundamental aspect of the contract is void Common Mistake 8 9 3 A common mistake arises when an agreement is reached on the basis of a mistaken assumption or belief shared by both parties This occurs for instance when A contracts to sell a consignment of goods to B but unknown to both parties the goods had been destroyed before the contract was formed In this situation owing to the destruction or non existence of the subject matter the contract may justifiably be regarded as invalid and void even though it is otherwise properly formed 8 9 4 The more problematic situation arises when the common mistake relates to a less fundamental matter such as the quality of a subject matter of the contract as opposed to its existence Here the law has to strike an appropriate balance between doing justice to the party disadvantaged by the mistake and protecting the counter party s legitimate expectation that the contractual bargain would be upheld The common law and principles of equity respond to this problem in different ways on the distinction between common law and equitable rules see Chapters 1 and 18 Singapore Legal System and Trusts Common Mistake at Common Law 8 9 5 At common law precedence is given to upholding bargains Thus a common mistake as to quality would not in general render a contract void unless the mistake has the effect of rendering the subject matter of the contract essentially and radically different from what the parties believed it to be The ambit of the common law doctrine is therefore extremely narrow having little application outside cases involving non existent or destroyed subject matter Common Mistake in Equity 8 9 6 Equity in comparison permits a more liberal approach even if a mistake is not sufficiently fundamental to render a contract void at common law it may still be set aside provided that the mistake is sufficiently serious 8 9 7 Distinguishing between the different degrees of fundamental mistakes that are operative at common law and in equity is a difficult task Nevertheless the Singapore Court of Appeal s recent observations appear to favour the retention of this two prong approach Chwee Kin Keong v Digilandmall com Pte Ltd 2005 1 SLR 502 This may be contrasted with the position in England where the more flexible equitable rule appears to have been abolished Great Peace Shipping Ltd v Tsavliris Salvage International Ltd 2003 QB 679 Unilateral Mistake 8 9 8 A contract may also be affected by a unilateral mistake that is when only one party is acting under a mistake For purposes of discussion it is convenient to distinguish between the following two cases a where the mistake relates to the identity of a contracting party and b those where the mistake relates to a term of the contract Unilateral Mistake as to Identity 8 9 9 It is useful to note for a start that unilateral mistakes as to identity typically involve cases where one party s consent to an agreement is procured by deception If A agrees to sell his car to B who has deceived A into believing that B is C the contract is affected by A s unilateral mistake as to B s true identity provided that it is clear that B s identity is material ie an important factor which induced the contract As between A and B it is not essential to determine whether such a mistake renders the contract void or voidable since A the mistaken party would have the right to set aside the contract in either case However the distinction becomes critical if B has sold the car to T an innocent third party who acquires the car without notice of B s deception before A discovers the fraud If the mistake has the effect of rendering the contract between A and B void A will be able to recover the car from T because B not having acquired any property right in the car has nothing to sell to T In the converse situation where the contract between A and B is merely voidable B would have acquired property rights in the car which he could subsequently transfer to T A is therefore unable to recover against T in this instance 8 9 10 Disputes involving mistakes as to identity are invariably hard cases because they often require the court to prefer one of two innocent parties Nevertheless it may be observed that the general approach in these cases requires examination of the facts to ascertain whether there is in fact an agreement between the mistaken party and the fraudulent counter party Thus if A intends to sell his car only to C then no agreement is reached between A and B when B attempts to purchase the car by pretending to be C Such intention may for instance be inferred from the fact that A s offer is expressly addressed to C or where there is a written contract purportedly made between A and C although fraudulently signed by B on C s behalf However where A and B transact face to face there is a presumption that they intend to deal with the physical person present in which case A is presumed to have intended to contract with B the fraudster Such a presumption may however be rebutted by clear evidence to the contrary Unilateral Mistake as to a Term 8 9 11 Unilateral mistakes may also arise in relation to the terms of a contract If A enters into a contract under a misapprehension as to a particular important term other than the identity of the other party B and the mistake is known to B such a mistake may render the contract void at common law The Singapore Court of Appeal has recently clarified in Chwee Kin Keong v Digilandmall com Pte Ltd 2005 1 SLR 502 that this common law doctrine is confined to cases where the non mistaken party B has actual knowledge of A s mistake In addition if a case does not fall within the ambit of the common law doctrine because for instance it has not been established that B has actual knowledge of A s mistake the court may nevertheless exercise its equitable power to set the contract aside if B is guilty of unconscionable conduct This may arise where B suspects that A is labouring under a mistake but consciously omits to disabuse A of his error Documents Mistakenly Signed 8 9 12 Generally a person of full age and understanding who has signed a written contract is bound by it even if he or she has not read it Exceptionally a signatory to a contract may be able to set it aside if it is fundamentally or radically different from what the signatory believed it to be as may occur if the signatory s understanding is limited by some innate incapacity or when he or she has been tricked into signing it This defence cannot however be invoked by a person who has been negligent in signing the document Documents Mistakenly Recorded 8 9 13 If a written contract does not by reason of a mistake accurately record the agreement between the parties the court may rectify the contract so as to give effect to the parties true intention Originally the remedy of rectification was only available in cases where the mistake is shared by both parties but was subsequently extended to situations where only one party is mistaken and such mistake is known to the other party Return to the top SECTION 10 MISREPRESENTATION The Nature of the Representation 8 10 1 A contract which is induced by a misrepresentation may be set aside and may give rise to an action for damages A misrepresentation occurs when one party to a contract makes a false statement of fact to the other contracting party which induces the latter to enter into the contract To be operative the false representation must relate to a past or present fact It follows that a vague or exaggerated statement that is in the nature of a puff does not suffice Generally a statement of a party s intention or opinion is also not a sufficient ground for relief However if the representor does not honestly hold such intention or opinion there is a misrepresentation of fact as to the representor s state of mind A statement of opinion may also be actionable if it is made by a person who professes to have special skill or knowledge in the matter stated Statements of law appear still to be excluded from the ambit of operative representations although the correctness of this position must now be doubted in light of the abolition of this distinction in the context of mistakes see Chapter 19 on Restitution Mistaken Payments 8 10 2 A representation may be express or it may be inferred from the representor s conduct On its own silence or non disclosure does not usually constitute a representation There are however exceptions to this general rule If a party makes a positive but incomplete disclosure the omitted disclosure may amount to a misrepresentation if it has the effect of distorting the truth of the information disclosed Similarly a failure to correct an earlier and continuing representation that was true at the time it was made but which has subsequently become incorrect is actionable A failure to disclose material facts whilst negotiating contracts uberrimae fidei such as insurance contracts would also give rise to an action for misrepresentation 8 10 3 Generally a misrepresentation must also be material in the sense that it relates to a matter which would influence a reasonable person s decision whether to enter into the contract If a representation is ambiguous and may be interpreted in two or more ways of which one is true and the other false it is not a misrepresentation unless the representor has intended it to be understood in the sense that is false The Falsehood Must Have Induced the Contract 8 10 4 Misrepresentation is a ground for relief only where it has induced a contract Clearly if a person is unaware of the representation or knows that it is untrue or does not believe it to be true he or she cannot reasonably have relied on or be induced by the representation to enter into the contract Reliance may also be negated if the representee has independently verified the truth of the representation although the failure to verify when the opportunity to do so is available is not in itself a bar to relief If the misrepresentation has in fact induced the representee to enter into the contract it does not matter that it is not the sole inducing factor The persons who may rely on a representation are not confined to those directly addressed by the representor but include any person whom the representor intends to reach and influence even if such a person learns of the representation indirectly from a third party The Right to Rescind 8 10 5 Once it is established that a contract has been induced by a misrepresentation whether innocent negligent or fraudulent the party induced may elect to rescind ie set it aside or affirm it The effect of rescission is to release the parties from their contractual obligations and to restore the parties to their respective positions prior to the making of the contract The right to rescind will however be lost if a the induced party has affirmed the contract b innocent third parties have acquired for value rights in the subject matter of the contract c it is no longer possible to restore the parties to their respective prior positions and d except in the case of fraud an inordinate period of time has lapsed It should also be noted that the court may pursuant to s 2 2 of the Misrepresentation Act Cap 390 1994 Rev Ed award damages in substitution for the right to rescind Damages for Fraudulent Misrepresentation 8 10 6 Whether damages may be awarded for misrepresentation depends on whether the misrepresentation is fraudulent negligent or innocent At common law damages may be awarded for fraudulent misrepresentations A fraudulent misrepresentation is a false representation that is made 1 knowingly 2 without belief in its truth or 3 recklessly careless whether it be true or false In such a case the representor would have committed the tort of deceit and the representee is permitted to recover for all losses incurred as a consequence of the fraudulent misrepresentation even for losses which might not have been reasonably foreseeable Common Law Damages for Negligent Misrepresentation 8 10 7 Where an operative misrepresentation results from negligence the party who has relied on it may obtain damages by commencing an action in the tort of negligence This requires proof that there is a special relationship between the parties which places the representor under a duty to take reasonable care in furnishing information or advice to the representee and that the representor has failed to do so A more extensive survey of the legal principles relating to this branch of the law is contained in See Chapter 20 on Tort Negligence Recovery in such a case would however be restricted to losses which are reasonably foreseeable Statutory Damages for Negligent Misrepresentation 8 10 8 Alternatively a party who has entered a contract in reliance on a negligent misrepresentation may claim damages under 2 1 of the Misrepresentation Act Cap 390 1994 Rev Ed In fact where the issue arises as between contracting parties this statutory action is generally the preferred route for recovering damages as its requirements are less onerous than those of the common law tortious action outlined in Paragraph 8 10 7 above Under s 2 1 the claimant only has to establish that he or she has contracted in reliance on the other party s misrepresentation whereupon the latter has the onus of proving that he or she was not negligent in that he or she had reasonable ground for believing in the truth of the statement In contrast the claimant in a tortious action bears the burden of proof of all elements of the action including the existence of a special relationship between the parties as well as the other party s negligence The language of the provision suggests that the measure of damages under s 2 1 should be the same as that for fraudulent misrepresentations which is more liberal than the measure which applies in contract cases see Paragraph 8 13 10 below or in cases based on the tort of negligence see Paragraph 8 10 7 above As a matter of principle however the contract measure appears to be the more appropriate option Innocent Misrepresentations 8 10 9 Misrepresentations may also be made innocently In such a case the claimant is not entitled to damages at common law but where the claimant still has the right to rescind and it appears beneficial to do so the claimant may persuade the court to exercise its discretion under s 2 2 of the Misrepresentation Act to award damages in lieu of rescission If the court is not so persuaded and the contract is rescinded the claimant may be compensated for expenses incurred in performing the contract in the form of an indemnity Misrepresentations and Terms 8 10 10 Misrepresentations are usually pre contractual statements made to induce a person to contract with the representor A pre contractual statement which has induced a contract may also have been incorporated as a term of the contract If so the person who made the statement would now also be in breach of the contract if the statement turns out to be false In such an event damages for breach of contract may be claimed and s 1 of the Misrepresentation Act makes it clear that the representee may still rescind the contract for misrepresentation For the test for distinguishing between terms and representations see Paragraph 8 5 1 Excluding Liability For Misrepresentation 8 10 11 Parties to a contract may agree to contractual terms which exclude or limit their liability for misrepresentation but s 3 of the Misrepresentation Act requires such a term to satisfy the test of reasonableness set out in s 11 1 of the Unfair Contract Terms Act Cap 396 1994 Rev Ed This test has been discussed in Paragraph 8 5 15 above Return to the top SECTION 11 DURESS UNDUE INFLUENCE UNCONSCIONABILITY Duress 8 11 1 If A enters into a contract with B as a result of B s coercion often taking the form of threats of unlawful acts the contract may be set aside by A on the ground of duress The types of unlawful or improper pressure that may have this effect include actual or threatened harm to a person a person s goods or his or her economic interests 8 11 2 The recognition that economic duress can suffice as a ground for avoiding a contract is a relatively recent development justified by the concern to prevent a party with strong bargaining power from exploiting the weaker position of the counter party However it is not the case that economic duress arises whenever a contract is entered into between

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  • Ch.20 The Law of Negligence
    Authority 1994 5 Med LR 170 confirm a rigid application of the need for a secondary victim to be at the actual scene of an accident and to suffer sudden shock some like Galli Atkinson v Seghal 2003 EWCA 697 where the physical proximity requirement was relaxed seemed to point to a partial easing of Alcock However in Taylor v A Novo UK Ltd 2013 3 WLR 989 the English Court of Appeal held when refusing a woman s claim for post traumatic stress suffered after she witnessed her mother collapse and die following a workplace accident which had occurred three weeks previously that any extension of the boundaries in secondary victim claims must be left to Parliament In Singapore a secondary victim s claim for psychiatric harm without proof that the claimant had witnessed a sudden shock inducing event was allowed on special facts in the medical negligence case of Pang Koi Fa v Lim Djoe Phing 1993 2 SLR R 366 1993 SGHC 153 Following a detailed examination of the rules on psychiatric harm the Court of Appeal in Ngiam see Section 20 3 5 above while recognizing arguments for comprehensive legislative reform confirmed the applicability of the McLoughlin proximities in Singapore In Man Mohan Singh Anor v Zurich Insurance Singapore Pte Ltd now known as QBE Insurance Singapore Pte Ltd Anor Anor appeal 2008 3 SLR R 735 2008 SGCA 24 Man Mohan Singh see Section 20 6 3 below decided just after Ngiam the McLoughlin proximities were applied in refusing a claim by parents who had neither been at the scene of the accident in which their children were fatally injured nor had witnessed the immediate aftermath and whose action had not been definitively shown to relate to psychiatric harm rather than pathological grief D Pure economic loss not linked to physical damage 20 3 7 The courts have always allowed recovery for economic loss which flows from physical damage Spartan Steel and Alloys Ltd v Martin Co 1972 QB 27 20 3 8 It was however historically impossible to recover for pure economic loss ie loss which could not be linked to physical damage The refusal to allow such claims was attributable to a number of concerns the most significant of which was the perceived danger of a possible flood of litigation due to the knock on effect of economic damage Statements 1 Negligent statements recovery possible when there is voluntary assumption of responsibility and reasonable reliance 20 3 9 In Hedley Byrne Co v Heller Partners Ltd 1964 AC 465 Hedley Byrne the House of Lords first recognized the possibility of recovering for pure economic loss caused by negligent statements The Hedley Byrne principle based on reasonable reliance by a claimant in circumstances where a defendant voluntarily assumes responsibility for his statement has since been applied in numerous cases in all major jurisdictions The decision by the House of Lords in Caparo see Section 20 2 6 above which confined the principle to situations where the statement was given by the maker to a known recipient for a specific purpose of which the maker was aware led for some years to a more cautious approach to imposing liability for negligent misstatements particularly with respect to the liability of auditors when preparing company accounts see eg Ikumene Singapore Pte Ltd Anor v Leong Chee Leng 1993 2 SLR R 480 1993 SGCA 50 and Public Prosecutor v Tan Cheng Yew and another appeal 2013 1 SLR 1095 Standard Chartered Bank Anor v Coopers Lybrand 1993 3 SLR R 712 However in recent years the courts have shown a renewed willingness to allow claims for negligent misstatements see eg Law Society v KPMG Peat Marwick 2004 4 All ER 540 For an application of Hedley Byrne in the context of an architect s duty to advise of the risks inherent in a building contract see Sonny Yap Boon Keng v Pacific Prince International Pte Ltd Anor 2009 1 SLR R 385 2008 SGHC 161 Note that the courts remain cautious about allowing claims in negligence where the relationship is governed by contract although in Go Dante Yap v Bank Austria Creditanstalt AG 2011 4 SLR 559 2011 SGCA 39 Go Dante Yap see Section 20 3 13 below the Court of Appeal recognised both an implied contractual duty of care on the part of a bank in carrying out its client s instructions as well as a duty of care in negligence to give advice of a kind which could reasonably have been expected of it when providing the client with financial services On the facts however there was no breach of either the contractual or the tortious duty Professional Responsibility 2 Professional responsibility recovery possible for negligent performance 20 3 10 The Hedley Byrne principle has also been extended in most jurisdictions to cover professional responsibility eg the negligent drafting or execution of wills and other documents by solicitors White v Jones 1995 2 AC 207 AEL and Ors v Cheo Yeoh Associates LLC Anor 2014 SGHC 129 In such situations a duty of care is held to exist even when the negligence complained of takes the form of an act rather than a statement and even in the absence of active reliance by the claimant For a decision of the Court of Appeal finding that a solicitor who negligently caused loss to non contracting parties owed those parties a duty of care see Anwar Patrick Adrian Section 20 2 13 above With respect to the overlap between professional responsibility and negligent statements see too Plan Assure PA formerly known as Patrick Lee PAC v Gaelic Inns Pte Ltd 2007 4 SLR R 513 2007 SGCA 41 and for further discussion of the liability of professionals see Section 20 4 6 below Acts 3 Negligent acts causing pure economic loss recoverable under the Spandeck test 20 3 11 The position with respect to negligent acts which cause pure economic loss varies from jurisdiction to jurisdiction In Singapore Australia and other jurisdictions it is in some circumstances possible to sue for pure economic loss caused by negligent acts However English law still takes an extremely restrictive approach to such claims 20 3 12 In Singapore the Court of Appeal has imposed a duty of care for pure economic loss in actions brought by management corporations for the negligent design and defective construction of condominiums in Ocean Front see Section 20 2 9 above and RSP Architects v MCST Plan No 1075 Eastern Lagoon 1999 2 SLR R 134 The position in Singapore is similar to that in Bryan v Maloney 1995 182 CLR 609 where the Australian High Court in a decision based largely on the economic vulnerability of individuals when purchasing their homes imposed on the builder of a house a duty of care towards a subsequent purchaser Indeed the decision of the High Court of Singapore in Management Corporation Strata Title Plan No 2757 v Lee Mow Woo 2011 SGHC 112 suggests that the courts in Singapore might even be willing to extend this principle to commercial properties If this is in fact the case it will be consistent with the decision of the Supreme Court of New Zealand in Body Corporate 207624 v North Shore City Council 2012 NZSC 83 but not that of the High Court of Australia in Woolcock Street Investments Pty Ltd v CDG Pty Ltd 2004 216 CLR 515 The House of Lords on the other hand unequivocally rejected the possibility of recovering for pure economic loss associated with any category of defective premises in Murphy v Brentwood District Council 1991 AC 398 which overruled Anns on the economic loss point and the English courts have shown no sign of relaxing this attitude 4 More restrictive approach adopted when imposing a duty of care for pure economic loss in comparison to that applied in cases of physical damage 20 3 13 In P T Bumi see Section 20 2 10 above a case which involved an unsuccessful claim for a defective chattel the Singapore Court of Appeal expressed the need for extreme caution in allowing claims outside the arena of actions by management corporations with respect to residential property particularly where the circumstances were fundamentally contractual In United Project Consultants Pte Ltd v Leong Kwok Onn 2005 4 SLR R 214 United Project Consultants see Section 20 7 3 below the Court of Appeal confirmed that in deciding whether to impose a duty of care for pure economic loss the courts would adopt a more restrictive approach than that applied in cases of physical damage and a similarly cautious approach prevailed in the Court of Appeal in Sunny Metal see Sections 20 2 12 above and 20 5 1 and 20 5 2 below a contractual matrix case which raised issues of both tort and contract In Spandeck see Section 20 2 13 above the Court of Appeal held that the same two stage test of proximity based on assumption of responsibility and reliance and policy should be used with respect to all categories of claim However it recognised that a more restrictive application might be appropriate in cases of economic loss and held that the action in that case which again involved a contractual matrix must fail The existence of a contractual matrix will not however necessarily prove fatal to an action in negligence In Animal Concerns see Section 20 2 13 above the Court of Appeal held that both assumption of responsibility and reliance were satisfied in an action brought by the claimant which had commissioned a construction project against the project s clerk of works notwithstanding the existence of a contract between the claimant and the project s contractor Similarly in Go Dante Yap see Section 20 3 9 above it was held that in addition to an implied contractual duty a bank owed its client a duty of care in negligence when providing financial services although neither duty was breached on the facts For an economic loss case involving different issues see Kimly Section 20 2 13 above in which the Court of Appeal held that a certifying engineer ought not to have to act as insurer for a contractor s statutory obligations to ensure worker safety 20 3 14 Where a claimant suffers pure economic loss through damage not to his own property but to property belonging to someone else actions have been allowed in Australia again based on the specific economic vulnerability to which the defendant s negligence has exposed the claimant Perre ors v Apand Pty Ltd 1999 198 CLR 180 However English law does not allow such actions in any circumstances Candlewood Navigation v Mitsui OSK Lines 1986 AC 1 C No general duty for pure omissions 1 Reasons for not imposing duty with respect to pure omissions 20 3 15 Generally no duty is imposed with respect to pure omissions ie situations in which a defendant who has created no danger to the claimant merely fails to prevent him from sustaining harm There are a number of reasons for this One is the large number of potential defendants in situations of failure to act Another is society s focus on the more modest aim of discouraging wrongdoing rather than on the more ambitious one of encouraging good deeds For these and other reasons there is for example ordinarily no duty to rescue even when such an act could be carried out without personal risk 2 Situations where there is a duty to act to prevent harm 20 3 16 However there will be a duty to act to prevent harm in certain situations eg where the defendant and the claimant are in a special relationship of dependence such as guardian child carrier passenger employer employee where the defendant has control over something which or someone who poses a threat to the claimant in which respect note that the responsibility of an occupier of premises to persons entering those premises which was formerly determined by the application of special rules relating to occupiers liability is now broadly governed by the Spandeck test for duty of care Toh Siew Kee v Ho Ah Lam Ferrocement Pte Ltd 2013 SGCA 29 or where the defendant has assumed responsibility for the claimant or his property F Statutory authorities owe a duty only in restricted circumstances 1 Duty of care unlikely to arise where conduct involves policy discretionary elements or the balancing of resources 20 3 17 A statutory authority owes a duty of care to members of the public for a failure to exercise its statutory powers or for the improper exercise of those powers only in restricted circumstances This is because statutory authorities invariably have limited resources and are unlikely when allocating those resources to be able to act in a way which satisfies all those affected by their decisions The courts faced with turning what is effectively a public duty in to a private one have attempted to delimit the duty of care in negligence by developing various tests These tests include the operational policy test Anns see Section 20 2 4 to 20 2 5 above the irrationality test Stovin v Wise 1996 AC 293 and the justiciability test Barrett v Enfield London Borough Council 1999 3 WLR 628 It is generally more likely that an act rather than an omission will be regarded as justiciable and it is unlikely that conduct which involves policy or discretionary elements or the balancing of resources or competing functions will be held to give rise to a duty of care 2 Developments in the United Kingdom 20 3 18 For several years the UK courts were extremely cautious in their attitude to claims against statutory authorities X Minors v Bedfordshire County Council 1995 2 AC 633 However later cases suggest a slight relaxation in this respect particularly where there is a direct relationship between the statutory authority and the claimant Phelps v Hillingdon London Borough Council 2001 2 AC 619 In Singapore observations by the Court of Appeal in Andrea De Cruz see Section 20 2 10 above and 20 5 13 below indicate the possibility of regulatory bodies being held responsible for the negligent rubber stamping of commercial products 20 3 19 A number of cases relate to the duty owed by the emergency services in the exercise of their statutory functions The majority of these cases concern the police whose duty to protect the public at large does not extend to a duty to protect individual members of the public during the conduct of an investigation Hill v Chief Constable of West Yorkshire Police 1989 AC 53 or even in response to an emergency call Michael v Chief Constable of South Wales Police 2015 UKSC 2 The rationale for this seemingly harsh approach is that a private law duty by the police to protect individuals from criminal acts committed by third parties would not only be difficult to confine within rational parameters but would also be contrary to the ordinary principles of common law The fire services owe no duty to individual members of the public either even when they have undertaken to deal with a fire unless they actually make matters worse through their positive intervention Capital and Counties v Hampshire County Council 1997 QB 1004 However the ambulance services have been held to owe a duty of care to individual members of the public whom they have undertaken to assist Kent v London Ambulance Services 1999 Lloyd s Rep Med 58 Return to the top SECTION 4 BREACH OF DUTY 20 4 1 Before a court can determine whether the defendant has breached his duty to the claimant it is first necessary to establish the standard of care to which he will be held The Standard of Care A Establishing the due standard of care whether reasonable care has been taken to avoid reasonably foreseeable harm 20 4 2 The basic question in every case is whether reasonable care has been taken to avoid reasonably foreseeable harm Government of Malaysia v Jumal b Mahmud 1977 2 MLJ 103 Factors which are relevant in this determination include the likelihood or probability of the risk eventuating the seriousness or gravity of the foreseeable risk the practicability of avoiding or minimising the risk the justifiability of taking the risk the time for assessing the risk the relevant characteristics of the foreseeable plaintiff For an application of these factors see the judgement of Choo Han Teck J in Tesa Tape see Section 20 3 1 above The test used is that of the reasonable person in the circumstances It is an objective test under which a defendant is judged not by his own characteristics and attributes but by the nature of the task he is performing and the circumstances in which he is performing it For a clear illustration of the balancing of factors including the magnitude of the risk inherent in an activity the social utility of that activity the seriousness of the harm should the risk eventuate and the cost of taking precautions against the risk see too the judgment of Coomaraswamy J in BNJ v SMRT Trains Ltd and another 2014 2 SLR 7 2013 SGHC 286 BNJ see too Section 20 4 13 below 20 4 3 Note that in certain areas such as industrial safety there is considerable interplay between duty and standard of care For a Court of Appeal decision recognising the extensive non delegable nature of an employer s obligations to its employees and the standard of care to which the employer will consequently be held see Chandran a l Subbiah v Dockers Marine Pte Ltd 2010 1 SLR 786 2009 SGCA 58 For confirmation that industry standards should be taken into account in assessing the standard of care see too Jurong Primewide Pte Ltd v Moh Seng Cranes Pte Ltd and others 2014 SGCA 6 B Special standards of care 1 Standard of care not normally lowered to take account of a defendant s inexperience 20 4 4 The standard of care is not normally lowered to take account of a defendant s inexperience since that would be unfair to those whom he injures Nettleship v Weston 1971 2 QB 581 For much the same reason an amateur is judged according to objective standards of acceptability for the task in which he is engaged not according to his personal level of expertise 2 Lower standard applied to children 20 4 5 A lower standard is applied to children Mullin v Richards 1998 1 WLR 1304 and it seems to conduct in the heat of competition during sporting events Wooldridge v Sumner 1963 2 QB 43 see too Section 20 7 8 below A higher standard is applicable where the defendant knows or can foresee that a claimant is particularly vulnerable Paris v Stepney Borough Council 1951 AC 367 3 Professional negligence standard of care is that of the ordinary skilled man exercising and professing to have that special skill 20 4 6 The duty owed by professionals extends equally to acts and statements and is nowadays encompassed by the notion of professional responsibility see Section 20 3 10 above The applicable standard of care as laid down by McNair J in Bolam v Friern Hospital Management Committee 1957 1 WLR 582 Bolam at 586 is that of the ordinary skilled man exercising and professing to have that special skill Under the Bolam test a professional will not be negligent as long as he meets the standard of an ordinary competent exponent of his profession For an application of the Bolam test with respect to auditors see JSI Shipping S Pte Ltd v Teofoongwonglcloong A Firm 2007 4 SLR R 460 2007 SGCA 40 JSI Shipping see Sections 20 4 8 and 20 4 10 below 20 4 7 In the conduct of trades and professions the law allows for a variety of levels of qualification and thus a variety of standards as long as the level of expertise which can be expected from any given professional is readily apparent from his particular qualification eg that he is a general practitioner rather than a specialist However every professional must achieve an acceptable level of basic competence Ang Tiong Seng v Goh Huan Chir 1970 2 MLJ 271 20 4 8 When assessing whether or not a professional has been negligent the courts will normally use as their benchmark the common practice within the relevant profession However where they consider that a profession adopts an unjustifiably lax practice they may condemn the common standard as negligent Edward Wong Finance Co Ltd v Johnson Stokes and Master 1984 AC 296 and JSI Shipping see Sections 20 4 6 above and 20 4 10 below Medical Negligence 4 Medical negligence different applications of the Bolam test in various jurisdictions 20 4 9 In his decision in Bolam see Section 20 4 6 above McNair J laid down a specific test for determining the standard of care applicable to the medical profession Under this test a doctor is not guilty of negligence if he has acted in accordance with a practice accepted as proper by a responsible body of medical men skilled in that particular art 20 4 10 The Bolam test forms the basis for assessing medical negligence in Singapore and in the UK although in the latter its application is now confined to negligent treatment and diagnosis see Section 20 4 11 below Even though the question of whether or not a doctor has been negligent is ultimately for the court to decide Bolitho v City and Hackney Health Authority 1998 AC 232 the significance which the courts place on the opinions of fellow doctors when determining the issue of negligence tends particularly in Singapore to make it more difficult for claimants to succeed in medical actions than might be the case in actions against other professions Dr Khoo James and anor v Gunapathy d o Muniandy 2002 2 SLR 414 For an application of Gunapathy see Re JU Section 20 3 2 above a decision which also raises issues relating to the difficult and somewhat controversial areas of wrongful life and wrongful birth Note however that the decision of the Court of Appeal in JSI Shipping see Sections 20 4 6 and 20 4 8 above could be interpreted as favouring a common professional standard 20 4 11 In Rogers v Whitaker 1992 175 CLR 479 which concerned failure to disclose a risk involved in medical treatment the Bolam test was rejected in Australia in favour of a test based on the duty to disclose a risk which a reasonable patient would consider material This followed the approach already adopted in Canada under Reibl v Hughes 1980 114 DLR 3d Although under the decision in Sidaway v Bethlem Royal Hospital 1985 AC 871 Sidaway the English courts traditionally applied the Bolam test to cases of negligent non disclosure of risks the decision of the House of Lords in Chester v Afshar 2004 UKHL 41 Chester see Section 20 5 11 below while focusing primarily on the issue of causation effectively favoured a reasonable patient approach to failure to disclose a risk of treatment Application of the reasonable patient approach in the UK has now been confirmed by the Supreme Court in Montgomery v Lanarkshire Health Board 2015 UKSC 11 Montgomery which overruled Sidaway Interestingly although in most jurisdictions the rejection of the Bolam test has been largely confined to cases involving non disclosure of medical risks the Federal Court of Malaysia held in Foo Fia Na v Dr Soo Fook Mun 2007 1 MLJ 593 that the reasonable patient test should be used in Malaysia to assess all forms of medical negligence In Singapore however under Gunapathy see Section 20 4 10 above the Bolam test continues to apply not only to negligent diagnosis and treatment but also to negligent non disclosure of risks In the wake of Montgomery the High Court has left open for determination at a later date the question of whether Singapore should now adopt the same approach to the non disclosure of risks as that in the UK see Chua Thong Jiang Andrew v Yue Wai Mun and another 2015 SGHC 119 Proof of Breach C Proving breach of duty is a question of fact determined by specific circumstances of each case 20 4 12 Whether or not a duty has been breached is a question of fact to be determined according to the specific circumstances of each case For this reason precedents are of value only in terms of the general principles which they establish Qualcast Wolverhampton Ltd v Haynes 1959 AC 743 1 Shifting of burden to the defendant where exact cause of incident is unknown defendant had control over the agent of harm and that relevant damage would not normally have occurred in the absence of negligence 20 4 13 In some circumstances the claimant may lack sufficient knowledge to prove negligence on the part of the defendant In such circumstances the defendant will clearly choose to remain silent unless the normal rules for establishing negligence are varied The courts will vary the rules and infer negligence if the claimant can show that the exact cause of the incident is unknown that the defendant had control over the agent of harm and that the relevant damage would not normally have occurred in the absence of negligence On occasion the effect of this inference sometimes referred to under the Latin maxim res ipsa loquitur has been to shift the legal burden of proof onto the defendant but it more frequently results only in the evidentiary burden being shifted This requires the defendant to adduce evidence in rebuttal failing which the claimant s case will succeed Awang b Dollah v Shun Shing Construction 1996 SGHC 296 Note however that in BNJ see section 20 4 2 above the High Court of Singapore confirmed that res ipsa loquitur will not apply where the circumstances are clear and there is no evidentiary gap Return to the top SECTION 5 CAUSATION OF DAMAGE A Causation the physical link between the defendant s negligence and the claimant s damage 20 5 1 Causation relates to the physical link between the defendant s negligence and the claimant s damage Even if it can be shown both that the defendant breached his duty of care to the claimant and that the claimant sustained damage the claim will not succeed unless the damage is shown to have resulted from the breach For a detailed analysis of the rules on causation as applied in Singapore albeit with little discussion of recent developments elsewhere see the decision of the Court of Appeal in Sunny Metal Sections 20 2 12 and 20 3 13 above and 20 5 2 below Simple Issues of Causation B The but for test dealing with simple issues of causation 20 5 2 The basic test for establishing causation is the but for test under which the defendant will be liable only if the claimant s damage would not have occurred but for his negligence or looked at the other way round the defendant will not be liable if the damage would or could have happened anyway regardless of his negligence Yeo Peng Hock v Pai Lily 2001 3 SLR R 555 In Sunny Metal Sections 20 2 12 20 3 13 and 20 5 1 above the Court of Appeal held that the but for test could also be extended to determine the issue of causation in fact in contract cases C Multiple consecutive causes involvement of either a second tortfeasor or a natural event 20 5 3 The but for test works well in straightforward situations where it is easy to establish that the damage has been caused by the defendant s negligent act see dicta in F v Chan Tanny 2003 4 SLR R 231 but it proves inadequate in establishing causation in more complex situations where a number of actual or potential causes operate either consecutively or concurrently Multiple Consecutive Causes 20 5 4 When there are two discrete torts one following the other but no additional damage is caused by the second tort only the first tortfeasor is liable Where additional damage is caused by the second tort each tortfeasor is liable for the damage he has caused The first tortfeasor s liability remains what it would have been had the second tort not occurred even if the physical manifestations of the second tort appear to wipe out the damage caused by the first tort Baker v Willoughby 1970 AC 467 Baker This avoids the claimant being under compensated or the second tortfeasor compensating for more harm than he has actually caused Note that in Salcon Ltd v United Cement Pte Ltd 2004 4 SLR R 353 the Court of Appeal held that even assuming Baker to be applicable in Singapore it must be confined to personal injuries and cannot extend to commercial disputes 20 5 5 However when a tort is followed by a natural event which wipes out the physical effects of the tort the tortfeasor s liability ceases at the date when the supervening condition manifests itself Jobling v Associated Dairies 1982 AC 794 If this were not so the defendant would be liable for damage which would have occurred naturally anyway due to the vicissitudes of life D Multiple potential causes claimant can succeed only if he proves on the balance of probabilities that the damage is attributable to the tort 20 5 6 Where there are several discrete potential causes of harm some of which are tortious and some of which are natural the basic rule is that the claimant can succeed only if he proves on the balance of probabilities that the damage is attributable to the tortious conduct Wilsher v Essex Area Health Authority 1988 AC 1074 Wilsher 20 5 7 In circumstances where a defendant has exclusive control over a damage causing agent he may be held liable even if his negligence cannot be shown to be the sole cause of the damage as long as it can be proved to have made a material contribution Bonnington Castings v Wardlaw 1956 AC 613 Wardlaw The Wardlaw principle was extended in McGhee v National Coal Board 1973 1 WLR 1 McGhee to provide for liability even where a claimant can establish only that the defendant negligently increased the risk of harm Although McGhee was implicitly criticised in Wilsher see Section 20 5 6 above its fortunes were revived in Fairchild v Glenhaven Funeral Services Ltd 2003 1 AC 32 Fairchild where it was held that several defendants who consecutively exposed claimants to the same risk of mesothelioma involving the same damage causing agent asbestos fibres could all be treated as having materially contributed to the disease and could thus be held jointly liable even though it was impossible to determine which of them was actually responsible for triggering the condition The subsequent decision in Barker v Corus UK Ltd 2006 2 WLR 1027 re interpreted Fairchild as having been based on increased risk and favoured apportioned liability but the effect of this decision was reversed by legislation which reinstated joint liability at least in mesothelioma cases The application of Fairchild to all mesothelioma cases even those where exposure to the damage causing agent is both tortious and environmental was confirmed by the Supreme Court in Sienkiewicz v Greif UK Limited 2011 UKSC 10 However as the judgments in Zurich Insurance PLC UK Branch v International Energy Group Limited 2015 UKSC 33 demonstrate departure from the but for test in the UK under Fairchild and its satellite cases has given rise to some judicial disquiet Fairchild has yet to be accepted as good law in Australia and in Amaca v Booth 2011 HAC 53 the High Court of Australia accepted evidence that mesothelioma could in fact develop as a result of cumulative exposure to asbestos fibres rather than being triggered at a single moment 20 5 8 Note that while the Wardlaw McGhee and Fairchild principles were developed in the context of industrial diseases contracted through exposure to dangerous dusts and fibres several decisions in recent years have applied the principles in other circumstances and most notably in medical negligence situations For an application of McGhee in Singapore with respect to a hospital s liability for negligent failure to monitor a post operative patient see Surender Singh s o Jagdish Singh and another v Li Man Kay 2010 1 SLR 428 2009 SGHC 168 And for an application of Wardlaw in the wake of McGhee and in particular Fairchild in the UK with respect to a hospital s liability for a patient s brain damage see Bailey v Ministry of Defence 2008 EWCA Civ 883 2009 1 WLR 1052 Loss of a Chance 20 5 9 The standard requirement that in civil actions a claimant must establish his case on the balance of probabilities applies equally to actions based on loss of a chance Under English law if there is a less than 51 chance that the thing which might have happened would actually have happened had it not been for the defendant s negligence the claimant will fail even if he seeks to recover not for the whole of his damage but only for the chance which the defendant caused him to lose This analysis has been applied primarily in medical cases where actions by claimants whose chances of recovery from illness or injury have been reduced due to the negligence of their doctors have failed when they could not establish that with proper treatment their chances of recovery would have exceeded 50 Gregg v Scott 2005 UKHL 2 2005 2 WLR 268 Although in the past claims for loss of chance succeeded in medical negligence cases in some Australian states see eg Rufo v Hosking 2004 NSWCA 391 the decision of the High Court of Australia in Tabet v Gett 2010 HCA 12 established that Australian law does not recognise the concept of loss of chance in medical negligence proceedings 20 5 10 The rule that a claimant cannot normally recover for a lost chance is modified in cases where a defendant negligently deprives the claimant of the opportunity to gain financial benefit or to avoid financial risk In such cases damages are assessed not on the outcome which the claimant would have sought but on the economic opportunity which he has lost The claimant must prove on the balance of probabilities that he would have taken action to obtain the relevant benefit or avoid the relevant risk Once this has been established he need then only show that the chance which he has lost was real or substantial Asia Hotel Investments Ltd v Starwood Asia Pacific Management Pte Ltd Anor 2005 1 SLR R 661 which although a contract case made reference to and for the most part approved the test applied in the tort decision of Allied Maples Group Ltd v Simmons Simmons 1995 1 WLR 1002 F Loss of a right recovery possible if it can be shown that defendant s failure to advise claimant of risks inherent in treatment has deprived him of the right to choose a more experienced doctor or defer treatment 20 5 11 Founded on the notion of patient autonomy medical negligence cases from both Australia and the UK suggest tacit recognition of a more rights based approach to damage Under this approach a claimant who cannot establish causation using the traditional rules may nevertheless recover if he can show that in failing to advise him of the risks inherent in treatment a defendant has deprived him of the right either to choose a more experienced doctor Chappel v Hart 1998 195 CLR 232 or to defer the date of the treatment Chester see Section 20 4 11 above However the concept of patient autonomy has

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  • Ch.12 Intellectual Property Law
    b Examples of registrable designs 12 2 7 Examples of registrable designs include the shape and configuration of an electrical meter box Hunter Manufacturing Pte Ltd v Soundtex Switchgear Engineering Pte Ltd 1999 3 SLR R 1108 the shape of a chair Sebel Furniture Ltd v Tiong Hin Engineering Pte Ltd 1999 3 SLR R 690 the shape of an orchid applied to ornamental pieces for use as brooches and pendants Risis Pte Ltd v Polar Gems Pte Ltd 1994 2 SLR R 1091 c Example of unregistrable design 12 2 8 An example of an unregistrable design is the shape and configuration of an electrical isolator where the features depended entirely on industry standards Nagasima Electronic Engineering Pte Ltd v APH Trading Pte Ltd 2005 2 SLR R 641 3 Definition of new a Design is new if it is not substantially same as any other design registered or published in Singapore or elsewhere 12 2 9 A design is new if it is not the same or substantially the same as any other design that has been registered or published in Singapore or elsewhere Publication includes sale or use of any article which embodies the design b Novelty of design assessed as at date of application for registration 12 2 10 The novelty of a design is assessed as at the date of the application for registration Where the applicant has claimed a right of priority see Section 12 2 3 above the date of his application shall be the date of his application in the foreign country c Certain prior disclosures disregarded when assessing novelty of design 12 2 11 Certain prior disclosures are disregarded when assessing the novelty of a design These are essentially disclosures which cannot be said to have thrown the design into the public domain For example a disclosure of a design made during business negotiations such as to import an obligation of confidence on the parties involved would not destroy the novelty of the design Hunter Manufacturing Pte Ltd v Soundtex Switchgear Engineering Pte Ltd 1999 3 SLR R 110 D Ownership and dealings of design 1 Owner of design usually person who created it 12 2 12 The owner of a design is usually the person who created the design and he is the one entitled to apply for registration of the design There are two notable exceptions to this general rule Design created in pursuance of a commission unless there is an agreement to the contrary the commissioning party shall be treated as the owner Design created by an employee in the course of employment unless there is an agreement to the contrary the employer shall be treated as the owner 2 Registered designed is personal property and may be assigned as such 12 2 13 A registered design or any right in it is personal property and may be assigned as such absolutely or by way of security Licences may also be granted for the use of the registered design Such dealings should be registered with the Registry of Designs failure to do so means that the assignment or licence is ineffective as against a person acquiring a conflicting interest in the registered design in ignorance of it E Maximum duration of rights conferred is 15 years 12 2 14 The maximum duration of the exclusive rights conferred by registration is 15 years F Exclusive rights and infringement 1 Registered owner has exclusive rights to make or import articles which embody the registered design 12 2 15 The registered owner has the exclusive rights to make or import for the purposes of trade eg sale hire articles in respect of which his design is registered which embody the registered design or one that is substantially the same 2 Infringement occurs when person does exclusive rights without authorisation or certain preparatory acts 12 2 16 Infringement occurs not only when a person does any of the above exclusive rights without authorisation there can also be infringement in respect of certain preparatory acts for example making something that enables the infringing article to be made 3 Protection conferred by registration limited to allow for certain acts 12 2 17 The monopoly conferred by registration is limited to allow for certain acts such as Acts done for a private non commercial purpose Acts done for the purpose of evaluation analysis research or teaching Acts done in relation to genuine articles that is those marketed in and outside of Singapore by the registered owner or with his consent conditional or otherwise G Remedies for infringement 12 2 18 The range of remedies which the Court can order in infringement proceedings includes an injunction either damages or an account of profits an order for delivery up and or disposal of infringing articles in relation to the registered design However if the registered owner does not succeed in his claim of infringement he may find himself liable for a claim for making groundless threats of design infringement The remedies in such a claim can include an injunction against the continuance of the threats damages as well as a declaration that the threats are unjustifiable F Protection available under the RDA only when there is overlap with copyright protection 12 2 19 It is very possible that designs which qualify for protection under the RDA are also original artistic works in which copyright subsists see Section 12 1 2 above 12 2 20 Where there is such an overlap there is no cumulative protection under registered design and copyright law protection is available under the RDA only Also if a design is registrable under the RDA but has not been registered the design falls to be covered by neither the registered design nor the copyright regime Therefore if the artistic work is a registrable design and the intention is to industrially apply it steps should be taken to register it under the RDA otherwise there would be no protection for the design at all Return to the top SECTION 3 PATENTS A Source of law 12 3 1 Inventions are protected in Singapore under the Patents Act Cap 221 2005 Rev Ed the PA It is based on the UK Patents Act 1977 but there are some important differences B Formalities of registration 1 Registration may be obtained through domestic or international application 12 3 2 Registration may be obtained in two ways through i a domestic application filed with the Registry of Patents within the Intellectual Property Office of Singapore IPOS or ii an international application filed in accordance with the Patent Cooperation Treaty with the Registry acting as the Receiving Office for the application 2 Person who has earlier filed application in Paris Convention WTO country may claim right of priority 12 3 3 A person who has earlier filed an application for registration in a Paris Convention WTO country may if he files for registration in Singapore within 12 months from the date of such application claim a right of priority For the significance of a claim of right of priority see Section 12 3 6 below It is important to note that it is an offence for a Singapore resident without the Registrar s written consent to file or cause to be filed a patent application outside Singapore without first filing an application for the same invention in Singapore at least two months before the application outside Singapore is made C Subject matter of protection 1 Patent may be granted for invention which is product or process 12 3 4 A patent may be granted for an invention which is a product or a process The invention must satisfy the following conditions it is new it involves an inventive step it is capable of industrial application and the publication or exploitation of the invention would not generally be expected to encourage offensive immoral or anti social behaviour Behaviour is not to be regarded as offensive immoral or anti social merely because it is prohibited by any law in force in Singapore 2 Invention is new if it does not form part of state of art 12 3 5 An invention is new if it does not form part of the state of the art The state of the art refers to all matters whether a product a process information about either or anything else which have at any time before the priority date of the invention been made available to the public whether in Singapore or elsewhere by written or oral description by use or in any other way A matter contained in a prior patent application is also included There is no need for the matter to be widely available to the public in order to form part of the state of the art Windsurfing International Inc v Tabur Marine GB Ltd 1985 RPC 59 If a known product is disclosed in a form which makes it suitable for a stated use it is no longer new notwithstanding that it has never been described for that use Martek Biosciences Corp v Cargill International Trading Pte Ltd 2012 2 SLR 482 A useful guide to determining whether an invention is new is the reverse infringement test Under this test an invention is no longer new if a prior art publication contains clear and unmistakeable instructions or descriptions which if followed would allow a person skilled in the art to obtain a product or process which would infringe the patent assuming that the patent is valid Mühlbauer AG v Manufacturing Integration Technology Ltd 2010 2 SLR 724 Dien Ghin Electronic S Pte Ltd v Khek Tai Ting 2011 3 SLR 227 It is a general rule that mosaicing of prior art i e combining selected features in different prior art publications is not allowed when assessing whether an invention is new FE Global Electronics Pte Ltd v Trek Technology Singapore Pte Ltd 2006 1 SLR R 874 and Mühlbauer AG v Manufacturing Integration Technology Ltd 2010 2 SLR 724 12 3 6 Whether an invention is new is to be assessed as at the date of the application for registration If the applicant claims a right of priority see Section 12 3 3 above the date of his application shall be the date of his application in the foreign country 3 Invention involves inventive step if it is not obvious to person skilled in art 12 3 7 An invention involves an inventive step if it is not obvious to a person skilled in the art Such a notional person is not to be endowed with inventive capacity but is deemed to have practical knowledge and experience of the kind of work in which the invention is intended to be used Ng Kok Cheng v Chua Say Tiong 2001 2 SLR R 326 referred to by the Court of Appeal in First Currency Choice Pte Ltd v Main Line Corporate Holdings Ltd 2008 1 SLR R 335 He may be a team of highly qualified researchers whose combined skills would normally be employed in the relevant art Optical Coating Laboratory v Pilkington 1995 RPC 145 at 156 12 3 8 To determine whether an invention is obvious the court would first identify the inventive concept embodied in the patent then assume the mantle of the normally skilled but unimaginative person in the art at the priority date of the patent and impute to him what was at that date common general knowledge in the art identify what if any differences exist between that knowledge and the patented invention and finally consider whether without knowledge of the invention those differences constitute steps which would have been obvious to the person skilled in the art or whether they require any degree of invention Windsurfing International Inc v Tabur Marine GB Ltd at 73 74 applied in Merck Co Inc v Pharmaforte Singapore Pte Ltd 2000 2 SLR R 708 and by the Court of Appeal in First Currency Choice Pte Ltd v Main Line Corporate Holdings Ltd 2008 1 SLR R 335 and and Mühlbauer AG v Manufacturing Integration Technology Ltd 2010 2 SLR 724 see also Pozzoli SPA v 1 BDMO SA et al 2007 EWCA Civ 588 where the Windsurfing test is reformulated in the context of obviousness The fact that an invention is simple does not mean that it is obvious Peng Lian Trading Co v Contour Optik Inc 2003 2 SLR R 560 followed in the First Currency case Commercial success is a factor which can be taken into account in determining obviousness though it is not conclusive Ng Kok Cheng v Chua Say Tiong 2001 2 SLR R 326 and and in and Mühlbauer AG v Manufacturing Integration Technology Ltd 2010 2 SLR 724 12 3 9 When assessing whether an invention involves an inventive step mosaicing of prior art is generally allowed unless it would not have been obvious to a person skilled in the art to mosaic the different pieces of prior art Martek Biosciences Corp v Cargill International Trading Pte Ltd 2012 2 SLR 482 4 Invention taken to be capable of industrial application if it can be made or used in any kind of industry 12 3 10 An invention is to be taken to be capable of industrial application if it can be made or used in any kind of industry including agriculture However a method of treatment of the human or animal body by surgery or therapy or of diagnosis practised on the human or animal body will not be considered capable of industrial application although this does not prevent the patenting of drugs to be used in any such treatment or diagnosis D Ownership and dealings of patent 1 Patent normally granted to actual devisor of invention 12 3 11 The patent for an invention is normally granted to the actual deviser inventor of the invention unless by virtue of any statute rule of law treaty international convention or enforceable term of any agreement entered into with the inventor before the making of the invention it is to be granted to any other person or a successor in title 2 Patent or application for patent is personal property 12 3 12 A patent or an application for patent is personal property As such it and any rights in or under it may be assigned mortgaged licensed or vested by operation of law in the same way as any other personal property The assignment mortgage application for a patent or any right in a patent or application as well as any assent relating to any patent application or right shall be void unless it is in writing and signed by or on behalf of the parties to the transaction 3 Any person who claims to have acquired property in patent should register transaction 12 3 13 Any person who claims to have acquired the property in a patent or an application for a patent by virtue of any transaction instrument or event collectively transaction should register the transaction with the Registrar of Patents failing which his rights are restricted as against an infringer and person acquiring a conflicting interest in the invention in ignorance of the transaction 4 Exclusive licensee of patent has right to bring proceedings for infringement 12 3 14 An exclusive licensee of a patent has the same right as the proprietor of the patent to bring proceedings for infringement of the patent E Duration of patent 12 3 15 The maximum period of duration of the exclusive rights conferred by registration of a patent is 20 years from the filing date To enjoy this full term the patent must be renewed before the expiry of the 4th year and every year thereafter F Exclusive rights and infringement 1 Registered owner has exclusive right to prevent any person from doing certain things 12 3 16 The registered owner has the exclusive right to prevent any person from doing any of the following things in Singapore in relation to a patented invention if the invention is a product making disposing of offering to dispose of using or importing the product or keeping the product whether for disposal or otherwise if the invention is a process using the process or offering it for use in Singapore when the person knows or it is obvious to a reasonable person in the circumstances that its use without the owner s consent would be an infringement of the patent and if the invention is a process disposing of offering to dispose of using or importing any product obtained directly by means of the process or keeping the product whether for disposal or otherwise 2 Whether rights have been infringed depends on comparison of alleged infringing product with patent claims 12 3 17 Whether these rights have been infringed depends on a comparison of the alleged infringing product or process with the patent claims The claims are to be construed purposively Catnic Components Ltd v Hill Smith Ltd 1982 RPC 183 and the following comparative approach has been endorsed by our Court of Appeal in Genelabs Diagnostics Pte Ltd v Institut Pasteur anor 2000 3 SLR R 530 see also the affirmation of the Catnic case as the bedrock of patent construction in House of Lords in Kirin Amgen Inc v Hoechst Marion Roussel Ltd 2004 UKHL 46 at 51 52 also referred in First Currency Choice Pte Ltd v Main Line Corporate Holdings Ltd 2008 1 SLR R 335 and Mühlbauer AG v Manufacturing Integration Technology Ltd 2010 2 SLR 724 Does the variant have a material effect on the way the invention works If yes the variant is outside the claim If no Would this that is the variant having no material effect have been obvious at the date of publication of the patent to a reader skilled in the art If no the variant is outside the claim If yes Would the reader skilled in the art nevertheless have understood from the language of the claim that the patentee intended that strict compliance with the primary meaning was an essential requirement of the invention If yes the variant is outside the claim 12 3 18 The abovementioned approach would give the patentee the full extent but no more than the full extent of the monopoly which a reasonable person skilled in the art reading the claims in context would think that the patentee was intending to claim and Mühlbauer AG v Manufacturing Integration Technology Ltd 2010 2 SLR 724 3 Permitted acts which do not constitute infringement of patent acts done privately and for non commercial purposes acts done for experimental purposes relating to the subject matter of the invention and acts which consist of the extemporaneous preparation of a medicine for a person in accordance with a medical or dental prescription or consist of dealing with such medicine G Remedies for infringement 12 3 20 The remedies which the Court can order in infringement proceedings include an injunction either damages or an account of profits an order for delivery up and or disposal of infringing articles in relation to the registered patent and a declaration that the patent is valid and has been infringed H Groundless Threats 12 3 21 Where a person threatens another person with proceedings for any infringement of a patent the aggrieved person may also counterclaim for groundless threats of infringement proceedings To succeed the plaintiff in the groundless threats proceeding must prove that the threats were so made and satisfy the court that he is the person aggrieved by them He will be entitled to relief unless the defendant is able to justify the threat by showing that the acts in respect of which infringement proceedings were threatened constitute or would constitute an infringement of its patent and the patent must not be invalid in the relevant respect ASM Assembly Automation Ltd v Aurigin Technology Pte Ltd 2010 1 SLR 1 Return to the top SECTION 4 CONFIDENTIAL INFORMATION TRADE SECRETS A Nature of law on confidential information 12 4 1 The law on confidential information is concerned with preventing a person from divulging information which has been given to him in confidence and on the express or implicit understanding that the information should not be disclosed to others or otherwise used by him It is given statutory recognition in Singapore in section 6 of the Copyright Act which states Nothing in this Act shall affect the operation of the law relating to breaches of trust or confidence The law on confidential information provides a useful adjunct to the other intellectual property rights For instance whilst copyright protects the expression of the idea only as mentioned in Section 12 1 2 above the law on confidential information is wider and can protect the idea itself Additionally the law can be useful for certain types of trade secrets for which the other rights may not be appropriate such as the recipe for the Coca Cola drink or a secret business plan B Elements of the law on confidence 12 4 2 To be protectable the information must have the necessary quality of confidence about it the information must have been imparted in circumstances importing an obligation of confidence and there must be an unauthorised use of the information to the detriment of the party communicating it Coco v Clark Engineers Ltd 1969 RPC 41 followed by the Court of Appeal in Obegi Melissa and Others v Vestwin Trading Pte Ltd and Another 2008 2 SLR R 540 1 Necessary quality of confidence a Information must not already be available to public at large 12 4 3 To have the necessary quality of confidence the information must not already be available to the public at large It does not have to be new inventive or special as any ordinary or mundane information can be the subject matter of confidence provided it is private to the person who discloses the information even though others could gather similar information if they took the trouble to do so The information can relate to technical commercial and personal matters e g price lists customer lists and financial statements The information can be confidential as a whole even though its component parts are in the public domain however the information has to be sufficiently well developed such that it can be defined with sufficient objective certainty Invenpro M Sdn Bhd v JCS Automation Pte Ltd 2014 2 SLR 1045 Mere gossip or information relating to scandalous or immoral material is not protectable b Factors affecting confidentiality of information 12 4 4 In general the information is likely to be considered to be confidential and therefore protectable if release of the information would injure the owner of the information or benefit others the owner believes the information to be secret and not already in the public domain the owner s belief in respect of a and b above is reasonable and the information must be judged in the light of usages and practices of the particular trade or industry concerned Thomas Marshall Exports Ltd v Guinle 1979 Ch 227 c Information must be clearly and specifically identified in action for breach of confidence 12 4 5 In an action for breach of confidence the owner must clearly and specifically identify the confidential information that is alleged to have been wrongly disclosed or used by the defendant Chiarapurk Jack v Haw Par Brothers International Ltd 1993 2 SLR R 620 2 Obligation of confidence a Obligation of confidence can arise by contract or by implication of law 12 4 6 The obligation can arise by contract or be implied in equity by applying principles of good faith and conscience such as where there is a duty of good faith as in the relationship between a lawyer and his client a banker and his customer and an employer and his employee Another situation in which such an implication would arise is where a person discusses his information e g business plan with a potential business partner with a view to commercially exploiting the information A person who is given confidential information will not be bound by the obligation if he is unaware and has no reason to be aware of the confidential nature of the information If the parties deal directly an objective test is the preferred basis for determining whether good faith and conscience supports the imposition of a duty of confidence Invenpro M Sdn Bhd v JCS Automation Pte Ltd 2014 2 SLR 1045 12 4 7 In addition an equitable obligation of confidentiality may be imposed on a third party recipient who has knowledge of the breach of confidence by the direct recipient Such knowledge is usually sufficient to give rise to actual or constructive knowledge notice of the breach Invenpro M Sdn Bhd v JCS Automation Pte Ltd 2014 2 SLR 1045 b Ex employee not bound by duty of good faith 12 4 8 An ex employee is not bound by the duty of good faith He is permitted to make use of his memory of the information that he has acquired during employment except trade secrets and information covered by the express term of his employment contract Whether the information is to be regarded as a trade secret depends on such factors as the nature of the employment the nature of the information how the information was handled in the company e g whether the employer stressed the confidential nature of the information and whether the information could easily be isolated from the other information that the employee could use ul Faccenda Chicken Ltd v Fowler 1987 Ch 117 applied in Tang Siew Choy v Certact Pte Ltd 1993 1 SLR R 835 Asia Business Forum Pte Ltd v Long Ai Sin 2003 4 SLR R 658 and the Court of Appeal in Man Financial S Pte Ltd v Wong Bark Chuan David 2008 1 SLR R 663 and Clearlab SG Pte Ltd v Ting Chong Chai 2014 SGHC 221 3 Unauthorised use of information a Objective test of conscionability as to whether there is obligation not to disclose or use confidential information 12 4 9 A person who has acquired confidential information under confidential circumstances is under an obligation not to disclose or use the information Whether there is such an obligation on him depends on whether it is conscionable for a recipient of confidential information to disclose or use the information in the circumstances in question Douglas v Hello Ltd 2001 QB 967 at 65 The test is objective He is liable even if he does not appreciate the confidentiality of the information National Broach v Churchill Gear 1967 1 WLR 384 has no intention to take advantage of the information Interfirm Comparisons v Law Society of New South Wales 1977 RPC 137 or uses the information subconsciously Seager v Copydex 1967 1 WLR 923 b Third party to whom confidential information has been wrongfully disclosed would not be liable if he is bona fide purchaser 12 4 10 A third party to whom confidential information has been wrongfully disclosed would not be liable for disclosing or using the information if he is a bona fide purchaser for value without notice of the confidentiality of the information see Stevenson Jordan and Harrison Ltd v Macdonald and Evans Ltd 1951 69 RPC 10 But once he knows that the information was originally given in confidence he can be restrained from disclosing or using the information Wheatley v Bell 1984 FSR 16 c Unauthorised disclosure is allowed if it is in public interest 12 4 11 Unauthorised disclosure is allowed if it is in the public interest or there is a just cause or excuse e g to prevent cover up of a wrongdoing Lion Laboratories Ltd v Evans 1985 QB 526 C Remedies for breach of confidence 12 4 12 Where the requirements are established the owner of the confidential information can apply to the Court for an injunction either damages or an account of profits and an order for delivery up and or disposal of materials containing the confidential information Return to the top SECTION 5 TRADE MARKS PROTECTION UNDER TRADE MARKS ACT A Source of law 12 5 1 Singapore has a dual system of trade mark law protection for trade marks may be available both under the Trade Marks Act Cap 332 2005 Rev Ed the TMA and at common law see Section 6 below These two systems are independent of each other B Formalities of registration 1 Protection under TMA conditional upon registration of trade mark 12 5 2 Protection under the TMA is conditional upon registration of the trade mark with the Registry of Trade Marks within IPOS There is one exception in this regard special protection is granted under the TMA to well known trade marks regardless of whether they are registered see further Sections 12 5 30 12 5 32 below 2 Registration may be obtained through domestic or international application 12 5 3 Registration may be obtained in two ways through i a domestic application filed with the Registry of Trade Marks or ii an international application filed under the Madrid Protocol designating Singapore as a country where protection is sought 3 Person who has earlier filed application in Paris Convention WTO country may claim right of priority 12 5 4 A person who has earlier filed an application for registration in a Paris Convention WTO country may if he files for registration in Singapore within 6 months from the date of such application claim a right of priority For the significance of a claim of right of priority see Section 12 5 13 below 4 Application to specify the goods and services for which trade mark is to be registered 12 5 5 Singapore follows the Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks C Subject matter of protection 12 5 6 There are three key criteria for registration the subject matter must be i a trade mark which ii is distinctive and iii does not conflict with an earlier trade mark 1 Trade mark a Trade mark is any sign capable of being graphically represented to distinguish goods or services 12 5 7 A trade mark is any sign capable of being graphically represented that is used or proposed to be used by a trader to distinguish his goods or services from those of other traders Classic examples include brand names devices or logos and colours Where the sign consists of a three dimensional shape it must not consist exclusively of the shape which results from the nature of the goods themselves the shape of goods which is necessary to obtain a technical result or the shape which gives substantial value to the goods 12 5 8 Non visually perceptible signs eg sound marks such as the Intel chime can also qualify as trade marks provided that they are graphically represented b Sufficient for trade mark registration if trader has bona fide intention to use sign 12 5 9 As indicated in Section 12 5 7 above to qualify as a trade mark the sign need not have been used in the course of trade as at the date of filing the application for registration It is sufficient if the trader proposes to use the sign or to use the language of the TMA has a bona fide intention to use it see further Section 12 5 18 below In such a case the trader must ensure that within 5 years following the date of completion of the registration procedure the trade mark is put to genuine use otherwise the registration may be revoked 2 Distinctive a Meaning of distinctiveness 12 5 10 A trader s trade mark is distinctive of his goods or services if in particular it is not descriptive of those goods or services It is a question of degree in every case whether the sign is so descriptive of the goods or services in question that it will be refused registration There are some signs which are so descriptive that they are incapable of distinguishing the trader s goods or services for example soap for soap Such a sign cannot qualify as a trade mark regardless of the amount of use made of it by the trader 12 5 11 A sign which is less descriptive of the trader s goods or services may nevertheless be devoid of distinctive character if it cannot do the job of distinguishing without the trader first educating the public that it is a trade mark Trade marks falling within this category include the word LOVE in relation to jewellery Love Co Pte Ltd v The Carat Club Pte Ltd 2009 1 SLR R 561 and laudatory terms like ROYAL to convey pre eminence or superior quality of the goods or services Sime Darby Edible Products Ltd v Ngo Chew Hong Edible Oil Pte Ltd 2000 2 SLR R 604 A trader who adopts such an inherently descriptive trade mark may however use it to such an extent that it becomes in fact distinctive of his goods or services in such a case the requirement for distinctiveness would be satisfied To prove that the trade mark has acquired distinctiveness through use it is usual to tender evidence of sale volume advertisements etc 12 5 12 The following is an example of a trade mark which while not totally meaningless when used in relation to the goods or services in question is not so descriptive as to be devoid of distinctive character LADY ROSE in relation to perfumes Hai Tong Co Pte Ltd v Ventree Singapore Pte Ltd 2013 SLR 941 3 No conflict with earlier trade marks a Trade mark which conflicts with earlier trade mark would be refused registration 12 5 13 A distinctive trade mark would nevertheless be refused registration if it conflicts with an earlier trade mark that is an earlier registered trade mark or a trade mark whether registered or not which is well known in Singapore In determining whether which mark is earlier in time account will be taken of any priority claimed in respect of the trade marks see Section 12 5 4 above 12 5 14 There is a conflict generally speaking when the two marks are identical or similar and their co existence in the market would be likely to confuse the public There are two situations where it is not necessary to prove such confusion b Situations where it is not necessary to prove that co existence would be likely to confuse public 12 5 15 The first situation is where the marks are identical and the goods services in question are identical The likelihood of confusion is presumed 12 5 16 The second situation is where the earlier trade mark is well known to the public at large in Singapore This special category of well known trade marks is protected against any registration in relation to identical similar dissimilar goods or services which would cause dilution in an unfair manner or take unfair advantage of the distinctive character of the mark This is the Singapore model of the anti dilution right It is modelled after the WIPO Joint Recommendations Concerning the Provisions on the Protection of Well known Marks 4 Other obstacles to registration 12 5 17 Finally there are other obstacles to registration For example a trade mark shall not be registered if it is contrary to public policy or morality or the application is not made in good faith Examples of lack of good faith would be the case where the applicant has no bona fide intention to use the trade mark at all but wishes to prevent a competitor from using the mark or one that is similar to it Weir Warman Ltd v Research Development Pty Ltd 2007 2 SLR R 1073 and 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