Scraping the Sarcophagus of a Company in Liquidation: A Guide for Corporate Tomb Raiders Under the IRDA in Singapore

A PDF version of the article can be found here.

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SCRAPing the SARCOPHAGUS OF A COMPANY IN LIQUIDATION: A GUIDE FOR CORPORATE TOMB RAIDERS UNDER THE IRDA IN SINGAPORE

Clement Karim Lim Zhi Ren *

I. Introduction

Warren Buffett famously remarked that “only when the tide goes out do you discover who has been swimming naked”. As tidal fortunes ebb under the unrelenting headwinds of the COVID-19 pandemic, countless businesses have failed, and numerous managerial indiscretions have been brought to light. In 2020, we have seen the collapse of many former industry giants in Singapore, among many others: Hin Leong Trading, KS Energy, and Robinsons. Almost certainly, more will follow. [1] Unsecured creditors are usually left with only the bare-bones remains of a company’s assets. Hapless but not helpless— this is where the liquidator steps in.

Liquidators are appointed by the court or creditors to realize and distribute the maximum value of assets of an insolvent company. This article aims to canvas the best existing remedies available for liquidators to ‘claw back’ monies paid out by an insolvent company under the Insolvency, Restructuring and Dissolution Act 2018 [2] (‘IRDA’) which came into effect on 30 July 2020. The IRDA is an ‘omnibus’, but admittedly not ‘omnipotent’, legislation [3] that consolidates corporate and personal insolvency laws formerly found under the Bankruptcy Act [4] and the Companies Act. [5]

This article shall discuss four available actions available for liquidators under the IRDA: 1) to avoid prior transactions made by the insolvent company; 2) to hold the owner-controllers behind-the-scenes responsible for the company’s debts, for improper trading; 3) to pursue a common law claim for damages against the directors for the breach of fiduciary duties; and 4) to establish a proprietary claim for a breach of constructive trust.

II. Avoiding Prior Transactions under the IRDA

By relying on an avoidance claim under the IRDA, the liquidator can ‘wind back the clock’ and avoid prior transactions entered into by the insolvent company that were: (a) undervalue transactions; and/or (b) unfair preferences.

A. Undervalue transactions

The elements of a claim for undervalue transactions are as follows:

a) the transactions were made within the relevant time; [6]

b) the transactions were at an undervalue; [7] and

c) the defence of good faith does not apply. [8]

The relevant period for which transactions can be avoided is 3 years prior to the commencement of winding-up proceedings. [9] The period is not relevant unless the company was insolvent or became insolvent in consequence of the undervalue transaction. ^[10] The company is presumed to be unable to pay its debts or presumed to become unable to pay its debts in consequence of the undervalue transaction, in the case of connected persons. ^[11]

A company enters into an undervalue transaction if the company enters into a transaction wherein it receives no consideration, [12] or the consideration received by the company thereunder is significantly less than the consideration incurred by the company. [13]

The courts will not make an order that a transaction is undervalued if the company entered the transaction in good faith and to carry on its business, ^[14] and there were reasonable grounds for believing that the transaction would benefit the company. ^[15] According to the Encus International v Tenacious Investment, [16] the defence of good faith will not apply if it were “obvious” that the transaction would not benefit the insolvent company. [17]

B. Unfair Preferences

The elements of a claim for unfair preference are as follows:

a) the payments were made within the relevant time; ^[18]

b) the defendant is a creditor, surety or guarantor of the insolvent company’s debts or liabilities; ^[19]

c) the insolvent company conducted itself in a manner which put the creditor in a more advantageous position during the relevant period; ^[20] and

d) in giving the preference, the insolvent company was influenced by a desire to improve the creditor’s position. ^[21]

The relevant period for which transactions can be avoided is 2 years prior to the commencement of winding-up proceedings. [22] As with an avoidance claim for undervalue transactions, this 2-year period is only relevant if the insolvent company was insolvent or became insolvent as a consequence of the unfair preference. [23]As is the case for undervalue transaction detailed above, a company is presumed to have been insolvent or have become insolvent as a consequence of the unfair preference, in the case of connected persons. [24]

A company gives an unfair preference to a person if the person is a creditor, surety or guarantor of the company, [25] and the company does anything which puts that person in a more advantageous position than that person would have been ordinarily in the event of the company’s winding up. [26] This element of being put in a more advantageous position should be easily satisfied for unsecured creditors because but for the preference payments, insolvency law would have taken claimants “exactly as it finds them” [27] according to the pari passu principle, which is the default mode of distribution. Without preference payments, unsecured creditors would ordinarily be relegated to scrape the bottom of the barrel and receive the leftover assets (if there are even any remaining) of the company.

The Court will only make an order that payment was preferential if the insolvent company, in making that payment, had a desire to place the creditor in a more advantageous position. [28] This desire is presumed if the preferred creditor is a connected person. [29] To determine whether the insolvent company had a desire to place the creditor in a more advantageous position, the courts will first consider the state of mind of the officers controlling the debtor [30].

Transactions which are actuated only by proper commercial considerations will not constitute a voidable preference. [31] An example of such a proper commercial consideration can be found in Re MC Bacon [32]. There, the bank creditor had placed pressure on the debtor company and demanded a debenture. In deciding that the debenture was not an unfair preference, Millett J found that the debtor company’s decision to grant the debenture to the bank creditor had been made as part of the director’s decision to continue trading in a genuine belief that the company could be salvaged and that they had no choice but to accede to the bank’s request for a debenture. [33]

If the claim is successful, the court has a wide discretion to make orders under s 227(1) of the IRDA. The available orders include, inter alia, an order requiring any beneficial recipient to account for benefits received from the company [34], an order requiring any property transferred as part of the transaction to be vested in the company [35] or the release or discharge of any security given by the company. [36]

III. Improper trading

It is trite law that a company, even if effectively managed and owned by one owner, is a separate legal entity from its owner-controllers. [37] However, this does not mean that owners of the company are insulated from all personal liability in the event of any personal wrongdoing. The liquidator can apply to court to hold the owners fully liable for the debts of the company under one of the two categories of “improper trading” under the IRDA: (1) wrongful trading; and (2) fraudulent trading. These two variants of “improper trading” shall be addressed in turn below.

For wrongful trading, a company liable if it, inter alia, incurs debts or other liabilities without reasonable prospect of meeting them in full. [38] The provision captures every person who was a party to the company trading in that manner who knew that the company traded wrongfully or ought to have known about the wrongful trading as an officer.

Fraudulent trading, on the other hand, is satisfied if in the course of winding up of a company, it appears that the business of the company has been carried on with intent to defraud creditors of the company.

In either case of “improper trading”, the liquidator may apply to the Court to hold knowing parties or officers who ought to have known about the company trading in that manner personally responsible, without any limitation of liability, for all or any of the debts or other liabilities of the company. [39]

IV. Breach of Directors’ Common Law Fiduciary Duties

The liquidator may also have a common law claim against the directors of company for breach of fiduciary duties. This includes: (a) the duty to act bona fide in the company’s interests; (b) the duty to act for proper purpose; and (c) the duty to not be found in a position of conflict-of-interest without proper disclosure. [40] In addition, if a director procures a payment to be made by the company in breach of his fiduciary duty while the company is on the brink of insolvency, the liquidator may sue him personally to recover the money. [41]

A. Duty to act bona fide in the company’s interest

The duty to act bona fide in the company’s interests is theoretically a subjective test, based on what the director himself had honestly believed [42]. However, as a matter of evidence, courts have verged on an objective test based what an “an honest and intelligent man in the directors’ position, taking an objective view, could reasonably have concluded”. [43] If an act committed by a director is not in the objective interests of the company, the court may draw an inference that the director was not acting bona fide in the interests of the company. [44] In a modern setting, this rule may be better reframed as a duty to ensure that whatever transactions are authorised by the board must be commercially justifiable from the company’s point of view. [45]

B. Duty to act for proper purposes

If the main consideration for a director’s act or resolution was to benefit an individual and not the company, then the action is taken for an improper purpose. [46] An example of a breach of the duty to act for proper purposes is the use of a power to forestall one take-over bid in preference over another. [47] The general principle is that an exercise of a fiduciary power can be set aside if its exercise was actuated by an improper purpose. [48]

C. Duty to disclose conflicts of interests

The no-conflict rule obliges a director to avoid situations where his personal interest may conflict with those of the company. [49] In particular, when a director makes his own interests paramount, he will invariably not be acting in the interests of the company. This is a strict duty and applies even where the company itself could not have profited from the corporate opportunity that was diverted to the directors. [50] The fact that the director has acted bona fide does not preclude the court from imposing liability—the liability arises from the mere fact of a profit having, in the stated circumstances, been made. [51]

D. Duty to take into account interests of creditors when company is insolvent/approaching insolvency

There is a separate doctrine which states that, if a company is on brink of insolvency, its directors cannot dissipate the company’s assets unless there is a legitimate reason to do so. [52] In Chip Thye Enterprises Pte Ltd (in liquidation) v Phay Gi Mo and Others [53], the High Court held that certain transactions entered by the directors in the name of the company were not in the interest of the creditors, as they reduced the assets of the company, which should have been preserved for the benefit of its creditors. Therefore, the directors in Chip Thye were held personally liable to compensate the company. The underlying rationale is that when a company is insolvent, the interests of the creditors become the dominant factor in what constitutes as benefit to the company. [54] Simply put, in a company approaching insolvency, its creditors displace its shareholders as the primary stakeholder. [55]

V. Breach of Constructive Trust

The liquidator can also seek to establish a proprietary claim against an insolvent company for breach of a constructive trust. [56] In such a cause of action, the liquidator can pursue monies transferred out of the company’s accounts on the basis of knowing receipt and/or dishonest assistance.

The elements of a claim in dishonest assistance are: (a) the existence of a trust; (b) a breach of that trust; (c) assistance rendered by third party towards the breach; and (d) a finding that the assistance rendered by the third party was dishonest. [57]

The elements required to establish knowing receipt are: (a) a disposal of the plaintiff’s assets in breach of fiduciary duty; (b) the beneficial receipt by the defendant of assets which are traceable as representing the assets of the plaintiff; and (c) knowledge on the part of the defendant that the assets received are traceable to a breach of fiduciary duty. [58] As with dishonest assistance, one particular difficulty that remains is in determining precisely the degree of knowledge that is required for recipients of trust property to be fixed with liability.

VI. CONCLUSION

The commencement of winding-up proceedings is only the beginning of the end. Where their own actions are questionable, controllers of insolvent companies will not simply be able to wash their hands off the debts of the company once it fails. Liquidators, as the representative of all ‘corporate tomb raiders’, still have an extensive range of options to enrich an insolvent company’s depleted pool of assets, as outlined above. This will prevent one’s pound of flesh from being entombed in the sarcophagus of the company and lost forever.

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* LLB (Candidate) (NUS). All errors and views expressed in this article remain my own. Weblinks cited in the article are functioning as of the date of publication.

[1] Business Times (21 December 2020), “More restructuring, insolvency cases likely in 2021 as reliefs end” online: <https://www.businesstimes.com.sg/companies-markets/more-restructuring-insolvency-cases-likely-in-2021-as-reliefs-end>.

[2] No. 40 of 2018, Sing.

[3] Singapore Parliamentary Debates: Official Report (1 October 2018) vol 94 (Mr Edwin Tong Chun Fai, Second Minister for Law)

[4] Cap 20, 1985 Rev Ed Sing.

[5] Cap 50, 2006 Rev Ed Sing.

[6] IRDA, s 226.

[7] Ibid, s 224(3).

[8] Ibid, s 224(4).

[9] Ibid, s 226(1).

[10] Ibid, s 226(2).

[11] Ibid, s 226(3).

[12] Ibid, s 224(3)(a).

[13] Ibid, s 224(3)(b).

[14] Ibid, s 224(4)(a).

[15] Ibid, s 224(4)(b).

[16] [2016] SGHC 50.

[17] Ibid at para 65.

[18] IRDA, supra note 2, s 226.

[19] Ibid, s 225(3)(a).

[20] Ibid, s 225(3)(b).

[21] Ibid, s 225(4).

[22] Ibid, s 226(1)(b).

[23] Ibid, s 226(2).

[24] Ibid, s 226(3).

[25] Ibid, s 225(3)(a).

[26] Ibid, s 225(3)(b).

[27] See e.g. Re Smith, Knight & Co, ex p Ashbury (1868) L.R. 5 Eq. 223 at 226: “The Act of Parliament unquestionably says, that everybody shall be paid pari passu, but that means everybody after the winding-up has commenced. [The Act] takes them exactly as it finds them, and divides the assets amongst the creditors, paying them their dividend on their debts as they then exist”.

[28] IRDA, supra note 2, s 225(4).

[29] Ibid, s 225(5).

[30] DBS Bank v Tam Chee Chong and another [2011] 4 SLR 948 at para 22.

[31] Ibid.

[32] [1990] BCLC 324.

[33] Ibid at 336F–337E, explained by DBS Bank v Tam Chee Chong, supra note 32 at para 23.

[34] IRDA, supra note 2, s 227(1)(d).

[35] Ibid, s 227(1)(a).

[36] Ibid, s 227(1)(s).

[37] Salomon v A Salomon & Co Ltd [1896] UKHL 1.

[38] IRDA, supra note 2, s 239(12).

[39] Ibid, ss 238(1) and 239(1).

[40] Walter Woon, Walter Woon on Company Law, 3^rd Ed (Singapore: Sweet & Maxwell, 2005) at paras 8.09 to 8.12.

[41] Singapore Swimming Club v Koh Sin Chong Freddie [2016] SGCA 28 (CA). While the case was not strictly about a company (it involved a club), it was found that the management committee was a fiduciary of the club, and the fiduciary duties owed by the management committee to the club in that case could be analogized to the duties of a director of a company.

[42] Goh Chan Peng v Beyonics Technology Ltd [2017] SGCA 40 at para 36 [Beyonics].

[43] Intraco Ltd v Multipak [1994] SGCA 142 at para 29.

[44] Beyonics, supra note 45.

[45] Walter Woon, Walter Woon on Company Law, 3^rd Ed (Singapore: Sweet & Maxwell, 2005) at para 8.20.

[46] Goh Kim Hai Edward v Pacific Can Investment Holdings Ltd at 1 SLR(R) 540 at para 98 [Pacific Can].

[47] Howard Smith Ltd v Ampol Petroleum Ltd [1974] 2 WLR 689 (Privy Council on appeal from New South Wales),

[48] Pacific Can, supra note 49.

[49] Beyonics, supra note 45 at para 47.

[50] See Regal (Hastings) v Ltd v Gulliver [1967] 2 AC 134.

[51] Ibid at 145.

[52] Liquidators of Progen Engineering Pte Ltd v Progen Holdings Ltd [2010] SGCA 31; Parakou Investment Holdings Pte Ltd v Parakou Shipping Pte Ltd [2018] SGCA 3 (CA) [Parakou]; Chip Thye Enterprises Pte Ltd (in liquidation) v Phay Gi Mo and Others [2004] 1 SLR 434 [Chip Thye]; Cheng Wai Yuen, “Corporate Director's Common Law Duty to Creditors? - A Revelation of the Present State of Law” [2002] 22 SingLRev 104 at 106: “in light of recent judicial trends in the common law jurisdictions, as well as the unanimous recognition of such a duty by academics and jurists, this duty is so firmly entrenched in the common law that any attempt to dispute its existence would be futile”.

[53] Chip Thye, supra note 55.

[54] Ibid at para 13.

[55] Lee Eng Beng S.C, “The Duty to Maintain Equality in Collective Creditor Actions” (2008) 20 SAcLJ 369 at 371.

[56] This was successfully attempted in the recent Court of Appeal case of Parakou—see Parakou, supra note 55.

[57] George Raymond Zage III v Ho Chi Kwong [2010] 2 SLR 589 at para 20.

[58] El Ajou v Dollar Land Holdings plc and another [1994] 2 All ER 685 at 700, affirmed by the Singapore Court of Appeal in George Raymond Zage III v Ho Chi Kwong [2010] 2 SLR 589.

Algorithmic Contracts: Who is to Blame?

The PDF version of this article can be found here.

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ALGORITHMIC CONTRACTS: WHO IS TO BLAME?

Journe Fu*

I.          Introduction

Traditionally, all the elements leading to the formation of a valid contract require some form of human cognition. A party will make an offer, while the other party will receive the offer, deliberate the terms, and eventually decide to accept. Rapid advancements in artificial intelligence technology has allowed algorithms to form contracts without human cognition at the time of formation. This stretches traditional contract law principles, which are premised on two human beings reaching an agreement, into unchartered territory.

This article closely examines how the Singapore Court of Appeal (‘Court of Appeal’) in Quoine Pte Ltd v B2C2 Ltd[1] adapts the doctrine of unilateral mistake to contracts formed using a deterministic algorithm and evaluates the approach proposed by the Court of Appeal.

II. The Law on Unilateral Mistake

The law on unilateral mistake was comprehensively laid out by the Court of Appeal in Chwee Kin Keong v Digilandmall.com Pte Ltd.[2] A unilateral mistake occurs when one party is mistaken as to a fundamental term of the contract and the other non-mistaken party is aware of this.[3] At common law, the non-mistaken party must have actual knowledge of the mistake, which would render the contract void.[4] The Court of Appeal also accepted that there exists an equitable doctrine of unilateral mistake that operates when the non-mistaken party, having constructive knowledge of the mistake, engages in some form of unconscionable conduct pertaining to the mistake. In equity, the contract will be voidable.[5]

III. THE Facts of Quoine

Both B2C2 and Quoine were market-makers who created liquidity on the trading platform (the “Platform”) by actively buying and selling cryptocurrency. Both parties utilised deterministic algorithms[6] to complete these trades, meaning that the buy/sell contracts were concluded without any direct human involvement apart from the initial programming.

Quoine’s algorithm subsequently encountered software errors which set off a sequence of events ultimately triggering margin calls against counterparties (the ‘Counterparties’), who had borrowed Ethereum (‘ETH’) from Quoine to purchase Bitcoin (‘BTC’). Quoine’s algorithm automatically sold ETH to the counterparties in exchange for BTC, in order to repay the ETH loans (see diagram below, arrows 1 and 2).

These orders were in part met by B2C2’s orders to sell ETH for BTC (see diagram below, arrows 3 and 4). However, due to the software error, the ETH was sold at approximately 250 times the going market rate, leaving B2C2 with a windfall.[7] In response, Quoine then unilaterally cancelled and reversed these trades (see diagram below, arrows 1, 2, 3 and 4) leading B2C2 to claim against Quoine for breach of contract.

One of the defences raised by Quoine was that the underlying trades were void for unilateral mistake at common law or voidable in equity, therefore entitling them to reverse the trades. The main problem presented to the Court of Appeal in Quoine was ascertaining the type of knowledge possessed by the non-mistaken party, since the contract was formed solely using deterministic algorithms and neither party had any knowledge of its formation or the terms of the contract before the contract was concluded.

Quoine asserted that the Counterparties held two mistaken beliefs: first, that it was necessary to close out their positions in response to margin calls made by the Platform; second, that they were buying ETH for BTC at prices accurately representing the true market value of ETH relative to BTC.

(i) Unilateral mistake at common law

The first alleged mistake was held to be a mistaken assumption and not a mistake as to a term of the contract, and so in respect of which the doctrine of mistake would not operate. As for mistake (2), the Court of Appeal held that it was wrongly characterised and that since the prices had been arrived at by the parties’ respective algorithms as agreed upon, the actual premise for the mistake was the belief that the platform would not fail. In other words, the Counterparties mistakenly believed the Platform would either always operate as intended or would otherwise provide adequate identification and protection to stop trading. Even then, the Court of Appeal held this was merely a mistaken assumption as to the circumstances under which the Trading Contracts were entered into and not a mistake as to a contractual term.[8] The common law doctrine of unilateral mistake therefore did not apply.

(ii) Unilateral mistake in equity

The Court of Appeal left open the question of whether its equitable jurisdiction could be extended to mistaken assumptions,[9] but nevertheless explored the outcome on the assumption that it could. This led to a unique problem since, at both common law and equity, the requisite knowledge of the mistake must accrue prior to contract formation for the doctrine of mistake to operate. In the present case, the contracts were entered into without human cognition. The parties would therefore only have knowledge of the mistakes post-contract formation.

IV. Adapting the Knowledge Rule for Algorithmic Contracts

The majority, led by Menon CJ, held that to ascertain ‘knowledge’, the state of mind of the programmer of the algorithm at the time of programming would be examined. This was supported by the view of amicus curiae Professor Goh Yihan, who recognised that the time of programming is when the programmer’s knowledge is the most concretised.[10] The doctrine of unilateral mistake would apply if the programmer had contemplated or ought to have contemplated that a future party would be mistaken and specifically designed the algorithm to exploit such a mistake.[11] Alternatively, if after programming, but before the time of contracting, the programmer or user of the algorithm becomes aware that the party might be mistaken but allows the algorithm to continue running in order to exploit this mistake, the doctrine will likewise apply.[12] The Court of Appeal held that B2C2 had no such contemplation and therefore neither possessed the requisite actual nor constructive knowledge for the doctrine of unilateral mistake to operate.

In his dissenting judgment, Mance IJ held that a contract could be set aside if it would be obvious to a reasonable person aware of the prevailing circumstances that some fundamental error had occurred, the timing of the mistake being irrelevant.[13] Mance IJ emphasized that algorithmic transactions with no human involvement did not fit with the principles of unilateral mistake at common law but what was certain was the fundamentality of the mistake. He held that the mistake in Quoine was just as fundamental as the mistake in Digiland and that any human trader viewing the transaction would have realized there was a fundamental error.

The majority approach therefore focuses on the reprehensible conduct of the non-mistaken party, stemming from the principle that where both parties had agreed to transact in a manner which prevents them from knowing if a contract would be formed or the contractual terms, the court ought to uphold this agreement and not intervene. Contrastingly, Mance IJ asserts that the court may intervene where there is substantive unfairness of the contract, choosing to focus instead on whether the contract is exceedingly onerous to one party. This requires a comparison of the transaction in question with other similar transactions in the market.

V. Evaluation OF THE TWO APPROACHES

The Majority’s Approach

(i) Lack of protection for end users of trading platforms

The majority approach upholds contracts where the algorithm-induced mistake was neither contemplated nor ought to have been contemplated by the programmer. For protection against commercially unsound contracts formed by way of algorithmic errors, it is crucial that parties contract for such unwanted events by allowing for the reversal of transactions when such unforeseen circumstances arise. The problem here is that trading agreements are usually entered into based on standard forms put forth by the platform operator, with the end users having little say as to the terms of the agreement.

Conveniently, in Quoine, the mistake was caused by the Platform operator, who dictates the terms of the standard form agreements and can easily contract for such reversals. However, should the mistake arise due to the fault of the end user’s algorithm (ie, B2C2 or the Counterparties’ algorithms, in the case of Quoine), then there is little that the end user can do to contractually provide for a right to reverse transactions. The majority approach therefore overlooks whether parties are able to bargain for risk allocation when entering trading agreements, leaving the end users of trading platforms unduly vulnerable.

(ii) Distinction between contemplation and possibility: black swan events

In Quoine, B2C2 knew of the possibility that the mistake would occur but, because such an event was unlikely, never contemplated its actual occurrence.[14] Based on this finding, the Court of Appeal affirmed the Singapore International Commercial Court’s decision[15] that B2C2 did not have actual or constructive knowledge of the mistake since the B2C2 programmer had not turned his mind in any detail to the circumstances in which the mistake would happen.

By drawing a distinction between the possibility of a mistake occurring and the contemplation of that possibility, end users become more vulnerable to black swan events.[16] Such events are rare, and therefore may never be in the contemplation of the non-mistaken party, yet there is a real risk that they will occur and lead to severe consequences. The majority approach precludes a finding of unilateral mistake under black swan events since the non-mistaken party would not have considered the real possibility of it happening. This further exacerbates the vulnerability of end users.

(iii) Impracticality and unfairness

Low and Mik posit that the majority’s approach unduly focuses on the deterministic nature of the algorithm, using it as the grounds on which to assess the programmer’s knowledge at the time of programming by working backwards.[17] This overlooks how market conditions (and therefore prices) are likely to change between programming and contracting, and the parties’ state of mind at the time of contracting has to be evaluated in light of the prevailing market conditions.[18] ‘Working backwards’, merely because the algorithm is deterministic, would require the programmer to have near-prophetic knowledge which would undermine the doctrine’s practical operation tremendously.[19] The authors therefore argue that the focus should be on market indeterminacy and not algorithmic determinism. Moreover, the authors identified that the Court of Appeal’s approach may be largely impractical in certain situations. It is convenient that Mr. Boonen, who programmed B2C2’s algorithm, was also the director of B2C2 who made important business decisions.

In reality, this is the exception rather than the norm. Complex algorithms are generally written by multiple programmers over long periods of time, and these programmers typically follow the instructions of their bosses or clients. It is therefore appropriate for a distinction to be drawn between writing the program (a purely technical activity) and setting the transactional parameters (involving commercial decisions), as aptly demonstrated by Software Solutions Partners Ltd, R (on the application of) v HM Customs & Excise.[20] It would be useful for the Court of Appeal to clarify whose knowledge under such circumstances should be assessed, as well as the time at which to do so.

Increasingly, parties are also utilising ‘off the shelf’ algorithms, which are programmed by an external party and made available for purchase in a digital library. Surely, it would seem absurd to trace knowledge of a mistake back to the programmers of such software. Applying the majority approach in Quoine to such situations would find the mistaken party having to prove a prophetic and dishonest intent on the party using the algorithm, which seems plainly unfair. Further, the commercial reality is that the party employing the algorithm is also likely to be in a stronger bargaining position. Surely the doctrine of unilateral mistake ought not to exacerbate inequality.[21]

The Minority’s Approach

(i) Third-party interests

While Mance IJ’s approach appears to resolve the impracticality of the majority approach, problems arise with Mance IJ’s insistence on a purely equitable doctrine of unilateral mistake for automated contracts—supposedly because these contracts do not fit within the principles governing unilateral mistake at common law. This is especially since the operation of algorithms might lead to third-party interests arising before any human discovery of the mistake.[22]

Assuming Mance IJ was referring to algorithms which are capable of both contract formation and contract performance, if third-party interests are the sole reason for voiding contracts at common law, perhaps the consequences of unilateral mistake ought to be revised generally, as opined by Mik and Low.[23]

(ii) Reliance interests

In Singapore and England, benefits transferred under a contract that has been rescinded are reversed in the law of unjust enrichment. The law, however, will not allocate losses incurred in reliance of the transaction in the absence of any transferred benefits. Perhaps it would be apt for the court to protect the reliance interest of users since foreign jurisdictions have done so. In Germany, non-mistaken parties will be entitled to compensation if their reliance on the rescinded contract was justified. However, they might lose the right to compensation if they knew of the grounds for rescission vitiating the contract or ought to have known it (and were therefore negligent).[24] Provisions where reliance is given similar protection can also be found in the Principles of International Commercial Contracts[25] and the Second Restatement of Contracts in the US[26].

VI. Conclusion

The majority approach in Quoine remains the law on algorithmic contracts in Singapore. Nevertheless, it remains to be seen how the Singapore courts will assess knowledge in the context of non-deterministic algorithms (ie, machine learning) whereby the same input may lead to differing outputs. It is also clear that the approach in Quoine will benefit from further refinement over time. Until then, it seems prudent for parties to contract for the right to reverse a transaction should algorithmic errors occur.

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* LLB (Candidate) (NUS), Class of 2023. All errors and views expressed in this article remain my own.

[1] [2020] SGCA(I) 2 [Quoine].

[2] [2005] 1 SLR(R) 502 [Digiland].

[3] Ibid at paras 34 and 80.

[4] Ibid at para 37.

[5] Ibid at para 80.

[6] Quoine, supra note 1 at para 82 defines deterministic algorithms as those which ‘will always produce precisely the same output given the same input’.

[7] At the material time, the market rate was approximately 0.04 BTC to 1 ETH. The impugned trades in Quoine were made at the rate of 9.99999 BTC to 1 ETH.

[8] Quione, supra note 1 at para 115.

[9] Ibid at para 92.

[10] Quione, supra note 1 at para 99.

[11] Ibid at para 104.

[12] Ibid at para 99.

[13] Ibid at paras 181-183.

[14] Quione, supra note 1 at para 121.

[15] B2C2 Ltd v Quoine Pte Ltd [2019] SGHC(I) 3.

[16] A black swan event is an unpredictable event that is beyond what is normally expected of a situation and has potentially severe consequences.

[17] Kelvin F.K. Low & Dr Eliza Mik, “Lost in Transmission: Unilateral Mistakes in Automated Contracts” Law Quarterly Review (forthcoming, Jun 2020) [Low and Mik] at p 3.

[18] Ibid.

[19] Ibid.

[20] [2007] EWHC 971.

[21] Low and Mik, supra note 17 at p 4.

[22] Quoine, supra note 1 at para 182.

[23] Low and Mik, supra note 17 at p 5.

[24] § 122 BGB (Germany).

[25] Article 3.2.2(1)(a), Principle of International Commercial Contracts.

[26] § 153 Restatement (Second) of Contracts, The American Law Institute.

Empirical Legal Research in Singapore: Its Uses, Its Limitations, and the Way Forward

A PDF version of the article can be found here.

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Empirical Legal Research in Singapore: ITS USES, ITS LIMITATIONS, AND THE WAY FORWARD

Darren Ang*

I.               Introduction

A.    Lawyers against scientists

Let us begin with a simple proposition: the methods used to reach conclusions in law are inherently different from those used in the hard sciences.[1]

We can explain this with a quick thought experiment. Ask a lawyer to prove a point, and they would probably point to an authoritative source that is broadly related to the conclusion sought to be reached, then hammer in their conclusion with arguments from principle and logic (and sometimes, rhetoric).

In contrast, ask a scientist to prove a point, and their approach is quite different. They would probably make a hypothesis, then run experiments to collect data before analysing that data using statistical methods. Their conclusions are reached through careful observation, complete with declarations of percentage-accurate degrees of confidence in their results.

If these contrasting methodologies had to be summarised in one word each, it could be said that methods in law are “argumentative”, while those in the hard sciences are “empirical”. More broadly, it could also be said that law is “qualitative" while the hard sciences are “quantitative”.

B.     The landscape of empirical legal research

However, over the past half-century, empirical methodologies have increasingly found their way into legal scholarship, particularly in the United States.[2] Entire textbooks have been written on the subject,[3] and legal studies with empirical components have come to take on bolder inquiries—including assessing judges’ behaviour and explaining their individual writing styles.[4]

In Singapore, the empirical charge has just begun to take hold. Over the past decade, at least six studies have relied on some form of empirical methodology, and all of them have relied on published judicial decisions as quantitative data.[5]

It turns out that there is a well-developed discipline in communications research which neatly encapsulates methodologies which “proceed from text to results”—its name is “content analysis”.[6] However, among the six empirical legal studies in Singapore, only the study by Lo et al has expressly acknowledged that it was adopting a content analysis methodology.[7]

In light of the recent empirical legal research charge, this article seeks to shed some light on the nature of content analysis methodologies, its limitations in the context of analysing published judicial decisions, and some potential workarounds to these limitations. It concludes with a brief suggestion that, in such contexts, the “empirical” methodologies of content analysis achieve their objectives best when paired with conventional, “argumentative” legal analysis.

II.             What is Content Analysis, and why is it appropriate For Legal Research?

A.    Content analysis and its methodology

Content analysis is a research technique that seeks to make replicable and valid inferences from texts to the contexts of their use.[8] That is, it seeks to draw meaningful conclusions through analysing large bodies of text quantitatively, such that future researchers applying the same methodology would reach the same conclusions.

The methodology of content analysis is robust—in a leading text on the discipline, Krippendorff identified six “components” of content analysis, which are as follows:[9]

1)     Unitizing: distinguishing segments of text which are of interest to an analysis;

2)     Sampling: limiting observations to a manageable subset of units that is statistically or conceptually representative of the set of all possible units;

3)     Recording/Coding: interpreting the unitized data and stating one’s experiences either in the formal terms of an analysis (recording) or according to observer-independent rules (coding);

4)     Reducing: using established statistical techniques or other methods for summarising or simplifying data;

5)     Abductively inferring contextual phenomena: bridging the gap between texts and what the texts imply using analytical constructs;

6)     Narrating: making the results comprehensible to others.

While a full exposition of each of these six components is out of the scope of this article, some discussion of the component of “abductive inference” is apposite. This component is said to “distinguish content analysis from other modes of inquiry”,[10] and it materialises as “analytical constructs” which function as “the best hypothesis or explanation that the analyst can imagine or defend … backed by knowledge of the context of the analysed texts”.[11]

The distinctive element of “abductive inference” makes content analysis methodologies particularly appropriate for the analysis of published judicial decisions—in this context, the “analytical constructs” can take the form of legal principles derived from conventional legal analysis, and these can be employed to justify quantitative findings.[12] To illustrate this with an example from an upcoming empirical legal study involving the author, a quantitative finding that a traffic offender’s plea of guilt is given mitigatory weight about 80% of the time may be explained with an argument from the sentencing objective of specific deterrence.

B.     The history and development of content analysis in legal scholarship

The earliest examples of content analysis are found in the quantitative analyses of printed matter by the Church in the 17^th Century, to which the Church concluded that the printing of non-religious materials were a threat to its authority—this went on to inspire a significant 20^th Century movement where various researchers engaged in quantitative analyses of newspapers and propaganda publications in an attempt to uncover, among other things, the profit motives behind newspapers and their negative effects on society.[13] Around that time, the seeds to the content analysis movement in legal scholarship were sown.

It has been said that “[t]he epistemological roots of content analysis [in legal scholarship] lie in Legal Realism”.[14] Legal Realism was a movement within the American legal academic circle that first gained traction in the 1920s,[15] and while the Realists departed from each other at various points, they shared a common scepticism towards conventional legal theories and zeal for reform.[16] Among them, a significant faction of the Realists sought to predict judges’ decisions with some degree of certainty,[17] and the empirical analysis of recorded judicial opinions was a particularly appropriate means towards that end.[18]

While the full extent of Realist thought has since lost most of its force,[19] the Realists’ clarion call to empiricism survived:[20] following the explosion of quantitative studies involving the content analysis of published judicial decisions in the United States in the 1990s-2000s,[21] the systematic content analysis of published judicial decisions is now “a mainstay of legal and political science scholarship”.[22]

C.    The place of content analysis in modern legal scholarship

What, then, is the place of content analysis in modern legal scholarship? It is said that content analysis “trades the pretence of ontological certainty for a more provisional understanding of case law”.[23] That is, conventional legal analysis requires the subjective, “deeply reflective” interpretation of a narrower area of the law,[24] while content analysis reaches an objective, “thinner” understanding of a large number of decisions.[25] They are different tools within the toolbox of legal analysis.

It follows that the role of content analysis in legal scholarship is not to supersede conventional legal analysis; instead, its role is to complement and augment conventional analysis.[26] For example, while conventional legal analysis is best suited for landmark judgments with great legal and cultural significance,[27] content analysis is particularly useful at “proving a negative”—if Principle Y states that Factor X will not be given weight except in exceptional cases, it can only be tested by looking through a sample of cases where Factor X was brought to the court’s attention, and finding that Factor X was given no weight in almost all of the sampled cases. It follows that both tools can be used in tandem to reach more robust conclusions[28]—continuing off the above example, if the content analysis reveals that Factor X is actually given weight in a significant proportion of cases, this would strongly support an argument for Principle Y to be reformed (or repealed).

However, there exists a more compelling reason to use content analysis in tandem with conventional legal analysis—there are several limitations inherent in published judicial decisions which, in most cases, render content analysis methodologies incapable of reaching robust conclusions in and of themselves.

III.           Limitations and potential workarounds

A.    The problem of unpublished decisions

Not every dispute goes to court, and the ones that do are often resolved without written or published opinions. In Singapore, the existence of unpublished decisions is well-known[29]—judges generally do not owe a duty to issue written grounds of decision. The most common situation for the duty to issue a written grounds of decision to arise, in both civil and criminal cases, is when a notice of appeal is filed.[30]

From these circumstances alone, it could be assumed that published decisions would likely involve more contentious cases, while straightforward cases are more likely to be unpublished.[31] However, this forms an insurmountable hurdle for aspiring researchers at the “sampling” component of content analysis, as the sample of published judicial decisions would never be representative of the whole population of interest of an empirical legal study. [32]

One workaround suggested by Hall & Wright is to acknowledge this hurdle and explicitly limit the scope of the study to published judicial decisions.[33] For example, in the study on the development of Singapore law by Goh & Tan, the authors limited their sample to reported cases, justifying this by arguing that reported cases “perhaps provide more significant influence on our local jurisprudence”.[34] In the author’s view, Goh & Tan’s argument sufficiently addresses the problem of unreported cases while also providing a positive justification for their sample.

However, even in studies where limiting the sample to published or reported cases cannot be similarly justified, it is said that a “skewed view” is better than having no view on the matter, and published decisions, as one of the significant sources of law for lawyers in the common law tradition, are still a “highly valuable source for systematic study”.[35] The limitations to empirical legal studies only mean that researchers must be “less expansive … in drawing conclusions from their findings”.[36] For example, while empirical studies measuring the effects of extra-legal factors on appellate decision-making in the United States had been subject to harsh attacks on their accuracy, more nuanced empirical legal studies that have acknowledged the limitations of their methodologies and employed more sophisticated techniques have been taken to more kindly.[37]

B.     The problem with analysing causative relationships between facts and decisions

In addition to the problem of unpublished decisions, Hall & Wright argue that a “circularity problem” arises when content analysis is employed to find causative relationships between legally relevant factors and judicial opinions, as the written facts and opinions may not fully capture the “real world facts” or the entirety of the case process.[38] This raises an issue at the “abductive inference” component of content analysis—abductive inference contemplates finding the best explanation to a particular set of facts, but if the facts themselves are incomplete, any inferences made from them will be similarly imperfect.

Unfortunately, to the author’s knowledge, no workaround is available to deal with this problem, and various empirical legal studies have faced harsh attacks on their validity for failing to take it into account.[39] While some empirical legal researchers have resorted to gathering data by physically attending court hearings,[40] and those studies have a stronger claim to their validity, no empirical study could possibly account for the closed-door and confidential nature of judicial decision-making.[41] Therefore, a similar attitude as with that towards unpublished decisions must be adopted: the problem must be acknowledged, and the conclusions sought to be reached must be restricted accordingly.

To that end, it is suggested that any empirical legal study that seeks to find the “weight” or “significance” attached to factors considered in judicial decisions may overreach the boundaries of content analysis—as “weight” or “significance” is a qualitative inquiry, best suited for conventional legal analysis. Most of the empirical legal studies in Singapore appear to have recognised this, and they have generally involved the counting of factors without any evaluation of causative significance, coupled with qualitative analyses of the findings using more conventional techniques of legal analysis.[42] In the author’s view, this combination the best balance between depth and objectivity of understanding.[43]

IV.           Conclusion

This article has set out the basic methodology and historical development of content analysis as a methodology in empirical legal scholarship, as well as its uses, limitations, and potential workarounds to those limitations. In summary, it has been argued that in the context of analysing published judicial decisions, content analysis methodologies achieve their objectives best when paired with conventional legal analysis, and while the problems with unpublished decisions and analysing causative relationships can be mitigated to some degree by such a pairing, they should be explicitly dealt with (or simply acknowledged) where they arise.

The empirical legal research charge has already begun—it should be welcomed with open arms. It is hoped that aspiring empirical legal researchers remain cognisant of the unique capabilities and limitations of their methodologies, and that the introduction of empirical methodologies into legal scholarship in Singapore will be the catalyst for fruitful discussions and developments in the law.

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* LL.B. (Hons.) Candidate, National University of Singapore. The author wishes to express his most heartfelt gratitude to Mr. Benny Tan (Sheridan Fellow, National University of Singapore) for leading the empirical legal research charge within the Singapore Law Review, and for the many illuminating discussions about empirical methodologies in law—from which the seeds to a forthcoming empirical legal research paper and this companion piece were sown.

[1] For more variants on this illustration and the inspiration for this section, see Robert Lawless et al, Empirical Methods in Law, 2nd ed (Alphen aan den Rjin: Wolters Kluwer, 2016) at 7-20.

[2] Mark A Hall & Ronald F Wright, “Systematic Content Analysis of Judicial Opinions” (2008) 96:1 Cal L Rev 63 at 72.

[3] See eg, Lawless et al, supra note 1.

[4] James C Phillips & Edward L Carter, “Oral Argument in the Early Roberts Court: A Qualitative and Quantitative Analysis of Individual Justice Behaviour” (2010) 11:2 J App Pr & Pro 325; Keith Carlson et al, “A Quantitative Analysis of Writing Style on the U.S. Supreme Court” (2016) 93:6 Wash ULO 1461.

[5] These are: Goh Yihan & Paul Tan, “An Empirical Study on the Development of Singapore Law” (2011) 23 SAcLJ 176; Lee Zhe Xu et al, “The Use of Academic Scholarship in Singapore Supreme Court Judgments” (2015) 33 Sing L Rev 25; Cheah W L & Goh Yihan, “An Empirical Study on the Singapore Court of Appeal’s Citation of Academic Works: Reflections on the Relationship Between Singapore’s Judiciary and Academia” (2017) 29 SAcLJ 75; Agnes Lo et al, “The Evaluation of Medical Expert Opinions in Litigation: An Empirical Study” (2018-2019) 36 Sing L Rev 247; Jerrold Soh, “A Network Analysis of the Singapore Court of Appeal’s Citations of Precedent” (2019) 31 SAcLJ 246; and Professor Gary Chan’s monograph at Gary Chan Kok Yew, Tort of defamation before the Singapore Courts, 1965-2015: A comparative and empirical study (Singapore: Academy Publishing, 2017).

[6] Klaus Krippendorff, Content analysis: an introduction to its methodology, 2nd ed (California: Sage Publications, Inc., 2004) at 83

[7] Agnes Lo et al, “The Evaluation of Medical Expert Opinions in Litigation: An Empirical Study” (2018-2019) 36 Sing L Rev 247 at 254, 255.

[8] Krippendorff, supra note 6 at 18.

[9] Ibid at 83-85, 126, 171. Also note that these components do not have to be organised linearly, and a content analysis design can contain iterative loops: see ibid at 85.

[10] Ibid.

[11] Ibid at 171.

[12] See ibid at 90 for a research design framework that seeks to “operationalise expert knowledge”; this directly supports the use of legal principles as analytical constructs.

[13] Ibid at 3-6.

[14] Hall & Wright, supra note 2 at 76.

[15] Michael Freeman, Lloyd’s Introduction to Jurisprudence, 9th ed (London: Sweet & Maxwell, 2014) at 845.

[16] Ibid.

[17] Brian Z Tamanaha, Law as a Means to an End: Threat to the Rule of Law (Cambridge: Cambridge University Press, 2006) at 70.

[18] Karl Llewellyn famously read thousands of cases randomly selected from various American appellate courts to determine the factors which would influence a judge’s decision. See Karl N Llewellyn, The Common Law Tradition: Deciding Appeals (Boston: Little, Brown & Co, 1960).

[19] Tamanaha, supra note 17 at 1, 72.

[20] Hall & Wright, supra note 2 at 76.

[21] See Table 1 in Ibid at 72.

[22] Carlson et al, supra note 4 at 1466.

[23] Hall & Wright, supra note 2 at 87.

[24] Ibid.

[25] Ibid at 78.

[26] Ibid at 88. See also the concept of “triangulation” in the social sciences, in ibid at 83.

[27] Ibid at 84, citing the well-known case of Roe v Wade 410 U.S. 113 (1973).

[28] Ibid at 81.

[29] For a readily observable example, it appears that the Singapore courts have added the word “unreported” in brackets to indicate that a case cited as authority is an unpublished decision.

[30] For the position in the civil law, see Rules of Court (Cap 322, s 80, 2014 Rev Ed Sing), O 42 r 8(1). For the position in the criminal law, see Criminal Procedure Code (Cap 68, 2012 Rev Ed Sing) at ss 377(5) and (7). See also ss 394A-B and 397(3A) of the Criminal Procedure Code for more exceptional situations where a written grounds of decision must be issued.

[31] This assumption is backed by some literature. Judge Edwards wrote that “any assessment of the work of the courts of appeals that does not include unpublished decisions cannot be seen as complete”, and that according to official statistics, less than 17 percent of all opinions in courts of appeals were published. See Harry T Edwards & Michael A Livermore, “Pitfalls of Empirical Studies that Attempt to Understand the Factors Affecting Appellate Decisionmaking” (2009) 58:8 Duke U 1895 at 1923. In Singapore, this is likely to be the case as well—as an illustration, the State Courts had heard 303,487 criminal cases in the year 2018 alone, while searching the term “Public Prosecutor” in LawNet yields 15,482 results across all years. See “One Judiciary Annual Report 2018”, Supreme Court Singapore, online: <https://www.supremecourt.gov.sg/docs/default-source/default-document-library/ojar_full-8.pdf>.

[32] In Singapore, there is at least one channel for researchers to access court archives—the Empirical Judicial Research Programme. However, there appear to be no channels for application for this programme that are available to the general public. See “About the Empirical Judicial research Programme”, Singapore Judicial College, online: <https://www.supremecourt.gov.sg/sjc/empirical-judicial-research>.

[33] Hall & Wright, supra note 2 at 92.

[34] Goh Yihan & Paul Tan, “An Empirical Study on the Development of Singapore Law” (2011) 23 SAcLJ 176 at para 43.

[35] Hall & Wright, supra note 2 at 92.

[36] Harry T Edwards & Michael A Livermore, “Pitfalls of Empirical Studies that Attempt to Understand the Factors Affecting Appellate Decisionmaking” (2009) 58:8 Duke U 1895 at 1907.

[37] Ibid at 1904-1905.

[38] Hall & Wright, supra note 2 at 95.

[39] See Edwards & Livermore, supra note 36 at 1930-1944.

[40] See eg, Jessica Jacobson & Mike Hough, “Personal Mitigation: An Empirical Analysis in England and Wales” in Julian V Roberts eds, Mitigation and Aggravation at Sentencing (Cambridge: Cambridge University Press, 2011) at 146-167.

[41] Edwards & Livermore, supra note 36 at 1903.

[42] A notable exception is Lo et al, supra note 8, which the author is immensely grateful to have been involved in—the methodology of the study involved various coders identifying certain factors and assigning “scores” from 1 to 5 to them based on their “significance”. While a critical examination of the methodology used is out of the scope of this article, it suffices to say that this is a novel methodology which warrants much closer examination. See also Jerrold Soh, “A Network Analysis of the Singapore Court of Appeal’s Citations of Precedent” (2019) 31 SAcLJ 246, the first empirical legal study to adopt network analysis in Singapore.

[43] Hall & Wright, supra note 2 at 88.

A Matter of Interpretation: Wong Souk Yee Revisited at the Court of Appeal

A PDF version of the article can be found here.

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A MATTER OF INTERPRETATION: WONG SOUK YEE REVISITED AT THE COURT OF APPEAL

Benjamin Low

I. INTRODUCTION

In an earlier piece for this publication,[1] I had noted the Singapore High Court’s reliance on canons of statutory interpretation normally designed for ordinary legislation, for the purpose of interpreting provisions belonging to the Constitution of the Republic of Singapore[2] in its decision in Wong Souk Yee v Attorney-General.[3] I considered that the recourse to such interpretative tools under the banner of the so-called “purposive approach”[4] towards constitutional interpretation carried with it the latent risk of the judiciary straying, in effect, into the arena of judicial legislation, and had expressed the hope that such a methodology be further clarified by the Court of Appeal.[5]

The Court of Appeal has since delivered its judgment on the matter in Wong Souk Yee v Attorney-General.[6] Although the judgment largely upheld the original decision of the lower court in Wong Souk Yee (HC), there are certain aspects of the Court of Appeal’s decision that arguably present rather intriguing, if not troubling, implications for constitutional law in Singapore and which, accordingly, necessitate further discussion and scrutiny. This article endeavours to go some way towards meeting that need.

II. BACKGROUND

In Wong Souk Yee (HC), the Appellant had applied for a mandatory order requiring that the Members of Parliament (“MPs”) for the Marsiling-Yew Tee Group Representation Constituency (“GRC”) vacate their seats and that the Prime Minister advise the President to issue a writ of election for the Marsiling-Yew Tee GRC.[7] Her application was predicated on the basis that a vacancy had arisen in the Marsiling-Yew Tee GRC after one of its MPs, Madam Halimah Yacob, vacated her seat in Parliament on 7 August 2017 to contest in the 2017 Presidential Election.[8] Since Madam Halimah’s departure, the Marsiling-Yew Tee GRC continued to be represented by its three remaining MPs from the ruling People’s Action Party. The Appellant submitted that the occasion of such a vacancy was sufficient to trigger the by-elections mechanism in Article 49(1) of the Singapore Constitution.[9]

The Appellant also applied, in the alternative, for a declaratory order that section 24(2A) of the Parliamentary Elections Act[10] be interpreted as requiring all the MPs of a GRC to vacate their seats (i) when one or more MPs of the GRC vacate their seats; or (ii) in the alternative, when the only MP in the GRC who belongs to a minority community vacates his or her seat.[11] On the flip side, if such an interpretation was not possible, the Appellant further sought a declaratory order that s 24(2A) be declared void for inconsistency with the Singapore Constitution as per Article 4 read with Article 49.[12]

The High Court rejected the Appellant’s claim chiefly on the basis that her application for mandatory orders was grounded on a legal improbability.[13] In short, the Court below held that there was no express provision in the Singapore Constitution justifying or permitting the ‘mandated’ vacation by the remaining MPs of the Marsiling-Yew Tee GRC of their seats in the event of a single vacancy arising in the constituency.[14] Although the Singapore Constitution does provide for several grounds on which an MP’s seat may be vacated,[15] there was nothing in these grounds that pointed to the vacation of seats by the remaining MPs of a GRC in the event a vacancy first arose in any one of the seats.[16] This, in the judgment of Chua Lee Ming J, presented the single most significant legal hurdle in the Appellant’s case which she could surmount, and which sufficed to doom her application. Nor was the Appellant able to succeed in her alternative case for declaratory orders.[17]

At the same time, while Chua Lee Ming J found that the Appellant could not successfully make out her case for the mandatory and declaratory orders, the learned Judge was prepared to accept the Respondent Attorney-General’s contention that Article 49(1) could be interpreted to mean that a by-election in a GRC could only be held if all MPs vacated their seats mid-term[18] or, alternatively, that Article 49(1) applied only to Single-Member Constituencies (“SMC”) and not GRCs.[19] Crucially, the High Court accepted the Attorney-General’s reasoning that either an updating or rectifying or even a strained construction could be applied to Article 49(1) so as to fully accommodate Parliament’s intent when it sought to introduce the GRC scheme in 1988.[20] On that basis, the High Court found in favour the Respondent Attorney-General and dismissed the Applicant’s case. The Appellant duly appealed to the Court of Appeal.

III. THE COURT OF APPEAL’S DECISION

Both parties appealed largely on the same grounds that they had raised earlier in the High Court below.[21] The Appellant however also took the opportunity to address the Attorney-General’s submissions concerning the applicability of an updating and/or rectifying construction to the Singapore Constitution, contending that such rules of statutory interpretation “would entail the court overstepping its constitutional role”[22] and thus had no basis in the province of constitutional interpretation. There was an additional issue for the Court of Appeal’s consideration concerning the matter of costs[23] which we will not go into for the purposes of this article. Suffice to say, our concern is chiefly with the primary substantive issues that the Court of Appeal had to grapple with, namely the proper interpretation of Article 49(1) vis-à-vis the GRC scheme and the means by which this proper interpretation ought to be reached.

A. The Ambiguity of Article 49(1) and the Will of Parliament

From the outset, the Court of Appeal recognised that the meaning of Article 49(1) of the Singapore Constitution had become ambiguous vis-à-vis the mechanism of by-elections for a GRC, as opposed to an SMC.[24] Article 49(1) in its present incarnation reads as such:

49.—(1) Whenever the seat of a Member, not being a non-constituency Member, has become vacant for any reason other than a dissolution of Parliament, the vacancy shall be filled by election in the manner provided by or under any law relating to Parliamentary elections for the time being in force.

As the Court of Appeal observed, and as has been well-documented elsewhere, Article 49(1) preceded the introduction of GRCs in 1988 and was clearly applicable to SMCs.[25] Furthermore, it was also decided by the Court of Appeal in its earlier decision of Vellama d/o Marie Muthu v Attorney-General[26] that Article 49(1) imposed a duty on the Prime Minister to call a by-election “to fill casual vacancies of elected MPs which may arise from time to time”[27] in the event of such vacancies arising in an SMC. All well and good, but could this interpretation of Article 49(1) extend to GRCs as well?[28] The Court of Appeal in Wong Souk Yee (CA) further noted that such an interpretation was possible on the one hand[29] and yet, on the other, noted that the express wording of Article 49(1) “presupposes the existence of a vacancy in a particular seat before a by- election has to be called for that seat”[30] which, when read together with the proviso in Article 39A of the Singapore Constitution that elections to a GRC could only be conducted “on the basis of a group”,[31] suggested that “a by-election in a GRC can only be conducted if all the Members representing that GRC have vacated their seats”.[32] So while it appeared to be fairly undisputed that by-elections for a GRC have to be held on a group basis, which in turn is only possible in a situation involving the vacating by all MPs of a GRC of their seats, this still left unaddressed the pertinent issue as to what ought to be the proper procedure in a situation involving the vacating of one or more seats by one or more MPs,[33] short of a complete vacating of all seats by all MPs of a GRC.

Here the Court of Appeal found itself to be in a dilemma. The Court rightly observed that nothing in the texts of Articles 49 and 39A, nor in Article 46 for that matter, was capable of supporting the proposition that the remaining MPs of a GRC had to vacate their seats in the event one or more MPs vacated their seats in the first place.[34] By contrast, there was an express provision in s 24(2A) of the PEA which made clear that no writ for an election to a GRC could be issued unless all MPs in that GRC had vacated their seats.[35] In short, there was something of a “legislative oversight”[36] concerning the implementation of the GRC scheme so as to make the meaning of Article 49(1) ambiguous where vacancies in a GRC arose. The Court thus considered it necessary to have recourse to extraneous material for the purpose of ascertaining Parliament’s intention regarding the operation of the GRC scheme in order to arrive at a purposive interpretation of Article 49.[37]

What then did Parliament intend in the event of a single vacancy arising in a GRC? In this it was clear, and remains so to this day, that Parliament expressly intended that by-elections would only be called for a GRC in the event that all MPs of that constituency vacated their seats and not in the event one or more MPs vacated their seats.[38] And yet, despite this evident clarity in the will and intent of the Legislature, the extraneous material, in the Court’s opinion, fell short of clarifying “how Parliament thought it would effect this outcome [of permitting by-elections in a GRC only upon the vacating of all seats by all MPs]”[39] given that the extraneous material had the effect of creating three distinct possibilities as to how Parliament intended to effect such an outcome, namely that (i) Parliament intended to amend Article 49(1) to reflect its intention concerning GRC by-elections but omitted to do so; (ii) Parliament intended for Article 39A to be the operative provision regulating all matters pertaining to GRCs, including the filling of vacancies, and that Article 39A contained sufficient reference to s 24(2A) PEA to achieve its desired outcome; or (iii) Parliament intended that Article 49(1) would apply to GRCs but the wording in that provision was sufficiently broad to include references to s 24(2A) PEA so as to render an express amendment unnecessary.[40] This ultimately served to compound the Court of Appeal’s difficulty in ascertaining the proper interpretation of Article 49(1) in the context of by-elections for a GRC.

B. The Proper Interpretation of Article 49(1) and the Role of Updating and Rectifying Constructions

The Court of Appeal next considered three possible interpretations of Article 49(1) vis-à-vis vacancies in a GRC, based on the submissions of the Appellant and the Attorney-General, which were that:

(a) the vacancy arising in a GRC, as and when it arises, shall be filled by a by-election for all the seats in the GRC (“the Appellant’s Interpretation”);

(b) the vacancy in a GRC shall only be filled by a by-election if and when all the seats in the GRC have been vacated (“the Respondent’s First Interpretation”); or

(c) the “seat of a Member” in Art 49(1) refers only to the seat of a Member of an SMC, and Art 49(1) does not apply to seats in a GRC at all (“the Respondent’s Second Interpretation”).[41]

The Court of Appeal rejected the Appellant’s Interpretation as being contrary to the will and intent of Parliament and thus incompatible with the purposive approach in interpreting Article 49(1).[42] As for the Respondent’s First Interpretation, which the Respondent submitted could be achieved by way of either an updating or rectifying construction, the Court held that neither of these two canons of statutory interpretation was appropriate to the present case before it and thus declined to accept the Respondent’s First Interpretation.[43]

Having rejected the Respondent’s First Interpretation, and by extension, the High Court’s preferred interpretation of Article 49(1),[44] the Court of Appeal opted instead to adopt the Respondent’s Second Interpretation.[45] The Court justified its holding for several reasons, such as the textual limitations arising from the express words of Article 49(1) itself as well as the fact that Article 49(1) was first enacted when Singapore’s electoral divisions consisted only of SMCs and the GRC scheme had yet to come into existence.[46]

The problematic implication of this decision is that the Respondent’s Second Interpretation effectively denudes the GRC by-elections mechanism of any constitutional basis on which it may stand. If Article 49(1), being the only provision in the Singapore Constitution that deals with the filling of vacancies in parliamentary seats by way of by-election, is limited in scope to SMCs only, that means, in effect, that Singapore’s constitutional scheme recognises only the permissibility of by-elections for SMCs and not so for GRCs.[47]

In turn, this arguably creates the worrisome inference that any attempt by Parliament to establish a separate by-elections scheme for a different type of constituency such as the GRC must necessarily fall outside of the ambit of the Singapore Constitution.[48] If the Singapore Constitution does not recognise the holding of by-elections in a GRC, and in the absence of any other constitutional provision authorising or enabling the enactment of a separate by-elections mechanism to fill vacancies arising in a GRC,[49] this can only mean that s 24(2A) PEA is for all intents and purposes inconsistent with the terms of the Singapore Constitution.[50] It would seem that in trying to remedy the ambiguity concerning Article 49(1)’s relation with vacancies in a GRC, the Court of Appeal might have perhaps inadvertently called into question the very legitimacy of the GRC scheme itself.[51]

C. The Role of Updating and Rectifying Constructions in Constitutional Interpretation

At this point, some words may also be said about the Court of Appeal’s observations regarding the appropriateness of applying either an updating or rectifying construction to the interpretation of the Singapore Constitution. It was evident that the Court of Appeal had reservations about the applicability of these canons of statutory interpretation in the context of constitutional interpretation, given the unique nature of constitutional provisions as opposed to ordinary statutory provisions. As the Court pithily observed, the provisions of a constitution “are designed to be more deeply entrenched and are generally regarded as fundamental in nature, and there may be a concern that applying such tools of statutory interpretation may not be consistent with the nature of constitutional provisions”.[52]

The Court of Appeal was cognisant, and arguably correctly so, in recognising that simply importing such canons of statutory interpretation, which have the practical effect of introducing substantive changes into the constitutional provisions, could potentially distort the constitutional schema while establishing potentially undesirable knock-on effects. After all, a constitution is generally meant to serve as a supreme or paramount law that supersedes all other laws subsisting in a legal system.[53] In line with this element of paramountcy, constitutions have often—although this is not always necessarily the case—been designed with a certain degree of rigidity in mind by rendering their amendment subject to more cumbersome procedures and requirements as compared to ordinary statutes, with the understanding that the provisions of a constitution are not meant to be easily amended.[54] At the heart of the matter, there is something principally incongruent with attempting to apply a rule of statutory interpretation, such as a rectifying construction which “involves the addition or substitution of words to give effect to Parliament’s manifest intentions”,[55] to a fundamental law that is supposed to be amended or altered only in accordance with the special amendment procedure that the constitution sets out for itself.[56]

Unfortunately however, the Court of Appeal tentatively declined to make any express finding as to whether an updating or rectifying construction could be applied to a constitutional provision,[57] notwithstanding its earlier observations on the unsuitability of relying on these rules of statutory interpretation and its conclusion that the two canons were not appropriate in the present case.[58] This leaves open the possibility that similar arguments may yet arise in the future, given the Court’s refusal to expressly rule on this particular issue.[59] It would have been far better if the Court of Appeal had simply rejected completely the applicability of either an updating or rectifying construction to the Singapore Constitution from the outset, thereby clarifying the proper scope and operability of rules of statutory interpretation in the context of constitutional interpretation. This sadly, has not been done.

IV. CONCLUSION

The Court of Appeal, as we have seen, ultimately upheld the High Court’s decision by dismissing the Appellant’s appeal although it did diverge significantly from the High Court insofar as the proper interpretation of Article 49(1) of the Singapore Constitution was concerned. The failure of the Appellant’s appeal ought not to come as a surprise to anyone, given that the main thrust of the Appellant’s case was hampered by the critical absence of any provision in the Singapore Constitution capable of buttressing her claim for mandatory orders seeking the vacating of the seats of the remaining MPs of Marsiling-Yew Tee GRC. Nor was the Appellant’s case assisted by the presence of a clear Parliamentary intention that militated against her interpretation of the GRC by-elections mechanism.

Unfortunately, by rejecting the High Court’s interpretation of Article 49(1) in favour of its own interpretation of that proviso, the Court of Appeal appears to have inadvertently opened up several cans of worms with rather problematic implications for the development of constitutional law in Singapore. The applicability of canons and rules of statutory interpretation in the context of constitutional interpretation remains tainted by uncertainty and ambiguity while the constitutional basis for the existence of the GRC by-elections mechanism contained in s 24(2A) PEA appears to have been called into question in light of the Court of Appeal’s decision that Article 49(1) does not extend to GRCs.[60] It remains to be seen whether Parliament or a future court may be able to provide more definitive solutions capable of remedying this legal quandary.

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[1] Benjamin Low, “Leaving an Empty Seat: Wong Souk Yee’s answer to By-Elections in a Group Representation Constituency” (30 May 2018), Singapore Law Review: Juris Illuminae, online: <http://www.singaporelawreview.com/juris-illuminae-entries/2018/leaving-an-empty-seat-wong-souk-yees-answer-to-by-elections-in-a-group-representation-constituency> [Low, “Leaving an Empty Seat”].

[2] Constitution of the Republic of Singapore (1999 Rev Ed) [Singapore Constitution].

[3] [2018] SGHC 80 [Wong Souk Yee (HC)].

[4] The “purposive approach” here refers to a method of constitutional interpretation, that is to say, it is the interpretation of the provisions of the Singapore Constitution in a manner that “would promote the purpose or object underlying the written law”: see Interpretation Act (Cap 1, 2002 Rev Ed Sing), s 9A; see also the decision of Tan Cheng Bock v Attorney-General, [2017] 2 SLR 850 (CA) [Tan Cheng Bock] at para 54.

[5] Low, “Leaving an Empty Seat”, supra note 1.

[6] [2019] 1 SLR 1223 (CA) [Wong Souk Yee (CA)].

[7] Wong Souk Yee (HC), supra note 3 at para 3.

[8] Ibid at para 2.

[9] Singapore Constitution, supra note 2, art 49(1).

[10] Parliamentary Elections Act (Cap 218, 2011 Rev Ed Sing), s 24(2A) [PEA].

[11] Wong Souk Yee (HC), supra note 3 at para 4.

[12] Ibid.

[13] Ibid at paras 22-26.

[14] Ibid at para 26.

[15] Singapore Constitution, supra note 2, art 46(2).

[16] As the High Court so correctly identified: see Wong Souk Yee (HC), supra note 3 at para 24.

[17] Wong Souk Yee (HC), supra note 3 at paras 58-60.

[18] Ibid at paras 38, 41, and 44.

[19] Ibid at para 45. More importantly, although the High Court ultimately opted for the Attorney-General’s first interpretation of art 49(1) as the correct interpretation of that provision, it was prepared to accept that the Attorney-General’s second interpretation was a possible interpretation of art 49(1) as well, rather than rejecting it outright.

[20] Ibid at paras 27-43.

[21] Wong Souk Yee (CA), supra note 6 at para 16.

[22] Ibid at para 17.

[23] Ibid at para 21 and paras 88-96.

[24] Ibid at para 27.

[25] Ibid at para 28.

[26] [2013] 4 SLR 1 (CA) [Vellama].

[27] Ibid at para 82.

[28] Interestingly, the Court of Appeal in Vellama merely stated rather obliquely that the general duty imposed by art 49(1) on the Prime Minister “will only apply to a SMC as there is a special provision where a vacancy arises in a GRC” which seems to suggest that this duty does not apply where a vacancy arises in a GRC: see Vellama, ibid.

[29] Wong Souk Yee (CA), supra note 6 at para 34.

[30] Ibid at para 35.

[31] Singapore Constitution, supra note 2 at art 39A.

[32] Wong Souk Yee (CA), supra note 6 at para 37.

[33] Thus, to borrow the original factual matrix of Wong Souk Yee (HC), even if additional MPs besides Madam Halimah vacated their seats in the Marsiling-Yew Tee GRC, this would not be considered a complete vacating of all seats in the GRC as long as at least one MP remained to occupy one seat in Marsiling-Yew Tee GRC.

[34] Wong Souk Yee (CA), supra note 6 at paras 38-39.

[35] Ibid at para 44.

[36] Ibid at paras 46-47.

[37] Ibid at para 48.

[38] Ibid at paras 49-53; see also Parliamentary Debates Singapore: Official Report, vol 50 at cols 334–335 (12 January 1988) (Deputy Prime Minister Goh Chok Tong).

[39] Wong Souk Yee (CA), supra note 6 at para 54 [additions added].

[40] Ibid.

[41] Ibid at para 58.

[42] Ibid at para 71.

[43] Ibid at paras 65-69.

[44] Wong Souk Yee (HC), supra note 3 at paras 27-44.

[45] Wong Souk Yee (CA), supra note 6 at paras 72-73.

[46] Ibid.

[47] Thus, while the by-elections mechanism for SMCs derives its fundamental constitutional validity from the justifying proviso in art 49(1) of the Singapore Constitution, the by-elections mechanism for GRCs cannot likewise claim constitutional validity by the same art 49(1).

[48] Assuming we follow the Court of Appeal’s own reasoning that art 49(1) only applies to SMCs and not to GRCS, or any other types of constituencies for that matter, to its logical conclusion.

[49] This becomes evident when one takes a cursory look at the remaining provisions of the Singapore Constitution.

[50] If s 24(2A) PEA is inconsistent with the terms of the Singapore Constitution, then it must ipso facto be void by virtue of art 4 of the Singapore Constitution: see Singapore Constitution, supra note 2 at art 4; see also Taw Cheng Kong v Public Prosecutor, [1998] 1 SLR(R) 78 (HC) at paras 14-15 for an enunciation of the principle of constitutional supremacy.

[51] The Court of Appeal appears to have recognised the problematic implications of its own decision when it referred to the Respondent’s Second Interpretation as “not ideal” and expressed its hope that the Singapore Constitution be amended to rectify this legal quandary: see Wong Souk Yee (CA), supra note 6 at para 72. However, to date, more than a year has elapsed since the decision of the Court and the hoped-for amendment to art 49(1) has not yet materialized.

[52] Ibid at para 64.

[53] For an exposition of the general principles of constitutional supremacy, see Kevin Tan & Thio Li-anne, Constitutional Law in Malaysia and Singapore, 3rd ed (Singapore: LexisNexis, 2010) at 102–103 and 106.

[54] Ibid; see also Jutta Limbach, “The Concept of the Supremacy of the Constitution” (2001) 64:1 Mod L Rev 1 at 2–3.

[55] Wong Souk Yee (CA), supra note 5 at para 63.

[56] There has already been criticism levelled at such a mode of constitutional interpretation as potentially turning courts in Singapore into “mini-legislatures”: see Po Jen Yap & Benjamin Joshua Ong, “Judicial Rectification of the Constitution: Can Singapore Courts Be Mini-Legislatures” (2018) 48:2 Hong Kong LJ 389 at 395–398; see also my own comments in Low, “Leaving an Empty Seat”, supra note 1.

[57] Wong Souk Yee (CA), supra note 5 at para 65.

[58] Ibid at para 65.

[59] At this point, we may ask ourselves: If the Court of Appeal was evidently uncomfortable with the use of updating and rectifying constructions as part of the process of constitutional interpretation, why then hold back from expressly rejecting their applicability?

[60] I had earlier suggested, in a separate piece, that a far more elegant solution for the Court of Appeal would have been to simply accept that s 24(2A) PEA had the effect of implicitly amending the provisions of the Singapore Constitution. Such an argument would have obviated any lingering doubt as to the constitutional validity of s 24(2A) PEA and the by-elections mechanism for GRCs as a whole: see Benjamin Low, “Full Powers and the Constitutional Doctrine of Implied Amendments” (2019) Sing JLS 390 at 413–414.

The Narrow, Broad And Middle Grounds: The Muddled Doctrine Of Unconscionability

A PDF version of the article can be found here.

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THE NARROW, BROAD AND MIDDLE GROUNDS: THE MUDDLED DOCTRINE OF UNCONSCIONABILITY

TOH DING JUN^*

I. INTRODUCTION: BOM V BOK

In 2018, the Singapore Court of Appeal (“SGCA”) in BOM v BOK^[1]confirmed that the doctrine of unconscionability formed part of the law in Singapore.^[2] To this end, the SGCA stated that for the doctrine of unconscionability to be invoked, the plaintiff must show:

1.      That he was suffering from an infirmity; and

2.      That the infirmity was exploited by the other party exploited in procuring the transaction.^[3]

Once the plaintiff has satisfied the requirements, the burden then shifts to the defendant to show that the transaction was fair, just and reasonable.^[4] To this end, the court will invariably consider, inter alia, whether:

1.      Whether the transaction was at an undervalue; and

2.      Whether the plaintiff had received independent legal advice.^[5]

The SGCA stated that this approach was a modification of the ‘narrow’ doctrine of unconscionability that was first espoused by the House of Lords in Fry v Lane[6] and Cresswell v Potter^[7].^[8] In doing so, the SGCA stressed that the approach to be adopted in Singapore was not the ‘broad’ doctrine of unconscionability adopted by the Australian courts.^[9] In other words, it would seem that the SGCA was adopting a ‘middle’ ground to the doctrine of unconscionability. However, this leads to the question—what exactly is this ‘middle’ ground?

In this article, it is submitted that the difference between the ‘broad’ and ‘middle’ grounds is more apparent than real. Further, it will be argued that the court ought to take a broader approach to invoking the doctrine of unconscionability, which could include situational infirmities such as emotional dependence and infatuation.

II. THE ORIGINAL NARROW DOCTRINE OF UNCONSCIONABILITY

At this stage, it is apposite to briefly state the ‘narrow’ doctrine of unconscionability that was originally conceptualised by the English courts to prevent expectant heirs from being exploited and deprived of their inheritances.^[10] The ‘narrow’ doctrine involves the consideration of three requirements:

1.      Whether the plaintiff is poor and ignorant;

2.      Whether the sale was at a considerable undervalue; and

3.      Whether the vendor had independent advice.^[11]

By accepting that the plaintiff may have other forms of infirmities besides being poor and ignorant, the SGCA has certainly broadened the doctrine of unconscionability from its ‘narrow’ beginnings.^[12] However, the question remains—what is the scope of the doctrine of unconscionability as espoused by the SGCA? This is a question we now turn to.

III. THE ‘BROAD’ DOCTRINE ADOPTED IN AUSTRALIA

The position as adopted in Australia will be discussed first, followed by Singapore’s latest position in BOM.

The SGCA in BOM used the High Court of Australia (“HCA”) decision of Commercial Bank of Australia Limited v Amadio[13] to exemplify the ‘broad’ doctrine of unconscionability. Briefly, this ‘broad’ doctrine of unconscionability requires the plaintiff to prove that [“Amadio formulation”]:

1.    He was “…under a special disability in dealing with the other party with the consequence that there was an absence of any reasonable degree of equality between them…”[14]; and

2.    “…[T]hat the disability was sufficiently evident to the stronger party to make it prima facie unfair or ‘unconscientious’ that he procure[d], or accept[ed], the weaker party’s assent to the impugned transaction…”.[15]

Once these elements were established by the plaintiff, the onus is then on the defendant to show that the transaction was fair, just and reasonable.[16]

Further, the HCA emphasised that a mere difference in bargaining power of the parties was ipso facto insufficient to invoke the doctrine of unconscionability. As Mason J put it:

I qualify the word “disadvantage” by the adjective “special” in order to disavow any suggestion that the principle applies whenever there is some difference in the bargaining power of the parties and in order to [emphasise] that the disabling condition or circumstance is one which seriously affects the ability of the innocent party to make a judgment as to his own best interests, when the other party knows or ought to know of the existence of that condition or circumstance and of its effect on the innocent party.[17]

Two points can be distilled from this quote:

1.  There is a standard of “special” disadvantage, presumably taken from the objective person’s point of view, ie it must be “special” in the circumstances, presumably taken from a reasonable man’s standpoint.

2.  The content of this standard is that the condition or circumstance must have “seriously” affected the ability of the innocent party to protect his own best interests.

Seen in this light, it is puzzling as to why the SGCA rejected this ‘broad’ doctrine on the basis that “it affords the court too much scope to decide on a subjective basis”[18], because it comes dangerously close to empowering the court to subjectively decide whether there was an inequality of bargaining power as between the parties.[19] This seems to go against the express wording of the judgment, as made by Mason J, where he stated that the inequality of bargaining power must have arose from the “disabling condition” of the weaker party, and must have “seriously [affected]” the weaker party’s ability to make a judgment as to his best interests.[20] It is submitted that Mason J’s words suggest that the courts have an objective standard to guide its inquiry into whether there was an inequality of bargaining power for the purposes of invoking the doctrine of unconscionability – that of a “disabling condition” which “seriously affects” the innocent party’s ability to make a judgment as to his own best interests. Indeed, it is submitted that where the disadvantage merely amounts to inequality in bargaining positions seen in the normal course of business, the innocent party’s ability will not be said to be “seriously affected” such that the doctrine of unconscionability can be invoked.

Moreover, it is unclear as to why the SGCA was concerned with the “subjectivity” of the ‘broad’ doctrine of unconscionability. When the HCA applied the law to the facts of Amadio, Deane J stated:

[T]he result of the combination of their age, their limited grasp of written English, the circumstances in which the bank presented the document to them for their signature and, most importantly, their lack of knowledge and understanding of the contents of the document … [the plaintiffs] lacked assistance and advice where assistance and advice were plainly necessary if there were to be any reasonable degree of equality between themselves and the bank.[21]

As stated in the Amadio formulation, the court is to determine the inequality of bargaining power through the lens of what is reasonable in the circumstances that the transaction was completed (ie “reasonable degree”).[22] This has since been suggested to be a comparison of the relative disparity between the positions of the stronger and weaker party rather than focusing upon the inherent weakness of the latter.[23] If this is true, it seems to suggest an objective test being used, where the “relative disparity” is seen from a third party’s point of view, with the third party necessarily objective and neutral. Again, this is certainly not a subjective test which the SGCA was concerned would lead to uncertainty in contract law.[24]

Further, it is submitted that the use of the term “plainly necessary”[25] fortifies the opinion that a reasonable man standard was used by the HCA in establishing the first element to the Amadio formulation. In other words, it is submitted that the HCA was suggesting that any reasonable person not party to the transaction would have known that, without assistance and advice, there would not be any reasonable degree of equality between the parties. To conclude, and with due respect, it is submitted that had the SGCA considered the position in Amadio in this light, the Amadio formulation may have well been adopted in Singapore.

IV. THE POSITION IN SINGAPORE: DIFFERENCE MORE APPARENT THAN REAL?

It is also submitted that the doctrine of unconscionability may be similar, if not the same, in both Singapore and Australia. Briefly, there are three reasons why this may be so:

1.   In both jurisdictions, the doctrine of unconscionability is primarily concerned with procedural fairness and not substantive fairness.

2.  Prima facie, both jurisdictions seem to accept the same range of infirmities or special disabilities.

3.   In both jurisdictions, the evidential burden of proof is shifted to the defendant once the plaintiff has made out a prima facie case of unconscionability.

First, it is submitted that the focus of the inquiries in Australia and Singapore is on procedural fairness as opposed to substantive fairness. In BOM, the SGCA held:

We stress that the absence of independent advice and the characterisation of a transaction as being at an undervalue are not mandatory elements to be satisfied … However, as this case demonstrates, the presence of these factors will often underscore and highlight the exploitation of an infirmity that renders a transaction improvident.[26]

In an article, Professor Rick Bigwood wrote:

[T]he Australian doctrine is purely procedural in its focus, [with] substantive unconscionability serving merely an important forensic role, namely, ‘as supporting the inference that a position of disadvantage existed’, and also ‘as tending to show that an unfair use was made of the occasion’.[27]

As such, it can be seen that both the ‘broad’ and ‘middle’ grounds of unconscionability are primarily concerned with procedural unfairness, with the SGCA making it clear that an undervalue only goes to “underscore and highlight the exploitation of an infirmity”[28], rather than ipso facto allowing the doctrine of unconscionability to be invoked.

Second, while different terms were used by the SGCA and HCA, ie “infirmities” and “special disability” respectively, it would seem that both courts had the same definition in mind. In BOM, the SGCA stated:

[I]n addition to considering whether or not the plaintiff is poor and ignorant, we would also include situations where the plaintiff is suffering from other forms of infirmities – whether physical, mental and/or emotional in nature … [The infirmity] must have been of sufficient gravity as to have acutely affected the plaintiff’s ability to “conserve his own interests” … Such infirmity must also have been, or ought to have been, evident to the other party procuring the transaction.[29]

Similarly, in Amadio, the HCA stated:

The adverse circumstances which may constitute a special disability for the purposes of the principles relating to relief against unconscionable dealing may take a wide variety of forms and are not susceptible to being comprehensively catalogued … [They include] poverty or need of any kind, sickness, age, sex, infirmity of body or mind, drunkenness, illiteracy or lack of education, lack of assistance or explanation where assistance of explanation is necessary …[30]

It bears mentioning that the definition of “special disability”, as stated by the HCA, is intended to be non-exhaustive.[31] Likewise, it seems that the SGCA left the categories of “infirmities” broad. As such, it is submitted that the list of specific “special disabilities”, as stated by the HCA, could very well be mapped onto the broad categories stated by the SGCA. For example, the concepts of “age” and “sex”, as espoused by the HCA, could very be placed under the broad categories of “physical” or “emotional”. Likewise, the idea of “drunkenness” may well be categorised under “emotional” or “mental”. In other words, there exists an argument that the list of infirmities as stated by the SGCA may be as broad as the position taken by the HCA. To this end, we will now discuss the boundaries of what constitutes an “infirmity”.

V. INFATUATION: WHAT SHOULD SINGAPORE’S POSITION BE?

With regards to the criterion of “infirmity”, it would seem that both the courts and academics have drawn a distinction between “situational infirmities” and “constitutional infirmities”.[32]

As noted by Le Miere J in Warren v Lawton (No 3)[33]:

I use the descriptions constitutional and situational disadvantage to distinguish between disadvantages which are inherent characteristics of a person, for example, lack of intelligence, infirmity and illiteracy – and disadvantages which arise because of the circumstances in which an otherwise normal and ordinary person finds herself.[34]

Further, as noted by Professor Burton Ong:

The SGCA’s choice of the noun “infirmity” to describe the disadvantageous position of the weaker party appears confined to a limited range of constitutional qualities personal to him or her. It would probably not be enough, for example, to plead vulnerability on the basis that a party faced difficult circumstances in his personal life (ie, a situational disadvantage) …[35]

Furthermore, not every constitutional disadvantage is likely to be regarded as an “infirmity” for the purposes of the Singapore doctrine of unconscionability … it is far from certain whether “infirmity” would cover a foolish, naïve or immature individual … who has entered into a bad bargain.[36]

One such “situational infirmity” immediately comes to mind—emotional dependence arising out from an intimate relationship, or infatuation, as accepted by the HCA in Louth v Diprose[37].

Indeed, at the boundaries of the doctrine of unconscionability lies the “situational infirmity” of emotional dependence and infatuation. This area of the law is fraught with much difficulties because courts are generally ill-equipped to determine the emotional state of parties to the impugned transaction.[38] Indeed, it is likely that the weaker party will find it hard to furnish scientific evidence to the courts to establish his “emotional weakness” at the time when the transaction was completed.

Further, as noted by the dissenting judgment given by Toohey J in Louth:

The [weaker party] was well aware of all the circumstances and of his actions and their consequences … That knowledge and his clear appreciation of the consequences of what he was doing run directly counter to a conclusion that he was suffering from some special disability or was placed in some special situation of disadvantage. It is clear that the respondent was emotionally involved with the appellant. But it does not follow that he was emotionally dependent upon her in any relevant legal sense.[39]

Admittedly, there is certainly much force in this statement. Why should the law intervene to vitiate a transaction where parties are fully aware of their what they are doing, notwithstanding that there may be certain situational disadvantages? After all, inequality in bargaining position may very well make the weaker party ‘feel’ as if he needs the transaction to be completed more than the stronger party ie, emotional pressure. Seen in this light, a strong argument exists against allowing “emotional weakness” to be seen as an “infirmity”. In other words, a person may be “emotionally weak” in the factual sense but is taken as a normal person in the legal sense, when the court determines whether the doctrine of unconscionability should be invoked.

However, this cannot be right, and it is submitted that situational infirmities should be considered as an “infirmity” for the purposes of invoking the doctrine of unconscionability. The kernel of the doctrine of unconscionability lies in the element of exploitation, where the stronger party exploits the weaker party’s infirmity, with the actual or constructive knowledge of that infirmity.[40] As such, it should follow that the law should not allow the stronger party to keep any gains he received from the transaction, notwithstanding that the “infirmity” exploited is a situational infirmity and not a constitutional one. In other words, where an offeror intentionally manipulates and exploits the offeree’s emotions and the prevailing situation, knowing that the offeree has a certain emotional weakness vis-à-vis him or her, the transaction should be vitiated.

Further, perhaps the Singapore courts should not be overly concerned with limiting the list of legally acceptable “infirmities” for the purposes of the doctrine. As the SGCA rightfully noted:

The inquiry [into the weaker party’s infirmity] … would, of course, be an intensely fact-sensitive one … [The infirmity] must have been of sufficient gravity as to have acutely affected the plaintiff’s ability to “conserve his own interests” …[41]

As such, it is submitted that the list of “infirmities” should not be limited or restricted. In the context of “emotional weakness”, it is submitted that there is conceivably a myriad of situations where emotional manipulation or exploitation may take place in, and which would not attract the doctrines of duress or undue influence eg, emotional manipulation of one party by another over cyberspace.

It is further submitted that fears of contractual uncertainty, arising from a broad conception of “infirmity”, are misplaced because:

1.   Such an “infirmity” must still be proven by the plaintiff to have acutely affected his ability to conserve his own interests; and

2.   The court is entitled to consider other factors such as, inter alia, the presence of independent legal advice and the entire factual matrix in which the transaction took place in.

Ultimately, this gives effect to both certainty, in the sense that parties know for certain that they want to partake in the transaction, and fairness, in the sense that nobody should be allowed to manipulate and exploit others beyond what is reasonably acceptable in commercial or domestic negotiations.

VI. CONCLUSION

In conclusion, it is submitted that, for the foregoing reasons established in this article, the Armadio formulation of the doctrine of unconscionability and the conception of the doctrine as espoused by the SGCA in BOM are more alike than initially thought. To recapitulate:

1.  It is submitted that the SGCA was mistaken in its belief that adopting the Armadio formulation would introduce greater subjectivity into the doctrine of unconscionability. This possibly led to fears of greater contractual uncertainty.

2.  Additionally, it is worth noting that the ‘broad’ conception of the doctrine was objectively applied by the HCA in Armadio.

3.  Seen in this light, the ‘middle’ ground, as stated by the SGCA resembles the ‘broad’ ground espoused by the HCA. While different terms may have been used, it is submitted that the difference is more apparent than real.

4.  To this end, it is submitted that the Singapore courts should interpret the term “infirmity” broadly because the doctrine of unconscionability is fundamentally concerned with exploitative conduct on the stronger party’s part.

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* Third Year Student, Faculty of Law, National University of Singapore.

^[1] [2019] 1 SLR 349 (CA) [BOM].

^[2] Ibid at para 114.

[3] Ibid at para 142.

^[4] Ibid.

^[5] Ibid.

^[6] (1888) 40 Ch D 312.

^[7] [1978] 1 WLR 255.

^[8] BOM, supra note 2 at para 141.

^[9] Ibid at para 144.

^[10] Ibid at para 127.

^[11] Ibid at para 130.

^[12] Ibid at para 141.

^[13] (1983) 46 ALR 402 (HCA) [Amadio].

^[14] Ibid at 422.

^[15] Ibid.

^[16] Ibid.

^[17] Ibid at 413.

^[18] BOM, supra note 1 at para 133.

^[19] Ibid at paras 133, 134.

^[20] Amadio, supra note 13 at 413.

^[21] Ibid at 425.

^[22] Ibid.

^[23] Burton Ong, “Unconscionability, Undue Influence and Umbrellas: The “Unfairness” Doctrines in Singapore Contract Law After BOM v BOK” [2020] SJLS 295 at 307 [Ong, Unconscionability].

^[24] BOM, supra note 2 at para 121.

^[25] Amadio, supra note 11 at 425.

^[26] BOM, supra note 1 at para 155.

^[27] Rick Bigwood, “Knocking Down the Straw Man: Reflections on BOM v BOK and the Court of Appeal’s “Middle-Ground” Narrow Doctrine of Unconscionability for Singapore” [2019] SJLS 29 at 47.

^[28] BOM, supra note 1 at para 155.

^[29] BOM, supra note 1 at para 141.

^[30] Amadio, supra note 13 at 423.

^[31] Ibid.

^[32] Ong, Unconscionability, supra note 23 at 306.

^[33] [2016] WASC 285.

^[34] Ibid at para 158.

^[35] Ong, Unconscionability, supra note 23 at 306-307.

^[36] Ibid at 307.

^[37] (1992) 110 ALR 1 (HCA) [Louth].

^[38] Chong Yee Ka v Public Prosecutor [2017] 4 SLR 309 (HC) at paras 55-56, where the court there noted that “psychiatry is an inexact science” and that it would generally be acceptable for different psychiatrists to have different expert opinions. Further, see Ngiam Kong Seng v Lim Chiew Hock [2008] 3 SLR(R) 674 (CA) at para 97, where the court recognised that the “recognised psychiatric illness” requirement at the threshold stage of the Spandeck test was “more easily stated than ascertained”.

^[39] Louth, supra note 38 at 28.

^[40] BOM, supra note 1 at para 141.

^[41] Ibid.

Counting Double Counting

The PDF version of this article can be found here.

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counting double counting

Desmond Chye & Russell Vaz*

I.               INTRODUCTION

The law against double counting is seldom taught but remains an important part of the criminal law. It ensures an offender is not punished twice for the same crime. This is especially vital in this day and age where the preponderance of similar offences makes double counting far more likely. In this article, we will attempt to explain the law on double counting; in particular, the dispute over the test for ‘same offences’ and the effect that Tan Khee Koon v Public Prosecutor[1] has had on this dispute.

II.            WHAT IS DOUBLE COUNTING?

Double counting is not to be confused with its more famous relative, double jeopardy. As helpfully explained by the Singapore High Court in Chong Kum Heng v Public Prosecutor, “[t]he rule against double jeopardy is that a person cannot be made to face more than one trial for the same offence”.[2] In contrast, the rule against double counting prevents double punishment for the same offence, where the same set of facts gives rise to liability under more than one written law.

The statutory basis for the prohibition on double counting derives from section 40 of the Interpretation Act:[3]

“Where any act or omission constitutes an offence under 2 or more written laws, the offender shall, unless the contrary intention appears, be liable to be prosecuted and punished under any one of those written laws but shall not be liable to be punished twice for the same offence.” [emphasis added]

A plain reading makes it clear that the determining factor in finding double counting is whether the offences charged constitute the ‘same offence’. However, as this was not defined in the IA, case law is instructive on what it means.

III.           THE MEANING OF ‘the saME OFFENCE’ IN CASE LAW

The starting point would be the Singapore High Court case of Tan Khee Koon,[4] where the court applied the test in the Malaysian case of Jamali Bin Adnan v PP.[5] However, the endorsement of Jamali, which is a double jeopardy case, indicates that the definition of the ‘same offence’ is shared with double counting, thus introducing some complications.

In the area of double jeopardy, the locus classicus on what constitutes the ‘same offence’ is the English House of Lords case of Connelly v Director of Public Prosecutions.[6] In Connelly, there were two proposed approaches to finding similarity. Lord Morris adopted a more generous approach where the similarity need only be substantial.[7] On the other hand, Lord Devlin took a stricter view that the offence must be exactly the same in law because “legal characteristics are precise things and are either the same or not”.[8] However, it is unclear from the remaining Law Lords’ judgements which approach is to be preferred.

The most authoritative court to have weighed in on the conflicting approaches is the Privy Council (on appeal from Singapore). In Wee Harry Lee v Law Society of Singapore,[9] a solicitor was subject to two disciplinary proceedings for violations under section 84(2) of the Legal Profession Act.[10] The provisions violated were:

“[The solicitor] (a) has been convicted of a criminal offence, implying a defect of character which makes him unfit for his profession; or (b) has been guilty of … grossly improper conduct in the discharge of his professional duty …”[11]

The first proceeding arose from (b), which resulted in a two-year suspension, while the second proceeding founded on (a) resulted in a further two year suspension.

Their Lordships ultimately allowed the solicitor’s appeal against the further suspension, holding that the second proceeding was “an abuse of the disciplinary process”.[12] In coming to their conclusion, the court endorsed both approaches proposed in Connelly, but stopped short of deciding which approach was to be preferred as the result would be the same regardless. Even if the case fell outside the narrow scope of Lord Devlin’s test, it would still be covered “by the alternative form of relief which [Lord Devlin] favoured as mitigating the rigour of his strict test”.[13] This is likely the rule in Reg v Elrington,[14] where Cockburn CJ held that “[w]here a person has been charged with an offence (whether he be acquitted or convicted), he cannot be again tried “on the same facts in a more aggravated form””.[15] This leaves only two possible conclusions: the offences were the same using either Lord Morris’ or Lord Devlin’s test, or that the Elrington approach was used instead.

Assuming it was the former, it would appear impossible for their Lordships to have used Lord Devlin’s approach in Harry Lee if we were to examine the offences charged closely. This is because the emphasis in (a) is on the lawyer’s character (in other words, propensity for future professional misconduct) for which his criminal conviction is evidence thereof whereas (b)’s emphasis is on the lawyer’s actual act of wrongdoing. These are two conceptually distinct requirements that would certainly fail the exact similarity test. Therefore, in reaching the conclusion that they did, their Lordships must have considered the offences substantially—but not exactly—similar.

It is also interesting to note that the subsequent Singapore High Court case of Lim Keng Chia v Public Prosecutor[16] interpreted Harry Lee to stand for the former, as evidenced by the learned judge’s description of the case:[17]

“In Wee Harry Lee’s case, the Privy Council was asked to determine whether the two successive sets of disciplinary proceedings brought against the appellant were based on the same instance of misconduct; and if so, whether the second set of such proceedings amounted to a violation of the doctrine of autrefois convict and acquit or at the very least, an abuse of the disciplinary process provided for in the Legal Profession Act (Cap 217). The Privy Council answered these questions in the affirmative. It must be pointed out, however, that the Privy Council in Wee Harry Lee’s case was faced with two sets of the same sort of proceedings.”

The use of the phrase “same sort of proceedings” implied the learned judge’s belief that it was the similarity between the offences that was critical to the outcome. It would thus be reasonable to believe that in the future, the courts will not treat Harry Lee as a case applying the rule in Elrington.

We return to the decision in Tan Khee Koon, which began the controversy by citing Jamali. Ironically, this citation is the closest thing we have to a resolution. The test in Jamali involves an inquiry into whether essential ingredients of the offences are the same. In Jamali, the offences were held to be different because the essential ingredients of armed robbery differed from that of an offence under the Malaysian Internal Security Act 1960.[18] “[A]rmed robbery can be regarded as an aggravated form of theft causing fear of instant death or hurt on the intended victim voluntarily by means of a deadly weapon” while “the essential ingredients under the Internal Security Act 1960 are simply control of firearms and/or ammunitions without lawful authority”.[19] This bears a striking similarity to Lord Morris’ test, which the court in Jamali treated as the majority judgement without making any mention of Lord Devlin’s test. This signals an implicit endorsement of Lord Morris’ test over Lord Devlin’s by the court in Tan Khee Koon, albeit in obiter.

However, as the citation in Tan Khee Koon was merely obiter and no court has yet to make a definitive pronouncement, there regrettably remains some element of uncertainty as to whether Lord Morris’ substantial similarity approach is truly preferred.

IV.           TAN KHEE KOON’S SIGNIFICANT ADDITION TO DOUBLE COUNTING

Double counting arose as an issue in Tan Khee Koon. The case involved an accused who tried to steal $20,000 but was only able to obtain $4,500. He was charged with two separate offences: the first for obtaining $4,500 (“1st Offence”) and the second for attempting to obtain $20,000 (“2nd Offence”), with the former sum naturally being a component of the latter sum.[20] Although one concerned an attempt and the other concerned the actual commission of an act, statutory provisions prevent one from being punished with both.[21] The court therefore had to decide the following: can obtaining $4,500 be considered the same offence as attempting to obtain $20,000 if the $4,500 was a part of the $20,000?

The answer was simple: the 2nd Offence did not consist of an attempt of the 1st Offence alone. It consisted of a series of attempts; only one of which was committed. The learned judge approached the problem in an ingenious manner. His Honour broke down the 2nd Offence into 2 ‘sub-offences’, ie, (1) obtaining $4,500, and (2) attempting to obtain $14,740. In the result:

(a)   1^st Offence: Obtaining $4,500

(b)  2^nd Offence: Obtaining $20,000 = Obtaining $4,500 (‘Sub-offence 1’) + Attempting to obtain $15,500 (‘Sub-offence 2’)[22]

It becomes clear that Sub-offence 1 is identical to the 1^st Offence.[23] In order to avoid double counting, it became necessary to separate the offending ‘sub-offence’ from the remaining portions.[24] However, the nature of the 2nd Offence prevented that, causing it to be struck out entirely.[25]

Tan Khee Koon represents a significant addition to our legal firmament. A single offence can now be considered an amalgamation of several smaller ‘sub-offences’. Double counting is now far easier to successfully plead, especially with infinitely divisible elements like money.

Unfortunately, this rule introduces uncertainties into the already fractious law on double counting. Chiefly, how far can an offence be broken down? Such ramifications can only be answered by the courts.

V.             CONCLUSION

Given the importance of double counting as a statutory safeguard against punitive punishment, the considerable uncertainty over what is required to find it is highly undesirable. The endorsement of Jamali’s essential ingredient test in Tan Khee Koon, albeit in obiter, suggests it will be used going forward. Being the practical embodiment of Lord Morris’ substantial similarity test, it would appear that the debate is somewhat provisionally resolved. However, while resolving one uncertainty, Tan Khee Koon has created another: the court’s method of breaking down offences bypasses the need for offences to be holistically similar. As such, it would be in the interest of the courts to demarcate the boundaries of Tan Khee Koon’s rule to avoid stretching the concept of similarity too far and conclusively decide which test for similarity they prefer.

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^* LLB (Candidate) (NUS), Class of 2023. All errors and views expressed in this article remain our own.

[1] [1995] 3 SLR(R) 404 [Tan Khee Koon].

[2] [2020] SGHC 21 at para 50.

[3] (Cap 1, 2002 Rev Ed) [IA].

[4] Tan Khee Koon, supra note 1 at para 105.

[5] [1986] 1 MLJ 162 [Jamali]

[6] [1964] AC 1254 [Connelly].

[7] Ibid at 1306.

[8] Ibid at 1340.

[9] [1983–1984] SLR(R) 768 (PC) [Harry Lee].

[10] (Cap 217, 1970 Rev Ed); that provision has since been redesignated as Section 83(2) of the Legal Profession Act (Cap 161, 2009 Rev Ed Sing), where it remains otherwise unchanged.

[11] Harry Lee, supra note 9 at para 2.

[12] Ibid at para 27.

[13] Ibid.

[14] 1 B. & S. 688 [Elrington]; cited in Connelly, supra note 6, at 1202.

[15] Ibid at 696.

[16] [1998] 1 SLR(R) 1.

[17] Ibid at para 8.

[18] Jamali, supra note 5 at 166.

[19] Ibid at 167.

[20] Tan Khee Koon, supra note 1 at para 100.

[21] Ibid at para 122.

[22] Ibid at paras 114-117.

[23] Ibid at para 115.

[24] Ibid at para 116.

[25] Ibid at para 119.

The Future of ESG in Singapore

The PDF version of this article can be found here.

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The future of esg in singapore

ivan tan ren yi*

I.                    Introduction

Globally, policymakers are having to rethink how best to tackle sustainability issues in their own economies, issues created in large part by corporate short-termism.[1] Short-termism refers to an “excessive focus on short term goals at the expense of longer-term objectives”.[2] For companies, the excessive focus on short term growth and earnings without due regard of long terms costs have accelerated the pace of environmental degradation and social inequality.[3] It is within this context that I discuss the importance of companies (specifically Singapore listed companies) integrating Environmental, Social and Governance [ESG] factors into their business practices.

ESG factors refer to the deployment of business and finance in a manner that protects the stability and resilience of the environment, facilitates social justice and promotes long-term economic prosperity, thereby securing the “social foundation” of humanity without further degradation of the “planetary boundaries”.[4]

II.                 The importance of esg factors

There is a growing consensus around the world that ESG factors are a key determinant factor in the corporate performance of companies, and would become even more important in the near future,[5] exacerbated in the wake of Covid-19 with increased scrutiny on how companies treat their employees and customers,[6] coupled with the rise of carbon taxes.

According to a report by the Chartered Financial Analyst [CFA] Institute that studies ESG Integration among companies in Asia [CFA Report],[7] among the 3 ESG factors, corporate governance was the main driver of share prices in listed companies in 2017. More importantly however, the report also indicated that social and environmental issues will have an even greater impact on share prices moving forward.[8]

It is striking that Singapore listed companies, while ranking amongst the highest in Asia for ESG, surprisingly rank amongst the lowest when rankings are adjusted to only reflect Environmental and Social factors [E/S] as compared to companies in other highly developed economies in Asia such as Hong Kong, Korea, Taiwan and Japan. [9] While this is a testament to the long standing reputation of Singapore’s good corporate governance, it also highlights how comparatively, environmental and social factors are lacking.

With the rise of institutional shareholding in listed companies all around the world, institutional investors’ portfolio selection of companies can have a very large impact on a company’s share price performance due to the enormous amount of funds they have at their disposal for investment.[10] Importantly, institutional funds are increasingly screening for E/S factors when making their investment decisions.[11] Taken together, a company that winds up on the negative list of a large international institutional fund such as Blackrock or Vanguard could see its share price drop precipitously.[12]

However, one might argue that the impact of a low E/S score in the Singapore context is less pronounced. Afterall, Singapore’s shareholder landscape is dominated by government linked and family owned companies, where institutional investors do not have a substantial shareholding.[13] Consequently, the impact of an institutional fund’s perception of companies listed in Singapore might not be as pronounced as in the West.

Be that as it may, the implications of having a low E/S score would go beyond altering the perception of institutional investors, to also affecting a company’s reputation amongst their consumers and employees as well. This is especially so in the wake of the Covid-19 pandemic.[14] Also, with the introduction of carbon taxes in Singapore,[15] the cost of noncompliance by companies would be higher, since companies would have to pay more taxes if they are less fuel efficient and this would in turn negatively affect the financial performance of such companies.

In addition to the financial implications for companies, the stakes are even higher for Singapore, which markets itself an International Financial Centre [IFC].[16] Scoring significantly lower than the other developed economies in the Asia-Pacific region on environmental and social factors is not beneficial to Singapore’s reputation.

According to the CFA report, the main reasons for companies in Singapore being reluctant in adopting E/S practices are, inter alia: (i) the “[l]ack of comparable and historical data” (47%), (ii) a “[l]imited understanding of ESG issues” (44%), (iii) “[n]o evidence of investment benefits” (36%), and (iv) a “[l]ack of company culture” (27%).[17] Firstly, ESG remains a highly ambiguous term to many people, and they do not completely understand what ESG entails.[18] Secondly, the correlation between embracing ESG and better corporate performance, specifically E/S factors is still not clear. Currently, studies on corporate outperformance focus predominantly on Europe and the United States. Even when there are case studies that showcase the benefits of ESG, they do not highlight the opportunity costs. The lack of comparable and historical data is also a recurring problem in Singapore.[19] Thirdly, Singapore lacks a culture for ESG integration. While Singapore may be slightly more advanced on ESG integration than other parts of Asia and have a more advanced understanding of ESG, much of this knowledge remain scarce in local companies.[20]

In this article, I will attempt to diagnose the causes of this underperformance, and surmise that a combination of reasons such as a (i) lack of a clear working definition of E/S, (ii) a dearth of data on the relationship between E/S and corporate performance within Singapore, (iii) a weak corporate culture promoting E/S and (iv) a weak regulatory framework to ensure companies comply with E/S principles are all contributing reasons to this phenomenon.

In turn, I propose that an independent regulatory agency be established to assess the quality of the sustainability reports submitted by listed companies in Singapore based on a set list of criteria. These sustainability reports should plug the informational gap that explains how embracing E/S policies is tied to a company’s long-term financial performance. The regulatory agency should also issue recommendations on areas where companies can improve. Additionally, the agency should ensure that companies follow through with E/S policies which they had pledged to adopt in their sustainability reports. Finally, stewardship would play an important role in helping companies embrace E/S factors in the coming years. Both the Singapore Stewardship Code[21] and Family Stewardship Code[22] should be improved by having clearer guidelines on what ESG means and how it should be implemented within companies.

III.              Current regulatory regime

Free trade jurisdictions with open financial markets like Singapore are perceived to prefer incentive based regulation, for fear than an overly-prescriptive approach might drive investment and businesses away.[23] So far, the Singapore Government’s approach to regulation is consistent with such a perception, as shown in the government’s generous funding in supporting companies in their pursuit of sustainability,[24] while simultaneously maintaining a generally flexible regulatory regime.

As of 2016, the Singapore Exchange [SGX] has introduced a regime requiring listed companies to publish annual reports on a “comply or explain” basis.[25] However, these sustainability reports issued by companies have been criticised for box-ticking.[26] Critically, companies are seen to be publishing these reports “without a clear sense of what it means for their future”, and whether environmental issues such as climate change would force them to alter their business model in the long term.[27]

Furthermore, there is no body that serves the function of an independent auditor/regulator monitoring the accuracy and the extent to which these companies actually follow through with the E/S plans they publish in their sustainability reports. In contrast, in Japan, the top ranked economy for E/S factors in the CG Watch Report 2018,[28] most of the corporate disclosures with regard to environmental and social issues have to be sent “to the national regulators for monitoring and compliance purposes”.[29]

Additionally, under the current regime, there is no prescribed method of issuing a sustainable reporting and companies have carte blanche over the topics they want to report on.[30] Consequently, there is a lack of comparable data that other companies can rely on to better implement their own E/S strategies. Also, this flexible regulatory framework opens up the possibility for companies to engage in green washing, where companies can promise to engage in lofty sustainability and corporate social responsibility programmes in their sustainability reports without having to actually follow through on these promises.[31]

There are suggestions as to whether the government should follow the European Union, “which is debating whether to deploy a stick and become a lot more prescriptive in its approach”.[32] In the European Union and the UK where awareness of sustainability issues is high, hard law provisions regulating these issues make sense because compliance is likely to be high. However, in Asia, where many companies are still trying to grapple with E/S concepts, either due to a strong profit maximisation mindset or simply a lack of information,[33] a softer regulatory regime that focuses on education rather than penalties could be more appropriate. Arguably Singapore is in the latter scenario, and in a phase where companies are still trying to grapple with E/S concepts. However, once E/S factors have gained a stronger traction in Singapore, more can be done to ensure companies continuously look for ways integrate E/S concepts into their business practices such as through instituting harsher penalties for failing to comply with E/S laws and guidelines.

On the other hand, the results have shown that the current approach might not be sufficient on its own to achieve the desired results. At the very least, SGX could improve the current regulatory regime by issuing clearer guidelines on what companies should report on, so that companies will publish useful data that others can reference to make their own E/S related decisions. For this, inspiration can be taken from the Global Reporting Initiative, an international independent standards organization that helps businesses, governments and other organizations understand and communicate their impact on issues such as climate change, human rights and corruption.[34] In their 2013 conference, it was suggested that sustainability reports be assessed based on basic reporting principles such as materiality, stakeholder inclusiveness, completeness, comparability, balance, accuracy and reliability.[35]

Additionally, the government could consider setting up an independent regulator, or rely on existing regulators such as SGX or the Monetary Authority of Singapore to make sure that companies actually follow through on what they propose to do in their sustainability reports. Alternatively, the government could mandate that companies have to send their sustainability reports to independent auditors for monitoring purposes. External checks on sustainability reports “reduce the risk of greenwashing and reports being used as” marketing exercises by companies.[36]

IV.              the singapore and the family stewardship codes to play a role beyond halo signalling

Stewardship is another area of focus which the government could look into to help companies better integrate E/S factors into their businesses. The Singapore Stewardship Code and Family Stewardship Code were Singapore’s unique response to the UK’s Stewardship Code[37], which itself was enacted in response to the rise of institutional investors as the largest investor group in listed companies in the United Kingdom [UK] and to compel them to play a supervisory role to alleviate the shareholder-management agency problem.[38]

Unlike the UK, institutional ownership of listed Companies in Singapore continue to be small, and Singapore’s shareholder landscape is dominated by family owned and government-linked companies [GLCs].[39] Consequently, as pointed out by Prof Dan W Puchniak & Samantha S Tang in their article “Singapore’s Embrace of Shareholder Stewardship: A Puzzling Success”, Singapore’s stewardship codes were designed to be “toothless”,[40]and instead were enacted to signal good corporate governance in the country by keeping up with developments in “Anglo-American-cum global standards of good corporate governance”, despite not having any real need for it.[41]

There are a couple of reasons why the Singapore Stewardship Code and Family Stewardship Codes lack any “tooth” in compelling Institutional investors and Family Controllers to comply with them.[42] Firstly, the Singapore Stewardship and Family Stewardship code do “not articulate a singular model of stewardship with which investors should comply”.[43] Secondly, the codes do not employ a “comply or explain” approach, and it operates purely on a voluntary basis.[44] Thirdly, there is no mechanism/metric to determine if institutional investors have complied with the codes.[45] Finally, there is no regulatory agency in Singapore that is responsible for the administration of the codes.

Stewardship Asia, the organisation tasked with drafting the stewardship codes, is only responsible for promoting the code, and does not perform any regulatory function.[46] Given Temasek, Singapore’s state owned investment trust’s close relationship with Stewardship Asia, Puchniak & Tang argue that Temasek is located within an institutional architecture that serves as a functional substitute for shareholder activism and monitoring of management.[47] There are also significant legal obstacles that limits excessive “state influence from being exerted on Temasek’s board or its subsidiary companies”, which “ensures that decisions made by Temasek’s management are made for commercial and not political reasons”.[48]  Temasek has also committed itself to refrain from any direct involvement in the management of its investee companies.[49] This arrangement has served Singapore well in the area of corporate governance, and subsidiary companies of Temasek can operate without a great amount of interference from Temasek.[50] It thus would be accurate to conclude that Singapore’s successes in the area of corporate governance are ‘in spite of’ rather than ‘because of’ the Stewardship code, and by maintaining the status quo.

However, the viability of such an arrangement is put into question when tackling issues arising from E/S factors. As established earlier,[51] because of the multitude of reasons such as the corporate culture in Singapore, coupled together with a lack of solid data, the management of listed companies remain predominantly focused on maintaining high returns on investments, without adequate regard for E/S factors.

Admirably, Temasek has in recent years been more vocal about promoting sustainability efforts.[52] However, the very institutional architecture that has prevented it from interfering directly with the management of GLCs could now also impede its ability to compel the management of GLCs to seriously consider integrating E/S factors. Without greater interference from Temasek, it is unlikely that GLCs would have the necessary incentives to integrate E/S factors into their business practices.

The same criticisms of the Singapore Stewardship Code could also be levelled at the Family Stewardship Code, which was tailored for family owned companies, with the aim of enabling owners to become better stewards of their company. Based on a textual analysis of the Family Stewardship Code, it does not seem to have a huge focus on ESG.[53] ESG factors seem to be implied rather than expressly mentioned in the code, and there are no guidelines on what E/S actually means. For example, Principle 6 of the family stewardship code appears to reflect environmental, social and governance concerns. It states, “Do well, do good, do right; contributing to community”.[54] As Puchniak & Tang note:

This principle promotes the importance of “non-economic wealth”, such as “social capital, communal ties, family reputation and core values”.[55]

Puchniak & Tang also mention that similar to GLCs, there are functional substitutes in the area of corporate governance with regard to family owned companies, where the controlling shareholder (often the family or family members) would naturally act in the best interests of the company and monitor management.[56] However, I question the extent to which family controllers are able to gauge the long term interests of the company, especially since there is a lack of important data showing tangible financial returns from engaging in these E/S practices and a lack of knowledge of how to plan for the long term in light of these E/S factors. As such, due to the lack of knowledge, family controllers might not know the best way to integrate E/S factors into their business practices.

Additionally, in many of these family-controlled companies, there is a long-established business culture and a set way of doing things which had ensured the success of these companies in the past.[57] Owing to these prior successes, it would be difficult to convince the controllers of these companies that urgent change is required, and especially since there are not enough case studies or information available that link the integration of E/S factors with the long-term success of the company.

In view of these problems unique to the Singapore landscape, I am of the view that the objective of stewardship codes should go beyond signalling good corporate governance to also aid in the integration of E/S factors into company’s business practices. For example, stewardship codes can help to spread best practice and have an educative effect on companies, preparing companies for the “potential strengthening of hard law provisions” on sustainability in Singapore.[58] Unlike the area of corporate governance, which is predicated on shareholders having a specific amount of corporate control,[59] institutional investors could play an integral role in educating companies on ESG best practices, regardless of the size of their stake in the company. These institutional investors have better knowledge and experience on how best to integrate E/S practices to boost corporate performance. Also, the presence of clear and fixed metrics in stewardship codes when determining whether stewards have done enough to assist companies on E/S factors would provide the necessary incentives for institutional investors to engage in adequate stewardship since falling short would be detrimental to their reputation, on which they rely on predominantly to attract investors.[60]

More importantly, there should be a regulator monitoring stewardship activity in Singapore. Previously, I have discussed the possibility of SGX being the one to monitor companies’ sustainability reports. Similarly, they could also be the regulator ensuring the intended stewards of these companies exercise proper stewardship since there is likely to be synergy between the two roles.

V.                 Conclusion

I have discussed the reasons for Singapore’s underperformance with regards to E/S factors and possible policies that can be implemented to improve performance. While every policy has to be tailored to suit Singapore’s needs, there is much to be learnt from observing other economies, especially economies which have done better in the E/S sphere. For now, the priority should be to ensure that Singapore’s companies are keeping up with global developments in the E/S sphere. While the current arrangement of maintaining the status quo has worked well in the area of corporate governance as evinced by Singapore’s high score in this area, this approach has to be tweaked to facilitate greater integration of E/S factors by listed companies in Singapore.

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* LLB (Candidate) (NUS). All errors and views expressed in this article remain my own. Weblinks cited in the article are functioning as of the date of publication.

[1]Ernest & Young Poland, “Short-termism in business: causes, mechanism and consequences” (2014) online: <https://www.ey.com/Publication/vwLUAssets/EY_Poland_Report/$FILE/Short-termism_raport_EY.pdf> at 6.

[2] Ibid at 7.

[3] See generally Henry M Paulson Jr, “Short-termism and the threat from climate change” (1 April 2015), McKinsey & Company, online: <https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/short-termism-and-the-threat-from-climate-change>.

[4] Beate Sjåfjell and Christopher M Bruner, “Corporations and Sustainability” in Beate Sjåfjell and Christopher M Bruner (eds), Cambridge Handbook of Corporate Law, Corporate Governance and Sustainability (UK: CUP 2019) 3, 7-10.

[5] See generally S&P Global Ratings, “The ESG Advantage: Exploring Links to Corporate Financial Performance” (March 2020), online: <https://www.spglobal.com/_assets/documents/ratings/the-esg-advantage-exploring-links-to-corporate-financial-performance-april-8-2019.pdf>.

[6] Pippa Stevens, “Sustainable investing is set to surge in the wake of the coronavirus pandemic” (7 June 2020), CNBC, online: <https://www.cnbc.com/2020/06/07/sustainable-investing-is-set-to-surge-in-the-wake-of-the-coronavirus-pandemic.html> [Stevens (2020)].

[7]CFA Institute, “ESG Integration in Asia Pacific: Markets, Practices, and Data” online: <https://www.cfainstitute.org/-/media/documents/survey/esg-integration-apac.ashx> at 18. The report noted that in relation to the impact of ESG issues on share prices: (i) governance issues had a 71% impact in 2017 and are predicted to have a 78% impact in 2022, (ii) environmental issues had a 22% impact in 2017 and are predicted to have a 56% impact in 2022, (iii) while social issues had a 22% impact in 2017 and are predicted to have a 47% impact in 2022.

[8] Ibid at 143.

[9] See Jamie Allen et al, “CG Watch 2018: Hard Decisions Asia faces tough choices in CG reform”, (5 December 2018), CLSA & ACGA, online: <https://www.acga-asia.org/cgwatch-detail.php?id=362> [CG Watch 2018] at 8.

[10] See generally Lucian A Bebchuk, Alma Cohen & Scott Hirst, “The Agency Problems of Institutional Investors” (2017) 31(3) J Econ Perspect 89 [Lucian et al (2017)].

[11] See Sara Bernow et al, “From ‘why’ to ‘why not’: Sustainable investing as the new normal” (25 October 2017), McKinsey & Company, online: <https://www.mckinsey.com/industries/private-equity-and-principal-investors/our-insights/from-why-to-why-not-sustainable-investing-as-the-new-normal>.

[12] See Robert G Eccles & Svetlana Klimenko, “The Investor Revolution”, (May-June 2019), Harvard Business Review, online: <https://hbr.org/2019/05/the-investor-revolution> accessed 29 June 2020.

[13] Dan W Puchniak & Samantha Tang, “Singapore’s Puzzling Embrace of Shareholder Stewardship: A Successful Secret” (October 23, 2019) NUS Law Working Paper No. 2019/022, Vand J Transnat’l Law (Forthcoming), online: <https://ssrn.com/abstract=3474151> [Punchniak & Tang (2019)] at 5.

[14] See generally, Stevens (2020), supra note 6.

[15] Masagos Zulkifli, “Welcome Address by Mr Masagos Zulkifi, Minister for the Environment and Water Resources, at the Launch of Singapore Exchange’s (SGX) Inaugural Review of Sustainability Reports Produced by Singapore-listed Companies, on 4 December 2019” (4 December 2019), Ministry of the Environment and Water Resource, Singapore, online: <https://www.mewr.gov.sg/news/welcome-address-by-mr-masagos-zulkifli--minister-for-the-environment-and-water-resources--at-the-launch-of-singapore-exchange-s-sgx-inaugural-review-of-sustainability-reports-produced-by-singapore-listed-companies--on-4-december-2019#:~:text=Welcome%20Address%20by%20Mr%20Masagos,Companies%2C%20on%204%20December%202019&text=Good%20morning%20to%20all.> [Masagos (2019)] at [24].

[16] Woo Jun Jie, “Positioning Singapore in a new financial world order” (2 October 2019), Today, online: <https://www.todayonline.com/commentary/positioning-singapore-new-financial-world-order>.

[17] Supra note 7 at 146. The report notes that: “Percentages represent those who thought each item was a main barrier. Survey respondents could choose more than one answer.”

[18] Ibid.

[19] Ibid.

[20] Ibid.

[21] Stewardship Asia, “Singapore Stewardship Principles for Responsible Investors”, (November 2016), online: <https://www.stewardshipasia.com.sg/sites/default/files/Section%202%20-%20SSP%20(Full%20Document).pdf>.

[22] Stewardship Asia Publications, “Stewardship Principles for Family Businesses: Fostering Success, Significance and Sustainability”, (October 2018), online: <https://www.stewardshipasia.com.sg/sites/default/files/SSP-brochure-0913_approved%20for%20printing.pdf>.

[23] Jackie Horne, “Singapore ESG Financing: Dirty hands make green work?” (15 January 2019), Finance Asia, online: <https://www.financeasia.com/article/singapore-esg-financing-dirty-hands-make-green-work/449097> [Horne (2019)].

[24] Masagos (2019), supra note 15 at [24]-[27].

[25] See SGX, “Sustainability Reporting”, online: <https://www.sgx.com/regulation/sustainability-reporting>, for an explanation of the “comply or explain” regime put in place for sustainability reporting by companies as of June 2016.

[26] See Claudia Tan, “Investors to see more useful data in mandatory sustainability reports”, 5 December 2019, Business Times online: <https://www.businesstimes.com.sg/companies-markets/investors-to-see-more-useful-data-in-mandatory-sustainability-reports> [Tan (2019)].

[27] CG Watch 2018, supra note 9 at 323.

[28] CG Watch 2018, supra note 9.

[29] WBCSD, “Corporate and sustainability reporting trends in Japan” (10 February 2019), online: <https://www.wbcsd.org/Programs/Redefining-Value/External-Disclosure/The-Reporting-Exchange/Resources/Corporate-and-sustainability-reporting-trends-in-Japan> at 5.

[30] See Tan (2019), supra note 26.

[31] Ibid.

[32] See, Horne (2019), supra note 23.

[33]Eric Ng, “Why is Asia lukewarm to sustainable investing?” (14 October 2017), South China Morning Post, online: <https://www.scmp.com/business/companies/article/2115233/why-asia-lukewarm-sustainable-investing>.

[34] See link for a brief description of goals of the Global Reporting Initiative, see GRI, “About GRI”, online: <https://www.globalreporting.org/information/about-gri/Pages/default.aspx>.

[35] See generally Global Reporting Initiative, “2013 Global Conference on Sustainability and Reporting” (May 2013), online: <https://www.globalreporting.org/resourcelibrary/2013-GRI-Global-Conference-in-Review.pdf>.

[36] European Court of Auditors, “Reporting on sustainability: A stocktake of EU Institutions and Agencies” (June 2019), online <https://www.eca.europa.eu/Lists/ECADocuments/RCR_Reporting_on_sustainability/RCR_Reporting_on_sustainability_EN.pdf> at 35.

[37] Financial Reporting Council, “The UK Stewardship Code” at 5, (September 2012), online: <https://www.frc.org.uk/getattachment/d67933f9-ca38-4233-b603-3d24b2f62c5f/UK-Stewardship-Code-(September-2012).pdf>.

[38] See generally Lucian et al (2017), supra note 10. See also, Puchniak & Tang (2019), supra note 13, “Abstract”.

[39] Puchniak & Tang (2019), supra note 13 at 5.

[40] Ibid at 6.

[41] Ibid at 9.

[42] Ibid at 20.

[43] Ibid at 20.

[44] Ibid at 21.

[45] Ibid at 21-22.

[46] Ibid at 22.

[47] Ibid at 25.

[48] Ibid at 26.

[49] Ibid.

[50] Ibid at 15.

[51] CG Watch 2018, supra note 9 at 323.

[52] See Temasek, “Temasek Review 2019”, online: <https://www.temasekreview.com.sg/overview/from-our-chairman.html>.

[53] Supra note 22 at 6-9.

[54] Puchniak & Tang (2019), supra note 13 at 29, see also supra note 22 at 6.

[55] Ibid. Although it is apposite to note they the principle does not go into detail on how best to effect its goals.

[56] Puchniak & Tang (2019), supra note 13 at 31.

[57] Philip Kunz, “Family businesses need to move on sustainability or be left behind” (19 February 2020), The Business Times, online: <https://www.businesstimes.com.sg/hub-projects/whos-who-in-private-banking-feb-2020/family-businesses-need-to-move-on-sustainability>.

[58] Dionysia Katelouzou & Alice Klettner, “Sustainable Finance and Stewardship: Unlocking Stewardship's Sustainability Potential” (April 17, 2020) European Corporate Governance Institute – Law Working Paper No. 521/2020, online: <https://ssrn.com/abstract=3578447> at 24.

[59] Puchniak & Tang (2019), supra note 13 at 5.

[60] Franklin Templeton, “ESG Study: How Institutional Investors Embrace Responsible Investing” (16 January 2020), Beyond Bulls & Bears, online: <https://global.beyondbullsandbears.com/2020/01/16/esg-study-how-institutional-investors-embrace-responsible-investing/>.

Justice in its Fullest Orb: The Evolving Relationship Between Procedure and Substantive Law (II/II)

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Justice in its fullest orb: the evolving relationship between procedure and substantive law (ii/ii)

lim toh han*

I.                    Introduction

This two-part article considers how various High Court and Court of Appeal cases from 2001 to 2020 show that procedure has been made coequal with substantive law, and how this shift to coequality has occurred in two stages:

(a)    From resolving the tension between procedure and substantive law as separate conceptions of justice (“to resolve this tension”, in the words of Andrew Phang JC, as his Honour then was[1]) – discussed in Part I;

(b)   To balancing procedure and substantive law as integrated aspects of the orb of justice (“to integrate … justice”, in Andrew Phang JC’s words[2]) – discussed in Part II (this Part).

II.                 “To integrate justice”

More recent cases have adopted a conceptually different approach. Procedure and substantive law are not conflicting concepts in a tension to be resolved, but harmonious aspects of the orb of justice to be integrated. The following propositions may be distilled from the cases:

A.  The Balance of Justice

First, the court will weigh the procedural and substantive aspects of the case to locate the balance of justice. This judicial discretion is guided, not by rules, but by the following principles:

1.      Procedural Merits

One, procedural merits are not about the technical procedural rights of parties, but the procedural conduct of parties and the spirit of procedural rules. In United Overseas Bank Ltd v Ng Huat Foundations Pte Ltd [UOB],[3] Andrew Phang JC dismissed an application to stay winding-up proceedings, pending an appeal against Lai Kew Chai J’s dismissal of an application for a scheme of arrangement. The substantive merits clearly favoured the respondent.[4] The procedural merits also favoured the respondent; the applicant’s long string of procedural applications was merely “another device … to stave off what appeared … inevitabl[e]”,[5] the respondent had endured “continued and unjustified delay”, and the applicant could still sue after winding-up (albeit by its liquidator).[6] The court was unimpressed by the applicant’s plea for “procedural justice”,[7] which were really technical procedural rights. Subsequently, in Liberty Sky Investments Ltd v Aesthetic Medical Partners Pte Ltd,[8] a claim for fraudulent misrepresentation, Andrew Phang JA rejected the representee’s argument that the trial court had erroneously refused rescission as the representor had not pled any bars to rescission (as was the representor’s onus to). Not only was the representee’s argument “rather arid and technical”; it was “antithetical to the very spirit of the rules of pleading”, because in this (somewhat unusual) case, it was the representee (rather than the representor) who had exclusive knowledge of the facts underlying potential bars to rescission.[9] Furthermore, the representee had knowledge of the representor’s arguments on potential bars to rescission, and had even written a letter to the trial court rebutting those arguments.[10]

Two, procedural merits may need to be balanced between the parties. Such balancing was evident in Lea Tool and Moulding Industries Pte Ltd v CGU International Insurance plc [Lea Tools],^[11] where neither party’s procedural conduct was satisfactory (leading the court to dismiss the application initially),[12] though the balance tipped in the plaintiff’s favour (since the court allowed the application only on further arguments).[13]

Three, procedural merits may need to be balanced between the parties and the public. In the administration of justice, the public interest weighs more heavily than the parties’ interests. In Alliance Management SA v Pendleton Lane P [Alliance],[14] the High Court struck out the defence of a party which deliberately disregarded court orders regarding evidence. This was not to punish but to prevent injustice (whether to the other party in the proceedings, or to other litigants generally, with their demands on the court’s limited resources),[15] because irrespective of the possibility of a fair trial, total disregard of court rules or orders amounts to abuse of process.[16]

Four, the adequacy of compensation by costs is a significant, but not determinative, factor. In Eller, Urs v Cheong Kiat Wah,[17] the High Court made a bifurcation order even though the plaintiff only effectively requested bifurcation in closing submissions[18] (rather than before the trial commenced). Any prejudice to the defendant was “readily compensated by costs” as it was “very slight” (at best), because first, a bifurcation order would almost certainly have been granted if the plaintiff had applied for bifurcation timeously,[19] and second, the defendant had not called expert witnesses to rebut the plaintiff’s submissions on quantum[20] (and spent any money or effort doing so). By contrast, in Alliance,[21] the High Court struck out the disobedient party’s defence to liability (though it was allowed to take part on the question of quantum).[22] This reflects the principle that, while adjudication will ordinarily not be denied if costs adequately compensate the aggrieved party, it will be denied if demanded by the public interest on balance (as this case demanded).[23]

2.      Substantive Merits

Five, in weighing substantive merits, the court may need to form a view of the substantive case:

(a)    If liability and remedies have been tried, the court already has a final view of the substantive merits. For example, in Lee Chee Wei v Tan Hor Peow Victor [Lee Chee Wei],[24] where a non-bifurcated trial[25] had taken place, the Court of Appeal could form the view that an order for assessment of damages in lieu of specific performance (which the trial judge had refused to make[26]) was appropriate.[27]

(b)   If not, the court may need to form a provisional view of the substantive merits:

(i)             It may be clear where the substantive justice lies. For example, in UOB,[28] even though the principal petition was still being heard,[29] the “long string of procedural applications”[30] made it clear where the substantive justice lay.[31]

(ii)           If not, the court will likely not require proof on a balance of probabilities. For example, in Lea Tools,[32] the court considered it sufficient that there were triable issues (as summary judgment had been refused[33]).

(c)    Nonetheless, a provisional view may be impossible or unnecessary where evidence is deliberately made unavailable (eg in K Solutions Pte Ltd v National University of Singapore^[34] and Alliance[35]).

Six, the claim amount is also a factor. In Lee Chee Wei,[36] the Court of Appeal ordered damages to be assessed, despite the plaintiff’s failure to plead for damages “to be assessed” and to adduce evidence on damages.[37] While the latter “le[ft] much to be desired”,[38] the court seemed moved by “the princely consideration of $4.5m”, which was “anything but small change”.[39] (The former was not prejudicial, as the words “to be assessed” were “superfluous”.[40]) By contrast, in Edmund Tie & Co (SEA) Pte Ltd v Savills Residential Pte Ltd [Edmund Tie],[41] the High Court did not allow the plaintiff, who had pleaded for a particular amount of damages without the words “or such sums as the court deems fit”, to claim a different amount of damages. The court emphasised that “the amount involved is only $13,385.70, at best, or just $6,255”.[42] (The court also emphasised that the plaintiff made no attempt to rectify its inadequately pleaded case.[43])

3.      Fact Sensitivity

Seven, the exercise is fact-sensitive. The opposite outcomes in Lee Chee Wei[44] and Edmund Tie,[45] despite apparently similar facts, show that “previous decisions [are] no more than guides”.[46]

4.      No Procedure-Substance Dichotomy

Eight, the procedural and substantive aspects need not be distinguished as such in every case. While often convenient, the procedure-substance dichotomy sometimes obscures the true principle: the court balances, not procedure on the one hand and substance on the other hand, but all procedural and substantive aspects of the case in a manner inadequately described by a two-handed metaphor. For example, in Sun Jin Engineering Pte Ltd v Hwang Jae Woo,[47] the Court of Appeal allowed a late application for stay of proceedings based on various factors: the applicant’s lateness was unintentional, the application was not without merit, and the application did not pertain to a notice of appeal.[48] Under the classical approach, these factors must be classified as procedural or substantive before a tension arises. One might argue all the factors are procedural; another might argue that the application’s merits are a substantive aspect of procedural justice. But under the integrated approach, such a fruitless inquiry is unnecessary.

B.  The Importance of Procedure

Second, procedure remains an important aspect of the orb of justice.

Courts constantly enjoin litigants to observe procedural discipline. But the Court of Appeal dramatically enjoined judges to do the same in AXM v AXO,[49] where it considered whether an interim maintenance order could be retrospectively lowered. While substantive justice was not in issue, Andrew Phang JA’s concern was the procedural pathway to the substantive outcome.[50] As a matter of statutory interpretation, an interim maintenance order could not be retrospectively overridden[51] or varied by a final maintenance order.[52] Inherent power was inapt.[53] Instead, a final maintenance order should be (prospectively) made based on retrospective considerations.[54] His Honour concluded that “on the facts at hand … a substantively just and fair result can be achieved in accordance with [procedure]”.[55]

The message is clear: procedure is not just an aspect of the orb of justice that occasionally recedes out of sight as the orb rotates. Even without tensions to resolve, the task of integrating justice remains at hand, for procedural discipline is also justice.

C.  The Place of Ethics

Third, ethics must be an important aspect of the orb of justice. Apart from its fundamental importance to a noble and honourable profession,[56] ethics also affects the administration of justice.

Lock Han Chng Jonathan v Goh Jessiline[57] was a dispute over merely $60.35 that reached the Court of Appeal. The Court of Appeal ordered the plaintiff’s solicitor not to tax his solicitor-and-client costs before disciplinary investigations concluded.[58] Lam Hwa Engineering & Trading Pte Ltd v Yang Qiang[59] was not only a dispute over merely $1,208 that reached the Court of Appeal, but also an appeal with “absolutely no merit” (the defendant’s solicitor quoted a 17^th-century Lord Coke commentary and a 19^th-century case on a 21^st-century Rules of Court issue, which was both irrelevant[60] and erroneous[61]). The Court of Appeal ordered the defendant’s solicitor’s law firm to bear the plaintiff’s costs on an indemnity basis.[62]

These decisions evince the court’s readiness to use procedural mechanisms to address ethical considerations. Indeed, in these cases, costs struck an optimum balance between binding a principal to their agent’s acts and imposing liability on the actual wrongdoer. However, where costs do not adequately compensate (eg where land is involved), a more difficult balance may need to be found between the procedural, substantive and ethical merits of the case.

D.  Limitations

Finally, the orb of justice need not be slavishly applied in well-developed areas of civil procedure. For example, setting aside irregular default judgments is already governed by established Mercurine[63] principles, which embody the orb principle at a less abstract level. An analogy[64] is the Spandeck[65] test in negligence, which is in theory universal, but in practice applied only in novel situations.[66]

III.              Conclusion

Where will the orb of justice next turn? The history of physics provides an instructive parallel. For millennia, space (with its three dimensions) and time were considered separate concepts. Only by Albert Einstein were they unified as four dimensions of the same thing – spacetime.[67] Hermann Minkowski, his ex-teacher, famously hailed thus: “Henceforth, space by itself, and time by itself, are doomed to fade away into mere shadows, and only a kind of union of the two shall [be feasible].”[68] This was hyperbolic, for today, physics remains divided into two branches: classical physics, which separates space and time and is sufficient for most situations, and modern physics, which unifies spacetime and is necessary only for extreme conditions.

Similarly, well-developed areas of civil procedure are governed by established principles. Even in the less-developed areas of civil procedure, most cases can be resolved using the classical approach. Only in the most difficult cases does the integrated approach come vividly to the fore, and “justice in its fullest orb … shine forth”.[69]

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*LLB (First Class Honours) (NUS), LLM (Melb) (w.e.f. 26 July 2020). A version of this article was submitted as a mid-term assignment for the NUS Law module LL4413 Civil Justice and Procedure. I would like to thank Professor Jeffrey Pinsler, SC (Geoffrey Bartholomew Professor, NUS Law) for his kind and helpful comments. All errors and views expressed in this article remain my own.

[1] United Overseas Bank Ltd v Ng Huat Foundations Pte Ltd [2005] 2 SLR(R) 425, [2005] SGHC 50 at [9] [emphasis removed].

[2] Ibid.

[3] [2005] 2 SLR(R) 425, [2005] SGHC 50 [UOB].

[4] Ibid at [16]. I use “applicant” and “respondent” to refer to the applicant and respondent in this stay application (rather than the respondent and applicant, respectively, in the principal winding-up petition).

[5] Ibid at [17].

[6] Ibid at [41] [emphasis removed].

[7] Ibid at [14] [emphasis removed].

[8] [2020] 1 SLR 606, [2020] SGCA 7.

[9] Ibid at [16] [emphasis removed].

[10] Ibid at [15].

[11] [2000] 3 SLR(R) 745, [2000] SGHC 241 [Lea Tools]. “Lea Tool” and “Lea Tools” were used interchangeably by the court.

[12] Ibid at [17].

[13] Ibid at [18], [22].

[14] [2008] 4 SLR(R) 1, [2008] SGHC 76 [Alliance].

[15] Ibid at [9].

[16] Ibid at [13].

[17] [2020] SGHC 106.

[18] Ibid at [137].

[19] Ibid at [142].

[20] Ibid at [143].

[21] Alliance, supra note 14.

[22] Ibid at [45].

[23] Ibid at [6]–[7].

[24] [2007] 3 SLR(R) 537, [2007] SGCA 22 [Lee Chee Wei].

[25] Ibid at [64].

[26] Ibid at [57].

[27] Ibid at [80].

[28] UOB, supra note 3.

[29] Ibid at [10].

[30] Ibid at [15] [emphasis removed].

[31] Ibid at [16].

[32] Lea Tools, supra note 11.

[33] Ibid at [3], [21].

[34] [2009] 4 SLR(R) 254, [2009] SGHC 143.

[35] Alliance, supra note 14.

[36] Lee Chee Wei, supra note 24.

[37] Ibid at [62], [72], [80].

[38] Ibid.

[39] Ibid at [65].

[40] Ibid at [62].

[41] [2018] 5 SLR 349, [2018] SGHC 84 [Edmund Tie].

[42] Ibid at [8].

[43] Ibid at [11].

[44] Lee Chee Wei, supra note 24.

[45] Edmund Tie, supra note 41.

[46] Sun Jin Engineering Pte Ltd v Hwang Jae Woo [2011] 2 SLR 196, [2011] SGCA 4 at [30].

[47] [2011] 2 SLR 196, [2011] SGCA 4.

[48] Ibid at [45].

[49] [2014] 2 SLR 705, [2014] SGCA 13.

[50] Ibid at [36].

[51] Ibid at [19]–[20].

[52] Ibid at [29].

[53] Ibid at [23].

[54] See ibid at [29]–[30], [35]–[37].

[55] Ibid at [30].

[56] See Legal Profession (Professional Conduct) Rules 2015 (S 706/2015), r 7(1), Principle (a).

[57] [2008] 2 SLR(R) 455, [2007] SGCA 56.

[58] Ibid at [47].

[59] [2014] 2 SLR 191, [2014] SGCA 3.

[60] Ibid at [24].

[61] Ibid at [25].

[62] Ibid at [42]–[43].

[63] Mercurine Pte Ltd v Canberra Development Pte Ltd [2008] 4 SLR(R) 907, [2008] SGCA 38.

[64] In AXM v AXO [2014] 2 SLR 705, [2014] SGCA 13 at [23], Andrew Phang JA noted parallels between procedural law and negligence law, such as the applicability of the floodgates argument.

[65] Spandeck Engineering (S) Pte Ltd v Defence Science & Technology Agency [2007] 4 SLR(R) 100, [2007] SGCA 37.

[66] See ibid at [73].

[67] Albert Einstein, “On the Electrodynamics of Moving Bodies” (1905) 322:10 Annalen der Physik 891, set out two postulates of special relativity (the principle of relativity and the principle of invariant light speed). A consequence of the postulates was that space and time were inseparable. Subsequently, Hermann Minkowski, “The Union of Space and Time” (Address delivered at the 80th Assembly of German Natural Scientists and Physicians, 21 September 1908) in Milič Čapek, ed, The Concepts of Space and Time: Their Structure and Their Development (Dordrecht: D Reidel Publishing Co, 1976) 339, developed a mathematical model of special relativity that unified space and time (although, to be precise, it treated the dimension of time differently from the three dimensions of space). Eventually, Minkowski’s model was used by Albert Einstein, “The Foundation of the General Theory of Relativity” (1916) 49:7 Annalen der Physik 769, to develop general relativity.

[68] Hermann Minkowski, “The Union of Space and Time” (Address delivered at the 80th Assembly of German Natural Scientists and Physicians, 21 September 1908) in Milič Čapek, ed, The Concepts of Space and Time: Their Structure and Their Development (Dordrecht: D Reidel Publishing Co, 1976) 339 at 339.

[69] UOB, supra note 3 at [9].

Justice in its Fullest Orb: The Evolving Relationship Between Procedure and Substantive Law (I/II)

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justice in its fullest orb: the evolving relationship between procedure and substantive law (i/II)

lim toh han*

I.                    Introduction

Common-law procedure has come a long way since England’s royal courts of justice were established in the 12^th century. For centuries, procedure was the law; the common law was called “a law of procedure” with “whatever substantive law … hidden … in its ‘interstices’”.[1]

Following the 19^th-century Judicature Acts,[2] procedure was made subservient to substantive law. Sir Richard Collins MR (as his Lordship then was) memorably described procedure as a “handmaid” (a servant of a household) rather than a “mistress” (a controller of a household)[3]:

Although … a Court cannot conduct its business without a code of procedure … the relation of rules of practice to the work of justice is intended to be that of handmaid rather than mistress, and the Court ought not to be so far bound and tied by rules, which are after all only intended as general rules of procedure, as to be compelled to do what will cause injustice in the particular case.[4]

Since this century’s turn, procedure has been made coequal with substantive law. VK Rajah JA (as his Honour then was) described procedure as the servant, not of substantive law, but of the “overriding objective” of “even handed justice”:

The rules of court practice and procedure exist to provide a convenient framework to facilitate dispute resolution and to serve the ultimate and overriding objective of justice. Such an objective must never be eclipsed by blind or pretended fealty to rules of procedure. On the other hand, a pragmatic approach governed by justice as its overarching aim should not be viewed as a charter to ignore procedural requirements. In the ultimate analysis, each case involving procedural lapses or mishaps must be assessed in its proper factual matrix and calibrated by reference to the paramount rationale of dispensing even handed justice.[5]

More dramatically, Andrew Phang JC (as his Honour then was) described procedure and substantive law as two facets of one “orb” of justice:

The quest for justice … entails a continuous need to balance the procedural with the substantive. More than that, it is a continuous attempt to ensure that both are integrated, as far as that is humanly possible. Both interact with each other. One cannot survive without the other. There must, therefore, be – as far as is possible – a fair and just procedure that leads to a fair and just result. This is not merely abstract theorising. It is the very basis of what the courts do – and ought to do. When in doubt, the courts would do well to keep these bedrock principles in mind …

It is true, however, that in the sphere of practical reality, there is often a tension between the need for procedural justice on the one hand and substantive justice on the other. The task of the court is to attempt … to resolve this tension. There is a further task: it is to actually attempt, simultaneously, to integrate these two conceptions of justice in order that justice in its fullest orb may shine forth.[6]

Building on Professor Jeffrey Pinsler, SC and Cavinder Bull, SC’s seminal work,[7] which covered cases from 2005 to 2010,[8] this two-part article examines various High Court and Court of Appeal cases from 2001 to 2020, most of which are expressed in terms of the orb of justice or even-handed justice. It considers how these cases show that procedure has been made coequal with substantive law, and how this shift to coequality has occurred in two stages:

(a)    From resolving the tension between procedure and substantive law as separate conceptions of justice (“to resolve this tension”, in Andrew Phang JC’s words[9]) – discussed in Part I (this Part);

(b)   To balancing procedure and substantive law as integrated aspects of the orb of justice (“to integrate … justice”, in Andrew Phang JC’s words[10]) – discussed in Part II.

II.                 “To resolve this tension”

Classically (at least following the Judicature Acts[11]), the common law has been bifurcated between procedure and substantive law, perhaps in line with 19^th-century English lawyers’ tendency to classify the world into binary sets. This sets up a tension which the cases have resolved in several ways:

(a)    For a long time, procedure was subservient to substantive law – discussed in section II(A).

(b)   Recently, procedure has become more dominant, whether:

(i)             In protection of substantive law – discussed in section II(B); or

(ii)           In collaboration with substantive law – discussed in section II(C)

(c)    Fundamentally, procedure is the very means by which substantive law is effectuated – discussed in section II(D).

A.      Procedure Yields to Substantive Law

First, procedure yields to substantive law in the interest of justice, though as an equal “spouse” rather than a subordinate “handmaid” shoved aside by substantive law.

Perhaps the pioneering case in this shift to coequality is Lea Tool and Moulding Industries Pte Ltd v CGU International Insurance plc,[12] where the High Court set aside a judgment in default of compliance with an unless order. Substantive justice favoured setting aside the default judgment: the claim was “substantial” (slightly under $1.5m) and there were triable issues (summary judgment had been refused).[13] The balance of procedural justice was less clear: on the one hand, the application to set aside the default judgment was nearly three years late; on the other hand, the applicant’s non-compliance with the unless order was “minor”, and the respondent’s failure to highlight the potential irregularity to the registrar (when the respondent should have) contributed to the irregularity of the registrar’s default judgment.[14] Ultimately, the court held that the applicant “should not be deprived of the benefit of an insurance cover merely because of a minor [procedural] irregularity”,[15] as “procedural laws are ultimately handmaidens to help us achieve the ultimate and only objective of achieving justice”.[16]

The decision, while expressed in the language of subservient “handmaidens”, foreshadows procedure’s new role as a coequal “spouse” on closer inspection. Initially, the court was not inclined to set aside the default judgment.[17] After further arguments,[18] the court was persuaded that the balance of procedural justice tipped in favour of setting aside the default judgment.[19] Thus, procedure was not violently shoved aside by, but gently yielded to, substantive law in the interest of justice.

B.      Procedure Protects Substantive Law

Second, procedure protects substantive law’s integrity.

In K Solutions Pte Ltd v National University of Singapore,[20] the High Court struck out the claim of a party who deliberately destroyed documents. The court held that the possibility of a fair trial depended, not only on the availability of documents, but also the reasons for any unavailability of documents:[21]

(a)    If the destruction was deliberate, and:

(i)             If important documents were unavailable, striking out would be appropriate.[22]

(ii)           If important documents remained available, striking out would not necessarily be appropriate, depending on the availability of other documents.[23]

(b)   If the destruction was reckless or negligent, striking out would depend on a variety of considerations.[24]

(c)    If the destruction was innocent, even if important documents were unavailable, striking out “must be rare”.[25]

This intricate classification reveals a nuanced approach towards protecting substantive law’s integrity. A fair trial is impossible if important documents are deliberately destroyed. But a fair trial remains possible even if important documents are innocently destroyed, or unimportant documents are deliberately destroyed. Indeed, striking out may even occasion substantive injustice, as “… perfect justice … would actually defeat justice”.[26]

C.     Procedure Collaborates with Substantive Law

Third, procedure collaborates with substantive law to achieve the policy of the law. While policy has long been derided as a “very unruly horse”,[27] the twin whips of procedure and substantive law can be helpful in taming this workhorse.[28]

In Greenline-Onyx Envirotech Phils, Inc v Otto Systems Singapore Pte Ltd [Greenline],[29] the Court of Appeal admitted into evidence a letter which was both a without-prejudice communication and an acknowledgement of debt. It held that the letter fell within all three solutions in Bradford & Bingley plc v Rashid [Bradford][30] to the question of the admissibility of without-prejudice acknowledgements, without endorsing either the majority’s, Lord Hoffmann’s, or Lord Hope’s solution.[31]

Greenline remains to be explained in terms of which Bradford solution(s) apply in Singapore (even if, strictly speaking, the discussion on the admissibility of without-prejudice acknowledgements were obiter, as the ratio turned on the waiver of privilege[32]), for three reasons. First, Greenline was applied without explanation by the Court of Appeal in Fairview Developments Pte Ltd v Ong & Ong Pte Ltd,[33] in admitting a without-prejudice acknowledgement.[34] Second, Greenline was applied at some length by the High Court in Cytec Industries Pte Ltd v APP Chemicals International (Mau) Ltd [Cytec],[35] which preferred the majority’s solution, and noted that Lord Hoffmann’s solution was subsequently disapproved by the UK House of Lords (while ultimately leaving the question to the Court of Appeal).[36] Third, Bradford’s solutions should be reconsidered in Singapore, where both the without-prejudice rule and the acknowledgement rule are statutory rules embodying Parliament’s intent.[37]

Procedure’s collaboration with substantive law can partly explain which Bradford solution(s) should apply in Singapore. The basis for this collaboration is the policy of encouraging settlements shared by the Limitation Act[38] and the Evidence Act;[39] the High Court in Cytec[40] observed that both the without-prejudice rule and the acknowledgement rule have the policy of encouraging settlements.[41] A recent exercise in identifying a policy shared by two statutes is UKM v Attorney-General [UKM],[42] where Sundaresh Menon CJ held that the Adoption of Children Act’s[43] specific provisions on child adoption were “supplemented by” the Guardianship of Infants Act’s general provision for the paramountcy of the child’s welfare,[44] so that the policy of the paramountcy of the child’s welfare was shared by both statutes.[45]

Collaboration favours the majority’s solution – that the without-prejudice rule does not apply to apparently open communications designed only to discuss the repayment of an admitted liability, rather than to negotiate the existence and extent of a disputed liability[46] (which was preferred by the High Court in Cytec[47]). The majority’s solution is not unlike Lord Hope’s solution – that the without-prejudice rule does not apply to “clear admissions or statements of fact”, which do “not form part of the offer to compromise”.[48] Both solutions achieve the policy shared by the without-prejudice rule and the acknowledgement rule – to keep claims out of court.[49] Otherwise, to exclude without-prejudice acknowledgements, even if they clearly admit the existence or extent of liability, not only does nothing to achieve the (other) policy of the without-prejudice rule – to encourage parties to reach agreement[50] (presumably, because agreement has already been reached); but also undermines the policy of the acknowledgement rule – to keep claims out of court (because creditors will be forced to litigate, if the limitation clock cannot be reset by acknowledgement).[51] Indeed, both solutions not only represent collaboration between procedure and substantive law, but would also give full effect to the Singapore Parliament’s intent.

Collaboration is inconsistent with Lord Hoffmann’s solution – that the without-prejudice rule does not apply to acknowledgements,[52] unless parties agree that anything said in negotiations cannot be used as acknowledgements[53] (which was subsequently disapproved by the UK House of Lords, as noted by the High Court in Cytec[54]). Lord Hoffmann’s solution effectively emasculates the without-prejudice rule in the context of acknowledgements (since, as his Lordship acknowledges, parties in this context are unlikely to agree that anything said in negotiations cannot be used as acknowledgements, as creditors will realise that debtors are trying to run down the limitation clock[55]). Indeed, Lord Hoffmann’s solution not only represents the triumph of procedure over substantive law (albeit a largely hollow triumph since, as his Lordship acknowledges, “[q]uestions of evidence to prove the debt will arise later”[56]); it is also questionable in Singapore, where the without-prejudice rule is a statutory rule embodying Parliament’s intent, rather than a “general public policy” as in England and Wales.[57]

Furthermore, collaboration is inconsistent with Lord Hoffmann’s justification for his solution – that a statement of acknowledgement would be used, not as evidence of an acknowledgement (ie an admission), but as the acknowledgement itself.[58] Lord Hoffmann’s justification was subsequently disapproved by the UK House of Lords[59] because his Lordship’s distinction between admissions and acknowledgements was difficult to draw.[60] Perhaps, this is because Lord Hoffmann’s distinction undermines the collaboration between procedure and substantive law; Lord Hope (taking another bite at the without-prejudice cherry) opined that “this is not a situation in which arguments that resort to procedural … technicalities are appropriate”.[61]

D.    Procedure Effectuates Substantive Law

Finally, procedure effectuates substantive law. As Lord Penzance in Kendall v Hamilton[62] said, procedure is “the machinery of the law”.[63]

This perhaps obvious point is vividly illustrated in Family Food Court v Seah Boon Lock,[64] where the Court of Appeal considered an agent’s claim for substantial damages in contract for loss suffered by its (identifiable) undisclosed principal. The substantive law was controversial, with “conflicting arguments” whether to award the agent substantial damages for its loss.[65] Fortunately, procedure had a “simple … solution” for achieving substantive justice: awarding the principal substantial damages for its loss by joining it as a party, whether on parties’ application, of the court’s own motion or by the court’s inherent power.[66] If the principal decides not to join, it cannot re-open the case,[67] presumably for abuse of process.

It seems ironic that, in trying to achieve substantive justice, substantive law tied itself up in knots. Instead, procedure cut the Gordian knot and “obviate[d] all the difficulties [vis-à-vis recovery of damages]”, awarding the principal its “full measure of damages”[68] and achieving the full extent of substantive justice. But it is unsurprising, for procedure has secreted substantive law since the 12^th century. Substantive law’s recent growth spurt (at least since the Judicature Acts[69]) may obscure this. But when substantive law inadvertently throws in a spanner, procedure still restarts the law’s machinery.

III.              Conclusion

Part II discusses how more recent cases have adopted a conceptually different approach, where procedure and substantive law are not conflicting concepts in a tension to be resolved, but harmonious aspects of the orb of justice to be integrated.

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*LLB (First Class Honours) (NUS), LLM (Melb) (w.e.f. 26 July 2020). A version of this article was submitted as a mid-term assignment for the NUS Law module LL4413 Civil Justice and Procedure. I would like to thank Professor Jeffrey Pinsler, SC (Geoffrey Bartholomew Professor, NUS Law) for his kind and helpful comments. All errors and views expressed in this article remain my own.

[1] H Patrick Glenn, Legal Traditions of the World: Sustainable Diversity in Law, 5th ed (Oxford: OUP, 2014) at 242.

[2] Supreme Court of Judicature Act, 1873 (UK), 36 & 37 Vict, c 66; Supreme Court of Judicature Act, 1875 (UK), 38 & 39 Vict, c 77.

[3] See Jeffrey Pinsler & Cavinder Bull, “Procedure’s multi-faceted relationship with substantive law: Not a ‘mistress’; nor a ‘handmaid’” in Yeo Tiong Min, Hans Tjio & Tang Hang Wu, gen eds, SAL Conference 2011: Developments in Singapore Law between 2006 and 2010 – Trends and Perspectives (Singapore: SAL Publishing, 2011) [Pinsler & Bull (2011)] at [2].

[4] Re Arbitration between Coles and Ravenshear [1907] 1 KB 1 at 4.

[5] Lee Chee Wei v Tan Hor Peow Victor [2007] 3 SLR(R) 537, [2007] SGCA 22 at [82].

[6] United Overseas Bank Ltd v Ng Huat Foundations Pte Ltd [2005] 2 SLR(R) 425, [2005] SGHC 50 [UOB] at [8]–[9] [emphasis in original].

[7] Pinsler & Bull (2011), supra note 3. See also Jeffrey Pinsler, “The Ideals in the Proposed Rules of Court” (2019) 31 SAcLJ 987 at section II.

[8] Ibid at [2].

[9] UOB, supra note 6, at [9] [emphasis removed].

[10] Ibid.

[11] Supra note 2.

[12] [2000] 3 SLR(R) 745, [2000] SGHC 241.

[13] Ibid at [3], [21].

[14] Ibid at [17], [21].

[15] Ibid at [21].

[16] Ibid at [16].

[17] Ibid at [17].

[18] Ibid at [18].

[19] Ibid at [22].

[20] [2009] 4 SLR(R) 254, [2009] SGHC 143.

[21] Ibid at [129].

[22] Ibid at [127].

[23] Ibid at [126].

[24] Ibid at [130]; as noted by the SGHC, such circumstances are “infinitely varied”.

[25] Ibid.

[26] Breezeway Overseas Ltd v UBS AG [2012] 4 SLR 1035, [2012] SGHC 170 at [20], citing Nichia Corp v Argos Ltd [2007] EWCA Civ 741 at [51].

[27] Ngiam Kong Seng v Lim Chiew Hock [2008] 3 SLR(R) 674, [2008] SGCA 23 at [40], citing Richardson v Mellish (1824) 2 Bing 229 at 252, 130 ER 294 at 252, 303.

[28] See Ngiam Kong Seng v Lim Chiew Hock [2008] 3 SLR(R) 674, [2008] SGCA 23 at [40], citing Enderby Town Football Club Ltd v Football Association Ltd [1971] Ch 591 at 606.

[29] [2007] 3 SLR(R) 40, [2007] SGCA 25 [Greenline].

[30] [2006] 1 WLR 2066 [Bradford].

[31] Greenline, supra note 29 at [17]–[19].

[32] Ibid at [22].

[33] [2014] 2 SLR 318, [2014] SGCA 5 at [93].

[34] See ibid at [93].

[35] [2009] 4 SLR(R) 769, [2009] SGHC 177 [Cytec].

[36] Ibid at [36].

[37] See Evidence Act (Cap 97, 1997 Rev Ed Sing), s 23(1); Limitation Act (Cap 163, 1996 Rev Ed Sing), s 26(2).

[38] Cap 163, 1996 Rev Ed Sing.

[39] Cap 97, 1997 Rev Ed Sing.

[40] Cytec, supra note 35.

[41] Ibid at [15], [27]–[28].

[42] [2019] 3 SLR 874, [2018] SGHCF 18.

[43] Cap 4, 2012 Rev Ed Sing.

[44] Cap 122, 1985 Rev Ed Sing, s 3.

[45] UKM, supra note 42 at [148].

[46] Bradford, supra note 30 at [73].

[47] Cytec, supra note 35 at [36].

[48] Bradford, supra note 30 at [25].

[49] Ibid at [34], [74].

[50] Ibid at [74].

[51] Ibid at [3], [38], [74].

[52] Ibid at [16].

[53] Ibid at [16], [18].

[54] Cytec, supra note 35 at [36].

[55] Bradford, supra note 30 at [18].

[56] Ibid at [16]. See KLD Residential CC v Empire Earth Investments 17 (Pty) Ltd (1135/2016) [2017] ZASCA 98, [2017] 3 All SA 739 at [39], where the Supreme Court of Appeal of South Africa, applying Bradford, held, “Where acknowledgements of liability … would interrupt the running of prescription, such acknowledgements should be admissible, even if made without prejudice during settlement negotiations, but solely for the purpose of interrupting prescription. … The admission remains protected in so far as proving the existence and the quantum of the debt is concerned.”

[57] See Bradford, supra note 30 at [16].

[58] Ibid at [16].

[59] See Ofulue v Bossert [2009] 2 WLR 749.

[60] Ibid at [43], [51], [95].

[61] Ibid at [7].

[62] (1879) 4 App Cas 504.

[63] Ibid at 525.

[64] [2008] 4 SLR(R) 272, [2008] SGCA 31.

[65] Ibid at [60], [62].

[66] Ibid at [63]. In Re Nalpon Zero Geraldo Mario [2013] 3 SLR 258, [2013] SGCA 28, VK Rajah JA (as his Honour then was) observed that “inherent power” was not synonymous with “inherent jurisdiction” (at [33]), given the distinction between jurisdiction (the authority to hear and determine a dispute) and power (the capacity to give effect to the determination of a dispute) (at [31]).

[67] Ibid at [65]–[67].

[68] Ibid at [63].

[69] Supra note 2.

Compliance with Cybersecurity and Privacy Laws in the Healthcare Sector in Singapore

A PDF version of the article can be found here.

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COMPLIANCE WITH CYBERSECURITY AND PRIVACY LAWS IN THE HEALTHCARE SECTOR IN SINGAPORE

Harleen Sethi*

I.                    introductioN

Healthcare is a highly regulated industry, even in the cybersecurity and privacy law domain. Applicable laws, rules and regulations in this sector require routine risk assessments. The information pertaining to the healthcare data of patients which is collected and processed by healthcare authorities should adhere to compliance mechanisms and standards as laid down by regulatory authorities. It is essential for such data controllers and intermediaries to demonstrate compliance with such laws to mitigate the risks at hand.

II.                 LAWS, RULES AND REGULATIONS TO BE CONSIDERED BY THE HEALTHCARE AUTHORITIES IN ADDRESSING CYBERSECURITY, PRIVACY/DATA PROTECTION ISSUES

1.      Singapore Computer Misuse Act[1]

This is the main piece of legislation in Singapore that overlooks criminal activities that take place in the online environment. Section 3 of the CMA establishes the principle offence under the Act, that is the “Unauthorised access” offence[2] and section 4 of the CMA is an aggravated computer hacking offence.[3] Sections 5, 6, 7, 8 of the CMA further regulate offences like unauthorised modification, unauthorised obstruction, unauthorised disclosure of access codes. The important point to note here is that in 2017, a new set of provisions were enacted under the CMA to criminalise activities associated with the use of personal information obtained in the breach of the other provisions under the CMA. Section 8A deals with the issue of identity theft in Singapore.[4] Another essential provision to note is Section 9 of the CMA which was adopted from the US Computer Fraud and Abuse Act[5] and introduced the concept of “protected computers”. Section 9(2)(d) of the CMA means to include “the protection of public safety including systems related to essential emergency services such as police, civil defence and medical services” under the ambit of the definition of “protected computers”.[6]

2.      Singapore Cybersecurity Act[7]

The Cybersecurity Act is an omnibus piece of legislation which applies to all type of information and computer systems. In Singapore, which is known to be a smart city and technologically advanced in its operations, private corporations and government verticals rely heavily on the internet for provision and delivery of a wide range of services, including essential services as specified under the First Schedule of the Cybersecurity Act[8]. This increase in the reliance on the technological and digital network stimulated environment has its pros but at the same time also exacerbates vulnerability to cybersecurity attacks which result in disruptions to such essential services, causing not only moral and economic damage, but also personal harm and loss of life. In this regard, the Cybersecurity Agency [CSA] which was set up in 2015 oversees and coordinates all aspects of cybersecurity for Singapore, ensuring cybersecurity strategy and crisis management across all critical information infrastructure [CII] sectors[9] (which includes healthcare). The Cybersecurity Act imposes duties on CII owners to ensure cybersecurity of their respective CIIs and advocates the creation of a framework for sharing cybersecurity information with CSA and for complying with the provisions of the Cybersecurity Act. Under the Cybersecurity Act, there are certain obligations which need to be complied with by CII owners. A brief summary of the same is provided below in order to highlight the important provisions which need to be taken into consideration by the healthcare sector:

(a) Section 10[10] states that the identified owner/operator of the CII has to furnish specific information; even if such information is confidential and commercially sensitive,[11] pertaining to the CII infrastructure including its set up, design, security, operation, configuration.

(b) Section 11[12] gives authority and enables the Commissioner of the CSA to regulate by prescribing standards of performance and codes of practice to the CII owners. These may not be binding in nature but have to be complied with as non-compliance attracts criminal penalties.[13] The Personal Data Protection Act 2012[14] has issued advisory guidelines on key concepts which set out factors to assess the reasonableness of security arrangements.[15]

(c) Section 13 imposes an obligation on the CII owner to report to the CSA Commissioner any legal or beneficial change in the ownership/share of ownership in the CII.[16]

(d) Section 14(1)-(3) impose obligations on the CII owners in respect of the reporting of a cybersecurity incident within a prescribed period.[17] For this purpose, it is pertinent that the CII owners have in place a mechanism for detecting such cybersecurity threats and incidents.[18] It is for these reasons that hospitals need to put a risk management and compliance framework in place which facilitates the timely detection of such cybersecurity risks and threats, as non-compliance to these sections attracts criminal penalties.[19]

(e) Section 15[20] and section 16[21] impose additional obligations on the CII owners to conduct regular cybersecurity audits and risk assessments of their CII infrastructure by a third party approved auditor. In addition to this an audit or risk assessment may be ordered by the Commissioner in certain circumstances of non-compliance, misleading/inaccurate/incomplete provision of information by the CII[22] or where such assessments have not been carried out satisfactorily.[23]

III.              privacy and personal data protection obligations

Singapore follows a hybrid approach with its PDPA as it is an extensive privacy legislation supplemented by certain sector-specific legislation.[24] The PDPA constitutes a comprehensive set of provisions that provides for baseline standards and requirements for the protection of personal information. All private organisations are subject to the data protection obligations under the PDPA.[25] The statutory definition of “personal data”[26] is stated under section 2(1) of the PDPA. The purpose of the PDPA as per Section 3 is to govern the collection, use and disclosure of personal data by organisations in a manner that balances the interests between the right of individuals to protect their personal data and the requirement of the organisation to collect, use and disclose personal data for purposes a reasonable person would consider appropriate in the business circumstances.[27] It is pertinent to note that hospitals possess a fair amount of personal information pertaining to the identification and healthcare of their patients. This information is highly sensitive in nature and as per the Cybersecurity Act, comes under the ambit of CII sector.[28] Section 11 of the PDPA imposes and enforces that it is the primary duty of the organisation to comply with the PDPA.[29] It is important to note here that it is because of the sensitive and highly critical nature of the information in the healthcare sector that Singapore has proposed a Healthcare Services Bill in 2018, following the Singhealth data breach incident (as discussed below).[30] Further, sections 24[31] and 25[32] of the PDPA highlight steps to be taken by the organisation for the protection and retention of personal data.

IV.              impact of such rules and regulations in the healthcare sector

The PDPC issued advisory guidelines for the healthcare sector in 2014, which were revisited and revised in 2017.[33] These guidelines and the PDPA endorse a set of basic principles[34] which governs the rules, laws and legislations under this domain that should be complied with by organisation in the process of collection, use and dissemination of personal information. These principles are also enforced by international rules and regulations, for instance the OECD Guidelines on the Protection of Privacy and Transborder Flows of Personal Data[35], the EU GDPR[36], Health Insurance Portability and Accountability Act [HIPAA] Privacy Rule[37] and HIPAA Security Rule[38].

The PDPA and the PDPC Healthcare Guidelines[39] provide rules and guidelines to be followed by healthcare institutions which engage third parties like data intermediaries to process personal data and also impose obligations on such institutions to oversee data processing.[40] In these unprecedented times of COVID-19, where countries around the world including Singapore are launching apps for contact tracing of affected individuals in order to flatten the curve, these rules and regulations will play an extensive role in ensuring that privacy is maintained. A repeat of the Singhealth breach would not be desirable at the moment. Given that the contact tracing app “TraceTogether” works by exchanging short distance Bluetooth signals between phones to detect other participating app users in close proximity, privacy risks are certainly elevated.[41]

A recent pertinent shift can be seen in the minds of the law and policy makers towards taking steps to strengthen legislation governing cybersecurity, privacy and data protection laws. It is submitted that the reasons for such shift can be attributed to the increase in technological advancements, the growing importance of the nature of personal information, and the absence of robust laws, rules and regulations to deal with such pertinent issues. In light of these circumstances, it is not just sufficient to execute the laws and rules in this area, but to effectively comply with and practice the same within the realities and limits of sound business practices. In view of the above, the healthcare sector needs to shift towards a proportionate compliance and risk management approach in cybersecurity, privacy and data protection laws in order to successfully maintain privacy standards and safeguard themselves from increased security and data privacy concerns.

One of the worst breaches of personal data in Singapore’s history took place when between May 2015-July 2018, the personal information of 1.5 million patients and records of outpatient dispensed medicines for 160,000 of those patients were stolen, malicious accessed and copied. This information included national registration identity card numbers, gender of patients, date of birth, age which is regarded as personal information under the PDPA. This cyberattack was effected on the Singapore Health Services Pte Ltd [SingHealth] patient database system.[42]

As reiterated above, the health sector handles one of the most critical and sensitive sets of personal information. The patients have a right to expect and ensure security and protection of such data provided to the hospitals and the government in confidentiality.[43] The role of the government in collecting and processing the information pertaining to the medical history and travel whereabouts, inter alia, in the wake of this pandemic so as to better trace and facilitate contact tracing to identify the affected individuals and confirmed cases of COVID-19, is also to be taken into account. In view of these practices, which are no doubt critical in COVID-19 times, it is pertinent to be aware of the potential cybersecurity and privacy threats which need to be guarded against.

Once we are at a stage of flattening the curve and even whilst collecting such personal information ‘privacy by design’ plays an extremely essential role right through the process of inflow to the outflow of such data. Data organisations and intermediaries should prepare a checklist of the obligations to be complied with under the Cybersecurity Act and the PDPA with regard to the privacy and security of such data in order to set up a compliance framework in place to ensure all these rules, laws and regulations are complied with.

Due diligence tests need to be conducted on the third-party vendors, especially data intermediaries (specifically in cases of contact tracing via apps) which need to be engaged in order to ensure that the data intermediaries also comply with the obligations set forth on them under the PDPA and PDPC Guidelines. The data organisations should also ensure that their policies, controls and standard operating procedures are implemented and updated to log the physical/electronic movement of records and maintain an audit trail of record transactions to ensure protected safe keeping and secured access to such records.

V.                 concluding remarks

As the SingHealth data breach case has cautioned, it is not only important to have policies and procedures in place, it is equally significant to timely and efficiently execute such procedures. The TraceTogether app which has been developed by the Government Technology Agency of Singapore in collaboration with the Ministry of Health does not collect or use location data.[44] It also does not have access to the contacts in the user’s phone. It primarily uses Bluetooth data to establish a contact and all such data which is collected is stored locally on the user’s phone and is encrypted.[45] It is only when an individual is confirmed to have contracted COVID-19 that the government will request the user to upload the data to the government in order to facilitate contact tracing of close contacts.[46] An additional privacy practice which is followed by the app pertains to the storage of such data wherein if a user does not come into close contact with a confirmed COVID-19 case, data which is older than 21 days will be automatically deleted.[47] It is also essential to note here that in order to flatten the curve, artificial intelligence in health care may be able to supplement manual contact tracing but cannot replace the same. It cannot pick up on nuances like false positives and negatives, which health care workers can do.[48] The apps do not account for instances beyond the algorithm activated, for instance certain factors beyond proximity like environment and activity. There are lives at stake and false positives and negatives may actually result in life and death consequences. This is why technology should be used as an aid to the human-fronted process in combating this pandemic, rather than a replacement, whilst maintaining all privacy and security standards in the healthcare sector.

Note: At the time of publication, the Personal Data Protection (Amendment) Bill 2020 had not been passed.

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* LLM (IP and Technology Laws) (NUS), Class of 2020.

[1] (Cap 50A, 2007 Rev Ed) [CMA].

[2] CMA, supra note 1, s 3(1) states that “any person who knowingly causes a computer to perform any function for the purpose of securing access without authority to any program or data held in any computer shall be guilty of an offence”.

[3] Ibid, s 4(1) states that “Any person who causes a computer to perform any function for the purpose of securing access to any program or data held in any computer with intent to commit an offence to which this section applies shall be guilty of an offence.”

[4] Ibid; s 8A(1) provides that “A person shall be guilty of an offence if the person, knowing or having reason to believe that any personal information about another person (being an individual) was obtained by an act done in contravention of section 3, 4, 5 or 6… .”

[5] 18 U.S.C. § 1030.

[6] CMA, supra note 1, s 9(2)(d).

[7] Cybersecurity Act 2018 (Act 9 of 2018) [Cybersecurity Act].

[8] Cybersecurity Act, supra note 7, s 2(1) defines “essential service as any service essential to the national security, defence, foreign relations, economy, public health, public safety or public order of Singapore, and specified in the First Schedule”.

[9] Ibid; s 2(1) defines CII as “critical information infrastructure means a computer or a computer system in respect of which a designation under section 7(1) is in effect”.

[10] Ibid; s 10.

[11] Cybersecurity (Critical Information Infrastructure) Regulations 2018, s 4(2)(a).

[12] Ibid; s 11 establishes the Codes of practice and standards of performance.

[13] Ibid; s 12 establishes the power of Commissioner to issue written directions in the event of non-compliance.

[14] Personal Data Protection Act 2012 (No. 26 of 2012) [PDPA].

[15] Personal Data Protection Commission Singapore, “Advisory Guidelines on Key Concepts in the Personal Data Protection Act (revised 9 October 2019)”, online: PDPC <https://www.pdpc.gov.sg/-/media/Files/PDPC/PDF-Files/Advisory-Guidelines/AG-on-Key-Concepts/Advisory-Guidelines-on-Key-Concepts-in-the-PDPA-9-Oct-2019.pdf> [PDPC Guidelines].

[16] Cybersecurity Act, supra note 7, s 13.

[17] Ibid; s 14(1) states “the owner of a critical information infrastructure must notify the Commissioner of the occurrence of any of the following in the prescribed form and manner, within the prescribed period after becoming aware of such occurrence”.

[18] Ibid; s 14(2) states “the owner of a critical information infrastructure must establish such mechanisms and processes for the purposes of detecting cybersecurity threats and incidents in respect of the critical information infrastructure, as set out in any applicable code of practice”.

[19] Ibid; s 14(3) states “any owner of a critical information infrastructure who, without reasonable excuse, fails to comply with subsection (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $100,000 or to imprisonment for a term not exceeding 2 years or to both”.

[20] Ibid; s 15(1) “The owner of a critical information infrastructure must:

(a)at least once every 2 years (or at such higher frequency as may be directed by the Commissioner in any particular case), starting from the date of the notice issued under section 7, cause an audit of the compliance of the critical information infrastructure with this Act and the applicable codes of practice and standards of performance, to be carried out by an auditor approved or appointed by the Commissioner; and

(b)at least once a year, starting from the date of the notice issued under section 7, conduct a cybersecurity risk assessment of the critical information infrastructure in the prescribed form and manner”.

[21] Ibid; s 16 states “the Commissioner may conduct cybersecurity exercises for the purpose of testing the state of readiness of owners of different critical information infrastructure in responding to significant cybersecurity incidents”.

[22] Ibid; s 15(4).

[23] Ibid; s 15(5).

[24] Examples of certain sector-specific privacy legislation in Singapore: Banking Act (Cap 19, 2008 Rev Ed); Protection from Harassment Act (Cap 256A, 2015 Rev Ed); Infectious Diseases Act (Cap 137, Rev Ed 2003).

[25] Warren B Chik and Pang Keep Ying Joey, “The Meaning and Scope of Personal Data under the Singapore Personal Data Protection Act” (2014) 26 SAcLJ 354.

[26] Personal Data under the PDPA is defined as “data, whether true or not, about an individual who can be identified from that data; or from that data and other information to which the organisation has or is likely to have access”.

[27] PDPC Guidelines, supra note 15, 31.

[28] Cybersecurity Act, supra note 7, s 7(1) interprets Critical Information Infrastructure [CII] sectors to refer to such sectors that are responsible for the continuous delivery of essential services in Singapore and healthcare is one of the sectors under CII.

[29] PDPA, supra note 14, s 11(1) states that the organisation must be the one to consider whether their practices are what a reasonable person would consider appropriate under the circumstances and s 11(2) states that an organisation is responsible for personal data in its possession or under its control.

[30] Public Consultation on the Draft Healthcare Services (HCS) Bill, Ministry of Health (5 January 2018- 15 February 2018) online: Reach <https://www.reach.gov.sg/participate/public-consultation/ministry-of-health/corporate-communications/public-consultation-on-the-draft-healthcare-services-bill>.

[31] PDPA, supra note 14, s 24.

[32] Ibid, s 25.

[33] Personal Data Protection Commission Singapore, “Advisory Guidelines for the Healthcare Sector

(revised 28 March 2017)”, online: PDPC <https://www.pdpc.gov.sg/-/media/Files/PDPC/PDF-Files/Sector-Specific-Advisory/advisoryguidelinesforthehealthcaresector28mar2017.pdf> [PDPC Healthcare Guidelines].

[34] PDPC Healthcare Guidelines, supra note 33; These basic principles include consent, use, retention, collection, transfer and purpose limitations; notification, access, security, accountability, correction, data quality, accuracy, transfer and openness obligations to be complied with by the organisations with such personal information of individuals.

[35] OECD Guidelines on the Protection of Privacy and Transborder Flows of Personal Data (2013 Rev Ed), online: OECD <https://www.oecd.org/sti/ieconomy/oecd_privacy_framework.pdf>.

[36] Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016.

[37] United States Department of Health and Human Services OCR Privacy brief, “Summary of the HIPAA Privacy Rule”, online: HHS <https://www.hhs.gov/sites/default/files/privacysummary.pdf>.

[38] United States Department of Health and Human Services OCR Privacy brief, “Security 101 for Covered Entities”, online: HHS <https://www.hhs.gov/sites/default/files/ocr/privacy/hipaa/administrative/securityrule/security101.pdf>.

[39] PDPC Healthcare Guidelines, supra note 33, 15.

[40] PDPA, supra note 14, s 4(3) states “the organisation that engages the data intermediary would still have the same obligations under the PDPA in respect of personal data processed on its behalf as if the personal data were processed by the organisation itself”.

[41] Dean Koh, “Singapore government launches new app for contact tracing to combat spread of COVID-19” Mobi Health News (20 March 2020), online: Mobi Health News <https://www.mobihealthnews.com/news/asia-pacific/singapore-government-launches-new-app-contact-tracing-combat-spread-covid-19> [Mobi Health News].

[42] PDPC Commissioner, “Singapore Health Services Pte. Ltd. & Ors’ [2019] SGPDPC 3”, online: PDPC <https://www.singaporelawwatch.sg/Portals/0/Docs/Judgments/2019/[2019]%20SGPDPC%203.pdf> [PDPC Singhealth].

[43] PDPC Singhealth, supra note 42, 17.

[44] Mobi Health News, supra note 41.

[45] Ibid.

[46] Ibid.

[47] Ibid.

[48] Alfred Ng, “Tech isn’t the solution to COVID-19” CNet Health and Wellness (13 April 2020), online: CNet <https://www.cnet.com/health/director-behind-singapores-contact-tracing-app-says-tech-isnt-the-solution-to-covid-19/>.