LawLinesVol 9 . Issue 3 • September 2007
Rajah & Tann’s Quarterly Journal on articles of current interest, features, cases and legislative developments
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LawLinesVol 9 . Issue 3 • September 2007
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AROUND RAJAH & TANNA Round-Up Of Key Deals And Events In The Third Quarter Of 2007
Around Rajah & Tann
A Round-Up Of Key Deals And Events In The Third Quarter Of 2007
International Arbitration Practice Group
Feature Articles
Courts Get Tough On Industrial Accidents: First Prosecution Under The Workplace Safety & Health Act
Animation And Games: Finding The Cauldron Of Gold
A Brief Overview Of Market Rigging And Its Consequences
Case Bites
Legislation Bites
As we head into the fi nal quarter of the year, Rajah &
Tann is once again on a hiring spree. Among the new
additions to the Firm are senior partners from various
disciplines, and a large team comprising several
senior corporate lawyers. This swells our headcount
to over 210 lawyers. We have also garnered wins
at the annual Asian Legal Business Deals of the
Year Awards 2007 and our partners have collected
several more accolades along the way.
New HiresWe are extremely pleased to welcome a large
number of lateral hires who have either joined us
recently, or who will be joining us very shortly.
Aurill Kam rejoins the Firm as a partner of the
Commercial Litigation Practice Group after a
five-year stint with the Monetary Authority of
Singapore (‘MAS’). Before she left the
MAS, she was Head of the Market &
Business Conduct Department and
part of MAS’ management team.
The department was responsible for
capital markets regulatory development, corporate
governance standards for listed companies, and
market conduct policies (under the Securities
and Futures Act and Financial Advisers Act).
The department also administered the licensing
and regulatory framework for fi nancial advisers
and Singapore’s national financial education
programme, MoneySENSE. Aurill also served as
Director & Head, Enforcement Division (Securities
& Futures Supervision Department), when the civil
penalty enforcement regime for market under the
Securities and Futures Act was operationalised.
During that time, she handled various enforcement
cases involving corporate misfeasance, insider
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LawLinesVol 9 . Issue 3 • September 2007
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trading, manipulation and other forms of securities
contraventions.
Gregory Vijayendran was formerly the
co-head of the Banking & Insolvency
Practice of a major fi rm and has now
joined our Commercial Litigation
Practice Group. He practices civil
and commercial litigation encompassing banking,
company and shareholder disputes, commercial
crime, corporate insolvency, employment law,
defamation, negligence, contentious probate and
other tort claims. Among his signifi cant cases
include acting for the incumbent liquidators of
Daewoo in a novel insolvency application for
conversion of a creditors’ voluntary liquidation to a
compulsory liquidation. Gregory is also a very active
member of the Law Society, currently co-chairing
The Law Society Publications Committee. Gregory
is a prolifi c writer and his contributions include the
chapter in ‘Legal Issues: Singapore’ published in the
Asian Development Bank Guide to Restructuring in
Asia 2001, which he has co-authored, and being
on the panel of contributors to the Singapore Court
Practice 2003 and Singapore Precedents and
Forms (Wills Trusts and Administration).
Tan Lee Cheng has joined the
Commercial Litigation practice of
Rajah & Tann. Lee Cheng headed
the Insurance practice group at her
previous firm. Lee Cheng acts for
major insurance companies in almost all classes of
insurance with particular emphasis on construction
insurance, professional indemnity insurance and
fi nancial lines insurance. Lee Cheng is well regarded
for her expertise in construction insurance having
advised and represented the project underwriters
in the North East Line MRT project (NEL), the
Circle-Line Project (CCL) and the Kallang / Paya
Lebar Expressway (KPE). In this capacity, she led
a team representing the lead insurer and reinsurers
in the high profi le Nicoll Highway Collapse inquiry
in 2004. Effectively bilingual, Lee Cheng has also
represented several local and foreign clients in their
resolution of claims involving Chinese contracting
parties in mediations and arbitrations.
Yang Lih Shying has been appointed
Chief Representative of our Shanghai
Offi ce. He has almost thirty years of
experience in legal practice. During
that period, he was most active as a
Around Rajah & Tann
A Round-Up Of Key Deals And Events In The Third Quarter Of 2007
International Arbitration Practice Group
Feature Articles
Courts Get Tough On Industrial Accidents: First Prosecution Under The Workplace Safety & Health Act
Animation And Games: Finding The Cauldron Of Gold
A Brief Overview Of Market Rigging And Its Consequences
Case Bites
Legislation Bites
page 4 of 51 pages
LawLinesVol 9 . Issue 3 • September 2007
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commercial litigator in the High Court and Court of
Appeal in a wide variety of cases, primarily involving
maritime and international trade. Lih Shyng has
extensive experience advising and representing PRC
clients as well as Singapore business entities in their
commercial dealings involving China. Between 2003
and March 2007, he was the chief representative
of a major Singapore law fi rm’s Shanghai offi ce.
For nearly a decade, Lih Shyng has been advising
Singapore and international clients on issues relevant
to foreign investment and mergers and acquisitions
in China, as well as representing PRC companies
in their business ventures in Singapore. Lih Shyng
is also an active arbitrator, especially in disputes
involving PRC parties or where proceedings are
conducted wholly or partly in Chinese.
Cheng Yoke Ping joins the Corporate
& Capital Markets Practice Group
as a partner. She has more than ten
years’ experience in mergers and
acquisitions, schemes of arrangement,
corporate fi nance, capital markets and general
corporate work. Yoke Ping also advises on
regulatory issues including securities laws and
regulations, stock exchange requirements and
procedure and compliance issues.
Additionally, a large team of corporate lawyers will
be joining us in September 2007. The team, which
includes senior practioners Andrew Ong, Christina
Ng, Evelyn Wee and Lim Wee Hann, are a welcome
addition to our already strong corporate team. Their
expertise and experience in cross-border transaction
will further bolster our regional capabilities.
Andrew Ong joins the Corporate Practice Group
with a wealth of expertise in corporate as well as
technology law. His primary focus is on information
technology, telecommunications and media law,
where he has received numerous accolades and
been cited as a leading telecommunications lawyer
by legal ranking journals. His other areas of practice
include corporate and commercial law, corporate
restructuring, employment and immigration law,
franchising and business transactions generally.
Andrew is also involved in cross-border work, with
an emphasis on Sri Lanka and Cambodia.
Christina is primarily involved with mergers and
acquisitions in the region, in particular, South East
Asia. She also has vast experience in venture
capital and direct investments. Christina is also an
experienced tax practitioner, and her speciality is
in structured fi nance and tax driven cross-border
Around Rajah & Tann
A Round-Up Of Key Deals And Events In The Third Quarter Of 2007
International Arbitration Practice Group
Feature Articles
Courts Get Tough On Industrial Accidents: First Prosecution Under The Workplace Safety & Health Act
Animation And Games: Finding The Cauldron Of Gold
A Brief Overview Of Market Rigging And Its Consequences
Case Bites
Legislation Bites
page 5 of 51 pages
LawLinesVol 9 . Issue 3 • September 2007
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transactions. At her previous fi rm, she headed the
Indonesia and Thai desks, and co-headed the
South Asia desk.
Evelyn practices corporate, securities and banking
law. In the course of her work, she is involved in
cross border transactions, venture capital funds,
asset management, syndicated loans, ship and
construction fi nancing as well as mergers and
acquisitions. She also has experience in capital
markets issues, listings and work related to listed
companies.
Wee Hann’s primary areas of practice are cross-
border investments and acquisitions, corporate
restructuring and employment and immigration law.
He was resident partner in the Vietnam branches
in Hanoi and Ho Chi Minh City of his previous
fi rm, where he provided consultancy services on
corporate and banking matters to companies and
foreign investors. He also co-headed the Medical
Science practice group at his previous fi rm.
Awards & Accolades Rajah & Tann has had several notable wins in this
year’s Asian Legal Business Deals of the Year
Awards 2007. We have continued our winning
streak by once again clinching the Construction
Law Firm of the Year as well as the Shipping Law
Firm of the Year. Our Insolvency and Corporate
practices also proved their mettle again by winning
the Singapore Insolvency & Restructuring Deal of
the Year for Accord Customer Care Solutions and
the Singapore M&A Deal of the Year for the much
publicised PacNet – MediaRing deal.
Rajah & Tann has also once again been ranked
among the top fi rms advising on M&As in Asia
(excluding Japan) in the first half of this year.
We ranked within the top twenty M&A advisers
for announced deals in the Thomson Financial
M&A League Tables. We were also featured in
Mergermarket’s 2007 House League Tables of
Legal Advisers to Asia-Pacifi c M&A.
A large number of our lawyers have been nominated
to Who’s Who Legal: Singapore 2008, with several
receiving multiple nominations. Steven Chong
SC, Sundaresh Menon, Quentin Loh SC and
Andre Yeap SC were nominated for Commercial
Litigation, with Steven also being nominated for
Shipping & Maritime, Menon also being nominated
for Commercial Arbitration and Construction, and
Around Rajah & Tann
A Round-Up Of Key Deals And Events In The Third Quarter Of 2007
International Arbitration Practice Group
Feature Articles
Courts Get Tough On Industrial Accidents: First Prosecution Under The Workplace Safety & Health Act
Animation And Games: Finding The Cauldron Of Gold
A Brief Overview Of Market Rigging And Its Consequences
Case Bites
Legislation Bites
page 6 of 51 pages
LawLinesVol 9 . Issue 3 • September 2007
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Quentin also being nominated for Insurance &
Reinsurance.
Together with Menon, Choy Chee Yean was the
other nominee for Construction. We continued
our lead in Shipping with our other partners Jainil
Bhandari and Leong Kah Wah also making the
list. White-collar crime expert Hamidul Haq was
nominated in the category of Business Crimes,
while our Competition lawyers Kala Anandarajah
and Dominique Lombardi did us proud by making
the list for Competition. Kala was also nominated
for Corporate Governance. In Insolvency &
Restructuring, experts Patrick Ang and Lee Eng
Beng received nominations, affi rming their status
as top lawyers in their fi eld. En-bloc sale veteran
Gan Hiang Chye also received a nomination in
Real Estate, while Lau Kok Keng and Rajesh
Sreenivasan were honoured with nominations in
Regulatory Communications. Our M&A experts
Wong Kok Hoe and Serene Yeo, who have played
an active role in the Singapore market, also received
due recognition with their nominations.
In other publications, Kala Anandarajah was
named in Euromoney Experts Guide to the World’s
Leading Corporate Governance Lawyers 2007,
while Kok Hoe was named in Euromoney Experts
Guide to the World’s Leading Capital Markets
Lawyers 2007.
National Day HonoursWe are also extremely proud to announce that
Gan Hiang Chye has been awarded the Public
Service Star at this year’s National Day Awards.
Gan has served as the Deputy President of the
Strata Titles Boards for many years and has
received the award in this capacity. He is no
stranger to public service, and is also currently
a Board member of the Building Construction
Authority and the Chairman of the Conveyancing
Practice Committee and Council member of the
Law Society of Singapore.
Major Disputes & Signifi cant DealsMajor Disputes
In a case dealing with important issues such as
conflict of interests between a customer and
private banker, as well as undue infl uence, Francis
Xavier and Boey Swee Siang from our Commercial
Around Rajah & Tann
A Round-Up Of Key Deals And Events In The Third Quarter Of 2007
International Arbitration Practice Group
Feature Articles
Courts Get Tough On Industrial Accidents: First Prosecution Under The Workplace Safety & Health Act
Animation And Games: Finding The Cauldron Of Gold
A Brief Overview Of Market Rigging And Its Consequences
Case Bites
Legislation Bites
page 7 of 51 pages
LawLinesVol 9 . Issue 3 • September 2007
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Litigation Practice Group are defending the
American Express Bank (‘Bank’) against a major
claim by Madam Susilawati, a wealthy Indonesian
customer of the Bank’s private banking division.
She has sued the Bank, demanding that it return
US$17.5 million of her money drawn down to
offset trading losses incurred by her son-in-law, Mr
Lim Thian Long, pursuant to a third party pledge
(‘Third Party Pledge’) which Madam Susilawati
had signed, to guarantee Mr Lim’s debts to the
Bank. She claims that, when she signed the Third
Party Pledge, she was under the undue infl uence
of Mr Lim. Madam Susilawati alleges, among
other things, that she was dependent on Mr Lim
to manage her account, since she was not highly
educated or literate in English. The Firm’s lawyers
are arguing that she had executed the Third Party
Pledge in the exercise of her free and independent
mind, in the full knowledge that she was pledging
the sums in her account to cover Mr Lim’s liabilities
and that she was a savvy investor.
Francis also represented the Law Society in
objecting to Far Eastern Economic Review’s appeal
for a Queen’s Counsel to be allowed to represent
the Review in a lawsuit brought against it by Prime
Minister Lee Hsien Loong and Minister Mentor
Lee Kuan Yew. The Law Society was successful
in its objections and the application to allow
representation by Queen’s Counsel was denied.
The lawsuit in question involves a high profile
defamation case.
Chandra Mohan, another partner from our
Commercial Litigation team, has been involved in
several notable cases before the Court of Appeal.
In JSI Shipping (S) Pte Ltd v TeoFoongWong
LCLoong, Chandra acted for the respondents
when the appellants appealed against Justice Lee
Seiu Kin’s decision dated 6 December 2006 to
dismiss the Plaintiffs’ claim against the Defendants
for breach of contract in that the Defendants had
failed in its duty as auditor to identify abuse of the
Plaintiffs’ funds by a director of the Plaintiffs at the
material time.
Chandra is also acting in The Republic of the
Philippines v Maler Foundation and 5 others for
the 1st to 5th Respondents. The Appellants are
appealing against the whole of Justice Kan Ting
Chiu’s decision dated 27 December 2006, whereby
the Honourable Justice Kan had dismissed the
Around Rajah & Tann
A Round-Up Of Key Deals And Events In The Third Quarter Of 2007
International Arbitration Practice Group
Feature Articles
Courts Get Tough On Industrial Accidents: First Prosecution Under The Workplace Safety & Health Act
Animation And Games: Finding The Cauldron Of Gold
A Brief Overview Of Market Rigging And Its Consequences
Case Bites
Legislation Bites
page 8 of 51 pages
LawLinesVol 9 . Issue 3 • September 2007
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Plaintiffs’ application to stay the interpleader
proceedings in OS No 134/2004/Q.
Irving Choh recently defended Tran Thi Gai who
married three men in fi ve years. She was still married
to her fi rst husband when she wed her present
spouse. She pleaded guilty to the bigamy charge
and to the other charges of making a false marriage
declaration and entering Singapore illegally.
Edwin Lee and Looi Ming Ming from the Projects
& Infrastructure Practice Group successfully
represented a Hong Kong public-listed developer
in its claim for refund of tax paid against the
Comptroller of Income Tax. The developer’s gains of
S$12 million from the sale of an upscale residential
development was assessed as trading gains by the
Comptroller, but before the Income Tax Board of
Review, Rajah & Tann successfully argued that the
gains were capital gains and hence not taxable.
Signifi cant Deals
In terms of Corporate deals, Wong Kok Hoe and Sin
Chei Liang are acting for United Test and Assembly
Center Ltd (‘UTAC’) (a SGX-ST mainboard
listed company) in relation to its entering into an
Implementation Agreement with a Consortium
comprising Affinity Equity Partners and TPG
Capital and its proposed Scheme of Arrangement,
pursuant to which the Consortium is to acquire all
the issued shares of UTAC.
They are also acting for Holcim Investments
(Singapore) Pte Ltd and its ultimate holding
company, Holcim Ltd (‘Offeror’), which has entered
into a series of acquisitions with approximately 35
shareholders of Jurong Cement Limited (‘Target’).
Following the acquisitions of approximately 47.3%
of the issued shares in Target, the Offeror made a
mandatory conditional cash offer to acquire all the
remaining issued shares in the capital for the Target.
The deal is valued at approximately S$93 million
based the issued share capital of the Target as at
the date of the general offer.
Chei Liang is also involved in the following deals:
Acting for Timespace Trading Limited, which
has entered into a concert party consortium
arrangement with Standard Chartered Private
Equity, CVC Capital Partners Asia Pacifi c II LP and
CVC Capital Partners Asia Pacifi c II Parallel Fund
to form a consortium and make a mandatory
•
Around Rajah & Tann
A Round-Up Of Key Deals And Events In The Third Quarter Of 2007
International Arbitration Practice Group
Feature Articles
Courts Get Tough On Industrial Accidents: First Prosecution Under The Workplace Safety & Health Act
Animation And Games: Finding The Cauldron Of Gold
A Brief Overview Of Market Rigging And Its Consequences
Case Bites
Legislation Bites
page 9 of 51 pages
LawLinesVol 9 . Issue 3 • September 2007
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general cash offer for Amtek Engineering Ltd.
The entire offer size is approximately S$515.5
million.
Acting for Sonus Pte Ltd, Sky Alliance Global
Holdings Limited and Yap Beng Kooi (‘Vendors’)
in the sale of 90% issued shares in the capital of
Plimsoll Corporation Pte Ltd by the Vendors to
the purchaser. The balance 10% of the issued
shares is subject to put and call options between
the purchaser and the Vendors.
Goh Kian Hwee, Serene Yeo, Cynthia Goh and
Yanni Long are acting for Indofood Agri Resources
Ltd. (‘IndoAgri’) in the proposed acquisition
by IndoAgri (a company listed on the SGX-ST)
and its 90 per cent-owned subsidiary, PT Salim
Ivomas Pratama (‘PT SIMP’), of a majority stake
in PT Perusahaan Perkebunan London Sumatra
Indonesia Tbk (‘Lonsum’), a company listed on the
Jakarta and Surabaya stock exchanges, at a total
consideration of S$1.6 billion, as follows:
shares and mandatory convertible notes (‘MCNs’)
in Lonsum, representing 64.4% of its enlarged
share capital assuming conversion of the MCNs
from First Durango, the Ashmore Funds and Mr
Eddy Sariaatmadja, at a total consideration of
•
•
approximately S$1 billion, comprising S$879.1
million cash and 98,082,830 new shares in
IndoAgri at the issue price of S$1.2758 per new
IndoAgri share; and
the remaining shares in Lonsum at the price of
Rp6,900 per share pursuant to a tender offer
by PT SIMP, amounting to an aggregate of
S$589 million (assuming full acceptances of
the tender offer).
Kian Hwee and Serene are also advising SC Global
Developments Ltd in a proposed underwritten scrip
dividend scheme involving the potential issue of up
to 6.7 million new SC Global shares. The deal value
is estimated to be approximately S$14.55 million
(based on net dividends to be paid out).
Kian Hwee, together with Lawrence Tan, recently
acted for Hwa Hong Corporation Limited in
connection with the subscription by its subsidiary
of S$42 million in principal amount of Secured Fixed
Rate Senior Notes due 2010, which were issued by
Sardinia Properties Pte Ltd to partially fi nance the
development of the property at 37 Scotts Road.
Arnold Tan, our Funds specialist, acted for
Blackhorse Asset Management in the launch of
•
Around Rajah & Tann
A Round-Up Of Key Deals And Events In The Third Quarter Of 2007
International Arbitration Practice Group
Feature Articles
Courts Get Tough On Industrial Accidents: First Prosecution Under The Workplace Safety & Health Act
Animation And Games: Finding The Cauldron Of Gold
A Brief Overview Of Market Rigging And Its Consequences
Case Bites
Legislation Bites
page 10 of 51 pages
LawLinesVol 9 . Issue 3 • September 2007
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The Blackhorse Enhanced Vietnam Inc Fund, a
leveraged absolute return product that invests
both in Vietnam’s nascent stock market and in
private companies preparing for initial public
offerings.
Arnold has also acted for Blackhorse Asset
Management in its launch of The Blackhorse
Early-Stage Technology, or BEST, Fund, on
July 1. The long / short fund, which focuses on
emerging technology companies in Asia, will
concentrate on companies working in computer
hardware, software, semiconductors, displays,
communications, memory storage and tech
services. It will invest in both publicly listed
companies and unlisted equities, mainly ones that
are due for a public listing or merger in the near
future.
Liew Lan Hing, Howard Cheam and Felicia Lai are
the solicitors to China Sports International Limited
in connection with its listing and quotation on the
Mainboard of the SGX-ST, which was launched on
9 July 2007. China Sports International Limited,
which is in the sports fashion footwear and
apparel industry, plans to raise S$74.7 million in
net proceeds through the IPO.
Lan Hing and Audrey Ng also acted for DBS
Bank Ltd, the issue manager, in the listing of Uni-
Asia Finance Corporation. The listing will raise
approximately S$41.4 million in gross proceeds.
On the Competition law and Merger regulation
front, Kala Anandarajah and team have been
acting for several high profi le investigations by
the Competition Commission of Singapore as
well as in cross-border mergers taking place
amongst multi-national corporations. The team has
advised industries in the media and entertainment,
publishing as well as in the fi nancial industries
regarding the mergers taking place and the possible
impact in Singapore.
A team of lawyers from Rajah & Tann’s iTec Practice
Group, headed by Rajesh Sreenivasan, has been
appointed by Nokia Siemens Networks (‘NSN’)
to provide legal services in NSN’s participation in
the NextGeneration Broadband Network tender,
called by the Infocomm Development Authority of
Singapore. The tender calls for the deployment and
operation of a new communications network that
will provide high bandwidth data and telephony
access through extending the optical fi bre network
into the home. Rajah & Tann will advise on issues
Around Rajah & Tann
A Round-Up Of Key Deals And Events In The Third Quarter Of 2007
International Arbitration Practice Group
Feature Articles
Courts Get Tough On Industrial Accidents: First Prosecution Under The Workplace Safety & Health Act
Animation And Games: Finding The Cauldron Of Gold
A Brief Overview Of Market Rigging And Its Consequences
Case Bites
Legislation Bites
page 11 of 51 pages
LawLinesVol 9 . Issue 3 • September 2007
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relating directly to the tender and downstream
issues with suppliers and partners.
Rajesh and his team are also acting for and
advising the Government of the Islamic Republic of
Afghanistan (‘Afghan Government’) on two projects.
He has been appointed by the United Nations
Development Program to work with the Afghan
Government’s Ministry of Communications and
Information Technology (‘MCIT’) to comprehensively
review the current state of ICT legislation and policy
in Afghanistan, gather feedback with the various
Afghan Government Ministries and other interested
parties and propose draft legislation needed
to provide a sound legislative and regulatory
foundation for the growth and development of
a thriving ICT sector in the Islamic Republic of
Afghanistan.
Rajesh has also been appointed by the World Bank
to advise the MCIT on a set of comprehensive
policies and regulations for the regulation and
operation of the proposed Afghan National Data
Centre (‘ANDC’). The scope of work entails tasks
which include a comprehensive review covering
the existing data storage and access practices in
Afghanistan, presentation of and working through
case studies and scenarios to posit likely situations
and management mechanisms for the same in
relation to data centre access and operation, and
proposing and drafting of a set of policies and
regulations for the regulation and operation of the
ANDC.
The Property practice continues in its sweep of
en bloc deals. Gan Hiang Chye recently acted for
CapitaLand in the en bloc purchase of Char Yong
Gardens, a freehold condominium at the corner of
Cairnhill and Hullet roads, for S$420 million. Gan
and Lim Lee Kian also acted for the owners in the
en bloc sale of eight houses along Pulasan Road
to Vicland Pte Ltd.
Gan and Lee Kian are also acting for Hong Leong
International Property Investments (Singapore) Ltd
in the sale of 1 Finlayson Green building for a sum
of S$230.88 million.
Edwin Lee from the Projects & Infrastructure
Practice Group has advised on the tender for the
organisation of an international event known as
the Singapore International Water Week (‘SIWW’).
SIWW is a platform to attract new investments
Around Rajah & Tann
A Round-Up Of Key Deals And Events In The Third Quarter Of 2007
International Arbitration Practice Group
Feature Articles
Courts Get Tough On Industrial Accidents: First Prosecution Under The Workplace Safety & Health Act
Animation And Games: Finding The Cauldron Of Gold
A Brief Overview Of Market Rigging And Its Consequences
Case Bites
Legislation Bites
page 12 of 51 pages
LawLinesVol 9 . Issue 3 • September 2007
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into Singapore, increase R&D opportunities and
showcase Singapore capabilities in the fi eld of
water and environment. It focuses on practical water
technology and business solutions, best practices
in the successful delivery of various aspects of
water resource and wastewater management.
SIWW is positioned as a complementary forum
to existing well-recognised global water forums
such as Stockholm World Water Week and World
Water Forum.
Books And ContributionsPartners Quentin Loh SC and Edwin Lee have
authored a book entitled ‘Confidentiality In
Arbitration: How Far Does It Extend?’. The
monograph explores the concept of confi dentiality
in arbitration proceedings and its exceptions.
Case law in England is examined and compared
with the positions in Australia, New Zealand,
the United States, Sweden, France, Germany
and Singapore. The various institutional rules on
confi dentiality are also studied. In the foreword of
the book, The Right Honourable the Lord Mustill
refers to the book as ‘a thoughtful analysis and
exposition’ of the subject.
Kala Anandarajah has contributed a chapter
on Singapore in the International Comparative
Legal Guide - Environmental Law 2007 as well
as the International Comparative Legal Guide
- Pharmaceutical Advertising 2007. Leonardo
Bernard, a foreign lawyer in our Firm, also assisted
in the latter publication. The guides, which are
written by leading lawyers in their respective fi elds,
is aimed at providing the international practitioner
and in-house counsel with a comprehensive
worldwide legal analysis of the topics.
Seminars We have almost reached the end of this year’s
Lunchtime Seminar Series. This quarter witnessed
a whole variety of interesting and noteworthy topics
being presented. Rajesh Sreenivasan from our iTec
Practice Group spoke on the topic ‘An Update On
Outsourcing’, Susan Paat from our Indonesian
Desk discussed the topic ‘Indonesia’s Business
Law: Foreign Direct Investment’ and Francis Xavier
and Gregory Vijayendran gave a presentation on
the topic ‘Managing Arbitration Disputes In The
Region’. We also had a talk on the topic ‘Security
of Payment: Issues Raised From Adjudication
Around Rajah & Tann
A Round-Up Of Key Deals And Events In The Third Quarter Of 2007
International Arbitration Practice Group
Feature Articles
Courts Get Tough On Industrial Accidents: First Prosecution Under The Workplace Safety & Health Act
Animation And Games: Finding The Cauldron Of Gold
A Brief Overview Of Market Rigging And Its Consequences
Case Bites
Legislation Bites
page 13 of 51 pages
LawLinesVol 9 . Issue 3 • September 2007
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Determinations’, where Edwin Lee discussed the
adjudications determinations that have been made
since the Security of Payment Act came into effect
on 1 April 2005.
The last seminar in this series for the year will be
held on 4 October, and the topic is ‘Opportunities
In The Indian Property Sector and SEZs’. The
series will be back next year, so do watch out
for it.
Concluding WordsAs we head to the end of the third quarter and into
the fi nal quarter of 2007 with an enlarged team of
experts, and an unwavering commitment to our
clients, Rajah & Tann is poised to serve you even
better in the months ahead.
Around Rajah & Tann
A Round-Up Of Key Deals And Events In The Third Quarter Of 2007
International Arbitration Practice Group
Feature Articles
Courts Get Tough On Industrial Accidents: First Prosecution Under The Workplace Safety & Health Act
Animation And Games: Finding The Cauldron Of Gold
A Brief Overview Of Market Rigging And Its Consequences
Case Bites
Legislation Bites
page 14 of 51 pages
LawLinesVol 9 . Issue 3 • September 2007
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The growth of international trade and commerce
has resulted in the corresponding growth of cross-
border disputes. In Asia Pacifi c where numerous
international trade and business transactions take
place, arbitration has become an increasingly
popular way of resolving disputes and Singapore
is gaining its reputation as an excellent forum for
international arbitration.
Given this background, it is critical that law fi rms
position themselves with extensive arbitration
expertise to service the needs of their clients and
those who may wish to engage their services.
Rajah & Tann has been in the forefront in meeting
this challenge through its International Arbitration
Practice.
Leading International Arbitration Practice The International Arbitration Practice in Rajah
& Tann has consistently ranked among the top
international arbitration practices in Singapore,
recognised by leading publications like Asian
Legal Business, Chambers Global, Asia Pacifi c
Legal 500 and Global Counsel 3000. The UK-
based Asia Pacifi c Legal 500 noted that the Firm
‘is at its strongest in corporate, construction,
IT and shipping arbitrations…’. Global Counsel
3000 declared Rajah & Tann as a ‘leading
litigation and arbitration practice in Singapore’.
The award winning members of the team are
known for consistently delivering top-quality
service and providing clients with real and sensible
solutions.
Depth Of ExperienceThe arbitration team comprises lawyers with multiple
jurisdictional qualifi cations, who together bring to the
practice a wide range of experience and expertise
in corporate, commercial and construction as well
International Arbitration Practice GroupAround Rajah & Tann
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Feature Articles
Courts Get Tough On Industrial Accidents: First Prosecution Under The Workplace Safety & Health Act
Animation And Games: Finding The Cauldron Of Gold
A Brief Overview Of Market Rigging And Its Consequences
Case Bites
Legislation Bites
page 15 of 51 pages
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as shipping disputes in Asia Pacifi c. The team’s
predominant focus is on international arbitration.
Led by Chong Yee Leong and anchored by leading
and illustrious arbitration practitioners, Sundaresh
Menon, Steven Chong SC and Quentin Loh SC,
the team has worked together for nearly a decade
and in that time established a close and collective
work ethic which has been an invaluable factor
underpinning the team’s success. The team has
been consistently recognised as the top international
arbitration team in South East Asia.
Breadth Of PracticeMembers of the team have been retained
as arbitrators, advisors and / or counsel on
arbitrations conducted under the auspices of
the leading arbitration institutions in the world,
including the International Court of Arbitration
of the ICC, the London Court of International
Arbitration, the American Arbitration Association,
the Hong Kong International Arbitration Centre,
the Singapore International Arbitration Centre,
the Kuala Lumpur Regional Centre for Arbitration,
the Thai Arbitration Institute, and the Society of
Maritime Arbitrators.
In the past year, the team has been involved
in arbitrations conducted throughout Asia and
Europe, including Singapore, Bangkok, Kuala
Lumpur, Hong Kong, New Delhi, Taipei, London,
Paris, Geneva and New York. We have also acted
for or against governments and government-linked
entities in Singapore, Malaysia, Thailand, Brunei,
Indonesia, Laos and Hong Kong. The extensive
geographical range of our practice refl ects the
international nature of our clientele and the matters
that we handle.
Client DiversityBecause of the diversity of our clients, we have in-
depth knowledge of a wide variety of industries. The
disputes handled involve complex and multilayered
legal and factual issues. A substantial number of
these cases involve extensive collaboration with
industry experts and specialists in state-of-the-art
technology.
The team has worked on disputes in the following
areas:
corporate and commercial matters, such
as complex cross-border joint venture and
•
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A Round-Up Of Key Deals And Events In The Third Quarter Of 2007
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Feature Articles
Courts Get Tough On Industrial Accidents: First Prosecution Under The Workplace Safety & Health Act
Animation And Games: Finding The Cauldron Of Gold
A Brief Overview Of Market Rigging And Its Consequences
Case Bites
Legislation Bites
page 16 of 51 pages
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shareholder disputes, banking, f inance,
insurance, regulatory, distributorship and
employment disputes;
oil and gas upstream and downstream;
power p ro jec ts and power purchase
agreements;
telecommunication networks, infrastructure and
sales;
infrastructure projects such as airports, railways,
ports, highways, suspension bridges, tunnels
and sewerage systems;
building projects including residential, industrial,
•
•
•
•
•
mixed-development and commercial building
projects; and
maritime and shipbuilding contracts.
Concluding Words Amidst Singapore’s changing fi nancial and legal
landscape, the Firm’s International Arbitration
Practice is determined to excel in its areas of
specialisation. We will continue to anticipate and
fulfi ll the needs of our clients and provide them
with creative and pragmatic solutions to further
their interests.
•
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Feature Articles
Courts Get Tough On Industrial Accidents: First Prosecution Under The Workplace Safety & Health Act
Animation And Games: Finding The Cauldron Of Gold
A Brief Overview Of Market Rigging And Its Consequences
Case Bites
Legislation Bites
page 17 of 51 pages
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Courts Get Tough On Industrial Accidents: First Prosecution Under The Workplace Safety & Health Act
FEATURES
The fi rst prosecution under the Workplace Safety
& Health Act (‘WSHA’), which came into force on 1
March 2006, has taken place with the District Court
in Public Prosecutor v Low Lye Wah MOM 58 of
2007 handing out a stiff three-month jail sentence.
Was this decision too harsh? After all, none of the
three charged and convicted in the far more serious
cases involving the Nicoll Highway collapse were
jailed. So, in seeking to get tough on industrial
safety, have the courts gone too far?
This article takes a quick look at the Low Lye Wah
case and the rationale of the Court in imposing the
jail sentence on the accused. It also examines how
this case compares to pre-WSHA cases in so far as
the courts’ sentencing policy is concerned.
The Facts In March 2006, a marine worker was hit on the head
by a 15 kg bag of tools that was being lowered from
a ship into a ferry boat next to it. The bag came
loose and fell about 10 metres, hitting the worker
underneath. The worker was not wearing a helmet
at the time and passed away.
The worker was employed by a marine contractor
called Leelloyds that was contracted to repair
and service a generator on a ship. Following the
accident, both Leelloyds and the person in charge
of the workers, Low Lye Wah (‘Low’), were charged.
Leelloyds pleaded guilty to a charge under section
12(1) of the WSHA and was fi ned S$100,000 (out of
a maximum fi ne of S$500,000) for failing to ensure
the safety and health of its employees.
Low also pleaded guilty. Low was responsible for
rigging and lowering loads from the ship to the
ferry boat. He had instructed workers (including the
deceased) to wait on the ferry boat to receive the
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Animation And Games: Finding The Cauldron Of Gold
A Brief Overview Of Market Rigging And Its Consequences
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page 18 of 51 pages
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loads. When it came to the third and fourth loads,
Low started lowering the fourth load before the third
load was untied. This action exposed the workers
waiting below to the risk of objects falling onto them
and that was exactly what happened.
Low ultimately pleaded guilty to a charge under
section 15(3) of the WSHA:
‘(3) Any person at work who, without reasonable
cause, wilfully or recklessly does any act which
endangers the safety or health of himself or others
shall be guilty of an offence.’
The Court accepted that Low’s actions were
reckless within the meaning of section 15(3) of the
WSHA and convicted him. Low could have been
fi ned up to S$200,000 or imprisoned for a term not
exceeding two years or subject to both. The Court
decided to jail Low for three months.
The Jail SentenceThe Judge recognised that there are similar offences
under the Penal Code relating to acts which
endanger the life or safety of others, ie section
336 (performing an act that rashly or negligently
endangers life or the personal safety of others),
section 337 (causing hurt by such acts), section
338 (causing grievous hurt by such acts), and
section 304A (causing death by a rash or negligent
act not amounting to culpable homicide).
He then said that although the Penal Code offences
were of general application and the punishments
under the WSHA were much heavier, he felt that the
sentencing principles in the analogous cases under
the Penal Code provisions would be relevant. On this
basis, the Judge felt that the ‘scale would start with
mere negligence and end with gross recklessness’.
There would be no jail where the death was caused
by a negligent act, but where the death was caused
by a rash act, imprisonment would be appropriate.
On the facts, the Judge felt that the acts of Low
crossed the line into a custodial sentence. The
key factor was the fact that Low was very much
aware that what he was doing was risky to the
workers and could injure them, but he decided
to run the risk anyway.
How Does The Case Compare To Pre-WSHA Cases?The approach taken by the Judge in this case is
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Courts Get Tough On Industrial Accidents: First Prosecution Under The Workplace Safety & Health Act
Animation And Games: Finding The Cauldron Of Gold
A Brief Overview Of Market Rigging And Its Consequences
Case Bites
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page 19 of 51 pages
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very much in keeping with the pre-WHSA cases
where prison sentences are restricted to cases of
gross and wilful negligence.
In the Nicoll Highway case of Public Prosecutor
v Shun Sugawara, Kazuo Shimada And Paul
Broome [2006] SGDC 42, the same approach
was taken. The three accused were charged with
offences under the Factories Act (‘Act’) including
contravention of section 89(5) of the Act, ie for
causing the deaths of four persons, who had
died during the collapse of the retaining wall. The
maximum punishments therefore included custodial
sentences. The three were sentenced to fi nes of
S$120,000 for Sugawara and S$160,000 each
for Broome and Shimada. No custodial sentences
were imposed. The Court held:
‘In coming to the appropriate sentence, it is
important to note that the agreed facts contain
no evidence of untoward risk taking, or deliberate
adventurism. There was no allegation even that
these men were callous or generally incompetent.’
And that ‘substantial fi nes …would be suffi cient
to address the public interests and seriousness
of the offences at hand. ’
Similarly, in Public Prosecutor v Soo Kim Shiun
[2005] SGMC 36, the project manager in charge of a
work site was charged and found guilty of ‘conniving’
in the failure to test the structural adequacy of a
hopper-cum-cage that was being used at a work
site under section 88(13) of the Act. The cage was
dislodged and fell on a worker who died as a result.
The Court only imposed a S$20,000 fi ne because it
found the misconduct was the result of inadvertence
rather wilful or callous behaviour.
Concluding Words This new decision of the Low Lye Wah case
confi rms that under the WSHA, the courts will
continue the sentencing policy of drawing a
distinction between cases of gross and wilful
negligence (where the accused would be jailed)
and cases of negligence simpliciter (where the
accused would not), and secondly, so far as the
imposition of a jail sentence is concerned, the
sentence is consistent on the basis of the fi nding
that the death had been caused by a rash act.
On that basis, the decision to impose a custodial
sentence is not excessive by past standards. It
also means that it is still possible even under the
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Courts Get Tough On Industrial Accidents: First Prosecution Under The Workplace Safety & Health Act
Animation And Games: Finding The Cauldron Of Gold
A Brief Overview Of Market Rigging And Its Consequences
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page 20 of 51 pages
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WHSA to avoid a jail sentence even when death
has been caused.
As to the length of the sentence, although stiff
and naturally dependent on the particular facts
of this case, the length of jail meted out is hardly
surprising given the intent and aims of the WSHA
to get tough in the wake of increasing numbers of
industrial accidents that occurred in 2005 – 2006
that led to the enactment of WSHA itself, as noted
in the Judge’s own reasons.
Indeed, going by statistics, the punishments are
likely to get even tougher. In addition to attention
grabbing incidents like Biopolis and Nicoll Highway,
there are a great number of cases that are no less
tragic involving a single or less than three deaths. For
example, in May 2007 alone, there were reported 10
fatalities and two injuries in a total of nine separate
incidents, the most serious case being the widely
reported industrial fi re at the ExxonMobil Plant at
Ayer Chawan where there were three fatalities.
That these incidents involved companies across
a wide spectrum of industries from petro-
chemicals to marine and civil construction to a
port operator demonstrates that the problem of
industrial accidents is not one that is restricted
to any one industry. Naturally, the particular facts
and circumstances of these cases will have to
be carefully examined and not all of these cases
necessarily involve breaches of the WSHA.
Philip L. Tay Partner, Admiralty & Shipping Practice GroupDID: 6232 [email protected]
For more information, contact:
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Animation And Games: Finding The Cauldron Of Gold
A Brief Overview Of Market Rigging And Its Consequences
Case Bites
Legislation Bites
page 21 of 51 pages
LawLinesVol 9 . Issue 3 • September 2007
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The interactive digital media industry in Singapore
is abuzz with excitement, in large part engendered
by the Singapore government’s attention of late.
Interactive digital media has been identifi ed to be
a key growth sector for Singapore’s economy in
the years ahead by the high-powered Research,
Innovation and Enterprise Council during its
inaugural meeting in 2006, chaired by Prime
Minister Lee Hsien Loong. Games and animated
productions are two important sectors of the
interactive digital media industry. The Singapore
government has set aside S$500 million over
5 years (2006 – 2010) to develop this nascent
industry.
The arrival of reputable foreign players stands
testimony to the government’s efforts in harnessing
this industry as a growth engine for Singapore.
Singapore can proudly boast the likes of Lucasfi lm
Animation, Electronics Arts and 10tacle Studios as
having set up shop here.
Local corporations have recognised the potential of
this industry for what it can offer towards increasing
shareholder value. What better example than
engineering conglomerate Singapore Technologies
Engineering, whose subsidiary, ST Electronics,
has opened an animation studio and has co-
produced a US$20 million animated fi lm, the Ten
Commandments, which is scheduled to be released
some time this year in more than 600 cinemas in
the USA.
This article is the fi rst of a two-part series, with this
fi rst part focusing on animated productions and the
second on games. In this article, we will be looking
at some of the issues that may affect the producer
of an animated fi lm (‘Producer’) in its exploitation
of the completed animated fi lm.
Animation And Games: Finding The Cauldron Of Gold
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Animation And Games: Finding The Cauldron Of Gold
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page 22 of 51 pages
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Producing An Animated FilmThere are three key phases to an animated fi lm
production. They are as follows:
the development phase where screenplay or
script development takes place, crews and
voice actors are engaged, rights and content
clearance looked at and production fi nance
sourced;
the production phase where the animated fi lm
is produced; and
the distribution phase where the animated fi lm
and ancillary rights including merchandising are
exploited.
The Source MaterialAn animated fi lm could be based either on an
existing copyright work or a newly commissioned
work.
In the case of an existing copyright work, it could
be a novel, magazine article, play or existing
screenplay or script. Such works cannot be
adapted into an animated fi lm without the consent
of the copyright owner. Hence, the Producer will
a)
b)
c)
want to either obtain an outright assignment of all
intellectual property rights in the existing work, or
a licence for it to lawfully produce the animated
fi lm. An assignment is always preferred as it means
the Producer has absolute control over its use
of the existing copyright work and exploitation
thereafter.
Should a licence be obtained instead, the Producer
would be well advised to ensure that the licence
agreement clearly sets out the ambit of its rights
to usage and exploitation as its ability to recoup its
investment in producing the animated fi lm depends
entirely on the permitted modes of exploitation.
Territorial limits are but one of the key provisions
to be aware of. Depending on the nature of the
production, the territories in which the Producer
may exploit the animated fi lm would determine the
success or failure of the fi lm. For English based
animated films, the North American market is
certainly one market that should not be passed
over. Another key consideration is the media of
exploitation. This could be theatrical, non-theatrical,
home video, etc.. Most Producers would often not
restrict themselves to theatrical exploitation as the
attendant risks are high. Home video is viewed as
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page 23 of 51 pages
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a lucrative mode of exploitation and such rights are
usually hotly sought after by the Producer.
In obtaining an assignment of an existing work, it is
quite common for a Producer to take an option over
an existing copyright work for a lesser fee instead
of acquiring all rights via an outright assignment
from the outset at the full purchase price. Such an
option and assignment agreement will permit the
Producer for a limited period on an exclusive basis
to develop the project in exchange for an option
fee. Development work at this stage could include
engaging voice actors and crew and budgeting.
Should the Producer wish to thereafter ‘greenlight’
the project, it may exercise the option which will
enable it to acquire the rights in perpetuity of the
existing copyright work.
Where commissioning a new copyright work
on which the animated fi lm is to be based on,
the Producer has to ensure that the copyright
in the work is assigned to the Producer, failing
which the commissioned party would own the
work, curtailing the Producer’s ability to exploit
the fi nished product, unless further consents are
obtained from the commissioned party. Hence,
it is of utmost importance that the agreement
between the commissioned party and the Producer
unequivocally spells out that such rights are
assigned to the Producer. Apart from that, it is usual
to ask for all moral rights (such as the right of an
author to be identifi ed as the author of the work
and the right of an author to object to derogatory
treatment of the work) in the work to be waived,
failing which the commissioned party would still
retain some control over the Producer’s exploitation
of the commissioned work despite the copyright
therein having been assigned to the Producer.
Warranty Of Non-InfringementWhether the animated fi lm is produced based on
an existing work or on a commissioned work, the
Producer should pay due attention to whether such
work itself infringes the intellectual property rights
of any third party. It is therefore customary for the
Producer to insist on a warranty from the author
of the existing work or of the commissioned work
that such work does not infringe the intellectual
property rights of any third party. Depending on
the credibility of the owner who has given such a
warranty, some Producers may take the warranty
at face value while others would carry out further
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page 24 of 51 pages
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due diligence to trace the chain of title and verify
the sanctity of the warranty.
A Producer would shudder at the thought of his
production infringing the intellectual property rights
of a third party. The Producer could not only face
a claim for damages, but also be prevented by the
third party by way of an injunction, from exploiting
the production, thereby forestalling its ability to
generate revenue and recoup its investment.
Raising FundsProducers often do not have sufficient funds
themselves to complete production of the animated
fi lm. As such, it is common for Producers to source
for funding from third parties. This could be by way
of equity investment, distribution advances via pre-
sales to distributors and co-productions.
As far as equity investment is concerned, apart
from ensuring that the agreement between the
investor and the Producer is weighted in favour of
the investor, the investor would wish to have some
form of security over its investment. As such, it is
a given that the investor will want to have a share
of ownership of the copyright in the animated
fi lm. The investor will also be looking to recoup its
investment from the revenue generated from the
worldwide exploitation of the animated fi lm and
merchandising rights. Some of the commercial
terms that are the subject of lengthy negotiations
between the Producer and an investor include the
proportion of copyright in the animated fi lm that the
investor owns jointly with the Producer, the order
of repayment to the investor from the receipts of
the exploitation of the animated fi lm (for example,
it could be investor A being repaid its investment
before investor B or pari passu and pro rata, ie
without preference and in proportion to each
investor’s respective contributions), the mechanics
of profi t participation, screen credits, termination
consequences and Producer warranties. These
terms have important ramifi cations as they will have
a direct impact on the Producer’s profi ts arising
from its production venture.
Finding The Cauldron Of GoldHaving a fi rst class animated production in terms
of storyline, visual effects, cinematography and
voice actors does not necessarily guarantee the
success of the production as revenue ultimately
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A Brief Overview Of Market Rigging And Its Consequences
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page 25 of 51 pages
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depends on the whimsical tastes of consumers.
That said, should a production garner a popular
response from consumers worldwide, this may
give the Producer a sense of comfort of profi ts to
come. However, if the Producer had been less than
circumspect in dealing with the various agreements
which it had inked with underlying rights owners,
investors and other third party participants, it may
have unwittingly signed away its entitlement to
riches. Hence, realising that the main asset of an
animated production is the underlying intellectual
property is a positive fi rst step in the right direction.
Having in place robust agreements to clarify the
rights and obligations of each participant in the
production vis-à-vis such intellectual property is
an imperative second step to fi nding that cauldron
of gold.
Lionel TanPartner, iTec Practice GroupDID: 6232 [email protected]
For more information, contact:
Steve TanSenior Associate, iTec Practice GroupDID: 6232 [email protected]
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Animation And Games: Finding The Cauldron Of Gold
A Brief Overview Of Market Rigging And Its Consequences
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page 26 of 51 pages
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In today’s thriving market, it may be worthwhile to
revisit the law against market rigging in Singapore.
The purpose of this short article is to provide a brief
overview of the more common forms of market
rigging which are prohibited under the provisions of
the Securities and Futures Act (‘SFA’) and highlight
the changing judicial perspectives of the Singapore
courts in dealing with these offences.
False TradingSection 197(1) of the SFA prohibits generally the
creation of a false or misleading appearance of
active trading, the price of or the market for any
securities on a securities market. The essential
element of the offence is whether the conduct in
question was intended or likely to create a false or
misleading appearance of an active market or in the
price or market of the securities. Hence, that there
has been a genuine business transaction involved
may not be wholly relevant. It may not even be
relevant that the market was not affected by the
conduct of the transaction. For instance, the act of
intentionally churning trade volumes of a security
may amount to an offence under section 197(1) of
the SFA. Exploiting the market pre-opening or pre-
closing routine to set an artifi cial price for securities
may also amount to a similar offence.
More specifi c forms of prohibited market conduct are
set out in sections 197(2) and 197(3) of the SFA.
‘Wash Sales’ Sections 197(2) of the SFA sets out a specifi c
prohibition against what is commonly known
as ‘wash sales’. ‘Wash sales’ generally involve
securities transactions which do not result in any
change in benefi cial ownership but are intended
to ‘maintain, infl ate, depress or cause fl uctuations
in, the market price of any securities’. There is no
A Brief Overview Of Market Rigging And Its Consequences
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page 27 of 51 pages
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change in benefi cial ownership if a person has an
interest in the securities before the transaction and
retains his interest after the transaction. ‘Wash
sales’ take place typically when a person trades in
securities using multiple trading accounts (usually
not belonging to him, but which he controls), so that
the securities in which he has an interest are moved
or transferred among these trading accounts. As
the person retains his interest in these securities
after the transactions, such conduct potentially
creates a false impression of active trading which
may affect the price of the securities. However,
section 197(6) of the SFA provides a defence
if the person did not conduct the transactions
for the purpose of creating a false or misleading
appearance in the market price of the securities.
Section 197(2) of the SFA also prohibits any use
of fi ctitious transactions or devices to affect the
price of securities.
‘Matched Orders’ Sections 197(3)(b) and 197(3)(c) specifi cally prohibit
the abuse of matched orders. Matched orders are
achieved by simultaneously entering identical or
nearly identical buy and sell orders for a security to
create a false appearance of active trading in the
market. Under section 197(3) of the SFA, any practice
of entering matched orders would be deemed to
have created a false or misleading appearance of
active trading in the securities concerned, unless
the person can establish that his actions were not
pursuant to such illegal purpose.
Market Manipulation & Short Selling Section 198(1) of the SFA prohibits a person from
carrying out ‘2 or more transactions in securities
of a corporation...that have...the effect of raising,
lowering, maintaining or stabilising the price of the
securities...with intent to induce other persons to
subscribe for, purchase or sell securities of the
corporation or of a related corporation’. For the
purposes of this section, the term ‘transaction’
includes the making of offers to buy or sell
securities as well as invitations to treat. The ambit
of this provision is very wide and may under some
circumstances even encompass within its scope
common trading strategies such as short-selling
or naked-shorting. Short-selling involves selling
of a stock that a person does not yet own by
‘borrowing’ the stock. That person hopes to profi t
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page 28 of 51 pages
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by buying the stock back at a lower price before
returning it. It is essentially a gamble on price
decline. Naked shorting is based on the same
principle but involves the selling of a stock that has
not even been affi rmatively determined to exist. For
short-selling or naked-shorting to be an offence
under the SFA, there must, however, exist an ‘intent
to induce’ others to trade in the securities.
So far, there has been no opportunity for the courts
to scrutinise the legitimacy of short-selling or naked-
shorting, especially where such trading strategies
were used to ‘induce’ the investing public to trade
in securities. Unlike some other jurisdictions such
as Malaysia, Singapore presently has no specifi c
regulatory regime to limit or restrict short-selling or
naked-shorting.
Extra-territoriality & Criminal Sanctions The rationale behind the law is to ensure that the
Singapore market refl ects the forces of genuine
supply and demand. To that end, section 339 of
the SFA grants the enforcement agencies and the
courts extra-territorial jurisdiction to investigate
and try a person who, while outside Singapore,
has carried out prohibited transactions in the
Singapore market.
Any person convicted of an offence for market
rigging may be punished with a fine up to
S$250,000 or imprisonment for a term of up to
seven years or with both.
Before 2006, the Singapore courts often imposed
fi nes rather than imprisonment for offences of market
misconduct under section 197 of the SFA. This may
have to do with the fact that courts used to consider
such offences as mala prohibita, or conduct which
is prohibited because of specific prohibition or
regulation, as opposed to mala in se, or conduct
which is morally or socially reprehensible. Since Ng
Geok Eng v Public Prosecutor [2007] 1 SLR 913,
the courts have changed their stance. Ng Geok Eng
is a case involving ‘wash sales’. The High Court in
Ng Geok Eng held that the ‘approach of imposing a
fi ne in almost every case fails to suffi ciently express
the abhorrence with which our society regards such
conduct’. The High Court added that ‘[a]n offence of
false trading is one which strikes at the fundamental
integrity of our securities market’ and that ‘[p]ersons
found guilty of such offences should be taken to task
far more fi rmly than they have been thus far’ such
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Hamidul HaqPartner, Commercial Litigation Practice GroupDID: 6232 [email protected]
For more information, contact:
Thong Chee KunSenior Associate, Commercial Litigation Practice GroupDID: 6232 [email protected]
that ‘[t]he courts should not shy away from imposing
custodial sentences for offences of false trading or
market rigging’.
Following Ng Geok Eng, it is likely that the courts will
adopt a similarly tough stance against other forms of
market misconduct including offences arising from
section 198(1) of the SFA (market manipulation) and
section 218 of the SFA (insider trading).
The Civil Penalty Regime Under The SFAIt is foreseeable that the civil penalty regime of the
SFA would become an increasingly popular option
for persons who, having run foul of the law, hope
to be able to avoid criminal action and possibly
imprisonment. Under the SFA, an offender may avoid
the wrath of the courts by entering into an agreement
with the Monetary Authority of Singapore (‘MAS’)
to pay civil penalty fi nes, with or without admission
of liability but subject to the consent of the Public
Prosecutor. In practice, the MAS and the Public
Prosecutor may agree and consent to resolving
less egregious offences by way of civil penalty only
if the offender admits to liability. Some cases under
section 197(1) of the SFA which were resolved
recently by way of civil penalty involved individuals
who conducted false trading in the shares of China
Merchants Holdings (Pacific) Ltd, Eagle Brand
Holdings Ltd and ASA Group Holdings Ltd.
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CASE BITES
Admiralty & Shipping Detention Of Salvage Vessel By Port Authorities Not A Frustrating Event
In The ‘Sea Angel’ (2006), T, the salvors of a
grounded tanker time chartered the vessel, SA,
to transship the tanker’s cargo to a larger tanker.
When the transshipment was completed, the vessel
SA was unable to depart because the port refused
to issue a ‘No Demand Certifi cate’ (‘NDC’), until
all costs relating to the oil pollution damage from
the grounding had been paid. The vessel SA was
redelivered late and the owners of SA claimed hire
due under the charterparty from the time T ceased
to pay hire, up to redelivery. T contended that the
charterparty was frustrated by the unlawful refusal
of the port to issue a NDC.
The English High Court noted that frustration was
concerned with the incidence of unforeseen risks.
For instance, frustration was not concerned with
events which had been anticipated and provided
for in the contract itself. In a case involving pollution,
a salvage contractor was exposed to the risk
of governmental intervention and unreasonable
detention of its craft. This risk was addressed in
the contract between the salvor and the tanker
owner. Accordingly, the Court held that there was
no frustrating event.
Whether Charterer Liable For Deadfreight AIC Ltd v Marine Pilot Ltd (2007) involved a dispute
as to whether a charterer was liable for deadfreight
under a charterparty. At the load port, the charterer
formally tendered a loading quantity close to the
deadweight of the vessel. However, the quantity
loaded was significantly less because of draft
restrictions caused by the silting of the dredged
channel.
The English High Court held that the obligation
to pay deadfreight was only triggered if the
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charterer failed to supply a full cargo. Where
there was a tender of full contractual performance
by the charterer, there was no failure to supply
and accordingly, there was no obligation to pay
deadfreight. It was further argued by the owner
that even if the tender had satisfi ed the charterer’s
obligation to furnish, the existence and availability of
the option to load the balance of the cargo by ship-
to-ship (‘STS’) transfer meant that the charterer
could not escape liability for its failure to load the
full cargo if it failed to exercise the STS option.
The Court rejected this and held that the charterer
was not obliged to require an alternative means of
loading in order to top up the contractual minimum
where the failure to load the contractual minimum
had nothing to do with the act or omission.
Banking & Finance Moneylenders Act Not Intended To Apply To Arm’s Length Commercial Transactions
In Donald McArthy Trading Pte Ltd v Pankaj s/o
Dhirajlal (2007), the respondent entered into an
agreement with the appellants to allow, for and in
consideration of some commission and interest, the
use of the respondent’s letters of credit facilities with
various banks to fi nance the purchase of goods by the
appellant. Subsequently, the appellant defaulted on
its obligations under the agreement whereupon the
respondent commenced an action for the amounts
owing. In its defence, the appellant argued that the
arrangement under the agreement amounted to a
moneylending transaction and that the terms of the
agreement were thus illegal and unenforceable under
the Moneylenders Act (‘MLA’) as the respondent was
an unlicensed moneylender.
The Singapore Court of Appeal held, disagreeing
with the appellant, that the MLA was not intended
to apply to transactions made at arm’s length
between commercial entities so as to prohibit or
impede legitimate commercial intercourse between
them but instead was social legislation designed to
protect individuals from unscrupulous unlicensed
moneylenders.
ContractsCourt Awards Compensation For Wasted Management Time In Dispute In Bridge UK.Com Ltd v Abbey Pynford Plc (2007),
the English High Court awarded a company,
apart from other claims, damages for the wasted
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management time of a company executive spent
dealing with the dispute. The Court relied on
the earlier case of R+ V Verischerung AG v Risk
Insurance and Reinsurance Solutions SA (2006),
where management time was deemed recoverable,
provided that it has been demonstrated with
sufficient certainty that the wasted time was
indeed spent on investigating and / or mitigating
the relevant tort.
The Court, in its award of compensation to Bridge
for wasted management time, also accepted as
valid Bridge’s method of calculation of the wasted
time, which was a retrospective assessment by
the executive of the hours he had spent on various
matters based on documents relating to the case
and from his own records.
An Exclusion Clause That Is Too Broad Will Not Be Considered Reasonable
In Regus (UK) Ltd v Epcot Solutions Ltd (2007),
the English High Court, though recognising that
companies frequently try and exclude as much
liability as possible in their standard terms and
conditions, held that there are clear limits on what
can and cannot be so excluded.
Regus’ usual terms and conditions, in its tenancy
agreement with Epcot, included an exclusion clause
(‘Clause 23’) which limited Regus’ liability in any
circumstances for ‘loss of business, loss of profi ts,
loss of anticipated savings, loss of or damage to
data, third party claims or any consequential loss’.
Clause 23 also limited liability in respect of other
losses, damages, expenses or claims.
The Court held that Regus’ failure to provide
adequate air conditioning was a breach of
contract. As such, Epcot was entitled to recover
damages for any loss which it had suffered as
a result, subject to Clause 23. The Court held
that Clause 23 fell within section 3 of the Unfair
Contract Terms Act 1977 (the equivalent of section
3 of the Singapore Unfair Contract Terms Act) as
it restricted liability in respect of a breach. The
Court found that Clause 23 was unreasonable as
it sought to deprive Epcot of any remedy at all for
serious breaches by Regus.
Oral Contracts Can Be Binding Even Where Certain Aspects Not Yet Agreed On
In Bear Stearns Bank Plc v Forum Global Equity
Ltd (2007), the High Court of England held that
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an oral contract over the phone is binding, and
a verbal agreement did not have to be reduced
to writing.
In concluding that the oral contract between Bear
Stearns and Forum was enforceable, the Court
held that where parties have shown an intention
to be contractually committed, even though
deferring discussion of some aspects of the
deal, courts will recognise a contract unless the
outstanding aspect is essential and the contract
is too uncertain or incomplete to be enforced
without it. The Court added that in the absence of
an express agreement, there was an implied term
of the agreement that the parties would execute it
within a reasonable time.
The Court also added that the law will imply any
terms necessary to give business effi cacy to what
was agreed by the parties. Further, the Court
added that no specifi c forms of words are needed
nor do all matters need to be agreed on in order to
conclude a contract of this kind. However, to avoid
a binding contract from being made, parties need
to say something explicit to that effect.
Construction ‘Unreasonable Or Vexatious’ Termination
In Reinwood Ltd v L Brown & Sons Ltd (2007),
the English High Court considered the test to be
applied when deciding whether a contract had been
determined by a contractor in an ‘unreasonable or
vexatious’ manner. The claimant contractor entered
into a contract with the defendant employer for
the construction of residential apartments. The
defendant purported to terminate the contract
on the grounds that the claimant had repeated a
specifi ed default by failing to pay sums that were due
under an interim certifi cate. The claimant submitted
that, even if the notices were valid, the defendant
had acted ‘unreasonably or vexatiously’ within the
meaning of a certain clause of the contract and that
the notice of determination was, for this reason, void
and ineffective.
Applying the principles laid down in the leading
cases on the meaning of ‘unreasonably or
vexatiously’, the Court held that the contractor had
acted neither vexatiously nor unreasonably. It had
not acted vexatiously because it had not acted with
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any motive or intention of harassing, oppressing
or annoying the employer. Nor had it acted
unreasonably given all the facts and circumstances
of the case. The defendant had acted to protect its
legitimate interest in being paid the monies which it
considered it was entitled to and, in doing so, could
not be said to have acted unreasonably.
The Meaning Of ‘Under The Contract’ In A Letter Of IntentIn Skaanska Rashleigh Weatherfoil Ltd v Somerfi eld
Stores Ltd (2006), the English Court of Appeal held
that the words ‘under the terms of the Contract’
in a letter of intent had the effect of incorporating
into the contract represented by the letter of
intent, the terms of the draft contract which had
been under negotiation between the parties prior
to the sending of the letter of intent (unless those
terms were inconsistent with the terms of the
letter of intent).
The Court rejected the submission that the
reference to ‘the Contract’ was only for the purpose
of identifying the services to be performed. In
reaching this conclusion the Court placed primary
emphasis on the natural meaning of the words
‘under the Contract’ and stated that the adoption
of a commercially minded construction of a clause
does not give to the court a licence to re-write the
contract simply because the terms appear a little
unexpected, unreasonable or unwise.
Corporate & Capital Markets Retrospective And Unilateral Imposition Of Term Requiring Director To Retire At 55
In See Teow Chuan v YAM Tunku Nadzaruddin
Ibni Tuanku Jaafar (2007), the issue before the
Malaysian Court of Appeal (Putrajaya) was whether
the company could, by board resolution, require the
plaintiff to retire on the ground that he had already
attained 55 years of age, an event which took place
some three years earlier. The plaintiff challenged the
introduction of a new term into his existing contract
that he should retire.
The Court found that it was neither an express nor
implied term of the plaintiff’s contract that he must
retire on attaining 55 years of age. It was also plainly
a term of the contract that the plaintiff would serve
as managing director for as long as he was willing
and able to perform his duties. There was also
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material to support the inference that the resolution
was designed to have the plaintiff removed as
managing director. As the other directors had used
their fi duciary power for a collateral or improper
purpose, namely, to remove the plaintiff, that power
was to that extent invalid. Accordingly, the Court
granted an injunction restraining the implementation
of the resolution on the plaintiff.
Whether There Was Breach Of Duty In Relation To Investment Losses
In Orient Centre Investments v Societe Generale
(2007), a company made a claim for breach of
representations, breach of fi duciary and other duties
and for negligence in relation to its investments in
certain structured fi nancial products with a bank, SG,
as a result of losses sustained in the investments.
The Singapore Court of Appeal found that the
agreements between the company and SG for the
provision of the relevant services provided that the
company was exercising its own business judgment
independently of SG in entering into the agreements,
and that SG was not acting as a fi duciary for or as
an advisor to it in respect of the agreements. The
combined effect of the terms applicable to the
products in question was an insuperable obstacle to
any claim by the company against SG based on the
alleged breach of representations or duties, fi duciary
or contractual or on negligence on the part of G, an
employee of SG. The Court further held that even
if G had made representation concerning capital
preservation and income return, it would not have
assisted the appellants in relation to the structured
products, as they had represented and warranted
that they did not rely on any representation given by
any of SG’s offi cers.
Court Declines Order To Restrain Company From Forfeiting And Selling Shares
In McLaughlin v Dungowan Manly Pty Ltd (2007),
the Supreme Court of New South Wales had to
determine an application to restrain the defendant
company from taking action to forfeit and sell the
shares of the company which belonged to the
plaintiffs, after they had failed to pay a levy on the
same.
In response to an allegation of abuse of powers
by the directors, the Court held that the evidence
did not support an inference that the removal
of the plaintiffs was an actuating purpose in the
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decision to impose the levy. The fi nancial needs
of the company and the absence of means other
than the levy to satisfy them must have led to the
decision to impose the levy regardless of the impact
on the plaintiffs.
The plaintiffs were informed that their shares were
‘liable’ to forfeiture and sale if one or two things
did not happen, that is, payment of the levy or
the making of an arrangement satisfactory to the
company. The Court noted that if the plaintiffs did not
have the fi nancial resources and if, in addition, they
were unwilling or unable to negotiate an acceptable
payment arrangement, resort by directors to the
powers of forfeiture and sale would be appropriate.
The Court accordingly declined the injunction.
Director Held Liable For Unauthorised Loans Made To Another Director
The English Court of Appeal held in Neville v Krikorian
(2006) that a director who knowingly allowed a
practice of lending by his company to a co-director
to be treated as acceptable and to continue, could
properly be said to have authorised individual
payments made in accordance with that practice
pursuant to section 330 of the English Companies
Act (the equivalent of section 162 of the Singapore
Companies Act). This was notwithstanding that he
did not have actual knowledge of each individual
payment at the time that it was made. The Court
further held that the director was also in breach of
duty in failing to take steps to cause the company
to call in the indebtedness after he had learnt of
the practice of directors’ loans which had been
allowed to arise.
Dispute ResolutionPre-nuptial Agreement Recognised By The Court In TQ v TR (2007), a Swedish woman, P, and a Dutch
national, R, agreed before they got married in the
Netherlands that there was to be no common marital
property (‘Agreement’). R came to Singapore to
work. P and the three children of the marriage arrived
a month later to join him. Their marriage turned sour,
prompting P to fi le for divorce in Singapore. One of
the major issues that the Singapore High Court had
to tackle in connection with the parties’ division of
assets was whether the Agreement was enforceable
in Singapore.
Despite the fact that the Agreement was executed
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under Dutch law, the Court still considered whether
it ought to give effect to it as an enforceable
document irrespective of where the parties’
domicile might be. Citing section 112(1) and (2)
of the Women’s Charter (‘Power of court to order
division of matrimonial assets’), the Court stated
that it was entitled to take into account a pre-nuptial
agreement and give effect to it if the circumstances
permit, as in this case. Here, the couple entered
into the Agreement on their own volition, as mature
adults and in the presence of a notary public who
had explained the content and effect of it to P. The
Court took the view that the Agreement must be
upheld and take effect accordingly.
Removal Of Arbitrators
In ASM Shipping Limited of India v Bruce Harris
& Ors (2007), ASM and TTMI entered into a
charterparty which contained a clause providing
for arbitration before a tribunal consisting of one
arbitrator to be approved by ASM, one by TTMI,
and one by the two so chosen.
Following a dispute between the parties, the
charterers began the arbitration and the parties
appointed H and S as arbitrators. M was
subsequently appointed as the third arbitrator. A
fi nding of apparent bias prompted M to resign from
the reference. ASM asserted that the remaining two
arbitrators should be removed because they were
/ would have been infected also by the apparent
bias of M. The English High Court stressed that
it does not necessarily follow from the fi nding of
apparent bias on the part of M that the whole of the
arbitral tribunal and each member of it are tainted
by apparent bias. Here, circumstances did not
exist that gave rise to justifi able doubts as to the
impartiality of the two remaining arbitrators.
Law Of General Importance And ‘Special Reasons’ As Grounds For Appeal
In Ng Chin Siau and Others v How Kim Chuan
(2007), H sought leave to appeal against an adverse
judgment of the Singapore High Court which
reversed an arbitrator’s decision. Essentially, the
Singapore High Court declared that a clause in the
partnership agreement between H and the other
partners (plaintiffs herein) was not applicable in the
assessment of the valuation of the partnership’s
goodwill because it was not adequately pleaded.
The Court dismissed the application. Citing section
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49(11) of the Arbitration Act, it held that leave to
appeal to the Court of Appeal against a decision
on an appeal from an arbitration award may only be
granted if the question of law before it was one of
general importance, or one which for some special
reason should be considered by the Court of
Appeal. A ‘question of law of general importance’
should be one of ‘general principle upon which
further argument and a decision of a higher tribunal
would be to public advantage’. There was a ‘special
reason’ to consider the appeal if the question of law
was a question on which the judge’s decision had
been obviously wrong. The formulation ‘obviously
wrong’ imposed a higher burden on the prospective
appellant than the formulation ‘prima facie error of
law’ did. The Court ruled that in the present case,
the fi nding that the clause was not applicable on
the basis that it was not adequately pleaded was
not obviously wrong so as to permit an appeal to
the Court of Appeal.
‘Without Prejudice’ Letter
In Greenline-Onyx Envirotech Phils, v Otto
Systems Singapore Pte Ltd (2007), G defaulted
in its payment obligations to O. Consequently, O’s
lawyers sent a demand letter to G. Following an
unsuccessful attempt to hold a meeting to discuss
the settlement of the debt, G’s lawyers replied in a
letter (‘Letter’) to dispute the outstanding balance
stated in the demand letter.
The issue in this case was whether G had, by
the Letter, acknowledged its debt due to O.
The Singapore Court of Appeal took note of G’s
argument that, notwithstanding that the Letter
admitted that there was debt due and owing, so
long as the quantum of the debt was in dispute, the
Letter could not have amounted to an admission
of debt. The Court rejected this contention. It held
that given the clear words of the Letter, there was
no reason why O should not be allowed to rely on
G’s own admission for the purpose of establishing
it as an acknowledgment of a debt.
Letters Not Protected By ‘Without Prejudice Privilege’
In Bradford & Bingley v Rashid (2006), there was an
exchange of correspondence between a creditor
and a debtor following the creditor’s invitation to
the debtor for the latter to make a proposal for
the payment of his outstanding indebtedness. In
the fi rst letter, the debtor wrote that it was not in a
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position to ‘repay the outstanding balance, owed
to you’. The creditor’s solicitors responded, stating
that the creditor was willing to consider writing off
a substantial amount of the debt if the debtor were
in a position to raise up a lump sum payment. The
debtor’s agent then wrote a second letter informing
the creditor that it was willing to pay a certain
amount towards the ‘outstanding amount’ as a
fi nal settlement.
The English House of Lords declared that each of
the letters constituted a clear acknowledgment of
debt. It held that neither of the letters was protected
by the ‘without prejudice’ rule from being admitted
in evidence as acknowledgement because
there was no dispute to be compromised. The
correspondence treated the debt as an undisputed
liability and dealt only with whether, what and to
what extent the debtor could meet that liability.
Certain Communications Can Be Covered By Both Legal Advice Privilege And Litigation Privilege In Skandinaviska Enskilda Banken AB, Singapore
Branch v Asia Pacifi c Breweries (Singapore) Pte
Ltd (2007), the Singapore Court of Appeal, in
dismissing the appeal of the appellant banks
seeking disclosure, held that communications
made by Asia Pacifi c Breweries (Singapore) Pte
Ltd to PricewaterhouseCoopers and Drew &
Napier LLC, and vice versa, were related to current
or contemplated imminent litigation and as such
would be covered by both legal advice privilege
and litigation privilege.
The Court held that legal advice privilege existed
regardless of whether litigation was contemplated,
though it did not apply to communications by third
parties to the solicitor unless they were made to the
solicitor as agent for the client. In this respect, the
Court also took the view that a party could still be
an agent even though he acted as more than just
a conduit for communication between the client
and the legal adviser.
Qualifi ed Privilege In Publication In Jameel (Mohammed) v Wall Street Journal
Europe Sprl (2006), Wall Street Journal (‘Wall
Street’) published an article listing the respondent
company as one of the bank depositors in Saudi
Arabia which might have some potential ties with
terrorists. The company fi led a defamation case
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against Wall Street. The judge ruled against the
qualified privilege invoked by Wall Street as a
defence on the ground that Wall Street had failed
to obtain the permission of the company prior to
publication to include its name in the article.
The English House of Lords upheld the defence of
qualifi ed privilege and confi rmed that the doctrine in
Reynolds v Times Newspaper Ltd (2001) attached
to the published article. The Reynolds privilege is
available to the public media when they disseminate
stories of public interest containing defamatory
material. According to the House, the inclusion of
a defamatory statement in the article was justifi ed
as it made a proper contribution to the whole thrust
of the publication. It was also held that since the
article had been written by an experienced and
specialist reporter and approved by senior staff who
had sought to verify its contents, failure to obtain
the company’s response was an insuffi cient ground
on which to deny the privilege.
Letters Not Protected By ‘Without Prejudice Privilege’The plaintiff in Sin Lian Heng Construction Pte Ltd v
Singapore Telecommunications (2007) fi led a case
for non-payment of contractual obligations against
the defendant. In its counter-claim, the defendant
pleaded various admissions which were allegedly
made by the plaintiff’s offi cers. The admissions were
made in the course of site meetings (‘Meetings’)
and in a letter made by the plaintiff to the defendant
(‘Letter’). The plaintiff objected to the admissions,
arguing that the same had been made ‘without
prejudice’ and were therefore privileged.
The Singapore High Court held that the plaintiff was
entitled to invoke the protection afforded by the
‘without prejudice’ privilege in respect of the Letter
but not in respect of the Meetings. The Meetings
were not conducted in the context of an attempt
to compromise a dispute and therefore could not
be regarded as constituting negotiations genuinely
aimed at settling a dispute. As for the Letter, it
was written in the context of and shortly after the
Meetings, and perhaps as a result of the discussions
during the Meetings. From the surrounding
circumstances and the content of the Letter itself,
the Letter was intended to shift the discussion to a
new phase directed at fi nding a commercial solution
acceptable to both parties. The Letter clearly fell
within the protection afforded by the privilege.
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EmploymentDuty Of Employer To Ensure Health, Safety And Welfare Of Employees In R v HTM Ltd (2006), the English Court of
Appeal had to determine whether under the
circumstances, foreseeability was relevant to an
employer’s duty of ensuring, so far as is reasonably
practicable, the health and safety of its employees
at work pursuant to section 2(1) of the Health and
Safety at Work etc Act (the equivalent of section
12(1) of the Singapore Workplace Safety and
Health Act).
The Court ruled that foreseeability was relevant
to the duty of ensuring the health and safety
of employees while at work. Accordingly, an
employer who wished to call evidence at trial to
establish foreseeability could not be precluded
from adducing evidence as to the likelihood of the
incidence of the relevant risk to support its case
that it had taken all reasonable steps to eliminate
the risk. It was stressed that the risk of accident
had to be weighed against the measures necessary
to eliminate the risk.
Insolvency Whether Compulsory Winding Up Should Displace Voluntary Winding Up In Sysma Construction Pte Ltd v EK Developments
Pte Ltd (2007), the directors of EK lodged a
statutory declaration that the company could not
carry on business as it was insolvent. E and L were
appointed as EK’s provisional liquidators. Sysma
did not want E and L to be the liquidators of EK
and sought instead to nominate H as the liquidator.
Sysma thereafter applied for leave for compulsory
winding order against EK following the appointment
of E and L as liquidators.
The Court dismissed the application for leave.
It held that Sysma did not have a strong and
legitimate sense of grievance if EK was not wound
up compulsorily, and that this outcome would
not offend the general principles of fairness and
commercial morality. It noted that Sysma only
petitioned for compulsory winding up when E and
L were appointed as liquidators. Sysma could
have challenged the appointment by applying to
the court for the removal of E and L under section
302 of the Companies Act.
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Undue Preference
In The Liquidator of Leong Seng Hin Piling Pte
Ltd v Chan Ah Lek (2007), the Singapore High
Court had to determine whether the cash payment
made by the company in this case in favour of the
second defendant amounted to undue preference
within section 329(1) of the Companies Act in
relation to sections 98 to 100 of the Bankruptcy
Act.
The Court observed that the cash payment
took place less than two years prior to the
commencement of winding up and the second
defendant, during that time, was an ‘associate’
of the company within the meaning of section
99(5) read with section 101(4) of the Bankruptcy
Act. As such, it was incumbent upon the second
defendant to rebut the statutory presumption
that the cash payment to him was infl uenced by
a desire to prefer him. The Court found that the
second defendant failed to rebut the statutory
presumption in respect of a certain portion of the
cash payment. He was thus asked to pay back
this sum of money.
iTec Obligation Of Confi dence Can Be Owed By Third Parties
In Douglas v Hello! Ltd (2007), the House of Lords
held that the publishing of unauthorised celebrity
photographs by a magazine (Hello!) amounted
to a breach of commercial confi dentiality owed
to another magazine (Ok!), which had paid
considerable amounts for the benefit of that
confi dence.
The Court viewed the case as one about
commercial confi dentiality by regarding the celebrity
photographs as commercially valuable pieces of
information. The Court held that the Douglases,
by keeping their wedding private in accordance
with their exclusive arrangements with OK!, had
succeeded in creating an obligation of confi dence
owed to them by all those who attended the
wedding, whether invited or not. Thus, the taking
of any photographs without consent and the
subsequent publication thereof was a breach of the
Douglases’ personal rights of confi dentiality.
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Accordingly, the Court found that since the
arrangements that gave rise to the confi dentially
were entered into for the benefi t of OK!, then OK!
was entitled to take the benefi t. Thus, the Court
found that Hello! owed an obligation of confi dence
to OK!, even though they had not explicitly agreed
to such an obligation. The Court further added
that this obligation of confi dence owed by Hello!
could not be destroyed by OK!’s publication of the
photographs before Hello!.
More Than ‘Bringing To Mind’ Needed To Show Trademark Infringement
In Intel Corporation Inc v CPM United Kingdom
Ltd (2007), the English Court of Appeal held that
the mere ‘bringing to mind’ of an earlier trademark
with a reputation was not enough to prevent a later
trademark registration. The Court also held that
the use of a trademark, for dissimilar goods or
services, which merely ‘brings to mind’ a registered
trademark which has a reputation would not infringe
that registered trademark.
The Court held that more than a tenuous association
between the two marks would be needed to
establish a ‘link’. In addition, the Court added ‘if a
trade mark for particular goods or services is truly
inherently and factually distinctive it will be robust
enough to withstand a mere passing bringing to
mind when it or a similar mark is used for dissimilar
goods or services.’
The Court also pointed out that it was very
important that the harm or prospect of harm to a
trademark must be real and tangible and that ‘a
mere possibility or assertion of damage is just too
remote and would leave trademark owners in too
monopolistic a position’.
PropertySale By Mortgagee In Meretz Investments NV and another v ACP Ltd
and others (2006), the mortgagee was granted
the power of sale to secure the sums it lent to a
company in relation to the development costs of
a construction project. The construction ran into
fi nancial diffi culties. The mortgagee, concerned that
it would be unable to realise its security, decided
to exercise its power of sale.
The English High Court held that the mortgagee had
properly exercised its power of sale. Unlike statutory
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powers conferred for the public benefi t or a trustee’s
powers conferred for the benefi t of benefi ciaries, a
mortgagee’s powers were conferred upon it for its
own benefi t. It was thus legitimate for a mortgagee
to exercise its powers for the purpose of protecting
its security. Where a mortgagee had mixed motives,
one of which was a genuine purpose of recovering
the amount secured by the mortgage, the exercise
of that power would not be invalidated merely on that
ground. Since at least one of the purposes of the
mortgagee’s exercise of its power of sale had been
to recover the whole or part of the debt due, it was
not in breach of its equitable duty and the sale that
took place could not be set aside.
Remedies Only A Deliberate Inducement To Breach A Contract Can Be PunishedIn Mainstream Properties Ltd v Young and others
and another (2007), the House of Lords ruled that a
person cannot be sued for inducing another person
to breach a contract unless it can be shown that the
inducement was knowing and deliberate.
In a case of ‘inducing a breach of contract’, the
person procuring the breach of contract would
be held liable in tort for being an accessory to the
liability of the contracting party. An example of
such a situation is where a company ‘poaches’
an employee, causing that person to breach the
terms of his contract.
In this case, the Court observed that a third party
may know nothing of the contract, and may quite
unknowingly and unintentionally procure a breach
of the contract by offering an inconsistent deal to
a contracting party, which persuades the latter to
default on its contractual obligations. As such, the
Court held that the third party would not be liable
in such a case, even if it acts carelessly. The Court
further added that the third party in this instance
owes no duty of care to the victim of the breach
of contract.
TaxAnnual Value Of Property For Purposes Of Property TaxThe Singapore Court of Appeal in BCH Retail
Investment Pte Ltd v Chief Assessor (2007) was
confronted with the issue of whether all reasonable
advertising and promotion expenses incurred in
relation to a commercial property may be deducted
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from the gross rental of such property for purposes
of property tax.
The Court referred to the definition of ‘annual
value’ under section 2 of the Property Tax Act and
stressed that the provision focused on the elements
of rent and letting. As such, only these elements
should be included in the annual value of a given
property for the purposes of levying property tax.
The Court pointed out that any expenses that were
not related to the elements of rent or letting ought to
be excluded from the computation of annual value.
Thus, not all reasonable advertising and promotion
expenses incurred in relation to the subject property
may be deducted from the gross rental.
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LEGISLATION BITES
Corporate & Capital Markets SGX Consultation - New Listing Rules To Enhance Competitiveness Of Securities MarketOn 23 May 2007, the Singapore Exchange Limited
(‘SGX’) issued a consultation on proposed new
listing rules aimed at enhancing the competitiveness
of its securities market. The focus for the respective
boards is as follows:
Mainboard - to attract larger companies and
maintain the quality of listed companies; and
SESDAQ - to transform it into a sponsor-
supervised board which will target both local and
foreign growth companies.
The SGX also issued, on 18 May 2007, a
consultation paper on proposed amendments to
the minimum bids schedule for the SGX securities
market. These amendments follow from the
fi rst public consultation launched by the SGX in
•
•
February 2006 and include the following:
a reduction in the minimum bid sizes for securities
priced above S$3; and
an increased single tier forced order schedule for
securities to refl ect the reduction in the minimum
bid sizes.
For these purposes, ‘securities’ exclude ETFs,
bonds, debentures, loan stocks and those securities
traded in Japanese Yen and Hong Kong Dollar.
A Client Update on these developments has been
issued, and is available on eOASIS.
Proposed Amendments To Listing Rules Involving Trading Halt, Suspension Of Trading And Cash Companies
On 10 May 2007, the Singapore Exchange Limited
(‘SGX’) issued a consultation paper proposing
amendments to the listing rules, which included
the following:
•
•
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trading halt, suspension of trading and cash
companies;
shortening of the minimum duration of trading
halt;
clarifying rules relating to suspension of trading
when the issuer is unable to continue as a going
concern;
allowing trading of cash companies with
safeguards,
announcement of grants of employee share
option;
alignment of all references to issued share
capital with the Companies (Amendment) Act
2005; and
introduction of miscellaneous listing rules, for
example, to clarify the application of listing rules
for REITs and ETFs.
A Client Update on this matter has been issued,
and is available on eOASIS.
Practice Statement Issued On Application Of Take-over Code To REITs
The Securities Industry Council (‘SIC’) has
announced that the Singapore Code on Take-
•
•
•
•
•
•
•
overs and Mergers (‘Code’) will be extended to
apply to Real Estate Investment Trusts (‘REITs’).
This announcement follows from the consultation
on the Code conducted by the SIC in June 2006,
when the SIC disclosed that it was studying
the issue of whether the Code should apply to
REITs.
The Securities and Futures Act and the Code
will be amended to facilitate the extension of the
Code. In the meantime, the SIC suggested in a
Practice Statement issued on 8 June 2007 that
parties who are currently engaged in a take-over
or merger transaction involving a REIT comply
with the Code. This means that although it is not
mandatory, such parties are strongly encouraged
to apply the Code.
A Client Update on this matter has been issued,
and is available on eOASIS.
Consultation On Dissolution Of Compensation Fund For Derivatives MarketThe Singapore Exchange Limited has issued a
consultation paper on the dissolution of the SGX-
Derivatives Trading Compensation Fund (‘Fund’).
The Fund was set up by the predecessor of the
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SGX-Derivatives Trading Ltd (‘SGX-DT’), SIMEX,
in order to provide compensation to investors,
the exchange or the clearing house if a loss was
incurred through the default or defalcation of any of
SIMEX’s derivatives members. The Fund will expire
on 24 November 2007. The SGX has proposed
dissolving the Fund in order to apply its assets more
effectively. The SGX is of the view that the Fidelity
Fund, which was established under the Securities
and Futures Act, provides suffi cient protection for
investors.
A Client Update on this matter has been issued,
and is available on eOASIS.
Competition The Competition (Amendment) Bill Passed In Parliament On The Merger Regime Parliament passed the Competition (Amendment)
Bill (‘Amendment Bill’), which outlines the new
regulatory regime for mergers, on 21 May 2007.
This new merger regime is part of the Competition
Act (‘Act’) and will come into effect on 1 July 2007.
The Act itself was passed in October 2004 and
the Amendment Bill represents the third, and fi nal,
phase of implementing the Act in Singapore.
A Client Update on this matter has been issued,
and is available on eOASIS.
Dispute ResolutionNew SIAC Arbitration Rules, Schedule Of Fees And Practice Notes
The Singapore International Arbitration Centre
(‘SIAC’) has published new arbitration rules
which came into force on 1 July 2007. The new
arbitration rules aim to improve the effi ciency
in the resolution of international commercial
disputes through the consolidation of 10 years of
experience in case administration and adopting
best practices in institutional arbitration. For a
copy of the new SIAC Rules 2007, please click
on this link.
A new Schedule of Fees and supplementary
Practice Notes for Ad Hoc and Administered Cases
also came into force on 1 July 2007. For the new
schedule of fees, please click on this link.
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Insolvency Proposed Debt Repayment Scheme The Ministry of Law and the Insolvency & Public
Trustee’s Offi ce have issued a consultation paper
on the proposed Debt Repayment Scheme (‘DRS’)
to help wage-earner debtors with relatively small
unsecured debts not exceeding S$100,000 avoid
bankruptcy.
The DRS seeks to benefi t both the creditor and
the debtor. Under the DRS, the debtor is given the
opportunity to pay off all or some of his debts under
a repayment plan over a period of time. If he dutifully
meets his fi nancial obligations under the repayment
plan, the debtor will be able to avoid the stigma of
bankruptcy and have a fresh start. At their end, the
creditors will receive not less than what they would
have otherwise received had the debtor gone into
bankruptcy. The public consultation closed on 1
June 2007.
A Client Update on this matter has been issued,
and is available on eOASIS.
PropertyDispensation Of Classifi cation Of ‘Minor’ And ‘Non-Minor’ ErrorsPursuant to Practice Circular 1 of 2007 issued by
the Singapore Land Authority (‘SLA’), the Registrar
of Titles will dispense with the classifi cation of
‘minor’ and ‘non-minor’ errors in the amendment
of instruments that are provisionally registered.
He will now also allow the solicitor who signed
the Certificate of Correctness to authorise a
representative from the same fi rm who is not a
practicising solicitor to attend to the amendment
of all types of errors. The current practice is that
solicitors are required to attend personally at
the Registry of Titles to amend errors which are
classified as ‘non-minor’ errors in instruments
which are pending registration.
This development was made to simplify SLA
practices and procedures to serve law fi rms and
clients better. Practice Circular 1 of 2007 takes
effect immediately.
For a copy of Practice Circular 1 of 2007, please
click on this link.
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TaxPublic Consultation On Draft Income Tax (Amendment) Bill 2007The Ministry of Finance issued on 15 June 2007
the draft Income Tax (Amendment) Bill 2007 (‘Bill’)
for public consultation. The Bill incorporates
amendments to the current Income Tax Act relating
to the tax changes announced by the Second
Minister for Finance, Mr Tharman Shanmugaratnam,
in his 2007 Budget Statement, and refi nements to
existing tax policies and administration resulting
from on-going reviews of the income tax system.
The consultation closed on 14 July 2007.
A Client Update on this matter has been issued,
and is available on eOASIS.
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Admiralty & ShippingSteven Chong SC 6232 [email protected] Sing Toh SC 6232 [email protected] 6536 1335
BankingSoon Choo Hock 6232 [email protected] 6438 0248
Business Finance & InsolvencyPatrick Ang 6232 [email protected] Eng Beng 6232 [email protected] 6438 4787
CompetitionKala Anandarajah 6232 [email protected] 6557 0901
Capital Markets & Corporate FinanceWong Kok Hoe 6232 [email protected] Kian Hwee 6232 [email protected] Serene W Yeo 6232 [email protected] 6536 9453
Commercial LitigationFrancis Xavier 6232 [email protected] 6533 0827
DerivativesDavid Yeow 6232 [email protected] 6438 0248
iTecLau Kok Keng 6232 [email protected] Sreenivasan 6232 [email protected] 6438 5227
International ArbitrationSteven Chong SC 6232 [email protected] Menon 6232 [email protected] Loh SC 6232 [email protected] Yee Leong 6232 [email protected] 6438 1995
PRACTICE GROUP CONTACT PARTICULARS
ADVOCATES & SOLICITORSCOMMISSIONERS FOR OATHS, NOTARIES PUBLIC TRADE MARK & PATENT AGENTS
The information contained in this newsletter is correct to the best of our knowledge and belief at the time of writ-
ing. The contents are intended to provide a general guide to the subject matter and should not be treated as a
substitute for specifi c professional advice for any particular course of action as the information may not necessarily
suit your specifi c business and operational requirements. It is to your advantage to seek specifi c legal advice for
your specifi c situation. In this regard, you may call the writer of the article, the lawyer you normally deal with or
e-mail Rajah & Tann’s Knowledge & Risk Management Group at [email protected].
© Rajah & Tann: September 2007. All rights reserved.
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