Singapore Law Gazette (April 2014)

An Official Publication of The Law Society of Singapore | April 2014

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Th ree Hundred and Eighty-sixis not a decision that they take lightly. Many struggle with it, some for years. It does seem a waste to walk away from what had seemed a cherished goal just a few short years before as they graduated from law school.

Soon after OLY, quite a number of young lawyers actually called me to give me their views about why they or their friends chose to leave or are thinking about leaving private practice. Particularly poignant was a rather weary young lady in the middle category, torn between continuing in her high pressure, high demand job as a litigator and crossing over to another career possibly as in-house counsel. Her love lies in practising the law as a practitioner but the pressures of handling high stakes litigation, winning them and wining clients whilst sacrifi cing her time with family and friends have taken a toll on her enjoyment in a career in private practice she had thought she would stick to for life.

I do not think I was able to give her any advice or any particularly enlightening pointers, but I think she appreciated the fact that what she was struggling with is a common experience amongst many of her peers. The pressures and the commercial realities of private practice are unrelenting. They demand an intensity which no doubt diminishes the strength or stamina for a full and extended career. Such pressures in turn create push factors which coupled with the pull factors presented as a result of the economic boom we have experienced over the last eight to nine years, have been a big reason for the crossovers and even for the sizeable numbers who apparently have entirely left the profession for careers in the arts, in banking, in the food and beverage industries and as entrepreneurs.

It is not that the profession is all that bad; it is also a case that our economy has been that good. And our members are that talented and versatile.

An interesting article appeared recently in our Straits Times, highlighting the beautiful blooms that have been sprouting all over Singapore, in very much the way the world renowned cherry blossoms have been adorning the parks and highways in Japan this time of the year. Singaporeans identify with that story. Our pink mempats, trumpet trees

A young lawyer gave me an enthusiastic wave when he saw me from across the lobby the other day at the Supreme Court building. He was cheerful, in good spirits and was on his way back to the offi ce after his hearing was done. Off so quickly? You should drop by our Bar room for coffee, I suggested to him. Thanks, but lots to do at the offi ce, he replied with a cheerful grin. By the way, President, I am one of your 386! We both laughed.

I am told this number does have an auspicious ring to it in Cantonese. But when I fi rst mentioned it at OLY (Opening of the Legal Year) 2014, it wasnt exactly in a celebratory context. The fi gure, of course, refers to the number of lawyers in the middle category holding Practising Certifi cates (PCs) as at the start of 2014. It is a surprisingly low fi gure compared to those in the junior and senior categories; one that makes each of the 386 holders of PCs in this category out to be rather rare and special. Like the 300 men who fought alongside Gideon in the Biblical account who overcame overwhelming odds to triumph in battle or the estimated 600 who staunchly defended the Alamo with Davy Crockett about 200 years ago, some have likened the 386 to brave men on a mission; men who would not be deterred, whether by hardship or fortune, from the fulfi lment of their mission. Whilst such comparison no doubt is well intended, I think it is hardly a fair one.

In the fi rst place, I do not think there is any justifi cation to say that those in the middle category who have chosen to leave private practice are any less committed either to the profession or to fulfi lling their own dreams and ambitions. Anecdotal evidence appears to suggest that a good number of our younger members do leave private practice after a few years to pursue professionally fulfi lling as well as rewarding careers either in-house, in the Courts, with MinLaw or the Attorney-Generals chambers. Such crossovers, whilst still a loss for private practice, do not result in a loss of talent from the profession. They do, however, raise questions as to the ability of our fi rms to retain talented and promising young lawyers for a full career in private practice.

What I do know is that when the lawyers think about crossing over (or even leaving the profession entirely), it

01Presidents

Message

Singapore Law Gazette April 2014

Three Hundred and Eighty-six 01

Presidents Message M

Diary and Upcoming Events 06Council and Committee Updates 08The Law Societys Defence Assist Scheme 10Part B of the Singapore Bar Examinations 2013 14

NewsN

Discovery Disputes Under the Criminal Case Disclosure Conference Regime 16 Process and Resolution Bonus Payments: Who Calls the Shots? 22How Well Do You Understand the Personal Data Protection Act 29and its Practical Implications?

FeaturesF

Ethics In Practice Silence is Golden 37Legal Management Valuation of Intellectual Property 38

ColumnsC

Alter Ego The Occupiers Liability 41Travel Sipadan Divers Paradise in Peril 43

LifestyleL

Notices Professional Moves 50Information on Wills 52N 55Appointments

A

Contents

Th e Singapore Law Gazette

An O cial Publication of Th e Law Society of Singapore

Th e Law Society of Singapore39 South Bridge Road, Singapore 058673Tel: (65) 6538 2500Fax: (65) 6533 5700Website: http://www.lawsociety.org.sgE-mail: [email protected]

Th e Council of Th e Law Society of SingaporePresident Mr Lok Vi Ming, SCVice Presidents Mr Th io Shen Yi, SC Mr Kelvin WongTreasurer Mr Gregory Vijayendran

Mr Lim Seng Siew, Ms Kuah Boon Th eng, Ms Rachel Eng, Mr Adrian Tan, Mr Steven Lam, Ms Sunita Sonya Parhar,

Ms Lisa Sam, Mr Anand Nalachandran, Mr Lee Terk Yang,Ms Rajvant Kaur, Ms Usha Ranee Chandradas, Mr See Chern Yang, Mr Yeo Chuan Tat, Mr Paul Tan, Mr Josephus Tan, Ms Simran Kaur Toor, Mr Grismond Tien

Editorial BoardMs Malathi Das, Mr Prakash Pillai, Mr Chua Sui Tong, Mr Gregory Vijayendran, Ms Alicia Zhuang, Mr Benjamin Teo, Mr Cameron Ford, Ms Celeste Ang, Ms Crystal Ma, Ms Debby Lim, Ms Lye Huixian, Ms Kannan Malini, Mr M Lukshumayeh, Mr Marcus Yip, Mr Rajan Chettiar, Ms Shen Xiaoyin, Ms Supreeta Suman, Mr Vincent Leow

Th e Law Society SecretariatChief Executive O cer Ms Tan Su-YinCommunications & Membership Interests Mr Shawn TohCompliance Mr Kenneth GohConduct Ms Ambika Rajendram, Mr K GopalanContinuing Professional Development Ms Jean WongFinance Ms Jasmine Liew, Mr Cli ord HangInformation Technology Mr Michael HoPro Bono Services Mr Tanguy Lim, Ms Vimala Chandrarajan,Ms Nadine Yap, Ms Babara SeetPublications Ms Sharmaine LauRepresentation & Law Reform Ms Michelle Woodworth

Publishing Reed Elsevier (Singapore) Pte Ltd trading as LexisNexisAssociate Director, Publishing, Singapore Terence LimAssociate Director, Contract Publishing Ivan YapEditor ChandranieCover Design Mohd Khairil JohariDesigner Mohd Khairil JohariWeb Administrator Jessica WangAdvertising Account Manager Anthony Eng For Advertising EnquiriesTel: (65) 6349 0172Email: [email protected] Markono Print Media Pte Ltd

LexisNexis, a division of Reed Elsevier (Singapore) Pte Ltd, is a leading provider of legal and professional information in Asia, with o ces in Singapore, Malaysia, Hong Kong, India, England, Scotland, Ireland, Australia, New Zealand, Canada and South Africa. Th e complete range of works published by LexisNexis include law reports, legal indexes, major works, looseleaf services, textbooks, electronice products and other reference works for Asia.

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Continued from page 1

build greater capacity on the part of our younger members to better take the stresses that come with private practice. I can think of some of the good soil deeper roots can be sunk into; pro bono involvement, mentoring younger lawyers, teaching and volunteering with the Society. And if the story of the blooms do apply similarly to the struggles of our younger members, who is to say that beauty and vibrancy will not adorn their careers in the years to come?

The fi gures are looking encouraging. According to PC applications fi led as at 2 April 2014, some 394 applicants hail from the middle category; a modest increase from the 386 holders of PCs in this category at the beginning of the year. Modest yes, but in the circumstances, any increase cannot be considered to be insignifi cant.

I believe the fi gures can still be better and we can all play a role to help achieve that in the years to come.

Lok Vi Ming, Senior Counsel President The Law Society of Singapore

and yellow fl ames, among others have been brightening our highways and lorongs with their bursts of colours since late March this year. I happened to run into Mr Poon Hong Yuen, Deputy Secretary (DS) at MinLaw recently. Mr Poon was formerly CEO at the National Parks Board, so he knows his plants.

Whats with these blooms? I asked him. DS explained that the unusual drought followed by the heavy rains probably provided a stress to the trees and that seemed to have brought about the blooms. Even the species of plants that do bloom in normal conditions seem to fl ower better in the recent dry and then wet spells. It suggests these trees have deep roots and reserves of resilience and that stresses to the system can bring out pleasant surprises after the trial is over.

I mulled over what DS shared. I would like to think that there is a point of encouragement for us in the story of the blooms. Perhaps in the midst of the struggle, if we can fi nd a way to help our young lawyers sink deeper roots into the profession, not just into the business of the profession, but into the heart and soul of it, we might just be helping to

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04Presidents Message


1-3 May 2014Annual Malaysia/Singapore Bench & Bar Games 2014

7 May 2014Personal Data Protection Seminar

9, 16, 23 &30 May 2014 Series of Probate Seminars

Upcoming Events

17 March 2014 Book-Keeping for Law Practices Course

Organised by the Continuing Professional Development Department 2pm-6pmSingapore Management University

18 March 2014 Ethics in Practice for Practice Trainees (Second Run)

Organised by the Continuing Professional Development Department9.30am-12.00pm NTUC Business Centre

28 March 2014 Legal Profession (Solicitors Accounts) Rules for Practice Trainees (First Run)

Organised by the Continuing Professional Development Department9.30am-12.00pmSingapore Management University

5 March 2014 Recruitment of Volunteers for Defence Assist Scheme

Organised by the Communications and Membership Interests Department12.30pm-2.00pmThe Law Society of Singapore

Diary

4 March 2014 Seminar on Mediation Advocacy

Co-organised by the Law Society of Singapore and Singapore Mediation Centre 5.00pm-7.00pmSupreme Court of Singapore

06News


Diary and Upcoming Events

PRIVATE PRACTICEAssistant Manager (8+ PQE), SingaporeLeading manufacturer of plastics and chemicals seeks a lawyer for a role with APAC coverage. The successful candidate will manage, review and negotiate a variety of contracts including operational, logistics and shipping contracts, for the APAC business teams and shall advise management on compliance obligations including providing legal and compliance training to business units. The successful candidate should have a working knowledge of anti-corruption laws and competition laws. Good leadership, organisational and communication skills are vital to this role. In-house experience is preferred. [S15577]

Regional Counsel (8+ PQE), SingaporeAn MNC reinsurance group serving clients in the fast-growing Pan-Asian region offers an exciting standalone opportunity for a motivated and commercial minded legal counsel. You will provide support for key business functions extending to board and shareholder affairs, business development, human resource, IT, corporate communications, finance and accounts, treasury, investment and corporate secretarial matters. Corporate commercial experience gained both in a law firm as well as in-house, is highly desirable. Candidates with regional exposure, and with experience in the financial services industry and dealing with regulators, will be looked upon favourably. [S15570]

Legal Counsel (8+ PQE), SingaporeGlobal MNC seeks a lawyer for a standalone role based in Singapore. Reporting to the APAC general counsel, this hire will be responsible for managing the full range of legal, risk, governance and compliance issues affecting the daily operations of the business in Singapore. The ideal candidate would be a team player with solid corporate commercial experience and strong negotiating and communication skills. In-house experience is preferred. [S3268]

Data Protection Officer (Contract) (6-8 PQE), Singapore A major private equity investment firm is looking for a data protection officer (on a 2-year contract) to manage, in consultation with the internal legal and compliance teams, the firms compliance framework with respect to the new Personal Data Protection Act. The ideal candidate should have a law degree, excellent interpersonal, communication and analytical skills and be able to independently project/program manage across multiple functions. [S15764]

Hospitality Lawyer (4-7 PQE), SingaporeA well-known hospitality trust is looking for a lawyer to join them in a standalone role. This is a good opportunity for a business savvy lawyer to work closely with management and business teams. The ideal candidate must have some experience in the hospitality industry and a good working knowledge of hotel management contracts. [S15574]

Corporate Counsel (3+ PQE), SingaporeA leading local listed company seeks a Singapore qualified lawyer to join their legal team. The successful candidate will be involved in corporate work relating to joint ventures, collaborations and mergers and acquisitions, various forms of financing as well as SGX compliance work. The ideal candidate should have similar experience, preferably in a public listed company and be able to work independently. The role entails some travel. [S15805]

Corporate Partner (10+ PQE), SingaporeThis well-established law firm is seeking to add a senior corporate lawyer to its team to meet the diverse needs of its blue-chip clientele. You will need substantial experience in M&A and/or corporate finance. Knowledge of Takeover Code and Listing Manual would also be an added advantage. This is an exciting opportunity for an independent self-motivated junior partner to build a practice, and be rewarded with a fast career track. Experienced partners with an existing team will also be considered. [S15472]

Disputes Partner (8+ PQE), Singapore This disputes practice is one of the top-ranked and most established in Singapore, and is seeking to add a junior partner with substantial experience in commercial litigation and arbitration. The ideal candidate will have breadth of experience working out solutions for clients in diverse areas of law, including financial, corporate or regulatory disputes. Helmed by well-respected names in the industry, this team will expose you to quality work and blue-chip clients. [S15466]

Insolvency Litigation Lawyer (7+ PQE), SingaporeA global international firm is seeking an experienced litigator with insolvency experience. The ideal candidate should be a Singapore qualified senior associate or junior partner with a top-tier law firm who has experience in insolvency/restructuring matters. If you are a litigator who specializes in banking disputes and would like the opportunity to be more focused in this area, your application will also be considered. The preferred candidate will be self-motivated, mature and business-minded with excellent technical skills. This is a rare opportunity for an experienced disputes lawyer to build a practice with a global law firm. [S10204]

M&A Associate (5-8 PQE), SingaporeThe well-known corporate practice of this international law firm in Singapore is seeking to add a mid-level corporate lawyer. If you are with a top-tier law firm and have both private and public M&A experience, you should apply. Our client is looking for a candidate with the right personality and the ability to work well in a team. This is an excellent opportunity to join a strong growth platform and work on high profile cross-border transactions. Highly competitive remuneration is available for the right candidate. [S15019]

Banking & Finance Associate (2-5 PQE), SingaporeA highly prestigious international firm is seeking a junior Banking & Finance associate to work on complex cross-border financings throughout ASEAN. The ideal candidate will possess top academic credentials and experience gained from a recognized local or international law firm. A common law qualification is required, as is the ability to interface with clients and work both independently and in a team. Previous experience with multi-jurisdictional deals would be an advantage. [S16498]

Corporate Associate (1-5 PQE), SingaporeOur client, a local law firm with a well-regarded corporate practice is exceedingly busy and is seeking a junior associate to join its expanding team. If you are a lawyer who has had some experience with IPOs and corporate finance matters gained in a recognised practice, and are looking for a dynamic growth opportunity, you should apply. Non-Singapore admitted lawyers with excellent experience and credentials will also be considered. [S3373]

IN-HOUSE

Re-naming of the NIMA-PIMA Committee

Council resolved to change the name of the NIMA-PIMA Committee (Non-Injury Motor Accident-Personal Injury Motor Accident Committee) to the PIPD Committee (Personal Injury/Property Damage Committee) with effect from 10 March 2014.

Request for Tender Renovations of 39 South Bridge Road

The Secretariat premises at South Bridge Road will be undergoing renovations in the third quarter of 2014 to increase the seating capacity to accommodate more staff. The Society has requested for proposals for the renovation of its four-storey shop house.

Council and Committee Updates

28 May 2014Mandatory Ethics Programme for Newly-Qualifi eds Lawyers

25 August 20142nd Regional Insolvency Conference

2-4 October 2014 3rd Southeast Asia/Asia Pro Bono Conference 2014

Upcoming Events (continued)

08News


Council and Committee Bulletin

Recognise your IPOpen your eyes

Trademarks s Patents s Copyright

Designs s Confidential Information

Domain Names s Competition Law

Licensing s IP Opinions and Litigationt. 65 6336 6990 www.ipravi.com

M. RavindranK. SukumarAngela LeongPaul TeoSue-Ann Li

Dr Poh Chu Chai has adopted a rened and vastly expanded the

second edition which includes a more detailed discussion of banking

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Most of the recent developments in Singapore and Malaysia have

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Introduction: A Familiar Scenario to Some Lawyers*

I was puzzled when I received an envelope from the Law Society of Singapore. I wondered what its contents were. As I prepared to slit the envelope open to reveal the message within, my heart palpitated furiously as I suddenly recalled a dispute I had with a client not too long ago. The client had alleged that I had provided poor service and had overcharged him. All baseless allegations of course, but harsh words were exchanged nonetheless. Regrettable. These thoughts went through my mind as the letter opener tore through the envelope. With a fi nal fl ick of the blade, the letter was ready to be pulled out. I hesitated a moment, then reached inside the envelope and pulled out the letter.

It was a notifi cation from the Law Society that a complaint has been lodged against me. That night, and for some nights after, I could not sleep. I had to defend myself and clear my name. The distressing news occupied my mind ceaselessly. I devoted a large part of my time and energies to my own defence, thinking no one else knows my case better than I do. This meant that my work for my clients was inevitably affected.

The complaint was eventually dismissed. Although I succeeded in defending my name, in retrospect, it would have been better if the task of defending myself was undertaken by another lawyer who could view the dispute with objectivity. In my zeal to defend myself, I forgot the wise adage: A man who is his own lawyer has a fool for his client.

*A completely fi ctional account of a likely scenario based on anonymous and unverifi ed anecdotal evidence.

Two Forms of Complaints that Can be Lodged Against Lawyers

Practising members of the Law Society are subject to the Legal Profession (Professional Conduct) Rules which set out guidelines for professional conduct of lawyers in various areas. These rules may subject practising members to complaints being lodged against them. Two forms of complaints that can be lodged against lawyers are:

1. A complaint of Inadequate Professional Service pursuant to s 75(A) Legal Profession Act; and

Th e Law Societys Defence Assist Scheme

10News


Defence Assist Scheme

2. A complaint of Professional Misconduct pursuant to s 85(1) Legal Profession Act.

Once a complaint is lodged, there will be a due process of review into the matter to conclude the outcome of the allegation made against the lawyer. This process, to some respondent lawyers, may cause at best some imminent inconvenience, or at worst, constant anxiety and distress. From the Law Societys experience, most respondent lawyers represent themselves. Whether the allegation is eventually dismissed or not, many lawyers would have by the end of the process spent a considerable amount of time and effort in the process of defending themselves.

Th e Defence Assist Scheme and its Bene ts

One of the Members Support Schemes administered by the Law Society is the Defence Assist Scheme (the Scheme). The Scheme was launched in 2007 when the Council noticed a trend of unrepresented respondent lawyers at Inquiry Committee proceedings and felt the need to provide these lawyers with an avenue to seek assistance. Thus, with the facilitation of the Scheme, members facing disciplinary proceedings could seek legal assistance from fellow volunteer members either on a pro bono or ad honorarium basis.

The Law Society has continuously raised awareness of the Scheme to all members. The Law Society has also engaged efforts to expand the panel of volunteer lawyers for the Scheme. As part of these efforts, a lunch seminar was organised at the Law Society on 5 March 2014 to recruit more volunteer lawyers to the panel. Mr Wong Meng Meng, SC and Mr Gregory Vijayendran, both members of the Inquiry Panel, shared information on the Scheme as well as their perspectives as members of the Inquiry Panel.

Members present at the seminar were introduced to the latest amendments to the Legal Profession (Amendment) Act 2012 (the Act) by Mr Gregory Vijayendran. He explained the complete process of a disciplinary proceeding and used a case study to illustrate how references were made to the Act during the inquiry process.

Mr Wong Meng Meng, SC, on the other hand, noted that while the Law Society extends such assistance, not all respondent lawyers see the good in it. Some may prefer to defend themselves while others are not even convinced that there is a need to defend themselves as they would leave it to justice to seek the truth. Although the decision to engage a defence counsel would ultimately lie with the respondent lawyer, both speakers enlightened members with the advantages that a defence counsel may bring to a

lawyer who is faced with a disciplinary proceeding. These include:

1. A defence counsel may provide more objectivity in the matter;

2. A defence counsel may provide a more detached perspective;

3. A defence counsel may be able to better distinguish mitigating factors from aggravating factors; and

4. A defence counsel may be able to provide some psychological support to the respondent lawyer.

It was highlighted that the process of a disciplinary proceeding can be highly exasperating and taxing for a respondent lawyer, and this burden is made greater when considering the fact that he still has his ongoing obligations and duty to his clients to take care of as the disciplinary proceedings unfold. More crucially, such proceedings can

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Other support schemes administered by the Law Society include:

1. Practice Consult

2. PracMentor

3. Mentoring Scheme for Small Firms

4. LawCare

5. SCMediate

6. Cost Dispute Resolve

7. Welfare Fund

8. Scholarship

For more information, please refer to the Societys website www.lawsociety.org.sg (For Members > Support Schemes) or e-mail [email protected].

potentially harm a lawyers professional career, which may inevitably intensify the pressure faced by the lawyer. Hence, both speakers urged fellow members to recognise these factors as the rationale that drives the Scheme. More importantly, members were encouraged to lend their assistance to the Scheme as the Law Society strives to ensure that there is always assistance available whenever a fellow member requires help.

The seminar followed with a question and answer session where a young lawyer expressed interest in volunteering as a defence counsel but questioned his practical ability to do so, owing to his inexperience as a young lawyer. To this, both speakers assured that guidance can be extended to young volunteers as long as they are willing to help fellow members.

The Law Society would like to thank Mr Wong and Mr Vijayendran for their support of the Defence Assist Scheme. Those interested to volunteer or who wish to fi nd out more about the Scheme may approach the Communications and Membership Interests Department at [email protected].

Note:Special reminder on the Professional Indemnity (PI) Scheme: Members who intend to fi le a claim under the PI Scheme to cover the legal costs of possible Disciplinary Tribunal proceedings are reminded to notify Lockton Companies (Singapore) Pte Ltd (the scheme broker) when a complaint has been lodged. Any further enquiries should be made to the scheme broker.

Krystel Ee Communications and Membership Interests Department The Law Society of Singapore

12News



Creating Vibrant Pro Bono Ecosystems to StrengthenAccess to Justice

Public-Private-People Vision

The 3rd Southeast Asia/Asia Pro Bono Conference, organised by The Law Society of Singapore and Bridges Across Borders Southeast Asia Community Legal Education Initiative (BABSEA CLE) will bring together lawyers, in-house counsel, civil society and non-profi t representatives, academics, the judiciary, policy makers, law students and other stakeholders in the pro bono ecosphere to consider the many ways pro bono initiatives can strengthen access to justice in Southeast Asia and internationally. The conference and workshop will consist of an exciting mix of keynote speeches, panel discussions, poster presentations and interactive workshop sessions. The sessions will provide a unique space for participants to collaborate to improve access to justice for some of the regions most marginalised communities.

Save the Date Now and we look forward to seeing you on 2-4 October 2014!

For more information, please email us at: [email protected]

Part B of the Singapore Bar Examinations 2013Commendation List

The list of top 24 candidates was based on the distinctions awarded to candidates.

Name No. of DistinctionsPosition in Class

Chong Wei-Zhen Amanda 4Joint 1st

Priscilla Lim Jiao Ling 4Chiam Yee Sheng 3

Joint 3rd

Koh Ngiap Hong (Xu Yehong) 3Kuan Ling Li, Sabrina (Guan Lingli)

3

Liu Zhao Xiang 3Reka Mohan 3Delwin Singh 3Tan Zhi Feng (Chen Zhifeng) 3Ang Leong Hao (Hong LiangHao)

2

Joint 10th

Ang Yong Sheng, Jonathan (Hong Yongsheng)

2

Chan Kar Fai, Ivan (Chen Jiahui)

2

Chiew Ning Xin 2Chng Kaiqing, Mavis (Zhuang Kaiqing)

2

Fang Hao Wen, Bryan 2Gan Hong Chew (Yan Hongzhou)

2

Goh Huijun, Adeline 2Ko Weifen, Cindy (Xu Weifen) 2Randeep Singh Koonar 2Lau Hui En, Charisse 2Low Chin Yong, James (Liu Zhenrong)

2

Soh Peiqi, Cheryl 2Tay Zhuo Lin, Cheryl (Zheng Zhuolin)

2

Teo Xue Fen 2

Prize Award List

Pursuant to s 4(1)(g) of the Legal Profession Act (Chapter 161), the Singapore Institute of Legal Education has resolved to award the following prizes:

The Singapore Institute of Legal Education Prize for the Best Students on the CourseChong Wei-Zhen AmandaPriscilla Lim Jiao Ling

The Singapore Institute of Legal Education Prize for the Best Student in Ethics & Professional ResponsibilityPriscilla Lim Jiao Ling

The Law Society of Singapore Prize for the Best Speaker in AdvocacyPereira Shaun

The Singapore Institute of Legal Education Prize for the Best Student in Criminal Litigation PracticeAng Leong Hao (Hong LiangHao)

The Singapore Institute of Legal Education Prize for the Best Student in Insolvency Law and PracticeHannah Tjoa Kai Xuan

Examinations Department Singapore Institute of Legal Education

14News


Part B Bar Examinations

Employment Lawin Singapore4th Edition

by Ravi Chandran

Employment Law in Singapore, 4th Edition takes into account the changes to the Employment Act which came into force on 1st April 2014, aswell as other legislative and case law developments. This publication is fully referenced with the latest legislation and case law and each chapterhas a clear overview of the subject matter and is broken down into bold headings covering each focal point for revision and reference. Thisedition also has a new and very detailed index thereby making it easier to use.

Written in a clear and concise language, this publication is a comprehensive text on employment law in Singapore which considers both basic aswell as sophisticated issues. It is written for both the legally trained and for those who are not legally trained, such as employers, employees,business students and human resource practitioners.

"Since the previous edition of this book, there were a slew of changes to labour legislation and policies in Singapore. In particular,we saw the milestone Employment Act 2013 amendments which expanded the scope of coverage of the Act to PMEs. The PersonalData Protection Act and the Progressive Wage Model through the Environmental Public Health Act were also introduced andpassed as law.

.... It is therefore with great delight and appreciation that Ravi has updated the law and policies in this fourth edition. I applaud hisuntiring efforts in bringing this comprehensive and well-researched piece to fruition. This book is a key employment law academicresearch piece in Singapore and serves not just legal practitioners, academics and students but equip human resource andindustrial relations practitioners with the necessary knowledge in this growing area of law."

Foreword by Patrick Tay Teck Guan, Assistant Secretary-General, NTUC

Chapter 1 IntroductionChapter 2 Entering into a Contract of EmploymentChapter 3 Terms of the Contract of EmploymentChapter 4 Obligations of the EmployerChapter 5 Obligations of the EmployeeChapter 6 Termination of the Contract of EmploymentChapter 7 Health and Safety at WorkChapter 8 Trade Unions and Industrial RelationsChapter 9 Changes in the Employing EnterpriseChapter 10 Employment of Foreign Employees

SGD

171.20*

ISB

N: 9

78-9

81-

44

0-6

86

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About the Author

Ravi Chandran has written widely in the area of employment law, bothlocally and internationally, his work has been cited in court judgments,books and journal articles. His opinion on employment law matters hasbeen sought by, among others, law rms, government-linked organisationsand the International Labour Organisation. Ravi Chandran is also currentlythe President of the Asian Society of Labour Law Scholars.

Table of Contents

To order, please contact our Helpdesk at Tel: +65.6349.0110 orEmail: [email protected] or Twitter: @HelpLNSG

*Price inclusive of 7% GST

The CCDC regime was introduced in the Criminal Procedure Code 2010 (CPC 2010). It was meant to usher in a new era of pre-trial criminal discovery and a move towards greater procedural fairness and transparency in the criminal justice system.1

The CCDC regime created a formalised system of reciprocal disclosure that imposes obligations on both the Prosecution and accused to reveal aspects of their cases and the evidence that each party intends to rely on at the pre-trial stage.2 This would facilitate smoother trials, as the accused would know the case that he had to meet and the Prosecution would not be caught off-guard by the Defence raised by the accused.3

Since the CCDC regime was introduced, there have been precious few, if any, challenges in Court as to the suffi ciency of disclosure by either the Prosecution or the Defence during the CCDC process.

One critical part of the Case for the Prosecution (CFTP) is a summary of the facts in support of the charge.4 An accused person would also have to fi le a summary of the facts of his Defence in the Case for the Defence (CFTD).

In Li Weiming, a contention by the respondents that the Prosecutions Summaries of Facts were insuffi ciently particularised in each of their cases led to applications being taken out by each respondent in the District Court for more particulars, alternatively for the Court to order a discharge not amounting to an acquittal (DNAQ). After the District Court dismissed all of the applications, the respondents successfully petitioned the High Court to revise the District Courts orders, which in turn led the Public Prosecutor (PP) to fi le a Criminal Reference to refer four Questions of Law to the Court of Appeal.

Background Facts

The three respondents were each jointly charged with a single charge of conspiracy to falsify accounts (unders 477A read with s 109 of the Penal Code) and fi ve charges of conspiring to remove from jurisdiction or transfer property that represented their benefi ts of criminal conduct (under s 47(1)(b) of the Corruption, Drug Traffi cking and Other Serious Crimes (Confi scation of Benefi ts) Act read withs 109 of the Penal Code). The CCDC regime applied to all six joint charges that the respondents faced.

All three respondents had separate representation and the Prosecution served separate CFTPs on each of them. The respondents took issue with the lack of completeness of the CFTPs as the contents of the respective Summaries of Facts were almost completely identical to the wordings of

Discovery Disputes Under the Criminal Case Disclosure Conference Regime Process and Resolution

This article sets out a summary of the recent Court of Appeal decision in PP v Li Weiming and others [2014] SGCA 7 (Li Weiming) and the writers thoughts on the implications of the decision. In Li Weiming, the Court of Appeal had occasion to consider, inter alia, the ability of the Court to ensure compliance by both the Prosecution and the Defence of their obligations under the Criminal Case Disclosure Conference (CCDC) regime, the consequences for non-compliance and the level of disclosure required in a Summary of Facts fi led during the CCDC process.

16Feature


the six joint charges. The respondents thus contended that the Summaries of Facts did not add anything more than what the six joint charges already told them and were thus inadequate to properly inform them of the case they would have to meet at trial.

The respondents each fi led applications in the District Court seeking further particularisation of the Summary of Facts, or alternatively, a DNAQ pursuant to s 169(2) of the CPC 2010. The Court was urged to order that further particulars be furnished, as a DNAQ would simply mean that the respondents could be immediately re-arrested and charged again for the same offences, which would be a waste of time and resources.

The three categories of particulars sought were:

1. The identity of the person(s) whom the respondents had allegedly conspired to defraud;

2. The reasons why the sub-contract in question was allegedly fi ctitious; and

3. The roles of each respondent and the acts committed pursuant to the alleged conspiracy.

The application was dismissed by the District Court, which ruled that the Summaries of Facts were suffi cient.

The respondents then fi led petitions for revision pursuant to s 404 of the CPC 2010, seeking an order from the High Court that the decision of the District Court be set aside and that the original application for further particulars be granted, alternatively, that DNAQs be granted.

The High Court agreed that the Summaries of Facts were not suffi ciently particularised, and ordered that the PP furnish the respondents with the fi rst two categories of particulars.

The PP then fi led a criminal reference to refer the following four questions of law of public interest to the Court of Appeal:

1. Does s 169 of the CPC 2010 set out comprehensively and exhaustively all the available consequences for alleged non-compliance with the CCDC procedures?

2. If the answer to (1) is negative, does the Magistrate or District Judge who presides over a CCDC have the power to order the Prosecution to furnish additional particulars in the Summary of Facts in support of the charge fi led and served as part of the CFTP?

3. If the answer to (2) is positive, where the Magistrate/District Judge who presides over a CCDC has refused to order that the Prosecution furnish additional particulars in the Summary of Facts in support of the charge fi led and served as part of the CFTP, what is the legal threshold that needs to be crossed before the High Court should exercise its revisionary jurisdiction pursuant to s 404 of the CPC 2010?

4. Can the Prosecution be ordered to provide facts in relation to a specifi c intent to defraud for a charge under s 477A of the Penal Code in the Summary of Facts in support of the said charge that was fi led and served as part of the CFTP under s 161(2) where the explanation to s 477A specifi cally provides that it shall be suffi cient in any charge under the said section to allege a general intent to defraud without naming any particular person intended to be defrauded?

Legislative Purpose Behind the CCDC Regime

Before dealing with the questions of law, the Court of Appeal examined the legislative purpose behind the CCDC regime and found that the CCDC procedures were consciously envisaged as a model of reciprocal discovery that would serve a commonality of interests and seek a fair equilibrium between the rights of the Prosecution and the accused.

At the second reading of the Criminal Procedure Code Bill 2010 (Bill 11 of 2010) (the Bill), the Minister for Law, Mr K Shanmugam expounded the following objectives of the new disclosure procedure:

Disclosure is familiar to lawyers operating within the common law system. In civil proceedings, the timely disclosure of information has helped parties to prepare for trial and assess their cases more fully.

Criminal cases can benefi t from the same approach. However, discovery in the criminal context would need to be tailored to deal with complexities of criminal practice, such as the danger of witnesses being suborned.

To this end, Part IX of the Bill introduces a formalised framework obliging the Prosecution and the Defence to exchange relevant information about their respective cases before trial. This will introduce greater transparency and consistency to the pre-trial process.5 (emphasis added)

The Court of Appeal observed at [26] that timely disclosure of information facilitated the effi cient dispensation of criminal justice as both the Prosecution and the accused would then

17Feature


be in a position to evaluate the merits of their respective cases and decide whether a reduction or a withdrawal of the charge was warranted or whether early guilty pleas should be entered. The CCDC regime, therefore, encouraged the Prosecution and the accused to engage with each other on a reasoned and open basis by providing an avenue for parties to sharpen the material issues in the cases, creating a balanced and fair procedure that provides a system for arriving at the truth.

Th e Four Questions of Law of Public Interest

Question 1: Does s 169 of the CPC 2010 set out comprehensively and exhaustively all the available consequences for alleged non-compliance with the CCDC procedures?

The Court of Appeals Answer:No, s 169 enumerates the substantive consequences for non-compliance with the CCDC procedures in Division 2 of Part IX of the CPC 2010, but does not preclude any directions or orders that the Court may make in relation to compliance with the requirements for the fi ling of the CFTP and the CFTD.

The Court of Appeals Reasoning:The PP had argued in Li Weiming that all available consequences for alleged non-compliance with the CCDC procedures were captured in s 169 of the CPC, ie that the Court could draw such inference as it thought fi t or, where the PP was concerned, order a DNAQ.

The Court of Appeal reviewed the legislative history of the CPC 2010 and found that it was not apparent from the drafting history of the Bill or the parliamentary debates whether Parliament had intended for the Courts to retain some residual power to manage the CCDC regime.

However, the Court of Appeal held that the role of the Court at the pre-trial CCDC was not a purely administrative and mechanistic one that was limited to overseeing the progress of the sequential CCDC procedures. The PP had also acknowledged in oral arguments at the hearing of Li Weiming that the Judge presiding over a CCDC was entitled to qualitatively assess whether parties had complied with their statutory obligations in fi ling their cases.

The Court of Appeal noted that s 160 of the CPC 2010 set out a list of matters to be settled at a CCDC and that the settling of these matters would inevitably involve the Court giving incidental directions or orders. Further s 160(2) enjoined the Court from making orders in the absence of a party if the order were prejudicial to that party. Lastly, the High Court had powers of revision over orders made

at CCDC proceedings under s 404. The Court of Appeal reasoned that there thus must have been a premise that the Court may at a CCDC make substantive orders in relation to the matters set out in s 160(1) that would affect the parties and not merely schedule CCDC hearings.7

The Court of Appeal held that ss 160 to 169 of CPC 2010 should be construed purposively as creating a minimal framework for criminal discovery that leaves a residual measure of discretion for the presiding judicial offi cer to make interlocutory orders and directions.

Although the Court of Appeal agreed with the Prosecution that the sanctions for non-compliance of criminal discovery obligations were exhaustively contained within s 169 of the CPC, the Court of Appeal clarifi ed that the power of the Court to order particularisation of the Summary of the Facts was not a sanction but rather a power to facilitate (and ensure that parties complied with) the criminal discovery process.

As such, when parties were directed to furnish more particulars, they were simply being ordered to do what they were by statute bound to do but had not done. The Court was thus not exercising an additional or extra-statutory power.

The Court of Appeal further opined that if the Courts only role at the pre-trial stage was limited to fi xing the matter for trial or ordering a DNAQ, the effectiveness of the CCDC regime in achieving greater transparency, fairness and effi ciency would be undermined. Moreover, the CCDC Court would be in a better position to mete out appropriate remedial responses to non-compliance, compared to the trial Court, where the options would be of polar extremes a DNAQ on one end of the spectrum and drawing an adverse inference on the other.8 The latter would be of scant consolation to the accused if he is unable to be properly prepared for trial due to the incomplete Case for the Prosecution9 and would not give meaningful effect on the right to discovery.

In conclusion, the Court of Appeal held that whilst s 169 of the CPC 2010 exhaustively set out the substantive consequences for non-compliance with the CCDC procedures, it did not preclude the Court from making any directions or orders in relation to compliance with the requirements for the fi ling of the cases.10

Question 2:Does the Magistrate or District Judge who presides over a CCDC have the power to order the Prosecution to furnish additional particulars in the Summary of Facts in support of the charge fi led and served as part of the CFTP?

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The Court of Appeals Answer:Yes, the Magistrate or District Judge who presides over a CCDC has general powers under s 160(1)(a) of the CPC 2010 to make orders relating to the fi ling of the cases. This includes the power to order the Prosecution to furnish additional particulars in the Summary of Facts in support of the charge fi led and served as part of the CFTP.11

The Court of Appeal held that pursuant to the analysis of Question 1, the powers conferred on the Court by s 160(1) of the CPC 2010 were powers that are necessary or ancillary to settling [such] matters.

As the term settling was very broad, it is implicit that the presiding judicial offi cer had the power to do what was necessary to achieve that objective. That necessarily included the making of orders to any party to provide further particulars or information to fully comply with the requirements for the contents of the cases.12

Question 3:What is the legal threshold that needs to be crossed before the High Court should exercise its revisionary jurisdiction pursuant to s 404 of the CPC 2010?

The Court of Appeals Answer:The High Courts exercise of its powers to revise orders made at CCDCs under s 404 of the CPC 2010 was subject to the threshold of serious injustice.

The Court of Appeals Reasoning:The PP contended that the same threshold ought to apply to the exercise of the High Courts general revisionary jurisdiction under s 400 of the CPC 2010 (which required serious injustice to have occurred before intervention was warranted) and the revisionary jurisdiction for orders made at a CCDC under s 404 of the CPC 2010.

The respondents argued that a different test should be applied for the invocation of the Courts revisionary powers under s 404 of the CPC 2010. This was because there was only a single avenue of recourse under s 404 of the CPC 2010 to challenge an order made during a CCDC (which was only interlocutory or procedural in nature). As such, the test for invocation of the power of revision ought not to be as onerous as that for revisions of fi nal judgments, orders or sentences, for which there was a parallel appellate jurisdiction that entitled a party to bring a challenge on the merits of the fi nal decision. The High Court could conduct a de novo review of orders made at a CCDC.

The High Court agreed that an order made at a CCDC could be revised pursuant to s 404 of the CPC 2010 as long

as the correctness, legality or propriety of the order or the regularity of the proceedings was in question.

The Court of Appeal rejected this argument. The Court of Appeal acknowledged that that the powers of criminal revision are generally not exercised readily so as to preserve the fi nality of judgments and orders and to prevent the circumvention of the appellate process. It did not follow that the absence of an appeal against orders made at a CCDC should mean that an attenuated threshold would apply to applications seeking revision of such orders.

The Court of Appeal went on to observe that there was no general right of appeal in the CPC 2010 against interlocutory orders made in the course of criminal proceedings and that such orders could only be challenged as part of an appeal against the merits of the Courts decision on the charge proper. Where a power of revision was statutorily conferred with respect to a specifi c category of interlocutory orders that otherwise cannot be appealed, it was possible that the legislature had intended to keep the scope of intervention within the narrow scope of revision. This would balance the considerations of ensuring that criminal proceedings would not be subject to undue delays caused by dilatory tactics, while providing a limited safeguard against interlocutory orders that might lead to a miscarriage of justice.13

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The Court of Appeal provided some useful guidance for the application of the threshold of serious injustice unders 404 of the CPC 2010:14

1. Orders made during CCDCs inevitably involve some measure of administrative discretion, exercised within the context of the course of the entire CCDC process, which the High Court ought to accord some latitude to.

2. As the orders that may be challenged are interlocutory in nature, what may constitute substantial injustice would have to be viewed fl exibly through this perspective, and substantial injustice need not necessarily rise to the level of requiring the order to have a considerable or immediate bearing on the actual merits of the case.

3. In assessing whether an order made at a CCDC would lead to substantial injustice, the Court may have due regard to the yardsticks of fairness and natural justice and whether the impugned order would seriously undermine the statutory purpose of the CCDC regime in assisting the parties to prepare adequately for their cases before trial.

Question 4:Can the Prosecution be ordered to provide facts in relation to a specifi c intent to defraud for a charge under s 477A of the Penal Code in the Summary of Facts in support of the said charge that was fi led and served as part of the CFTP under s 161(2) of the CPC 2010 where the Explanation to s 477A specifi cally provides that it shall be suffi cient in any charge under the said section to allege a general intent to defraud without naming any particular person intended to be defrauded?

The Court of Appeals Answer:While the Prosecution cannot be ordered in every charge under s 477A of the Penal Code to provide facts that are necessary to prove a specifi c intent to defraud in the required Summary of Facts under s 162(b) of the CPC 2010, it does not follow that facts that relate to proof of an intent to defraud including, but not limited to, the identity of the allegedly defrauded party can never be required in the Summary of Facts for a charge under s 477A if such facts are necessary in the instant case to establish the primary factual foundation for the charge.15

The Court of Appeals Reasoning:The Explanation to s 477A stated that It shall be suffi cient in any charge under this section to allege a general intent to defraud without naming any particular person intended to be defrauded, or specifying any particular sum of money intended to be the subject of the fraud or any particular day

on which the offence was committed.

The respondents contended that the Explanation applied to charges under s 477A but did not absolve the Prosecution from proving at trial that the respondents intended to defraud a specifi c person or entity, and as such particulars on the person(s) to be defrauded ought to be refl ected in the Summary of Facts so that the respondents could know the case to be met.

The Court of Appeal examined at length the legislative history of s 477A from the UK and India and cases ons 477A and predecessor legislation, as well as the approach of other jurisdictions with statutory provisions for pre-trial disclosure before coming to its decision.

In connection with the answer, the Court of Appeal laid down some useful guidance as to the requisite contents of the Summary of Facts. The Court of Appeal noted that there was no statutory defi nition of the Summary of Facts, save for the substantive requirement that it has to be in support of the charge. The use of the word summary indicates that what Parliament had in mind was a concise, but not necessarily comprehensive, description of the Prosecutions case in relation to the charge, and in support of the charge suggests that the facts set out must establish the essential factual basis for the charge. The level of detail required in the summary of facts should, therefore, generally suffi ce to provide adequate notice to the accused when read in the context of the entire CFTP.

While the Court of Appeal declined to defi ne what would constitute adequate notice on a particular set of facts, the Court of Appeal made the following observations:

1. Facts which do not go directly to proving the legal elements of the charge would not be essential facts in support of the charge required in the Summary of Facts;

2. However, this was not an immutable rule. Where certain elements were not required to be contained in the charge, the summary may still be required to contain details of these elements. This would depend on the precise circumstances of the charge before the Court;

3. The Summary of Facts was not a mere formalistic requirement that can be satisfi ed by a cursory reproduction of the elements of the charge.

The Court of Appeal then considered the issue of whether or not the respondents needed to be informed of the particulars

20Feature


sought for the purposes of the s 477A charge at hand, and concluded that the respondents were adequately informed of the case against them in the existing Summaries of Facts.

The Court of Appeal then set aside the orders made against the PP by the High Court pursuant to s 397(5) of the CPC 2010.

Conclusion

The Court of Appeal in Li Weiming has provided signifi cant clarifi cation on the extent of the discovery obligations of the Prosecution and the Defence, as well as the powers of the Court in administering the CCDC regime and in the revisionary powers of the High Court of any orders made at CCDCs.

The Court of Appeals pronouncements in Li Weiming have fl eshed out the CCDC regime much more than the deceptively simple wording of the CCDC provisions in the CPC 2010 tell us.

Given the Court of Appeals answers to Questions 1 and 2, it is hoped that the Prosecution and the Defence will be encouraged to engage with each other more openly, thereby focussing more sharply on the real issues in dispute.

The declaration that CCDC Judges can, after qualitatively assessing the degree of a partys compliance with its discovery obligations, direct parties in non-compliance to provide a clearer picture of their case, can only benefi t the criminal justice system as a whole.

The guidance provided by the Court of Appeal as to what the High Court should consider in respect of petitions for revision under s 404 of the CPC 2010 will not open the fl oodgates for satellite litigation. The clarifi cation that serious injustice can arise if the impugned order would severely undermine the statutory purpose of the CCDC regime in assisting the parties to prepare adequately for their cases before trial is consonant with the purpose for which the CCDC regime was enacted. It also encourages parties to comply with the spirit of the CCDC regime by ensuring that suffi cient discovery is given to the opposing side to enable them to properly prepare for trial.

Though the Court of Appeals answer to Question 4 related specifi cally to s 477A cases, the reasoning and comments on the requirements of a Summary of Facts apply to both the Prosecution and Defence in all cases that fall under the CCDC regime.

Li Weiming builds on the momentum created by the earlier decisions of the Court of Appeal in Muhammad bin Kadar and another v Public Prosecutor16 and Public Prosecutor v Goldring Timothy Nicholas and others17as the criminal justice system in Singapore moves towards a more balanced and fair environment for arriving at the truth. The decision is much welcomed.

* Disclaimer: Lok Vi Ming, SC and the writers acted for the fi rst respondent, Li Weiming, in the Criminal Reference.

^ The writers wish to express their appreciation to Ms Audrey Sim, a Practice Trainee of Rodyk & Davidson LLP, for assisting with the drafting of the article.

Notes

1 At [24] of the Judgment.


3 See [20] of Li Weiming v PP [2013] 2 SLR 1227 (High Court) .

4 Section 162(b) of the CPC 2010.

5 At [24] of Judgment and Singapore Parliamentary Debates, O cial Report (18 May 2010) vol 87 at cols 413-414.


7 At [41] of the Judgment

8 See [56] of the Judgment.





13 [69] of the Judgment

14 [70] of the Judgment


16 [2011] 3 SLR 1205

17 [2014] 1 SLR 586

Derek Kang* Rodyk & Davidson LLP E-mail: [email protected]

Tang Jin Sheng^ Rodyk & Davidson LLP E-mail: [email protected]

21Feature


Are there circumstances in which an employee can have a legally enforceable right to a bonus?

This perennial question1 of employment law reared its head at the beginning of the recent High Court judgment in Daniel John Brader and others v Commerzbank AG (Commerzbank).2

The answer, in the view of the Honorable Judicial Commissioner Lionel Yee (as he then was) (JC Yee), was as follows: yes, but only in circumstances in which a declaration of bonus can amount to a contract separate from the employment contract.

JC Yees decision in Commerzbank breaks new ground by fi nding a way around the knotty question of whether discretionary bonuses in employment contracts are indeed

purely discretionary. Commerzbank also leaves open the possibility that a failure to pay out a declared discretionary bonus might, albeit in fairly limited circumstances, amount to a breach of an implied term of mutual trust and confi dence in employment contracts.3

This latter proposition bears further exploration, particularly in light of the relatively incipient nature of local jurisprudence on the substantive content of the term of mutual trust and confi dence in employment contracts. The purpose of this article is twofold: fi rst, to examine how the law on discretionary bonuses in Singapore has changed in the wake of Commerzbank, and second, to explore whether an employers discretion as to whether or not to pay a bonus must now be exercised subject to an implied term of mutual trust and confi dence in employment contracts.

Bonus Payments: Who Calls the Shots?

The year-end bonus is a coveted component of remuneration packages; but do employees have a legal claim when bonuses are not paid? This article explores the changing tenor of the law concerning bonuses, and posits that, following a recent High Court judgment, employers may be held to higher standards when making the call on whether or not to pay a bonus.

22Feature


Th e Orthodox Position Under Singapore Law: Employees Have No Legal Claim to Discretionary Bonuses

The bonus is a powerful workplace incentive. Corporations across industries depend on sizeable bonus payouts to keep employees motivated, retain talent and attract new hires. In recent years, however, a level of caution brought about by uncertain economic conditions has prompted fi rms to ramp up cost-cutting measures. A survey of 1,400 Singaporean employees4 showed that bonus payouts in 2013 did not meet the expectations of 63.2 per cent of the employees surveyed. In fact, 35.8 per cent of the respondents did not receive any bonus for that year.

Conventional wisdom has it that bonuses are ultimately a payout that lies entirely within the discretion of the employer. From the employers perspective, this discretion allows it the fl exibility to reduce layoffs, and perhaps even to keep afl oat, amidst bleak business conditions. Likewise, employees generally do not see the bonus as a staple in their remuneration package, and would intuitively prefer, in bad times, for the employer to stay sustainable (so that the employees can keep their jobs) rather than to continue paying out fi nancially unviable bonuses.

As a result, contracts of employment usually frame bonus clauses as payable at the discretion of the employer. Fortunately for employers, the law in Singapore affi rms that discretionary bonuses are payable at the employers absolute discretion. In Latham Scott v Credit Suisse First Boston (Latham),5 the Singapore Court of Appeal held that, on a proper construction of a discretionary bonus clause in an employment contract,6 the decision to grant a bonus lies entirely at the discretion of an employer and that, accordingly, an employee has no legal right to claim a discretionary bonus from the employer.7 This discretion, it was suggested, was absolute. Citing the English Industrial Tribunal Case of Walz v Baring Services Ltd, the Court of Appeal went so far as to suggest that, even if a bonus was announced or declared, there was simply no obligation on the employers part to pay.8

This position was subsequently followed by the Singapore High Court in Tan Hup Thye v Refco (Singapore) Pte Ltd (Refco),9 where it was held that, barring a term in the employment contract guaranteeing bonus payments, an employee would have no contractual right to a bonus: the discretion vested in the [employer] as to whether to pay bonus or not [is] an absolute discretion not fettered in any way.10 This strongly-worded holding effectively sums up the orthodox judicial attitude towards bonuses.

Th e Orthodox Position May Have Been Displaced by Commerzbank

An unconventional departure from the long-standing position on discretionary bonuses in Singapore came in late 2013.

In Commerzbank, the Singapore High Court took what can best be characterised as a more pro-employee stance by holding that employees, in certain limited circumstances, can legally enforce their rights to bonuses against their employers.

The plaintiffs were 10 former employees of Dresdner Bank AG, a bank incorporated in Germany. Dresdner Bank AG had a global investment banking division known as Dresdner Kleinwort (DKIB). The plaintiffs worked within DKIBs Singapore offi ce. Dresdner Bank AG was formerly a wholly-owned subsidiary of Allianz SE. In early 2008, Dresdner Bank AG made a decision to exit the investment banking business. Allianz SE sold Dresdner Bank AG to Commerzbank AG in early 2009 (therefore rendering Commerzbank AG the named defendant in this lawsuit).

Dresdner Bank AGs decision to exit the investment banking business left DKIBs employees throughout the world fl oundering. The plaintiffs claimed that many DKIB employees feared for their careers should DKIB be sold off, scaled down or wound down. A number of employees, rather than to sit through this period of uncertainty, tendered their resignations. To maintain internal stability, DKIB made employee retention a key priority. DKIBs then-CEO, Dr Stefan Jentzsch (Jentzsch), decided that this would be best achieved through fi nancial incentives. On 18 August 2008, Jentzsch announced a retention plan to DKIB employees worldwide through a business update meeting broadcast over DKIBs intranet (the 18 August Announcement). Jentzsch informed employees that there would be a minimum bonus pool of 400 million set aside for the year of 2008, and that there was a potential for the size of this pool to go up if certain targets were exceeded. Jentzsch also informed employees that the 18 August Announcement did not give rise to individual guarantees and the pool would be allocated on a discretionary basis with reference to the employees individual performance.

On 19 December 2008, a letter was sent to all DKIB employees who were eligible for bonuses. This letter stated that a discretionary bonus for 2008 had provisionally been awarded, and each employee was informed, in the letter, of the provisional quantum he or she would be receiving. However, the letter also stated that the provisionally-awarded bonus sum would be subject to review in the

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event that DKIBs revenue deteriorated. In the event of such deterioration, DKIB reserved its right to review and reduce the provisional award. Only in February 2009 would employees receive a statement confi rming their fi nal bonus award.

February 2009 came, and DKIB employees were met with disappointing news. By this time, Dresdner Bank AG (including DKIB) had been sold off to Commerzbank AG. On 18 February 2009, the management of Commerzbank informed DKIB employees that, because of diffi culties faced by Dresdner Bank AG and Commerzbank AG in 2008, no bonuses would be paid out for that year. This was shortly followed by an email from DKIBs new CEO, Michael Reuther, informing employees that the provisional bonuses announced on 19 December 2008 would be reduced by 90 per cent pro rata.

The plaintiffs commenced an action claiming either the remaining 90 per cent of their provisional bonus awards (declared in the letter of 19 December 2008), or alternatively, damages. They advanced these claims through three arguments, out of which the following two are noteworthy and will be discussed in this article:

1. The plaintiffs contended that the 18 August Announcement could be seen as a contractually-binding promise, separate from the employment contract, that a bonus pool in the amount of at least 400 million had been set aside and would be paid out regardless of DKIBs fi nancial performance (the Separate Contract Approach); and

2. Alternatively, the plaintiffs contended that, by failing to pay the declared bonuses in full, the defendant was in fact acting in capriciously, in breach of an implied term of mutual trust and confi dence in employment contracts. According to the plaintiffs, Dresdner Bank AG had deliberately misled its employees regarding the bonuses, all along intending to renege on its commitments to pay once it restored stability.

Th e Plainti in Commerzbank Succeeded on the Separate Contract Approach

JC Yees analysis of the Separate Contract approach relied on basic principles of contractual formation. The learned judicial commissioner held that that the 18 August Announcement constituted an offer to pay the employees bonuses from the declared minimum bonus pool. It did not matter that the plaintiffs did not expressly accept such an offer. Acceptance, as a requirement, was waived in this instance because the offer was a unilateral one.11 The plaintiffs provided consideration in the form of forbearance

from resigning, and this was benefi cial to the defendant because it helped maintain the companys stability during a period of fi nancial and structural uncertainty.12 An intention by the defendant to create legal relations could be inferred from the subject matter of the 18 August Announcement remuneration from the employer to the employee.13 According to JC Yee, it was unlikely for DKIB to have made assurances and guarantees concerning bonuses lightly, especially in light of a very real risk that a mass exodus of employees could take place. Finally, JC Yee held that there was suffi cient certainty in the terms of the contract. While gaps such as the exact quantum payable to each employee existed, it is settled law that these lacunae can be plugged, having reference to previous courses of dealings or past practices between parties. In this case, a suffi cient degree of certainty could have been reached by referring to methodology used by the bank in allocating past-years bonuses.

Accordingly, a binding contract was formed between Dresdner Bank AG and the plaintiffs (as well as all the DKIB employees) in the form of the 18 August Announcement. This contract was altogether separate from the employment contracts each employee had with the bank. Under this separate contract, Dresdner Bank AG was obliged to pay all or substantially all of the 400 million in the bonus pool to its DKIB employees (including the plaintiffs). By eventually deciding to only pay 10 per cent of this amount, Dresdner Bank AG (and by extension, the defendant) had breached this separate contract. The Court, therefore, found the plaintiffs entitled to the remaining 90 per cent of the bonus pool as damages payable for breach of contract.

While the plaintiffs in Commerzbank succeeded on the Separate Contract Approach alone, this line of argument might not offer much succor for prospective employees seeking to claim under discretionary bonus clauses in their employment contracts. After all, the fi nding that there was a separate contract in Commerzbank was arrived at on the rather fact-specifi c nature of the 18 August Announcement. Additionally, the Separate Contract Approach sits uneasily with the Court of Appeals position in Latham. In Latham, it was expressly stated (albeit in obiter dicta) that announcing [a bonus] did not convert the payment of the bonus into a contractual obligation. Despite this, the High Court in Commerzbank found that the 18 August Announcement amounted to a contractual obligation to pay a bonus a conclusion that appears to contradict the proposition in Latham. Employees who seek to rely on the Separate Contract Approach as authority in support of a claim to a discretionary bonus may fi nd themselves hard-pressed to justify their reliance on a High Court decision that openly contradicts a prior Court of Appeal decision on the same point.

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Commerzbank A rms an Implied Term of Mutual Trust and Con dence in Employment Contracts

More fertile soil in which to ground a claim for discretionary bonuses can perhaps be found in the second argument advanced by the plaintiffs: that the defendants failure to pay the plaintiffs their 2008 bonus in full in accordance with the 18 August Announcement was a breach of the Defendants implied term of mutual trust and confi dence (the Implied Term).14

JC Yee held that the Implied Term was not breached in the circumstances because the bank had good reason to withhold the bonus in light of the increasing scrutiny the remuneration practices of the bank and the fi nancial industry in general had come under. It was also not tenable, in the view of the Court, for the defendants management to pay out sizable bonuses in its subsidiary companies during a period of remunerative austerity with regards to its own employees.15

However, in the course of considering the plaintiffs argument, JC Yee conclusively affi rmed the Singapore Courts recognition of the Implied Term in employment contracts,16 citing the recent judgment of Justice Quentin Loh in Cheah Peng Hock v Luzhou Bio-Chem Technology Ltd (Cheah Peng Hock) and Justice Steven Chong in Wong Leong Wei Edward and another v Acclaim Insurance Brokers Pte Ltd and another suit (Edward Wong).17 This is a notable development in local jurisprudence concerning employment law because, prior to Edward Wong (decided in 2010), Cheah Peng Hock (decided in 2013) and Commerzbank, it was unsettled whether or not, under Singapore law, a term of trust and confi dence could be implied into employment contracts. While there is no local Court of Appeal decision on the Implied Term, an appeal against Justice Lohs decision in Cheah Peng Hock was dismissed by the Court of Appeal on 23 September 2013,

Judicial affi rmation of the Implied Term in employment contracts is promising for employee-claimants who are looking to mount claims for bonus payments in situations where employers have previously declared or intimated that bonuses are to be payable. This is a marked departure from the orthodox positions in Latham and Refco, under which employees cannot lay a legal claim to a discretionary bonus payment regardless of circumstances, and may be the thin end of a wedge of employee/claimant litigation.

The effect of applying the Implied Term to payment of declared employee bonuses could potentially mean that, if an employer announces or declares a bonus to be payable, it cannot subsequently withhold the bonus in the absence

of reasons for non-payment (eg fi nancial hardship, austerity etc). Employers who capriciously withhold bonus payments even after declaring or announcing them may be in breach of the Implied Term.

Is an Employers Discretion Over Whether or Not to Pay a Bonus Now Tempered by a Duty to Preserve Mutual Trust and Con dence?

A broader and more interesting question arises in the wake of Commerzbank to what extent does the Implied Term operate to limit the employers discretion in deciding not to pay a discretionary bonus?

The practical effect of the Implied Term is that the express obligations of employers (including the discretionary obligation to pay a bonus) must be performed subject to the doctrine of mutual trust and confi dence. The Implied Term means that an employer has an obligation to not, without reasonable and proper cause, conduct itself it a manner calculated to destroy or seriously damage the relationship of confi dence and trust between employer and employee.18 The employers conduct towards, and treatment of, the employee cannot be undertaken in a capricious, perverse and inequitable manner.19

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An employees expectation to be paid a bonus is often drawn from the bonus clause in his or her employment contract with the employer (although, as discussed above, such bonus clauses usually state expressly that the bonus is of a discretionary nature). In certain industries traditionally perceived to be profi table, such as banking and shipping, bonuses are paid out regularly and some employees may even have been enticed to take up a position with the company on the promise of attractive bonuses. This creates a bonus culture where employees come to expect (though not legally) sizeable bonuses every year. If the employer fails to announce or declare a bonus for the year, can the employee still rely on the Implied Term to demand that a bonus be paid (under the discretionary bonus clause)?

The cases affi rming the Implied Term, decided after Latham and Refco, have the potential to ameliorate the harshness of the orthodox legal position on discretionary bonus (ie, that the employer retains an absolute and unfettered discretion even if its been declared).

Given that the Implied Term now exists in all employment contracts alongside any discretionary bonus clauses, there is an arguable case that an employers decision whether or not to pay a bonus is now fettered. Arbitrarily withholding a discretionary bonus irrationally and capriciously may amount to a breach of the Implied Term, following which the employee would have a legally enforceable right to the bonus payment (to be claimed as damages for breach).

The net effect of this could be to bring the Singapore position on discretionary bonuses closer to case law in England. A line of English cases have held that an employers discretion to pay must be exercised in a genuine and rational, as opposed to an empty or irrational manner.20 In Cantor Fitzgerald International v Horkulak,21 the English Court of Appeal held that a company was obliged to engage in a rational exercise of its discretion to pay a senior employee his bonus even when the employees performance had been adversely affected by bouts of alcohol and substance abuse. In Clark v Nomura International plc,22 the plaintiff-employees contract of service provided for a discretionary bonus which was dependent upon individual performance. The English High Court held that, under such a clause, the employer was bound to exercise its discretion with reference to the performance of the plaintiff. Given that the employee had earned substantial profi ts for the company, the employer was found to have breached the employment contract by not awarding the employee a bonus. These cases drive home the point that, while bonuses are discretionary, employers remain held to certain standards when exercising such discretion.

Closer to home, and in Cheah Peng Hock,23 Loh J cited Ian Smith and Gareth Thomas, Smith & Woods Employment Law (Oxford University Press, 9th Ed, 2007) as follows:

Reliance on the implied term can arise on a wide variety of facts, to such an extent that it can constitute something of a wild card in employment law, often requiring the employer to think in terms not just of whether contemplated or proposed conduct (for example changes to working practices or terms and conditions) is strictly lawful under the wording of the individual contracts, but whether objection could legitimately be made by affected employees to the manner in which the management propose to pursue their goals.

This quote underscores the open-textured nature of the Implied Term and points to the potential applicability of the term to an employers decision to pay (or not pay) bonuses. While admittedly imposing an onerous duty on the employer, it is not diffi cult to see how this fl ows as a direct and logical consequence of implying a term of mutual trust and confi dence into the employment contract. The Implied Term must apply with equal force to all obligations set out in the employment contract, including the discretionary bonus clause. What this means is that, if a discretionary bonus clause exists in an employment contract, the employer has to exercise its discretion over payment of the bonus in a manner that does not damage the relationship of trust and confi dence between itself and the employee, in other words, in a manner that is rational and not capricious or perverse. Where the employer possesses a discretionary power under the employment contract, it seems particularly important to guard against an abuse of power, given the imbalance in bargaining positions that is almost inevitable in the employment relationship.24 Implied terms have a role to play in protecting employees from harsh and unacceptable employment practices,25 and such a role has been said to be fi rmly grounded in the values of the common law which will not permit abuse of power26 There is some inherent uncertainty in attempting to fl esh out the subst

Singapore Law Gazette (April 2014)

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Transcript of Singapore Law Gazette (April 2014)