SUPREME COURT OF SINGAPORE

20 December 2019

Case summary

Singapore Shooting Association and others v Singapore Rifle Association [2019] SGCA 83

Civil Appeal No 103 of 2018

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Decision of the Court of Appeal (delivered by Chief Justice Sundaresh Menon):

Outcome: Court of Appeal allows the appeal in part, and rules that the respondent’s claim in unlawful means conspiracy fails for lack of actionable loss or damage, and its application for declaratory relief fails in the absence of a real controversy.

Pertinent and significant points of the judgment:

• The legal fees incurred in investigating, detecting, unravelling and/or mitigating a conspiracy cannot constitute actionable loss or damage in the tort of unlawful means conspiracy if they are in substance the sort of expenses that would be incurred in preparation for litigation, and so would be recoverable as costs in any action that may be brought. However, such legal fees may constitute actionable loss or damage if, for some reason, they cannot be recovered as costs instead: at [92]–[98].

• The failure to obtain the Commissioner of Charities’ authorisation under s 31(2) of the Charities Act (Cap 37, 2007 Rev Ed) to pursue a particular head of claim or relief bars a claimant from presenting that head of claim or relief as part of charity proceedings in the High Court, unless it clearly falls within the scope of authorisation that has already been given: at [161]–[162].

• Lawyers have a professional obligation to ensure that a proper risk-benefit evaluation is undertaken at each stage of legal proceedings. Even if a lawyer’s client is prepared to take a matter to court and bear the expense of litigation, the lawyer, as an officer of the court, nevertheless owes a higher duty to the court to assess whether it is in the interests of the administration of justice to pursue the matter: at [175] and [178].

Background to the appeal

1. The first appellant, the Singapore Shooting Association (“SSA”), is the national sports association for the sport of shooting and a registered charity under the Charities Act (Cap 37, 2007 Rev Ed) (“the Charities Act”). The second to fourth appellants (“the Individual Defendants”) were SSA Council members at the material time. The respondent, the Singapore Rifle Association (“SRA”), is one of the founder members and constituent clubs of SSA.

2. The dispute arose out of a resolution passed by the SSA Council purporting to suspend SRA’s privileges at the National Shooting Centre (“the NSC”), which SSA had sub-leased from Sport Singapore (“Sport SG”) and operated for a period of time. SRA brought an action (“the present suit”) in the High Court for declarations that (among other things) the resolution was ultra vires and the SSA Council had no power to pass such a resolution by circular instead of at a meeting. SRA also pursued a claim in the tort of unlawful means conspiracy against the Individual Defendants for conspiring to cause it damage by procuring the passage of that resolution. On its part, SSA counterclaimed against SRA for the cost of demolishing a shooting range (“the Proprietary Range”) which it alleged had been built illegally by SRA at the NSC.

3. Under a “Proprietary Range Agreement” (“the Agreement”) entered into between SSA and SRA in November 2014, it was agreed that SRA could construct the Proprietary Range within a specified area of the NSC at its own expense for its exclusive use. Unknown to SRA, however, the appellants, in particular, the second appellant (“Mr Vaz”), who was SSA’s president, started complaining to the Building and Construction Authority (“BCA”) about the construction works in September 2015. BCA investigated the complaints and found that the Proprietary Range had been erected without the requisite regulatory approval. BCA thus sent Sport SG, as the lessee of the NSC, a demolition order on 6 November 2015, ordering the complete demolition of the Proprietary Range by 7 December 2015 (the “Demolition Order”). However, along with the Demolition Order, BCA also sent Sport SG a separate letter informing Sport SG how the Proprietary Range could be regularised if Sport SG wished to retain it. Sport SG forwarded those documents to SSA on 11 November 2015, and left it to SSA to decide whether to demolish or to retain the Proprietary Range.

4. The SSA Executive Committee, a smaller body within the SSA Council, resolved to demolish the Proprietary Range and conveyed that decision to SRA on 12 November 2015. SRA was not told about the option of regularising the Proprietary Range, and found out about that option only later, when it reached out to BCA as part of its efforts to resist the demolition of the Proprietary Range.

5. Vexed by SRA’s actions in resisting the Demolition Order, Mr Vaz drafted a circular resolution (the “Circular Resolution”) that would have the effect of suspending SRA’s privileges at the NSC. The resolution was circulated among the SSA Council on 16 December 2015, and a majority consisting of the Individual Defendants voted in favour of it, with the result that it was passed.

6. In the meantime, SSA had engaged its own contractor to demolish the Proprietary Range. The demolition was completed by 22 January 2016.

7. On 6 February 2016, Sport SG terminated SSA’s sub-lease of the NSC with immediate effect after the police seized from the NSC’s armouries firearms which were found to have no proper records. Sport SG resumed control of the NSC, although it appointed SSA as its interim managing agent for the NSC subject to various conditions.    

8. On 6 May 2016, SRA commenced the present suit against the appellants.

The decision below

9.     The High Court judge (“the Judge”) allowed SRA’s application for declaratory     relief and held that the Circular Resolution was ultra vires for three reasons. First,     the SSA Council had no power to suspend the privileges of a member of SSA.     Second, SSA’s constitution did not empower the SSA Council to make decisions     by circular resolution. Third, the Circular Resolution was passed without SRA     having been given a reasonable opportunity to be heard, and was therefore void for     being in breach of natural justice.    

10.     The Judge also held that the Individual Defendants were liable in the tort of unlawful means conspiracy. The unlawful means was the SSA Council’s passing of the ultra vires Circular Resolution, which the Individual Defendants had collaborated together to procure with the intention of causing SRA damage, and SRA’s damage took the form of the legal fees and disbursements incurred in investigating, detecting and responding to the conspiracy.    

11.     The Judge rejected SSA’s counterclaim for an indemnity for the cost of demolishing the Proprietary Range. He held that SSA’s loss in this regard was sustained as a result of its own breach of an implied term in the Agreement that it would use reasonable efforts to assist SRA in obtaining planning and building approval from BCA for the construction of the Proprietary Range.    

The Court of Appeal’s decision

SRA’s conspiracy claim against the Individual Defendants

12.     The Court of Appeal (“the Court”) held that the Individual Defendants were not liable in the tort of unlawful means conspiracy. In arriving at this conclusion, the Court applied the rule that the legal fees incurred in investigating, detecting, unravelling and/or mitigating a conspiracy could not constitute actionable loss or damage for the purposes of this tort if they were in substance the sort of expenses that would be incurred in preparation for litigation, and so would be recoverable as costs in any action that might be brought: at [92].    

13.     There were three reasons for this rule. First, if legal fees that could be recovered as costs were held to be sufficient to constitute actionable loss or damage in the tort of conspiracy, the element of damage would be satisfied in virtually every case where the litigant pleading conspiracy engaged a lawyer. This would too readily dilute the requirement that the claimant in an action in conspiracy must prove that he had suffered loss or damage as a result of the conspiracy. Second, allowing solicitors’ fees that were recoverable as costs to be recovered as damages instead would subvert the costs regime put in place to regulate the recoverability of such fees. Third, there was no authority to support SRA’s contention that the legal fees incurred for the purposes of investigating a conspiracy could constitute actionable loss or damage in the tort of conspiracy: at [93]–[96].    

14.     That said, such legal fees might constitute actionable loss or damage if, for some reason they could not be recovered as costs instead. A party who wished to make such an argument would have to offer cogent proof that its lawyers truly performed a discrete investigative function, instead of merely gathering such evidence, facts and information as would typically precede the giving of legal advice or the commencement of litigation. It would also be necessary to demonstrate with sufficient particularity that the time spent on investigating and/or mitigating the conspiracy, and, hence, the expenditure incurred, was directly attributable to the conspiracy: at [97]–[98].    

15.     In the present case, there was no evidence that the legal fees which SRA had paid its lawyers were for investigative work in respect of the conspiracy alleged by SRA, rather than for advisory work of the type that solicitors would typically do in preparing for litigation. SRA also could not rely on the expenses incurred by its council members in relation to the investigation of the conspiracy as constituting the relevant actionable loss or damage because: (a) the council members did not appear to have pursued any investigations on their own; and (b) SRA was not obliged to pay its council members, given that they were volunteers. SRA’s claim in unlawful means conspiracy thus failed because the element of actionable loss or damage was not made out: at [103]–[113].

SRA’s application for declaratory relief

16.     The Court held that SRA’s application for declaratory relief in respect of the Circular Resolution failed because there was no real controversy underlying the declaratory relief sought by SRA at the time it brought its application. The entire purpose of the Circular Resolution was to suspend SRA’s privileges at the NSC, as the relevant part of the Circular Resolution made clear. But SSA lost the power to manage and operate the NSC when its sub-lease with Sport SG was terminated on 6 February 2016, well before the present suit commenced on 6 May 2016. Although Sport SG gave SSA certain residual powers to manage the NSC after terminating the sub-lease, those powers were severely restricted by Sport SG’s own conditions. This meant that SSA was unable to confer on or grant SRA any privileges at the NSC, which correspondingly entailed that it also could not suspend any such privileges. Thus, the real controversy underlying the declaratory relief sought by SRA had been extinguished by the time the present suit commenced, and declaratory relief should not have been granted: at [122]–[131].    

SSA’s counterclaim for an indemnity

17.     The Court held that SSA was not entitled to an indemnity from SRA for the cost of demolishing the Proprietary Range. On a natural reading of cl 10 of the Agreement, which required SRA to indemnify and keep indemnified SSA from liabilities which SSA might suffer or incur “for any death, injury, loss and/or damage caused directly or indirectly by its activities, including the activities of its members, employees, independent contractors, agents, invitees or other permitted occupier at the [NSC]” [emphasis added], the word “its” therein could only refer to SRA, with the result that SRA would indemnify SSA in respect of all liability and loss that SSA might suffer or incur as a result of SRA’s activities, as only seemed commercially sensible. In contrast, an absurd result would ensue if the word “its” was interpreted as referring to SSA instead. In that event, SRA would be required to indemnify SSA for liabilities that SSA had suffered or incurred as a result of SSA’s own activities. No evidence was put forward to suggest that the parties had intended such a result: at [136]–[137].    

18.     SSA’s demolition of the Proprietary Range fell outside the indemnity in cl 10 as the cost of the demolition did not represent loss incurred by SSA that was caused by SRA’s activities. SSA acted unilaterally in hiring its own contractor to demolish the Proprietary Range even though SRA had asked SSA to desist from doing so. Further, to give SSA the benefit of the indemnity in cl 10 would be to allow it essentially to benefit from its own wrong. SSA knew of the option of regularising the Proprietary Range when it was notified of BCA’s Demolition Order, but wilfully concealed that option from SRA; and after SRA fortuitously came to know of that option by its own efforts, SSA refused to meet SRA to discuss regularising the Proprietary Range: at [138]–[139] .    

Section 31 of the Charities Act

19.     An additional issue relating to s 31 of the Charities Act arose in the course of oral argument before the Court. The Court expressed its concern that, although the conspiracy claim formed the heart of the dispute between the parties, the loss that SRA had allegedly suffered as a result of the conspiracy was, on its best case, a sum of only $63,200, which was well below the monetary threshold for claims to be commenced in the High Court. In response, SRA’s counsel submitted that the dispute had to be litigated in the High Court pursuant to s 31 of the Charities Act because it concerned declaratory relief being sought against a charity for breaches of the charity’s constitution. SRA had also obtained the requisite approval of the Commissioner of Charities (“the Commissioner”) under s 31(2) of the Charities Act to commence the litigation in the High Court: at [140]–[141].    

20.     The Court accepted that SRA had standing to bring the present suit as a “person interested in the charity” under s 31(1) of the Charities Act. This was because SRA had a materially greater interest than ordinary members of the public in securing the due administration of SSA, given that: (a) it was a founder member and constituent club of SSA; and (b) it was seeking declaratory relief in respect of a resolution which it perceived not only to have been passed ultra vires SSA’s constitution, but moreover, to have had the effect of depriving it of certain privileges to which it considered itself entitled: at [155]–[156].    

21.     The Court found, however, that SRA had failed to obtain the Commissioner’s authorisation to bring the conspiracy claim against the Individual Defendants. The failure to obtain the Commissioner’s authorisation to pursue a particular head of claim or relief barred a claimant from presenting that head of claim or relief as part of charity proceedings in the High Court. In the present case, the authorisation granted by the Commissioner had been restricted only to those claims by SRA that formed the subject of its application for declaratory relief; no authorisation had been sought by or granted to SRA for the conspiracy claim: at [161]–[165].    

22.     SSA, too, had failed to obtain the Commissioner’s authorisation for its counterclaim for an indemnity for the cost of demolishing the Proprietary Range. The value of the counterclaim was also far below the monetary threshold for proceedings to be brought in the High Court. Thus, the counterclaim, too, could not have supported the litigation in the High Court: at [169].    

23.     The Court further observed that in any event, both SRA’s conspiracy claim and SSA’s counterclaim for an indemnity did not fall within the ambit of “charity proceedings” as defined in s 31(8) of the Charities Act, which proceedings had to be brought in the High Court. The Court considered that “charity proceedings” typically concerned the administration of a charity, as opposed to the enforcement of common law rights or equitable rights not relating to the administration of a charity. SSA’s counterclaim for an indemnity was plainly concerned with the enforcement of its common law rights, and SRA’s conspiracy claim similarly did not concern the administration of SSA as a charity as it was directed against the Individual Defendants only: at [171]–[173].    

Costs

24.     In dealing with the costs of the proceedings, the Court took into account not only the outcome reached on the substantive issues, but also the disproportionate manner in which it considered this litigation was run by SRA: at [174].    

25.     The Court emphasised that lawyers had a professional obligation to ensure that a proper risk-benefit evaluation was undertaken at each stage of legal proceedings. Even if a lawyer’s client were prepared to take a matter to court and bear the expense of litigation, the lawyer, as an officer of the court, nevertheless owed a higher duty to the court to assess whether it would be in the interests of the administration of justice to pursue the matter: at [175] and [178].    

26.     The Court found that the present litigation was disproportionately conducted by SRA in several ways. First, the conspiracy claim ought not to have been part of the proceedings in the High Court because: (a) the Commissioner had not authorised the bringing of the claim in the High Court; (b) the claim was not even directed at SSA, but was instead directed only at the Individual Defendants; (c) the element of actionable loss or damage was not made out; and (d) most strikingly, even if the claim had succeeded, the most SRA stood to recover, on its best case, was a sum of $63,200, far below the threshold for a claim to be mounted in the High Court. Second, SRA failed to pursue more cost-effective options that it could have taken, such as seeking an injunction to restrain SSA from acting on the Circular Resolution and suspending its privileges at the NSC. Third, although SRA ultimately succeeded in defending SSA’s counterclaim for an indemnity, it failed to pursue a far simpler means of arguing its case that was available to it: at[176], [179] and [180].    

27.     The appellants, on the other hand, had also behaved deplorably. The genesis of the dispute could be traced to the appellants’ actions in giving SRA the right to build the Proprietary Range, and then completely reversing their position by seeking to undermine SRA instead. To that end, Mr Vaz complained to BCA behind SRA’s back about the construction of the Proprietary Range. After BCA issued the Demolition Order, the appellants deceptively concealed the option of regularising the Proprietary Range from SRA; and after SRA found out about that option of its own accord, the appellants refused to co-operate in the regularisation process in any way whatsoever, and instead proceeded unilaterally to demolish the Proprietary Range. The Court of Appeal registered its strong disapproval of and dismay at the appellants’ conduct: at [181]–[182].    

28.     The Court considered that the appellants’ actions in engendering this dispute and the way the litigation was conducted by SRA reflected appallingly on both parties. It therefore ruled that there would be no order as to the costs of the proceedings both in the appeal and in the High Court, and that each party would bear its own costs: at [183].    

29.     In addition, the Court indicated that it was minded to require Mr Vaz personally to indemnify and hold SSA harmless in respect of any and all legal costs it had incurred or might become liable for as a result of the proceedings. It was also minded to make an order disallowing or limiting the costs recoverable by SRA’s solicitors from SRA. The Court stated that before it made any orders to such effect, it would afford Mr Vaz and SRA’s solicitors the opportunity to make written submissions explaining why the respective orders ought not to be made: at [184]– [186].    

Conclusion

30.     In summary, the appeal was allowed in part, in that SRA’s claim in unlawful means conspiracy failed for lack of actionable damage and its application for declaratory relief failed in the absence of a real controversy. However, the appeal was dismissed where SSA’s counterclaim for an indemnity for the cost of demolishing the Proprietary Range was concerned: at [187].   

31.     Given the disproportionate manner in which the litigation was conducted by SRA as well as the appellants’ deplorable conduct, there was no order as to the costs of the proceedings both in the appeal and in the High Court, and each party was to bear its own costs. In addition, further costs orders might be made by the Court after it had heard from Mr Vaz and SRA’s solicitors respectively: at [188].    

This summary is provided to assist in the understanding of the Court’s judgment. It is not intended to be a substitute for the reasons of the Court. All numbers in bold font and square brackets refer to the corresponding paragraph numbers in the Court’s judgment.    

Version No 1: 27 Oct 2020 (22:41 hrs)