COURT PROCEEDINGS AFTER SETTLEMENT?
In Tan Ng Kwang Nicky v Metax Eco Solutions Pte Ltd [2021] SGCA 16 (“Tan v Metax”), the Singapore Court of Appeal had the occasion to explain the impact of settlement agreement on court proceedings.
Background. The appellants were the liquidators of Sembawang Engineers and Constructors Pte Ltd (“SEC”). The respondent was a sub-contractor of SEC. There was an ongoing suit between SEC and the respondent, but SEC ran into financial difficulties and was ordered to be wound up.
The liquidators were faced with a decision whether to go ahead with oral closing submissions in the suit against the respondent, and the concern arose whether the Estate Costs Rule applied such that the respondent’s costs from the commencement of the proceedings would be paid in priority to the expenses of the liquidation if the respondent succeeded.
The liquidators obtained directions from the High Court on this issue, which they were dissatisfied with, and they subsequently appealed to the Court of Appeal.
However, the parties then reached a settlement, but the liquidators were nonetheless keen to have the Court of Appeal consider the application of the Estate Costs Rule. Part of the settlement was that the respondent would not file its Respondent’s Case.
The Court of Appeal had convened a 5 judge coram to hear the arguments, but the Court of Appeal summarily dismissed the case after finding out that there was a settlement agreement.
Settlement before hearing. The Court of Appeal explained that “In Singapore, the general principle is that the court will decline to hear cases or arguments that do not involve an issue that is “live” between the parties. This arises from the essential duty of the court which is to determine disputes, not to render advice or comment upon hypothetical issues.” ([62] Tan v Metax).
The Court of Appeal also emphasised that Singapore law does not presently have an exception for important public law questions:
“70. … The English courts have held that in certain very limited circumstances they have a discretion to hear cases involving important public law questions notwithstanding that there is no longer a live issue between the parties.
…
76. We would emphasise here that the exception that is applied in England, an exception which is not a part of Singapore law at present, is an exception that only comes into play if parties inform the court of the true position and apply for leave to continue the appeal nevertheless. …”
Settlement after hearing but before judgment. The Court of Appeal also briefly touched on what happens when a settlement is reached after the hearing but before the judgment is released.
“81. Where a settlement is reached between the parties after the hearing but before the judgment is released, the general position is that the court has a discretion whether or not to release its judgment. …”
Significance. In the usual case, parties will inform the Court when a settlement agreement is reached and the case will be discontinued. Many cases are resolved amicably out-of-court this way.
Indeed, the Court of Appeal reiterated that settlements are encouraged:
“45. We have no difficulty with the fact that negotiations for a settlement of Suit 965 took place. Indeed, it is an important plank of the judicial philosophy adopted by this court that parties should do their utmost to settle their disputes amicably out of court as doing so saves time and effort and expense for the parties and the court. What concerns us is why the negotiations here, albeit resulting in a successful settlement of the commercial dispute, did not have the usual result of removing the dispute from the court altogether.”
As such, if parties have settled the dispute, the case should generally be discontinued in order to avoid wasting the Court’s time and resources.
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