singapore law gazette (april 2012)

An Official Publication of The Law Society of Singapore | April 2012

www.lawgazette.com.sgR

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Commoditising ProfessionalismSweeping changes are taking place in the legal profession in Singapore, and not just because of the opening up of the industry to foreign lawyers. Yes, there will be challenges, but it will be the larger law firms that will bear the brunt of the opening up, with the greatest fight concentrated on the battle for the best young legal talent available. This fight unfortunately will have its consequences in higher salaries (and, therefore, higher costs of doing business), maybe undercutting of fees (which would be detrimental to the firms' ability to pay higher salaries), and more demanding clients (as they have a larger choice of legal providers to choose from).

The plus side to all this is of course an improvement in the quality of legal services all round as ultimately better service should be the decider in most situations.

But even without the foreign lawyers, there has been and continues to be a real challenge which has crept into the legal profession and indeed into all professions, as well as into commercial products. This is the commoditisation of legal and other professional services. By commoditisation, I refer to the "cheapening" of such services: cheapening in terms of the common-ness of the services and the price that can be charged. Before lawyers and other professionals shout about the unfairness of earning a fair living for their years of slogging in universities, they should consider the price of other commercial commodities.

The price of an Economy class air ticket to London and back is today cheaper than it was in 1972 when I was admitted. I remember it was S$1,760 then compared to about S$1,300 today (special offer). A TV set costs much less today than 20 years ago, and today's models are lighter, slimmer, and pack more goodies. Plasma TVs cost much less today than yesterday, but the investment in plasma factories runs into the billions of dollars. Some manufacturers are getting out of the business. Similarly, one needs to invest billions to start an airline, yet air travel is getting cheaper and cheaper. Why has all this happened?

Air travel has become an everyday occurrence; owning a plasma TV is no big deal. In other words, these special consumer items have ceased to be special and have

become commodities. And once a service or product becomes a commodity, it has to be inexpensive.

Compare these mass comsumables with luxury goods. Luxury goods retain their specialness and high prices by simply being what they are: special and pricey. Consider the prices of a Louis Vuitton or a Hermes Birkin bag. Everyone has learnt from the lesson of Pierre Cardin. His was an iconic brand in the 70s, but he decided to "bring fashion to the masses". Unfortunately high fashion and the masses do not mix well. So the brand today is no longer a luxury brand, and most people today would prefer to carry a no-brand handbag than a Pierre Cardin. Of course many women would prefer to carry a Birkin, if they can afford one!

What does this mean for the legal profession? As the population gets more educated, there has been an increase in demand for legal and other professional services. So for a long period after the Second World War, the demand worldwide for legal and other professional services exploded. Lawyers became wealthy, and sometimes obscenely so. So did medical specialists. But not the general specialists in the HDB estates, or the lawyers practising mainly in the Subordinate Courts. A quick look at the situation of just these two professions tells us immediately that the specialists and those that cater to the big and wealthy clients do very well, but not those that cater to the masses. Again there is a clear distinction between the fashion suppliers and the mass manufacturers. (There is of course one major difference between luxury goods and professional services. People usually seek professional services out of necessity; whereas people buy luxury goods out of desire. Somehow, and this always intrigues me, people are always willing to pay more for what they desire than for what they require.)

But now law firms, including big firms, throughout the world, are under threat. Some of America's oldest firms have either folded up, or merged. Clients are questioning (relatively) big bills. Clients do not accept time costs. Clients are also looking at smaller firms to do the more "vanilla" work that does not require such specialised skills.

Presidents Message

Singapore Law Gazette April 2012

Commoditising Professionalism 01Presidents

Message

When a Spouse Gives the Other a Gift: How the Law Treats Inter-spousal Gifts When 12 Dividing Matrimonial Assets Intent to Claim 18The Future of Digital Lockers 23Declining to Advise a Person with Opposing Interests Under Rule 30 PCR 26

Features

Diary 05Upcoming Events 05Council Bulletin 06Part B of the Singapore Bar Examinations 2011 08CPD News 10

News

The Benchmark Separation Anxiety: Living Separate and Apart, 30Living Together Yet Living Apart When is a Separation a Separation for Purposes of Divorce? The Young Lawyer Oppressed Minority 34

Columns

Legal Updates Legislation 36In Practice

Alter Ego The Gen Y Relationship 37Travel The Colours of Maldives 39Travel Onsen Style Romantic Get-Away in Singapore 44Food The Halia Lunch at the Gardens 45

Lifestyle

Professional Moves 49Admission of Advocates and Solicitors 50Information on Wills 51

Notices

52Appointments

Contents

The Singapore Law Gazette

An Official Publication of The Law Society of Singapore

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

The Council of The Law Society of SingaporePresident Mr Wong Meng Meng, SCVice Presidents Mr Lok Vi Ming, SC Mr Leo Cheng SuanTreasurer Mr Kelvin Wong

Mr Rajan Menon, Mr Young Chee foong, Mr Lim Seng Siew, Ms Kuah Boon Theng, Ms Eng Yaag Ngee Rachel, Mr Thio Shen Yi, SC, Ms Lisa Sam Hui Min, Mr Michael S Chia,

Mr Moiz Haider Sithawalla, Mr Koh Theng Jer Christopher, Mr Anand Nalachandran, Mr Sean francois LaBrooy, Mr Lee terk Yang, Mr Ong Pang Yew Shannon, Ms tang Bik Kwan Hazel, Ms Kang Yixian, Ms Simran Kaur toor

Editorial BoardMr gregory Vijayendran, Ms Malathi Das, Ms Celeste Ang, Mr Chua Sui tong, Mr Han Wah teng, Mr Looi teck Kheong, Mr Mahadevan Lukshumayeh, Mr Marcus Yip, Mr Melvin See, Mr Prakash Pillai, Mr Rajan Chettiar, Ms Simran Kaur toor, Mr Vincent Leow, Mr Yeoh Lian Chuan

The Law Society SecretariatChief Operating Officer / Chief Financial Officer Ms tan Su-YinChief Legal Officer MrAlvin ChenCommunications MrShawntohCompliance MrKennethgohConduct MsAmbikaRajendram MsVimalaChandrarajanContinuing Professional Development MsJuliaWanFinance MsJasmineLiew MrCliffordHangInformation Technology Mr Michael HoPro Bono Services Mr tanguyLim Ms Shahrany Binte HassanPublications MsSharmaineLauRepresentation & Law Reform MrAlvinChenPublishing ReedElsevier(Singapore)PteLtd tradingasLexisNexis

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

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The Singapore Law gazette is the official publication of the Law Society of singapore. Copyright in all material published in journal is retained by the Law Society. no part of this journal may be reproduced or transmitted in any form or by any means, including recording and photocopying without the written permission of the copyright holder, application for which should be addressed to the law society. Written permission must also be obtained before any part of this publication is stored in a retrieval system of any nature. the journal does not accept liability for any views, opinions, or advice given in the journal. further, the contents of the journal do not necessarily reflect the views or opinions of the publisher, the Law Society or members of the Law Society and no liability is accepted or members of the Law Society and no liability is accepted in relation thereto. Advertisements appearing within this publication should not be taken to imply any direct support for, or sympathy with the views and aims of the publisher or the Law Society.

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The Law Societys Mission Statementto serve our members and the communitty by sustaining a competent and independent Bar which upholds the rule of law and ensures access to justice.


Recruit Legal391A Orchard Road

#11-03 Ngee Ann City Tower ASingapore 238873

Legal In-HouseSenior- to Mid-Level L-0312-1897 Senior Legal Counsel - Corporate Trust - 6-10PQE. A renowned financial institution is looking to hire a Senior Legal Counsel to join its team. Experiences in corporate trust and regulatory work will be a significant advantage. Candidates should be called to the Singapore Bar. Contact CelineL-0412-1912 Senior Manager/Manager Aviation Engineering > 8PQE A World Renowned Aviation Engineering Company is seeking a Senior Manager/Manager with strong corporate commercial as well as corporate secretariat background. Contact EvelynL-0310-1504 Legal Director - Investment Industry (Sing) > 8 PQE Global investment house seeks a counsel with strong transactional experience, with solid corporate and M&A background. Extensive exposure and competitive remuneration can be expected. Contact ClaireL-0412-1909 Sole Legal Counsel - Manufacturing 6-8PQE. A highly established European MNC is looking to hire a Sole legal counsel. Candidates with general corporate commercial experiences, preferably serving in the Manufacturing industry, are ideal prerequisites for the role. Contact Celine L-1211-1861 Legal Counsel & Company Sec - Healthcare >7 years A healthcare MNC is looking for a Singapore-called lawyer to join their dynamic team which offers exciting and challenging regional exposure. Corporate secretarial experience will be required. Contact Claire

Mid- to Junior-Level L-0412-1910 Legal Counsel Oil & Gas 4-8PQE. A highly established organization in the oil & gas industry is looking to hire a Legal Counsel. Experiences in trading, ISDA, and shipping litigation are highly regarded. Contact Celine L-0413-1914 Claims Executive Insurance > 5PQE A Leading Insurance company is looking to hiring a Claims Executive. Candidates with experience in insurance claims litigation with great negotiation and Chinese skills are required. Contact EvelynL-0312-1903 Legal Counsel - FMCG > 4PQE A Singapore Listed FMCG Company is seeking lawyer with wider range of corporate and commercial experience to join their expanding legal team. Experience in the corporate sector would be advantage. Candidates should preferably to be called to Singapore Bar and must have Mandarin understanding skills. Contact Jean L-0312-1902 Sole Legal Counsel - Investment House >4 PQE A foreign leading investment advisory firm is looking to hire legal counsel. Candidate with wide range of legal, company secretarial and regulatory matters are welcomed to apply. Contact Jean

Please visit www.recruit-legal.com for a full list of our positionsAlternatively, contact us at (65) 6535 8255 or 391A Orchard Road, #11-03 Ngee Ann City Tower A, Singapore 238873

Interested? Please contact Claire at [email protected], Celine at [email protected], Helmi at [email protected], Evelyn at [email protected],

Samantha at [email protected] or Jean at [email protected] or (65) 6535 8255 for more information

L-0412-1919 Attorney Manufacturing > 4 PQE One of the largest US manufacturers of construction and mining equipments is seeking for lawyer to join their dynamic team. Candidates with a broad range of corporate and commercial experience are welcomed to apply. Experience in working top tiered law firm is preferred. Contact Jean L-0412-1908 Legal Counsel - Construction 2-4PQE. A Statutory board is looking to hire a Legal Counsel with general corporate commercial experiences. A background in construction law is a significant advantage. Candidates should be admitted to the Singapore Bar. Only Singaporeans and Singapore PR need apply. Contact Celine L-0412-1913 Legal Associate Property Investment 2-4PQE An Established and Leading Property Investment Company seeking a bright and independent junior lawyer to join their team. Background in Real Estate, M&A, Banking or related industry would be an advantage. Contact Evelyn L-0611-1754 Legal Counsel - Aviation Industry 5-8 PQE Our client, a leading Asian aviation investment company is seeking a bright, dynamic Legal Counsel to join its expanding operations in Asia. Candidates who are qualified to advise Singapore law or UK law are preferred. Strong interest in project finance and corporate work are pre-requisites for this role. Ability to communicate in Mandarin is an advantage for projects in China. Candidates who are qualified to Singapore or Commonwealth Jurisdiction are welcome to apply.Contact SamanthaL-0911-1807-Legal Counsel-Technology 5-7PQE Our client, a leading provider of telecommunications networks is seeking a counsel to provide legal support to projects in the telecommunication industry within the region. Candidate will be expected to draft and review commercial and financing legal documents in compliance with laws, regulations and internal policies. Good knowledge in the areas of law of banking and financing would be highly advantageous. Ability to communicate in Mandarin is preferred. Contact ClaireL-0312-1901 Legal Counsel - Singapore Conglomerate >2PQE A Singapore leading conglomerate which covers on various leading businesses is seeking for junior counsel to join on board. Experience in corporate and listed companys compliance matters, joint ventures, sales & purchase agreement and etc. Candidate should be called to Singapore Bar as well as proficient in Mandarin skills. Contact Jean. L0112-1878 - Prosecutor - Health - > 2PQE Our client is a statutory board for national health and safety. Candidates with criminal litigation background and are interested in healthcare are welcome. Training is provided for candidates with LLB keen in pursuing a prosecution role. Contact SamanthaL-0412-1911 Senior Contract Administrator Oil & Gas > 2PQE A World Renowned Oil & Gas company seeking a Senior Contract Administrator with Engineering background and offshore oil&gas/construction background. Contact Evelyn

Continued from page 1

And the politicians add to the problem as they demand, and quite rightly so, that all must have access to justice. And so the politicians think, and quite wrongly so, that low legal fees are the way to getting access to justice. One of the problems, as more astute observers have noted, lies in the pricing by big firms. It is said that they price according to what they want their profits to be, not according to what their skills are worth.

Law firms need to change the way they do business. But a huge problem lies in identifying the area for change. Should firms go the Birkin way or the Walmart way? Or the Ikea way? I mention Ikea as Ikea is not necessarily low market it has very many attractive designs and some items are not that cheap. But what it has going for it is its unique attractive designs. In other words, attractive customisation at an attractive price. Of course Ikea has volume, and no legal firm can have the same volume as Ikea. What I am trying to say is that a law firm will have to find its own niche, and decide on what is best. This is no doubt the most difficult issue of all. Some firms can do it, others cannot. In the west, some law firms have tried commoditisation in their own way. Some have set up web portals for their clients to download "standard" documents; some have turned to outsourcing by having their work done more cheaply in other countries; and yet others have simply lent their lawyers to clients on a long-term basis. Frankly, I think many of these ideas will fail. But these firms are to be lauded for not standing still.

So what can lawyers do to maintain their special status, and their fee levels? Big legal practices simply abandon the so-called commodity work: they will generally not do retail property work, and will take on property work only when it is part of a large commercial or financial transaction. Other commodity work, such as vanilla type loans are either rejected or left to young associates as part of their training.

Such attitudes by the larger firms are beneficial to the smaller firms, as this gives the smaller firms the opportunity to do the types of work that they were not able to do, say, 20 years ago. But in respect of their own traditional work, what can the smaller firms do? The clients are more demanding, so more time is required to attend to them; the field is getting crowded, so fee-undercutting takes place, to the detriment of quality.

I think the smaller law firms should also decide on the level of commodity work that they can do without. I know some law firms will say easier said than done to this suggestion. I agree it is not easy, as smaller firms will not find it easy to reject work. But for those firms that can do it, I would recommend that they look into this. They should also bear in mind that for every piece of work that they can reject, some other even smaller firm will benefit. The feed-chain will take care of that issue.

To achieve their own upgrading and specialisation, it will be necessary for these smaller firms to study what has been done overseas and in other professions. Lawyers have the advantage that the dental profession does not have there is no need to invest heavily in specialist equipment. Even the lone dental surgeon has to invest in pocket-busting equipment. They should also look into what are likely to be future trends in practice and demands: will all land titles be fully guaranteed by the government in future, so that common law searches will no longer be necessary? And what does that mean to the practice?

Will mediation be the norm instead of litigation, so that the gladiatorial mind-set has to be changed? Lawyers need to bear in mind that litigation, especially in the Subordinate Courts, cannot expand indefinitely as there is a limit to the expansion of the Courts, however one measures the Courts capacity. So lawyers need to look at how they should practise.

Should lawyers also develop DIY kits for potential clients and sell these kits? After all, divorce actions have become largely DIY affairs in some countries. Some kits can be developed for fairly routine matters but the clever lawyer will reserve some issues for the clients to come back for specific advice.

Commoditisation will continue to grow. So lawyers should look closely at the problems that come with it.

Wong Meng Meng, Senior Counsel President The Law Society of Singapore

Presidents Message


April 2012

Malaysia/Singapore Bench & Bar Games 2012

Kuching, Sarawak

May 2012

Law Society LAWASIA International Conference on eCommerce and Communication: Regulating a New World Order

NUS Suntec City Guild House

April, May

June 2012

Primers on Professional Ethics and Legal Profession (Solicitors Accounts) Rules for Practice Trainees

NTUC Business Centre

Upcoming Events

March 2012

Primers on Legal Profession (Solicitors' Accounts) Rules for Practice Trainees

Organised by the Continuing Professional Development Committee9.00am-1.15pmNTUC Business Centre

March 2012

Visit by Kenya Judicial Service Commission

Law Society of Singapore

March 2012

Visit by the Chairman of the Bar Council of England and Wales

Law Society of Singapore

March 2012

Primers on Professional Ethics for Practice Trainees

Organised by the Continuing Professional Development Committee9.15am-12.30pmNTUC Business Centre

Diary

March 2012

Lunchtime Seminar on Insolvency Remuneration

Jointly organised by the Law Society and the Insolvency Practitioners Association of Singapore 11:30am-1:30pmErnst & Young Office

March 2012

Seminar on Legal Issues in Delay Claims

Organised by the Continuing Professional Development Committee3.00pm-6.00pmRaffles City Swissotel

News


Diary and Upcoming Events

Council UpdateNew Committees of Council

Council resolved to appoint two new Committees of Council for 2012, as follows:1. Subordinate Courts Committee, to coordinate the work of the relevant practice committees which have regular

interactions with the Subordinate Courts on practice matters; and

2. Pro Bono Committee, to coordinate the work of the relevant practice committees which have regular interactions with the Societys Pro Bono Services Office.

Formation of NIMA-PIMA Sub-Committee 2012

Council resolved that the NIMA-PIMA sub-committee will continue for the year 2012 as a sub-committee of the Civil Practice Committee. Further, the new Subordinate Courts Committee (refer to above) chaired by Council member Lisa Sam will coordinate the work of all the relevant committees involved with the Subordinate Courts, including the NIMA-PIMA sub-committee.

A list of the NIMA-PIMA sub-committee members for 2012 can be found at http://www.lawsociety.org.sg/about/organisation_structure/committee.aspx

National Council on Problem Gambling

Council approved a collaboration between the Law Societys Pro Bono Services Office (PBSO) and the Ministry of Community Development, Youth and Sports (MCYS) whereby PBSO would assist MCYS to develop a legal tool-kit for caseworkers working with problem gamblers and their families.

International Collaborations

Council agreed to support the facilitation of internships for staff and students from the law faculty of the National University of Laos and Singapore law practices as well as the Pro Bono Services Office.


News

Council Bulletin

Contact Us www.jlegal.com melbourne sydneysingapore hong kong london uaevisit our website or contact us: e | [email protected] t | singapore 65 6818 9701

What is the best advice you have ever received? Two actually. First, no one owes you anything. It doesnt matter what prestigious schools you went to or what big companies you used to work for. To be successful, you need to continue to work hard and be focused on what is valued in the market (which is changing all the time!). Second, dont just offer correct advice; it has to be useful. Many young or inexperienced lawyers, whether in private practice or in-house, dont understand that. Our clients already assume that our advice is correct. The key to getting ahead is whether your work product is useful (or perceived to be helpful) in helping the client reach a solution.

In recent times, the role of the General Counsel has diversified into a multi faceted role (where the General Counsel can wear the 'hat' of Lawyer, Legal Manager, Compliance Manager, and Company Secretary). In your opinion, do you believe this has increased your risk profile? Perhaps, but thats what we strive for. Ultimately, each lawyer is expected to be a leader, not just a lawyer, in our company. To be recognized as a valued leader, you have to be willing to step up and play many different roles. To become a trusted business advisor, we do have to step outside of our comfort zone (i.e., reviewing contracts) and take calculated risks, offering insights based on both our expertise and experience. If you articulate clearly the issues to your business partners, and offer solutions to how to manage those issues, I see that taking on this risk of wearing multiple hats can only be a good thing. If you do this, and become a trusted advisor to your clients, you can only add more value and, at the same, improve your own personal standing and stature within the company.

In your opinion, why have in-house lawyers become an increasingly indispensable part of an organisation? Im not sure if were indispensible, but we certainly can add much value to our organization. That is because we have the skill sets to play different instrumental roles, in addition to our core competency of providing legal advice. We are good executors; we have skills that can drive successful negotiations or closure of transactions. As good project managers, we can drive collaboration among the sales teams and other business partners. Finally, being involved in so many parts or activities of the organization allow us to be strategic; we can offer insight required to achieve business objectives that goes beyond legal knowledge.

Main external counsel We use a combination of international firms and domestic firms, depending on the requirements and expertise.

Legal capability 9 Lawyers

Corporate Counsel, Commercial Finance Co., 10+ Years PQEOur client, the consumer financing arm of a Fortune 500 company, is seeking a corporate counsel to be based here in Singapore supporting the business operations of the company in the region. The ideal candidate will be UK/Commonwealth qualified and have a solid founda-tion in asset/aviation finance gained with a leading City/International firm, plus some prior corporate commercial experience gained in-house within the APAC region. Working knowledge of the UK Bribery Act/ FCPA will be an advantage. Competitive remuneration package on offer. Ref GSC-IS-1136

APAC Corporate Counsel, Travel & Tourism, 6 to 8 years PQEWith a presence in more than 150 countries worldwide, our client is an undisputed leader in the travel industry. They are now looking to strengthen their global legal team with an additional dedicated corporate counsel to be based in Singapore and to support the business operations in Asia Pacific. The selected candidate will preferably have top tier firm training and some prior commercial in-house experience within the region. An able communicator and a team player, you will enjoy working closely with a dynamic business in a supportive and positive environment. Some travel is required. Ref GSC-IS-1128

Legal Counsel, New Energy Company, 5 yrs PQEThis is an excellent opportunity for an energetic lawyer looking for an in-house role within the energy sector. Reporting directly to the General Counsel, the successful candidate will enjoy a full range of responsibilities providing legal and regulatory support for the initial project development and continuing operations, as well as handling corporate governance and compliance matters. Ideal candidates should have 5 years relevant commercial experience gained in private practice or in-house. Prior experience in the Energy/ Oil and Gas or Construction/Engineering industries is desirable. Ref LXX-IS-1091

Genevieve Chia | Head of In-House | loves fast cars, good wines and is currently handling these exciting roles:

e | [email protected]

Duc Trang

Regional Lead Counsel, Asia Pacific & Country Manager, VietnamMotorola

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Part B of the Singapore Bar Examinations 2011Commendation List

The list of top 20 candidates, having considered the overall performance of candidates in the examinations and through coursework components assessed.

Student No. Name Distinctions (Examination)

Distinctions (Coursework)

Position in Class

B2011006 Ang Ming Sheng, Terence (Hong Mingsheng) 4 31

B2011272 Ng Eng Zhen 4 3

B2011163 Khoo Suat Lim, Lynette (Qiu Xuelin) 4 2 3

B2011333 Shi Pei-Yi, Sarah (Xu Peiyi) 3 3 4

B2011279 Ngiam Hian Theng, Diana (Yan Xianting) 3 2 5

B2011042 Cheang Jiarong, Joel (Zheng Jiarong) 3 16

B2011079 Choo Yi Ming 3 1

B2011292 Ong Kai Min, Kelvin (Wang Kaimin) 2 3

8B2011296 Pang Mei Yu 2 3

B2011348 Soh Sook Lee 2 3

B2011367 Tan Lin Yen, Ilona 2 3

B2011058 Cheong Wei Yan, Ginny (Zhong Weiyan) 2 2

12B2011208 Jonathan Lim Wei Zhong 2 2

B2011241 Low Tzeh Shyian, Russell (Liu Zexian) 2 2

B2011366 Tan Liyun, Samantha 2 2

B2011075 Chong Wan Yee Monica (Zhang Wanyu) 2 1

16

B2011135 Ho Li Ming 2 1

B2011160 Simren Kaur 2 1

B2011301 Phang Pompidou Chien Yong 2 1

B2011401 Tay Xin-Wang, Alphis (Zheng Xinwang) 2 1

News


Part B of Bar Exams 2011

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:

Prize Student No. Name

The Singapore Institute of Legal Education Prize for the Best Students on the Course

B2011006 Ang Ming Sheng, Terence (Hong Mingsheng)

B2011272 Ng Eng Zhen

The Singapore Institute of Legal Education Prize for the Best Student in Ethics & Professional Responsibility

B2011348 Soh Sook Lee

The Law Society of Singapore Prize for the Best Speakers in Advocacy

B2011411 Teng Po Yew

B2011302 Priya Dharshini Pillay

The Singapore Institute of Legal Education Prize for the Best Student in Criminal Litigation Practice B2011333 Shi Pei-Yi, Sarah (Xu Peiyi)

The Singapore Institute of Legal Education Prize for the Best Student in Corporate & Commercial Practice B2011075 Chong Wan Yee Monica (Zhang Wanyu)

Examinations DepartmentSingapore Institute of Legal Education

News


Part B of Bar Exams 2011

The International Conference on eCommerce and Communication is proudly presented by the Law Society of Singapore and LAWASIA. This Conference serves to promote discussion on a wide range of contemporary issues in relation to ecommerce and communication and aims to bring together senior practitioners, industry experts, academics and policy-makers in various jurisdictions to discuss the diverse topical issues of this dynamic arena. This two-day Conference features a diverse range of topics such as data protection, regulation of online content and outsourcing, which will provide a broad multi-disciplinary overview of this new and exciting frontier of legal practice for legal practitioners.

In the interest of being environmentally responsible, a soft copy of conference materials will be provided to delegates and made available on the conference website.

For Singapore Advocates and Solicitors: This event is an SILE-Accredited CPD event for which eligible registrants may accumulate 12 Public CPD Points.

Plenary Sessions: DATAPROTECTION How transborder data flow restrictions are impacting

privacy legislation and to what extent is Asia keeping up? REGULATIONOFONLINECONTENT Regulation of obscene and political/racial content CLOUDCOMPUTING What are some of the legal challenges posed in relation to

cloud computing? SOCIALMEDIAANDDEFAMATION To what extent is the increasing use of social media

requiring us to re-evaluate traditional legal principles? OUTSOURCING Directions in outsourcing and the legal issues it raises ELECTRONICMONEY Current and future developments in relation to regulation

of money deposits SPAMREGULATION Is spam regulation working? CRIME How will technology facilitate criminal activity in the future?

How should the law respond?

Featured Speakers:

GordonHughesAUSTRALIARobertToddAUSTRALIATimBrookesAUSTRALIA

Prashant Kumar INDIA

Chunghwan Choi KOREA

ProfessorAbuBakarMunirMALAYSIASyahredzanJohan,MALAYSIA

Akram Sheikh PAKISTAN

Professor Ang Peng Hwa SINGAPOREGilbert Leong SINGAPOREKenneth Chia SINGAPORELim Kian Kim SINGAPOREMark Robinson SINGAPORERajesh Sreenivasan SINGAPOREWong Siew Hong SINGAPORE

Sunil Abeyeratne SRI LANKA

Registration is available at: http://www.lawsociety.org.sg/conference/ICeCC2012/Default.aspxHurry Early Bird registration ends 5pm, 20 April 2012!For any queries, please contact us at [email protected] or at 6530 0201/6530 0230.

Category Event & Date Practice Area Venue

Nuts and Bolts for the Learning Lawyer

Primer on Professional Ethics for Practice Trainees

Runs: 13 March 2012, 10 April 2012, 8 May 2012, 5 June 2012

Ethics NTUC Business Centre

Primer on Legal Profession (Solicitors Accounts) Rules for

Practice TraineesRuns: 21 Mar 2012, June 2012 (date to

be confirmed)

Solicitors Accounts Rules / Compliance URA Auditorium

Practical Ethical Decision-Making for YoungLawyers

May 2012 (date to be confirmed)Professional Ethics Venue to be confirmed

Developing Commercial Acumen for YoungLawyers

May / June 2012 (date to be confirmed) Finance Venue to be confirmed

Practice Management for the Savvy Practitioner

ManagingDifficultClientsforYoungPractitioners

May / June 2012

Professional Conduct/ Client Care

Venue to be determined

Latest Developments for the Busy Practitioner

Seminar on Mareva Injunctions in Aid of Foreign Proceedings

April 2012 (date to be confirmed) Arbitration/ Litigation Venue to be determined

Psychology and the Law Seminar: Psychology of Sexual Offenders

23 April 2012 Criminal Law Subordinate Courts Auditorium

Seminar on DamagesMay / June 2012 (date to be confirmed) Litigation/ Tort

Venue to be confirmed

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Two interesting issues arise when one spouse gives the other a gift during the marriage. When spouses divorce, can these inter-spousal gifts be divided as matrimonial assets under s 112 of the Womens Charter? If these gifts remain matrimonial assets available for division, how should such gifted assets be divided between the spouses? Recent cases in 2011 are discussed in this article which offers an approach to how the law should treat inter-spousal gifts.

When a Spouse Gives the Other a Gift:How the Law Treats Inter-spousal Gifts When Dividing Matrimonial AssetsAre Inter-spousal Gifts Matrimonial Assets?

Two issues in family law are pertinent when one spouse gives the other a gift during their marriage. First, when these spouses divorce, are such gifts subject to the Courts power of division over matrimonial assets? Section 112 of the Womens Charter provides that (t)he court shall have power, when granting or subsequent to the grant of a judgment of divorce, ... to order the division between the parties of any matrimonial asset ... between the parties ... in such proportions as the court thinks just and equitable.1 Second, if these gifts remain matrimonial assets available for division, how should such gifted assets be divided between the spouses?

Statutory Definition of Matrimonial Asset

Section 112(10) of the Womens Charter provides that all assets acquired by one or both parties during marriage are matrimonial assets. These assets constitute the bulk of matrimonial assets in most cases. An asset acquired before marriage or by gift is not a matrimonial asset unless the other spouse or both spouses have substantially improved it during the marriage, or alternatively, it is a matrimonial home. Assets acquired before marriage are also matrimonial assets if used by the family for shelter or transportation or for household, education, recreational, social or aesthetic purposes. Is property acquired by one spouse during marriage and given to the other considered a gift within the meaning of s 112(10) and hence excluded from the pool of divisible assets?

Judicial Views

In the nineties, the Court of Appeal in Yeo Gim Tong Michael v Tianzon Lolita2 (Yeo Gim Tong Michael) established that an inter-spousal gift (at [12]):

was nonetheless acquired by the donor and not the recipient, and if it was acquired during the marriage it would fall within the class of assets covered (in s112) .... However, where the subject matter of the gift is itself a gift from a third party, for instance from a parent of the donor, then the gift is not property acquired by the donor by any effort on his part.... Gifts emanating from third parties to a spouse during his marriage have been held not to be assets acquired by him.

However, in early 2011, the High Court held in Wan Lai Cheng v Quek Seow Kee3 (Wan Lai Cheng) that inter-spousal gifts are not matrimonial assets and should be excluded from the pool of assets available for division. In this case, one of the issues was whether shares registered in the plaintiffs name in three companies belonged to her beneficially or were held by her on trust for the defendant. The High Court found that the defendant had transferred the disputed shares to the plaintiff upon professional advice as part of a financial and estate duty planning exercise, and not as a sham transaction. The presumption of a resulting trust was displaced by the presumption of advancement in favour of the plaintiff. As such, the shares were found to have been transferred to the plaintiff absolutely as gifts. The High Court then proceeded to consider whether such an inter-spousal

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gift was a matrimonial asset. After examining the definition of matrimonial asset in s 112(10) of the Womens Charter, Kang Ting Chiu J concluded that inter-spousal gifts were gifts excluded in s 112(10) and thus were not matrimonial assets. He observed that when s 112, formerly s 106, was reviewed in 1996, Prof Leong Wai Kum had proposed that a matrimonial asset should include an asset which was acquired by one spouse as a gift from the other spouse. The Law Reform Committee of the Singapore Academy of Law also proposed that a distinction be made between an inter-spousal gift and a third-party gift. The learned Judge noted that as these suggestions were not adopted in the post-1996 definition in the Charter, the enacted amendment excluded all gifts as matrimonial assets. He was of the view that there is nothing in the parliamentary records and other material within s 9A(3) of the Interpretation Act4 which suggests that the definition should not bear its clear and unambiguous meaning. As such, his honour held that gifts, whether they are from a third-party or made by one spouse to the other, are not matrimonial assets.

The High Court in two subsequent cases in 2011 returned the law on track to that in Yeo Gim Tong Michael. In Tan Cheng Guan v Tan Hwee Lee5 (Tan Cheng Guan) and Sigrid Else Roger Marthe Wauters v Lieven Corneel Leo Raymond Van Den Brande,6 (Sigrid) Choo Han Teck J held that inter-spousal gifts remained matrimonial assets. In Tan Cheng Guan, the wife claimed that the husband gave her a property to persuade her not to end the marriage. She sought the whole of this property, relying on the High Court decision in Wan Lai Cheng that this property should not form part of the pool of matrimonial assets. Choo J held that: an inter-spousal gift, acquired by the donor other than

as a gift or inheritance from a third party, remains a matrimonial asset. Although this may appear contrary to the intuitive notion that a gift is irrevocable, the concept of gift remains valid, but applies only at the third stage, when the Court decides how to give effect to the percentage division it has ordered, and not earlier. Giving effect to the gift at the third stage reconciles the law on matrimonial assets and the law of property on gifts. The Court should not exclude the inter-spousal gift from the matrimonial pool at the first stage because the qualifying words of s 112(10) only attaches to assets that were never part of the matrimonial pool to begin with. It does not apply to gifts which were purchased with a pre-existing matrimonial asset, such as a spouses salary. In the latter situation, only the identity of the asset changes. It does not lose its nature as a matrimonial asset. At the same time, considering the gift at the third stage enables the Court to give effect to the irrevocability of the inter-spousal gift.

The learned Judge illustrated his views with these examples:

(a) At the first stage, the Court assesses the matrimonial assets to be worth $10m. Of this, $1m was used by the husband to buy jewellery for the wife. The Court decides at the second stage to divide the matrimonial assets 60:40 between husband and wife. At the third stage, the Court may order that the $4m the wife will receive will include the jewellery.

(b) At the first stage, the Court assesses the matrimonial assets to be worth $10m. There is a house worth $6m. Not the matrimonial home, the husband gives it to the wife. The Court decides at the second stage to divide the matrimonial assets 60:40 between the husband and wife. At the third stage, the Court may order the house be given to the wife but that she will have to pay $2m to the husband.

The approach taken by Tan Cheng Guan ensures that the total pool of assets available for division is not reduced by the exclusion of inter-spousal gifts and that the specific identifiable gifted asset will ultimately remain with the donee spouse after division is ordered. The judgment explained that the approach does not give the donee spouse a greater share of the assets because the value of the gift is included in her or his share of the assets. In Wan Lai Cheng, Kan J had noted that the donee spouse will not have the advantage of keeping the gifts without it being taken into account in the division exercise. Thus, Choo J remarked that though my reasoning differs from that in Wan Lai Cheng, the practical outcome in most cases will likely be the same. The approach in Tan Cheng Guan was also used in the High Court decision of Sigrid. Choo J in Sigrid added that the High Court in Yow Mee Lan v Chen Kai Buan7 noted that the Courts power to divide gifts between spouses has been established beyond a doubt in Yeo Gim Tong and that if the gift was derived from the efforts of the spouse, there was no doubt that it was properly a matrimonial asset.

Suggested Approach

Yeo Gim Tong Michael, Tan Cheng Guan and Sigrid rightly treat inter-spousal gifts as matrimonial assets. However, it is not necessary to limit the Courts discretion in the manner illustrated by the two examples in Tan Cheng Guan. The different approaches of Wan Lai Cheng and Tan Cheng Guan can in fact lead to different results.

In NK v NL,8 the Court of Appeal explained that the power to divide can sensibly and logically be exercised in these steps:9

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the courts duty is to (a) identify and pool all the matrimonial assets pursuant to s 112(10) of the Act; (b) assess the net value of the pool of assets; (c) determine a just and equitable division in the light of all the circumstances of the case; and (d) decide on the most convenient way to achieve these proportions of division, ie, how the order of division should be satisfied from the assets.

The first task of the Court is to identify the assets which are available for division as matrimonial assets. Its later task is to decide in what proportions these assets should be divided between the spouses.

Tan Cheng Guans holding that inter-spousal gifts are matrimonial assets is relevant to the Courts first task in stage (a). Matrimonial assets liable to be divided should comprise all assets acquired during the marriage by the efforts of either or both parties to the marriage. Transferring ownership from one spouse to the other does not alter this characteristic of the asset. In contrast, gifts from third parties are not matrimonial assets, not having been acquired by the efforts of either party to the marriage and are thus external to the marriage.

However, when deciding the proportions of division in stages (c) and (d), the Court need not be constrained to include the gift as part of the share awarded to the donee spouse. It may include the gift within the donees share, but it need not always do so. The ultimate aim is to achieve an order that is just and equitable. It can, for instance, in the above example (a) in Tan Cheng Guan, award the $1m worth of jewellery to the wife and divide the remaining $9m in the proportion of 60:40.

The recent legal developments in the area of marital agreements support giving substantial weight to agreements on division of assets fairly reached between spouses.10 In TQ v TR and another appeal,11 the Court of Appeal gave critical weight to the foreign prenuptial agreement made by the parties 16 years earlier. When such decisive weight is given to a marital agreement, the Court is in effect accepting that the terms of the agreement represent a just and equitable division of the assets. A gift made by one spouse to the other could form the subject matter of a marital agreement. For example, a marital settlement agreement may require a spouse to give the other a house to provide assurance of financial security or to compensate the spouse for the emotional pain caused by the other. It may be the intention of the parties that this gift is made independent of or in addition to how the rest of their matrimonial assets will be divided.

It is possible to explain the earlier case of Lee Leh Hua v Yip Kok Leong12 (Lee Leh Hua) as one where the Court upheld a gift and thus gave effect to the private agreement of the parties. In Lee Leh Hua, the couples matrimonial flat was sold and the husband instructed the HDB to issue the balance sale proceeds in the wifes sole name. The wife claimed that the husband gave the flat to her as a form of compensation for the mental devastation she underwent upon his revelation of his liaison with another woman and for terminating the marriage. The High Court thought that the Courts option not to invoke the power is preserved in the wordings in s 112 and where the events before the divorce petition clearly establish that one party was entitled to an asset as of right, the Court should not allow the other party to ask the Court to exercise its power under s 112 of the Womens Charter. With respect, this reasoning is erroneous. The Courts power to divide in s 112 is over all matrimonial assets, including assets acquired and owned solely by one party, if the asset was acquired by her or his efforts during the marriage. Thus even if one party was entitled to an asset as of right under the principles of property law, the Court can still divide such an asset between spouses using the power conferred by s 112. However, the ultimate result reached in Lee Leh Hua may not be faulty: a sensible explanation for the result is that giving effect to the private agreement reached between parties was just and equitable under the circumstances. The Court, in exercising its powers to divide, should take into account any agreement reached by the parties in accordance with the provision in s 112(2)(e).13 The arrangement between the parties to have the property gifted to the wife as compensation for her emotional suffering was an important fact and it was just and equitable to give effect to this agreement.

A similar approach was taken in Wong Ser Wan v Ng Cheong Ling.14 In this case, the husband and wife were married for almost 25 years. The husband built up substantial financial resources over the years, although he was bankrupt by the time of the hearing of the ancillary matters. The wife took on the role of homemaker and particularly in the years where the marriage was breaking down, she was the mainstay and support of the children, one of whom had a history of mental disorder. In the course of an attempt by the husband to save the marriage after the wife discovered the husbands infidelity, the parties signed a Financial Agreement. The husband made various gifts to the wife in accordance with the terms of the Agreement. The wife subsequently discovered that the husband had not ceased his extra-marital relationship and had been dissipating his assets. She filed a fresh divorce petition and obtained a Decree Nisi of divorce. Some assets had been transferred to the

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wife under the Agreement before the hearing of the ancillary matters. The husband asked that these gifts be subject to division as matrimonial assets. The High Court held that the express intention of the husband was to transfer to the wife irrevocably, the assets listed in the Financial Agreement. At the time he signed the agreement, he had been legally represented and had the resources to adhere to its terms. His purpose in concluding the document was to delay or stop the divorce proceedings that the wife had begun. He was successful in his aim and was able to take action to shrink his assets by fraudulently conveying certain assets away. If the wife had continued with the divorce proceedings earlier, the wife might well have obtained a greater amount of the assets in the division process. On the facts, it was inequitable to put the gifts into the common pool for division and the Court held that the wife should retain the gifts. The learned Judge explained:

The circumstances of this case are much more akin to those in Lee Leh Hua than to those in Yeo Gim Tong Michael. In the first case, the gift was made as compensation for the husbands abandonment of the wife whereas in the latter case, the husband had, in the course of the marriage, bought land in the Philippines for the wife and had paid for the construction of a house there. The gift to the wife was not connected with any breakdown of the marriage nor was it given to her for any particular purpose or to compensate her in any way. Here, the gifts made to the wife under the Financial Agreement were made for the specific purpose of inducing the wife to act in a certain way. She did so. I think that it would be inequitable to allow the husband to retract these gifts now even though his financial circumstances may have changed for the worse. In fact, one of the purposes of the gifts must have been to insulate the wife from reverses in the husbands finances since she wanted a certain level of security and he was prepared to give her the same in the circumstances that then existed.

The more principled approach is to treat inter-spousal gifts as matrimonial assets. These gifts may be divided like any other matrimonial asset. However, what proportions of these gifts each spouse should obtain must depend on what is just and equitable after taking into account all relevant circumstances. One important circumstance is the agreement reached by the spouses in making the inter-spousal gifts. The parties agreement is a factor specifically listed in s 112(2)(e) that the Court is obliged to have regard to. The Court may uphold an inter-spousal gift agreement by incorporating it in its order of division, instead of deciding on another manner of division proportions. In Lee Leh Hua

and Wong Ser Wan, a just and equitable result required the donee spouse to keep the gifted assets, even if it amounted to a very generous share of the total matrimonial assets.

Conclusion

When issues are dealt with systematically in the stages suggested in NK v NL, the exercise of the power in s 112 will be clear and principled. Conflating the issue of whether a gift is a matrimonial asset with the issue of how it (and other assets) should be divided leads to confusion in how the law treats inter-spousal gifts. This article suggests placing the treatment of inter-spousal gifts in the broader context of how the Court treats marital agreements. The first step is to include inter-spousal gifts within the pool of matrimonial assets. The subsequent step is to determine how to divide the gift and other assets in a just and equitable manner. If it is appropriate in a particular case that an inter-spousal gift be perceived as (or as part of) a marital agreement, then the Court could consider the gift arrangement as factor (e) in s 112(2). It can give effect to it, although it is not constrained to do so, as the Court has both the discretion and duty to order what is ultimately just and equitable.

Debbie Ong Associate Professor Faculty of Law National University of Singapore E-mail: [email protected]

Notes

1 Section 112, Womens Charter, Cap 353, 2009 ed.

2 [1996] 1 SLR(R) 633.

3 [2011] 2 SLR 814.

4 Cap 1, 2002 Rev ed.

5 [2011] 4 SLR 1148.

6 [2011] SgHC 237.

7 [2000] 2 SLR(R) 659.

8 [2007] 3 SLR 743.

9 Ibid, at para 31.

10 See Leong Wai Kum, The Law in Singapore on Rights and Responsibilities in Marital Agreements [2010] SingJLS 107-128; Debbie Ong Prenuptial Agreements: A Singaporean perspective in TQ v TR (2009) 21 Child and Family Law Quarterly 536-547; Debbie Ong, Prenuptial Agreements and foreign Matrimonial Agreements: TQ V TR (2007) 19 SAcLJ 397; Debbie Ong, When Spouses Agree [2006] 18 SAcLJ 96-115.

11 [2009] 2 SLR(R) 961.

12 [1999] 1 SLR(R) 554.

13 in exercising its power under s 112 of the Womens Charter, the Court will have regard to the factors in s 112(2), including (e) any agreement between the parties with respect to the ownership and division of the matrimonial assets made in contemplation of divorce. See also comment in (2000) 1 SAL Ann Rev 180 at 194.

14 [2006] 1 SLR (R) 416.

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Intent to Claim

In context of the Building and Construction Industry Security of Payment Act (Cap 30B) (Security of Payment Act), a payment claim may be described as a written document that is served by the claimant on the respondent for payment of goods supplied under a supply contract, or for payment of construction work carried out, or for related goods or services provided, under a construction contract. We know that care must be taken in preparing a payment claim. A document must contain certain formal requirements in order to constitute a valid payment claim for the purpose of the Security of Payment Act. These formal requirements are set out in s 10(3) of the Security of Payment Act, and in reg 5(2) of the Building and Construction Industry Security of Payment Regulations (Security of Payment Regulations), and include, for example, the requirement of the claimed amount, and the requirement of the period within which the works were carried out. If the formal requirements are not provided and the purported payment claim is found to be invalid, the Singapore High Court in Sungdo Engineering & Construction (S) Pte Ltd v Italcor Pte Ltd [2010] 3 SLR 459 (Sungdo Engineering) has held that the adjudicator would not have jurisdiction to determine the adjudication application. Accordingly, the adjudication application will be

rejected. In the words of the Honourable Justice Lee Seiu Kin in Sungdo Engineering:

I am, with respect, unable to agree that jurisdiction is not affected by an invalid Payment Claim or service thereof. The power of the [Authorised Nominating Body] to appoint an adjudicator arises from the receipt of an adjudication application from a claimant, and that is predicated by a whole chain of events initiated by the service of a Payment Claim by the claimant on the respondent under [Section 10 of the Security of Payment Act]. It must follow that if the claimant had failed to serve a Payment Claim, or to serve something that constitutes a Payment Claim, the power to appoint an adjudicator for that particular claim has not arisen. (Emphasis added).

An instance where the adjudicator lacked the jurisdiction to determine the adjudication application, was in Adjudication AA116 (2009),1 where the purported payment claim to which the adjudication application relates was found not to contain the formal requirements, and hence, defective as a payment claim for the purpose of the Security of Payment Act. Accordingly, the Adjudicator rejected the adjudication application.

This feature considers the argument raised in Hon Industries Pte Ltd v Wan Sheng Hao Construction Pte Ltd [2011] SGHC 247, that the claimant did not intend a progress claim to be a payment claim for the purpose of the Security of Payment Act.

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Looked at another way, the formal requirements ensure that a respondent receiving a document would recognise the document as a payment claim. The formal requirements also ensure that a respondent would have adequate information to consider the payment claim, and respond accordingly to the payment claim with an appropriate payment response.

In Hon Industries Pte Ltd v Wan Sheng Hao Construction Pte Ltd [2011] SGHC 247 (Hon Industries), decided on 16 November 2011, the applicant Hon Industries Pte Ltd had applied by way of Originating Summons No 628 of 2011 to set aside an Adjudication Determination dated 26 May 2011 obtained by Wan Sheng Hao Construction Pte Ltd, on grounds, inter alia, that Progress Claim No. 8 to which the adjudication application relates, was not a valid payment claim for the purpose of the Security of Payment Act. However, its argument that Progress Claim No. 8 was invalid was not premised on Progress Claim No. 8 not containing the formal requirements set out in s 10(3) of the Security of Payment Act, and in reg 5(2) of the Security of Payment Regulations, but premised on the ground that Wan Sheng Hao Construction Pte Ltd had not intended Progress Claim

No. 8 to be a payment claim for the purpose of the Security of Payment Act. In the alternative, the applicant argued that even if Wan Sheng Hao Construction Pte Ltd had intended Progress Claim No. 8 to be a payment claim for the purpose of the Security of Payment Act, such an intention was not communicated.

This submission appears to stem from the case of Sungdo Engineering. In that instance, the Honourable Justice Lee Seiu Kin held that for a document to amount to a payment claim for the purpose of the Security of Payment Act:

not only must [the document] comply with the prescribed requirements for a Payment Claim, it must be intended to be such by the party submitting it and, importantly, such intention must be communicated to the recipient. Whether or not this communication has taken place in each case would be a question of fact to be determined according to the circumstances of that case. Evidence of such communication may come from covering letters, e-mail exchange referring to the document in question or even

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oral communication. Evidence could well come from the manner in which the respondent had dealt with the document, eg, he gives a payment response. It would not be possible to set out all the circumstances under which a court would hold that such intention has been communicated and each case would have to be determined on the basis of its unique facts. But certainly a statement in the document that it is a payment claim under the Act would be the most effective manner of communicating this intention. (Emphasis added).

The learned Assistant Registrar went on to consider the material parts of the cover letter of Progress Claim No. 8, and noted that it was not disputed that the cover letter contained all formal requirements required of a payment claim for the purpose of the Security of Payment Act. The learned Assistant Registrar held that it was apparent that Progress Claim No. 8 was a business-like document, and that it was also apparent from its content that Wan Sheng Hao Construction Pte Ltd was claiming a sum of money that was due.

The learned Assistant Registrar further regarded as an important factor that the applicant had in the course of the adjudication below not taken any issue with the validity of Progress Claim No. 8 but had instead sought to prove that it had responded with a valid payment response. This factor, it was reasoned, demonstrated that the applicant understood

at that material time, that Progress Claim No. 8 was intended as a payment claim. The fact that Progress Claim No. 8 made provision for the applicant to sign to acknowledge receipt of the claim, was also one factor which the learned Assistant Registrar relied on, in finding that Progress Claim No. 8 was intended as a payment claim.

It is now somewhat uncertain, following Sungdo Engineering, that where a document contains the formal requirements set out in s 10(3) of the Security of Payment Act, and in reg 5(2) of the Security of Payment Regulations, the document would invariably constitute a valid payment claim. According to the Honourable Court, the party submitting the document must intend it to be a payment claim, and such intention must also be communicated to the recipient.

It has often been said that the law is predominantly concerned with the objective intentions of a party, and not his subjective or actual intentions. Hence, the objective approach ascertains a partys intention by looking at his words and conduct from the perspective of a reasonable man. Applying the objective approach in the context of statutory adjudication under the Security of Payment Act, so long as a document contains the formal requirements of a payment claim, the party serving that document would be taken to have intended it to be a payment claim. Sungdo Engineering has carved an exception to the objective approach, and recognises that there would be cases where a partys actual intention differs from his apparent intention,

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and this may or may not be known to the recipient of the document. Hence, the document must not only comply with the formal requirements for a payment claim, the party serving the document must intend it to be a payment claim, and such intention must be communicated to the recipient.

This begs the question of how such an intention may be communicated. Certainly if the expression Payment Claim or Payment Claim under the Building and Construction Industry Security of Payment Act (Cap. 30B) is applied to the document in question, such an intention would undoubtedly be communicated across and the recipients impression of the document would be that of a payment claim. However, Sungdo Engineering held that there is no requirement in the Security of Payment Act for a document to contain a statement that it is a payment claim made for the purpose of the Security of Payment Act. This was affirmed by the same Court in Chua Say Eng (formerly trading as Weng Fatt Construction Engineering) v Lee Wee Lick Terence (alias Li Weili Terence) [2011] SGHC 109 (Chua Say Eng). An expression Payment Claim or like expression may also alert the recipient of an impending adjudication application, and negate the tactical and procedural advantages enjoyed by a claimant.

In my view, pending an amendment to the Security of Payment Act to require a document intended to be a payment claim to contain a statement that it is a payment claim made under the Security of Payment Act (which would help put to bed the uncertainty of the intention of the party serving the document), which is incidentally a requirement under s 13(2)(c) of the New South Wales Building and Construction Industry Security of Payment Act 1999, an intention may be communicated if the document in question was served on the recipient while the works were still in progress, or if the document in question was substantially in the same format as earlier payment claims. The example raised in Hon Industries of the claimant making provision in the document for the recipient to acknowledge receipt of the claim, is also instructive. These examples are certainly by no means exhaustive. In the words of the Honourable Justice Lee Seiu Kin, [i]t would not be possible to set out all the circumstances under which a court would hold that such intention has been communicated and each case would have to be determined on the basis of its unique facts. Each case would be a question of fact to be determined according to the circumstances of that case.

As an aside, the decision of Chua Say Eng has resulted in uncertainty in the construction industry. In that case, the underlying contract was silent in the sense that it did not contain an express term on the due date for submission of a payment claim. In those circumstances, reg 5 of the Security

of Payment Regulations would apply, which provides inter alia, that the payment claim shall be served by the last day of each month following the month in which the contract is made. Based on this provision, the Honourable Justice Tay Yong Kwang ruled that for work carried out in April 2010, the last day for serving a payment claim for the work carried out was in May 2010. As the payment claim in question was served only on 2 June 2010, it was served out of time. I share the view that that it is common practice in the construction industry for a contractor to submit a payment claim in respect of work that could be carried out for more than two months earlier. Pending decision of the Court of Appeal, this would be the law applicable in cases where the underlying contract is silent on the due date for submission of a payment claim.

* Any error is the authors own. Special thanks to Mr Amos Teo of Davis Langdon & Seah, Singapore (Contract Advisory and Dispute Management unit) for lending his personal and invaluable views to this article. Mr Amos Teo is an Accredited Adjudicator.

Notes

1 [2009] 3 SCAdjR 628.

John Lim Harry Elias Partnership LLP E-mail: [email protected]

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This article discusses the legal issues and legitimacy of changing online data storage and delivery facilities.

The Future of Digital LockersDisputes have constantly arisen between technology and copyright interests since the internet became popularized as the preferred medium for modern day communication. This has been occurring with greater frequency in various jurisdictions including the US and Singapore, where both statutory and Judge made laws have been developing in tandem with the evolution of IT in order to formulate and update copyright laws to better balance the rights and interests of all the stakeholders concerned. One line of disputes relates to the invention and use of technologies for the delivery of digital content. In the US, the earlier battle has been taken against Peer-to-Peer (P2P) networks even as different models of P2P technology evolved through changes in their technical operations.1 Even the Singapore Court of Appeal had the opportunity to consider the subject in the recent case of RecordTV Pte Ltd v MediaCorp TV Singapore Pte Ltd2 that considered the legal status of digital video recorders, which is another form of digital sharing facility (albeit through streaming as opposed to downloading of content as in the P2P cases).

A recent dispute that has arisen in the US continues this trend of disputes and illustrates the difficulties of any form of resolution even as technology embraces, but copyright owners (by-and-large) resist, such changes. This article lays out the parties, facts and issues relating to the disputes between Universal Music Group Inc., the US government (and other jurisdictions) on the one hand and Megaupload Ltd. (and its executives) on the other (the "Megaupload Dispute").3 In the process, some observations and suggestions will be made on how the dispute can be resolved through legislation, which can also be useful consideration for the parties to achieve private settlement or as a compromise between the industries concerned.

The Future of Digital Lockers: Universal v Megaupload

It was foreseeable and inevitable that the battle for digital supremacy would lead up to the showdown between a media industry giant and the leading digital locker company. The big media companies have been playing tag team in bringing a series of actions against technological products and services that they perceive as threats to their profitability for many years beginning with the Napster case, culminating in the Supreme Court Grokster decision, which have yet to resolve the issues given the changes in technology and the latest developments in the US in relation to the attempted

introduction of the Stop Online Piracy Act and the Protect Intellectual Property Act into the House and Senate that led to a stalemate after a concerted online protest was made by the leading technological companies such as Wikipedia and Google. The trend of disputes follows technologies that have developed in operations that essentially perform the same or similar functions, and seek to achieve the same objectives, as their P2P predecessors, even as the technology or operations involved appear different.

The Facts

The legal maneuverings between Universal and Megaupload began in 2011 when Megaupload harnessed big name musical artistes in a video advertisement touting its services. This was followed by a highly suspect move by Universal to block the content on video-sharing portals where it was uploaded such as YouTube. This was followed by threats of, ostensibly, indirect copyright infringement by Universal against Megaupload which culminated in legal action taken across several jurisdictions (including the US, Hong Kong and New Zealand) through legal processes initiated by the US Department of Justice (US DOJ) against the company and its top executives for criminal conspiracy to facilitate copyright infringement.4 The case remains outstanding although counter-retaliation by the group Anonymous has already hit the US DOJ and other government and media industries.

Interestingly, before it was taken down by the US government, Megaupload had in turn sued Universal Music for abusing YouTubes content filters under its Content Management System to take down the abovementioned music video advertisement of its services,5 featuring original music performed by paid musical artistes.6 The argument on the side of Megaupload and YouTube is that that action amounted to a Digital Millenium Copyright Act (DMCA) notice-and-take-down procedure that can only be utilized by copyright owners to require removal of illegally uploaded content that belonged to them.7 Universal claimed that the filtering system did not amount to such a takedown notice in the DMCA and that it was merely using a technological service made available to them by YouTube. Whatever the merits of the arguments on both sides, this illustrates where the battle lines are drawn and that technology interests will stand on the same side even if their individual interests and operations may differ.8

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The Issues

Megauploads business model and its practices that induce rampant file-sharing as well as its lack of good faith and safeguards in its file storage operations, which resembles an alternative file-sharing facility a la P2P (for users utilizing the search engine and other search aggregators to find the files) clearly features in the case. In fact, Megaupload even paid its users to upload popular files to the site, a major point of contention in this case. Thus, other digital locker websites have already tried to distance themselves from Megaupload on these activities based on the element of good faith and responsiveness to (and compliance) with copyright complaints while relying on existing statutory safe harbour protection of the DMCA for internet intermediaries.9 For example, Rapidshare have announced its operations which include collecting account details of its users and slowing down its download speed for its free services and so on, in order to distancing itself in its operations from Megaupload in matters that it considers to be important determinants of good faith actions in deterring and reducing primary copyright infringement by its users. Other file hosting sites have followed suit and also amended their policies to pacify as well as to render their services less likely to constitute complicit behaviour. According to PCMag.com, several smaller cloud-based services are changing their services in response to the Megaupload case. FileSonic and Upload too have disabled their file-sharing functionality, and others are shutting down their affiliate programs. Many similar file hosting sites have cancelled similar rewards programs as that offered by Megaupload for sharing popular files.

Another group of people and their interest in this have to be considered even though the main dispute is between the US government, Megaupload and Universal, and that is the legal rights of Megaupload users, particularly those that have existing paid accounts with the service. Genuine users' data is under threat of being deleted by the government and the question arises as to whether the government is inducing breaches of contract between Megaupload and its users. The Electronic Frontier Foundation and other like-minded organisations are mobilizing efforts to prevent this from happening by helping customers retrieve data in the grace period before deletion (an acknowledgment by the government of the genuine interest and concerns of such users). This is the danger of users only relying on cloud service industry providers for backing up data. This also complicates the legality of the actions taken vis--vis the content that is stored in such digital lockers without distinction.

Practical Problems

Digital lockers appeal to the user because of the ease of use, and in reality a big portion of their services are used by people freely sharing materials, whether that involves

original or pirated materials. When one includes competition into the mix and the rapid changes in (and quick turnover of) communications technology, then there are incentives for these services to push the envelope to maximise profitability in the shortest time. Moreover, many of these companies operate out of (and store their profits) in safe havens, as was the case of Megaupload (hence the cross-jurisdictional courses of action). Finally, there will always be those, such as The Pirate Bay, that seem to genuinely believe in and support a digital commons and the free sharing culture, even if their methods may also be suspect, by the way they apply that philosophy in practice.

On the other side, there is little incentive for the media industry to switch tactics from the lobby-and-litigate strategy given the erosion of the persuasiveness of moral arguments and ethical preaching, the rapid decline of their profitability and faced with possible decline and death. Desperate times for the survival of these companies call for desperate measures. Even while they transition to the digital and new business models, there are two major impediments to huge success in the digital business, the first to succeed often dominates the market that also saturates with players in a short time; also, any business model that requires direct remuneration from consumers will face stiff competition from those that do not.

There must be a genuine compromise between both sides in order for a solution to succeed and the hope within the Pandoras box is that the mutually dependent relationship between digital technology and creative content will lead to such an outcome.

Possible Solutions

Digital lockers have their place in the digital economy and society, hence an argument can be made for a limited form of statutory protection with safeguards against abuse in the form of legal requirements or conditions for such protection. Other independent but reinforcement measures can also be put into place to supplement the safeguards that are contained in the proposed safe harbour provision. Some features that should be considered include the following:1. A public-private key system, limiting access to

lockers, thereby, limiting access and sharing. This need not be categorical but can consist of levels of paid services pirates are deterred from sharing simply due to simple cost-benefit analysis (the current appeal to pirates and users are unpaid (direct) services; making it a fully paid service will also discourage most pirates (and their ad sponsors) because of uncertainty of user donations as well as most users if the pirates require direct payment.10 The primary market remains on personal storage and very limited sharing or transfer such as within an organisation or a household.

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2. Prohibiting exclusive file hosting site searchservices involving spidering and aggregation, which are services that may be offered by other services that are not necessarily offered by or affiliated with the digital lockers in question (eg, filecrop and 4megaupload).11 However, the prohibition should not extend to self-blocking by general search engines of their search results, which will have the effect of the objectionable approach taken in the Stop Online Piracy Act (SOPA) and Protect IP Act (PIPA),12 although takedown notices can likewise be used by copyright owners to request the take down of search results hyperlinks to URLs containing infringing materials for sharing and download. It is to be noted that this suggestion merely reinforces preventative measures against copyright infringement as, even if these websites may yield the search result and hyperlink, the first suggestion will still provide an effective and final roadblock to access and sharing.

3. Non-inducement measures that demonstrate good faith is another key. This can be in the form of observing takedown notices upon specific knowledge of offences; perhaps even a denial of service to recalcitrant offenders/abusers (although this may be too draconian a move). Subscription and registration, which is already in use, can also be used as measures for identification (and hence, a form of deterrence). Changes in terms of service and use including warnings and penalties (eg, breach of contract) can also evidence good faith and have the effect of deterring offenders. Also, the collection of information on accounts and subscribers during registration for identification of user and content can likely have that effect.13

With these and other possible safeguards in place, digital lockers meeting the requirements should be provided safe harbour from copyright infringement actions, which will allow its continued existence while satisfying the concerns of copyright holders. Statutory protection will also encourage the incorporation of companies and the location of their hardware and finances within the jurisdiction concerned, even though that may or need not be made a formal pre-requisite for the safe harbour to apply, in order for better oversight and enforcement. Even if statutory resolution is not on the cards, the above features can form the springboard for a compromise solution between the parties, and also the media and the digital locker industry.

The story obviously does not end here as the march of digital delivery technology continues to take new forms and techniques, which will continue to be considered as threats to copyright interests and trigger the protectionist instincts of the media industry. It will be interesting to see how the status of digital lockers will be resolved and what will be the subject of the next battle between the two sides.

Notes

1 See A&M Records, Inc v Napster, Inc 239 f3d 1004 (9th Cir, 2001) to MGM Studios, Inc v Grokster, Ltd 545 US 913 (2005).

2 [2011] 1 SLR 830.

3 See eg Case No. 1:12CR3 (Eastern District of Virginia) (the US governments action against Megaupload et. al.) and Case No. 4:2011cv06216 (California Northern District Court) (Megauploads counter-action against Universal).

4 US Department of Justice, Justice Department Charges Leaders of Megaupload with Widespread Online Copyright Infringement (U.S. DOJ Press Release, 19 January 2012), available at: http://www.fbi.gov/news/pressrel/press-releases/justice-department-charges-leaders-of-megaupload-with-widespread-online-copyright-infringement (last accessed on 8 March 2012).

5 to facilitate copyright owners, the google-owned Youtube invented a filtering system that enables rights holders to upload videos they own to a fingerprinting database. When Youtube account holders upload their content, the system scans the database for matches and if a full or partial match is found, the alleged rights holder can seek to have it removed or alternatively place advertising on the video and make money per click.

6 The Megaupload advertisement is still available at: http://bcove.me/3wfx4v6h.

7 The Copyright Act forbids false copyright claims, and Courts such as in the Lenz have stated that takedown notices should be issued only after assessment that it did not cons

singapore law gazette (april 2012)

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