Judgment

[Please note that this case has not been edited in accordance with the current Singapore Law Reports house style.]

      Judgment reserved.

Michael Hwang JC:

1           In this case I have to consider if the Miliangos doctrine applies in Singapore, in the light of a previously overlooked Privy Council decision. If it does apply, I also have to consider whether it is a mandatory or optional rule.

2           The defendants were the plaintiff’s agents in the Middle East to procure purchasers for the purchase of timber or plywood from the plaintiff. In the statement of claim, the plaintiff’s claim against the defendants was stated to be for US$33,556.45 or its equivalent in Singapore dollars, as money had and received by the defendants for the use of the plaintiff. This claim was made up as follows:

(a)    On 24 June 1984 the defendants received US$16,000 which was intended to be used to clear the plaintiff’s goods but instead, on 11 October 1984, the defendants paid to a third party a sum of US$8,454, leaving a balance of US$7,546 held by the defendants to the use of the plaintiff.

(b)    On an unknown date, the defendants also obtained from another consignee a sum of UAE Dirhams 304,980.42 (equivalent to US$83,010.45) for timber sold and delivered by the plaintiff to another third party, out of which two sums of US$27,000 and US$30,000 were paid by the defendants to the plaintiff on 12 January 1985 and 19 February 1985 respectively, leaving a balance of US$26,010.45 held by the defendants to the use of the plaintiff.

3           The plaintiff made numerous requests to the defendants for payment, but no payment was made. The statement of claim (as amended) claimed the sum of US$33,556.45 or its equivalent in Singapore dollars, but did not specify the date on which conversion was to be made.

4           Although the defendants originally engaged solicitors to contest the action and a defence was filed on their behalf, their solicitors eventually discharged themselves and the defendants did not appear on the day of trial, 26 June 1992. Plaintiff’s counsel accordingly applied for judgment under O 35 r 1(2) of the Rules of the Supreme Court 1970. However, counsel asked for judgment to be entered for the plaintiff, not for the sum of US$33,556.45, but for the equivalent sum in Singapore dollars at the prevailing rate of exchange as at the date of the writ, 25 April 1986. As counsel did not have the appropriate exchange rate for that date available, the matter was adjourned for him to ascertain the rate as well as for him to furnish legal authorities in support of his request. Counsel returned on 9 July 1992 and tendered a written submission, and I then reserved judgment to consider his submissions.

5           Counsel’s submissions are based on an article Judgments in Foreign Currencies by Justice PE Nygh in (1980) 22 Mal LR 1 and, in particular, on a passage at p 13:

If the plaintiff does exercise a choice to claim in sterling what should be the date of conversion? It is submitted that in such a case it should be the date the claim is made. The breach-date rule is now totally discredited and it has nothing to recommend it. If the loss was incurred in foreign currency and the plaintiff chooses not to claim in that currency, the last possible date for restitution would have been the date on which the loss is formally claimed in sterling.

6           To understand this passage in context, it is necessary to discuss more fully the problem which is the subject of Justice Nygh’s article.

7           The old English rule, which was followed throughout the Commonwealth, was that a court could only give judgment in its own currency, and, where a debt was expressed in foreign currency, it had to be converted into local currency as at the date which the debt was payable, or, in the case of damages arising from breach of contract or tort, as at the date when the breach of contract occurred or the damage in relation to which compensation was claimed was suffered. This principle is known as the ‘breach-date rule’ (or the ‘sterling breach-date rule’) and was laid down authoritatively by the English Court of Appeal in Di Ferdinando v Simon, Smits & Co Ltd in relation to damages for breach of contract, affirmed by the House of Lords in SS Celia v SS Volturno in relation to damages for tort and again re-affirmed by the House of Lords in Re United Railways of Havana and Regla Warehouses Ltd in relation to a contract debt.

8           The demise of the breach-date rule in England effectively dates from the decision of the House of Lords in Miliangos v George Frank (Textiles) Ltd, which held that an English court could give judgment for a sum of money expressed in foreign currency and, if it was necessary to execute on the judgment, the judgment in foreign currency would be converted to local currency at the date when the plaintiff was given leave to levy execution. The actual decision in Miliangos4 was specifically limited first, to the case of debts (as distinguished, in particular, from claims for damages in contract or tort) and, secondly, to contracts governed by a foreign system of law and whose money of account and payment was that of the foreign country in question (or possibly of another foreign country). However, the Miliangos principle has since been extended by a number of decisions to: (a) damages for breach of contract (Services Europe Atlantique Sud (SEAS) v Stockholms Rederiaktiebolag Svea of Stockholm; ‘The Folias’) and for the commission of a tort (Owners of the mv Eleftherotria v Owners of the mv Despina R; ‘The Despina R’); (b) restitution under the English Law Reform (Frustrated Contracts) Act 1943 (BP Exploration Co (Libya) Ltd v Hunt (No 2) at pp 840-841); (c) debts due (Barclays Bank International Ltd v Levin Brothers (Bradford) Ltd); and (d) claims for liquidated (Federal Commerce and Naviga- tion Co Ltd v Tradax Export SA; ‘The Maratha Envoy’ at pp 341–342, 349, 354) and unliquidated (‘The Folias’) damages arising under contracts whose proper law is English.

9           Two questions arise for consideration:

(a)    does the Miliangos principle apply in Singapore?

(b)    if so, does it give a plaintiff the option of asking for judgment in local currency or for conversion of the judgment sum from the foreign to local currency at a date other than the date of execution?

Does the Miliangos principle apply in Singapore?

10       It may seem strange to ask this question when Miliangos has been applied on a number of occasions in Singapore (see ‘The Vishva Pratibha’; Sarathi Co v ‘Vishva Pratibha’ (Owners of); Port of Bombay, India, Ooi Han Sun v Bee Hua Meng, Tatung Electronics (S) Pte Ltd v Binatone International Ltd and Wardley Ltd v Tunku Adnan & Anor) as well as in Malaysia (see Lee Tai Hoo v Lee Swee Keat, Popular Industries Ltd v Eastern Garment Manufacturing Sdn Bhd and Re P Suppiah (Tara Rajaratnam, Judgment Creditor)). However, a problem arises with a decision of the Privy Council that runs contrary to the Miliangos principle, namely, Syndic in Bankruptcy of Salim Nasrallah Khoury v Khayat, which was not apparently cited in any of the cases I have mentioned. This case was an appeal from the Supreme Court of Palestine on an issue involving the interpretation of s 72(4) of the Palestine Bills of Exchange Ordinance, which is in pari materia with s 72(4) of the English Bills of Exchange Act 1882 (now repealed), as well as s 72(d) of the Singapore Bills of Exchange Act (Cap 23). Section 72(4) of the Palestine Ordinance provided :

Where a bill is drawn out of but payable in Palestine, and the sum payable is not expressed in the currency of Palestine, the amount shall, in the absence of some express stipulation, be calculated according to the rate of exchange for sight drafts at the place of payment on the day the bill is payable.

11       It will be seen that this section applies the breach-date rule to bills of exchange. In Khoury v Khayat, the question was at what date foreign bills payable in Palestine had to be converted into local currency, the Supreme Court of Palestine having refused to apply this section and having held that the relevant date was the date of actual payment. Lord Wright, delivering the judgment of the Board, said (at p 513):

There can, their Lordships apprehend, be now no doubt as to the English law on this point. It is true that different views have been taken at different times and by different systems of law. Indeed, there are at least four different rules which might be adopted. The rate of exchange might be determined as at the date at which payment was due, or at the date of actual payment, or at the date of the commencement of proceedings to enforce payment, or at the date of judgment. English law has adopted the first rule, not only in regard to obligations to pay a sum certain at a particular date, but also in regard to obligations the breach of which sounds in damages, as for an ordinary breach of contract, and also in regard to the satisfaction of damages for a wrongful act or tort. The general principles on which that rule has been based are explained by the Court of Appeal in Di Ferdinando v Simon, Smits & Co [1920] 3 KB 409, a case of an ordinary breach of contract. The rule, however, was established many years before then. It was again enunciated by the House of Lords in SS Celia v SS Volturno [1912] 2 AC 544, where the claim was for damages in tort consequent on a collision.

12       Lord Wright then went on to elaborate on the reasoning of the House of Lords in the latter case and concluded (at p 514):

The [Palestine] ordinance only declares what the English rule is, and, as it is, so it has been for many years.

13       It is clear therefore that the Judicial Committee, in deciding an issue relating to bills of exchange, relied on what it perceived to be the general rule of damages prevailing in English law in relation to foreign currency claims for contract and tort, namely, the breach-date rule.

14       The status of Khoury v Khayat in Singapore in the light of Miliangos4 raises a difficult question of the application of the doctrine of stare decisis in Singapore. It is first of all quite clear that Khoury v Khayat cannot stand with Miliangos: see Barclays Bank v Levin (at pp 281–282) and Veflings (George) Rederi A/S v President of India (‘The Bellami’). Justice Nygh has suggested in his article (at p 18) that the ratio decidendi of Khoury v Khayat is confined to bills of exchange. However, if one takes the generally accepted understanding of ratio decidendi as:

any rule of law expressly or impliedly treated by the judge as a necessary step in reaching his conclusion, having regard to the line of reasoning adopted by him

15       (Cross on Precedent in English Law (3rd Ed, 1977) at p 76), then the reasoning of the Judicial Committee in Khoury v Khayat clearly rests on its acceptance of the breach-date rule relying, as it does, on Di Ferdinando v Simon and ‘The Volturno’. In applying s 72(4) of the Ordinance, the Board deliberately chose to emphasize that it did so, both because it represented English common law as well as Palestinian statute law and went on (at p 516) to justify why the breach-date rule was the appropriate date of conversion as opposed to the date of actual payment. The passage from the judgment of Lord Wright I have quoted earlier must, in my view, be treated as part of the ratio of the case, and it is interesting to note that Khoury v Khayat was relied on by counsel for the appellant in Miliangos itself as authority for the breach-date rule. Although Di Ferdinando v Simon and ‘The Volturno’ were expressly not overruled in Miliangos, they were subsequently dealt with by the House of Lords in ‘The Folias’, which overruled Di Ferdinando v Simon (at p 701), and ‘The Despina R’, which distinguished ‘The Volturno’ out of existence (at pp 696–697). Thus, the authorities which Khoury v Khayat relied on, as well as the decision itself, are clearly no longer authoritative statements of English law after Miliangos and the cases following it.

16       I am therefore faced with the situation of a Privy Council decision on a common law point from another jurisdiction which is in conflict with a decision of the House of Lords. The question is: am I, exercising the powers of a High Court judge at first instance, bound to apply the Privy Council decision, or may I (and should I) follow the conflicting House of Lords decision? While there is no reason in theory why Singapore courts should be bound by Privy Council decisions from other jurisdictions (as opposed to treating them with great weight), the practice has been for Singapore courts to treat themselves as virtually bound by any Privy Council decision on a point of law, whether statutory or common law and from whatever jurisdiction. These decisions are conveniently set out in The Singapore Legal System (1st Ed, 1989) by Mr Walter Woon (at pp 249–251). I am not, however, aware of any decision of the Singapore Court of Appeal decided after 9 August 1965 which binds me to follow a Privy Council decision when that decision was on appeal from another jurisdiction. Having regard to Singapore’s status as an independent sovereign nation after that date, it may therefore be possible to re-state the doctrine of stare decisis in such a way that only Privy Council decisions on appeal from Singapore will be binding on Singapore courts.

17       However, I am able to avoid addressing that issue directly because there is another rule of stare decisis which points the way to the course I should take. The Singapore Court of Appeal has applied the Miliangos principle in Tatung Electronics v Binatone (at p 216). While the decision itself was in respect of a claim for damages for breach of contract, there is no reason to suppose that the Court of Appeal intended its acceptance of Miliangos to be confined only to this field. Although Khoury v Khayat was not cited to the court (nor apparently to any of the courts in the Singapore decisions which have applied Miliangos), it is not open to me, sitting as a court below the Court of Appeal, to decline to follow a decision of the Court of Appeal on the ground that it was decided per incuriam. This was in fact the position in which Bristow J found himself when he heard Miliangos at first instance, because he was confronted with the House of Lords decision in United Railways of Havana (applying the breach-date rule) on the one hand, and the English Court of Appeal decision in Schorsch Meier GmbH v Hennin (which refused to follow the former case) on the other. Faced with this dilemma, Bristow J decided to follow Schorsch Meier v Hennin but, although the House of Lords agreed with the substantive result reached by Bristow J, it also said that he was incorrect in declining to follow United Railways of Havana. Ironically, it was left to the dissenting judge, Lord Simon of Glaisdale, to point out (at pp 477–479) that the per incuriam rule can only be invoked by a court at the same horizontal level as the court whose decision is in question (see also Cassell & Co Ltd v Broome at p 1054 and Baker v The Queen at p 788). I am therefore obliged to (and I willingly) follow the Court of Appeal decision in Tatung Electronics v Binatone (and there can be no doubt that its decision on this point was ratio) in preference to the apparently conflicting Privy Council decision in Khoury v Khayat.

18       I have deliberately refrained from making any firm statement on what should be the practice of the High Court when faced with conflicting decisions of the Privy Council from another common law jurisdiction and the House of Lords, because such an important matter should only be decided by the Court of Appeal. I would only observe that this case must demonstrate the undesirability of any rule (if in fact it exists) that a Singapore court should regard itself bound by a Privy Council decision from another jurisdiction which clearly cannot stand against a more recent House of Lords decision on the same common law point. Should any judge apply Khoury v Khayat, and should that decision be appealed to the Privy Council, the Judicial Committee itself would be virtually certain to apply Miliangos in preference to Khoury v Khayat. There can therefore be no practical justification for a rigid adherence to precedent in such a situation.

19       There is also a possible alternative reason for following Miliangos in preference to Khoury v Khayat. The nature of this case is a claim by a principal against an agent and it is arguable that the issue that has to be decided may be characterized either as an issue relating to the law of principals and agents or (insofar as it touches on the proper currency in which to express a commercial claim) as an issue relating to mercantile law generally. If that analysis is accepted I would be bound in this case to apply English law pursuant to s 5(1) of the Civil Law Act (Cap 43), even if it means disregarding a binding Privy Council decision which is inconsistent with English law. English law is clearly expressed by the decisions of the House of Lords in preference to any decisions of the Privy Council (see Tai Hing Cotton Mill Ltd v Liu Chong Hing Bank Ltd, at p 108) and for that reason Miliangos and the cases following that decision would be binding on me in preference to Khoury v Khayat. However, the issue of characterization for the purposes of s 5(1) is a thorny one, and it would not be appropriate for me on this occasion to rely on this ground, particularly when it has not been fully argued before me.

If Miliangos applies, does it give a plaintiff the option of asking for judgment in local currency or for conversion of the judgment sum from foreign currency to local at a date other than the date of execution?

20       This is, in a sense, a reverse of the Miliangos situation. The plaintiff is not asking to enter judgment for United States dollars (as it has claimed in its writ) but for Singapore dollars at the date of the writ being, as Justice Nygh put it in his article (at p 13), ‘the date the claim is made’.

21       In Miliangos, judgment was entered in foreign currency or its equivalent in local currency at the date when leave was granted to levy execution. Plaintiff’s counsel’s request in theory seeks to apply the Miliangos principle but to apply a different conversion date. However, in practice, since that date is past, judgment will be entered in local dollars. To that extent the plaintiff is really asking for judgment in Singapore dollars when his claim is expressed in United States dollars.

22      The authorities are ambivalent on this point. In Miliangos, Lord Wilberforce (who delivered the leading judgment) said (at p 468) :

In my opinion acceptance of the argument already made requires that the claim must be specifically for the foreign currency — as in this case for a sum stated in Swiss francs.

23       However, this remark has been interpreted by Mocatta J in Barclays Bank v Levin Brothers (at p 280) as follows:

I cannot read this passage in the opinion of Lord Wilberforce as expressing an obligation upon the foreign plaintiff to claim only in the foreign currency in question. All I think that Lord Wilberforce meant was that if judgment was to be entered in a currency other than sterling, then the claim must be made in such currency.

24       With respect, if that were really what the sentence meant, it would have been too obvious to be worth saying, and Lord Wilberforce is not normally given to stating the obvious.

25       In Federal Commerce v Tradax Export, Lord Denning MR (with whose judgment on this point the other judges agreed) said (at p 342):

Once it is recognized that judgment can be given in a foreign currency, justice requires that it should be given in every case where the currency of the contract is a foreign currency; otherwise one side or the other will suffer unfairly by the fluctuations of the exchange. … So I would hold that in contracts where the currency of the contract is a foreign currency, but the proper law of the contract is English law, the court can and should give judgment in the foreign currency : and this both when it is for a debt due under the contract (as demurrage) or damages for breach of contract (as of the implied term). (Emphasis in original.)

26       Lord Denning would of course have applied the same rule when the proper law of the contract was foreign law, as this had already been decided by Miliangos. Although the actual decision in Federal Commerce v Tradax Export was overruled in the House of Lords, these remarks were not affected by the overruling.

27       The Supreme Court Practice 1991 states (at para 42/1/5):

It is not clear whether the plaintiff has the right to elect that the judgment should be expressed in sterling or in a foreign currency. It would seem that the court retains a residual discretion to determine whether the judgment should be expressed in sterling or in a foreign currency and that it will exercise this discretion having regard to all the circumstances including the position of the parties and the fluctuations in the rates of exchange between the currency of the contract and sterling during the period between the date when the cause of action whether in contract or tort arose and the date of judgment. There may well be cases in which although the plaintiff may elect that the judgment should be expressed in sterling, yet the defendant may wish, or it might otherwise be just, that the judgment should be expressed in a foreign currency of the contract and vice versa. (Emphasis in original.)

but cites no authority.

28       In Ozalid Group (Export) Ltd v African Continental Bank Ltd, Donaldson J said (at pp 233–234):

I have said that under the new rule the plaintiff is entitled to make his claim in foreign currency. I use the word advisedly, because I can find no trace in the speeches [in Miliangos] of any intention to make a claim in this form obligatory. The overriding reason for changing the law was to provide a procedure which would enable the courts to compensate the claimant in full for the wrong which he had suffered. A change which required the plaintiff to claim in foreign currency and to accept sterling at the rate prevailing at the date of judgment could in some circumstances work as great an injustice as the old procedure requiring him to claim in sterling and to adopt the date of breach rate of exchange. (Emphasis in original.)

29       Most of the leading jurists, however, argue that, where Miliangos applies, it allows no option, and that a plaintiff must take his judgment in the foreign currency, and only convert the foreign currency to local currency when execution needs to be made after judgment has been entered. Thus, Professor RM Goode in Payment Obligations in Commercial and Financial Transactions (1st Ed, 1983) criticizes the remarks of Donaldson J quoted above as follows (at p 140):

With respect, this is a misunderstanding of the purpose of the Miliangos rule, which, as I have pointed out earlier, was not to provide full compensation to the creditor for delay in payment but simply to give him the benefit of his bargain, ie a right to be paid to the value of the designated currency of account without having that currency converted into sterling before he had the benefit of it through payment or initiation of steps to enforce a judgment. If the creditor of a foreign money obligation suffers loss because of a fall in that currency in relation to sterling after the breach date, the correct way of providing him with a remedy is not by allowing him to claim the sterling equivalent at breach date of what was then due in foreign currency (the procedure adopted in Ozalid and rightly criticized in the Working Paper [of the Law Commission referred to later in this judgment] as contrary to the Miliangos rule) but by awarding him damages for the loss in exchange resulting from the delay in payment. The two routes may well lead to the same result, as in Ozalid, but the former is inappropriate because it may enable the creditor to bypass a requirement of a claim to consequential loss, namely, that it is of a kind that should have been within the defendant’s contemplation at the time of the contract. Admittedly, Donaldson J allowed the claim in sterling not merely on the basis that the proceedings were brought in England but also because ‘it is clear that the plaintiffs’ loss was incurred in sterling’ (at p 234). But the fact that the creditor would have immediately converted the foreign money of account into sterling is not relevant to a claim for a liquidated amount under a contract, where there is an established money of account, and is material only to a claim for consequential loss resulting from the delay in payment.

and concludes:

We may therefore conclude that where the relevant currency (whatever it may be) is foreign, the creditor must claim in that currency, not in sterling. Of course, if the claim is liquidated the matter will never be looked at by the court if the defendant fails to take steps to defend the claim, so that judgment is given in default and is not set aside. But where the case comes before the court, whether at trial of the action or on the assessment of damages, a sterling claim should be ignored where improperly made. (Emphasis added.)

30       The most comprehensive review of the implications of Miliangos was made by the English Law Commission in its Working Paper No 80 (published in 1981) entitled Private International Law: Foreign Money Liabilities. In this paper, the Law Commission addressed the issue (at pp 69–70) as follows :

It must be borne in mind, however, that, as Lord Wilberforce explained in Miliangos, the principle underlying that decision is that a ‘foreign’ creditor has no concern with pounds sterling: for him what matters is that, for example, ‘a Swiss franc for good or ill should remain a Swiss franc’. The application of that principle in the case where sterling has appreciated in terms of the foreign currency between the date of maturity of the debt and the date of judgment would therefore also entitle the debtor to demand that judgment be given in the foreign currency.

Moreover, in the Ozalid case Donaldson J explained, obiter, that the plaintiff does not have a free choice; it is (he said):

“… for the plaintiff to select the currency in which to make his claim and it is for him to prove that an award or judgment in that currency will most truly express his loss and accordingly most fully and exactly compensate him for that loss”.

(It is true that Donaldson J also stated, at p 233, that the plaintiff was entitled, not bound, to claim in foreign currency. But he was making the point that, since on the facts of Ozalid the currency of the plaintiff’s loss happened to be sterling despite the money of account being foreign, judgment should be given in sterling. He was not apparently suggesting that, where the plaintiff’s loss was most truly expressed in a foreign currency, the plaintiff could obtain judgment for a specific sum in sterling.)

Although the point has not yet arisen directly for decision, we believe that the courts will have little difficulty as part of their judicial development of the principle underlying Miliangos in applying that principle to the case where the relative value of sterling has risen against the foreign currency in question between the date when the obligation was due and the date of judgment (and it is in this situation, for example, that the plaintiff may well be tempted to seek judgment for a specific sum in sterling). We do not think that legislative intervention is necessary to preclude a plaintiff from obtaining judgment in sterling in any case where the relevant obligation is properly to be expressed in a foreign currency. (Emphasis added.)

31       Cheshire and North on Private International Law (11th Ed, 1987) shares the same view and states (at p 99):

So what happens if sterling appreciates? In the case of an action for a debt it seems clear that the plaintiff ought to be entitled to judgment in the currency of the debt, converted into sterling as at the date of payment, and not judgment in sterling converted from the currency of the debt as at the date of breach. As was said in Miliangos, ‘the creditor has no concern with pounds sterling: for him what matters is that a Swiss franc for good or ill should remain a Swiss franc’. A similar rule ought to apply to claims for damages in foreign currency. The plaintiff should be entitled to judgment in the currency of his loss and not in sterling calculated as at the date the cause of action arose. In this way the plaintiff is protected against changes in the value of his currency as against sterling but is not, and should not be, protected against changes in the internal value of his own currency.

32       So also, Dicey and Morris on The Conflict of Laws (11th Ed, 1987) states (at p 1459):

In Miliangos the situation was that sterling depreciated in terms of the foreign currency between the date when the debt became due and the date of the judgment; and the House of Lords held in effect that the creditor’s right to receive the agreed amount in the foreign currency in which the debt was expressed could not be adversely affected by a subsequent depreciation of sterling. In the converse situation where sterling appreciates in terms of the foreign currency, no doubt the creditor cannot for that reason claim more in foreign currency than the agreed amount of the debt. [This sentence has, however, been criticized by Dr FA Mann at p 353 of his book which is discussed later.] Expressed in sterling, the debtor bears the risk of appreciation, the creditor the risk of depreciation of the foreign currency in accordance with the principle of nominalism. As Lord Wilberforce put it in Miliangos: ‘The creditor has no concern with pounds sterling: for him what matters is that a Swiss franc for good or ill should remain a Swiss franc.’ So the debtor as well as the creditor can demand a judgment in the foreign currency. (Emphasis added.)

33       McGregor on Damages (15th Ed, 1988) is to similar effect (at para 660):

The new rule will therefore not assist plaintiffs if sterling should start to rise again. But this is as it should be; indeed, the former rule may sometimes have unfairly advantaged plaintiffs suing in a climate of appreciating sterling.

34       Finally, these jurists are joined by the late Dr FA Mann, whose last edition of The Legal Aspect of Money (5th Ed, 1992) states (at pp 352–353) :

... where the plaintiff claims a sum of foreign money, he is both entitled and bound to apply for judgment in terms of such foreign money and it is only at the stage of payment or enforcement that conversion into sterling at the rate of exchange then prevailing takes place. (Emphasis added.)

…

If the foreign currency depreciates in terms of sterling the law as it now stands allows the creditor to recover the amount of foreign currency he is entitled to and does not attempt to compensate him for the loss which he suffers as a result of the debtor’s default in discharging his obligations.

35       I make three observations:

(a)    It should be noted that the various judicial remarks I have quoted are all obiter dicta. There is no case where a plaintiff, having established that the relevant currency is a foreign currency, has thereafter been allowed to enter judgment in local currency.

(b)    Care must be taken to distinguish cases where, although the relevant currency is foreign, the debtor chooses to tender payment in local currency. Miliangos does not preclude this course of action so long as payment in local currency is made at the date when payment is due, provided there is no other term of the transaction which will expressly or impliedly preclude such payment. This is a different question from the problem that arises when a debtor does not pay on the due date and the issue is in what currency the creditor is to present his claim (see Barclays Bank v Levin Brothers at p 277, In re Lines Bros Ltd (In Liquidation) at p 25 and Libyan Arab Foreign Bank v Bankers Trust Co at pp 764–766).

(c)    In all these cases sterling was of course the local currency, and we should therefore substitute Singapore dollars for sterling to understand the cases as they apply to Singapore. But it should also be noted that in most of the English cases the plaintiffs were foreigners seeking to enforce judgments in their home currencies, and in the present case we are concerned with a Singaporean suing a foreigner on a contract where United States dollars has been chosen as the relevant currency and now seeks to enter judgment in Singapore dollars.

36       Quite apart from authority, I believe that there should be no right of election open to the plaintiff for the following reasons:

(1)    The rationale for the Miliangos doctrine (as developed) is that it is right to allow judgment to be entered in a foreign currency where that currency is the relevant currency, either because it is the currency of the transaction or because it is the currency in which the plaintiff has most truly suffered his loss. If the court has ascertained that those criteria apply to a currency other than the local currency, then, given that Miliangos has removed the legal obstacle to entering judgment in foreign currencies, there can be no logical justification for entering judgment in any currency other than the relevant currency. The fact that some plaintiffs may suffer loss from the strict application of Miliangos should not be allowed to detract from the force of this logic. I will suggest a remedy for such plaintiffs later.

(2)    The oft-quoted words of Lord Wilberforce in Miliangos (at p 466):

The creditor has no concern with pounds sterling; for him what matters is that a Swiss franc for good or ill should remain a Swiss franc. (Emphasis added.)

indicate that the House of Lords recognized that it was not giving the plaintiff an option to select his currency but was redefining the obligation of the debtor to pay the sum owed in the relevant currency after the court had determined what that relevant currency was.

(3)    The only reason why the plaintiff would want to make his claim in local currency although the relevant currency is foreign is where, because of the delay in payment, the relevant foreign currency has depreciated against the local currency. The breach-date rule was tolerated for many years because of the relative strength of sterling; as sterling did not depreciate against foreign currencies from the time of breach to the time of eventual payment, there was usually no loss suffered by the plaintiff from the application of the breach- date rule. The Miliangos principle was evolved in response to the fluctuations (mostly downwards) in the external value of sterling. In Singapore, we have now reached a situation where the strength of the Singapore dollar has ironically led to what is in effect a plea by the plaintiff for the resurrection of the breach-date rule (although the plaintiff has in fact asked for conversion at the date of writ, which is much closer to the breach-date than the date of judgment or enforcement). However, in the present case, it cannot be ascertained whether or not the plaintiff will suffer any loss from his judgment in United States dollars until such time as payment is made voluntarily or it becomes necessary to enforce his judgment, since no one can predict what the rate of exchange between United States dollars and Singapore dollars will be at that time. Since the plaintiff has theoretically at least six years in which to choose its time for execution, it would not be right for me to presume that such loss must necessarily occur.

(4)    The short answer to what the plaintiff seeks to do in this case is to be found in Miliangos itself. Once the breach-date rule was abandoned, an alternative date for conversion of the foreign currency into the local currency had to be found. Lord Wilberforce said (at p 468) that the choice

is between (i) the date of action brought, (ii) the date of judgment, (iii) the date of payment [meaning the date on which the court authorized execution].

37       He went on to say (at p 469) that of these, the date of payment undoubtedly ‘gets nearest to securing to the creditor exactly what he bargained for’.

38       Lord Fraser put the matter thus (at p 502):

Any conversion date earlier than the date of payment would, in my opinion, be open to the same objection as the breach date, viz that it would necessarily leave a considerable interval of time between the conversion date and the date of payment. During that interval currency fluctuations might cause the sterling award to vary appreciably from the sum in foreign currency to which the creditor was entitled. In my opinion, it would not be justifiable to disturb the existing rule of taking the breach date, merely to substitute for it some other date rather nearer to the date of payment but still more or less distant from it. If the date of raising an action in this country were taken for conversion, a period of a year or more might easily elapse, allowing for appeals, before payment was made. The date of judgment would be better but there seems no reason why one should stop short of the latest practicable date, which seems to be the date when the court authorizes enforcement of the judgment.

39       Lord Fraser also said (at p 501):

Theoretically [the conversion date] should, in my opinion, be the date of actual payment of the debt. That would give exactly the cost in sterling of buying the foreign currency. But theory must yield to practical necessity to this extent that, if the judgment has to be enforced in this country, it must be converted before enforcement.

40       I therefore conclude that the court should not grant judgment in any terms other than as set out in Miliangos,4 namely, in the relevant foreign currency or its equivalent in local currency at the time the court authorizes execution (see Practice Direction (Judgment: Foreign Currency) [1976] 1 WLR 83 and [1977] 1 WLR 197).

Claim for exchange loss

41       Dr FA Mann’s book, from which I have quoted earlier, goes on to say (at p 353):

The consequences of that default [in payment] have to be decided upon, not by the law of procedure which is concerned with the enforcement rather than the creation of rights, but by the proper law of the contract or the substantive law governing the particular obligation under consideration. Where the applicable law is English it is, therefore, most important in the interest of justice and in accordance with suggestions made earlier in this book to develop a sound rule permitting the recovery of damages for the loss caused by the depreciation of foreign money — a rule such as many foreign countries have evolved and which, it is submitted, is or ought to be concomitant to the modern English law.

42       If in fact the plaintiff does suffer an exchange loss on conversion, then he may have a separate remedy by means of a claim for damages for breach of contract arising from the exchange loss based on the rule in Hadley v Baxendale. In Ozalid Group (Export) Ltd v African Continental Bank, Donaldson J awarded damages for a foreign exchange loss in sterling arising from a late payment of United States dollars. Again, in Isaac Naylor & Sons Ltd v New Zealand Cooperative Wool Marketing Association Ltd, a buyer who made late payment of the sums due in foreign currency was successfully sued by the vendor for the exchange loss suffered. (See also the comment on the New Zealand case by Mr CEF Ricketts at [1982] 4 LMCLQ 566.)

43       On the other hand, the House of Lords in Lips Maritime Corp v President of India has said (arguably obiter at p 425) that:

There is no such thing as a cause of action in damages for late payment of damages. The only remedy which the law affords for delay in paying damages is the discretionary award of interest pursuant to statute.

44       Accordingly, their Lordships set aside an umpire’s award that charterers were liable to pay damages for depreciation of sterling suffered by the late payment of demurrage payable in United States dollars. The decision has been criticized by Dr FA Mann in (1988) 104 LQR 3 and in his book at pp 293–294, but this is not the occasion for me to become embroiled in this controversy. The plaintiff will have to decide whether or not to mount a separate claim against the defendants for its exchange losses, if they materialize, and it would not be right for me to preempt the arguments on that claim.

Jurisdiction

45       The plaintiff commenced proceedings by applying ex parte for leave to issue a writ against the defendants. Leave was granted under O 11 r 1 of the Rules of the Supreme Court 1970 (in the version that existed in 1986). The defendants entered unconditional appearance on 31 May 1986 and later filed an application for an extension of time to file and serve the defence, but subsequently applied to set aside the writ and all other proceedings, on the grounds that leave should not have been granted under O 11. The deputy registrar granted the application and his decision was appealed to the then Chief Justice. In an unreported judgment dated 31 October 1986, Wee Chong Jin CJ held that there were no circumstances bringing the case within any of the limbs of O 11 r 1. However, he also went on to say:

The other question raised on this appeal is whether the defendants by entering unconditional appearance have submitted to the jurisdiction of the Singapore courts. When the defendants were served with the writ they had the alternative of doing nothing. They were not subject to the jurisdiction of the court and, if they did nothing, although the court might have given judgment against them, the judgment could not have been enforced against them unless they had property within the court’s jurisdiction. But they did something which they were not obliged to do. They chose to and entered unconditional appearance when they could have done nothing or, if they so wished they could have entered conditional appearance and applied to set aside the writ and service of the writ on the ground that the Singapore courts had no jurisdiction over them.

In my judgment the defendants by entering unconditional appearance have unequivocally agreed to the Singapore courts being the arbiter of any dispute arising out of the agency contract. The defendants, furthermore, by their application to the court for extension of time to file and serve their defence after their unconditional appearance before first applying to set aside the writ and service of the writ, have unequivocally submitted to the jurisdiction of the court.

46       He therefore allowed the appeal and restored the writ, after which proceedings carried on in the usual way until trial.

47       Since that order has been made in these proceedings I am loath to disturb it, although an issue of jurisdiction can be taken at any time, even by the court on its own initiative: see Westminster Bank Ltd v Edwards at pp 533–534. I must, however, express my serious reservations about the correctness of the remarks I have quoted as general propositions of law.

48       I should make it clear that, in this discussion, I am using the term ‘jurisdiction’ to mean only the authority of a court to hear a case and not the powers of a court to grant particular reliefs claimed.

49       The learned Chief Justice apparently relied on submission to the jurisdiction as conferring jurisdiction on the court to hear this case. With respect, submission to the jurisdiction does not of itself confer jurisdiction on the High Court unless one of the conditions in ss 16 or 17 of the Supreme Court of Judicature Act (Cap 322) are satisfied. In this regard, the position in Singapore is different from that in England, where, under common law, the High Court will have jurisdiction to hear any action in personam where a defendant submits to its jurisdiction (see Dicey and Morris at p 299). The jurisdiction of the High Court in Singapore, however, is founded on statute and the requirements of ss 16 or 17 (or some other written law) must first be satisfied before the court has jurisdiction to hear a case. Submission to the jurisdiction is not one of the conditions mentioned in any written law in Singapore and therefore will not by itself confer jurisdiction on the High Court except in the circumstances envisaged in s 16(2) which provides:

The High Court shall also have jurisdiction to try any civil proceedings where all the parties consent in writing to have the proceedings tried in Singapore.

50       The point I make is indirectly acknowledged by Dicey and Morris (at p 302) where it is stated:

The principle of submission can give the court jurisdiction only to the extent of removing objections thereto which are purely personal to the party submitting, as, for example, that he has not been duly served with a writ. Submission cannot give the court jurisdiction to entertain an action or other proceeding which in itself lies beyond thecompetence or authority of the court.

51       However, in this case, at the hearing before the deputy registrar, the then counsel for the defendants said:

Jurisdiction of the court not challenged. Not disputing jurisdiction under s 16 of the Supreme Court of Judicature Act.

52       In view of this concession, my doubts as to the correctness of Wee Chong Jin CJ’s remarks will not preclude relief being granted in this case. It is sufficient to say that his views cannot be accepted as a correct statement of the law without further consideration of other arguments which were apparently not put before him.

Order

53       I therefore enter judgment for the plaintiff in the sum of US$33,556.45 or its equivalent in Singapore dollars at the time of payment and (as counsel has also orally claimed interest) I also award interest at 6% pa from the date of the writ and costs to be taxed.

Order accordingly.

Reported by Liu Hern Kuan