Judgment

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

Karthigesu JA (delivering the grounds of judgment of the court):

1       This is yet another appeal arising from an absent member of the Singapore Island Country Club (the club) seeking a declaration from the court that his removal from the register of members of the club pursuant to a rule of the club providing that an absent member’s membership shall automatically cease should his subscription be in arrears for a period exceeding 12 calendar months was null and void and of no effect and consequentially claiming for reinstatement of his membership

2       The absent member succeeded in the court below and the club appealed. We allowed the appeal and now give our reasons.

3       The rule in question is r 23(c) to which reference will be made later and the absent member in question is the respondent (Hilborne). Although this court has pronounced definitively on the construction and application of r 23(c) in Singapore Island Country Club v Brown [1994] 3 SLR 206 and also approved that part of the judgment which dealt with the construction and application of r 23(c) in Lee Chuen Li & Anor v Singapore Island Country Club [1992] 2 SLR 900, the learned judge took the view that this case, to use his own words, raised certain issues of fact and law not raised in the previous cases, which compelled him to reconsider the views expressed in those cases concerning the operation and effect of the rules of the club. The learned judge’s judgment is reported at [1996] 2 SLR 468.

4       The brief facts are these. Hilborne had practised as an advocate and solicitor in Singapore until his retirement in 1981 and had been a member of the club since 1963. In February 1981, Hilborne notified the club that he was planning to leave Singapore and requested to be placed on the absent members’ list as from March 1981.

5       The club responded to Hilborne’s request by letter dated 16 February 1981. We will set this letter out in full as it embodies r 23(c), as it was then, and it also contains some points of interest which ought to be noted:

Absent Membership

Thank you for your letter dated 12.2.81.

          As requested your name will be placed on the Absent Members’ List with effect from 1.3.81.

          It would be appreciated if you could use cash coupons, instead of signing chits with immediate effect so as to facilitate the Club’s Accounts Section to prepare your statement of accounts and to forward it for settlement prior to your departure in accordance with our Club’s Constitution.

          Please note that reminders are not sent to Absent members and the Rule Re: Absent Members was amended at the Annual General Meeting held on 30 September 1975 to read as follows:

‘Any Ordinary member leaving Singapore for more than one month, and gives notice of his intended departure to the Secretary shall be placed on the list of absentees provided that he has paid all amounts due by him to the Club.

An Absent member shall remain on the Absent member’s list so long as he keeps his account in credit. The fee for Absent members shall be $5/- per month. Such member shall pay the reduced subscription for the period of his absence but shall be liable for the full subscription for the month in which he leaves and the month in which he returns.

Should an Absent member during his period of absence be in arrears of his Absent Member’s subscription for a period exceeding twelve calendar months he shall automatically cease to be a member of the Club.

The same privilege is extended to Lady members.’

The onus is therefore on the member to ensure that his membership does not lapse.

          In case you do not receive your statement in time, please telephone the Accounts Section during office hours and we will furnish you with the necessary details, so that you can send us your cheque to settle your account.

          Please be advised that your deposit with the Club cannot be used to off-set your account and will be refunded only when you resign from the Club.

          You will have to inform us when you return to the Republic.

          We wish you a bon voyage.

6       This letter could not have been more explicit of the meaning and the intent of r 23(c). It informs the member in the plainest and simplest language that being placed on the absent members’ list is a privilege accorded to members who intend to be and will be absent from Singapore for more than a month; that he shall remain an absent member so long as he keeps his account in credit; that for the period of his absence from Singapore he shall pay only a reduced subscription (which was then $5 per month); that the onus is on him to ensure his membership does not lapse; that reminders are not sent to absent members; that his membership will lapse (‘automatically cease’) should he, during the period of his absence from Singapore, allow his absent member’s subscription to be in arrears for a period exceeding 12 calendar months; and that the deposit with the club cannot be used to off-set his account. Quite clearly the reference to the non-receipt of ‘your statement’ in the letter is a reference to the statement of the member’s dues before the date on which he is placed on the absent members’ list and which it is expected he will settle before leaving Singapore and which is a condition precedent to being placed on the absent members’ list.

7       Since Hilborne became an absent member on 1 March 1981, r 23(c) has seen two changes. The first in September 1981, effective from 1 September 1982, allowed for the appropriation of the absent member’s deposit before the period of 12 months was counted and the second in September 1986, effective from 1 January 1988, by removing the appropriation of the deposit before counting the 12 months’ period thus restoring the rule for all practical purposes to the same position as it was on the date Hilborne became an absent member, except that the absent member’s subscription was now $10 per month. Hilborne claimed he was unaware of both these changes. However, that is immaterial as Hilborne’s position regarding the cessation of his membership is unaffected by these changes and he had been paying his absent membership subscription of $10 per month from 1 January 1988 to the date of his last payment on 1 June 1989, which covered his absent membership subscription up to 31 May 1989.

8       Also, since Hilborne became an absent member on 1 March 1981, he returned to Singapore for short periods on three occasions and on each occasion, at his request, he was restored to the active members’ list. The last occasion was in February 1989. It is not clear from the evidence or from the correspondence exhibited how long he remained in Singapore but it appears that he was restored to the active members’ list for the period 9 February 1989 to the end of that month as his name was again placed on the absent members’ list with effect from 1 March 1989. This is evident from the club’s letter to Hilborne dated 13 February 1989 the material portions of which read as follows:

‘Restoration to Active Membership’

Thank you for your letter dated 9 February 1989.

          As requested your name has been restored to the Register of Active Members of this Club with effect from 9 February 1989.

          …

          Please note that the current Rule for Absent Membership read as follows:

(a)    Any member leaving Singapore for more than six (6) months and giving notice of his/her intended departure to the Secretary shall be placed on the Absent members’ list provided he/she has paid all amounts due by him/her to the Club. … An Absent member shall be replaced on the Active members’ list on his/her return to Singapore and it shall be incumbent upon him/her to give notice of his/her return to the Secretary. …

(b)    An Absent Member shall remain on the Absent Members’ list so long as he keeps his account in credit. The fee for Absent Members shall be $10 per month. Such member shall pay the reduced subscription for the period of his absence but shall be liable for the full subscription for the month in which he leaves and the month in which he returns.

(c)    Should an Absent member during his period of absence be in arrears of his Absent member’s subscription for a period exceeding twelve calendar months, he shall automatically cease to be a member of the Club.

(d) …

PS Your name will be placed on the absent members’ list with effect from 1 March 1989.

9       Hilborne at first claimed that he had not received the club’s letter to him dated 13 February 1989 but subsequently in his affidavit evidence in chief said that he probably did receive it.

10     It was the club’s policy that newsletters, circulars and statements are not sent to absent members. However this policy was changed in May 1986 and absent members informed by a circular dated 26 May 1986 that henceforth on an absent member’s written request and undertaking to pay for the postage such newsletters, circulars and statements would be sent to him until he gives written notice that he did not wish to receive them anymore. Hilborne responded to this circular on 10 June 1986 and from then on all newsletters, circulars and statements were sent to him until he requested the club by his letter of 1 June 1989, with which he made his last payment of absent membership subscriptions (see para 7) to ‘cancel (his) monthly club magazine as from receipt of this letter’. This letter was received by the club on 8 June 1989.

11     The club, rightly or wrongly, interpreted Hilborne’s letter of 1 June 1989 to mean that he wanted not only the club magazine but also newsletters, circulars and statements to stop and from 8 June 1989 did not send anything at all to Hilborne. On the other hand, Hilborne’s position on this letter was that he only wanted the club’s magazine stopped but wanted to continue receiving the monthly statements and other documents.

12     However that may be, it should have been apparent to Hilborne that following his letter to the club dated 1 June 1989, he received no communication whatever from the club. It is pertinent to note also that from 1 June 1989 he made no payments at all towards his absent member’s subscriptions. Prior to 1 June 1989 he paid his absent member’s subscriptions at irregular intervals and when the amount payable had reached a sizeable amount.

13     It is in evidence that initially the club’s finance sub-committee wanted to send a warning letter to all absent members, including Hilborne, whose arrears of absent membership subscriptions exceeded $110 but the club’s general committee decided against it as it felt r 23(c) was very clear. In the result Hilborne was notified by letter dated 30 May 1991 that his membership of the club had automatically ceased pursuant to r 23(c). Hilborne issued the writ in this matter on 21 January 1993.

14     Several legal arguments were raised in the court below including arguments on natural justice. We do not need to refer to them here in detail. Suffice it to say that the learned judge’s reasons for finding in favour of Hilborne can be grouped under three heads, namely, (1) the views expressed by this court in Singapore Island Country Club v Brown on the construction of r 23(c) which also approved the High Court’s consideration of r 23(c) in Lee Chuen Li & Anor v Singapore Island Country Club had to be reconsidered because there was no evidence of (a) the club’s billing practice; (b) the sending of reminders and (c) the club’s practice as regards r 23(c) and were not explored at all or to the extent it has been in this case (see the learned judge’s judgment at p 478D–F); (2) that on the facts of this case, there was a convention between Hilborne and the club such as to estop the club from relying on r 23(c) (see pp 484 and 485); and (3) whether on the facts, relief against forfeiture can be granted, for the learned judge in concluding his judgment at p 486 said: ‘In case I am wrong in the decisions I have made, I think this is an eminently fit case for the exercise of the court’s equitable jurisdiction to grant relief against the forfeiture, and I would have granted it.’

15     We will deal with these issues in the order in which we have listed them above. First, the club’s billing practice. The learned judge at p 479E of his judgment said:      

The course of dealing between the club and its members, in particular the plaintiff, (Hilborne) clearly established a practice for members, active or absent, to pay on receipt of bills in the form of statements of account and only on receipt of them.

16     The foundation of this statement is that (a) Hilborne had received monthly statements from January 1987 to May 1989 and (b) Hilborne usually paid after receiving such statements (see p 474B of the judge’s judgment). However both these facts, if they are facts to be relied on, must be looked at in the context in which Hilborne received the statements and his practice of paying his monthly absent member’s subscriptions. The learned judge seems to have overlooked that the practice of sending monthly statements of account together with newsletters and circulars was first implemented by the club only from May 1986 and were sent to Hilborne at his request from June 1986 to June 1989, when it was stopped (see paras 10 and 11 above). Hilborne became an absent member from 1 March 1981. Further, on his own admission, Hilborne did not pay the monthly absent member’s subscriptions on receipt of each monthly statement but paid at irregular intervals when the subscriptions had accumulated to a sizeable amount.

17     The crucial point to note, however, is that the sending of such statements is not and cannot be a pre-condition to a member paying his monthly subscriptions. In fact the club’s r 7(b) clearly provides that monthly subscriptions are to be paid in advance, on the first day of each month. The rules govern the contractual relationship between the club and its members. They do not impose any obligation on the club to send out monthly statements for subscriptions.

18     Furthermore, it cannot be said, as the learned judge did, that the sending of such monthly statements either imposed an obligation on the club to continue sending such monthly statements such that it altered the legal relationship and in particular r 7(b) and that Hilborne, or any absent member for that matter, did not have to pay until he received such a monthly statement. This argument is simply untenable. In Brown’s case this court said at p 210D in reference to r 23(b) and (c):

The substance of these rules was that an absent member was required to keep his absent member’s fee of $10 per month, for the payment of which no notice would be sent, and should he fail to do so and allow his absent member’s subscription to be in arrears for a period exceeding 12 months, he shall automatically cease to be a member of the Club.

19     The facts and circumstances regarding the club’s billing practice vis-a-vis Hilborne did not behove us to alter the construction of r 23(c) given to it either in Lee Chuen Li’s case or in Brown’s case.

20     The learned judge also held he could depart from Lee Chuen Li’s case and Brown’s case because he felt that in this case, there was a well established practice as regards the sending of reminders, as well as the statements of account which was not evident in the earlier two cases. From what we have said in paras 10 to 13 and 15, it is clear that an absent member would receive statements of account only on express request and an undertaking to pay for the postage. It was on this basis that Hilborne received statements of account from June 1986 to June 1989. Regarding the sending of reminders to absent members, it is clear that Hilborne himself never received any such reminders. However there was some evidence that in the past when an absent member, or even an active member, defaulted in paying his dues to the club, the club would approach his proposer or seconder to speak to the defaulting member. This cannot be said to be a practice of sending reminders. In fact we are unable to agree with the learned judge that there was an established practice of the club of sending statements of accounts and reminders to absent members.

21 The learned judge also expressed the view that the club’s practice in the past of enforcing r 23(c) was inimical to the club’s desire to strictly enforce r 23(c) in this case. This, he held, enabled him to depart from the reasoning in Lee Chuen Li’s case and Brown’s case as it seemed to him that it was never the club’s intention to strike a member off the register merely because he was in arrears of his subscriptions. He held that absent members only paid a token subscription; that the club’s main concern with absent members was to ensure that they remained contactable; that the mere non-payment of subscriptions was not of significant concern to the club; and that r 23(c) had seldom been invoked in the past. Even if all these were true, they are irrelevant considerations and could not be relied on as reasons for departing from the reasoning in Lee Chuen Li’s case and Brown’s case.

22     In our judgment the learned judge was bound by this court’s decision in Brown’s case and none of the matters referred to in paras 15 to 19 are grounds for departing from the construction and application of r 23(c), the effect of which is clear beyond peradventure.

23     We now turn to the principal ground on which the learned judge rested his decision, that the club was estopped by convention from invoking r 23(c) against Hilborne.

24     Mr Shanmugam for the club submitted to us that there were two reasons for rejecting the estoppel by convention argument. Firstly it was not pleaded and secondly there was no factual basis for holding that a convention existed.

25     Estoppel by convention, by definition, is an estoppel that arises out of a mutually held common belief in a state of affairs. See the learned judge’s discussion of this concept at pp 483 and 484 of his judgment. It is true that the estoppel was not pleaded. It is also true that in the court below Hilborne’s principal argument was that the deletion of his membership was contrary to the rules of natural justice because, or so he contended, that r 23(c) had not been invoked for over 20 years; that the club failed to notify him that membership in the club was to become transferable; that the club allowed some members who had automatically ceased to be members by reason of r 23(c) to retain their membership; and that the club had failed to apply its rules fairly. But, the learned judge took a consoling attitude towards Hilborne and said at p 486 that although he had characterised the club’s conduct as a violation of the rules of natural justice, he could have chosen a more apt label; the gravamen of his complaint was clear enough. It seemed to us that the learned judge would have allowed an amendment had one been requested for. We need not therefore dwell any longer on the pleading point.

26     But what is the convention? It seems to us that there was no evidence of it given by Hilborne. However, the learned judge relied on three reasons for holding that there was a convention. In other words there was a common assumption between the club and Hilborne that the club would not take the position that subscriptions were payable without demand; that the club would not choose the less advantageous r 23(c) as opposed to the more benevolent r 47 (it will be noted that r 23(c) deals specifically with absent member’s subscriptions whereas r 47 deals generally with members’ accounts); and that r 23(c) would not be invoked without prior notice (see p 484 of the judgment).

27     With respect to the learned judge there is not a shred of evidence that there was any such common assumption between the club and Hilborne. The criteria for establishing an estoppel by convention are:

(i)     that there must be a course of dealing between the two parties in a contractual relationship;

(ii)    that the course of dealing must be such that both parties must have proceeded on the basis of an agreed interpretation of the contract; and

(iii)   that it must be unjust to allow one party to go back on the agreed interpretation.

28     (See Amalgamated Investment and Property Co Ltd v Texas Commerce International Bank Ltd [1981] 3 All ER 577).

29     On the contrary there was clear evidence in this case that Hilborne was notified that the onus for ensuring payment of his absent member’s subscription was on him; that the club had never said to Hilborne, or indeed to any absent member, that r 23(c) would not be invoked without notice and that the club had no obligation to send statements of account to absent members unless they expressly requested for them and undertook to pay for the postage.

30 This being the case there was no factual basis for holding that there was an estoppel by convention.

31     In a cryptic sentence at the end of his judgment the learned judge said that he would have granted relief from forfeiture if he was otherwise wrong in his judgment. He did not give any reasons for the exercise of this discretion.

32     In our judgment the relief is not available to Hilborne. Firstly r 23(c) does not provide for forfeiture. From the very nature of r 23 it is clear that this form of membership is made available for those members who intend to be out of Singapore, originally for more than one month and latterly for more than six months. It is a contractual provision enabling a member to pay a much smaller subscription for the period he is out of Singapore and thus unable to enjoy the facilities the club provides. It provides a code of conduct agreed to between the club and its members under which the member can voluntarily surrender or terminate his membership of the club. The question of forfeiture does not arise for under the rule there is no act or action required of the club. The rule simply provides that on the occurrence of a certain event, completely within the control of the member, his membership of the club automatically ceases.

33     Secondly, even if the relief were available to Hilborne we can see no reason why the discretion ought to be exercised in Hilborne’s favour, this being an equitable relief. The club has not been guilty of any inequitable conduct. On the other hand, Hilborne must have been well aware of his obligation to pay the absent member’s subscriptions as he had at least two, if not more, notices informing him of the consequences of being in arrears with his subscriptions for more than 12 months. He cannot deny and he did not deny receipt of the club’s letter dated 16 February 1981 when he first became an absent member (para 5) and if this letter could have faded from his memory there was the club’s letter of 13 February 1989 (para 8) when on a short visit to Singapore he had requested to be placed on the active list of members.

34     Hilborne blamed the club for his failure to pay his subscriptions contending that the club through an administrative error had stopped sending him monthly statements of account which would have served as reminders to him. We do not accept that there was an administrative error, but even if there was one he should have realised that following his letter to the club dated 1 June 1989 to stop sending him the club’s magazine, the monthly statements of account also stopped (see paras 10 and 11). He says he was busy and did not notice that the monthly statements of account were not arriving. We have difficulty in accepting this excuse. He had only just returned to the United Kingdom after visiting Singapore in February of that year when he had been restored to active membership and had enjoyed the club’s facilities. Even if he did not realise at first that he was not getting the monthly statements of account, surely a person who had so recently enjoyed the club’s facilities would have realised that they had stopped coming together with the club’s magazine. This shows a lack of vigilance and relief is not granted where a person has failed to be vigilant. See Barrow v Isaacs [1891] 1 QB 417 at pp 426 and 429.

35     It was for the foregoing reasons that we allowed the club’s appeal.

Appeal allowed.

Reported by Audrey Lim