Interpretations: Thoughts on the SLR Lecture by Sundaresh Menon CJ

by Xing Yun*

The Singapore Law Review Lecture (“SLR Lecture”) was started in 1984 to raise the profile of the Review and attract good students onto the editorial board.1 It has since evolved into an institution by itself and is now the longest running public lecture on law in Singapore. Punch Coomaraswamy J delivered the inaugural SLR Lecture on “The Perils of Drafting”.2 Perhaps fittingly, the 25th edition of the lecture is titled “The Interpretation of Documents: Saying What They Mean or Meaning What They Say”3, delivered by the Honourable the Chief Justice Sundaresh Menon.

The shift in lecture topic from drafting to interpretation mirrors Menon CJ’s observation that “the law has evolved from a literal approach, to what is commonly known as the purposive approach (in statutory interpretation) and the commercial or contextual approach (in contractual interpretation)”. Back in 1984, the s 9A of the Interpretation Act was not in existence and it was more than two decades before Zurich Insurance4. In this context, it made sense, then, to focus more on proper drafting, so as to avoid the prospects of expensive litigation later down the road. However, even a well drafted law has its problems; the shortfalls of the literal approach are well documented, resulting in courts taking on more proactive roles in interpretation.

As one would expect from a common law jurist, Menon CJ started his lecture by reiterating the central role of the objective approach in the common law tradition. The objective approach “shift[s] the burden … [to] the contracting parties to ensure at the outset that their respective subjective intentions are accurately encapsulated within the four corners of the legal text”. The inadequate discharge of this burden was however immediately acknowledged as an inevitable source of interpretative dispute. “The imperfect mind, bedevilled with imperfect foresight and knowledge, and subject to economic constraints, directs the drafting of a legal text using language that is inherently imprecise.”

The economic analysis in particular merits attention. It is an acknowledgment that parties cannot be expected to contract for all possibilities. By deliberately leaving some portions open, parties are taking the risk that those issues will not result in protracted and expensive proceedings. The author however submits that courts should not hastily jump on this contracting impossibility as a justification for taking on a more hands-on approach. When parties make the conscious decision to leave certain matters out of a contract, they depend on the court to adjudicate not just on the fairness, but also according to their reasonable expectation of the result at the time they took the decision. While it may be fair to take into account matters such as commercial context, this should not come at the expense of certainty. Indeed, it is acknowledged that the two do not necessarily conflict. The point to be made though, is that courts should err on the side of caution and exercise the appropriate self-restraint in not departing too far from written contracts for the sake of commercial fairness.

After establishing the need for the purposive and contextual approaches, Menon CJ then considered the approaches in detail. Of note are the limitations of these approaches. While both approaches try to give effect to the purpose/intent of the drafter/parties, the commercial context is more contentious because Singapore has departed from the UK analysis of the extents of the contextual approach.5 Menon CJ justified Singapore’s higher threshold of “necessity” by highlighting the differences between interpretation and implication, with the latter involving some form of rewriting of the contract. The question of implication of statutes was however left open, though a lower threshold may be possible since, as Menon CJ noted, parliamentary intention can be ascertained much more easily.

Menon CJ’s lecture seems to indicate that the burden of the cost-benefit analysis has been shifted onto the courts. For instance, in the context of statutory interpretation, ‘the courts should have regard to “the desirability of persons being able to rely on the ordinary meaning … taking into account its context … and the purpose or object underlying the written law”, and also, “the need to avoid prolonging legal or other proceedings without compensating advantage”‘. Whether prior negotiations should be admitted as evidence was also described as a balancing act between the cost and benefits. These do not suggest, however, that parties can abdicate their responsibilities of drafting adequate contracts (and there is indeed no incentive for them to do so). Rather, the statements serve as a reminder that the courts, with their significant discretion in the interpretation of contracts, must also take a measured approach in discharging justice without compromising on efficiency, and vice versa.

The Chief Justice understandably chose to reserve his thoughts on some outstanding issues. It is noteworthy however that the live issues he highlighted, such as the admission of prior negotiations in contractual interpretation6, the use of expert evidence in establishing commercial context7 and the expansion of the contractual approach to other areas of contract law in the UK8, were all concerning the further liberalisation of existing rules. This suggests that future debates in the area of interpretation, at least in the Singapore context, will likely be centred on increased liberalisation.

*Executive Editor, Singapore Law Review. All remarks made in this article are mine alone and do not reflect the position of the Review.

[1] Kevin Tan, 10 Years of the Singapore Law Review (1993) Sing L Rev 24, at 38

[2] (1985) Sing L Rev 39

[3] A transcript of the lecture can be found in the 32nd issue of the Singapore Law Review, to be published in mid 2014.

[4] Zurich Insurance (Singapore) Pte Ltd v B-Gold Interior Design & Construction Pte Ltd [2008] 3 SLR 1029; [2008] SGCA 27 [Zurich Insurance]

[5] It is well documented that Singapore courts have chose to retain the (higher) threshold of “necessity” as the test for implication of contractual terms. See Sembcorp Marine Ltd v PPL Holdings Pte Ltd [2013] SGCA 43 [Sembcorp Marine]; Foo Jong Peng v Phua Kiah Mai [2012] SGCA 55; c.f. Attorney-General of Belize and others v Belize Telecom Ltd and another [2009] 1 WLR 1988 [Belize]

[6] See Chartbrook Ltd and another v Persimmon Homes Ltd and another [2009] 1 A.C. 1101; Zurich Insurance supra note 4; Sembcorp Marine supra note 6

[7] See Rainy Sky SA and others v Kookmin Bank [2011] 1 WLR 2900

[8] See Transfield Shipping Inc v Mercator Shipping Inc (The Achilleas) [2009] 1 AC 61; Oceanbulk Shipping & Trading SA v TMT Asia Limited and others [2010] UKSC 44; Belize supra note 6