CIVIL LAW (AMENDMENT) BILL

Order for Second Reading read. 4.18 pm

The Minister of State for Law (Assoc. Prof. Ho Peng Kee): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

Sir, this Bill makes technical amendments to the Civil Law Act for purposes of clarification and law reform. The provisions have the support of relevant bodies such as the Monetary Authority of Singapore and the Singapore Academy of Law, where the Law Society of Singapore is represented. The financial services industry and NUS law lecturers were also consulted. The Bill will improve our commercial and civil law and will provide a more predictable legal environment, something important to businesses and financial institutions.

Updating the law on contribution

Sir, the first set of amendments makes new provisions for contribution between persons who are jointly or severally, or both jointly and severally, liable for the same damage and in certain other similar cases where two or more persons have paid or may be required to pay compensation for the same damage. It also amends the law relating to proceedings against persons jointly liable for the same debt or jointly or severally, or both jointly and severally, liable for the same damage.

These amendments are of a law reform nature. They were proposed by the Academy of Law's Law Reform Committee and supported by the Attorney-General (AG). The changes will bring our law on contribution in line with the UK Civil Liability (Contribution) Act 1978 and address anomalies in litigation practice. The law on contribution is a technical area which deals with the payment of a proportionate share of a liability which has been borne by one or some only of a number of persons who are jointly liable.

Also, the Civil Law Act will be amended to extend the applicability of the provisions on contribution to damages arising from legal grounds other than tort. The rule in Bain v Fothergill

Another amendment of a law reform nature is to abolish the rule of law known as the rule in Bain v Fothergill. This follows changes made in the UK by the Law of Property (Miscellaneous Provisions) Act 1989.

This rule of law is that "if, a person enters into a contract for the sale of real estate knowing that he has no title to it, nor any means of acquiring it, the purchaser cannot recover damages beyond the expenses he has incurred by an action for breach of the contract; he can only obtain other damages by an action for deceit". This rule is an anachronism and was abolished in the UK in 1989. It was established before the development of a comprehensive land registration system, when parties could not be absolutely certain about their title to land and when there was a requirement to trace a good root of title back for 60 years. The rule is no longer relevant in present day Singapore. Most of our land are now registered under the Land Titles Act or the Land Titles (Strata) Act. Further, all dealings in unregistered land are required to be registered under the Registration of Deeds Act where the duty to show good root of title goes back only 15 years.

Creating predictability for financial services law against gaming

Sir, the next set of amendments is for purposes of clarification. They are supported by MAS and the financial services industry. These amendments do not affect the regulation of financial and investment activities.

The first amendment relates to section 6(1) of the Civil Law Act, which renders all contracts or agreements by way of gaming or wagering null and void. This amendment arose out of concerns expressed by a private sector Corporate Finance Committee (CFC), chaired by Mr Lim Yong Wah, that there is currently uncertainty over whether the trading of "Over the Counter" (OTC) derivatives in Singapore is illegal and unenforceable because of the law against gaming. The CFC felt that this uncertainty has impeded the growth of a thriving OTC derivatives market in Singapore. As a large number of derivatives contracts are settled by price differences based on future uncertain events, and do not depend on any actual delivery of the underlying property, they could technically fall within the definition of gaming. The CFC's report, published on 9th November 1998, recommended that the law should be clarified to facilitate the growth of the derivative business.

Indeed, the law against gaming should not apply to any legitimate or hedging investment activity. It should not hinder the dynamic development of innovative financial products in Singapore. The Bill therefore amends section 6 to make clear that the law against gaming does not affect the validity or enforceability of contracts entered into by way of business and the making or performance of which constitutes an investment or hedging activity. A list of these activities, drafted in close consultation with MAS and representatives of the financial services industry, is set out in the Bill.

EMU and the Euro

Sir, another amendment makes clear that the European Economic and Monetary Union (EMU) will not affect the continuity of contracts denominated in currencies that will be affected by the introduction of the euros. The premise underlying this amendment is that, as far as possible, we should maintain Singapore's competitiveness as an international business and financial centre by providing predictability and certainty to businesses when the euro is introduced on 1st January 1999, the start of the transitional stage. It is modelled after the equivalent New York law.

For the avoidance of doubt, a declaratory provision will be enacted that the continuity of contracts will not be affected by the substitution or replacement of currencies by the euro arising from the European Economic and Monetary Union.

Consequential and related amendments

Finally, Sir, the Bill makes consequential amendments to section 6(1) of the Carriage by Air Act (Cap. 32A) and section 3 of the Contributory Negligence and Personal Injuries Act (Cap. 54). The Bill also makes a related amendment to the Limitation Act (Cap. 163) by inserting a new section 6A to provide for a special time limit of two years for claiming contribution. This will clarify a current uncertainty in litigation practice.

Sir, I beg to move.

Question proposed.

Mr Shriniwas Rai: I am obliged to you, Mr Speaker, Sir, for giving me this opportunity. I am in support of the Bill. The Minister has been very thorough and convincing. I will be very short.

Sir, the Civil Law Act is one of the cornerstones of our legal system and the number of amendments that has been proposed will help us in the administration of justice. In our system, we practise the rule of law and the separation of power - Judiciary, Executive and Legislature. The function of the Judiciary is to interpret the law while it is the function of Parliament to enact laws. I congratulate the Minister for introducing this Bill. It is timely. I am especially happy that the rule in Bain's case is being laid to rest. It has outlived its usefulness. It just goes to show that the law cannot be static. It is a living institution. It must undergo change from time to time. And in this regard, I am asking the Minister whether, besides the Law Reform Committee of the Singapore Academy of Law, the Ministry has any unit which monitors changes of law that are required in our system.

Sir, to administer outmoded law would do grave injustice to the parties. The Minister has been very, very thorough in showing us the various amendments he is going to introduce, which are going to help us, and I hope other Ministries would also do likewise. I support the Bill.

Assoc. Prof. Ho Peng Kee: Sir, the Ministry of Law itself also monitors what laws need to be amended.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. - [Assoc. Prof. Ho Peng Kee].

Bill considered in Committee; reported without amendment; read a Third time and passed.