Introduction

Courts seek to impose a degree of finality in their judgments, and so if an issue has been decided in an earlier proceeding, the same parties cannot reopen the issue in subsequent proceedings. However, the application of this principle is less clear if the earlier proceeding has ended in a consent judgment. This was the issue before the Singapore High Court in the case of Cost Engineers (SEA) Pte Ltd v Chan Siew Lun [2015] SGHC 262.

Brief Facts

The Plaintiff and the Defendant had been involved in a dispute over their respective shareholdings in a company. At the end of closing submissions, the Defendant agreed to consent judgment, whereby he would transfer 60,000 shares to the Plaintiff and “provide an account to the 1st Plaintiff of all dividends and profits”.

In the assessment hearing, the Defendant submitted that no dividends had been declared, and there was thus nothing to account for. However, the Plaintiff argued that the term “all dividends and profits” should include unofficial payouts as well.

The Court thus had to determine the scope of the term “all dividends and profits”. In particular, it had to assess:

  1. Whether issue estoppel applies to consent judgments; and
  2. If so, whether issue estoppel applies to prevent the Defendant from arguing that “all dividends and profits” does not include unofficial payouts.

​Issue Estoppel

Issue estoppel operates when an issue of fact or law is necessarily decided and concluded in an earlier proceeding. It prevents the same issues from being reopened or submitted again for decision in subsequent proceedings between the same parties. Since the court has already made a determination on an issue, outside of an actual appeal, the „losing‟ party cannot get a second try to obtain a different decision.

In a consent judgment, however, there is technically no final and conclusive judgment on the merits of the issues; it is essentially just an agreement as to a result of the dispute endorsed by the court. Therefore, can a consent judgment ever give rise to issue estoppel and, if so, what is the precise scope of the estoppel given that no findings would have been made by the court?

Here, the High Court followed UK authority and previous Singapore decisions and held that consent judgments can give rise to issue estoppel as long as the judgment is final; it need not be a judgment on the merits. A party who has consented to a judgment is not any more deserving of a chance to re-litigate.

In terms of scope, a consent judgment only covers issues which are “fundamental and not merely collateral” to the decision. However, the judgment need not contain an explicit finding on the issue for issue estoppel to arise; the determination of the issue may be implicit from the judgment.

Application

On the facts of the case, the High Court found that the consent judgment had not decided that “all dividends and profits” should bear the special meaning submitted by the Plaintiff. The Plaintiff‟s definition was not an explicit part of the consent judgment, nor was it implied, as it was not necessarily decided and concluded by the judgment. Further, the Plaintiff had not maintained a consistent definition of “all dividends and profits” throughout the various stages of the dispute, reinforcing the point that the alleged special meaning could not have been part of the decision in the consent judgment.

The High Court found that the term “all dividends and profits” was to bear its ordinary meaning, and did not include unofficial payouts. Therefore, since no dividends were ever declared by the company, the Defendant was not required to account for any dividends to the Plaintiff.

Concluding Words

The decision highlights the final and determinative nature of decisions of the court. Parties may appeal a decision but, beyond that, they are not able to reopen issues (barring certain special circumstances). This prevents a dispute from becoming an unending cycle of litigation over repeated arguments.

Parties should also note that consent judgments are capable of being final as to issues of fact or law, so as to give rise to issue estoppel. Before agreeing to a consent judgment, parties should thus ensure that they are in fact willing to concede to all parts of the decision, whether explicit or implied.