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Jeyaretnam Kenneth Andrew v. Attorney-General is a Singapore constitutional law case that was decided in the High Court in 2012 and upon appeal, in the Court of Appeal in 2013. Kenneth Andrew Jeyaretnam, the Secretary-General of the Reform Party, one of the opposition political parties in Singapore, alleged that the Government of Singapore's contingent loan commitment to the International Monetary Fund via the Monetary Authority of Singapore was not made in accordance with the procedures set out in Article 144 of the Constitution of the Republic of Singapore. On that basis, he sought leave to apply for prerogative orders and declarations against the Government and/or the Monetary Authority of Singapore in relation to the Loan commitment.

In the High Court, Jeyaretnam argued that Article 144(1) should be given a literal and dictionary reading as opposed to a purposive interpretation. This would have the effect of preventing the Government from giving a loan without obtaining the prior approval of the Parliament and the concurrence of the President. Tan Lee Meng J dismissed Jeyaretnam’s case and held that Article 144(1) should be given a purposive interpretation. On that basis, the Government’s act of giving a loan to the International Monetary Fund does not fall within the ambit of Article 144(1).

Upon appeal, the Court of Appeal concurred with the High Court’s interpretation of Article 144. It further found that the Loan commitment could not be compared to a contingent liability or guarantee despite Jeyaretnam’s arguments. It ruled that the amount of risk involved in holding an asset does not change its nature from an asset to a liability, and that a guarantee was also “distinct and separate” from a loan commitment. The Court of Appeal thus upheld the ruling of the High Court and dismissed Jeyaretnam’s appeal, denying his application for leave to apply for prerogative orders.

Facts


In order to support the international effort to provide the International Monetary Fund ("IMF") with sufficient resources to combat the Eurozone Financial Crisis, the Singapore Government had decided that Singapore, through the Monetary Authority of Singapore (“MAS”), would make a contingent loan of US$4 billion to the IMF (“Loan commitment”). The money would not come from the Government Budget, but from part of the Singapore’s Official Foreign Reserves (“OFR”). This is achieved by converting part of the foreign investment assets to a loan made to the IMF, which would still count towards the OFR. In effect, the OFR does not decrease even if the IMF were to draw down on the loan.

Jeyaretnam brought an application for judicial review to challenge the constitutionality of the Loan commitment. He claimed that the Loan commitment contravened Article 144 of the Constitution of the Republic of Singapore (“Constitution”), as the Government had not obtained the requisite Parliamentary and Presidential approvals before granting the Loan commitment.

Article 144 reads as follows:

"Restriction on loans, guarantees, etc.

144.—(1) No guarantee or loan shall be given or raised by the Government —
 * (a) except under the authority of any resolution of Parliament with which the President concurs;
 * (b) under the authority of any law to which this paragraph applies unless the President concurs with the giving or raising of such guarantee or loan; or
 * (c) except under the authority of any other written law.

(2) The President, acting in his discretion, may withhold his assent to any Bill passed by Parliament providing, directly or indirectly, for the borrowing of money, the giving of any guarantee or the raising of any loan by the Government if, in the opinion of the President, the Bill is likely to draw on the reserves of the Government which were not accumulated by the Government during its current term of office.

(3) Clause (1)(b) shall apply to the following laws:
 * (a) the Asian Development Bank Act (Cap. 15) ;
 * (b) the Bretton Woods Agreements Act (Cap. 27)
 * (c) [Deleted by Act 27/2008 wef 01/01/2009]
 * (d) the External Loans Act (Cap. 102) ;
 * (e) the Financial Procedure Act (Cap. 109) ;
 * (f) the International Development Association Act (Cap. 144A) ;
 * (g) the International Finance Corporation Act (Cap. 144) ;
 * (h) the Jurong Town Corporation Act (Cap. 150) ; and
 * (i) the Loans (International Banks) Act (Cap. 164)."

Jeyaretnam thus sought leave to make applications for the following prerogative orders under O 53 of the Rules of Court : a prohibiting order prohibiting the Government or the MAS from giving any loan or guarantee to the IMF except in accordance with Article 144; and/or a quashing order quashing the decision to make the loan for contravening Article 144.

Jeyaretnam further argued that if leave were granted for either or both of the above, he should also be granted leave to apply for a declaration that a loan or guarantee may not be raised or given by the Government or the MAS except in accordance with Article 144 and/or declaration that a loan commitment or guarantee may not be given by the Government or the MAS except in accordance with Article 144.

There were three issues before the High Court and the Court of Appeal: first, whether the subject matter of the complaint was susceptible to judicial review; second, whether there was an arguable case or a prima facie case of reasonable suspicion in favour of granting the remedies sought by Jeyaretnam; and third, whether Jeyaretnam has sufficient interest in the matter.

The first issue was uncontentious; the High Court ruled that the subject matter of Jeyaretnam's application is susceptible to judicial review. However, it did not find in favour of Jeyaretnam on the second and third issues, following a purposive interpretation of Article 144. They hence dismissed the applications. Jeyaretnam subsequently appealed to the Court of Appeal with different arguments. The Court of Appeal dismissed his appeal on the same grounds.

Issues before the High Court
The High Court dealt with the following issues in ascertaining whether leave should be granted for Jeyeretnam's application: (1) whether the subject matter of the complaint is susceptible to judicial review; (2) whether the material before the court discloses an arguable case or a prima facie reasonable suspicion in favour of granting the remedies sought by the applicant and specifically, whether Article 144(1) was intended to also apply to the giving of loans by the Government ("the Second Issue"); and (3) whether the applicant has sufficient interest in the matter.

The parties' arguments
In relation to the Second Issue, Jeyaretnam argued that Article 144(1) should be given a literal and dictionary reading as opposed to a purposive interpretation. He further contended that adopting a purposive interpretation would not be appropriate where the provision in question relates to the Executive’s accountability to the Legislature. In this vein, the Government should neither give nor raise any loan without obtaining the prior approval of the Parliament and the concurrence of the President.

The Attorney-General (“AG”), acting on behalf of the Singapore Government, argued that Article 144(1) should be given a purposive interpretation to reflect the intention of Parliament. Applying this reading, no guarantee shall be given and no loan shall be raised without the approval of the Parliament and the concurrence of the President.

Holding of the High Court
The High Court rejected Jeyaretnam's assertions and applied a purposive approach to the interpretation of Article 144. In the course of ascertaining Parliament's intention in relation to Article 144, the High Court had regard to various materials, which are examined below, and concluded that Article 144 does not apply to the giving of loans and consequently Parliament's approval and the President's concurrence are not required for the Loan commitment. On this basis, the High Court held that Jeyaretnam's application did not disclose a prima facie case of reasonable suspicion in favour of granting the remedies sought and dismissed his application for leave accordingly.

Purposive approach
Tan Lee Meng J rejected Jeyaretnam’s assertion that Article 144 should be construed literally and reiterated that section 9A(1) of the Interpretation Act mandates that all written law, which includes the Constitution are to be interpreted in a manner that would promote its underlying purpose or object.

This is supported by Article 2(9) of the Constitution, which states that the Interpretation Act applies in the interpretation of the Constitution. Also, in Constitutional Reference No. 1 of 1995, the Constitutional Tribunal stated that it would be wrong to interpret the Constitution literally if doing so does not give effect to Parliament’s intention underpinning the relevant provision''. ''

Comparison between the Constitutional Amendment Bill, Explanatory Statement and the final version of Art 144(1)
Applying the purposive approach, Tan J looked at the relevant materials regarding the enactment of Article 144 and concluded that Article 144 only applies when the Government raises a loan or gives a guarantee, and not when it gives a loan.

In reaching the decision, Tan J looked at three documents, namely, (i) the Constitution of the Republic of Singapore (Amendment No 3) Bill 1990 (Bill 23 of 1990), (ii) the Explanatory Statement with respect to the Bill, and (iii) the amended Constitution, which incorporated Articles 144(1) & (2) in 1991.

From the Bill, Tan J looked at the order of the words “debt, guarantee or loan”, and noted that the words that followed were “incurred, given or raised”. When the arrangement in the Explanatory Statement was later changed to “loan, debt or guarantee”, the words that followed were correspondingly rearranged to “raised, incurred or given”. Tan J found that the linking of “loan” to “raised”, “debt” to “incurred”, and “guarantee” to “given” was indicative of Parliament’s intention that both the words “given” and “raised” in Article 144(1) were not meant to apply to “loan”.

Tan J’s conclusion on this point was buttressed by the fact that when Article 144 was enacted, the Select Committee recommended for the word “debt” to be removed from Article 144(1). This resulted in the corresponding deletion of the word “incurred”. Tan J found this confirmatory of Parliament’s intention to link the words, and that only the giving of guarantees and raising of loans by the Government fall within the ambit of Article 144.

Elected Presidency
In ascertaining the intention of Parliament, Tan J was of the view that Article 144 must be viewed in the context of the Elected Presidency since the former was enacted contemporaneously with the Elected Presidency scheme.

He justified his proposition by reference to the Explanatory Statement to the Constitution of the Republic of Singapore (Amendment No 3) Bill 1990 (Bill 23 of 1990), which provided that the purpose of the proposed constitutional amendments in relation to the Elected Presidency scheme was, inter alia, to “confer upon the elected President certain functions for the purpose of safeguarding the financial reserves of Singapore and the integrity of the Public Services...”

Tan J further examined the following documents and concluded that the Article 144 does not bar the giving of loans by the Government: (i) the Singapore Parliamentary Debates, Official Report (14 Jan 1998) ; (ii) the White Paper entitled Constitutional Amendments to Safeguard Financial Assets & Integrity of the Public Services (1988) ("the 1988 White Paper") and the White Paper entitled Safeguarding Financial Assets and the Integrity of the Public Services (“the 1990 White Paper”); and (iii) Article 144(2) of the Constitution.

=
Reference to the Singapore Parliamentary Debates =====

In 1998, the then AG Chan Sek Keong was tasked with advising the Government on the giving of a loan to a neighbouring country.

AG Chan opined that Article 144 was enacted to safeguard the nation’s accumulated reserves against profligate public spending by an irresponsible Government and the Elected Presidency scheme was established as the institution for this purpose. He further stated that the transactions that will be caught by Article 144 are those that increase the financial liability of the Government or lead to a drain on its past reserves, such as the giving of a guarantee or the raising of a loan by the Government on public credit. Conversely, the giving of a loan by the Government creates a liability for the borrower and a corresponding asset for the Government. Accordingly, the act of giving a loan by the Government will not be caught by Article 144.

AG Chan’s opinion was endorsed by the Government during a parliamentary sittting in the same year.

The 1988 and 1990 White Papers
Tan J noted that paragraph 1 of the 1988 White Paper states in subsection (b) that if the Government wants to spend any reserves which it has not itself accumulated, it must obtain the concurrence of the Elected President.

He further noted that paragraph 42 of the 1990 White Paper states under the heading “Restriction on Loans, Guarantees, etc.” that the “Government may not raise loans, incur debts or give guarantees except with the concurrence of the President or under the authority of law…”

In both instances, no reference was made to any restrictions in relation to the giving of loans by the Government.

Article 144(2) of the Constitution
Article 144(2) states that the “... President, acting in his discretion, may withhold his assent to any Bill passed by Parliament providing, directly or indirectly, for the borrowing of money, the giving of any guarantee or the raising of any loan by the Government if, in the opinion of the President, the Bill is likely to drawn on the reserves of the Government which were not accumulated by the Government during its current term of office.”

The absence of any reference to the giving of any loan by the Government supports the conclusion that Article 144(1) is not engaged when the Government gives loans.

Legislation referred to in Article 144(3) supports the AG's interpretation of Art 144 of the Constitution
Article 144(3) listed a number of statutes that Article 144(1)(b) applied to. Amongst these, Tan J found that two of the statutes, namely the Financial Procedure Act ("FPA") and the Bretton Woods Agreements Act ("BWAA"), reinforced his conclusion that the giving of loans by the Government did not fall within the scope of Article 144.

The FPA was passed after Article 144 and Tan J noted that section 15(1) of the FPA concerned the giving of guarantees, while section 15(2) of the FPA governed the raising of loans. Further, upon examination of section 9 of the BWAA, Tan J found that the requirement of presidential concurrence for the raising of loans but not the giving of loans bolstered the view that Article 144 does not concern the Government’s giving of loans.

The reddendo singula singulis principle
Tan J also stated that by using one of the canons of statutory interpretation, reddendo singula singulis, the conclusion is that loans given by the Government will fall beyond the scope of Article 144. The canon states that where a complex sentence has more than one subject and more than one object, it may be the right construction to render each to each. Applying this to Article 144, the giving of loans by the Government falls outside its ambit.

Decision of the Court of Appeal
Jeyaretnam appealed against the High Court decision regarding the interpretation of Article 144. Besides reiterating the arguments he made to Tan J, he further submitted four new arguments.

First, he contended that the Government had given an implied guarantee to the MAS for the Loan commitment to the IMF. Second, he alleged that the MAS should not be treated as a separate vehicle from the Government. Third, he argued that the Loan commitment ought to be classified as a contingent liability rather than an asset. Fourth, Jeyaretnam likened the Loan commitment to a guarantee and drew a comparison between the Loan commitment and a call option.

The Court of Appeal agreed with the High Court’s decision regarding the interpretation of Article 144, and rejected Jeyaretnam’s new arguments. Accordingly, it dismissed Jeyaretnam’s appeal.

Arrangement of words
On the issue of the interpretation of Article 144, the Court of Appeal agreed with the High Court’s reasoning as well as the finding that Parliament intended for Article 144 to refer only to the giving of guarantees and raising of loans, and not the giving of loans.

Jeyaretnam raised a new argument under this issue, contending that the words “given” or “raised” in Article 144(1) could both appropriately apply to a guarantee by citing the possibility of raising a letter of credit, which was “equivalent to a guarantee”. This would mean that it was not “inconceivable” to refer to the giving of a guarantee as raising a guarantee.

The Court of Appeal dismissed this argument, finding it “an abuse of the language” - the meaning of “raising a guarantee” is different from “giving a guarantee”. The Court of Appeal also found that a letter of credit is an entirely different financial instrument from a guarantee. Jeyaretnam conceded it was not common in financial jargon to raise a guarantee.

Implied guarantee
Jeyaretnam argued that the Government had violated Article 144 as it had given an implied guarantee to the MAS to reimburse the MAS for any loss suffered if the IMF were to be unable to repay the Loan. In his proposition, Jeyaretnam relied on section 38(1) of the Monetary Authority of Singapore Act (“MASA”), which states that the Government “shall be responsible for the payment of all moneys due by the Authority”.

The Court of Appeal held that Jeyaretnam’s reliance on section 38(1) of the MASA was flawed and incorrect. Section 38(1) refers to the payment of moneys due from the MAS to others, not vice versa. As the Loan commitment only involved the IMF owing moneys to the MAS, section 38(1) does not apply.

The Court of Appeal also agreed with the AG that an “implied guarantee” is a legal impossibility because Article 144(1) provides for three specific instances in which the Government can give a guarantee: if the guarantee was authorised by any resolution of the Parliament with the concurrence of the President under Article 144(1)(a); if the guarantee was made under the statutes listed in Article 144(3) with the concurrence of the President under Article 144(1)(b); or if any other written law authorises such a guarantee under Article 144(3). Hence, an implied guarantee is impossible given that a guarantee in itself can only arise in these specific instances.

The MAS as a separate vehicle
Jeyaretnam contended that the MAS was not a separate vehicle from the Government, given that it is a statutory corporation listed under the Fifth Schedule of the Constitution  and its shares are fully owned by the Government.

The Court of Appeal dismissed this , as section 3(1) of the MASA states otherwise:


 * Establishment of Authority


 * 3. —(1)  There shall be established an Authority to be called the Monetary Authority of Singapore which shall be a body corporate and shall have perpetual succession and may sue and be sued in its own name.

Contingent liability
Jeyaretnam contended that the loan should be classified as a contingent liability rather than an asset, based on the distinction Tan J drew between the Government’s promissory note to the IDA and the facts at hand. Tan J had dismissed Jeyaretnam’s reference to the Report of the Auditor-General for the Financial Year 2011/12  and explained that the Government’s promissory note to the IDA was a liability, and hence it required presidential assent, whereas the Loan commitment constituted an asset. Jeyaretnam leveraged on this explanation to liken the Loan commitment to a share option, which is classified as a contingent liability.

The contingent loan gives the IMF the right to draw down on the sum committed through the loan when necessary. He argued that the IMF is likely to draw down on the Loan commitment only when there is widespread breakdown in the global financial system and no other countries are willing to make loans to the IMF. Should a drawdown be effected, Singapore’s exposure in relation to the Loan would be a lot riskier than it currently stands.

He further argued that such a loan could not be a commercial asset since it would be given to support the global financial system in times of financial crisis. In this context, it is unlikely that the IMF will be able to repay the loans extended to it by the contributing countries and hence, notwithstanding the general accounting classification of loans as assets, the loan to the IMF constitutes, in substance, a liability. He proceeded to use the United States Federal Deposit Insurance Corporation’s Risk Management Manual of Examination Policies (“FDIC Manual”)’s  inclusion of loan commitments under customers’ liabilities in Section 3.8 to bolster his point.

The Court of Appeal dismissed the argument for several reasons. It stated that accounting standards vary across countries and further explained that the amount of risk involved in holding an asset does not change its nature from an asset to a liability. Then, it also pointed out that Section 3.8 of the FDIC Manual refers specifically to the contingent liability of the customer, as financial institutions have to determine customers’ credit risks. That is distinguished from the present case, in which the IMF’s draw-downs would be a debt due from the IMF to the MAS and hence reflected as an asset of the MAS and not a liability.

“Like a guarantee”
Another argument put forth by Jeyaretnam was that the Loan commitment was like a guarantee. He argued that because both a loan commitment and a guarantee were both off-balance sheet lending commitments, they were “identical” in nature. As a result, the loan commitment should be treated in the same manner as a guarantee, and both Parliamentary and Presidential approval for the Loan commitment is required since Art 144 is triggered. Jeyaretnam relied on accounting practices referred to by the 2011 Annual Report of JPMorgan Chase & Co and the Bank of England’s Yellow Folder to reinforce his argument that guarantees and loan commitments were to be treated in the same manner.

Alternatively, Jeyaretnam argued that the Loan commitment and the giving of a call option were similar. No evidence was provided for this assertion.

The Court of Appeal dismissed both submissions. On the first contention, the judges stated that it was “obvious” that the nature of the two contractual arrangements was “distinct and separate”, albeit without elaboration. It also described the connection that Jeyaretnam sought to draw between the loan commitment and guarantee as “tenuous”. The Court of Appeal did not address the supporting evidence was made.

Regarding the second argument, the Court of Appeal disagreed that there was a similarity between the Loan commitment and the giving of a call option. They emphasised that there was a difference in the mechanisms, and defined a call option as a contractual arrangement to buy a right, but did not explain why that was “entirely distinct from the workings of a loan commitment”.

For these reasons, the appeal was dismissed.

Jeyaretnam's comments
In his blog post dated 13 November 2013, Jeyaretnam responded to the Court of Appeal’s judgment and claimed that the judgment was evidence that the “[Singapore] [G]overnment is to all intents and purposes above the law”. He stated that the judiciary, in handing down such a judgment, is “essentially subordinate to the executive”.

Jeyaretnam responded to both the Article 144 issue and the question of locus standi. With regard to Article 144, Jeyaretnam opined that the Court of Appeal had misunderstood and misinterpreted him, and that the judges had made several “basic” errors with regard to basic modern finance theory.

In a subsequent blog post dated 28 January 2014, Jeyaretnam made reference to Deputy Prime Minister and Minister for Finance Tharman Shanmugaratnam’s motion in Parliament to move for an increase in Singapore’s subscription to the International Bank for Reconstruction and Development, and claimed that Shanmugaratnam’s explanation was contradictory to the information that was given by the Ministry of Finance and the basis on which the Singapore Government had won its case. Jeyaretnam further claimed that this was indicative of the Singapore Government “pulling the wool over the eyes of the judges” and likened the judges to “spectators at a magic show” who were “happy to be taken in by this gross misdirection.”