Vigar, Andrew v XL Insurance Company Se Singapore Branch [2025] SGHCR 12

Case Details

• Citation: [2025] SGHCR 12
• Court: General Division of the High Court of the Republic of Singapore
• Decision Date: 02 May 2025
• Coram: Assistant Registrar Leo Zhi Wei
• Case Number: Originating Claim No 539 of 2024; Summonses No 3301 of 2024
• Hearing Date(s): 8 January 2025, 6 March 2025, 28 March 2025
• Claimant: Andrew Vigar
• Respondent: XL Insurance Company Se Singapore Branch
• Counsel for Claimant: Tan Chau Yee, Kok Yee Keong, Laila Jaffar (Harry Elias Partnership LLP)
• Counsel for Respondent: Goh Seow Hui, Jingjie Yuan (Bird & Bird ATMD LLP)
• Practice Areas: Civil Procedure – Pleadings - Striking Out; Employment Law – Implied Terms

Summary

In Vigar, Andrew v XL Insurance Company Se Singapore Branch [2025] SGHCR 12, the High Court (General Division) addressed a significant interlocutory application to strike out various claims brought by an employee against his employer. The dispute arose from the fallout of internal investigations conducted in 2018, which the Claimant alleged were mishandled, leading to breaches of both implied terms in law and implied terms in fact. The judgment serves as a critical examination of the boundaries of the implied term of mutual trust and confidence (IMTC) and the stringent requirements for implying a contractual obligation on an employer to comply with its own internal policies.

The Claimant, Andrew Vigar, sought damages for breach of contract, asserting that the Defendant, XL Insurance Company Se Singapore Branch, had failed to conduct internal investigations and audits with the requisite promptness, thoroughness, and fairness. Central to the Claimant's case were three primary categories of implied terms: the IMTC, an implied term in fact requiring compliance with internal company policies, and an implied duty to exercise contractual discretion regarding bonuses and salary increments reasonably and without caprice. Furthermore, the Claimant sought damages for "loss of chance" regarding career opportunities he claimed were foreclosed by the Defendant's conduct.

The Defendant applied under the Rules of Court 2021 to strike out these claims on the basis that they were legally and factually unsustainable. Assistant Registrar Leo Zhi Wei's decision provides a meticulous application of the Sembcorp Marine three-step test for implied terms in fact and reinforces the high threshold for striking out pleadings. The court ultimately struck out the claims relating to the IMTC and the implied term to comply with internal policies, finding them either inadequately pleaded or legally unsustainable. However, the court allowed the claims regarding the exercise of contractual discretion for bonuses and salary increments to proceed, acknowledging that such issues are fact-sensitive and require a full trial.

The decision is particularly noteworthy for its treatment of the IMTC in light of recent conflicting High Court authorities. While acknowledging the debate between the positions in [2021] SGHC 123 and [2024] SGHC 260, the court focused on the insufficiency of the Claimant's pleadings. This judgment underscores the necessity for practitioners to plead material facts with precision when alleging breaches of implied duties in the employment context, particularly when those duties overlap with procedural aspects of internal investigations.

Timeline of Events

1. 2000: The Claimant commenced his employment relationship with the Defendant.
2. 2018: The Defendant commenced internal investigations against the Claimant following harassment allegations raised by a direct report, Ms. Kazumi Fujimoto.
3. 12 September 2018: The Defendant informed the Claimant that he had been found guilty of the harassment allegations based on the internal investigations.
4. 14 February 2023: The Tokyo District Court dismissed the harassment allegations against the Claimant in separate proceedings.
5. Post-February 2023: Following the Tokyo District Court's decision, the Claimant requested an internal audit by AXA XL’s internal audit department regarding the 2018 investigations.
6. 16 July 2024: The Claimant filed Originating Claim No 539 of 2024 against the Defendant.
7. 15 October 2024: The Claimant filed his 1st Amended Statement of Claim (SOC).
8. 12 November 2024: The Defendant filed SUM 3301/2024 to strike out portions of the 1st Amended SOC.
9. 8 January 2025: The first substantive hearing for the striking out application took place.
10. 6 March 2025: A subsequent hearing was held to address further arguments on the implied terms and loss of chance claims.
11. 28 March 2025: The court rendered an oral judgment in SUM 3301, striking out part of the Claimant’s claims.
12. 02 May 2025: The court delivered the full written grounds of decision.

What Were the Facts of This Case?

The Claimant, Andrew Vigar, was a long-term employee of XL Insurance Company Se Singapore Branch, having served the company since 2000. The core of the dispute originated in 2018 when the Defendant initiated internal investigations into the Claimant's conduct. These investigations were triggered by allegations of harassment made by Ms. Kazumi Fujimoto, an employee of XL Catlin Japan and a direct report to the Claimant. On 12 September 2018, the Defendant concluded its internal process and informed the Claimant that the allegations had been substantiated, finding him guilty of harassment.

The situation took a dramatic turn on 14 February 2023, when the Tokyo District Court, in proceedings involving the underlying allegations, dismissed the harassment claims against Mr. Vigar. Armed with this judicial exoneration, the Claimant challenged the validity and fairness of the Defendant's 2018 internal investigations. He contended that the investigations were flawed, lacked thoroughness, and were not conducted with the necessary promptness. He subsequently requested that AXA XL’s internal audit department conduct a review of the 2018 investigation process. However, the internal audit did not uphold his complaints, leading the Claimant to seek legal redress in the Singapore High Court.

In his 1st Amended Statement of Claim, the Claimant alleged that the Defendant had breached several terms of his employment contract. These included:

• The Implied Term of Mutual Trust and Confidence (IMTC): The Claimant argued that the Defendant breached this term by failing to conduct the 2018 investigations and the subsequent internal audit in a fair, prompt, and thorough manner.
• The Implied Term to Comply with Internal Policies: The Claimant asserted that there was an implied term in fact that the Defendant would comply with its own internal policies, specifically those governing investigations and audits. He alleged that the Defendant's failure to adhere to these policies constituted a breach of contract.
• Breach of Discretionary Duties: The Claimant contended that the Defendant had a duty to exercise its contractual discretion regarding salary increments and bonuses reasonably, in good faith, and not capriciously or arbitrarily. He alleged that between 2018 and 2023, the Defendant breached this duty by failing to award him appropriate increments and bonuses due to the (erroneous) findings of the 2018 investigation.
• Loss of Chance: As a consequence of these breaches, the Claimant claimed he had lost the chance to secure various career opportunities, both within the Defendant's organization and with third parties.

The Defendant's response was to seek a striking out of these claims under Order 9 Rule 16 of the Rules of Court 2021. The Defendant argued that the IMTC was not a recognized term under Singapore law for the purposes alleged, or alternatively, that the Claimant had failed to plead the material facts necessary to sustain such a claim. Regarding the internal policies, the Defendant argued that the Sembcorp Marine test for implying terms in fact was not met. Finally, the Defendant contended that the "loss of chance" claims were legally unsustainable as they related to internal promotions which the employer had no contractual obligation to provide.

The procedural history involved multiple hearings where the court scrutinized the Claimant's pleadings. The court noted that the Claimant had already amended his Statement of Claim once and had been given opportunities to clarify his position during the hearings on 8 January and 6 March 2025. The final determination on 28 March 2025 resulted in a partial striking out, the reasons for which were detailed in the May 2025 judgment.

What Were the Key Legal Issues?

The application for striking out raised several critical legal issues concerning the intersection of contract law and employment practices in Singapore:

• The Sustainability of the Implied Term of Mutual Trust and Confidence (IMTC): Whether the IMTC exists as an implied term in law in Singapore employment contracts, and if so, whether it can be invoked to challenge the procedural conduct of internal investigations and audits. This involved navigating the conflicting precedents of [2021] SGHC 123 and [2024] SGHC 260.
• The Implication of Internal Policies as Contractual Terms: Whether a term can be implied in fact (using the Sembcorp Marine test) that an employer must comply with its internal policies. The court had to determine if such an implication was necessary for business efficacy or if it met the "officious bystander" test.
• The Scope of "Loss of Chance" Damages in Employment: Whether an employee can claim damages for the loss of a chance to secure career opportunities within the same employer's organization, or if such claims are limited to opportunities with third parties. This required an analysis of the rule in Latham Scott v Credit Suisse First Boston [2000] 2 SLR(R) 30.
• The Duty of Rationality in Contractual Discretion: Whether the Braganza duty (the duty not to exercise discretion arbitrarily, capriciously, or in bad faith) applies to an employer's decision-making regarding bonuses and salary increments, and whether a breach of this duty is a triable issue.
• The Threshold for Striking Out under ROC 2021: The application of the "plainly or obviously unsustainable" test in the context of evolving legal doctrines and complex factual matrices.

How Did the Court Analyse the Issues?

The court began its analysis by reiterating the high threshold for striking out under the Rules of Court. Citing Iskandar bin Rahmat and others v Attorney-General and another [2022] 2 SLR 1018, the court noted that a claim is only struck out if it is "plainly or obviously unsustainable" (at [17]). This occurs if the claim is legally unsustainable (disclosed by the pleadings to have no foundation in law) or factually unsustainable (where the allegations are fanciful or contradicted by incontrovertible evidence).

1. The Implied Term of Mutual Trust and Confidence (IMTC)

The court examined the Claimant's reliance on the IMTC. The Claimant argued that the Defendant breached this term by failing to conduct the 2018 investigations and the internal audit with promptness and thoroughness. The court noted the current judicial landscape in Singapore regarding the IMTC. While earlier decisions like Cheah Peng Hock v Luzhou Bio-Chem Technology Ltd [2013] 2 SLR 577 accepted the term, more recent decisions have cast doubt on its existence or scope. Specifically, in [2021] SGHC 123, the court suggested the IMTC was intended to protect the relationship rather than provide a back-door for procedural challenges. Conversely, in [2024] SGHC 260, it was expressed that such a term ought not to exist at all.

Assistant Registrar Leo Zhi Wei observed that as an Assistant Registrar, he was bound by High Court decisions under the doctrine of stare decisis, citing [2016] SGHCR 11 and [2017] SGHCR 18. However, he found it unnecessary to resolve the conflict between Dong Wei and Dabbs because the Claimant’s pleadings were deficient regardless. The court held:

"The implied term of mutual trust and confidence is intended to protect the relationship between the employer and the employee... it does not, without more, impose a specific procedural obligation on the employer to conduct investigations in a particular way." (at [38]-[40])

The court found that the Claimant had failed to plead material facts showing how the alleged lack of promptness or thoroughness amounted to a breach of the IMTC. Consequently, these claims were struck out as legally unsustainable in their current form.

2. Implied Term in Fact: Compliance with Internal Policies

The Claimant sought to imply a term in fact that the Defendant was contractually bound to comply with its internal policies. The court applied the three-step test from Sembcorp Marine Ltd v PPL Holdings Pte Ltd [2013] 4 SLR 193:

• Step 1 (Gap): Is there a gap in the contract because the parties did not contemplate the issue?
• Step 2 (Business Efficacy): Is it necessary to imply the term to give the contract business efficacy?
• Step 3 (Officious Bystander): Is the term so obvious that the parties would have said "oh, of course" if asked?

The court found that the Claimant failed at Step 2. The employment contract was fully functional without an implied term requiring strict adherence to every internal policy. The court reasoned that internal policies are often administrative and subject to change; elevating them to contractual obligations would restrict an employer's flexibility in a way the parties likely never intended. As the court noted, the "business efficacy" test is a high bar, and the Claimant did not demonstrate that the contract would be unworkable without this term. Thus, the claim was struck out.

3. Loss of Chance Claims

The Claimant alleged he lost the chance to secure career opportunities. The court distinguished between "internal" opportunities (within the Defendant's group) and "external" opportunities (with third parties). Relying on Latham Scott v Credit Suisse First Boston [2000] 2 SLR(R) 30, the court held that an employee cannot claim damages for the loss of a chance for a promotion or opportunity that the employer was not contractually bound to provide. Because the Defendant had no contractual obligation to promote the Claimant or provide him with specific internal roles, any claim for "loss of chance" regarding internal opportunities was struck out. However, the court allowed the Claimant to amend his pleadings to focus solely on lost opportunities with third parties, which are legally cognizable.

4. Discretionary Bonuses and Salary Increments

The court declined to strike out the claims regarding the Defendant's exercise of discretion. Citing [2024] SGHC 206, the court acknowledged that where a contract grants an employer discretion (such as over bonuses), that discretion must not be exercised "irrationally, capriciously or arbitrarily" (at [72]). The Claimant’s allegation—that the Defendant withheld increments based on an investigation finding that was later discredited—raised a triable issue of fact. The court held that determining whether the Defendant's exercise of discretion was "Braganza-rational" required a full trial to examine the evidence and the Defendant's decision-making process.

What Was the Outcome?

The court ordered a partial striking out of the Claimant's 1st Amended Statement of Claim. The operative disposition was summarized as follows:

"For the foregoing reasons, I struck out part of the Claimant’s claims in SUM 3301 and ordered the Claimant to pay the Defendant costs of S$22,000 (all in)." (at [76])

The specific orders were:

• Struck Out: All claims predicated on the implied term of mutual trust and confidence insofar as they alleged procedural failures in the 2018 investigation and the internal audit.
• Struck Out: All claims alleging an implied term in fact that the Defendant was contractually required to comply with its internal policies.
• Struck Out: Claims for "loss of chance" damages relating to internal career opportunities within the Defendant's organization.
• Allowed to Proceed: Claims alleging that the Defendant breached its duty to exercise contractual discretion reasonably and without caprice regarding salary increments and bonuses between 2018 and 2023.
• Leave to Amend: The Claimant was granted leave to amend his pleadings to properly frame the "loss of chance" claim as relating only to third-party opportunities.

Regarding costs, the court fixed the costs of SUM 3301 at S$22,000 (inclusive of disbursements) in favor of the Defendant. This reflected the Defendant's substantial success in narrowing the scope of the litigation, although it did not succeed in striking out the entirety of the claim.

Why Does This Case Matter?

This judgment is a significant contribution to Singapore's employment law jurisprudence, particularly concerning the limits of implied terms. For practitioners, the case provides several layers of guidance:

1. The Status of the IMTC: The decision highlights the increasing difficulty employees face when relying on the implied term of mutual trust and confidence to challenge an employer's procedural conduct. By declining to resolve the Dong Wei vs. Dabbs conflict but striking out the claim based on pleading deficiencies, the court signaled that the IMTC is not a "catch-all" for any perceived unfairness in the workplace. It reinforces the view that the IMTC's primary function is to protect the core of the employment relationship, not to mandate specific procedural standards for investigations unless those standards are expressly contracted for.

2. Internal Policies are Not Automatically Contractual: The court's application of the Sembcorp Marine test to internal policies is a stern reminder that administrative guidelines and HR policies are generally not part of the contract of service. Employers often maintain these policies to guide internal conduct, but this judgment confirms that courts will be slow to imply a contractual obligation to follow them. This provides employers with necessary operational flexibility while warning employees that they cannot easily convert a policy breach into a breach of contract claim.

3. Pleading Standards for Discretionary Breaches: The survival of the claims regarding discretionary bonuses and increments is a victory for the application of the Braganza duty in Singapore. It confirms that even where an employer has "absolute" discretion, that discretion is subject to a baseline of rationality and good faith. However, the court's insistence on material facts shows that claimants must do more than simply allege "unfairness"; they must point to specific instances where the discretion was exercised based on irrelevant factors or in a capricious manner.

4. Clarification of the Latham Scott Rule: The case clarifies the "loss of chance" doctrine in employment. By striking out claims for internal opportunities, the court maintained the principle that an employer cannot be liable for failing to provide a benefit (like a promotion) that it was never contractually obligated to provide. This prevents the "loss of chance" doctrine from being used to circumvent the lack of a contractual right to promotion.

5. Procedural Rigor under ROC 2021: Finally, the case demonstrates the court's willingness to use striking out powers to prune unsustainable claims early in the litigation process. This promotes the "Ideals" of the Rules of Court 2021, specifically the expeditious and cost-effective resolution of disputes by ensuring that only triable issues reach the courtroom.

Practice Pointers

• For Employee Counsel: When pleading a breach of the implied term of mutual trust and confidence, avoid broad assertions of "unfairness." Instead, identify specific material facts that demonstrate how the employer's conduct was calculated or likely to destroy or seriously damage the relationship of trust and confidence.
• For Employer Counsel: Ensure that internal policies and employee handbooks contain clear disclaimers stating that they do not form part of the contract of service and are subject to change at the employer's discretion. This helps defeat arguments for implied terms in fact.
• Regarding Investigations: While this case suggests procedural flaws in investigations might not always breach the IMTC, practitioners should advise clients to maintain fair processes to avoid "Braganza" challenges when those investigation results are used to exercise contractual discretions (like bonuses).
• Loss of Chance Claims: When claiming for loss of chance, clearly distinguish between opportunities the employer was contractually bound to provide (rare) and opportunities with third parties. Claims for the former are likely to be struck out under the Latham Scott principle.
• Striking Out Strategy: Under ROC 2021, focus striking out applications on claims that rely on novel or disputed legal doctrines (like the IMTC) where the pleadings fail to meet the high bar of "necessity" or "materiality."
• Drafting Discretionary Clauses: When drafting bonus or increment clauses, be aware that "absolute discretion" does not mean "unfettered discretion." The Braganza duty of rationality will likely be implied by the courts.

Subsequent Treatment

As a decision rendered in May 2025, Vigar v XL Insurance represents the current state of the law regarding the intersection of the IMTC and procedural fairness in Singapore. It is likely to be cited in future interlocutory applications where employees attempt to elevate internal HR policies to contractual status. Its treatment of the Dong Wei and Dabbs conflict suggests that until the Court of Appeal provides a definitive ruling on the IMTC, lower courts will continue to resolve these disputes on the basis of pleading sufficiency and the Sembcorp Marine test for implied terms in fact.

Legislation Referenced

• Rules of Court 2021: Order 9 Rule 16 (Striking out pleadings and endorsements)
• Rules of Court (Cap 322, R 5, 2014 Rev Ed): Order 18 Rule 19 (The predecessor provision for striking out)
• Rules of Court (Cap 322, R 5, 2014 Rev Ed): Order 18 Rule 24

Cases Cited

• Applied: Iskandar bin Rahmat and others v Attorney-General and another [2022] 2 SLR 1018
• Applied: Sembcorp Marine Ltd v PPL Holdings Pte Ltd [2013] 4 SLR 193
• Referred to: [2021] SGHC 123
• Referred to: [2024] SGHC 260
• Referred to: [2024] SGHC 206
• Referred to: Latham Scott v Credit Suisse First Boston [2000] 2 SLR(R) 30
• Referred to: The Bunga Melati 5 [2012] 4 SLR 546
• Referred to: Kallivalap Praveen Nair v Glaxosmithkline Consumer Healthcare Pte Ltd [2023] 3 SLR 922
• Referred to: Cheah Peng Hock v Luzhou Bio-Chem Technology Ltd [2013] 2 SLR 577
• Referred to: [2016] SGHCR 11
• Referred to: [2017] SGHCR 18
• Referred to: BCBC Singapore Pte Ltd and another v PT Bayan Resources TBK and another [2023] 4 SLR 1
• Referred to: Palliser Ltd v Fate Ltd [2019] EWHC 43
• Referred to: The Moorcock (1889) 14 PD 64

Source Documents

• Original Judgment PDF (eLitigation)
• Case Details on eLitigation