CH 1998 B No. 5286
Royal Courts of Justice
Strand, London, WC2A 2LL
B e f o r e :
| BARINGS Plc (in liquidation) and anr||Claimants|
|- and -|
|COOPERS & LYBRAND (a firm) and ors||Defendants|
|BARINGS FUTURES (SINGAPORE) PTE LTD (in liquidation)||Claimants|
|MATTAR and 36 ors||Defendants|
Jonathan Gaisman QC/Christopher Butcher QC/David Bailey/ James Brocklebank (instructed by Clifford Chance for D&T)
Hearing dates: 28th January 2002 - 8th March 2002
Crown Copyright ©
Mr Justice Evans - Lombe:
The relevant trading
Suppression of activity statements for the 88888 account
The chronology of the 1992 and 1993 audits
i) on 16 October 1992 D&T sent to Coopers & Lybrand (London) (“C&LL”) the consolidation schedules which they had prepared in relation to BFS and the other Barings Singapore companies, for consolidation into the group accounts of BSL. They were expressed to be subject, inter alia, to the resolution of the local statutory accounts;
ii) on 20 November 1992, D&T sent BFS’ statutory accounts in draft to Mr Jones, along with a draft representation letter addressed to D&T to cover the 1992 audit which they asked him to sign and return. They repeated the request on 10 December 1992;
iii) on or about 17 December 1992, Mr Jones returned the signed representation letter. Apparently he had had it retyped on BFS letterhead, but he did not change the text from D&T’s draft;
iv) on 31 December 1992, D&T issued their opinion on the statutory accounts of BFS and submitted their regulatory reports to the Singapore regulators, MAS and SIMEX.
The representation letters
“Baring Futures (Singapore) Pte Ltd
20 Raffles Place, 24th Floor, Ocean Towers, Singapore 0104
Deloitte & Touche
Certified Public Accountants
95 South Bridge Road #09-00
FINANCIAL STATEMENTS FOR FINANCIAL [YEAR/PERIOD] ENDED [SEPTEMBER 30, 1992/DECEMBER 31, 1993]
This representation letter is provided to you in connection with your audit of the financial statements of Baring Futures (Singapore) Pte Ltd (“company”) as of the above date and for the period then ended for the purpose of expressing an opinion as to whether the financial statements give a true and fair view of the financial position, results of operations and changes in financial position in accordance with statements of accounting standard consistently applied bearing in mind the requirements of the Companies Act. For convenience the term “company” covers the company and where appropriate the group and members of the group audited by you.
We confirm, to the best of our knowledge and belief, the following representation:
1 We acknowledge our responsibility for the fair presentation of the financial statements in accordance with statements of accounting standard including the appropriate disclosure of all information required by the Companies Act, and in conformity with generally accepted accounting principles in Singapore.
2 There have been no irregularities involving management or employees who have a significant role in the system of internal control or that could have a material effect on the financial statements. There are no instances where any officer or employee of the company has an interest in a company with which the company does business which would be considered a “conflict of interest”. Such an interest would be contrary of company policy.
3 We have made available to you all books of account and supporting documentation and all minutes of the meetings of shareholders, directors, and committees of directors, or summaries of actions of recent meetings for which minutes have not yet been prepared from the beginning of the financial year to the date of this letter.
4 The financial statements are free of material errors and omissions. There are no material transactions or related issues or liabilities that have not been properly recorded in the financial and accounting records.
Adequate provision has been made for current and deferred taxes on income including adjustments for over or under accrual for prior years.
5 The company has complied with all aspects of contractual agreements that could have a material effect on the financial statements in the event of non-compliance.
There have been no communications concerning non-compliance with requirements of regulatory authorities with respect to financial statements nor any fraud or dishonesty reportable by you under section 207(9A) of the Companies Act.
6 Where applicable or required, the following have been properly recorded and, where required, adequately disclosed in the financial statements:
(a) Balances and transactions with related parties. The notes to the financial statements fully describe such related party transactions and balances as required by the statement of accounting standard No. 21. Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial and operating decisions. There were no non-cash assets over S$100,000 purchased from or sold to a director or director connected person or company requiring shareholders approval in accordance with sections 160A to 160D of the Companies Act. There were no loans to directors nor assistance to acquire shares in the company or its holding company that breach the Companies Act.
(b) Losses arising from sale and purchase commitments (including forward transactions in inventories, commodities, foreign exchange etc).
(c) Agreements to buy back assets previously sold and agreements to repurchase assets previously sold and options to purchase property or equipment of material amounts.
(d) Assets pledged as collateral.
(e) Capital shares purchase options or agreements or capital shares reserved for options, warrants, conversions, or other requirements.
(f) Unasserted claims that our lawyers have advised are probable of assertion.
(g) All possible claims that our lawyers have advised are probable of assertion.
(h) All unsupported expenses have been incurred on the company’s business and are a charge to the company.
(i) All plans or intentions that may materially affect the carrying value or classification of assets and liabilities.
(j) Capital expenditure commitments.
7 We have no plans or intentions that may materially affect the carrying value or classification of assets and liabilities reflected in the financial statements.
We are aware of the requirements of section 201(3C) of the Companies Act that require the directors to ascertain that no non-current asset is shown at an amount which exceeds the recoverable amount of the non-current asset over its useful life or on its disposal. There are no such items requiring provision or explanation to avoid the financial statements being misleading.
8 The company has satisfactory title to all assets and there are no liens or encumbrances on the company’s assets, except for those that are disclosed in the notes to the financial statements. Receivables do not include amounts for goods or services provided or transactions that have occurred after the balance sheet date for goods or services not sold.
9 We have recorded or disclosed all liabilities, both actual and contingent, and have disclosed in the notes to the financial statements the guarantees that we have given to all third parties. Any expenditure included in the accounts where receipts or vouchers were not available was properly made in connection with the carrying on of the company’s business.
10 Other than those described in notes to the financial statements, there have been no events subsequent to the balance sheet date which require adjustment of or disclosure in the financial statements and related notes.
11 Fixed assets accounts and depreciation accounts have been reduced in respect of all items which have been sold, scrapped or which are otherwise no longer usable. The carrying costs of the fixed assets and other non-current assets are not in excess of recoverable amounts. No provision for impairment which is other than temporary is necessary.
12 There are no formal or informal compensating balance arrangements with any of our bank and investment accounts. Except as disclosed in the notes to the financial statements, we have no other line of credit arrangements.
13 We have properly recorded or disclosed in the financial statements the redemption options and agreements and shares reserved for options, warrants, conversions and other requirements.
14 The company has good title to the fixed assets, investments and other assets detailed in the financial statements, and no provision is necessary for any impairment in value.
The directors have valued unquoted investments as detailed in the financial statements and have arrived at the values using the basis of valuation more fully described in the notes to the financial statements.
EVIDENCE FOR THE PRELIMINARY ISSUE
THE ELEMENTS OF D&T’S DEFENCE
D&T’s case in the preliminary issue
i) one or more representations by Mr Jones,
ii) which were false,
iii) which were made deceitfully (in this case recklessly, so as to amount to deceit),
iv) which were intended to, and did, induce D&T to engage in, or abstain from, certain conduct,
v) which caused loss to D&T, and
vi) for which BFS is responsible.
LEGISLATION AND ACCOUNTING GUIDANCE
Section 172 (equivalent s.310 CA 1985)
(1) Any provision, whether in the articles or in any contract with a company or otherwise, for exempting any officer or auditor of the company from, or indemnifying him against, any liability which by law would otherwise attach to him in respect of any negligence, default, breach of duty or breach of trust of which he may be guilty in relation to the company, shall be void.
Section 201 (equivalent s.226 CA 1985)
(1) The directors of every company shall … lay before the company at its annual general meeting a profit and loss account … that gives a true and fair view of the profit and loss of the company …
(3) The directors of every company shall cause to be made out, and to be laid before the company at its annual general meeting with the profit and loss account required by subsection (1) a balance-sheet … that gives a true and fair view of the state of affairs of the company …
(4) The profit and loss account and the balance-sheet of a company … shall be duly audited before they are laid before the company at its annual general meeting as required by this section and the auditor’s report required by section 207 shall be attached to or endorsed upon the accounts…
Section 205 (equivalent s.384 CA 1985)
(1) The directors of a company shall … appoint a person or persons to be the auditor or auditors of the company …
Section 207 (equivalent ss.235 and 237 CA 1985)
(1) An auditor of a company shall report to the members on the accounts required to be laid before the company in general meeting and on the company’s accounting and other records relating to those accounts …
(2) An auditor shall, in a report under this section, state –
(a) whether the accounts … are in his opinion properly drawn up (i) so as to give a true and fair view of the matters required by section 201 to be dealt with in the accounts …; and (ii) in accordance with this Act so as in the case of a balance-sheet to give a true and fair view of the company’s affairs and in the case of a profit and loss account to give a true and fair view of the company’s profit or loss;
(b) whether the accounting and other records … have been, in his opinion, properly kept in accordance with this Act;
(3) It is the duty of an auditor of a company to form an opinion as to each of the following matters:
(a) whether he has obtained all the information and explanations that he required;
(b) whether proper accounting and other records, including registers, have been kept by the company as required by this Act…
and he shall state in his report particulars of any deficiency, failure or shortcoming in respect of any matter referred to in this subsection.
Singapore Statements of Auditing Guideline (“SAGs”)
SAG 9 (Audit Evidence) (equivalent to IAG 8 and UK Auditing Guideline 203)
12. The auditor obtains evidence in performing compliance and substantive procedures by one or more of the following methods:
- inquiry and confirmation;
- computation; and
- analytical review.
15. Inquiry consists of seeking appropriate information of knowledgeable persons inside or outside the entity. Inquiries may range from formal written inquiries addressed to third parties to informal oral inquiries addressed to persons inside the entity. Responses to inquiries may provide the auditor with information which he did not previously possess or may provide him with corroborative evidence.
16. Confirmation consists of the response to an inquiry to corroborate information contained in the accounting records. For example, the auditor normally requests confirmation of receivables by direct communication with debtors.
SAG 12 (Fraud and Error) (equivalent to IAG 11 and UK Auditing Guideline 418)
4. The responsibility for the prevention and detection of fraud and error rests with management through the implementation and continued operation of an adequate system of internal control. Such a system reduces but does not eliminate the possibility of fraud or error.
5. The objective of an audit of financial information is to enable an auditor to express an opinion on such financial information. In forming his opinion, the auditor carries out procedures designed to obtain evidence that will provide reasonable assurance that the financial information is properly stated in all material respects. Consequently, the auditor seeks reasonable assurance that fraud or error which may be material to the information has not occurred or that, if it has occurred, the effect of fraud is properly reflected in the financial information or the error is corrected. The auditor, therefore, should plan his audit so that he has a reasonable expectation of detecting material misstatements in the financial information resulting from fraud or error. The degree of assurance of detecting errors would normally be higher than that of detecting fraud, since fraud is usually accompanied by acts specifically designed to conceal its existence.
8. The risk of not detecting material misstatement resulting from fraud is greater than the risk of not detecting a material misstatement resulting from error, because fraud usually involves acts designed to conceal it, such as collusion, forgery, deliberate failure to record transactions, or intentional misrepresentations being made to the audit. Unless the auditor’s examination reveals evidence to the contrary, he is entitled to accept representations as truthful and records and documents as genuine. However, the auditor should plan and perform his audit with an attitude of professional scepticism recognising that he may encounter conditions or events during his examination that would lead him to question whether fraud or error exist.
9. While the existence of an effective system of internal control reduces the probabilities of misstatement of financial information resulting from fraud or error, there will always be some risk of internal controls failing to operate as designed. Furthermore, any system of internal control may be ineffective against fraud involving collusion among employees or fraud committed by management. Certain levels of management may be in a position to override controls that would prevent similar frauds by other employees; for example, by directing subordinates to record transactions incorrectly or to conceal them, or by suppressing information relating to transactions.
11. In planning and performing his examination, the auditor should take into consideration the risk of material misstatement of the financial information caused by fraud or error. He should inquire of management as to any fraud or significant error which has occurred in the reporting period and modify his audit procedures, if necessary.
SAG 20 (Representations by Management) (equivalent to IAG 22 and SAS 440)
2. The auditor performs various audit procedures designed to obtain sufficient appropriate audit evidence to enable him to express an opinion on the financial statements as a whole. One form of audit evidence is relevant representations from management.
4. The auditor should obtain evidence that management acknowledges its responsibility for the appropriate presentation of the financial statements and that management has approved the financial statements. The auditor can obtain evidence of management’s acknowledgement of such responsibility and approval from relevant minutes of meetings of the management board or similar body or by obtaining a written representation from management or a signed copy of the financial statements.
5. During the course of an audit, management makes many representations to the auditor, either unsolicited or in response to specific inquiries. When such representations relate to matters which are material to the financial statements, the auditor should:
- seek corroborative audit evidence from sources inside or outside the entity,
- evaluate whether the representations made by management appear reasonable and consistent with other audit evidence obtained, including other representations, and
- consider whether the individuals making the representations can be expected to be well-informed on the matter.
If a representation by management is contradicted by other evidence, the auditor should investigate the circumstances and, when necessary, reconsider the reliability of other representations made by management.
6. Representations by management cannot be a substitute for other audit evidence that the auditor would expect to find. For example, a representation by management as to the original cost of an asset is no substitute for the normal evidence of such cost that an auditor would expect to find. If the auditor is unable to obtain sufficient appropriate audit evidence that he believes should be available, this will constitute a limitation in the scope of his examination even if he has a representation from management on the matter.
7. In certain instances a representation by management may be the only audit evidence which can reasonably be expected to be available. For example, the auditor would not necessarily expect that other evidence would be available to corroborate management’s intention to hold a specific investment for long-term appreciation. In such circumstances, provided that the auditor obtains written confirmation of management’s oral representations, this may not constitute a limitation on the scope of his examination.
8. The auditor can document in his working papers evidence of management’s representations by summarising oral discussions with management, or by obtaining written representations from management. Written representations can take the form of:
- a representation letter from management, or
- a letter from the auditor outlining his understanding of management’s representations, duly acknowledged and confirmed by management.
9. The possibility of misunderstandings between the auditor and management is reduced when oral representations are confirmed by management in writing. Furthermore, as described in paragraph 7, written representations from management should be obtained to confirm oral representations given to the auditor on matters material to the financial statements when other sufficient appropriate audit evidence cannot reasonably be expected to exist. Matters which might be included in a letter from management or in a confirmatory letter to management are contained in the example of a management representation letter in the Appendix.
13. A management representation letter should be signed by the members of management who have primary responsibility for the entity and its financial aspects, usually the senior executive officer and the senior financial officer, based on the best of their knowledge and belief…
14. If management refuses to provide representations that the auditor considers necessary, this will constitute a limitation on the scope of his examination. In such circumstances, the auditor should evaluate any reliance he has placed on other representations made by management during the course of his examination and consider if the refusal may have any additional effect on his report.
“My Lords, the primary purpose of the statutory requirement that a company’s accounts shall be audited annually is almost self-evident. The structure of the corporate trading entity, at least in the case of public companies whose shares are dealt with on an authorised stock exchange, involves the concept of a more or less widely distributed holding of shares rendering the personal involvement of each individual shareholder in the day-to-day management of the enterprise impracticable, with the result that management is necessarily separated from ownership. The management is confided to a board of directors which operates in a fiduciary capacity and is answerable to and removable by the shareholders who can act, if they act at all, only collectively and only through the medium of a general meeting. Hence the legislative provisions requiring the board annually to give an account of its stewardship to a general meeting of the shareholders. This is the only occasion in each year on which the general body of shareholders is given the opportunity to consider, to criticise and to comment on the conduct by the board of the company’s affairs, to vote on the directors’ recommendation as to dividends, to approve or disapprove the directors’ remuneration and, if thought desirable, to remove and replace all or any of the directors. It is the auditors’ function to ensure, so far as possible, that the financial information as to the company’s affairs prepared by the directors accurately reflects the company’s position in order, first, to protect the company itself from the consequences of undetected errors or, possibly, wrongdoing (by, for instance, declaring dividends out of capital) and, second, to provide shareholders with reliable intelligence for the purpose of enabling them to scrutinise the conduct of the company’s affairs and to exercise their collective powers to reward or control or remove those to whom that conduct has been confided.”
“any opinion given carries with it a representation that the maker of the statement has some genuine factual basis for the formation of [his] opinion”
or, as Simon Brown LJ put it in Economides v Commercial Assurance  QB 587, at page 598,
“the plaintiff had to have some basis for his statement of belief in this valuation; he could not simply make a blind guess: one cannot believe to be true that which one has not the least idea about. But … the basis of belief does not have to be an objectively reasonable one. … he was under a duty of honesty, not a duty of care.”
“if the facts are not equally known to both sides, then a statement of opinion by one who knows the facts best involves very often a statement of a material fact, for he impliedly states that he knows facts which justify his opinion.”
“What would be the effect of this language upon the mind of a possible purchaser? Clearly, I should have thought, it would flow from the language used and would be intended to be understood by a reader of the particulars that persons who knew the significance of this matter and who were experienced and competent to look into it were expressing a belief founded upon substantial and reasonable grounds.”
i) he believed the statements in the letters to be true, and
ii) he bona fide believed that he had reasonable grounds for making representation (i).
FALSITY OF REPRESENTATIONS
DECEIT: THE TEST FOR DECEIT
“fraud is proved when it is shewn that a false representation has been made (1) knowingly, (2) without belief in its truth or (3) recklessly, careless whether it be true or false. Although I have treated the second and third as distinct cases, I think the third is but an instance of the second, for one who makes a statement under such circumstances can have no real belief in the truth of what he states. To prevent a false statement being fraudulent, there must, I think, always be an honest belief in its truth.”
“… the old direction [to the jury], time out of mind, was this, did he know that the statement was false, was he conscious when he made it that it was false, and without caring? Not caring, in that context, did not mean not taking care, it meant indifference to the truth, the moral obliquity which consists in a wilful disregard of the importance of truth…”
i) knowing that the statements in the letters were untrue, without an honest belief in their truth, or indifferent as to whether or not they were true, or
ii) knowing that he had no reasonable grounds for making the statements, without an honest belief that he had such grounds, or indifferent as to whether he had or not.
“A representor may have acted on inquiry and materials which would not have satisfied a person of normal intelligence, much less a trained judge, but this counts for nothing if the belief – the individual being who he was – really and truly existed. Belief is none the less belief because it is irrational.”
DECEIT: WAS MR JONES DECEITFUL?
Mr Jones’ knowledge of BFS’ activities
Mr Jones’ knowledge of BFS’ operations and controls
“It would be reasonable to expect that the process of reconciliation of margin calls by the related company customers would serve to identify fraudulent acts.”
Supervision of BFS’ trading and settlement functions, and of Mr Leeson
Administrative and financial back-up
Audits and consolidation with BSL accounts
Must Mr Jones have had no honest belief in the representations made?
i) the first is simply the result of assessing Mr Jones in the course of his giving evidence before me for five days. I deal below with the defects in Mr Jones’ evidence, which were many. Nevertheless I was left with the view that Mr Jones did honestly believe when he signed the 1992 and 1993 representation letters that the statements in the letters were true and that his knowledge of BFS and its business was sufficient to give him reasonable grounds for signing the letters;
ii) the second stems from an analysis of (a) the knowledge Mr Jones had, (b) whether that knowledge would cause another person in Mr Jones’ position to feel able to sign the letters, and (c) whether the defects in Mr Jones’ evidence should nevertheless cause me to hold that he was dishonest when another person would not have been. I develop this analysis below.
Could a reasonable finance director have signed the representation letters?
Mr Jones’ evidence
i) knowing that the statements in the letters were untrue, without an honest belief in their truth, or indifferent as to whether or not they were true, or
ii) knowing that he had no reasonable grounds for making the statements, without an honest belief that he had such grounds, or indifferent as to whether he had or not.
OTHER LEGAL ISSUES
MATERIALITY AND INDUCEMENT
“…whereas, if the representation inducing a contract was … fraudulent, …its falsehood would invariably give a right to avoid, an innocent misrepresentation inducing the contract would give the underwriter a right to avoid only if it was material.”
“If management refuses to provide representations that the auditor considers necessary, this will constitute a limitation in the scope of his examination. In such circumstances, the auditor should evaluate any reliance he has placed on other representations made by management during the course of his examination and consider if the refusal may have any additional effect on his report.”
i) there is no requirement in a deceit claim to prove causation, once inducement is proved, and
ii) if there is such a requirement, D&T have clearly met the test of showing that the transaction which was induced by Mr Jones’ alleged fraud was a cause of D&T being exposed to a claim in negligence arising from the 1992 and 1993 audits.
Is causation a requirement?
“So far I have discussed in general terms the scope of a fraudster’s liability in accordance with the rule identified in Doyle v Olby (Ironmongers) Ltd. It is now necessary to consider separately the three limiting principles which, even in a case of deceit, serve to keep wrongdoers’ liability within practical and sensible limits. The three concepts are causation, remoteness and mitigation.”
“even if the maker of the fraudulent statement is liable for all the consequences of the plaintiff having entered into the transaction, the identification of those consequences may involve difficult questions of causation.”
“the judge should have concluded that the plaintiffs had proved their case on causation and that the only remaining question was what loss the plaintiffs had suffered as a result of entering into the contract…”,
he was clearly acknowledging the need to prove that the claimed loss had been caused by the transaction which the fraud had induced.
Is causation established?
“The development of a single satisfactory theory of causation has taxed great academic minds …. But, as yet, it seems to me that no satisfactory theory capable of solving the infinite variety of practical problems has been found. Our case law yields few secure footholds. But it is settled that at any rate in the law of obligations causation is to be categorised as an issue of fact. What has further been established is that the "but for" test, although it often yields the right answer, does not always do so. That has led judges to apply the pragmatic test whether the condition in question was a substantial factor in producing the result. On other occasions judges assert that the guiding criterion is whether in common sense terms there is a sufficient causal connection: see Yorkshire Dale Steamship Co. Ltd. v. Minister of War Transport  A.C. 691, 706, per Lord Wright. There is no material difference between these two approaches. While acknowledging that this hardly amounts to an intellectually satisfying theory of causation, that is how I must approach the question of causation.”.
“How does the court decide whether the breach of duty was the cause of the loss or merely the occasion of the loss? The answer in my judgment is supplied by the Australian decisions to which I have referred, … in relation to a breach of duty imposed on a defendant whether by contract or in tort in a situation analogous to breach of contract. The answer in the end is “By the application of the court’s common sense.” Doing my best to apply this test, I have no doubt that the deputy judge arrived at a correct conclusion on this issue. The breach of duty by the defendants gave the opportunity to Galoo and Gamine to incur and to continue to incur trading losses; it did not cause those trading losses, in the sense in which the word “cause” is used in law.”
“The first point to emphasise is that common sense answers to questions of causation will differ according to the purpose for which the question is asked. Questions of causation often arise for the purpose of attributing responsibility to someone, for example, so as to blame him for something which has happened or to make him guilty of an offence or liable in damages. In such cases, the answer will depend upon the rule by which responsibility is being attributed. …”
“These examples show that one cannot give a common sense answer to a question of causation for the purpose of attributing responsibility under some rule without knowing the purpose and scope of the rule. Does the rule impose a duty which requires one to guard against, or makes one responsible for, the deliberate acts of third persons? If so, it will be correct to say, when loss is caused by the act of such a third person, that it was caused by the breach of duty. In Stansbie v. Troman, Tucker L.J. referred to a statement of Lord Sumner in Weld-Blundell v. Stephens, in which he had said:
"In general, even though A is in fault, he is not responsible for injury to C which B, a stranger to him, deliberately chooses to do. Though A may have given the occasion for B's mischievous activity, B then becomes a new and independent cause."
Tucker L.J. went on to comment:
"I do not think that Lord Sumner would have intended that very general statement to apply to the facts of a case such as the present where, as the judge points out, the act of negligence itself consisted in the failure to take reasonable care to guard against the very thing that in fact happened."
Before answering questions about causation, it is therefore first necessary to identify the scope of the relevant rule. This is not a question of common sense fact; it is a question of law. In Stansbie v. Troman the law imposed a duty which included having to take precautions against burglars. Therefore breach of that duty caused the loss of the property stolen. In the example of the vapour-filled drum, the duty does not extend to taking precautions against arsonists. In other contexts there might be such a duty … but the law of negligence would not impose one.”
“gave unqualified reports on the Plaintiff’s financial statements and the group consolidation package notwithstanding the matters aforesaid and the fact that they did not show a true and fair view…”
“Commercial fraud must be condemned. It can only properly be condemned by an award of the whole of the damage which the defendants intended to cause. Highwaymen in commerce forfeit the right to just and equitable treatment. In my judgement in the law of deceit there is to be no apportionment.”
“ The company’s primary rules of attribution, together with the general principles of agency, vicarious liability and so forth, are usually sufficient to enable one to determine its rights and obligations. In exceptional cases, however, they will not provide an answer…”