Aver Asia (S) Pte Ltd v RJS Engineering and Marine Services Pte Ltd

• Jurisdiction: Singapore
• Judge: Chua Wei Yuan
• Judgment Date: 21 April 2017
• Neutral Citation: [2017] SGMC 24
• Court: Magistrates' Court (Singapore)
• Docket Number: MC/Magistrate’s Court Suit No 884 of 2017, MC/Summons No 640 of 2017)
• Year: 2017
• Published date: 17 August 2017
• Hearing Date: 20 March 2017
• Plaintiff Counsel: Dhanwant Singh (S K Kumar Law Practice LLP)
• Defendant Counsel: and Katie Lee Shih Ying (Chris Chong & C T Ho Partnership)
• Subject Matter: Civil procedure,Instalment orders
• Citation: [2017] SGMC 24

Deputy Registrar Chua Wei Yuan:

This was an application by the defendant-judgment debtor, an exempt private limited company, for an order that a judgment sum of $23,326, costs of $1,000 and the usual interest be paid in instalments. The defendant proposed paying a first instalment of $4,000 within two weeks and eight equal monthly instalments thereafter.

I dismissed the application because the defendant did not make full and frank disclosure of its financial position and, accordingly, I could not satisfy myself that it was facing special circumstances of hardship. These are my detailed grounds.

The applicable principles

Ordinarily, judgment sums are due and payable immediately. However, the Magistrate’s Court may, “as it thinks fit”, order that a judgment sum be payable in instalments rather than in one sum (s 43(1) read with s 52(1B)(d)(i) of the State Courts Act (Cap 321, 2007 Rev Ed) (“SCA”)).

It suffices to say here that the local jurisprudence on instalment orders is thin, and it is helpful to refer to Malaysian and Indian cases that apply the “sufficient reason” standard because, as will be seen below at [21]–[24], this was the language used in our predecessor provisions on instalment orders and no reason was given for the change in statutory language.

When will a court grant an instalment order?

An instalment order is meant to be “concessionary towards judgment debtors who are mired in circumstances of serious hardship” (Khoo Wai Keong Ronnie v Hanam Andrew J [2003] SGMC 41 (“Ronnie Khoo”) at [29]) and, in my view, not meant to be an indulgence granted at whim. The power to grant such an order points to “the policy of the law in not permitting a man to be stripped of all means of livelihood and entirely pauperized” (M P L A Peyna Carpen Chitty v Max J D’Souza (R Wildman, garnishee) [1893] 1 SSLR 64 at 65 per Wood ACJ).

Fundamentally, the court must ascertain whether there are special circumstances of hardship that make it just and equitable to make such an order. The threshold to invoke the court’s power is not an easy one to cross. An instalment order has been described as “a definite derogation from the legal right of the decree holder to immediate execution, and must only be made in exceptional circumstances” (Muthupalaniappa Chettiar v Mohamed Yusof bin Haji Ahmad Ee Tin [1931-1932] FMSLR 231 (“Muthupalaniappa Chettiar”) at 232 per Burton J). The lone fact that a defendant is “hard pressed” (interpreted in Muthupalaniappa Chettiar at 232 to mean being in a state of “poverty”) would not be a “sufficient reason” to make such an order (Binda Prasad vs Madho Prasad and others (1880) ILR 2 All 129 (Allahabad High Court) at [9] per Oldfield J (with whom Turner J concurred)).

The principal considerations include: (i) the circumstances giving rise to the cause of action, (ii) whether the debtor fully disclosed his assets and liabilities, (iii) whether there are circumstances making it inexpedient to enforce the judgment immediately, (iv) whether the judgment creditor faces any serious danger of losing the fruits of his judgment, (v) the terms of the proposed offer in relation to the size of the judgment debt, and (vi) the debtor’s conduct. This is ultimately an exercise in common sense that turns on the facts and circumstances of each case. These principles are borne out by the three cases that follow.

First, in S P L R M Ramasamy Chettiar v Nordin bin Uda Shukor (1934) 3 MLJ 299 (Perak High Court) (“Ramasamy Chettiar”) at 300, cols 1–2, Howes J explained:

What is a “sufficient reason” must depend on the facts of the particular case. The Court should consider the circumstances in which the debt was contracted, the conduct of the debtor, his financial condition and so forth. Instalments should be ordered where the defendant shows his bona fides by offering to pay anything like a fair proportion of his debt at once. … [emphasis added]

Next, in Phan Pow v Tuck Lee Mining & Co (1959) 25 MLJ 32 (“Phan Pow”), Ong J held that it was inexpedient to enforce the judgment forthwith because of the immediate detrimental effects of a tin restriction scheme which might reap dividends in the longer term, and that there was no serious danger of prejudice or undue advantage to the judgment creditor. He explained p 34, col 1D–1G:

… special circumstances of hardship … render it inexpedient to enforce the judgment forthwith. [The defendant’s] difficulties have arisen largely by reason of the tin restriction scheme, which has had immediate detrimental effects on the tin industry, but in the long run, and before long, when the scheme gets into proper working order, its beneficial effects on tin miners may well prove its worth. The defendants have offered to increase the amount of monthly instalments to $300. … other judgment creditors have stayed their hands. There is no very serious danger of the plaintiff losing the fruits of his judgment, or any likelihood of his being better off if the defendants should be forced into bankruptcy. Finally, if there is any material change in the circumstances, the plaintiff may at any time apply to Court for variation or rescission of the order. [emphasis added]

Third, in Ronnie Khoo, an application for an instalment order was allowed because the applicant, who would be serving national service for the next 10 months, had no bank savings and could not earn any income apart from his national service allowance (at [9] and [14]). The court explained:

SIC 20417 of 2003 – Instalment application by Mr. Khoo

9 In this instalment application Mr. Khoo tendered an affidavit containing supporting documents describing his personal circumstances. a) He is a full time national serviceman earning $417.50 per month with no other source of income. His salary is paid directly into his OCBC bank account. The August 2003 and September 2003 bank statements show him having no savings. Pending national service, it is also impossible for him to earn other employment income. b) He is single and lives with his 2 aged parents. He is currently servicing a hire-purchase loan for his motorcycle at $238.55 per month. Apart from the finance company and Mr. Hanam, he has no other creditors. At the hearing, he mentioned his national service duty would end in June 2004. c) He initially proposed to pay Mr. Hanam $50.00 per month but in the course of the hearing, he increased the offer to $100.00 per month. This leaves him with less than $100.00 per month to meet his monthly expenditure.

Instalment orders made under Section 43 Subordinate Courts Act

10 Under Section 43(1) Subordinate Courts Act (read with Section 52(1) Subordinate Courts Act), the Magistrates Court may, as it thinks fit, order a money judgment to be paid by such instalments payable at such times as the court may fix. The object of this provision is concessionary; it gives debtors reprieve from execution: see also O 46 r 26A. Section 43 Subordinate Courts Act finds its statutory ancestry in Sections 1197 and 1203 of the Civil Procedure Code 1907 (and its equivalents in the Civil Procedure Ordinance 1898). Behind this power rests a policy preventing judgment debtors from being pauperized by their creditors: see MPLA Peyna Carpen Chitty v Max JD Souza [1893] 1 SSLR 64. 11 What must a court weigh in deciding these applications? There are hardly any reported cases which assist but relevant factors can be deduced from an affidavit prescribed in Form 95B of our Rules. This affidavit discloses the judgment debtor’s means and is filed under O 47 r 1B to support an application to vary an earlier order made under Section 43 Subordinate Courts Act. A similar affidavit is frequently used by judgment debtors making a first instance application. It is also helpful to peruse how other jurisdictions approach similar instalment applications: see in particular the Malaysian case of Phan Pow v Tuck Lee Mining & Co [1959] 1 MLJ 32. From these sources and understanding the policy behind Section 43 Subordinate Courts Act, it appears the duty of the court is to ascertain whether there exists special circumstances of hardship rendering it just and equitable to make an instalment order. Although this is mainly an exercise of common sense, it is nevertheless useful to set out the usual factors considered. Examples include: (a) Whether the debtor has made full disclosure of his assets and liabilities i.e. (i) his net disposable income; household expenses for basic amenities e.g. utility bills, food, transport; and (ii) special expenses e.g. recurrent medical expenses; (iii) number of dependants and their basic expense items such as school fees and medical bills; and (iv) whether he owns any items of value. (b) Whether there is any serious danger of the judgment creditor losing the fruits of his judgment. For example, if a debtor has multiple execution creditors from other judgments, it may not be equitable for the court to fetter the judgment creditor by making an instalment order since other execution creditors are unrestrained from seizing the debtor’s assets. Conversely, the court may view an instalment application more favourably if the debtor only has a single judgment creditor. (c) The size of judgment debt outstanding, and the instalment offer proposed. For instance, it may be inequitable for the court to compel the judgment creditor to receive payment of say $100 per month on a judgment debt of $30,000 as compared to a judgment debt of $3,000. 12 If special circumstances exist, the court may let the instalment plan run until the entire judgment debt is repaid, or for a shorter period resulting in partial payment of the instalment plan. This latter scheme is appropriate when debtors are temporarily unable to repay the full sum to their creditors and have reasonable prospect of regaining financial solvency...