Baiduri Bank Bhd v Dong Sui Hung and Another

• Jurisdiction: Singapore
• Judge: Chan Seng Onn JC
• Judgment Date: 28 June 2000
• Neutral Citation: [2000] SGHC 118
• Docket Number: Suit No 1495 of 1999 (Registrar's
• Date: 28 June 2000
• Published date: 19 September 2003
• Year: 2000
• Plaintiff Counsel: Leslie Chew SC (Khattar Wong & Partners)
• Citation: [2000] SGHC 118
• Defendant Counsel: Ng Siew Hoong (Peter Moe & Partners)
• Court: High Court (Singapore)
• Subject Matter: Bank commencing action against guarantors in Singapore,Conflict of Laws,Foreign jurisdiction clause not exclusive,Guarantors saying proper forum is Brunei,Whether action should be stayed,Jurisdiction,Bank having option to enforce guarantee in any court of competent jurisdiction

: Background

The plaintiff bank is incorporated in Negara Brunei Darussalam (`Brunei`) where it has its principal place of business. The defendants are Singapore businessmen having their principal place of business in Brunei.

Briefly, the bank`s claim is against the two defendants as guarantors of Borneo Builders Sdn Bhd (the `company`). By virtue of the company being placed under provisional liquidation on 21 July 1999, an event of default has occurred, thereby rendering all the outstandings due and owing by the company to become immediately due and payable. The two defendants together with one Pg Rosli bin Pg Hj Sabli have jointly and severally guaranteed to pay the bank on demand all sums of moneys which shall from time to time be due and owing to the bank by the company up to the limit of BND9,283,900 plus accrued interest. Under the guarantee, the defendants` liability is that of primary debtors and will not be affected, discharged or diminished by reason of, inter alia, any present or future lien or other security. There is no obligation on the part of the bank under the guarantee to first proceed against or to establish liability against the company whose debts are guaranteed. The guarantee is in addition to and will not merge with or otherwise prejudice or affect any other security and may be enforced notwithstanding such security then or thereafter be held by or be available to the bank. It is further provided that the bank`s right to recover from the defendants to the full extent of the guarantee is not prejudiced or affected by reason of any security being given or made.

The defendants applied to stay the bank`s action in Singapore on the basis that the proper forum should be Brunei. The stay application was refused by the learned assistant registrar, Ms Sia Aik Kor. The defendants appealed. I dismissed their appeal. I now give my reasons.

Defendants` case

In his arguments based on the forum non conveniens principle, counsel for the defendants set out the following as the real and substantial connecting factors showing that the more appropriate forum for the action is the courts in Brunei:

a the principal debtor under the banking facility offered by the plaintiffs is a Brunei construction company;

b the banking facility granted by the plaintiffs is in Brunei and all accounts are operated upon in Brunei;

c the guarantee was executed in Brunei;

d funds were disbursed by the plaintiffs to the company in Brunei;

e the underlying loan transaction and the subsequent default, which triggered the recalling of the guarantee arose in Brunei;

f witnesses and supporting documents are readily available in Brunei;

g government officials in Brunei have to be subpoenaed to testify;

h it is inconvenient and costly for these witnesses to fly from Brunei to testify in Singapore;

i it is also inconvenient and costly to obtain all the relevant documents of the company which are now with the provisional liquidators in Brunei;

j defendants` only place of business is in Brunei and they have resided there until the company went into provisional liquidation;

k the defendants further allege they do not `own` the assets listed by the plaintiffs. However, counsel for the defendants said that he did not have instructions whether they do have beneficial ownership of those assets;

l the plaintiffs` place of business is in Brunei and they have no presence in Singapore;

m no cogent evidence has been produced to show that the plaintiffs` action cannot be fairly tried in Brunei;

n a judgment obtained in Brunei, once registered, is readily enforceable in Singapore;

o the letter of offer for the facilities states that the terms and conditions are to be construed and governed in accordance with the laws of Brunei;

p in a contractual dispute where the law governing the contract is Brunei law, it is more appropriate for the action to be tried by the Brunei courts. A question of foreign law decided by the foreign court is appealable as such to the appellate court in that foreign country. However, a question of foreign law decided by the trial court in Singapore based on expert evidence is treated as a question of fact for purposes of an appeal, which thus substantially limits the scope of the appeal on that finding of fact on foreign law by the trial court;

q the defendants have to labour under legitimate personal and juridical disadvantages in having to litigate in Singapore. Amongst them is the need to join the Brunei Government, because of the assignment of proceeds from construction projects with the Brunei Government under the banking facilities granted by the plaintiffs. Leave of court is also needed to proceed against third parties in Brunei who are out of jurisdiction. The defendants considered these to be onerous;

r as the defendants have commenced an injunction action in Brunei against the plaintiffs to restrain them from continuing with their action in Singapore, and as an appeal to the Court of Appeal in Brunei is pending, there is the inherent prejudice to the parties having to contend with the possibility of conflicting judgments arising out of the multiple proceedings in two different jurisdictions.

Counsel submitted that the case would be more suitably tried in Brunei in the interests of all parties and the ends of justice.

Plaintiffs` response

If indeed this case is to be decided on the basis of forum non conveniens , I would accept the submissions of counsel for the bank that the connecting factors cited by defendants` counsel do not point clearly nor distinctly to Brunei as the more appropriate forum for the following reasons:

a The defendants are both Singapore citizens and residents in Singapore. As they have been properly served in Singapore with the writ, the courts in Singapore have the jurisdiction to hear and try the matter. Being Singaporeans who are resident in Singapore, it is thus very convenient for them to attend the trial in Singapore.

b The defendants own real estate property in Singapore. (See pp 23 and 30 of the first affidavit of Luc Rousselet). The defendants have not shown that they have assets in Brunei.

c The bank`s action is on a demand guarantee. Letter of demand was issued in Singapore. The debt arose in Singapore pursuant to the demand guarantee. Therefore, the cause of action against the defendants arose in Singapore when they, as guarantors, defaulted in Singapore.

d The plaintiff bank is more than willing to bring the documents and witnesses from Brunei to Singapore for the trial.

e Brunei is geographically not that distant from Singapore. Basically, it is not expensive nor inconvenient for the defendants to bring any documents and witnesses from Brunei to Singapore.

f The defendants have not shown any material differences in the laws of the two countries that will have a bearing on the enforcement of the guarantee, and how these differences, if any, will affect the determination of the dispute at the trial.

g The Brunei officials whom the defendants wish to call may be relevant to establish the liability of the company. But liability under the guarantee is not conditional upon establishing primary liability. As such, the testimonies of these defendants` witnesses are inconsequential.

My analysis

In my opinion, it is necessary to establish the proper basis to decide the question of stay because different factual circumstances may call for an application of different principles and approaches. In my comparative analysis, I will set out four possible scenarios. Hopefully it will be clearer which scenario best fits the factual circumstances of this case and the correct test to apply will then be apparent. The starting point is to determine whether in the written guarantee there is any exclusive foreign jurisdiction clause.

A Where a foreign jurisdiction clause does not exist

When parties have not in their agreement provided for any jurisdiction clause, then staying an action will be decided on the typical forum non conveniens principles as set out in the well known case of The Spiliada; Spiliada Maritime Corp v Cansulex Ltd [1987] AC 460[1987] 1 Lloyd`s Rep 1, which principles the Court of Appeal in Singapore had adopted in Brinkerhoff Maritime Drilling Corp & Anor v PT Airfast Services Indonesia and another appeal [1992] 2 SLR 776 . LP Thean JA, delivering the judgment of the Court of Appeal in Eng Liat Kiang v Eng Bak Hern [1995] 3 SLR 97 , succinctly summarised those principles set out by Lord Goff of Chieveley in The Spiliada and modified them to the Singapore context as follows:

A stay will only be granted on the ground of forum non conveniens, where the court is satisfied that there is some other available and appropriate forum for the trial of the action. The burden of proof rests on the defendant, and the burden is not just to show that Singapore is not the natural or appropriate forum but to establish that there is another available forum which is clearly or distinctly more appropriate than the Singapore forum. The natural forum is that with which the action has the most real and substantial connection, and the court will consider what factors there are which point in that direction. If the court concludes at that stage that there is no other available forum which is clearly more appropriate for the trial of the action, it will ordinarily refuse a stay. If, however, the court concludes at that stage that there is some other available forum which prima facie is clearly more appropriate for the trial of the action it will ordinarily grant a stay, unless there are circumstances by reason of which justice requires that a stay should nevertheless be refused. The court in this respect will consider all the circumstances of the case.

Where there is no foreign jurisdiction clause, a balancing exercise is thus necessary to ascertain the forum coveniens, and in doing...