BNP Paribas (formerly known as Banque National De Paris) v Polynesia Timber Services Pte Ltd and Another

• Jurisdiction: Singapore
• Judge: Lai Siu Chiu J
• Judgment Date: 26 March 2002
• Neutral Citation: [2002] SGHC 56
• Citation: [2002] SGHC 56
• Defendant Counsel: Michael Palmer and Chenthil Kumarasingham (Harry Elias Partnership)
• Published date: 19 September 2003
• Plaintiff Counsel: Herman Jeremiah and Vivian Lim ( Helen Yeo & Partners )
• Date: 26 March 2002
• Docket Number: Suit No 152 of 2000
• Court: High Court (Singapore)
• Subject Matter: Whether incomplete compliance with Practice Direction warrants setting aside of writ,Nature of Practice Directions,Whether non-compliance with Practice Direction renders substituted service void,Civil Procedure,Writ of summons,Substituted service,O 11 Rules of Court,Practice Direction of Malaysian High Court,Practice Note No 1 of 1968 of Malaysian High Court,Service,Service out of jurisdiction

They obtained judgment in default of appearance against the first defendant but faced difficulties serving a writ on the second defendant who was resident in Kuala Lumpur.

When asked by the second defendant to make prior appointment with his secretary, the plaintiffs’ solicitors took it to mean that the second defendant was deliberately evading or delaying service. The plaintiffs then applied ex parte to the court for substituted service to be effected on the second defendant by advertising in some Malaysian newspapers and took the precaution of faxing copies of the advertisements to the second defendant to ensure that he had actual notice of the writ.

The second defendant did not enter appearance to the writ of summons. Consequently, the plaintiffs entered judgment in default of appearance against him. The second defendant applied to set aside the substituted service as well as the default judgment and the application was granted by the Deputy Registrar. The plaintiffs appealed.

The second defendant’s counsel submitted that the plaintiffs had not shown that it was impractical to serve the writ personally on the second defendant, relying on O 62 r 5(1) of the Malaysian Rules of the High Court 1980. He further submitted that the service was bad as it did not comply with Practice Note No. 1 of 1968 of the Malaysian High Court governing substituted service, and the plaintiffs had failed to disclose certain material facts in their affidavits. Reliance was also placed on O 11 r 3(3) which required service to be ‘in accordance with the law of the country in which service is effected’.

The plaintiffs submitted that their non-compliance with the Practice Direction was only an irregularity which did not nullify the proceedings since practice directions or notes do not have the force of law and are intended to be no more than directions for administrative purposes. Furthermore, since service was not effected by the plaintiffs but through the Malaysian judicial authorities, the process of service was beyond the control of the plaintiffs.

Held

, allowing the plaintiffs’ appeal

(1) The following orders were made: (a) the plaintiffs were to re-serve the wit of summons within jurisdiction for which purpose the second defendant would appoint solicitors to accept service; (b) failing his appointment of solicitors, the default judgment against the second defendant would stand; (c) if the second defendant appointed solicitors to accept service, it would be without prejudice to his right to take fresh steps to set aside the writ; (d) pending appointment of solicitors by the second defendant to accept service, all execution proceedings by the plaintiffs were stayed (see 30).

(2) Service through Malaysia judicial authorities, of writs issued in Singapore, came about as a direct result of the ruling in United Overseas Bank Ltd v Wong Hai Ong [1999] 1 MLJ 474, extending the holding in Sunkyong International Inc v Malaysian Rubber Development Corporation Bhd [1992] 2 MLJ 146 (see 31 and 32).

(3) Non-compliance with para 5 of the Practice Direction is not fatal and would not automatically render service thereafter by way of substituted service null and void. The Practice Direction is not law but merely a direction for administrative purpose and incomplete compliance would only amount to an irregularity, not the setting aside of service of the writ (see 34 to 37); Re S Nirmala ex-parte: The New Straits Times Press [1988] 2 MLJ 616; Karen Ahmad v Standard Chartered Bank Mallal’s Digest vol 2(2) 4 ed (1998 reissue); Re Yeap Chee Fun ex-parte Pernas Trading [2000] 5 MLJ 510; and Koh Thong Kuang United Malayan Banking Corporation Bhd [1994] 3 MLJ 509 followed.

(4) Where Singapore plaintiffs are dependant on service being effected by the Malaysian judicial authorities, it would be unduly harsh to penalise the plaintiffs and or their solicitors for the acts/ omissions of the process server (see 37).

(5) Here, it cannot be disputed that the second defendant was fully aware, even before substituted service was effected, that a writ had been issued against him by the plaintiffs. There was thus no question of his having suffered any prejudice as a result of not knowing of the advertisements (see 38 and 39).

(6) The purpose of the appointment requirement at both the second defendant’s office and home could be either to ensure that the service was successful or equally to ensure that it was unsuccessful as the second defendant could absent himself from the appointed venue at the appointed time. It seemed strange that a defendant, whose liability to the plaintiffs as guarantor had crystallised because judgment had been obtained against the principal debtor, could be in a position to dictate terms to the plaintiffs on how he wished to be served with their legal process (see 40).

(7) It was not unreasonable under the circumstances for the plaintiffs to think that the second defendant was avoiding service (see 41 and 42).

(8) The second defendant at no time raised the merits of any defence he may have had to the plaintiffs’ claim against him. His entire complaint was focussed on the fact that he had been embarrassed and felt that his reputation had been somehow maligned by the advertisements (see 43).

NB: 2^nd defendant’s appeal vide CA 600150 of 2001 was dismissed on 24 July 2002.

Case(s) referred to

Yeo Yoo Teik v Jemaah Pengadilan Sewa, Pulau Pinang & Anor

[1996] 2 MLJ 54 (refd)
Raja Guppal a/l Ramasamy v Sagaran a/l Pakiam [1999] 2 MLJ 677 (refd)
Capital Insurance Bhd v Kasim bin Mohd Ali [2000] 1 MLJ 193 (refd)
Re S Nirmala a/p Muthiah Selvarajah t/a Shamin Properties; ex-parte The New Straits Times Press [1988] 2 MLJ 616 (folld)
Lee Tain Tshung v Hong Leong Finance Bhd [2000] 3 MLJ 364 (refd)
Ooi Bee Tat v Tan Ah Chim & Sons Sdn Bhd [1995] 3 MLJ 465 (refd)
Karen Ahmad Aliyuddin v Standard Chartered Bank Mallal's Digest vol 2(2) 4 ed (1998 reissue) para 4141 (folld)
Malayan United Finance Bhd v Sun Chong Construction Sdn Bhd [1995] 4 MLJ 741 (refd)
Re Yeap Chee Fun: ex-parte Pernas Trading Sdn Bhd [2000] 5 MLJ 510 (folld)
United Overseas Bank Ltd v Wong Hai Ong [1999] 1 MLJ 474 (folld)
Sunkyong International Inc v Malaysian Rubber Development Corporation Bhd [1992] 2 MLJ 146 (folld)
Koh Thong Kuang v United Malayan Banking Corporation Bhd [1994] 3 MLJ 509 (folld)

Legislation referred to

Malaysian Rules of the High Court 1980 O 62 r 5(1), O 11 r 6(2), O 2 rr 1(1) and 1(3)
Malaysian High Court Rules Practice Note No. 1 of 1968
Rules of the Court of Appeal 1994 Practice Directions No. 2 of 1991, No. 1 of 1996 and No. 1 of 1992
Rules of Supreme Court 1957 O 10 r 2

Judgment

GROUNDS OF DECISION

The facts

1. The plaintiffs in this case are a French bank with a branch in Singapore operating at No 20 Collyer Quay #01-01, Tung Centre, Singapore 049319. The first defendants (the company) were a customer of the plaintiffs in 1998. Its loan facilities from the plaintiffs were guaranteed by the second defendant, who is both its director and shareholder. The company markets timber logged inter alia, in Sarawak and The Cameroons.

2. Due to the decline in the demand for logs in Japan and other markets, the company was unable to repay the loan facilities to the plaintiffs by the due date. Consequently, the plaintiffs' solicitors gave notice to the company on 12 February 1999, that its loan facilities had been cancelled and demanded immediate repayment of the sum of US$3,616,172.15 due and outstanding as at that date. By a separate letter also dated 12 February 1999 to the second defendant, the plaintiffs' solicitors made a demand on the second defendant as guarantor.

3. Thereafter the plaintiffs gave the company more time to pay. Pursuant to a revised schedule of repayments, the company made 3 instalment payments (albeit late) totalling US$288,750 as principal and US$130,105.03 as interest. No further payments were made after 9 July 1999.

4. Consequently, the plaintiffs commenced these proceedings against both defendants on 12 April 2000. As against the company, the plaintiffs' solicitors had no difficulty in effecting service on its registered office at No. 190, Middle Road #16-03, Fortune Centre, Singapore 188979; this was done on 28 April 2000 by the service clerk of the plaintiffs' solicitors. No appearance was entered to the writ of summons by the company within the deadline of 8 (eight) days. Accordingly, the plaintiffs obtained judgment in default of appearance against the company on 4 July 2000.

5. Service on the second defendant was considerably more difficult and complicated than on the company. According to the address stated on the writ of summons, the second defendant is resident in Kuala Lumpur at No. 2109, High Rise 2, Riana Green Condominium, Jalan Tropicana Utara, 47410, Tropicana, Petaling Jaya Selangor. The address was furnished to the plaintiffs' solicitors by a staff member of the company when the plaintiffs made unsuccessful attempts to serve letters on him at the company's office. The second defendant had also written to the plaintiffs' solicitors on 17 July 2000 to confirm that he was residing at his Kuala Lumpur address; he further requested the plaintiffs to fix an appointment through his secretary, to effect service on him at his residence, furnishing a telephone number for the purpose.

6. In accordance with O 11 of the Rules of Court (the Rules), the plaintiffs applied for and obtained, an order of court (on 9 June 2000) for service to be effected outside jurisdiction on the second defendant, at his aforementioned address or elsewhere as he may be found in Malaysia. The time for entry of appearance by the second defendant was fixed at 21 days after service of the writ.

7. Pursuant to the order of court and pursuant to O 11 r 4 of the Rules, the plaintiffs made a request on 6 July 2000 (through the Registrar) to the Registrar of the High Court at Kuala Lumpur, for service on the second defendant to be...