Bulk Trading SA v Pevensey Pte Ltd

• Jurisdiction: Singapore
• Judgment Date: 24 November 2014
• Date: 24 November 2014
• Docket Number: Suit No 571 of 2014 (Summons No 3899 of 2014)
• Court: High Court (Singapore)

Bulk Trading SA

Plaintiff

and

Pevensey Pte Ltd and another

Defendant

[2014] SGHC 236

Steven Chong J

Suit No 571 of 2014 (Summons No 3899 of 2014)

High Court

Civil Procedure—Corporate self-representation—Company applying for leave to be represented by director in proceedings commenced against it—Whether leave should be granted—Historical justifications for distinction between conduct of court proceedings by natural persons and body corporates—Rationale for requiring body corporates to apply for leave—Proper judicial approach towards applications seeking leave for corporate self-representation—Relevant factors in exercise of court's discretion—Order 1 r 9 (2) Rules of Court (Cap 322, R 5, 2014 Rev Ed)

The plaintiff, Bulk Trading SA (‘Bulk Trading’), commenced trading with the second defendant Indonesian company, PT Pevensey Indonesia (‘Pevensey Indonesia’), in 2011. Those transactions were relatively small and, in mid-2013, Bulk Trading expressed interest to purchase coal on a larger scale. However, it was Bulk Trading's preference that payment should be made through Singapore and, shortly thereafter, the first defendant, Pevensey Pte Ltd (‘Pevensey Singapore’) was incorporated in Singapore. Bulk Trading then entered into several agreements with Pevensey Singapore which included two agreements from which Bulk Trading's present claim arose. Both agreements contained arbitration clauses stipulating that the disputes thereunder were to be referred to arbitration in Singapore. Disputes subsequently arose and the parties entered into settlement discussions. Bulk Trading raised several invoices to Pevensey Singapore and Pevensey Indonesia for payment of various settlement sums and this led to compensation being paid from Pevensey Singapore and/or Pevensey Indonesia to Bulk Trading in the sum of US$1,050,000. A balance sum of US$1,873,850.11 remained unpaid and Bulk Trading commenced arbitration proceedings against Pevensey Singapore on or around 13 May 2014.

Pevensey Singapore failed to take any steps to participate in the arbitration. This led Bulk Trading to commence the present proceedings on or around 29 May 2014 when it applied for a worldwide freezing order (‘WFO’) against Pevensey Singapore and Pevensey Indonesia which was granted the next day. Bulk Trading served the writ of summons and the WFO on Pevensey Singapore on 2 June 2014, followed by the service of an amended writ of summons on 4 June 2014. Pevensey Singapore entered an appearance on 9 June 2014 and, on the same day, its director, Mr Agus Salim (‘Mr Salim’), affirmed an affidavit in response to the WFO deposing that the only assets of Pevensey Singapore were the balances of S$320 and US$2,107.59 in two bank accounts. On or around 16 June 2014, Bulk Trading applied for leave to serve the amended writ of summons on Pevensey Indonesia out of jurisdiction, though it remained unclear as to whether it had been successfully served.

Bulk Trading filed its statement of claim on 25 July 2014. This was served on Pevensey Singapore on 29 July 2014. Bulk Trading's claims against Pevensey Singapore were essentially for short shipment, demurrage and failure to deliver the cargo of the contractual quality. As against Pevensey Indonesia, Bulk Trading's case appeared to be that Pevensey Indonesia was likewise liable to it on the basis that Pevensey Singapore was a ‘mere extension’ of Pevensey Indonesia that was incorporated in order that Pevensey Indonesia could ‘establish a presence in Singapore and use Singapore banking channels’. Pevensey Singapore filed its defence (‘Defence’) on or about 8 August 2014 (which was the same day that it filed the present application). However, Pevensey Singapore omitted to serve its Defence on Bulk Trading within the timeframe required and, consequently, on 14 August 2014, Bulk Trading applied for and obtained default judgment under O 19 r 3 of the Rules of Court (Cap 322, R 5, 2014 Rev Ed) (‘ROC’) against Pevensey Singapore.

The present application was filed by Pevensey Singapore on 8 August 2014 pursuant to O 1 r 9 (2) of the ROC seeking leaving for Mr Salim to represent it in the underlying proceedings. This application was supported by an affidavit affirmed by Mr Salim (‘Mr Salim's 2nd Affidavit’). However, as Mr Salim's 2nd Affidavit was bereft of any information or material as to why leave should be granted, he was directed to file and serve a detailed supplemental affidavit by 26 September 2014, setting out the reasons why he should be granted leave to represent Pevensey Singapore in the present proceedings. Mr Salim duly filed his supplemental affidavit (‘Mr Salim's 3rd Affidavit’) but, apart from exhibiting the formal documents authorising him to represent Pevensey Singapore and stating that the dispute should be referred to arbitration, did not explain why leave of court should be granted to authorise him to represent Pevensey Singapore. Bulk Trading did not object to Pevensey Singapore's application in principle.

Held, dismissing the application:

(1) At common law, a distinction had always been made between natural persons and body corporates in the conduct of court proceedings. Litigants in person were allowed to represent themselves in court whereas body corporates could only do so by solicitors. Several reasons had been offered to rationalise the distinction - some obscure, some archaic but none particularly compelling in the current legal landscape. It was therefore not surprising that many common law jurisdictions, including Singapore, had come round to the view that body corporates could and should in certain circumstances be permitted to represent itself through its duly authorised officers in legal proceedings: at [23] to [34] .

(2) Order 1 r 9 (2) of the ROC plainly conferred a wide discretion on the court to determine when leave should be granted for a company to be represented by an ‘officer’ as defined in O 1 r 9 (6). It neither circumscribed the circumstances in which it would be ‘appropriate’ to grant leave nor did it specify the standard on which the court had to be ‘satisfied’ before doing so: at [36] .

(3) The historical development of O 1 r 9 (2) did not point to a clear way forward in respect of its proper construction. Each amendment leading up to its current form appeared to be unaccompanied by any sort of explanatory material which might shed light on the relevant policy intention. Depending on where one placed the emphasis in the historical development of O 1 r 9 (2), it could arguably support three different possible approaches: (a) a liberal approach whereby applications for leave should be treated with a light touch; (b) a restrictive approach requiring exceptional or special reasons for leave to be obtained; or (c) a neutral approach which was not necessarily predisposed one way or the other with the court's true focus being on a judicious balancing of the relevant factors surrounding each application: at [44] .

(4) Practically all the common law jurisdictions had introduced legislation to allow for corporate self-representation and their respective judicial stances on this subject broadly ranged on a spectrum that reflected the three approaches outlined above. The authorities originating from these jurisdictions therefore provided much grist for the mill but the different judicial approaches were each a function of the particular wording of each jurisdiction's relevant legislation and their specific policy concerns. One therefore had to proceed with a degree of caution when attempting to derive guidance from the experiences abroad: at [45] .

(5) All the common law jurisdictions began from the common platform of according different treatment to a litigant in person and to a corporate litigant. The former was generally able to represent himself in court proceedings as of right, whereas the latter generally could not. There were sound reasons for this which could all be linked to the court's inherent desire to ensure that justice was administered both fairly and efficiently in the interests of the immediate parties and the wider public. It was therefore not difficult to see why the general prohibition against the lay representation of companies in O 5 r 6 (2) and O 12 r 1 (2) of the ROC had not been completely abolished by recent amendments. Instead, Singapore had elected to take a more calibrated approach by imposing the requirement of obtaining leave under O 1 r 9 (2). That was crucial in allowing the court to scrutinise, inter alia, the competency of the representative with reference to the complexity of the underlying factual and legal issues. The court could then arrive at an informed view on whether granting leave would be unduly prejudicial to the administration of justice and, in this way, it performed an important sieving function under O 1 r 9 (2): at [46] to [48] .

(6) A neutral outlook of O 1 r 9 (2) was to be preferred because there was plainly nothing in the language used which suggested that the court had to necessarily be inclined one way or the other. While a survey of other jurisdictions showed that many courts elsewhere had articulated a particular tendency on the subject of corporate self-representation, doing so in the local context only served to place an unnecessary gloss over O 1 r 9 (2). By de-emphasising the struggle to identify the proper default position under O 1 r 9 (2), the analytical focus naturally shifted to how the court's discretion was to be exercised. That required the court to recognise and closely consider all relevant factors which impacted upon the merits of an application and come to a reasoned determination on whether there was sufficient reason to grant the leave sought: at [79] and [80] .

(7) Order 1 r 9 (2) did not identify the relevant factors for consideration by the court in the exercise of its discretion. In general, the experiences of other jurisdictions demonstrated a recurring and ultimately inevitable...