Mercurine Pte Ltd v Canberra Development Pte Ltd

• Jurisdiction: Singapore
• Judge: Chan Sek Keong CJ
• Judgment Date: 08 September 2008
• Neutral Citation: [2008] SGCA 38
• Docket Number: Civil Appeal No 143 of 2007,Suit No 861 of 2005 (Registrar's Appeal No 168 of 2007)
• Date: 08 September 2008
• Published date: 12 September 2008
• Year: 2008
• Plaintiff Counsel: Christopher Chong and Kelvin Teo (Legal Solutions LLC)
• Citation: [2008] SGCA 38
• Defendant Counsel: Harpreet Singh Nehal SC, Kelly Fan and Lin Yan Yan (Drew & Napier LLC)
• Court: Court of Appeal (Singapore)
• Subject Matter: Civil Procedure,Whether part of default judgment specifying excessive amount claimed could be amended instead of setting aside entire default judgment,Applicable tests on merits for setting aside regular and irregular default judgments,Power to amend irregular default judgment,Judgments and orders,Relevance of delay in application to set aside default judgment,Whether one part of irregular default judgment could be severed from another part

8 September 2008

V K Rajah JA (delivering the grounds of decision of the court):

Introduction

1 This appeal raised for consideration some important procedural issues relating to the appropriate legal tests to be applied in assessing whether to set aside a default judgment. It also posed squarely for determination the relevance of a delay in making an application to set aside such a judgment (referred to hereafter as a “setting-aside application”).

2 The respondent, Canberra Development Pte Ltd (“Canberra”), owns Sun Plaza, a shopping mall at No 30 Sembawang Drive. The appellant, Mercurine Pte Ltd (“Mercurine”), claims to be the tenant of units #04-01 and #05-01 at Sun Plaza (“the Premises”), where it operates a six-screen cinema complex and concessionaire stands. Canberra is Mercurine’s direct landlord in respect of the Premises.

3 Canberra commenced Suit No 861 of 2005 (“Suit 861”) on 30 November 2005 claiming unpaid rent and vacant possession of the Premises. The writ was served on Mercurine on 1 December 2005. When Mercurine failed to enter an appearance by the deadline of 9 December 2005, Canberra entered default judgment against it on 9 January 2006 (“the Default Judgment”). Some fifteen months later, on 26 April 2007, Mercurine applied, via Summons No 1843 of 2007 (“SUM 1843”), to set aside the Default Judgment. This application was granted by Assistant Registrar Lim Jian Yi (“AR Lim”) (see Canberra Development Pte Ltd v Mercurine Pte Ltd [2007] SGHC 107 (“the AR’s Judgment”)), but his decision was subsequently reversed by a judge (“the Judge”) in Canberra Development Pte Ltd v Mercurine Pte Ltd [2008] 1 SLR 316 (“the Judge’s Judgment”) following Canberra’s appeal. Mercurine then appealed to this court against the Judge’s order reinstating the Default Judgment.

4 This court was asked to determine whether Mercurine was entitled to set aside the Default Judgment, taking into consideration:

(a) the regularity or otherwise of the Default Judgment;

(b) the merits of Mercurine’s defence; and

(c) the reason for the long lapse of time between the entry of the Default Judgment and the filing of SUM 1843.

We were initially minded to allow the appeal in full. However, as two separate writ actions commenced by Mercurine against Canberra in connection with an inter-related dispute had already been set down for trial (see [15]–[16] below), the logical result – as we shall explain – was to make the setting aside of the Default Judgment contingent upon the outcome of the writ actions – ie, if Mercurine succeeds in those proceedings, the Default Judgment will be deemed to be set aside. We thus varied the Judge’s orders rather than simply set aside the Default Judgment (see further [22] below). Before we give our reasons for this, we will first summarise the salient facts. We also set out below the outline of these grounds of decision so as to give an overview of the approach which we adopted in considering this appeal.

INTRODUCTION...................................................................................	1
THE FACTS............................................................................................	4
The parties.....................................................................................	4
The dispute.....................................................................................	5
Suit 861..........................................................................................	6
Canberra’s claim....................................................................	6
Communications between the parties after the entry of the; Default Judgment....................................................................	7
Commencement of related proceedings by Mercurine........................	9
THE DECISIONS BELOW ON SUM 1843.............................................	11
AR Lim’s decision.............................................................................	11
The Judge’s decision.........................................................................	12
THE ISSUES ON APPEAL......................................................................	13
OVERVIEW OF OUR DECISION..........................................................	14
THE THRESHOLD ISSUE: WHETHER MERCURINE’S DELAY IN; FILING SUM 1843 WAS REASONABLE..............................................	14
Actions taken by Mercurine before filing SUM 1843.........................	14
The effects of delay on a setting-aside application..............................	18
Whether there was undue delay on Mercurine’s part.........................	22
Summary of our ruling on the threshold issue of delay........................	25
THE LEGAL PRINCIPLES RELATING TO SETTING-ASIDE; APPLICATIONS.....................................................................................	25
Regular default judgments.................................................................	26
The orthodox position.............................................................	26
The decision in The Saudi Eagle..............................................	28
Criticisms of the Saudi Eagle test.............................................	32
The test presently applicable to the setting aside of regular; default judgments.....................................................................	38
Irregular default judgments................................................................	42
Whether irregular default judgments must be set aside as of right.	42
(1) The historical position: Anlaby v Praetorius.............	42
(2) The modern approach: Order 2 rule 1 of the Rules of; Court...........................................................................	43
(3) The symmetry between Order 2 rule 1 and Order 13; rule 8 as well as Order 19 rule 9....................................	46
The test for determining whether or not the ex debito justitiae rule should be applied............................................................	47
The legal position where the ex debito justitiae rule is not applied: Whether the court may consider the merits of the defence...................................................................................	50
(1) The decision in Faircharm.....................................	51
(2) The significance of Faircharm..............................	55
(3) Should Faircharm be adopted in Singapore?.........	58
How an application to set aside an irregular default judgment should henceforth be assessed..................................................	61
Synopsis of the legal principles applicable to setting-aside applications..	64
WHETHER THE DEFAULT JUDGMENT SHOULD HAVE BEEN SET; ASIDE.......................................................................................................	68
AN ASIDE ON THE QUESTION OF COSTS IN SETTING-ASIDE; APPLICATIONS......................................................................................	70
CONCLUSION........................................................................................	71

The facts

The parties

5 Mercurine and Canberra are both joint venture entities. As a result of the linkages between their joint venture partners, there are two common ultimate shareholders in the corporate structures of both Mercurine and Canberra, viz, Koh Brothers Group Limited (“Koh Brothers”) and Heeton Holdings Limited (“HH”). Mercurine is the corporate vehicle for the joint venture between Eng Wah Organization Ltd (“Eng Wah”), Koh Brothers and HH. EWO Entertainment Concepts Pte Ltd (“EWO”) and Clareville Investments Pte Ltd (“Clareville”) each have a 50% shareholding in Mercurine. EWO’s holding company is Eng Wah Investments Pte Ltd, which is in turn wholly-owned by Eng Wah. Fifty per cent of Clareville is held by Batam Vision Pte Ltd, whose ultimate shareholder is Koh Brothers; the other 50% is held by Heeton Land Pte Ltd, a wholly-owned subsidiary of HH. As for Canberra, it is a joint venture between Koh Brothers Development Pte Ltd, a wholly-owned subsidiary of Koh Brothers, and HH. Broadly speaking, Mercurine can be identified with Eng Wah, and Canberra, with Koh Brothers.

The dispute

6 Mercurine took possession of the Premises on or about 25 February 2000. To date, no written agreement for the lease of the Premises (“the Lease”) has been executed between the parties. Disagreements arose over the term of the Lease, with Mercurine contending that the Lease was valid for 14 years as stated in Canberra’s letter of offer dated 4 November 1999. Canberra, on the other hand, asserted that, in subsequent discussions, the term of the Lease was reduced to seven years, with an option to renew for a further seven years upon Mercurine making a written request within a stipulated time. Since Mercurine did not meet this requirement, Canberra claimed, the Lease had expired. While the issue of the actual term of the Lease was not crucial to the outcome of this appeal, it was nevertheless of some relevance because the alleged expiry of the Lease was one of the grounds upon which Canberra staked its right to vacant possession of the Premises.

7 Between April 2003 and November 2005, Mercurine did not pay the contractual monthly rent for the Premises. This alleged breach of the Lease was the foundation of Suit 861. Mercurine’s explanation for its non-payment of rent was that Canberra was frequently late in carrying out its obligation to reimburse Mercurine’s air-conditioning charges as earlier agreed. In her affidavit filed on 26 April 2007 in respect of Suit 861 (“Ms Goh’s Suit 861 affidavit”), Ms Goh Min Yen (“Ms Goh”), a director of Mercurine, averred that, as at June 2005, Canberra owed Mercurine $297,287.97 in air-conditioning reimbursement. Ms Goh also claimed that Canberra had failed to purchase annually the agreed number of...