Canberra Development Pte Ltd v Mercurine Pte Ltd

• Jurisdiction: Singapore
• Judge: Judith Prakash J
• Judgment Date: 26 October 2007
• Neutral Citation: [2007] SGHC 185
• Court: High Court (Singapore)
• Year: 2007
• Published date: 30 October 2007
• Plaintiff Counsel: Harpreet Singh Nehal SC and Lin Yan Yan (Drew & Napier LLC)
• Defendant Counsel: Christopher Chong and Kelvin Teo (Legal Solutions LLC)
• Subject Matter: Civil Procedure,Judgments and orders,Setting aside of judgment in default of appearance,Test for setting aside irregular default judgment,Power to amend irregular default judgment,Whether unreasonable delay in making application to set aside prejudicing right to set aside default judgment
• Citation: [2007] SGHC 185

26 October 2007 Judgment reserved.

Judith Prakash J:

1 This is an appeal by the plaintiff, Canberra Development Pte Ltd, against the decision of Assistant Registrar Lim Jian Yi to set aside the default judgment that the plaintiff had obtained against the defendant, Mercurine Pte Ltd, on 9 January 2006.

Background

2 The plaintiff is the owner of the commercial building known as Sun Plaza in Sembawang Drive. In February 2000, the plaintiff leased units #04-01 and #05-01 of the building (“the premises”) to the defendant who operated the same as a 6-screen cinema complex. The plaintiff and the defendant are loosely related companies in that one of the defendant’s two equal shareholders is, ultimately, owned by the same companies that own the plaintiff. The defendant took possession of the premises on 25 February 2000 and commenced paying rent on 25 May 2000.

3 Disputes subsequently arose between the parties. First, they had agreed that the plaintiff would bear the air-conditioning charges for the premises for a maximum of 12 hours each day. These air-conditioning charges were billed directly to the defendant’s account by the utility supplier and the defendant therefore sought reimbursement from the plaintiff. The plaintiff, however, was often late in making such reimbursement. Second, the parties disagreed over the plaintiff’s commitment to buy movie gift passes (“MGVs”) from the defendant for the purpose of promoting the cinema. The defendant alleged that the plaintiff had not met this commitment. From April 2003, the defendant stopped paying rent pending the resolution of the issues in relation to the air-conditioning charges and the MGVs.

4 On 30 November 2005, the plaintiff commenced the present action against the defendant. In its statement of claim, the plaintiff claimed unpaid rent from April 2003 to November 2005 amounting to the sum of $1,005,916.81. It averred that by reason of the non-payment of the rent, the defendant had evinced an intention no longer to be bound by the lease agreement and had repudiated the same and that the plaintiff had accepted such repudiation on 7 November 2005. Further, by reason of the defendant’s non-payment of rent and its repudiation of the lease, the plaintiff was entitled to exercise its right of re-entry. The plaintiff therefore claimed, inter alia, possession of the premises, the sum of $1,005,916.81 and damages to be assessed.

5 The writ was duly served. The defendant did not enter an appearance. On 9 January 2006, the plaintiff entered default judgment against the defendant for:

(a) possession of the premises;

(b) the sum of $864,388.31 as outstanding rent from April 2003 to November 2005;

(c) damages to be assessed; and

(d) interest and costs.

The amount of rent for which judgment was issued was reduced from the sum of $1,005,916.81 claimed in the statement of claim as that amount had not taken into account a payment of $141,528.50 which the defendant had made towards rent on 11 November 2005.

6 The defendant found out about the default judgment on 16 January 2006. It recognised that it had two options at that stage: the first was to apply to set aside the default judgment and contest the plaintiff’s claims, and the second was to negotiate with the plaintiff to try and resolve the disputes between the parties and thereby avoid a trial. The defendant said that it preferred to resolve the disputes amicably and decided to take the latter route since the parties had some shareholders in common.

7 Thereafter, there were negotiations between the parties and there is now a dispute about the results of those negotiations. The defendant takes the position that all disputes in the action were compromised with the plaintiff and that the plaintiff agreed to “withdraw” the default judgment (including the order in the default judgment that the defendant was to deliver possession of the premises to the plaintiff) in return for payment of the sum of $519,155.62. The plaintiff’s position is that whilst the “money” part of the default judgment was compromised pursuant to a settlement agreement by which it agreed to accept $519,155.62 in full settlement of its claims for rental arrears, it did not agree to withdraw the default judgment or to compromise its right to repossess the premises.

8 The defendant paid the plaintiff the sum of $519,155.62 on 6 June 2006. The plaintiff did not thereafter take any steps to have the default judgment set aside or to otherwise “withdraw” it. The defendant itself also took no further action at that stage although, in July 2006, the plaintiff’s solicitors wrote to the defendant’s solicitors stating that the plaintiff intended to enforce the order for possession contained in the default judgment.

9 The next development was in December 2006 when the defendant filed an originating summons (OS 2374 of 2006) seeking, inter alia, a declaration that it and the plaintiff had entered into full and final settlement of the disputes which were the subject matter of the present case. OS 2374 of 2006 was heard on 2 February 2007 and the defendant was granted the declaration it prayed for. The plaintiff then appealed. This appeal was allowed on 29 March 2007 by Belinda Ang J and the order in favour of the defendant was set aside. Her Honour also ordered that OS 2374 of 2006 be converted into a writ action (it is now known as S 244 of 2007) and gave directions for pleadings to be filed. That action is on-going.

10 Summons-in-chambers No 1843 of 2007 was filed by the defendant in the present action on 26 April 2007. By it, the defendant prayed for, inter alia, the following orders:

(a) that the judgment in default of appearance entered in this suit by the plaintiff on 9 January 2006 be set aside; and

(b) that the plaintiff’s claim in this suit be stayed pending final determination of Suit 244 of 2007.

The grounds of the application were stated to be as follows:

(a) that the default judgment was irregular as: (i) the plaintiff had failed to comply with the requirements of O 13 r 4(1) of the Rules of Court (2006 Rev Ed) (“the Rules”) and (ii) the plaintiff had entered judgment for an excessive sum; and

(b) the defendant had a defence on the merits which had a real prospect of success and carried some degree of conviction.

11 The defendant’s summons was heard before the Assistant Registrar on 19 June 2007. On that same morning, the plaintiff filed a summons in chambers asking for the amount of $864,388.31 stated in para 2 of the default judgment be amended to $725,116.81. The difference of $139,271.50 comprised credit for various cross claims the defendant had for the air-conditioning charges, the MGVs and another item. It was not in dispute in the court below therefore that the plaintiff had in fact entered judgment for an excessive sum.

The decision below

12 In the setting aside application, the defendant argued as follows:

(a) the default judgment was irregular in three aspects:

(i) judgment was entered for claims which fell beyond the scope of O 13 rr 1-4;

(ii) in entering judgment for possession of the premises, the plaintiff failed to produce a certificate under O 13 r 4(1); and

(iii) judgment was entered for an excessive sum;

(b) it being an irregular judgment, the defendant was entitled to have the default judgment set aside ex debito justitiae; and

(c) in any event, the defendant had a meritorious defence. First, there was an agreement between the plaintiff and the defendant to set off the rental arrears against outstanding sums owed by the plaintiff to the defendant. Second, the plaintiff had agreed that the balance rental arrears due to the plaintiff after the set-off would not be due until additional fund contributions were made by the defendant’s shareholders (“the pay later agreement”)

13 As stated, the Assistant Registrar decided that the whole of the default judgment should be set aside. He gave written grounds for his decision and, in the course of those grounds, dealt in some detail with the legal position. His conclusions can be summarised as follows. First, the Assistant Registrar held that the default judgment was irregular. On the issue as to whether the default judgment was entered for claims beyond the scope of O 13 rr 1-4, the Assistant Registrar dismissed the defendant’s contention. He accepted the plaintiff’s argument that the default judgment was entered for claims falling under O 13 r 5, i.e. that the default judgment was for a mixed claim. The Assistant Registrar was of the view that all the three claims in the default judgment fell within the ambit of O 13 rr 1-4.

14 As for the plaintiff’s failure to produce a certificate under O 13 r 4(1), the Assistant Registrar also dismissed the defendant’s arguments. He held that the failure to produce the certificate under O 13 r 4(1) was not an error “so fundamental or serious that the court ought not to exercise its discretion under r 1 to remedy it”. Neither was the requirement contained in O 13 r 4(1) a mandatory rule which required strict compliance. On the facts of the case, the Assistant Registrar was of the view that the omission to produce the certificate was not an incurable irregularity and that it had caused the defendant no prejudice whatsoever.

15 On the issue of the default judgment being for an excessive sum, after reviewing the defendant’s claims for air-conditioning charges and purchase cost of the MGVs, the Assistant Registrar held that the judgment sum was excessive. He declined to amend the default judgment on the basis that, as a matter of law, an amendment of an excessive judgment sum only occurs in cases of accidental errors. In this case, he considered that the judgment sum entered was not a product of any mere accident or clerical error but was plainly intended and consciously entered by the plaintiff. As the amount was excessive, the Assistant Registrar held that the default judgment was irregular.

16 Second, the Assistant Registrar held that the...