Changhe International Investments Pte Ltd (formerly known as Druidstone Pte Ltd) v Dexia BIL Asia Singapore Ltd (formerly known as Banque Internationale A Luxembourg BIL (Asia) Ltd)

• Jurisdiction: Singapore
• Judge: Chao Hick Tin JA
• Judgment Date: 31 May 2005
• Neutral Citation: [2005] SGCA 30
• Docket Number: Civil Appeal No 119 of 2004
• Date: 31 May 2005
• Published date: 02 June 2005
• Year: 2005
• Plaintiff Counsel: Leslie Yeo Choon Hsien (Leslie Yeo and Associates)
• Citation: [2005] SGCA 30
• Defendant Counsel: Sarjit Singh Gill SC and Seah Yi-Lein (Shook Lin and Bok)
• Court: Court of Appeal (Singapore)
• Subject Matter: Appellant subsequently commencing second action against respondent,Whether trial judge correct in dismissing appellant's second action for abuse of process of court,Striking out,Appellant's first action against respondent dismissed for failure to comply with peremptory order,Whether appellant's failure to adequately explain non-compliance with peremptory order in first action amounting to contumelious conduct,Civil Procedure

31 May 2005 Judgment reserved

Judith Prakash J (delivering the judgment of the court):

Introduction

1 In December 1999, Changhe International Investments Pte Ltd (“Changhe”) sued Banque Internationale A Luxembourg BIL (Asia) Ltd (now called Dexia BIL Asia Singapore Limited) (“Dexia”) for the return of US$10m that Changhe had deposited with Dexia, and that Changhe alleged Dexia had wrongfully paid out to a third party. This suit, High Court Suit No 1725 of 1999 (“Suit 1725”), was dismissed on 8 March 2000 on the ground that Changhe had failed to comply with a peremptory order of court.

2 In January 2004, Changhe and another plaintiff started an action in the High Court against Dexia and two other defendants (Suit No 63 of 2004, referred to herein as “the second action”). In so far as Dexia was concerned, the cause of action was the same as that in Suit 1725. Shortly after being served with the Writ, Dexia applied for the Statement of Claim in the second action to be struck out on the ground that it was an abuse of process of the court. Dexia failed in its application before the assistant registrar. It appealed and Justice Tan Lee Meng allowed the appeal and struck out the Statement of Claim (see [2005] 1 SLR 598). Changhe has now appealed to this court.

The decision below

3 Tan J decided the case on the basis that he had to determine whether there had been an abuse of process of the court when Changhe resurrected Suit 1725 in the form of the second action. Applying the case of Janov v Morris [1981] 1 WLR 1389, he noted that it was a matter of discretion whether the second action should be struck out. He also noted that the court should be cautious in allowing the second action to continue, and should have due regard to the necessity of maintaining the principle that orders are made to be complied with and not ignored. Tan J observed that if an appeal had been lodged against the dismissal of Suit 1725, Changhe would have had to explain its failure to comply with the peremptory order in question and commented “[n]o lower standard can be expected if a litigant chooses not to appeal but to start a fresh action several years down the road” (at [11] of his judgment).

4 The judge considered that neither in Suit 1725 nor in the second action had Changhe offered any satisfactory explanation for the failure to comply with the peremptory order. In the second action, Changhe had sought an adjournment before the assistant registrar for the purpose of filing an affidavit to explain its actions in Suit 1725. However, it failed to file the said affidavit before 20 September 2004, the deadline fixed by an order of court dated 30 August 2004. It subsequently relied on an affidavit filed three years earlier on behalf of Changhe during proceedings relating to Suit 1725. That affidavit did not offer any satisfactory explanation for the non-compliance with the court order.

5 Tan J held that Changhe’s lack of diligence in complying with court orders in the first suit was equally evident in the second action, and to allow Changhe to proceed with the second action would be to condone a blatant disregard of orders of court. Accordingly, he allowed Dexia’s appeal with costs.

The law

6 Since the 1980s, it has been settled law that the court has the discretion to strike out an action as an abuse of process of the court where there had been a failure by a litigant to comply with a peremptory order of the court in a previous action. Before the English Court of Appeal decision in Janov v Morris, due to obiter dicta in Birkett v James [1978] AC 297 at 334, it had been doubted that a person who started an action within the limitation period was liable to have it struck out as constituting an abuse of the process of the court for the sole reason that a previous suit instituted by him in respect of the same cause of action was itself struck out on the ground that his disobedience to the court’s orders amounted to contumelious default: Tolley v Morris [1979] 1 WLR 592 at 604, per Lord Edmund-Davies. His lordship expressed the view (albeit obiter) that even in such circumstances, a plaintiff who had not been declared a vexatious litigant could, within the limitation period, prosecute to trial a fresh action, but stated that he regarded such a conclusion as unfortunate.

7 This question came up for direct decision in Janov v Morris (supra [3]). The plaintiff in that case had issued a writ in 1978 claiming damages for breach of contract. The defendant delivered particulars of defence and counterclaim, and then no further step was taken in the action for a period of ten months. On the defendant’s application to strike out the action for want of prosecution, the master ordered that the action would be struck out unless the plaintiff served his summons for directions by a specified date. The plaintiff failed to comply with the order or to offer any explanation for his delay in prosecuting the action. In July 1980, the master gave judgment on the claim for the defendant. In September 1980, the plaintiff issued a second writ pleading the same cause of action. The defendant was successful in an application to strike out the second action as an abuse of the process of the court. The plaintiff appealed. The judge accepted the plaintiff’s contention that he was entitled to bring a second action at any time within the limitation period, notwithstanding that his original action had been struck out for failure to comply with a peremptory order of the court, and rescinded the striking out.

8 The defendant’s further appeal to the Court of Appeal was successful. In allowing the appeal, Dunn LJ referred to the statements made by Lord Edmund-Davies in Tolley v Morris and said at 1394:

[O]ne can well understand his Lordship’s opinion that the conclusion which he preferred would be a highly unfortunate one, because it was conceded by counsel for the plaintiff that if it were right, a litigant could disobey and disregard orders of the court, have his action struck out, and provided he was within the limitation period, he could immediately start another action; and even if another peremptory order was made in the second action and that action dismissed, then if the logic of Birkett v. James [1978] A.C. 297 is taken to its ultimate, he could start a third or any number of actions provided they were within the limitation period and none would be regarded as an abuse of the process of the court.

Dunn LJ then stated he would decide the question according to principle. He referred, first, to Samuels v Linzi Dresses Ltd [1981] QB 115, an earlier Court of Appeal decision, which considered an analogous though dissimilar situation. In that case, a peremptory order had not been complied with and the issue was how the court should exercise its power to extend time to comply with the order. Roskill LJ had expressed the view (at 126) that this power “should be exercised cautiously and with due regard to the necessity for maintaining the principle that orders are made to be complied with and not to be ignored”. Dunn LJ applied those words by analogy to the situation where a peremptory order had been made and not complied with, and the action had been struck out and the second action started. In his view, “the court should be cautious in allowing the second action to continue and should have due regard to the necessity of maintaining the principle that orders are made to be complied with and not to be ignored” (at 1395). He therefore held that, in the absence of any explanation as to why the order had not been complied with in the previous action or of any assurance as to the conduct of the present litigation, the present litigation had to be struck out.

9 Watkins LJ agreed with Dunn LJ. He said (at 1395):

A prospective litigant must be deemed to know that upon taking out a writ endorsed with a claim for monetary or other relief, his conduct of the action thereby brought into being will be governed thereafter by rules and orders of the court. A failure to conform to any one of these may cause him to be penalised even to the extent of having his action struck out.

In the event of his action being ordered to be struck out for failure to obey a peremptory order, he may appeal against that order seeking, if necessary, an extension of time within which to do so. The outcome of such an appeal will to some extent depend upon the excuse for failure preferably set forth in affidavit form provided for the court’s consideration. If a litigant neglects to avail himself of that procedure and brings a fresh but precisely similar action to that ordered to be struck out without any explanation then or at any later time for a failure to obey the peremptory order, he should not be surprised that the commencement of the second action is found to be an abuse of the process of the court and for that reason it, too, is struck out.

To behave in such a way is in my judgment to treat the court with intolerable contumely.

10 Janov v Morris and Samuels v Linzi Dresses Ltd have stood as good law for more than 20 years. The latter case has been cited and followed in several decisions in Singapore and, in particular, by this court in Syed Mohamed Abdul Muthaliff v Arjan Bhisham Chotrani [1999] 1 SLR 750 (“the Syed Mohamed case”) where this court held that in cases in which it had to decide what were to be the consequences of a failure to comply with an unless order, the relevant question was whether such failure was intentional and contumelious. The court should not be astute to find excuses for such failure since obedience to orders of the court was the foundation on which its authority rested. The crux of the matter was that the party seeking to escape the consequences of his default would have to show that the failure was not contumelious because he had made positive efforts to comply but was prevented from doing so by extraneous circumstances, and that he had no intention of ignoring or...