Diamond Exchange of Singapore v Singapore Diamond Exchange Pte Ltd

CourtHigh Court (Singapore)
JudgeEunice Chua AR
Judgment Date03 April 2013
Neutral Citation[2013] SGHCR 10
Citation[2013] SGHCR 10
Publication Date04 February 2014
Docket NumberSuit No 984 of 2012; Summons No 1281 of 2013
Plaintiff CounselLim Ying Sin Daniel (Joyce A Tan & Partners)
Defendant CounselWong Siew Hong and Poonaam Bai (Eldan Law LLP)
SubjectCivil Procedure,Costs,Security
AR Eunice Chua:

This application raised the novel question of when security of costs should be ordered against a not-for-profit society under s 36(1) of the Societies Act (Cap 311, 1985 Rev Ed). There have been no reported cases on this provision of the Societies Act since it was introduced in 1982.

Facts

The plaintiff, Diamond Exchange of Singapore, is a trade association registered as a society in Singapore since 20 August 1976. It seeks to, inter alia:

promote and foster all aspects of the trade, commerce and business of wholesale importers and exporters of diamonds and other precious and semi-precious stones, pearls and jewellery and any allied business in Singapore and to consider all matters affected or concerning such trade, commerce and business and generally to watch over and protect the interest of its members engaged in the business.1

The plaintiff’s members are manufacturers, dealers, wholesalers, retailers and individuals in the trade of diamonds, other precious and semi-precious stones, pearls and jewellery.

On 21 November 2012, the plaintiff commenced suit against the defendant, Singapore Diamond Exchange Pte Ltd, for passing off and on the ground that the defendant’s name is a colourable imitation of the plaintiff’s name under s 55 of the Trade Marks Act (Cap 332, 2005 Rev Ed). On 11 March 2013, the defendant filed an application to seek security in the sum of $35,000 against the plaintiff for costs up to completion of discovery.

The defendant relied on the following pieces of circumstantial evidence to justify invoking the court’s discretion to order security for costs: (a) the plaintiff is a not-for-profit organisation; (b) the plaintiff’s membership has since 1987 declined from 73 members to 43 in 2011; (c) the amount of fees payable by the plaintiff’s members for subscriptions each year has not been disclosed by the defendant; (d) the plaintiff’s income is primarily from member’s subscriptions; and (e) the plaintiff’s latest annual return available from the Registry of Societies was from 2010.

The president of the plaintiff, on behalf of the plaintiff, responded on affidavit to emphasise the strengths of the plaintiff’s claim against the defendant and to state that the factors relied on by the plaintiff were “neither here nor there”, did not set out a complete picture, or were non-issues. The president of the plaintiff did not produce the plaintiff’s accounts or say that the plaintiff held sufficient assets to pay the costs of the defendant if the defendant were successful in its defence. Rather, he stated that the plaintiff was a trade association whose members were involved in the trade of diamonds, and that he had “every confidence that the [plaintiff] will remain solvent and will continue to fully function regardless of the outcome of [the] action”.2 He also stated that each of the members of the plaintiff was a “quality member with many years of reputable trading history” and that collectively they were “well able to fund the activities of the [plaintiff], including the present action”.3 He admitted that the plaintiff had been late in filing its annual returns with the Registry of Societies but that it had since done so.

Background to s 36(1) of the Societies Act

Section 36(1) of the Societies Act states:

Where a registered society or any of its officers purporting to act on its behalf is plaintiff in any action or other legal proceeding, the court having jurisdiction in the matter may, if it appears by credible testimony that there is reason to believe that the society or the officer will be unable to pay the costs of the defendant if successful in his defence, require sufficient security to be given for those costs and stay all proceedings until the security is given.

This section was introduced by the Societies (Amendment) Bill 1982 (Act 16 of 1982) (“the Amendment Bill”). During the second reading speech of the Amendment Bill in Parliament, the purpose of s 36(1) was described as follows (Singapore Parliamentary Debates, Official Report (27 July 1982) vol 42 cols 56–58):

The purpose of this Bill is to amend the Societies Act so as to empower the court, where proceedings are instituted by a registered society, to require it to furnish sufficient security for costs that might be incurred by the defendant in such proceedings. …

Mr Speaker, Sir, it is common knowledge that costs will have to be paid in any civil litigation. The party that loses his case in court will normally have to pay the costs of not only his, but that of the other party. If the court's order is not observed then, as the law stands at present, any judgment against a registered society can only be enforced by writs of execution against the assets of the society. However, there are instances where the successful party has not been able to recover the costs from the plaintiff. This means that if a society institutes legal proceedings but it does not have the assets or funds to meet the costs of such proceedings, a defendant who successfully defends an action brought against him by a society would be unable to recover his costs from the society.

This is not an academic issue. We have the recent example of a political party, the Workers Party, which instituted defamation proceedings against an individual, Mr Tay Boon Too, a former Member of Parliament, and the Attorney-General (representing the former Department of Broadcasting). The plaintiff lost its defamation case against the defendants but did not fully pay the costs awarded to the defendants....

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