Falmac Ltd v Cheng Ji Lai Charlie

• Jurisdiction: Singapore
• Judgment Date: 01 August 2014
• Date: 01 August 2014
• Docket Number: Originating Summons No 1125 of 2013 and Summons No 1410 of 2014
• Court: Court of Appeal (Singapore)

Falmac Ltd

Plaintiff

and

Cheng Ji Lai Charlie and another matter

Defendant

[2014] SGCA 42

Andrew Phang Boon Leong JA

and

Judith Prakash J

Originating Summons No 1125 of 2013 and Summons No 1410 of 2014

Court of Appeal

Civil Procedure—Appeals—Extension of time—Whether leave to file notice of appeal which was close to five months late should be granted

On 23 May 2013, the High Court issued a judgment dismissing the plaintiff's various claims for breach of fiduciary duties against the defendant (‘the Defendant’), a former director of the plaintiff (‘the Plaintiff’), and allowing a counterclaim for $1.33 m by the Defendant. One of the allegations of the Plaintiff was that the Defendant had breached his fiduciary duties in the course of disposing two of the Plaintiff's subsidiaries in Tianjin, People's Republic of China, Falmac Machinery (Tianjin) Ltd (‘FM’) and Falmac Textile (Tianjin) Co Ltd (‘FT’) to a company known as Sino Vision (HK) Ltd (‘Sino Vision’).

The Plaintiff did not file a notice of appeal within the prescribed one-month window. Six months later on 19 November 2013, the Plaintiff took out the present application seeking leave to file a notice of appeal against the High Court's decision. The Plaintiff explained that it was only filing its appeal close to five months after the time for filing an appeal had expired as it had received on 17 October 2013 two favourable judgments from the Higher People's Court of Tianjin which supported the Plaintiff's case that the Defendant had breached his fiduciary duties in causing the disposal of FM and FT. The Defendant was not a party to the proceedings in Tianjin which were against Sino Vision and in which the Plaintiff sought a reversal of the disposal of FM and FT.

Held, dismissing the application:

(1) It was trite law that whether time for filing of a notice of appeal would be extended depended on the application of four factors: (a) the length of delay; (b) the reasons for the delay; (c) the chances of the appeal succeeding if time for appealing were extended; and (d) the prejudice caused to the would-be defendant if an extension of time was in fact granted. Bearing in mind that the precise facts and circumstances of each case were all-important, the assessment of the four factors was, in the final analysis, guided by the need for an integrated and holistic approach: at [12] and [16] .

(2) Generally, close to five months delay in the filing of a notice of appeal could hardly be considered ordinary: at [18] .

(3) The Plaintiff had only itself to blame for its predicament. From its conduct, it was evident that the Plaintiff had made a conscious decision to have related proceedings take place in Tianjin and Singapore at the same time. The Plaintiff could have but chose not to take steps in Singapore to avoid parallel proceedings: at [21] to [26] .

(4) The Plaintiff also could have but did not file a notice of appeal followed by an application to stay the appeal timelines pending the decision of the Tianjin court. The best and most charitable construction of the Plaintiff's conduct was that the Plaintiff was unaccountably tardy; if that was truly the case, then it had only itself to blame for the consequences of its inaction. A less charitable interpretation of the Plaintiff's conduct was that the Plaintiff wanted to hedge its position - the Plaintiff did not want to run the risk that an appeal would be heard before the Tianjin court had determined the Plaintiff's claims: at [29] and [30] .

(5) It was unacceptable for the Plaintiff to disregard all rules in Singapore regulating the trial process and the appeal process, including timelines for filing appeals as well as all other associated rules. The Plaintiff's conduct suggested that it considered those rules subordinate to the foreign proceedings in Tianjin. A party could not legitimately seek an extension of time to appeal when it had authored or engineered a litigation strategy that evinced scant regard for the court process: at [34] and [35] .

(6) In any event, without undertaking a full-scale examination of the merits of the underlying dispute, it was evident that the Plaintiff's appeal would have been hopeless: at [46] to [61] .

(7) A foreign judgment could only be raised and relied upon to found an issue estoppel if certain conditions were fulfilled. One such condition was that the parties in the local proceedings in which the contents of the foreign judgment which was sought to be recognised had to be the same parties (or be privy to the parties) in the foreign proceedings. On the face of the judgments from the Tianjin court, the Defendant was neither a party nor privy to the parties in the foreign proceedings: at [50] .

(8) However, there was no material prejudice to the Defendant that could not be compensated by an appropriate costs order. This was not a case where the judgment sum had been paid and expended by the Defendant. The Defendant was not any worse off now than at the time of the release of the High Court judgment, save for sums incurred to enforce the judgment debt. These could be recovered as costs in the respective applications. Although this last factor was in the Plaintiff's favour, looking at all the factors in relation to the relevant facts and circumstances and taking an integrated and holistic approach, it was plain beyond question that the application had no merit and ought therefore to be dismissed: at [64] and [65] .

[Observation: A plaintiff who took the position in related proceedings in Singapore that it would not appeal a decision in another proceeding would not be permitted to resile from its original intent subsequently without demonstrating strong cause. The winning party was entitled to know its position, and to order its affairs in reliance not just on timelines set by the court but also on the opposing party's communications to the court: at [39] and [40] .]

Aberdeen Asset Management Asia Ltd v Fraser&Neave Ltd [2001] 3 SLR (R) 355; [2001] 4 SLR 441 (folld)

Giant Light Metal Technology (Kunshan) Co Ltd v Aksa Far East Pte Ltd [2014] 2 SLR 545 (refd)

Ladd v Marshall [1954] 1 WLR 1489 (refd)

Lai Swee Lin Linda v AG [2006] 2 SLR (R) 565; [2006] 2 SLR 565 (folld)

Lee Hsien Loong v Singapore Democratic Party [2008] 1 SLR (R) 757; [2008] 1 SLR 757 (folld)

Tan Sia Boo v Ong Chiang Kwong [2007] 4 SLR (R) 298; [2007] 4 SLR 298 (refd)

Companies Act (Cap 50, 2006 Rev Ed) s 272 (2) (a) (consd)

Alfred Dodwell and Tay Chie Chiang (Dodwell&Co LLC) for the plaintiff

Tan Teng Muan and KBalachandran (Mallal&Namazie) for the defendant.

Andrew Phang Boon Leong JA

(delivering the grounds of decision of thecourt):

Introduction

1 Falmac Limited (‘the Plaintiff’) filed Originating Summons No 1125 of 2013 (‘OS 1125’) on 19 November 2013 for an extension of time to file a notice of appeal against the decision of the High Court judge (‘the Judge’) in Falmac Limited v Cheng Ji Lai Charlie[2013] SGHC 113 (‘the HC Judgment’).

2 Although the law in this area is well-settled, the grounds relied upon by the Plaintiff for the late application - which came close to six months after the HC Judgment had been delivered or close to five months after the deadline for filing the notice of appeal had lapsed - were unusual, particularly in the context of the procedural history and background of the dispute. Essentially, the Plaintiff wanted to rely on two favourable foreign judgments issued some five months after the HC Judgment was issued. It claimed that the two foreign judgments supported its action in the High Court and would therefore support its position on appeal.

3 We dismissed, after hearing oral arguments, OS 1125 as well as Summons No 1410 of 2014 (‘SUM 1410’), which was a related summons to adjourn the hearing for OS 1125 before this court pending the result of an appeal against the two foreign judgments in the foreign court. We now set out the detailed grounds for our decision.

Background

4 Cheng Ji Lai Charlie (‘the Defendant’) was a former director and chief executive officer of the Plaintiff. The main action in the High Court was essentially a claim by the Plaintiff against the Defendant for numerous breaches of fiduciary duties by the Defendant. The proceedings initially involved four other defendants but the actions against them were discontinued.

5 One of the alleged breaches was in relation to the Defendant's involvement in the Plaintiff's disposal of two of its subsidiaries in Tianjin, People's Republic of China (‘the PRC’) to a company known as Sino Vision (HK) Ltd (‘Sino Vision’): Falmac Machinery (Tianjin) Ltd (‘FM’) and Falmac Textile (Tianjin) Co Ltd (‘FT’).

6 The trial was heard over three tranches. The first was in July 2011, the second was in September 2012, and the last was a day in November 2012. The HC Judgment dismissing the Plaintiff's claim and awarding the Defendant about $1.33 m in his counterclaim was given on 23 May 2013. No appeal was filed within the one-month window period.

7 On 19 November 2013, the Plaintiff filed OS 1125 and its articulated reason for an extension of time to file an appeal nearly six months after the HC Judgment ( [1] supra) was delivered was that it now had two favourable judgments (‘the Tianjin judgments’) issued by the Higher People's Court of Tianjin (‘the Tianjin court’) on 17 October 2013, some five months after the HC Judgment was delivered.

8 Alittle more background should be given of the proceedings in Tianjin. On 26 June 2012, which was after the end of the first tranche but prior to the start of the second tranche of the High Court trial, the Plaintiff commenced two proceedings in the Tianjin court against Sino Vision. The two proceedings were essentially for the same reliefs, albeit in respect of each subsidiary, ie,FM and FT. The reliefs sought by the Plaintiff were for the share transfer agreement which had vested ownership of FM and FT in Sino...