Fibresteel Industries Pte Ltd v Radovic Dragoslav

• Jurisdiction: Singapore
• Judge: Tay Yong Kwang J
• Judgment Date: 20 September 2007
• Neutral Citation: [2007] SGHC 157
• Docket Number: Suit No 554 of 2006 (Registrar's Appeal No 63 of 2007)
• Date: 20 September 2007
• Published date: 29 November 2007
• Year: 2007
• Plaintiff Counsel: A Rajandran (A Rajandran)
• Citation: [2007] SGHC 157
• Defendant Counsel: Goh Aik Chew (Goh Aik Chew & Co)
• Court: High Court (Singapore)
• Subject Matter: Defendant's application for security for costs,Civil Procedure,Whether defendant's application oppressive,Whether any admission to plaintiff's claim made by defendant,Whether reason to believe plaintiff unable to pay costs if defence successful,Interim orders,Whether filing of defence crucial to assessment of merits of plaintiff's case

20 September 2007

Tay Yong Kwang J:

Introduction

1 The defendant (originally the 3^rd defendant) applied for security for costs in the sum of $150,000 to be provided by the plaintiff within 14 days pursuant to the Rules of Court and s 388(1) of the Companies Act (Cap 50). An Assistant Registrar dismissed his application with costs fixed at $550. The Assistant Registrar acknowledged that the plaintiff was impecunious but found the merits of the case difficult to assess without the benefit of the Defence, which had not been filed yet. The defendant then appealed to a Judge in chambers.

2 On 26 March 2007, I heard the appeal and dismissed it with costs fixed at $1,200 to be paid by the defendant to the plaintiff. The next day, the plaintiff filed its Statement of Claim (Amendment No. 1). At the request of the defendant’s solicitors, I agreed to hear further arguments on the appeal as a result of the amendments made to the Statement of Claim.

3 On 7 May 2007, I decided to set aside my earlier orders. I ordered that security for costs in the amount of $30,000 be furnished by the plaintiff within 4 weeks and also ordered the plaintiff to pay $1,200 costs to the defendant in respect of the appeal. In the meantime, the proceedings would be stayed save that the Defence should be filed, as ordered earlier by an Assistant Registrar.

4 The plaintiff now appeals to the Court of Appeal against the above orders. In addition, the plaintiff states in the Notice of Appeal (at paragraph 3) that:

The Appellants further seek leave of the Court of Appeal to allow the Appellants to appeal out of time against the decision of the Honourable Justice Lee Seiu Kin made on 8^th February 2007 striking out Alexander Chan Tien Chee, originally named as a party to the proceedings as the 1^st Defendant.

As the earlier order of Lee Seiu Kin J is a totally different matter, I shall make no comment on the merits of the plaintiff’s application to the Court of Appeal.

The defendant’s case

5 In response to the plaintiff’s submission that the application for security for costs was premature in that the defendant had not yet filed his Defence, the defendant argued that such an application could be made at any stage of the proceedings and in fact should be made as promptly as possible and not too close to trial (citing Halsbury’s Laws of England, Vol. 37, 4^th edition at paragraph 305).

6 There were originally four defendants in this action. The plaintiff’s action against the 1^st, 2^nd and 4^th defendants has since been struck out. As mentioned above, the present defendant was originally the 3^rd defendant. The initial Statement of Claim filed on 28 August 2006 against all four defendants was a short two-page document with a one-page annexure. It read as follows:

1 The Plaintiffs’ claim against the Defendants is for the sum of S$505,989.06 and damages for loss of profits in respect of the Defendants’ repudiation of the contract with the Plaintiffs.

2 Sometime in March 2006, the Plaintiffs purchased a machinery from the Defendants for the purchases of concrete reinforcement at the price of US$250,000.00.

3 The Plaintiffs were assured that the machine would be set up in their premises at No. 7 Tuas Avenue 6 Singapore. The Plaintiffs took a tenancy on the said premises in the belief that the machine would be operational within 7 days. Now, the Plaintiffs are bearing the losses in respect of the rental charges for the said premises.

4 The Plaintiffs were further assured that there was a contract with an Indonesian company in respect of which the Plaintiffs could earn profits upon the start-up within 7 days.

5 The 3^rd and 4^th Defendants who are responsible for the start-up for the machines and the Defendants assured the Plaintiffs repeatedly that the machine would be in operation within 7 days. In the meantime, it was agreed that the Plaintiffs were to bear the costs and the expenses of the 3^rd and 4^th Defendants for the period of 7 days.

6 However, even after 37 days, the machine could not be operated and the Plaintiffs believe that they have been cheated by the fraudulent conduct of the Defendants causing the Plaintiffs to suffer loss and damages.

7 The Plaintiffs now verily believe that the Defendants have started their own operation and to usurp the profits meant to be earned by the Plaintiffs.

8 Particulars of the liquidated claim are enclosed in the Annex herewith.

AND THE PLAINTIFF CLAIMS:

1) The said sum of S$505,989.06;

2) Damages to be assessed;

3) The Plaintiffs also claim an injunction to restrain the Defendants from removing the machinery and materials from the Plaintiffs’ premises at No. 7 Tuas Avenue 6 Singapore;

4) Interest on the abovementioned sum at the rate of 6% per annum;

5) Costs; and

6) Such further or other relief that the Honourable Court may deem just.

The 16 items in the annexure added up to S$505,989.06. The main item in the annexure was a sum of S$407,697.38, said to be part payment by the Plaintiffs for the machinery.

7 The plaintiff is a $2 shell company owned by one Wong Wai Peng (“Wong”) and another. Before 21 January 2006, it was known as My Nikko Pte Ltd. It has no assets. As at February 2007, it owed the defendants various amounts of costs ordered in interlocutory applications. In late March 2007, it paid the present defendant $2,450 out of $3,198 owing.

8 The defendant, through the former 1st defendant, his only business contact in Singapore, sought parties who were interested in a joint venture to produce and sell fibre steel, a specialised building material, and who would buy the machine in issue from his Dubai company, Cellate Marble LLC. Wong was keen in the joint venture. She and her associates would have a 60% stake in the joint venture while the defendant and his associates would have 40%. The plaintiff was meant to be the vehicle for the intended joint venture, hence its change of name to the present Fibresteel Industries Pte Ltd. It would own the machine. Wong provided US$250,000 to enable Cellate Marble LLC to redeem a pledge on the machine and to send it to Singapore.

9 The lack of bona fides in the plaintiff’s action was demonstrated by its indiscriminate action in suing the defendant and all parties related to him. The former 1st defendant was the middleman who solicited Wong’s participation in the joint venture. The former 2^nd defendant, Cellate Concrete Systems Pte Ltd, was the company formed by the defendant and others after the intended joint venture with Wong failed and was aborted. The former 4^th defendant is the brother of the present defendant. He was hired as a technician along with others to install the machine in the plaintiff’s premises.

10 These three former defendants applied to strike themselves out as parties to this action on the ground that there was no reasonable cause of action and that the action against them was scandalous, frivolous and vexatious and an abuse of process of court. Lee Seiu Kin J granted these three former defendants the order sought. They thus ceased to be parties to this action with effect from 8 February 2007. The present defendant did not take out such an application and therefore remained the only defendant on record.

11 The original Statement of Claim (see [6] above) was based on a contract purportedly entered into by the plaintiff and the four defendants. The successful striking out application showed the plaintiff’s claim to be totally false and made in bad faith. The US$250,000 provided by Wong was an interest-bearing advance made by her to secure the release of the machine from its pledge in Dubai. The purchase price of the machine was US$510,000. With the said advance, the machine was released and shipped to the plaintiff in Singapore. Wong still has possession of the machine through her control of the plaintiff and the plaintiff’s premises, where the machine was kept. The advance would be repaid to Wong if the joint venture had materialised. The plaintiff would then include participation of the defendant and his associates as shareholders.

12 Unfortunately, no final agreement was entered into. At the later stage of the negotiations, the matter became acrimonious and the parties decided to abort the joint venture. They then had discussions on the return of the advance made by Wong and other consequential matters. Proposals were made to return the money to Wong in consideration of a global settlement which would involve the return...