Hayate Investment Co Ltd v ManagementPlus (Singapore) Pte Ltd
Jurisdiction | Singapore |
Judge | Chan Wei Sern Paul AR |
Judgment Date | 09 May 2012 |
Neutral Citation | [2012] SGHCR 3 |
Court | High Court (Singapore) |
Docket Number | Suit No 929 of 2011(Summons No 222 of 2012) |
Year | 2012 |
Published date | 20 May 2013 |
Hearing Date | 27 April 2012,30 March 2012,13 April 2012,20 April 2012,19 March 2012,04 May 2012,22 March 2012 |
Plaintiff Counsel | Chia Swee Chye Kelvin (Samuel Seow Law Corporation) |
Defendant Counsel | Gregory Vijayendran and Zheng Sicong (Rajah & Tann LLP) |
Subject Matter | Civil Procedure,setting aside of judgment,Debt and Recovery,right of set-off,Equity,defences,equitable set-off |
Citation | [2012] SGHCR 3 |
This is a judgment about the law of legal and equitable set-off.
The defendant, ManagementPlus (Singapore) Pte Ltd, was the manager of the Hayate Japan Equity Long-Short Master Fund (the “Master Fund”), a fund incorporated in the Cayman Islands. The Master Fund was established as an open-ended investment company, owned, at least beneficially, by its unitholders. Its source of investment capital was derived from a unit trust, the Hayate Japan Equity Long-Short Fund (the “Feeder Fund”), a fund which “feeds” capital into the Master Fund. Officially, these funds were established in early 2006 by a company known as Duet Research and Trading Pte. Limited who acted as the first manager of the funds. In September 2006, ManagementPlus took over from Duet as manager of the funds and, at the same time, appointed the plaintiff, Hayate Investment Co Ltd (“Hayate”), to provide investment advice in respect of the Master Fund.
The investment advisory agreement entitled Hayate to a substantial portion of the fee payable to ManagementPlus as manager. By the present suit, Hayate sued ManagementPlus to the tune of
The issues, as I understand them, are as follows:
The present application is brought pursuant to Order 13, rule 8 of the ROC which reads:
The Court may, on such terms as it thinks just, set aside or vary any judgment entered in pursuant of this Order.
Where a regular default judgment is concerned, the Court of Appeal in
The Court of Appeal went on to state that the test for setting aside a regular default judgment should not be any stricter than that for obtaining leave to defend in an Order 14 application.... in deciding whether to set aside a regular default judgment, the question for the court is whether the defendant can establish a
prima facie defence in the sense of showing that there are triable or arguable issues.
It must be stated at the outset that the standard of a triable or arguable issue is not high at all. In fact, the Court of Appeal in
Thus, all that ManagementPlus has to do to succeed in the present application is demonstrate that it has a
As mentioned, ManagementPlus is endeavouring to set-off various sums that it claims Hayate owes it against the debt it owes Hayate. It is uncontroversial that a claim of set-off, although not a direct rebuttal against the initial claim made, constitutes a defence if properly established. This is reflected in Order 18, rule 17 of the ROC:
Where a claim by a defendant to a sum of money (whether of an ascertained amount or not) is relied on as a defence to the whole or part of a claim made by the plaintiff, it may be included in the defence and set-off against the plaintiff’s claim, whether or not it is also added as a counterclaim.
While the particular principles that are contested in the present application are necessarily discussed in detail later, it is useful to begin by briefly and broadly examining the contours of the law of set-off.
In
The act of deducting from sums otherwise due is known variously as set-offs, counterclaims and cross-claims. Some of these terms carry different meanings. As far as legal terminology is concerned, the terms “cross-claim” and “counterclaim” are used interchangeably. It is important to appreciate, however, that set-off has a narrower meaning than cross-claim. All set-offs are cross-claims but not all cross-claims are set-offs.
Set-offs are a subset of counterclaims because they possess one additional quality. Counterclaims are essentially procedural in nature in that they afford a defendant a mechanism by which separate actions may be tried in the same proceedings. In contrast, set-offs have, in addition to this procedural quality, also a substantive aspect. At their best, set-offs allow the defendant a self-help remedy. Even if not, set-offs, at the very least, have the potential to affect the rights and interests of third parties. For that reason, set-offs are considered to constitute a proper defence to any claim while counterclaims in general are not.
There are various types of set-offs. The main ones I shall outline. To fully appreciate the development of set-offs, however, one must first have reference to the prior common law position. On this subject, Rory Derham, the learned author of
Prior to the enactment of the first Statute of Set-off in 1729, there was no general right of set-off available to a defendant in a common law action when he or she was being sued by a solvent plaintiff, as opposed to the assignees of a bankrupt.
This denial of a set-off has been explained as being consistent with the adoption by the common law courts of strict rules of pleading and of forms of action, which were designed to reduce the question to be decided by the court as far as possible to a single, well-defined issue. It would have been contrary to that approach to introduce collateral issues through consideration of a cross-claim. [Emphasis added.]
Another motivation for the vintage common law disdain for set-offs is proffered in Philip Wood,
Regardless of which explanation is accurate, it would not be unfair to say that the common law courts historically placed a premium on certainty in their attempts to achieve justice. It is a reaction to this starting position that doctrine of set-off was first developed. The legal set-offThe English hostility to self-help set-off is in sharp contrast to many civil code jurisdictions... The policy informing the English exclusion of independent set-off as a self-help remedy would seem to be based on the proposition that
creditors are entitled to be paid by legal tender unless otherwise agreed and upon the need for predictability and certainty of payments in commercial transactions – the cash-flow principle. [Emphasis added.]
One of the most important types of set-off is what is today commonly called the legal set-off, so-called because it was applied by the English common law courts. It was originally derived from the Statutes of Set-off enacted in 1729 and 1735. The immediate purpose of these statutes appears, from the title of the first statute - ‘An Act for the Relief of Debtors with respect to the Imprisonment of their Persons’ - to be to provide relief from incarceration for debtors who were unable to pay their debts. Although the statutes were eventually repealed in 1879, the repeal was expressly stated to not affect any principle of law...
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