Hendrawan Setiadi v OCBC Securities Pte Ltd and Others

• Jurisdiction: Singapore
• Judge: Woo Bih Li JC
• Judgment Date: 01 October 2001
• Neutral Citation: [2001] SGHC 290
• Docket Number: Suit No 866 of 2000 (Registrar's
• Date: 01 October 2001
• Year: 2001
• Published date: 19 September 2003
• Plaintiff Counsel: Molly Lim SC and Philip Ling (Wong Tan & Molly Lim)
• Citation: [2001] SGHC 290
• Defendant Counsel: Muthu Arusu and Mak Wei Munn (Allen & Gledhill)
• Court: High Court (Singapore)
• Subject Matter: Issue estoppel,O 21 r 3 Rules of Court,Court refusing leave to discontinue earlier action and ordering claim to be struck out,Whether such order precludes plaintiff from commencing fresh action on same matter,Striking out,Civil Procedure,Res judicata,Pleadings

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Background

The plaintiff Hendrawan Setiadi is an Indonesian businessman. He was a client of the first defendant OCBC Securities Pte Ltd (`OCBC Securities`), a stockbroking company incorporated in Singapore.

At all material times, the second defendant Ng Haw Hua was a dealer`s representative and an associate director employed by OCBC Securities.

At all material times, the third defendant Tang Boon Hai was also a dealer`s representative employed by OCBC Securities.

The additional background information below is based on Mr Setiadi`s allegations.

Sometime in July 1995, Mr Setiadi opened an account with OCBC Securities and traded in securities through Mr Ng and Mr Tang. For the purpose of that account, Mr Setiadi deposited the sum of $5m. In respect of the trading under this account, about $4.13m was returned by OCBC Securities leaving a balance of about $587,000 (`Singapore transactions`).

Sometime in May 1996, at the request/advice of Mr Ng, Mr Setiadi deposited US$10m with OCBC Securities for investment in the shares of Megaworld Properties and Holdings Inc, a company in the Philippines (`Megaworld shares`).

Mr Setiadi`s case is that Mr Ng had represented to him that in return for his investment of US$10m, there would be a guaranteed gross return of 20% of that investment by OCBC Securities. In consideration of a guarantee being given to him by OCBC Securities, he agreed to invest about US$10m in Megaworld shares. The guarantee (`the guarantee`) was faxed over by Mr Ng to Mr Setiadi at his offices in Jakarta. Upon receipt of the guarantee, Mr Setiadi remitted the sum of US$10m which was then used to purchase Megaworld shares. The value of Megaworld shares subsequently plummeted and he suffered a loss.

To mitigate his loss, Mr Setiadi sold off the Megaworld shares. He then commenced an earlier action in Suit 559/98 (`the first action`) against OCBC Securities and Mr Ng to recover the losses suffered under the Singapore transactions and in respect of the Megaworld shares.

Under the Singapore transactions, Mr Setiadi claimed that the losses were suffered as a result of various unauthorised transactions effected by Mr Ng. Consequently, OCBC Securities was also vicariously liable to him for the losses.

In respect of the Megaworld shares, Mr Setiadi`s claim against OCBC Securities was based on the guarantee. Alternatively, his claim was that the terms in the guarantee were representations made by Mr Ng as a servant/agent of OCBC Securities to induce him to purchase the Megaworld shares which he did. As the representations were made fraudulently, he was entitled to rescind the contract or to claim damages for the loss suffered. As an alternative, he also claimed that his loss and damage was occasioned by the negligence of Mr Ng as servant/agent of OCBC Securities.

The writ in the first action was filed on 15 April 1998 and fixed for trial in November 1998 before Justice Rajendran.

On 12 November 1998 (`Day 1`), on the application of counsel for OCBC Securities and for Mr Setiadi, the hearing was adjourned to Monday, 16 November 1998 on the ground that parties needed some time to prepare the various trial bundles.

On 16 November 1998 (`Day 2`), the then counsel for Mr Setiadi in his opening statement informed the court that Mr Ng had still not been served with the writ. Mr Setiadi`s solicitors were still trying to serve Mr Ng with the writ and believed he was away in the Philippines.

On Day 2 of the hearing, counsel for OCBC Securities also applied for security for costs, further discovery, etc against Mr Setiadi.

On Day 4 of the trial, Mr Setiadi`s counsel applied to amend his statement of claim in respect of some of the Singapore transactions. The trial was then adjourned to 5 April 1999.

At the adjourned hearing on 5 April 1999, OCBC Securities` counsel applied for leave to amend the defence to include the point that the guarantee was fabricated. OCBC Securities claimed that based on its document expert`s report, the guarantee was a `cut and paste` job.

For that reason, the trial was then adjourned again and was fixed for hearing from 13 July 1999 to 26 July 1999.

In the course of the adjournment, Mr Setiadi engaged a document expert from Australia to deal with the issue as to whether the guarantee was a `cut and paste` job.

On 13 July 1999, Mr Setiadi was re-called to the stand for continued cross-examination. By then, he was represented by a new counsel, ie Ms Molly Lim SC, who also appeared before me.

On 16 July 1999, Ms Lim applied under O 21 r 3 for leave to discontinue the action. At that stage, the cross-examination of Mr Setiadi had not yet been completed.

It was alleged for Mr Setiadi that during the resumed trial of the first action on 13 July 1999, it had become clear that the evidence of Mr Ng was crucial. Before the amended defence of OCBC Securities, its pleaded case was a denial of any liability on the guarantee and they alleged that Mr Ng had no authority to issue the guarantee. Mr Setiadi`s then solicitors` inability to serve the writ on Mr Ng was therefore thought not to be crucial and his case could be proceeded with against OCBC Securities in the absence of Mr Ng.

After the defence was amended to include the point that the guarantee was fabricated and during the continuation of the trial from 13 July 1999, Mr Setiadi learnt from his own document expert that there were at least two different versions of the guarantee. The copy in the possession of OCBC Securities was different from that in the possession of Mr Setiadi.

Mr Setiadi alleged that it then became clear that the participation and evidence of Mr Ng was crucial.

It is important to bear in mind what transpired then before Rajendran J on 16 July 1999 in respect of the application on behalf of Mr Setiadi to discontinue the action. I set out below the notes as recorded by the judge:

16.7.99 (FRIDAY) (DAY 10)

In Chambers.

2.45pm

Miss Lim:

My instructions are to discontinue the action with costs to be taxed. I so apply.

Shanmugam:

I would ask for action to be discussed ( sic) [dismissed] rather than leave to discontinue be given.

Order 21, rule 3, is for leave. Under that rule court has discretion. My reasons for application are:

(1) Most horrendous allegations made against OCBC. OCBC is a major institution in Singapore and prides itself on its reputation. In this context, it is important for world to know that allegations are frivolous. The best way to achieve this is to have action struck out.

(2) Court has seen the plaintiff on stand. It does not fit within parameters of what we may see as acceptable behaviour in Singapore. If leave is granted, nothing to stop him from starting fresh action in Singapore or in Indonesia on some issues.

If Court dismisses the action, then there would be serious difficulties in him commencing fresh proceedings in Singapore. He may not find difficulties in Indonesia but he will find any judgment entered difficult to enforce outside of Indonesia.

(3) There is no prejudice to the plaintiff. What the plaintiff`s solicitor is saying is: "I can`t go on". That being so, ask that the court dismisses the claim.

Miss Lim:

I ask for leave to discontinue. I spoke and obtained instructions from my client on that basis.

If court is inclined to dismiss the claim and not grant leave to discontinue, I would have to take further instructions as to whether I wish to pursue with this application for leave to discontinue.

On the rules, it is court`s discretion and I am asking court to exercise discretion in favour of my client.

Shanmugam:

What they really are saying is that the client may not be happy if court orders claim to be struck off.

Miss Lim:

I have a choice of withdrawing my application.

Shanmugam:

If she is withdrawing the application, then she should say so.

Court:

This is a case which I may well, in the exercise of my discretion, order that the claims be dismissed.

Miss Lim:

I have to take instructions.

Court:

Adjourned 10 minutes for Miss Lim to take instructions.

Intld: SR

Court resumes

4 pm

Miss Lim:

We are proceeding with our application for leave to discontinue against the 1st defendants. Leave it to court. Discontinuance is only against the 1st defendants and not 2nd defendant.

Shanmugam:

That makes it all the more imperative that the action against the 1st defendants be struck out.

Court:

(1) Leave to discontinue denied.

(2) Order that the plaintiff`s claim against the 1st defendants be struck out.

(3) Costs to be taxed and paid to the 1st defendants.

Mr Setiadi alleged that after the order of 16 July 1999 (`the order`), he tried to locate Mr Ng. When Mr Ng was located, Mr Setiadi commenced the present action in October 2000 (`the second action`). He also added Mr Tang as a party to the second action.

Mr Ng entered an appearance to the writ on 29 March 2001 and the writ was served on OCBC Securities on 16 April 2001. If Mr Ng could not be located, the second action would not have been proceeded with since nothing had changed from the date of the order.

OCBC Securities then applied for Mr Setiadi`s claim in the second action to be struck out.

On 18 July 2001, the deputy registrar struck out the second action.

Mr Setiadi appealed and on 22 August 2001, I dismissed his appeal.

Mr Setiadi has appealed against my decision.

Arguments

Mr Muthu Arusu for OCBC Securities based his submission on res judicata, in its original and extended form as enunciated in Henderson v Henderson [1843-60] All ER Rep 378 and abuse of the process of the court.

Ms Lim accepted that Mr Setiadi`s claim against OCBC Securities in the second action is the same as the claim in the first action, save for an additional claim for negligence against OCBC...