Hong Leong Finance Ltd v v Famco (S) Pte Ltd and Others

• Jurisdiction: Singapore
• Judgment Date: 03 June 1992
• Date: 03 June 1992
• Docket Number: Suits Nos 6568, 6569 and 6659 of
• Court: High Court (Singapore)

Hong Leong Finance Ltd

Plaintiff

and

Famco (S) Pte Ltd and others

Defendant

[1992] SGHC 151

Judith Prakash JC

Suits Nos 6568, 6569 and 6659 of 1985

High Court

Civil Procedure–Pleadings–Amendment–Defendant applying for leave to amend amended defence at close of plaintiff's case–Court refusing application but giving leave to defendant to reapply–Defendant renewing application for amendment after certain witnesses giving evidence on behalf of defence–Completely new line of defence sought by amendment–Whether to allow amendment

The plaintiff sued various defendants to recover amounts owed under guarantees given for the benefit of the first defendant. By the time the trial commenced, only SPP Ltd (“SPP”), as well as one Mr Chew and one Mr Cheng, directors of the first defendant, were contesting the plaintiff's claim.

At the close of the plaintiff's case, SPP applied to amend its amended defence. The court refused the application at that stage but gave leave to SPP to reapply. After four witnesses, including Mr Cheng and Mr Chew, had given evidence on behalf of the defendants, SPP's application for amendment was renewed. By the amendment SPP sought to contend that M/s Chew and Cheng acted in breach of their fiduciary duties as directors of SPP in procuring the issue of the corporate guarantee and that the plaintiff knew or ought to have known this and were precluded from relying on SPP's guarantee. This was a completely new line of defence.

Held, dismissing the application:

(1) Amendments required to define the issues in dispute should be allowed unless an injustice would be caused to the opposing party. Generally, however, the later an application to amend was made, the more likely it was that it would result in an injustice which could not be recompensated by an award of costs: at [10] and [11].

(2) The present suit started in 1985 based on events which took place in 1983. Nearly ten years after the events occurred and during the trial after the plaintiff's case was closed, SPP sought to introduce a fresh line of defence. SPP had the necessary material to allege a breach of fiduciary duty which the plaintiff “knew or ought to have known” a long time ago: at [12].

(3) If the application were granted, the injustice to the plaintiff was not merely a matter of costs. It involved a re-presentation of its case, an investigation of SPP's allegations and a consideration of whether to allow the defendants to have a second opportunity to cross-examine the plaintiff's witnesses. For that reason alone, the court was against allowing the amendment. Even if the amendment were allowed, it would not afford SPP a real and viable defence: at [13].

(4) Further, if the court allowed the amendment, Mr Chew and Mr Cheng would have had to amend their defences to meet SPP's amended defence and there would be delay. This suit had been hanging over the heads of these two defendants for seven years and their anxiety and need to have the issues resolved one way or the other must have some weight with the court: at [15].

Ismail bin Ibrahim v Sum Poh Development Sdn Bhd [1988] 3 MLJ 348 (refd)

Ketteman v Hansel Properties Ltd [1987] AC 189; [1988] 1 All ER 38 (folld)

Michael Khoo (Michael Khoo & B B Ong) for the plaintiff

Sim Yong Chan (M P D Nair & Co) for the second and third defendants

Sng Kheng Huat (Low Yeap & Co) for the seventh defendant.

Judgment reserved.

Judith Prakash JC

1 In October 1983, the plaintiffs in Suit No 6568 of 1985, a well-known finance company, entered into a hire-purchase agreement with Famco (S) Pte Ltd (“Famco”) (the first defendants), to let to them certain woodworking machinery. The financing was substantial. RM770,000 was paid to the vendor of the machines. As support for Famco's obligations, the plaintiffs were initially given personal guarantees of all the directors of Famco. At that time the directors were the second defendant (“Mr Chew”), the third defendant (“Mr Cheng”), the fourth defendant (“Mr Kee”), the fifth defendant (“Mr Yap”), and the sixth defendant (“Mr Ong”). As additional security, a company known as Feng Yuan Holdings Pte Ltd (“FYH”) executed a “deposit of shares agreement” which constituted a second charge over certain shares which FYH had previously pledged to the plaintiffs to secure unrelated facilities. The hire-purchase documents, the “deposit of shares agreement” and the guarantees by the five directors were all dated 26 October 1983.

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