Karats Pte Ltd v Asia Capital and Brokerage Pte Ltd

• Jurisdiction: Singapore
• Judge: Chua Wei Yuan
• Judgment Date: 10 June 2019
• Neutral Citation: [2019] SGMC 20
• Court: Magistrates' Court (Singapore)
• Hearing Date: 06 May 2019
• Docket Number: MC/Magistrate’s Court Suit No 18576 of 2018 (MC/Summons No 407 of 2019)
• Plaintiff Counsel: Lulla Ammar Khan (Cairnhill Law LLC)
• Defendant Counsel: and Vishnu Aditya Naidu (Phoenix Law Corporation)
• Subject Matter: Civil Procedure,Setting aside,Simplified process,Upfront discovery
• Published date: 05 July 2019

Deputy Registrar Chua Wei Yuan:

This was the defendant’s application to set aside a judgment entered in default of defence. I set aside the judgment essentially on the twin bases that it had been irregular and that the defendant was not bound to lose. My reasons follow.

Facts

The plaintiff sued on a dishonoured cheque for $50,000, which it said represented the refund of a deposit given on account of the defendant being unable to perform its end of an agreement. The defendant’s position, as appears from the affidavits filed on its behalf, was that the cheque had been unsupported by consideration, that it had been delivered conditionally (and should not have been encashed), and in any event that the notice of dishonour was defective.

The writ and statement of claim (“SOC”) were served on 22 November 2018. These were, purportedly in compliance with O 108 r 2(3) of the Rules of Court (Cap 322, R 5, 2014 Rev Ed) (“ROC”), accompanied by a list of documents (“LOD”).

There is no dispute that the last day to file a defence would have been 14 December 2018. It transpired, however, that the serial number of the cheque and the bank through which the cheque had been issued (as pleaded in the SOC) were wrong. The parties realised this, for on that day the defendant did not file its defence, but instead sent the plaintiff a letter requesting further and better particulars of the SOC and a copy of the cheque referred to in the SOC.

On 18 December 2018, the plaintiff filed and served an amended SOC to correct the errors. The defendant did not dispute that the plaintiff was entitled to do so. By virtue of O 20 r 3(2)(b) and O 3 r 3, the time allowed for the filing of a defence would have been extended to 2 January 2019.

By virtue of O 108 r 2(5), the plaintiff would have had to provide a copy of the cheque to the defendant by 21 December 2018. (Parties did not dispute this point, even though the cheque was not listed in the LOD. In this regard, O 108 r 2(5) requires a party to provide a copy of any document listed in the LOD. I can only presume this was because the cheque was referred to in the SOC and should have been listed in the LOD. I return to this point below at [34].) However, it was only on 3 January 2019—after the defendant had sent some chasers—that the plaintiff furnished the defendant with a copy of the cheque referred to in the amended SOC (the particulars requested were not forthcoming).

On 7 January 2019, the defendant filed and served an application, essentially for further and better particulars, and for an extension of time (until 14 days after that application was disposed of) to serve its defence on the plaintiff.

On 8 January 2019, the plaintiff filed a request to enter judgment on the amended SOC in default of defence. This was accepted into the electronic case file on 10 January 2019, just after counsel for the plaintiff sought an audience before the duty registrar asking about the status of the request.

Shortly after, the defendant filed this application to set aside the judgment.

Decision

The defendant argued that the judgment was irregular and, in any event, there were triable issues.

Was the judgment irregular?

In brief, the defendant raised 3 lines of argument as regards the regularity of the judgment: that the plaintiff acted despite knowing of a pending application by the defendant to extend the time for filing its defence; that the plaintiff had acted in breach of natural justice and did not give full and frank disclosure to the court; and that the plaintiff did not comply with its discovery obligations under O 108.

I did not consider the judgment irregular for the exact reasons advanced by the defendant. However, its arguments as regards discovery obligations led me to take notice of some other matters which made the judgment irregular.

Knowledge of pending application to extend time to file defence

The defendant argues that the plaintiff entered default judgment despite knowing that it had filed an application for particulars and for an extension of time to file its defence.¹

In my view, the plaintiff is not obligated to refrain from entering default judgment in the light of the pending application (or its knowledge that the application is pending).

In BSN Commercial Bank (M) Bhd v Zaq Construction Sdn Bhd & Others [2001] 4 MLJ 472 (HC, Kuala Lumpur) at 476C, Abdul Aziz J restored a judgment that had been set aside below, precisely because the defendants had no legal authority to say that default judgment could not be entered while an application for an extension of time to serve its defence was pending. Similarly, an application to stay court proceedings in favour of arbitration does not pause the timer for serving a defence (Australian Timber Products Pte Ltd v Koh Brothers Building & Civil Engineering Contractor (Pte) Ltd [2005] 1 SLR(R) 168 (“Australian Timber”) at [16] per Belinda Ang Saw Ean J). Ang J in fact thought that the defendant there could have been proactive by, for example, asking the duty registrar for an urgent hearing of the stay application and an extension of time to serve the defence under O 3 r 4.

I am aware that a seemingly different result was reached in Carona Holdings Pte Ltd and others v Go Go Delicacy Pte Ltd [2008] 4 SLR(R) 460 (CA). There, after the writ had been served, the defendants applied for a stay of proceedings in favour of arbitration but did not file a defence. After the time limited for filing a defence had lapsed, the plaintiff filed an inter partes application for judgment to be entered in default of defence. Both applications were fixed for hearing together, whereupon an assistant registrar entered judgment and made no order on the stay application. The High Court judge, relying on Australian Timber, affirmed this result on appeal. On further appeal, V K Rajah JA (delivering the grounds of decision of the court) held at [37]–[38] that the merits of a stay application should always be heard first if applications for a stay and default judgment are concurrently pending. That case, however, concerned the unusual situation where the plaintiff filed an inter partes application to enter judgment in default of defence instead of a request (as required today by Practice Direction 76). The consequence is that there were two applications concurrently pending. Such was not the situation in the present case. In fact, Rajah JA stated at [32]:

… far from suggesting that the timelines in the Rules of Court will stop on the filing of a stay application, Chao JA was in fact alluding to quite the opposite. By observing (at [18] of [Samsung Corp v Chinese Chamber Realty Pte Ltd [2004] 1 SLR(R) 382]) that, in the event of the failure of the stay application, “the court would no doubt make the necessary consequential orders, including setting the time-limit for the filing of Defence”, the court in Samsung Corp confirmed that fidelity to the timelines in the Rules of Court must still be observed. After the merits of the stay application have been found to be wanting, an unsuccessful defendant has to file his defence. The time limits for the filing of the defence can, at the same hearing, be set by the court. In a similar vein, Australian Timber clarifies that the onus lies on the defendant to bring forward the hearing date or apply for an extension of time to serve the defence, if a default judgment is to be avoided. [emphasis added]

I return to the present case. The general rule is that, in the first place, an order for further and better particulars will not be made before the service of the defence unless the court considers it necessary or desirable to enable the defendant to plead, or for some other special reason (O 18 r 12(5)). Even if the defendant nonetheless took the view that the particulars had to be given before a defence could be filed, and that the extension of time meant so much to the defendant, then Ang J’s comments in Australian Timber squarely apply to this case. The defendant could have sought, before the duty registrar, an urgent hearing date of the application or an extension of time to file the defence pending the disposal of the application. As long as the court has not extended the time for the filing of the defence, the plaintiff is not precluded from enter judgment in default of defence.

This matter, in my view, does not make the judgment irregular.

Breach of natural justice/lack of full and frank disclosure

The defendant raised a litany of complaints which it says amounted to either lack of full and frank disclosure or a breach of natural justice. It says that the plaintiff: did not inform the defendant that on 8 Jan 2019 it filed a request to enter default judgment, until after the judgment was accepted into the case file on 10 Jan 2019;² did not copy the defendant in its letter to court that set out the correspondence between parties and requesting that default judgment be entered;³ had attended before the duty registrar on 10 Jan 2019 without having informed the defendant or its solicitors of its intention to seek an audience;⁴ and had, in its letter to court and attendance before the duty registrar, failed to inform the court of the fact that the defendant had filed an application to extend the time allowed to file its defence.⁵

In my view, while these complaints raise a spectrum of concerns if they are true, none make the judgment irregular.

First, a plaintiff need not inform a defendant that it has filed a request to enter default judgment (whether or not either is represented). It is true that a solicitor must not enter default judgment against a represented party unless 2 working days have elapsed after he/she has notified that in writing of his/her intention to do so (Legal Profession (Professional Conduct) Rules 2015 (S 706/2015) (“LPPCR”), r 28(1)). However, this is a rule of professional conduct that applies to solicitors; it is...