Kraze Entertainment (S) Pte Ltd v Marina Bay Sands Pte Ltd

• Jurisdiction: Singapore
• Judgment Date: 08 October 2013
• Date: 08 October 2013
• Docket Number: Suit No 401 of 2013 (Summons No 2671 of 2013)
• Court: High Court (Singapore)

Kraze Entertainment (S) Pte Ltd

Plaintiff

and

Marina Bay Sands Pte Ltd

Defendant

[2013] SGHC 207

George Wei JC

Suit No 401 of 2013 (Summons No 2671 of 2013)

High Court

Abuse of Process—Whether plaintiff bringing second claim same as claim previously struck out amounted to abuse of process

Civil Procedure—Pleadings—Striking out—Plaintiff's claim same as previous claim that was struck out—Previous claim struck out for non-compliance of peremptory order—Whether plaintiff's claim should be struck out because claim same as previous claim that was struck out—Order 18 r 19 (6) Rules of Court (Cap 233, R 5, 2004 Rev Ed)

The plaintiff lessee was a company incorporated in Singapore and was part of a Korean-based group known as the Kraze Group of companies. In 2009, the plaintiff lessee and the defendant lessor entered into a lease whereby certain premises of the defendant lessor was leased to the plaintiff lessee specifically to be used for ‘a premium nightclub, bar and restaurant under an international nightclub brand name first approved in writing by the Landlord’. In early December 2009, it was agreed that the premises would only be used for a premium nightclub, bar and restaurant operating under the brand names ‘Avalon’ and ‘Pangaea’.

Sometime in 2011, the plaintiff lessee ran into problems with the owner of the rights in Avalon and Pangaea from whom it had secured a licence to use the brand names. As a result the plaintiff lessee encountered difficulties in meeting certain conditions in the lease agreement with the defendant lessor. After negotiations with the defendant lessor failed, the defendant lessor terminated the lease on the ground that the plaintiff lessee was in repudiatory breach.

The plaintiff lessee then commenced Suit No 410 of 2011 against the defendant on 7 June 2011 (‘the First Action’) for, inter alia, declarations that the plaintiff lessee was not in breach, that the defendant lessor was not entitled to terminate the lease and that the lease remained valid and legally binding. The plaintiff lessee also sought an order for specific performance and, in the alternative, damages for breach of the lease.

Before the First Action went to trial, the defendant lessor successfully applied by Summons No 5528 of 2012 for an order that the plaintiff lessee furnish security of costs in the sum of S$100,000 by 15 January 2013, failing which, the First Action would be struck out. The plaintiff lessee failed to meet this date. The plaintiff lessee then applied for an extension of time, but was unsuccessful. The plaintiff lessee took out an appeal against the decision refusing the extension of time (Registrar's Appeal 39 of 2013), but subsequently withdrew the appeal on 13 March 2013. As a result of this, the First Action was struck out.

On 2 May 2013, the plaintiff commenced Suit No 401 of 2013, which was in substance the same as the First Action (‘the Second Action’). The defendant lessor then took out the current application, Summons No 2671 of 2013, to strike out the plaintiff lessee's claim.

Held, granting the application and striking out the plaintiff's claim:

(1) The reasons why the plaintiff withdrew its appeal against the decision refusing the extension of time in the First Action was largely irrelevant at this stage of the proceedings. In any case, it was clear that neither the judge nor opposing counsel in the First Action had made any statement on the substantive merits of the plaintiff lessee starting a fresh action. The decision to withdraw the appeal was a matter for the plaintiff alone: at [30] .

(2) It was established law that where a litigant, whose first action had been struck out for failure to comply with a peremptory order, brought a second suit based on the same cause of action, that the second suit may be struck out as being an abuse of process of the court unless the litigant could give a proper explanation so as to establish that his failure to comply with the peremptory order in the first action was not contumelious: at [35] .

(3) Disobedience to a peremptory order would generally amount to contumelious conduct. In order to discharge the burden, the litigant would have to show that its disobedience to the ‘unless order’ was not contumelious ‘in that it was not intentional and arose from an extraneous circumstance over which the litigant had no control’. The mere fact that the contumelious conduct was that of the litigant's solicitor was not necessarily a sufficient explanation since ordinarily the court should not distinguish between the litigant and his advisers: at [36] .

(4) In deciding whether a satisfactory explanation had been provided the court in the second action should be mindful that the exercise of its discretion should not amount to a ‘back door’ appeal on the merits of the grant of the peremptory order that lead to the striking out of the first action: at [64] and [65] .

(5) There were degrees of contumelious behaviour. The more serious the breach, the more careful the court in the second action would be in deciding whether (a) a satisfactory explanation has been given for the non-compliance (breach); and (b) whether it should exercise its residual discretion not to strike out the second action: at [43] .

(6) The Court of Appeal's decision in Mitora Pte Ltd v Agritrade International (Pte) Ltd[2013] 3 SLR 1179 advocating a principle of proportionality in deciding the consequence of breach of a peremptory order was a relevant consideration. Even if the plaintiff failed to demonstrate that it was prevented from complying in the first action because of extraneous circumstances (over which he had no control), it did not mean that the court had to inevitably strike the second action out as being an abuse of process. The court retained a (residual) discretion not to strike out the second action even if the plaintiff was unable to provide a proper or full explanation for the failure to comply in the earlier action. For example, if the plaintiff was able to show that the failure to comply was due to a momentary act of carelessness and that immediate steps were taken in an attempt to rectify the breach, then even though he was unable to show that he had been prevented by extraneous circumstances from complying with the order in the first action, the court in the second action might exercise the residual discretion in the litigant's favour: at [44] to [52] , [54] , [55] and [71] .

(7) In the instant case, the plaintiff had apologised for the breach of the peremptory order, paid up all outstanding costs (for the First Action) and provided evidence that a shareholder had transferred a sum in excess of S$200,000 to the plaintiff thereby making it possible for the plaintiff to provide security for costs for the Second Action (if allowed to continue). However, the actual costs of the Second Action if allowed to proceed could be far in excess of S$200,000. The plaintiff's slow payment of the cost orders in the First Action including the final cost orders, its failure to file affidavits in support of their applications for extension of time to comply with peremptory order and its inability to provide a satisfactory explanation for non-compliance in the First Action was and remained a cause for concern: at [67] to [69] .

(8) The principal new factor asserted by the plaintiff was the involvement of a shareholder and the promise of injection of new or fresh funds and support, should the second action be allowed to continue. Based on this alone, the court was not convinced that the plaintiff would comply promptly with future court orders. Therefore, this was not an appropriate case where any residual discretion should be exercised in favour of the plaintiff. The First Action was accordingly struck out: at [69] and [72] .

Kraze Entertainment (S) Pte Ltd v Marina Bay Sands Pte Ltd [2013] SGHC 39 (refd)

Birkett v James [1978] AC 297 (refd)

Changhe International Investments Pte Ltd v Dexia BIL Asia Singapore Ltd [2005] 1 SLR (R) 598; [2005] 1 SLR 598, HC (refd)

Changhe International Investments Pte Ltd v Dexia BIL Asia Singapore Ltd [2005] 3 SLR (R) 344; [2005] 3 SLR 344, CA (folld)

Janov v Morris [1981] 1 WLR 1389 (refd)

Jokai Tea Holdings Ltd, Re [1992] 1 WLR 1196 (folld)

Mitora Pte Ltd v Agritrade International (Pte) Ltd [2013] 3 SLR 1179 (folld)

Samuels v Linzi Dresses Ltd [1981] QB 115 (refd)

Syed Mohamed Abdul Muthaliff v Arjan Bhisham Chotrani [1999] 1 SLR (R) 361; [1999] 1 SLR 750 (folld)

Tolley v Morris [1979] 1 WLR 592 (refd)

Rules of Court (Cap 322, R 5, 2006 Rev Ed) O 18 r 19 (1) , O 18 r 19 (6)

Tito Shane Isaac, Justin Chan and Ho Seng Giap (Tito Isaac & Co LLP) for theplaintiff

Davinder Singh SC, Pardeep Singh Khosa and Manbeer Singh Mangat (Drew & Napier LLC) for the defendant.

Judgment reserved.

George Wei JC

1 This case concerns an application to strike out the plaintiff's writ of summons and statement of claim in Suit No 401 of 2013 (‘the Second Action’) filed on 2 May 2013, under O 18 r 19 (1) of the Rules of Court (Cap 332, 2006 Rev Ed) (‘ROC’) and/or the court's inherent jurisdiction.

Background facts

2 The plaintiff is a company incorporated in Singapore and is part of a Korean-based group known as the Kraze Group of companies whose businesses are centred primarily on entertainment, food and beverage, information technology and investment. The statement of claim filed in the Second Action asserts that the plaintiff has a paid-up share capital of approximately S$10,711,788.00.

3 The substantive dispute between the plaintiff and the defendant arises out of a lease agreement for certain premises situated at #B 2-05, South Crystal Pavilion at the Marina Bay Sands Shoppes, Singapore. Under the terms of the lease (signed 18 November 2009), the defendant leased the premises to an associated company of the plaintiff called Krazetech (incorporated in the Republic of Korea) for a term of ten years...