LaserResearch (S) Pte Ltd v Internech Systems Pte Ltd

• Jurisdiction: Singapore
• Court: High Court (Singapore)
• Judge: Belinda Ang Saw Ean J
• Judgment Date: 24 September 2010
• Neutral Citation: [2010] SGHC 285
• Citation: [2010] SGHC 285
• Hearing Date: 16 August 2010,09 July 2010
• Published date: 05 October 2010
• Year: 2010
• Date: 24 September 2010
• Docket Number: Originating Summons Nos 495 and 746 of 2010
• Subject Matter: Civil Procedure
• Plaintiff Counsel: Terence Tan (Rodyk & Davidson LLP)
• Defendant Counsel: Ng Yeow Khoon and Sim Mei Ling (KhattarWong),Terence Tan (Rodyk & Davidson LLP)

Belinda Ang Saw Ean J: Introduction and background facts

In January 2008, Internech Systems Pte Ltd (“Internech”) commenced an action against LaserResearch (S) Pte Ltd (“LaserResearch”) for the sum of $81,451.15 in unpaid invoices (“the DC Suit”). LaserResearch admitted 14 out of the 25 invoices Internech’s claim was based on, and the former duly made payment after the Writ of Summons was issued in the District Court (ie, the DC Suit). It disputed the remaining 11 invoices, which totalled $62,142.94, on the basis that the goods under those documents were not delivered to it or to persons who had authority to accept the goods on its behalf. Internech applied for summary judgment for the balance of its claim on the 11 invoices.

At the hearing of the application for summary judgment, the Deputy Registrar entered judgment on four of the invoices, totalling $1,260.31 and granted LaserResearch leave to defend the claim against the remaining seven invoices, totalling $60,884.63, on the condition that it furnished a banker’s guarantee in Internech’s favour. Internech’s appeal against the Deputy Registrar’s conditional order was dismissed.

LaserResearch duly put its bank in funds and secured the required banker’s guarantee on 28 August 2008. On 24 April 2009, Internech filed an Affidavit Verifying List of Documents. No further formal steps in the proceedings were taken in the DC Suit after that. The parties’ lawyers continued to communicate, however, in the search for a settlement. The date of the last correspondence between the parties’ lawyers on the matter was 4 May 2009.

On 15 May 2009, LaserResearch went into provisional liquidation and a provisional liquidator was appointed on 15 May 2009 by way of directors’ resolution and accompanying statutory declaration of the company’s inability to continue with the company’s business. Both documents were duly filed with the Accounting and Corporate Regulatory Authority. In the normal course of events, Internech received a letter dated 18 May 2009 giving it notice that a creditors’ meeting was to be convened on 12 June 2009. While at that time it had been in the midst of preparing affidavits of evidence-in-chief of their witnesses for the trial, its solicitors advised that the DC Suit had been stayed as a result of the winding up and that the company could not proceed with the DC Suit except by leave of court. Rather than seek leave of court to continue with the proceedings, Internech instead filed proof of debt against LaserResearch on 1 June 2009. On 12 June 2009, at the creditors’ meeting, a liquidator was appointed. It is common ground that commencement date of the creditors’ voluntary winding up of LaserResearch was 15 May 2009.

On 5 February 2010, LaserResearch’s solicitors wrote to Internech requesting that the banker’s guarantee be returned together with a written confirmation that the former could proceed to effect cancellation of the banker’s guarantee in view of its liquidation. In the same letter, LaserResearch’s solicitors drew attention to Internech’s inaction in DC Suit since May 2009. Internech was also informed that an application would be taken out should the request not be acceded to by 5.00 pm on 18 February 2010. No reply was received by that deadline and the liquidator, accordingly, commenced the present application (viz Originating Summons No 495 of 2010 (“OS 495”)) for, inter alia, an order to cancel the banker’s guarantee on the ground that DC Suit was deemed discontinued under O 21 r 2(6) of the Rules of Court (Cap 322, R 5, 2006 Rev Ed) (“ROC”). It is common ground that more than one year had lapsed since the last step in the proceedings on 24 April 2009 (“the trigger date”). OS 495 was filed more than one year after the trigger date.

Issue

The facts are undisputed, and for the purpose of OS 495, the narrow issue before me was simply whether time continued to run under O 21 r 2(6) of the ROC even though the proceedings had already been stayed by virtue of s 299(2) of the Companies Act (Cap 50, 2006 Rev Ed) on 15 May 2009. This issue turns on the interpretation of, and inter-relationship between a statutory stay of proceedings pursuant to s 299(2) of the Companies Act and the strict language of O 21 r 2(6A) which refers only to stay of proceedings pursuant to an order of court.

Discussion and conclusions on the issue

The relevant parts of O 21 r 2 read as follows: (6) Subject to paragraph 6(a), if no party to an action or cause or matter has, for more than one year (or such extended period as the Court may allow under paragraph (6B)), taken any step or proceeding in the action, cause or matter that appears from records maintained by the Court, the action, cause or matter is deemed to have been discontinued. (6A) Paragraph 6 shall not apply where the action, cause or matter has been stayed pursuant to an order of court. (6B) The Court may, on an application by any party made before the one year referred to in paragraph (6) has elapsed, extend the time to such extent as it may think fit.

[emphasis added]

It is also convenient to now set out the text of s 299(2) of the Companies Act pertaining to creditors’ voluntary winding up:

(2) After the commencement of the winding up no action or proceeding shall be proceeded with or commenced against the company except by leave of the Court and subject to such terms as the Court imposes.

Before me, opposing arguments were canvassed on the inter-relation of the two provisions above. Internech, who was represented by Mr Ng Yeow Khoon (“Mr Ng”), pointed out that since DC Suit was already stayed under s 299(2) of the Companies Act, O 21 r 2(6) did not apply. Mr Ng submitted that the purpose of the deeming provision is to catch tardy litigants, not actions that are automatically stayed by legislation like, for example, s 299(2) of the Companies Act. In contrast, counsel for LaserReasearch, Mr Terence Tan (“Mr Tan”) asserted that even though the DC Suit was stayed by virtue of s 299(2), time continued to run under O 21 r 2(6) as the statutory stay was not “pursuant to an order of court” as prescribed by O 21 r 2(6A). In effect, Mr Tan contended that the proper procedure Internech ought to have adopted was to first seek leave of court to lift the statutory stay on the DC Suit, and to follow thereafter with an application for an order of court to stay the same DC Suit under O 21 r 2(6A) (hereafter referred to as “the suggested procedural steps”). The suggested procedural steps would have to be taken before the guillotine date as time continued to run O 21 r 2(6). Mr Tan also suggested another way to avoid the guillotine date by extending the 12-month period under O 21 r 2(6B). Again there is a need to first lift the stay under s 299(2) before resorting to O 21 r 2(6B).

Section 19(c) of the Interpretation Act (Cap 1, 2002 Rev Ed), which Mr Ng directed my attention to, provides that “no subsidiary legislation made under an Act shall be inconsistent with the provisions of...