Lee Bee Eng (formerly trading as AFCO East Development) v Cheng William

• Jurisdiction: Singapore
• Judge: Lee Seiu Kin J
• Judgment Date: 01 October 2020
• Neutral Citation: [2020] SGHC 207
• Court: High Court (Singapore)
• Docket Number: Suit No 437 of 2017 (Registrar’s Appeal Nos 82 and 363 of 2019)
• Year: 2020
• Published date: 07 October 2020
• Hearing Date: 08 October 2019,12 September 2019,08 April 2019,13 February 2020,25 November 2019
• Plaintiff Counsel: John Lim Kwang Meng, Sia Dewei, Alvin and Ng Kai Ling (LIMN Law Corporation)
• Defendant Counsel: Goh Wei Wei and Ling Jia Yu (WongPartnership LLP)
• Subject Matter: Civil Procedure,Parties,Joinder,Substitution,Rules of court,Striking out
• Citation: [2020] SGHC 207

Lee Seiu Kin J: Introduction

These appeals arise out of the decision of the assistant registrar (the “AR”) to add Ms Lee Bee Eng (“Ms Lee”) as a plaintiff to Suit No 437 of 2017 (“Suit 437/2017”) pursuant to O 15 r 4 of the Rules of Court (Cap 322, R 5, 2014 Rev Ed) (“O 15 r 4”), and to strike out the original plaintiff and its claims.

The matter had been adjourned a number of times, initially at the behest of the defendant for him to apply to be legally aided, then on the application of the plaintiff to file further evidence, and again at the defendant’s request on account of recently appointed solicitors. The hearing was finally completed on 25 November 2019 and I adjourned it to a later date to announce my decision. On 13 February 2020, I set aside the AR’s decision and ordered a substitution of the original plaintiff for Ms Lee pursuant to O 15 r 6 of the Rules of Court (Cap 322, R 5, 2014 Rev Ed) (“O 15 r 6”). In consequence, I dismissed Registrar’s Appeal No 82 of 2019 (“RA 82/2019”) and allowed Registrar’s Appeal No 363 of 2019 (“RA 363/2019”) in part.

Facts The parties

Ms Lee is a director of AFCO East Development Pte Ltd¹, a private limited company that undertakes general contracting work, and “other specialised construction and related activities”.² AFCO East Development Pte Ltd (“AFCO”) was the original plaintiff in Suit 437/2017.

The defendant is Mr William Cheng.

Background to the dispute

On 15 May 2006, the plaintiff registered a sole proprietorship with the Accounting and Regulatory Authority of Singapore under the name and style of “AFCO East Development” (the “Sole Proprietorship”).³

In early 2012, the defendant approached the Sole Proprietorship to replace a prior contractor who had been engaged to construct a single storey terrace house at 210 Yio Chu Kang Road (the “Project”). The Sole Proprietorship provided a quotation of $460,000 for the Project via a work order dated 23 April 2012⁴, which was accompanied by a form of quotation (“Form of Quotation”) setting out the contract period, the scope of works and a detailed breakdown of the tender price.⁵ On 24 April 2012, the defendant issued a letter of award (the “Letter of Award”) to the Sole Proprietorship⁶ and signed the Form of Quotation. On 6 May 2014, (i) AFCO was incorporated, (ii) the Sole Proprietor’s business was allegedly “transferred to AFCO”, and (iii) the Sole Proprietorship was terminated.⁷

Disputes subsequently arose between the parties. From 23 April 2012 to 31 October 2016, five progress payment invoices totalling the contract sum of $460,000 were issued to the defendant for works done for the Project.⁸ The defendant only paid $322,000 in satisfaction of the first three invoices and part of the fourth invoice.⁹ AFCO commenced Suit 437/2017 against the defendant on 12 May 2017, claiming the outstanding progress payments totalling $138,000 (“the Progress Payments”). It also claimed that the defendant had (i) failed to pay $193,280 for completed variation works (“the Variation Payments”); and (ii) wrongfully called on a performance bond provided by the Sole Proprietorship in the defendant’s favour.¹⁰

Procedural history Suit 437/2017

In his defence filed on 18 January 2018, the defendant’s main argument was that AFCO had no standing to bring the suit. The contract was between him and the Sole Proprietorship¹¹, not AFCO. This was evinced by the Letter of Award (which had been issued to the Sole Proprietorship¹²) and the Form of Quotation (which had been signed by the Sole Proprietorship’s project manager).

SUM 4037 & SUM 4360

The defendant then filed Summons No 4037 of 2018 (“SUM 4037/2018”) on 31 August 2018 to (i) strike out AFCO’s claims; and (ii) seek security for costs. In response, AFCO filed Summons No 4360 of 2018 (“SUM 4360/2018”) to have the Sole Proprietor added as a plaintiff to Suit 437/2017.

Both summonses were heard before the AR. On 13 December 2018, the AR made the following orders:¹³ that the Sole Proprietor be added as a plaintiff pursuant to O 15 r 4¹⁴; and that AFCO (as a plaintiff) and its claims against the defendant be struck out.

During a further hearing on 26 December 2018, the AR declined to grant the defendant’s application for security for costs.¹⁵ The AR determined that the pre-requisite conditions under O 23 r 1 of the Rules of Court (Cap 322, R 5, 2014 Rev Ed) (“Rules of Court”) had not been satisfied and that consequentially, there was no discretion to make such orders.

RA 82/2019

On 7 March 2019, the defendant commenced RA 82/2019, appealing against the AR’s decision to (i) add the Sole Proprietor as Ms Lee; and (ii) decline his application for security for costs. Ms Lee did not appeal against the AR’s decision.

RA 82/2019 was heard before me on 12 September, 8 October and 25 November 2019. On 12 September 2019, I dismissed the defendant’s appeal against the AR’s decision not to grant security for costs. I observed that such orders are usually made in situations involving foreign plaintiffs or companies. This was not such a case. Considering all the circumstances, there was no reason to order security for costs. The hearing on 8 October 2019 was adjourned upon the defendant’s application and resumed on 25 November 2019. For reasons that shall be explained later in this judgment at [21], Counsel for Ms Lee, Mr Sia Dewei, Alvin (“Mr Sia”), orally sought leave to file an appeal out of time against the AR’s decision, ie, to appeal against the AR’s decision to strike out AFCO and its claims. I granted such leave and RA 363/2019 was subsequently filed on 2 December 2019.

The defendant’s case Did the AR make any procedural errors in substituting AFCO for Ms Lee as the plaintiff in this suit?

Counsel for the defendant, Ms Goh Wei Wei (“Ms Goh”) raised two arguments.

Firstly, it was argued that O 15 r 4 was not the proper provision for adding the Sole Proprietor as a plaintiff. The effective outcome of the AR’s decision – to strike out AFCO’s claims and add the Sole Proprietor – was a substitution of plaintiffs. This should have been more appropriately pursued under O 15 r 6 which was a provision created to effect such corrective action. O 15 r 4, on the other hand, was meant to consolidate plaintiffs. Here, AFCO was hardly a plaintiff with proper standing, much less one that could expect to be consolidated pursuant to O 15 r 4.

Secondly, Ms Goh argued that the AR did not have the power to add the Sole Proprietor under O 15 r 6 as proceedings had already concluded. Citing the Court of Appeal in Ernest Ferdinand Perez De La Sala v Compania De Navegación Palomar, SA and others and other appeals [2018] 1 SLR 894 (“Ernest Ferdinand”), she argued that the power to order joinders only exists when there remains something to be done in the matter. It followed that since AFCO and its claims had been struck out, there was nothing more to be done in the matter. Accordingly, the AR’s power of joinder no longer existed.

Should the AR have exercised its discretion to substitute AFCO for Ms Lee as the plaintiff in this suit?

Ms Goh submitted that a court should not exercise its power of joinder where the pleaded case is plainly unsustainable (Alliance Entertainment Singapore Pte Ltd v Sim Kay Teck and another [2007] 2 SLR(R) 869 (“Alliance Entertainment”)). Ms Goh argued that AFCO/Ms Lee’s case was plainly unsustainable since Ms Lee was not entitled to the Progress Payments in the first place. Ms Lee’s entitlement to the Progress Payments was subject to a qualified person first evaluating and certifying the work done¹⁶. Having never obtained such a certification, Ms Lee could not have been entitled to the Progress Payments.

Similarly, Ms Lee was not entitled to the Variation Payments. The defendant contended that there were neither directions from him to carry out such works nor was there an agreement that the defendant would make additional payment for the same. In support of his contention, the defendant referred to (i) the last page of the Form of Quotation (which states, “price is lump sum @ $460k — any variation would be lower and not higher than the said sum of $460k”)¹⁷ and (ii) AFCO/Ms Lee’s failure to produce any invoices for variation works¹⁸. Collectively these suggested that Ms Lee had no basis to claim for the Variation Payments and that her pleaded case was therefore unsustainable. Accordingly, the Court should not exercise its power of joinder.

Were Ms Lee’s claims time-barred?

With regard to Ms Lee’s claims for the Progress Payments, the defendant submitted that the cause of action accrued when the contractual relationship was created, ie, 24 April 2012, when the Letter of Award was signed. SUM 4360/2018 was subsequently commenced on 20 September 2018 — more than six years after the accrual of the cause of action. It followed that Ms Lee was barred from bringing any action by virtue of s 6(1)(a) of the Limitation Act (Cap 163, 1996 Rev Ed) (“Limitation Act”).

The plaintiff’s case Did the AR make any procedural errors in substituting AFCO for Ms Lee as the plaintiff in this suit?

As a preliminary point, Mr Sia did not dispute that the defendant’s contract had been with the Sole Proprietorship rather than AFCO.

Mr Sia advanced two arguments. Firstly, he contended that Ms Goh’s arguments about the applicability of O 15 r 6 (as opposed to O 15 r 4) were excessively technical. Secondly, he submitted that the AR’s power of joinder still subsisted since the AR made the order for the Sole Proprietor to be added as a plaintiff before he struck out AFCO and its claims.¹⁹ This meant that the proceedings had not yet concluded in the manner as described by the Court in Ernest Ferdinand ([16] supra). At my invitation, Mr Sia made an application to appeal the AR’s decision out of time, affording me the discretion to reverse the striking out and to order a substitution pursuant to O 15 r 6. With my leave, Mr Sia did...