Lee Ngiap Pheng Tony v Cheong Ming Kiat (Zhang Minjie) (trading as Autohomme Automobiles)

• Jurisdiction: Singapore
• Judge: Tay Yong Kwang J
• Judgment Date: 03 August 2010
• Neutral Citation: [2010] SGHC 216
• Plaintiff Counsel: Claire Nazar (Kalpanath & Company)
• Docket Number: DC Suit No 501 of 2002; RAS51 of 2010
• Date: 03 August 2010
• Hearing Date: 12 May 2010
• Subject Matter: Civil procedure
• Year: 2010
• Citation: [2010] SGHC 216
• Defendant Counsel: Parwani (Parwani & Company)
• Court: High Court (Singapore)
• Published date: 16 August 2010

Tay Yong Kwang J: Introduction

The Defendant, Cheong Ming Kiat (Zhang Minjie) t/a Autohomme Automobiles, applied by way of Summons 21202/2009 (“the Summons”) to set aside a judgment entered against him by the Plaintiff, Tony Lee Ngiap Pheng, after a hearing some seven years ago on 30 January 2003. The Defendant also sought to have the action restored for trial. District Judge Leslie Chew (the “DJ”) dismissed the Defendant’s application and awarded the Plaintiff costs of $2,000 (inclusive of disbursements). The Defendant appealed to the High Court against the DJ’s decision. I dismissed the appeal with costs.

Background

In February 2001, the Defendant set up a sole-proprietorship which dealt with the purchase and sale of second hand cars (“the business”). The Plaintiff approached the Defendant and suggested that they enter into a partnership. The Defendant agreed and the Plaintiff was made an equal partner in April 2001.

In the middle of 2001, the Plaintiff was arrested on a drug related charge. As a result, his name had to be removed from the partnership to prevent the licence granted to the business from being revoked.

According to the Defendant, the attack on the World Trade Centre in New York in September 2001 affected the business adversely. Matters were compounded when the Plaintiff had to serve time in prison. It was therefore agreed that the Plaintiff would cease to be a partner of the business as from 1 November 2001. However, the terms for the parting of ways were disputed.

The Plaintiff contended that despite the depressed market condition, the Defendant agreed to repay him the amount that he had put into the business with interest at 6.5% per annum. Thus, he asserted that he was entitled to a total of $133,482.02. In addition, the Plaintiff claimed that the Defendant had made unauthorized withdrawals from the partnership assets amounting to $215,170.53 over a period of seven months from 1 April 2001 to 30 October 2001. Accordingly, the Plaintiff argued that he was entitled to half this amount which is $107,585.26. The Plaintiff therefore claimed the sum of $241,067.28 (comprising $133,482.02 and $107,585.26) (“the sum”) from the Defendant. As the Defendant refused to pay the sum to the Plaintiff, the Plaintiff commenced this action on 2 February 2002.

The Defendant’s version of events was totally different. According to him, due to bad market conditions, the Plaintiff and he agreed to end the partnership on the basis that the Plaintiff would forgo his capital investment of slightly over $100,000.

At the commencement of the trial on 30 January 2003 in a district court, the Defendant did not turn up but his counsel (not the present solicitors) was present. His counsel informed the court that he had no instructions to defend the case but was still on record as counsel for the Defendant. He did not ask the Plaintiff and his three witnesses any questions during cross-examination. The Defendant’s counsel also offered no witness and no submissions at the conclusion of the Plaintiff’s case. On the same day, the Plaintiff obtained judgment against the Defendant for the sum with interest at 6% per annum from 5 February 2000 to the date of judgment. The court also awarded costs of $13,000 plus reasonable disbursements to the Plaintiff (“the 2003 judgment”).

The Plaintiff did not attempt to enforce the 2003 judgment. This was apparently because the Defendant was then in a poor financial state. When the Defendant’s financial situation improved markedly over the years, the Plaintiff took action in 2009 to execute the 2003 judgment. In response, the Defendant filed the Summons to set aside the 2003 judgment.

On 25 March 2010, the Summons was heard. As mentioned above, the DJ dismissed the Defendant’s application.

On 1 April 2010, the Defendant filed notice of appeal against the DJ’s decision and the appeal came up before me for hearing.

The DJ’s decision

The DJ held that the action had not been decided on its merits. He took the view that the 2003 judgment was given pursuant to O 35 of the Rules of Court (Cap 322, R 5, 2006 Rev Ed)(“the Rules”). However, he noted that by virtue of O 35 r 2(2) of the Rules, an application to set aside the judgment must be made within 14 days. In this case, the application to set aside the 2003 judgment was made on 17 December 2009, almost seven years after the 2003 judgment.

The DJ stressed that the court’s predominant concerns in setting aside a judgment entered in default under O 35 of the Rules were the reasons for the defendant’s absence from the trial and his delay in applying to set the judgment aside rather than the merits of the case. The factors that he took into account included the issue of prejudice to the other party and the prospects of success on the part of the Defendant if a retrial was ordered. The DJ found that the Defendant had no good and valid reasons to explain his absence from the trial in 2003 and his long inaction in not applying to set aside the 2003 judgment. He therefore dismissed the Defendant’s application to set aside the 2003 judgment.

The appeal

Order 35 r 1(2) of the Rules provides: If, when the trial of an action is called on, one party does not appear, the Judge may proceed with the trial of the action or any counterclaim in the absence of that party, or may without trial give judgment or dismiss the action, or make any other order as he thinks fit. O 35 r 2 goes on to state that: (1) Any judgment or order made under Rule 1 may be set aside by the Court on the application of any party on such terms as the Court thinks just. (2) Unless the Court otherwise orders, an application under this Rule must be made within 14 days after the date of the judgment or order. The words “Unless the Court otherwise orders” in O 35 r 2(2) were inserted on 1 January 2010. The Summons here was taken out in December 2009 but nothing turns on this as the said words were inserted for clarification rather than to change the procedure under this rule.

The Defendant contended that the 2003 judgment had not been obtained on the merits of the case as he was not present at the trial and his counsel did not take part in the proceedings. He asserted that this was clear from the Notes of Evidence (“NE”) of the hearing which indicated that his counsel did not cross-examine the Plaintiff and his witnesses, who merely appeared in the witness box to confirm the truth of the contents of their affidavits of evidence in chief (“AEIC”).

In contrast, the Plaintiff, who pointed out that the...