Lum Ooi Lin v Hyflux Ltd (in compulsory liquidation) and others

• Jurisdiction: Singapore
• Judge: Sundaresh Menon CJ
• Judgment Date: 30 November 2023
• Neutral Citation: [2023] SGCA 43
• Hearing Date: 25 July 2023
• Docket Number: Civil Appeal No 30 of 2023
• Citation: [2023] SGCA 43
• Court: Court of Appeal (Singapore)
• Year: 2023
• Published date: 30 November 2023

[LawNet Admin Note: The following judgment is displayed as received from source]

Belinda Ang Saw Ean JCA (delivering the judgment of the court): Introduction

This appeal, CA/CA 30/2023 (“CA 30”), is against a recent decision of the General Division of the High Court in HC/RA 42/2023 (“RA 42”) filed in HC/S 267/2022 (“Suit 267”) ordering security for costs (“SFC”) in the manner and form of a joint undertaking furnished by the respondents’ litigation funder’s parent company and a Singapore-incorporated subsidiary of that parent company. The decision in RA 42 highlights and reinforces the wide discretion of the court as to the infinite forms of SFC that the court may accept and order.

In AD/OA 33/2023 (“OA 33”), the Appellate Division of the High Court (the “Appellate Division”) granted permission to appeal against the decision in RA 42 and crafted two questions of law for consideration in the appeal. The two questions of law pertain to the nature of the principles governing the exercise of the court’s discretion to accept and order the form of SFC offered by a party. A preliminary issue in the present appeal is the scope of the Appellate Division’s order in OA 33 granting permission to appeal. The respondents argue that the permission to appeal is confined to the two legal questions posed by the Appellate Division whereas the appellant adopts the position that the scope of the permission to appeal is wider and allows for an assessment of the merits of the High Court judge’s (the “Judge”) decision.

Background facts

The appellant is Ms Lum Ooi Lin (“Ms Lum”). The respondents in this appeal are three companies – Hyflux Ltd, Hydrochem (S) Pte Ltd and Tuaspring Pte Ltd – and the joint and several liquidators of Hyflux Ltd and Hydrochem (S) Pte Ltd, Mr Cosimo Borrelli and Mr Patrick Bance.

The respondents are the five remaining plaintiffs in Suit 267 following the withdrawal of 33 other parties from the proceedings in 2022. The respondents’ litigation funder in Suit 267 is a company incorporated in the Cayman Islands, Omni Bridgeway (Fund 5) Cayman Invt Ltd (the “Omni Funder”). Ms Lum sought security for her costs in Suit 267 for the period until the filing and/or exchange of affidavits of evidence-in-chief (“AEICs”) in the sum of $90,000. The respondents were agreeable to furnishing SFC in the sum of $90,000. However, the parties could not agree on the form of security to be provided by the respondents. The parties duly appeared before Senior Assistant Registrar Cornie Ng (“SAR Ng”) for a decision on the matter.

On 14 February 2023, SAR Ng made the following orders:

1. The [respondents] do within fourteen (14) days from the date of the Order to be made herein furnish security in the sum of S$90,000 for [Ms Lum’s] costs for the period until the filing and/or exchange of affidavits of evidence-in-chief;

2. The said security for costs be by way of the provision of a costs undertaking jointly by Omni Bridgeway Limited and Omni Bridgeway (Singapore) Pte. Limited on terms satisfactory to [Ms Lum] (the “Costs Undertaking”), if not, a banker’s guarantee on terms satisfactory to [Ms Lum], and if not, a solicitor’s undertaking from the [respondents’] lawyers on terms satisfactory to [Ms Lum]. If the parties cannot agree on the terms of the Costs Undertaking, banker’s guarantee or solicitor’s undertaking, then the said security shall be provided by the [respondents] by way of a payment into Court;

3. Pending the [respondents’] provision of the said security, and from 20 February 2023, all further proceedings in this action, other than the giving of such security, be stayed; and

4. [Ms Lum] be at liberty to apply for further and/or subsequent security from the [respondents] in relation to the action.

By SAR Ng’s order (ie, HC/ORC 784/2023), the respondents would have to make payment into court of the agreed quantum of security if the parties could not come to an agreement on any one of the other forms of security mentioned in SAR Ng’s order. Unfortunately, the parties could not agree on an appropriate arrangement. The respondents maintained that an undertaking from two companies (the “Omni Undertaking”) would be a satisfactory security arrangement. The first company was Omni Bridgeway Limited, the parent of the Omni Funder and a company listed on the Australian Securities Exchange. The second was Omni Bridgeway (Singapore) Pte Ltd, Omni Bridgeway Limited’s Singapore-incorporated subsidiary (collectively, the “Omni Related Companies”). On 28 February 2023, the respondents appealed against SAR Ng’s order by way of RA 42. The Judge allowed the appeal. He accepted the Omni Undertaking as an adequate form of security and ordered that the respondents furnish security for Ms Lum’s costs for the period until the filing and/or exchange of AEICs by way of the Omni Undertaking (see Hyflux Ltd (in compulsory liquidation) and others v Lum Ooi Lin [2023] SGHC 113 (“RA 42 Judgment”) at [49]–[50]).

OA 33 was Ms Lum’s application for permission to appeal against the order made in RA 42. The Appellate Division allowed OA 33 on 26 June 2023 on the grounds that there were questions of general principle to be decided for the first time, which were also questions of importance upon which further argument and a decision of a higher tribunal would be to the public advantage. These questions (the “PTA Questions”) are: What are the applicable principles in the determination of the appropriate form of SFC? In particular, should those principles be as stated by Hargrave J in DIF III Global Co-Investment Fund, L.P. & Anor v BBLP LLC & Ors [2016] VSC 401 (“DIF III”)?

On 28 June 2023, Ms Lum filed an appeal against the whole of the decision in RA 42 in AD/CA 64/2023 (“AD 64”). On 25 August 2023, AD 64 was transferred to the Court of Appeal on the Court of Appeal’s own motion pursuant to s 29D(1)(a) read with s 29D(2)(a) of the Supreme Court of Judicature Act 1969 (2020 Rev Ed) (“SCJA 1969”). AD 64 was renumbered as CA 30.

Ms Lum is represented by Davinder Singh Chambers LLC (“DSC”) while the respondents are represented by Tan Kok Quan Partnership (“TKQP”).

The decision below

The Judge considered the powers of the court under O 23 of the Rules of Court (Cap 322, 2014 Rev Ed) (“ROC 2014”). After noting the wide discretion afforded to the court under O 23 r 2 of the ROC 2014 to order security in any form that it deems fit, the Judge then turned to consider the principles that govern the court’s exercise of discretion when determining the adequacy of the form of security that is offered. The Judge adopted as a matter of Singapore law the principles enunciated by Hargrave J in DIF III for the determination of the form of SFC, namely that (RA 42 Judgment at [11]–[12]): the plaintiff is entitled to propose security in a form least disadvantageous to it; the plaintiff bears a “practical onus” of establishing that the proposed security is adequate and does not impose an “unacceptable disadvantage” on the defendant; in order to be adequate, the proposed security must satisfy the protective object of a SFC order, namely, to provide a fund or asset against which a successful defendant can readily enforce an order for costs against the plaintiff; and based on these and any other relevant considerations, the Court will determine how justice is best served in the particular circumstances of the case.

For simplicity, the Judge synthesised the four principles into two principles to adopt as the legal framework governing the court’s exercise of discretion when determining the adequacy of the form of security that is offered. We refer to the synthesised principles as the “Mode Principles”. They are (RA 42 Judgment at [12]): the plaintiff is not restricted to any fixed form of SFC (the “first Mode Principle”); and the plaintiff bears the burden of showing that the proposed form of security is “adequate”, ie, whether it provides a fund or asset against which a successful defendant can readily enforce an order for costs against the plaintiff (the “second Mode Principle”).

The Judge then went on to apply the Mode Principles to the facts of the case. In light of the first Mode Principle that there is no limitation on the form of security that the court may order, the respondents were free to propose the Omni Undertaking as a form of security (RA 42 Judgment at [39]). With respect to the second Mode Principle, the Judge was satisfied (at [40]–[49]) that the Omni Undertaking was adequate as it provided a fund or asset against which Ms Lum could readily enforce an order for costs if necessary. The Judge gave five reasons for accepting the Omni Undertaking as an adequate form of security: First, the Omni Undertaking was an irrevocable and unconditional promise to pay Ms Lum the amount of any costs order (up to $90,000) in her favour, and hence was akin to a bank guarantee. Second, the Judge was satisfied that the Omni Related Companies had sufficient assets to satisfy a costs order of up to $90,000, as the quantum of security sought was not too high and was a small fraction of their assets. Third, there was little to no risk of the Omni Related Companies not honouring the Omni Undertaking due to the substantial reputational damage they would suffer in not doing so. Fourth, Ms Lum would be able to enforce the Omni Undertaking easily, as she would have immediate recourse against Omni Bridgeway (Singapore) Pte Ltd which is based in Singapore. Even if she had to bring proceedings against Omni Bridgeway Limited in Australia, Singapore judgments can be enforced in Australia with relative ease and the Omni Undertaking provided that Omni Bridgeway Limited would not seek to set aside any Australian court judgment or seek security for costs in any proceedings by Ms Lum to enforce the Omni Undertaking there. Finally, the Omni Undertaking also required the Omni Related Companies to notify Ms Lum if the...