Meyer Erwin v Lerner Brian and Others

• Jurisdiction: Singapore
• Judge: Woo Bih Li J
• Judgment Date: 15 September 2006
• Neutral Citation: [2006] SGHC 163
• Plaintiff Counsel: Abraham Vergis (Drew & Napier LLC)
• Published date: 18 September 2006
• Court: High Court (Singapore)
• Defendant Counsel: Kevin Kwek (Legal Solutions LLC)
• Subject Matter: Civil Procedure,Rules of court,First to third defendants obtaining additional security for costs and appealing for a higher sum,Plaintiff cross-appealing for additional security to be discharged,Discretion of court,O 23 r 1(1)(a) Rules of Court (Cap 322, R 5, 2006 Rev Ed)

15 September 2006

Woo Bih Li J:

Background

1 The case of the plaintiff, Erwin Meyer (“Meyer”), was that he had in the past agreed with the first defendant, Brian Lerner (“Lerner”), and the second defendant, Anna Leong (“Leong”), to sell antiques in Singapore. Lerner and Leong are husband and wife. The antiques would be supplied by Meyer while Lerner and Leong would operate the business in Singapore.

2 The third defendant, Sanjaya Antiquities Gallery Pte Ltd (“Sanjaya Antiques”), was incorporated on or about 9 May 2000 with a paid-up capital of $50,000 held in the following percentages:

Meyer – 50%

Lerner – 25%

Leong – 25%

3 In or around May 2000, Meyer agreed with Lerner and Leong to supply Sanjaya Antiques with antiques on a consignment basis. Meyer asserted that the terms of the consignment agreement were as follows:

(a) Title in each antique would remain with him until it was sold by Sanjaya Antiques.

(b) When a piece was sold, Sanjaya Antiques would pay him his cost price and his expenses for importing the piece into Singapore.

(c) Thereafter, the balance would be used to pay the overheads of Sanjaya Antiques including but not limited to salaries and rental.

(d) The net profit would be divided among him, Lerner and Leong according to their shareholdings in Sanjaya Antiques.

Lerner and Leong asserted, inter alia, that the fourth defendant, Sjenny Zahara Kremer (“Sjenny”), who was the wife of Meyer at that time, was also a party to the agreement to sell antiques in Singapore and the consignment agreement. They said they were informed by Meyer and Sjenny that the antiques were jointly owned by them. As for Meyer’s 50% shareholding in Sanjaya Antiques, it was agreed amongst the four of them that Sjenny was beneficially entitled to half of Meyer’s shareholding. They also did not accept the terms of the consignment agreement as asserted by Meyer to be correct. I will say more about this later.

4 The antiques which were sent by Meyer to Singapore were stored at a facility of Helu-Trans (S) Pte Ltd (“Helu-Trans”). Lerner and Leong would select the pieces to be sent to Sanjaya Antique’s premises in Raffles Hotel (“the gallery”). The items delivered to the gallery would be recorded in a pick-up/collection receipt of Helu-Trans. Likewise, when items were to be returned, Helu-Trans would be contacted to come and collect the same and again the items to be collected would be recorded in such a receipt.

5 According to Lerner and Leong, the descriptions in such receipts were general in nature. Furthermore, Sanjaya Antiques did not maintain its own record of pieces being delivered to or collected from its premises.

6 Subsequently, Meyer gave written notice on or about 18 February 2003 to the effect that he would no longer allow his antiques to be sold. In the meantime, Sanjaya Antiques was in arrears with its rent. Accordingly the landlord’s solicitors commenced action in District Court Suit No 844 of 2003 against Sanjaya Antiques for unpaid rent and obtained judgment in default of appearance on or around 23 March 2003. On or about 4 April 2003, the landlord obtained a writ of seizure and sale, and executed the seizure on pieces which were still at the gallery. Sjenny claimed that the seized pieces belonged to her and under an order of court on or about 27 October 2003, these pieces were released to her.

7 Meyer was seeking an account of the antiques which were supplied to Sanjaya Antiques from May 2000 to January 2003 and delivery up thereof or damages for conversion. As regards those antiques which were released to Sjenny, Meyer was also seeking an account of the same and delivery up of the same or damages for conversion on the ground that Lerner and Leong had conspired with Sjenny to convert those antiques. I should mention that para 19 of Meyer’s affidavit filed on 7 March 2006 states that he was also claiming an account of the business of Sanjaya Antiques and an account of the net profits on the sale of his pieces. This claim for an account of the business and net profits of Sanjaya Antiques may not have been properly pleaded as para 16(i) of the amended statement of claim simply claims “an account of the Converted Antiques that were supplied … and delivery up or damages for conversion”. In any event, this claim was not material for the appeals before me.

8 The first to third defendants did not accept that they were under a duty or liability to account. As regards the terms of the consignment agreement, they asserted that once an antique was sold, the sale proceeds were to be applied as follows:

(a) first, all operating expenses would be paid;

(b) thereafter, Meyer would be paid the cost of the piece sold which the first to third defendants referred to as the “In Price” together with payment of $10,000 to Lerner and Leong being start-up costs paid by them; and

(c) the balance would be divided between Meyer, Lerner and Leong according to the shareholdings in Sanjaya Antiques, with Sjenny’s share being paid through Meyer.

9 The first to third defendants also claimed that they had learned from Sjenny that Meyer had inflated or misrepresented the “In Prices” which induced them into paying higher “In Prices” than what he would have been entitled to. Accordingly they were claiming US$93,981, being the loss and damage arising from the inflated pricing or misrepresentation, or damages to be assessed.

10 The first to third defendants obtained an order dated 24 August 2005 that Meyer provide $20,000 as security for their costs up to the discovery stage on the basis that he was not ordinarily resident within Singapore, as he was residing in Yogyakarta, Indonesia and had no assets in Singapore. Meyer is a Dutch citizen. This security was provided by way of a banker’s guarantee on 13 September 2005.

11 Discovery was then completed and at a pre-trial conference on 6 January 2006, the parties, ie, Meyer and the first to third defendants, were ordered to exchange their affidavits of evidence-in-chief by 24 February 2006.

12 On 22 February 2006, the first to third defendants applied for an order that Meyer furnish an additional $80,000 as security for their costs up to the end of trial. The application was heard by an assistant registrar on 31 March 2006 who ordered Meyer to furnish an additional $20,000 as such security. Being dissatisfied, the first to third defendants appealed against this order as they wanted the additional security to be for a sum larger than $20,000. Meyer cross-appealed as he did not want to furnish the additional $20,000.

13 I should also mention that in the meantime, Meyer had also applied to have the earlier order for the first $20,000 security to be varied or discharged. This was also heard on 31 March 2006 by the same assistant registrar. Meyer’s application was dismissed. There is no appeal from this decision.

14 I heard the two appeals on 28 July 2006. I dismissed the appeal of the first to third defendants and allowed Meyer’s appeal. In other words, as a result of my decision, Meyer need not have to furnish the additional $20,000 as further security. The first to third defendants have appealed to the Court of Appeal against my decision.

The court’s reasons

15 Order 23 r 1(1)(a) of the Rules of Court (Cap 322, R 5, 2006 Rev Ed) states:

Where, on the application of a defendant to an action or other proceeding in the Court, it appears to the Court —

(a) that the plaintiff is ordinarily resident out of the jurisdiction;

…

then, if, having regard to all the circumstances of the case, the Court thinks it just to do so, it may order the plaintiff to give such security for the defendant’s costs of the action or other proceeding as it thinks just.

16 In Pandian Marimuthu v Guan Leong Construction Pte Ltd [2001] 3 SLR 400 at [12], G P Selvam J stated the principles which govern the exercise of the power to order security as follows:

(1) Security will not be ordered based on the mere fact that the plaintiff is a foreigner with no address or assets within the jurisdiction. The applicant must establish that in all the circumstances of the case it would be just to grant the application.

(2) In considering the application, the court should be mindful of the underlying principle on which security is ordered — that is, the plaintiff should not be permitted to litigate on an unlikely claim and leave the defendant with a paper judgment for costs. This means that there must be an appreciable degree of certainty that there will [be] a judgment for costs in favour of the defendant. Otherwise the order for security will be purposeless and will defeat the ends of essential justice when the plaintiff is disabled or unable to secure the security.

(3) The court should be circumspect to ensure that the defendant’s purpose of seeking security for costs is not to quell the plaintiff’s quest for justice.

(4) Ultimately the court should, on a broad view, weigh the merits of the claim and defence and decide whether it would be just to order security.

17 In Jurong Town Corp v Wishing Star Ltd [2004] 2 SLR 427 at [14], Chao Hick Tin JA (as he then was) said:

It is settled law that it is not an...