Nanyang Law LLC v Alphomega Research Group Ltd

• Jurisdiction: Singapore
• Judge: Andrew Ang J
• Judgment Date: 30 April 2010
• Neutral Citation: [2010] SGHC 133
• Date: 30 April 2010
• Docket Number: Suit No 540 of 2009 (Registrar’s Appeal No 67 of 2010)
• Published date: 25 August 2010
• Plaintiff Counsel: Philip Jeyaretnam SC and Ng Hui Min (Rodyk & Davidson LLP)
• Hearing Date: 25 March 2010,09 March 2010
• Defendant Counsel: Adrian Tan and Robert Raj Joseph (Drew & Napier LLC)
• Court: High Court (Singapore)
• Subject Matter: Statutory Interpretation,Civil Procedure,Companies

Andrew Ang J: Introduction

This is an appeal by Alphomega Research Group (“Alphomega”) against the decision of the learned assistant registrar (“AR”) who declined to set aside a default judgment dated 7 July 2009 (“the Default Judgment”), which was granted in favour of Nanyang Law LLC (“Nanyang”), as well as two orders of court with respect to execution (“the Orders”) and a writ of seizure and sale (“the WSS”). After much consideration, I decided to allow Alphomega’s appeal. I now give my reasons for doing so.

Background

The facts in the present matter are clearly set out at [3] to [8] of the AR’s judgment in Alphomega Research Group Ltd v Nanyang Law LLC [2010] SGHC 45 (“the Judgment”). Essentially, Nanyang, a firm of advocates and solicitors, had represented Alphomega in two suits involving Alphomega’s directors/shareholders and Alphomega, viz, Suit No 49 of 2008 (“Suit 49”) and Suit No 856 of 2008. Both suits were consolidated, together with a third suit, viz, Suit No 855 of 2008 and heard before Tan Lee Meng J (“Tan J”).¹ Midway through the trial before Tan J on 9 February 2009, Alphomega terminated the services of Nanyang and replaced Nanyang with Sterling Law Corporation (“Sterling”) as its counsel. Subsequent to its discharge, Nanyang sought to recover from Alphomega payment for work done up to the termination. Several invoices were rendered to Alphomega. However, payment was not made. Nanyang then proceeded to tax the solicitor-client costs with the result that registrar’s certificates were issued for sums totalling $332,229.40 payable by Alphomega to Nanyang. Nanyang then sought payment of this sum from Alphomega. Once again, this was to no avail. Nanyang hence commenced the present action against Alphomega to recover the total outstanding amount in respect of the registrar’s certificates.

The writ of summons for the present suit (“the Writ”) was filed on 23 June 2009. It was purportedly served by a court clerk of Nanyang (“the Court Clerk”) on Alphomega on 24 June 2009 at 6 Sungei Kadut Way, Singapore 728786, the address of Alphomega’s principal place of business. As Alphomega did not enter appearance in respect of the Writ, Nanyang obtained judgment in default against Alphomega (ie, the Default Judgment) for the sum of $332,229.40 on 3 July 2009. Thereafter, Nanyang proceeded with execution proceedings against Alphomega. It obtained the Orders and the WSS and lodged a caveat in the Registry of Land Titles in connection with the WSS.

On 26 November 2009, Alphomega filed an application to set aside the Default Judgment (“the Application”). Two other summonses, viz, Summons No 6297 of 2009 and Summons No 6440 of 2009, were filed to amend the Application. One of the amendments to the Application was to include an additional ground for setting aside the Default Judgment, namely, the merits of its defence against Nanyang’s claim. After hearing the arguments of both parties, the AR dismissed the Application and upheld the Default Judgment. Alphomega’s appeal against the AR’s decision then came before me.

After careful consideration of the respective submissions of the parties, I allowed Alphomega’s appeal on the basis that even though the Default Judgment was regularly obtained, as the learned AR had rightly found, Alphomega had a prima facie defence and ought therefore to be allowed to defend itself against Nanyang’s claim.

The law on the setting aside of default judgments

Under O 13 r 8 of the Rules of Court (Cap 322, R5, 2006 Rev Ed) (“Rules of Court”), the court may, on such terms as it thinks just, set aside a judgment entered in default of appearance. The law on the setting aside of default judgments may be found in the seminal case of Mercurine Pte Ltd v Canberra Development Pte Ltd [2008] 4 SLR(R) 907 (“Mercurine”), where the Court of Appeal restated the principles governing this area of the law. The Court of Appeal drew the usual distinction between default judgments which have been obtained regularly and those obtained irregularly.

Where the default judgment sought to be set aside is regular, the Court of Appeal said at [60] (and again at [95]) that “the question for the court is whether the defendant can establish a prima facie defence in the sense of showing that there are triable or arguable issues”. However, the Court of Appeal stressed at [65] that “the merits of the defence do not constitute the sole consideration that a court takes into account in deciding whether to set aside a regular default judgment”, indicating that it will also take other considerations into account. At the end of the day, whether there is a defence on the merits is to be balanced against other considerations, such as the applicant’s explanation for the default and any delay, as well as against prejudice to the other party.

Where the default judgment sought to be set aside is irregular, the Court of Appeal’s guidance at [96] is instructive:

Where the default judgment sought to be set aside is an irregular one, setting aside as of right (viz, the ex debito justitiae rule) remains the starting point, especially in cases where the irregularity consists of the premature entry of a default judgment or a failure to give proper notice of the proceedings to the defendant – ie, in cases where there has been egregious procedural injustice to the defendant. This starting point may, however, be departed from where there are proper grounds for doing so. The court has an unfettered discretion whether the ex debito justitiae rule should be followed, and, in exercising this discretion, it may take into account, among other factors (see also [76] above): (a) the blameworthiness of the respective parties (eg, whether there has been undue delay on the defendant’s part in making its setting-aside application); (b) whether the defendant has admitted liability under the default judgment; and (c) whether the defendant would be unduly prejudiced if the irregular default judgment is allowed to stand.

In those instances where the court is of the view that there has been no procedural injustice of such an egregious nature as to warrant setting aside the irregular default judgment as of right, the court has to go on to consider whether to nonetheless set aside the irregular default judgment on some other basis apart from the ex debito justitiae rule. To this end, it is crucial for the court to take into account the merits of the defence. Should the court find that the defendant is ‘bound to lose’ (per Sir Staughton in Faircharm ([77] supra)) if the default judgment is set aside and the matter re-litigated, the court should ordinarily uphold the default judgment, subject to any variation which the court deems fit to make and/or any terms which it deems fit to impose.

In other words, the plaintiff has first to persuade the court that the ex debito justitiae rule should not be applied. Having done so, it then has to counter the defendant’s setting aside application by showing that the defendant is “bound to lose”. Whether the Default Judgment was regularly obtained

Based on the guidance provided in Mercurine ([6]supra), I had first to decide whether the Default Judgment was regularly or irregularly obtained. In this regard, I agreed with the AR that the Default Judgment was regularly obtained. First, I was of the view that service of the Writ had indeed been effected. The Court Clerk had described in detail how service was effected on 24 June 2009 in a statutory declaration. Alphomega’s argument (that Nanyang’s assertion that service of the Writ had been acknowledged by one “Chris” ought not to be believed because none of its employees bore the name of “Chris”) was weak. I was also not convinced by Alphomega’s argument that Nanyang’s chairman, Mr Ng Kim Tean (“Mr Ng”) who was also Alphomega’s company secretary, had possession of Alphomega’s stamp and could have belatedly and improperly affixed the same to the Writ. This was because I noted that Mr Ng had ceased to be Alphomega’s company secretary in February 2009.

Second, not only had service of Writ been effected, I was also of the view that there was proper service of the same. To my mind, service of the Writ at Alphomega’s principal place of business was good service. In this regard, I disagreed with the learned authors of Walter Woon on Company Law (Sweet & Maxwell, 3rd Ed, 2005) at para 10.2 and Halsbury’s Laws of Singapore vol 6 (LexisNexis, 2006 Reissue) at para 70.298, who take the view that s 387 of the Companies Act (Cap 50, 2006 Rev Ed) (“Companies Act”), which provides for service at a company’s registered office, is prescriptive and not only permissive. I based my decision, in part, on the AR’s comprehensive discussion of service on companies at [19] to [39] of his Judgment. In addition to his analysis of the law in Singapore, the United Kingdom and Australia, I have two points to add. First, s 387 of the Companies Act which provides that “a document may be served on a company by leaving it at or sending it by registered post to the registered office of the company” is in substance very similar to s 1139(1) of the UK Companies Act 2006 which also provides that “a document may be served on a company registered under [the Companies Act 2006] by leaving it at, or sending it by post to, the company’s registered office”. I noted, in particular, that the word “may” is used in both ss 387 and 1139(1).

Apart from the other authorities considered by the learned AR, the Court of Appeal in England in Singh v Atombrook [1989] 1 WLR 810 suggests (at...